Shareholders want Oracle Board accountability

PGGM and Railpen are pressing the Board of Oracle to start a dialogue with long term shareholders, the Financial Times is reporting.

In the media

Oracle shareholders turn up pressure on Ellison

Larry Ellison, one of the US’s highest paid executives and co-founder of the Oracle software company, has come under renewed pressure from shareholders over his “excessive” remuneration and “unprecedented” failure to engage with investors.

The Netherlands’ second-largest asset manager and one of the UK’s largest pension funds, will on Monday file a letter to Oracle with the Securities and Exchange Commission, outlining their corporate governance concerns.

More than half of the group’s shareholders have voted against the executive compensation scheme in each of the past three years.

Mr Ellison, who is executive chairman and chief technology officer and holds a significant interest in the group, reduced his total pay, including options, for 2014 to $67.3m from $78m in 2013, signalling that he is listening to his critics, but the shareholders say this is not enough.

PGGM of the Netherlands and Railpen, the UK’s Railway Pension Trustee Company, say the company’s “lack of communication” has heightened their concern over pay, boardroom accountability and the independence of non-executive directors.

It is rare for such groups to go public with criticism of a company they invest in, underlining their anger and frustration after four years of trying to engage with the board and company executives.

In their letter to the company, they say: “As global investors, we believe that governance risk is particularly heightened in companies in which the founder serves as CEO or otherwise remains in a leadership role with the company.”

The shareholders have written the letter on behalf of pension plans in the Netherlands and the UK with more than 2.8m members and $238bn in assets under management.

Although the two groups have small shareholdings in Oracle, amounting to about $310m combined, or 0.16 per cent, they say their concerns are mirrored by other investors.

Catherine Jackson, senior adviser responsible for investment at PGGM, said: “Mr Ellison’s pay is excessive and so is that of other executives. But pay is just one issue. There is a concern over board accountability and whether it is independent enough to stand up to Mr Ellison. The lack of communication heightens this concern.”

Deborah Gilshan, senior investment manager at Railpen, said: “Over the past four years, we have tried to set up meetings with directors, but we have been ignored. The company’s lack of communication is unprecedented. In all our years, we have never been ignored like this.”

The two investors travelled to Oracle’s annual meeting in San Francisco in November to ask to see directors, but were rebuffed.

Oracle declined to comment.


Senior Advisor Responsible Investment

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