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Technology Stocks : Siebel Systems (SEBL) - strong buy? -- Ignore unavailable to you. Want to Upgrade?

To: chojiro who wrote (6432)	10/17/2002 10:33:33 PM
From: chojiro	Read Replies (2) \| Respond to of 6974

Last weeks news, FTR.... Siebel Sued by Public Pension on Employee Options Friday October 11, 6:49 pm ET By Lisa Baertlein SAN MATEO, Calif. (Reuters) - A public pension fund has filed a lawsuit alleging that Siebel Systems (NasdaqNM:SEBL - News) violated its own rules for granting stock options, enriching directors and executives at the expense of shareholders. ADVERTISEMENT The Teachers' Retirement System of Louisiana said in its lawsuit that Siebel Systems' board gave company founder, CEO and Chairman Tom Siebel, millions of stock options at or below market prices -- rather than at a premium, as company rules required. According to court documents, the Louisiana fund further charged that Tom Siebel was also granted, under certain circumstances, more options than allowed under the rules. To cover the move, the pension fund alleged in its complaint filed Sept. 23 in San Mateo, California, Siebel directors "changed the grant date on the options, fabricated the reports, and rolled over the improper grants into the following year." The suit also named all Siebel directors as defendants. A Siebel Systems spokeswoman said a similar case had been brought against the company and summarily dismissed in 2000. She said the name of the plaintiff in that case was not immediately available. She declined to comment further. Parties to the lawsuit are slated to appear for their first conference on Jan. 9 before San Mateo County Superior Court Judge Mark Forcum. The pension fund said it will continue to hold Siebel System shares during the duration of its legal action against the company. Siebel Systems' stock -- a darling of the tech boom that flirted with $120 in November 2000 -- finished Friday's regular Nasdaq session at $6.81, up 9.5 percent on the day. The teachers fund and its attorneys did not return calls seeking comment about the lawsuit. MILLIONS AND BILLIONS From 1996 through 2001, Tom Siebel received options valued at nearly $1 billion on the date of grants, the lawsuit said. "The real source of wealth provided to Siebel, and the source of the waste that has cost the company well over a billion dollars, was in the form of option grants that the board of directors authorized to be paid to Siebel and to themselves," the pension fund said. According to the lawsuit, certain Siebel Systems' directors received millions of options. The suit alleges that Siebel Systems did not disclose 2000 and 2001 option grants to directors. Defendants in the lawsuit include Tom Siebel and Patricia House, Siebel Systems' co-founder and vice chairman. Transamerica Investment portfolio manager Ken Broad called Siebel Systems' use of stock options "egregious," even for Silicon Valley, where tons of tech execs and employees walked away with millions of dollars in options as many mom-and-pop stock buyers lost their shirts. According to published reports, San Mateo, California-based Siebel Systems had issued so many employee options that by the end of 2001, they accounted for just over half of the company's undiluted shares outstanding. Siebel Systems said in a footnote to its annual report that it would have had a 2001 net loss of $467 million, or $1.02 per share, if it had been forced to expense options employees exercised. Instead, it reported a net profit of $255 million, or 49 cents per diluted share. "I would argue that one of Siebel's core product lines is issuing equity," said Broad, who noted that the current market is more efficiently pricing and punishing companies that abuse employee options. As for Siebel Systems, Broad said: "I wouldn't touch the stock with a 10-foot pole because of their stock option program."