UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

☐		Preliminary Proxy Statement
☐		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒		Definitive Proxy Statement
☐		Definitive Additional Materials
☐		Soliciting Material Pursuant to Section 240.14a-12

Oracle Corporation

 

 

(Name of Registrant as Specified In Its Charter)

 

 

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

☒		No fee required.
☐		Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
		(1)		Title of each class of securities to which transaction applies:
		(2)		Aggregate number of securities to which transaction applies:
		(3)		Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
		(4)		Proposed maximum aggregate value of transaction:
		(5)		Total fee paid:
☐		Fee paid previously with preliminary materials.
☐		Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
		(1)		Amount Previously Paid:
		(2)		Form, Schedule or Registration Statement No.:
		(3)		Filing Party:
		(4)		Date Filed:

 

 

 

TABLE OF CONTENTS

 

Proxy Statement Summary			1
How Do I Vote?			5
Board of Directors			6
Nominees for Directors			6
Board Meetings			12
Committees, Membership and Meetings			12
Director Compensation			15
Corporate Governance			18
Corporate Governance Guidelines			18
Proxy Access and Director Nominations			19
Majority Voting Policy			19
Prohibition on Speculative Transactions and Pledging Policy			20
Board and Committee Performance Evaluations			20
Stock Ownership Guidelines for Directors and Senior Officers			21
Board Leadership Structure			21
Board’s Role in Risk Oversight			22
Board of Directors and Director Independence			22
Director Tenure, Board Refreshment and Diversity			23
Stockholder Outreach			24
Communications with the Board			24
Employee Matters			24
Security Ownership of Certain Beneficial Owners and Management			25
Delinquent Section 16(a) Reports			27
Executive Compensation			28
Compensation Discussion and Analysis			28
Report of the Compensation Committee of the Board of Directors			43
Fiscal 2019 Summary Compensation Table			44
Grants of Plan-Based Awards During Fiscal 2019			46
Outstanding Equity Awards at 2019 Fiscal Year-End			47
Option Exercises and Stock Vested During Fiscal 2019			48
Fiscal 2019 Non-Qualified Deferred Compensation			49
Potential Payments Upon Termination or Change in Control			50
Equity Compensation Plan Information			51
CEO Pay Ratio			52
Transactions with Related Persons			52
Legal Proceedings			54
Management Proposals			55
Proposal No. 1: Election of Directors			55
Proposal  No. 2: Advisory Vote to Approve the Compensation of our Named Executive Officers			56
Proposal  No. 3: Ratification of Selection of Independent Registered Public Accounting Firm			58
Report of the Finance and Audit Committee of the Board of Directors			59
Stockholder Proposals			60
Proposal No. 4: Stockholder Proposal Regarding Pay Equity Report			60
Proposal No. 5: Stockholder Proposal Regarding Independent Board Chair			62
Stockholder Proposals for the 2020 Annual Meeting			65
Questions and Answers about the Annual Meeting			66
No Incorporation by Reference			71
Other Business			71
Householding			71

 

2019 Annual Meeting of Stockholders  

 

2019 Annual Meeting of Stockholders     1

 

2     2019 Annual Meeting of Stockholders

 

2019 Annual Meeting of Stockholders     3

 

4     2019 Annual Meeting of Stockholders

PROXY STATEMENT

We are providing these proxy materials in connection with Oracle Corporation’s 2019 Annual Meeting of Stockholders (the Annual Meeting). The Notice of Internet Availability of Proxy Materials (the Notice), this proxy statement and the accompanying proxy card or voting instruction card, including an Internet link to our most recently filed Annual Report on Form 10-K, were first made available to stockholders on or about September 27, 2019. This proxy statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. Please read it carefully.

HOW DO I VOTE?

 

Your vote is important. You may vote on the Internet, by telephone, by mail or by attending the Annual Meeting and voting by ballot, all as described below. The Internet and telephone voting procedures are designed to authenticate stockholders by use of a control number and to allow you to confirm that your instructions have been properly recorded. If you vote by telephone or on the Internet, you do not need to return your proxy card or voting instruction card. Telephone and Internet voting facilities are available now and will be available 24 hours a day until 11:59 p.m., Eastern Time, on November 18, 2019.

Vote on the Internet

If you are a stockholder of record, you may submit your proxy by going to www.voteproxy.com and following the instructions provided in the Notice. If you requested printed proxy materials, you may follow the instructions provided with your proxy materials and on your proxy card. If your shares are held with a broker, you will need to go to the website provided on your Notice or voting instruction card. Have your Notice, proxy card or voting instruction card in hand when you access the voting website. On the Internet voting site, you can confirm that your instructions have been properly recorded. If you vote on the Internet, you can also request electronic delivery of future proxy materials.

Vote by Telephone

If you are a stockholder of record, you can also vote by telephone by dialing 1-800-PROXIES (1-800-776-9437) or 1-718-921-8500. If your shares are held with a broker, you can vote by telephone by dialing the number specified on your voting instruction card. Easy-to-follow voice prompts will allow you to vote your shares and confirm that your instructions have been properly recorded. Have your proxy card or voting instruction card in hand when you call.

Vote by Mail

If you have requested printed proxy materials, you may choose to vote by mail, by marking your proxy card or voting instruction card, dating and signing it, and returning it in the postage-paid envelope provided. If the envelope is missing and you are a stockholder of record, please mail your completed proxy card to American Stock Transfer & Trust Company, LLC, 6201 15th Avenue, Brooklyn, New York 11219. If the envelope is missing and your shares are held with a broker, please mail your completed voting instruction card to the address specified therein. Please allow sufficient time for mailing if you decide to vote by mail.

Please note that if you received a Notice, you cannot vote by marking the Notice and returning it. The Notice provides instructions on how to vote by Internet and how to request paper copies of the proxy materials.

Voting at the Annual Meeting

The method or timing of your vote will not limit your right to vote at the Annual Meeting if you attend the Annual Meeting and vote in person. However, if your shares are held in the name of a bank, broker or other nominee, you must obtain a legal proxy, executed in your favor, from the holder of record to be able to vote at the Annual Meeting. You should allow yourself enough time prior to the Annual Meeting to obtain this proxy from the holder of record.

The shares voted electronically, telephonically, or represented by the proxy cards received, properly marked, dated, signed and not revoked, will be voted at the Annual Meeting.

 

2019 Annual Meeting of Stockholders     5

BOARD OF DIRECTORS

 

Nominees for Directors

Our Board of Directors (the Board) consists of 15 directors, 14 of whom stood for election at our last annual meeting of stockholders. The Board unanimously elected Rona A. Fairhead as a director effective as of July 31, 2019, and Mrs. Fairhead will stand for election at the Annual Meeting along with our other 14 directors. Mrs. Fairhead was identified as a potential director by the Nomination and Governance Committee (the Governance Committee).

Director Qualifications

Our Corporate Governance Guidelines (described in “Corporate Governance—Corporate Governance Guidelines” on page 18) contain Board membership qualifications that apply to Board nominees recommended by the Governance Committee. The Governance Committee strives for a mix of skills, experience and perspectives that will help create an outstanding, dynamic and effective Board. In selecting nominees, the Governance Committee assesses the independence, character and acumen of candidates and endeavors to collectively establish areas of core competency of the Board, including, among others, industry and technical knowledge and experience; management, accounting and finance expertise; and demonstrated business judgment, leadership and strategic vision. The Governance Committee values a diversity of backgrounds, experience, perspectives and leadership in different fields when identifying nominees. As noted in our Corporate Governance Guidelines, the Governance Committee is committed to actively seeking women and minority candidates for the pool from which director candidates are chosen.

The Governance Committee also takes director tenure into consideration when making director nomination decisions and believes that it is desirable to maintain a mix of longer-tenured, experienced directors and newer directors with fresh perspectives. The Governance Committee and the Board also believe that longer-tenured, experienced directors are a significant strength of the Board, given the large size of our company, the breadth of our product offerings and the international scope of our organization. See “Corporate Governance—Director Tenure, Board Refreshment and Diversity” on page 23 for more information.

Below we identify the key experiences, qualifications and skills our director nominees bring to the Board and that the Board considers important in light of Oracle’s businesses and industry.

 

•

Industry Knowledge and Experience. We seek to have directors with experience as executives or directors or in other leadership positions in the particular technology industries in which we compete because our success depends on developing and investing in innovative products and technologies. This experience is critical to the Board’s ability to understand our products and business, assess our competitive position within the technology industry and the strengths and weaknesses of our competitors, maintain awareness of technology trends and innovations, and evaluate potential acquisitions and our acquisition strategy.

 

•

Management, Accounting and Finance Expertise. We believe that an understanding of management practices, accounting and finance processes is important for our directors. We value management experience in our directors as it provides a practical understanding of organizations, processes, strategies, risk management and the methods to drive change and growth that permit the Board to, among other things, identify and recommend improvements to our business operations, sales and marketing approaches and product strategy. We also seek to have at least one independent director who qualifies as an audit committee financial expert, and we expect all of our directors to be financially knowledgeable.

 

•

Business Judgment, Leadership and Strategic Vision. We believe that directors with experience in significant leadership positions are commonly required to demonstrate excellent business judgment, leadership skills and strategic vision. We seek directors with these characteristics as they bring important insights to Board deliberations and processes.

The Board evaluates its own composition in the context of the diverse experiences and perspectives that the directors collectively bring to the boardroom. Their backgrounds provide the Board with vital insights in areas such as:

 

Finance and Accounting		Technology Industry		Cybersecurity and Risk Management		Mergers and Acquisitions
Operation of Global Organizations		Computer Science		Governmental Affairs and Regulation		Strategic Transformation
International Tax and Monetary Policy		Intellectual Property		Executive Leadership and Talent Development		Customer Perspective

 

6     2019 Annual Meeting of Stockholders

 

2019 Annual Meeting of Stockholders     7

 

8     2019 Annual Meeting of Stockholders

 

2019 Annual Meeting of Stockholders     9

 

10     2019 Annual Meeting of Stockholders

 

2019 Annual Meeting of Stockholders     11

Recommendations of Director Candidates

The Governance Committee will consider all properly submitted candidates recommended by stockholders for Board membership. Our Corporate Governance Guidelines (available on our website at www.oracle.com/goto/corpgov) set forth the Governance Committee’s policy regarding the consideration of all properly submitted candidates recommended by stockholders as well as candidates recommended by current Board members and others.

Any stockholder wishing to recommend a candidate for consideration for nomination by the Governance Committee must provide a written notice to the Corporate Secretary of Oracle at 500 Oracle Parkway, Mailstop 5op7, Redwood City, California 94065, or by email (Corporate_Secretary@oracle.com) with a confirmation copy sent by mail. The written notice must include the candidate’s name, biographical data and qualifications and a written consent from the candidate agreeing to be named as a nominee and to serve as a director if nominated and elected. By following these procedures, a stockholder will have properly submitted a candidate for consideration. However, there is no guarantee that the candidate will be nominated.

Potential director candidates are generally suggested to the Governance Committee by current Board members and stockholders and are evaluated at meetings of the Governance Committee. In evaluating such candidates, every effort is made to complement and strengthen skills within the existing Board. The Governance Committee seeks Board approval of the final candidates recommended by the Governance Committee. The same identifying and evaluating procedures apply to all candidates for director, whether submitted by stockholders or otherwise.

Information regarding procedures for the stockholder submission of director nominations to be considered at our next annual meeting of stockholders may be found in “Corporate Governance—Proxy Access and Director Nominations” on page 19 and “Stockholder Proposals for the 2020 Annual Meeting” on page 65.

Board Meetings

Our business, property and affairs are managed under the direction of the Board. Members of the Board are kept informed of our business through discussions with our Chairman, Vice Chairman, CEOs, General Counsel, Corporate Secretary and other officers and employees, by reviewing materials provided to them, by visiting our offices and by participating in meetings of the Board and its committees.

During fiscal 2019, the Board met four times (four regularly scheduled meetings). Each director attended at least 75% of all Board and applicable committee meetings in fiscal 2019. Board members are expected to attend our annual meeting of stockholders, and all of our directors serving on the Board at the time of our last annual meeting of stockholders in November 2018 attended that meeting.   Committees, Membership and Meetings		Number of Board and Committee Meetings Fiscal 2019
The current standing committees of the Board are the Finance and Audit Committee (F&A Committee), the Governance Committee, the Compensation Committee and the Committee on Independence Issues (Independence Committee).

Each committee reviews its charter at least annually, or more frequently as legislative and regulatory developments and business circumstances warrant. Each of the committees may make additional recommendations to our Board for revision of its charter to reflect evolving best practices. The charters for the F&A, Governance, Compensation and Independence Committees are posted on our website at www.oracle.com/goto/corpgov.

 

12     2019 Annual Meeting of Stockholders

Committee Membership

The table below identifies committee membership as of September 20, 2019, the record date of the Annual Meeting.

 

Director		Finance and Audit		Compensation		Governance		Independence
Jeffrey S. Berg								Chair
Michael J. Boskin		Chair
Safra A. Catz
Bruce R. Chizen						Chair
George H. Conrades				Chair
Lawrence J. Ellison
Rona A. Fairhead
Hector Garcia-Molina
Jeffrey O. Henley
Mark V. Hurd
Renée J. James
Charles W. Moorman IV
Leon E. Panetta
William G. Parrett
Naomi O. Seligman				Vice Chair

The Board has determined that all directors who served during fiscal 2019 on the Compensation, F&A, Governance and Independence Committees were independent under the applicable New York Stock Exchange (NYSE) listing standards during the periods they served on those committees. The Board has also determined that all directors who served during fiscal 2019 on the Compensation and F&A Committees satisfied the applicable NYSE and U.S. Securities and Exchange Commission (SEC) heightened independence standards for members of compensation and audit committees during the periods they served on those committees. See “Corporate Governance—Board of Directors and Director Independence” on page 22 for more information.

The Finance and Audit Committee

The F&A Committee oversees our accounting and financial reporting processes and the audit and integrity of our financial statements, assists the Board in fulfilling its oversight responsibilities regarding audit, finance, accounting, cybersecurity, tax and legal compliance and risk, and evaluates merger and acquisition transactions and investment transactions proposed by management. In particular, the F&A Committee is responsible for overseeing the engagement, independence, compensation, retention and services of our independent registered public accounting firm. The F&A Committee’s primary responsibilities and duties are to:

 

•

act as an independent and objective party to monitor our financial reporting process and internal control over financial reporting;

 

•

review and appraise the audit efforts of our independent registered public accounting firm;

 

•

receive regular updates from our internal audit department regarding our internal audit plan and compliance with various policies and operational processes across all lines of business;

 

•

evaluate our quarterly financial performance at earnings review meetings;

 

•

oversee management’s establishment and enforcement of financial policies and business practices;

 

•

oversee our compliance with laws and regulations and our Code of Ethics and Business Conduct;

 

•

provide an open avenue of communication between the Board and the independent registered public accounting firm, General Counsel, financial and senior management, Chief Compliance & Ethics Officer and internal audit department;

 

•

review and, if within its delegated range of authority, approve merger and acquisition and financial transactions proposed by our management; and

 

•

produce the Report of the Finance and Audit Committee of the Board, included elsewhere in this proxy statement, as required by SEC rules.

 

2019 Annual Meeting of Stockholders     13

The F&A Committee held executive sessions with our independent registered public accounting firm on four occasions in fiscal 2019. The Board has determined that Dr. Boskin and Mr. Parrett each qualify as an “audit committee financial expert” as defined by SEC rules.

The Compensation Committee

The primary functions of the Compensation Committee are to:

 

•

review and approve all compensation arrangements, including, as applicable, base salaries, bonuses and equity awards, of our CEOs and our other executive officers;

 

•

review and approve non-employee director compensation, subject to ratification by the Board;

 

•

lead the Board in its evaluation of the performance of our CEOs;

 

•

review and discuss the Compensation Discussion and Analysis (CD&A) portion of our proxy statement with management and determine whether to recommend to the Board that the CD&A be included in our proxy statement;

 

•

review the Compensation Committee Report for inclusion in our proxy statement, as required by SEC rules;

 

•

review, approve and administer our stock plans, and approve equity awards to certain participants;

 

•

annually assess the risks associated with our compensation practices, policies and programs applicable to our employees to determine whether such risks are appropriate or reasonably likely to have a material adverse effect on Oracle; and

 

•

oversee our 401(k) Plan Committee and amend the Oracle Corporation 401(k) Savings and Investment Plan (the 401(k) Plan) when appropriate.

The Compensation Committee helps us attract and retain talented executive personnel in a competitive market. In determining any component of executive or director compensation, the Compensation Committee considers the aggregate amounts and mix of all components in its decisions. Our legal department, human resources department and the independent compensation consultant support the Compensation Committee in its work. For additional details regarding the Compensation Committee’s role in determining executive compensation, including its engagement of an independent compensation consultant, refer to “Executive Compensation—Compensation Discussion and Analysis” beginning on page 28. See “Executive Compensation—Compensation Discussion and Analysis—Other Compensation Policies—Equity Awards and Grant Administration” on page 42 for a discussion of the Compensation Committee’s role as the administrator of our stock plans and for a discussion of our policies and practices regarding the grant of our equity awards.

Risk Assessment of Compensation Policies and Practices

The Compensation Committee, in consultation with management and Compensia, Inc., the committee’s independent compensation consultant, has assessed the compensation policies and practices applicable to our executive officers and other employees and concluded that they do not create risks that are reasonably likely to have a material adverse effect on Oracle. The Compensation Committee conducts this assessment annually.

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee has ever been an officer or employee of Oracle or of any of our subsidiaries or affiliates. During the last fiscal year, none of our executive officers served on the board of directors or on the compensation committee of any other entity, any officers of which served either on our Board or on our Compensation Committee.

The Nomination and Governance Committee

The Governance Committee has responsibility for monitoring corporate governance matters, including periodically reviewing the composition and performance of the Board and its committees (including reviewing the performance of individual directors), reviewing and assessing the adequacy of our policies, plans and procedures regarding succession planning, and overseeing our Corporate Governance Guidelines. The Governance Committee also considers and recommends qualified candidates for election to the Board.

The Committee on Independence Issues

The Independence Committee is charged with reviewing and approving individual transactions, or a series of related transactions, involving amounts in excess of $120,000 between us (or any of our subsidiaries) and any of our affiliates, such as an executive officer, director or owner of 5% or more of our common stock. The Independence

 

14     2019 Annual Meeting of Stockholders

Committee’s efforts are intended to ensure that each proposed related person transaction is on terms that, when taken as a whole, are fair to us. If any member of the Independence Committee would derive a direct or indirect benefit from a proposed transaction, he or she is excused from the review and approval process with regard to that transaction. The role of the Independence Committee also encompasses monitoring of related person relationships as well as reviewing proposed transactions and other matters for potential conflicts of interest and possible corporate opportunities in accordance with our Global Conflict of Interest Policy. The Independence Committee also evaluates the independence of each non-employee director as defined by NYSE listing standards.

Director Compensation

Highlights

 

•

Annual and initial equity awards capped at a maximum dollar value

 

•

No per-meeting fees

 

•

Emphasis on equity to align director compensation with our stockholders’ long-term interests

 

•

Stockholder-approved limits on equity awards

 

•

No retirement benefits or perquisites

 

•

Robust stock ownership guidelines (see page 21 for details)

Overview

Our directors play a critical role in guiding our strategic direction and overseeing the management of Oracle. Ongoing developments in corporate governance, executive compensation and financial reporting have resulted in increased demand for highly qualified and productive public company directors. In addition, Oracle’s acquisition program and expansion into new lines of business can demand substantial time commitments from our directors.

These considerable time commitments and the many responsibilities and risks of being a director of a public company of Oracle’s size, complexity and profile require that we provide reasonable incentives for our non-employee directors’ continued performance by paying compensation commensurate with their qualifications and significant workload. Our non-employee directors are compensated based on their respective levels of Board participation and responsibilities, including service on Board committees. Our non-employee directors display a high level of commitment and flexibility in their service to Oracle. Several of our directors serve on more than one committee. In addition to engaging with our senior management, our non-employee directors personally attend and participate in important customer and employee events, such as Oracle OpenWorld and Oracle President’s Council forums, and meet with our stockholders throughout the year to better understand their perspectives. Annual cash retainers and equity awards granted to our non-employee directors are intended to correlate with the qualifications, responsibilities and time commitments of each such director.

Our employee directors, Mr. Ellison, Ms. Catz, Mr. Hurd and Mr. Henley, do not receive separate compensation for serving as directors of Oracle.

Cash Retainer Fees for Directors

 

Effective June 1, 2018, the Board eliminated per-meeting fees.

Annual Equity Grant for Directors

Non-employee directors also participate in our Amended and Restated 1993 Directors’ Stock Plan (the Directors’ Stock Plan), which sets forth stockholder-approved limits on annual equity awards for service on the Board and as a committee chair. The annual equity awards are granted on May 31 of each year. Committee chair equity awards are prorated for chairs who served for less than the full fiscal year.

 

2019 Annual Meeting of Stockholders     15

In fiscal 2018, the Board approved changes to our non-employee director compensation program, including reductions in the size of equity awards. The Board determined that each equity award will be limited to the lesser of the stockholder-approved limits set forth in the Directors’ Stock Plan or a specified maximum dollar value. Below is a summary of the stockholder-approved limits on annual equity awards set forth in the Directors’ Stock Plan, the maximum dollar value limit on annual equity awards effective May 31, 2018 and the number of RSUs actually granted to non-employee directors on May 31, 2019.

 

Grant Type		Stockholder-Approved Equity Award Limits		Maximum Dollar Value Effective May 31, 2018					Equity Actually Granted on May 31, 2019 (1)					% Reduction from   Stockholder-Approved   Limits (3)
Board Annual Grant		45,000 options (or 11,250 RSUs)			$	400,000					7,905 RSUs					30	%
F&A Committee Chair		45,000 options (or 11,250 RSUs)			$	200,000					3,952 RSUs					65	%
F&A Committee Vice Chair		30,000 options (or 7,500 RSUs)				—					—	(2)				100	%
Compensation Committee Chair		45,000 options (or 11,250 RSUs)			$	200,000					3,952 RSUs					65	%
Governance Committee Chair		15,000 options (or 3,750 RSUs)			$	65,000					1,284 RSUs					66	%
Independence Committee Chair		15,000 options (or 3,750 RSUs)			$	65,000					1,284 RSUs					66	%

 

(1)	Calculated by dividing the maximum dollar value by the closing price of Oracle common stock on the date of grant ($50.60 per share), rounding down to the nearest whole share.

 

(2)	The Board eliminated the annual equity award for service as F&A Committee Vice Chair in fiscal 2016.

 

(3)	Percentage reduction in the number of RSUs actually granted on May 31, 2019 compared to stockholder-approved equity award limits.

The Directors’ Stock Plan provides that in lieu of all or some of the stock option limits set forth in the plan, non-employee directors may receive grants of RSUs of an equivalent value, as determined on any reasonable basis by the Board. The Board determined that a ratio of four stock options to one RSU should be used, consistent with its approach for equity awards granted to Oracle employees. The Board determined in April 2016 that all non-employee director equity awards will be delivered in the form of RSUs that vest on the first anniversary of the date of grant.

Initial Equity Grant for New Directors

The Directors’ Stock Plan also provides for an initial equity award of not more than 45,000 stock options (or 11,250 RSUs) for new non-employee directors, prorated based upon the number of full calendar months remaining in the fiscal year of the director’s appointment. In accordance with the reductions to our non-employee director compensation described above, any new non-employee director will receive an initial equity award equal to the lesser of 11,250 RSUs or RSUs with a total value of $400,000 (calculated by dividing the maximum dollar value by the closing price of Oracle common stock on the date of grant, rounding down to the nearest whole share), prorated based upon the number of full calendar months remaining in the fiscal year of the director’s appointment.

Fiscal 2019 Director Compensation Table

The following table provides summary information regarding the compensation we paid to our non-employee directors in fiscal 2019.

 

Name (1)		Fees Earned or Paid in Cash ($)					Stock Awards (2) (3) ($)					Total ($)
Jeffrey S. Berg				122,500					456,326					578,826
Michael J. Boskin				102,500					588,819					691,319
Bruce R. Chizen				107,500					456,326					563,826
George H. Conrades				117,500					588,819					706,319
Hector Garcia-Molina				67,500					392,562					460,062
Renée J. James				52,500					392,562					445,062
Charles W. Moorman IV				73,288					392,562					465,850
Leon E. Panetta				92,500					392,562					485,062
William G. Parrett				73,288					392,562					465,850
Naomi O. Seligman				77,500					392,562					470,062

 

16     2019 Annual Meeting of Stockholders

(1)	Rona A. Fairhead joined the Board in fiscal 2020 and therefore received no fiscal 2019 compensation. In fiscal 2020, Mrs. Fairhead will receive Oracle’s standard non-employee director compensation, as described above.

 

(2)

The amounts reported in this column represent the aggregate grant date fair values of RSUs computed in accordance with the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) Topic 718, Compensation—Stock Compensation (FASB ASC 718). The non-employee directors have not presently realized a financial benefit from these awards because none of the RSUs granted in fiscal 2019 have vested. For information on the valuation assumptions used in our stock-based compensation computations, see Note 13 to our consolidated financial statements in our Annual Report on Form 10-K for fiscal 2019.

 

(3)	The following table provides additional information concerning the stock awards (in the form of RSUs) and stock options held by our non-employee directors as of the last day of fiscal 2019.

 

Name		Total Unvested RSUs Outstanding at Fiscal 2019 Year End  (#)					RSUs Granted During Fiscal 2019 (a) (#)					Total Option Awards Outstanding at   Fiscal 2019 Year End (#)
Jeffrey S. Berg				9,189					9,189					247,500
Michael J. Boskin				11,857					11,857					450,000
Bruce R. Chizen				9,189					9,189					225,000
George H. Conrades				11,857					11,857					67,500
Hector Garcia-Molina				7,905					7,905					225,000
Renée J. James				8,491					7,905					9,375
Charles W. Moorman IV				7,905					7,905					—
Leon E. Panetta				7,905					7,905					37,500
William G. Parrett				7,905					7,905					—
Naomi O. Seligman				7,905					7,905					202,500

 

(a)

The RSUs reported in this column were granted on May 31, 2019 and vest on the first anniversary of the date of grant (May 31, 2020).

 

2019 Annual Meeting of Stockholders     17

CORPORATE GOVERNANCE

 

We regularly monitor developments in corporate governance and review our processes and procedures in light of such developments. As part of those efforts, we review federal laws affecting corporate governance, as well as rules adopted by the SEC and NYSE. We believe we have in place corporate governance procedures and practices that are designed to enhance our stockholders’ interests.

Corporate Governance Guidelines

The Board has adopted Corporate Governance Guidelines (the Guidelines), which address the following matters:

 

 

The Guidelines require all members of the F&A, Compensation, Governance and Independence Committees to be independent, each in accordance with or as defined in the rules adopted by the SEC and NYSE. The Independence Committee and the Board make this determination annually for all non-employee directors.

The Board and each committee have the power to hire legal, accounting, financial or other outside advisors as they deem necessary in their best judgment without the need to obtain the prior approval of any officer of Oracle. Directors have full and free access to officers and employees of Oracle and may ask questions and conduct investigations as they deem appropriate to fulfill their duties.

Conflict of interest expectations for our non-employee directors are addressed in the Guidelines and provide that each non-employee director must disclose to our General Counsel:

 

•

all of his or her executive, employment, board of directors, advisory board or equivalent positions in other organizations annually;

 

•

any such proposed positions with a public company before they become effective and any such positions with a private company promptly following his or her appointment to such entity; and

 

•

any potential conflicts of interest that may arise from time to time with respect to matters under consideration of the Board.

The General Counsel must report all such disclosures to the Independence Committee, and the Board must consider such disclosures and other available information and take such actions as it considers appropriate. All directors are expected to comply with Oracle’s Code of Ethics and Business Conduct, except that for our non-employee directors, the provisions regarding conflicts of interest in the Guidelines supersede these same provisions in the Code of Ethics and Business Conduct.

The Guidelines provide for regular executive sessions to be held by non-employee directors. The Guidelines also provide that the Board or Oracle will establish or provide access to appropriate orientation programs or materials for the benefit of newly elected directors, including presentations from senior management and visits to Oracle’s facilities.

Under the Guidelines, the Board periodically evaluates the appropriate size of the Board and may make any changes it deems appropriate. The Compensation Committee is required under the Guidelines to conduct an annual review of our CEOs’ performance and compensation, and the Board reviews the Compensation Committee’s report to ensure the CEOs are providing the best leadership for Oracle in the short and long term.

The Guidelines are posted on, and we intend to disclose any future amendments to the Guidelines on, our website at www.oracle.com/goto/corpgov.

 

18     2019 Annual Meeting of Stockholders

Proxy Access and Director Nominations

Under our proxy access bylaw, a stockholder (or a group of up to 20 stockholders) owning at least 3% of Oracle’s outstanding shares continuously for at least three years may nominate and include in Oracle’s annual meeting proxy materials director nominees constituting up to the greater of two individuals or 20% of the Board, provided that the stockholders and the nominees satisfy the requirements specified in our Bylaws.

See “Stockholder Proposals for the 2020 Annual Meeting” on page 65 for information on the requirements for stockholders who wish to submit a director nomination for inclusion in our 2020 proxy statement or submit a director nomination to be presented at our 2020 annual meeting of stockholders (but not for inclusion in our proxy statement).

Majority Voting Policy

The Guidelines set forth our majority voting policy for directors, which states that, in an uncontested election, if any director nominee receives an equal or greater number of votes WITHHELD from his or her election as compared to votes FOR such election (a Majority Withheld Vote) and no successor has been elected at such meeting, the director nominee must tender his or her resignation following certification of the stockholder vote.

The Governance Committee must promptly consider the resignation offer and a range of possible responses based on the circumstances that led to the Majority Withheld Vote, if known, and make a recommendation to the Board as to whether to accept or reject the tendered resignation, or whether other action should be taken. The Governance Committee in making its recommendation, and the Board in making its decision, may each consider any factors or other information that it considers appropriate and relevant, including, but not limited to:

 

•

the stated reasons, if any, why stockholders withheld their votes;

 

•

possible alternatives for curing the underlying cause of the withheld votes;

 

•

the director’s tenure;

 

•

the director’s qualifications;

 

•

the director’s past and expected future contributions to Oracle; and

 

•

the overall composition of the Board.

The Board will act on the Governance Committee’s recommendation within 90 days following certification of the stockholder vote. Thereafter, the Board will promptly publicly disclose in a report furnished to the SEC its decision regarding the tendered resignation, including its rationale for accepting or rejecting the tendered resignation. The Board may accept a director’s resignation or reject the resignation. If the Board accepts a director’s resignation, or if a nominee for director is not elected and the nominee is not an incumbent director, then the Board, in its sole discretion, may fill any resulting vacancy or may decrease the size of the Board, in each case pursuant to our Bylaws. If a director’s resignation is not accepted by the Board, such director will continue to serve until the next annual meeting and until his or her successor is duly elected, or his or her earlier resignation or removal.

Any director who tenders his or her resignation pursuant to this policy may not participate in the Governance Committee recommendation or Board action regarding whether to accept the resignation offer. However, if a majority of the members of the Governance Committee received a Majority Withheld Vote at the same election, then the independent directors who did not receive a Majority Withheld Vote must appoint a committee among themselves to consider any resignation offers and recommend to the Board whether to accept such resignation offers.

Through this policy, the Board seeks to be accountable to all stockholders and respects the rights of stockholders to express their views through their votes for directors. However, the Board also deems it important to preserve sufficient flexibility to make sound evaluations based on the relevant circumstances in the event of a greater than or equal to 50% WITHHELD vote against a specific director. For example, the Board may wish to assess whether the sudden resignations of one or more directors would materially impair the effective functioning of the Board. The Board’s policy is intended to allow the Board to react to situations that could arise if the resignation of multiple directors would prevent a key committee from achieving a quorum. The policy also would allow the Board to assess whether a director was targeted for reasons unrelated to his or her Board performance at Oracle. The policy imposes a short time frame for the Board to consider a director nominee’s resignation.

 

2019 Annual Meeting of Stockholders     19

Prohibition on Speculative Transactions and Pledging Policy

Prohibition on Speculative Transactions. Our Insider Trading Policy prohibits all of our employees, including our executive officers, and our non-employee directors from purchasing financial instruments (including prepaid variable forward contracts, equity swaps, short sales, puts, collars, straddles and exchange funds) or otherwise engaging in transactions that are designed to or have the effect of hedging or offsetting any decrease in the market value of Oracle securities.

Pledging Policy. In fiscal 2018, the Governance Committee and the Chair of the Compensation Committee met with independent advisers to review policies and procedures regarding pledging. In January 2018, the Governance Committee adopted a Policy on Pledging Oracle Securities (the Pledging Policy).

The Pledging Policy prohibits Oracle directors, executive officers and their immediate family members from:

 

•

holding Oracle securities in a margin account; and

 

•

pledging Oracle securities as collateral to secure or guarantee indebtedness, subject to two exceptions:

 

•

pledges of securities of a target company that are in place at the time Oracle acquires such company are permitted; and

 

•

Oracle’s founder may continue to pledge Oracle securities as collateral to secure or guarantee indebtedness, but he may not hold Oracle securities in a margin account.

The Pledging Policy also requires the Governance Committee to review all pledging arrangements, assess any risks to Oracle and its stockholders and report on the arrangements to the F&A Committee and the Board. The Pledging Policy provides that all pledges must comply with Oracle’s Insider Trading Policy and must be pre-cleared as specified in Oracle’s Trading Pre-clearance Procedures. The Governance Committee may periodically seek outside advice and counsel in connection with its oversight of pledging arrangements.

Review of Pledging Arrangements. As of September 20, 2019, Mr. Ellison, Oracle’s founder, Chairman, CTO and largest stockholder, had pledged 305,000,000 shares of Oracle common stock (unchanged from the prior year) as collateral to secure certain personal indebtedness. Mr. Ellison’s pledged shares secure personal term loans only; none of his shares are pledged as collateral for margin accounts. The pledged shares are not used to shift or hedge any economic risk in owning Oracle common stock. No other executive officer or director, or any of their immediate family members, holds shares of Oracle common stock that have been pledged to secure any personal or other indebtedness.

Every fiscal quarter, the Governance Committee reviews Mr. Ellison’s pledging arrangements from a risk management perspective and regularly provides a report to the F&A Committee and the Board. In accordance with the Pledging Policy, the Governance Committee considers the following when reviewing the pledging arrangements:

 

•

historical information and trends regarding Mr. Ellison’s pledging arrangements;

 

•

the key terms of the loans under which shares of Oracle common stock have been pledged as collateral;

 

•

the magnitude of the aggregate number of shares of Oracle common stock that are pledged in relation to:

 

•

the total number of shares of Oracle common stock outstanding; and

 

•

the total number of shares of Oracle common stock owned by Mr. Ellison;

 

•

the market value of Oracle common stock;

 

•

Mr. Ellison’s independent ability to repay any loans without recourse to the already-pledged shares; and

 

•

any other relevant factors.

Board and Committee Performance Evaluations

The Board and each of its committees conduct annual self-evaluations to determine whether they are functioning effectively and whether any changes are necessary to improve their performance. Every year, the Chair of the Governance Committee and other members of the Governance Committee interview each director and certain members of management to obtain his or her assessment of the effectiveness of the Board and its committees, director performance and Board dynamics. The Chair of the Governance Committee then reports the results of these interviews at meetings of the Governance Committee and the Board, where the results are discussed. In addition, the chair of each committee guides an annual committee self-evaluation discussion among the committee members. The results of the committee self-evaluations are also reported to the Board for review and discussion.

 

20     2019 Annual Meeting of Stockholders

Stock Ownership Guidelines for Directors and Senior Officers

Non-employee directors and senior officers are required to own shares of Oracle common stock to align their interests with the long-term interests of our stockholders. The Governance Committee sets and periodically reviews and makes changes to these ownership requirements, which we refer to as the Stock Ownership Guidelines. The current Stock Ownership Guidelines were adopted in July 2011 and amended in April 2015.

Under the Stock Ownership Guidelines, our non-employee directors and senior officers must own the following number of shares of Oracle common stock within five years from the date such person becomes a director or senior officer:

 

Title		Minimum Number of Shares
Chairman and Chief Technology Officer				250,000
Chief Executive Officers				250,000
Presidents				100,000
Executive Vice Presidents who are Section 16 Officers				50,000
All other Executive Vice Presidents				25,000
Non-employee directors				10,000

Each person promoted from within the senior officer positions has one year from the date of his or her promotion to comply with any increased ownership requirement. Shares of Oracle common stock that count toward satisfying the Stock Ownership Guidelines include any shares held directly or through a trust or broker; shares held by a spouse; shares held through our 401(k) Plan and our Oracle Corporation Employee Stock Purchase Plan (the ESPP); deferred, vested RSUs; and shares underlying vested but unexercised stock options, with 50% of the “in-the-money” value of such options being used for this calculation. Full-value awards, including RSUs and PSUs, do not count toward the Stock Ownership Guidelines until they vest.

We believe all of our non-employee directors and senior officers are currently in compliance with the Stock Ownership Guidelines, and many of them maintain holdings of Oracle common stock significantly in excess of the minimum required number of shares. Consistent with our objective of aligning the interests of our directors and officers with the long-term interests of stockholders, many of our directors and officers do not sell their shares of Oracle common stock when their RSUs vest or upon exercise of their stock options. For example, Mr. Ellison acquired seven million shares of Oracle common stock in fiscal 2019 upon the exercise of options that were scheduled to expire in July 2019. These shares were acquired in transactions whereby he paid the taxes and exercise price from cash so as to maximize the number of Oracle shares he acquired. As of September 20, 2019, Mr. Ellison has not sold any of the shares he acquired upon exercise of his options in fiscal 2019.

Board Leadership Structure

The roles of Board Chair and CEO are currently filled by separate individuals. Since September 2014, Mr. Ellison has served as our Chairman, and Ms. Catz and Mr. Hurd have served as our CEOs. Previously, Mr. Henley served as Chairman and Mr. Ellison served as CEO.

The Board believes that the separation of the offices of the Chair and CEOs is appropriate at this time because it allows our CEOs to focus primarily on Oracle’s business strategy, operations and corporate vision. However, as described in further detail in our Guidelines, the Board does not have a policy mandating the separation of the roles of Chair and CEO. The Board elects our Chair and our CEOs, and each of these positions may be held by the same person or by different people. We believe it is important that the Board retain flexibility to determine whether these roles should be separate or combined based upon the Board’s assessment of the company’s needs and Oracle’s leadership at a given point in time.

We believe that independent and effective oversight of Oracle’s business and affairs is maintained through the composition of the Board, the leadership of our independent directors and Board committees and our governance structures and processes in place. The Board consists of a substantial majority of independent directors, and the Board’s Compensation, F&A, Governance and Independence Committees are composed solely of independent directors.

As set forth in our Guidelines, on an annual rotating basis, the chairs of the F&A Committee, the Governance Committee and the Compensation Committee serve as the lead independent director at executive sessions of the Board. The lead independent director serves as a liaison between our independent directors and our executive directors and performs such additional duties as the Board determines. Currently, Mr. Chizen serves as the lead independent director.

 

2019 Annual Meeting of Stockholders     21

Board’s Role in Risk Oversight   Management is responsible for assessing and managing risks to Oracle, and, in turn, the Board is responsible for overseeing management’s efforts to assess and manage risk. The Board’s risk oversight areas include, but are not limited to:   •  leadership structure and succession planning for management and the Board;   •  strategic and operational planning, including with respect to significant acquisitions, the evaluation of our capital structure and long-term debt financing, and Oracle’s long-term growth;   •  information technology and cybersecurity; and   •  legal and regulatory compliance.
						Cybersecurity Risk Oversight   Cybersecurity risk oversight is a top priority for the Board. Oracle’s head of Global Information Security and its Chief Privacy Officer regularly brief the F&A Committee on Oracle’s information security program and its related priorities and controls. In turn, the F&A Committee reports to the full Board regarding the committee’s cybersecurity risk oversight activities.

 

While the Board has the ultimate oversight responsibility for Oracle’s risk management policies and processes, various committees of the Board also have the following responsibilities for risk oversight:

 

•

the F&A Committee oversees risks associated with our financial statements and financial reporting, our independent registered public accounting firm, our internal audit function, tax issues, mergers and acquisitions, credit and liquidity, information technology and cybersecurity, legal and regulatory matters, and Code of Ethics and Business Conduct compliance;

 

•

the Compensation Committee considers the risks associated with our compensation policies and practices, with respect to executive compensation, director compensation and employee compensation generally;

 

•

the Governance Committee oversees risks associated with our overall governance practices and the leadership structure of management and the Board, as well as risks related to the pledging of Oracle securities; and

 

•

the Independence Committee reviews risks arising from transactions with related persons and director independence issues.

In accordance with our Pledging Policy, the Governance Committee regularly reviews Mr. Ellison’s pledging arrangements from a risk management perspective and provides a report to the F&A Committee and the Board, as described in “Prohibition on Speculative Transactions and Pledging Policy” on page 20.

The Governance Committee also periodically reviews and assesses the adequacy of our policies, plans and procedures with respect to succession planning for Oracle’s key executive officers, including the CEOs and the CTO. At least annually, the Board holds an executive session with each of the CEOs and the CTO to discuss potential successors and the performance, strengths and weakness of any such candidates.

The Board is kept informed of each committee’s risk oversight and other activities via regular reports of the committee chairs to the full Board. For example, with respect to acquisitions and depending on the size of the acquisition meeting a threshold figure, the F&A Committee performs the initial review of the proposed transaction—taking into consideration any risks associated with the transaction—and determines whether to recommend that the Board approve the transaction. The F&A Committee also reviews completed acquisitions on a quarterly basis to determine whether the acquired companies have performed as expected.

In addition, the Board plays an active oversight and risk mitigation role through its regular review of Oracle’s strategic direction. While management is responsible for setting Oracle’s strategic direction, the directors review Oracle’s strategy at every regular meeting of the Board. One Board meeting each year is held off-site and is dedicated to strategy. The Board engages in candid discussions with management with respect to Oracle’s strategic direction. We believe this Board oversight helps identify and mitigate risks associated with our overall business strategy.

Board of Directors and Director Independence

Each of our directors stands for election every year. We do not have a classified or staggered board. If the director nominees are elected at the Annual Meeting, the Board will continue to be composed of four employee directors (Mr. Ellison, Ms. Catz, Mr. Hurd and Mr. Henley) and eleven non-employee directors.

Upon the recommendation of the Independence Committee, the Board determined that each of the following ten current directors is independent (as defined by applicable NYSE listing standards and our Corporate Governance

 

22     2019 Annual Meeting of Stockholders

Guidelines): Mr. Berg, Dr. Boskin, Mr. Chizen, Mr. Conrades, Mrs. Fairhead, Mr. Garcia-Molina, Mr. Moorman, Secretary Panetta, Mr. Parrett and Ms. Seligman. Ms. James ceased to be independent upon her appointment as Chairman and CEO of Ampere Computing LLC. Therefore, all directors who served during fiscal 2019 on the Compensation, F&A, Governance and Independence Committees were independent under the applicable NYSE listing standards and SEC rules. The Board also determined, upon recommendation of the Independence Committee, that all directors who served during fiscal 2019 on the Compensation and F&A Committees satisfied the applicable NYSE and SEC heightened independence standards for members of compensation and audit committees.

In making the independence determinations, the Board and the Independence Committee considered all facts and circumstances relevant under the NYSE listing standards and SEC rules, including any relationships between Oracle and entities affiliated with the directors. In particular, the following relationships were considered:

 

•

Dr. Boskin and Mr. Garcia-Molina are both employed by Stanford University, which has received donations from both Oracle and various Board members. In addition, certain Board members serve on advisory or oversight boards at Stanford University or are otherwise employed part-time by Stanford University.

 

•

The total amount Oracle donated to Stanford University constituted less than 0.01% of Oracle’s total revenues in fiscal 2019. Predominately all of the funds Oracle donated were contributed directly to Stanford Hospital and Clinics. Based on a review of publicly available data, we believe the contributions represented less than 0.03% of Stanford University’s total revenues in its last fiscal year. The contributions fall within NYSE prescribed limits and guidelines.

The non-employee directors held an executive session following each of the regularly scheduled Board meetings, for a total of four meetings in fiscal 2019.

The F&A Committee has adopted a requirement that if an F&A Committee member wishes to serve on more than three audit committees of public companies, the member must obtain the approval of the F&A Committee, which will determine whether the director’s proposed service on the other audit committee(s) will detract from his/her performance on our F&A Committee.

Director Tenure, Board Refreshment and Diversity

We believe it is desirable to maintain a mix of longer-tenured, experienced directors and newer directors with fresh perspectives. In furtherance of this objective, the Board elected Mrs. Fairhead in fiscal 2020, Mr. Moorman and Mr. Parrett in fiscal 2018, Ms. James in fiscal 2016 and Secretary Panetta in fiscal 2015.

However, we do not impose director tenure limits or a mandatory retirement age. The Board has considered the perspectives of some stockholders regarding longer-tenured directors, but believes that longer-serving directors with experience and institutional knowledge bring critical skills to the boardroom. In particular, the Board believes that given the large size of our company, the breadth of our product offerings and the international scope of our organization, longer-tenured directors are a significant strength of the Board. The Board also believes that longer-tenured directors have a better understanding of the challenges Oracle is facing and are more comfortable speaking out and challenging management. Accordingly, while director tenure is taken into consideration when making nomination decisions, the Board believes that imposing limits on director tenure would arbitrarily deprive it of the valuable contributions of its most experienced members.

 

Board Diversity   33% of our Board   members are women   or come from a diverse background				The Board and the Governance Committee value diversity of backgrounds, experience, perspectives and leadership in different fields when identifying nominees. As set forth in our Guidelines, the Governance Committee, acting on behalf of the Board, is committed to actively seeking women and minority candidates for the pool from which director candidates are selected. Presently, 33% of our Board members are women or come from a diverse background (4 of our 15 Board members are women, including one of our CEOs).

 

2019 Annual Meeting of Stockholders     23

Stockholder Outreach   We have a long tradition of engaging with our stockholders to solicit their views on a wide variety of issues, including corporate governance, environmental and social matters, executive compensation and other issues. On a regular basis, certain of our independent directors hold meetings with our institutional stockholders. The Board believes these meetings are important because they foster a relationship of accountability between the Board and our stockholders and help us better understand and respond to our stockholders’ priorities and perspectives.						Voting Rights: One Share, One Vote   Oracle has a single class of voting stock, with each share entitled to one vote. Our executives, including our founder, are thus held accountable to stockholders, who have voting power in proportion to their economic interest in our stock.

Thus far in fiscal 2020, members of the Compensation Committee held meetings with eight institutional stockholders representing approximately 16% of our outstanding unaffiliated shares. In addition, as part of our regular Investor Relations engagement program, our executive directors hold meetings with a number of our institutional stockholders throughout the year. We also hold an annual financial analyst meeting at Oracle OpenWorld in San Francisco where analysts are invited to hear presentations from key members of our management team, including our executive directors. In fiscal 2019, our executive directors held meetings with stockholders representing approximately 29% of our outstanding unaffiliated shares. (All percentages calculated based on data available as of June 30, 2019.)

The feedback received from our stockholder outreach efforts is communicated to and considered by the Board, and, when appropriate, the Board implements changes in response to stockholder feedback. See “Proxy Statement Summary—Stockholder Outreach and Board Responsiveness” on page 3 for a summary of the recent feedback we have received from our stockholders and the Board’s response to this feedback.

Communications with the Board

Any person wishing to communicate with any of our directors, including our independent directors, regarding Oracle may write to the director, c/o the Corporate Secretary of Oracle at 500 Oracle Parkway, Mailstop 5op7, Redwood City, California 94065, or may send an email to Corporate_Secretary@oracle.com. The Corporate Secretary will forward these communications directly to the director(s) specified or, if none is specified, to the Chairman of the Board. In addition, we present all such communications, as well as draft responses, at meetings of our Governance Committee. These communications and draft responses are also provided to the appropriate committee or group of directors based on the subject matter of the communication; for example, communications regarding executive compensation are provided to our Compensation Committee, in addition to our Governance Committee.

Employee Matters

Code of Conduct. In 1995, we adopted a Code of Ethics and Business Conduct (the Code of Conduct), which is periodically reviewed and amended by the Board. We require all employees, including our senior officers and our employee directors, to read and to adhere to the Code of Conduct in discharging their work-related responsibilities. Our Compliance and Ethics Program, under the direction of our Chief Compliance and Ethics Officer, administers training on and enforces the Code of Conduct. We have also appointed Regional Compliance and Ethics Officers to oversee the application of the Code of Conduct in each of our geographic regions. We provide mandatory web-based general training with respect to the Code of Conduct, and we provide additional live and web-based training on specific aspects of the Code of Conduct from time to time to certain employees. Employees are expected to report any conduct they believe in good faith to be a violation of the Code of Conduct. The Code of Conduct is posted on our website at www.oracle.com/goto/corpgov. We intend to disclose on our website any future amendments of the Code of Conduct or any waivers granted to our executive officers from any provision of the Code of Conduct.

Compliance and Ethics Reports. With oversight from the F&A Committee, we have established several different reporting channels employees may use to seek guidance or submit reports concerning compliance and ethics matters, including accounting, internal controls and auditing matters. These reporting channels include Oracle’s Integrity Helpline, which may be accessed either over the phone or by way of a secure Internet site. Employees may contact the helpline 24 hours a day, seven days a week. Interpreters are provided to helpline callers who want to communicate in languages other than English, and employees using the online system may file a report in the language of their choice. Employees who contact the helpline, whether over the phone or online, generally may choose to remain anonymous. Certain countries other than the United States, however, limit or prohibit anonymous reporting; employees who identify themselves as being from an affected country are alerted if special reporting rules apply to them.

 

24     2019 Annual Meeting of Stockholders

Global Conflict of Interest Policy. Our Global Conflict of Interest Policy (the Conflict of Interest Policy), which supplements the Code of Conduct, is applicable to all Oracle employees. The Conflict of Interest Policy is designed to help employees identify and address situations that may give rise to potential conflicts of interest or the appearance of conflicts of interest. Employees are required to disclose any conflicts of interest or potential conflicts of interest in accordance with the Conflict of Interest Policy. On an annual basis, each senior officer of Oracle is required to submit a Conflicts of Interest Questionnaire and Affirmation disclosing any actual or potential conflicts of interest and affirming that the senior officer has read, understands and is in compliance with the Conflict of Interest Policy.

Corporate Citizenship Report. Information regarding our workforce, charitable activities, environmental policy and global sustainability initiatives and solutions is available in our Corporate Citizenship Report published on our website at www.oracle.com/corporate/citizenship. The information posted on or accessible through our website is not incorporated into this Proxy Statement (see “No Incorporation by Reference” on page 71).

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table provides information, as of September 20, 2019, the record date of the Annual Meeting, with respect to the beneficial ownership of Oracle common stock by: (1) each stockholder known by us to be the beneficial owner of more than 5% of our common stock; (2) each director or nominee; (3) each executive officer named in the Summary Compensation Table; and (4) all current executive officers and directors as a group. Except as set forth below, the address of each stockholder is 500 Oracle Parkway, Redwood City, California 94065.

 

Name of Beneficial Owner		Amount and Nature of Beneficial Ownership  (1)				Percent     of Class
Directors and NEOs
Lawrence J. Ellison (2)			1,172,919,853				35.4	%
Jeffrey S. Berg (3)			449,316				*
Michael J. Boskin (4)			359,796				*
Safra A. Catz (5)			22,806,092				*
Bruce R. Chizen (6)			275,813				*
George H. Conrades (7)			99,809				*
Dorian E. Daley (8)			920,817				*
Rona A. Fairhead (9)			—				*
Hector Garcia-Molina (10)			256,419				*
Jeffrey O. Henley (11)			4,934,516				*
Mark V. Hurd (12)			21,776,255				*
Renée J. James (13)			39,917				*
Charles W. Moorman IV (14)			11,015				*
Leon E. Panetta (15)			68,562				*
William G. Parrett			8,561				*
Edward Screven (16)			6,043,113				*
Naomi O. Seligman (17)			157,207				*
All current executive officers and directors as a group (18 persons) (18)			1,231,596,441				36.6	%
Other More Than 5% Stockholders
The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355 (19)			197,348,700				6.0	%
BlackRock, Inc., 55 East 52nd Street, New York, NY 10055 (20)			187,772,023				5.7	%

 

*	Less than 1%

 

(1)	Unless otherwise indicated below, each stockholder listed had sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws, if applicable.

 

2019 Annual Meeting of Stockholders     25

(2)

Includes 34,187,500 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date and 305,000,000 shares pledged as collateral to secure certain personal indebtedness, including various lines of credit. See “Corporate Governance—Prohibition on Speculative Transactions and Pledging Policy” on page 20 for more information on Board and committee oversight of Mr. Ellison’s pledging arrangements.

 

(3)

Includes 5,000 shares owned by Mr. Berg’s spouse, 129,222 shares held in a trust for the benefit of Mr. Berg and his family, 67,594 shares held in a grantor retained annuity trust for the benefit of Mr. Berg and his family and 247,500 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(4)	Includes 300,000 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(5)	Includes 1,118,592 shares held in a trust for the benefit of Ms. Catz and her spouse and 21,687,500 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(6)	Includes 5,000 shares held in a trust for the benefit of Mr. Chizen and his spouse and 225,000 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(7)	Includes 67,500 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(8)	Includes 139,567 shares held in trusts for the benefit of Ms. Daley and her spouse and 781,250 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(9)	Mrs. Fairhead joined the Board on July 31, 2019. She has been granted RSUs, none of which have vested or will vest within 60 days of the record date.

 

(10)	Includes 220,357 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(11)

Includes 1,800,569 shares held in trusts for the benefit of Mr. Henley and his spouse, 31,000 shares held in a trust for the benefit of Mr. Henley’s children, 102,947 shares held in a trust by the J&J Family Foundation, and 3,000,000 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(12)	Includes 762,755 shares held in a trust for the benefit of Mr. Hurd and his spouse and 20,962,500 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(13)	Includes 7,031 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(14)	Includes 2,454 shares held in trusts for the benefit of Mr. Moorman’s family.

 

(15)	Includes 31,062 shares held in a trust for the benefit of Mr. Panetta’s family and 37,500 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(16)	Includes 3,700,000 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date and 31,506 vested RSUs (including dividend equivalents) for which Mr. Screven has elected to defer settlement.

 

(17)	Includes 7,397 shares owned by Ms. Seligman’s spouse of which she disclaims beneficial ownership and 112,500 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date.

 

(18)

Includes all shares described in the notes above. Also includes 69,380 additional shares of Oracle common stock and 400,000 shares subject to currently exercisable stock options or stock options exercisable within 60 days of the record date, in each case held by an executive officer who is not named in the table.

 

(19)

Based on a Schedule 13G/A filed with the SEC on February 11, 2019 by The Vanguard Group (Vanguard) on behalf of itself, Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd. The Schedule 13G/A indicates that as of December 31, 2018, Vanguard had sole voting power with respect to 3,112,573 shares, shared voting power with respect to 723,442 shares, sole dispositive power with respect to 193,579,992 shares, and shared dispositive power with respect to 3,768,708 shares.

 

(20)

Based on a Schedule 13G/A filed with the SEC on February 6, 2019 by BlackRock, Inc. (BlackRock), on behalf of itself, BlackRock Life Limited, BlackRock International Limited, BlackRock Advisors, LLC, BlackRock Capital Management, Inc., BlackRock (Netherlands) B.V., BlackRock Institutional Trust Company, N.A., BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, FutureAdvisor, Inc., BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock Asset Management Deutschland AG, BlackRock (Luxembourg) S.A., BlackRock

 

26     2019 Annual Meeting of Stockholders

Investment Management (Australia) Limited, BlackRock Advisors (UK) Limited, BlackRock Fund Advisors, BlackRock Asset Management North Asia Limited, BlackRock (Singapore) Limited, BlackRock Fund Managers Ltd. The Schedule 13G/A indicates that as of December 31, 2018, BlackRock had sole voting power with respect to 161,816,036 shares and sole dispositive power with respect to 187,772,023 shares.

DELINQUENT SECTION 16(a) REPORTS

 

Section 16(a) of the Securities Exchange Act of 1934 (Exchange Act) requires our executive officers and directors and any persons who beneficially own more than 10% of our common stock (collectively, Reporting Persons) to file reports of ownership and changes in ownership with the SEC. Reporting Persons are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. As a matter of practice, we assist our executive officers and non-employee directors in preparing initial ownership reports and reporting ownership changes and we typically file these reports on their behalf.

Based solely on our review of the copies of any Section 16(a) forms received by us or written representations from the Reporting Persons, we believe that all Reporting Persons complied with all applicable filing requirements in fiscal 2019, except for the following: for each of Dorian E. Daley, Jeffrey O. Henley, Edward Screven and William C. West, a Form 4 reporting an annual equity grant of RSUs or stock options, as applicable, was filed twelve days late due to an administrative error.

 

2019 Annual Meeting of Stockholders     27

EXECUTIVE COMPENSATION

 

 

Compensation Discussion and Analysis

 

This section provides information on our fiscal 2019 executive compensation program and compensation philosophy for our named executive officers (NEOs). Our fiscal 2019 NEOs were:   •  Lawrence J. Ellison, Chairman and Chief Technology    Officer*   •  Safra A. Catz, Chief Executive Officer   •  Mark V. Hurd, Chief Executive Officer   •  Edward Screven, Executive Vice President, Chief    Corporate Architect   •  Dorian E. Daley, Executive Vice President and General    Counsel   •  Jeffrey O. Henley, Vice Chairman   Fiscal 2019 began on June 1, 2018 and ended on May 31, 2019.   *  We have included Mr. Ellison as an NEO for fiscal 2019 on a voluntary basis in the interest of transparency. See the Summary Compensation Table on page 44 for additional information.				Quick Reference Guide
				Executive Summary			28
				Five-Year Performance-Based Stock Options Overview			29
				Fiscal 2019 Compensation Overview			30
				Stockholder Outreach			31
				Fiscal 2019 Pay Outcomes			32
				Compensation Best Practices			32
				Objectives of Our Executive Compensation Program			33
				Elements of Our Executive Compensation Program			33
				Long-Term Incentive Compensation			33
				Annual Cash Bonus			36
				Base Salary, Perquisites and Other Personal Benefits			37
				Determination of Executive Compensation Amounts			38
				Other Factors in Setting Executive Compensation			40
				2018 Stockholder Advisory Vote			42
				Report of the Compensation Committee			43
				Compensation Tables			44

 

Fiscal 2019 Executive Compensation Highlights   •  No tranches of the performance-based stock options (PSOs) granted to Mr. Ellison, Ms. Catz and Mr. Hurd in fiscal 2018 have been earned, due to the rigor and long-term nature of the PSO goals.   •  Total compensation for Mr. Ellison, Ms. Catz and Mr. Hurd, in the aggregate, decreased by approximately 98% in fiscal 2019 compared to fiscal 2018 (as reported in the Summary Compensation Table (SCT) on page 44). In fiscal 2019, for these NEOs:   •  Base salaries remained unchanged;   •  No bonuses were earned; and   •  No equity awards were granted.   •  In the aggregate, approximately 95.2% of the total compensation reported in the SCT in fiscal 2019 for Mr. Screven, Ms. Daley and Mr. Henley was at-risk.

Oracle in Fiscal 2019   •  $38.9 billion returned to stockholders   •  $36.0 billion in repurchases of common stock   •  $2.9 billion in dividends paid   •  Earnings per share of $2.97, a 251% increase from fiscal 2018   •  Total revenues of $39.5 billion, a slight increase from fiscal 2018   •  Cloud services and license support revenues plus cloud license and on-premise revenues of $32.6 billion, a 2% increase from fiscal 2018   •  Operating income of $13.5 billion, a 2% increase from fiscal 2018   •  Operating margin of 34%, a slight increase from fiscal 2018

 

28     2019 Annual Meeting of Stockholders