I recently found a couple pieces on how Oracle CEO Larry Ellison has $1 billion in debt despite being a multi-billionaire. Here's Money magazine's report:
Oracle Corp. CEO Larry Ellison, one of the world's richest men, has managed to run up more than $1 billion in debt, sparking concern from his financial advisor, according to a published report.
The San Francisco Chronicle, citing documents recently unsealed in a shareholder lawsuit against Ellison, reports that Ellison had as much as $1.22 billion in loans against the value of his Oracle stock in 2001, using the proceeds to finance his lavish lifestyles, including homes and yachts.
Even with his spending and debt levels, Ellison remains one of the world's richest men. Forbes magazine puts his net worth at $18.4 billion, making him the No. 4 richest American and the ninth richest man in the world. And despite the warnings from Simon, Ellison apparently didn't view his way of operating as risky, according to the Chronicle, which cites a court document quoting him as pointing out that his net worth was always at least 10 times his debt.
Here's what USA Today added:
They show Simon warning that Ellison faced a possible financial crisis in 2002 if he didn't slash his $1 billion in personal debt, curb hundreds of millions of dollars in spending, and diversify his portfolio by selling some of his Oracle stock.
Simon cautioned Ellison in a flurry of e-mails, many of them sent to the executive from 2000 to 2002. "I think it's imperative that we start to budget and plan," Simon warned in one 2002 message.
The flamboyant CEO hardly needs a collection plate, however. He is worth an estimated $16.6 billion, mostly in Oracle stock, according to Forbes magazine. It ranks him No. 5 on its most recent list of the 400 richest Americans.
It's interesting to see two side-by-side reports on the same issue -- and how they get different facts. ;-)
Ok, I know some will say that $1 billion in debt is no problem for someone who's worth $16-18 billion. In essence, I agree that he can manage it given what he's worth. However, this does give a glimpse of the principle we talk about often at Free Money Finance: it's not what you make, it's what you spend. If your spending is out of control, you can be in financial trouble, even if you're a billionaire.
For more of my thoughts on this topic, see these posts:
- How You Can Become Wealthy
- The Best Financial Advice I Can Give
- Comments: Spend Less than Your Earn
- It's Not What You Make, It's What You Spend
- Michael Jackson and More: It's Not What You Make, It's What You Spend
- It's Not What You Make, It's What You Spend, Part 3
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