Battered software consultant Novell Corporation’s proxy contains some stark language in proposals from a high-profile shareholder frustrated at the once high-flying company’s generous compensation packages, despite the slide in stock price.

Shares of Novell, Waltham, Mass., hit a 52-week low when they briefly dropped to $4.94 Monday. In early 2000, the stock had traded above $49 before beginning what would be a four-year decline in value.

A proposal from the $183 billion California Public Employees Retirement Cystem pension fund, better known as Calpers, advocates making 75% of Novell’s senior management’s stock compensation performance based. The fund owns about 1.71 million shares of the stock.

The Calpers proposal did not spare scorn for what it perceived was the methodology behind the company’s stock-compensation approach. “At best, it is unclear how the company presently uses performance-based parameters in awarding equity-based compensation, since it refuses to increase disclosure.”

The theme of disclosure resurfaced further down in the proxy when Calpers argued, “History indicates that the company’s compensation policies are not appropriately linked to performance.” As an example, in 2002 Novell gave “substantial” bonuses to senior executives despite losing $246 million and its stock dropping 34%.

In 2003, despite no bonuses being awarded when revenue and income targets were not met 980,000 shares worth of stock options were awarded to the chief executive officer. In discussing the award, Calpers said the company referred to vague criteria such as CEO “performance” and “survey data for the technology industry,” and did not refer to any specific criteria.

As a way to directly tie management compensation to company performance, as well as providing transparent benchmarks for managerial success, Calpers recommended indexed stock options. These options would offer reward for outperforming the competition but would not have their exercise price adjusted downward in the event of a broader market correction.

A call to Calpers was not returned.

Novell’s board of directors recommended that the proposal be rejected because it did not offer the company the flexibility to design compensation packages to retain and attract talent.

Moreover, the board’s response suggested there might be accounting liabilities for index options. The board also disagreed with Calpers’ assertion that equity performance was insufficiently considered in awarding stock performance.

A spokesman for Novell, Hal Thayer, declined to expand on the board’s response.