Okay. Good morning, ladies and gentlemen. I'm Jeff Henley, Chairman of the Board of Directors, and it's my pleasure to welcome all of you. In accordance with the notice of the meeting, I call to order the 36th Annual Meeting of the Stockholders of Oracle Corporation. Each stockholder was given agenda for today's meeting.
We will first conduct the formal part of the shareholders meeting in accordance with this agenda. Following adjournment of the formal portion of the meeting, I will have a presentation, after which we'll have an opportunity for questions and discussion. Before proceeding to the business of the meeting, I would like to make certain introductions. First, I would like to introduce myself and the other directors who are standing for election. As I mentioned, my name is Jeff Henley.
I've been a director since June 1995 and Chairman since January 2,004. I previously served as Oracle's Chief Financial Officer from March 1991 to July 2004. Larry Ellison has been our Chief Executive Officer and a Director since he founded Oracle in June 1977. Doctor. Michael Boskin has been Director of Oracle since April 1994.
He currently is Chair of the Nomination and Governance Committee and Vice Chair of the Finance and Audit Committee. Michael is the Tully M. Friedman Professor Hoover Institution Senior Fellow at Stanford University. Jeff Berg has been a Director since February 1997 and is currently a member of the Nomination and Governance Committee and Independence Committee. He is the Founder and Chairman of Resolution, a talent and literary agency as well as former Chairman and Chief Executive Officer of International Creative Management Inc, one of the largest talent agencies in the entertainment industry.
Safra Katz has been a director since October 2000 and 1 and is a President and Chief Financial Officer of Oracle. Hector Garcina Molina has been a Director since October 2001 and is currently a member of the Independence Committee. He is the Leonard Bosack and Sandra Lerner Professor in the Department of Computer Science and Electrical Engineering at Stanford University. Ray Bingham has been a Director since November 2002 and serves as the chair of both the Finance and Audit Committee and the Independence Committee and is an alternate member of the Nomination and Governance Committee. He is an advisory director of General Atlantic LLC, a leading global private equity firm.
Naomi Seligman has been a director since November 2005 and is currently a member of the compensation committee. She is a senior partner at Ostergaard von Simpson, a leading technology research firm, which chairs the CIO Strategy Exchange. George H. Conradis has been a Director since January 2008 and is currently a member of the Nomination and Governance Committee and the Compensation Committee. He is the Chairman of Akamai Technologies Inc.
And previously served as Akamai's Chief Executive Officer. Bruce R. Chisholm has been a Director since July 2008 and is currently the Chair of the Compensation Committee and a member of the Finance and Audit Committee. He's an independent consultant and serves as senior advisor to Premier Advisors LLP, a leading private equity firm and as a venture partner at Voyager Capital. He previously served as Chief Executive Officer of Adobe Systems Incorporated.
Mark V. Hurd has been a Director since September 2010 and is President of Oracle. Prior to joining Oracle, he was Chairman and CEO of Hewlett Packard Company. Seated next to me is Dorian Daly, Oracle's General Counsel and Secretary. Also present today from Ernst and Young LLP, our independent registered public accounting firm are Remco Bartman and David Cabral.
Prior to this meeting, we asked if E and Y wish to make any statements at today's meeting and they indicated that while they will not make a formal presentation, they would be glad to respond to any questions during the question and answer period. Finally, we are assisted today by Joshua McKinnon, a representative of American Stock Transfer and Trust Company LLC, our Inspector of Elections and in tabulation of the proxies and ballots. 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 to the formal portion of the meeting. So Dorian Daley will now report on the mailing of the notice of this meeting.
Mr. Chairman, this meeting is held pursuant to a notice dated September 20, 2013. On or about September 20, 2013, each stockholder of record as of the close of business on September 3, 2013, was sent either a notification of Internet availability of proxy materials or the notice itself. All documents concerning notice of the meeting will be filed with the records of the meeting. A proof of mailing and the list of stockholders entitled to vote are both available for inspection by any stockholder wishing to do so.
Dorian will now advise whether a quorum is present at the meeting and canvas 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 approximately 4,000,00569,000,000 220,069 shares of Oracle's common stock issued outstanding and entitled to vote at this meeting. A majority of these shares is present in person or by proxy and therefore a quorum necessary to transact business is present. If you have a proxy to be voted at this meeting that has not been delivered to the Inspector of Elections, you should register your name with the monitors and show them the proxy. If you have submitted a proxy but now wish to withdraw the proxy and submit a new proxy or vote in person, you should register with the monitors if you have not already done so. If you have not submitted a proxy and you wish to vote in person, you should now register with the monitors if you have not already done so.
Please raise your hand if you need to register your name with the monitors or if you require any assistance with your ballot or your proxy.
I think someone went over there.
Gentleman over here.
Right over here.
The polls will close at the conclusion of the formal portion of the meeting. So please be sure to register with the monitors and hand in your ballot or proxy prior to the conclusion of the formal portion of the meeting.
Thanks, Dorian. I hereby declare a quorum is present at this meeting. On behalf of the Board of Directors of Oracle, I would like to express our appreciation to all stockholders who return their proxies or submitted ballots. There are 9 items of business on the agenda for this year's meeting, 4 management proposals and 5 stockholder proposals. Final vote totals for each of the proposals voted upon today will be made publicly available within the next few days.
So we'll start with the management proposals. The first matter to be acted upon by the stockholders is the election of 11 directors to serve until the next annual meeting of stockholders. I've just introduced the nominees recommended by the Board of Directors and additional information about them is in the proxy statement. Nominations are now in order.
Hector Garcia Molina, Ray Bingham, Naomi Seligman, George Conrades, Bruce Chisholm and Mark Hurd.
And is there a second to these nominations?
I second the nominations.
It's been moved and seconded that the nominations be elected the nominees be elected directors of Oracle. Will the secretary now announce the results of the vote?
Each nominee for election to the Board of Directors has received an affirmative vote of a majority of Oracle's outstanding shares of common stock present and entitled to vote at this meeting.
So 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. So will the secretary please indicate the results of the voting?
Based on preliminary numbers available at the start of this meeting, 1,000,000,000 560,628,544 shares voted for the say on pay resolution.
2,040,000,000,8954
shares voted against the say on pay resolution and 23,352,597 shares abstained.
Thank you. The non binding advisory vote on Oracle's compensation program for executive officers is hereby noted. So the next item of business is the approval of the amendment of the 2000 long term equity incentive plan. This amendment and the 2000 long term equity incentive plan generally are described in our proxy statement. Is there a motion that the amendment to the 2,000 long term equity incentive plan be approved?
I move that the amendment to the 2000 Long Term Equity Incentive Plan be approved.
Okay. And is there a second to the motion?
I second the motion.
Okay. It's been moved and seconded that the amendment to the 2,000 long term equity incentive plan be approved. Will the secretary now announce the results of the vote?
This proposal received the affirmative vote of a majority of Oracle's outstanding shares of common stock present and entitled to vote at this meeting.
So I hereby declare that the amendment to the 2000 long term equity incentive plan be approved, is approved. The next matter is the ratification of the appointment of Ernst and Young LLP as our independent registered public accounting firm by the Finance and Audit Committee of the Board of Directors. Is there a motion to ratify the appointment of Ernst and Young as our independent registered public accounting firm?
I move to ratify the appointment of Ernst and Young as Oracle's independent registered public accounting firm.
Is there a second to the motion?
I second the motion. Okay.
It's been moved and seconded to ratify the appointment of Ernst and Young as our independent registered public accounting firm. Will the secretary now announce the results of the vote?
This proposal received the affirmative vote of a majority of Oracle's outstanding shares of common stock present and entitled to vote at this meeting.
The appointment of Ernst and Young to audit the financial statements of Oracle and its subsidiaries for fiscal year 2014 has been duly ratified. Okay. The next matter being submitted to the stockholders' fraction is the adoption of the proposal submitted by Jing Zhao, a stockholder of Oracle. The proposal requests that Oracle establish a Human Rights Committee, including independent relevant human rights experts to review, assess, disclose and make recommendations to enhance Oracle's policy and practice on human rights. We understand that Jing Zhao will present and I'm sorry if I didn't pronounce the name correctly will present the proposal.
Is he present? Yes. Okay. So pursuant to the rules of conduct for the meeting, you will have up to 5 minutes to present the proposal and move for its adoption.
Thank you. Resolution for Oracle 2013 Shareholders Meeting on Human Rights Committee. Be it resolved that the following proposal be adopted by Oracle shareholders. Oracle will establish a human rights committee, including independent, relevant human rights expert to review, assess, disclose and make recommendations to enhance the company's policy and the practice of human rights. Among others, the Human Rights Committee will solicit public import and to issue periodic reports to shareholders and the public on the committee's activity, findings and the recommendations and adopt any other measures consistent with applicable principles and law.
Support statement from the Chinese Tiananmen tragedy in 1989 to the recent Harbor Spring Movement human rights issue have become the most important international concerns for every company doing business globally, especially the human rights concern of the international companies doing business in repressive countries is from the core issue of legitimacy. What I mean legitimacy, it's not like a license from a government, but from the representative or people's view of point, you are doing business here. But so what's the principle, the value? And so what's the purpose of doing business here? As the world's largest provider of enterprise software and the leading provider of computer product and services, including cloud computing, which involves many human rights issues such as privacy, freedom of express.
Our company also has extensive business in representative countries, including China, where people are basically human rights were severely violated. For example, I myself was deprived of my Chinese citizenship without any writing document because I authorized human rights activity in Japan during the 1980 Taino Massacre. On the other hand, our company has neither a human rights policy nor an organization or mechanism to deal with human rights issues. For example, our 2010 Corporate Citizenship report admits nowhere to report human rights concerns in our company. So no wonder the independent think tank U.
S.-China Comparative Policy Research Institute ranked our company C- in corporate social responsibility index, I want to say another word about the Board statement. The Board statement does list some policy and award, but I want to say there's no way to verify how the company implemented its policy. And in fact, I or we do not see any meaningful dialogue or communications with independent relevant human rights. I say this because I myself has been in the Bay Area for almost 20 years and I have extensive communications with many companies including, for example, Intel, Microsoft, Cisco, HP, Boeing, Chevron, even Goldman Sachs. But I did not see any indication that our company has the intent or the purpose to have dialogue with relevant parties of human concerns.
So I urge our shareholders to vote for this proposal. Thank you very much.
Okay. Thank you. The Board opposes adoption of the stockholder proposal. While we share the proponents concern for human rights, we believe that adoption of the stockholder proposal is unnecessary as well as potentially adverse to the interest Oracle and our stockholders. We are a socially responsible company that regards human rights issues very seriously and we strive to promote within our own workforce amongst other things the improvement of working conditions, personal freedoms and diversity.
Our standard business practices require adherence to local, state, federal, international laws and regulations on labor and environmental matters and enforcement of our long standing code of ethics and business conduct, which requires our employees to comply with such laws in the numerous countries in which we operate. Furthermore, we often go above and beyond these laws with our efforts to enrich the quality of life in the communities where we operate. We were included on the Human Rights Campaign List of Best Places to Work in 2012 2011 and on the Ethisphere Institute's list of World's Most Ethical Companies in 2,009 and 2,008. In 2012, we were named to the 100 Best Corporate Citizens List published by Corporate Responsibility Magazine. We feel that our existing and continuing evolving policies, practices and procedures relating to human rights effectively addresses the concerns contained in this proposal and do not demonstrate the need for additional time and expense to be spent on the establishment and operation of an additional and unnecessary board committee.
Consequently, the board does not believe the proposal is in the best interest of Oracle or its shareholders and is recommended against this stockholder proposal. It's been moved that the stockholders proposal called calling for an establishment of a Board Committee on Human Rights be approved. Will the Secretary now announce the results of the vote?
This stockholder proposal was defeated by a majority of Oracle's outstanding shares of common stock present and entitled to vote at this meeting.
Okay. So I hereby declare that the stockholders proposal calling for establishment of a board committee on human rights has been defeated. The next matter being submitted to stockholders for action is the adoption of the proposal submitted for the 2nd year in a row by Kenneth Steiner, a stockholder of Oracle. The proposal request that our Board of Directors adopt a policy that whenever possible, the Chairman of our Board of Directors shall be an independent director. And we understand that Xin Zhao will represent Kenneth Steiner at this meeting.
So again, pursuant to the rules of conduct for the meeting, you have up to 5 minutes to present the proposal and move for its adoption.
Resolved shareholders request that our company of directors adopt a policy that whenever possible, the Chairman of our Board of Directors shall be an independent director. An independent director is a director who has now served as our Executive Officer of our company. This policy should be implemented so as not to warrant any contractor obligations in effect when this resolution is adopted. The policy should also specify how to select a new independent Chairman if current Chairman ceases to be independent between annual shareholder meetings. To foster flexibility, this proposal gives the option ability to this arrangement can hinder our Board's ability to monitor our CEO's performance.
An independent Chairman is prevailing practice in the United Kingdom and many international markets. These proposal topics won more than 50% vote from our independent shares in 2012 in spite of deceptive management response to the 2012 proposal. This proposal topics worth 1 50% plus support at 3 major U. S. Companies in 2012, including 55% support at Simpola Energy.
This proposal should also be evaluated in the context of our company's overall corporate governance as reported in 2013. TMI Ratings, an independent investment research firm, has rated our company D continuously since 2006 with high governance risk, also high concern for our directors' qualifications and very high concern in executive pay, RMB69,000,000 for our CEO, Lawrence Ellison, plus our excessively high executive pay received only 32% support from our shares outstanding. Bruce Cheesen, George Konark and Naomi Silkemann received our highest negative votes, 33% to 38% and made up 100% of Executive Pay Committee. 7 directors had 11 to 36 years long tenure. GMI ratings and director independence erode after 10 years.
4 Directors were Oracle Executives. Our Board did not have an independent Chairman or an independent Lead Director, and 2 directors served together on the Board of Akamai Technologies. These factors, according to question, our Board's ability to act as an effective counterbalance to management. Our company awarded stock options with a grand date value of over 237,000,000 for our 4 highest paid executives. These options will market price and simply vote over time.
Equity Pay should have job performance requirement in order to assure align with shareholder interest. Market price stock options may provide reward to our executive due to rising market run regardless of individual job performance. Mr. Allison also realized over RMB31 1,000,000 from the exercise of RMB2,200,000 options in 2012. Additionally, our executive pay program continued to lack performance based equity pay for long term incentive and the annual bonus was tied to a single financial performance measure.
Please vote to protect shareholder value. Independent Board Chairman, Proposal 6. Thank you very
much.
Okay. Thank you. The Board continues to oppose the adoption of this proposal. We do not have a formal policy mandating that the offices of Chairman and CEO continue to be separated. We believe it's important that the Board retain flexibility to determine whether the role should be separate or combined based upon the Board's assessment of the company's needs and Oracle's leadership.
The board believes that adopting a policy that requires an independent Chairman would unduly limit the Board in determining the leadership structure that is in the best interest of Oracle and its stockholders at any particular point in time. The Board has deep knowledge of the strategic goals of the company, the unique opportunities and challenges it faces, and the various capabilities of our directors and senior management. Thus, rather than taking a one size fits all approach to board leadership, the board is best positioned to determine the most effective leadership structure for Oracle. And while we do not have a policy mandating an independent lead director, we believe that a number of non employee directors fill the lead director role at various times, including during executive sessions, depending upon the particular issues that are involved. So currently the board does not believe the proposal is in the best interest of Oracle or its stockholders and has recommended against the stockholder proposal.
It's been moved that the stockholders proposal regarding independent board chairman be approved. Will the secretary now announce the results of the vote?
This stockholder proposal was defeated by a majority of Oracle's outstanding shares of common stock present and entitled to vote at this meeting.
So I hereby declare that the stockholders proposal regarding the independent Board Chairman has been defeated. The next matter being submitted to Stockholders for Action is the adoption of the proposal submitted by Bruce T. Herbert, the Chief Executive of Investor Voices on behalf of the Equality Network Foundation, a stockholder of Oracle. The proposal request that the board amend Oracle's governing documents to provide that all matters presented to stockholders for a vote shall be decided by a simple majority of the votes voted for and against
a particular
item or withheld in the case of board elections. This requested policy would apply to all matters unless stockholders have approved higher thresholds or applicable laws or stock exchange regulations dictates otherwise. We understand that Samantha Rayner and Duffy Tillman will represent Equality Network Foundation at this meeting. Is Ms. Raynor and Mr.
Tillman present. Okay. So pursuant to the rules of the conduct of the meeting, you will have up to 5 minutes to present the proposal and move for its adoption.
Good morning. My name is Sami Rayner from San Francisco. I stand today on Investor Voice of Seattle to present Proposal Number 7, which calls for Oracle to embrace fair and accurate vote counting. It is a deplorable yet surprisingly unknown fact that in Corporate America, not all shareholder votes are counted in the same way. At Oracle, when shareholders open their ballots, they are presented with a choice to vote for, against or to abstain on most items.
However, it's a false choice because those three options are not treated consistently throughout the proxy. It may come as a surprise to learn that Oracle uses 2 different vote counting formulas in its proxy, each of which favor management to the detriment of company shareholders. To be clear, Oracle is not required to have 2 different folk counting formulas. They choose to do so. Where it incorporated in New York State, Oracle would be mandated to use a single fair and consistent vote counting formula across the board, the very formula that this proposal requests.
So here's how it works. On proposal number 1, the director election, a voter cannot choose to abstain. The option is just not there. Because abstain votes are removed from the formula, it boosts the percent tally on this company sponsored proposal and maximizes the appearance of support from management slate of directors. In contrast, on proposal 7 and other shareholder sponsored resolutions, the situation is different.
An abstain vote is possible and does get counted. But what then happens is Oracle essentially changes every abstain vote to count as against. Doing this lowers the percent tally and depresses support for shareholder supported items. So most people would call this stacking the deck, which in a game of cards is considered cheating. But it's no different when a company votes in ways that improve management's chances while harming our shareholders.
This matters because these practices manipulate vote tallies and can be enough to take a majority vote, one that rightfully earned over 50% of shareholder support and allow management to claim that it had failed. Oracle's policies do not respect voter choice. Why does the company offer shareholders a misleading choice, one that ignores voter intent on shareholder sponsored items and effectively changes each abstain vote to count in favor of management. These manipulations are just not becoming of a company that excels to greatness in so many other aspects of its operations. Therefore, to put Oracle on the right track of good corporate governance in regard to fair and accurate vote counting, please cast your vote for proposal number 7.
And remember, until our voices are heard and these policies are changed, any vote to abstain on this proposal will arbitrarily count against your hope. Thank you.
Okay. Thank you. The board opposes the adoption of this proposal. We believe our current voting tabulation methodology of including abstentions on matters other than the election of directors best reflects and honors the intent of our stockholders who choose to abstain on a proposal. This standard applies identically to both management sponsored and stockholder sponsored proposals and ensures that a matter has the requisite affirmative support for approval by our stockholders.
As a Delaware corporation, Delaware corporate law governs the voting standards for actions by our stockholders and our existing voting standards are fully compliant with Delaware law standards. We believe that the approval of this stockholder proposal would not further compliance with our high standards, would be inconsistent with the default Delaware law standards, followed by a majority of Delaware corporations and would not enhance the stockholder value or serve the best interests of our stockholders. Our Board is committed to strong corporate governance and we have already established highly effective corporate governance structures and processes. We do not believe this proposal will enhance our corporate governance in any meaningful way. Consequently, the board does not believe the proposal is in the best interest of Oracle or its stockholders and is recommended against this stockholder proposal.
So it's been moved that the stockholders proposal regarding vote tabulation be approved. Will the secretary now announce the results of the vote?
The stockholder proposal was defeated by a majority of Oracle's outstanding shares of common stock present and entitled to vote at this meeting.
So I hereby declare that the stockholders proposal regarding vote tabulation has been defeated. The next matter to be submitted for the 2nd year in a row to stockholders for action is the adoption of the proposal submitted by the Comptroller of the City of New York, John C. Liu as custodian and trustee of the New York City Employees Retirement System, the New York City Fire Department Pension Fund, the New York City Teachers Retirement System and the New York City Police Pension Fund and as custodian of the New York City Board of Education Retirement System. The proposal request that the compensation committee of the Board of Directors is setting in setting performance measures for top executives include multiple weighted metrics that correctly reflect both individual and business accomplishments over an established multiyear period and excluding proprietary information disclose to the shareholders any changes made in the basket of metrics during the multiyear period. We understand that Michael Price Jones will represent the City of New York, Office of the Controller at this meeting is Michael Price Jones present.
Okay. So pursuant to the rules of conduct for the meeting you have up to 5 minutes to present the proposal and move for its adoption.
Thank you. Ms. Daly, I hope this isn't out of order, but could you just repeat the say on pay vote? I got so lost with all the zeros.
I can, but why don't we get through your proposal. You've got 5 minutes to get through. Okay.
Thank you. I hereby move proposal number 5 on behalf of the New York City Comptroller, John Liu and the trustees of the New York City Pension Funds. The proposal asked that the Board set performance measures for its top executives using multiple targets that correctly reflect both individual and business accomplishments over an established multiyear period. The proposal does not direct the compensation committee to utilize specific metrics and therefore does not infringe on the committee's ability to set remuneration packages. Compensation consultant firms recommend the use of multiple for performance measures in setting executive pay.
The consulting firm Mercer for example believes that performance measures often have to be complex to be effective and the performance measures should cover a range of relevant dimensions of performance. Relying on a single metric as does Oracle may incentivize excessive risk taking and encourage executives to focus on a single aspect of the company's performance rather than on a relevant set of dimensions as Mercer recommends. The use of multi year performance measures performance period may better align executive pay with the interest of long term shareholders such as the New York City Funds. Over 90% of Oracle CEO compensation is not performance based, it's stock options which are time vesting. And the small portion that is relies on a very single metric non GAAP pre tax earnings.
Because of the resulting disconnect between pay and performance, the New York City funds were among the shareholders who cast 59% of the vote against the company's say on pay proposal last year. The company, as many shareholders have been stating, has not followed up with any fundamental changes to its compensation program and thus proxy advisory firms are once again recommending against the proposal. Glass Lewis, for example, states that the best remuneration policies are those that are based on a variety of performance metrics, which better gauges the company's overall financial health and performance and more effectively aligns the interests of executives with those of shareholders. ISS contends that support for the proposal would send a strong message to the Board to adopt compensation programs that utilize multiple performance metrics and better link executive pay to performance. We believe the company is not fully addressing the risks of long term performance from its compensation design.
And consequently, we urge other shareholders to support the proposal. At the same time, given the depth of our concerns over Oracle's pay and the Board's failure to address to respond to last year's rejection of the say on pay, the New York City funds are also voting against members of the compensation committee and once again against the ratification of the company's stay on pay. Thank you.
Okay. Thank you. The Board opposes the adoption of this proposal. Despite the proponents statements to the contrary, we believe that our current executive compensation program is significantly performance driven. We continue to effectively link pay to performance by allocating a vast majority of our executive officers' total compensation to performance based vehicles, either in the form of annual performance cash bonuses, which require improved financial performance in the form of year over year growth in non GAAP pre tax profits or stock options which require an increase in the stock price to have any value.
We believe that our existing executive compensation program achieves an appropriate balance between encouraging our senior executives to take actions that are consistent with our business strategy of constantly improving our performance and building long term shareholder value and discouraging executives from taking inappropriate or unnecessary risks. Consequently, the board does not believe the proposal is in the best interest of Oracle or its shareholders and as recommended against the stockholder proposal. It's been moved that the stockholders performance stockholders proposal regarding multiple performance metrics be approved. Will the secretary now announce the results of the vote?
This stockholder proposal was defeated by a majority of Oracle's outstanding shares of common stock present and entitled to vote at this meeting.
Okay. I hereby declare that the stockholder's proposal regarding multiple performance metrics has been defeated. So the next matter being submitted to the stockholders for action is the adoption of proposals submitted by the AFL CIO Equity Fund, a stockholder of Oracle and a co and co sponsored by Trowel Trade S and P 500 Index Fund in the City of Philadelphia each also stockholders of Oracle. The proposal requests that the compensation committee adopt a policy that all equity compensation plans submitted for stockholder approval after the 2013 annual meeting of the stockholders under Section 162M of the Internal Revenue Code will specify the awards that will result from performance. This will require stockholder approval of quantifiable performance metrics, numerical formulas and payout schedules for at least a majority of awards to the named executive officers.
We understand that Thomas McIntyre will represent the AFL CIO Equity Fund at this meeting. Is Thomas McIntyre present? Okay. So pursuant to the rules of conduct for the meeting, you'll have up to 5 minutes to present the proposal and move for its adoption.
Thank you, Mr. Chairman, and good morning to everyone. I'm Tom McEntire here to present proposal number 9 on behalf of the TrialTrades S and P 500 and NICS Fund, the City of Philadelphia Board of Pensions and Retirement and the AFL CIO Equity Index Fund. Now this proposal sounds complicated, but it's pretty simple. The company has a long term equity plan that provides executives with stocks and stock and options when they meet certain performance targets.
The company gets a tax break on these equity awards because the plan is based on performance and improved by shareholders. What this proposal asks is for the company to give us enough information to evaluate these types of plans when the Board submits them to us and other shareholders for our approval. That is no more than what's required by the IRS. That is the equity awards must be based on performance that's approved by shareholders. The trick is getting that performance in plain language from the company.
What we now excuse me, what we have now under the equity plan is a laundry list of 23 different metrics the company says it considers. There's no information about which metrics are actually used and how they're calculated and what amount of boards is given to the executives. Without clarity from the Board, shareholders are giving the compensation committee a blank check to pick whichever metrics and calculations it chooses. This is even more concerning because of the past several years, the Board has sat by despite persistent pay for performance mislimin. Our executives received outside compensation by average performance.
The Board's role is to protect shareholders' interest and responding to our concerns would be a step in the right direction. We urge shareholders to support this resolution and the Board to consider implementing it. And just one quick question, the paper
We're happy to take that, but let's do it in the Q and A session, okay? All right. Okay. All right. So thank you.
The Board opposes the adoption of this proposal. We believe that our current procedures to determine equity compensation awarded to our named executive officers are fair and transparent, serve the best interests of our stockholders and advance the objectives of our executive compensation program by driving performance to create long term shareholder value and providing compensation opportunities that are competitive with those offered by companies with whom we compete for executive talent. Implementing the rigid requirements contained in this proposal would restrict our flexibility to adapt to performance metrics and performance targets to changing market conditions and in turn hinder our ability to retain, attract and motivate talented executives. Furthermore, we believe that certain aspects of the proposal are unclear. For instance, it's unclear whether a majority of the awards refers to greater than 50% of the actual number of awards granted, granted to the named executive officers or greater than 50% of the aggregate compensation resulting from the awards.
The proposal fails to specify whether it will apply only to new equity compensation plans submitted for stockholder approval or also to amendments to our long term equity incentive plan. Additionally, the proposal provides no guidance on how awards should be valued. So consequently, the board does not believe the proposal is in the best interest of Oracle or its stockholders and is recommended against this stockholder proposal. It's been moved that the stockholders proposal regarding quantifiable performance metrics be approved. Will the secretary now announce the results of the vote?
The stockholder proposal was defeated by a majority of Oracle's outstanding shares of common stock present and entitled to vote at this meeting.
Okay. So I hereby declare the stockholders proposal regarding quantifiable performance metrics has been defeated. So this concludes the formal part of the annual meeting. Is there a motion that the meeting be adjourned?
I move that the meeting be adjourned.
Was there a second? I second. Okay. It's been moved and seconded that the meeting be adjourned. Is there any opposition to the motion?
Okay. The formal part of the meeting is adjourned and the polls are now closed. So I'd now like to make a brief business overview of Oracle. But before moving to that, I'd like the secretary to read our safe harbor statement.
Today's discussion 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 uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revisions of these forward looking statements in light of new information or future events. Throughout today's discussion, we'll attempt to present some important factors relating to our business that may affect our predictions, And you should also review our most recent Form 10 ks and Form 10 Q for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock.
A PDF copy of our related earnings press releases and financial tables, which include a GAAP to non GAAP reconciliation, can be viewed and downloaded on the Oracle Investor Relations website at www.oracle.com/investor.
Okay. So let me stand up here and Okay. So we're going to we'll run through these slides and then we'll go to Q and A. So we've covered the Safe Harbor and the non GAAP. All right, so again, this is a chart that we've shown for a number of years now and it is really, I think, a great way of explaining what's been built and acquired over the years at Oracle.
We have put together a very complete stack of technology. We have storage, hardware, server hardware, networking, virtual machine, operating systems, databases, middleware applications. So it's changed dramatically over the years as the company has built a much, much broader complete stack of technology that we can sell to thousands, hundreds of thousands of customers around the world. Some of the biggest parts of the messaging is around the fact that every layer in that stack has to be very competitive. We call it we have to have really terrific best of breed capability at every layer.
We have to use open standards. We have to be able to interoperate obviously with other technology platforms. But we also believe that having strong vertical integration between those layers is a really necessary and extra value add for our customers. So we work very hard to integrate all the logical points between the various products in that stack. And one of the things that we've done with the advent of being getting into the hardware business a few years ago is we also believe that by being able to vertically integrate and have our engineering departments work closely together in these various stacks like our database and hardware, we can create very, very extreme performance and that's what we call our engineered systems.
And so the company has continued to announce newer broaden its offerings, if you will, of engineered systems. And we think it's a tremendous value to the customers to be able to get the stack integrated at the database level with hardware and so forth. And the other thing that we do, we started out many years ago as an on premise company. Basically, people bought our software and deployed it in their data center. That's changed over the years.
And today, we have a very thriving business around private clouds, public clouds, and then many customers are using all 3 together. And we call that the hybrid sort of approach that people are using today. So the business has certainly evolved over the years. We've gotten much bigger and broader and the way we offer our products has changed quite a bit over the years. We are obviously known still as the leading database company in the world and we're very proud of that.
But we have lots of number one status, if you will, across that large stack of things I talked about. So this is a list of some of the areas where we have the number one position today. Oracle is a big and growing company. Last year, in our fiscal year that ended in May, we did approximately $37,000,000,000 in revenue. We have 100 of 1000 of customers, about 120,000 employees.
We're all over the world. Lots of developers, millions of developers using our technologies. The heart of a company like Oracle is its developers, 35,000 of those 120,000 employees are engineers and developers. And so the statistics are, I think, impressive. The company has come a long ways and we're still going.
We're still adding to those numbers each year. So this is the results for the last fiscal year, which ended May and then our most recently announced Q1, which ended in August. And I'll kind of we'll show a couple of charts after this that put a little more color on this. But our software business, which is made up of our new license sales on our support business, has been pretty consistent. Last year, it grew 7% and this year, it grew 8%.
And these again are these are non GAAP numbers, which we think the best portrayal of how these numbers work. And they're also in constant currency. So they take out the effect of changes in exchange rate. So this is the way we tend to look at the company internally and how we run the company. We also provide GAAP numbers and explain the differences in currency and all that.
Our hardware business has been declining. However, we think that and we've said publicly that we believe that the mix of our hardware business is quite good and all the new engineered systems and the newer products are actually growing quite nicely. And so we feel very good about the hardware business, but it's being recast into a different kind of hardware business that we think adds a lot more value for the customers. So that part of our business is doing well and we think we'll eventually be the bigger part of our business. And so we should begin to see hardware growth at some point.
Services business is relatively small and that's been shrinking a bit. So as you'll see in a minute, the big part of our business is our software business that's doing well. Our operating income continues to grow. Our margins in the Q1 always a bit smaller than the rest of the year. So our margins didn't dip as much as just it's a Q1 seasonal kind of thing more than anything.
Earnings per share continue to grow nicely and we continue to generate a lot of cash and we'll talk about how we use that cash in a little more detail. But geographically, here's the mix of our business for all that revenue and 53% of it in the Americas, 30% in EMEA and 17% of it in Asia Pacific. And then this is the breakdown of the software and hardware. So the software is again, as I said, it's the license update and support as well as the new software licenses. So that's, as you can see, roughly 3 quarters of our business.
So it is the heart and soul of the company. And the breakouts of our hardware business, our hardware support business and our services are the remaining parts of that pie. If you look at our software revenue over the last 10 years, this is the trend of that and it's shown a 14% compounded average growth rate. And this is a business where we sell new licenses and the same goes for the cloud, by the way. We sell a cloud offering and it tends to be a recurring kind of revenue thing.
So whether it's on premise or in the cloud, you have an initial sale and then there is a recurring revenue stream that's created out of that. So today, over the years, as we've gotten bigger and bigger, the recurring revenue coming from support for all the licenses we've sold over the years is actually larger than the new software licenses that we're doing each year. But that's still obviously, the new numbers are still very significant, very important to continued growth in the business. This is a long term trend of the margins and we have seen some good improvement over the last 10 years in margins. The grade area is the one sort of area period where we dipped a little bit and that was the acquisition of Sun, which is a very large acquisition.
It was a big company and it was not performing particularly well. And so we're very proud of the fact that we added it to our portfolio of products. I think it's a very strategic investment, but we've also cleaned it up a lot and really made it a much more high performing part of our business. So our margins are now back to where they were absorbing the Sun business and really cleaning it up and making it a profitable business. Earnings over the last 10 years have grown earnings per share at 20% per annum compounded.
Our free cash flow similar 17% per annum. In terms of investments we're making, there's 2 areas to refocus on. 1 is sales. These are the cumulative additions over the last 10 years to people out selling to our customers. So we've obviously adding a lot of new salespeople and particularly the last couple of years.
And the same in R and D. We have a lot of growth in R and D. And I think the best way to portray that is to reflect that since June 2010, more than 3 years ago, 90% 96% of all the headcount added Oracle was in these 2 categories. So we call that investing in growth and innovation. But that's what you have to do in this business.
You have to keep innovating, need developers and keep making investments and building new things. But we also need to have more salespeople. We have an enormous opportunity, we think, with all the products we have today to get out and do sell to more and more customers. So we're making those two investments and that's the bulk of what of how we're spending the shareholders' money in the last couple of years. This is a list of all the logos.
We've acquired approximately 100 companies since 2004 and we've kind of portrayed them in these different categories of the stack. So servers and storage, operating systems, virtual machine, even database, we've made some acquisitions, middleware, applications, horizontal, vertical. So the company has been acquiring as well as building things and we've been acquiring things in all parts of the stack, which has basically allowed us to build a deeper, broader stack, if you will, and has been a significant part of our strategy of being a more important strategic partner with our customers. If you look at the cash flow over the years, we have generated a lot of cash. We're a pretty big company and our cash balance has actually grown too from $7,000,000,000 in 2,003 to $32,000,000,000 today.
But if you look at the sources and uses of cash, there's the $82,000,000,000 we've generated, but we've actually used some degree of debt. We had no debt virtually 10 years ago. So we've done a little bit of leverage, not much relatively. And then we have made a lot of acquisitions. I showed the previous chart about $44,000,000,000 But we've also paid back a lot of money to shareholders in the form of buybacks, which we've had going for many years and in the more recent years, we've begun to add a dividend as well that's been growing.
So we think that it's a healthy balance. We're obviously returning money where we can to the shareholders, but we're our first priority is to grow and invest in the business and developers and buy businesses that can be additive to the business. In terms of the buybacks, this is a chart that just shows when we started making those dividends and then that's becoming more significant as time goes on. But obviously, the buyback program consumes a bigger part of the cash outlay and contributes to that 20% a year compounded growth rate you see in earnings per share. So we have a very strong balance sheet, very strong return
on investment. We think
a modest amount of leverage for a company our size and the predictability of our company. And the other point, I guess, would be just kind of comparing ourselves to others in the industry. So we've taken a list of companies that are in our business, many of whom we compete with in some way. And we've compared the performance on average of these companies versus Oracle. So we've also looked at the Dow and these are companies that are not always in most are not in our industry, but they're large cap companies.
We've the we'll show you comparisons for Oracle over since 2006 versus the tech peers is like the first chart I showed and then the Dow peers excluding Financial Services. And again, I think on a relative basis, we can always do better, but we're pretty proud of the performance that we delivered over time. And then the same goes for operating income. And the same goes for net income and for free cash flow. So I mean, I think absolute performance is important, but obviously, it's relative to what, relative to how you're performing against your peers in the industry and so forth.
So we think we've got a good strategy of having good current performance, but I showed the investments we're making. Also very interested on continuing to have good performance in the future. And the last one is earnings per share. Compared to the broader indexes of NASDAQ and the S and P, again, we've had good performance since that 2,006 period. So again, that's quick presentation of the numbers.
And I think we'll turn it over to questions. And I'll let Larry Ellison take over and answer questions. And he can direct it to other people on the board if the questions needs to be. Thank you.
Okay. Thank you, Jeff. And let's start with the questions from the audience. Right here.
Hi. Mr. Allison, I'm pretty sure you voted for the Board. They pay you $80,000,000 a year. What shareholders are interested in?
What percentage of votes of outside shareholders supported the members of the Board? And also could you repeat the say on pay vote? These are very important. And also if the say on pay did get defeated for the 2nd year running, which my maths, I think it did, that's a real check mark against Chairman, Bruce Chizen. I think at some point, he should step aside from Chairman Is
this a question or an editorial comment? Yes. Can you please ask a question and refrain from editorial comments.
Okay. Could you repeat the vote results with the percentages and the numbers for the election of directors and the say on pay, so shareholders can understand who voted for the say on pay, who voted against it and for the election of directors? And could Mr. Boskin address the question about whether Chisholm's mandate has been effectively negated at this point?
So I can respond to your question and repeat the vote count that I gave you for the say on pay. I can't give you the percentages for the other votes that you've asked because I don't have them in front of me. So based on the preliminary numbers on the say on pay vote, 1,560,000,000,000,628,544 shares voted for say on pay. 2,040,000,000,18,954 shares voted against and 23,352,000 597 shares abstained.
Okay. Michael? Yes. The Board is obviously pleased that Bruce Chizen has been reelected. We have great confidence in him.
We have robust processes for that have served the company very well. If you look at the metrics that Jeff Henley had up a few moments ago, that has served the company well and its shareholders well over a long span of time. We're constantly evaluating information and we will continue to do so, but we think we have a good process that is good corporate governance.
Okay. Next question. Gentleman right here.
Congratulations,
Larry, on the America's Cup. I watched it in 50 years ago when I was based in Newport, Rhode Island. Why don't you go back there? It's the point I want to make. The passion that you brought to that activity is reflected, I'm sure, in your passion for this company.
You and your peers, your employees create wealth. John Liu, the Controller of the City of New York, takes other people's money and messes with Corporate America. My question is, we had almost a disaster with the possible election of Elliot Spitzer as Controller of the City of New York, who was going to really go after Corporate America even worse than Mr. Liu or Mr. Thompson or the others.
Do you think that you and your corporate peers should intervene financially in New York City elections?
Well, I was born in New York. I am not a resident of New York. I vote in California. So I neither voted for Elliot Spitzer nor against him. I think we live in a democracy and the people pick their leaders and we do that all the time.
And if we're not happy with them, we can pick somebody else. So I can't cast my vote on that basis, and I'm sure in the same way everyone in the room does. But I don't think Oracle should engage in political, but to answer precisely your question, I don't think Oracle should engage in political activities specifically trying to influence either the New York City or the New York State elections. I think we should focus on other things like building fast computers and better software. And thank you for the kind comments about the America's Cup.
All the way in the back.
I don't see many companies with 2 presidents. Why do you need to have that?
Well, I
just figured 2 is better than 1. It's a large company. We have a separation of responsibilities. Safra runs finance and
can go out and get a CEO's job tomorrow.
We're thrilled to have them. Can go out and get a CEO's job tomorrow. We're thrilled to have them. We think they'd more than deserve the title of President and are doing a fantastic job. Over here, lady over here.
Okay. Hi. I'm Maureen O'Brien. I'm from Marco Consulting Group. We vote proxies on behalf of 3.30 benefit plans that represents about $150,000,000,000 And for this year's meeting, we voted 7,000,000 shares.
I wanted to convey my support for the proposal number 9, which asks that when the company is submitting equity plans to shareholders for approval or amendments that you get very specific with us about the performance. It is the performance is in there, but what it does is it gives us a bunch of metrics. It doesn't say how the company uses the metrics, how it's calculated, what the expectation is. So from a voter standpoint, it's really not much of a choice. So I'm just wondering from your point of view, how many metrics does the company actually use for its equity plan?
I would assume it's very much less than 28. And what would be the drawback to sharing that with shareholders ahead of time? I mean, you can always change them and adjust them as the market demands.
Okay. I'll just refer back to our Chairman's comments about why we opposed that particular motion. So Jeff, do you want to go back and read it again?
No, I don't need to repeat it.
Okay. But I think it's in the notes. So I think the answer to your question is in our notes. We explicitly stated why the company recommended against doing that to give us more flexibility as things change to make us more allow us to be competitive in recruiting executives and retaining executives. So again, I think we have gave a detailed answer as to why we oppose that.
And I'm not sure what purpose it would serve to just repeat that detailed answer. Do you want to continue? Okay.
Yes. I just wanted to respond. I guess maybe we're miscommunicating here because the proposal doesn't prohibit the company from making any changes and the proposal doesn't suggest that the company use any particular metrics. It only asked for transparency. So it only says when you're submitting it to shareholders, just let us know what the standards and the metrics are?
Well, so every time we change it, we have to again, I'm not sure I want to get into a debate. But if we say these are the metrics we're using over the next 12 month period, it's not clear to me we can then change them at any point in time. That's what you're saying though. We're saying it limits our flexibility that once we write down we're using these exact 8 metrics in exactly this way and we decide to recruit another executive, we have to change one of those things. It's not obvious to me at all that we have the authority to do that once we've committed to our shareholders to this exact and precise set of metrics used exactly this way.
What's next question please? Over here.
Hi. Given the suspicion that the average shareholder might reasonably have towards the fairness of the 2 tier vote counting system and the fact that a large number of companies embrace the approach that item number 7 proposes, What steps has the board taken to review its posture and to consider a move in this more positive direction?
Well, again, we conform with the laws of the state that we're incorporated in, which is Delaware. And our vote counting treats the management proposals identically with the shareholder proposals. So I would dispute your characterization as it's 2 different types of counting. Jeff, do you want to add anything to that or Dorian, do you want anything to that?
Yes. The
other thing I would say is we've given out in some of these votes that abstain, they're tiny. So I mean, I don't know that it's that big an at least that big an issue. We're just trying to be consistent with the laws and that sort of thing. So I think I understand if half the motors were abstaining or something, maybe that makes some sense. But In
other words, these even if we change, the results wouldn't change, wouldn't be material. And but I want to emphasize that we do treat the management proposals and the shareholder proposals and account votes exactly the same way. Way in the back. Lady, way in the back.
I belong to Investment Club and I had to call the Investment Relations three times to find out about this meeting. It's not listed on your website under Investor Calendar. Do you not want people to come to your annual meeting?
No, we love to. We love people coming to our annual meeting and we even have cookies. So I don't know is that the case, we announced it. I'm not sure if it's not on the website. If it is not on the website, we will add it.
So we'll take action immediately and fix that problem. Thank you for calling it to our attention. Well, we're trying to cut down on the sugar we're giving. We're following we do watch New York. New York is a trendsetter.
Mayor Bloomberg has been very concerned about the amount of sugar people are consuming. And we were trying to decide whether we should just make the orange juice glasses very small or cut it out entirely and take a leadership position on sugary juices. And we went with the leadership position trying to get fallen behind Michael Bloomberg and think that the left coast is just as good as the right coast in terms of helping people watch their sugar intake. We should put that on our corporate social responsibility page,
yes.
Right here.
I'm Roy Finkelstein, a shareholder. I've been to quite a few of these meetings over the last 10 or 15 years. And what I've noticed this year is 2 things. 1, the size of the meeting seems to be a lot smaller. And 2, there's almost no mention of future projections of what's going to happen, areas you're concentrating on.
What are your plans for the future? There's been some discussion of what the past results are, but nothing about the future. Thank you.
Okay. Well, we have 1, I guess, umbrella concept, which is that information technology should be easier to consume by our customers going forward. We continue to work towards that goal in 2 specific ways. 1 is we are creating these appliances. You can see some of the pictures of the appliances on the wall like the Exadata database machine that combines lots of components that our companies have our customers have historically bought separately.
So they typically buy storage separately and networking separately and servers separately and database software separately and operating system software separately and virtual machine software separately. And we've taken all of those components and combine them into that machine to give our customers a database appliance that is at once easier to use because they don't the customer doesn't have to be the system integrator. We are the system integrator. So it's easier to use and lower cost for the customer and more reliable because testing. So we think that gives us a huge competitive advantage and it is fundamental to our strategy in hardware.
People say our hardware business keeps declining, our hardware business keeps declining. In fact, we have 2 hardware businesses. We have the traditional hardware business of let's say selling Intel X86 servers kind of raw iron, I'd call it that. And then we have our next generation hardware business, which sells these appliances, which are a combination of hardware and software engineered to work together. And that's a rapidly growing business.
So that's one thing that we're doing is we're pre integrating, pre configuring hardware and software in these appliances. And we think that's the hardware, if you will, the hardware business of the future. And that's a growing and profitable business for us. That's one. I'll set that aside.
The other is under the same umbrella of making information technology easier to consume is software applications that run-in the public cloud. Again, customers historically, if they wanted to run a human resources system or run a financial accounting system or a sales management system, they would have to buy a server, an operating system, a network storage, a database and applications. They would buy all of that, integrate all those pieces together in order to have an application like that. That's no longer the case. We can offer those applications as a service if you will, the software as a service in our public cloud, again with the goal of making information technology easier to consume, easier to buy, easier to use, lower cost, more reliable and more secure.
So those are I guess are the 2 major thrusts we have in our company, appliances and cloud computing. Now we think the industry is gradually moving to both of those, but doesn't mean we're exiting the very, very large businesses that we're already in. We still sell a lot of database. We still sell a lot of servers by themselves. But we are have embraced this transition to appliance computing to appliances and to cloud computing.
And we're doing our very best to be a leader in both of these areas. So that is how we see the future. That's how we're investing our R and D dollars. That's how we're redeploying and expanding our sales organization, so we can both develop, distribute and support our customers as they embrace this next generation of technologies, appliance based hardware and cloud computing. Thank you for asking.
Maybe no one wants to ask another question after such a long answer. Gentleman gets his second question.
It's a 2 part question. Was Oracle asked to bid on healthcare dot gov? And if you had one contract and had 3.5 years to develop that system, would it tell you not in service every day?
Well,
we are currently doing everything we can to help to get healthcare.gov. I know it's a very political topic and people have very strong feelings on both sides of the issue. But as an information technology provider, we are doing everything we can to assist those contractors to make healthcare.gov a highly performant, highly reliable, highly secure system. So it's we think it's our responsibility as a technology provider in the technology industry to serve all of our customers. And the federal government is one of our customers, so we are helping them in every way we can.
And I will refrain from editorial comments about what has happened there. I think most of us want to see our government operating efficiently and effectively and incumbent upon us to help them do that. All the way in the back.
Do you see Cisco as a competitor? And are you seeing convergence in IT, software and networking?
Again, I mentioned before that our Exadata machine has a combination of storage, networking and software built into it. So in a sense, Cisco is a competitor, but I wouldn't list them as one of our major competitors. Our major competitors are companies like IBM, EMC, much more so than Cisco, though They are on the edges in some cases, a competitor. But again, I'd write IBM well in front of them and EMC well in front of them. And of course, the major software companies, SAP and the upstarts, the next generation of software companies like the salesforce.coms that sell their wares in the cloud.
So when I I would say those 4 companies I just mentioned IBM, EMC, SAP and Salesforce are 4 competitors we spent a lot of time thinking about and competing with. I wouldn't categorize Cisco as one of our fundamental competitors. And but we do have networking built into these boxes and we do sell networking and switches. We compete against a lot of people. Gentlemen right behind.
So how do you see Mr. Marc Benioff on the Board of Cisco as a competitive situation for you?
Well, again, I think Marc's done a very good job at salesforce.com. Not many people start companies that become so successful. So I'm sure John Chambers dealt, he would be a contributor to the Cisco Board and I'm sure he will be. So I don't feel personally that Oracle is threatened by such a move. I don't think it's going to change what fundamentally what Cisco does or how Cisco competes or change fundamentally what Salesforce does or how Salesforce competes.
But it's not uncommon for technology executives to serve on each other's boards. If there are no more questions, I think we're done. Oh, all right.
Couldn't resist. Cloud computing, right now, it's a relatively smaller portion of Oracle's business. It seems to be much more rapidly growing. Where do you see it growing in the next 3, 5 years in terms of percentage of business that Oracle does as opposed to on premise business?
Well, one of the problems with the
question is lots of companies classify what is cloud computing very differently. IBM classifies cloud computing to include things that we don't consider cloud computing. So let me kind of take your question a little bit differently and talk about SaaS, which is a portion of cloud computing. There's 2 big chunks. There's infrastructure as a service from Amazon dotcom and we are playing in that market.
And then there is SaaS, software as a service, applications as a service and that would be companies like salesforce.com and pure SaaS place. Our SaaS business currently is over $1,000,000,000 a year. We're a very large player in SaaS. Infrastructure, again, it depends how you count. People count differently, but let's just take SaaS.
So we're one of the larger players in SaaS and we believe we will be. It's certainly our intent and this is why we read the caveats and the forward looking statements.