Oracle extends share options plans, no bumper payday for execs... yet
Not all investors happy that suits get more time to earn significant stock-option awards
Not all execs are created equal and those of the Oracle variety remain among the highest paid due to an extension to performance-based stock options that gives them more time to achieve corporate goals.
Founder, chairman and CTO Larry Ellison was awarded $138.6 million in the year ended 31 May 2022, and CEO Safra Catz was awarded $138.2 million, Oracle confirmed in an annual proxy shareholder statement [PDF].
However the bulk of the headline-grabbing figures, some $129.3 million of the total awards for both the CTO and CEO, will not be realized for a further three years. The performance-based stock options (PSOs) were granted in May 2018 and were supposed to vest in May 2022 "at the earliest" but were expected to take five years.
Three of the market capitalization goals set out by Oracle were achieved by June 2021, "but no operational performance goals have yet been satisfied." Oracle said that without the extension, the options would have expired.
Oracle confirmed in the proxy filing that only 60 percent of shareholders were in favor of its pay decisions in 2021, which is generally lower than similar votes for Big Red's peers, including IBM.
Of the extension it added: "Although some stockholders supported the extension of the PSO performance period [to May 2025], other stockholders expressed concern that the performance was extended with no change to the performance metrics and indicated that they generally do not support mid-cycle changes to equity compensation," the document states.
By pushing out the PSO deadline, Oracle said it would "encourage a longer-term focus on Oracle's performance". It also said the performance goals – in a nod to shareholder concerns – are "rigorous" and "not easily attainable during the extended period."
Should the goals not be met, the PSO will not be paid in full. Should they be exceeded, the maximum amount the two execs' could receive runs to $330 million each.
The six operational goals include Oracle becoming the largest enterprise SaaS player in the world; attaining $20 billion in non-GAAP cloud revenue per fiscal year; $10 billion in non-GAAP total SaaS revenue; $10 billion per fiscal for PaaS and IaaS; annual group gross margin of 80 percent; and PaaS/IaaS gross margin of 30 percent for three of the eight fiscal years before the PSO vests.
No equity awards were granted to Ellison or Catz during fiscal 2022. Ellison was paid $1 in annual salary – unchanged from recent years. He also received $7.799 million in non-equity incentive plan compensation (that's a cash bonus to you and me) and $1.47 million in terms of all other compensation.
Catz was paid an annual salary of $950,000, again the same as she received in the past three years. The CEO also received a $7.799 million cash bonus, and $167,677 for all other compensation.
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According to WSJ, the pay for the Ellison and Catz ranks them as fourth and fifth respectively among its S&P 500 CEOs pay survey, above Apple boss Tim Cook, who was paid $98.7 million.
In fiscal 2022, Oracle reported $42.4 billion in revenue, up 5 percent year-on-year and $10.9 billion in operating profit, down 28 percent. It laid off a bunch of folk last month in the face of deteriorating economic conditions.
Anyone feeling sorry for Larry – there must be one or two out there – should note that he already owns 1.157 billion of Oracle shares, helping to make him among the richest people on the planet. ®