Oracle's Ellison gives up $500m to settle Pillar Data Systems claim

Oracle's Ellison gives up $500m to settle Pillar Data Systems claim

Summary: Oracle CEO Larry Ellison has agreed to give up a potential payout of around $500 million to settle conflict of interest accusations over the purchase of Pillar Data Systems.

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Credit: Jack Clark/ ZDNet

Oracle Chief Executive Larry Ellison has agreed to give up a payout reaching potentially $500 million to settle a dispute based around conflict of interest when Oracle purchased a firm that he controlled.

In 2011, Oracle agreed to purchase Pillar Data Systems. The company was majority owned by Oracle's chief executive, founded in 2005 and Ellison contributed $150m personally to kick-start the firm.

Rather than paying cash up-front, Oracle agreed to buy the data storage company through future payments decided based on Pillar Data Systems' performance until 2014. At part of the deal, Ellison would receive the first $562 million of any payment related to the acquisition, according to court documents viewed by Reuters.

However, the suit against the acquisition -- launched by shareholders and pension funds the City of Roseville Employees' Retirement System and the Southeastern Pennsylvania Transportation Authority -- says that the deal was "tainted by conflicts of interest and was unfair to Oracle." At a hearing in August last year, questions were raised as to whether "it was a legitimate deal and whether somebody could have gotten a better deal."

As a result, Ellison -- who owns a 55 percent stake in San Jose, California-based Pillar -- will be required to keep only five percent of the total ultimate payment.

In 2012, Ellison was one of the most well-paid CEOs worldwide.

Topics: Oracle, Tech Industry

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  • Five percent of $500 million

    "As a result, Ellison -- who owns a 55 percent stake in San Jose, California-based Pillar -- will be required to keep only five percent of the total ultimate payment."

    Only $25 million.

    How will he buy a hamburger if he's that poor.
    fairportfan
  • Pillar situation standard operating procedure at Oracle

    The brilliant and iconoclastic book "High-Tech Planet", written by a former Oracle executive, recounts a case similar to the Pillar Data Systems where fraud, insider trading and conflicts of interest by a CEO clearly molded on Larry Ellison is standard operating procedure. At the end, the Larry Ellison-inspired CEO gets a slap on the wrist but is not fired because, as the book, says, he cannot fire himself since he owns a majority of the company’s stock.

    It is exactly the same situation with His Larryness who treats Oracle like his own personal kingdom, appoints on the supine board his buddies who then agree on whatever compensation he wants and makes disastrous strategy decisions (such as the acquisition of Sun.)

    I can't remember the name of the author but I know you can read the first chapters for free on Amazon
    Pete Clarckson