U.S. Securities and Exchange Commission
Washington, D.C. 20449
Notice of Exempt Solicitation
Submitted pursuant to Rule 14a-6(g)
1. Name of Registrant:
Siebel Systems, Inc.
2. Name of person relying on exemption:
College Retirement Equities Fund
3. Address of person relying on the exemption:
730 Third Avenue, New York, NY 10017
4. Written materials. The following written materials are attached:
Exhibit 1: Letter from Peter C. Clapman on behalf of Teachers
Insurance and Annuity Association - College Retirement
Equities Fund
Ex. 99.1
LETTER
Exhibit 1
TEACHERS INSURANCE AND ANNUITY ASSOCIATION PETER C. CLAPMAN
COLLEGE RETIREMENT EQUITIES FUND Senior Vice President and Chief
730 Third Avenue/New York, NY 10017-3206 Counsel, Corporate Governance
212 490-9000
May 27, 2003
Dear Fellow Siebel Systems Shareholder:
I am writing to you on behalf of the College Retirement Equities Fund
(CREF), a holder of more than 2.4 million shares of common stock in Siebel
Systems ("the Company"), which has submitted the shareholder resolution this
year requesting that the Company adopt performance-based compensation programs.
The Company went to the SEC in an effort to deprive you of your opportunity to
vote on this issue, but fortunately the SEC rejected the Company's attempt. We
believe that support for our resolution will have a positive long-term effect on
the value of your shares and thus urge you to support our resolution and vote
"FOR" Proposal 4 on the company's proxy card.
Our proposal presents a clear question for shareholders. DO YOU WANT A
COMPENSATION PLAN THAT TRULY LINKS MANAGEMENT INTERESTS AND YOUR INTERESTS, OR
DO YOU WISH TO ACQUIESCE IN THE COMPANY'S CONTINUED RELIANCE ON TRADITIONAL
OPTIONS AT AN EXTREMELY HIGH LEVEL?
As a shareholder in Siebel Systems, you have a vital interest in this
issue, because traditional stock options do not effectively align management's
interests with your interests as a shareholder. We ask that Siebel adopt an
equity policy for future compensation plans that includes intended dilution
levels, performance hurdles, holding periods for stock, or other measures that
would ensure that executives face real financial risk. Traditional fixed options
can reward executives solely because of market changes, not because of true
company performance. Transforming the Company's compensation plans to link
equity pay to a group of peer companies or a market-based index would provide
executives with incentives aligned with your interests as shareholders.
A policy imposing intended dilution levels is especially important
because the Company's program now has the potential to significantly dilute your
ownership interests over time. At the end of 2001, Siebel Systems had potential
dilution--shares granted and shares available for grant under compensation
plans--equal to 77% of total shares outstanding. The IRRC (Investor
Responsibility Research Center) reports that the average dilution for all
technology companies was 24%, with Siebel's 77% in the top ten for public
companies in its use of options for compensation.
The Company argues that Chairman and CEO Thomas Siebel recently gave
back all of the 25,950,000 options that he had been granted since late 1998.
Yet, in 2002 alone, Mr. Siebel cashed in options for a gain of over $35 million.
For the three years before that, his total realized gain from options was over
$311 million. In the final analysis, the real question for shareholders today
may be why he had so many option shares, none of which were performance-based,
in the
first place. Even with that option giveback and other actions since late
2001, the Company's potential dilution still recalculates to 69%. It is
important to send a clear message for the future.
The past three years have been an extremely difficult period for Siebel
Systems' shareholders, both on absolute and relative measures. We ask that
Siebel Systems consider fundamental changes for its future executive
compensation plans, including more thoughtful use of equity incentives. Heavy
reliance on the use of fixed options is not in the best interests of
shareholders.
Since this issue affects the potential value of your investment, we
urge your support for the resolution.
Very truly yours,
/s/ Peter C. Clapman
Peter C. Clapman
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PLEASE VOTE "FOR" SHAREHOLDER PROPOSAL 4 ON SIEBEL'S PROXY CARD
TIAA-CREF is requesting that you cast your votes FOR shareholder proposal 4 on
the proxy card sent out by Siebel Systems for its June 11, 2003, annual meeting.
Please note that if you leave the proxy card blank and return it, the company
will count your votes against our proposal. TIAA-CREF, which will not be sending
out a separate proxy card, is taking no public position on any other item being
considered at the annual meeting.
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