REDWOOD CITY — Under fire from investors over how much it pays its top brass, technology giant Oracle appears to have slashed by more than half the annual stock options it awards CEO Larry Ellison and other executives.
The Bay Area’s highest-paid boss by far, Ellison made nearly all of his $78.4 million last year in the form of 7 million stock-option shares, an amount he has consistently received since 2006, according to the Redwood City corporation’s regulatory filings. But Monday, Oracle in another filing listed his annual stock options at just 3 million.
Similar filings were made for several other executives, including co-presidents Mark Hurd and Safra Catz, whose stock options appear to have been scaled back to 2.25 million for each from 5 million last year. They each earned $43.5 million in total compensation last year, with nearly all of that in option awards.
It was not immediately clear if the filings represented the total stock options Ellison and the executives will receive this year or whether it is possible Oracle might give them additional options in a later filing. Oracle spokeswoman Deborah Hellinger declined to comment.
The company has been under intense pressure to rein in executives pay after stockholders in 2013 and 2012 opposed Oracle’s executive pay packages in nonbinding votes.
In a letter last year to Oracle’s compensation committee chairman, the CtW Investment Group complained that “Mr. Ellison’s pay far outstrips that of the highest-paid executive at the companies Oracle has identified as peers for compensation purposes,” even though Oracle’s stock price and profit haven’t warranted such remuneration. And it added, “neither the board nor the compensation committee seems to grasp the depth of shareholder frustrations with Oracle’s pay practices.”
Ellison’s compensation has been a particular target because it’s so out of proportion to what other executives make. His pay last year ranked tops among 177 local CEOs, according to What the Boss Makes, the annual Equilar Silicon Valley CEO Pay Study conducted for the Bay Area News Group. The CEO with the next-closest pay was Zynga CEO Don Mattrick, who was awarded $57.8 million. By contrast, Intel CEO Brian Krzanich got just $9.5 million and Apple CEO Tim Cook received $4.2 million.
Aaron Boyd, a corporate pay expert with Equilar, said it’s possible Oracle could grant Ellison, Hurd, Catz and the other executives additional stock options this year. But he said the company hasn’t done that sort of thing historically and he suspects Oracle has decided to cut their stock options to mollify shareholders.
“I think it stands to reason that investor sentiment and concern over the amount of equity he (Ellison) has gotten probably has something to do with it,” Boyd said.
“A change in the pay mix is long overdue,” added CtW analyst Michael Pryce-Jones. But he cautioned that “investors are right to remain skeptical” until Oracle files its annual Proxy statement, which lists its executives’ salary, bonuses and all 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.”
Contact Steve Johnson at 408-920-5043. Follow him at Twitter.com/steveatmercnews.
