Oracle share price up, under investor pressure over executive pay

Two European pension funds wrote a letter for Oracle Corp, including concerns over the companys compensation structure and the boards inability to communicate with shareholders.

Else Bos and Chris Hitchen, CEOs of Netherlands PGGM N.V. and Railways Pension Trustee Company Ltd, one of the biggest pension funds in the UK, respectively, have requested a meeting with Oracles board in order to discuss their concerns.

According to the letter, published on PGGMs website, the US software companys board has been avoiding their requests for four years. During the period PGGM and Railways have written several letters to “certain directors to begin a constructive dialogue for addressing our governance concerns.”

However, those letters were never received by Oracles board, the CEOs said, outlining the publishing as a way to reach the board as otherwise there is an “untenable barrier” for shareholders to communicate directly with the board.

“The way we’ve been rebuffed is unprecedented,” Catherine Jackson, a senior adviser for responsible investments at PGGM, said in an interview for Bloomberg. “We have never gone through four years of having legitimate governance concerns and writing to companies and not having the opportunity to address the concerns directly to the board.”

The pension funds also expressed concerns over the higher governance risk in companies in which the founder is acting as CEO or taking other leadership role, citing their experience as global investors.

Larry Ellison, who founded of what is now known as Oracle in 1977, was serving as CEO until last year, when he became executive chairman and chief technology officer. Mr. Ellison owns around 25% of Oracles stock.

Executives pay is another concern for the pension funds, despite last years reduction from $78 million in 2013 to $67.3 million in Mr. Ellisons compensation.

Regardless of the small share of Oracle they own, 0.16%, Railways and PGGM said their worries are also shared by other investors. Over the past three years the better half of the shareholders have voted against the executive compensation scheme.

The two funds demanded in the letter that Oracle delivers a “compensation structure that shareholders can support” and “develop a policy to allow shareholders to communicate effectively and directly with the board.” The companies also intent to send the letter to the US Securities and Exchange Commission.

Oracle Corp gained 0.32% on Friday and closed at $44.19 in New York, marking a one-year increase of 15.83%. The company is valued at $194.05 billion.

According to CNN Money, the 34 analysts offering 12-month price forecasts for Oracle have a median target of $47.00, with a high estimate of $57.86 and a low estimate of $34.00. The median estimate represents a 6.36% increase from the last close price.