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Oracle suit: Why a sick day may be worth $10 million

A fired executive's nearly $10 million worth of options is the subject of a lawsuit filed by the software maker, which seeks a court ruling on whether its dismissal of the executive was legal.

A fired executive's nearly $10 million worth of options is the subject of a lawsuit filed by software maker Oracle.

Oracle's inside story Just four days before Pier Carlo Falotti's nearly $10 million in options were about to vest, the Oracle executive vice president was fired for undisclosed reasons, according to court documents. Falotti ran Oracle's Europe, Middle East and Africa operations out of an office in Geneva, Switzerland, and was a member of Oracle's executive management committee.

Falotti says that the 125,000 options are legally his, as he was unable to work on the day of his scheduled termination, according to the suit. Under Swiss law, a company cannot terminate an employee while that person is too ill to work. Falotti has a note from his doctor that states the executive "was ill and unable to work as of May 30 for an indefinite period of time."

Oracle, which filed a lawsuit in U.S. District Court in San Francisco last month, seeks a court ruling on whether its employment agreement supersedes Swiss law. Oracle is asking the court to determine that Falotti was fired May 31 and has no right to the options, and the database giant is seeking court costs should it prevail.

The suit is the second major dispute this year involving the termination of a high-ranking Oracle executive. In May, Randy Baker, 55, an executive vice president and member of the company's management committee, sued the database software giant for age discrimination and wrongful termination. He is seeking $18.5 million in lost compensation and damages.

The suits--together with the recent abrupt departure of Oracle president Ray Lane--provide a glimpse into the sometimes cutthroat inner workings of the world's second-largest software company and its hard-charging CEO, Larry Ellison.

Falotti joined Oracle in September 1996 and was previously executive vice president of international operations at AT&T, where he was responsible for all countries outside the United States, according to a press release issued by Oracle.

According to the suit, Falotti was paid $600,000 per year, plus an incentive compensation of $400,000 per year. He was granted 600,000 Oracle options at the time of his hire, in July 1996.

An Oracle spokeswoman declined to comment on the suit, noting that the case is in litigation. Falotti could not be reached for comment.

Oracle also declined to comment on a press release, issued May 31, stating that Falotti retired. The press release does not mention Oracle's apparent termination of the executive.

According to Oracle's lawsuit, its vice president of human resources for the region traveled to Falotti's office May 31. Although the executive, Vance Kearney, planned to find Falotti at his office and terminate him, Falotti had already left the office to board a train bound for his native Italy.

Kearney then called Falotti on his mobile phone to deliver the news, according to the suit. Later that day, Ellison and Falotti discussed Falotti's termination, and he was advised it would take effect immediately, according to the lawsuit.

Several days later, on June 5, Falotti submitted his doctor's note to the company.

According to its lawsuit, Oracle says, "On information and belief, (Falotti) was working on both May 30 and May 31, and therefore the doctor's note plainly misrepresented the facts."