 Investor Presentation
September 2016
Exhibit 99.1 |
 Copyright © 2016,
Oracle and/or its affiliates. All rights reserved.
Rotation of Compensation Committee Members
In the last two fiscal years we have
transitioned a significant portion of compensation to long-term, performance-based PSUs, and have taken a number of steps to reduce the overall quantum of
compensation In fiscal 2016, the Board changed the composition of the Compensation Committee and the
Compensation Committee rotated
the principal partner from its independent compensation
consultant in order to gain a fresh perspective on compensation matters Ray Bingham is now Chair Naomi Seligman is now Vice Chair Renée James (our newest director) joined the committee Bruce Chizen (former Chair) has stepped down George Conrades remains a committee member 2 Our goal: Engage in substantive discussions with stockholders regarding executive compensation
matters and continually refine the design of Oracle’s executive
compensation program |
 Copyright © 2016,
Oracle and/or its affiliates. All rights reserved.
Significant Compensation Program Improvements for top 3 NEOs
Introduced Performance Stock Units (“PSUs”)
PSUs are earned based on relative performance
PSUs are long-term (4 year term with multiple performance periods, the
longest of which is 3 years), performance based, and subject to
robust metrics Mr. Ellison’s compensation reduced to reflect
transition from CEO to Executive Chairman & Chief Technology
Officer roles Performance-based compensation
Long-term performance periods
Quantum of pay and equity dilution
Significant changes in ORCL compensation…
…are consistent with investor perspectives
Significantly reduced number of shares subject to stock options
Option award terms reduced to 5 year terms (from 10 years), significantly
reducing value; maintain 4 year time-based
vesting Continuing to award equity in the form of PSUs
FY15
FY16 3 |
 Copyright © 2016,
Oracle and/or its affiliates. All rights reserved.
Significantly Reduced Director Compensation
While we believe our non-employee directors have been properly compensated in prior years, certain of our stockholders and their advisors expressed concern last year regarding our director compensation practices
We do not want our director compensation to create even the appearance of an
independence issue In fiscal 2016, the Board approved significant
reductions to our non-employee director compensation structure, including: – Eliminating the F&A Committee Vice Chair cash retainer and equity award grant
– Reducing the amount of equity granted in the annual equity award grant for Board service by 25%
– Reducing the amount of equity granted in the initial equity award grant for new directors by 25%
– Reducing the amount of equity granted annually for committee chair service by 25%
– Delivering all equity awards in the form of restricted stock units that vest on the first anniversary of the date of grant
These changes contributed to an average reduction
of 24% in the total value of our non-employee directors’ compensation in fiscal 2016 compared to fiscal 2015 4 Director Fiscal 2016 Total Compensation ($) Fiscal 2015 Total Compensation ($) % Reduction Jeffrey S. Berg 512,398 561,131 9% H. Raymond Bingham 890,902 1,243,639 28% Michael J. Boskin 724,092 1,081,763 33% Bruce R. Chizen 716,061 1,084,763 34% George H. Conrades 468,645 585,131 20% Hector Garcia-Molina 425,645 534,131 20% Renée J. James 548,005 n/a n/a Leon E. Panetta 424,681 591,840 28% Naomi O. Seligman 440,645 558,131 21% Average Reduction in Director Total Compensation 24% |
 Copyright © 2016,
Oracle and/or its affiliates. All rights reserved.
Emphasis on Variable, “At-Risk” Compensation
Our goal: Align the interests of executive officers with those of stockholders;
provide incentives to executive officers for superior performance;
and attract and retain highly talented and productive executive officers Compensation Element Designed to Reward Incentive Metrics At-Risk Long-Term Incentive Compensation – PSUs Success in achieving sustainable long-term results For top 3 executives: 50% of target PSUs are tied to relative growth in total consolidated revenues on a U.S. GAAP basis 50% of target PSUs are tied to relative growth in total consolidated operating cash flow (OCF) on a U.S. GAAP basis Objective relative performance metrics – both revenue and OCF growth requires relative performance above the
weighted average of the peer group for target payout, and performance in the bottom two of
peer group results in zero payout Long-Term
Incentive Compensation –
Stock Options Executives realize value from stock options only when our stock price increases and they remain
employed beyond the date their stock options vest
5 year term for top 3 executives is tied to the timeline for transitioning to
the Cloud Annual
Performance-Based
Cash Bonus Success in achieving annual results Bonus based on growth
in non-GAAP
pre-tax profits during a fiscal year If non-GAAP pre-tax profits do not grow year over year, no bonus is paid Bonuses paid out at $0 for the top 5 NEOs for the 2 year in a row Base Salary Experience, industry knowledge, duties, scope of responsibility N/A 5 nd |
 Copyright © 2016,
Oracle and/or its affiliates. All rights reserved.
Continued Decreases in Compensation
Since 2012, total compensation has decreased 57% for Mr. Ellison
1 In connection with the management transition, the Compensation Committee cancelled 1.5 million equity equivalent shares (750,000 options and 187,500 PSUs) of Mr. Ellison’s FY 2015 equity award 2 In FY 2015, Ms. Catz and Mr. Hurd each received a one-time promotional grant of 1 million equity equivalent shares (500,000 options
and 125,000 PSUs) in connection with their promotions to CEO
6 % of Compensation Compared to Fiscal 2012 |
 Copyright © 2016,
Oracle and/or its affiliates. All rights reserved.
Proxy Access At the 2015 Annual Stockholder meeting, a majority of Oracle’s stockholders approved a proxy access proposal Oracle’s institutional investors generally agreed that proxy access should be available for stockholders to nominate at least 2 members of the Board The N&G Committee and the Board spent significant time evaluating the adoption of proxy access bylaw provisions An independent expert in proxy access and board governance matters gave a presentation to the N&G Committee In June 2016, on the recommendation of the N&G Committee, the Board adopted amendments to our Bylaws to implement Proxy Access with 3/3/20/20 terms: – Ownership threshold of at least 3% of Oracle’s stock – For at least 3 years
– Up to 20 stockholders may group together to meet
the ownership requirement
– May nominate up to the greater of 2 directors or 20% of the board Investor Feedback Board’s Response 7 |
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Oracle and/or its affiliates. All rights reserved.
Board Composition
The N&G Committee strives for a mix of director skills, experience and
perspectives that will help create an outstanding, dynamic and
effective Board to represent the interests of stockholders Investor
Feedback Board’s
Response—Refreshment
Mix of Long-Tenured
Directors and New Directors
Investors are focused on
board composition
Some stockholders are
concerned that long-
tenured directors are less
independent 2 new independent directors added to the Board in the last 2 fiscal years Renee James added as a director in fiscal 2016 Leon Panetta added as a director in fiscal 2015 We believe that it is desirable to maintain a mix of longer-tenured,
experienced directors and newer directors with fresh perspectives
The Board believes that longer-serving directors with experience
and institutional knowledge bring critical skills to the
boardroom Given the complexity of Oracle’s business, the
breadth of Oracle’s product offerings and the international
scope of the organization, longer-tenured directors are a
significant strength of the Board While director tenure is taken
into consideration when making nomination decisions, the Board
believes that imposing limits on director tenure or having a
mandatory retirement age would arbitrarily deprive it of the
valuable contributions of its most experienced
members 8 |
 Copyright © 2016,
Oracle and/or its affiliates. All rights reserved.
Governance Highlights
9 Governance Best Practices Independent lead director in place with clearly defined role and responsibilities Majority of independent directors (9 out of 13) and 100% independent committees Robust stockholder outreach and engagement program Annual director elections (no staggered or classified board structure) Single class of voting stock Director majority voting policy Annual Board and committee performance evaluations Stockholder ability to call a special meeting (20%) and to act by written consent Executive sessions for independent directors Board leadership structure – separate Chairman and CEO roles Director and executive officer stock ownership guidelines Anti-hedging policy applicable to all employees and directors Adopted proxy access (3/3/20/20) |
 Copyright © 2016,
Oracle and/or its affiliates. All rights reserved.
Managing in the Best Interests of Stockholders
Return of Capital to Stockholders in the Last 5 Years (US$ in
Billions): Over $55 billion of
capital returned to stockholders
Quarterly dividends per
share increased 150%
10 • In fiscal 2016: • Oracle continued to make strategic acquisitions • Grew its Cloud business, and • Exercised discipline with stockholder capital $5.9 $11.0 $9.8 $8.1 $10.4 $1.2 $1.4 $2.2 $2.3 $2.5 FY12 FY13 FY14 FY15 FY16 Stock Repurchases Dividend Payments |
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Oracle and/or its affiliates. All rights reserved.
"Safe Harbor" Statement: Statements in
this presentation relating to Oracle’s future plans, expectations, beliefs, intentions and prospects are "forward-looking statements"
and are subject to material risks and uncertainties. A detailed discussion of
these factors and other risks that affect our business is
contained in our SEC filings, including our most recent reports
on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors." Copies of these filings are available online from the SEC or by contacting Oracle
Corporation’s Investor Relations Department at (650) 506-4073 or by
clicking on SEC Filings on Oracle’s Investor Relations
website at http://www.oracle.com/investor. All information set
forth in this presentation is current as of September 7, 2016. Oracle undertakes no duty to update any statement in light of new information or future
events. Safe Harbor Statement 11 |
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