Oracle Corporation (ORCL) Investors, Pay Attention: You Are Paying for Underperformance at These Companies

Published on April 9, 2013 at 6:10 pm by The Motley Fool in News

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Actually, the stock market’s long-term return has been closer to 9.6%, based on data from 1928 from IFA.com, which includes dividends.

Geometric mean returns (1926 through 2008)

Asset Class	Average Annual Return
Large-cap stocks	9.6%
Long-term government bonds	5.7%
U.S. Treasury Bills	3.7%

An option to rip off shareholders
Ellison isn’t the only CEO with the potential to gain an outrageous pay package without putting up a performance to match it. Eric Schmidt, former CEO of Google Inc (NASDAQ:GOOG) , was granted a pay package worth more than $100 million in 2011. $38 million of that pay package comes from 181,840 options given an at-the-money a strike price of $612. As was the case with Ellison’s options, Schmidt’s options had a 10-year life span and put Schmidt in a position to make much more than $38 million on them if Google went on to put up a merely average performance. If Google’s stock price appreciates by an average of 7% per year, Schmidt’s shares will be worth more than $111 million by the time the options are set to expire.

The article Investors, Pay Attention: You Are Paying for Underperformance at These Companies originally appeared on Fool.com.

Fool contributor M. Joy Hayes is the Principal at ethics consulting firm Courageous Ethics. She has no position in any stocks mentioned. Follow @JoyofEthics on Twitter. The Motley Fool recommends Google. The Motley Fool owns shares of Google and Oracle.