Oracle CEO Compensation


“Is any CEO worth $1 million a day?” That’s what this NY Times article poses in an article about executive pay. As the fourth highest paid executive in 2011 (a total of over $96 million), Larry Ellison of Oracle hasn’t been able to avoid the spotlight on the aggressive compensation he receives.

Oracle Corporation is a multinational computer technology company that creates both software and hardware products for businesses worldwide. Headquartered in California, Oracle is one of the biggest firms in its industry and is extremely successful worldwide. Its rise is attributed to the technology boom of the 1990s and its products are increasingly in demand as businesses improve their data management systems. Oracle operates in a highly capital-intensive business and, accordingly, is generously rewarded with high profits.

Larry Ellison, Oracle’s co-founder, CEO and Director, is one recipient of Oracle’s substantial compensation packages. This Yahoo! News article explains that in the past year, Ellison’s compensation rose 24% despite a 23% decrease in the company’s share price during that period. Ellison’s compensation mostly consists of stock options, making him the largest shareholder (he owns almost a quarter of Oracle stock). Ellison isn’t shy to show off some of his prized possessions, which include cars, jets, yachts, multiple homes, and islands.

Is his compensation justified? Given the recent HBS article we read about Home Depot’s CEO compensation, I found this topic to be really interesting. I’m not even sure yet if this is justified but I want to take a deeper look so that I may come to a conclusion and possible help others come to a conclusion on this issue. With all the poverty and destruction in the world, should this money go elsewhere? Or are Oracle’s compensation packages justified given the company’s enormous success?

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One response to “Oracle CEO Compensation

  1. One question that I have seen come up with using stock so heavily is that it can dilute the share price of ever other shareholder’s holdings. Now, that would need to be a lot for a big company, but I wonder if it is worth looking at in this situation.

    I also do not understand how is total compensation can increase 24% if it is heavily stock-based bu the stock lost 23% of its value in the same year. Is the growth from the stocks?

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