Technology Financials
Chris Green looks at the latest technology company financial results and examines what the companies are doing right and wrong in their efforts to maintain the bottom line.
Monday 24 August 2009, 12:33 PM
Larry takes a pay cut
Oracle’s chief executive and founder Larry Ellison has agreed to cut his basic pay from $1 million to just $1 dollar for the coming financial year. However, the Ellison household is unlikely to starve, as the Oracle boss is still set to pocket an overall pay packet worth $84.5 million (£51 million).
The move also aligns Larry’s remuneration package with the fellow Silicon Valley luminaries Steve Jobs, Larry Page and Sergey Brin, who all receive a token pay cheque paired with large, performance-related remuneration packages. Ellison also owns a stake in Oracle worth some $26 billion based on last week’s closing share price.
The news comes after Oracle reported healthy turnover and profit numbers for its last full year. Oracle reported revenue of $23.3 billion and a $5.6 billion profit for its 2009 financial year to May 2009. However, despite bringing in enough profit to more than cover the cost of its proposed takeover of Sun Microsystems with money to spare, the markets wanted and expected more given years of double-digit growth at the database giant.
The Sun acquisition is likely to be a financial drain on Oracle in the short term as the cost of integration and redundancies hit the bottom line of both businesses. Questions remain as to whether Oracle can realise any value from Sun given the latter’s appearance as a basket case bogged down with products and solutions that few companies want or need, while still retaining a few software gems such as Solaris and Java.
As for Larry, he faces a rough ride at the next Oracle AGM, with more than a few shareholders expressing dismay and concern at the size of his pay package. Such a large deal is considered excessive by some institutional investors given the current media and government focus on executive pay deals. Expect an unsuccessful but vocal minority vote of disapproval.
PreviousComments on this post
It makes you wonder at the end of the day, when is a enough a enough
constantly consuming great sums of money to what end?
As previous cases have already shown in becomes counter productive at the end of the day, surely something much more meaningful can be done with it.
The likes of Oracle, Apple and others would argue that the pay structure of their chief execs is designed to reflect true success, rather than just rewarding people for turning up to a few board meetings each year.
Unfortunately, the reality doesn't always seem to mirror the stated intention, with many business leaders still picking up life-changing sums of money despite a failure to maintain share price value, meet market expectations, maintain growth levels, realise publicly-stated value and synergies from acquisitions etc.
Thats because they lose touch with the true value of money it becomes one big monopoly board game to them, but as they all to often use the arguments that there success brings many benefits to others, it also swings the other way when they loose these vast sums as we have already witnessed on massive scale.
The problem lies with the complete lack of moral judgment when making such decisions which in turn filters down and greatly effect's the outcome of other's decisions, its a never ending loop see even if you where to win all the time no matter what decisions you passed you then what stockpile your earning's ok and now what? the chief executives of the banks holding your company's fortune's are gambling it away as you ponder, and the more you have the less likely you'll get it back when things go pair shaped.
So in reality all this money's passing from pillar to post all over the place in some instances it does some good, but on the other side of the world it's doing the exact opposite several times over so for every single win else where suffers multiple losses, so the whole system is fundamentally flawed.
With the world being a smaller place now, the markets have nothing left to hide behind, resulting in an expedited process of demise.
