Oracle awarded $988 million in stock options to co-founder Larry Ellison and new co-CEOs Clay Magouyrk and Mike Sicilia during fiscal 2026, but by the May 31 fiscal year end, all of those options were underwater. The company disclosed in its September 25 proxy filing that the grants 'had no intrinsic value' at year end, meaning the exercise price was above the market price of Oracle's stock.
The grants and the recipients
The options went to three top executives: Larry Ellison, who co-founded Oracle and has long been a central figure at the company; and Clay Magouyrk and Mike Sicilia, who are described as new co-CEOs. The total value of the awards was $988 million, a figure that would have represented a significant payday had the stock performed as expected. Instead, the fiscal year closed with the options out of the money, leaving the recipients with paper losses on those particular grants.
What 'underwater' means for the awards
An underwater stock option is one where the current market price is below the option's strike price, making exercise unprofitable. In this case, Oracle's proxy filing explicitly states that the grants 'had no intrinsic value' as of May 31. That doesn't necessarily mean the executives received nothing—they may still hold the options in hopes of a future rebound—but at the fiscal year end, the awards were worth zero on paper. The disclosure provides a rare window into how even large executive compensation packages can sour when share prices decline.
Why the options lost value
The filing doesn't detail the reasons behind Oracle's stock performance during fiscal 2026, but the outcome is clear: the options' exercise price remained above the market price through the end of the period. That could stem from a broad market downturn, company-specific challenges, or simply the timing of when the options were granted relative to the stock's trajectory. What's certain is that by the May 31 close, none of the three executives could have exercised those options at a profit.
How Oracle reported the compensation
Oracle's September 25 proxy filing is a standard regulatory document that publicly traded companies use to disclose executive pay. In it, Oracle stated plainly that the grants 'had no intrinsic value' at fiscal year end. The company did not mince words, and the filing serves as the official record of the awards' status. While the proxy doesn't speculate on future stock movements, it does confirm that the $988 million headline figure didn't translate into realizable gains for Ellison, Magouyrk, or Sicilia during the last fiscal year.
What happens next
The options remain outstanding unless Oracle's stock price rises above their strike price before expiration. If that happens, the executives could still profit. If not, the awards may expire worthless. Oracle hasn't indicated whether it plans to adjust the grants or issue new ones, and the proxy filing doesn't address any potential changes to executive compensation. For now, the $988 million in options stands as a reminder that even the most generous pay packages can be undone by market forces. The next update will come when Oracle reports its fiscal 2027 results or files its next proxy statement.
