PeopleSoft Inc. CEO Craig Conway, who has steadfastly opposed Oracle Corp.'s $7.7 billion acquisition attempt, has been fired.
The board of directors, citing a lack of confidence in Conway's ability to lead the company, announced his termination this morning. It is effective immediately. PeopleSoft's founder and chairman, Dave Duffield, will take over as CEO. Kevin Parker, the chief financial officer, and Phil Wilmington, executive vice president, Americas, will serve as co-presidents.
The vote was unanimous and the board thanked Conway for his service.
On a conference call this morning with reporters and analysts, Duffield said his priority would be to build on the values PeopleSoft was founded on -- operational excellence, innovation and a relentless commitment to customers.
He insisted his appointment was not on an interim basis, adding he was in it "for the long haul." Duffield will receive a salary of $1 for the year and no additional equity in the company.
Conway's termination comes on the heels of a strong third quarter. Parker announced projected quarterly license revenues in excess of $150 million, well above expectations. The board of directors rejected the notion that the leadership change was due to Oracle's takeover attempt and Conway's resistance to it.
A. George Battle, a board member, noted that previous recommendations that shareholders reject the Oracle offer were unanimous decisions from PeopleSoft's transaction committee. Conway, he said, was not present during those committee meetings.
"The very simple and plain reason is that over time the board has become increasingly concerned with Craig's leadership and has essentially lost confidence," Battle said. "Speculation that this is positioning ourselves in regards to Oracle is just not right."
Battle credited the finance and sales departments, run by Parker and Wilmington, for the strong quarterly results.
"It wasn't really very shocking," said Chris Selland, vice president of sell side research at Boston-based Aberdeen Group. He added the takeover had seemed like a personal battle between Conway and Oracle CEO Larry Ellison.
"You had to ask the question, 'Should [PeopleSoft] at least be looking at this?'" Selland said.
Conway's firing comes one week after PeopleSoft wrapped up its annual user conference. At that event's opening session, Conway praised Duffield's leadership and vision. He also asked the company founder to stand and be acknowledged by the crowd.
"I think [Duffield] is not only a pioneer and a man of tremendous compassion, but also a very smart strategist," said CRM author and consultant Paul Greenberg. "The salad days of PeopleSoft are associated with Dave Duffield. The man has the smarts; he has the experience; and he has the compassion necessary to run the company."
The takeover attempt appears to be a major factor in Conway's dismissal, Selland said.
"The shareholders are not happy," Selland said. "The stock hasn't performed well and there's an offer on the table. Part of this is the late influence when Oracle dropped its bid [price]. I think a lot of shareholders wished they took that bid when it was $26 a share."
This morning, the markets reacted favorably to Conway's ouster. Peoplesoft shares rose more than 8% to $21.49, eclipsing Oracle's $21-per-share offer. Rival SAP AG stock also took off, up as much as 3.3% on the news. Shares in Oracle also rose slightly.
Last month U.S. District Court Judge Vaughn Walker allowed Oracle's takeover bid to go forward, ruling it would not violate antitrust law. The case was the major impediment to the acquisition, though hurdles still remain in the form of a "poison pill" enacted by PeopleSoft to drive up the cost of the bid, the European Commission's review and a PeopleSoft civil lawsuit against Oracle.
Greenberg, who is against the takeover, said that Oracle may have worn down PeopleSoft's board.
"[Conway's firing] does open the door considerably for an Oracle takeover," Greenberg said. "It may not be a deliberate signal, but Oracle's going to take it that way and redouble their efforts. It's also going to shake the confidence of a lot of PeopleSoft users, although it shouldn't."
Executive editor Jon Panker contributed to this report.