Here We Go Again: Oracle’s Ellison Gets More Options - 14 July 2009

Here We Go Again: Oracle’s Ellison Gets More Options

http://www.siliconbeat.com/2009/07/13/here-we-go-again-oracles-ellison-gets-more-options/

Posted by Chris OBrien on July 13th, 2009 at 4:13 pm | Categorized as O'Brien, Policy | Tagged as Larry Ellison, Oracle

Last year I wondered why Oracle CEO and founder Larry Ellison continued to receive additional stock options when he already had more than 1 billion:

“However, I do have a beef with Ellison’s compensation
that should get a sympathetic ear from Oracle’s shareholders: Why is
the company doling out more stock to a man who already owns 22.3
percen?”

It’s not like I expected Ellison or Oracle’ s board to listen to me. And guess what? They didn’t!

I came back from vacation today to find this nugget about Oracle’s board awarding Ellison another 7 million stock options for the fourth year in a row.   The four-page report, called “Larry Ellison Rides Again,” 
comes from Graef Crystal, one of the most respected voices on executive
compensation. In meticulous detail, Crystal breaks down the numbers,
and in doing so, points out the absurdity of this latest award.

Perhaps there’s no more room for outrage when it comes to executive
compensation, or Ellison continuing to rack up more options, but in any
case, here are the highlights of Crystal’s analysis.

First, Crystal gives the history of Ellison’s recent stock option awards:

• “On July 6, 2006, he received a grant covering 7,000,000 shares
  with a strike price of $14.57 and a term of 10 years. The company
  declared the option to have a grant date fair value of $50 million.”

• “On July 5, 2007, he received a second grant covering another
  7,000,000 shares, with a strike price of $20.49 and a term of 10 years.
  The company declared the option to have a grant date fair value of $71
  million.”

• “On July 3, 2008, he received a third grant again covering
  7,000,000 shares, with a strike price of $20.73 and a term of 10 years.
  The company’s declaration of grant date fair value is not currently
  known, as the proxy covering the fiscal year ended May 31, 2009 has not
  yet been filed.”

• “On July 2, 2009, he received a fourth grant again covering
  7,000,000 shares, with a strike price of $21.04 and a term of 10 years.
  The company’s declaration of grant date fair value is not currently
  known, as the proxy will not be filed for over a year.”

Was he really worth that? Crystal:

“It is important to observe here that the strike prices
of the most recent three grants — $20.49 for the grant made on July 5,
2007, $20.73 for the grant made on July 3, 2008 and $21.04 for the
grant made on July 2, 2009 – are essentially unchanged. The compounded
rate of stock price appreciation between July 5, 2007 and July 2, 2009
was just 1.46 percent per year. And for the single year ended July 2,
2009, Oracle delivered an appreciation of only 1.32 percent.”

And:

“To be fair to Mr. Ellison, while his stock price has
gone essentially nowhere in the last few years, the overall stock
market has gone to hell. For the fiscal year ended May 31, 2009,
Oracle’s total return was

more...http://www.siliconbeat.com/2009/07/13/here-we-go-again-oracles-ellison-gets-more-options/