TMCnet News
Oracle Boss Charitably Buys Off LawsuitBy DAVID R. BUTCHER, Assistant Editor, Customer Interaction Solutions
Yes, yes, everyone’s talking about the Oracle-Siebel acquisition news (for customers, it’s probably not the best news; see below), but let’s not overlook today’s news regarding the fact that Oracle’s chief executive, Lawrence Ellison, has to pay $100 million to resolve a lawsuit, a lawsuit which charged Ellison with insider trading in 2001.
According to the New York Times today, Ellison has reached a tentative agreement to pay $100 million to charity in order to conclude the five-year-pending lawsuit. The lawsuit charged that Ellison sold almost $900 million of shares before news that Oracle would not meet its expected earnings target. The same amount of stock, after the announcement, was worth slightly more than half as much, the NYT said.
And much back-patting ensued: “The plaintiffs believe this is a very innovative settlement providing a positive benefit to Oracle,” the NYT newspaper quoted one of the lawyers representing shareholders in the suit as saying.
The rather odd settlement, which at this point requires the approval of Oracle’s board and could still break down, “would be one of the largest payments made to resolve a shareholder suit of this kind, known as a derivative lawsuit,” according to AP.
A derivative lawsuit is normally present among charges that officers and directors are wasting corporate assets, or that a corporation’s management or board breached fiduciary duties owed to shareholders by negligence, mismanagement or self-dealing. Damages are also paid directly to the company under typical derivative lawsuits’ processes.
Under the terms of this settlement, Ellison would designate the charity; the payments, paid in the name of Oracle, would be made over the span of five years. It was unclear whether the payments would be tax-deductible by Ellison, the NYT said.
A hearing on the settlement, which requires court approval, is scheduled for September 26. Oracle refused to comment on the NYT story. The paper also reported that lawyers on the case would receive a separate payment of $22.5 million.
This allows Ellison and the rest of Oracle to focus on their other major news: The business software company today said it will acquire CRM provider Siebel Systems Inc. The deal is worth about $5.85 billion in cash and stock.
Oracle said the companies’ joint customers have recommended the transaction to both of them for more than a year. TMCnet Editor-in-Chief Rich Tehrani, on the other hand, is likely less inclined to see it that way: “This is not a good deal for the customer [...] A purchase by Oracle will no doubt dilute focus and attention from CRM, making it just another product line instead of a core strategy. We can expect reduced innovation, as there will be more of a focus on a cohesive software strategy as opposed to making and selling the world’s best CRM software,” as Tehrani offered his opinion on the acquisition's effects on Siebel's customers this morning.
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David R. Butcher is Assistant Editor of Customer Interaction Solutions. To see more articles by David Butcher, please visit his archive.
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