PeopleSoft trial airs dirty laundry

As PeopleSoft Inc. and Oracle Corp. continue dragging each other into courtrooms across the country, the trials are bringing to light reams of internal documents and discussions usually hidden from public view. Highlights so far from this week's case in Delaware's Chancery Court include:

-- Oracle is leaving itself room to raise its bid for PeopleSoft, which currently stands at $21 per share. Oracle director Joseph Grundfest said in court on Wednesday that no one should assume Oracle's current offer is its final one.

-- The surprise firing last Friday of PeopleSoft Chief Executive Officer Craig Conway was sparked in part by a mutiny. Chief Financial Officer Kevin Parker, Americas field operations head Phil Wilmington and Chief Marketing Officer Nanci Caldwell no longer wanted to work with Conway, and PeopleSoft couldn't afford to lose the three executives, director Steven Goldby testified.

-- Although board members first raised the idea of firing Conway earlier in the year, the decision to go ahead and do so came quite rapidly last week, with Conway given little warning. Goldby and another director, George "Skip" Battle, met with Conway several weeks ago to discuss their qualms about a deposition Conway gave for the Delaware case, in which Conway acknowledged lying to analysts in a conference call by telling them Oracle's takeover campaign was not affecting PeopleSoft's sales. Conway was not told at that meeting that he might be fired. When he was told of his termination last Thursday night, "He was quiet," Goldby said. "I don't know if this was a surprise to him or not."

-- Conway overstated PeopleSoft's case several times in the months after Oracle launched its tender offer. "In a lot of ways, I was doing the same thing policemen do at the scene of the crime," Conway said in a deposition. "I was telling people, 'The show is over.' ... Absolutely not true. The company was under ongoing attack."

-- At one point, PeopleSoft's directors changed quotes in a transcript of Conway's remarks before filing the transcript with the U.S. Securities and Exchange Commission. In response to a question from analysts, Conway said, "The last remaining customers whose business decisions were being delayed have actually completed their sales and completed their orders." That statement was incorrect, and PeopleSoft removed it from the transcript it filed, adding a note that some statements in the transcript had been changed "to reflect the intended meaning of the speaker."

The transcript alteration drew some sharp words from Judge Leo Strine. "This is some sort of Orwellian thing?" he asked. "It strikes me as passing strange. Like Gerald Ford, I'm sure, wishes he could revise what he said about Poland in 1976."

-- PeopleSoft's "customer assurance plan" (CAP), a contractual addition that offers customers sizable payments if PeopleSoft is bought by a company that disrupts its development and support, has been controversial from its start. But one of the provision's most inflammatory clauses ended up included by accident. "Anne Jordan, who was then the general counsel of the company, simply cut and pasted a definition out of what I think was an employee agreement," Goldby testified when asked to explain how a clause listing a change in the compensation of PeopleSoft's board -- not just a change of company ownership -- came to be included as a trigger for the CAP.