Larry Ellison couldn't buy this kind of PR

And here I thought that court sycophancy died out with the demise of the ancient regime.

Just another working stiff.

In Forbes' annual list of top executive salaries, Oracle's Larry Ellison finished in first place, with total 2007 compensation at $192.9 million. I'm sure it's good to be the king. But just in case any jealous serfs are asking why this mere mortal is worth such a royal sum, here comes journalist Sarah Lacy to remind us Ellison "deserves to be one of the most highly paid CEOs in the Valley."

That might have been a good point of departure for a more searching conversation on wealth and power in America or a discussion about how society divides up its spoils. Instead, the post skims the surface. Lacy writes that "Ellison gets where software is going" and that "he also gets where the technology business is going." Gee, with those credentials, I guess Oracle's board was guilty of short-changing its CEO.

More seriously, Ellison deserves fair compensation for his labors over the years. Of course, if you ask a dozen compensation experts what "fair" means, you'll wind up with a dozen different answers. Boring blather about whether Ellison's a sweetheart or someone who kicks pussycats is irrelevant. There's a statistical benchmark to measure the CEO of a publicly traded company. So I went back in time to how Oracle's shares fared over the last decade in two-year increments.

• May 4, 1998: $26.31

• May 4, 2000: $37.12

• May 3, 2002: $8.43

• May 4, 2004: $11.35

• May 3, 2006: $14.32

• May 3, 2008: $21.50

Not the most impressive stock performance in memory. Of course, the intervening 10 years were marked by the dot-com bubble burst as well as the subsequent recession. But when the economy recovered, so did the stock market. Judge Oracle's performance for what it is over the course of the last decade, but is the CEO really worth $192.9 million? You tell me.

***

Update: Judging from the feedback, I'm a moron for not noting stock adjustment & dividend announcements prior to the bubble. At the risk of again letting the trolls change the subject, I ask again: Is Ellison worth nearly $193 million for the job turned in over the course of last year? I must have missed it when Oracle shares broke triple digits in 2007. Wait, they didn't? No kidding. 'I'm still rubbing my eyes in disbelief at anyone who thinks that this incredible compensation package makes sense based upon the company's performance. If some folks still want to make that claim, whatever. There is no shortage of suck-ups to corporate greed. Anyway, I'm moving on.

[dpitfiel]

The closing price of ORCL on May 4, 1998 (adjusted for splits) was $4.39, not $26.31 as you state.

http://finance.yahoo.com/q/hp?s=ORCL&a=04&b=4&c=1998&d=04&e=4&f=1998&g=d

[bodacious99]

i have a relative who bought oracle in 2000 or 2001 (can't remember) at around 28. he asked me whether i thought it was a good investment. my response was, hey, you're on you're own. i don't know stocks. but has that share price ever since gotten back to that level? i don't think so. given that record, how can you say the guy's worth close to $193 million...really?

[charlie cooper]

dear "bodacious99," (i luv that handle!),

i agree with your post. some people are making a big deal about steve jobs and we can argue about whether his compensation is justified. but apple's share price has soared into the stratosphere post-tech bubble. that's clearly not been the case with oracle. it's a solid company. but lacy & her fanboys notwithstanding, there's no way you can say he's worth $192 million-plus in compensation and keep a straight faith.

[BillFromPittsburgh]

Sarah Lacy - lets see - a horrible interview of Mark Zuckerberg at SXSW; now proposing anybody is worth a $192 Million to their company.

Perhaps Ellison does get it, but it looks like Lacy doesn't.

[sgornick]

Hey Cooper, you know why I don't write columns for CNet? Because I am not a great writer, don't do my reasearch, etc. But you are proving to me that those are not necessary attributes. Sarah Lacy's track record isn't much better either: http://www.news.com/8301-13772_3-9889528-52.html

Cooper's right--the most important measure of a CEO's effectiveness is how s/he enhances shareholder value, and he's further right that there's an easy way to measure that effectiveness. Given that the right information in that regard is effortlessly accessible, is Cooper lazy, incompetent, or just another journalistic doofus who doesn't understand how financial markets work? How long will it take Cooper to change the thrust of his blog post? It could be argued that Ellison is or isn't worth $192M (or any other figure, for that matter), but not from the "data" that Cooper has produced. Funny thing is it would have taken Cooper less time to see that ORCL's share price has done reasonably well over time (both in the abstract and relative to the Nasdaq, S&P 500, and the Dow indices) than it took him to type out the wrong share-price information. What a putz! Wonder how much Cooper gets paid to generate such "journalism"? Think he's worth whatever it is?

[pegdashfab]

what a dope! ever heard of a stock split, you moron?

oracle split 3:2 on 3/1/99, 2:1 on 1/19/00, and 2:1 on 10/13/00.

don't quit yer day job, pinhead.

[somaglib]

you're just like the other guy. you're looking at the wrong data. this stock hasn't done much of anything since the crash. you're ok with $193 million for the ceo? yeah, whatever

[charlie cooper]

dear trollboy,

thanks for stopping by and adding to the conversation. yeah, you're surely right. oracle's been a `wonderful' stock investment since the bubble burst.

[ColinToal]

Charles Cooper - you're right - nobody did ask you.

If you are curious about Ellison's contribution to ORCL and business software as a whole, consider the following:

1. Oracle commercialized the relational database management system. Ellison, as a founder of Oracle brought RDMS to market which has revolutionized electronic data processing and business software applications.

2. Oracle's market cap as of today (May 3/2008) is USD$110.8B - this is a much better measure than stock price.

3. Oracle is the largest business applications provider by market cap and arguably the largest by installed base of users since they have been consolidating in the past few years.

This is really simple research. Last year, when Jobs was the highest paid CEO, I don't remember anyone questioning whether he is worth the money.

Sometimes I think 'professional bloggers' are one step below talk radio hosts in the depth of their research and their efforts to troll or bait for comments.

[somaglib]

i don't know what kind of math you're using but most people don't buy stock based on "adjusted price." they buy it at market price. and by that measure, oracle's done poorly over the years - surely not enough to justify $192 mil

Join the parade of maroons. Historical stock prices are adjusted based on certain interim developments, generally splits. Thus, if "most people" paid $10/share for stock in company XYZ on 1 Jun 05, and the company split its stock 2-for-1 on 1 Jul 05, the "adjusted" price of each share of stock would be $5.00. It's a pretty simple concept, and before you try to speak for "most people", you should try to understand what's meant by the terms of reference? Hope you don't vote.

[dpitfiel]

Oh good heavens!

If you bought 1 share on May 4 1998 at the closing price of $26.31, you would have 6 shares now (because of the stock splits), which you could have sold yesterday for a total of 6 x $21.51 = $129.06.

On your investment of $26.31 you would have made $102.75 ($129.06 - $26.31) over the past 10 years. Got it?

[charlie cooper]

hmm. that comment sounds like it could fit nicely with sarah lacy's post. if you still think ellison's worth $192 million for presiding over the consolidation of a big chunk of the enterprise market. have right at it. the jobs' comparison is weak. if you even bothered to track the appreciation in apple's stock the last couple of years compared with oracle's, you would know that.

[x4r32]

You were incorrect and now defensive...
...pathetic

[x4r32]

That response was unfortunate...

[face0]

Uh, yes Mr. Cooper, you need to account for stock splits. The graph shoes the value of the shares and as you can plainly see, the stock is worth much more now than in '98 not less as you are trying to lead your readers to believe. In fact, looks to me like the trend is up currently...
http://finance.yahoo.com/q/bc?s=ORCL&t=my&l=on&z=m&q=l&c=

[Srinidhi_Thirumala]

In comparision these are the compensation numbers for Microsoft's CEO Steve Ballmer for 2007 - Base Salary: 620000 and Bonus 670000 for a total of 1.3 million$ there abouts. Bill Gates's compensation for 2007 and 30 years before that may even be lesser each year.

So There you go - Microsoft and Bill Gates/Steve Ballmer are the very best when it comes to Corporate Governance even in matters pertaining to Executive Compensation. Sure they have tonne of Founder (Bill) and New Hire (Ballmer) stock but so does Larry and likes of Dell but yet they take this kind of compensation year after year. Steve Jobs is in the Same league as Dell, Larry.

Bill Gates is in another league to himself even when it comes to Corporate Governance/Lack of Greed/Ethics/Exec Compensation.

He should be lauded for this - it is a seperate topic from being the richest man or 2nd richest on earth

[SGK1212]

Coop: You'd better hope your bosses don't discover your ignorance. Snap out of it and write sometning intelligent!

[bingosherlock]

Larry Ellison is a bit of an egomaniac. Historically, interviews with him have shown that he is probably one of the most annoyingly egotistical CEOs in the world. It hurts to hear him talk.

However, Oracle is a brilliantly successful company, both from a technological perspective and from the perspective of the stockholder. Had this article accounted for stock splits, it would show that owning ORCL has been wildly profitable, even if you bought it during the "dot com era" of the late 90s.

Oracle is still a giant in the tech industry, and they continually make good moves to stay relevant in this industry. Their stock has performed consistently well despite periods of troubled times in both the industry and the economy.

If it ain't broke, don't fix it. If your company's overpaid egomaniac CEO keeps steering your company towards success and shareholder satisfaction, you're probably doing something right, no matter how much he's being paid.

[mhatter13]

Not Cooper's best piece ever. But Sarah Lacy is BEYOND retarded. And $200 million dollars is obscene.

[okeydokie]

"letting the trolls change the subject"? "Anyway, I'm moving on"? Cooper acts like wanting accurate information from him is tantamount to changing the subject. The facts, indeed, weaken the case, but it's still a defendable argument. Does he really not have the integrity to correct the error, or does he thing that facts are just not relevant to the discussion?

Cooper really should move on, as it seems he doesn't have the wherewithal to put together a coherent argument to support his uninformed opinion. If Cooper objects to Ellison's 2007 salary (and there are any number of reasons he could or should), and wants to tie that criticism to ORCL's stock price, then he should consider the performance of the company's stock during the same period. Fact is, ORCL's stock value increased 31%+ during the period. Put another way, ORCL's market capitalization (the real measure of a CEO's performance) increased approximately $26B in the year. That's B dollars, and that's more than most enterprises generate in revenue. Ellison's salary represents approximately .7% (that's point seven percent) of the added market capitalization. Is Ellison worth that much (or that little, depending on your point of view?) I don't have an opinion on that, but ORCL's board and shareholders seem to, and their opinion is what seems to matter most here. I do have an opinion about Cooper's simplistic view, and willingness to rail about something that is ultimately nuanced and shouldn't be considered in a vacuum, and that is that Cooper is lazy. I do have an opinion about Cooper's comment ("Whatever. I'm moving on.") on being taken to task for his laziness, and that is that he's an irresponsible coward. Cooper should spend his time "reporting" and opining on topics that don't require research, a calculator, or even a smidgen of curiosity about how financial markets work. What a waste of a podium! CNET must be so proud. Who's Sara Lacy?

[willdryden]

If I could get that kind of money, I would work one year, pay the taxes, and invest it all in U. S. treasury notes and live off the interest.