Ellison Locks Away Right to Vote on NetSuite Directors

By Renee Boucher Ferguson  |  Posted 2007-10-31 Print this article Print

As the majority shareholder, Ellison maintains his ability to vote on changes in NetSuite's ownership.

Oracle CEO Larry Ellison has put his considerable shares of on-demand software rival NetSuite in a "lock box" to limit his influence on the board, though not on NetSuites potential future owners.

According to an Oct. 30 filing with the Securities and Exchange Commission, Ellison plans to set aside the voting power of his 639.3 million shares, or 60 percent of NetSuite. The shares will be put into a self-described lock box, established by NetSuite, which will squelch some of Ellisons direct influence on the San Mateo, Calif., company.
With his shares—theoretically—locked away, Ellison will not have the right to vote for board directors as long as he remains director of Oracle. That could be quite some time—Ellison reportedly has no succession plans in place despite a shallow bench of top executives to fill his shoes. However, he will still be able to vote on changes in the companys ownership, a provision that leads to questions of NetSuites future independence, despite its July IPO filing.
Currently, Ellison owns the majority stake in NetSuite, which develops on-demand ERP (enterprise resource planning) and CRM (customer relationship management) software. His family owns an additional 13 percent of NetSuite. NetSuite, once the basis for Oracles small business software, is in a sense a direct competitor of Oracle, which acquired Siebel and its on-demand stack of CRM software for $5.85 billion in 2005. At the same time, Oracle offers a hosted version of its E-Business Suite. NetSuite was founded in 1998 by Ellison and Evan Goldberg, a formal Oracle executive. Goldberg is now NetSuites chairman and chief technology officer. NetSuite CEO Zach Nelson is also an Oracle alumnus. Check out eWEEK.coms for the latest news, reviews and analysis about productivity and business solutions.

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