Following the advice of proxy advisory firms Institutional Shareholder Services (ISS) and Egan-Jones, Oracle shareholders voted against the compensation packages of CEO Larry Ellison and other executives at a Thursday shareholder meeting. The advisory firms had previously stated that Oracle executive pay should be aligned with company performance.
At the Thursday shareholder meeting, shareholders also voted in favor of the re-election of all directors, contrary to ISS's prior recommendation. ISS had previously suggested that Oracle investors should block the re-election of Chairman Jeff Henley and seven independent directors, including Bruce Chizen, George Conrades, and Naomi Seligman, to adjust the existing compensation policy. Apart from Henley, the three aforementioned individuals are members of Oracle's Compensation Committee.
Oracle is also embroiled in a dispute with the American labor movement organization Change to Win, which has criticized the high executive compensation of the world's largest database software developer. On October 28, the California State Teachers' Retirement System, the U.K.'s Railway Pension Investments Ltd., and Dutch pension fund PGGM NV separately wrote letters to Oracle shareholders urging them to carefully consider the issue of executive compensation.
The California State Teachers' Retirement System also stated at the time that it would vote against the executive compensation plan and against the re-election of Compensation Committee Chairman Bruce Chizen during the shareholder meeting. This marks the second consecutive year that Oracle shareholders have voted against the executive compensation plan at the shareholder meeting, although this vote is not binding.
Oracle director Michael Boskin said, "We continuously evaluate information and will continue to assess relevant data. We believe we have very good procedures in place that benefit corporate governance."
Slowing Growth
Due to the rapid rise of cloud computing, Oracle's revenue growth rate has begun to slow. Bloomberg data indicates that Oracle expects a 3% increase in revenue for the current fiscal year. Over the past year, Oracle's stock price has risen by 7.9%, underperforming the S&P 500 index's 25% gain over the same period.
At 68 years old, Ellison has a personal fortune of $38.7 billion, ranking eighth on the Bloomberg Billionaires Index. Despite forfeiting his annual bonus in 2013, resulting in an 18% decrease in total compensation, Ellison still earned $78.4 million, making him the highest-paid CEO in America. Last month, Oracle projected that net profit for the current quarter would fall below market expectations.
The investment firm CtW Investment Group hopes Oracle appoints a new director to oversee executive compensation and opposes the use of stock options to pay Ellison and other executives. As of October 3, Ellison held 24.4% of Oracle's shares, making it more challenging for other shareholders to vote against the company's directors and compensation plans.
To date, Oracle spokesperson Deborah Hellinger has not commented on the shareholders' vote against executive compensation.