Magazine article Workforce Management

To Keep Its Rank and File, PeopleSoft Offers a Sweeter "Stay" Package

Magazine article Workforce Management

To Keep Its Rank and File, PeopleSoft Offers a Sweeter "Stay" Package

Article excerpt


It's not just the executives who are being offered retention deals. The company hopes to prevent mass defections in the face of Oracle's takeover threat.

FOR MORE THAN A YEAR, software maker PeopleSoft Inc. has weathered one of the toughest challenges of employee retention: rival Oracle Corp.'s $7.7 billion hostile takeover bid, which threatens to wipe out thousands of jobs.

But PeopleSoft is soldiering on. The Pleasanton, California, company has intensified efforts to keep its 11,500 employees from abandoning the ranks, including boosting severance packages for executives and rank-and-file employees as well as holding seminars on retention for supervisors. And, in a move that some analysts have speculated was taken in part to keep employees from jumping ship, it also brought back founder Dave Duffield. He replaced Craig Conway as the company's chief executive after Conway was fired last month.

The moves come at a critical time in the company's 16-month battle against Oracle. For most of the year, PeopleSoft had the edge. But a federal judge unexpectedly handed a crucial victory to Oracle in September. The ruling turned the tide in Oracle's favor, increasing its chances of succeeding. And it meant that PeopleSoft was more vulnerable than ever to employee flight.

Many employees have heralded Duffield's recent return as a dramatic move to raise morale. Duffield has said that one of his goals is "reinvigorating the employee community."

"It's great to be back," Duffield said in an e-mail to employees on the first day of his homecoming. "For those of you who don't know me, you can expect to see me in the halls, on the road, in the cafeterias, looking for feedback and the opportunity to meet you."

Besides Duffield's appointment, PeopleSoft has taken aggressive steps to offer employees a tangible reason for staying. A week after the federal court's ruling, PeopleSoft announced new compensation packages. The board of directors approved the plan to recognize the role that workers have played in the past year and to alleviate their concerns "regarding their long-term employment prospects," according to a Securities and Exchange Commission filing.

The plan, which is triggered if another company takes control of PeopleSoft and fires its staff, gives executives between 150 percent and 200 percent of their annual salary and bonus, plus up to two years of health coverage. Before, they were to receive 75 percent to 100 percent of their salary and bonus.

All employees will collect at least 12 weeks' salary and health benefits; before, they were to receive one week of salary for each year of service, and the maximum available was three months' salary. Some employees could receive additional benefits based on their level in the company and their performance, the filing said.

In addition, the plan accelerated the vesting schedule for employee stock options, allowing them to be exercised and sold immediately. And lest the acquiring company try to avoid complying with the new plan, the SEC report said, PeopleSoft also "authorized changes to prevent an acquirer from seeking to avoid complying with the company's existing obligations," although it didn't spell out what those changes were.


"The two things you're always fighting when you're facing a hostile takeover are the distraction of the event itself and the impact on morale because of the uncertainty of what's to come," says Lynn Bersch, a partner at the law firm Reed Smith who specializes in employment issues. …

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