Published On: Thu, Oct 17th, 2013

Safra Catz Is Getting Ready to Face Some Shareholder Flak

Catz, CFO of software giant Oracle, will have to work hard to once again justify the company’s stock compensation plan at the fast approaching annual stockholders meeting.

Oracle

Safra Catz / Flicker

Safra Catz will probably never forget the torrid time she had at last year’s annual shareholders meeting of the Oracle Corporation, where she serves as   chief financial officer (CFO).

However, according to reports all indications, last year’s shareholder’s reaction to the excessive stock option schemes being offered to the company’s leading executives, particularly the company’s founder and major shareholder Larry Ellison, last year’s meeting looks like being a picnic compared to the 2013 AGM to be held on the 31st October.

One of Oracle’s leading shareholders, the iCtW Investment Group, have already given Ms. Catz a taste of things to come, circulating a strongly worded letter to the rest of the company’s shareholders stating that  Oracle CEO Ellison as well as the company’s other top level managers, including Ms. Catz are being overcompensated for their efforts, particularly in comparison to their peers in the software development industry and certainly with regards to the company’s disappointing returns of late.

In their open letter, iCtW, a division of labor-group Change to win stated their intention to demand at the AGM that Oracle, the largest database-software maker in the world, be forced to adopt industry benchmarks for compensation.

According to industry sources, so far the reaction from Oracle is to reject Cow’s claims of overcompensation has been addressed by their current compensation committee, in a letter that has been filed with the U.S. Securities and Exchange Commission.

The members of Oracle’s compensation committee are Bruce Chizen, formerly of Adobe Systems who has been heading the compensation committee for the last three years, Naomi Seligman, a partner at technology consultants Ostriker von Simson, and well-known venture capitalist George Conrades, currently chairman of Akamai Technologies.

iCtW, who claim to hold six million shares in Oracle, have obviously done their homework, citing in their open letter to Oracle’s board, that the compensation practices are exaggerated in favor of Larry Ellison and fellow members of the top management team when compared to their counterparts in the industry such as Apple, Amazon and Google, especially when it comes to stock options,

The management at CtW seems to be particularly up in arms about the compensation package Larry Ellison received in the financial year 2012/2013, which at $78.4 million was eighteen million dollars less than the previous financial year, after Ellison passed up on his annual bonus.

While iCtW appear to be the most vociferous and active of the shareholder blocks in Oracle, Ms. Catz will be aware that there  are other groups who are equally dissatisfied with the compensation packages over the top management at the company especially in relation to the company’s tepid performance during the last financial year.

Ellison, who was his sole founder of Oracle and still is the major shareholder with about 25% of the company’s shares in his hands has courted controversy by continuing to pick up tens of millions of dollars of stock options in the company every year, even when returns have been less than outstanding.

While the board at Oracle has consistently succeeded in standing by Ellison’s side in the face of pressure not only regarding the chairman’s compensation package but also their own, expectations is that this year the complaints will be considerably louder and more aggressive than they have been in the past.

What Safra Catz will undoubtedly argue is that thanks to Larry Ellison, Oracle has earned close to $40 billion for their shareholders during the past decade, with shares in the company having risen by.28% in its last fiscal year, surpassing the 24% overall increase recorded by the Standard & Poor’s 500 index for the same period.

 

What may possibly offend some of the shareholders is Larry Ellison’s less than modest lifestyle, using his estimated personal fortune of $41 billion to buy luxurious properties in the most fashionable spots around the world, including his own Hawaiian island, Lanai. In addition Ellison has provided total financial support for the US sailing teams participating in the America’s Cup. In return the US has picked up the trophy in the past two contests, with the most recent triumph coming last month in San Francisco.

Safra Catz has been a member of the top management team for twelve years and no doubt has enjoyed a lot of the financial benefits. Since April of 2011 Ms. Catz has held the posts of Co-President and Chief Financial Officer, reported to be one of Larry Ellison closest confidants .

According to the most recent reports published by Fortune going back to 2011, Safra Catz holds the title of being the highest-paid female executive in the list of Fortune 1000 companies, with her estimated remuneration for the 2010/2011 financial year being close to $52 million.

News of the impending confrontation at Redwood City, California, Oracle head offices has had its effects on the company’s share performance in recent days, dropping by 1.1 percent to $32.84 at the most recent close of business in the New York stock exchange.

 

Safra Catz was born in Holon, near Tel Aviv,  Israel and brought up in Brookline, Massachusetts, where her family moved to in 1967 when she was just six.

After graduating from High School, Ms. Catz went on to earn her bachelor’s degree from the Wharton School of the University of Pennsylvania as well as her Juris Doctor from the University Of Pennsylvania Law School.

Safra Catz began her professional career in New York-based merchant banking company of Donaldson, Lufkin & Jenrette, rising up the ladder to become the bank’s Managing Director.

Catz joined Oracle Corporation in April 1999, and was appointed to the company’s Board of Directors two years later, reaching the rank of President in 2004. Ms. Catz is recognized as being one of the driving forces behind Oracle’s success in recent years in particular the masterminding of the software giant’s successful acquisition of one of the company’s main rivals PeopleSoft in a $10.3 billion takeover in 2005.

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