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In the interest of full disclosure, I’m something of a fan of Craig Conway, the former CEO of PeopleSoft. His ability to take a moribund PeopleSoft, largely rudderless at the close of the 20th century, and return it to quasi-greatness was a monumental achievement.
I will also confess that at the time he took over from Dave Duffield, I publicly stated that Conway was a “turnaround and sell it” CEO. It’s somewhat ironic that his ouster has come precisely because he was simply unfit to accomplish the “sell it” part.
Of course, at the moment there’s a lot of public hoo-haw about how Craig was ousted because he lied about the effect of the take-over to analysts. Craig did say a lot of things about the effects of the takeover, some of which were, to be charitable, a bit hyperbolic. At a press conference last spring, Craig stated that “maybe 25 people” were involved in dealing with the Oracle takeover, something that no one with any real sense truly believed.
But the real reason Craig’s firing had nothing to do with whether he stretched the truth a little is simple: It’s time to sell PeopleSoft to Oracle, and Craig was too personally invested in trying to defeat the takeover to be able to sit down and negotiate the best deal possible for PeopleSoft shareholders.
The effect of his firing on the price of PeopleSoft shares clearly justified his termination. The almost 15 percent jump in the stock price — adding almost $2 billion in value to shareholders — reflected the best in “fiduciary responsibility” on the part of the board. The end of the Department of Justice suit and the continuingly disappointing revenue picture for PeopleSoft made obstructionism in the face of Oracle’s bid almost illegal: PeopleSoft’s business has been sinking for most of the year, and would continue to sink without help. Oracle, despite Craig’s invective about predatory business tactics, is the board’s best bet to protect shareholder value.
There really is no other outcome. Dave Duffield, back from a country gentlemen’s retirement helping stray canines and the like, didn’t take back the helm to reinvigorate the company so that it could live to fight another day. He’s there to make sure that his half-billion dollar stake in PeopleSoft stays that way, and that means engineering a favorable sale to a man that Craig simply could never face across a negotiating table.
Sure, there are also questions about whether Craig’s leadership and direction were right for the company. The company definitely lost its momentum in technology, opting for a too-close embrace with IBM, and there are questions about whether PeopleSoft was doing the best job in marketing itself against SAP, among others. But none of that really mattered when it came time to oust Craig.
So what’s to negotiate? Other than price, count on Duffield to negotiate on behalf of his customers and employees. Doing well by these two constituencies are cherished values in Duffield’s eyes, and he’ll try to protect them as much as possible. The customer side will be relatively easy; Oracle doesn’t want to make it any easier for SAP to poach PeopleSoft customers than it already has. But the employee side will be much harder: Oracle has stated it has little use for the majority of the PeopleSoft employee base, and you can expect the flurry of resumes on the street from PeopleSoft employees to become a blizzard in coming weeks.
In the end, it’s hard to know if the protracted fight was worth all the effort. Craig’s continued stand against Oracle, though laudable in a sort of David vs. Goliath way, made little sense in the free market economy in which we operate. I can understand Craig’s desire to continue to excel at the best job he ever had, but given the set of rules under which he was forced to play, looking for a fair and just outcome to what was strictly a financial transaction wasn’t a good use of corporate resources. To his credit Craig, like everyone else, was operating without the benefit of any real precedent. Now that he’s become precedent himself, I wish him more luck the next time around.
