Last week wasn’t a very good one for Oracle chief Larry Ellison. For starters, Oracle shareholders are in full-scale revolt against what they say is an example of the most excessive CEO compensation in U.S. industry. Shareholder activist firm CtW Investment Group launched a scathing attack against Ellison’s salary, which was $78.4 million in Oracle’s last fiscal year ending in May, and $96.2 million the year before.
At the company’s annual meeting last year, 59 percent of Oracle shareholders voted against a "say-on-pay" proposal seeking an endorsement of the board's compensation policies. The vote was non-binding, and Oracle’s compensation committee determined that no changes were needed, despite shareholder opinion.
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In the next kerfuffle facing Ellison, Reuters is reporting that Ellison has agreed to a more than $500 million settlement amid accusations of a conflict of interest in an acquisition made by Oracle. Pillar Data Systems, which produced data storage systems, was bought by Oracle in 2011. It later came to light that Ellison owned 55 percent of the company.
Two pension funds, the City of Roseville Employees' Retirement System and the Southeastern Pennsylvania Transportation Authority, accused Ellison of shortchanging investors in Pillar, and claiming that the deal was "tainted by conflicts of interest and was unfair to Oracle."
“After weighing the costs and uncertainties of continued litigation against the benefits of the settlement, plaintiffs have determined it’s in the best interests of Oracle and its stockholders” to settle lawsuits over the deal, investors’ lawyers said in court filings.
According to Bloomberg, the pension fund investors said in court papers that Oracle directors improperly used company resources to “bail out” Ellison from his “horrible investment” in Pillar. They accused Oracle directors of violating legal duties to shareholders by backing the Pillar buyout.
Lawyers for Oracle tried unsuccessfully to have the suit thrown out last year. At the time, the lawyers said that since the acquisition was crafted in a way that yielded no immediate payment to Ellison, there was no impropriety. The deal was that Oracle would make payments that would depend on Pillar’s performance through 2014. This would have yielded a check of about $562 million to Ellison.
Edited by Alisen Downey