Oracle Handed Ellison and Co-CEOs $988 Million in Options. All Underwater

By Nathan Brooks

Oracle granted co-founder Larry Ellison and its new co-CEOs stock option packages worth a combined $988 million at grant date in fiscal 2026 — and by the fiscal year's close on May 31, every single option was underwater. The proxy statement Oracle published Friday said the awards "had no intrinsic value" at year end. The math is blunt: Oracle stock closed Friday at $137, down 53% over the past 12 months.

The strikes tell the story. Ellison's award was valued at $117.8 million when granted in October, with a strike price of $280. Co-CEOs Clay Magouyrk and Mike Sicilia, who took over from Safra Catz after their September 2025 promotions, hold strikes of $308 on packages valued at $621.7 million and $248.7 million respectively. For the co-CEOs to profit, the stock has to more than double from Friday's close.

What does this change for Oracle's pay playbook?

More than you'd think. Stock options have largely vanished from Fortune 500 pay in favor of performance shares and RSUs. Oracle is running against that tide — and defending it. The board wrote in the proxy that options "are strongly performance-based," and the company told investors that the options' zero intrinsic value means the plan is working as intended.

"The Compensation Committee did not take any special actions to compensate executives for potential losses in stock option value," Oracle wrote. Translation for practitioners: no repricing, no make-whole grants — at least not this cycle.

New CFO Hilary Maxson, appointed in April 2026, got a different tool. Under the "Equity Choice Program" rolled out in fiscal 2026, executives pick between 100% options, 100% RSUs, or a 50-50 mix. Option-takers get four options for every RSU they forgo — a 4-to-1 exchange that pays off big if the stock climbs and delivers nothing if it doesn't. Maxson, hired on a roughly $30 million package with a $26 million equity award, put $10.4 million into RSUs. Those were worth $12.7 million at fiscal year end and just $7.7 million at Friday's close. Her remaining options carry a $185 strike — also underwater.

The split among the executive committee is telling: Safra Catz (now executive vice chair), chief legal officer Stuart Levey, and operations chief Douglas Kehring all chose RSUs. Global field operations president Mark Hura chose options.

The balance sheet behind the pay story

Oracle attributes the outsized awards to a competitive market for veteran cloud and AI leaders. Meanwhile, the business underneath those grants is a study in contradiction:

• Cloud revenue rose 39% to $34 billion; cloud infrastructure revenue grew 77% to $18.1 billion.
• Total revenue climbed 17% to $67.4 billion.
• Remaining performance obligations hit $638 billion, up from $138 billion a year earlier — a nearly fivefold jump.
• Free cash flow was negative $23.7 billion, per the 10-K.
• Oracle sold $43 billion in senior notes and, over the summer, $20 billion of stock at $141 a share.

That last figure stings: the equity raise priced above where the stock trades today. Oracle spent $55.7 billion in capital last fiscal year racing to build data centers alongside other mega-caps. Bloomberg reported this week that Oracle's decision to invoke force majeure on a New Mexico data center pushed the cost of insuring its debt against default to a record.

Note on the headline numbers: Oracle values options differently from peers, treating four options as a single share. On its own accounting, the three executives' packages total $400 million, not $988 million.

Cash still flowed — for the top tier

Fiscal 2026 delivered $4.9 million cash bonuses to each of Ellison, Magouyrk, and Sicilia. Ellison even got a raise: his base salary went from a symbolic $1 to $950,000, matching his co-CEOs.

Rank-and-file Oracle workers didn't fare as well. The company has cut staff through layoffs, and the majority of its outstanding options company-wide are also underwater. Median global employee compensation fell to $94,740 in fiscal 2026 from $98,899 the prior year — roughly a 4% drop per employee.

Oracle did not immediately respond to a request for comment. Shareholders vote on the pay plan on Nov. 18 — the first real test of whether investors buy the board's argument that worthless options are a feature, not a bug.