Pay For Oracle’s Ellison, Hurd Valued At More Than $77M Each
REDWOOD SHORES (CBS / AP) — Mark Hurd may get his $100 million payday after all.
The former CEO of Hewlett-Packard Co. was negotiating a multiyear contract that size last year when an ethical scandal erupted and he resigned under pressure. The contract talks crumbled, but Hurd found a new home with his friend Larry Ellison at Oracle Corp. On Friday, Oracle disclosed that Hurd’s compensation for the year came in slightly higher than even Ellison’s.
Taken together, Hurd’s severance package from HP and his hiring package at Oracle may put him well north of the amount he was originally seeking, a rich reward that demonstrates Hurd’s strategic and symbolic value in Silicon Valley’s rapidly transforming tech landscape.
The document Oracle submitted to the Securities and Exchange Commission shows that Hurd got a pay package valued at $78.4 million for the company’s latest fiscal year, which ended May 31. The package includes a large signing bonus, but most of it consists of stock options that he won’t have immediate access to. That means Hurd may never see the full amount, or he may get far more, depending on fluctuations in Oracle’s stock price.
Hurd received $12.2 million in severance pay upon leaving HP, and $30 million worth of stock that he got by exercising options that came with that package. The figures would have been even higher if Hurd hadn’t surrendered some of his severance in a settlement with HP that allowed him to work at Oracle.
Ellison, one of the world’s richest men, spared no expense in hiring Hurd as Oracle mounts a strong attack against HP in computer servers, an HP stronghold in which Oracle is a new entrant. Ellison himself is also richly paid.
Ellison padded his fortune with compensation valued at $77.6 million, a par-for-the-course payday for Ellison. He has been Oracle’s CEO since he co-founded the company in 1977 and has been instrumental in building it into one of the world’s biggest business software companies.
But Hurd’s compensation was especially remarkable considering his compensation during his last full year at HP was valued at $24.2 million, according to calculations by The Associated Press.
Hurd and Ellison are tennis buddies whose alliance has aligned them on the right side of a lucrative trend: Corporations are spending on technology even as their spending on hiring has remained tepid.
Oracle’s focus has always been on businesses, and its model has helped lift its stock price over the last year while HP’s heavy consumer focus, especially in personal computers, has hurt its market value. In a sign of how seductive the business-centric approach is these days, last week HP announced plans to kill its fledgling tablet and smartphone business. It is also considering selling or spinning off its PC division.
In that fight, Hurd is a crucial ally for Ellison, and his value to the Redwood Shores-based corporation was outlined in detail in Oracle’s proxy filing Friday.
In the filing, Oracle’s board of directors called Oracle’s recent performance “outstanding” and noted that the company’s stock rose more than 50 percent in the latest fiscal year. Oracle’s database software and business applications have sold robustly despite the financial crisis.
Their satisfaction translated to bigger pay for top executives.
Ellison’s salary was $1, he got a $13.3 million bonus, had $1.5 million in miscellaneous compensation that went mostly for home security, and got stock options worth $62.7 million. The value of the options will fluctuate based on Oracle’s stock price.
Ellison owns nearly a quarter of Oracle’s outstanding shares, which makes up the bulk of his fortune. The stock closed Friday at $26.65, which made Ellison’s 1.1 billion shares worth roughly $30 billion.
The pay package was an increase from last year, when Ellison received compensation valued at about $70 billion, according to calculations by the AP.
Hurd received a salary of $698,106, bonus pay of $9.3 million, miscellaneous compensation of just over $16,000, and options worth $68.3 million on the day they were granted.
Hurd’s severance from HP was raised eyebrows considering the circumstances of his departure.
A former HP contractor had accused him of sexual harassment. The company’s board said it found no evidence of harassment, but voted unanimously to seek his resignation anyway over faulty expense reports. Hurd insists that he didn’t prepare his own expenses and that he wasn’t responsible for any oversights on them.
In a statement announcing the resignation, Hurd said obliquely that there were “instances in which I did not live up to the standards and principles of trust, respect and integrity that I have espoused at HP and which have guided me throughout my career.” He said he believed it would be difficult for him to continue as an effective leader at HP.
Ellison sharply criticized HP’s decision, and Hurd’s hiring was a strategic as well as a symbolic move, illustrating Oracle’s new direction.
The AP’s formula is designed to isolate the value the company’s board placed on the executive’s total compensation package during the last fiscal year. It includes salary, bonus, performance-related bonuses, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year.
The calculations don’t include changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the Securities and Exchange Commission, which reflect the size of the accounting charge taken for the executive’s compensation in the previous fiscal year.
Oracle set its annual shareholders meeting for Oct. 12.
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