PeopleSoft Inc.’s board fired Craig Conway as its chief executive after hearing him explain why he made a misleading statement about the business software maker’s ability to close sales while fighting rival Oracle Corp.’s $7.7 billion takeover bid.
Kicking off a two-week trial over PeopleSoft’s anti-takeover defenses, company director Steven Goldby testified Monday that concerns about Conway’s “situational ethics” contributed to the surprise decision to fire him late last week.
Conway, who marshaled PeopleSoft’s 16-month resistance to Oracle until his ouster, misled industry analysts in September 2003 when he told them the hostile takeover bid wasn’t a sales deterrent, Goldby said.
Realizing the statement wasn’t true, PeopleSoft omitted Conway’s misleading remarks in a “corrected” transcript filed with the Securities and Exchange Commission.
“We knew that Conway had misspoken and what he had said was untrue,” Goldby testified under questioning by Oracle attorney Michael Carroll.
The misstatement apparently didn’t get Conway into hot water until late last month, when Oracle provided PeopleSoft’s board with a deposition that revealed the reasons for his deceit.
“I was promoting, promoting, promoting,” Conway said during the deposition. At another point in the deposition, Conway said he decided to downplay the sales threat posed by Oracle’s bid because he was “hoping for a self-fulfilling prophecy.”
Under questioning, Goldby acknowledged that Conway’s explanation for the misleading statements troubled Peoplesoft’s board, contributing to the decision to replace him with the company’s chairman and founder, Dave Duffield.
Goldby also testified that other factors contributed to Conway’s ouster, although he didn’t elaborate in court Monday.
Conway, who is still on Peoplesoft’s board despite his firing as CEO, is scheduled to take the witness stand Wednesday.