At software powerhouse Oracle, shareholders have demonstrated increased support for Chairman, Co-founder, and Chief Technology Officer Larry Ellison as the company's cloud infrastructure business experiences rapid growth. During a previous meeting, a non-binding proposal suggesting an independent director lead the board faced opposition from 53% of shareholders, excluding current executives. This proposal is seen as a referendum on Ellison's leadership as Chairman, a position he has held since 2014.
The recent vote marks a shift in shareholder sentiment, with fewer investors supporting the proposal compared to any vote since 2018. Ellison's leadership has come under scrutiny in the past, but the dynamics have changed in 2023 as Oracle's cloud infrastructure business gained traction, reaching $5 billion in revenue for the fiscal year ending in May.
Bloomberg Intelligence analyst Anurag Rana notes Ellison's long-standing efforts in the cloud battle, with the company's success this year contributing to a 41% increase in Oracle's shares. Oracle has been recognized for its transition to becoming the fourth-largest hyperscaler in the competitive cloud market, competing with leaders like Amazon Web Services, Microsoft, and Google.
Institutional Shareholder Services Inc. expressed concerns about Oracle's compensation practices and the significant number of shares, valued at over $30 billion, used as collateral by Ellison. Glass Lewis & Co. recommended expanding the separation of CEO and board chairman roles for enhanced independent oversight. However, shareholders, including current executives, opposed these recommendations, signaling continued confidence in Ellison's leadership.
Oracle defended Ellison's position, emphasizing his over 45 years of experience at the company and his unique position to lead the board in overseeing business and strategic direction. Ellison's role as chief technology officer, in addition to chairman, was highlighted as contributing to the company's effective governance.
While Ellison is the company's largest shareholder with approximately 42% of outstanding stock, this year marks the first where a majority of non-executive shareholders sided with the company, assuming executives consistently voted with the board's recommendations.
Investor support also increased for Oracle's executive compensation plans, with 44% approval, up from 30% in the previous year and 16% in 2021. The positive sentiment reflects the broader acknowledgment of Oracle's successful transition and growth in the cloud infrastructure space.
Oracle's cloud business success and shareholder support indicate a shift in perception, with Ellison's leadership garnering increased confidence amid the company's strategic moves in the evolving technology landscape.
