If Larry Ellison, Silicon Valley`s bad boy of software, wants to be the world`s richest man, he may get that title sooner rather later.
In lieu of a salary and bonus, the 56-year-old chairman of No. 2 software maker Oracle Corp, was granted options for a whopping 20 million shares during the next four years as part of a new contract that took effect in June 1999, according to the company`s annual proxy filing with the Securities and Exchange Commission.
His 24 percent stake in the company he co-founded in 1977 is now worth about $55.3 billion, more than the shareholding his archrival Bill Gates holds in Microsoft Corp, a company he co-founded. But Gates is still the richest man on the planet with a fortune of more than $60 billion, according to Forbes magazine.
Oracle said in its filings that the board of directors` compensation committee agreed to the new contract to give Ellison further incentive to stay close to Oracle and boost the company`s stock price.
Ellison is back at the helm and firmly in control of Oracle after periods of what many had called inattention. Employees sighting him on the corporate campus in the past took to calling him Elvis for his infrequent appearances. One money manager who appeared on CNBC earlier this year commented that he tended to stay away from Oracle stock when "Larry is on his boat`` and tended to own it when Ellison was on dry land and at the office.
But that changed in the last couple of years as a reinvigorated Ellison has seen what the Internet could do for his company: make its stock market value higher than that of the vaunted but now besieged Microsoft. Investors have richly rewarded Ellison, other Oracle top executives and employees. The stock has soared nine-fold in the last two years.
On Tuesday, Oracle shares closed down $4-1/16 at $79-3/4 on Nasdaq. The recent departure of Oracle`s long-time No. 2, Ray Lane, also showed Ellison`s recommitment to Redwood Shores, Calif.-based Oracle. Lane, in recent interviews, has said that Ellison stripped him of so many of his responsibilities there was little left for him to do at the company.
Lane is now a venture capitalist at Kleiner Perkins Caufield & Byers in Menlo Park, Calif. His holdings in Oracle are worth about $800 million. In exchange for the options for 20 million shares, Ellison is giving up an average salary and bonus of $2.7 million. His strike price on the options is $13.75 per share. Normally, Oracle said, Ellison would have received about 13.6 million shares in a four-year period.
Lane realized a pretax gain of $230.7 million by exercising options during the fiscal year ended May 31, according to the company`s proxy statement. Oracle`s top five executives got $417.5 million pretax from exercising options last fiscal year. Ellison made $75 million, Jeff Henley, chief financial officer, collected $76 million, Gary Bloom, executive vice president, got $20.5 million and Jay Nussbaum, executive vice president, collected $15 million.
Ellison was paid $208,000 in salary before the new contract went into effect in June 1999.
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