RealTime IT News

The Ol' Stick-and-Carrot

Oy vey!

Larry Ellison is at it again. This time, the shenanigans revolve around the eleventh hour firing of Pier Falotti, Oracle's executive VP of overseas operations in Geneva, Switzerland. With just four days until his remaining $10 million worth of options were set to vest as part of a lucrative stock options package, Falotti was let go by the database giant for taking a sick day.

In a nutshell, Falotti jumped ship as executive VP of Ma Bell's international operations in the mid-90s in favor of the red carpet treatment offered by Oracle. Including incentives, the journeyman pulled down a cool million in cash each year, but that was pocket change compared to the 600,000 options Oracle granted its new hire.

Falotti has already cashed in to the tune of nearly $50 million, but with his last 125,000 options set to vest in just four days, he received a phone call from everyone's favorite flamboyant oddball. It turns out that Falotti had called in sick a day prior, and Oracle pounced on the chance to tighten its purse strings. Oracle wasted little time filing a lawsuit in a Bay area District Court requesting a ruling to decide whether Falotti's employment agreement falls under a California jurisdiction or Swiss law. Because in the Alps, a company can't terminate an employee if said employee is too sick to go to work.

According to Oracle's lawsuit, the company contends that Falotti was in fact working during his two days off, and that a doctor's note wouldn't be that hard to come by when millions in options were at stake. It's more than likely that the employment agreement will be subject to a California court, and even if it weren't, Oracle looks prepared to spend that $10 million on attorney's fees just for spite.

So what are the implications here and what's the fallout likely to be after the dust settles? Well, first off, regardless of the reasoning behind Falotti's pink slip, his employer's timing couldn't be worse. There's the perception of a tremendous amount of greed and arrogance on Oracle's part here and some signs that point to a bevy of bad blood between Oracle's top banana and its former VP of international operations.

Whether Falotti ever sees the last of his loot remains to be seen. On the surface, he has a strong case and a sizable war chest to thumb wrestle with Oracle's lawyers. But that's not the meat and potatoes of this brouhaha. The real damage is likely to be to Oracle's image, because anyone familiar with the high-tech industry knows that stock options are the stick-and-carrot that attracts top talent.

Snatching options from lower-level worker bees is a commonplace activity amongst technology companies these days. But usually transient employees leave the payday on the table and walk away quietly in a booming economy. While this is one of a handful of high-profile executives cut loose in a tight labor market, it's not the only one involving Oracle.

Headhunters may encounter difficulty convincing crackerjack execs to jump ship for a position at Oracle in the future. They read the papers just like anyone else, and when it comes to the options game, Oracle's committing a technical foul. If you have a slightly less rewarding career with a traditional blue chip firm, it'll still smell sweeter than slaving at the number-two software firm only to have the rug pulled from under you in the home stretch.

In a twist of irony, Ellison bought this year's America's Cup runner-up yacht AmericaOne from a fellow club member last week. While financial details weren't disclosed, in a round about way, a modest portion of Falotti's nest egg is floating somewhere in a San Francisco harbor as we speak.

Any questions or comments, love letters or hate mail? As always, feel free to forward them to kblack@internet.com.

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