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Oracle Shareholders Vote Against Ellison's Compensation Package (Again)

samzenpus posted about a year ago | from the no-bonus-for-you dept.

The Almighty Buck 213

angry tapir writes "A majority of Oracle shareholders have once again voted against the company's executive pay practices, including for CEO Larry Ellison. The vote at Oracle's annual shareholder meeting is nonbinding, and follows complaints from some large shareholders and their representatives who say Ellison is overpaid compared to his peers. Ellison is paid US$1 in salary, receiving the rest of his pay in stock options. In Oracle's past fiscal year, that totaled $76.9 million. Shareholders voted against Oracle's executive pay practices at last year's meeting as well."

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A bunch of spineless wimps... (2, Insightful)

RocketRabbit (830691) | about a year ago | (#45298309)

They know they don't have any power, so they choose to "vote" in a non-binding resolution. Larry must be really scared now!

The guy built that company up from a two-bit hole in the wall operation into one of the largest computer empires known to man. He could fairly ask for a billion bucks a year as a salary and he would deserve it all!

I don't like Oracle and think their products are suck-ass bloatware, but Larry Ellison made that company. He should be able to profit from it to his heart's content! Plus he likes to play with toys all the time. Wouldn't you just say "fuck all" and go sailing for a while if you had billions of dollars in net worth?

Re:A bunch of spineless wimps... (1, Insightful)

Anonymous Coward | about a year ago | (#45298341)

No, he shouldn't

Re:A bunch of spineless wimps... (1, Insightful)

Anonymous Coward | about a year ago | (#45298359)

No, he shouldn't

Spoken like a true socialist.

Re:A bunch of spineless wimps... (0, Insightful)

Anonymous Coward | about a year ago | (#45298413)

Nobody needs that much cash, and nobody deserves that much cash. It's not like he did everything himself.

Re:A bunch of spineless wimps... (2, Insightful)

Anonymous Coward | about a year ago | (#45298433)

There's that word again ... "need". Who made you judge and gets to decide what Mr Larry "needs"?

Re:A bunch of spineless wimps... (0)

Anonymous Coward | about a year ago | (#45298803)

Who made you the judge and gets to decide what mr Larry deserves?

Re:A bunch of spineless wimps... (1)

Anonymous Coward | about a year ago | (#45298813)

Have I said that Larry deserves anything? I'm just saying that no one gets to decide what anyone needs, Larry or otherwise.

Re:A bunch of spineless wimps... (3, Insightful)

Anonymous Coward | about a year ago | (#45298989)

So how come larry gets to decide that all the people actually doing the work only gets a 1/1000th (or whatever) of what he gets? You think he is forced to take that money?

Re:A bunch of spineless wimps... (1, Flamebait)

Ash-Fox (726320) | about a year ago | (#45299037)

So how come larry gets to decide that all the people actually doing the work only gets a 1/1000th (or whatever) of what he gets?

It's a top-bottom organization, like most organizations in the world. The people at the top dictate what happens below. The people at the bottom are free to leave the firm if they wish. If they were really invested behind not wanting to support him from the bottom, they would go on strike, leave etc.

You think he is forced to take that money?

You think people at the bottom are forced to work there?

Re:A bunch of spineless wimps... (0, Interesting)

Anonymous Coward | about a year ago | (#45298835)

Also, do you have no fucking common sense? Think about it, nobody needs and deserves 77 million a year. He does not work 1000 hours a day. And what judge has any common sense?

OK, what does he need it for? (1)

Anonymous Coward | about a year ago | (#45299211)

And I think what makes him a judge of it is that he's a shareholder of the company who is saying that Larry is paid too much.

Re:A bunch of spineless wimps... (-1, Troll)

RocketRabbit (830691) | about a year ago | (#45298541)

Somebody dig old Milton Friedman up and explain "need" to this nitwit. Also, I'm sure that Larry actually enslaved the Oracle employees, rather than fairly compensating them for their time.

Obama supporters / communists / progressive liberals (same things) are so stupid. It reminds me of something that one of the early American correspondents (and closet commie) in the newly-formed Soviet Union said: "Isn't it wonderful that everybody is equally shabby?"

Re: A bunch of spineless wimps... (0, Interesting)

Anonymous Coward | about a year ago | (#45298743)

You really should shut up.
You don't what communism is. Just. Shut. Up.

Re: A bunch of spineless wimps... (-1)

Anonymous Coward | about a year ago | (#45299041)

I accidentally the entire communism.

Re:A bunch of spineless wimps... (1, Informative)

Joining Yet Again (2992179) | about a year ago | (#45298791)

It's funny because Friedman was far from laissez-faire and believed in central control of the money supply.

It's just that the baboons who pass for talking heads nowadays haven't actually read his work.

Re:A bunch of spineless wimps... (2, Insightful)

erikkemperman (252014) | about a year ago | (#45299213)

Obama supporters / communists / progressive liberals (same things)

As I read your post it is at "-1, Insightful". Next we'll see a "+5, Troll" or something.

Slashdot is getting more confused by the minute. You clearly have no idea what either word "communist" or "progressive liberal" means if you think they are the same or that a typical Obama supporter is either.

Re:A bunch of spineless wimps... (1)

Curunir_wolf (588405) | about a year ago | (#45299265)

"-1 Insightful"

opinion mod much?

Re:A bunch of spineless wimps... (3, Funny)

Tridus (79566) | about a year ago | (#45298493)

Oracle's shareholders agree with him. Damn socialist investment bankers!

Re:A bunch of spineless wimps... (5, Informative)

fuzzyfuzzyfungus (1223518) | about a year ago | (#45298495)

No, he shouldn't

Spoken like a true socialist.

Or, y'know, somebody familiar with the concept of 'property'. Oracle is a publicly traded company (not that this is always a good idea; but they did it), not some sole proprietor outfit. It sold substantial chunks of itself to assorted third parties, so now they get a say. That's about as far from 'socialism' as you can reasonably get.

It doesn't matter whether or not the claim that "Larry Ellison made that company" is true or not because he doesn't own most of it. He is a major shareholder(a trifle under 25%, I think); but he gets paid as an employee of a company owned by a collection of people, including himself, not because Oracle is his personal candy jar and he can get paid what he likes.

He's certainly the most identifiable personality; but charisma is not the foundation of property rights...

Re: A bunch of spineless wimps... (3, Insightful)

Anonymous Coward | about a year ago | (#45298551)

Don't bother using logic and legal talk with a true believer in American Capitalism (TM). Every time an economic issue comes up around here some right wing crank will call anything socialism that isn't 'let the rich do anything they want without restriction, and minor facts like how publicly traded companies are owned and governed don't matter at all.

I think they get paid a quarter per post or something.

Re: A bunch of spineless wimps... (-1, Troll)

Anonymous Coward | about a year ago | (#45298611)

Every time an issue of economic equality comes up on here, a European socialist stops upvoting Reddit propaganda for 5 minutes, taking time to state their personal redistribution opinion regardless of European socialist countries like Greece, Italy, and Spain going broke / having high unemployment.

Re: A bunch of spineless wimps... (2)

cyborg_zx (893396) | about a year ago | (#45298631)

Whereas the economic situation in the US is going just swimmingly of course.

Re: A bunch of spineless wimps... (0)

Anonymous Coward | about a year ago | (#45298831)

That's OK, been through Europe and I'll take the good old USA any day.

Re: A bunch of spineless wimps... (1)

Anonymous Coward | about a year ago | (#45299271)

I've met some of these USAans "being through Europe". They typically visit half a dozen countries in as many days and then feel like they are honorary locals. And when I say visit a country, I mean roll out of the train in the capital's central station, into the nearest McD, and back into the train.

Re: A bunch of spineless wimps... (1)

Anonymous Coward | about a year ago | (#45299055)

So about 4 posts earns a dollar, eh? At least this guy can claim, Hey, I earned about as much as Ellison, just posting on slashdot!

Re:A bunch of spineless wimps... (4, Informative)

Will.Woodhull (1038600) | about a year ago | (#45298667)

As an employee, he gets paid $1/yr. This is not about what he is doing as an employee.

This is about what he is doing as a corporate officer in setting company policies that award himself with $77 million/yr. This is about abusing the corporation so he can diddle the taxman (in the USA all those stock options give him an immediate amount of financial clout that he does not have to pay taxes on until he exercises them. Further, his tax rate at that time will depend on exactly how he structures the transactions that exercise those options).

But the main point is that this corporate officer is twisting company policy to his personal benefit of $77 million/yr and the majority of owners of the company don't like him screwing around with their investment that way.

Re:A bunch of spineless wimps... (4, Insightful)

fuzzyfuzzyfungus (1223518) | about a year ago | (#45298733)

Oh, I'd be the last to argue that he isn't weaseling around (while the 'incentives alignment' theory of stock options is noble, implementation has... encountered assorted complexities under field conditions, to put it politely).

My point was merely that (ironically enough), the guy who was decrying 'socialism' was actually using a we-worship-rich-guys version of the 'labor theory of value' argument(a socialist classic), while the person he was arguing against was using the (more common among people who describe themselves as 'socialists'; but theoretically quite similar) 'no one man's labor can possibly be worth 24534x another's!' labor theory of value(also a fairly common, as well as fairly direct, implication of the labor theory of value).

Had Ellison been a midlevel engineer or something, Mr. Capitalism never would have gone with the 'But without Ellison, PRODUCT X would have crashed and burned! He deserves 200 million if he wants it!' argument. Damn employee can take his salary, and like it, and if he think's he's worth more, he can ask for a raise or man up and start his own company...

The numbers are bigger (owning a little over 20% of Oracle stock is Not Small); but if you want to be a not-socialist, the CEO is still just an employee, working for the shareholders, and he gets the salary market forces command (Har, har, because that's how executive compensation works... In your dreams), and absolutely fuck-all for having 'made this company'. Even if he made it 100%, he only owns 20-odd%, and works for the people who own the rest.

Re:A bunch of spineless wimps... (0)

Anonymous Coward | about a year ago | (#45298805)

Further, his tax rate at that time will depend on exactly how he structures the transactions that exercise those options).

Granted, $77MM/yr is obscene, but you're incorrect about the tax rate.

The gains on stock options that are granted as part of a compensation package are always taxed as regular income at the time they are exercised.

It's those gains, that are able to compound tax-deferred on top of the $77/MM/yr, that you should be railing against.

Re:A bunch of spineless wimps... (4, Insightful)

TheRaven64 (641858) | about a year ago | (#45298723)

A socialist would believe that all of the workers who contributed to Oracle's success should be allowed to share in the results. A capitalist would believe that all of the investors whose capital made that success possible should share in that success. There are several terms for someone who thinks that the founder should be able to get all of the benefit because he's rich, but none of them are very polite.

Re:A bunch of spineless wimps... (1)

TFAFalcon (1839122) | about a year ago | (#45298479)

He should profit from the increase in the value of any shares he owns. Otherwise running the company well is his JOB.

Re:A bunch of spineless wimps... (2, Insightful)

Will.Woodhull (1038600) | about a year ago | (#45298617)

Is it okay for Ellison to pay income tax on his $1 per year salary, while taking $77 million a year in stock options that won't be taxed until he decides to exercise them? And even then he has all kinds of discretion in how much tax he will pay, since there are all kinds rollover investments, etc, that he can use. The guy is poster brat for the 1%ers. If you are paying USA income tax, he is screwing you over as well as screwing the other shareholders.

Re: A bunch of spineless wimps... (0)

Anonymous Coward | about a year ago | (#45298665)

Which makes a good argument for a flat sales tax instead of an income tax. That way a rich guy buying an island and a yacht pays a lot more in tax than most of the 99%.

Re: A bunch of spineless wimps... (1)

parkinglot777 (2563877) | about a year ago | (#45298907)

Which makes a good argument for a flat sales tax instead of an income tax. That way a rich guy buying an island and a yacht pays a lot more in tax than most of the 99%.

And what hard evidence do you have to prove that, under the same circumstance as now, it will guarantee that he will not screw other shareholders if the tax is changed to a flat sales tax instead of an income tax?

Re: A bunch of spineless wimps... (1)

Anonymous Coward | about a year ago | (#45298935)

I'm afraid that a sales tax is a huge bruden on the poor, and still doesn't balance out. A rich person buying the same car as a poor person sees a lot less of their money go towards the tax than the poor person does. That is, it could be 1% of a rich person's salray, but 10% of a poor person's income.

Re: A bunch of spineless wimps... (0)

Anonymous Coward | about a year ago | (#45299023)

but you can put tax on used car worth $5'000 to be 0% and tax on luxury car worth $300'000 to be 99% (so it will cost 30 millions 300K for car manufacturer and 29 million 700K for tax, flat tax is better just have different rates, one for food/health/necessities another for luxury items like caviar or champagne ...

Re: A bunch of spineless wimps... (2)

Ash-Fox (726320) | about a year ago | (#45299071)

In the UK, the VAT is mostly 20% on everything purchased, there are a few exceptions like books and food, where they are simply taxed less or not taxed at all. Additionally, they don't confuse the issues by adding taxes after you have elected to buy something, the price you see on the box is the price you pay.

Re: A bunch of spineless wimps... (1)

stewsters (1406737) | about a year ago | (#45298997)

Not if he buys his yacht from New Zealand [dailymail.co.uk] . Then if New Zealand has a sales tax they get the money, otherwise he just keeps it and fills a swimming pool on his yacht with money.

Re: A bunch of spineless wimps... (2)

Vintermann (400722) | about a year ago | (#45299059)

Talk faster. Sales tax hits the poor hardest because they have to spend their entire income - locally. The billionaire can invest and salt away and simply purchase his yachts in areas where there isn't a sales tax.

Sales tax is an extremely regressive tax. It is not a good idea.

Re:A bunch of spineless wimps... (2, Interesting)

Ash-Fox (726320) | about a year ago | (#45299049)

If you are paying USA income tax, he is screwing you over

He is complying to the law, like people paying the USA income tax. If the law is unfair, then get the law changed.

Re:A bunch of spineless wimps... (4, Insightful)

Hentes (2461350) | about a year ago | (#45299005)

I don't like Oracle and think their products are suck-ass bloatware, but Larry Ellison made that company.

And then he sold that company to the shareholders. His profit is the money he got for the shares.

Finally! (2, Informative)

Anonymous Coward | about a year ago | (#45299073)

I don't like Oracle and think their products are suck-ass bloatware, but Larry Ellison made that company.

And then he sold that company to the shareholders. His profit is the money he got for the shares.

Finally, someone who understands!

And it's sad that the above comments turned it into a Capitalist/Socialist thing.

What we're seeing is your typical corporate CEO strategy - outlandish pay for mediocre performance. And I think that's the REAL issue here.

And folks, remember stock options DO NOT GET TAXED LIKE REGULAR INCOME. So, he's paying close to zero tax on this and differing gains - maybe forever by moving them offshore. This billionaire is getting a sweet sweet deal on the middle class' back.

Go look at your pay stubs or at at that check you send to the IRS every quarter my fellow small businessmen and ask yourself, "Why am I not getting that same deal?"

Re:A bunch of spineless wimps... (0)

Anonymous Coward | about a year ago | (#45299225)

They do have power, that's why they get to vote.

Why? (2, Interesting)

rsmith-mac (639075) | about a year ago | (#45298327)

While TFA provides a good summary of the vote, it does a terrible reason of explaining why the shareholders voted as they did.

So why are the shareholders against Larry's compensation package? The use of stock options means that Larry only gets paid if the company is doing well; or rather more specifically if the company's shares are doing well, which is all the shareholders are going to care about in the first place. At 4.6B shares the company is big enough that Larry's compensation isn't going to meaningfully dilute the value of shares. And switching to traditional compensation packages would eat into Oracle's profits.

What am I missing here? For a company that's doing well, this seems like the perfect way to pay Larry. What is it the shareholders would rather do, and why would it be any better?

Re:Why? (2)

smitty_one_each (243267) | about a year ago | (#45298349)

More importantly, if companies don't launder the money through the CEO, how will the the bicycle of political influence be pedaled?

Re:Why? (4, Funny)

hairyfish (1653411) | about a year ago | (#45298435)

The bicycle of political influence? You really just said that?

Re: Why? (0)

Anonymous Coward | about a year ago | (#45298459)

He was shooting for the laundry delivery metaphor. Isn't your laundry delivered by bicycle?

Re: Why? (1)

Anonymous Coward | about a year ago | (#45298601)

no, he was going for a pun of peddle vs pedal. Peddling influence vs. pedaling a bicycle.

Re:Why? (1)

Shadow of Eternity (795165) | about a year ago | (#45298377)

And if he ever decides to short-sell his own company?

Re:Why? (1)

Anonymous Coward | about a year ago | (#45298463)

He goes to prison. Insider trading is illegal.

Re:Why? (0)

Anonymous Coward | about a year ago | (#45298709)

But if he wants to short-sell and lose money, that is okay, no?

Re:Why? (1)

Amouth (879122) | about a year ago | (#45299261)

if he can show that the decision was made completely as an investor and zero input from his job at the company then sure.

Thats going to be hard to prove with him being CEO and all.

Re:Why? (1)

BitZtream (692029) | about a year ago | (#45299315)

Uhm, CEOs don't get that option.

Re:Why? (2)

fatphil (181876) | about a year ago | (#45298389)

> And switching to traditional compensation packages would eat into Oracle's profits.

Only if he were to get a nett 76 million via that mechanism. Maybe the shareholders think that he doesn't deserve to be compensated anything like that amount?

Re:Why? (2)

TFAFalcon (1839122) | about a year ago | (#45298485)

For every stock that he gets, the value of stockholder stocks is diluted - they own a lesser % of the company. Why shouldn't they complain about that?

If stock options were 'free' for the stockholders, then why doesn't every worker get a few million dollar's worth of them?

Re:Why? (2)

Richard_at_work (517087) | about a year ago | (#45298543)

That depends on how the stock is issued - from a non-issued pool (has 100% of Oracle shares already been issued publicly, or did the company retain a pool) or through a new issue? If the former, no dilution happens.

Re:Why? (1)

CaymanIslandCarpedie (868408) | about a year ago | (#45298751)

If they come from a company retained pool, that company retained pool would be an asset on the companies balance sheet. So taking it from there lowers the company's value by 76M. The stock options are a tax dodge, but that isn't what Oracle's owners are complaining about. They are complaining about his compensation being too high. I don't think they are too worried about the exact structure of that compensation. Either way it takes from their value.

Re:Why? (2)

Richard_at_work (517087) | about a year ago | (#45298869)

If they come from a company retained pool, that company retained pool would be an asset on the companies balance sheet. So taking it from there lowers the company's value by 76M

From the Oracle financial report, last page:

Stock-based compensation expenses: We have excluded the effect of stock-based compensation expenses from our non-GAAP
operating expenses and net income measures. Although stock-based compensation is a key incentive offered to our employees, and we
believe such compensation contributed to the revenues earned during the periods presented and also believe it will contribute to the
generation of future period revenues, we continue to evaluate our business performance excluding stock-based compensation expenses.
Stock-based compensation expenses will recur in future periods

http://www.oracle.com/us/corporate/investor-relations/financials/q1fy14-detailed-financials-2016793.pdf [oracle.com]

However, they are detailed in the Stock Holding Pattern filings, which show as of September 2013 74.98% of the company is held by the company, and 25.02% of the company is held publicly (which is an increase of 0.01 percentage points since June 2013).

http://www.oracle.com/us/industries/financial-services/share-holding-pattern-sep2013-2031438.pdf [oracle.com]

Re:Why? (1)

TFAFalcon (1839122) | about a year ago | (#45298769)

But won't the value of the company drop as a result? Since it no longer owns those shares?

Re:Why? (1)

Richard_at_work (517087) | about a year ago | (#45298881)

Won't the value of the company drop as a result of any transfer of compensation from the company to someone else? That $74Million would have to come from somewhere if it was cash rather than stock options.

The toss up is whether the person you are compensating was responsible in whole or in part for bringing in more than their compensation package as revenue...

Re:Why? (1)

TFAFalcon (1839122) | about a year ago | (#45299003)

Exactly - giving him stock is about the same as giving him cash. The only difference is that it that it looks better on the balance sheet.

As for the second part of your response, why is this view only taken when it comes to management? Nearly every worker will bring in more then they are being paid (if they don't you fire them anyway). So why does the management get such ridiculously inflated bonuses? And don't say it's because of all the responsibility they have - I've yet to hear of a manager paying the company when they do a poor job.

Re:Why? (1)

Will.Woodhull (1038600) | about a year ago | (#45298771)

I don't think it works like that. Typically when a corporation goes public, a percentage of the stock is held in reserve: the company qua corporate person retains those shares. For things like offering stock option incentives to its employees.

So long as Ellison's stock options are not exercised, they have no direct effect on the value of stock that is being actively traded. When they are exercised, the company's reserve is depleted, but there is no direct dilution of outstanding stock. Putting more stock into active trading might have an effect, but that would be no different from any other market activity.

Re:Why? (1)

tgd (2822) | about a year ago | (#45298969)

For every stock that he gets, the value of stockholder stocks is diluted - they own a lesser % of the company. Why shouldn't they complain about that?

If stock options were 'free' for the stockholders, then why doesn't every worker get a few million dollar's worth of them?

Which doesn't matter if he continues to grow the company's value. If you dilute stock 10% and the price goes down 10% as a result, that's bad. If you dilute a stock 10% and the value goes up 10%, there's no problem.

The stranger thing is them being options, not shares vesting over time. That *may* be the source of the concern ... the stock price doesn't, generally, take into account the share dilution represented by outstanding options, so there's some risk, I suppose, that a large purchase of shares would dilute the company in one quick transaction... but given the numbers of shares we're talking about, I'd think it'd get lost in the noise of normal fluctuations.

I'm guessing most of the votes came from people who don't really understand economics, or just wanted to jump on the CEO pay bandwagon.

Re:Why? (2, Insightful)

Luckyo (1726890) | about a year ago | (#45298497)

He's good, but not worth the pay he's receiving.

Just because plumber does a good job, doesn't mean he's worth tens of millions a year. Just because CEO does a good job, doesn't mean that he's worth 76.9 million USD.

Re:Why? (2, Insightful)

adolf (21054) | about a year ago | (#45298629)

Your analogy is backwards.

Most plumbers don't work for, much less run, companies that have annual revenue measured in billions of dollars.

Indeed, I'd wager that most plumbers take home a far greater share (on a percentage basis) of the company's revenue than does Ellison.

One could draw from this the conclusion that Ellison is underpaid compared to most plumbers, but that would be absurd.

Hence, your analogy is useless.

Re:Why? (1)

Luckyo (1726890) | about a year ago | (#45298731)

I don't think you realize that 76.9 million is just his stock options. He also gets dividends, just like all other stock holders.

Also, I'd take that wager once we agree that plumbing company in question must be at least within hundred times as large as Oracle. How much are you willing to bet?

Re:Why? (1)

adolf (21054) | about a year ago | (#45298785)

I think I realize that 76.9 million, plus any dividends, plus $1, is far less than the per-capita wage on a percentage basis of most plumbers.

That said, this statement is nonsensical:

once we agree that plumbing company in question must be at least within hundred times as large as Oracle

Whatever it is you're going on about, I don't think it relates well to most plumbers. No bet.

Re:Why? (1)

Anonymous Coward | about a year ago | (#45298753)

Indeed, I'd wager that most plumbers take home a far greater share (on a percentage basis) of the company's revenue than does Ellison.

Most plumbers also produce a far greater share of the company's revenue than does Ellison. They earn their pay.

Ellison almost certainly does not generate $76M per year for the shareholders.

Indeed, Oracle would probably do better if they fired Ellison, replaced him with any competent person willing to work for $1M a year, and used the $75M saved to branch out into plumbing.

Re:Why? (0)

Anonymous Coward | about a year ago | (#45299083)

Yeah, but what percentage of the work does Ellison do?

Too many shares (1)

brunes69 (86786) | about a year ago | (#45298547)

The idea is sound but it's simply too many shares. He doesn't even need to perform well because the stock could tank 50% and he would still get almost 40 million dollars. Cut the number of shares by 75% and it makes more sense.

Re:Why? (2)

mysidia (191772) | about a year ago | (#45298561)

The use of stock options means that Larry only gets paid if the company is doing well; or rather more specifically if the company's shares are doing well

Well exactly... the company doesn't have to do well in the long term Just its shares. Providing an executive options, means that the exec is going to be focused on trying to maximize short term share price increase, at the potential cost of tens of billions in long-term opportunity, for the company.

And switching to traditional compensation packages would eat into Oracle's profits.

Using the options-based compensation eats into shareholder's equity interests, with regards to the company's current profit and future profit, forever.

Re:Why? (5, Informative)

Required Snark (1702878) | about a year ago | (#45298645)

Right. I don't know about Ellison specifically, but the shares are usually granted at a discount, so there is a significant boost in real value. Plus there are tax advantages that he accrues, so he is effectively getting an even larger compensation package.

Plus it's not Ellison's company, it's the shareholders company. If shareholders think he is overpaid that should have some impact. If he disagrees, he can just quit, right? (That's the bullshit line that used to justify treating workers like shit, so it feels really good to use on a prick like Ellison.)

What this really shows is that corporate governance is broken. The board doesn't work for the shareholders, they are at the beck and call of the CEO. He puts them on the board, they make huge amounts for the little work they do, and so they do whatever the CEO wants. They are a rubber stamp. This is a lot closer to feudalism then real capitalism. The workers are serfs, the shareholders are not much better off, and the lords who run the show take everything they can lay their hands on. Welcome to non-capitalist, not a democracy 21st America.

Re:Why? (0)

Anonymous Coward | about a year ago | (#45298931)

Although the shareholders have the right to sell their shares, but obviously they don't want to do that.

Re:Why? (2)

tgd (2822) | about a year ago | (#45298993)

Although the shareholders have the right to sell their shares, but obviously they don't want to do that.

Absolutely. Ellison's pay is the board of directors responsibility and call to make, not the shareholders. They can vote for the board members they want to represent them, and vote with their wallet if they don't like it. That's how the market works.

The irony is, of course, that the people complaining about it *wouldn't* sell their shares over it, because they're making too much money on it.

Re:Why? (1)

Neil Boekend (1854906) | about a year ago | (#45298977)

Not quite. If Larry left tomorrow then he would do well focusing on the short term share value, since he would be cashing them in shortly. If, however, he wants to have a continuing revenue stream he'd do well to focus on the long term share value. The only way I know how to do that is to keep the company healthy and growing.
Since he build the company up from the ground I would assume that leaving his baby isn't in his immediate plans. Ergo it wouldn't be wise to focus on empty stock value increases and other Pyrrhic victories.
Disclaimer: I have no experience running a company, large or small. I'm just an armchair theorist.

Re:Why? (1)

Will.Woodhull (1038600) | about a year ago | (#45298725)

Ellison is taking $77 million / yr in stock options while accepting $1 / yr in salary. He has arranged that himself, since he is the Chief Executive Officer and sets corporate policy. Most shareholders are calling foul because he is abusing the corporation they own to diddle the USA taxman for his personal benefit. He also is increasing the amount of influence he can exert over the value of their shares as he manages his stock portfolio.

Re:Why? (2)

locofungus (179280) | about a year ago | (#45298765)

What am I missing here? For a company that's doing well, this seems like the perfect way to pay Larry.

His share options are almost certainly offered way below par.

If the shares are $33 and he gets 2M @ $3 then that's a theoretical gain of $60M when he exercises.

A 10% fall in the value of the company means he "only" gets $54M instead - while the investors who bought $2M at $33 lose $6M

I'm not 100% sure of the UK regulations but I think for share options schemes of this size (there are tax exemptions for some cases but I think the cap is £30000) you would be taxed as income on the gain when you exercised the options. (For gains of this size, 50% rather than 28% CGT)

For the US I think it's different and it's a way of avoiding income tax with fairly minimal risk.

The UK sees share option schemes like this as just another form of income, albeit deferred and not guaranteed - so the UK defers the income tax to the point where the gain is actually made.

Re:Why? (1)

tranquilidad (1994300) | about a year ago | (#45299333)

They are almost certainly not offered way below par. Par value for Oracle stock is $0.01 per share.

Perhaps you meant his stock options were issued below market value. Doing so would be a huge problem for Oracle and Larry.

I think Ellison's stock options are NQSOs (non-qualified stock options). There's an extremely low possibility he was issued ISOs (Incentive Stock Options) - I say low possibility because ISOs are complex for both the company and the recipient.

NQSOs are issued to many employees at Oracle and they all fall under a filed stock option plan. The options must be issued at market value. The market value used by Oracle used to be the closing price on the day the option was issued. (There are other IRS approved methods for determining market value such as sampling lowest closing price over a 30-day period).

When Larry gets an option each option is priced at the market closing price on the date issued. Yesterday's close was $33.50.

Larry can exercise his options in one of two ways after the defined vesting period has occurred. (The vesting period for Oracle's stock options is 4 years which means he is permitted to exercise 25% of the granted options each year starting after 1 year has passed. The options expire after 10 years - if he doesn't exercise them he loses them.)

Larry can do a same-day-sale exercise. In this case he would use the value of immediately selling the shares on the open market to purchase the options. If he was granted 1,000 shares at an exercise price of $33.50 and the current market price is $43.50 then on the first year he could get $2,500 in income. (Exercising 250 shares with a same-day-sale netting $10 per share.)

With a same-day-sale he would pay ordinary income taxes on the $2,500.

Larry could also simply purchase the shares with his own money. In this case he would have to pay $83,750 to buy the 250 shares available to him. If he holds those 250 shares for less than two-years then he would owe ordinary income tax on the difference between what he paid and the price at which he sold them. If, however, he holds those shares for more than two years then he would pay the capital gains rate on those shares.

Larry will only make money if the price of the stock increases. In the case of a same-day exercise he takes no risk with his personal money and has to pay ordinary income tax on the profit. In the case of an outright purchase then he is placing his personal money at risk on the value of the company increasing over time and would only owe capital gains taxes on any profit if he risks his money for at least two years.

If, as others have argued here, the stock loses 99% of its value then Larry would make nothing and, if he had purchased the stock outright he would lose 99% of his personal money tied to that particular option.

I don't know what he does today but he used to wait until near the end of the exercise period (10 years) before purchasing the stock outright rather than a same-day exercise.

Re:Why? (0)

Anonymous Coward | about a year ago | (#45298819)

The use of stock options means that Larry only gets paid if the company is doing well; or rather more specifically if the company's shares are doing well, which is all the shareholders are going to care about in the first place.

If the stock loses 99% of its value, his compensation would still be more than most people make in their life. How that translates into not getting paid at all for you is a mystery to me.

Re:Why? (-1, Troll)

tgd (2822) | about a year ago | (#45299007)

The use of stock options means that Larry only gets paid if the company is doing well; or rather more specifically if the company's shares are doing well, which is all the shareholders are going to care about in the first place.

If the stock loses 99% of its value, his compensation would still be more than most people make in their life. How that translates into not getting paid at all for you is a mystery to me.

So? He is contributing more to the economy than most people will do in their life. That's how it works. If you don't like him making that much more than you, the real solution is to figure out how you can provide value to the economy, not cry foul when other people do.

Re:Why? (0)

Anonymous Coward | about a year ago | (#45299113)

He is contributing more to the economy than most people will do in their life.

That would be employees that actually design and build the products. He just takes the credit.

Re:Why? (0)

Anonymous Coward | about a year ago | (#45298899)

You also miss out on the fact that for Larry to have any money he will need to exercise his options, making them available to shareholders to purchase.

Interesting reference to HealthCare.gov (1)

bobthesungeek76036 (2697689) | about a year ago | (#45298397)

I wonder if Oracle is in damage control regarding healthcare.gov debacle? One article suggest Oracle software might be an issue:

http://www.propublica.org/article/heres-why-healthcaregov-broke-down [propublica.org]

Re:Interesting reference to HealthCare.gov (1)

Ash-Fox (726320) | about a year ago | (#45299203)

While Oracle software might be the cause of some of the problems, in reality there was no proper testing. I feel the fact that they only did two weeks of testing at the end of the project, when aren't doing any development after is more of an issue.

Two Presidents (4, Interesting)

bobthesungeek76036 (2697689) | about a year ago | (#45298405)

I've always wondered why Oracle has two presidents as well. Having worked for the Big-O I can atest that it is two companies in one. Sales is just an enabler for the real money maker: support and services. So even though Oracle has two presidents (Mark Hurd - sales, Safra Catz - services), there's only one big dog on the porch and believe me it's Safra...

Re:Two Presidents (5, Funny)

Anonymous Coward | about a year ago | (#45298447)

So Hurd isn't that important? I Gnu it!

If they really meant it, they'd sell their stock (0)

Anonymous Coward | about a year ago | (#45298489)

If they don't like the pay practices, why do they even own the stock?

Voting in a non-binding referendum? Isn't that like bailing the Costa Concordia with a paper cup?

Re:If they really meant it, they'd sell their stoc (0)

Anonymous Coward | about a year ago | (#45298507)

If they don't like the pay practices, why do they even own the stock?

Voting in a non-binding referendum? Isn't that like bailing the Costa Concordia with a paper cup?

More like a strainer...

Re: If they really meant it, they'd sell their sto (2, Insightful)

Anonymous Coward | about a year ago | (#45298571)

If they had a binding referendum, people might get the idea that shareholders own the company or something. We can't have that. They might want to do stuff that billionaires don't like.

Somewhat disappointed (2, Funny)

Anonymous Coward | about a year ago | (#45298641)

Maybe /. has grown up, or is it just me, but...

Not even a single joke about shareholders shocked by the size of Larry's packgage? How come?

As officially stated (0)

Anonymous Coward | about a year ago | (#45298711)

http://www.hhs.gov/digitalstrategy/blog/2013/10/more-on-the-tech-surge.html

Stock options are the right way to pay CEOs (1)

EmagGeek (574360) | about a year ago | (#45298761)

No CEO should get cash compensation. They should be paid exclusively in stock options. Why? Because they will only make any money if they make the company a success and the stock price goes up. If the stock price goes down, their options are worthless unless and until the price recovers.

Paying CEOs only in stock options would guarantee that they didn't make a dime if the company performed poorly. A 1 year holding period after exercise would prevent them pumping up a quarter artificially just to dump it and quit.

Re:Stock options are the right way to pay CEOs (1)

gmclapp (2834681) | about a year ago | (#45298837)

I had to read through all these comments to find one person who understands that the point of any compensation package is to incentivize doing one's job well. This is how you incentivize a CEO. Well said.

Re:Stock options are the right way to pay CEOs (2)

Anonymous Coward | about a year ago | (#45299061)

Maybe. But it depends on the "discount" the options are given. If I get 2 million shares, currently priced at $33, for $3 a piece, I can nearly bankrupt the company and walk away with a salary that in one year outranks any member of the middle-class's lifetime earnings. Furthermore, your one year holding scheme only means that I now take my stock-option, wait around a year, then pump up the 5th quarter, dump my options, and still make a pretty penny after the stock crashes and I exercise my options on the flailing stock the next year.

This is where you're falling short. The problem is not paying a CEO purely in stock options. The problem is that the CEO's have restructured it so that there's no longer an incentive to build a long term, stable plan for a company. Also, here in the US, stock options are an exceptionally clever way to get at minimum an awesome discount on your taxes and at best no taxes at all should you structure the transactions correctly under the right circumstances.

Because I'm sure we'll differ on the opinion of taxes and the "value of labor" for a CEO, I'll skip that and just focus on where we seem to both be red-blooded American-style Capitalists: fiscally incentivizing your CEO to do an exceptional job. In case you decide to go off on a tangent, the amounts here are merely for demonstration. Feel free to sub in $10 million or whatever amount you feel is necessary. I'm not arguing scale here, just mechanics.

I'm all for stock options. Oh look you, you're a CEO. I narrowly discount some shares of stock and effectively say, "You get $500,000 a year in 10% discounted stock options. The price is locked in at 10% off the price at the beginning of the fiscal year. At the end of the year, the option is exercised and you get actual shares of stock."

This has a two fold effect. In essence, if your CEO for whatever reason doesn't have a stash of cash to make it until he has actual stock to sale, he can use the options as collateral and get a line of credit. So you've sort-of paid up front and a fiscally responsible adult (is your CEO fiscally responsible?) will know how to make those options work for her in the interim.

This provides the incentive. If the stock tanks, they get substantially less money than $500,000 that year. If the stock soars, you get a good net-gain and an even larger discount in absolute terms (hence an even larger net-gain) for the next year.

You've paid in stock so the government is no longer interested in closing your tax loopholes and exempting your options from your cushy cap-gains rate because they realize a more steady stream of revenue this way. If the CEO pumps up your company and sells out at the end of the year, your board of investors should do a better job finding a CEO who is going to stick around for a while. Meanwhile, you're probably in a better position to attract a better CEO who can get the ship righted before the raze-and-burn tactics of the previous CEO festers.

BS (1)

Anonymous Coward | about a year ago | (#45299101)

No CEO should get cash compensation. They should be paid exclusively in stock options. Why? Because they will only make any money if they make the company a success and the stock price goes up. If the stock price goes down, their options are worthless unless and until the price recovers.

At which point the Board promptly "re-prices" the options. Lets see what CPAs have to say about that:"Repricings effectively reward executives for corporate difficulties, rather than hold them accountable."

http://www.nysscpa.org/cpajournal/2007/1007/perspectives/p6.htm [nysscpa.org]

I thought you had representation in a corporation (0)

Anonymous Coward | about a year ago | (#45298783)

It's always baited around that a corporation has to do what the shareholders say and that this ensures much less corruption than in government.

Seems more like the corporation is a dictatorship.

Re:I thought you had representation in a corporati (1)

tgd (2822) | about a year ago | (#45299029)

It's always baited around that a corporation has to do what the shareholders say and that this ensures much less corruption than in government.

Seems more like the corporation is a dictatorship.

No its not -- that's you just misunderstanding how a corporation works. The shareholders select the board. The board controls the leadership. The leadership controls the company. That's how all companies work, and should work. (And, probably not coincidentally, exactly how the US government was intended to work.)

Why? Shareholders (like voters in the US) don't have enough knowledge and experience to have their opinions really matter. You use your single vote to select people who you feel represent you best -- in a company, or the government. Then you let them do what you hired them to do. If you don't like it, you don't vote for them again.

Re:I thought you had representation in a corporati (0)

Anonymous Coward | about a year ago | (#45299133)

That's how all companies work, and should work.

Shouldn't the employees be the owners? Or at least have the voting rights? At least to vote in directors, if not actual policy?

Shareholders (like voters in the US) don't have enough knowledge and experience to have their opinions really matter.

Oh you're just one of those people... shouldn't have bothered replying.

So? (1)

sociocapitalist (2471722) | about a year ago | (#45299115)

It doesn't matter what the stockholders voted as their votes don't count.

It's like the French voting for American presidents.

The $1 salary scam again. (0)

Anonymous Coward | about a year ago | (#45299229)

Well, if the CEO is only paid $1 per year, the peons should probably receive only about 1c per year.

lol nonbinding (1)

slashmydots (2189826) | about a year ago | (#45299399)

Yeah, it's nonbinding as in they can still do it but they'll get massacred on the stock price. Good luck with that one, Larry. You know what would be really funny? If the stock options he got were voting stocks. Then he could show up in a hat, big glasses, and a mustache and and vote yes on Larry's compensation.
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