The recently filings by the company, disclosed that, its chief Larry Ellison would be drawing a salary of $1 for the year of 2010.
It has been a practice (or some call it publicity stunt) of CEOs to take $1 salary and cash in on other perks like stock. Most notable ones in the recent past include – Steve Jobs of Apple, Larry Sergei Brin from Google. Outside of the technology world, the CEOs of Big Three (Should’nt it be Big 1.5 or something now?) automakers also agreed to work for a $1.
While it is noble of Larry to base his compensation on the company performance, it is outrageous if you compare that with the daylight robberies done by financial services companies out in Wall Street. Let us compare and contrast. On the one-hand we have companies ranging from AIG, Citibank, Bank of America, GE and Goldman Sachs that went hat in hand for aid from taxpayers (although they would have you believe that it was Paulson who forced them to take it) and pay themselves multi-million dollar pay and bonus packages while their company profits are down by more 75% in some cases. Not to mention the travails of the shareholders during the same time. They have promptly cut dividends from the shareholders while the CEOs have continued to cash in on their large paychecks shamelessly. With the exception of Vikram Pandit of Citibank who agreed to work for $1, others have been raking it in.
Compare that with Oracle performance. Oracle stock (ORCL) has been near 52 week high and has been one of the stocks that has withstood the downturn. Thanks to the sustained acquisition strategy that Larry and his team embarked on just as the downturn was on the verge. The company revenues have doubled to $20B since the acquisition started. And if that were not enough, Oracle also started paying dividends to stockholders starting last quarter. (Thanks Larry, good that I kept the ESPP shares I got whilst working at Oracle).
So now that we have the comparison done, I think it is absurd for Larry to be paid $1. Larry was the poster child of excessive executive pay all these years when Oracle stock was languishing in low teens or single digits but this time around it he definitely has earned his $100 million or thereabouts he makes normally. Weird that I am making an argument for higher pay for the fourth richest person in the world.
Now if only, Ken Lewis, Jeff Immelt and Co – have it in them to do the right thing.
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