C Scott Hartz, the former chief executive of PricewaterhouseCoopers, is the newest addition to the company’s board. With the addition of Hartz, Siebel Systems’ board now consists of nine directors, according to an Associated Press report.
Hartz joins a board under fire by an investor lawsuit that alleges the directors distributed bushels of lucrative stock options to insiders in violation of the San Mateo, California-based company’s guidelines. In July, San Mateo County Superior Court Judge Quentin Kopp cleared the way for the Teachers Retirement System of Louisiana to continue to pursue its lawsuit against the software maker and to seek punitive damages against both Chief Executive Tom Siebel and members of the company’s board of directors (See Siebel Systems Could Face Punitive Damages For Option Fiasco ).
The retirement system alleged in its suit the software maker overstated its earnings by obfuscating stock option grants to CEO Siebel – a move that constituted a violation of the company’s own rules for granting options, by both exceeding a cap set on the number of options it was allowed to grant, and, in some cases, issuing options at below market value without expensing the difference in price.
Originally filed September 23, 2002, the lawsuit was amended in November (See Louisiana Fund Lobs More Allegations at Siebel ). Following the addendum, the suit further alleged the improperly issued stock options led to improper accounting that Siebel was aware of when he filed financial statements under the Sarbanes-Oxley Act.
The suit is now scheduled for a November 3, 2003 trial.