A massive gamble on the future of cloud computing has left Oracle’s top brass staring at empty pockets, at least when it comes to their latest equity grants. Co-founder Larry Ellison and newly appointed co-CEOs Clay Magouyrk and Mike Sicilia were awarded stock option packages totaling nearly one billion dollars in grant-date value during fiscal 2026. However, by the time the fiscal year wrapped up on May 31, every single one of those options was underwater, meaning they held no intrinsic value because the stock price plummeted below the required strike prices.
The timing proved unfortunate for the executives, as their options were priced near a peak before a period of extreme volatility hit the tech giant. While Oracle has seen an explosion in its cloud business and soaring revenues, investors have reacted poorly to the company’s aggressive spending habits. To keep pace in the artificial intelligence race, Oracle spent over fifty five billion dollars on capital expenditures to build out data centers, leading to negative free cash flow and significant debt issuance. This financial strain contributed to a steep slide in share price, leaving Magouyrk and Sicilia needing the stock to more than double before they can realize any gain from their respective rewards.
Despite these paper losses, the company maintains that this outcome is exactly how the system should work. In a recent proxy statement, Oracle argued that stock options are designed to be strictly performance-based incentives rather than guaranteed payouts. Unlike restricted stock units, which hold value regardless of whether the price rises or falls, options only pay off if leadership successfully drives growth. The board noted that no special actions were taken to cushion the blow for Ellison or his co-CEOs, framing the lack of payout as proof that the compensation plan is functioning as intended.
While the top executives still secured millions in cash bonuses and salary increases, others within the organization felt a sharper sting. Many rank-and-file employees found themselves holding underwater options amid a series of layoffs and a dip in median total compensation across the global workforce. As shareholders prepare to vote on the company’s pay plans this November, Oracle continues to balance its vision of becoming an AI powerhouse against a volatile market that is increasingly skeptical of its costly expansion strategy.