Oracle Corp. co-founder Larry Ellison has pledged shares equivalent to 24% of his net worth as collateral for personal debt, a figure that stands out even among tech billionaires and carries new risk as the company’s stock has fallen 50% from its peak.
In securities filings, Oracle’s board said it believes Ellison “has the financial capacity to repay his personal term loans without resorting to the pledged shares.” Representatives for Oracle and Ellison didn’t respond to requests for comment on the arrangements.
Ellison’s pledged stock is part of a larger pattern of borrowing against his 40% stake in the software company, valued as a significant portion of his $212.9 billion net worth, according to data from Altrata and Verity Platform. The practice, while common for freeing up cash without selling shares, introduces risk. A steep decline in share price could trigger margin calls, forcing a sale of the collateral and potentially driving the stock down further. The recent 50% drop in Oracle's share price since September has already cut the value of Ellison's total stake in half.
The scale of Ellison’s borrowing is notable, even before he committed to personally guarantee more than $40 billion for his son David Ellison’s $81 billion bid to take over Warner Bros. Discovery. Compared to other tech founders, Ellison’s 24% pledged portion of his net worth is substantial. Elon Musk has pledged 11% of his net worth in Tesla stock, while Mark Zuckerberg has only 3% of his Meta Platforms stake pledged, according to the latest disclosures.
Ellison’s large 40% ownership stake in Oracle provides a massive collateral base but also concentrates risk. While other founders like Jeff Bezos (8% of Amazon) and the founders of Alphabet hold smaller percentages of their companies, Ellison has maintained his significant holding. He has sold some shares while exercising options, reaping nearly $230 million since late 2022, but his overall ownership has remained steady.
The extensive use of pledged shares by a key founder like Ellison creates a potential overhang for Oracle’s stock. Investors will be watching Oracle's next proxy statement, due in September, for any changes to the number of pledged shares, which would offer the first official glimpse of how the Warner Bros. deal guarantee has impacted his financial arrangements.
This article is for informational purposes only and does not constitute investment advice.
