Ellison must pay $122m to settle lawsuit

Software mogul Larry Ellison has agreed to pay $122m (£71.2m) in a revised settlement with Oracle shareholders, the terms of which were approved on Tuesday by a California judge.

The suit, filed in 2001 by a group of shareholders, charged that Ellison, chief executive of Oracle, and Jeff Henley, the company's chief financial officer at the time, sold shares while knowing the company would soon report an earnings shortfall.

Ellison offered in September to settle the case with $100 million in charitable donations and without admitting wrongdoing. But a California judge declined to approve the proposed settlement because it called for Oracle to pay $24 million in lawyers' fees, saddling shareholders with extra costs.

The terms of the new, approved settlement leave the $100 million payment to charities intact while requiring Ellison to pay $22 million in legal fees.

"This provision makes an excellent settlement even better," Joseph Tabacco, the attorney who brought the case, said in a statement.

The charity payments are an unusual way to settle such a case. Typically, settlement payments would go directly to the company, in this case Oracle. "But with Mr. Ellison owning a quarter of Oracle's stock, much of such a direct payment, in effect, would have gone to him," Tabacco continued in a statement.

"That is one key reason why it made sense to structure the payment from Mr. Ellison in the form of charitable contributions in Oracle's name, enabling the company to accrue goodwill without a large chunk of the payments flowing back to Mr. Ellison," he said.

Under the settlement, Ellison will choose the charities that receive donations in Oracle's name under the approval of Oracle's board. He has five years to distribute the money.

Tabacco called the size of the settlement "unprecedented." Yet it's a minor dent in Ellison's personal fortune of $17bn, which recently landed him the number five spot on Forbes magazine's list of the wealthiest people in the US.