[Rhodes22-list] Sailing While Rich

Thu Oct 9 22:06:54 EDT 2008

Many of you are probably aware that Larry Ellison is a competitive
sailor and sponsors some high-end racing boats.  Below is an article
on his company's finances.  Read the headline as many times as it
takes to get the joke.  Brad

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Original URL: http://www.theregister.co.uk/2008/10/09/ellison_say_on_pay/

Oracle shareholders choke on Ellison's package - Size an issue

By Gavin Clarke in San Francisco

Posted in Financial News, 9th October 2008 03:49 GMT

Larry Ellison's days as one of the tech-sector's best-remunerated
chief executives could be numbered if a group of activist Oracle
shareholders get their way this week.

Investors attending Oracle's annual general meeting in California
Friday are being asked to support a "say-on-pay" plan that could see
them approve the pay and stock allocations granted to Ellison and
other senior Oracle executives going forward.
Click here to find out more!

Awards are currently left to an Oracle compensation committee of
elected members, a standard procedure in corporate America.

Ellison consistently rates as Silicon Valley's best-paid
(http://www.siliconvalley.com/salarysurvey/ci_9505476) chief
executives, and one of the world's richest
(http://www.forbes.com/lists/2008/10/billionaires08_Lawrence-Ellison_JKEX.html)
individuals.

His 2008 cash and stock package weighed in at $83m last year, 372 per
cent above what Ellison's peers in other chief executive positions
receive. Successive stock allocations, meanwhile, have transformed
Ellison into possibly Oracle's single biggest individual stockholder -
he holds 22.6 per cent of common Oracle stock.

The "say-on-pay" motion has been bought by Oracle investor the
Marianists Province of the United States and is supported by proxy
consultant Proxy Governance Inc. Both seem alarmed by the
concentration of wealth and power at the top of Oracle, and the
implications over Ellison's responsiveness to shareholders.

The motion also asks that Oracle shareholders withhold their votes
from the members on Oracle's current compensation committee.

The "say-on-pay" plan strikes at the heart of a corporate culture that
has always seen Oracle's senior management well rewarded and could
seem justified in light of recent performance. Oracle saw revenue up
29 per cent and income grow 25 per cent to $5.5bn and $22.4bn
respectively for fiscal 2008 - blowing through Ellison's goal of 20
per cent (http://www.reuters.com/article/technology-media-telco-SP/idUSN1424185220071114)
annual growth.

Proxy Governance managing director of policy Shirley Westcott told The
Reg her organization supports performance-related rewards for
management. It's just that Oracle has gone too far, she said. Proxy
Governance called Oracle's options awards "excessive, particularly
with regards to Ellison" in its report (warning - PDF)
(http://regmedia.co.uk/2008/10/09/proxy_oracle.pdf) to investors ahead
of Friday.

"This is shareholders money, is this is a good use?" Westcott said
about Ellison's pay. "You'd expect them to be better paid, but not
that much better paid."

Westcott's organization is also uncomfortable with the power conferred
on Ellison over the direction of the company by holding so much stock.
"You'd think his interests are [already] aligned with shareholders...
is it appropriate to keep giving him big stock options year after
year?"

The "say on pay" resolution is non-binding, so there's no guarantee
Oracle's management will accept it. The motion does, though, reflect a
growing trend in the US among shareholders to try and reign in senior
management compensation. So far in 2008, 80 similar proposals have
come up at US public companies' AGMs - up from 52 last year. Among the
few corporations to actually adopt them: cell phone giant Verizon.

A number of bills, meanwhile, have been put through the US Congress
that would make "say on pay" mandatory for US public companies. US
presidential hopeful Barack Obama has sponsored one, as has onetime
presidential hopeful Hillary Clinton, and US Congressman and chairman
of the House Financial Services Committee Barney Frank
(http://www.house.gov/frank/).

"Excessive executive compensation has been a long-standing issue among
many shareholders." Westcott said. "Some shareholders activists are
trying to come up with ways to get pay under controls and have more
say over it."
Bootnote

The Oracle "say on pay" goes before shareholders as it emerged
Microsoft is changing the way it rewards executives such as CEO Steve
Ballmer.

Microsoft's compensation committee has said that in fiscal 2009, it's
replacing the old annual cash bonus and equity award with a percentage
from a cash pool. The pool will be equal to 0.35 per cent of
Microsoft's fiscal year operating income. Based on fiscal 2008, that
works out at (http://blog.seattletimes.nwsource.com/brierdudley/2008/09/25/microsofts_new_bonus_plan_for.html)
$80.3 million, or $83.4 million including investment income. Payouts
are capped at a $20m per individual. (R)
Related stories

    * Larry Ellison becomes HP's richest reseller yet (26 September 2008)

      http://www.channelregister.co.uk/2008/09/26/hp_makes_kit_for_oracle/
    * Ellison flogs Oracle server appliance alliance with HP (25 September 2008)

      http://www.channelregister.co.uk/2008/09/25/exadata_oracle_appliance/
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      http://www.theregister.co.uk/2008/09/24/oracle_cloud/
    * Oracle pledges $3bn R&D spend (22 September 2008)

      http://www.theregister.co.uk/2008/09/22/oracle_development_spent/
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      http://www.theregister.co.uk/2008/08/28/ellison_salary_hike/
    * Oracle reports bumper results (25 June 2008)

      http://www.theregister.co.uk/2008/06/25/oracle_fourth_quarter/
    * Oracle hikes middleware license fees (20 June 2008)

      http://www.theregister.co.uk/2008/06/20/oracle_license_increase/