Oracle Cuts Larry Ellison’s Stock Options in Apparent Reaction to ‘Executive Pay Problems’

By Kelly Teal Comments
Posted in News, Oracle, Financial
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Larry Ellison wants for nothing except more stock options.

According to SEC filings made by Oracle Corp. this week, the company has cut the CEO's annual stock options by more than half – from 7 million to 3 million.

He’s received 7 million stock option shares each year since 2006, according to the San Jose Mercury News, but now, Silicon Valley’s highest-paid boss isn’t making the money he once was.

The news comes as Oracle appears to be responding to recent investor uproar over how much the company pays its executives. Indeed, Ellison raked in $78.4 million last year – almost all of that came from his stock holdings. And the stock options for co-presidents Mark Hurd and Safra Catz were scaled back from 5 million each last year to 2.5 million this year, the San Jose Mercury News reported. Hurd’s and Catz’s 2013 take-home totaled $43.5 million apiece; almost all of that was comprised of option awards.

An Oracle spokeswoman declined to tell the San Jose Mercury News whether this week’s SEC filings represented the total stock options Ellison and the executives will receive this year or whether there will be more.

The reduced options are important because shareholders have been on Oracle’s back about cutting down executives’ pay. They’ve complained that Ellison makes far more money than his peers, even though Oracle’s stock price and profit have not merited those amounts.

“[N]either the board nor the compensation committee seems to grasp the depth of shareholder frustrations with Oracle's pay practices," the CtW Investment Group wrote in a letter last year to Oracle’s compensation committee chairman, and cited by the San Jose Mercury News.

To be sure, Ellison’s pay is attracting attention “because it's so out of proportion to what other executives make," the San Jose Mercury News said. For example, in a study conducted for the Bay Area News Group, researchers discovered that Ellison made the most out of 177 CEOs, with Zynga’s chief coming in next at $57.8 million. The heads of Intel and Apple came in at $9.5 million and $4.2 million, respectively.

A CtW analyst told the San Jose Mercury News this week that investors likely will remain skeptical until Oracle files its annual proxy statement, detailing executives’ salary, bonuses and other compensation.

"Unless the headline number is meaningfully reduced, investors are not going to be easily persuaded that the board has gotten its hands around executive pay problems," Michael Pryce-Jones told the newspaper.

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