Welcome to the annual meeting for Oracle Corporation. Our host for today's call is Jeff Henley, Vice Chairman of the Board of Directors. At this time, all participants will be in a listen-only mode. I will now turn the call over to your host. Mr. Henley, you may begin.
Thank you. Good morning, ladies and gentlemen. I'm Jeff Henley, Vice Chairman of the Board of Directors, and I would like to welcome you to our annual meeting of stockholders. In accordance with the notice of the meeting, I call to order the forty-sixth annual meeting of the stockholders of Oracle Corporation. We will conduct the formal portion of the stockholders meeting in accordance with the agenda you see on your screen. Following the adjournment of the formal portion, there will be an opportunity for us to answer stockholder questions. Some of you have already submitted a question. If you submit a question at any time during this meeting in the space provided on the virtual meeting screen, we will ask that you please identify yourself. As a reminder, this meeting is being recorded.
So before proceeding to the business of the meeting, I'd like to introduce myself and the other directors, all of whom are standing for re-election. As mentioned, my name is Jeff Henley. I've been a director since 1995 and Vice Chairman since 2014. Previous to that, I served as Chairman. I was also previously Oracle's Chief Financial Officer from 1991 to 2004. Larry Ellison was appointed Chairman of the Board and Chief Technology Officer in 2014. Previously, Mr. Ellison was our CEO and has been a director since he founded Oracle in 1977. Safra Catz has been a director since 2001 and was appointed CEO of Oracle in 2014. Prior to that, Mrs. Catz served as the President and Chief Financial Officer. Dr.
Michael Boskin has been a director since 1994. Dr. Boskin is the Tully M. Friedman Professor of Economics and Wohlford Family Hoover Institution senior fellow at Stanford University. Jeff Berg has been a director since 1977. He's chairman of Northside Services, a media and entertainment advisory firm. Mr. Berg was formerly chairman and CEO of International Creative Management. Naomi Seligman has been a director since 2005. She's a senior partner at Ostrager von Simpson, a technology research firm that chairs the CIO Strategy Exchange. George Conrades has been a director since 2008. He's an executive advisor to Akamai Technologies and previously served as Akamai's chairman and CEO. Bruce Chizen has been a director since 2008. He's an independent consultant and serves as a senior advisor to Permira Advisers and as a strategic advisor at Voyager Capital.
He previously served as CEO of Adobe Systems. Secretary Leon Panetta has been a director since 2015. Secretary Panetta previously served as the U.S. Secretary of Defense and as director of the Central Intelligence Agency. He is the co-founder and chairman of the Panetta Institute for Public Policy. Renee James has been a director since 2015. She is the chairman and CEO of Ampere Computing, a provider of high-performance semiconductors for hyperscale cloud storage and edge computing. She's also an operating executive at The Carlyle Group. She previously served as president of Intel Corporation. Wick Moorman has been a director since 2018. He's currently a senior advisor to Amtrak, previously served as Amtrak's president and CEO. He also previously served as chairman and CEO of Norfolk Southern Corporation. Bill Parrett has been a director since 2018.
He previously served as CEO of Deloitte Touche Tohmatsu. Rona Fairhead has been a director since 2019. She previously served as Minister of State for Trade and Export Promotion in the Department for International Trade in the United Kingdom, and prior to that, she served as chair of the BBC Trust. Vishal Sikka has been a director since 2019. He is the CEO of Vianai Systems, a company that provides advanced software and services in artificial intelligence and machine learning. Awo Ablo has been a director since 2022. She is the Executive Vice President of Strategy and Partnership at the Tony Blair Institute for Global Change. Also present with me at the meeting is Brian Higgins, Oracle's Senior Vice President and Corporate Secretary. We will also be joined here today by representatives from Ernst & Young, our independent auditors.
They will be available during the question and answer session after the formal meeting to respond to appropriate questions. F inally, Oracle has appointed Broadridge Financial Solutions to act as Inspector of Elections. Catherine Blackwell, representing Broadridge, is with us today and has taken the oath of the Inspector of Elections. The minutes of last year's annual meeting are available, and any stockholder wishing to inspect the minutes should contact our corporate secretary. So now let's move on to the formal portion of the meeting. Brian Higgins will report on the mailing of the notice of this meeting.
... Thanks, Jeff. This meeting is held pursuant to a notice dated September 22, 2023. I have an affidavit of distribution from Broadridge Financial Solutions, certifying as to the giving of notice of this meeting and the sending of the proxy materials to stockholders of record as of September 18, 2023. All of which Broadridge commenced distributing to stockholders on September 22, 2023. I also have a copy of the 2023 annual report, which includes financial statements certified by Ernst & Young. A copy of this annual report was sent or made available to each stockholder entitled to vote at this meeting, and an electronic copy of the annual report is available on the website used to access this meeting. I also have the list of holders of record of common stock of the company at the close of business on September 18, 2023.
This list of stockholders has been open for re-examination for any purpose relevant to this meeting for the past 10 days. This list is available for inspection during this meeting by any stockholder on the website used to access this meeting. All documents concerning notice of the meeting, including proof of mailing, will be filed with the minutes of this meeting. This meeting is being held in accordance with Oracle's bylaws and Delaware law. A copy of the rules of conduct that govern today's meeting can be found in the Meeting Materials section of the web portal for today's virtual meeting. We ask that you abide by these rules in order to facilitate an orderly meeting.
Brian, will you now advise whether a quorum is present at the meeting and canvass the stockholders present? Those stockholders who have returned proxies have authorized the persons identified in the proxies to vote on the proposals coming before the meeting.
On the record date, there were 2,739,376,061 shares of Oracle's common stock issued, outstanding, and entitled to vote at this meeting. I have been informed by the Inspector of Elections that a majority of these shares is present in person or by proxy, and therefore a quorum necessary to transact business is present. It is now approximately 11:17 A.M. Eastern Time, 10:17 A.M. Central Time, and the polls are open but will close shortly. All Oracle stockholders entitled to vote at this meeting have the ability to do so online. If you are a stockholder entitled to vote and have not yet voted, or if you want to change your previously cast vote, please do so now. Please remember that if you have already voted by proxy, it is not necessary to vote again.
Once we complete the formal portion of the meeting, we will close the polls.
Thank you. I declare a quorum is present at this meeting. On behalf of Oracle's board, I'd like to express our appreciation for all stockholders who returned their proxies or who submit ballots. There are seven items of business on the agenda for this year's meeting, five management proposals and two stockholder proposals. So we will start with the management proposals. The first matter of business is the election of 15 directors to serve until the next annual meeting of stockholders. The nominees recommended by the board of directors are Larry Ellison, Jeff Henley, Safra Catz, Michael Boskin, Jeff Berg, Naomi Seligman, George Conrades, Bruce Chizen, Leon Panetta, Renee James, Wick Moorman, Bill Parrett, Rona Fairhead, Vishal Sikka, and Awo Ablo. Additional information about each of the nominees can be found on pages 12 through 16 of Oracle's proxy statement.
The next item of business is the non-binding advisory vote by stockholders on the compensation paid to Oracle's named executive officers, as disclosed in Oracle's proxy statement, filed in connection with this meeting. This is commonly referred to as the Say on Pay vote. The next matter is the non-binding advisory vote by stockholders on the frequency of future Say on Pay votes. Stockholders were given the option of selecting a frequency of one year, two years, three years, or abstaining. The board of directors recommended a frequency of one year. The proposal, which appears on page 84 of Oracle's... Sorry, I missed a page. Sorry.
So go back to the next item of business, which is the approval of an amendment to the Oracle Corporation Amended and Restated 2020 Equity Incentive Plan, as described in Oracle's proxy statement, filed in connection with this meeting. The final management proposal is the ratification of the appointment of Ernst & Young LLP as Oracle's independent registered public accounting firm by the Finance and Audit Committee of the Board of Directors. The Board of Directors recommends the ratification of the appointment of Ernst & Young as our independent registered public accounting firm for fiscal year 2024. The next item of business is the proposal submitted by our Arjuna Capital on behalf of Clark Freifeld and Andre Krasner, and by Proxy Impact on behalf of the Marguerite Casey Foundation, all of whom are stockholders of Oracle.
The proposal, which appears on page 84 of Oracle's proxy statement, requests that the company prepare a pay gap report. We understand that Julia Cederholm will represent Arjuna Capital at this meeting. Pursuant to the rules of conduct for the meeting, Ms. Cederholm has five minutes to present the proposal. Ms. Cederholm submitted the recorded presentation of the proposal in advance of the meeting. Operator, please play Ms. Cederholm's presentation.
Good morning. My name is Julia Cederholm from investment management firm Arjuna Capital, and I move Proposal Six, asking for a report on median and adjusted racial and gender pay gaps as a means to address pay inequity. As investors, we have worked with many of our portfolio companies to disclose pay gap data, and while 50% of the top 100 U.S. companies are now doing so, Oracle has failed to provide similar transparency. Best practice pay equity reporting consists of two elements: statistically adjusted numbers and unadjusted median numbers. Adjusted pay data compares how minorities and women are paid for the same roles as their white male peers, but that data alone does not account for who holds what jobs, ignoring the structural racism and sexism that relegate people of color and women into low-paying job categories.
That's why unadjusted median pay data is also needed, as it assesses equal opportunity to high-paying jobs and allows investors to understand how money is allocated at Oracle by demographic. This unadjusted median pay data shows us, quite literally, how companies assign value to their employees through the roles they inhabit and the pay they receive. Narrowing median pay gaps requires a comprehensive evaluation of hiring, development, and promotion practices. Median pay data also provides an adjustable data point for investors to assess how the company stacks up to peers and makes progress over time. Many peers are showing leadership by publishing both adjusted and median pay data, including Microsoft and Adobe. In doing so, they are creating a new standard for accountability and performance. I am frustrated to say that Oracle is not, despite its stated commitment to diversity and inclusion.
While Oracle states that analysis of pay gaps is not the same thing as promoting pay equity, a large body of research proves otherwise. The U.S. Equal Employment Opportunity Commission Chair, Charlotte Burrows, recently stated that its analysis of company-collected pay data confirms what the EEOC have long known. Collecting and analyzing pay data can be a useful tool in preventing and combating pay discrimination in American workplaces. This is exactly why countries like the UK and Ireland mandate reporting of median pay gaps. They recognize that pay gaps can only be rectified when they are no longer hidden from public view. We have also seen in real time how reporting pay gaps works to narrow gaps. For example, Citigroup has shrunk its median racial and gender pay gaps 3% each since it began public reporting.
I am surprised that despite a large body of research outlining the business value of managing pay equity and a growing number of peers that are actively reporting this data, that Oracle is fighting this simple and reasonable request. Thank you for your support of transparent, fulsome, and honest pay equity accounting.
Okay, thank you. The board opposes this proposal for the reasons described in the proxy statement. The next item of business is the proposal submitted by John Chevedden on behalf of Kenneth Steiner, a stockholder of Oracle. This proposal, which appears on page 89 of Oracle's proxy statement, requests the board adopt a policy requiring the board chairman to be an independent member of the board. We understand that John Chevedden will represent Kenneth Steiner at this meeting. Operator, please unmute the line of John Chevedden. Pursuant to the rules of conduct for the meeting, you'll have five minutes to present the proposal.
Hello, this is John Chevedden. Proposal Seven, Independent Board Chairman. Shareholders request that our board of directors adopt the policy and amend the governance documents to require that the chairman of the board be an independent, independent member of the board. Although it would be better to have an immediate transition to an independent chairman, the board would have the discretion to phase in this policy for the next chief executive officer transition. If the board determines that a chairman is no longer independent, the board shall select a new chairman who satisfies the requirements of the policy within a reasonable amount of time. This proposal topic won 52% support at Boeing, and Boeing responded by naming an independent board chairman. This proposal topic also won 50+% support at five major U.S. companies in one year, including 73% support at Netflix.
It is important to have an independent board chairman to build up the oversight role of the directors of Oracle. The following directors received more than 500 million against votes each at the 2022 annual meeting: Bruce Chizen, George Conrades, Wick Moorman, Leon Panetta, Naomi Seligman. These 500 million against votes each are worse than they seem, since Mr. Lawrence Ellison, who controls 35% of the vote, is believed to have voted in favor of these directors. These directors, unfortunately, have an oversized influence on the key committees of the board of directors. There's also a long history of shareholders rejecting Oracle's excessive executive pay. The rejection has ranged from 32% to 55%, and this covers each year between 2015 and 2022. A 5% rejection of executive pay is often the norm at well-performing companies.
The 32%-55% rejection is worse than it seems, because Mr. Ellison, who controls 35% of the vote-
... as believed to have voted in favor of this excessive executive pay. This proposal topic won 44% support at previous Oracle annual meeting. This 44% support represents majority support from the non-insider Oracle shares. Please vote yes. Proposal 7, Independent Board Chairman.
Thank, thank you. The board opposes this proposal for the reasons described in the proxy statement.
The polls will close shortly. If you intend to vote, you need to do so now. We will pause briefly to allow any final votes to come through. It is now approximately 11:28 A.M. Eastern Time, 10:28 A.M. Central Time, and the polls are now closed. We will now announce the preliminary voting results. Final vote totals for each of the proposals voted upon today will be made publicly available on a Form 8-K within four business days.
Will the Secretary please announce the results of the vote to elect 15 directors to serve until the next annual meeting of stockholders?
Each nominee for election to the Board of Directors has received the affirmative vote of a majority of Oracle shares of common stock present and entitled to vote at this meeting.
I declare that all the nominees for director have been duly elected. Next, will the Secretary please indicate the results of the Say on Pay vote?
This proposal also received the affirmative vote of a majority of Oracle shares of common stock present and entitled to vote at this meeting.
Thank you. The advisory Say on Pay vote is hereby noted. Will the Secretary please announce the results of the vote on the frequency of future Say on Pay votes?
A majority of Oracle shares of common stock present and entitled to vote at this meeting, voted for a frequency of one year for future say-on-pay votes.
Okay, thank you. The advisory vote on the frequency of future say on pay is hereby noted. Next, will the Secretary please announce the results of the vote to amend the Oracle Corporation amended and restated 2020 Equity Incentive Plan?
This proposal received the affirmative vote of a majority of Oracle shares of common stock present and entitled to vote at this meeting.
Thank you. The equity plan proposal has been approved. Next, will the Secretary please indicate the results of the vote to ratify the appointment of Ernst & Young LLP as Oracle's independent registered public accounting firm for the fiscal year 2024.
This proposal received the affirmative vote of a majority of Oracle shares of common stock present and entitled to vote at this meeting.
So the appointment of Ernst & Young as Oracle's independent registered public accounting firm for fiscal year 2024 has been duly ratified. Next, will the Secretary please announce the results for the stockholder proposal requesting that the company prepare a pay gap report?
This proposal was defeated by a majority of Oracle shares of common stock present and entitled to vote at this meeting.
I declare that the stockholder proposal requesting that the company prepare a pay gap report has been defeated. Finally, will the Secretary please announce the results for the stockholder proposal regarding independent board chairman?
This proposal was defeated by a majority of Oracle shares of common stock present and entitled to vote at this meeting.
I declare that the stockholder proposal regarding an independent board chairman has been defeated. So this concludes the formal part of this meeting, which is now adjourned. We are now at the part of the meeting providing for general questions and discussion. If you have a question regarding Oracle and its business, please follow the instructions provided on the virtual meeting screen. We ask that you please identify yourself when submitting a question. Please note that our answers to stockholder questions may include expectations, predictions, estimates, or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they're subject to risks and uncertainty that could cause actual results to differ materially.
You should review our most current Form 10-K and Form 10-Q for a discussion of risks that may affect our future results or the market price of our stock. You are cautioned not to place undue reliance on forward-looking statements, which reflect our opinions only as of today. Please keep in mind that we're not obligating ourselves to update these forward-looking statements in light of new information or future events.
Though we may not be able to answer every question, we will endeavor to answer as many stockholder-submitted questions as time permits, that comply with the meeting rules of conduct and are germane to Oracle's business. The first question we have, Larry, is: How does Oracle expect artificial intelligence to affect the company and its customers going forward?
Well, Oracle participates in two parts of the AI ecosystem. We are both a cloud infrastructure provider and we are a cloud applications provider. So in the infrastructure area, Oracle offers services of very, very large-scale computers called GPU Superclusters to do AI training and to create AI models and to specialize those models for different professions, let's say engineering or or let's say mechanical engineering, medicine, law, and a variety of other, you know, specialized professions. But we also do create what is called or help train what are called foundational models, where we provide services to companies like Cohere, Elon Musk's xAI, where they're training their foundational models at Oracle.
It was also recently announced that Microsoft is going to use Oracle's AI services in conjunction with their Bing search engine. Oracle has a very, very good and broad relationship with Microsoft in the infrastructure area. Oracle also, as I said, is in the cloud applications business, where we take these specialized AI models, let's say, in healthcare, and we prepare automatically. The system automatically will prepare a draft of doctor's notes when doctors meet with patients, whether it's an in-person meeting or a telemedicine meeting. When the doctors and the patients converse, we create a summary of that conversation and the specific actions the doctor takes as regards the healthcare of that patient.
We create a draft of that without the doctor having to sit down and type it out in front of a screen. That draft, of course, is then the doctor has to read. The AI system creates the draft. The doctor reads and edits and then signs and approves the draft of the doctor's orders, which might be giving the patient a prescription, ordering some kind of surgery, dismissing, releasing the patient from the hospital. Really, any kind of order a doctor might give in a hospital as regards to the patient. We use it in a bunch of other applications as well.
We have, for public safety, when there's an incident where a police officer is involved in a public incident or a fire department official is involved in a public incident, they also will draft a report on the fire or on, let's say, an arrest of some kind. That draft now is created by our AI systems, the public safety draft, and then the fire, you know, the fire officials or the public safety officials then review that draft and sign that draft. So a lot of manual processes, a lot of writing that used to be done by human beings are now not replaced by AI, but assisted by AI that generates the draft that the professional then reads, edits, signs, and submits.
So this is impacting everything from building recommendation engines in e-commerce, which is an AI process. If you wonder why, you know, why certain movies are recommended to you at Netflix. By the way, Netflix is not, you know, using Oracle's AI. They've been doing this for a long time. But a lot of people use Netflix, and they get a list of different movies that are similar to the movies that they have watched and rated highly before. That recommendation engine is done with something called a vector database and AI.
Oracle is enhancing its own database, the Oracle Database, to support vectors and in support of a variety of AI applications, including, but not limited to, recommendation engines. So in summary, everything from the basic training of AI models and low and powerful GPU superclusters, all the way up to specific applications in a variety of different industries, Oracle is participating in all of that, which we think this is going to be. Oracle is now a leader or the leader in training AI models, foundational models. W e think it's going to have a huge impact on Oracle's business, but also a huge impact on all of our customers' businesses. This is the most important new technology in the history of computing.
Thanks, Larry. The next question we have is, given the acquisition of Cerner, how can Oracle change modern healthcare, and what are the challenges to achieving this?
Well, by probably the first quarter of next calendar year, Oracle will have well over 1,000 Cerner hospitals and Cerner customers moved from on-premise to the cloud, which will make those systems much more secure and much more reliable. People may not know this, but an awful lot of systems, government systems, hospital systems are vulnerable to takeover by cyber attackers, and then their data gets ransomed. Oracle is moving as quickly as possible to move all of those Cerner customers into Oracle's cloud data centers, which are highly secure and have never been subjected to ransomware. So that's one of the things we're doing, and we're making great progress on that. But we're doing much more than that.
We're greatly broadening the level of the kind of service that the Cerner applications provide. It used to be fairly complicated if you go in and if you're a doctor, and you're having a meeting with a patient, and you want to pull up the patient's latest X-rays. You might have to call in an expert to help you find that patient's X-rays. No longer. Right now, we're adding voice interfaces to the new, what we call, New Millennium. The Cerner system that automates the hospital is called Millennium. The Oracle enhancements to that system and improvements to that system are called New Millennium. In New Millennium, you simply say, "Please find me Larry Ellison's latest X-rays." You have a voice UI.
Even if you're in the middle of surgery, and you're, and you have gloves on and a mask on, you still can use a voice, voice AI to direct the system and, and retrieve whatever data you need, to do your job. So we're making the systems dramatically easier to use, dramatically more secure. We're adding a variety of features that did not exist before. We're integrating clinical trials, with the hospital systems. We're integrating payment authorizations between insurance companies and, and providers, like hospitals and ambulatory clinics. We're automating that. We're helping hospitals manage their workforce. This has never been done before. Manage their work, manage their workforce. We're helping hospitals. It's never been done by Cerner before. We're helping hospitals, manage, find, manage their inventory, automatically reorder.
A broad, broad range of new features and new functions are going into the Cerner Millennium product, and it's being done in a seamless way, where they get these new features, every, you know, every episodically. They get new features every three months or new features every six months, that make the system easier to use with voice interfaces, that make the system more reliable, more secure, easier to log on to, easier to manage the workforce. So that's going extremely well. We recently received a number of new contracts, a number of new customers, for Cerner. So the business is growing nicely, and we're very, very happy with the progress we've made on the technology side of the Cerner acquisition and on the business side of the Cerner acquisition.
That's great. Thanks, Larry. That concludes the question and answer session.
Okay. All right. Ladies and gentlemen, thank you for attending today's meeting, and be well.
This now concludes the meeting. Thank you for joining, and have a pleasant day.