Judge Rejects Ellison’s Deal Over Fees

Oracle Corp. Chief Executive Larry Ellison’s agreement to pay $100 million to charities to settle a shareholder lawsuit was rejected Monday by a judge who said the company shouldn’t have to pay legal fees.

Oracle, the world’s No. 3 software maker, would have paid lawyers for the shareholders about $24 million in fees.

“The $24 million jumped off the page; at first I thought it was a typo,” Judge John Schwartz said. “Then I kept reading and said, ‘No, they’re not joking.’ ”

The suit claimed that Ellison improperly sold $900 million of Oracle stock in 2001, days before the Redwood City, Calif.-based company reported that earnings had missed forecasts, sending share prices down 8.7%.

“It’s a very good settlement, but I don’t see the corporation paying for it,” Schwartz said. “What I argue with is the corporation or the shareholders paying $25 million or $24 million or $1 million.”

Ellison “denies he engaged in insider trading,” said his lawyer, Alan Salpeter. “If he were to pay the fees, that would be a statement of wrongdoing.”

Salpeter said only Ellison or Oracle could potentially pay the attorney fees.

Oracle lawyer Jordan Eth told the judge that the deal had been approved by three of Oracle’s independent directors who weren’t defendants in the lawsuit.

Schwartz told the lawyers that the directors should explain their reasoning to him in court.

Joseph Tabacco, lead lawyer for shareholders, told the judge that the settlement was the result of “arduous negotiations.” Tabacco’s law firm would share the fees with another firm.