Oracle Corporation (NYSE:ORCL) shareholders may be getting ready for a fight as dissatisfaction with CEO Larry Ellison’s high pay continues to grow, report Joann S. Lublin and Shira Ovide for The Wall Street Journal. The company will have its annual meeting on October 31 and Ellison’s pay package will be a key item on the agenda.
Oracle CEO’s pay
Ellison, who founded Oracle Corporation (NYSE:ORCL), was recently listed as the third richest person in America, and he receives consistently high pay (largely in the form of guaranteed bonuses) even when Oracle has poor performance. He received $76.9 million last fiscal year, and that was after shareholders voted against Oracle’s pay practices, and that’s with Ellison controlling 25 percent of the company. Vanguard Group and BlackRock, Inc. (NYSE:BLK), two of the company’s largest shareholders, voted against the reelection of five directors.
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Oracle’s board on executive compensation program
CtW has already said that it intends to vote against this year’s pay package and that it will try to unseat members of the compensation committee if they don’t bring in an independent director, among other demands. Oracle Corporation (NYSE:ORCL)’s board has responded by saying that it doesn’t see any need for changes to its executive compensation program, giving voice to the notion that the board doesn’t really care what its largest shareholders think. Ellison probably didn’t help much either when he skipped out on a keynote speech at Oracle’s Conference for America to watch the America Cup sailing competition. Giving someone the cold shoulder to look at yachts must be in the running for ‘most stereotypical way to be an out-of-touch rich guy’.
With last years discontented investors likely to vote against management again this year, board members who received just over 60 percent of the vote last year may not have enough support to be reelected, forcing at least some changes at the top, though it’s not clear if that would help or hurt investor sentiment overall.
Oracle Corporation (NYSE:ORCL)’s shares are up 2 percent this year, far less than its rivals on the S&P 500 (.INX), and earnings have been disappointing in general. Shareholders want to tie pay packages to industry-specific performance standards, which would reduce executive pay unless there is a significant turnaround this year.