Charity may be winner in Oracle lawsuit
Published: September 13, 2005
Lawrence Ellison, the chief executive of Oracle, has reached a tentative agreement under which he would pay $100 million to charity to resolve a lawsuit charging that he engaged in insider trading in 2001, a lawyer involved in the case said.
The unusual settlement, which 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.
Typically in derivative lawsuits, damages are paid directly to the company. Under the proposed settlement, Ellison would designate the charity, and the payments - to be made over five years - would be made in the name of Oracle. It is unclear whether the payments would be tax-deductible for Ellison.
“The plaintiffs believe this is a very innovative settlement providing a positive benefit to Oracle,” said Joseph Tabacco Jr. of Berman DeValerio Pease Tabacco Burt & Pucillo, one of the lawyers representing shareholders in the suit. “It resolves a lawsuit that has been pending for almost five years.”
“I’ve never heard of anything, structured from the beginning as a settlement this large, going to a charity,” said Michael Perino, a professor at St. John’s University School of Law in New York. In April, three eBay executives agreed to pay $3.4 million to settle a derivative lawsuit, with half of the proceeds going to charity.
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