December 28, 2018 / 10:49 PM / a month ago

Breakingviews - Larry Ellison is anything but a check on Elon Musk

Larry Ellison, founder and former CEO of Oracle Inc. watches a training race from a motor boat ahead of the America's Cup World Series sailing competition on the Great Sound in Hamilton, Bermuda, October 16, 2015. REUTERS/Mike Segar

NEW YORK (Reuters Breakingviews) - Larry Ellison is anything but a check on Elon Musk. The Oracle founder calls himself a “very close friend” of the Tesla CEO and owns nearly $1 billion of the automaker’s stock. He also shares an imperious style and penchant for outsized pay. Musk’s deal with the Securities and Exchange Commission mandated an independent director, but Ellison is unlikely to rein him in.

Elon Musk’s infamous tweet in August saying he was “considering taking Tesla private at $420. Funding secured” prompted the Securities and Exchange Commission to sue for his removal as chief executive and from the company’s board. As part of a settlement, Musk agreed to step down as chairman and pay a $20 million fine. The company also agreed to appoint two independent directors.

While no heavyweight, Kathleen Wilson-Thompson, the Walgreens Boots Alliance human-resources chief Tesla named to its board, fits that bill. Ellison is a much more curious choice.

Like Musk, he is long on vision. Oracle wanted to change the face of computing; Tesla, the future of transportation. Oracle has been among the top tech firms for decades and boasts a market value of $160 billion, so Ellison’s gifts for spotting and seizing markets should not be discounted.

Yet despite Ayn Randian visions of greatness, the two companies were nurtured by federal-government largesse. Ellison and Musk both have a history of making over-optimistic promises for product launches. And neither is easy to work for, based on the many executives both firms have spit out.

The SEC was doing Musk a favor by demanding board members that would rein in his worst impulses. That’s unlikely to come from a man whose biography is entitled: “The Difference Between God and Larry Ellison: God Doesn’t Think He’s Larry Ellison.”

His tangles with shareholders and accountants also aren’t encouraging. In 2005 he agreed to donate $100 million to charity after shareholders claimed he had used inside information to dump $900 million of stock before a profit warning. Before that, the company lost a majority of its market value after restating financial results. And Ellison is often among America’s most highly paid executives, notwithstanding his $53 billion stake in the company. His latest annual compensation was a cool $109 million.

Perhaps Musk can learn from Ellison’s successes – and mistakes. But it’s just as likely that Ellison will overlook, or worse feed, the Tesla CEO’s excesses.

Breakingviews

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