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The Almighty Buck Oracle

Oracle Shareholders Vote Against Ellison's Compensation Package (Again) 213

Posted by samzenpus
from the no-bonus-for-you dept.
angry tapir writes "A majority of Oracle shareholders have once again voted against the company's executive pay practices, including for CEO Larry Ellison. The vote at Oracle's annual shareholder meeting is nonbinding, and follows complaints from some large shareholders and their representatives who say Ellison is overpaid compared to his peers. Ellison is paid US$1 in salary, receiving the rest of his pay in stock options. In Oracle's past fiscal year, that totaled $76.9 million. Shareholders voted against Oracle's executive pay practices at last year's meeting as well."
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Oracle Shareholders Vote Against Ellison's Compensation Package (Again)

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  • They know they don't have any power, so they choose to "vote" in a non-binding resolution. Larry must be really scared now!

    The guy built that company up from a two-bit hole in the wall operation into one of the largest computer empires known to man. He could fairly ask for a billion bucks a year as a salary and he would deserve it all!

    I don't like Oracle and think their products are suck-ass bloatware, but Larry Ellison made that company. He should be able to profit from it to his heart's content! Plus

    • He should profit from the increase in the value of any shares he owns. Otherwise running the company well is his JOB.

    • Re: (Score:3, Insightful)

      Is it okay for Ellison to pay income tax on his $1 per year salary, while taking $77 million a year in stock options that won't be taxed until he decides to exercise them? And even then he has all kinds of discretion in how much tax he will pay, since there are all kinds rollover investments, etc, that he can use. The guy is poster brat for the 1%ers. If you are paying USA income tax, he is screwing you over as well as screwing the other shareholders.

      • Re: (Score:3, Interesting)

        by Ash-Fox (726320)

        If you are paying USA income tax, he is screwing you over

        He is complying to the law, like people paying the USA income tax. If the law is unfair, then get the law changed.

        • by microbox (704317)

          If the law is unfair, then get the law changed.

          With the current political climate: good luck with that. You have the "JOB CREATOR" defenders (sorry, I meant FREEDOM) who will do everything they can to give tax breaks to the very rich [amazon.com], and cry about how the media is just biased against them, and that everyone should pay less tax anyway, because tax cuts just magically pay for themselves in hughly unrealistic economic growth [frumforum.com] that is just waiting to explode when the government just shuts down the IRS [thehill.com].

          Then you get a bunch of billionaires [dailykos.com] running "grassro [freedomworks.org]

        • by alexo (9335)

          If you are paying USA income tax, he is screwing you over

          He is complying to the law, like people paying the USA income tax. If the law is unfair, then get the law changed.

          I suspect he isn't wealthy enough to make law changes.

    • by Hentes (2461350) on Friday November 01, 2013 @08:40AM (#45299005)

      I don't like Oracle and think their products are suck-ass bloatware, but Larry Ellison made that company.

      And then he sold that company to the shareholders. His profit is the money he got for the shares.

      • Finally! (Score:2, Informative)

        by Anonymous Coward

        I don't like Oracle and think their products are suck-ass bloatware, but Larry Ellison made that company.

        And then he sold that company to the shareholders. His profit is the money he got for the shares.

        Finally, someone who understands!

        And it's sad that the above comments turned it into a Capitalist/Socialist thing.

        What we're seeing is your typical corporate CEO strategy - outlandish pay for mediocre performance. And I think that's the REAL issue here.

        And folks, remember stock options DO NOT GET TAXED LIKE REGULAR INCOME. So, he's paying close to zero tax on this and differing gains - maybe forever by moving them offshore. This billionaire is getting a sweet sweet deal on the middle class' back.

        Go look at

    • by sl4shd0rk (755837)

      He could fairly ask for a billion bucks a year as a salary and he would deserve it all!

      Indeed. He owns the company, however Ellison is the epitome of tax dodging, corporate greed, corruption and elitism. When the part of your brain that says you're acting like a douche doesn't function anymore, everything you do becomes the product of a self-serving narcissist. Your actions and decisions are no longer a benefit to the people around you. Such as shareholders and employees.

    • by evilRhino (638506)
      With his company in a near monopoly position, he has incentive to funnel company profits into stock buybacks rather than investing in real growth. The options he has will increase in price, and the shares the company buys from the open market can be set aside to replenish his options that he cashes in. This is only a problem for companies that have grown so large they have no real competition to challenge their profits.
      • by evilRhino (638506)
        Sorry to reply to my post, but I neglected to mention that the company *could* give out a dividend to investors instead of doing the buybacks, so there is a real penalty to them for having the CEO salary based on stock options only.
      • Near monopoly? In what?

        There are many other competing relational databases (MS-SQL, DB2, Postgres etc etc).

        There are many competing ERP suckblobs (SAP etc).

        Even Oracle marketing has peers. Though many are in prison.

    • The guy built that company up from a two-bit hole in the wall operation into one of the largest computer empires known to man.

      All by himself? Yeah, not quite. Larry may own a lot of stock but he didn't build Oracle up all by his lonesome. A LOT of other people were involved with that and their contributions matter. Many of them arguably more than Larry himself. You are making the same stupid argument I hear people make on sports radio about how some star player "won" the title, as if none of his teammates mattered a bit.

      He could fairly ask for a billion bucks a year as a salary and he would deserve it all!

      Really? He brings in more value to the company than $1B/year? I think you are going to have to provide so

  • Why? (Score:3, Interesting)

    by rsmith-mac (639075) on Friday November 01, 2013 @05:48AM (#45298327)

    While TFA provides a good summary of the vote, it does a terrible reason of explaining why the shareholders voted as they did.

    So why are the shareholders against Larry's compensation package? The use of stock options means that Larry only gets paid if the company is doing well; or rather more specifically if the company's shares are doing well, which is all the shareholders are going to care about in the first place. At 4.6B shares the company is big enough that Larry's compensation isn't going to meaningfully dilute the value of shares. And switching to traditional compensation packages would eat into Oracle's profits.

    What am I missing here? For a company that's doing well, this seems like the perfect way to pay Larry. What is it the shareholders would rather do, and why would it be any better?

    • More importantly, if companies don't launder the money through the CEO, how will the the bicycle of political influence be pedaled?
    • And if he ever decides to short-sell his own company?

    • by fatphil (181876)
      > And switching to traditional compensation packages would eat into Oracle's profits.

      Only if he were to get a nett 76 million via that mechanism. Maybe the shareholders think that he doesn't deserve to be compensated anything like that amount?
    • For every stock that he gets, the value of stockholder stocks is diluted - they own a lesser % of the company. Why shouldn't they complain about that?

      If stock options were 'free' for the stockholders, then why doesn't every worker get a few million dollar's worth of them?

      • That depends on how the stock is issued - from a non-issued pool (has 100% of Oracle shares already been issued publicly, or did the company retain a pool) or through a new issue? If the former, no dilution happens.

        • If they come from a company retained pool, that company retained pool would be an asset on the companies balance sheet. So taking it from there lowers the company's value by 76M. The stock options are a tax dodge, but that isn't what Oracle's owners are complaining about. They are complaining about his compensation being too high. I don't think they are too worried about the exact structure of that compensation. Either way it takes from their value.

          • If they come from a company retained pool, that company retained pool would be an asset on the companies balance sheet. So taking it from there lowers the company's value by 76M

            From the Oracle financial report, last page:

            Stock-based compensation expenses: We have excluded the effect of stock-based compensation expenses from our non-GAAP
            operating expenses and net income measures. Although stock-based compensation is a key incentive offered to our employees, and we
            believe such compensation contributed to the revenues earned during the periods presented and also believe it will contribute to the
            generation of future period revenues, we continue to evaluate our business performance ex

        • But won't the value of the company drop as a result? Since it no longer owns those shares?

          • Won't the value of the company drop as a result of any transfer of compensation from the company to someone else? That $74Million would have to come from somewhere if it was cash rather than stock options.

            The toss up is whether the person you are compensating was responsible in whole or in part for bringing in more than their compensation package as revenue...

            • Exactly - giving him stock is about the same as giving him cash. The only difference is that it that it looks better on the balance sheet.

              As for the second part of your response, why is this view only taken when it comes to management? Nearly every worker will bring in more then they are being paid (if they don't you fire them anyway). So why does the management get such ridiculously inflated bonuses? And don't say it's because of all the responsibility they have - I've yet to hear of a manager paying the c

      • I don't think it works like that. Typically when a corporation goes public, a percentage of the stock is held in reserve: the company qua corporate person retains those shares. For things like offering stock option incentives to its employees.

        So long as Ellison's stock options are not exercised, they have no direct effect on the value of stock that is being actively traded. When they are exercised, the company's reserve is depleted, but there is no direct dilution of outstanding stock. Putting more stock i

      • by tgd (2822)

        For every stock that he gets, the value of stockholder stocks is diluted - they own a lesser % of the company. Why shouldn't they complain about that?

        If stock options were 'free' for the stockholders, then why doesn't every worker get a few million dollar's worth of them?

        Which doesn't matter if he continues to grow the company's value. If you dilute stock 10% and the price goes down 10% as a result, that's bad. If you dilute a stock 10% and the value goes up 10%, there's no problem.

        The stranger thing is them being options, not shares vesting over time. That *may* be the source of the concern ... the stock price doesn't, generally, take into account the share dilution represented by outstanding options, so there's some risk, I suppose, that a large purchase of shares would d

    • Re: (Score:3, Insightful)

      by Luckyo (1726890)

      He's good, but not worth the pay he's receiving.

      Just because plumber does a good job, doesn't mean he's worth tens of millions a year. Just because CEO does a good job, doesn't mean that he's worth 76.9 million USD.

      • Re: (Score:3, Insightful)

        by adolf (21054)

        Your analogy is backwards.

        Most plumbers don't work for, much less run, companies that have annual revenue measured in billions of dollars.

        Indeed, I'd wager that most plumbers take home a far greater share (on a percentage basis) of the company's revenue than does Ellison.

        One could draw from this the conclusion that Ellison is underpaid compared to most plumbers, but that would be absurd.

        Hence, your analogy is useless.

        • by Luckyo (1726890)

          I don't think you realize that 76.9 million is just his stock options. He also gets dividends, just like all other stock holders.

          Also, I'd take that wager once we agree that plumbing company in question must be at least within hundred times as large as Oracle. How much are you willing to bet?

          • by adolf (21054)

            I think I realize that 76.9 million, plus any dividends, plus $1, is far less than the per-capita wage on a percentage basis of most plumbers.

            That said, this statement is nonsensical:

            once we agree that plumbing company in question must be at least within hundred times as large as Oracle

            Whatever it is you're going on about, I don't think it relates well to most plumbers. No bet.

            • by Luckyo (1726890)

              The point is that you're intentionally or unintentionally trying to fix the numbers. Most plumbing companies are one man or small business, so in relation to company budget, single employee would be earning a large portion of income. At large multinational like oracle, a single employee is always going to earn less in relation to company income than the single employee of one man business. Even if said business is bad and the only employee barely makes enough to earn a living.

        • Even though the analogy is backwards, it highlights that the CEO of any company cannot contribute the lions share of work.

          Is the job 1000 times more difficult than what the average worker does? Are they moving 1000 times faster? The delusion that says that some sort of fairness mechanism crept into a board meeting where executives decide compensation for other executives and for the average worker flies in the face of reality.

          "Fairness" might be workers voting on the compensation of their leaders as the lea

    • The idea is sound but it's simply too many shares. He doesn't even need to perform well because the stock could tank 50% and he would still get almost 40 million dollars. Cut the number of shares by 75% and it makes more sense.

    • by mysidia (191772)

      The use of stock options means that Larry only gets paid if the company is doing well; or rather more specifically if the company's shares are doing well

      Well exactly... the company doesn't have to do well in the long term Just its shares. Providing an executive options, means that the exec is going to be focused on trying to maximize short term share price increase, at the potential cost of tens of billions in long-term opportunity, for the company.

      And switching to traditional compensation packag

      • Re:Why? (Score:5, Informative)

        by Required Snark (1702878) on Friday November 01, 2013 @07:12AM (#45298645)
        Right. I don't know about Ellison specifically, but the shares are usually granted at a discount, so there is a significant boost in real value. Plus there are tax advantages that he accrues, so he is effectively getting an even larger compensation package.

        Plus it's not Ellison's company, it's the shareholders company. If shareholders think he is overpaid that should have some impact. If he disagrees, he can just quit, right? (That's the bullshit line that used to justify treating workers like shit, so it feels really good to use on a prick like Ellison.)

        What this really shows is that corporate governance is broken. The board doesn't work for the shareholders, they are at the beck and call of the CEO. He puts them on the board, they make huge amounts for the little work they do, and so they do whatever the CEO wants. They are a rubber stamp. This is a lot closer to feudalism then real capitalism. The workers are serfs, the shareholders are not much better off, and the lords who run the show take everything they can lay their hands on. Welcome to non-capitalist, not a democracy 21st America.

      • Not quite. If Larry left tomorrow then he would do well focusing on the short term share value, since he would be cashing them in shortly. If, however, he wants to have a continuing revenue stream he'd do well to focus on the long term share value. The only way I know how to do that is to keep the company healthy and growing.
        Since he build the company up from the ground I would assume that leaving his baby isn't in his immediate plans. Ergo it wouldn't be wise to focus on empty stock value increases and o
    • Ellison is taking $77 million / yr in stock options while accepting $1 / yr in salary. He has arranged that himself, since he is the Chief Executive Officer and sets corporate policy. Most shareholders are calling foul because he is abusing the corporation they own to diddle the USA taxman for his personal benefit. He also is increasing the amount of influence he can exert over the value of their shares as he manages his stock portfolio.

    • What am I missing here? For a company that's doing well, this seems like the perfect way to pay Larry.

      His share options are almost certainly offered way below par.

      If the shares are $33 and he gets 2M @ $3 then that's a theoretical gain of $60M when he exercises.

      A 10% fall in the value of the company means he "only" gets $54M instead - while the investors who bought $2M at $33 lose $6M

      I'm not 100% sure of the UK regulations but I think for share options schemes of this size (there are tax exemptions for some

      • They are almost certainly not offered way below par. Par value for Oracle stock is $0.01 per share.

        Perhaps you meant his stock options were issued below market value. Doing so would be a huge problem for Oracle and Larry.

        I think Ellison's stock options are NQSOs (non-qualified stock options). There's an extremely low possibility he was issued ISOs (Incentive Stock Options) - I say low possibility because ISOs are complex for both the company and the recipient.

        NQSOs are issued to many employees at Oracle

        • I meant market value at the time of issue. I had assumed that this is what par would be for options but actually par doesn't appear to have any meaning at all for options.

          As to the rest, I don't know. You could be right but then it doesn't make sense to say he's getting $77M in compensation. The naive value of what he's getting is, in fact, zero in that case.

    • Misunderstandings and ignorance included, all of these replies are your answer, and none are.
      Each shareholder voted for their own reasons. You would have to poll them all for an actual answer.
      With the number of shares involved, it may be more about company control and stock price than compensation. Think like a shareholder.
      If you don't own stock, pick 3 companies and buy token stock, like $20 each. follow the price for a year. You will understand so much more that way.

    • by tlhIngan (30335)

      So why are the shareholders against Larry's compensation package? The use of stock options means that Larry only gets paid if the company is doing well; or rather more specifically if the company's shares are doing well, which is all the shareholders are going to care about in the first place

      Because it encourages short-term thinking. As in, next-quarter-results. Stockholders care about next quarter, but they also care about next fiscal year, next 10 fiscal years, etc. Taking a hit this quarter to enable eve

  • I wonder if Oracle is in damage control regarding healthcare.gov debacle? One article suggest Oracle software might be an issue:

    http://www.propublica.org/article/heres-why-healthcaregov-broke-down [propublica.org]

    • by Ash-Fox (726320)

      While Oracle software might be the cause of some of the problems, in reality there was no proper testing. I feel the fact that they only did two weeks of testing at the end of the project, when aren't doing any development after is more of an issue.

  • Two Presidents (Score:5, Interesting)

    by bobthesungeek76036 (2697689) on Friday November 01, 2013 @06:09AM (#45298405)
    I've always wondered why Oracle has two presidents as well. Having worked for the Big-O I can atest that it is two companies in one. Sales is just an enabler for the real money maker: support and services. So even though Oracle has two presidents (Mark Hurd - sales, Safra Catz - services), there's only one big dog on the porch and believe me it's Safra...
  • by Anonymous Coward

    Maybe /. has grown up, or is it just me, but...

    Not even a single joke about shareholders shocked by the size of Larry's packgage? How come?

  • It doesn't matter what the stockholders voted as their votes don't count.

    It's like the French voting for American presidents.

  • Yeah, it's nonbinding as in they can still do it but they'll get massacred on the stock price. Good luck with that one, Larry. You know what would be really funny? If the stock options he got were voting stocks. Then he could show up in a hat, big glasses, and a mustache and and vote yes on Larry's compensation.
  • by coofercat (719737) on Friday November 01, 2013 @09:47AM (#45299591) Homepage Journal

    Pff! I wouldn't get out of bed for that. No wonder they're complaining it's not enough ;-)

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