Oracle Executives' $988M Stock Options Wiped Out by Fiscal 2026 Crash

Key points

• Oracle granted stock options worth $988 million at grant date to Ellison, Magouyrk, and Sicilia, all of which had zero intrinsic value by fiscal year-end on May 31, 2026.
• Oracle stock fell 53% over the past 12 months, closing at $137, making the strike prices of $280 for Ellison and $308 for the co-CEOs unattainable without a doubling of the share price.
• Cloud revenue grew 39% to $34 billion and cloud infrastructure revenue rose 77% to $18.1 billion, but free cash flow was negative $23.7 billion due to $55.7 billion in capital expenditures.
• New CFO Hilary Maxson chose a mix of restricted stock units and options under Oracle's new Equity Choice Program, with her RSU portion retaining value despite the stock drop.
• Oracle invoked force majeure on a New Mexico data center, causing the cost of insuring its debt against default to reach a record high, according to Bloomberg.

Background

In September 2026, Oracle faced significant investor scrutiny regarding its debt load and AI infrastructure spending. Larry Ellison canceled a pre-arranged plan to sell 50 million shares, valued at approximately $7.5 billion, amid a broader AI-stock selloff. The company also implemented layoffs with severance packages that included the cancellation of unvested stock options and RSUs for affected employees.

Why it matters

The situation highlights the risks of stock option compensation in volatile tech markets, particularly for companies heavily investing in AI infrastructure. While Oracle's cloud business is growing rapidly, the massive capital expenditure and debt accumulation are pressuring the stock price, rendering executive equity awards worthless. This contrasts with the performance of executives who chose restricted stock units, which retain value even in a declining market. The divergence in compensation outcomes underscores the importance of equity structure in executive pay plans during periods of high capital intensity and market volatility.

What to watch

Shareholders will vote on Oracle's pay plan on November 18. The company must navigate its heavy debt load and negative free cash flow while continuing to invest in AI data centers. The stock needs to more than double for Magouyrk and Sicilia to realize any value from their options, a scenario that remains uncertain given current market conditions and investor concerns about Oracle's debt insurance costs.