Okay. Good morning. I'm Jeff Henley, Vice Chairman of the Board of Directors. It's my pleasure to welcome you. In accordance with the notice of the meeting, I call to order the 41st 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, there will be an opportunity for questions and discussion. Before proceeding to the business of the meeting, I'd 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 1995 and Vice Chairman since 2014. Prior to that, I served as Chairman. I was previously Oracle's Chief Financial Officer from 1991 to 2004.
Larry Ellison was appointed Chairman of the Board and Chief Technology Officer in 2014. Previously, Mr. Ellison was our CEO and has been a director since he founded Oracle in 1977. Safra Catz, on the other side of Larry, has been a director since 2001, was appointed CEO of Oracle in 2014. Prior to that, Ms. Catz served as President and Chief Financial Officer. Mark Hurd has been a director since 2010, was appointed CEO of Oracle in 2014. Previously, Mr. Hurd served as President of Oracle. Before joining Oracle, he was the Chairman and CEO of Hewlett-Packard Company. Dr. Michael Boskin has been a director since 1994. Dr. Boskin is the Tully M. Friedman Professor of Economics and Hoover Institution Senior Fellow at Stanford University. Jeff Berg has been a director since 1997. He is Chairman of Northside Services, a talent and literary agency.
Mr. Berg was formerly Chairman and CEO of International Creative Management. Hector Garcia-Molina has been a director since 2001. He is the Leonard Bosack and Sandra Lerner Professor Emeritus in the Departments of Computer Science and Electrical Engineering at Stanford University. Naomi Seligman has been a director since 2005. She is a senior partner of Ostriker von Simson, Inc., a technology research firm that chairs the CIO Strategy Exchange. George Conrades has been a director since 2008. He is a senior advisor to Akamai Technologies and previously served as Akamai's Chairman and CEO. Bruce Chizen has been a director since 2008. He is an independent consultant and serves as a senior advisor to Permira Advisers and as a venture partner at Voyager Capital. He previously served as CEO of Adobe Systems Incorporated. Secretary Leon Panetta has been a director since 2015.
Secretary Panetta previously served as the U.S. Secretary of Defense and as a director of the Central Intelligence Agency. He is the co-founder and chairman of the Panetta Institute for Public Policy. Renee James has been a director since 2015. She is the Chairman and CEO of Ampere Computing, a company focused on data center server processors, and she is an operating executive at The Carlyle Group. She previously had a 28-year career with Intel Corporation, where she most recently served as president. Wick Moorman has been a director since 2018. He is currently a senior advisor to Amtrak and previously served as Amtrak's President and CEO. He previously served as Chairman and CEO of Norfolk Southern Corporation. Bill Parrett has been a director since 2018. He previously served as CEO of Deloitte Touche Tohmatsu.
Seated next to me, to my right, is Brian Higgins, Oracle's Vice President, Associate General Counsel, and Corporate Secretary. Also present today are Kevin Asher, Chris Anger, and Andrew Cavin from Ernst & Young LLP, our independent registered public accounting firm. They would be glad to respond to any questions during the question and answer period. Finally, we are assisted today by Chris Hall, a representative of American Stock Transfer & Trust Company, LLC, our inspector of elections in the tabulation of the proxies and ballots. The minutes of the last year's annual meeting are available, and any stockholder wishing to inspect the minutes should contact our corporate secretary. Now let's move on to the formal portion of the meeting. Brian Higgins will report on the mailing of the notice of this meeting.
Thank you, Jeff. This meeting is held pursuant to a notice dated September 26th, 2018. On or about September 26th, 2018, each stockholder of record as of the close of business on September 17th of this year 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 list of stockholders entitled to vote are both available for inspection by any stockholder.
Brian will now advise whether a quorum is present at the meeting and canvass the stockholders present. Those stockholders who have not returned proxies have authorized the persons identified in the proxies to vote on the proposals coming in before the meeting. On the record date, there were 3,788,638,156 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. The polls are now open. If you have not voted yet or you previously voted but want to change your vote, please raise your hand and one of the monitors standing in the aisles will assist you. Okay. It's back there.
The polls will close at the conclusion of the formal portion of the meeting, so please hand in your ballot or proxy prior to the end of the formal portion of the meeting. Excuse me.
That's okay. Thank you. I declare a quorum is present at this meeting. On behalf of Oracle's board, I would like to express my appreciation to all stockholders who returned their proxies or submitted ballots. There are seven items of business on the agenda for this year's meeting, three management proposals and four stockholder proposals. All voting results we'll announce today are preliminary. Final vote totals for each of the proposals voted upon today will be made publicly available within the next few days.
Okay, we'll start with the management proposals. The first matter of business is the election of 14 directors to serve until the next annual meeting of stockholders. The nominees recommended by the board of directors are Larry Ellison, Jeff Henley, Safra Catz, Mark Hurd, Michael Boskin, Jeff Berg, Hector Garcia-Molina, Naomi Seligman, George Conrades, Bruce Chizen, Leon Panetta, Renee James, Wick Moorman, and Bill Parrett. Additional information about each of the nominees can be found on pages seven through ten of Oracle's proxy statement. Will the secretary announce the results of the vote?
Each nominee for election to the board of directors has received the affirmative vote of a majority of Oracle's outstanding shares of common stock present and entitled to vote at this meeting.
I declare that all the 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 commonly referred to as the Say-on-Pay vote. Will the secretary please indicate 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.
Thank you. The Say-on-Pay proposal has been approved. The next matter is the ratification of the appointment of Ernst & Young LLP as Oracle's independent registered public accounting firm by the Finance and Audit Committee of the board of directors. The board of directors recommends the ratification of the appointment of Ernst & Young as our independent registered public accounting firm for the fiscal year 2019. Will the secretary announce the results of the vote?
This proposal also received the affirmative vote of a majority of Oracle's outstanding shares of common stock present and entitled to vote at this meeting.
Okay. The appointment of Ernst & Young as Oracle's independent registered public accounting firm for fiscal year 2019 has been duly ratified. The next item of business is the proposal submitted by the Pax World Mutual Funds, a stockholder of Oracle. The proposal, which appears on page 58 of Oracle's proxy statement, requests that the company provide a report disclosing certain information regarding pay equity. We understand that Heather Smith will represent Pax World Mutual Funds at this meeting. Is Heather Smith present? Okay. Pursuant to the rules of conduct for the meeting, you will have up to five minutes to present the proposal.
Good morning, and thank you, Mr. Vice Chairman. My name is Heather Smith, and I am here to present proposal number four on behalf of Pax World Mutual Funds . For the second straight year, the Pax World Mutual Funds proposal requests that Oracle issue a report identifying whether a gender pay gap exists among its employees, and if so, outline the steps being taken to reduce the gap. Despite strong shareholder interest in pay equity reporting, nearly 40% of the voting shares supported our proposal last year. Oracle still does not provide any public reporting on gender pay equity. We believe this issue is particularly relevant to Oracle, given ongoing lawsuits concerning its pay practices.
Pay inequity and advancement opportunities for women are concerns in the technology industry. There is a longstanding gender and racial pay gap in the U.S. A study by Glassdoor has found an unexplained gender pay gap for women in the information technology sector of nearly 6%. Mercer reports that women continue to be significantly underrepresented in the technology sector, and their representation falls as they move through the talent pipeline. Oracle's current workforce composition reflects this, as women comprise 29% of the company's employees, but just 23% of its leadership. These metrics are unchanged since 2016. Committing to and ensuring equal pay for equal work can help address this gap. Research has found that active management of pay equity is a crucial driver of gender diversity in organizations.
Greater gender diversity has been correlated with improved company performance, as well as increased innovation and better problem-solving, which is particularly relevant to the technology industry. By failing to comprehensively address pay equity issues, Oracle may be placing itself at a competitive disadvantage when it comes to talent recruitment, retention, and employee productivity. PayS cale reports that employee satisfaction goes up and intent to leave goes down when there is more transparency around pay practices. Other technology companies have already published information on their gender pay equity practices and committed to closing pay disparities. This includes Apple, Amazon, Cisco Systems, eBay, HP, Intel, Microsoft, Salesforce, and SAP, among others. We believe that Oracle, an S&P 100 company with 137,000 employees worldwide, can and should do more.
A recent survey by JUST Capital found that 63% of Americans believe that CEOs of large companies should speak out on important social issues like the gender pay gap and discrimination. For these reasons, we believe that both Oracle and its stakeholders would be well-served by greater transparency concerning its pay equity policies and practices. This approach would assure investors that Oracle is proactively managing this issue as part of its overall diversity and inclusion strategy, position the company to achieve greater diversity, and reduce regulatory and reputational risks. Thank you.
Okay. Thank you. The board opposes this proposal for the reasons described in the proxy statement. Will the secretary announce the results of the vote?
This proposal was defeated by a majority of Oracle's outstanding shares of common stock present and entitled to vote at this meeting.
Okay, I declare that the stockholder proposal regarding a pay equity report has been defeated. The next item of business is the proposal submitted by the New York State Common Retirement Fund, a stockholder of Oracle. The proposal, which appears on page 60 of Oracle's proxy statement, requests that the company provide a public report disclosing certain information regarding political contributions. Again, we understand that Heather Smith will again represent the New York State Common Retirement Fund at this meeting. As I stated before, you have up to five minutes to make your statement.
Thank you. Once again, my name is Heather Smith, and I am here today on behalf of the New York State Common Retirement Fund to present the fund's resolution calling on Oracle to fully report on its political spending and its process and procedures for making political contributions with corporate funds. As long-term shareholders of Oracle, the fund supports policies that apply transparency and accountability to corporate political giving. In its view, such disclosure is fully consistent with public policy in regard to public company disclosures. Company executives exercise wide discretion over the use of corporate resources for political purposes. Relying only on the limited data available from the Federal Election Commission and the Internal Revenue Service can give shareholders an incomplete picture of the company's political spending.
The New York State Fund believes that a complete disclosure by the company is necessary for shareholders to be able to fully evaluate the political use of corporate assets. Therefore, on behalf of the New York State Common Retirement Fund, I submit the resolution on political disclosure found in your proxy materials. Thank you.
Thank you. The board opposes this proposal for the reasons, again, we described in the proxy statement. Will the secretary announce the results of the vote?
This proposal was defeated by a majority of Oracle's outstanding shares of common stock present and entitled to vote at this meeting.
I declare that the stockholder proposal regarding a political contributions report has been defeated. The next item of business is the proposal submitted by Boston Common Asset Management and Walden Asset Management, stockholders of Oracle. The proposal, which appears on page 62 of Oracle's proxy statement, requests that the company provide a public report disclosing certain information regarding lobbying. We understand that Colin Mew will represent the proponents at this meeting. Is Mr. Mew present? Okay, pursuant to the rules of conduct for the meeting, you will have up to five minutes to present the proposal.
Thank you. Fellow stockholders and members of the board, my name is Colin Mew, and on behalf of Boston Common Asset Management and co-filer Walden Asset Management, I hereby move proposal 6, asking our company to provide a report on its state and federal lobbying expenditures, including indirect funding of lobbying through trade associations. Transparency and accountability in corporate spending to influence public policy are in the best interest of Oracle shareholders. Our company has spent over $68 million from 2010 to 2017 on federal lobbying, according to OpenSecrets.org. This figure does not include expenditures to influence legislations in states where Oracle also lobbies, but disclosure is uneven or absent. For example, Oracle spent $1,865,597 on lobbying in California from 2010 to 2017 and reportedly lobbied in 35 different states from 2010 through 2014, according to the Center for Public Integrity.
Corporations contribute millions to trade associations that lobby indirectly on their behalf without specific disclosures or accountability. Absent a system of accountability, company assets could be used for objectives contrary to Oracle's long-term interests. Unlike many of its peers, including Intel and Microsoft, Oracle does not disclose its membership in or payments to trade associations or the amounts used for lobbying. Oracle is listed as a member of the Business Roundtable, which spent $126.93 million on lobbying from 2010 to 2017, and is lobbying against the rights of shareholders to file resolutions, according to Reuters. Proxy adviser ISS supports this proposal, noting that Oracle, quote, "Does not provide comprehensive disclosure of its direct or indirect lobbying expenses. Direct expenses at the federal level were estimated to be $9 million in 2017.
There is also minimal disclosure of the policies and mechanisms Oracle has in place to manage its participation in trade organizations, which may use its dues to lobby for policies that may conflict with the company's." This information could help shareholders evaluate the extent and management of the company's political activities and the relative risks and benefits. Our request for disclosure is a call for transparency and accountability for the spending of shareholder resources, and we urge stockholders to vote for this proposal. Thank you.
Okay. Thank you. The board opposes this proposal for the reasons described in the proxy statement. Will the secretary announce the results of the vote?
This proposal was defeated by a majority of Oracle's outstanding shares of common stock present and entitled to vote at this meeting.
I declare that the stockholder proposal regarding a lobbying report has been defeated. The next item of business is the proposal submitted by Kenneth Steiner, a stockholder of Oracle. The proposal, which appears on page 64 of Oracle's proxy statement, requests that the board adopt a policy requiring the board chair to be an independent member of the board. We understand that Jin Zhao will represent Kenneth Steiner at this meeting. Is he present? Okay.
Thank you. Shareholders request our board of directors to adopt a policy and amend our governing documents as necessary to require henceforth that the chairman of the board of directors, wherever possible, to be an independent member of the board. The board would have the discretion to phase in this policy for the next chief executive officer transaction implemented so it does not violate any existing agreement. If the board determine that a chairman who was independent when selected is no longer independent, the board shall select a new chairman who satisfies the requirement of the policy within a reasonable amount of time. Compliance with this policy is waived if no independent director is available and willing to serve as chairman. Caterpillar and Wells Fargo are examples of companies changing course and naming an independent board chairman.
Caterpillar had even opposed a shareholder proposal for an independent board chairman at its annual meeting. There is plenty of work for an independent chairman of Oracle. An independent chairman is more likely to see that Oracle has more independent directors. Six Oracle directors each had from 16 to 14 years long tenure. The lead director had 24 years long tenure, perhaps the longest tenure of any lead director in the Fortune 500. Long tenure can impair the independence of a director, no matter how well qualified. Independence is a priceless attribute in a director. Safra Catz received a $135 million total realized pay in 2017, and each director on the executive pay committee received a negative vote of 13%-28%. The Oracle say on executive pay proposal received more negative votes from shareholders than positive votes.
Each director on the audit committee received a negative vote of 14%-33%. Directors at other committees typically receive 5% in negative votes, and the chairman of the nomination committee received a 33% negative vote. This proposal topic won 44% support at previous Oracle annual meeting. This 44% support would have been higher, for instance, 47%, if small shareholders had access to independent corporate governance advice. Please vote yes for independent board chairman. Thank you very much.
Okay. Thank you. The board opposes this proposal for the reasons described in the proxy statement. Will the secretary announce the results of the vote?
This proposal was also defeated by a majority of Oracle's outstanding shares of common stock present and entitled to vote at this meeting.
I declare that the stockholder proposal regarding an independent board chair has been defeated. This concludes the formal part of the meeting. I declare that the formal part of the meeting is adjourned and the polls are now closed. We're now at the part of the meeting providing for general questions and discussion. Anyone wishing to address the meeting should rise and 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 when called. Each person will be limited to one question or comment, so please limit any questions or comments to two minutes, and we'll answer as many questions as possible until we run out of time. Please note that our answers to stockholder questions may include expectations, predictions, estimates, or other information that might be considered forward-looking.
While our forward-looking statement represents our current judgment on what the future holds, we are subject to risks and uncertainties that could cause actual results to differ materially. You should review our most recent Form 10-K, Form 10-Q for a discussion of risks that may affect our future results or the market price of our stock. You are cautioned not to place undue reliance on forward-looking statements, which reflect our opinions only as of today. Please keep in mind that we are not obligating ourselves to update these forward-looking statements in light of new information or future events. I now turn the mic over to Chairman Chief Technology, Larry Ellison.
Okay. This gentleman right here.
Thank you. Good morning. I am Bill Kelly from San Diego. First for Mr. Ellison's benefit, I have to admit being a sailor, starting with El Toros and winding up with aircraft carriers.
I built an El Toro when I was a kid out of plywood.
Neat. The focus of Oracle is generally in the business sector and fringe activities around. I'm wondering if there might be an opportunity for us, that is, for Oracle, to make a contribution in the area of countering outside election influences, particularly foreign shores.
Well, again, Oracle Corporation doesn't run a public website like Facebook or Google. We don't deal with masses of consumers, we have less of an opportunity to influence elections or counter the influence of elections. Actually, I thank God every day for that. While I think we have to rely on other tech companies that do have a very large public presence to be as balanced as they're able to be while having a young, progressive employee base. Again, companies have personalities. Those personalities are reflected in their public postures. I think everyone sees that in Silicon Valley, in Apple, in Facebook, and Google. Oracle is primarily a B2B company. We don't deal directly with consumers, otherwise known as voters. We really don't have the opportunity to influence an election one way or another.
If I could just add that our technology, though, was used extensively in this election to protect the vote in multiple states. In fact, we were part of keeping the vote safe and to avoid any hacking or interference in the actual vote itself.
Yep.
Yeah. Anthony Fisher, stockholder. Wanted to ask the question, what, going forward, are the major growth areas within Oracle, and who is your major challengers?
We have two major growth areas. The cloud is divided into two segments. Business Applications is one segment. In there we have competitors like Salesforce.com, SAP, and Workday. We have an enormous opportunity to be we are overwhelmingly the number one cloud provider of ERP systems. SAP was the number one provider of ERP systems on-premise, the previous generation. Right now, we're overwhelmingly the number one ERP provider in the cloud, and that is the largest application segment in the cloud. That's extremely important for us. In the previous generation of on-premise applications, SAP was the number one company, and we were the number two company. We have a chance to reverse that, where in this new generation of cloud applications, we well expect to be this is one of those forward-looking statements.
We well expect it to be the number one SaaS or number one cloud application company in the world, led by our very strong position in the back office in ERP, in supply chain, and manufacturing. That's one huge opportunity for us. The other opportunity is our other business, the technology business, where in the previous generation of on-premise, we were by far the number one database company in the world. We need to hold onto that franchise and deliver our database in a cloud form where we previously delivered it in on-premise form. With the generation two of our infrastructure, which literally we've just released at Oracle OpenWorld. With generation two of our infrastructure, we think we can deliver a database that is vastly superior to what Amazon has, where Amazon is our primary competitor along with Microsoft, those two.
We demonstrated this year that our Oracle Autonomous Database is unique in the marketplace, and it's the only database that is self-driving. You don't need database administrators. You don't need talented engineers to run the database anymore. It runs itself. It's like a self-driving car. Amazon and Microsoft have nothing like an Oracle Autonomous Database. In addition, for example, this database automatically discovers a security threat. No human beings involved. The database will automatically fix itself and prevent the threat, block the threat while the database is still running. There's no other system in the world that can do anything like this. We automatically, we autonomously detect security threats and autonomously repair those threats while our database is still running. That gives us a huge advantage over anybody else in terms of reliability, security, what's called availability or uptime.
We have a huge advantage in the cloud with our database in terms of, again, those things, security, reliability, performance. The other thing that is shocking, if you want those advantages, if those advantages are important to you got to be willing to pay less because our database costs about one-fifth. Amazon's five times more expensive for their database. Our database, which runs itself automatically, costs one-fifth as much as Amazon's database that is run by human beings. Human-driven database, five times more expensive than an autonomous database. We think we have a huge advantage in the database business. Our new cloud infrastructure, we think is, again, a second-generation cloud infrastructure, which is much better than what Amazon has or what Microsoft has. We think that will allow us to hold onto and actually increase our database franchise.
The second part of the question was, what are your main challenges going forward?
Well, I think our main challenges are always making sure that we can recruit and retain. All we are is a group of people. We're a tech company. We've got to identify, recruit, train, and retain the top talent going forward. We have long been one of the largest, if not the largest recruiters of MIT engineers in the world. We recruit at elite engineering companies, and it's very important that we get the right people recruited into the company, the right people trained, and the right people retained. Our most precious assets drive home every evening and come back the following morning.
Thank you.
Hello, my name is Jong. I'm a stockholder from Mountain View. I have a question to Mr. Ellison. You've been investing a lot in uncertain in regards to cancer project and as well for USC. Is it part of Oracle project and why?
I'm sorry, I missed some of that. Could you-
Talking about your-
The USC
investment in cancer-
Oh
in uncertain and USC as well.
Oh, at USC. Let's see. Well, I lost my mother to cancer. I lost my best friend, Steve Jobs, to cancer. It's a horrible disease. It's devastating. Cancer is actually many different diseases, some of which we're making great progress on. The first miracle cancer drug was Herceptin that actually pretty much cured breast cancer if you had a HER2 positive type of breast cancer. I've decided to spend a good deal of money and spend my time helping to recruit scientists to try to discover more Herceptins and better therapies to provide better outcomes for cancer patients. In fact, I don't know anybody who hasn't lost a dear family member or friend to cancer. It seems like a good use of money and time.
It is. Yeah. Right.
Hello, my name is Bruce Whitson. I'm a stockholder, former employee. With the change in administration over the last two years at a federal level, knowing that maybe 55% of the revenue comes from the Americas, and a significant portion of that, I imagine comes from the U.S. Has there been any regulatory changes, which I think is indicative of perhaps the political party that has come into power in the U.S. that has either had a positive or detrimental effect on overall revenue or regulatory compliance. I don't know whether that's Secretary Panetta or anyone else on the board.
I don't want to answer all the questions, but I think one thing that's been very helpful, I think, to the economy and to our company in particular, is allowing the repatriation of a lot of funds that were kind of marooned overseas, and we couldn't bring them back without very, very high taxes and big impact to our earnings. I think that allowed us and other companies to bring several trillion dollars back into this country. I think that was a good thing. I know people give different people credit for the economic growth we're now experiencing in North America. Some people credit Barack Obama, some people credit the current administration. From my point of view, I'm just happy that we have good economic growth, and we're up over 3% again. That's all very helpful. I'm sure other people have opinions on this. Dr. Boskin?
Overall, there has been an attempt to roll back what the Republicans thought of as excesses of regulation. Some were done more or less for the first time by something called the Congressional Review Act, which enabled Congress to go back and revoke or amend regulations that they had been involved in putting in place over the previous period. Some were done administratively. Some are being challenged in court as they were under President Obama. We need sensible rules and regulations for a variety of activities. When they get overbearing, they impose lots of costs. They wind up harming companies, especially harmful to smaller companies, which can't amortize the fixed cost over a larger sales base. They affect where companies do business and so on. I think overall, that's changed. Technology has been a sector that is not regulated very much.
Only in the periphery there are some work, labor laws and other things that are regulated. There's been a lot of talk about, in both parties, about regulating some other technology companies. It's not so much directed at Oracle, but at Facebook and Google and some others about the intersection of their position in the market and their potential monopolization over information and potential biases and how it's handled and so on and so forth. The Europeans have moved aggressively with a data privacy directive that has some effect on us, but it's directed primarily at companies like Google and Facebook and so on. They're starting to fine those companies and address some of their business practices. European antitrust law is a bit different than American antitrust law. We will see.
I think we're in the early stages of where we wind up, and for the economy, also in Oracle's interest, but for the good of the economy and our society, it'd be good to reach a balance that's sensible, neither overbearing and stifling innovation, nor so light that we wind up with some of the problems that people have pointed to in the last few years.
Okay. Thank you very much. Okay. All right. That seems like that's all the questions. Again, the meeting's adjourned. Thank you.
Thank you.