Oracle awarded co-founder Larry Ellison and its newly minted co-CEOs stock option packages with a combined grant-date value of $988 million in fiscal 2026. By the time the fiscal year ended on May 31, every one of those options was underwater.
The grant came during a year in which Oracle's cloud business boomed and shares posted a 38% total return. But the stock's path turned sharply after the awards were set near the peak. Oracle stock closed Friday at $137, down 53% in the past 12 months.
Ellison's award was valued at $117.8 million when it was granted in October and carries a strike price of $280. The exercise price for co-CEOs Clay Magouyrk and Mike Sicilia is $308. Their packages were valued at $621.7 million and $248.7 million, respectively, after their September 2025 promotions. Oracle said the stock needs to more than double for Magouyrk and Sicilia to cash in on their options.
Oracle's proxy statement said the awards 'had no intrinsic value' at fiscal year end. The company also said the reason for the size of the grants was the competitive hiring market for veteran cloud and AI leaders. The board said stock options are 'strongly performance-based' and said the fact that Ellison and the co-CEOs' options had no intrinsic value means the plan is working as intended.
The numbers come first. Oracle disclosed that cloud revenue rose 39% to $34 billion, cloud infrastructure revenue grew 77% to $18.1 billion, and overall revenue increased 17% to $67.4 billion. Remaining performance obligations ballooned to $638 billion by fiscal year-end, compared with $138 billion last fiscal year.
But the balance sheet tells a different story for capital discipline. Free cash flow was negative $23.7 billion, Oracle sold $43 billion of senior notes, and during the summer it sold $20 billion of stock at $141 a share. Bloomberg also reported this week that Oracle's decision to invoke force majeure on a New Mexico data center sent the cost of insuring its debt against default to a record.
Ellison, Magouyrk and Sicilia still received $4.9 million in cash bonuses each. Ellison also got a raise, with base salary increasing from $1 to $950,000. New CFO Hilary Maxson, appointed in April 2026, opted into Oracle's new 'Equity Choice Program' and put $10.4 million into restricted stock units; the rest of her award is in options priced at $185, which are also underwater.
Oracle's compensation structure is a reminder that Wall Street rewards growth, but it also punishes excess when the market has already voted. Big stock awards only look cheap when shares keep climbing. When the price breaks, those paper gains turn back into risk, and the taxpayer is not the one left paying the bill.
