2 Siebel Investors to Withhold Votes

Two Siebel Systems Inc. investors, Jana Partners and Providence Capital Inc., plan to withhold votes for Chairman Tom Siebel and two other directors at the annual meeting Wednesday to pressure the company to distribute cash to shareholders or consider a sale.

“If things remain the same and they continue to ignore shareholders, they will be on the wrong end of a proxy vote,” said Barry Rosenstein, manager of Jana, a hedge fund that is Siebel’s No. 6 shareholder.

The rebuke from shareholders follows four years of sales declines at San Mateo, Calif.-based Siebel, the world’s No. 2 maker of software used by companies to track customer interactions. Siebel in mid-April ousted Chief Executive Michael Lawrie after he had been on the job for less than a year, and replaced him with George Shaheen, a Siebel director. Siebel’s market capitalization has dropped from $13 billion at the end of 2001 to $4.7 billion last week.

Tom Siebel, former Montana Gov. Marc Racicot and James Gaither, a managing director at Sutter Hill Ventures, are up for reelection at Wednesday’s meeting at the San Francisco Airport Marriott in Burlingame. Siebel’s other five directors are up for reelection in 2006 and 2007.

Shares of Siebel have tumbled 13% this year after sinking at least 25% in three of the last four years. They rose 5 cents Monday to $9.15.