Siebel Will Pay Dividend to Placate Shareholders

Troubled business software maker Siebel Systems Inc. said Wednesday that it would begin paying a quarterly dividend in an effort to placate disgruntled shareholders who want the company to either stop hoarding its cash or sell itself.

Chief Executive George Shaheen, who took over at Siebel two months ago in an abrupt shake-up, announced the 2.5-cents-a-share quarterly dividend before the San Mateo, Calif., company’s annual meeting. He also reiterated an earlier vow to reverse years of eroding sales and promised to expand the company’s board by adding two directors.

Siebel’s shares fell 18 cents to $8.91.

The dividend -- the first in Siebel’s 12-year history -- will cost about $51 million annually. As of March 31, Siebel held $2.2 billion, money that some shareholders think should entitle them to a larger dividend.

Siebel’s new dividend “is a distraction. It’s basically just the interest that they earn on their cash,” said Herbert Denton, an activist shareholder.

Shaheen defended the size of the dividend, saying it represented a 1.1% yield on Siebel’s stock price before Wednesday’s decline. The average yield of other dividend-paying technology companies is 0.8%, he said.