Thursday, October 16, 2008

Does Larry need a new boat?

"In 2008, [Oracle CEO Larry] Ellison's compensation package again included a $1 million base salary, but the value of his exercised and vested options was a staggering $543.8 million."

For 2009, the Oracle board has approved a maximum potential bonus for Ellison of about $13.6 million. Has Oracle's performance justified that kind of compensation? Based on a cursory look at their stock price, it doesn't appear that they are out-performing the market, dropping over 30% of its value from a 52-week high ($23.62 on 8 Aug) to yesterday's close of $16.16 per share, trading at a respectable, but not glamorous, P/E of 14.50. Has their product offering shaken anything up of late? Or are they showing signs of GM-itis... whereby they know there is competition out there, but they believe they have a captive market, and thus just don't care.

Are CIO's starting to push back on annual support fees? And when they do, we can expect that to cut into Oracle's profit margin. And today's small businesses are nearly as tied to traditional infrastructure and closed-source applications. That does not bode well for Oracle's future.

So I come back to the question: what has the CEO of Oracle done to earn over a half-billion dollars?

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