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 today. In accordance with the notice of the meeting, I call to order the 35th annual meeting of stockholders of Oracle Corporation. Each stockholder was given an agenda for today's meeting. We will first conduct the formal portion of the stockholders meeting in accordance with this agenda. Following adjournment of the formal portion of the meeting, we will have a presentation, after which we will 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 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 2004.
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. Dr. Michael Boskin has been a director of Oracle since April 1994. He is currently Chair of the Nomination and Governance Committee and Vice Chair of the Finance and Audit Committee. Michael is the Tully M. Friedman Professor of Economics and 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 the Independence Committee. He is the former Chairman and Chief Executive Officer of International Creative Management, one of the largest talent agencies in the entertainment industry. Safra Catz has been a director since October 2001 and is President and Chief Financial Officer of Oracle.
Hector Garcia-Molina has been director since October 2001 and is currently a member of the Independence Committee. He is the Leonard Bosack and Sandra Lerner Professor in departments of computer science and electrical engineering at Stanford University. Ray Bingham has been 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 director since November 2005 and is currently a member of the Compensation Committee. She is a senior partner at Ostriker von Simson. , a leading technology research firm which chairs the CIO Strategy Exchange. George H. Conrades has been a director since January 2008 and is currently a member of the Nomination and Governance Committee and Compensation Committee.
He is the Chairman of Akamai Technologies, Inc. and previously served as Akamai's Chief Executive Officer. Bruce Chizen has been a director since July 2008 and is currently the Chair of the Compensation Committee and an alternate member of the Finance and Audit Committee. He's an independent consultant and serves as senior advisor to Permira 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 B. Hurd has been director since September 2010 and is the President of Oracle. Prior to joining Oracle, he was Chairman and CEO of Hewlett-Packard Company. Don Lucas has been director of Oracle since March 1980 and is currently a member of the Independence Committee. Don has been a self-employed venture capitalist since 1967. Unfortunately, Don is not able to be here today for this shareholders meeting.
Seated next to me is Dorian Daley, Oracle's chief counsel and secretary. Also present today from Ernst & Young LLP, our independent registered public accounting firm, is Remco Bartman. Prior to this meeting, we asked if he wished to make any statement at today's meeting. He indicated that while he will not make a formal presentation, he would be glad to respond to any questions during the question and answer period. Finally, we are being assisted today by Norris Richardson, a representative of Computershare, our inspector of elections, in the 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. Let's move to the formal portion of the meeting. 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 21, 2012. On or about September 25, 2012, each stockholder of record as of the close of business on September 10, 2012 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 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 4,825,155,564 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.
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 my appreciation to all stockholders who returned their proxies or submitted ballots. There are eight items of business on the agenda for this year's meeting, four management proposals and four stockholder proposals. Final vote totals for each of the proposals voted upon today will be made publicly available in the next few days. I'll start with the management proposals. The first matter to be acted upon by the stockholders is the election of 12 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.
I nominate Jeff Henley, Lawrence Ellison, Donald Lucas, Michael Boskin, Jeffrey Berg, Safra Catz, Hector Garcia-Molina, Ray Bingham, Naomi Seligman, George Conrades, Bruce Chizen, and Mark Hurd.
Is there a second to these nominations?
I second the nominations.
Okay. It has been moved and seconded that 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.
I hereby declare that all nominees for director have been duly elected. 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 what is commonly referred to as say-on-pay vote. Will the secretary please indicate the results of the voting?
Based on preliminary numbers available at the start of this meeting, 1,555,030,790 shares voted for the say-on-pay resolution, 2,245,249,545 shares voted against the say-on-pay resolution, and 5,408,972 shares abstained.
Thank you. The non-binding advisory vote on Oracle's compensation program for executive officers is hereby noted. The next item of business is approval of the increase in shares under the directors' stock plan. This increase and the directors' stock plan generally are described in our proxy statement. Is there a motion that the increase in shares under the directors' stock plan be approved?
I move that the increase in the shares under the directors' stock plan be approved.
Is there a second to this motion?
I second the motion.
It has been moved and seconded that the increase in the shares under the directors' stock 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.
I hereby declare that the increase in shares under the directors' stock plan is approved. The next matter is the ratification of the appointment of Ernst & 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 & Young as our independent registered public accounting firm?
I move to ratify the appointment of Ernst & Young as Oracle's independent registered public accounting firm.
Is there a second to this motion?
I second the motion.
It has been moved and seconded to ratify the appointment of Ernst & 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 & Young to audit the financial statements of Oracle and its subsidiaries for fiscal year 2013 has been duly ratified. Okay. Now we'll move to the shareholder proposals. The next matter for action is the adoption of the proposal submitted by the City of New York, Office of the Comptroller, as custodian and trustee of New York City Police Pension Fund and the custodian of the New York City Board of Education Retirement System, a stockholder of Oracle. The proposal requests that the Compensation Committee of the Board of Directors, in setting performance measures for top executives, include multiple weighted metrics that correctly reflect both individual and business accomplishments over an established multi-year period and, excluding proprietary information, disclose to the shareholders any changes made in the basket of metrics during the multi-year period.
We understand that Scott Zdrazil will represent the City of New York, Office of the Comptroller at this meeting. Is he present? Thank you.
Thank you, Mr. Chair. Good morning, everybody. I'm Scott Zdrazil. I'm actually with Amalgamated Bank, I've been asked by the Office of the New York City Comptroller to present the proposal on their behalf. They've asked me to read the following statement. Proposal number five asks that the board set performance measures for its top executives' pay using multiple targets that correctly reflect both individual and business accomplishments over an established multi-year period. The proposal does not direct the compensation committee to utilize specific metrics, therefore does not infringe on the committee's ability to set remuneration packages. Compensation consulting firms recommend the use of multiple performance measures in setting executive pay. The consulting firm Mercer, for example, believes that performance measures often have to be complex to be effective, that performance measures should cover a range of relevant dimensions of performance at the company.
Relying on a single performance metric may incentivize excessive risk-taking and encourage executives to focus on a single aspect of the company's performance rather than a range of relevant performance measures. The use of a multi-year performance period also, in our view, better aligns executive pay with the interests of long-term shareholders, such as the New York City pension funds. Over 90% of Oracle's CEO's compensation is not performance-based, and the small portion that is performance-based relies on a single metric, non-GAAP, pre-tax profit. Oracle's existing pay formula does not result in the alignment of pay and performance, as evidenced by the over 30% withhold vote that the company received on last year's say and pay proposal. Again, this year, Glass Lewis and ISS are recommending against the company's say and pay proposal.
In recommending a vote against the proposal, Glass Lewis concluded that the best remuneration policies are those that are based on a variety of performance metrics, which better gauge a company's overall financial health and performance and more effectively align the interests of executives with those of shareholders. ISS contended that while long-term shareholder return has been positive at Oracle, the company's approach continues to raise risks. We believe the company is not fully addressing the risks to long-term performance in its compensation design, and we urge shareholders to support the resolution. Thank you.
Thank you. The board opposes the adoption of this proposal. Despite the proponent's 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 our stock price to have 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 stockholder 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 stockholders and has recommended against the stockholder proposal. It's been moved that the stockholder's 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. The next matter being submitted to stockholders for action is the adoption of the proposal submitted by Kenneth Steiner, a stockholder of Oracle. The proposal requests that our board of directors adopt a policy that whenever possible, the chairman of our board of directors shall be an independent director. We understand that Jing Zhao will represent Kenneth Steiner at this meeting. Is Mr. Zhao present? Okay, pursuant to the rules of conduct of the meeting, you have five minutes to present the proposal and move for its adoption.
Okay. Thank you very much. Thank you very much. Just to read the proposal. Resolved, the shareholders request that our board 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 not previously served as an executive officer of our company. This policy should be implemented so as not to violate any contractual obligations in effect when this resolution is adopted. The policy should also specify how to select a new independent chairman if a current chairman ceases to be independent between annual shareholder meetings. To foster flexibility, this proposal gives the option of being phased in and implemented when our next CEO is chosen. When a CEO serves as our board chairman, this arrangement can hinder our board's ability to monitor our CEO's performance. Many companies already have an independent chairman.
An independent chairman is a prevailing practice in the United Kingdom and many international markets. This proposal talks about 50% plus support at four major U.S. companies in 2011. This proposal should also be evaluated in the context of our company's overall corporate governance, as reported in 2012. The Corporate Library, an independent research firm, rated our company D with high governance risk, very high concern for executive pay, $77 million for our CEO, Lawrence Ellison, and high concern for the qualification of our directors. Mr. Ellison's 12/11 paycheck included a $7 million market price stock options worth $62 million. However, our recently appointed President, Mark Hurd, former Hewlett-Packard CEO, received $78 million, surpassing our CEO. For Mr. Hurd, this included options worth $68 million. For both, options typically vested without additional performance vesting conditions, and thus lacking financial incentives.
In addition, our CEO received $30 million compared to $6 million in 2010 in annual cash incentives, while our president received $7 million. Finally, despite less than two years with our company, Mr. Hurd was entitled to a potential payment of $100 million for change in control. Mr. Ellison was entitled to a potential payment of $229 million. Seven of our directors were long tenured with 11 to 35 years tenure, and three were age 73 to 82, which may indicate a succession planning concern. CEO Lawrence Ellison and Audit Committee Chair Donald Lucas both had over three decades of tenure. Executive Chairman Jeffrey Henley had 16 years, and CFO Safra Catz had 11 years. Additionally, four directors were insiders. Our board did not have an independent chairman or leading director, and two directors served together on the Akamai Technologies board.
Mr. and Mrs. Conrades, Seligman, and Binghams received by far our highest negative votes, and yet they occupied five seats on our most important board committees. Please encourage our board to respond positively to this proposal for an independent board. Thank you very much.
Thank you. The board opposes the adoption of this proposal. We do not have a formal policy mandating that offices of chairman and CEO continue to be separated. We believe it's important that the board retain flexibility to determine whether the roles should be separated 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. While we do not have a policy mandating an independent lead director, we believe that a number of non-employee directors fulfill the lead director role at various times, including during executive sessions, depending upon the particular issues involved. Consequently, the board does not believe the proposal is in the best interest of Oracle or its stockholders and has recommended against this shareholder proposal. It's been moved that the shareholder 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.
Okay, I hereby declare that the stockholder's proposal regarding independent board chairman has been defeated. The next matter being submitted to stockholders for action is the adoption of the proposal submitted for the fourth year in a row by the Nathan Cummings Foundation, a stockholder of Oracle. The proposal requests that the Compensation Committee of the board adopt a policy requiring that senior executives retain at least 75% of the shares acquired through equity compensation programs until reaching normal retirement age. We understand that Scott Drazel will represent the Nathan Cummings Foundation at this meeting. I'm sorry for the pronunciation. Again, pursuant to the rules, will you do this in five minutes or less to present the proposal?
Sure, I believe that's possible. Thank you. Again, Scott Drazel. Nathan Cummings Foundation has asked me to read the following statement on their behalf. The foundation's proposal asks the board to institute a policy requiring that senior executives retain a significant percentage of the shares acquired through compensation programs until reaching normal retirement age. Specifically, the proposal suggests a share retention requirement of at least 75% of net after-tax shares. The foundation, a growing number of institutional investors believe that holding shares until retirement promotes long-term shareholder value, does so by aligning the interest of executives and shareholders by encouraging a long-term focus and reducing risk-taking as executives approach retirement. A number of studies have found that high levels of stock ownership are directly correlated with better returns, including a recent study by Harvard Business Review, which for sake of brevity, perhaps we can just forward to the committee.
Oracle's board cites the company's recently strengthened stock ownership guidelines as one reason why the company doesn't need to establish a retention ratio or holding period. While the foundation views the strengthened guidelines as a positive step in the right direction, it does not believe that they obviate the need for policies requesting the proposal. The current requirements under the guidelines, coupled with the lack of any retention requirement, mean that, in effect, senior executives can exercise options and immediately sell virtually all of their shares acquired if they so desire. Thus, the intended alignment is not achieved.
The Nathan Cummings Foundation continues to believe that Oracle's current compensation structure could be improved by the adoption of this proposal and urges the board to take the steps necessary to bring the company into line with best current practices employed by both the growing number of peers, as well as other constituencies of the S&P 100. Thank you.
Thank you. The board continues to oppose adoption of this stockholder proposal. A similar stockholder proposal was presented by the Nathan Cummings Foundation during the last three annual meetings. In all three cases, it was soundly defeated. We believe that we already incentivize our executives to maximize long-term shareholder value. Executives only realize value from their equity compensation, which is comprised solely of stock options if our stock price rises and sustains its growth over time. The interest of our executives are already aligned with those of Oracle stockholders. Adoption of this proposal could have the perverse result of encouraging our successful executives to leave the company so that they can fully realize their equity awards. We believe the adoption of this proposal could significantly interfere with our compensation policies and our executives' ability to prudently manage their financial affairs.
Consequently, the board does not believe the proposal is in the best interest of Oracle or its stockholders and has recommended against this stockholder proposal. It's been moved that the stockholder's proposal calling for equity retention beyond termination 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.
I hereby declare that the stockholder's proposal calling for equity retention until a normal retirement age has been defeated. The next matter being submitted to stockholders for action is the adoption of the proposal submitted by Cornish Hitchcock, a stockholder of Oracle. The proposal requests that the board adopt a policy that if there is a change in control, as defined under any applicable equity incentive plan of Oracle, that there shall be no acceleration of vesting of any equity award granted to any senior executive, provided, however, that the board's Compensation Committee, as administrator of the plan, may provide in an applicable grant or purchase agreement that any unvested award will vest on a prorated basis up to the time of the senior executive's termination with such qualifications for an award as the committee may determine.
We understand that Scott Drazel will present the Cornish Hitchcock at this meeting. Once again.
Great. Thank you, Mr. Chair. Scott Drazel with Amalgamated Bank's LongView Funds. I'm wearing a few different hats this morning, but I am employed by the LongView Funds, which are the proponents of the proposal. Cornish Hitchcock is legal counsel to the funds. By way of background, the LongView Funds are money managers for a large number of institutional investors that are all long-term investors, including mostly healthcare funds and pension funds. The beneficiaries of those funds rely on stable returns to finance those pensions over the long term, and accordingly, we engage the companies in which we invest to promote corporate governance practices that we believe will help promote that stable shareholder value over the long term.
Of course, as I'm sure the board is well aware, compensation practices in the U.S. are a key aspect of focus for investors, and we, like many others, believe that such compensation practices should be based on pay-for-performance philosophies. Briefly, our resolution asks the company to consider reconsidering practices, employment contracts, and equity plans that automatically accelerate unvested equity upon a change in control. In our view, equity plans are designed to be, one, at risk, and two, to drive performance. If the provisions that automatically accelerate and disregard those vesting requirements inherently severs that pay-for-performance relationship in our view. We note that there are a number of other companies that have better practice, including simply forfeiting the unvested equity or prorating the unvested equity upon a change in control.
Such companies include peers of Oracle, such as Qualcomm, GE, IBM, even across the way at Hewlett-Packard, there were several revisions to accelerate vesting provisions last year, and other major California companies such as Chevron across the bay, and Occidental. We think it's a growing practice, and we'd urge the board to consider it. We certainly view that it might be appropriate to allow for some type of severance upon a change of control. Full accelerated vesting seems to be an icing on a cake and allow for an automatic reward, a performance that was never actually delivered to shareholders. The current equity holdings certainly allow for our top executives at Oracle to benefit from any upside in a change of control arrangement. We urge the board to consider it. I welcome shareholder support. I'd also like to end on a note that we're diversified investors.
We promote good practice, and we think one way to get to good practice that makes sense for both companies and shareholders is to engage in dialogue. Typically, when we have questions at companies, we've been able to find common ground and withdraw proposals or be able to address questions that we may have sent. Unfortunately, at Oracle, we've never really received a response to our request for dialogue, and we'd urge the committee and the board to consider revisiting that approach to shareholder engagement. We promise to be polite and respectful, and I respectfully request the board to consider some shareholder dialogue on these issues. Thank you very much.
Thank you. The board opposes the adoption of this proposal. If Oracle is acquired under our current stockholder approved, amended, and restated 2000 long-term equity incentive plan, stock options granted to all employees, including our executive officers, will become fully vested only if the stock options are not assumed or if the stock options are assumed and the option holder's employment is terminated without cause within 12 months after the acquisition. This double trigger accelerated vesting is appropriate and in the best interest of our stockholders. Failing to protect our executives against potential forfeiture of all or a substantial portion of their equity awards in the event of a change of control would interfere with our ability to attract and retain talented executive personnel. Further, double trigger accelerated vesting is consistent with our results-oriented executive compensation philosophy and strengthens the link between long-term performance and executive pay.
We believe that our current treatment of our outstanding and unvested equity awards upon and following a change in control of Oracle serves the best interest of our stockholders by creating retention incentives and promoting alignment between the interest of our stockholders and our executive officers. Consequently, the board does not believe this proposal is in the best interest of Oracle or its stockholders and has recommended against the stockholder proposal. It's been moved that the stockholder's proposal regarding equity acceleration upon a change in control of Oracle 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.
I hereby declare that the stockholder's proposal regarding equity acceleration upon a change in control of Oracle has been defeated. This concludes the formal portion of the annual meeting. Is there a motion that this meeting be adjourned?
I move that the meeting be adjourned.
Is there a second?
I second the motion.
It's been moved and seconded that the meeting be adjourned. Is there any opposition to the motion? Okay. The formal part of this meeting is adjourned. I will now give a brief business overview of Oracle. Before moving to this, the secretary will 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're 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, you should also review our most recent Form 10-K 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. Let me step through these slides and then we'll take questions and answers from Larry Ellison and other board members. We've covered the safe harbor, let's go back to the Oracle strategy. One of the hallmarks, I think, of Oracle is we've had a very consistent strategy. We've been using these particular slides for several years. We've had a long strategy of really believing in building and acquiring best-of-breed technologies, adopting open standards, and having products that can work in heterogeneous environments and are open. We believe very strongly that we add additional value when we can integrate our technology stack.
We put a lot of effort into making sure that we optimize integration so that customers can buy an individual product if they want, but as they begin to buy more and more products in our stack, they'll get a lot of additional benefits. One is performance. There's security. There's a whole variety of issues. When we acquired Sun almost three years ago, we began to use this term engineered systems, which was really the marriage of the Oracle software stack with the Sun hardware stack. We deploy these products in a variety of ways. Still, many customers deploy these products in their own data centers, so-called on-premise, but we have, over the years, developed a very strong private cloud offering and now a public cloud offering.
Of course, many customers are operating in sort of a hybrid mode where they may have things on-premise, they may have things in a private cloud, public cloud. We give people choice. We think that's really important to have great products that are well integrated, that provide a lot of benefits. They can choose how they want to deploy these things. We have a very strong best-in-class kind of mentality. As I said earlier, we really believe we have to have terrific products at every layer. We have thousands of products. These are just a list of some of the particular products that enjoy number 1 market share around the globe. In terms of the company size, our fiscal year ended in May of this year. We concluded the year at $37 billion in revenue. Again, a leader in many categories.
We have a large number of corporate and government customers around the world. We have many partners. We have almost 116,000 employees today. A lot of different developers working with Oracle. Inside the company, 34,000 developers and engineers, thousands of customer support people, and so forth. Clearly, over the years, the company has become a very large company. I think we continue to be very successful, which I'll talk about the financials in a second. This is last year's fiscal full-year results, FY 2012, ended in May. We announced in September our 1st fiscal quarter that ended in August. We continue. These numbers are in constant currency, and they are non-GAAP. This is the way we look at our business internally. That's how we measure ourselves, taking out the effect of currency.
Obviously, we report also in GAAP numbers, we make a reconciliation in all of our public disclosures. The company continued to grow its new software business. It continued to grow its support business. Our margins continued to show good performance, earnings, and share. I think the company, despite the fact that there have been some issues with the global economy over the last year, has continued to do well. This is a pie chart showing the makeup of our business. The largest part of our business is our software business, and that's made up of two components, our software license and updates and support business, and our new license sales of additional licenses that we do. That makes up more than two-thirds of our revenue. We have a services business, consulting, education, and so forth.
We have our hardware business, which came from the Sun acquisition. We also acquired software with Sun, but the hardware part of that business is shown here and makes up about 17% between the hardware and the system support. We don't typically make a lot of long-term predictions because it's difficult to predict based on what the economy does and that sort of thing. I would take you back to about 7 years ago, we did at that time talk about we were embarking upon an acquisition strategy, and there were some concerns and so forth. We did lay out a prognosis that we felt that over the next few years, we could earn in excess of 20% a year. Let me take you back over the last 7 years and show you. Again, that was earnings, okay?
I'll come to that in a minute. First of all, our revenue has grown at a compound annual growth rate of 18% over the last 7 years. The new license revenue grew 13% compounded. We had very good balance in that new software revenue around the world. The Americas growing at 16%, Europe, Middle East, Africa at 10%, Asia Pacific at 14%. Our software support business grew at 17% compounded. Our margins have steadily improved. We noted in the gray bars here, when we acquired Sun, it was a company that was barely making any money, and the hardware business traditionally have lower margins, so it had a temporary effect of reducing our margins. We have made tremendous improvement in making Sun a lot more efficient. We're very excited about the Sun acquisition, we think it's one of the most important acquisitions we've ever done.
As we got that business healed and made more efficient, you've seen that our margins have come back to near record levels. Our earnings per share have grown 20% compounded per year. Again, despite some economic issues and all the other things, I think the company has done a great job at our size and scale, continuing to do well. Our operating cash flow has grown at 21% compounded over the 7 years. To continue to keep growing, we obviously need to keep making investments. We've made a sizable investment the last couple of years in additional headcount. We think we have a tremendous product portfolio, we need to have more feet in the street, more salespeople. We've said that this year our intention is also to add some more people. That's one investment.
Obviously, the lifeblood of a technology company is its investment in R&D, and we continue to grow that staff as well. Very importantly, this represents the vast majority of the headcount increases in the company. We really think we're investing what matters, more R&D, more innovation, and more people to go out and sell these products to customers. We've made approximately 90 acquisitions since 2004, starting with the PeopleSoft acquisition. It's hard to read all those logos, but basically, it's meant to show that we've made a variety of applications in that stack of things. We've bought a lot of different applications companies, we've bought a lot of middleware companies. We've even bought some smaller database products with operating systems, and of course, the Sun Hardware business. We have continued to add organically to our R&D.
We continue to grow our products and build products internally, but we've clearly supplemented the strategy of building a broad portfolio and having a very strong world-class integrated stack via acquisition in the last number of years. We have spent a lot of money on doing the acquisitions. In addition to that, we've also used part of our cash flow to buy back shares. Shown in red are the annual buybacks, which have varied based upon the degree of acquisition that we're doing in particular years and so forth. As everyone maybe remember, a couple of years ago, we began a dividend policy, and we have continued to pay out a dividend. That together, over the seven years, we've put about $25 million into the combination of buybacks and dividends.
The company has a very strong balance sheet, a very healthy return on equity and assets, a good, strong cash position, a conservative debt, and if you take out the net, the cash against the debt, we continue to have a very conservative balance sheet, which we think is important. In terms of how we've done, I think absolute numbers are useful, but it's always helpful to compare yourself to others just on a relative basis, how is the company performing. We've taken 12 other larger tech stocks that are peers to ourselves, and you see the logos here, IBM and Microsoft and EMC and Dell and others. We have put their numbers on our same fiscal year comparison to be able to see how we have done to this peer group.
We've also compared Oracle being a large cap company to other large cap companies that make up the Dow Jones 30. If you look at going back to 2005 and then measure the relative performance starting with 100, if you will, how well we've done on revenue growth and our revenue compared to those two, the tech peer group and the Dow Jones, you can see that we've done very well. If you look at our operating income, we've done very well in comparison. If you look at our net income, we've done very well in comparison, and our free cash flow in comparison. I believe that the company, on an absolute basis, has done well, and on a relative basis, it's done well. We're very positive about the future.
We think that things only going to get better for us because we have a winning strategy, we're in this thing for the long haul. Every year, as we keep engineering and putting things together and adding more and more value for our customers and executing obviously well, it's a large, diverse company, that we can continue to do very well in the marketplace. Lastly was the earnings per share against all these companies. In terms of stock performance, again, not surprisingly relative to those peer groups, given the other financial performance I showed you, our stock has done better than those peer group comparisons that we talked about. That concludes that, and let's now come back to the microphone here. We've come to the part of the agenda providing for general questions and discussions.
Anyone wishing to address the meeting should rise or raise your hand for recognition. Please state your name and indicate whether you are a stockholder or a proxy for a stockholder, and proceed with your question. Please limit your questions or comments to two minutes or less. We will answer as many questions as possible until we run out of time. I'll now turn the mic over to our founder, Chief Executive Officer, Larry Ellison.
Tony Mezzapelle, shareholder. This is a T4 SPARC microprocessor, 850 million transistors, L3 cache, four megabytes, eight cores, 2.6 gigahertz, so very fast for database and server applications. I wonder if Warren Buffett understood the implications of hardware like this when he made a $10 billion investment in our competitor, IBM, about a year ago. I'm focused on IBM for seven reasons, really. First, the stock in the last 12 months outperformed us. Second, they're developing a lot of IP generally throughout their company. Where we had about 900 patents in 2011, they had 6,200. They also have a long stack like us, except for the application layer. Number 4, for the application layer, they're partnering with a lot of our competitors, SAP, sometimes. Infor Global Solutions, I especially don't like Infor Global Solutions because they know a lot about our company from the top.
Like us, IBM has applications that create platforms like Wintel did or apps on iPhone did, or Word on Windows did. Number 6, IBM has cloud capacity. Number 7, IBM has a CPU microprocessor like we do, and also big storage and server business like we do. What I want to ask about is where SPARC fits in with us going after with the server and storage $105 billion market. The reason I'm asking is because the Exadata boxes, the Exalogic boxes use Xeon chips right now. A lot of their engineering and the reason they're fast is because they're engineering on memory components or IO, not necessarily CPU. I have another example. When McNealy was CEO of Sun, I asked him why he wasn't getting the business at places like Google.
Google had zillions of x86 boxes. It would've been nice if Sun could have replaced those boxes. You would've thought the Google guys like Sun products. They're fast, powerful, reliable, run very efficiently in terms of power, run Linux, Unix. Sun was very connected to Google. The CEO of Google, Eric Schmidt, was the CTO of Sun. The angel at Google was one of the four founders of Sun. The venture capitalist, John Doerr, was the venture capitalist for Google and Sun, and on the board of both companies at the same time. I'm wondering if there was an issue. I'm wondering what is basically the vision for SPARC.
Next year, we'll be announcing the SPARC T5, which will be the fastest microprocessor in the world. It will run the Oracle database at about twice the speed of the fastest Xeon processor from Intel. We think if you're twice as fast and the same price, you can make a living. I'm not sure my answers, the ratio to question to answer will always be that good. Yes.
I'm here again this year to applaud the fact that the shareholder proposals didn't pass. You'll notice that Scott represented three groups. It shows that this is part of a vast left-wing conspiracy. My question to Mr. Ellison regards the last proposal by the Amalgamated Bank. How on earth would anybody acquire Oracle?
Well, we could make a big mistake which would make it easier. We don't intend to do that. Oracle's a fairly large cap company, around $150 billion. Clearly once you factor in an acquisition premium, it's a very large company to acquire. It seems like that's a very unlikely outcome in our future.
Excuse me. Leonard Sklar, Redwood Shores, longtime shareholder. I first want to acknowledge all of you for the absolutely phenomenal job you've done over lo these many years. Having said that, I want to look ahead a little bit, I want to ask you, compared to, let's say, Oracle's revenue growth for the past five years, do you see the next five years being better than that, about the same, or not as good? Regardless of the choice you pick, be as specific as you are willing to be about that. Alternatively, who in the heck knows?
Yeah, clearly it depends on a lot of things out of our control, like the macroeconomic conditions. I think our earnings and our revenue will continue to grow quite rapidly, faster than our peers. I think we'll continue to gain market share across the board, which means, again, we'll be growing faster than IBM and faster than all of the larger companies, all the companies our size, I think we'll be growing faster than. I think in the markets where we compete directly against salesforce.com and others in the cloud, I think we'll be growing. If you just look at our cloud business, I think that will be a more rapidly expanding part of our business. I think the goal of 20% EPS growth is, while challenging as we get larger, is not impossible.
Hi. Suzanne Joma, former employee and shareholder for a long time. This is kind of a nit, Larry, I was wondering, have you ever, maybe you've thought of it, exploited OpenOffice through Apple? Many people are buying Apple PCs, nobody wants to spend the money to buy Microsoft anymore.
Yeah. I think OpenOffice really was designed to be a Microsoft Office competitor. It was designed to run on personal computers as opposed to tablets and phones, which have simpler applications for word processing and email and those kinds of things. We acquired OpenOffice when we acquired Sun. We set it free, let it go back to the open source community because we didn't want to make continued investments in that product. We think the world's moving on. Microsoft Office kind of won the war for desktop applications like word processing, spreadsheets and so on. Again, OpenOffice really was not the technology basis to compete with applications that are coming from Apple and Google and others for mobile devices. We think, again, OpenOffice was not worth us continuing to invest in.
Tom Buffo, Shareholder. I had a question looking at the regional markets and the new license revenue comparisons. There's been difficulties in the EMEA region, and obviously, as you said, macroeconomics and problems in that area. Are you seeing any recovery or pockets of strength, and whether it be what part of the business?
Well, I think our EMEA business has, again, been holding up better than our peers on a relative basis. Well, again there's obviously an economic crisis centered in EMEA, centered in the Eurozone portion of EMEA. I think our team over there has done a very, very good job, and we measure ourselves on how we do against our competitors, our secular competitors, and we continue to take share across the board. We take share in database, we're taking share in middleware, and we're doing quite well in applications. We're pretty happy how we're doing in EMEA in spite of the difficult economic times.
Anthony Fisher, Shareholder. Again, I'd like to express my thanks to the great job that you people have done for many of us who are stockholders. My question is this: who in the U.S., the foreign countries in general, China and India, those are four things I'm looking for, are your major competitors for each of those areas?
Well, our major competitor. Well, there are a lot of areas. You mean in each geographic area who are our major competitors?
Right.
Well, our major competitors are IBM and SAP, so those are our two primary competitors. We compete against IBM in servers. EMC is another major competitor in storage. IBM, major competitor in servers and database and middleware. SAP in ERP applications. Salesforce.com in sales automation applications and marketing. We have lots and lots of different competitors, mainly located in the United States.
Any from China or India?
Well, in India, we are to some degree. We are in the services business, the consulting business. There are a variety of consulting companies in India. Again, we're not a services company like IBM. I would describe IBM as a services company primarily with a pretty impressive product portfolio behind it. We are an intellectual property company focused on deploying that intellectual property in products and selling those products and providing the services necessary to sell and support those products. No, not really. Huawei is a very impressive communications technology company in China, but they are more of a partner for us than a competitor. All the way in the back.
My name is [Kinza]. I'm a shareholder myself. I think I came three or four years ago. I ask you one question regarding the human rights. You answered me, our company do not do email as regarding Yahoo's scandal. Now, our company or every other big companies move to cloud. There's many concern regarding to human rights. You mentioned Huawei. Huawei actually is a very hot topic, say, in the Congress. Because I myself has worked with many companies, for example, Microsoft has a human rights and a technology center, and I also helped Intel to set up a human rights advisory group to advise their acquire of McAfee because Microsoft also shifted the software.
My question is that, as my question long time ago, as a long-time shareholder, is that do we have a human rights policy to develop or to do business in the whole world? Thank you.
Again, we're a company, not a country. We kind of adhere to the laws around the world, and we fully support human rights.