DEF 14A 1 d755300ddef14a.htm DEFINITIVE PROXY STATEMENT Definitive Proxy Statement
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

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Table of Contents

LOGO

 

 

LOGO

September 27, 2019

To our Stockholders:

You are cordially invited to attend the 2019 Annual Meeting of Stockholders of Oracle Corporation. Our Annual Meeting will be held on Tuesday, November 19, 2019, at 10:00 a.m., Pacific Time, in the Oracle Conference Center, located at 350 Oracle Parkway, Redwood City, California.

We describe in detail the actions we expect to take at the Annual Meeting in the following Notice of 2019 Annual Meeting of Stockholders and proxy statement. We have also made available a copy of our Annual Report on Form 10-K for fiscal 2019. We encourage you to read the Form 10-K, which includes information on our operations, products and services, as well as our audited financial statements.

This year, we will again be using the “Notice and Access” method of providing proxy materials to stockholders via the Internet. We believe that this process provides stockholders with a convenient and quick way to access the proxy materials and vote, while allowing us to conserve natural resources and reduce the costs of printing and distributing the proxy materials. We will mail to most of our stockholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy statement and the Form 10-K and vote electronically via the Internet. This notice will also contain instructions on how to receive a paper copy of the proxy materials. All stockholders who are not sent a notice will be sent a paper copy of the proxy materials by mail or an electronic copy of the proxy materials by email. See “Questions and Answers about the Annual Meeting” beginning on page 66 for more information.

Please use this opportunity to take part in our corporate affairs by voting your shares on the business to come before this meeting. Whether or not you plan to attend the meeting, please vote electronically via the Internet or by telephone, or, if you requested paper copies of the proxy materials, please complete, sign, date and return the accompanying proxy card or voting instruction card in the enclosed postage-paid envelope. See “How Do I Vote?” on page 5 of the proxy statement for more details. Voting electronically, by telephone or by returning your proxy card does NOT deprive you of your right to attend the meeting and to vote your shares in person for the matters acted upon at the meeting. If you cannot attend the meeting in person, we invite you to listen to the meeting via audio webcast by going to www.oracle.com/investor.

 

 

Sincerely,

 

LOGO

 

Lawrence J. Ellison

Chairman and Chief Technology Officer

  

 




Table of Contents

 

LOGO

500 Oracle Parkway

Redwood City, California 94065

 

NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS

 

 

TIME AND DATE

 

10:00 a.m., Pacific Time, on Tuesday, November 19, 2019

PLACE

 

Oracle Conference Center

350 Oracle Parkway

Redwood City, California 94065

LIVE AUDIO WEBCAST

 

Available on our website at www.oracle.com/investor, starting at 10:00 a.m., Pacific Time, on Tuesday, November 19, 2019

ITEMS OF BUSINESS

 

(1)

  

To elect 15 director nominees to serve on the Board of Directors until our 2020 Annual Meeting of Stockholders.

 

(2)

  

To hold an advisory vote to approve the compensation of our named executive officers.

 

(3)

  

To ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for fiscal 2020.

 

(4)

  

To consider and act on two stockholder proposals, if properly presented at the Annual Meeting.

 

(5)

  

To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof.

RECORD DATE

 

September 20, 2019

PROXY VOTING

 

It is important that your shares be represented and voted at the Annual Meeting. You can vote your shares electronically via the Internet, by telephone or by completing and returning the proxy card or voting instruction card if you requested paper proxy materials. Voting instructions are provided in the Notice of Internet Availability of Proxy Materials, or, if you requested printed materials, the instructions are printed on your proxy card and included in the accompanying proxy statement. You can revoke a proxy at any time prior to its exercise at the Annual Meeting by following the instructions in the proxy statement.

MEETING ADMISSION

 

You are entitled to attend the Annual Meeting only if you are a stockholder as of the close of business on September 20, 2019, the record date, or hold a valid proxy for the meeting. In order to be admitted to the Annual Meeting, you must present proof of ownership of Oracle common stock on the record date. This can be a brokerage statement or letter from a bank or broker indicating ownership on September 20, 2019, the Notice of Internet Availability of Proxy Materials, a proxy card, or legal proxy or voting instruction card provided by your broker, bank or nominee. Any holder of a proxy from a stockholder must present the proxy card, properly executed, and a copy of the proof of ownership. Stockholders and proxy holders must also present a form of photo identification such as a driver’s license or passport. We will be unable to admit anyone who does not present identification or refuses to comply with our security procedures.

 

LOGO

 

Brian S. Higgins

Vice President, Associate General Counsel and Secretary

September 27, 2019

 




Table of Contents

TABLE OF CONTENTS

 

Proxy Statement Summary

     1  

How Do I Vote?

     5  

Board of Directors

     6  

Nominees for Directors

     6  

Board Meetings

     12  

Committees, Membership and Meetings

     12  

Director Compensation

     15  

Corporate Governance

     18  

Corporate Governance Guidelines

     18  

Proxy Access and Director Nominations

     19  

Majority Voting Policy

     19  

Prohibition on Speculative Transactions and Pledging Policy

     20  

Board and Committee Performance Evaluations

     20  

Stock Ownership Guidelines for Directors and Senior Officers

     21  

Board Leadership Structure

     21  

Board’s Role in Risk Oversight

     22  

Board of Directors and Director Independence

     22  

Director Tenure, Board Refreshment and Diversity

     23  

Stockholder Outreach

     24  

Communications with the Board

     24  

Employee Matters

     24  

Security Ownership of Certain Beneficial Owners and Management

     25  

Delinquent Section 16(a) Reports

     27  

Executive Compensation

     28  

Compensation Discussion and Analysis

     28  

Report of the Compensation Committee of the Board of Directors

     43  

Fiscal 2019 Summary Compensation Table

     44  

Grants of Plan-Based Awards During Fiscal 2019

     46  

Outstanding Equity Awards at 2019 Fiscal Year-End

     47  

Option Exercises and Stock Vested During Fiscal 2019

     48  

Fiscal 2019 Non-Qualified Deferred Compensation

     49  

Potential Payments Upon Termination or Change in Control

     50  

Equity Compensation Plan Information

     51  

CEO Pay Ratio

     52  

Transactions with Related Persons

     52  

Legal Proceedings

     54  

Management Proposals

     55  

Proposal No. 1: Election of Directors

     55  

Proposal  No. 2: Advisory Vote to Approve the Compensation of our Named Executive Officers

     56  

Proposal  No. 3: Ratification of Selection of Independent Registered Public Accounting Firm

     58  

Report of the Finance and Audit Committee of the Board of Directors

     59  

Stockholder Proposals

     60  

Proposal No. 4: Stockholder Proposal Regarding Pay Equity Report

     60  

Proposal No. 5: Stockholder Proposal Regarding Independent Board Chair

     62  

Stockholder Proposals for the 2020 Annual Meeting

     65  

Questions and Answers about the Annual Meeting

     66  

No Incorporation by Reference

     71  

Other Business

     71  

Householding

     71  

 

2019 Annual Meeting of Stockholders   LOGO


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PROXY STATEMENT SUMMARY

This summary highlights information contained elsewhere in this Proxy Statement. For more complete information about these topics, please review our Annual Report on Form 10-K for fiscal 2019 and the contents of this Proxy Statement. Fiscal 2019 began on June 1, 2018 and ended on May 31, 2019. Fiscal 2020 began on June 1, 2019 and ends on May 31, 2020.

The Notice of Internet Availability of Proxy Materials, this Proxy Statement and the accompanying proxy card or voting instruction card, including an Internet link to our Annual Report on Form 10-K for fiscal 2019, were first made available to stockholders on or about September 27, 2019.

2019 Annual Meeting of Stockholders

 

 

Date and Time

Tuesday, November 19, 2019

10:00 a.m., Pacific Time

 

Place

Oracle Conference Center

350 Oracle Parkway

Redwood City, CA 94065

 

Record Date

September 20, 2019

 

Live Audio Webcast

Available on our website at www.oracle.com/investor, starting at 10:00 a.m., Pacific Time, on Tuesday, November 19, 2019

 

Attendance

You are entitled to attend the Annual Meeting only if you are a stockholder as of the close of business on September 20, 2019, or hold a valid proxy for the meeting. If you plan to attend the Annual Meeting, you will need to provide photo identification, such as a driver’s license or passport, and proof of ownership of Oracle common stock as of September 20, 2019 in order to be admitted to the Annual Meeting. We will be unable to admit anyone who does not present identification or refuses to comply with our security procedures.

 

Voting Roadmap

 

  Agenda Item

 

Board Recommendation

   Page  

    Election of 15 directors

  For Each Nominee      55      

    Advisory vote to approve the compensation of our named executive officers (NEOs)

  For      56      

    Ratification of selection of Ernst & Young LLP as our independent registered public accounting firm for fiscal 2020

  For      58      

    Stockholder proposals

 

  Against

 

    

 

60    

 

 

 

Corporate Governance Highlights

 

   

   LOGO

   Ongoing Board refreshment: 1 new independent director added in 2019, for a total of 5 directors added in the last 6 fiscal years

   LOGO

   Single class of voting stock and no supermajority voting provisions

   LOGO

   Pledging policy adopted in January 2018 with quarterly risk reviews

   LOGO

   Majority of independent directors (10 out of 15) and 100% independent Board committees

   LOGO

   33% of Board members are women or come from a diverse background

   LOGO

   Active stockholder outreach and engagement program

   LOGO

   Annual director elections

   LOGO

   Director majority voting policy

   LOGO

  

Separate Board Chair and Chief Executive Officer (CEO) roles

   LOGO

  

Lead independent director

   LOGO

  

Stockholder proxy access right

   LOGO

  

Annual Board and committee performance evaluations, including individual director interviews

   LOGO

  

Robust director and senior officer stock ownership guidelines

   LOGO

  

Anti-hedging policy applicable to all employees and directors

   LOGO

  

Stockholders representing at least 20% of the outstanding votes have the right to call a special meeting

   LOGO

 

  

Stockholder right to act by written consent



 

2019 Annual Meeting of Stockholders   LOGO   1


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Director Nominees

In Proposal No. 1, we are asking you to vote FOR each of the 15 director nominees listed below. Each director attended at least 75% of all Board meetings and applicable committee meetings during fiscal 2019.

 

  Nominee   Age   Director
Since
  Independent   Current Committees

Jeffrey S. Berg

Chairman of Northside Services, LLC; Former Chairman and CEO, International Creative Management, Inc.

  72   1997  

 

LOGO

 

   Independence (Chair)

   Finance and Audit

   Governance

Michael J. Boskin

Tully M. Friedman Professor of Economics and Wohlford Family Hoover Institution Senior Fellow, Stanford University

  73   1994  

 

LOGO

 

   Finance and Audit (Chair)

Safra A. Catz

CEO, Oracle Corporation

  57   2001  

 

 

 

Bruce R. Chizen*

Senior Adviser to Permira Advisers LLP; Venture Partner, Voyager Capital; Former CEO, Adobe Systems Incorporated

  64   2008  

 

LOGO

 

   Governance (Chair)

   Finance and Audit

George H. Conrades

Executive Advisor and Former Chairman and CEO, Akamai Technologies, Inc.; Managing Partner, Longfellow Venture Partners

  80   2008  

 

LOGO

 

   Compensation (Chair)

   Independence

Lawrence J. Ellison

Chairman, Chief Technology Officer (CTO) and Founder, Oracle Corporation

  75   1977  

 

 

 

Rona A. Fairhead

Former Minister of State, U.K. Department for International Trade; Former Chair of the BBC Trust; Former CEO, Financial Times Group

  58   2019  

 

LOGO

 

 

Hector Garcia-Molina

Leonard Bosack and Sandra Lerner Professor (Emeritus), Departments of Computer Science and Electrical Engineering, Stanford University

  65   2001  

 

LOGO

 

   Independence

Jeffrey O. Henley

Vice Chairman of the Board, Oracle Corporation

  74   1995  

 

 

 

Mark V. Hurd

CEO, Oracle Corporation

  62   2010  

 

 

 

Renée J. James

Chairman and CEO, Ampere Computing LLC; Operating Executive, The Carlyle Group; Former President, Intel Corporation

  55   2015  

 

 

 

Charles W. Moorman IV

Senior Advisor and Former CEO of Amtrak; Former CEO of Norfolk Southern Corporation

  67   2018  

 

LOGO

 

   Compensation

Leon E. Panetta

Co-founder and Chairman, Panetta Institute for Public Policy; Former U.S. Secretary of Defense; Former Director of the Central Intelligence Agency

  81   2015  

 

LOGO

 

   Compensation

   Governance

William G. Parrett

Former CEO of Deloitte Touche Tohmatsu

  74   2018  

 

LOGO

 

   Finance and Audit

Naomi O. Seligman

Senior Partner, Ostriker von Simson, Inc.

  81   2005  

 

LOGO

 

   Compensation (Vice Chair)

                 

 

*

Current lead independent director. See “Corporate Governance—Board Leadership Structure” on page 21 for more information.



 

2   LOGO   2019 Annual Meeting of Stockholders


Table of Contents

Stockholder Outreach and Board Responsiveness

We have a long tradition of engaging with our stockholders to solicit their views on a wide variety of issues, including corporate governance, environmental and social matters, executive compensation and other issues.

Independent Director Engagement. On a regular basis, certain of our independent directors hold meetings with our stockholders. The Board believes these meetings are important because they foster a relationship of accountability between the Board and our stockholders and help us better understand and respond to our stockholders’ priorities and perspectives. Thus far in fiscal 2020, members of the Compensation Committee held meetings with eight institutional stockholders representing approximately 16% of our outstanding unaffiliated shares.

Executive Director Engagement. As part of our regular Investor Relations engagement program, our executive directors hold meetings with a number of our institutional stockholders throughout the year. We also hold an annual financial analyst meeting at Oracle OpenWorld in San Francisco where analysts are invited to hear presentations from key members of our management team, including our executive directors. In fiscal 2019, our executive directors held meetings with stockholders representing approximately 29% of our outstanding unaffiliated shares (all percentages above calculated based on data available as of June 30, 2019).

Board Responsiveness. Below is a summary of the Board’s response to recent feedback received from investors.

 

     

What We Heard

     

 

   The Board’s Response

Add directors to the Board to maintain a mix of new and longer-tenured directors, and focus on recruiting diverse director candidates

  

 

LOGO

  

Board Refreshment and Diversity

 

The Board elected Mrs. Fairhead in July 2019 and has added a total of five new directors in the past six fiscal years. Presently, 33% of our Board members are women or come from a diverse background (four of our 15 Board members are women, including one of our CEOs).

 

The Governance Committee continues to consider potential director candidates on an ongoing basis. The Board’s Corporate Governance Guidelines affirm that the Governance Committee, acting on behalf of the Board, is committed to actively seeking women and minority candidates for the pool from which director candidates are selected.

 

Compensation for top executives should be reduced

  

 

LOGO

  

No Equity Awards Granted to Top Three Executives in Fiscal 2019

 

In fiscal 2019, Mr. Ellison, Ms. Catz and Mr. Hurd received no equity awards. Consequently, the total compensation for each of these executives reported in our Summary Compensation Table on page 44, in the aggregate, decreased by approximately 98% in fiscal 2019 compared to fiscal 2018.

 

Key executives should receive performance-based equity with performance metrics that align with stockholder value

  

 

LOGO

  

100% Performance-Based Equity Granted to Top Three Executives in Fiscal 2018

 

In fiscal 2018, Mr. Ellison, Ms. Catz and Mr. Hurd each received an equity award consisting entirely of performance-based stock options (PSOs) that may be earned only upon the attainment of rigorous stock price, market capitalization and operational performance goals over a five-year performance period. As noted above, no new equity awards were granted to these executives in fiscal 2019.

 

Six of the seven PSO tranches may be earned only if Oracle satisfies a combination of (1) an operational performance goal tied to significant growth of Oracle’s cloud business and (2) a substantial increase in Oracle’s market capitalization. The seventh PSO tranche may be earned only upon significant growth in Oracle’s stock price.

 

Due to the rigor and long-term nature of the PSO goals, none were achieved in fiscal 2018 or 2019, and thus no tranches of the PSOs have been earned to date.

 

When the grant date fair value of the PSOs is annualized over the five-year performance period, it represents a 47% decrease from the value of the fiscal 2017 equity awards granted to each of Mr. Ellison, Ms. Catz and Mr. Hurd. See page 29 for details on the PSOs.

 



 

2019 Annual Meeting of Stockholders   LOGO   3


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Executive Compensation Highlights

 

  No tranches of the PSOs granted to Mr. Ellison, Ms. Catz and Mr. Hurd in fiscal 2018 have been earned, due to the rigor and long-term nature of the PSO goals.

 

  Total compensation for Mr. Ellison, Ms. Catz and Mr. Hurd, in the aggregate, decreased by approximately 98% in fiscal 2019 compared to fiscal 2018 (as reported in the Summary Compensation Table (SCT) on page 44). In fiscal 2019, for these named executive officers (NEOs):

 

  Base salaries remained unchanged;

 

  No bonuses were earned; and

 

  No equity awards were granted.

 

  In the aggregate, approximately 95.2% of the total compensation reported in the SCT in fiscal 2019 for all other NEOs (Mr. Screven, Ms. Daley and Mr. Henley) was at-risk. The total compensation mix for these NEOs is heavily weighted toward equity-based awards, thus aligning their compensation with the interests of our stockholders.

     

 

Fiscal 2019 Named Executive Officers (NEOs)

 

  Lawrence J. Ellison, Chairman and CTO*

 

  Safra A. Catz, CEO

 

  Mark V. Hurd, CEO

 

  Edward Screven, Executive Vice President, Chief Corporate Architect

 

  Dorian E. Daley, Executive Vice President and General Counsel

 

  Jeffrey O. Henley, Vice Chairman

 

*  We have included Mr. Ellison as an NEO for fiscal 2019 on a voluntary basis in the interest of transparency. See page 44 for additional information.

   

 

 

 

Fiscal 2019 Compensation

Mr. Ellison, Ms. Catz and Mr. Hurd

 

Below is an excerpt of our fiscal 2019 SCT showing the total compensation for Mr. Ellison, Ms. Catz and Mr. Hurd. See page 44 for the full SCT and related footnotes.

 

 

 

 

 

 

Fiscal 2019 Compensation

Mr. Screven, Ms. Daley and Mr. Henley

 

LOGO

 
     Name  

Fiscal
Year

 

   

Salary
($)

 

   

All Other
Compensation ($)

 

   

Total ($)

 

        
 

 Lawrence J. Ellison

 

 

2019

 

 

 

1

 

 

 

1,662,827        

 

 

 

1,662,828

 

    
 

 Safra A. Catz

 

 

2019

 

 

 

950,000

 

 

 

15,981        

 

 

 

965,981

 

    
 

 Mark V. Hurd

 

 

2019

 

 

 

950,000

 

 

 

1,531,646        

 

 

 

2,481,646

 

    
                  

Compensation Best Practices

 

LOGO Best Practices We Employ

 

LOGO    High proportion of compensation for our most senior executives is performance-based and at-risk

 

LOGO    Caps on maximum payout of bonuses and performance-based equity awards

 

LOGO    Robust stock ownership guidelines

 

LOGO    Disciplined dilution rates from equity awards

 

LOGO    Compensation recovery (clawback) policy for cash bonuses in the event of a financial restatement

 

LOGO    Annual risk assessment of compensation programs

 

LOGO    Independent compensation consultant and independent compensation committee

 

LOGO    Anti-hedging policy applicable to all employees and directors

 

   

LOGO Practices We Avoid

 

LOGO  No severance benefit arrangements except as provided under our equity incentive plan to employees generally or as required by law

 

LOGO  No single-trigger change in control vesting of equity awards

 

LOGO  No change in control acceleration of performance-based cash bonuses

 

LOGO  No minimum guaranteed vesting for performance-based equity awards

 

LOGO  No discretionary cash bonuses for CEOs and CTO

 

LOGO  No tax gross-ups for NEOs

 

LOGO  No payout or settlement of dividends or dividend equivalents on unvested equity awards

 

LOGO  No supplemental executive retirement plans, executive pensions or excessive retirement benefits

 

LOGO  No repricing, cash-out or exchange of “underwater” stock options without stockholder approval



 

4   LOGO   2019 Annual Meeting of Stockholders


Table of Contents

LOGO

PROXY STATEMENT

We are providing these proxy materials in connection with Oracle Corporation’s 2019 Annual Meeting of Stockholders (the Annual Meeting). The Notice of Internet Availability of Proxy Materials (the Notice), this proxy statement and the accompanying proxy card or voting instruction card, including an Internet link to our most recently filed Annual Report on Form 10-K, were first made available to stockholders on or about September 27, 2019. This proxy statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. Please read it carefully.

HOW DO I VOTE?

 

Your vote is important. You may vote on the Internet, by telephone, by mail or by attending the Annual Meeting and voting by ballot, all as described below. The Internet and telephone voting procedures are designed to authenticate stockholders by use of a control number and to allow you to confirm that your instructions have been properly recorded. If you vote by telephone or on the Internet, you do not need to return your proxy card or voting instruction card. Telephone and Internet voting facilities are available now and will be available 24 hours a day until 11:59 p.m., Eastern Time, on November 18, 2019.

Vote on the Internet

If you are a stockholder of record, you may submit your proxy by going to www.voteproxy.com and following the instructions provided in the Notice. If you requested printed proxy materials, you may follow the instructions provided with your proxy materials and on your proxy card. If your shares are held with a broker, you will need to go to the website provided on your Notice or voting instruction card. Have your Notice, proxy card or voting instruction card in hand when you access the voting website. On the Internet voting site, you can confirm that your instructions have been properly recorded. If you vote on the Internet, you can also request electronic delivery of future proxy materials.

Vote by Telephone

If you are a stockholder of record, you can also vote by telephone by dialing 1-800-PROXIES (1-800-776-9437) or 1-718-921-8500. If your shares are held with a broker, you can vote by telephone by dialing the number specified on your voting instruction card. Easy-to-follow voice prompts will allow you to vote your shares and confirm that your instructions have been properly recorded. Have your proxy card or voting instruction card in hand when you call.

Vote by Mail

If you have requested printed proxy materials, you may choose to vote by mail, by marking your proxy card or voting instruction card, dating and signing it, and returning it in the postage-paid envelope provided. If the envelope is missing and you are a stockholder of record, please mail your completed proxy card to American Stock Transfer & Trust Company, LLC, 6201 15th Avenue, Brooklyn, New York 11219. If the envelope is missing and your shares are held with a broker, please mail your completed voting instruction card to the address specified therein. Please allow sufficient time for mailing if you decide to vote by mail.

Please note that if you received a Notice, you cannot vote by marking the Notice and returning it. The Notice provides instructions on how to vote by Internet and how to request paper copies of the proxy materials.

Voting at the Annual Meeting

The method or timing of your vote will not limit your right to vote at the Annual Meeting if you attend the Annual Meeting and vote in person. However, if your shares are held in the name of a bank, broker or other nominee, you must obtain a legal proxy, executed in your favor, from the holder of record to be able to vote at the Annual Meeting. You should allow yourself enough time prior to the Annual Meeting to obtain this proxy from the holder of record.

The shares voted electronically, telephonically, or represented by the proxy cards received, properly marked, dated, signed and not revoked, will be voted at the Annual Meeting.

 

2019 Annual Meeting of Stockholders   LOGO   5


Table of Contents

BOARD OF DIRECTORS

 

Nominees for Directors

Our Board of Directors (the Board) consists of 15 directors, 14 of whom stood for election at our last annual meeting of stockholders. The Board unanimously elected Rona A. Fairhead as a director effective as of July 31, 2019, and Mrs. Fairhead will stand for election at the Annual Meeting along with our other 14 directors. Mrs. Fairhead was identified as a potential director by the Nomination and Governance Committee (the Governance Committee).

Director Qualifications

Our Corporate Governance Guidelines (described in “Corporate Governance—Corporate Governance Guidelines” on page 18) contain Board membership qualifications that apply to Board nominees recommended by the Governance Committee. The Governance Committee strives for a mix of skills, experience and perspectives that will help create an outstanding, dynamic and effective Board. In selecting nominees, the Governance Committee assesses the independence, character and acumen of candidates and endeavors to collectively establish areas of core competency of the Board, including, among others, industry and technical knowledge and experience; management, accounting and finance expertise; and demonstrated business judgment, leadership and strategic vision. The Governance Committee values a diversity of backgrounds, experience, perspectives and leadership in different fields when identifying nominees. As noted in our Corporate Governance Guidelines, the Governance Committee is committed to actively seeking women and minority candidates for the pool from which director candidates are chosen.

The Governance Committee also takes director tenure into consideration when making director nomination decisions and believes that it is desirable to maintain a mix of longer-tenured, experienced directors and newer directors with fresh perspectives. The Governance Committee and the Board also believe that longer-tenured, experienced directors are a significant strength of the Board, given the large size of our company, the breadth of our product offerings and the international scope of our organization. See “Corporate Governance—Director Tenure, Board Refreshment and Diversity” on page 23 for more information.

Below we identify the key experiences, qualifications and skills our director nominees bring to the Board and that the Board considers important in light of Oracle’s businesses and industry.

 

   

Industry Knowledge and Experience. We seek to have directors with experience as executives or directors or in other leadership positions in the particular technology industries in which we compete because our success depends on developing and investing in innovative products and technologies. This experience is critical to the Board’s ability to understand our products and business, assess our competitive position within the technology industry and the strengths and weaknesses of our competitors, maintain awareness of technology trends and innovations, and evaluate potential acquisitions and our acquisition strategy.

 

   

Management, Accounting and Finance Expertise. We believe that an understanding of management practices, accounting and finance processes is important for our directors. We value management experience in our directors as it provides a practical understanding of organizations, processes, strategies, risk management and the methods to drive change and growth that permit the Board to, among other things, identify and recommend improvements to our business operations, sales and marketing approaches and product strategy. We also seek to have at least one independent director who qualifies as an audit committee financial expert, and we expect all of our directors to be financially knowledgeable.

 

   

Business Judgment, Leadership and Strategic Vision. We believe that directors with experience in significant leadership positions are commonly required to demonstrate excellent business judgment, leadership skills and strategic vision. We seek directors with these characteristics as they bring important insights to Board deliberations and processes.

The Board evaluates its own composition in the context of the diverse experiences and perspectives that the directors collectively bring to the boardroom. Their backgrounds provide the Board with vital insights in areas such as:

 

 

Finance and

Accounting

 

 

 

Technology

Industry

 

 

 

Cybersecurity and

Risk Management

 

 

 

Mergers and

Acquisitions

 

 

Operation of

Global Organizations

 

 

 

Computer

Science

 

 

 

Governmental Affairs

and Regulation

 

 

 

Strategic

Transformation

 

 

International Tax and

Monetary Policy

 

 

 

Intellectual

Property

 

 

 

Executive Leadership and

Talent Development

 

 

 

Customer

Perspective

 

 

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The experiences, qualifications and skills of each director that the Board considered in his or her nomination are included below the directors’ individual biographies on the following pages. The Board concluded that each nominee should serve as a director based on the specific experience and attributes listed below and the direct personal knowledge of each nominee’s previous service on the Board, including the insight and collegiality each nominee brings to the Board’s functions and deliberations. The age of each director is provided as of September 20, 2019, the record date for the Annual Meeting.

 

       

Jeffrey S. Berg

               

 

Independent Director

 

Age: 72

Director since 1997

 

Board Committees:

Independence (Chair),

Finance and Audit,

Governance

   

 

Mr. Berg has been an agent in the entertainment industry for over 40 years. Mr. Berg has served as Chairman of Northside Services, LLC, a media and entertainment advisory firm, since May 2015. Mr. Berg was Chairman of Resolution, a talent and literary agency he founded, from January 2013 until April 2015. Between 1985 and 2012, he was the Chairman and CEO of International Creative Management, Inc. (ICM), a talent agency for the entertainment industry. He has served as Co-Chair of California’s Council on Information Technology and was President of the Executive Board of the College of Letters and Sciences at the University of California at Berkeley. He previously served on the Board of Trustees of the Anderson School of Management at the University of California at Los Angeles.

 

Qualifications:    As the former CEO of ICM, Mr. Berg brings to the Board over 25 years of leadership experience running one of the world’s preeminent full service talent agencies in the entertainment industry. Mr. Berg’s prior experience as CEO and as a representative of some of the world’s most well-known celebrities offers the Board a unique perspective with respect to managing a global brand in rapidly changing industries and in management, compensation and operational matters.

   
       

 

       

Michael J. Boskin

               

 

Independent Director

 

Age: 73

Director since 1994

 

Board Committees:

Finance and Audit (Chair)

   

 

Dr. Boskin is the Tully M. Friedman Professor of Economics and Wohlford Family Hoover Institution Senior Fellow at Stanford University, where he has been on the faculty since 1971. He is CEO and President of Boskin & Co., Inc., a consulting firm. He was Chairman of the President’s Council of Economic Advisers from February 1989 until January 1993. Dr. Boskin previously served as a director of Exxon Mobil Corporation.

 

Qualifications:    Dr. Boskin is recognized internationally for his research on world economic growth, tax and budget theory and policy, U.S. saving and consumption patterns and the implications of changing technology and demography on capital, labor, and product markets. He brings to the Board significant economic and financial expertise and provides a unique perspective on a number of challenges faced by Oracle due to its global operations, including, for example, questions regarding international tax and monetary policy, treasury functions, currency exposure and general economic and labor trends and risks. In addition, Dr. Boskin’s experience as CEO of his consultancy firm and as a director of another large, complex global organization provides the Board with important perspectives in its evaluation of Oracle’s practices and processes.

   
       

 

       

Safra A. Catz

               

 

Chief Executive Officer

 

Age: 57

Director since 2001

   

 

Ms. Catz has been our CEO since September 2014. She served as our President from January 2004 to September 2014 and as our Chief Financial Officer (CFO) most recently from April 2011 until September 2014. Ms. Catz was previously our CFO from November 2005 until September 2008 and our Interim CFO from April 2005 until July 2005. Prior to being named President, she held various other positions with us since joining Oracle in 1999. Ms. Catz is currently a director of The Walt Disney Company and previously served as a director of HSBC Holdings plc. She also serves on the U.S. National Security Commission on Artificial Intelligence.

 

Qualifications:    In her current role at Oracle, Ms. Catz is primarily responsible for all operations at Oracle other than product development, sales and marketing, consulting, support and Oracle’s industry-specific global business units. Ms. Catz also leads the execution of our acquisition strategy and integration of acquired companies and products. Our Board benefits from Ms. Catz’s many years with Oracle and her unique expertise regarding Oracle’s strategic vision, management and operations. Prior to joining Oracle, Ms. Catz developed deep technology industry experience as a managing director with the investment banking firm Donaldson, Lufkin & Jenrette from 1986 to 1999 covering the technology industry. With this experience, Ms. Catz brings valuable insight regarding the technology industry generally, and in particular in the execution of our acquisition strategy. In addition, Ms. Catz’s service as a director of other large, complex global organizations provides the Board with important perspectives in its evaluation of Oracle’s practices and processes.

   
       


 

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Bruce R. Chizen

               

 

Independent Director

 

Age: 64

Director since 2008

 

Board Committees:

Governance (Chair),

Finance and Audit

   

 

Mr. Chizen is currently an independent consultant and has served as Senior Adviser to Permira Advisers LLP (Permira), a private equity firm, since July 2008, and as a Venture Partner at Voyager Capital, a venture capital firm, since August 2009. He has also served as an Operating Partner for Permira Growth Opportunities, a private equity fund, since June 2018. From 1994 to 2008, Mr. Chizen served in a number of positions at Adobe Systems Incorporated (Adobe), a provider of design, imaging and publishing software, including CEO (2000 to 2007), President (2000 to 2005), acting CFO (2006 to 2007) and strategic adviser (2007 to 2008). Mr. Chizen currently serves as a director of Synopsys, Inc.

 

Qualifications:    As the former CEO of Adobe, Mr. Chizen brings to the Board first-hand experience in successfully leading and managing a large, complex global organization in the technology industry. In particular, Mr. Chizen’s experience in heading the extension of Adobe’s product leadership provides the Board with perspectives applicable to challenges faced by Oracle. In addition, Mr. Chizen’s current roles at Permira and Voyager Capital require him to be very familiar with companies driven by information technology or intellectual property, which allows him to provide the Board with valuable insights in its deliberations regarding Oracle’s acquisition and product strategies. The Board also benefits from Mr. Chizen’s financial expertise and significant audit and financial reporting knowledge, including his experience as the former acting CFO of Adobe. Mr. Chizen’s service as a director of a large, complex global organization, as well as smaller private companies, provides the Board with important perspectives in its evaluation of Oracle’s practices and processes.

   
       

 

       

George H. Conrades

               

 

Independent Director

 

Age: 80

Director since 2008

 

Board Committees:

Compensation (Chair),

Independence

   

 

Mr. Conrades has served as an Executive Advisor to Akamai Technologies, Inc. (Akamai), a content delivery network services provider for media and software delivery and cloud security solutions, since June 2018. He previously served as Akamai’s CEO from 1999 to 2005 and Chairman from 1999 to March 2018. Mr. Conrades currently serves as Managing Partner at Longfellow Venture Partners, a private venture fund advising and investing in early stage healthcare and technology companies. He also served as a Venture Partner at Polaris Venture Partners, an early stage investment company, from 1998 to 2012 and is currently Partner Emeritus. Mr. Conrades currently serves as a director of Cyclerion, Inc. and previously served as a director of Akamai Technologies, Inc., Ironwood Pharmaceuticals, Inc. and Harley-Davidson, Inc.

 

Qualifications:    As the former CEO of Akamai, Mr. Conrades brings to the Board first-hand experience in successfully leading and managing a large, complex global organization in the technology industry. Mr. Conrades’ experience provides the Board with a perspective applicable to challenges faced by Oracle. In addition, Mr. Conrades’ current role at Longfellow Venture Partners requires him to be very familiar with growth companies, including those driven by information technology or intellectual property, which allows him to provide the Board with valuable insights in its deliberations regarding Oracle’s acquisition and product strategies. Mr. Conrades’ service as a director of large, complex global organizations, as well as smaller private companies, provides the Board with important perspectives in its evaluation of Oracle’s practices and processes.

   
       

 

       

Lawrence J. Ellison

               

 

Chairman, Chief Technology
Officer and Founder

 

Age: 75

Director since 1977

   

 

Mr. Ellison has been our Chairman of the Board and CTO since September 2014. Mr. Ellison served as our CEO from June 1977, when he founded Oracle, until September 2014. He previously served as our Chairman of the Board from May 1995 to January 2004. Mr. Ellison currently serves as a director of Tesla, Inc.

 

Qualifications:    Mr. Ellison is Oracle’s founder and served as our CEO since we commenced operations in June 1977 through September 2014. He is widely regarded as a technology visionary and one of the world’s most successful business executives. Mr. Ellison’s familiarity with and knowledge of our technologies and product offerings are unmatched. He continues to lead and oversee our product engineering, technology development and strategy. For over 40 years he has successfully steered Oracle in new strategic directions in order to adapt to and stay ahead of our competition and changing industry trends. Mr. Ellison is our largest stockholder, beneficially owning approximately 35.4% of the outstanding shares of our common stock, directly aligning his interests with those of our stockholders.

   
       


 

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Rona A. Fairhead

               

 

Independent Director

 

Age: 58

Director since 2019

   

 

Mrs. Fairhead served as Minister of State for Trade and Export Promotion, Department of International Trade in the United Kingdom from September 2017 to May 2019. She previously served as Chair of the British Broadcasting Corporation (BBC) Trust from October 2014 to April 2017. From 2006 to 2013, Mrs. Fairhead was Chair and CEO of the Financial Times Group Limited, which was a division of Pearson plc, and, prior to that, she served as Pearson plc’s CFO. Before joining Pearson plc, Mrs. Fairhead held a variety of leadership positions at Bombardier Inc. and Imperial Chemical Industries plc. Mrs. Fairhead previously served as a director of Pearson plc, HSBC Holdings plc and PepsiCo, Inc.

 

Qualifications:    Mrs.  Fairhead brings to the Board extensive international experience in finance, risk management and global operations gained from her leadership roles at the BBC Trust, the Financial Times Group, Pearson plc and other multinational companies. She also contributes significant expertise in government affairs from her experience as the U.K. Minister of State for Trade and Export Promotion. Mrs. Fairhead also offers her valuable perspectives on risk management resulting from her experiences serving as chair of the risk committee and financial system vulnerabilities committee of HSBC Holdings plc and as chair of the U.K. Government’s Cabinet Office Audit and Risk Committee. In addition, Mrs. Fairhead brings to the Board global marketplace insights and customer perspectives developed through her service on the boards of directors at multinational public companies across multiple industries.

   
       

 

       

Hector Garcia-Molina

               

 

Independent Director

 

Age: 65

Director since 2001

 

Board Committees:

Independence

   

 

Mr. Garcia-Molina has been the Leonard Bosack and Sandra Lerner Professor in the Departments of Computer Science and Electrical Engineering at Stanford University since October 1995 and served as Chairman of the Department of Computer Science from January 2001 to December 2004. He has been a professor at Stanford University since January 1992 and a professor emeritus since January 2018. From August 1994 until December 1997, he was the Director of the Computer Systems Laboratory at Stanford University.

 

Qualifications:    Widely regarded as an expert in computer science, Mr. Garcia-Molina brings to the Board significant technical expertise in the fields of computer science, generally, and database technology, specifically. He is the author of numerous books, journal articles, papers and reports documenting his research on a variety of technology subjects, including distributed computing systems, digital libraries and database systems. Mr. Garcia-Molina is a Fellow of the Association for Computing Machinery and the American Academy of Arts and Sciences and from 1997 to 2001 was a member of the U.S. President’s Information Technology Advisory Committee. He also serves as a Venture Advisor for Onset Ventures and is a member of technical advisory boards of numerous private companies. In these roles, and as a former director of other public companies, Mr. Garcia-Molina has helped oversee the strategy and operations of other technology companies and brings a valuable technical and industry-specific perspective to the Board’s consideration of Oracle’s product strategy, competitive positioning and technology trends.

   
       

 

       

Jeffrey O. Henley

               

 

Vice Chairman

 

Age: 74

Director since 1995

   

 

Mr. Henley has served as our Vice Chairman of the Board since September 2014. Mr. Henley previously served as our Chairman of the Board from January 2004 to September 2014. He served as our Executive Vice President and CFO from March 1991 to July 2004.

 

Qualifications:    Our Board benefits from Mr. Henley’s many years with Oracle and his deep expertise and knowledge regarding our strategic vision, management and operations. Mr. Henley meets regularly with significant Oracle customers and is instrumental in closing major commercial transactions worldwide. This role allows Mr. Henley to remain close to our customers and the technology industry generally. Mr. Henley also brings to the Board significant financial and accounting expertise from his service as our former CFO and in other finance positions prior to joining Oracle.

   
       


 

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Mark V. Hurd

               

 

Chief Executive Officer

 

Age: 62

Director since 2010

   

 

Mr. Hurd has been our CEO since September 2014. On September 11, 2019, Mr. Hurd commenced a leave of absence from his CEO duties to focus on his health. Mr. Hurd served as our President from September 2010 to September 2014. Prior to joining us, he served as Chairman of the Board of Directors of Hewlett-Packard Company from September 2006 to August 2010 and as CEO, President and a member of the Board of Directors of Hewlett-Packard Company from April 2005 to August 2010.

 

Qualifications:    In his role at Oracle, Mr. Hurd is responsible for sales and marketing, consulting, support and Oracle’s industry-specific global business units. Our Board benefits from Mr. Hurd’s insight as he has guided Oracle’s sales and marketing efforts, managed our support and consulting organizations and acted as a primary contact for our customers. As the former CEO of Hewlett-Packard Company and NCR Corporation, Mr. Hurd brings to the Board first-hand experience in successfully leading and managing large, complex global sales, support and consulting organizations in the technology industry. In addition, Mr. Hurd’s prior experience as Chairman of Hewlett-Packard Company’s board and as a director of another large, public company provides the Board with important perspectives in its evaluation of Oracle’s practices and processes.

   
       

 

       

Renée J. James

               

 

Non-Employee Director

 

Age: 55

Director since 2015

   

 

Ms. James is currently the Chairman and CEO of Ampere Computing LLC (Ampere), a company she founded in 2017 that produces high-performance semiconductors for hyperscale cloud, storage, and edge computing. Ms. James also has served as an Operating Executive for The Carlyle Group, a global alternative asset manager, since February 2016. In this role, Ms. James evaluates new technology investments for the firm and advises portfolio companies on their strategic direction and operational efficiency. In January 2016, Ms. James concluded a 28-year career with Intel Corporation (Intel), where she most recently served as President. Ms. James is Chair of the National Security Telecommunications Advisory Committee to the President of the United States. She also serves as a director of Citigroup Inc., Sabre Corporation and Vodafone Group Plc.

 

Qualifications:    As a seasoned technology executive, Ms. James brings to the Board extensive, international experience managing large, complex global operations in the technology industry. In her distinguished career at Intel, Ms. James held a variety of positions in research and development leadership in both software and hardware and the management of global manufacturing. Our Board benefits from the leadership, industry and technical expertise Ms. James acquired at Ampere and Intel and through her service on the boards of public and private companies in the technology and financial services industries. In addition, Ms. James brings to the Board expansive knowledge of cybersecurity gained through the positions she has held at Intel and as Chair of the National Security Telecommunications Advisory Committee to the President of the United States.

   
       

 

       

 Charles W. Moorman IV

               

 

Independent Director

 

Age: 67

Director since 2018

 

Board Committees:

Compensation

   

 

Mr. Moorman is currently a Senior Advisor to Amtrak, where he previously served as President and CEO from August 2016 to January 2018. Mr. Moorman was previously CEO (from 2005 to 2015) and Chairman (from 2006 to 2015) of Norfolk Southern Corporation (Norfolk Southern), a transportation company. From 1975 to 2005, he held various positions in operations, information technology, and human resources at Norfolk Southern. Mr. Moorman serves as a director of Chevron Corporation and Duke Energy Corporation, and previously served as a director of Norfolk Southern.

 

Qualifications:    As the former CEO of Norfolk Southern, Mr. Moorman brings to the Board extensive experience leading and managing the operations of a large, complex Fortune 500 company. Mr. Moorman’s forty-year career with Norfolk Southern included numerous senior management and executive positions requiring expertise in engineering, technology, finance and risk management. Mr. Moorman also brings to the Board significant regulatory expertise and familiarity with environmental affairs gained through his leadership roles at both Amtrak and Norfolk Southern. In addition, Mr. Moorman’s service as a director of other large public companies provides the Board with important perspectives in its evaluation of Oracle’s practices and processes.

   
       


 

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Leon E. Panetta

               

 

Independent Director

 

Age: 81

Director since 2015

 

Board Committees:

Compensation,
Governance

   

 

Secretary Panetta served as U.S. Secretary of Defense from 2011 to 2013 and as Director of the Central Intelligence Agency from 2009 to 2011. Prior to that time, Secretary Panetta was a member of the United States House of Representatives from 1977 to 1993, served as Director of the Office of Management and Budget from 1993 to 1994 and served as President Bill Clinton’s Chief of Staff from 1994 to 1997. He is the co-founder and Chairman of the Panetta Institute for Public Policy and currently serves as moderator of the Leon Panetta Lecture Series, a program he created. Secretary Panetta previously served as Distinguished Scholar to Chancellor Charles B. Reed of the California State University System and professor of public policy at Santa Clara University.

 

Qualifications:    With a distinguished record of public service at the highest levels of government, Secretary Panetta brings to the Board robust, first-hand knowledge of government affairs and public policy issues. Secretary Panetta’s 16 years of experience in the U.S. House of Representatives and service in the administrations of two U.S. Presidents allow him to advise the Board on a wide range of issues related to Oracle’s interactions with governmental entities. In addition, Secretary Panetta’s service as a leader of large and complex government institutions, including the U.S. Department of Defense, the Central Intelligence Agency and the Office of Management and Budget, provides the Board with important perspectives on Oracle’s operational practices and processes, as well as risk management and oversight expertise.

   
       

 

       

William G. Parrett

               

 

Independent Director

 

Age: 74

Director since 2018

 

Board Committees:

Finance and Audit

   

 

Mr. Parrett served as the CEO of Deloitte Touche Tohmatsu, a multinational professional services network, from 2003 until 2007. He joined Deloitte in 1967 and served in a series of roles of increasing responsibility until his retirement in 2007. Mr. Parrett serves as a director of The Blackstone Group L.P. and the Eastman Kodak Company. He previously served as a director of Conduent Inc., Thermo Fisher Scientific Inc., UBS Group AG and iGate Corporation. Mr. Parrett is a Certified Public Accountant with an active license.

 

Qualifications:    As the former CEO of Deloitte Touche Tohmatsu, Mr. Parrett brings to the Board significant experience leading and managing the operations of a large, complex global organization. Mr. Parrett is highly skilled in the fields of auditing, accounting and internal controls, and risk management, and he brings valuable financial expertise to the Board. In addition, Mr. Parrett’s service as a director of other public companies in the technology and financial services sectors provides the Board with important perspectives in its evaluation of Oracle’s practices and processes.

   
       

 

       

Naomi O. Seligman

               

 

Independent Director

 

Age: 81

Director since 2005

 

Board Committees:

Compensation (Vice Chair)

   

 

Ms. Seligman is a senior partner at Ostriker von Simson, Inc., a technology research firm which chairs the CIO Strategy Exchange. Since 1999, this forum has brought together senior executives in four vital quadrants of the IT sector. From 1977 until June 1999, Ms. Seligman served as a co-founder and senior partner of the Research Board, Inc., a private sector institution sponsored by 100 chief information officers from major global corporations. Ms. Seligman previously served as a director of Akamai Technologies, Inc., iGate Corporation and The Dun & Bradstreet Corporation.

 

Qualifications:    As a senior partner at Ostriker von Simson, Inc., a co-partner of the CIO Strategy Exchange, and a co-founder and former senior partner of the Research Board, Inc., Ms. Seligman is recognized as a thought leader in the technology industry. Ms. Seligman also serves as an independent advisor to some of the largest multinational corporations where she helps oversee global strategy and operations, which allows her to provide our Board with important perspectives in its evaluation of Oracle’s practices and processes. The Board also benefits from Ms. Seligman’s unique experience and customer-focused perspective and the valuable insights gained from the senior-level relationships she maintains throughout the technology industry.

   
       


 

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Recommendations of Director Candidates

The Governance Committee will consider all properly submitted candidates recommended by stockholders for Board membership. Our Corporate Governance Guidelines (available on our website at www.oracle.com/goto/corpgov) set forth the Governance Committee’s policy regarding the consideration of all properly submitted candidates recommended by stockholders as well as candidates recommended by current Board members and others.

Any stockholder wishing to recommend a candidate for consideration for nomination by the Governance Committee must provide a written notice to the Corporate Secretary of Oracle at 500 Oracle Parkway, Mailstop 5op7, Redwood City, California 94065, or by email (Corporate_Secretary@oracle.com) with a confirmation copy sent by mail. The written notice must include the candidate’s name, biographical data and qualifications and a written consent from the candidate agreeing to be named as a nominee and to serve as a director if nominated and elected. By following these procedures, a stockholder will have properly submitted a candidate for consideration. However, there is no guarantee that the candidate will be nominated.

Potential director candidates are generally suggested to the Governance Committee by current Board members and stockholders and are evaluated at meetings of the Governance Committee. In evaluating such candidates, every effort is made to complement and strengthen skills within the existing Board. The Governance Committee seeks Board approval of the final candidates recommended by the Governance Committee. The same identifying and evaluating procedures apply to all candidates for director, whether submitted by stockholders or otherwise.

Information regarding procedures for the stockholder submission of director nominations to be considered at our next annual meeting of stockholders may be found in “Corporate Governance—Proxy Access and Director Nominations” on page 19 and “Stockholder Proposals for the 2020 Annual Meeting” on page 65.

Board Meetings

Our business, property and affairs are managed under the direction of the Board. Members of the Board are kept informed of our business through discussions with our Chairman, Vice Chairman, CEOs, General Counsel, Corporate Secretary and other officers and employees, by reviewing materials provided to them, by visiting our offices and by participating in meetings of the Board and its committees.

 

During fiscal 2019, the Board met four times (four regularly scheduled meetings). Each director attended at least 75% of all Board and applicable committee meetings in fiscal 2019. Board members are expected to attend our annual meeting of stockholders, and all of our directors serving on the Board at the time of our last annual meeting of stockholders in November 2018 attended that meeting.

 

Committees, Membership and Meetings

  

Number of Board and Committee Meetings
Fiscal 2019

 

 

LOGO

The current standing committees of the Board are the Finance and Audit Committee (F&A Committee), the Governance Committee, the Compensation Committee and the Committee on Independence Issues (Independence Committee).

 

Each committee reviews its charter at least annually, or more frequently as legislative and regulatory developments and business circumstances warrant. Each of the committees may make additional recommendations to our Board for revision of its charter to reflect evolving best practices. The charters for the F&A, Governance, Compensation and Independence Committees are posted on our website at www.oracle.com/goto/corpgov.

 

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Committee Membership

The table below identifies committee membership as of September 20, 2019, the record date of the Annual Meeting.

 

         
  Director      Finance and Audit      Compensation      Governance      Independence

  Jeffrey S. Berg

     LOGO          

 

     LOGO           LOGO  Chair

  Michael J. Boskin

     LOGO  Chair     

 

    

 

    

 

  Safra A. Catz

    

 

    

 

    

 

    

 

  Bruce R. Chizen

     LOGO          

 

     LOGO  Chair     

 

  George H. Conrades

    

 

     LOGO  Chair     

 

     LOGO     

  Lawrence J. Ellison

    

 

    

 

    

 

    

 

  Rona A. Fairhead

    

 

    

 

    

 

    

 

  Hector Garcia-Molina

    

 

    

 

    

 

     LOGO     

  Jeffrey O. Henley

    

 

    

 

    

 

    

 

  Mark V. Hurd

    

 

    

 

    

 

    

 

  Renée J. James

    

 

    

 

    

 

    

 

  Charles W. Moorman IV

    

 

     LOGO          

 

    

 

  Leon E. Panetta

    

 

     LOGO           LOGO          

 

  William G. Parrett

     LOGO          

 

    

 

    

 

  Naomi O. Seligman

      

 

     LOGO  Vice Chair       

 

      

 

The Board has determined that all directors who served during fiscal 2019 on the Compensation, F&A, Governance and Independence Committees were independent under the applicable New York Stock Exchange (NYSE) listing standards during the periods they served on those committees. The Board has also determined that all directors who served during fiscal 2019 on the Compensation and F&A Committees satisfied the applicable NYSE and U.S. Securities and Exchange Commission (SEC) heightened independence standards for members of compensation and audit committees during the periods they served on those committees. See “Corporate Governance—Board of Directors and Director Independence” on page 22 for more information.

The Finance and Audit Committee

The F&A Committee oversees our accounting and financial reporting processes and the audit and integrity of our financial statements, assists the Board in fulfilling its oversight responsibilities regarding audit, finance, accounting, cybersecurity, tax and legal compliance and risk, and evaluates merger and acquisition transactions and investment transactions proposed by management. In particular, the F&A Committee is responsible for overseeing the engagement, independence, compensation, retention and services of our independent registered public accounting firm. The F&A Committee’s primary responsibilities and duties are to:

 

   

act as an independent and objective party to monitor our financial reporting process and internal control over financial reporting;

 

   

review and appraise the audit efforts of our independent registered public accounting firm;

 

   

receive regular updates from our internal audit department regarding our internal audit plan and compliance with various policies and operational processes across all lines of business;

 

   

evaluate our quarterly financial performance at earnings review meetings;

 

   

oversee management’s establishment and enforcement of financial policies and business practices;

 

   

oversee our compliance with laws and regulations and our Code of Ethics and Business Conduct;

 

   

provide an open avenue of communication between the Board and the independent registered public accounting firm, General Counsel, financial and senior management, Chief Compliance & Ethics Officer and internal audit department;

 

   

review and, if within its delegated range of authority, approve merger and acquisition and financial transactions proposed by our management; and

 

   

produce the Report of the Finance and Audit Committee of the Board, included elsewhere in this proxy statement, as required by SEC rules.

 

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The F&A Committee held executive sessions with our independent registered public accounting firm on four occasions in fiscal 2019. The Board has determined that Dr. Boskin and Mr. Parrett each qualify as an “audit committee financial expert” as defined by SEC rules.

The Compensation Committee

The primary functions of the Compensation Committee are to:

 

   

review and approve all compensation arrangements, including, as applicable, base salaries, bonuses and equity awards, of our CEOs and our other executive officers;

 

   

review and approve non-employee director compensation, subject to ratification by the Board;

 

   

lead the Board in its evaluation of the performance of our CEOs;

 

   

review and discuss the Compensation Discussion and Analysis (CD&A) portion of our proxy statement with management and determine whether to recommend to the Board that the CD&A be included in our proxy statement;

 

   

review the Compensation Committee Report for inclusion in our proxy statement, as required by SEC rules;

 

   

review, approve and administer our stock plans, and approve equity awards to certain participants;

 

   

annually assess the risks associated with our compensation practices, policies and programs applicable to our employees to determine whether such risks are appropriate or reasonably likely to have a material adverse effect on Oracle; and

 

   

oversee our 401(k) Plan Committee and amend the Oracle Corporation 401(k) Savings and Investment Plan (the 401(k) Plan) when appropriate.

The Compensation Committee helps us attract and retain talented executive personnel in a competitive market. In determining any component of executive or director compensation, the Compensation Committee considers the aggregate amounts and mix of all components in its decisions. Our legal department, human resources department and the independent compensation consultant support the Compensation Committee in its work. For additional details regarding the Compensation Committee’s role in determining executive compensation, including its engagement of an independent compensation consultant, refer to “Executive Compensation—Compensation Discussion and Analysis” beginning on page 28. See “Executive Compensation—Compensation Discussion and Analysis—Other Compensation Policies—Equity Awards and Grant Administration” on page 42 for a discussion of the Compensation Committee’s role as the administrator of our stock plans and for a discussion of our policies and practices regarding the grant of our equity awards.

Risk Assessment of Compensation Policies and Practices

The Compensation Committee, in consultation with management and Compensia, Inc., the committee’s independent compensation consultant, has assessed the compensation policies and practices applicable to our executive officers and other employees and concluded that they do not create risks that are reasonably likely to have a material adverse effect on Oracle. The Compensation Committee conducts this assessment annually.

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee has ever been an officer or employee of Oracle or of any of our subsidiaries or affiliates. During the last fiscal year, none of our executive officers served on the board of directors or on the compensation committee of any other entity, any officers of which served either on our Board or on our Compensation Committee.

The Nomination and Governance Committee

The Governance Committee has responsibility for monitoring corporate governance matters, including periodically reviewing the composition and performance of the Board and its committees (including reviewing the performance of individual directors), reviewing and assessing the adequacy of our policies, plans and procedures regarding succession planning, and overseeing our Corporate Governance Guidelines. The Governance Committee also considers and recommends qualified candidates for election to the Board.

The Committee on Independence Issues

The Independence Committee is charged with reviewing and approving individual transactions, or a series of related transactions, involving amounts in excess of $120,000 between us (or any of our subsidiaries) and any of our affiliates, such as an executive officer, director or owner of 5% or more of our common stock. The Independence

 

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Committee’s efforts are intended to ensure that each proposed related person transaction is on terms that, when taken as a whole, are fair to us. If any member of the Independence Committee would derive a direct or indirect benefit from a proposed transaction, he or she is excused from the review and approval process with regard to that transaction. The role of the Independence Committee also encompasses monitoring of related person relationships as well as reviewing proposed transactions and other matters for potential conflicts of interest and possible corporate opportunities in accordance with our Global Conflict of Interest Policy. The Independence Committee also evaluates the independence of each non-employee director as defined by NYSE listing standards.

Director Compensation

Highlights

 

   

Annual and initial equity awards capped at a maximum dollar value

 

   

No per-meeting fees

 

   

Emphasis on equity to align director compensation with our stockholders’ long-term interests

 

   

Stockholder-approved limits on equity awards

 

   

No retirement benefits or perquisites

 

   

Robust stock ownership guidelines (see page 21 for details)

Overview

Our directors play a critical role in guiding our strategic direction and overseeing the management of Oracle. Ongoing developments in corporate governance, executive compensation and financial reporting have resulted in increased demand for highly qualified and productive public company directors. In addition, Oracle’s acquisition program and expansion into new lines of business can demand substantial time commitments from our directors.

These considerable time commitments and the many responsibilities and risks of being a director of a public company of Oracle’s size, complexity and profile require that we provide reasonable incentives for our non-employee directors’ continued performance by paying compensation commensurate with their qualifications and significant workload. Our non-employee directors are compensated based on their respective levels of Board participation and responsibilities, including service on Board committees. Our non-employee directors display a high level of commitment and flexibility in their service to Oracle. Several of our directors serve on more than one committee. In addition to engaging with our senior management, our non-employee directors personally attend and participate in important customer and employee events, such as Oracle OpenWorld and Oracle President’s Council forums, and meet with our stockholders throughout the year to better understand their perspectives. Annual cash retainers and equity awards granted to our non-employee directors are intended to correlate with the qualifications, responsibilities and time commitments of each such director.

Our employee directors, Mr. Ellison, Ms. Catz, Mr. Hurd and Mr. Henley, do not receive separate compensation for serving as directors of Oracle.

Cash Retainer Fees for Directors

 

In fiscal 2019, each of our non-employee directors received (1) an annual cash retainer fee of $52,500 for serving as a director of Oracle (prorated for directors who did not serve on the Board for the full fiscal year) and (2) each of the applicable retainer fees set forth in the table to the right for serving as a chair or as a member of one or more of the committees of the Board (prorated for directors who served as chairs or committee members for less than the full fiscal year).

 

Annual Committee Member Retainer Fees

 

    

F&A and Compensation Committees

   $ 25,000  

Governance and Independence Committees

   $ 15,000  

Additional Annual Retainer Fees for Committee Chairs

 

F&A and Compensation Committees

   $ 25,000  

Governance and Independence Committees

   $ 15,000  
 

Effective June 1, 2018, the Board eliminated per-meeting fees.

Annual Equity Grant for Directors

Non-employee directors also participate in our Amended and Restated 1993 Directors’ Stock Plan (the Directors’ Stock Plan), which sets forth stockholder-approved limits on annual equity awards for service on the Board and as a committee chair. The annual equity awards are granted on May 31 of each year. Committee chair equity awards are prorated for chairs who served for less than the full fiscal year.

 

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In fiscal 2018, the Board approved changes to our non-employee director compensation program, including reductions in the size of equity awards. The Board determined that each equity award will be limited to the lesser of the stockholder-approved limits set forth in the Directors’ Stock Plan or a specified maximum dollar value. Below is a summary of the stockholder-approved limits on annual equity awards set forth in the Directors’ Stock Plan, the maximum dollar value limit on annual equity awards effective May 31, 2018 and the number of RSUs actually granted to non-employee directors on May 31, 2019.

 

         
  Grant Type   Stockholder-Approved
Equity Award Limits
  Maximum Dollar
Value Effective
May 31, 2018
  Equity Actually
Granted on
May 31, 2019 (1)
 

% Reduction from

  Stockholder-Approved  

Limits (3)

  Board Annual Grant

  45,000 options (or 11,250 RSUs)     $ 400,000       7,905 RSUs       LOGO     30 %        

  F&A Committee Chair

  45,000 options (or 11,250 RSUs)     $ 200,000       3,952 RSUs       LOGO     65 %

  F&A Committee Vice Chair

  30,000 options (or 7,500 RSUs)              —               —  (2)       LOGO   100 %

  Compensation Committee Chair

  45,000 options (or 11,250 RSUs)     $ 200,000       3,952 RSUs       LOGO     65 %

  Governance Committee Chair

  15,000 options (or 3,750 RSUs)     $  65,000       1,284 RSUs         LOGO     66 %

  Independence Committee Chair

  15,000 options (or 3,750 RSUs)     $  65,000       1,284 RSUs         LOGO     66 %

 

(1)

Calculated by dividing the maximum dollar value by the closing price of Oracle common stock on the date of grant ($50.60 per share), rounding down to the nearest whole share.

 

(2)

The Board eliminated the annual equity award for service as F&A Committee Vice Chair in fiscal 2016.

 

(3)

Percentage reduction in the number of RSUs actually granted on May 31, 2019 compared to stockholder-approved equity award limits.

The Directors’ Stock Plan provides that in lieu of all or some of the stock option limits set forth in the plan, non-employee directors may receive grants of RSUs of an equivalent value, as determined on any reasonable basis by the Board. The Board determined that a ratio of four stock options to one RSU should be used, consistent with its approach for equity awards granted to Oracle employees. The Board determined in April 2016 that all non-employee director equity awards will be delivered in the form of RSUs that vest on the first anniversary of the date of grant.

Initial Equity Grant for New Directors

The Directors’ Stock Plan also provides for an initial equity award of not more than 45,000 stock options (or 11,250 RSUs) for new non-employee directors, prorated based upon the number of full calendar months remaining in the fiscal year of the director’s appointment. In accordance with the reductions to our non-employee director compensation described above, any new non-employee director will receive an initial equity award equal to the lesser of 11,250 RSUs or RSUs with a total value of $400,000 (calculated by dividing the maximum dollar value by the closing price of Oracle common stock on the date of grant, rounding down to the nearest whole share), prorated based upon the number of full calendar months remaining in the fiscal year of the director’s appointment.

Fiscal 2019 Director Compensation Table

The following table provides summary information regarding the compensation we paid to our non-employee directors in fiscal 2019.

 

       

Name (1)

     Fees Earned or
Paid in Cash ($)
     Stock Awards
(2) (3) ($)
     Total ($)    

  Jeffrey S. Berg

         122,500          456,326          578,826    

  Michael J. Boskin

         102,500          588,819          691,319    

  Bruce R. Chizen

         107,500          456,326          563,826    

  George H. Conrades

         117,500          588,819          706,319    

  Hector Garcia-Molina

         67,500          392,562          460,062    

  Renée J. James

         52,500          392,562          445,062    

  Charles W. Moorman IV

         73,288          392,562          465,850    

  Leon E. Panetta

         92,500          392,562          485,062    

  William G. Parrett

         73,288          392,562          465,850    

  Naomi O. Seligman

         77,500          392,562          470,062    

 

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(1)

Rona A. Fairhead joined the Board in fiscal 2020 and therefore received no fiscal 2019 compensation. In fiscal 2020, Mrs. Fairhead will receive Oracle’s standard non-employee director compensation, as described above.

 

(2)

The amounts reported in this column represent the aggregate grant date fair values of RSUs computed in accordance with the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) Topic 718, Compensation—Stock Compensation (FASB ASC 718). The non-employee directors have not presently realized a financial benefit from these awards because none of the RSUs granted in fiscal 2019 have vested. For information on the valuation assumptions used in our stock-based compensation computations, see Note 13 to our consolidated financial statements in our Annual Report on Form 10-K for fiscal 2019.

 

(3)

The following table provides additional information concerning the stock awards (in the form of RSUs) and stock options held by our non-employee directors as of the last day of fiscal 2019.

 

       
  Name   Total Unvested RSUs
Outstanding at
Fiscal 2019 Year End  (#)
  RSUs Granted During
Fiscal 2019 (a) (#)
 

Total Option
Awards Outstanding at  

Fiscal 2019 Year End (#)  

   

 

   

 

   

 

   

 

  Jeffrey S. Berg

      9,189       9,189       247,500    

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

  Michael J. Boskin

      11,857       11,857       450,000    

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

  Bruce R. Chizen

      9,189       9,189       225,000    

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

  George H. Conrades

      11,857       11,857       67,500    

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

  Hector Garcia-Molina

      7,905       7,905       225,000    

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

  Renée J. James

      8,491       7,905       9,375    

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

  Charles W. Moorman IV

      7,905       7,905          

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

  Leon E. Panetta

      7,905       7,905       37,500    

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

  William G. Parrett

      7,905       7,905          

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

  Naomi O. Seligman

      7,905       7,905       202,500    

 

 

 

   

 

 

 

   

 

 

 

   

 

 

 

 

  (a)

The RSUs reported in this column were granted on May 31, 2019 and vest on the first anniversary of the date of grant (May 31, 2020).

 

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CORPORATE GOVERNANCE

 

We regularly monitor developments in corporate governance and review our processes and procedures in light of such developments. As part of those efforts, we review federal laws affecting corporate governance, as well as rules adopted by the SEC and NYSE. We believe we have in place corporate governance procedures and practices that are designed to enhance our stockholders’ interests.

Corporate Governance Guidelines

The Board has adopted Corporate Governance Guidelines (the Guidelines), which address the following matters:

 

   

director qualifications;

 

   

director majority voting policy;

 

   

director responsibilities, including risk oversight;

 

   

executive sessions and leadership roles;

 

   

director conflicts of interest;

 

   

Board committees;

 

   

director access to officers and employees;

 

   

director compensation;

 

   

director orientation and continuing education;

 

   

director and executive officer stock ownership;

 

   

CEO evaluations;

 

   

stockholder communications with the Board;

 

   

performance evaluations of the Board and its committees; and

 

   

management succession.

 

 

The Guidelines require all members of the F&A, Compensation, Governance and Independence Committees to be independent, each in accordance with or as defined in the rules adopted by the SEC and NYSE. The Independence Committee and the Board make this determination annually for all non-employee directors.

The Board and each committee have the power to hire legal, accounting, financial or other outside advisors as they deem necessary in their best judgment without the need to obtain the prior approval of any officer of Oracle. Directors have full and free access to officers and employees of Oracle and may ask questions and conduct investigations as they deem appropriate to fulfill their duties.

Conflict of interest expectations for our non-employee directors are addressed in the Guidelines and provide that each non-employee director must disclose to our General Counsel:

 

   

all of his or her executive, employment, board of directors, advisory board or equivalent positions in other organizations annually;

 

   

any such proposed positions with a public company before they become effective and any such positions with a private company promptly following his or her appointment to such entity; and

 

   

any potential conflicts of interest that may arise from time to time with respect to matters under consideration of the Board.

The General Counsel must report all such disclosures to the Independence Committee, and the Board must consider such disclosures and other available information and take such actions as it considers appropriate. All directors are expected to comply with Oracle’s Code of Ethics and Business Conduct, except that for our non-employee directors, the provisions regarding conflicts of interest in the Guidelines supersede these same provisions in the Code of Ethics and Business Conduct.

The Guidelines provide for regular executive sessions to be held by non-employee directors. The Guidelines also provide that the Board or Oracle will establish or provide access to appropriate orientation programs or materials for the benefit of newly elected directors, including presentations from senior management and visits to Oracle’s facilities.

Under the Guidelines, the Board periodically evaluates the appropriate size of the Board and may make any changes it deems appropriate. The Compensation Committee is required under the Guidelines to conduct an annual review of our CEOs’ performance and compensation, and the Board reviews the Compensation Committee’s report to ensure the CEOs are providing the best leadership for Oracle in the short and long term.

The Guidelines are posted on, and we intend to disclose any future amendments to the Guidelines on, our website at www.oracle.com/goto/corpgov.

 

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Proxy Access and Director Nominations

Under our proxy access bylaw, a stockholder (or a group of up to 20 stockholders) owning at least 3% of Oracle’s outstanding shares continuously for at least three years may nominate and include in Oracle’s annual meeting proxy materials director nominees constituting up to the greater of two individuals or 20% of the Board, provided that the stockholders and the nominees satisfy the requirements specified in our Bylaws.

See “Stockholder Proposals for the 2020 Annual Meeting” on page 65 for information on the requirements for stockholders who wish to submit a director nomination for inclusion in our 2020 proxy statement or submit a director nomination to be presented at our 2020 annual meeting of stockholders (but not for inclusion in our proxy statement).

Majority Voting Policy

The Guidelines set forth our majority voting policy for directors, which states that, in an uncontested election, if any director nominee receives an equal or greater number of votes WITHHELD from his or her election as compared to votes FOR such election (a Majority Withheld Vote) and no successor has been elected at such meeting, the director nominee must tender his or her resignation following certification of the stockholder vote.

The Governance Committee must promptly consider the resignation offer and a range of possible responses based on the circumstances that led to the Majority Withheld Vote, if known, and make a recommendation to the Board as to whether to accept or reject the tendered resignation, or whether other action should be taken. The Governance Committee in making its recommendation, and the Board in making its decision, may each consider any factors or other information that it considers appropriate and relevant, including, but not limited to:

 

   

the stated reasons, if any, why stockholders withheld their votes;

 

   

possible alternatives for curing the underlying cause of the withheld votes;

 

   

the director’s tenure;

 

   

the director’s qualifications;

 

   

the director’s past and expected future contributions to Oracle; and

 

   

the overall composition of the Board.

The Board will act on the Governance Committee’s recommendation within 90 days following certification of the stockholder vote. Thereafter, the Board will promptly publicly disclose in a report furnished to the SEC its decision regarding the tendered resignation, including its rationale for accepting or rejecting the tendered resignation. The Board may accept a director’s resignation or reject the resignation. If the Board accepts a director’s resignation, or if a nominee for director is not elected and the nominee is not an incumbent director, then the Board, in its sole discretion, may fill any resulting vacancy or may decrease the size of the Board, in each case pursuant to our Bylaws. If a director’s resignation is not accepted by the Board, such director will continue to serve until the next annual meeting and until his or her successor is duly elected, or his or her earlier resignation or removal.

Any director who tenders his or her resignation pursuant to this policy may not participate in the Governance Committee recommendation or Board action regarding whether to accept the resignation offer. However, if a majority of the members of the Governance Committee received a Majority Withheld Vote at the same election, then the independent directors who did not receive a Majority Withheld Vote must appoint a committee among themselves to consider any resignation offers and recommend to the Board whether to accept such resignation offers.

Through this policy, the Board seeks to be accountable to all stockholders and respects the rights of stockholders to express their views through their votes for directors. However, the Board also deems it important to preserve sufficient flexibility to make sound evaluations based on the relevant circumstances in the event of a greater than or equal to 50% WITHHELD vote against a specific director. For example, the Board may wish to assess whether the sudden resignations of one or more directors would materially impair the effective functioning of the Board. The Board’s policy is intended to allow the Board to react to situations that could arise if the resignation of multiple directors would prevent a key committee from achieving a quorum. The policy also would allow the Board to assess whether a director was targeted for reasons unrelated to his or her Board performance at Oracle. The policy imposes a short time frame for the Board to consider a director nominee’s resignation.

 

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Prohibition on Speculative Transactions and Pledging Policy

Prohibition on Speculative Transactions. Our Insider Trading Policy prohibits all of our employees, including our executive officers, and our non-employee directors from purchasing financial instruments (including prepaid variable forward contracts, equity swaps, short sales, puts, collars, straddles and exchange funds) or otherwise engaging in transactions that are designed to or have the effect of hedging or offsetting any decrease in the market value of Oracle securities.

Pledging Policy. In fiscal 2018, the Governance Committee and the Chair of the Compensation Committee met with independent advisers to review policies and procedures regarding pledging. In January 2018, the Governance Committee adopted a Policy on Pledging Oracle Securities (the Pledging Policy).

The Pledging Policy prohibits Oracle directors, executive officers and their immediate family members from:

 

   

holding Oracle securities in a margin account; and

 

   

pledging Oracle securities as collateral to secure or guarantee indebtedness, subject to two exceptions:

 

   

pledges of securities of a target company that are in place at the time Oracle acquires such company are permitted; and

 

   

Oracle’s founder may continue to pledge Oracle securities as collateral to secure or guarantee indebtedness, but he may not hold Oracle securities in a margin account.

The Pledging Policy also requires the Governance Committee to review all pledging arrangements, assess any risks to Oracle and its stockholders and report on the arrangements to the F&A Committee and the Board. The Pledging Policy provides that all pledges must comply with Oracle’s Insider Trading Policy and must be pre-cleared as specified in Oracle’s Trading Pre-clearance Procedures. The Governance Committee may periodically seek outside advice and counsel in connection with its oversight of pledging arrangements.

Review of Pledging Arrangements. As of September 20, 2019, Mr. Ellison, Oracle’s founder, Chairman, CTO and largest stockholder, had pledged 305,000,000 shares of Oracle common stock (unchanged from the prior year) as collateral to secure certain personal indebtedness. Mr. Ellison’s pledged shares secure personal term loans only; none of his shares are pledged as collateral for margin accounts. The pledged shares are not used to shift or hedge any economic risk in owning Oracle common stock. No other executive officer or director, or any of their immediate family members, holds shares of Oracle common stock that have been pledged to secure any personal or other indebtedness.

Every fiscal quarter, the Governance Committee reviews Mr. Ellison’s pledging arrangements from a risk management perspective and regularly provides a report to the F&A Committee and the Board. In accordance with the Pledging Policy, the Governance Committee considers the following when reviewing the pledging arrangements:

 

   

historical information and trends regarding Mr. Ellison’s pledging arrangements;

 

   

the key terms of the loans under which shares of Oracle common stock have been pledged as collateral;

 

   

the magnitude of the aggregate number of shares of Oracle common stock that are pledged in relation to:

 

   

the total number of shares of Oracle common stock outstanding; and

 

   

the total number of shares of Oracle common stock owned by Mr. Ellison;

 

   

the market value of Oracle common stock;

 

   

Mr. Ellison’s independent ability to repay any loans without recourse to the already-pledged shares; and

 

   

any other relevant factors.

Board and Committee Performance Evaluations

The Board and each of its committees conduct annual self-evaluations to determine whether they are functioning effectively and whether any changes are necessary to improve their performance. Every year, the Chair of the Governance Committee and other members of the Governance Committee interview each director and certain members of management to obtain his or her assessment of the effectiveness of the Board and its committees, director performance and Board dynamics. The Chair of the Governance Committee then reports the results of these interviews at meetings of the Governance Committee and the Board, where the results are discussed. In addition, the chair of each committee guides an annual committee self-evaluation discussion among the committee members. The results of the committee self-evaluations are also reported to the Board for review and discussion.

 

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Stock Ownership Guidelines for Directors and Senior Officers

Non-employee directors and senior officers are required to own shares of Oracle common stock to align their interests with the long-term interests of our stockholders. The Governance Committee sets and periodically reviews and makes changes to these ownership requirements, which we refer to as the Stock Ownership Guidelines. The current Stock Ownership Guidelines were adopted in July 2011 and amended in April 2015.

Under the Stock Ownership Guidelines, our non-employee directors and senior officers must own the following number of shares of Oracle common stock within five years from the date such person becomes a director or senior officer:

 

   
  Title    Minimum Number of Shares 

  Chairman and Chief Technology Officer

       250,000        

  Chief Executive Officers

       250,000        

  Presidents

       100,000        

  Executive Vice Presidents who are Section 16 Officers

       50,000        

  All other Executive Vice Presidents

       25,000        

  Non-employee directors

       10,000        

Each person promoted from within the senior officer positions has one year from the date of his or her promotion to comply with any increased ownership requirement. Shares of Oracle common stock that count toward satisfying the Stock Ownership Guidelines include any shares held directly or through a trust or broker; shares held by a spouse; shares held through our 401(k) Plan and our Oracle Corporation Employee Stock Purchase Plan (the ESPP); deferred, vested RSUs; and shares underlying vested but unexercised stock options, with 50% of the “in-the-money” value of such options being used for this calculation. Full-value awards, including RSUs and PSUs, do not count toward the Stock Ownership Guidelines until they vest.

We believe all of our non-employee directors and senior officers are currently in compliance with the Stock Ownership Guidelines, and many of them maintain holdings of Oracle common stock significantly in excess of the minimum required number of shares. Consistent with our objective of aligning the interests of our directors and officers with the long-term interests of stockholders, many of our directors and officers do not sell their shares of Oracle common stock when their RSUs vest or upon exercise of their stock options. For example, Mr. Ellison acquired seven million shares of Oracle common stock in fiscal 2019 upon the exercise of options that were scheduled to expire in July 2019. These shares were acquired in transactions whereby he paid the taxes and exercise price from cash so as to maximize the number of Oracle shares he acquired. As of September 20, 2019, Mr. Ellison has not sold any of the shares he acquired upon exercise of his options in fiscal 2019.

Board Leadership Structure

The roles of Board Chair and CEO are currently filled by separate individuals. Since September 2014, Mr. Ellison has served as our Chairman, and Ms. Catz and Mr. Hurd have served as our CEOs. Previously, Mr. Henley served as Chairman and Mr. Ellison served as CEO.

The Board believes that the separation of the offices of the Chair and CEOs is appropriate at this time because it allows our CEOs to focus primarily on Oracle’s business strategy, operations and corporate vision. However, as described in further detail in our Guidelines, the Board does not have a policy mandating the separation of the roles of Chair and CEO. The Board elects our Chair and our CEOs, and each of these positions may be held by the same person or by different people. We believe it is important that the Board retain flexibility to determine whether these roles should be separate or combined based upon the Board’s assessment of the company’s needs and Oracle’s leadership at a given point in time.

We believe that independent and effective oversight of Oracle’s business and affairs is maintained through the composition of the Board, the leadership of our independent directors and Board committees and our governance structures and processes in place. The Board consists of a substantial majority of independent directors, and the Board’s Compensation, F&A, Governance and Independence Committees are composed solely of independent directors.

As set forth in our Guidelines, on an annual rotating basis, the chairs of the F&A Committee, the Governance Committee and the Compensation Committee serve as the lead independent director at executive sessions of the Board. The lead independent director serves as a liaison between our independent directors and our executive directors and performs such additional duties as the Board determines. Currently, Mr. Chizen serves as the lead independent director.

 

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Board’s Role in Risk Oversight

 

Management is responsible for assessing and managing risks to Oracle, and, in turn, the Board is responsible for overseeing management’s efforts to assess and manage risk. The Board’s risk oversight areas include, but are not limited to:

 

  leadership structure and succession planning for management and the Board;

 

  strategic and operational planning, including with respect to significant acquisitions, the evaluation of our capital structure and long-term debt financing, and Oracle’s long-term growth;

 

  information technology and cybersecurity; and

 

  legal and regulatory compliance.

       
     

 

Cybersecurity Risk Oversight

 

Cybersecurity risk oversight is a top priority for the Board. Oracle’s head of Global Information Security and its Chief Privacy Officer regularly brief the F&A Committee on Oracle’s information security program and its related priorities and controls. In turn, the F&A Committee reports to the full Board regarding the committee’s cybersecurity risk oversight activities.

 

   

 

While the Board has the ultimate oversight responsibility for Oracle’s risk management policies and processes, various committees of the Board also have the following responsibilities for risk oversight:

 

   

the F&A Committee oversees risks associated with our financial statements and financial reporting, our independent registered public accounting firm, our internal audit function, tax issues, mergers and acquisitions, credit and liquidity, information technology and cybersecurity, legal and regulatory matters, and Code of Ethics and Business Conduct compliance;

 

   

the Compensation Committee considers the risks associated with our compensation policies and practices, with respect to executive compensation, director compensation and employee compensation generally;

 

   

the Governance Committee oversees risks associated with our overall governance practices and the leadership structure of management and the Board, as well as risks related to the pledging of Oracle securities; and

 

   

the Independence Committee reviews risks arising from transactions with related persons and director independence issues.

In accordance with our Pledging Policy, the Governance Committee regularly reviews Mr. Ellison’s pledging arrangements from a risk management perspective and provides a report to the F&A Committee and the Board, as described in “Prohibition on Speculative Transactions and Pledging Policy” on page 20.

The Governance Committee also periodically reviews and assesses the adequacy of our policies, plans and procedures with respect to succession planning for Oracle’s key executive officers, including the CEOs and the CTO. At least annually, the Board holds an executive session with each of the CEOs and the CTO to discuss potential successors and the performance, strengths and weakness of any such candidates.

The Board is kept informed of each committee’s risk oversight and other activities via regular reports of the committee chairs to the full Board. For example, with respect to acquisitions and depending on the size of the acquisition meeting a threshold figure, the F&A Committee performs the initial review of the proposed transaction—taking into consideration any risks associated with the transaction—and determines whether to recommend that the Board approve the transaction. The F&A Committee also reviews completed acquisitions on a quarterly basis to determine whether the acquired companies have performed as expected.

In addition, the Board plays an active oversight and risk mitigation role through its regular review of Oracle’s strategic direction. While management is responsible for setting Oracle’s strategic direction, the directors review Oracle’s strategy at every regular meeting of the Board. One Board meeting each year is held off-site and is dedicated to strategy. The Board engages in candid discussions with management with respect to Oracle’s strategic direction. We believe this Board oversight helps identify and mitigate risks associated with our overall business strategy.

Board of Directors and Director Independence

Each of our directors stands for election every year. We do not have a classified or staggered board. If the director nominees are elected at the Annual Meeting, the Board will continue to be composed of four employee directors (Mr. Ellison, Ms. Catz, Mr. Hurd and Mr. Henley) and eleven non-employee directors.

Upon the recommendation of the Independence Committee, the Board determined that each of the following ten current directors is independent (as defined by applicable NYSE listing standards and our Corporate Governance

 

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Guidelines): Mr. Berg, Dr. Boskin, Mr. Chizen, Mr. Conrades, Mrs. Fairhead, Mr. Garcia-Molina, Mr. Moorman, Secretary Panetta, Mr. Parrett and Ms. Seligman. Ms. James ceased to be independent upon her appointment as Chairman and CEO of Ampere Computing LLC. Therefore, all directors who served during fiscal 2019 on the Compensation, F&A, Governance and Independence Committees were independent under the applicable NYSE listing standards and SEC rules. The Board also determined, upon recommendation of the Independence Committee, that all directors who served during fiscal 2019 on the Compensation and F&A Committees satisfied the applicable NYSE and SEC heightened independence standards for members of compensation and audit committees.

In making the independence determinations, the Board and the Independence Committee considered all facts and circumstances relevant under the NYSE listing standards and SEC rules, including any relationships between Oracle and entities affiliated with the directors. In particular, the following relationships were considered:

 

   

Dr. Boskin and Mr. Garcia-Molina are both employed by Stanford University, which has received donations from both Oracle and various Board members. In addition, certain Board members serve on advisory or oversight boards at Stanford University or are otherwise employed part-time by Stanford University.

 

   

The total amount Oracle donated to Stanford University constituted less than 0.01% of Oracle’s total revenues in fiscal 2019. Predominately all of the funds Oracle donated were contributed directly to Stanford Hospital and Clinics. Based on a review of publicly available data, we believe the contributions represented less than 0.03% of Stanford University’s total revenues in its last fiscal year. The contributions fall within NYSE prescribed limits and guidelines.

The non-employee directors held an executive session following each of the regularly scheduled Board meetings, for a total of four meetings in fiscal 2019.

The F&A Committee has adopted a requirement that if an F&A Committee member wishes to serve on more than three audit committees of public companies, the member must obtain the approval of the F&A Committee, which will determine whether the director’s proposed service on the other audit committee(s) will detract from his/her performance on our F&A Committee.

Director Tenure, Board Refreshment and Diversity

We believe it is desirable to maintain a mix of longer-tenured, experienced directors and newer directors with fresh perspectives. In furtherance of this objective, the Board elected Mrs. Fairhead in fiscal 2020, Mr. Moorman and Mr. Parrett in fiscal 2018, Ms. James in fiscal 2016 and Secretary Panetta in fiscal 2015.

However, we do not impose director tenure limits or a mandatory retirement age. The Board has considered the perspectives of some stockholders regarding longer-tenured directors, but believes that longer-serving directors with experience and institutional knowledge bring critical skills to the boardroom. In particular, the Board believes that given the large size of our company, the breadth of our product offerings and the international scope of our organization, longer-tenured directors are a significant strength of the Board. The Board also believes that longer-tenured directors have a better understanding of the challenges Oracle is facing and are more comfortable speaking out and challenging management. Accordingly, while director tenure is taken into consideration when making nomination decisions, the Board believes that imposing limits on director tenure would arbitrarily deprive it of the valuable contributions of its most experienced members.

 

 

 

Board Diversity

 

33% of our Board
  members are women  

or come from a

diverse background

 

       

 

The Board and the Governance Committee value diversity of backgrounds, experience,
perspectives and leadership in different fields when identifying nominees. As set forth
in our Guidelines, the Governance Committee, acting on behalf of the Board, is
committed to actively seeking women and minority candidates for the pool from which
director candidates are selected
. Presently, 33% of our Board members are women or
come from a diverse background (4 of our 15 Board members are women, including
one of our CEOs).

 

 

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Stockholder Outreach

 

We have a long tradition of engaging with our stockholders to solicit their views on a wide variety of issues, including corporate governance, environmental and social matters, executive compensation and other issues. On a regular basis, certain of our independent directors hold meetings with our institutional stockholders. The Board believes these meetings are important because they foster a relationship of accountability between the Board and our stockholders and help us better understand and respond to our stockholders’ priorities and perspectives.

       

 

Voting Rights:

One Share, One Vote

 

Oracle has a single class of voting stock, with each share entitled to one vote. Our executives, including our founder, are thus held accountable to stockholders, who have voting power in proportion to their economic interest in our stock.

 

 

    


Thus far in fiscal 2020, members of the Compensation Committee held meetings with eight institutional stockholders representing approximately 16% of our outstanding unaffiliated shares. In addition, as part of our regular Investor Relations engagement program, our executive directors hold meetings with a number of our institutional stockholders throughout the year. We also hold an annual financial analyst meeting at Oracle OpenWorld in San Francisco where analysts are invited to hear presentations from key members of our management team, including our executive directors. In fiscal 2019, our executive directors held meetings with stockholders representing approximately 29% of our outstanding unaffiliated shares. (All percentages calculated based on data available as of June 30, 2019.)

The feedback received from our stockholder outreach efforts is communicated to and considered by the Board, and, when appropriate, the Board implements changes in response to stockholder feedback. See “Proxy Statement Summary—Stockholder Outreach and Board Responsiveness” on page 3 for a summary of the recent feedback we have received from our stockholders and the Board’s response to this feedback.

Communications with the Board

Any person wishing to communicate with any of our directors, including our independent directors, regarding Oracle may write to the director, c/o the Corporate Secretary of Oracle at 500 Oracle Parkway, Mailstop 5op7, Redwood City, California 94065, or may send an email to Corporate_Secretary@oracle.com. The Corporate Secretary will forward these communications directly to the director(s) specified or, if none is specified, to the Chairman of the Board. In addition, we present all such communications, as well as draft responses, at meetings of our Governance Committee. These communications and draft responses are also provided to the appropriate committee or group of directors based on the subject matter of the communication; for example, communications regarding executive compensation are provided to our Compensation Committee, in addition to our Governance Committee.

Employee Matters

Code of Conduct. In 1995, we adopted a Code of Ethics and Business Conduct (the Code of Conduct), which is periodically reviewed and amended by the Board. We require all employees, including our senior officers and our employee directors, to read and to adhere to the Code of Conduct in discharging their work-related responsibilities. Our Compliance and Ethics Program, under the direction of our Chief Compliance and Ethics Officer, administers training on and enforces the Code of Conduct. We have also appointed Regional Compliance and Ethics Officers to oversee the application of the Code of Conduct in each of our geographic regions. We provide mandatory web-based general training with respect to the Code of Conduct, and we provide additional live and web-based training on specific aspects of the Code of Conduct from time to time to certain employees. Employees are expected to report any conduct they believe in good faith to be a violation of the Code of Conduct. The Code of Conduct is posted on our website at www.oracle.com/goto/corpgov. We intend to disclose on our website any future amendments of the Code of Conduct or any waivers granted to our executive officers from any provision of the Code of Conduct.

Compliance and Ethics Reports. With oversight from the F&A Committee, we have established several different reporting channels employees may use to seek guidance or submit reports concerning compliance and ethics matters, including accounting, internal controls and auditing matters. These reporting channels include Oracle’s Integrity Helpline, which may be accessed either over the phone or by way of a secure Internet site. Employees may contact the helpline 24 hours a day, seven days a week. Interpreters are provided to helpline callers who want to communicate in languages other than English, and employees using the online system may file a report in the language of their choice. Employees who contact the helpline, whether over the phone or online, generally may choose to remain anonymous. Certain countries other than the United States, however, limit or prohibit anonymous reporting; employees who identify themselves as being from an affected country are alerted if special reporting rules apply to them.

 

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Global Conflict of Interest Policy. Our Global Conflict of Interest Policy (the Conflict of Interest Policy), which supplements the Code of Conduct, is applicable to all Oracle employees. The Conflict of Interest Policy is designed to help employees identify and address situations that may give rise to potential conflicts of interest or the appearance of conflicts of interest. Employees are required to disclose any conflicts of interest or potential conflicts of interest in accordance with the Conflict of Interest Policy. On an annual basis, each senior officer of Oracle is required to submit a Conflicts of Interest Questionnaire and Affirmation disclosing any actual or potential conflicts of interest and affirming that the senior officer has read, understands and is in compliance with the Conflict of Interest Policy.

Corporate Citizenship Report. Information regarding our workforce, charitable activities, environmental policy and global sustainability initiatives and solutions is available in our Corporate Citizenship Report published on our website at www.oracle.com/corporate/citizenship. The information posted on or accessible through our website is not incorporated into this Proxy Statement (see “No Incorporation by Reference” on page 71).

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table provides information, as of September 20, 2019, the record date of the Annual Meeting, with respect to the beneficial ownership of Oracle common stock by: (1) each stockholder known by us to be the beneficial owner of more than 5% of our common stock; (2) each director or nominee; (3) each executive officer named in the Summary Compensation Table; and (4) all current executive officers and directors as a group. Except as set forth below, the address of each stockholder is 500 Oracle Parkway, Redwood City, California 94065.

 

  Name of Beneficial Owner    Amount and Nature of
Beneficial Ownership  (1)
    

  Percent  

  of Class  

 

  Directors and NEOs

    

 

 

 

 

 

    

 

 

 

 

 

  Lawrence J. Ellison (2)

     1,172,919,853        35.4

  Jeffrey S. Berg (3)

     449,316        *  

  Michael J. Boskin (4)

     359,796        *  

  Safra A. Catz (5)

     22,806,092        *  

  Bruce R. Chizen (6)

     275,813        *  

  George H. Conrades (7)

     99,809        *  

  Dorian E. Daley (8)

     920,817        *  

  Rona A. Fairhead (9)

            *  

  Hector Garcia-Molina (10)

     256,419        *  

  Jeffrey O. Henley (11)

     4,934,516        *  

  Mark V. Hurd (12)

     21,776,255        *  

  Renée J. James (13)

     39,917        *  

  Charles W. Moorman IV (14)

     11,015        *  

  Leon E. Panetta (15)

     68,562        *  

  William G. Parrett

     8,561        *  

  Edward Screven (16)

     6,043,113        *  

  Naomi O. Seligman (17)

     157,207        *  

  All current executive officers and directors as a group (18 persons) (18)

     1,231,596,441        36.6
                   

  Other More Than 5% Stockholders

                 

  The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355 (19)

     197,348,700        6.0

  BlackRock, Inc., 55 East 52nd Street, New York, NY 10055 (20)

     187,772,023        5.7

 

*

Less than 1%

 

(1)

Unless otherwise indicated below, each stockholder listed had sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws, if applicable.

 

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(2)

Includes 34,187,500 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date and 305,000,000 shares pledged as collateral to secure certain personal indebtedness, including various lines of credit. See “Corporate Governance—Prohibition on Speculative Transactions and Pledging Policy” on page 20 for more information on Board and committee oversight of Mr. Ellison’s pledging arrangements.

 

(3)

Includes 5,000 shares owned by Mr. Berg’s spouse, 129,222 shares held in a trust for the benefit of Mr. Berg and his family, 67,594 shares held in a grantor retained annuity trust for the benefit of Mr. Berg and his family and 247,500 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(4)

Includes 300,000 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(5)

Includes 1,118,592 shares held in a trust for the benefit of Ms. Catz and her spouse and 21,687,500 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(6)

Includes 5,000 shares held in a trust for the benefit of Mr. Chizen and his spouse and 225,000 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(7)

Includes 67,500 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(8)

Includes 139,567 shares held in trusts for the benefit of Ms. Daley and her spouse and 781,250 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(9)

Mrs. Fairhead joined the Board on July 31, 2019. She has been granted RSUs, none of which have vested or will vest within 60 days of the record date.

 

(10)

Includes 220,357 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(11)

Includes 1,800,569 shares held in trusts for the benefit of Mr. Henley and his spouse, 31,000 shares held in a trust for the benefit of Mr. Henley’s children, 102,947 shares held in a trust by the J&J Family Foundation, and 3,000,000 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(12)

Includes 762,755 shares held in a trust for the benefit of Mr. Hurd and his spouse and 20,962,500 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(13)

Includes 7,031 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(14)

Includes 2,454 shares held in trusts for the benefit of Mr. Moorman’s family.

 

(15)

Includes 31,062 shares held in a trust for the benefit of Mr. Panetta’s family and 37,500 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(16)

Includes 3,700,000 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date and 31,506 vested RSUs (including dividend equivalents) for which Mr. Screven has elected to defer settlement.

 

(17)

Includes 7,397 shares owned by Ms. Seligman’s spouse of which she disclaims beneficial ownership and 112,500 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(18)

Includes all shares described in the notes above. Also includes 69,380 additional shares of Oracle common stock and 400,000 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date, in each case held by an executive officer who is not named in the table.

 

(19)

Based on a Schedule 13G/A filed with the SEC on February 11, 2019 by The Vanguard Group (Vanguard) on behalf of itself, Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd. The Schedule 13G/A indicates that as of December 31, 2018, Vanguard had sole voting power with respect to 3,112,573 shares, shared voting power with respect to 723,442 shares, sole dispositive power with respect to 193,579,992 shares, and shared dispositive power with respect to 3,768,708 shares.

 

(20)

Based on a Schedule 13G/A filed with the SEC on February 6, 2019 by BlackRock, Inc. (BlackRock), on behalf of itself, BlackRock Life Limited, BlackRock International Limited, BlackRock Advisors, LLC, BlackRock Capital Management, Inc., BlackRock (Netherlands) B.V., BlackRock Institutional Trust Company, N.A., BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, FutureAdvisor, Inc., BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock Asset Management Deutschland AG, BlackRock (Luxembourg) S.A., BlackRock

 

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Investment Management (Australia) Limited, BlackRock Advisors (UK) Limited, BlackRock Fund Advisors, BlackRock Asset Management North Asia Limited, BlackRock (Singapore) Limited, BlackRock Fund Managers Ltd. The Schedule 13G/A indicates that as of December 31, 2018, BlackRock had sole voting power with respect to 161,816,036 shares and sole dispositive power with respect to 187,772,023 shares.

DELINQUENT SECTION 16(a) REPORTS

 

Section 16(a) of the Securities Exchange Act of 1934 (Exchange Act) requires our executive officers and directors and any persons who beneficially own more than 10% of our common stock (collectively, Reporting Persons) to file reports of ownership and changes in ownership with the SEC. Reporting Persons are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. As a matter of practice, we assist our executive officers and non-employee directors in preparing initial ownership reports and reporting ownership changes and we typically file these reports on their behalf.

Based solely on our review of the copies of any Section 16(a) forms received by us or written representations from the Reporting Persons, we believe that all Reporting Persons complied with all applicable filing requirements in fiscal 2019, except for the following: for each of Dorian E. Daley, Jeffrey O. Henley, Edward Screven and William C. West, a Form 4 reporting an annual equity grant of RSUs or stock options, as applicable, was filed twelve days late due to an administrative error.

 

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EXECUTIVE COMPENSATION

 

 

Compensation Discussion and Analysis

 

This section provides information on our fiscal 2019
executive compensation program and compensation
philosophy for our named executive officers (NEOs). Our
fiscal 2019 NEOs were:

 

  Lawrence J. Ellison, Chairman and Chief Technology
   Officer*

 

  Safra A. Catz, Chief Executive Officer

 

  Mark V. Hurd, Chief Executive Officer

 

  Edward Screven, Executive Vice President, Chief
   Corporate Architect

 

  Dorian E. Daley, Executive Vice President and General
   Counsel

 

  Jeffrey O. Henley, Vice Chairman

 

Fiscal 2019 began on June 1, 2018 and ended on May 31,
2019.

 

*  We have included Mr. Ellison as an NEO for fiscal 2019
on a voluntary basis in the interest of transparency. See
the Summary Compensation Table on page 44 for
additional information.

     

 

    Quick Reference Guide

      
   

    Executive Summary

    28  
   

    Five-Year Performance-Based Stock Options Overview

    29  
   

    Fiscal 2019 Compensation Overview

    30  
   

    Stockholder Outreach

    31  
   

    Fiscal 2019 Pay Outcomes

    32  
   

    Compensation Best Practices

    32  
   

     Objectives of Our Executive Compensation Program

    33  
   

    Elements of Our Executive Compensation Program

    33  
   

    Long-Term Incentive Compensation

    33  
   

    Annual Cash Bonus

    36  
   

     Base Salary, Perquisites and Other Personal Benefits

    37  
   

    Determination of Executive Compensation Amounts

    38  
   

     Other Factors in Setting Executive Compensation

    40  
   

    2018 Stockholder Advisory Vote

    42  
   

     Report of the Compensation Committee

    43  
   

     Compensation Tables

    44  

 

              
 

 

Fiscal 2019 Executive Compensation Highlights

 

  No tranches of the performance-based stock options (PSOs) granted to Mr. Ellison, Ms. Catz and Mr. Hurd in fiscal 2018 have been earned, due to the rigor and long-term nature of the PSO goals.

 

  Total compensation for Mr. Ellison, Ms. Catz and Mr. Hurd, in the aggregate, decreased by approximately 98% in fiscal 2019 compared to fiscal 2018 (as reported in the Summary Compensation Table (SCT) on page 44). In fiscal 2019, for these NEOs:

 

  Base salaries remained unchanged;

 

  No bonuses were earned; and

 

  No equity awards were granted.

 

  In the aggregate, approximately 95.2% of the total compensation reported in the SCT in fiscal 2019 for Mr. Screven, Ms. Daley and Mr. Henley was at-risk.

 

    

 

Oracle in Fiscal 2019

 

  $38.9 billion returned to stockholders

 

  $36.0 billion in repurchases of common stock

 

  $2.9 billion in dividends paid

 

  Earnings per share of $2.97, a 251% increase from fiscal 2018

 

  Total revenues of $39.5 billion, a slight increase from fiscal 2018

 

  Cloud services and license support revenues plus cloud license and on-premise revenues of $32.6 billion, a 2% increase from fiscal 2018

 

  Operating income of $13.5 billion, a 2% increase from fiscal 2018

 

  Operating margin of 34%, a slight increase from fiscal 2018

 

  
         

 

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Five-Year Performance-Based Stock Options: A Rigorous Long-Term Equity Program Directly Linked to Performance

No equity awards were granted to Mr. Ellison, Ms. Catz or Mr. Hurd in fiscal 2019. In fiscal 2018, the Compensation Committee granted each of these NEOs an equity award consisting entirely of PSOs.

Due to the rigor and long-term nature of the PSO goals, none were achieved in fiscal 2018 or 2019, and thus no tranches of the PSOs have been earned to date.

Our cloud business has become an important part of our long-term success. With the PSO program, the Compensation Committee sought to directly link the long-term incentive compensation of our most senior executives with ambitious goals related to our cloud offerings and stockholder return.

The PSOs may be earned only upon the attainment of rigorous stock price, market capitalization and operational performance goals over a five-year performance period. Consistent with the long-term nature of our transition toward our cloud business, the PSOs granted to each of Mr. Ellison, Ms. Catz and Mr. Hurd are intended to represent five years of equity compensation and were granted with the expectation that these NEOs will receive no additional equity awards until 2022 at the earliest.

The PSOs are divided into seven equal tranches that are eligible to be earned based on the achievement of the following goals over the five-year performance period, which runs from fiscal 2018 through fiscal 2022.

 

 

1 Tranche (1/7th)

may be earned based on

achievement of
a stock price goal

 

    Oracle’s average stock price for 30 calendar days must equal or exceed $80 in order for the tranche to be earned

 

    

 

 

6 Tranches (6/7ths)

may be earned based on achievement of

both (1) market capitalization goals and (2) operational goals

 

  One goal of each type (market capitalization and operational) must be satisfied in order for a tranche (i.e., 1/7th of the award) to be earned

 

  If market capitalization goal(s) are satisfied but no operational goal(s) are satisfied (or vice versa), then no tranche will be earned until subsequent achievement of the other goal type occurs

 

 

LOGO

 

 

 

Six Market Capitalization Goals

    Increase Oracle’s market capitalization from a baseline of $207 billion by:

 

  $16.7 billion

 

  $33.3 billion

 

  $50 billion

 

  $66.7 billion

 

  $83.3 billion

 

  $100 billion

 

    Shares issued in connection with a material acquisition would be excluded from the calculation of market capitalization

 

    

  

 

Six Operational Goals

   Become the largest enterprise Software-as-a-Service (SaaS) company as measured by an independent third-party report

 

   Attain $20 billion in non-GAAP total cloud revenues in a fiscal year

 

   Attain $10 billion in non-GAAP total SaaS revenues in a fiscal year

 

   Attain $10 billion in non-GAAP total Platform-as-a-Service (PaaS) and IaaS revenues in a fiscal year

 

   Attain non-GAAP SaaS gross margin of 80%

 

   Maintain non-GAAP PaaS/Infrastructure-as-a-Service gross margin of at least 30% for three of the five fiscal years in the performance period

 



 

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Fiscal 2019 Compensation for Mr. Ellison, Ms. Catz and Mr. Hurd

The Compensation Committee routinely engages with our principal unaffiliated stockholders regarding executive compensation matters and takes stockholder feedback seriously (see page 31 for details). We believe the fiscal 2019 compensation of Mr. Ellison, Ms. Catz and Mr. Hurd addresses the feedback received from our stockholders because pay is aligned with the long-term interests of our stockholders.

Below is an excerpt of our fiscal 2019 SCT showing the total compensation for Mr. Ellison, Ms. Catz and Mr. Hurd. See page 44 for the full SCT and related footnotes.

 

   Name   Fiscal
Year
    Salary
($)
    Bonus ($)     Stock
Awards ($)
    Option
Awards ($)
    Non-Equity
Incentive Plan
Compensation ($)
    All Other
Compensation ($)
    Total ($)  

 

  Lawrence J. Ellison

 

 

 

 

2019

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,662,827

 

 

 

 

 

 

1,662,828

 

 

 

  Safra A. Catz

 

 

 

 

2019

 

 

 

 

 

 

950,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,981

 

 

 

 

 

 

965,981

 

 

 

  Mark V. Hurd

 

 

 

 

2019

 

 

    950,000    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,531,646

 

 

 

 

 

 

2,481,646

 

 

In fiscal 2019, the principal elements of compensation for each of Mr. Ellison, Ms. Catz and Mr. Hurd were as follows:

 

   

Base Salary: $1 for Mr. Ellison (unchanged since fiscal 2011); $950,000 for Ms. Catz and Mr. Hurd (unchanged since fiscal 2012)

 

   

Annual Performance-Based Cash Bonus: No cash bonuses were earned in fiscal 2019.

 

   

Long-Term Incentive Compensation: No equity awards were granted in fiscal 2019 because PSOs granted in fiscal 2018 are intended to represent five years of equity compensation. Due to the rigor and long-term nature of the PSO goals, none were achieved in fiscal 2018 or 2019, and thus no tranches of the PSOs have been earned to date.

Executive Compensation Program Evolution

The table below compares key features of the current five-year PSO program to our prior executive compensation program consisting of performance-based stock units (PSUs) and time-based stock options.

 

 

Program

 

 

PSUs/Time-Based Stock Options
(FY15—FY17)

     LOGO     

 

Five-Year PSO Program (FY18—present)

   

 

Form of Equity

 

 

50% Time-Based Stock Options

 

50% Performance-Based Stock Units

 

 

100% Performance-Based Stock Options

   

 

Performance Periods

 

 

PSUs have variable performance periods of 1, 2 or 3 years

 

 

5-year performance period

   

 

Metrics

 

 

PSUs earned based on Oracle’s revenue growth and cash flow growth compared to the PSU Comparator Companies

 

 

Oracle’s attainment of pre-established stock price, market capitalization and operational performance goals focused on growth of Oracle’s cloud business

   

 

Vesting

 

 

Time-Based Stock Options vest 25% per year over 4 years

 

Each tranche of PSUs may be earned at 0% to 150% of target

 

 

No time-based vesting

 

Each tranche of PSOs may be earned at 0% or 100% of the grant amount

   

 

Frequency of Grant

 

 

Annual

 

 

Intended to be the sole long-term incentive awards for Mr. Ellison, Ms. Catz and Mr. Hurd for 5 years

 

Fiscal 2019 Compensation for All Other NEOs

 

The principal elements of fiscal 2019 compensation for Mr. Screven, Ms. Daley and Mr. Henley were a base salary, a cash bonus opportunity, and restricted stock units (RSUs) or stock options, as described in further detail on pages 35 to 37. The total compensation mix for these NEOs is heavily weighted toward equity-based awards, thus aligning their compensation with the interests of our stockholders. In the aggregate, approximately 95.2% of the fiscal 2019 total compensation (as reported in the SCT on page 44) for Mr. Screven, Ms. Daley and Mr. Henley was at-risk.

 

Elements of Fiscal 2019 Compensation

Mr. Screven, Ms. Daley and Mr. Henley

 

LOGO



 

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Stockholder Outreach and Compensation Committee Responsiveness

The Compensation Committee actively solicits the views of our principal unaffiliated stockholders on executive compensation matters. On an annual basis, members of the Compensation Committee hold meetings with our unaffiliated stockholders at which executive compensation and other corporate governance matters are discussed at length. Thus far in fiscal 2020, members of the Compensation Committee held meetings with eight institutional stockholders representing approximately 16% of our outstanding unaffiliated shares.

In designing the five-year PSO program, the Compensation Committee carefully considered the feedback of stockholders. The Compensation Committee continues to believe that the five-year PSO program is responsive to feedback from stockholders, as described below.

 

What We Heard

         The Compensation Committee’s Response

Equity awards for top executives should not vest based solely on the passage of time

  

 

LOGO

  

100% Performance-Based Equity Compensation. In fiscal 2018, Mr. Ellison, Ms. Catz and Mr. Hurd each received an equity award consisting entirely of PSOs that may be earned only upon the attainment of rigorous stock price, market capitalization and operational performance goals over a five-year performance period.

 

No additional equity compensation was granted to these executives in fiscal 2019.

Performance metrics should better align with stockholder value

  

 

LOGO

  

PSOs with Rigorous Performance Goals. Payout for the PSOs is tied to significant stock price appreciation as well as the satisfaction of rigorous operational performance goals during a five-year performance period that, if achieved, should result in considerable stockholder returns.

 

Six of the seven PSO tranches may be earned only if Oracle satisfies a combination of (1) an operational performance goal tied to significant growth of Oracle’s cloud business and (2) a substantial increase in Oracle’s market capitalization. The seventh PSO tranche may be earned only upon significant sustained growth in Oracle’s stock price.

 

None of the goals were satisfied in fiscal 2018 or 2019, and thus no tranches of the PSOs have been earned to date.

Compensation should be reduced for top executives

  

 

LOGO

  

Significant Decrease in Equity Compensation Value. The PSOs represent a decrease in equity compensation value for the grantees. When the grant date fair value of the PSOs is annualized over the five-year performance period, it represents a 47% decrease from the value of the fiscal 2017 equity awards granted to each of Mr. Ellison, Ms. Catz and Mr. Hurd.

Long-term equity awards should have a minimum three-year performance period

  

 

LOGO

  

Five-Year Performance Period. The PSOs may be earned over a five-year performance period. The PSOs were granted with the expectation that no additional equity awards will be granted to Mr. Ellison, Ms. Catz and Mr. Hurd until 2022 at the earliest.

Fiscal 2020 Stockholder Feedback

In its fiscal 2020 meetings with stockholders, the Compensation Committee received positive feedback from a number of stockholders regarding the PSOs. These stockholders appreciated the reduction in equity compensation value resulting from the PSOs and the performance-based nature of the PSOs. A number of stockholders noted that the rigor of the PSO performance goals has become more evident this year, as no tranches of the PSOs have been earned to date. Stockholders agreed that if and when the PSO performance goals are satisfied, both executives and stockholders will benefit.

In addition, several stockholders noted the rarity of an entire compensation committee conducting outreach meetings with stockholders and expressed their appreciation for the time and effort the Compensation Committee members have put into ongoing stockholder engagement. The Compensation Committee values the relationships established during these meetings, and members of the committee share feedback from stockholders with the full Board.



 

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Fiscal 2019 Pay Outcomes: Pay-for-Performance

A significant portion of the compensation amounts our NEOs ultimately realize are contingent on the achievement of our primary business objectives and the creation of short-term and long-term value for our stockholders. The table below summarizes the fiscal 2019 outcomes for our NEOs’ performance-based compensation. Details regarding the material elements of the PSOs, PSUs and cash bonus awards can be found on pages 29 and 34 to 37.

 

     Pay Element   Executive   Fiscal 2019 Outcome    Reason       
   

PSOs

 

Lawrence J. Ellison

Safra A. Catz

Mark V. Hurd

 

    No tranches of the PSOs granted in fiscal 2018 have been earned to date

  

  None of the stock price, market capitalization and operational performance goals of the PSOs were satisfied in year 1 (fiscal 2018) or year 2 (fiscal 2019)

 

       
 

PSUs

 

Lawrence J. Ellison

Safra A. Catz

Mark V. Hurd

 

    2017 PSUs (3rd tranche) earned at 133% of target

 

    2016 PSUs (4th tranche) earned at 133% of target

  

  Oracle’s revenue growth was significantly greater than the weighted average revenue growth of the PSU Comparator Companies (as identified on page 34 below), resulting in achievement of 116% of the target award opportunity for this metric

 

  Oracle’s operating cash flow growth was significantly greater than the weighted average cash flow growth of the PSU Comparator Companies, resulting in achievement of 150% of the target award opportunity for this metric

 

 
 

Annual

Cash

Bonus

 

Lawrence J. Ellison

Safra A. Catz

Mark V. Hurd

Edward Screven

Jeffrey O. Henley

 

 

    No cash bonus paid

  

  Oracle’s non-GAAP pre-tax profits grew in constant currency but not in U.S. Dollars, and our bonus formula is based on U.S. Dollars

 

 
        Dorian E. Daley  

    $400,000 (53% of target)

  

  Ms. Daley made significant contributions to Oracle’s legal strategy and successes in fiscal 2019, but Oracle’s overall financial performance did not meet internal expectations

       

Compensation Best Practices

 

LOGO Best Practices We Employ

 

LOGO    High proportion of compensation for our most senior executives is performance-based and at-risk

 

LOGO    Caps on maximum payout of bonuses and performance-based equity awards

 

LOGO    Robust stock ownership guidelines

 

LOGO    Disciplined dilution rates from equity awards

 

LOGO    Compensation recovery (clawback) policy for cash bonuses in the event of a financial restatement

 

LOGO    Annual risk assessment of compensation programs

 

LOGO    Independent compensation consultant and independent compensation committee

 

LOGO    Anti-hedging policy applicable to all employees and directors

 

 

   

LOGO Practices We Avoid

 

LOGO   No severance benefit arrangements except as provided under our equity incentive plan to employees generally or as required by law

 

LOGO   No single-trigger change in control vesting of equity awards

 

LOGO   No change in control acceleration of performance-based cash bonuses

 

LOGO   No minimum guaranteed vesting for performance-based equity awards

 

LOGO   No discretionary cash bonuses for CEOs and CTO

 

LOGO   No tax gross-ups for NEOs

 

LOGO   No payout or settlement of dividends or dividend equivalents on unvested equity awards

 

LOGO   No supplemental executive retirement plans, executive pensions or excessive retirement benefits

 

LOGO   No repricing, cash-out or exchange of “underwater” stock options without stockholder approval

 



 

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Objectives of Our Executive Compensation Program

 

The objectives of our executive compensation program are to:

 

   

attract and retain highly talented and productive executive officers;

 

   

align the interests of our executive officers with those of our stockholders; and

 

   

provide incentives for their superior performance.

The Compensation Committee believes we employ some of the most talented senior executives in our industry. Our senior executives are routinely recruited as candidates to lead other large, sophisticated technology companies. Given the strength of our NEO group, the Compensation Committee believes it is critical they receive total compensation opportunities that reflect their individual skills and experiences and are commensurate with the management of an organization of Oracle’s size, scope and complexity. Further, the Compensation Committee believes that our NEOs’ compensation levels must be appropriate to retain and properly motivate them. At the same time, however, the Compensation Committee seeks to align our NEOs’ pay with the investment gains or losses of Oracle’s stockholders.

Within Oracle, executive compensation is weighted most heavily toward our most senior executive officers because they have the greatest impact on our business and financial results.

Elements of Our Executive Compensation Program

 

Each Element of the Program is Closely Linked to Our Business Objectives

Our executive compensation program consists of the three principal elements described in the table below. We believe this compensation mix encourages appropriate decisions that are consistent with our business strategy of constantly improving our performance and building short-term and long-term stockholder value.

 

  Compensation Element   Designed to Reward    Relationship to Business Objectives    At-Risk   

  1. Long-Term  Incentive  Compensation  (page 33)

 

   Success in achieving sustainable long-term results

  

   Align our NEOs’ interests with long-term stockholder interests to increase overall stockholder value

 

   Motivate and reward our NEOs for achieving financial performance goals that contribute to sustainable long-term results

 

   Attract and retain talented NEOs in a competitive market for talent

  

 

 

 

LOGO

 

 

  2.  Annual Cash  Bonus (page 36)

 

   Success in achieving annual operating results

  

   Motivate and reward our NEOs for achieving or exceeding annual financial performance goals

 

   Share incremental profits earned by Oracle with our NEOs

  

 

 

 

LOGO

 

 

  3.  Base Salary
 (page 37)

 

   Experience, knowledge of the industry, duties and scope of responsibility

  

   Provide a minimum, fixed level of cash compensation to attract and retain talented NEOs who can successfully design and execute our business strategy

        

1. Long-Term Incentive Compensation

Our philosophy with regard to granting long-term incentive compensation is to:

 

   

be sensitive to the overall number and value of shares of Oracle common stock underlying the equity awards granted;

 

   

effectively manage the overall net dilution resulting from our use of equity as a compensation tool, by granting equity awards to a relatively small number of employees, with a focus on our senior executives, engineers and high performers in other areas of our business; and

 

   

provide the largest awards to our top performers and individuals with the greatest responsibilities because they have the potential and ability to contribute the most to the success of our business and the creation of long-term stockholder value.

 

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Consistent with this philosophy, our cumulative potential dilution since June 1, 2016 has been a weighted-average annualized rate of 1.7% per year. For details on the calculation of our cumulative potential dilution, see Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 13 to our consolidated financial statements in our Annual Report on Form 10-K for fiscal 2019.

Long-Term Incentive Compensation—Mr. Ellison, Ms. Catz and Mr. Hurd

Fiscal 2019—No Equity Granted; No PSOs Earned

In fiscal 2019, the Compensation Committee did not grant any equity awards to Mr. Ellison, Ms. Catz and Mr. Hurd.

Fiscal 2018—PSOs Granted; No PSOs Earned

In fiscal 2018, the Compensation Committee granted each of Mr. Ellison, Ms. Catz and Mr. Hurd an equity award consisting entirely of PSOs that may be earned only upon the attainment of stock price, market capitalization and operational performance goals. Due to the rigor and long-term nature of the underlying performance goals, none of the goals were achieved in fiscal 2018 or 2019, and thus no tranches of the PSOs have been earned to date.

Long-term incentive compensation for these NEOs is 100% performance-based. The PSOs will be earned only if Oracle both significantly grows its cloud business and increases its stock price and market capitalization. The PSOs are intended to represent five years of long-term incentive compensation. Performance measured against the goals is evaluated annually. See page 29 above for a description of these grants.

Fiscal 2016 and 2017—PSUs

In fiscal 2016 and 2017, a portion of the long-term incentive compensation opportunities for Mr. Ellison, Ms. Catz and Mr. Hurd consisted of PSUs, which are measured using two performance metrics: (1) 50% of the number of target PSUs is tied to relative growth in total consolidated U.S. GAAP revenues; and (2) 50% of the number of target PSUs is tied to relative growth in total consolidated U.S. GAAP net cash flows from operating activities. The Compensation Committee selected these metrics because management analyzes revenue growth and operating cash flows as proxies for the creation of long-term stockholder value, and Mr. Ellison, Ms. Catz and Mr. Hurd are ultimately responsible for the continued success of Oracle as a whole.

The PSUs are divided into four equal annual tranches, each of which is eligible to be earned based on Oracle’s performance with respect to the two performance metrics as compared to the weighted average performance of the same metrics of the PSU Comparator Companies (Cisco Systems, Inc., Hewlett Packard Enterprise Company, IBM Corporation, salesforce.com, inc., SAP SE and Workday, Inc.), which represent some of our primary competitors and companies to which our stockholders frequently compare us.

There is no minimum guaranteed number of PSUs that may be earned in any year. The number of PSUs that may be earned in any year is capped at a maximum of 150% of the target number of PSUs allocated to that year, so the upside is limited. If Oracle’s growth exceeds the growth of the PSU Comparator Companies but is negative, the maximum number of PSUs that may be earned with respect to that metric is 100% of the target number of PSUs. If Oracle’s growth is one of the two lowest percentage growth amounts among any of the PSU Comparator Companies for either metric with each company’s growth measured separately and ranked from largest to smallest, none of the number of PSUs allocated to that year will be earned with respect to that metric.

One-fourth of the PSUs are eligible to be earned at the end of each of four separate, varying performance periods, as follows:

 

   Tranche Vesting Fiscal Year    % of PSU Award    Performance Metric

  Year 1

   25%   

  Year 1 weighted average comparator performance

  Year 2

   25%   

  Year 1 and Year 2 weighted average comparator performance

  Year 3

   25%   

  Year 1, Year 2 and Year 3 weighted average comparator performance

  Year 4

   25%   

  Year 2, Year 3 and Year 4 weighted average comparator performance

Earned PSUs vest upon the Compensation Committee’s certification of achievement measured against the pre-established and quantifiable target levels for each performance metric. Upon vesting, each PSU is converted into one share of Oracle common stock.

 

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The table below shows the fiscal 2017 and 2016 PSUs earned by Mr. Ellison, Ms. Catz and Mr. Hurd.

 

  Grant and

  Performance Metric

  PSUs Granted to Each NEO (#)   Weight     Percentage Earned for Fiscal Year     Total PSUs Earned by Each NEO as 
of September 20, 2019 (#)
  2016     2017     2018     2019     2020  

  2016 PSUs

  562,500 (Ellison, Catz and Hurd)              

  Revenue Growth

      50%       100%       100%       150%       116%      

  Operating Cash Flow Growth

      50%       100%       0%       150%       150%      

  Total Earned

        100%       50%       150%       133%       609,183 (Ellison, Catz and Hurd)

  2017 PSUs

  562,500 (Ellison, Catz and Hurd)              

  Revenue Growth

      50%         150%       150%       116%       TBD    

  Operating Cash Flow Growth

      50%         0%       150%       150%       TBD    

  Total Earned

          75%       150%       133%       TBD     503,715 (Ellison, Catz and Hurd)
               
                                                         

Long-Term Equity Compensation—Mr. Screven, Ms. Daley and Mr. Henley

Oracle employees who received annual equity awards in fiscal 2019, including Mr. Screven, Ms. Daley and Mr. Henley, were given a choice to receive their awards in the form of (1) 100% stock options, (2) 100% RSUs or (3) a combination of 50% stock options and 50% RSUs (the Employee Choice Program), with the exception of a limited number of employees in foreign jurisdictions where we are unable to offer the Employee Choice Program due to administrative or local law restrictions. In fiscal 2019, Mr. Screven and Ms. Daley elected to receive their annual equity awards in the form of 100% RSUs and Mr. Henley elected to receive his annual equity award in the form of 100% stock options.

RSUs—Mr. Screven and Ms. Daley

In fiscal 2019, Mr. Screven and Ms. Daley received long-term equity compensation in the form of RSUs that vest in equal annual installments over four years from the date of grant. The Compensation Committee believes that RSUs serve as an effective performance incentive because they become more valuable as our stock price increases (which benefits all stockholders) and fully vest only if the recipient remains employed through the final vesting date. Because RSUs have value to the recipient even in the absence of stock price appreciation, RSUs help retain and incentivize employees during periods of market volatility, and result in Oracle granting fewer shares of common stock than through stock options of equivalent grant date fair value.

Mr. Screven received an annual award of 250,000 RSUs in fiscal 2019. The Compensation Committee determined this amount based on, among other factors, competitive pay data drawn from the companies in our compensation peer group, input from the Compensation Committee’s independent compensation consultant, the recommendation of the CTO to whom Mr. Screven reports and an assessment of Mr. Screven’s significant role and responsibilities, including the Compensation Committee’s determination that Mr. Screven drives technology and architecture decisions across all Oracle products to ensure that product development is consistent with Oracle’s overall long-term strategy. Mr. Screven also plays a critical role by leading company-wide strategic initiatives, including with respect to industry standards and security.

In addition, Mr. Screven received a special supplemental award of 500,000 RSUs in December 2018 in connection with staffing changes in Oracle’s engineering organization following the departure of Thomas Kurian, Oracle’s former President, Product Development. Specifically, the Compensation Committee granted additional equity compensation to key employees across the engineering organization, including Mr. Screven, based on the following rationale and key factors: the significant strategic opportunity ahead for Oracle, the valuable talent of Oracle’s senior product managers and Oracle’s vulnerability to well-funded competitors seeking to attract Oracle’s highly regarded technical leaders. Because Mr. Screven received this supplemental equity award, he is not expected to receive any equity awards in fiscal 2020.

Ms. Daley received an annual award of 162,500 RSUs in fiscal 2019. The Compensation Committee determined this amount based on, among other factors, competitive pay data drawn from the companies in our compensation peer group, input from the Compensation Committee’s independent compensation consultant, the recommendation of the CEO to whom Ms. Daley reports, and an assessment of Ms. Daley’s significant role and responsibilities overseeing all legal matters at Oracle and managing a large-scale multinational legal team. Ms. Daley plays a critical role in setting the strategy for Oracle’s litigation and regulatory matters and provides leadership in the areas of compliance and ethics, data protection and privacy, intellectual property and corporate governance, among others.

 

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Stock Options—Mr. Henley

In fiscal 2019, Mr. Henley received long-term equity compensation in the form of a stock option to purchase 400,000 shares of Oracle’s common stock that vests in equal annual installments over four years from the date of grant. The Compensation Committee believes stock options serve as an effective performance incentive because the recipient derives value only if our stock price increases (which benefits all stockholders) and the recipient remains employed through the final vesting date. Stock options give the recipient the right to purchase at a specified price (the market price of Oracle common stock on the date when the stock option was granted) a specified number of shares of Oracle common stock for a specified period of time (generally ten years).

The Compensation Committee determined the amount of Mr. Henley’s stock option award based on, among other factors, competitive pay data drawn from the companies in our compensation peer group, input from the Compensation Committee’s independent compensation consultant, the recommendation of the CTO to whom Mr. Henley reports, and an assessment of Mr. Henley’s highly valued contributions to Oracle’s strategic vision, management and operations. Mr. Henley meets regularly with significant Oracle customers and is instrumental in closing major commercial transactions worldwide.

2. Annual Cash Bonuses

Performance-Based Cash Bonuses under the Executive Bonus Plan

Our stockholder-approved Executive Bonus Plan is intended to motivate our senior executives by rewarding them when our annual financial performance objectives are met or exceeded. In fiscal 2019, Mr. Ellison, Ms. Catz, Mr. Hurd, Mr. Screven and Mr. Henley did not earn bonuses.

Under the Executive Bonus Plan, the Compensation Committee assigns each participant an annual target cash bonus opportunity and establishes the financial performance metric or metrics that must be achieved before an award actually will be paid to the participant for the year. Consistent with prior years, the Compensation Committee selected year-over-year growth in our non-GAAP pre-tax profits as the financial performance metric for determining our NEOs’ bonuses for fiscal 2019 (other than for Ms. Daley, whose bonus arrangement is described below) because management regularly uses this metric internally to understand, manage and evaluate our business performance and make operating decisions with a view to the creation of stockholder value. In addition, as a measure of profitability, this metric requires our NEOs to manage multiple variables (i.e., revenues and operating expenses) in achieving the goal of growing our non-GAAP pre-tax profit, which the Board believes to be an important measure of Oracle’s financial performance and value creation for our stockholders.

For purposes of the Executive Bonus Plan, “non-GAAP pre-tax profit” is defined as:

 

   

Oracle’s U.S. GAAP income before provision for income taxes;

 

   

Minus stock-based compensation expenses, acquisition-related and other expenses, restructuring expenses and amortization of intangible assets; and

 

   

Plus an adjustment to increase our U.S. GAAP income before provision for income taxes for the full amount of revenues recognized from certain contracts assumed in acquisitions as if the acquired companies had remained independent entities during the applicable fiscal year.

Bonuses were calculated by multiplying each NEO’s individual bonus percentage by the growth in Oracle’s non-GAAP pre-tax profits, subject to an individual bonus cap. Each NEO’s individual bonus percentage is described on pages 39 and 40 below.

Under the bonus formula, if Oracle’s non-GAAP pre-tax profits do not grow year-over-year, then our NEOs will not receive any bonuses under the Executive Bonus Plan even if Oracle has been profitable. Further, even where Oracle’s non-GAAP pre-tax profits grow year-over-year, if we do not meet our internal profitability expectations for the fiscal year, the bonuses paid to our NEOs will be below target. The Compensation Committee has discretion to reduce or eliminate but not increase the award determined by the bonus formula.

Between fiscal 2018 and fiscal 2019, our non-GAAP pre-tax profits grew in constant currency but not in U.S. Dollars. Because the bonus formula is based on U.S. Dollars, Mr. Ellison, Ms. Catz, Mr. Hurd, Mr. Screven and Mr. Henley did not earn bonuses for fiscal 2019.

 

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Ms. Daley’s Cash Bonus Opportunity

As Executive Vice President and General Counsel, Ms. Daley oversees all legal matters at Oracle and manages a large-scale multinational legal team. Because Ms. Daley is not directly responsible for Oracle’s financial performance, the Compensation Committee believes it is inappropriate for Ms. Daley to participate in the Executive Bonus Plan described above. At the beginning of fiscal 2019, the Compensation Committee set a target bonus opportunity of $750,000 for Ms. Daley, subject to a $1,500,000 cap, based on, among other things, an assessment of Ms. Daley’s role and responsibilities, competitive pay data drawn from the companies in our compensation peer group, input from its independent compensation consultant and the recommendations of the CEO to whom Ms. Daley reports. After fiscal 2019 year-end, the Compensation Committee granted Ms. Daley a bonus of $400,000 (53% of target) in recognition of Ms. Daley’s significant contributions to Oracle’s legal strategy and successes. Ms. Daley’s bonus was paid below target based on Oracle’s overall financial performance in fiscal 2019.

3. Base Salary

The base salaries of Mr. Ellison, Ms. Catz and Mr. Hurd have not increased in over six years. Base salary represents the only fixed component of the three principal elements of our executive compensation program and is intended to provide a baseline amount of annual compensation for our NEOs. When setting base salary levels, the Compensation Committee considers the base salaries paid to NEOs in comparable positions at the companies in our compensation peer group, Oracle’s performance and the individual NEO’s performance. Mr. Ellison’s base salary is set at $1 consistent with the Compensation Committee’s view that his entire total direct compensation opportunity should be “at-risk.”

Limited Perquisites and Other Personal Benefits

In fiscal 2019, we provided our NEOs with certain limited perquisites and other personal benefits, each of which the Compensation Committee believes are reasonable and in the best interests of Oracle and our stockholders. The amounts of all perquisites and other personal benefits provided to our NEOs are reported in the “All Other Compensation” column of the SCT below.

Residential Security

The Board has established a residential security program for the protection of our most senior executives based on an assessment of risk, which includes consideration of the executive’s position and work location. We require these security measures for Oracle’s benefit because of the importance of these executives to Oracle, and we believe these security costs are necessary and appropriate business expenses since these costs arise from the nature of the executives’ employment at Oracle.

The Compensation Committee reviews and approves the residential security budget each year, which includes a review of the actual and credible threats made against our senior executives during the last completed fiscal year. For Mr. Ellison, Oracle pays for the annual costs of security personnel at his primary residence. Mr. Ellison paid for the initial procurement and installation of security equipment for his primary residence, and he pays for ongoing maintenance and upgrade fees for such equipment. Mr. Ellison also pays for all security costs for his other residences. For Mr. Hurd, Oracle previously paid for the cost of the installation of a technical security system at his primary residence and pays the related annual service costs. In fiscal 2019, Oracle also paid for additional security equipment and security personnel at Mr. Hurd’s primary residence. Ms. Catz was offered a security system paid for by Oracle but opted instead to maintain the existing security system at her residence, which she pays for directly.

Although we view the security services provided for our senior executives as an integral part of our risk management program and as necessary and appropriate business expenses, because they may be viewed as conveying a personal benefit to these individuals, we have reported the aggregate incremental costs to Oracle of these services in the “All Other Compensation” column of the SCT below.

Aircraft Use

Our company-owned aircraft are considered a business tool to be used for essential business purposes only. Our policy regarding the use of company-owned aircraft provides that use of the aircraft for non-business travel is prohibited, subject to certain limited exceptions. We permit our NEOs to be accompanied by guests during business trips on company-owned aircraft. We believe there is no aggregate incremental cost to Oracle as a result of our NEOs being accompanied by guests when traveling on Oracle business. However, in certain instances, a portion of the

 

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aircraft costs attributable to non-business passengers cannot be deducted by Oracle for corporate income tax purposes. When applicable, we disclose the amount of these incremental forgone tax deductions in the footnotes accompanying the SCT. In fiscal 2019, use of our company-owned aircraft did not result in a loss of a corporate income tax deduction.

Pension Benefits or Supplemental Retirement Benefits

During fiscal 2019, other than the 401(k) Plan and our deferred compensation programs, we did not provide any pension or retirement benefits to our NEOs and do not believe that these types of benefits are necessary to further the objectives of our executive compensation program.

We offer the 1993 Deferred Compensation Plan (the Cash Deferred Compensation Plan) to certain employees, including eligible NEOs, under which participants may elect to defer a portion of their base salary and annual performance-based cash bonus. We also offer certain employees, including eligible NEOs, the ability to defer the settlement of their earned and vested RSUs and PSUs under the terms of the Oracle Corporation Stock Unit Award Deferred Compensation Plan (the RSU Deferred Compensation Plan). We offer these plans because we believe they are competitive elements of compensation for our NEOs. For a description of our Cash Deferred Compensation Plan and RSU Deferred Compensation Plan, see “Fiscal 2019 Non-Qualified Deferred Compensation” on page 49.

Severance and Change in Control Benefits

Each of our NEOs is employed “at will.” None of our NEOs has an employment agreement with Oracle that provides for payments or benefits in the event of a termination of employment or in connection with a change in control of Oracle.

If Oracle is acquired, all RSUs, PSUs and time-based stock options granted to our employees (including our NEOs) under our Amended and Restated 2000 Long-Term Equity Incentive Plan (the 2000 Equity Plan) will become fully vested if (1) the equity awards are not assumed or (2) the equity awards are assumed and the holder’s employment is terminated without cause within 12 months after the acquisition. This vesting acceleration provision is provided to all employees who participate in the plan and is not subject to any other material conditions or obligations.

Pursuant to the terms of the PSO grant agreements, in the event of a change in control of Oracle, any unvested tranches subject to market capitalization goals and operational goals will be earned only to the extent any unmatched market capitalization goals have been met on or before the trading date immediately prior to the change in control. The unvested tranche subject to the stock price goal will only be earned if the stock price goal is achieved prior to the change in control.

Determination of Executive Compensation Amounts for Fiscal 2019

 

Factors Considered in Setting Fiscal 2019 Compensation for Our NEOs

The Compensation Committee approved our NEOs’ fiscal 2019 compensation and determined that the fiscal 2019 compensation levels were appropriate and necessary to reward, retain and motivate our NEOs based on our executive compensation philosophy and the Compensation Committee’s subjective evaluations of:

 

   

the potential future contributions our NEOs can make to our success and our NEOs’ roles in executing our business strategies;

 

   

our desired future financial performance in each NEO’s principal areas of responsibility and the degree to which we wish to provide incentives for him or her;

 

   

each NEO’s past performance, experience and level of responsibility;

 

   

the Compensation Committee’s belief that any one of the NEOs could lead another company and the goal of protecting against recruiting efforts by other companies;

 

   

the complexity of our business resulting in increased workloads and responsibilities for our NEOs, particularly in light of Oracle’s transition to cloud-based product offerings;

 

   

each NEO’s expected progress toward goals within his or her areas of responsibility;

 

   

each NEO’s skills, knowledge and experience;

 

   

the appropriate mix of compensation (i.e., short-term versus long-term, fixed versus variable) for each NEO; and

 

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any other factors the Compensation Committee deems appropriate.

The Compensation Committee does not have a set formula by which it determines which of these factors is more or less important, and the specific factors used and their weighting may vary among individual NEOs. When determining the size of the equity awards, the Compensation Committee considers both the overall size of the awards and the potential value of the awards.

Compensation Decision-Making Process and the Role of Executive Officers

The Compensation Committee deliberates on, determines and approves our NEOs’ compensation based on the collective subjective judgment of its members, which is guided by their significant collective business experience, and their evaluation of the factors above. See “Board of Directors—Nominees for Directors—Director Qualifications” on page 6 for a discussion of the expertise and skills of each of our Compensation Committee members. None of our NEOs determines his or her own compensation.

Fiscal 2019 Compensation for Mr. Ellison, Chairman and CTO

 

   

 Long-Term Incentive Compensation

 

  

None granted

 

 Performance-Based Cash Bonus

  

A cash bonus opportunity under the Executive Bonus Plan based on 0.2% multiplied by the growth in our non-GAAP pre-tax profits over the preceding fiscal year. Mr. Ellison received no bonus payment ($0) in fiscal 2019.

 

 Annual Base Salary

 

  

$1 (unchanged since fiscal 2011)

 

In addition to the factors described above, the Compensation Committee approved this compensation package based on Mr. Ellison’s overall responsibility for business strategy, operations and corporate vision, with an emphasis on the objectives of retaining his services and providing meaningful incentives for superior performance and engagement. The Compensation Committee believes that Mr. Ellison, as Oracle’s founder who has guided the company for over 40 years, is invaluable. Although Mr. Ellison has a significant equity interest in Oracle, the Compensation Committee believes his annual compensation package is necessary to maintain the focus of his visionary drive and his active role in our operations, technology, strategy and growth. The Compensation Committee also believes that Mr. Ellison’s role as an executive at Oracle is distinct from his roles as a director and significant stockholder.

Fiscal 2019 Compensation for Ms. Catz, CEO

 

   

 Long-Term Incentive Compensation

 

  

None granted

 

 Performance-Based Cash Bonus

  

A cash bonus opportunity under the Executive Bonus Plan based on 0.2% multiplied by the growth in our non-GAAP pre-tax profits over the preceding fiscal year. Ms. Catz received no bonus payment ($0) in fiscal 2019.

 

 Annual Base Salary

 

  

$950,000 (unchanged since fiscal 2012)

 

In addition to the factors described above, the Compensation Committee approved this compensation package based on Ms. Catz’s significant role and responsibilities with Oracle. As one of our CEOs, Ms. Catz sets our overall business and acquisition strategy and is responsible for executing that strategy. She also has oversight and responsibility for the accuracy and integrity of our financial results and oversight of our legal affairs, among other responsibilities.

Fiscal 2019 Compensation for Mr. Hurd, CEO

 

   

 Long-Term Incentive Compensation

 

  

None granted

 

 Performance-Based Cash Bonus

  

A cash bonus opportunity under the Executive Bonus Plan based on 0.2% multiplied by the growth in our non-GAAP pre-tax profits over the preceding fiscal year. Mr. Hurd received no bonus payment ($0) in fiscal 2019.

 

 Annual Base Salary

 

  

$950,000 (unchanged since fiscal 2012)

 

In addition to the factors described above, the Compensation Committee approved this compensation package based on Mr. Hurd’s significant role and responsibilities with Oracle. As one of our CEOs, Mr. Hurd is responsible for worldwide sales and marketing, consulting, support and Oracle’s industry-specific global business units. He also acts as a primary contact for our customers, among other responsibilities.

 

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Fiscal 2019 Compensation for Mr. Screven, Executive Vice President, Chief Corporate Architect

 

   

 Long-Term Incentive Compensation

 

  

An annual award of 250,000 RSUs and a supplemental award of 500,000 RSUs

 

 Performance-Based Cash Bonus

  

A cash bonus opportunity under the Executive Bonus Plan based on 0.1763% multiplied by the growth in our non-GAAP pre-tax profits over the preceding fiscal year. Mr. Screven received no bonus payment ($0) in fiscal 2019.

 

 Annual Base Salary

 

  

Initially $600,000 and increased to $800,000 mid-year, resulting in a total fiscal 2019 salary of $700,000

 

In addition to the factors described above, the Compensation Committee approved this compensation package based on its determination that Mr. Screven drives technology and architecture decisions across all Oracle products to ensure that product development is consistent with Oracle’s overall long-term strategy. Mr. Screven also plays a critical role by leading company-wide strategic initiatives, including with respect to industry standards and security.

The Compensation Committee increased Mr. Screven’s salary and granted Mr. Screven a supplemental equity award in December 2018 in connection with staffing changes in Oracle’s engineering organization following the departure of Thomas Kurian, Oracle’s former President, Product Development. Specifically, the Compensation Committee increased the compensation of key employees across the engineering organization, including Mr. Screven, based on the following rationale and key factors: the significant strategic opportunity ahead for Oracle, the valuable talent of specific senior product managers and Oracle’s vulnerability to well-funded competitors seeking to attract Oracle’s highly regarded technical leaders. In March 2019, Compensation Committee increased Mr. Screven’s individual bonus percentage under the Executive Bonus Plan from 0.0829% to 0.1763% in recognition of Mr. Screven’s increased responsibilities in fiscal 2019.

Fiscal 2019 Compensation for Ms. Daley, Executive Vice President and General Counsel

 

   

 Long-Term Incentive Compensation

 

  

An annual award of 162,500 RSUs

 

 Cash Bonus

  

A target cash bonus opportunity of $750,000, subject to a $1,500,000 cap. Ms. Daley received a $400,000 bonus in fiscal 2019.

 

 Annual Base Salary

 

  

$825,000

 

In addition to the factors described above, the Compensation Committee approved this compensation package based on Ms. Daley’s significant role and responsibilities overseeing all legal matters at Oracle and managing a large-scale multinational legal team. In particular, Ms. Daley plays a critical role in setting the strategy for Oracle’s litigation and regulatory matters and provides leadership in the areas of compliance and ethics, data protection and privacy, intellectual property and corporate governance, among other responsibilities.

Fiscal 2019 Compensation for Mr. Henley, Vice Chairman

 

   

 Long-Term Incentive Compensation

 

  

An annual award of 400,000 stock options

 

 Performance-Based Cash Bonus

  

A cash bonus opportunity under the Executive Bonus Plan based on 0.02% multiplied by the growth in our non-GAAP pre-tax profits over the preceding fiscal year. Mr. Henley received no bonus payment ($0) in fiscal 2019.

 

 Annual Base Salary

 

  

$650,000

 

In addition to the factors described above, the Compensation Committee approved this compensation package based on Mr. Henley’s highly valued contributions to Oracle’s strategic vision, management and operations. Mr. Henley meets regularly with significant Oracle customers and is instrumental in closing major commercial transactions worldwide. As Oracle’s former CFO and a seasoned executive with nearly 30 years of experience at Oracle, Mr. Henley also serves as a trusted adviser to our senior executives.

Other Factors in Setting Executive Compensation

 

Compensation Consultant

The Compensation Committee selected and directly engaged Compensia, Inc. (Compensia), a national compensation consulting firm, as its compensation advisor for fiscal 2019 to provide analysis and market data on executive and director compensation matters, both generally and within our industry. Among other matters, Compensia assisted

 

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the Compensation Committee with a comparison of our executive compensation policies and practices against a group of peer companies (as determined and identified below), and with reviewing the annual risk assessment of our compensation policies and practices applicable to our NEOs and other employees. Compensia also prepared materials for use in orientation for new directors who have or may join the Compensation Committee. Compensia did not determine or recommend any amounts or levels of our executive compensation for fiscal 2019.

The Compensation Committee recognizes that it is essential to receive objective advice from its external advisors. Consequently, the Compensation Committee is solely responsible for retaining and terminating Compensia. Compensia reports directly to the Compensation Committee and Compensia did not provide any other services to Oracle during fiscal 2019. Neither of our CEOs met independently with representatives of Compensia nor did they consult with management’s outside compensation consultant on any executive compensation matters for fiscal 2019. The Compensation Committee has determined that the work resulting from Compensia’s engagement did not raise any conflicts of interest.

Peer Company Executive Compensation Comparison

The Compensation Committee, in consultation with Compensia, annually establishes a group of peer companies, which are generally in the technology sector, for comparative purposes based on a number of factors, including:

 

   

their size and complexity;

 

   

their market capitalization;

 

   

their competition with us for talent;

 

   

the nature of their businesses;

 

   

the industries and regions in which they operate; and

 

   

the structure of their executive compensation programs (including the extent to which they rely on annual bonuses and other forms of variable, performance-based incentive compensation) and the availability of information about these programs.

For fiscal 2019, the companies comprising the compensation peer group consisted of:

 

Accenture plc

    

Facebook, Inc.

 

QUALCOMM Incorporated

Alphabet Inc.

    

Hewlett-Packard Enterprise Company

 

salesforce.com, inc.

Amazon.com, Inc.

    

Intel Corporation

 

SAP SE

Apple Inc.

     International Business Machines Corporation  

Cisco Systems, Inc.

    

Microsoft Corporation

 

In determining fiscal 2019 executive compensation, the Compensation Committee considered, among other factors, executive pay information drawn from this group of peer companies and from the Radford 2018 Executive Compensation Survey for comparative purposes. However, the Compensation Committee did not use such information to tie any executive’s individual compensation to specific target percentiles.

Risk Assessment of Our Executive Compensation Policies and Practices

As part of its annual compensation-related risk review, the Compensation Committee considered, among others, the following factors which mitigate incentives for our executive officers to take inappropriate risks:

 

   

The PSOs granted to Mr. Ellison, Ms. Catz and Mr. Hurd are divided into seven equal tranches that are eligible to be earned based on the attainment of rigorous stock price, market capitalization and operational goals within five fiscal years of the date of grant. Consequently, Mr. Ellison, Ms. Catz and Mr. Hurd only realize value from their equity awards through sustained long-term appreciation of our stock price and significant growth in our cloud business, which mitigates excessive short-term risk taking.

 

   

All annual performance-based cash bonuses are subject to a specified dollar cap that limits the maximum amount payable to an NEO and may be decreased in the Compensation Committee’s discretion, which protects against an NEO receiving a windfall or disproportionately large bonus relative to the Compensation Committee’s assessment of our actual financial performance. The cash bonus Ms. Daley is eligible to earn is also subject to a specified dollar cap set by the Compensation Committee at the beginning of each fiscal year.

 

   

The financial metric used in the Executive Bonus Plan for Mr. Ellison, Ms. Catz, Mr. Hurd, Mr. Screven and Mr. Henley is year-over-year growth in Oracle’s non-GAAP pre-tax profits. Our management regularly uses this

 

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metric to understand, manage and evaluate our business and make operating decisions. Using this metric for the annual performance-based cash bonus opportunities further aligns these NEOs’ interests with our business goals.

 

   

We maintain a compensation recovery (clawback) policy that allows us to recover or cancel any cash bonuses paid that are awarded as a result of achieving financial performance goals that are not met under any restated financial results.

 

   

Each of our senior officers is subject to robust stock ownership requirements described in “Corporate Governance—Stock Ownership Guidelines for Directors and Senior Officers” on page 21. Our senior officers would experience significant lost value in their holdings of Oracle common stock and potentially all of the value of their Oracle stock options and other equity awards if our stock price suffered an extended decline due to inappropriate or unnecessary risk taking.

Tax and Accounting Considerations

Section 162(m) of the Internal Revenue Code of 1986, as amended, places a limit of $1 million on the amount of compensation that we may deduct as a business expense in any year with respect to certain of our most highly paid executive officers. While the Compensation Committee considers the deductibility of compensation as one factor in determining executive compensation, the Compensation Committee retains the discretion to award compensation that is not deductible as it believes that it is in the best interests of our stockholders to maintain flexibility in our approach to executive compensation in order to structure a program that we consider to be the most effective in attracting, motivating and retaining key executives.

Accounting considerations also play a role in the design of our executive compensation program. Accounting rules require us to expense the grant date fair values of our equity awards (that is, the value of our equity awards based on U.S. GAAP), which reduces the amount of our reported profits under U.S. GAAP. Because of this stock-based expensing and the impact of dilution to our stockholders, we closely monitor the number, share amounts and the fair values of the equity awards that are granted each year.

2018 Stockholder Advisory Vote on Executive Compensation

 

At our annual meeting of stockholders in November 2018, we conducted our annual advisory vote on the fiscal 2018 compensation of our NEOs (a “say-on-pay” vote). The compensation of our NEOs received support from approximately 54% of the votes cast on the say-on-pay proposal. While we were pleased to achieve a majority vote, we would like to continue to increase stockholder support for our NEO compensation. To that end, the Compensation Committee continues to engage in regular discussions with our principal unaffiliated stockholders regarding their views on executive compensation matters and continues to take such input into account in making compensation decisions (see page 3 for details).

Other Compensation Policies

 

Compensation Recovery (Clawback) Policy

We have adopted a clawback policy for our executive officers providing that if Oracle restates its reported financial results, we will seek to recover or cancel any cash bonuses paid that were awarded as a result of achieving financial performance goals that are not met under the restated financial results. When the SEC adopts final clawback policy rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act, we will revise our policy to comply with such rules.

Equity Awards and Grant Administration

The Board has designated the Compensation Committee as the administrator of the 2000 Equity Plan and the Directors’ Stock Plan. The Compensation Committee, among other things, selects award recipients under the 2000 Equity Plan, approves the form of grant agreements, determines the terms and restrictions applicable to the equity awards and adopts sub-plans for particular subsidiaries or locations.

We have a policy of generally granting equity awards on pre-established dates. In accordance with the terms of the 2000 Equity Plan, the Board has delegated to an executive officer committee the authority to approve a capped number of equity award grants to certain employees. The executive officer committee cannot grant equity to non-employees or to certain executives. Equity awards approved by either the Compensation Committee or the executive officer committee during a calendar month are typically granted together on a pre-established day of the following month.

 

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The Compensation Committee and F&A Committee also monitor the dilution and “overhang” effects of our outstanding equity awards in relation to the total number of outstanding shares of Oracle common stock. We do not grant equity awards in anticipation of the release of material nonpublic information, and we do not time the release of material nonpublic information based on equity award grant dates.

Because we believe equity awards are an important part of our compensation program, we also grant equity awards on an annual basis to key employees, including our executive officers. The Compensation Committee generally approves these annual equity award grants during the ten business day period following the second trading day after the announcement of our fiscal year-end earnings in an effort to make our annual grants during the time when potential material information regarding our financial performance is most likely to be available to our stockholders and the market.

Report of the Compensation Committee of the Board of Directors

 

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement. Based upon this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.

 

Submitted by:

 

    George H. Conrades, Chair

    Naomi O. Seligman, Vice Chair

    Leon E. Panetta

    Charles W. Moorman IV

 

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Fiscal 2019 Summary Compensation Table

 

The following table provides summary information concerning cash, equity and other compensation awarded to, earned by or paid to our NEOs in fiscal 2019, 2018 and 2017.

 

  Name and Principal Position   Fiscal
Year
    Salary
($)
  Bonus
($)
  Stock Awards
(2) ($)
    Option Awards
(3) ($)
    Non-Equity
Incentive Plan
Compensation
($)
    All Other
Compensation
(4) ($)
    Total
($)
 

  Lawrence J. Ellison (1)

 

 

2019

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

1,662,827

 

 

 

1,662,828

 

Chairman and Chief Technology Officer

 

 

2018

 

 

1

 

 

 

 

 

 

103,700,000

 

 

 

3,612,553

 

 

 

1,619,089

 

 

 

108,931,643

 

 

 

2017

 

 

1

 

 

 

22,190,625

 

 

 

16,863,075

 

 

 

705,464

 

 

 

1,513,042

 

 

 

41,272,207

 

  Safra A. Catz

 

 

2019

 

 

950,000

 

 

 

 

 

 

 

 

 

 

 

 

15,981

 

 

 

965,981

 

Chief Executive Officer

 

 

2018

 

 

950,000

 

 

 

 

 

 

103,700,000

 

 

 

3,612,553

 

 

 

19,780

 

 

 

108,282,333

 

 

 

2017

 

 

950,000

 

 

 

22,190,625

 

 

 

16,863,075

 

 

 

705,464

 

 

 

20,801

 

 

 

40,729,965

 

  Mark V. Hurd

 

 

2019

 

 

950,000

 

 

 

 

 

 

 

 

 

 

 

 

1,531,646

 

 

 

2,481,646

 

Chief Executive Officer

 

 

2018

 

 

950,000

 

 

 

 

 

 

103,700,000

 

 

 

3,612,553

 

 

 

32,470

 

 

 

108,295,023

 

 

 

2017

 

 

950,000

 

 

 

22,190,625

 

 

 

16,863,075

 

 

 

705,464

 

 

 

123,115

 

 

 

40,832,279

 

  Edward Screven

 

 

2019

 

 

700,000

 

 

 

33,460,000

 

 

 

 

 

 

 

 

 

8,619

 

 

 

34,168,619

 

Executive Vice President, Chief Corporate Architect

 

 

2018

 

 

600,000

 

 

 

11,918,750

 

 

 

 

 

 

463,068

 

 

 

8,781

 

 

 

12,990,599

 

  Dorian E. Daley

 

 

2019

 

 

825,000

 

400,000

 

 

6,766,500

 

 

 

 

 

 

 

 

 

8,291

 

 

 

7,999,791

 

Executive Vice President and General Counsel

               

  Jeffrey O. Henley

 

 

2019

 

 

650,000

 

 

 

 

 

 

3,556,000

 

 

 

 

 

 

8,615

 

 

 

4,214,615

 

Vice Chairman

                                                       

 

(1)

We have included Mr. Ellison as an NEO for fiscal 2019 on a voluntary basis. Under applicable SEC rules, we were not required to include Mr. Ellison as an NEO for fiscal 2019, but we chose to do so in the interest of transparency.

 

(2)

The amounts reported in this column represent the aggregate grant date fair values of PSUs (for Mr. Ellison, Ms. Catz and Mr. Hurd) and RSUs (for Mr. Screven and Ms. Daley) granted during the relevant fiscal years computed in accordance with FASB ASC 718. The amounts reported in this column for Mr. Ellison, Ms. Catz and Mr. Hurd represent the grant date fair values of the fiscal 2017 PSUs calculated assuming achievement of target levels of performance, the performance outcome judged to be probable at the time of grant. Assuming maximum achievement of the performance goals (150% of target), the grant date fair value of the 2017 PSUs granted to each of Mr. Ellison, Ms. Catz and Mr. Hurd would be $33,285,938.

For information on the valuation assumptions used in our computations, see Note 13 to our consolidated financial statements in our Annual Report on Form 10-K for fiscal 2019. See “Compensation Discussion and Analysis—Elements of Our Compensation Program—Long-Term Incentive Compensation” on page 34 for a discussion of these awards. The amounts reported do not reflect whether the NEO has actually realized or will realize an economic benefit from the awards.

 

(3)

The amounts reported in this column for Mr. Ellison, Ms. Catz and Mr. Hurd for fiscal 2018 represent the grant date fair values of PSOs computed in accordance with FASB ASC 718, valued based on the probable achievement of the performance goals at the time of grant. Assuming maximum achievement of the performance goals, the grant date fair value of the PSOs granted to each of Mr. Ellison, Ms. Catz and Mr. Hurd would be $175,150,000. The amounts reported in this column for fiscal 2019 (for Mr. Henley) and 2017 (for Mr. Ellison, Ms. Catz and Mr. Hurd) represent the grant date fair values of time-based stock options granted during the relevant fiscal years computed in accordance with FASB ASC 718.

For information on the valuation assumptions used in our computations, see Note 13 to our consolidated financial statements in our Annual Report on Form 10-K for fiscal 2019. See “Compensation Discussion and Analysis—Elements of Our Compensation Program—Long-Term Incentive Compensation” on page 34 and “Executive Summary—Five-Year Performance-Based Stock Options” on page 29 for a discussion of these awards. The amounts reported do not reflect whether the NEO has actually realized or will realize an economic benefit from the awards.

 

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(4)

For fiscal 2019, the amounts reported in this column include:

 

  (a)

Company matching contributions under our 401(k) Plan of $5,126 for Mr. Ellison, $5,475 for Mr. Screven and $5,100 for each of Ms. Catz, Mr. Hurd, Ms. Daley and Mr. Henley. Our employees, including our NEOs, are eligible to participate in our 401(k) Plan and we match 50% of an eligible salary deferral up to the first 6% of such deferrals, not to exceed $5,100 in a calendar year and subject to a multi-year vesting schedule. Because our 401(k) Plan operates on a calendar-year basis, occasionally the company matching contributions in a given fiscal year will exceed $5,100.

 

  (b)

Flexible credits used toward covering the premiums for cafeteria-style benefit plans, including life insurance and long-term disability benefits, in the amount of $3,235 for Mr. Ellison, $10,580 for Ms. Catz, $2,980 for Mr. Hurd, $2,843 for Mr. Screven, $2,890 for Ms. Daley and $2,833 for Mr. Henley. All Oracle employees are eligible to receive flexible credits.

 

  (c)

Security-related costs and expenses of $1,653,888 for Mr. Ellison’s residence and $1,523,265 for Mr. Hurd’s residence and company-provided security at certain public events. Pursuant to a residential security program, as described in “Compensation Discussion and Analysis—Elements of Our Compensation Program—Limited Perquisites and Other Personal Benefits—Residential Security” on page 37, our most senior executives are required to maintain home security systems. We believe these security costs and expenses are necessary and appropriate business expenses.

 

  (d)

Legal counsel fees of $578 for Mr. Ellison, $301 for each of Ms. Catz, Mr. Hurd, Mr. Screven and Ms. Daley, and $682 for Mr. Henley. We hire legal counsel to assist our executives with complying with reporting obligations under applicable laws in connection with their personal political campaign contributions.

 

  (e)

The following may be deemed to be “personal benefits” for our NEOs although we believe there was no aggregate incremental cost to us during fiscal 2019: We permit our NEOs to be accompanied by guests on private aircraft leased or owned by Oracle, which are expected to be used for business travel. This use in fiscal 2019 did not result in a loss of a corporate income tax deduction.

 

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Grants of Plan-Based Awards During Fiscal 2019

 

The following table shows equity and non-equity awards granted to our NEOs during fiscal 2019. The equity awards identified in the table below are also reported in the Outstanding Equity Awards at Fiscal 2019 Year-End table.

 

                

 

Estimated Future Payouts Under
Non-Equity Incentive Plan Awards

   

All Other
Stock
Awards:
Number of
Shares of
Stock
or Units

(2) (#)

    All Other
Option
Awards:
Number of
Securities
Underlying
Options
(3) (#)
    Exercise or
Base Price
of Option
Awards
($/Share)
   

Grant Date
Fair Value
of Stock
and Option
Awards

($)

 
  Name  

Grant

Date

    Award Type   Threshold
($)
  Target
(1) ($)
    Maximum
(1) ($)
 

  Lawrence J. Ellison

   

Cash Bonus

 

 

 

964,800

 

 

 

1,929,600

 

       

  Safra A. Catz

   

Cash Bonus

 

 

 

964,800

 

 

 

1,929,600

 

       

  Mark V. Hurd

   

Cash Bonus

 

 

 

964,800

 

 

 

1,929,600

 

       

  Edward Screven

 

 

6/27/2018

 

 

RSUs

       

 

250,000

 

     

 

10,410,000  

 

 

 

12/5/2018

 

 

RSUs

       

 

500,000

 

     

 

23,050,000  

 

   

Cash Bonus

 

 

 

850,000

 

 

 

1,700,000

 

       

 

  

 

  Dorian E. Daley

 

 

6/27/2018

 

 

RSUs

       

 

162,500

 

     

 

6,766,500  

 

  Jeffrey O. Henley

 

 

6/27/2018

 

 

Stock Options

         

 

400,000

 

 

 

$43.45    

 

 

 

3,556,000  

 

           

Cash Bonus

 

 

 

96,480

 

 

 

192,960

 

                               

 

(1)

The target plan award amounts reported in these columns are determined based on our internal profitability expectations for the fiscal year multiplied by the individual’s bonus percentage under the Executive Bonus Plan. The maximum plan award amounts are equal to 200% of the applicable target. The actual payout amount for fiscal 2019 under the Executive Bonus Plan was $0 for each of Mr. Ellison, Ms. Catz, Mr. Hurd, Mr. Screven and Mr. Henley, as reported in the “Non-Equity Incentive Plan Compensation” column of the SCT above. See “Compensation Discussion and Analysis—Elements of Our Compensation Program—Annual Cash Bonuses” on page 36 for a discussion of the material features of our Executive Bonus Plan for fiscal 2019.

 

(2)

The RSUs reported in this column were granted under our 2000 Equity Plan. The RSUs vest 25% per year over four years on the anniversary of the date of grant.

 

(3)

The stock options reported in this column were granted under our 2000 Equity Plan. The stock options vest 25% per year over four years on the anniversary of the date of grant.

 

46   LOGO   2019 Annual Meeting of Stockholders


Table of Contents

Outstanding Equity Awards at Fiscal 2019 Year-End

 

The following table provides information on the outstanding PSOs, PSUs, RSUs and time-based stock options held by our NEOs as of May 31, 2019.

 

                   Option Awards (1)            Stock Awards (1)  
   Name  

Grant

Date

           Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
    Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
   

Equity

Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options

(2) (#)

   

Option
Exercise

Price
($)

    Option
Expiration
Date
           Number of
Shares or
Units of
Stock That
Have Not
Vested
(3) (#)
    Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
(4) ($)
   

Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested

(5) (#)

   

Equity
Incentive

Plan

Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested

(4) ($)

 

   Lawrence J.

 

 

7/20/2017

 

   

 

0

 

 

 

0

 

 

 

17,500,000

 

 

 

51.13

 

 

 

7/20/2025

 

         

   Ellison

 

 

6/30/2016

 

   

 

1,125,000

 

 

 

1,125,000

 

 

 

0

 

 

 

40.93

 

 

 

6/30/2021

 

   

 

187,311

 

 

 

9,477,937

 

 

 

210,936

 

 

 

10,673,362

 

 

7/2/2015

 

   

 

1,687,500

 

 

 

562,500

 

 

 

0

 

 

 

40.36

 

 

 

7/2/2020

 

   

 

187,311

 

 

 

9,477,937

 

 

 

0

 

 

 

0

 

 

 

7/24/2014

 

   

 

2,250,000

 

 

 

0

 

 

 

0

 

 

 

40.47

 

 

 

7/24/2024

 

         
 

 

7/1/2013

 

   

 

7,000,000

 

 

 

0

 

 

 

0

 

 

 

30.11

 

 

 

7/1/2023

 

         
 

 

7/5/2012

 

   

 

7,000,000

 

 

 

0

 

 

 

0

 

 

 

29.72

 

 

 

7/5/2022

 

         
 

 

6/29/2011

 

   

 

7,000,000

 

 

 

0

 

 

 

0

 

 

 

32.43

 

 

 

6/29/2021

 

         
 

 

7/1/2010

 

   

 

7,000,000

 

 

 

0

 

 

 

0

 

 

 

21.55

 

 

 

7/1/2020

 

         

   Safra A. Catz

 

 

7/20/2017

 

   

 

0

 

 

 

0

 

 

 

17,500,000

 

 

 

51.13

 

 

 

7/20/2025

 

         
 

 

6/30/2016

 

   

 

1,125,000

 

 

 

1,125,000

 

 

 

0

 

 

 

40.93

 

 

 

6/30/2021

 

   

 

187,311

 

 

 

9,477,937

 

 

 

210,936

 

 

 

10,673,362

 

 

 

7/2/2015

 

   

 

1,687,500

 

 

 

562,500

 

 

 

0

 

 

 

40.36

 

 

 

7/2/2020

 

   

 

187,311

 

 

 

9,477,937

 

 

 

0

 

 

 

0

 

 

 

10/5/2014

 

   

 

500,000

 

 

 

0

 

 

 

0

 

 

 

38.89

 

 

 

10/5/2024

 

         
 

 

7/24/2014

 

   

 

2,250,000

 

 

 

0

 

 

 

0

 

 

 

40.47

 

 

 

7/24/2024

 

         
 

 

7/1/2013

 

   

 

5,000,000

 

 

 

0

 

 

 

0

 

 

 

30.11

 

 

 

7/1/2023

 

         
 

 

7/5/2012

 

   

 

5,000,000

 

 

 

0

 

 

 

0

 

 

 

29.72

 

 

 

7/5/2022

 

         
 

 

6/29/2011

 

   

 

5,000,000

 

 

 

0

 

 

 

0

 

 

 

32.43

 

 

 

6/29/2021

 

         

   Mark V. Hurd

 

 

7/20/2017

 

   

 

0

 

 

 

0

 

 

 

17,500,000

 

 

 

51.13

 

 

 

7/20/2025

 

         
 

 

6/30/2016

 

   

 

1,125,000

 

 

 

1,125,000

 

 

 

0

 

 

 

40.93

 

 

 

6/30/2021

 

   

 

187,311

 

 

 

9,477,937

 

 

 

210,936

 

 

 

10,673,362

 

 

 

7/2/2015

 

   

 

1,687,500

 

 

 

562,500

 

 

 

0

 

 

 

40.36

 

 

 

7/2/2020

 

   

 

187,311

 

 

 

9,477,937

 

 

 

0

 

 

 

0

 

 

 

10/5/2014

 

   

 

500,000

 

 

 

0

 

 

 

0

 

 

 

38.89

 

 

 

10/5/2024

 

         
 

 

7/24/2014

 

   

 

2,250,000

 

 

 

0

 

 

 

0

 

 

 

40.47

 

 

 

7/24/2024

 

         
 

 

7/1/2013

 

   

 

5,000,000

 

 

 

0

 

 

 

0

 

 

 

30.11

 

 

 

7/1/2023

 

         
 

 

7/5/2012

 

   

 

5,000,000

 

 

 

0

 

 

 

0

 

 

 

29.72

 

 

 

7/5/2022

 

         
 

 

6/29/2011

 

   

 

5,000,000

 

 

 

0

 

 

 

0

 

 

 

32.43

 

 

 

6/29/2021

 

         
 

 

9/8/2010

 

   

 

800,000

 

 

 

0

 

 

 

0

 

 

 

24.14

 

 

 

9/8/2020

 

         

   Edward

 

 

12/5/2018

 

               

 

500,000

 

 

 

25,300,000

 

 

 

0

 

 

 

0

 

   Screven

 

 

6/27/2018

               

 

250,000

 

 

 

12,650,000

 

 

 

0

 

 

 

0

 

 

 

9/5/2017

 

               

 

46,875

 

 

 

2,371,875

 

 

 

0

 

 

 

0

 

 

 

7/10/2017

 

               

 

140,625

 

 

 

7,115,625

 

 

 

0

 

 

 

0

 

 

 

6/30/2016

 

               

 

87,500

 

 

 

4,427,500

 

 

 

0

 

 

 

0

 

 

 

7/2/2015

 

               

 

43,750

 

 

 

2,213,750

 

 

 

0

 

 

 

0

 

 

 

7/24/2014

 

   

 

700,000

 

 

 

0

 

 

 

0

 

 

 

40.47

 

 

 

7/24/2024

 

         
 

 

7/1/2013

 

   

 

700,000

 

 

 

0

 

 

 

0

 

 

 

30.11

 

 

 

7/1/2023

 

         
 

 

11/30/2012

 

   

 

200,000

 

 

 

0

 

 

 

0

 

 

 

32.18

 

 

 

11/30/2022

 

         
 

 

7/5/2012

 

   

 

700,000

 

 

 

0

 

 

 

0

 

 

 

29.72

 

 

 

7/5/2022

 

         
 

 

6/29/2011

 

   

 

700,000

 

 

 

0

 

 

 

0

 

 

 

32.43

 

 

 

6/29/2021

 

         
 

 

7/1/2010

 

   

 

700,000

 

 

 

0

 

 

 

0

 

 

 

21.55

 

 

 

7/1/2020

 

         

   Dorian E.

 

 

6/27/2018

               

 

162,500

 

 

 

8,222,500

 

 

 

0

 

 

 

0

 

   Daley

 

 

7/10/2017

 

               

 

121,875

 

 

 

6,166,875

 

 

 

0

 

 

 

0

 

 

 

6/30/2016

 

   

 

162,500

 

 

 

162,500

 

 

 

0

 

 

 

40.93

 

 

 

6/30/2026

 

   

 

40,625

 

 

 

2,055,625

 

 

 

0

 

 

 

0

 

 

 

7/2/2015