Oracle’s proxy reveals tempered extravagance…

We rarely write about the same company two days in a row, but the revised proxy that Oracle Corp. (ORCL) filed September 8 was too meaty to overlook.

After all, it’s not common to find a company at which a CEO can reduce his salary to $1.00, as Larry Ellison did during the past fiscal year, and still end up with a total compensation package of more than $70.14 million – a number that’s 17 percent lower than what he got the prior year.

But that’s just the beginning of what’s interesting about Oracle’s enigmatic proxy. For instance, in FY 2010, Oracle spent $1,478,600 on security-related costs and expenses for Ellison’s home (topping the $1.19 million that Ford Motor Co. (F) spent to protect William Clay Ford, Jr.). That expense hasn—t changed much in the past two years: Oracle paid $1,479,072 last year, per the 2009 proxy, and $1,432,424 the year before that.

At $1,478,600, that works out to about $4,051 per day. The proxy explains that Oracle’s board requires the security measures because of Ellison’s importance to the company and that the board deems the security costs —appropriate and necessary. Then came a surprising sentence:

——Ellison paid for the initial procurement, installation and maintenance of the equipment for this system and the replacement of any equipment, and we paid for the annual costs of security personnel.

The proxy also disclosed that for fiscal 2010, Oracle paid about $1 million to lease planes from Ellison’s company, —Wing and a Prayer. Oracle allowed Ellison and former president Charles Phillips to take their family members on planes leased for business trips; since it leased the entire plane anyway, Oracle takes the position that it doesn—t cost anything extra to allow the family members to tag along. But then Oracle states that —in the interests of transparency, it’s disclosing the fact that using the planes in the manner it does cost the company a lost corporate income tax deduction of about $314,380 for FY 2010. On the other hand, the company’s —Independence Committee…determined that the amounts billed for our use of the aircraft and pilots are at or below the market rate charged by third-party commercial charter companies for similar aircraft.

It also surprised us to read that Ellison has given Oracle a —written price protection agreement that applies to any goods or services the company purchases from an entity in which Ellison has a —direct or indirect material interest. The agreement provides that

——if we present Mr. Ellison with reasonable evidence of a lower price or rate for the same goods or services offered by the related company, which would have been available to us at the time we entered into the applicable transaction, then Mr. Ellison will reimburse us for the difference.

Whether or not an Oracle employee has the temerity to present Ellison with a bill for reimbursement is fun to imagine: Would you want to be the guy who tells the boss that he’s overcharging?

Image source: miguelb via flickr


See more of what’s in the filings: Check out FootnotedPro, where we highlight unusual opportunities and potential problems well in advance of the market. For more information or to inquire about a trial subscription, email us at