Oracle Gave Larry Ellison and His Co-CEOs Nearly $1 Billion in Stock Options — And by Year End, All of Them Were Underwater

 

Oracle Gave Larry Ellison and His Co-CEOs Nearly $1 Billion in Stock Options — And by Year End, All of Them Were Underwater

**By a Market Analyst & Business News Writer | September 26, 2026**

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## The $988 Million Bet That Went Bust

Let me tell you about a compensation package that should make every Oracle shareholder stop and think.

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. That's nearly a billion dollars in potential pay — one of the largest executive compensation packages ever assembled in corporate America.

By the time the fiscal year ended on May 31, 2026, **every single one of those options was underwater**. Not just down. Not just underperforming. Completely, utterly, "no intrinsic value" underwater, as Oracle's own proxy statement admitted .

The strike prices — the price at which the options could be cashed in — were set at the peak of Oracle's AI-fueled rally. Ellison's options carried a strike price of **$280**. Co-CEOs Clay Magouyrk and Mike Sicilia had a strike price of **$308** .

On Friday, Oracle stock closed at **$137.10**, down **53% over the past 12 months** .

For Magouyrk and Sicilia to see a single dime from their options, Oracle stock would need to **more than double** from its current level .

That's not a compensation plan. That's a lottery ticket. And right now, it looks like the lottery ticket lost.

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## The Anatomy of a $988 Million Underwater Bet

Let's break down exactly who got what, and why it went so wrong.

### The Packages

| Executive | Role | Grant Value | Strike Price | Status |

|-----------|------|-------------|--------------|--------|

| **Larry Ellison** | Co-founder, CTO, Executive Chair | **$117.8 million** | **$280** | Underwater |

| **Clay Magouyrk** | Co-CEO | **$621.7 million** | **$308** | Underwater |

| **Mike Sicilia** | Co-CEO | **$248.7 million** | **$308** | Underwater |

**Source: Oracle proxy statement, Fortune** 

Magouyrk and Sicilia received their packages just days after their **September 2025 promotions** to co-CEO, succeeding Safra Catz, who remains executive vice chair .

### The Stock Price Collapse

Oracle stock closed at **$137.10** on Friday, September 25, 2026. The 52-week high was **$322.54**. The stock is down **53% over the past 12 months** .

For context, the S&P 500 gained nearly **16% over the same period** . Oracle hasn't just underperformed. It has been obliterated.

### The "No Intrinsic Value" Admission

Oracle's proxy statement, published Friday, was remarkably blunt about the situation. It noted that the awards "had no intrinsic value" at fiscal year end .

The strike prices on the options are higher than the current price of Oracle's stock. That means exercising them would mean paying more for shares than they're currently worth on the open market.

This isn't a paper loss. This is a **$988 million compensation plan that currently pays out zero**.

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## Oracle's Defense: "This Means the Plan Is Working"

Here's where the story gets genuinely fascinating — and genuinely infuriating, depending on your perspective.

Oracle's board doesn't see this as a failure. They see it as **proof that their compensation philosophy is working as intended**.

In its proxy statement, Oracle told investors that the fact that Ellison and the co-CEOs' options had no intrinsic value means the plan is working as intended. Stock options, the board argued, "are strongly performance-based" .

"The Compensation Committee did not take any special actions to compensate executives for potential losses in stock option value," the company wrote .

The board's logic is this: Stock options only pay out if shareholders win. If the stock goes up, executives get rich. If the stock goes down, executives get nothing. That's alignment. That's performance-based pay.

And in a narrow, technical sense, they're right. Unlike restricted stock units (RSUs), which pay out regardless of stock performance, options only have value if the share price exceeds the strike price. That's why options have largely disappeared among Fortune 500 companies in favor of performance shares and RSUs — they're too risky for most executives to accept .

Oracle's board is essentially saying: *We gave them lottery tickets. The lottery didn't pay out. That's how lotteries work.*

But here's what that argument conveniently ignores.

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## The $4.9 Million Question: What They Got Anyway

Even though their stock options are worthless, Ellison, Magouyrk, and Sicilia didn't walk away empty-handed.

All three received **$4.9 million in cash bonuses** for fiscal 2026 .

And Ellison — a man worth approximately **$200 billion** — got a raise. His base salary jumped from **$1 per year** to **$950,000**, the same as Magouyrk and Sicilia .

Let that sink in for a moment. Larry Ellison, one of the richest people on the planet, was paid a $1 salary for years as a symbolic gesture. Now, in a year when his company's stock collapsed 53% and his options went underwater, he's getting a nearly $1 million raise.

The optics are brutal. But Oracle would argue that the raise was part of a standardized compensation package for all three executives, reflecting the competitive market for AI and cloud talent.

### The Pledged Shares Problem

Meanwhile, Ellison has been using his massive Oracle holdings as collateral for personal loans. In September 2026, he pledged **67 million more Oracle shares**, worth about **$9.2 billion**, as collateral — bumping his pledged shares up **19% since last year** .

About **36% of Ellison's total Oracle holdings** are now pledged . The move is tied to the Paramount Skydance takeover of Warner Bros. Discovery, where Ellison and his son David have committed **$47 billion in equity** for the buyout .

When a founder pledges more than a third of his stake in a company whose stock is down 53%, it raises uncomfortable questions. If Oracle's stock falls further, could Ellison face margin calls? And what would that mean for the company?

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## The Bigger Picture: Oracle's AI Bet Is Under Pressure

The underwater options aren't happening in a vacuum. They're a symptom of a company whose **AI-fueled stock rally has reversed violently**.

### The Force Majeure Controversy

On Thursday, September 24, Oracle shares fell **5%** after Bloomberg reported that the company sent a **"force majeure" notice** to the developer of its massive New Mexico data center project, a unit of Blue Owl Capital .

Force majeure is a legal clause that allows a party to escape contractual obligations due to unforeseeable circumstances. In plain English: **Oracle is trying to protect itself from financial consequences if the project is delayed** .

The project is called **Project Jupiter** — a $165 billion data center campus in Santa Teresa, New Mexico, designed to handle **2.45 gigawatts of power** . It's a cornerstone of the broader Stargate AI infrastructure buildout.

The force majeure notice signals that Oracle is worried about the project's timeline and its own financial exposure. Investors noticed.

### The Financial Pressure

Oracle's situation is precarious by several measures:

- **Free cash flow**: Negative **$45.85 billion** (levered free cash flow) 

- **Total debt**: **$169.14 billion** 

- **Debt-to-equity**: **251.72%** 

- **52-week stock decline**: **-50.65%** vs. S&P 500's **+15.96%** 

The company is burning cash at an extraordinary rate to fund its AI infrastructure ambitions, while its stock price collapses and its executive compensation plans go underwater.

### The Analyst View

Despite the carnage, Wall Street remains surprisingly bullish. According to **43 analysts** polled by S&P Global, Oracle stock has a consensus rating of **"Buy"** with an average price target of **$237.97** — implying **73.57% upside** from the current price .

The bull case rests on Oracle's cloud business, which grew revenue **17.35%** in fiscal 2026 to **$67.36 billion**, and its massive **$638 billion remaining performance obligations** backlog .

The bear case is simpler: The company is spending money it doesn't have on infrastructure that may never generate the returns investors expect.

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## Frequently Asked Questions (FAQs)

### Q1: What happened to Oracle's executive stock options?

Oracle awarded Larry Ellison and co-CEOs Clay Magouyrk and Mike Sicilia stock options with a combined grant-date value of **$988 million** in fiscal 2026. By the time the fiscal year ended on May 31, 2026, **all of the options were underwater** — meaning their strike prices were higher than Oracle's stock price .

### Q2: What are the strike prices on the options?

Ellison's options have a strike price of **$280**. Magouyrk and Sicilia's options have a strike price of **$308** . Oracle stock closed at **$137.10** on Friday, September 25, 2026 .

### Q3: How much would Oracle stock need to rise for the co-CEOs to profit?

For Magouyrk and Sicilia to cash in on their options, Oracle stock would need to **more than double** from its current price to exceed $308 per share .

### Q4: Did the executives get any money anyway?

Yes. All three received **$4.9 million in cash bonuses** for fiscal 2026. Ellison also received a raise, going from a base salary of **$1 to $950,000** — the same as the co-CEOs .

### Q5: Why does Oracle say the plan is working?

Oracle's board argues that the fact the options had no intrinsic value means the plan is working as intended. Stock options "are strongly performance-based," the board stated, and the Compensation Committee "did not take any special actions to compensate executives for potential losses in stock option value" .

### Q6: Why did Oracle stock fall so much?

Oracle stock is down **53% over the past 12 months** due to concerns about the company's massive AI infrastructure spending, negative free cash flow, rising debt levels, and a controversial "force majeure" notice on its Project Jupiter data center in New Mexico .

### Q7: Is Oracle stock a buy now?

That depends on your risk tolerance. The consensus analyst price target is **$237.97**, implying **73.57% upside** . However, the company faces significant execution risks and its stock has been extremely volatile. Consult a financial advisor before making any investment decisions.

### Q8: What is Project Jupiter?

Project Jupiter is a **$165 billion data center campus** in Santa Teresa, New Mexico, designed to handle **2.45 gigawatts of power**. It's a cornerstone of Oracle's AI infrastructure buildout. Oracle recently sent a force majeure notice to the developer, signaling concerns about the project's timeline .

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## Conclusion: A $988 Million Lesson in Risk and Reward

Oracle's executive compensation fiasco is, in one sense, a success story. It's a rare example of a board that refused to bail out its executives when their performance-based pay didn't perform. No special bonuses. No repriced options. No "retention grants" to make up for the losses. Just a simple acknowledgment: The bet didn't pay off, and that's the point of performance-based pay .

But in another sense, it's a cautionary tale about the dangers of tying executive compensation to the stock price of a company making an enormously risky bet on an emerging technology.

Oracle is spending tens of billions of dollars on AI infrastructure. It's burning through cash. It's taking on enormous debt. And its stock has been cut in half as investors question whether the returns will ever materialize.

The executives who bet their compensation on that gamble lost. But they still got **$4.9 million in cash bonuses** and, in Ellison's case, a **$950,000 salary** after years of working for $1 .

The shareholders who bet on Oracle's AI story lost **53% of their investment** in a year when the S&P 500 gained nearly 16% .

That's the uncomfortable truth at the heart of this story. The executives got a raise. The shareholders got a lesson in risk.

And Oracle's board is telling investors that this is how it's supposed to work.

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## Disclaimer

This article is for informational and educational purposes only and does not constitute financial, investment, or executive compensation advice. The information contained herein is based on publicly available sources as of September 26, 2026. Stock market investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. The author and publisher are not responsible for any financial decisions made based on the information presented in this article. Always consult a qualified financial advisor before making any investment decisions. The author does not hold positions in any of the securities mentioned.

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