Congratulations, Larry Ellison, you're No. 1!
Forbes, as it does every year, has released its list of top executive salaries. In the overall list as well as the technology category, Ellison, the Oracle chief exec and billionaire yachtsman, was tops with total 2007 compensation at $192.9 million.
2007 was a very good year for Larry Ellison.
It's another big win for Ellison, who recently won a $3 million tax break on his $200 million estate in swanky Woodside, Calif. Ellison's lawyers successfully argued that the house suffered from "significant functional obsolescence" because it turns out there's a limited market for 23-acre estates built to look like 16th century Japanese summer palaces.
There were a few surprises as well as the usual cast of well-compensated characters. Second on the tech list was Nabeel Gareeb of MEMC Electronic Materials, a little-known silicon wafer manufacturing company in Missouri. Rounding out the top 10 were Cisco's John Chambers, Hewlett-Packard's Mark Hurd, Nividia's Jen-Hsun Huang, IBM's Sam Palmisano, Corning's Wendell Weeks, EMC's Joe Tucci, Agilent's William Sullivan, and Intel's Paul Otellini.
Just missing the top 10 were Apple's Steve Jobs at No. 11 and Sun's Jonathan Schwartz at No. 12. Being named on a tech exec compensation list is probably the last thing Schwartz needed Friday, given that Sun's share price dropped more than 22 percent in one day of trading, thanks to very disappointing earnings news.
As a rule, executives (particularly the ones at under-performing companies) hate making these lists, because of the inevitable "are shareholders really getting their money's worth?" questions they engender. I know this firsthand: I used to have the pleasure of calling people to let them know they made the grade for the top executive compensation list at BusinessWeek. Once, a well-known Silicon Valley mogul gave me an earful off the record. He said something along the lines of: "This is bull***t. And you know it's bull***t. And you can tell your boss it's bull***t."
Why was he so angry? The methodology for measuring executive compensation tends to vary from publication to publication. That makes some sense, of course, since the methodology (or rationale) for lavishing millions on executives tends to vary from company to company. Forbes' list relies on "calculating the overall compensation for the past year for executives, factoring in salary, cash bonuses, vested stock grants, stock gains and exercised stock options," according to the magazine.
This methodology can lead to wild fluctuations from year to year. Jobs topped the 2006 list with $646 million thanks to a stock package. But he slid to 11 in the 2007 with $14.6 million in annual compensation.
Take what you will from the Forbes list: You can argue some of the execs earned their money, you can say many of them didn't. But all of them probably make far more money than you and me.
As the Saturday deadline looms for Yahoo to give Microsoft an answer on the latter's takeover bid, it's time for those of us writing about this to admit something: This is getting boring.
I mean "boring" in that Village of the Damned or Groundhog Day way, in which we're doomed to write the same story over and over and over again. Tomorrow, Yahoo may or may not respond to Microsoft with a carefully worded letter. Sunday, Microsoft may or may not respond with a carefully worded letter. Monday, The Wall Street Journal, which we suspect has a bat phone to Yahoo corporate PR, likely will publish yet another article quoting "people close to Yahoo" with another plan to wiggle out of Microsoft's grip.
We will dutifully cover all of it, and we will be bored. You know what this fracas really needs? Larry Ellison.
Ellison could make Microhoo interesting
Oracle's Ellison, of course, made a fine show of his hostile takeover of rival software maker PeopleSoft back in 2003. It was all vinegar from the start. Ellison mused about the thousands of PeopleSoft employees he'd have to lay off; the PeopleSoft customers who would be forced to migrate to Oracle software (the reality turned out to be much more accommodating); and at one point mused that if he had one bullet, PeopleSoft CEO Craig Conway's dog would be perfectly safe, but Conway could have some problems. (When Ellison made that crack in an analyst presentation, I was sitting behind an Oracle corporate PR person who made a sound something akin to "AIEEEEE!!!")
Conway responded by appearing on stage a few days later with his dog--both of them wearing bullet-proof vests. That's good stuff! So in the spirit of the real animosity that consumed that takeover, rather than the passive-aggressive testiness between Yahoo and Microsoft, here are five reasons the Oracle/PeopleSoft fight was so much more fun than this one:
The hostility was no act. Yahoo's Jerry Yang has made it clear he'd sooner kiss a Wookie than sell his company to Microsoft. But at PeopleSoft, there was genuine hatred for Oracle. You couldn't have two more different companies. PeopleSoft was viewed as the people-friendly company. Its core market was human resources software. Oracle was Oracle, with a well-earned reputation for cutthroat competition inside and outside the company. Its core market was databases and financial software. People...who needs people?
That's not to say the PeopleSoft people were pushovers. They were known to chant "Kill Oracle!" at corporate pep rallies, and were just as eager to brawl over big customers; their suits just weren't as fancy.
Craig Conway worked for Ellison
The Oedipal angle. At the time of the takeover fight, the CEOs of at least four major software companies had started their executive careers at Oracle, including PeopleSoft's Conway. Say what you want about Ellison, but he's good at spotting talent, and unfortunately turning that talent into rivals as they get older. That's what he had in Conway, a smart, aggressive executive who would, ummm, sooner kiss a Wookie than sell out to Ellison. I suppose you could make all sorts of Luke Skywalker/Darth Vader metaphors here, but I'll spare you the pain.
Ellison, the swashbuckler of software. Everyone loves a good show, and Ellison delivered. Besides the initial salt-of-the-earth musings and gunplay discussion, Ellison, the billionaire yachtsman, showed few executives can swagger like he can.
When he testified at an eventual antitrust trial that could have blocked the PeopleSoft takeover, Ellison arrived in celebrity style (with cameras swarming outside the federal courthouse in San Francisco where the trial was held) in a natty charcoal suit with patriotic red tie. On his way to the witness stand, he swiped a bottle of water off the Justice Department lawyer's desk, sat down, opened the bottle, and took a deep, satisfied swig. It was a moment of pure arrogance. Classic Ellison.
Dave Duffield, savior of kittens and puppies. Conway was the chief exec, but Duffield, PeopleSoft's founder, was still chairman of the board. Duffield's public persona was the antithesis of Ellison. He often signed his name with his initials, D.A.D., and that's how many longtime employees viewed him. Duffield had a reputation for lavishing his fortune on animal shelters, while Ellison had a reputation for lavishing his fortune on himself. They were the yin and yang of software.
Dave Duffield, PeopleSoft's founder, animal advocate
(Credit: Workplace)Oracle fought the law and Oracle won. Perhaps it's unfair to say the Justice Department prosecutors who tried to block Oracle from buying PeopleSoft were bumbling, but from the outset, their case seemed shaky. The federal judge presiding over the case started grilling them during opening statements, and didn't let up for the duration of the trial. Now I'm not ever going to argue that Oracle was an underdog, but for the anti-establishment types in the press corps, it was awfully interesting to see a government argument unravel so quickly.
Of course, there's still a very good chance Microhoo could draw government scrutiny. But I have no faith in the folks from Redmond (who have a long, painful track record with this sort of thing) to flamboyantly thumb their noses at the feds the way Oracle did.
So here's my plea to Ellison: Please, get involved, become Yahoo's white knight. It's not too late. Time-Warner's AOL and News Corp. (and probably Google, too) are just playing footsy with Yahoo. There's an opening for you. This is a great opportunity to piss off Ballmer and Gates & Co. Sure, you've got lots of other acquisitions to deal with, but you'll figure this out.
Help us, Larry Ellison. You're our only hope.
Want a tax break?
Then be like Larry Ellison. All you have to do is spend around $200 million on a replica of a 16th-century Japanese summer palace. Add extreme landscaping, such as a few hundred mature maple and cherry trees and a man-made waterfall carved into rock to look as though it had been put there "by the hand of God." Make sure this thing is so insanely over the top that no one besides you could possibly imagine living in it. And put this 23-acre estate in tony Woodside, in the hills above Silicon Valley.
Larry Ellison beat the tax man
Do all this and you too could be eligible for a $3 million tax break from the San Mateo (Calif.) County assessment appeals board. The lead story in Thursday's San Francisco Chronicle is what can be charitably described as a galling piece that proves the rich really are different from the rest of us, particularly when the rich person is billionaire adventurer, tech pioneer, and shameless rogue, Oracle CEO Larry Ellison.
Ellison, it seems, was displeased with the tax bill for his Shogun estate. Why, you ask? Well, turns out it suffers from "significant functional obsolescence," according to the Chronicle. Shocking as it may seem, there's a finite market for really, really high-end luxury homes and a limited appeal for 16th-century Japanese architecture. In other words, there is no one on this planet other than Ellison crazy enough to buy this place.
And think you're getting creamed by the housing market collapse? You should be in Ellison's shoes. Ellison spent $200 million on his palatial abode, but his lawyer says it's only worth $64.7 million, per the Chronicle. That's rough, considering the average price of luxury homes in San Mateo County only dropped 6.3 percent last year.
Ellison didn't do anything illegal, of course. He went to the appeals board with a complaint and they agreed with him. Fair enough. But the Chronicle also helpfully points out where that $3 million would have gone, including $1.4 million for public schools.
So while the rest of were wondering whether we'd qualify for a $600 ($1,200 for couples) IRS refund under President Bush's economic stimulus package, Ellison had bigger fish to fry. But here's another way to look at it: $3 million to Larry Ellison is equivalent to $300 for the average homeowner, according to the Chronicle.
So if you think about it, Ellison's getting a raw deal. While the rest of us may get $600, he's only getting half that! OK, so it takes some mental gymnastics and a good deal of hallucinogens to reach that conclusion. But what else are you going to do? Getting angry about this is like feigning shock that a billionaire prefers to spend on credit rather than cash out his company stock.
Oh wait, Ellison used to do that, too? OK, so what was that about the rich being different than the rest of us?
For anyone who's ever listened to Oracle founder Larry Ellison talk about his company, or on any topic for that matter, it can be entertaining. The dude is humorous, has great punch-line timing, and at times will make outlandish comments that send his public relations team into major damage control.
So, it was painful to listen in on the company's audio Webcast (registration required) announcing its $8.5 billion acquisition of BEA Systems.
The tightly scripted press conference, which had Ellison reading off a piece a paper, conjured up images of a tiger in a tight cage. His comments, which generally flow fast and freely, were so plodding in the press conference that occasionally he stumbled over his words, and, at one point, said "let me try that again" as he took another stab at reading off the script.
Alfred Chuang, BEA's co-founder and CEO, followed up Ellison's presentation, sounding comfortable with the task of reading off a script. And, in his relaxed tone, he wrapped up his comments with: "And back to you, Larry."
But Larry was gone.
He had left the proverbial building.
It almost makes one wonder whether BEA had negotiated the uncharacteristically scripted press conference as part of its buyout agreement.
OK, kids. Sharpen those pencils, sharpen those minds. Here's a pop quiz on a bit of Oracle nostalgia, as Larry Ellison, Oracle co-founder and chief executive, kicked off Oracle OpenWorld in San Francisco on Sunday with 30 years of highlights:
Larry Ellison at Oracle OpenWorld
(Credit: CNET Networks/ Dawn Kawamoto)
What was the name of Oracle, before it became Oracle?
A: Software Development Laboratories (SDL)
B: Laboratories Software Development (LSD)
C: BEL Systems (Bob Miner, Ed Oates, Larry Ellison, founders)
Answer: Software Development Laboratories. Ellison, during his keynote speech, dedicated the evening's event to the late Bob Miner.
When Oracle began selling its first commercial SQL relational database management system in 1978, which version was first officially released?
A: Version 1.0
B: Version 2.0
C: Version 3.0
Answer: Version 2.0. There was never a 1.0 version. Said Ellison: "Who'd buy a version 1.0 from four guys in California?"
And as government contracts began to payoff and money came rolling into the company in its early years, Ellison said he struggled to understand the items on a balance sheet and sought help. Who was the company's first official bean counter?
A: a waitress
B: an H&R accountant
C: a pizza delivery boy
Answer: A pizza delivery boy. Ellison noted that in the early days of Oracle, the company would often order dinner from a local pizzeria. And in talking with the delivery boy, they learned he was majoring in accounting at UC Berkeley. The student was hired to do the company's financials. Said Ellison: "He said, 'he wouldn't quit college, but he'd help us do our books.' We said, 'take whatever you need (for pay). We'd never know.'"
As Oracle began to grow and increase its presence on college campuses for recruiting young talent, the company tried to steer clear of students with a particular type of degree. What was it?
A: Masters in business administration
B: Mathematics
C: Liberal Arts
Answer: Masters in business administration. Ellison likened the company to operating in an MBA-free zone. But one such person's MBA status slipped by detection, until after having worked at Oracle for several years. Said Ellison: "Ron Wohl had an MBA from Harvard. It should have disqualified him from working at Oracle, but we didn't find out until (several years later)."
Those are just some of the tidbits from Oracle's 30 years of history that Ellison outlined during the Sunday opening keynote.
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