Oracle shareholders criticize CEO Larry Ellison's $72-million pay package

They are pressing for a say on compensation at the software maker, whose 29% profit growth last fiscal year trailed the chief executive's 38% pay increase.

Oracle Corp. co-founder Larry Ellison, the fourth-richest man in America, is drawing criticism from some shareholders for a $72-million pay package that is 12 times bigger than the median pay of chief executives in the technology industry.

Ellison, who proposed the 38% raise and won approval from a committee of board members, is now the second-best-paid CEO of a public company in the U.S. He received about $1.7 million less than Merrill Lynch & Co. chief John Thain did in 2007. Oracle's market value is almost three times Merrill's.

Shareholders are pressing for a say on compensation at Redwood City, Calif.-based Oracle, the second-largest computer software maker, whose 29% profit growth last fiscal year trailed Ellison's pay increase. The proposal, by the religious group Marianist Province of the U.S., is winning support from activist shareholders such as the American Federation of State, County and Municipal Employees and the California Public Employees' Retirement System, or CalPERS.

"Ellison's compensation was already sky-high and didn't need to go higher," said Scott Adams, the American Federation's pension and investment analyst in Oakland.

The "say on pay" plan, which goes before investors at an Oct. 10 meeting, could get at least a third of the votes, Adams said. Even though that would fall short of the majority needed to pass, it still would show shareholder concern about Ellison's pay, he said. The American Federation's fund held 73,000 shares of Oracle as of May 15.

Groups filed similar proposals at 92 companies this year, up from 54 in 2007, Adams said. The insurance provider Aflac Inc. and phone carrier Verizon Communications Inc. are among the companies now adding such advisory votes.

The pay for Ellison, 64, doesn't include the $544 million he made last year by exercising stock options. His package was examined and ranked in a study by Graef Crystal, a former executive compensation consultant who is now a columnist for Bloomberg.

Crystal included Ellison's $1-million salary and $10.8-million bonus, plus $1.45 million in "other pay" to cover the cost of items such as his home security system and air travel. The study valued Ellison's options granted during the year at $58.8 million, a more conservative estimate than Oracle's figure, $71.4 million.

Oracle did not respond to requests for comment. In the Aug. 20 filing outlining Ellison's compensation, the software company said he had requested the pay increase, which was approved by compensation committee members Jeffrey S. Berg, Hector Garcia-Molina and Naomi O. Seligman. They cited an "objective of providing incentives for superior performance."

Forbes magazine estimated Ellison's worth at $26 billion in September, putting him behind Bill Gates, Warren E. Buffett and Sheldon Adelson, chief of Las Vegas Sands Corp.

Ellison's stake in the company he co-founded in 1977 accounted for most of that wealth. Gates is chairman of Microsoft Corp., the world's biggest software producer; Buffett is chairman and CEO of Berkshire Hathaway Inc.

Ellison held 1.15 billion Oracle shares as of Feb. 15, more than 22% of the stock outstanding, according to data compiled by Bloomberg. Oracle awarded Ellison an additional 7 million options in fiscal 2008, filings show.

"That kind of package becomes a red flag for investors," said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.

"Would he leave if they didn't give him that much?" Elson asked. Would he work less hard?"

Source: Bloomberg News

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Oracle Tabs New CFO, Reporting To Safra Catz

Jeff Epstein most recently served as CFO of Oberon Media, a privately held Internet game technology provider and publisher. Oracle named a new chief financial officer on Wednesday and said he will report to Co-President Safra Catz, who had held the finance post for three years after two CFOs quit within a year.

Jeff Epstein, 52, will become executive vice president and CFO, effective in September, Oracle (NSDQ: ORCL) said. He most recently served as CFO of Oberon Media, a privately held Internet game technology provider and publisher, and had also worked at DoubleClick, King World Productions and ADVO.

Catz, 46, is co-president of Oracle with Charles Phillips, 49. Both report to Larry Ellison, the 64-year-old software industry icon who has been Oracle's CEO since he founded the company in 1977.

Catz is responsible for Oracle's finances and operations, while Phillips manages the sales and marketing efforts of the world's third-largest software maker.

Benchmark Co analyst Brent Williams said he was not familiar with Epstein, but did not read much into the change since Catz was retaining control of Oracle's finance organization.

"She is staying with the company," Williams said. "You can end up trying to read too much into the tea leaves."

Catz, a former investment banker, has been CFO of Redwood City, California-based Oracle since the November 2005 resignation of Greg Maffei, a former Microsoft executive who unexpectedly left less than five months after joining the software maker.

Catz also served as interim CFO for four months before Maffei was hired, after the resignation of his predecessor, Harry You.

Oracle shares ticked higher following the news to $22.40, after a Nasdaq close of $22.34. (Reporting by Jim Finkle; Editing by Gary Hill)

Source: www.reuters.com

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Microsoft and Oracle databases gain share vs IBM

Sales of business database software made by Microsoft and Oracle are holding up strongly this year after the companies gained share from IBM in 2007, according to market research firm Gartner.

"Microsoft and Oracle continue to make advancements in certain faster-growing areas," Gartner analyst Colleen Graham said in an interview. "IBM continues to struggle."

Sales of Microsoft's database software climbed 16.5 percent to $3.1 billion (1.68 billion pounds) last year, buoyed by growth in Asia and Eastern Europe. The No. 3 player in the market also expanded sales to mid-sized businesses in North America, Graham said.

Microsoft's market share widened to 18.1 percent from 17.6 percent, according to data that Gartner released to Reuters on Tuesday.

Graham said that Microsoft's software is gaining popularity because it generally includes more bells and whistles in basic versions that rival software from Oracle and IBM.

"The product is cheaper," she said.

Sales at Oracle, by far the market leader, rose 14.9 percent in 2007 to $8.3 billion. Its market share grew to 48.6 percent from 47.9 percent.

Oracle's strategy for boosting sales is to introduce new features that it can sell to its broad, existing customer base, an approach that Graham said has paid off.

"Oracle is like a really tricked-out car. You can get all this really great stuff, but you have to pay extra for all the options," Graham said.

While sales at No. 2 player International Business Corp rose 10 percent to $3.5 billion, its market share contracted to 20.7 percent last year from 21.3 percent, according to Gartner.

One factor hampering IBM's growth rate is that customers who buy its database software tend to use the programs on IBM hardware, whose sales are not growing as quickly as the systems that are most often used with databases from Microsoft and Oracle, Graham said.

Microsoft's database, by contrast, is generally used with the software maker's own Windows Server operating system. Oracle's database is typically run on the widely used Linux operating system.

Database sales at the three companies accounted for about 87 percent of the $17.1 billion global market for database software last year, according to Gartner.

Author: (Reporting by Jim Finkle; Editing by Steve Orlofsky) at uk.reuters.com

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