Oracle Shareholders Say Larry Ellison's $78 Million Paycheck Is Way Too High
Shareholders took part in a non-binding 'say on pay" vote, where they could vote in favor of the pay packages awarded to executives, or against. More than 2 billion votes were cast against, compared to more than 1 billion in favor, Randewich reports.
However, in a mixed message, they also voted to retain all of Oracle's directors.
Activist investment group CtW Investments, which owns 6 million shares of Oracle, started lobbying for a pay cut for Ellison and other execs in September. They wanted shareholders to vote "no" and also vote out three board member on the Compensation Committee: Bruce Chizen, George Conrades and Naomi Seligman.
"The board should tie his compensation to some kind of revenue target or strategic initiative, not just throw options at him in such a huge amounts," Michael Price Jones, CtW's senior governance analyst told Business Insider at the time.
Oracle's board didn't see it that way. Oracle's top attorney, Dorian Daley, responded to CtW by saying:
As best we can decipher, your position seems to be that Mr. Ellison's compensation package is approximately $50 million too high against a backdrop of $13.6 billion in free cash flow delivered under his leadership. In other words, we are spending approximately 36 basis points of our free-cash flow (less than one-half of one percent) too much to ensure the continued services of one of the country's most successful entrepreneurs and technological visionaries.
Top proxy advisor firm, Institutional Shareholder Services, agreed with CtW. It recommended that shareholders vote against Oracle pay packages and vote "withhold" for eight of Oracle's 11 directors, Reuters' Ross Kerber reported. A withhold vote is a non-binding way for shareholders to express disapproval.
This is the second year in a row that shareholders have voted against executive pay packages. And Ellison did give up a $1.2 million cash bonus for fiscal 2013, which ended in May. His annual salary is a token $1. But the board still showered him with stock options.
CtW pointed out in a research report that in 2013 that Ellison was paid about $78 million in cash and stock, mostly stock, compared to an industry average of $29 million. In 2012, it was $96 million, compared to an average of $43 million. And in 2011, it was $76 million, compared to $22 million. CtW also wants lower pay for Oracle's five top execs. In 2012, they were paid $253 million, compared to an industry average of $90 million, it said.
Larry Ellison is a self-made billionaire, one of the founders of Oracle and the Valley's longest-running CEO. He's the heart-and-soul of the company and his pay reflects that. Year after year, Ellison lands on the lists of the highest paid CEOs.
But his company is struggling to grow as smaller cloud computing players rise up to bite his ankles. And his grand vision of moving Oracle into the hardware business hasn't yet paid off.
This chart explains the problem:
