Shareholders complain of ‘extraordinarily top-heavy compensation culture’
Investors have rejected the pay package for Oracle’s chief executive officer for the second consecutive year. Approximately 57 percent of shareholders voted against the compensation package for Larry Ellison, almost the same as last year. But looking at independent shareholders only – and stripping out Ellison’s near-25 percent shareholding – brings that figure closer to 85 percent in opposition to Oracle’s executive compensation. Ellison’s compensation in the 2013 fiscal year totaled $78.4 mn.
The rejection of the non-binding compensation resolution follows recommendations by proxy advisory firms ISS and Glass Lewis that investors reject the company’s compensation plan for what they call ‘excessive pay’.
At the same time, shareholders approved the re-election of Oracle’s entire board despite recommendations from both proxy advisory firms that at least some members, particularly members of the board’s compensation committee, be rejected. The compensation committee members did face a tougher vote than board members outside the committee, however.
The closest vote was for Bruce Chizen, the chairman of the compensation committee, with 2.09 bn shares in favor and 1.53 bn against. George Conrades was next, with 2.16 bn votes in favor and 1.47 bn against, followed by Naomi Seligman, with 2.16 bn shares for and 1.46 bn against. ISS had recommended rejection of all three. If Ellison’s holding is removed, all three received votes against from at least 60 percent of independent shareholders, according to UK shareholder body PIRC.
‘By refusing to address long-standing pay concerns, Oracle directors have failed investors and utterly lost their support,’ said Dieter Waizenegger, executive director of the CtW Investment Group, an Oracle shareholder, in a statement after the vote. ‘Given the extent of investor opposition, Chizen must make room for fresh, independent thinking that can restore investor confidence in the board’s linking of pay with corporate performance and strategy. Any further foot dragging and Oracle risks a real governance crisis that will distract from the Oracle story.’
CtW and other shareholders have been leading a campaign against an ‘extraordinarily top-heavy compensation culture’ at Oracle. They complain that Ellison, the company founder who owns almost 25 percent of the firm’s shares, continues to receive tens of millions of dollars in stock options not warranted by the company’s performance. Oracle lost the say-on-pay vote at its annual shareholder meeting last year as well but did not make the adjustments to its compensation plan demanded by critics.
