Oracle Chief Will Pay $122 Million in Shareholder Suit
$100 Million Will Go to Charity, $22 Million to Plaintiffs
By MICHAEL LIEDTKE, AP

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REDWOOD CITY, Calif. (Nov. 22) - A California judge on Tuesday approved an unusual legal settlement that will require Oracle Corp. CEO Larry Ellison to donate $100 million to charity and pay another $22 million to the attorneys who sued him for alleged stock trading abuses - forcing Ellison to dig deeper into his pockets than he originally wanted.

Barring an appeal, the $122 million settlement finalized by San Mateo Superior Court Judge John Schwartz closes the books on a shareholder lawsuit filed nearly four years ago on behalf of Oracle, one of the world's largest software makers.

The civil complaint revolves around a $900 million gain that Ellison generated by selling some of his Oracle stock shortly before the company's shares plummeted in 2001.

Like many other high-tech companies, Oracle's sales sagged badly that year amid the aftershocks of the dot-com implosion that wiped out hundreds of companies. Oracle's shares plunged by 52 percent in 2001, wiping out about $85 billion in shareholder wealth.

Oracle's shares fell 5 cents to close at $12.39 in trading on the Nasdaq Stock Market. The level is about 25 percent below Oracle's market value when the shareholder lawsuit was first filed in late January 2002.

Although he denied doing anything wrong, Ellison tentatively agreed to settle the suit in September by donating $100 million to charity in Oracle's name.

At that time, Ellison - one of the world's wealthiest men with an estimated $17 billion fortune - refused to pay the lawyers that accused him of wrongdoing. He wanted to leave that responsibility to Oracle, the Redwood Shores, Calif.-based company he co-founded 28 years ago.

But Schwartz didn't want to saddle Oracle's shareholders with Ellison's legal bills. He refused to approve the settlement at a September court hearing, forcing the two sides to re-negotiate or take the case to trial.

Ellison's attorney, Alan Salpeter, told Schwartz during the September hearing that the flamboyant executive didn't want to pay the fees of the suing lawyers because it would make it appear like he was admitting he had done something wrong.
The about-face reflected Ellison's desire to avoid the risks and distractions of going to trial, according to the revised settlement.

"Ellison has asserted and continues to assert that at all relevant times, he acted in good faith, and in a manner that was in fact...in the best interests of Oracle and Oracle's shareholders," the court papers said.

A special committee appointed by Oracle's board of directors to investigate the allegations raised in the lawsuit also concluded Ellison did nothing wrong.

Salpeter declined to comment about Ellison's decision to pay the attorney fees. Oracle also declined to comment.

After a flurry of suits were filed against Ellison, Oracle changed its policies governing the stock sales of its top executives.

Unless Tuesday's settlement is appealed, Oracle will have to identify the recipient of Ellison's donation within the next three months. Ellison will have up to five years to donate the entire $100 million.

The $22 million in attorney fees and expense will be divided among 13 law firms. The firms had originally requested $22.5 million in fees and another $1.5 million in expenses before lowering their bill as part of the revised settlement.

Joseph Tabacco, one of the lead attorneys in the case, called the settlement "an extraordinary result and certainly one that is of great benefit to Oracle."

It remains unclear whether Oracle will be able to claim a tax deduction for Ellison's donations. There is nothing in the settlement that will prevent Ellison from seeking reimbursement from the insurers that cover Oracle's top executives and directors from legal liabilities arising from their jobs.

Ellison still faces a federal lawsuit similar to the one filed in San Mateo County. The San Mateo settlement requires the lead attorneys in the case to "use their best efforts" to dismiss the federal complaint.

The San Mateo case still could come back to haunt Ellison and Oracle. Lawyers for the executive and the company wanted to keep some documents sealed, but Schwartz refused and said he planned to sign an order making all the material available for public review.

Judge rejects Oracle CEO insider-trading deal, report says
A new hearing on the issue is set for Nov. 15

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SEPTEMBER 27, 2005 (REUTERS) - A California judge yesterday refused to approve a settlement in an insider-trading case involving Oracle Corp. CEO Larry Ellison, questioning whether shareholders should pay the legal fees, according to The Wall Street Journal.
The agreement called for Ellison, without admitting wrongdoing for a 2001 stock sale, to donate $100 million over five years to charity, the newspaper said.

San Mateo Superior Court Judge John Schwartz seemed to favor the agreement's outlines but wanted to hear more testimony about why Oracle shareholders should pay $22.5 million of related legal fees, the newspaper said, citing an account of the court proceeding. A new hearing is set for Nov. 15.

An Oracle spokeswoman declined to comment. Joseph Tabacco, a lawyer representing shareholders in the case, could not immediately be reached for comment. Legal observers had criticized the proposed settlement as holding little value for Oracle shareholders, the newspaper said.

According to the lawsuit, Ellison sold almost $900 million of Oracle shares just before the company warned of an earnings shortfall that published reports said caused the stock to drop sharply.