<PAGE> 1
SCHEDULE 14(A) INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Oracle Corporation
--------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Oracle Corporation
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
/X/ Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
$125
(2) Form, schedule or registration statement no.:
Schedule 14(A)
(3) Filing party:
Oracle Corporation
(4) Date filed:
August 28, 1995
<PAGE> 2
LOGO
500 Oracle Parkway
Redwood City, California 94065
September 15, 1995
To our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Oracle Corporation (the "Company"). The Annual Meeting will be held on Monday,
October 9, 1995, at 1:30 p.m., in the Grand Ballroom of the Hotel Sofitel,
located at 223 Twin Dolphin Drive, Redwood City, California.
The actions expected to be taken at the Annual Meeting are described in
detail in the attached Proxy Statement and Notice of Annual Meeting of
Stockholders.
Included with the Proxy Statement is a copy of the Company's Annual Report
on Form 10-K for fiscal year 1995. We encourage you to read the Form 10-K. It
includes information on the Company's operations, markets, products and
services, as well as the Company's audited financial statements.
Please use this opportunity to take part in the affairs of the Company by
voting on the business to come before this meeting. WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING
PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. Returning the proxy does NOT
deprive you of your right to attend the meeting and to vote your shares in
person for the matters acted upon at the meeting.
We look forward to seeing you at the Annual Meeting.
Sincerely,
SIG
Lawrence J. Ellison
Chairman of the Board,
President and Chief
Executive Officer
<PAGE> 3
LOGO
500 Oracle Parkway
Redwood City, California 94065
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To our Stockholders:
The Annual Meeting of Stockholders of the Company will be held on Monday,
October 9, 1995, at 1:30 p.m., in the Grand Ballroom of the Hotel Sofitel,
located at 223 Twin Dolphin Drive, Redwood City, California, for the following
purposes:
1. To elect a Board of Directors to serve for the ensuing year.
2. To approve the adoption of the Company's Executive Officers 1996 Bonus
Plan.
3. To approve an amendment to the Company's 1991 Long-Term Equity Incentive
Plan increasing the number of shares of the Company's Common Stock
reserved for issuance thereunder by 12,000,000 shares.
4. To approve an amendment to the Company's Certificate of Incorporation
increasing the number of authorized shares of the Company's Common Stock
by 200,000,000 shares.
5. To ratify the appointment of Arthur Andersen LLP as independent public
accountants for the Company for the current fiscal year.
6. To transact any other business that may properly come before the
meeting.
Stockholders of record at the close of business on August 25, 1995 will be
entitled to notice of and to vote at the Annual Meeting and at any continuation
or adjournment thereof.
By Order of the Board of Directors,
SIG
Raymond L. Ocampo, Jr.
Senior Vice President,
General Counsel &
Corporate Secretary
Redwood City, California
September 15, 1995
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE
AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
<PAGE> 4
PROXY STATEMENT
September 15, 1995
The accompanying proxy is solicited on behalf of the Board of Directors
(the "Board") of Oracle Corporation, a Delaware corporation (the "Company"), for
use at the Annual Meeting of Stockholders of the Company (the "Annual Meeting").
The Annual Meeting will be held on October 9, 1995, at 1:30 p.m., in the Grand
Ballroom of the Hotel Sofitel, located at 223 Twin Dolphin Drive, Redwood City,
California. All holders of record of Common Stock, par value $0.01 per share
(the "Common Stock"), on August 25, 1995, the record date, will be entitled to
vote at the Annual Meeting. At the close of business on the record date, the
Company had 434,612,710 shares of Common Stock outstanding and entitled to vote.
A majority, or 217,306,356, of these shares of Common Stock will constitute a
quorum for the transaction of business at the Annual Meeting. This Proxy
Statement, the accompanying proxy, and the Company's Annual Report on Form 10-K
were first mailed to stockholders on or about September 15, 1995. The Company's
Annual Report on Form 10-K contains the information required by Rule 14a-3 of
the Rules of the Securities and Exchange Commission (the "SEC").
VOTING RIGHTS AND SOLICITATION OF PROXIES
Stockholders are entitled to one vote for each share of Common Stock held.
Shares of Common Stock may not be voted cumulatively.
Any person signing a proxy in the form accompanying this Proxy Statement
has the power to revoke it either before the meeting at which the matter voted
by proxy is acted upon or at the meeting before the vote on the matter. A proxy
may be revoked by a later proxy that is signed by the person who signed the
earlier proxy and presented at the meeting or by attendance at the meeting and
voting in person.
The expense of printing and mailing proxy material will be borne by the
Company. In addition to the solicitation of proxies by mail, solicitation may be
made by certain directors, officers, and other employees of the Company by
personal interview, telephone, or facsimile. No additional compensation will be
paid for such solicitation. The Company also has retained Harris Trust and
Savings Bank to assist in the solicitation of proxies. Harris Trust and Savings
Bank will receive a fee for such services of approximately $4,000 plus out-
of-pocket expenses, which will be paid by the Company. The Company will request
brokers and nominees who hold shares of Common Stock in their names to furnish
proxy material to beneficial owners of the shares and will reimburse such
brokers and nominees for their reasonable expenses incurred in forwarding
solicitation materials to such beneficial owners.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Annual Meeting, the stockholders will elect directors to hold office
until the next annual meeting of stockholders and until successors have been
duly elected and qualified or until any such director's earlier resignation or
removal. Shares represented by the accompanying proxy will be voted for the
election of the eight nominees recommended by the Board of Directors, unless the
proxy is marked in such a manner as to withhold authority to vote or as to vote
for one or more alternate candidates. If any nominee for any reason is unable to
serve or will not serve, the proxies may be voted for such substitute nominee as
the proxyholder may determine. The Company is not aware of any nominee who will
be unable to or for good cause will not serve as a director.
DIRECTORS
The following incumbent directors are being nominated for reelection to the
Board: Lawrence J. Ellison, Donald L. Lucas, Delbert W. Yocam, James A.
Abrahamson, Michael J. Boskin, Jack Kemp, Raymond J. Lane and Jeffrey O. Henley.
1
<PAGE> 5
REQUIRED VOTE
Directors are elected by a plurality of votes cast. Votes withheld and
broker non-votes are not counted toward a nominee's total.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE ELECTION OF EACH OF THE NOMINATED DIRECTORS.
MR. ELLISON, 51, has been President, Chief Executive Officer, and a
director of the Company since he co-founded the Company in May 1977. Mr. Ellison
has been Chairman of the Board since June 1995 and was Chairman of the Board
from April 1990 until September 1992. He has been a member of the Executive
Committee since 1986. Mr. Ellison is also a director of NeXT Computer, Inc., is
Co-Chairman of California's Council on Information Technology and is a member of
President Clinton's Export Council.
MR. LUCAS, 65, has been a director of the Company since March 1980. He has
been Chairman of the Executive Committee since 1986 and Chairman of the Finance
and Audit Committee since 1987. Mr. Lucas has been a member of the Compensation
Committee since 1989. He was Chairman of the Board from October 1980 through
March 1990. He has been a venture capitalist since 1960. He is also a director
of Cadence Design Systems, Inc., Delphi Information Systems, Inc., ICOT
Corporation, Kahler Realty Corporation, Macromedia, Inc., Quantum Health
Resources, Inc., Racotek, Inc., Transcend Services, Inc. and Tricord Systems,
Incorporated.
MR. YOCAM, 51, has been a director of the Company and has been a member of
the Finance and Audit Committee since March 1992. Mr. Yocam has been an
independent consultant from November 1994 to the present. Mr. Yocam was
President, Chief Operating Officer and a director of Tektronix, Inc. from
September 1992 until November 1994. He was an independent consultant from
November 1989 until September 1992. Mr. Yocam was with Apple Computer, Inc. from
November 1979 through November 1989, serving in a variety of executive
management positions including Chief Operating Officer from August 1986 to
August 1988 and President of Apple Pacific, Inc., a subsidiary of Apple
Computer, Inc., from August 1988 to November 1989. Mr. Yocam is also a director
of Adobe Systems, Inc. and AST Research, Inc.
MR. ABRAHAMSON, 62, has been a director of the Company since September
1992, and served as Chairman of the Board from September 1992 through May 1995.
Mr. Abrahamson has been a Senior Advisor at Galway Partners from June 1995 to
the present. Since August 1995, he also has served as Chairman and Chief
Executive Officer of BDM Air Safety Management Corporation, and Chairman and
Chief Executive Officer of International Air Safety Corporation. He served as
Executive Vice President for Corporate Development for Hughes Aircraft Company
from October 1989 to April 1992 and President of the Transportation Sector for
Hughes Aircraft Company from April 1992 to September 1992. Mr. Abrahamson
directed the Strategic Defense Initiative from April 1984 until he retired from
the Air Force in January 1989 at the rank of Lieutenant General. Mr. Abrahamson
is also a director of Western Digital Corporation.
DR. BOSKIN, 49, has been a director of the Company since May 1994. He has
been a member of the Finance and Audit Committee since July 1994 and a member of
the Compensation Committee since July 1995. Dr. Boskin has been a professor of
economics at Stanford University since 1971 and principal of Boskin & Co., a
consulting firm, since 1980. He was Chairman of the President's Council of
Economic Advisers from February 1989 until January 1993. Dr. Boskin is also a
director of HealthCare COMPARE Corp.
MR. KEMP, 60, has been a director of the Company since February 1995. Mr.
Kemp has been Co-Director of Empower America from 1993 to the present. Mr. Kemp
was the Secretary of Housing and Urban Development from February 1989 until
January 1992. Mr. Kemp is also a director of WorldCorp, LandAir Services, Inc.,
Cyrix Corporation, Columbus Realty Trust and American Bankers Insurance Group.
MR. LANE, 48, has been Executive Vice President of the Company and
President of Worldwide Operations since October 1993, and has been a director
since June 1995. He served as Senior Vice President of the Company and President
of Oracle USA from June 1992 to September 1993. Before joining Oracle, Mr. Lane
was a Senior Vice President and Managing Partner of the Worldwide Information
Services Group at Booz-Allen & Hamilton from July 1986 to May 1992. He served on
the Booz-Allen & Hamilton Executive
2
<PAGE> 6
Committee from April 1987 to May 1992, and on its Board of Directors from April
1986 to May 1992. Mr. Lane is also a member of the Board of Trustees of
Carnegie-Mellon University.
MR. HENLEY, 50, has been Executive Vice President and Chief Financial
Officer of the Company since March 1991 and has been a director since June 1995.
Prior to joining Oracle, he served as Executive Vice President and Chief
Financial Officer of Pacific Holding Company, a privately-held company with
diversified interests in manufacturing and real estate, from August 1986 to
February 1991. Mr. Henley is also a director of Tricord, Inc., a computer
hardware company.
DIRECTOR COMPENSATION
The Company currently pays Messrs. Yocam, Abrahamson and Kemp and Dr.
Boskin directors' fees of (1) $1,000 for each regularly scheduled Board meeting
attended, (2) $3,000 for each meeting of the Finance and Audit Committee
attended, (3) $2,000 per day for each special meeting or committee meeting
attended, and (4) an annual retainer of $25,000. Mr. Lucas is paid an annual
retainer of $100,000. Mr. Abrahamson has a consulting arrangement with the
Company under which Mr. Abrahamson could receive a maximum of $100,000 during
fiscal year 1996. See footnote 3 to the Summary Compensation Table. Messrs.
Ellison, Lane and Henley are officers of the Company and are not separately
compensated as directors of the Company. Non-employee members of the Board also
participate in the Company's 1993 Directors' Stock Option Plan, which provides
for the following grants of options to purchase Common Stock of the Company to
non-employee members of the Board: 37,500 options as of the date an individual
becomes a non-employee director; 11,250 options on May 31 of each year provided
such director has served on the Board for at least six months; 26,250 options on
May 31 of each year to the director (or directors) who serves as chairman of
either the Executive Committee or the Finance and Audit Committee (or both)
provided such director has served in such capacity for at least one year.
BOARD OF DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors met four times at regularly scheduled meetings
during fiscal year 1995 and during that same period acted five times by
unanimous written consent. Standing committees of the Board currently include,
among others, an Executive Committee, a Finance and Audit Committee, a
Compensation Committee, an Independent Committee and a Nominating Committee.
Each director attended at least 75% of all Board and relevant committee meetings
during fiscal year 1995 except Mr. Kemp.
Messrs. Ellison, Lucas and Henley are presently the members of the
Executive Committee. The Executive Committee did not meet during fiscal year
1995, and during that same period acted one time by unanimous written consent.
Unless otherwise determined by the Board, the Executive Committee is vested with
all the powers of the Board of Directors, except that the Executive Committee
cannot take action to have the Company acquire another company, liquidate the
Company, sell all or substantially all of the Company's assets, merge the
Company with another company where the Company is not the surviving entity, or
take any other action not permitted to be delegated to a committee under
Delaware law or the Company's Bylaws.
Messrs. Lucas and Yocam and Dr. Boskin are presently the members of the
Finance and Audit Committee. The Finance and Audit Committee met four times
during fiscal year 1995. The function of the Finance and Audit Committee is to
review financial and auditing issues of the Company, including the Company's
choice of independent public accounting firms, and to make recommendations to
the Board of Directors.
Messrs. Lucas and Yocam and Dr. Boskin are presently the members of the
Compensation Committee. The Compensation Committee met one time during fiscal
year 1995, and during that same period acted twenty-eight times by unanimous
written consent. The function of the Compensation Committee is to review and set
the compensation of the Company's Chief Executive Officer and certain of its
most highly compensated officers, including salaries, bonuses and other
incentive plans, stock options, and other forms of compensation.
Mr. Abrahamson and Dr. Boskin are presently the members of the Nominating
Committee. The Nominating Committee did not meet during fiscal year 1995, and
during the same period acted two times by
3
<PAGE> 7
unanimous written consent. The function of the Nominating Committee is to
recommend qualified candidates for election as officers and directors of the
Company. Stockholders wishing to recommend candidates for consideration by the
Nominating Committee may do so by writing to the Secretary of the Company and
providing the candidate's name, biographical data and qualifications.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of August 25, 1995,
with respect to the beneficial ownership of the Company's Common Stock by: (i)
each stockholder known by the Company to be the beneficial owner of more than 5%
of the Company's Common Stock; (ii) each director; (iii) each executive officer
named in the Summary Compensation Table; and (iv) all current executive officers
and directors as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
---------------------------------------------------------------------- ------------ --------
<S> <C> <C>
Lawrence J. Ellison(2)................................................ 101,258,691 23.30
500 Oracle Parkway, Redwood City, CA 94065
Fidelity Management and Research Co................................... 43,396,107 9.99
82 Devonshire Street, Boston, MA 02109
Dirk A. Kabcenell(3).................................................. 744,591 *
Jeffrey O. Henley(4).................................................. 725,000 *
Raymond J. Lane(5).................................................... 530,343 *
James A. Abrahamson(6)................................................ 248,073 *
Donald L. Lucas(7).................................................... 67,375 *
Delbert W. Yocam(8)................................................... 10,313 *
Michael J. Boskin(9).................................................. 9,375 *
Jack Kemp............................................................. 0 *
All current executive officers and directors as a group (12
persons)(10)........................................................ 103,781,714 23.88
</TABLE>
---------------
* Less than 1%
(1) Unless otherwise indicated below, each person listed had sole voting and
sole investment power with respect to all shares beneficially owned,
subject to community property laws where applicable.
(2) Includes 2,677,500 shares subject to currently exercisable options or
options exercisable within 60 days.
(3) Includes 323,754 shares subject to currently exercisable options or options
exercisable within 60 days, including 20,250 shares subject to options
owned by Mr. Kabcenell's wife. Includes 16,912 shares owned by Mr.
Kabcenell's wife.
(4) Includes 725,000 shares subject to currently exercisable options or options
exercisable within 60 days.
(5) Includes 524,500 shares subject to currently exercisable options or options
exercisable within 60 days.
(6) Includes 236,418 shares subject to currently exercisable options or options
exercisable within 60 days.
(7) Includes 3,000 shares owned of record by Mr. Lucas' Keogh Profit Sharing
Trust and 15,000 shares owned of record by Mr. Lucas or his successor
trustee under a trust agreement for the benefit of Mr. Lucas and his wife.
Includes 49,375 shares subject to currently exercisable options or options
exercisable within 60 days.
(8) Includes 10,313 shares subject to currently exercisable options or options
exercisable within 60 days.
(9) Includes 9,375 shares subject to currently exercisable options or options
exercisable within 60 days.
(10) Includes all shares described in notes (2)-(9) above.
4
<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation paid by the Company to the Company's Chief Executive Officer and
each of the four other most highly compensated executive officers of the Company
(determined as of May 31, 1995) (hereinafter referred to as the "named executive
officers") for the fiscal years ended May 31, 1995, 1994 and 1993:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS
------------------- OTHER ANNUAL --------------- ALL OTHER
YEAR SALARY COMPENSATION OPTIONS/SARS(1) COMPENSATION(2)
NAME AND PRINCIPAL POSITION ($) ($) BONUS ($) (#) ($)
---------------------------- ---- ---------- ---------- ------------ --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence J. Ellison......... 1995 $1,099,992 $2,243,098 $ 0 450,000 $ 0
Chairman, President and 1994 $1,015,008 $1,394,610 $ 0 300,000 $ 189
Chief Executive Officer 1993 $1,000,000 $1,150,000 $ 0 300,000 $ 432
Raymond J. Lane............. 1995 $ 700,008 $1,427,426 $ 0 225,000 $ 0
Executive Vice President 1994 $ 514,992 $ 707,610 $ 0 450,000 $ 189
and President, Worldwide 1993 $ 458,940 $ 527,781 $ 0 1,050,000 $ 396
Operations
Jeffrey O. Henley........... 1995 $ 499,992 $1,019,590 $ 0 225,000 $ 0
Executive Vice President 1994 $ 364,992 $ 501,510 $ 0 150,000 $ 189
and Chief Financial Officer 1993 $ 350,000 $ 402,500 $ 0 150,000 $ 432
Dirk A. Kabcenell........... 1995 $ 341,665 $ 713,713 $ 0 200,000 $ 0
Executive Vice President, 1994 $ 247,756 $ 150,000 $ 0 75,000 $ 189
Product Division 1993 $ 221,917 $ 50,000 $ 0 300,000 $ 324
James A. Abrahamson(3)...... 1995 $ 450,000 $ 200,000 $267,500(4) 0 $ 0
Chairman (through May
1995)..................... 1994 $ 429,002 $ 418,960 $153,460(4) 75,000 $ 189
1993 $ 247,868 $ 200,000 $244,694(4) 600,000 $ 288
</TABLE>
---------------
(1) All figures in this column reflect options to purchase common stock.
(2) All amounts in this column reflect premiums paid for group term life
insurance.
(3) Mr. Abrahamson resigned as Chairman effective May 31, 1995, but agreed to
provide consulting services to the Company in exchange for annual fees of
$100,000 until he accepts regular employment elsewhere or until May 31,
1996, whichever is earlier. Mr. Abrahamson will be required to exercise any
outstanding options within 90 days of his ceasing to serve as a director or
ceasing to provide consulting services to the Company, whichever is earlier.
Mr. Abrahamson also had an arrangement with the Company whereby the Company
forgave certain indebtedness annually. See Note 4 below and "Executive
Compensation -- Transactions and Legal Actions Involving Management."
(4) The 1995 figure includes reimbursement of $55,825 for relocation expenses
and $267,500 for forgiveness of indebtedness. The 1994 figure includes
reimbursement of $2,210 for relocation expenses and $151,250 for forgiveness
of indebtedness. The 1993 figure includes reimbursement of $82,237 for
relocation expenses and $146,096 for forgiveness of indebtedness.
5
<PAGE> 9
STOCK OPTIONS
The following table sets forth information concerning the grant of stock
options to each of the named executive officers in fiscal year 1995:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL POTENTIAL REALIZABLE VALUE
SECURITIES OPTIONS/SARS AT ASSUMED ANNUAL RATES OF
UNDERLYING GRANTED TO EXERCISE STOCK PRICE APPRECIATION
OPTIONS/SARS EMPLOYEES IN OR BASE EXPIRATION FOR OPTION TERM
NAME GRANTED(1) FISCAL YEAR 1995 PRICE ($/SH) DATE --------------------------
-------------------------- ------------- ---------------- ------------ ---------- 5% 10%
---------- -----------
($) ($)
<S> <C> <C> <C> <C> <C> <C>
Lawrence J. Ellison....... 450,000(2) 8.19% $ 34.25 5/31/05 $9,692,838 $24,563,555
Raymond J. Lane........... 225,000(2) 4.10% $ 34.25 5/31/05 $4,846,419 $12,281,778
Jeffrey O. Henley......... 225,000(2) 4.10% $ 34.25 5/31/05 $4,846,419 $12,281,778
Dirk A. Kabcenell......... 150,000(3) 2.73% $ 29.583 10/14/04 $2,790,717 $ 7,072,224
50,000(2) .91% $ 34.25 5/31/05 $1,076,982 $ 2,729,284
James A. Abrahamson....... 0 -- -- -- -- --
</TABLE>
---------------
(1) Each option granted vests at the rate of 25% per annum. Options will become
immediately exercisable if fifty percent of the voting stock of the Company
is acquired in a transaction or series of transactions expressly
disapproved by the Board. Each option was granted under the Company's 1991
Long-Term Equity Incentive Plan and has an exercise price equal to the fair
market value of the Common Stock on the date of grant.
(2) Each of the indicated options was granted on May 31, 1995.
(3) The indicated option was granted on October 14, 1994.
The following table sets forth information with respect to the named
executive officers concerning exercises of options during fiscal year 1995 and
unexercised options held as of the end of fiscal year 1995:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY
SHARES ACQUIRED VALUE AT FISCAL OPTIONS/SARS AT
ON EXERCISE REALIZED YEAR-END (#) FISCAL YEAR-END ($)
NAME (#) ($) ------------------------- -------------------------
----------------------- --------------- ----------- EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
<S> <C> <C> <C> <C>
Lawrence J. Ellison.... 427,500 $10,800,104 2,077,500/ 975,000 $61,832,512/$24,343,725
Raymond J. Lane........ 218,000 $ 5,936,418 419,500/1,087,500 $ 9,556,698/$18,484,358
Jeffrey O. Henley...... 175,000 $ 4,398,953 725,000/ 412,500 $21,061,956/$ 2,809,373
Dirk A. Kabcenell...... 0 $ 0 231,086/ 433,914 $ 6,365,467/$ 6,462,035
James A. Abrahamson.... 17,082 $ 369,591 292,668/ 0 $ 7,019,144/$ 0
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Messrs. Lucas and Yocam
and Dr. Boskin. Joseph B. Costello served on the Compensation Committee until
his resignation from the Board of Directors in July 1995. Since February 1989,
Cadence Design Systems, Inc. has paid the Company an aggregate of approximately
$2,500,000 to purchase software licenses and related services. Mr. Costello is
President and a Director of Cadence Design Systems, Inc., and was a director of
the Company and a member of its
6
<PAGE> 10
Compensation Committee until July 1995. See "Executive
Compensation -- Transactions and Legal Actions Involving Management."
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
Notwithstanding anything to the contrary set forth in any of the Company's
previous or future filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934 (the "Exchange Act") that might incorporate this Proxy
Statement or future filings with the Securities and Exchange Commission, in
whole or in part, the following report and the Performance Graph which follows
shall not be deemed to be incorporated by reference into any such filing.
Membership and Role of the Compensation Committee
The Compensation Committee (the "Committee") consists of the following
non-employee members of the Company's Board of Directors: Donald L. Lucas,
Delbert W. Yocam and Michael J. Boskin.
The Committee reviews and determines the Company's executive compensation
objectives and policies and administers the Company's stock plans. The Committee
reviews and sets the compensation of the Company's Chief Executive Officer and
the four most highly compensated executive officers other than the Chief
Executive Officer.
The Internal Revenue Code of 1986, as amended (the "Code"), was amended in
1993 to add Section 162(m). Section 162(m) places a limit of $1,000,000 on the
amount of compensation that may be deducted by the Company in any year with
respect to certain of the Company's highest paid executives. Certain performance
based compensation that has been approved by stockholders is not subject to the
deduction limit. The Company intends to qualify certain compensation paid to
executive officers for deductibility under the Code, including new Section
162(m). The Company is submitting for a vote of the stockholders at the Annual
Meeting the executive officer bonus program and the Company's 1991 Long-Term
Equity Incentive Plan, as amended by amendments described in Proposal No. 3.
However, the Company may from time to time pay compensation to its executive
officers that may not be deductible.
Compensation Program
Objectives
The Objectives of the Company's executive compensation program are to:
-- Attract and retain highly talented and productive executives.
-- Provide incentives for superior performance by paying above-average
compensation.
-- Align the interests of the executive officers with the interests of
the Company's stockholders by basing a significant portion of
compensation upon the Company's performance.
Components
The Company's executive compensation program combines the following three
components, in addition to the benefit plans offered to all employees: base
salary (including cash provided for automobile allowances); annual bonus; and
long-term incentive compensation consisting of stock option grants.
It is the Company's policy to set base salary levels, annual bonuses and
long-term incentive compensation above an average of select corporations to
which the Company compares its executive compensation. The Company selects such
corporations on the basis of a number of factors, such as their size and
complexity, the nature of their businesses, the regions in which they operate,
the structure of their compensation programs (including the extent to which they
rely on bonuses and other contingent compensation) and the availability of
compensation information. The corporations with which the Company compares its
compensation are not necessarily those included in the indices used to compare
the stockholder return in the Stock Performance Chart. Further, the corporations
selected for such comparison may vary from year to year based upon market
7
<PAGE> 11
conditions and changes in both the Company's and the corporations' businesses
over time. The Company believes that above-average compensation levels are
necessary to attract and retain high caliber executives necessary for the
successful conduct of the Company's business.
Each component of the Company's executive compensation program serves a
specific purpose in meeting the Company's objectives.
Base salary. The Committee annually reviews the salaries of the Company's
executives. When setting base salary levels, in a manner consistent with the
objectives outlined above, the Committee considers competitive market conditions
for executive compensation, Company performance and individual performance.
The measures of individual performance considered in setting fiscal year
1995 salaries included, to the extent applicable to an individual executive
officer, a number of quantitative and qualitative factors such as the Company's
historical and recent financial performance in the principal area of
responsibility of the officer (including such measures as gross margin, net
income, sales, customer count and market share), the individual's progress
toward non-financial goals within his area of responsibility, individual
performance, experience and level of responsibility and other contributions made
to the Company's success. The Committee has not found it practicable, nor has it
attempted, to assign relative weights to the specific factors used in
determining base salary levels, and the specific factors used may vary among
individual officers. As is typical for most corporations, payment of base salary
is not conditioned upon the achievement of any specific, pre-determined
performance targets.
Annual bonus. The Company's cash bonus program seeks to motivate
executives to work effectively to achieve the Company's financial performance
objectives and to reward them when objectives are met. Executive bonus payments
are based upon earnings per share and revenue growth and are increased or
decreased if the Company's revenue growth for certain products changes in
relation to the revenue growth of one or more of the Company's competitors
designated by the Committee. The limit on the maximum bonus that any individual
executive officer may receive under the Company's cash bonus program is
$6,000,000. In order to maximize the deductibility of future bonuses under
Section 162(m) of the Code, the Company is requesting stockholders to approve
the bonus program at the Annual Meeting.
Long-term incentive compensation. The Company believes that option grants
(1) align executive interests with stockholder interests by creating a direct
link between compensation and stockholder return, (2) give executives a
significant, long-term interest in the Company's success, and (3) help retain
key executives in a competitive market for executive talent.
The Company's 1990 Executive Officers Stock Option Plan and 1991 Long-Term
Equity Incentive Plan authorize the Committee to grant stock options to
executives. Option grants are made from time to time to executives whose
contributions have or will have a significant impact on the Company's long-term
performance. The Company's determination of whether option grants are
appropriate each year is based upon individual performance measures established
for each individual. Options are not necessarily granted to each executive
during each year. Generally, options granted to executive officers vest in equal
annual installments over a period of four years and expire ten years from the
date of grant.
Benefits. The Company believes that it must offer a competitive benefit
program to attract and retain key executives.
During fiscal year 1995 the Company provided medical and other benefits to
its executive officers that are generally available to the Company's other
employees.
Compensation of the Chief Executive Officer. The Chief Executive Officer's
compensation plan includes the same elements and performance measures as the
plans of the Company's other senior executives. The Compensation Committee
believes that Mr. Ellison's total compensation reflects the unique contributions
that he makes to the Company's long-term strategic performance as one of the
leading innovators of the technology industry.
8
<PAGE> 12
Mr. Ellison's salary for fiscal year 1995 increased 8% and bonus for fiscal
year 1995 increased 61% over the previous fiscal year. The Committee believes
that such increases are appropriate based upon the Company's financial
performance, including earnings per share, revenue growth and cash flow from
operations.
Submitted by: Donald L. Lucas
Delbert W. Yocam
Michael J. Boskin
STOCK PERFORMANCE CHART
The graph below compares the cumulative total stockholder return on the
Company's Common Stock with the cumulative total return on the Standard & Poor's
500 Index and the Hambrecht & Quist ("H&Q") Technology Index for the five fiscal
years commencing May 31, 1990 and ending May 31, 1995, assuming an investment of
$100 and the reinvestment of any dividends.
The comparisons in the graph below are based upon historical data and are
not indicative of, nor intended to forecast, future performance of the Company's
Common Stock.
<TABLE>
<CAPTION>
Hambrecht &
Measurement Period Oracle Cor- Quist Tech-
(Fiscal Year Covered) poration S & P 500 nology
<S> <C> <C> <C>
5/90 100 100 100
5/91 38 112 108
5/92 75 123 120
5/93 211 137 139
5/94 347 143 149
5/95 528 172 211
</TABLE>
TRANSACTIONS AND LEGAL ACTIONS INVOLVING MANAGEMENT
From June 1, 1994 to the present, there have been no transactions between
the Company and any executive officer, director, 5% beneficial owner of the
Company's Common Stock, or member of the immediate family of the foregoing
persons in which one of the foregoing individuals or entities had an interest of
more than $60,000, except for the following:
As previously announced, the Company develops and licenses software
products which may be used with a computer manufactured by nCUBE, a manufacturer
of massively-parallel supercomputers. Mr. Ellison owns a controlling interest in
nCUBE. During fiscal year 1995, the Company purchased from nCUBE computer
equipment in the aggregate amount of approximately $586,556 and maintenance and
related services in the aggregate amount of approximately $623,068. The Company
has loaned nCUBE certain computer hardware (used primarily to facilitate
communications between the Company and nCUBE and for development work requested
by the Company) and nCUBE has loaned certain computer hardware to the Company.
In exchange for software development services rendered by the Company for the
nCUBE operating system valued at approximately $1 million, the Company received
from nCUBE certain computer hardware equipment valued
9
<PAGE> 13
at approximately the same amount. The Company has also entered into a reseller
agreement with nCUBE entitling nCUBE to distribute certain software which the
Company has a license to distribute. The Company also has entered into a
consulting services agreement with nSOF Parallel Software, Ltd., in which Mr.
Ellison owns a controlling interest.
In October 1992, the Company loaned Mr. Abrahamson $500,000 in the form of
an unsecured interest bearing note, the proceeds of which were used for the
purpose of covering the cost of relocating his primary residence. The note
accrued interest at 7% per annum. The note has been forgiven in connection with
Mr. Abrahamson's resignation as Chairman at the end of fiscal year 1995. The
largest aggregate amount outstanding under the loan during fiscal year 1995 was
$267,500. See "Executive Compensation -- Summary of Cash and Certain Other
Compensation."
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers and
directors and persons who own more than 10% of the Company's Common Stock
(collectively, "Reporting Persons") to file reports of ownership and changes in
ownership with the SEC and NASDAQ. Reporting Persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received or written
representations from Reporting Persons, the Company believes that with respect
to the fiscal year ended May 31, 1995 all the Reporting Persons complied with
all applicable filing requirements.
PROPOSAL NO. 2
ADOPTION OF THE
EXECUTIVE OFFICERS 1996 BONUS PLAN
On July 17, 1995, the Compensation Committee unanimously approved the
adoption of the Executive Officers 1996 Bonus Plan (the "Bonus Plan"), and the
Board directed that the Bonus Plan be submitted to the stockholders for approval
at the 1995 Annual Meeting. Targets set at the July 17, 1995 meeting for the
applicable performance period shall be null and void and no payments pursuant
thereto may be made if the Bonus Plan is not approved by the stockholders of the
Company.
The purpose of the Bonus Plan is to motivate executives to achieve the
Company's financial performance objectives and to reward them when those
objectives are met.
REQUIRED VOTE
Approval of the adoption of the Bonus Plan requires the affirmative vote of
the holders of a majority of shares of Common Stock present or represented and
entitled to vote at the Annual Meeting. Abstentions and broker non-votes will be
counted as present for purposes of determining whether a quorum is present, and
broker non-votes will not be treated as entitled to vote on this matter at the
Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL OF ADOPTION OF THE EXECUTIVE OFFICERS 1996 BONUS PLAN.
DESCRIPTION OF THE EXECUTIVE OFFICERS 1996 BONUS PLAN
HISTORY. The Compensation Committee (the "Committee") approved the
adoption of the Executive Officers 1996 Bonus Plan (the "Bonus Plan") on July
17, 1995.
PURPOSE. The purpose of the Bonus Plan is to motivate executives to
achieve the Company's financial performance objectives and to reward them when
those objectives are met.
10
<PAGE> 14
ADMINISTRATION. The Bonus Plan will be administered by the Committee
consisting of no fewer than two members of the Board, all of which members
qualify as "outside directors" within the meaning of Section 162(m) of the
Internal Revenue Code.
ELIGIBILITY. Participants in the Bonus Plan are chosen solely at the
discretion of the Committee. All officers of the Company are eligible to
participate in the Bonus Plan. No person is automatically entitled to
participate in the Bonus Plan in any plan year.
DETERMINATION OF AWARDS. Under the Bonus Plan, participants will be
eligible to receive awards based upon the attainment and certification of
performance criteria established by the Committee. The performance criteria are
earnings per share and revenue growth. Awards are based upon the Company's level
of achievement of the foregoing performance criteria and consist of a percentage
of base salary tied to a matrix of the Company's performance criteria. The
Committee adopts the performance criteria within 90 days after the start of each
fiscal year or in advance of such other date as may be permitted under Internal
Revenue Code Section 162(m). The Committee also adopts at the same time a
mathematical formula for the fiscal year which is applied to either reduce or
increase an award if the Company's revenue growth for certain products changes
in relation to the revenue growth of one or more of the Company's competitors
designated by the Committee. The limit on the maximum bonus that any individual
participant may receive under the Bonus Plan is $6,000,000. With respect to the
Company's current fiscal year, such determinations were made by the Compensation
Committee at a meeting held on July 17, 1995. In order for participants to
achieve a comparable bonus percentage of base salary as was awarded in fiscal
year 1995, the Company will have to substantially outperform its fiscal year
1996 budget and/or outperform the revenue growth of one or more of selected key
competitors.
PAYMENT OF AWARDS. All awards will be paid in cash as soon as is
practicable following determination of the award, unless the Committee has,
prior to the grant of an award, received and approved, in its sole discretion, a
request by a participant to defer receipt of an award in accordance with the
Bonus Plan.
ESTIMATE OF BENEFITS. The amounts that will be paid pursuant to the Bonus
Plan are not currently determinable.
AMENDMENT AND TERMINATION. The Committee may terminate the Bonus Plan, in
whole or in part, may suspend the Bonus Plan, in whole or in part from time to
time, and may amend the Bonus Plan from time to time, including the adoption of
amendments deemed necessary or desirable to correct any defect or supply omitted
data or reconcile any inconsistency in the Bonus Plan or in any award granted
thereunder so long as stockholder approval has been obtained if required in
order for awards under the Bonus Plan to qualify as "performance-based
compensation" under Code Section 162(m). No amendment, termination, or
modification of the Bonus Plan may in any manner affect awards theretofore
granted without the consent of the participant unless the Committee has made a
determination that an amendment or modification is in the best interests of all
persons to whom awards have theretofore been granted, but in no event may such
amendment or modification result in an increase in the amount of compensation
payable pursuant to such award.
TERMINATION OF EMPLOYMENT. Should the participant's employment with the
Company terminate for any reason during the plan year, the participant will not
be eligible to receive an award under the Bonus Plan.
FEDERAL INCOME TAX CONSEQUENCES. Under present federal income tax law,
participants will realize ordinary income equal to the amount of the award
received in the year of receipt. That income will be subject to applicable
income and employment tax withholding by the Company. The Company will receive a
deduction for the amount constituting ordinary income to the participant,
provided that the Bonus Plan satisfies the requirements of Code Section 162(m),
which limits the deductibility of nonperformance-related compensation paid to
certain corporate executives (and otherwise satisfies the requirements for
deductibility under federal income tax law). It is the Company's intention that
the Bonus Plan be adopted and administered in a manner which maximizes the
deductibility of compensation for the Company under Section 162(m) to the extent
practicable and consistent with the Company's business considerations.
11
<PAGE> 15
PROPOSAL NO. 3
AMENDMENT TO THE 1991 LONG-TERM EQUITY INCENTIVE PLAN
At the Annual Meeting, the stockholders are being asked to approve the
adoption of an amendment to the Company's 1991 Long-Term Equity Incentive Plan
(the "1991 Plan"), as adopted by the Board on July 17, 1995, which increases the
number of shares reserved for issuance thereunder by a total of 12,000,000
shares of Common Stock (the "Additional Shares").
The 1991 Plan is intended to provide additional compensation and incentive
to eligible individuals whose present and potential contributions are important
to the continued success of the Company, to afford such persons an opportunity
to acquire a proprietary interest in the Company and to enable the Company to
continue to attract and retain the best available talent for the successful
conduct of its business.
REQUIRED VOTE
Approval of the adoption of the amendment to the 1991 Plan requires the
affirmative vote of the holders of a majority of shares of Common Stock present
or represented and entitled to vote at the Annual Meeting. Abstentions and
broker non-votes will be counted as present for purposes of determining whether
a quorum is present, and broker non-votes will not be treated as entitled to
vote on this matter at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF THE AMENDMENT TO THE 1991 LONG-TERM EQUITY INCENTIVE PLAN.
PLAN ACTIVITY
As of May 31, 1995, options to purchase an aggregate of 2,990,571 shares of
Common Stock issued under the 1991 Plan had been exercised, and options to
purchase 19,092,138 shares were outstanding. Without taking into account the
proposed amendment to the 1991 Plan, 4,917,291 shares remained available for
future grants as of May 31, 1995.
The table under the caption "Option/SAR Grants in Last Fiscal Year"
provides information with respect to the grant of options under the 1991 Plan to
the Chief Executive Officer and the next four most highly compensated executive
officers during fiscal year 1995. The following table sets forth additional
information with respect to options granted under the 1991 Plan during fiscal
year 1995 to certain groups:
<TABLE>
<CAPTION>
IDENTITY OF GROUP WEIGHTED AVERAGE EXERCISE PRICE OPTIONS GRANTED
---------------------------------------------------- ------------------------------- ---------------
<S> <C> <C>
All executive officers as a group (8 persons)....... $ 33.04 1,281,500
Non-executive officer employees as a group
(approximately 870 persons)....................... $ 29.43 4,210,350
</TABLE>
DESCRIPTION OF THE 1991 PLAN AND OPTION TERMS
The following is a summary of the principal provisions of the 1991 Plan,
but it is not intended to be a complete description of all of the terms and
provisions of the 1991 Plan. A copy of the 1991 Plan will be furnished to any
stockholder upon written request to the Corporate Secretary of the Company at
the principal executive offices of the Company in Redwood City, California.
HISTORY. The 1991 Plan was adopted by the Company's Board of Directors on
July 31, 1991 and was approved by the Company's stockholders on October 14,
1991, and a total of 15,000,000 shares of the Company's Common Stock were
reserved for issuance thereunder. On October 11, 1993, the 1991 Plan was amended
by the stockholders to increase the number of shares reserved for issuance
thereunder by 12,000,000. On October 10, 1994, the 1991 Plan was amended by the
stockholders to limit the number of options that can be granted to any
individual during any year to 3,000,000.
PURPOSE. The purpose of the 1991 Plan is to provide additional
compensation and incentive to eligible employees, officers, directors, advisors
and consultants whose present and potential contributions are important to the
continued success of the Company, to afford such persons an opportunity to
acquire a
12
<PAGE> 16
proprietary interest in the Company and to enable the Company to continue to
enlist and retain the best available talent for the successful conduct of its
business.
ADMINISTRATION. The 1991 Plan is currently administered by the
Compensation Committee (the "Committee"). Subject to the terms of the 1991 Plan,
the Committee determines the persons who are to receive awards, the number of
shares subject to each award, the terms and conditions of such awards and the
dates of grants. The Committee also has the authority to construe and interpret
any of the provisions of the 1991 Plan or any options granted thereunder. Such
interpretations are binding on the Company and on the participants.
ELIGIBILITY. All officers, directors (who are also employees or
consultants of the Company), employees, advisors and consultants of the Company
(or any subsidiary or affiliate of the Company) are eligible to receive awards
under the 1991 Plan. The Company currently has approximately 50 subsidiary
corporations eligible to participate in the 1991 Plan. Approximately 16,000
full-time employees are eligible to receive options under the 1991 Plan, except
those who are not eligible due to local securities laws.
OPTION AWARDS. Both incentive stock options ("ISOs"), as defined in
Section 422(b) of the Code, and nonqualified stock options ("NQSOs"), may be
granted under the 1991 Plan. The Committee determines whether an option granted
under the 1991 Plan will be an ISO or a NQSO. The 1991 Plan limits the aggregate
fair market value (determined as of the time the option is granted) of the
shares with respect to which ISOs are exercisable for the first time by the
optionee during any calendar year to not more than $100,000. There is no similar
limit on NQSOs granted under the Plans.
OTHER AWARDS. In addition to stock options, certain other awards may be
granted under the 1991 Plan, although no such rights or awards have been granted
to date under the 1991 Plan. The Committee may grant Stock Appreciation Rights
("SAR") together with related options, entitling the holder upon exercise to
receive an amount in any combination of cash or Common Stock (as determined by
the Committee) equal in value to the excess of the fair market value of the
shares covered by such SAR on the date of exercise over the aggregate exercise
price of the related option for such shares. The Committee may also grant rights
to purchase stock under such terms and conditions as it may determine. In
addition, the Committee may grant stock bonus awards payable in cash or Common
Stock based upon reasonable performance criteria the Committee deems
appropriate.
PERFORMANCE-BASED COMPENSATION LIMITS. No employee shall be granted in any
fiscal year of the Company options and SARs to acquire in the aggregate more
than 3,000,000 shares of Common Stock. The foregoing limitation, which shall
adjust proportionately in connection with any change in the Company's
capitalization, is intended to satisfy the requirements applicable to options
and SARs intended to qualify as performance-based compensation within the
meaning of Internal Revenue Code Section 162(m).
TERMS OF THE OPTIONS. Each option granted pursuant to the Plan is
evidenced by a stock option grant (the "Grant") issued by the Company. An
exercise notice and agreement (the "Exercise Notice") is to be completed by the
optionee at the time an option is exercised. The Company does not receive any
consideration from an optionee at the time an option is granted. The form of the
Grant and the Exercise Notice may be amended by the Committee from time to time,
subject to the terms of the Plans.
Options may be granted under the 1991 Plan until July 30, 2001.
Subject to the provisions of the 1991 Plan, the Committee may determine the
vesting schedule of each option and other terms and conditions of
exercisability. Options granted under the 1991 Plan typically vest in four equal
annual installments starting from the date of grant, although vesting of an
option may be accelerated by the Committee. The Committee also has the
discretion to modify, extend or renew outstanding awards and to issue new awards
in exchange for surrender of outstanding awards. The Committee also may cause
the Company to purchase for cash or shares of Common Stock any option issued
under the 1991 Plan.
13
<PAGE> 17
Generally, ISOs and NQSOs granted under the Plans must be exercised within
ten years of the option grant date. Any ISO granted to a person owning 10% or
more of the total combined voting power of all classes of stock of the Company
or of any subsidiary of the Company (a "Ten Percent Stockholder") must be
exercised within five years of the option grant date.
The Committee determines the exercise price of each option granted, which
is set forth in the Grant. Under the 1991 Plan, the exercise price of a NQSO
granted to an employee may be less than the fair market value per share of the
Company's Common Stock on the date the option is granted, except that NQSOs
granted to named executive officers subject to Section 162(m) of the Code shall
in all cases have an exercise price equal to such fair market value per share on
the grant date. In the case of an ISO, or in the case of an NQSO granted to a
person other than an employee, the price shall be no less than 100% of the fair
market value of a share of Common Stock at the time such option is granted,
subject to certain conditions set forth in the 1991 Plan; provided that, in the
case of an ISO granted to a Ten Percent Stockholder, the price shall be no less
than 110% of the fair market value of the Common Stock on the date the option is
granted. The exercise price of options granted under the 1991 Plan, including
all applicable withholding taxes, must be paid: (1) in cash; (2) by surrender of
shares of the Company's Common Stock owned by the optionee for at least six
months (or, in the case of payment of withholding taxes, by having the Company
withhold from the shares to be issued upon exercise) having a fair market value
on the date of surrender equal to the exercise price of the option (or the
amount of the withholding obligation); (3) where permitted by applicable law and
approved by the Committee, in its sole discretion, by tender of a promissory
note; (4) by cancellation of indebtedness of the Company to the optionee; (5) by
waiver of compensation due to or accrued by the optionee for services rendered;
(6) by a same-day sale commitment from the optionee and a qualified broker; (7)
by a margin commitment from the optionee and a qualified broker; or (8) by any
combination of the foregoing, where approved by the Committee in its sole
discretion.
DEFERRALS. The Committee may also permit participants to elect to defer
receipt of benefits under the 1991 Plan or make automatic deferrals. The
Committee may also provide and determine the amount of any deemed earnings for
amounts deferred under the 1991 Plan.
NONTRANSFERABILITY AND TERMINATION OF OPTIONS. Options granted under the
Plan may not be transferred by the optionee other than by will or by the laws of
descent and distribution. During the lifetime of the optionee, an option may be
exercised only by the optionee or his or her legal representative.
If an optionee's employment or other association with the Company or a
subsidiary is terminated for any reason other than death or disability, any
outstanding option, to the extent (and only to the extent) that it was
exercisable on the date of such termination, must be exercised by the optionee
the earlier of three months following such termination or the expiration of the
option.
CAPITAL CHANGES. If the number of outstanding shares of Common Stock of
the Company is changed by a stock dividend, stock split, reverse stock split,
combination, reclassification or similar change in the capital structure of the
Company without consideration, the number of shares of Common Stock available
for option grants under the 1991 Plan, the number of shares and the exercise
price per share for each outstanding option and the annual limitation noted
above will be proportionately adjusted, subject to any required action by the
Board or stockholders of the Company.
In general, in the event of a merger or consolidation in which the Company
is not the surviving corporation, or the sale of all or substantially all of the
assets of the Company, the vesting of all awards granted pursuant to the 1991
Plan will accelerate and the awards will become exercisable in full prior to the
consummation of such event, at such times and on such conditions as the
Committee determines, unless the successor corporation assumes the outstanding
awards or substitutes substantially equivalent awards. In addition, if an
employee's employment or other association with the Company's successor is
terminated without cause within 12 months after consummation of a merger,
consolidation or sale of assets, awards under the 1991 Plan will accelerate and
become immediately and fully exercisable upon such termination.
Notwithstanding the above, if 50% or more of the outstanding voting
securities of the Company becomes beneficially owned (as defined in Rule 14d-3
promulgated by the SEC) by a person (as defined in Section
14
<PAGE> 18
2(2) of the Securities Act of 1933 and in Section 13(d)(3) of the Securities
Exchange Act of 1934) in a transaction or series of transactions expressly
disapproved by the Board, then all outstanding awards shall become immediately
exercisable with no further act or action required by the Board or the
Committee.
AMENDMENT AND TERMINATION. The Committee may amend or terminate the 1991
Plan at any time and in any respect, except that the Committee cannot, without
the approval of the stockholders of the Company, amend the 1991 Plan in any
manner that requires stockholder approval pursuant to the Code or the
regulations thereunder or pursuant to Rule 16b-3 of the Exchange Act. No
amendment of the 1991 Plan may adversely affect any outstanding option or
unexercised portion thereof without the optionee's written consent. Subject to
the specific terms of the 1991 Plan, the Committee may accelerate any award or
option, reduce any applicable exercise price or waive any conditions or
restrictions pursuant to such award or option at any time.
If an option granted pursuant to the 1991 Plan expires or terminates for
any reason without being exercised in whole or in part, the shares released from
such option or award will again become available for grant and purchase under
the 1991 Plan.
CERTAIN UNITED STATES FEDERAL INCOME TAX INFORMATION
General. The following is a general summary as of the date of this Proxy
Statement of the United States federal income tax consequences associated with
participation in the 1991 Plan. The federal tax laws may change and the federal,
state and local tax consequences for any participant will depend upon his or her
individual circumstances. This information may not be applicable to employees of
foreign subsidiaries or to participants who are not residents of the United
States. All participants have been and are encouraged to seek the advice of a
qualified tax advisor regarding the tax consequences of participation in the
1991 Plan. Any tax effects that accrue to foreign employees as a result of
participation in the 1991 Plan will be subject to the tax laws of the countries
in which such employees reside.
Tax Treatment of the Optionee
Incentive Stock Options. The optionee will recognize no income upon grant
of an ISO and incur no tax on its exercise unless the optionee is subject to the
alternative minimum tax described below. If the optionee holds the stock
acquired upon exercise of an ISO (the "ISO Shares") for one year after the date
the option was exercised and for two years after the date the option was
granted, the optionee generally will realize long-term capital gain or loss
(rather than ordinary income or loss) upon disposition of the ISO Shares. This
gain or loss will be equal to the difference between the amount realized upon
such disposition and the amount paid for the ISO Shares.
If the optionee disposes of ISO Shares prior to the expiration of either of
the above required holding periods (a "disqualifying disposition"), the gain
realized upon such disposition, up to the difference between the fair market
value of the ISO Shares on the date of exercise and the option exercise price,
will be treated as ordinary income. Any additional gain will be long-term or
short-term capital gain, depending upon whether or not the ISO Shares were held
for more than one year following the date of exercise by the optionee. A
disposition of ISO Shares for this purpose includes not only a sale or exchange,
but also a gift or other transfer of legal title (with certain exceptions).
Long-term capital gain is taxed at a maximum federal income tax rate of 28%
rather than the 39.6% maximum rate applicable to other income.
Alternative Minimum Tax. Generally, the difference between the fair market
value of stock purchased by exercise of an ISO (generally measured as of the
date of exercise) and the amount paid for that stock upon exercise of the ISO is
an adjustment to income for purposes of the alternative minimum tax. An
alternative minimum tax adjustment applies unless a disqualifying disposition of
the ISO Shares occurs in the same calendar year as exercise of the ISO. The
alternative minimum tax (imposed to the extent it exceeds the taxpayer's regular
tax) is 26% of an individual taxpayer's alternative minimum taxable income for
alternative minimum taxable income up to $175,000 and 28% thereafter.
Alternative minimum taxable income is determined by adjusting regular taxable
income for certain items, increasing that income by certain tax preference items
and reducing this amount by the applicable exemption amount ($45,000 in the case
of a joint return, subject to reduction under certain circumstances).
15
<PAGE> 19
Nonqualified Stock Options. An optionee will not recognize any taxable
income at the time an NQSO is granted. However, upon exercise of an NQSO the
optionee will include in income as compensation an amount equal to the
difference between the fair market value of the shares on the date of exercise
(in most cases) and the optionee's purchase price. The included amount will be
treated as ordinary income by the optionee and will be subject to income tax and
FICA withholding by the Company (either by payment in cash or withholding out of
the optionee's salary) if the optionee is an employee. Upon the sale of the
shares by the optionee, any subsequent appreciation or depreciation in the value
of the shares will be treated as short term or long term capital gain or loss
and will be taxable as long-term capital gain or loss if the optionee held the
shares for more than one year following exercise of the NQSO.
Tax Treatment of Insiders. Optionees who are officers or directors of the
company subject to Section 16(b) of the Securities Exchange Act may be subject
to special federal income tax treatment upon exercise of their options. In
general, such optionees will be subject to tax with respect to income recognized
upon exercise of their options upon the later to occur of (1) the date such
income normally would be recognized under the principles described above, or (2)
the expiration of the six-month forfeiture period under Section 16(b), unless
such an optionee makes the election under Section 83(b) of the Internal Revenue
Code to be taxed as of the date specified in (1). The amount of income will be
measured by reference to the value of the shares acquired upon exercise as of
the applicable date. Optionees subject to this special treatment should consult
their own tax advisors for further information.
Tax Treatment of the Company
The Company will be entitled to a deduction in connection with the exercise
of an NQSO by a domestic optionee to the extent that the optionee recognizes
ordinary income provided that the deduction is not disallowed under the
provisions of Section 162(m) of the Code. The Company will be entitled to a
deduction in connection with the disposition of ISO Shares only to the extent
that the optionee recognizes ordinary income on a disqualifying disposition of
the ISO Shares and will not be entitled to any deduction upon exercise of an
ISO.
ERISA. The Company believes that the 1991 Plan is not subject to any of
the provisions of the Employee Retirement Income Security Act of 1974.
PROPOSAL NO. 4
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
On July 17, 1995, the Board authorized an amendment of the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock, par value $.01 per share ("Common Stock"), from 800,000,000 to
1,000,000,000. The stockholders are being asked to approve this proposed
amendment. As of August 25, 1995, 434,612,710 shares of Common Stock were issued
and outstanding and 37,537,810 shares were reserved for issuance under the
Company's stock plans and employee stock purchase plan.
The Board believes that the proposed increase is desirable so that, as the
need may arise, the Company will have more flexibility to issue shares of Common
Stock without the expense and delay of a special stockholders' meeting, in
connection with possible future stock dividends or stock splits, equity
financings, future opportunities for expanding the business through investments
or acquisitions, management incentive and employee benefit plans and for other
general corporate purposes.
Authorized but unissued shares of the Company's Common Stock may be issued
at such times, for such purposes and for such consideration as the Board of
Directors may determine to be appropriate without further authority from the
Company's stockholders, except as otherwise required by applicable law or stock
exchange policies.
The increase in authorized Common Stock will not have any immediate effect
on the rights of existing stockholders. However, the Board will have the
authority to issue authorized Common Stock without requiring future stockholder
approval of such issuances, except as may be required by applicable law or
exchange
16
<PAGE> 20
regulations. To the extent that the additional authorized shares are issued in
the future, they will decrease the existing stockholders' percentage equity
ownership and, depending upon the price at which they are issued, could be
dilutive to the existing stockholders. The holders of Common Stock have no
preemptive rights.
The increase in the authorized number of shares of Common Stock and the
subsequent issuance of such shares could have the effect of delaying or
preventing a change in control of the Company without further action by the
stockholders. Shares of authorized and unissued Common Stock could (within the
limits imposed by applicable law) be issued in one or more transactions which
would make a change in control of the Company more difficult, and therefore less
likely. Any such issuance of additional stock could have the effect of diluting
the earnings per share and book value per share of outstanding shares of Common
Stock, and such additional shares could be used to dilute the stock ownership or
voting rights of a person seeking to obtain control of the Company. The Company
has previously adopted certain measures that may have the effect of helping to
resist an unsolicited takeover attempt.
REQUIRED VOTE
The approval of the adoption of the amendment to the Company's Certificate
of Incorporation requires the affirmative vote of a majority of the outstanding
shares of the Company's Common Stock. Abstentions and broker non-votes are not
affirmative votes and, therefore, will have the same effect as a vote against
the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION.
PROPOSAL NO. 5
RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has engaged Arthur Andersen LLP as its principal independent
public accountants to perform the audit of the Company's financial statements
for fiscal 1996. Arthur Andersen LLP has audited the Company's financial
statements for its last eight fiscal years. The Board of Directors expects that
representatives of Arthur Andersen LLP will be present at the Annual Meeting,
will be given an opportunity to make a statement at the meeting if they desire
to do so, and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE SELECTION OF ARTHUR ANDERSEN LLP.
STOCKHOLDER PROPOSALS
Stockholder proposals for inclusion in the Company's Proxy Statement and
form of proxy relating to the Company's 1996 Annual Meeting of Stockholders must
be received by May 18, 1996. Stockholder proposals should be addressed to
Raymond L. Ocampo, Jr., Senior Vice President, General Counsel and Corporate
Secretary, Oracle Corporation, Box 659507, Redwood City, California 94065.
17
<PAGE> 21
OTHER BUSINESS
The Board of Directors does not presently intend to bring any other
business before the meeting, and, so far as is known to the Board of Directors,
no matters are to be brought before the meeting except as specified in the
notice of the meeting. As to any business that may properly come before the
meeting, however, it is intended that proxies, in the form enclosed, will be
voted in respect thereof in accordance with the judgment of the persons voting
such proxies.
By Order of the Board of Directors,
LOGO
Raymond L. Ocampo, Jr.
Senior Vice President,
General Counsel &
Corporate Secretary
ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. THANK YOU FOR
YOUR PROMPT ATTENTION TO THIS MATTER.
18
<PAGE> 22
ORACLE CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS OCTOBER 9, 1995
The undersigned hereby appoints LAWRENCE J. ELLISON, RAYMOND J. LANE and
JEFFREY O. HENLEY, or any of them, each with power of substitution, as proxies
to represent the undersigned at the Annual Meeting of Stockholders of ORACLE
CORPORATION, to be held on Monday, October 9, 1995, at 1:30 p.m., in the Grand
Ballroom of the Hotel Sofitel, 223 Twin Dolphin Drive, Redwood City, California,
and any adjournment thereof, and to vote the number of shares the undersigned
would be entitled to vote if personally present on the following matters:
1. ELECTION OF DIRECTORS
FOR all nominees listed below (except as marked to the contrary below): / /
WITHHOLD AUTHORITY to vote for all nominees listed below: / /
Nominees: Lawrence J. Ellison, Donald L. Lucas, Delbert W. Yocam, James A.
Abrahamson, Michael J. Boskin, Jack Kemp, Raymond J. Lane and
Jeffrey O. Henley.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below)
--------------------------------------------------------------------------------
2. PROPOSAL TO APPROVE THE ADOPTION OF THE COMPANY'S EXECUTIVE OFFICER 1996
BONUS PLAN
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO APPROVE THE ADOPTION OF AN AMENDMENT TO THE COMPANY'S 1991
LONG-TERM EQUITY INCENTIVE PLAN
/ / FOR / / AGAINST / / ABSTAIN
4. PROPOSAL TO APPROVE THE ADOPTION OF AN AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION
/ / FOR / / AGAINST / / ABSTAIN
5. PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
/ / FOR / / AGAINST / / ABSTAIN
6. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting or any adjournment
thereof.
(Continued and to be signed on reverse side)
(Continued from other side)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY WILL BE
VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED FOR THE
EIGHT NOMINEES FOR ELECTION, TO APPROVE THE ADOPTION OF THE EXECUTIVE OFFICERS
1996 BONUS PLAN, TO APPROVE THE AMENDMENT TO THE 1991 LONG-TERM EQUITY INCENTIVE
PLAN, TO APPROVE THE ADOPTION OF THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION AND FOR THE RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN
LLP.
PROXY INSTRUCTIONS
1. Please sign exactly as the name
or names appear on stock
certificate (as indicated
hereon).
2. If the shares are issued in the
names of two or more persons,
all such persons should sign
the proxy.
3. A proxy executed by a
corporation should be signed in
its name by its authorized
officers.
4. Executors, administrators,
trustees, and partners should
indicate their positions when
signing.
Dated: , 1995
Signatures
STOCKHOLDERS ARE URGED TO DATE,
MARK, SIGN, AND RETURN THIS PROXY
IN THE ENVELOPE PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED
WITHIN THE UNITED STATES.
