Oracle gave Larry Ellison and his co-CEOs nearly $1 billion in stock options. By fiscal year end, all were underwater

Stock options awarded to Oracle executives are now worthless, meaning they will not receive the expected payout tied to stock appreciation.

In fiscal year 2026, Oracle granted stock options valued at nearly $1 billion to co-founder Larry Ellison and its co-CEOs. The grant-date valuation for these options totaled $988 million. However, by the end of the fiscal year on May 31, 2026, all of these stock options were underwater. This means their strike prices, the price at which they can be exercised, exceeded Oracle's stock price at that time. Ellison's award was valued at $117.8 million with a $280 strike price, while co-CEOs Clay Magouyrk and Mike Sicilia received options valued at $621.7 million and $248.7 million respectively, both with a $308 strike price. New CFO Hilary Maxson also received options underwater, though she opted for a mix of options and restricted stock units (RSUs) under a new program. Despite the decline in stock value affecting executive options, Oracle reported significant growth in its cloud business, with cloud revenue up 39% and cloud infrastructure revenue up 77%. Overall revenue increased by 17%, and remaining performance obligations more than quadrupled.

The significant value of stock options granted to Oracle's top executives, nearly $1 billion, highlights the intense competition and high compensation packages being offered to attract and retain talent in the cloud and AI sectors. While Oracle maintains that the structure of stock options is inherently performance-based and the current outcome is by design, the fact that these awards are now underwater suggests a disconnect between the company's strategic investments and its immediate stock performance. This situation could signal investor concerns about Oracle's significant capital expenditures and debt financing impacting its stock price, even as its cloud business demonstrates strong growth.

The widespread underwater options for executives, alongside reported staff cuts and a decline in median employee compensation, may lead to internal morale issues and scrutiny from shareholders. Oracle's strategy of offering substantial equity grants, particularly stock options, in a volatile market carries inherent risks for both the company and its leadership. Investors will be closely watching the upcoming shareholder vote on the compensation plan, which could influence future executive pay structures and reflect sentiment on the company's financial management and stock valuation strategies.