A modern day tragedy .........
An Oracle shareholder has filed a lawsuit against Larry Ellison & Co. for "gross mismanagement" in their handling of a long-running whistleblower case, alleging that by fighting a case they knew to be grounded in fact, they drove the ultimate settlement up to a hefty $200m. "Rather than attempt to settle all claims at that time …
If only he ran a bank, then the government would have been falling over itself to protect him.
While I don't agree with the underlying premise - that investors are always due profits, I certainly agree that it is high time that investors begin to sue corporations (they are people now aren't they?) boards and corporate officers for their woeful mismanagement and strategies predicated on pride instead of logical thinking.
Paying fines to the government is one thing. Completly mismanaging a company by stupidity, greed and ego is quite another. The officers are paid high salaries, bonuses and perks to ensure that their corporations or private companies are profitable, successful and operating lawfully/ethically. Unfortunately, I have seen few who are actually capable over the short or long term of doing so.
This is wierd. As soon as you get above Director in a company, you are given shares. (Or at least the top bods will get shares.)
This isn't a reward or a bonus. This is to ensure that the Shareholders interests are always prominent in your mind. Whatever you do will not only affect Shareholders dividends, but your dividends too.
So it wouldn't surprise me if the cover-up was in the Shareholder's best interests (God knows why), and a Shareholder is now playing the honesty card to benefit again.
Then sue it and chop it off to recover damages.
It is time to get it out in the open that large corporations are often run by psychopaths and I am using that term clinically. Kinda explains a lot, don't it? See Ron Jonson's "The Psychopath Test"
Seriously, it won`t change a damn thing. Paying a fine is one thing, admitting responsibility is another. The two do not always go hand in hand, especially in US courts. Oracle seem to believe they are "special" in every way and therefore above the laws that us mere mortals have to observe.
Strictly it's the money of the first round of investors who bought share *from* the company when it floated (IE the cash that went *to* the company, everything else is just a secondary market).
Pragmatically it's about did the Board know how badly their commercial pricing was know to the DoJ.
If they did not then the "play dumb" defense is not unreasonable (just unethical and immoral)
OTOH if they *knew* they were bang to rights and *still* tried to play the innocent that's just incompetent decision making (probably backed by a *lot* of corporate arrogance).
Shareholders *should* be critical of the latter. Those hits to the corporate piggy bank *wasted* funds that could have been put to more productive use (yes by this yardstick that *does* include bigger shareholder dividends).
and IIRC Oracle had a biggish payout to the State of California for fleecing them in software procurement - i.e. overcharging. 5-6 years back.
Hardly unusual behavior then - Larry's yacht needed a new paint job.
If the product is price banded then they should pay for the band they buy in, not that earned by some company really forking out.
Meanwhile I once worked for a UK sub of a US company that went down the US shareholders suing for a higher share of the profits route. They won their case in the States, resulting in the US company having to sell off bits to make the divis. Unfortunately the only big bit they could sell was us, the profit makers - to a competitor. End of UK company and a couple of poor years later the US company was no more either.
If the chappie is worried about Oracle using company funds to fight the previous case, whose funds does he think they will use to fight this one, or will he then sue them again for fighting him and not settling in the first place. Care in the community has a lot to answer for..
Every company wants preferential pricing. So the government could either play with the other children and beg for discounts every year, or cut to the chase and ask for the best price automatically.
The only asked for the best price that Oracle has been offering to other companies. And if Oracle doesn't like it, they could always move to another country like... er...
1) The USG retains the right to cancel *any* contract with *no* notice, *no* compensation and *no* negotiation.
2) Procurement is usually on a yearly basis, like UK local authorities. Large multi year programmes require Acts of Congress. Even NASA does not get multi-year funding, hence a couple of months after the *last* budget horse trading ends, the next one starts.
3)The USG operates on a "cash" accounting basis. The idea that some of next year's budget is *already* spent to cover costs incurred this year (and therefor *completely* predictable) does not exist. I'm unaware of any multi-billion dollar corporations that operate in this way.
4)I'd not heard of the "give us the same pricing as your *best* deal your commercial customers get" but it's another attempt to avoid being used as a cash cow by large corporates.
5)The Federal Acquisitions Regulations (FARs) with *endless* paperwork requirements and financial reporting, designed to *prove* that the USG is not being ripped off.
The goals are admirable but the result is breeding a *very * special form of business, the govt con-tractor. Lots of lobbyists to stop a contract *ever* being cancelled, *dedicated* paper shufflers to produce "evidence" that they are not stiffing Uncle Sam and ones who have *no* equivalent commercial customers to check pricing against. EDS and the Medicaid/Medicare system being a case in point.
For the person who down voted my previous post you need to separate someone *describing* a situation from *approving* of it. The clue was "Immoral and unethical." Directors are (likely) the highest paid *employees* of a business, the *stockholders* own it. In a well run company the Directors have good enough uses for the money that the stockholders are *happy* to leave it in the company, knowing it will be used fund something which will raise profits and/or the stock price IE their value, rather than wanting it *all* out in the form of dividends.
This is *not* happening with Oracle.
This is broadly the way joint stock companies work. Don't like it? Talk to the SEC, the NYSE and/or your elected representatives.