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Oracle Corporation
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 Investor Presentation October 2014 |
 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. 2 Executive Summary Pay-for-Performance. We substantially strengthened our executive compensation plan by: 1) making 50% of long-term equity performance based; 2) Requiring material long-term outperformance for vesting; 3) Allowing vesting for PSUs to go to zero for underperformance Strong Performance and Commitment to Stockholder Returns. Oracle had Total Revenues of $38.3B for FY2014. Approximately 90% of aggregate FY2013 and FY2014 Free Cash Flow, or roughly $24.4B was returned to Oracle stockholders Strong Governance Practices. We have a strong, independent Board that serves the interests of stockholders and we are committed to best practices in corporate governance and pay governance Stockholder Engagement. During our last fiscal year, members of our Board met with investors and shared the diverse and wide-ranging feedback with the full Board. We made changes to our executive compensation for FY2015 based on common elements of the investor feedback. We are engaging in additional meetings to gauge investor reactions to these changes and seek support for the 2014 Annual Meeting |
 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. 3 Overview of Oracle Cloud 4% of Revenue US$38.3 billion total GAAP revenue in FY 2014 100% of the Fortune 100 are customers Over 400,000 customers in 145+ countries Invested $5.2 billion in R&D in FY2014 More than 120,000 employees #1 provider of enterprise software worldwide and leading provider of hardware and services for Oracle database and middleware software, application software, cloud infrastructure, and hardware systems Asia Pacific 16% of Revenue EMEA 31% of Revenue Americas 53% of Revenue On-Premise Software 72% of Revenue Hardware 14% of Revenue Services 10% of Revenue |
 Company Transformation One of Oracle’s primary areas of focus over the next few years is becoming the #1 company in cloud computing’s two most profitable segments – SaaS and PaaS Software Revenue Cloud Revenue 4 FY10 FY11 FY12 FY13 FY14 IaaS SaaS/PaaS +88% +12% 4 Year CAGR 0 5 10 15 20 25 30 FY10 FY11 FY12 FY13 FY14 Software and Cloud 4 Year CAGR Copyright © 2014, Oracle and/or its affiliates. All rights reserved. |
 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. Demonstrated Results ~ 90% of FY13/FY14 Free Cash Flow Returned to Stockholders Free Cash Flow Grew 14% CAGR EPS Grew 14% CAGR Source: GAAP results except for EPS and Free Cash Flow. GAAP to Non-GAAP reconciliations are available at www.oracle.com/investor Stock chart: FactSet Research. Prices for the last 10 years were indexed (10/04 – 9/14) 5 0 2 4 6 8 10 12 14 FY10 FY11 FY12 FY13 FY14 Buybacks Dividends FY10 FY11 FY12 FY13 FY14 $8.5B $10.8B $13.1B $13.6B $14.3B FY10 FY11 FY12 FY13 FY14 $1.67 $2.22 $2.46 $2.68 $2.87 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Oracle S&P 500 Nasdaq Dow Jones Oracle Stock Has Outperformed |
 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. Significant Compensation Changes for FY 2015 We made significant changes for FY 2015… Introduced Performance Stock Units (“PSUs”) PSUs are earned based on relative or absolute performance depending on each NEO’s position PSUs are long-term, performance based, and subject to robust metrics tailored to business responsibilities Significantly reduced number of shares subject to stock option granted to Mr. Ellison, Ms. Catz, and Mr. Hurd …consistent with areas of investor focus Performance-based (relative and absolute) compensation Long-term performance periods Quantum of pay and dilution 6 The Board and Compensation Committee have taken steps to meaningfully enhance our compensation program and increase responsiveness to our stockholders We engaged with 13 of our top 20 stockholders, representing approximately 30% of unaffiliated shares in the last fiscal year to hear their views and discuss areas of concern regarding governance and compensation |
 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. 7 Compensation Program Overview & Objectives * Excludes approximately 1% tied to “All Other Compensation” (e.g., the amount related to all perquisites and other personal benefits) Our goal: Align the interests of executive officers with those of stockholders; provide incentives to executive officers for superior performance; and attract and retain highly talented and productive executive officers Compensation Element Designed to Reward Annual & Long-Term Incentive Metrics % of 2014 NEO Comp* Performance- Based/ “At Risk” Base Salary Experience, industry knowledge, duties, scope of responsibility N/A 2% Annual Performance- Based Cash Bonus Success in achieving annual results Bonus based on growth in non-GAAP Pre-Tax Profits from FY2013 to FY2014 If non-GAAP pre-tax profits do not grow Y-o-Y, no bonus is paid $0 bonus in FY2013 and 16% of target bonus in FY2014 1% Long-Term Incentive Compensation Success in achieving sustainable long-term results 50% of target PSUs are tied to relative growth in total consolidated revenues on a U.S. GAAP basis 50% of target PSUs are tied to relative growth in total consolidated operating cash flow (OCF) Objective relative performance metrics – both revenue and OCF growth requires relative performance above the weighted average of the peer group for target payout, and performance in the bottom quartile of peer group results in zero payout 96% |
 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. 8 Compensation Best Practices Vast majority of executive compensation is “at risk” or performance based o 96% of Named Executive Officer (“NEO”) compensation is equity-based o 50% of NEO long-term incentives are now structured as long-term, performance-based units o Annual incentive bonus is based on rigorous, objective metrics Strong historical pay-for-performance alignment Engagement efforts with investors on executive compensation o In the last fiscal year, we engaged with 13 our top 20 investors representing approximately 30% of the unaffiliated shares o Directors participated in a majority of these engagements Meaningful stock ownership guidelines for NEOs and directors, with executives and directors holding 25% of Oracle’s stock Double trigger change-in-control benefits under equity plan Clawback policy for executive officers Independent compensation consultant |
 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. 9 Sound Corporate Governance Practices Annual director elections Stockholder ability to call a special meeting Stockholder ability to act by written consent Director majority voting policy Diverse and experienced Board with significant stockholder representation Independent Presiding Director Committees are 100% independent Active and engaged Board, with several independent directors serving on multiple committees, participating in key customer events (e.g., Oracle OpenWorld and Oracle President Council Forums) |
 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. 10 Proxy Access Stockholder Proposal The Oracle Board of Directors opposes the “proxy access” proposal submitted by The Nathan Cummings Foundation and certain other stockholders for the following reasons and requests that stockholders vote “against” this proposal: Existing Governance Mechanisms Ensure Board Accountability – All directors elected annually with majority vote standard • Directors who fail to receive majority vote must tender their resignations for Board consideration – No supermajority stockholder voting requirements and no “poison pill” – Stockholders already have the right to call special stockholder meetings (subject to conditions in the Oracle bylaws) Stockholders Currently Have Avenues to Communicate with the Board – Stockholders may communicate with any director in writing – – Stockholders have the ability to submit proposals through 14a-8 Proxy Access Undermines Processes of the Nomination and Governance Committee – N&G Committee specifically tasked to find the right nominees with the appropriate skill sets the Oracle Board needs – Proxy Access would allow for a nominee with a narrow focus beholden to one specific special interest group to potentially join the Oracle Board Potentially Adverse Consequences if Oracle Board Were to Adopt Proxy Access – Encourages short term focus for the benefit of one group of stockholders rather than the long term benefit for all stockholders – Significant disruption to Oracle’s management team and the Board as a result of dealing with distraction of divisive proxy contests • stockholders – Potential disruption to the effective operation of existing Board with special interest directors creating dissention and precluding the Board’s ability to function effectively – Potentially discourages highly qualified director candidates from serving on the Oracle Board Both time and financial resources would be deployed to deal with proxy contests which is a distraction from the goal of increasing value for all Stockholders may propose director nominees to the Nomination and Governance Committee for consideration |
 Copyright © 2014, Oracle and/or its affiliates. All rights reserved. 11 "Safe Harbor" Statement: Statements in this presentation relating to Oracle's future plans, expectations, beliefs, intentions and prospects are "forward- looking statements" and are subject to material risks and uncertainties. A detailed discussion of these factors and other risks that affect our business is contained in our SEC filings, including our most recent reports on Form 10-K and Form 10-Q, particularly under the heading "Risk Factors." Copies of these filings are available online from the SEC or by contacting Oracle Corporation's Investor Relations Department at (650) 506-4073 or by clicking on SEC Filings on Oracle’s Investor Relations website at http://www.oracle.com/investor. All information set forth in this presentation is current as of October 15, 2014. Oracle undertakes no duty to update any statement in light of new information or future events. SAFE HARBOR STATEMENT |
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