Edgar Filing: ORACLE CORP

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

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Oracle Corporation

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Investor Presentation

October 2014

Executive Summary

Pay-for-Performance.

substantially

strengthened

our

executive

compensation

plan

by:

making

50%

long-term

equity

performance

based;

Requiring

material

long-term

outperformance for vesting; 3) Allowing vesting for PSUs to go to zero for underperformance

Strong

Performance

and

Commitment

Stockholder

Returns.

Oracle

had

Total

Revenues

$38.3B

for

FY2014.

Approximately

90%

aggregate

FY2013

and

FY2014 Free

Cash Flow, or roughly $24.4B was returned to Oracle stockholders

Strong Governance Practices.

We have a strong, independent Board that serves the

interests

stockholders

and

are

committed

best

practices

corporate

governance and

pay governance

Stockholder

Engagement.

During

our

last

fiscal

year,

members

our

Board

met

with

investors

and

shared

the

diverse

and

wide-ranging

feedback

with

the

full

Board.

made

changes

our

executive

compensation

for

FY2015

based

common

elements

the

investor feedback. We are engaging in additional meetings to gauge investor reactions to

these changes and seek support for the 2014 Annual Meeting

Overview of Oracle

Cloud

4% of Revenue

US$38.3 billion total GAAP revenue in FY 2014

100% of the Fortune 100 are customers

Over 400,000 customers in 145+ countries

Invested $5.2 billion in R&D in FY2014

More than 120,000 employees

#1 provider of enterprise software worldwide and leading provider of hardware and services for

Oracle database and middleware software, application software, cloud infrastructure, and hardware

systems

Asia Pacific

16% of Revenue

EMEA

31% of Revenue

Americas

53% of Revenue

On-Premise Software

72% of Revenue

Hardware

14% of

Revenue

Services

10% of

Revenue

Company Transformation

One

Oracle’s

primary

areas

focus

over

the

few

years

becoming

the

company

cloud

computing’s

two

most

profitable

segments

–

SaaS

and

PaaS

Software Revenue

Cloud Revenue

FY10

FY11

FY12

FY13

FY14

IaaS

SaaS/PaaS

+88%

+12%

4 Year

CAGR

FY10

FY11

FY12

FY13

FY14

Software and Cloud

4 Year

CAGR

Demonstrated Results

~ 90% of FY13/FY14 Free Cash Flow Returned

to Stockholders

Free Cash Flow Grew 14% CAGR

EPS Grew 14% CAGR

Source:

GAAP

results

except

for

EPS

and

Free

Cash

Flow.

GAAP

Non-GAAP

reconciliations

are

available

www.oracle.com/investor

Stock

chart:

FactSet

Research.

Prices

for

the

last

years

were

indexed

(10/04

–

9/14)

FY10

FY11

FY12

FY13

FY14

Buybacks

Dividends

FY10

FY11

FY12

FY13

FY14

$8.5B

$10.8B

$13.1B

$13.6B

$14.3B

FY10

FY11

FY12

FY13

FY14

$1.67

$2.22

$2.46

$2.68

$2.87

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Oracle

S&P 500

Nasdaq

Dow Jones

Oracle Stock Has Outperformed

Significant Compensation Changes for FY 2015

We made significant changes for FY 2015…

Introduced Performance Stock Units (“PSUs”)

PSUs are earned based on relative or absolute

performance depending on each NEO’s position

PSUs are long-term, performance based, and subject to robust

metrics tailored to business responsibilities

Significantly reduced number of shares subject to stock option

granted to Mr. Ellison, Ms. Catz, and Mr. Hurd

…consistent with areas of investor focus

Performance-based (relative and absolute)

compensation

Long-term performance periods

Quantum of pay and dilution

The Board and Compensation Committee have taken steps to meaningfully enhance our compensation

program and increase responsiveness to our stockholders

We engaged with 13 of our top 20 stockholders, representing approximately 30% of unaffiliated shares in the

last fiscal year to hear their views and discuss areas of concern regarding governance and compensation

Compensation Program Overview & Objectives

* Excludes

approximately

tied

“All

Other

Compensation”

(e.g.,

the

amount

all

perquisites

and

other

personal

benefits)

Our goal: Align the interests of executive officers with those of stockholders; provide incentives to executive

officers for superior performance; and attract and retain highly

talented and productive executive officers

Compensation

Element

Designed

to Reward

Annual & Long-Term Incentive Metrics

% of

2014

NEO

Comp*

Performance-

Based/

“At Risk”

Base Salary

Experience, industry

knowledge, duties,

scope of responsibility

N/A

Annual

Performance-

Based

Cash

Bonus

Success in achieving

annual results

Bonus

based

growth

non-GAAP

Pre-Tax

Profits

from

FY2013 to FY2014

If non-GAAP pre-tax profits do not grow Y-o-Y, no bonus is paid

$0 bonus in FY2013 and 16% of target bonus in FY2014

Long-Term

Incentive

Compensation

Success in achieving

sustainable long-term

results

50% of target PSUs are tied to relative growth in total consolidated

revenues

on a U.S. GAAP basis

50% of target PSUs are tied to relative growth in total consolidated

operating cash flow (OCF)

Objective

relative

performance

metrics

–

both

revenue

and

OCF

growth

requires

relative

performance

above

the

weighted

average

the

peer

group

for

target

payout,

and

performance

the

bottom quartile of peer group results in zero payout

96%

Compensation Best Practices

Vast

majority

executive

compensation

“at

risk”

performance

based

o

96% of Named Executive Officer (“NEO”) compensation is equity-based

o

50% of NEO long-term incentives are now structured as long-term, performance-based units

o

Annual incentive bonus is based on rigorous, objective metrics

Strong historical pay-for-performance alignment

Engagement efforts with investors on executive compensation

o

the

last

fiscal

year,

engaged

with

our

top

investors

representing

approximately

30%

the

unaffiliated shares

o

Directors participated in a majority of these engagements

Meaningful stock ownership guidelines for NEOs and directors, with executives and directors holding

25% of Oracle’s stock

Double trigger change-in-control benefits under equity plan

Clawback policy for executive officers

Independent compensation consultant

Sound Corporate Governance Practices

Annual director elections

Stockholder ability to call a special meeting

Stockholder ability to act by written consent

Director majority voting policy

Diverse and experienced Board with significant stockholder representation

Independent Presiding Director

Committees are 100% independent

Active and engaged Board, with several independent directors serving on multiple committees,

participating

key

customer

events

(e.g.,

Oracle

OpenWorld

and

Oracle

President

Council

Forums)

Proxy Access Stockholder Proposal

The Oracle Board of Directors opposes the “proxy access”

proposal submitted by The Nathan Cummings Foundation and certain other stockholders

for the following reasons and requests that stockholders vote “against”

this proposal:

Existing Governance Mechanisms Ensure Board Accountability

–

All directors elected annually with majority vote standard

•

Directors who fail to receive majority vote must tender their resignations for Board consideration

–

No supermajority stockholder voting requirements and no “poison pill”

–

Stockholders already have the right to call special stockholder meetings (subject to conditions in the Oracle bylaws)

Stockholders Currently Have Avenues to Communicate with the Board

–

Stockholders may communicate with any director in writing

–

Stockholders have the ability to submit proposals through 14a-8

Proxy Access Undermines Processes of the Nomination and Governance Committee

–

N&G Committee specifically tasked to find the right nominees with the appropriate skill sets the Oracle Board needs

–

Proxy Access would allow for a nominee with a narrow focus beholden to one specific special interest group to potentially join the Oracle Board

Potentially Adverse Consequences if Oracle Board Were to Adopt Proxy Access

–

Encourages short term focus for the benefit of one group of stockholders rather than the long term benefit for all stockholders

–

Significant disruption to Oracle’s management team and the Board as a result of dealing with distraction of divisive proxy contests

•

stockholders

–

Potential disruption to the effective operation of existing Board with special interest directors creating dissention and precluding the Board’s ability to

function effectively

–

Potentially discourages highly qualified director candidates from serving on the Oracle Board

Both time and financial resources would be deployed to deal with proxy contests which is a distraction from the goal of increasing value for all

Stockholders may propose director nominees to the Nomination and Governance Committee for consideration

"Safe

Harbor"

Statement:

Statements

this

presentation

relating

Oracle's

future plans, expectations, beliefs, intentions and prospects are "forward-

looking statements" and are subject to material risks and uncertainties. A

detailed

discussion

these

factors

and

other

risks

that

affect

our

business

contained in our SEC filings, including our most recent reports on Form 10-K

and Form 10-Q, particularly under the heading "Risk Factors." Copies of these

filings are available online from the SEC or by contacting Oracle Corporation's

Investor Relations Department at (650) 506-4073 or by clicking on SEC Filings

on Oracle’s Investor Relations website at http://www.oracle.com/investor. All

information set forth in this presentation is current as of October 15, 2014.

Oracle undertakes no duty to update any statement in light of new information

or future events.

SAFE HARBOR STATEMENT