Ellison’s estimated share of Oracle’s new quarterly dividend: $57.5 million

oracle-ellisonOracle shareholders got a pleasant surprise this week when the Redwood City software giant said it would begin paying its first ever dividend. One shareholder in particular was no doubt especially pleased, though probably not surprised: Oracle founder and chief executive, Larry  Ellison, who sits on the board and is also its largest stockholder.

When his company makes its first quarterly dividend payment of 5 cents per share on May 8, Ellison’s payment will amount to $57.5 million, based on the 1.15 billion shares he owned according to a regulatory filing last August.

Over the course of a year, if Oracle continues to pay the dividend and Ellison doesn’t sell any share, that would add up to $230 million.

Oracle’s move appears especially bullish in light of the rash of blue chip companies that have recently cut or even eliminated the practice. Oracle joins a relatively small number of high-tech companies that pay a regular dividend, including some two dozen in Silicon Valley, or about 9 percent of local companies.

Oracle’s arch-rival, German-based SAP — from whom Oracle said it gained market share in all regions during its last quarter — has been paying its shareholders a dividend for a decade, including more than $800 million last year. Oracle will be seeing that and raising it to over $1 billion, based on quarterly 5-cent dividend payments on the 5 billion shares the company currently has outstanding.

As recently as August, Oracle said its policy was to “reinvest earnings to fund  future growth”, and that it did not anticipate paying a cash dividend “in the foreseeable future.”

When Oracle released its third quarter results Wednesday, President Safra Catz said the company “generated $8 billion in free cash flow over the last  twelve months and we are running our business at  record operating margins,” adding that  “this is the right time to declare a dividend for our stockholders.”

The news sent Oracle shares up 10 percent  the next day on twice the volume as the day before. (Shareholders of record as of April 8 will be eligible to receive the payments.)

Last year, Ellison — who submits his own proposal for how much he should be paid each year to the Oracle compensation committee — was paid nearly $85 million last year, including a $1 million salary, a $10.8 million cash bonus and an option grant on 7 million shares valued at $71.3 million.

When the world’s biggest software company, Microsoft, first began paying a dividend to its shareholders in 2004, that company’s co-founder, Bill Gates, said he would pay his $3 billion share to the Bill & Melinda Gates Foundation, his philanthropic organization.

We asked Oracle  whether Ellison’s new-found dividend wealth will have any effect on his regular compensation as CEO, and what he plans to do with the extra money.

While the company had nothing to say on those topics, a spokesperson did say that, “Oracle shareholders are thrilled and have had an overwhelmingly positive response to our dividend offering.”

 

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  • RC

    I guess it is nice that stockholders are actually getting something for their investment in Oracle, but this line from the balance sheet for Oracle on Yahoo Finance tells the real story:

    http://finance.yahoo.com/q/bs?s=ORCL

    Total Stockholder Equity
    22,821,000 23,816,000 23,025,000 20,815,000
    Net Tangible Assets
    ($3,867,000) ($2,597,000) ($3,361,000) $1,732,000

    This is the data for the last 4 quarters. It turns out that the bulk of the stockholder equity is in ‘intangible assets’. So shareholders now have almost negative $4billion in tangible assets. They should hope that none of the ‘Goodwill’ has to be written down since it represents over 50% of Oracles assets.

 
 
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