NEW YORK (Reuters) - Lawrence Ellison, chief executive of software maker Oracle Corp, has reached a tentative agreement to pay US$100 million to charity to resolve a lawsuit charging that he engaged in insider trading in 2001, the New York Times reported on Monday.
"The plaintiffs believe this is a very innovative settlement providing a positive benefit to Oracle," the newspaper quoted Joseph Tabacco Jr. of Berman DeValerio Pease Tabacco Burt & Pucillo, one of the lawyers representing shareholders in the suit, as saying.
"It resolves a lawsuit that has been pending for almost five years," Tabacco told the Times.
A spokeswoman for Oracle declined to comment to the newspaper and Alan Salpeter, a lawyer at Mayer Brown Rowe & Maw who has represented Ellison, also declined to comment.
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, the report said.
Typically in derivative lawsuits, damages are paid directly to the company. Under the terms of the settlement, Ellison would designate the charity and the payments, to be made over five years, would be paid in the name of Oracle. It was unclear whether the payments would be tax-deductible by Ellison, the Times said.
The lawsuit charged that Ellison sold almost US$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 Times said.
According to the court docket for the case, which was filed in Superior Court in San Mateo, California, a hearing on the settlement -- which requires court approval -- is scheduled for September 26. Under the terms of the agreement, the lawyers who brought the case for shareholders would receive about US$22.5 million, separate from the US$100 million payment, the Times report said.
Oracle's Ellison settling insider-trading suit
By Staff Writers on Sep 13, 2005 3:04PM
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