Oracle awarded stock options with a combined grant-date value of $988 million to co-founder Larry Ellison and co-CEOs Clay Magouyrk and Mike Sicilia in fiscal 2026, and all three packages are now underwater after a steep fall in the company's shares, Fortune reported Saturday.

What Happened

Magouyrk and Sicilia received their grants in September 2025, when they were promoted to co-chief executives. Magouyrk's award was valued at $621.7 million and Sicilia's at $248.7 million, both with a strike price of $308. Ellison, Oracle's chairman and chief technology officer, received an October grant valued at $117.8 million with a $280 strike price.

Oracle shares closed Friday at $137, down 53% over the past 12 months, according to Fortune. At that level Magouyrk's and Sicilia's options would need the stock to more than double before they carried any value.

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Cash pay rose as well. Each of the three executives received a $4.9 million bonus, and Ellison's base salary, previously set at $1, increased to $950,000, matching the co-CEOs' salaries.

Why It Matters

The pay packages were set when Oracle's stock was riding investor enthusiasm about its role as a supplier of AI computing capacity. The stock's decline since then reflects a shift in how the market weighs that bet. Oracle's cloud business is growing quickly: fiscal 2026 cloud revenue rose 39% to $34 billion, cloud infrastructure revenue jumped 77% to $18.1 billion, and total revenue grew 17% to $67.4 billion. Remaining performance obligations, the value of contracted future revenue, reached $638 billion, up from $138 billion a year earlier.

But building the data centers to serve those contracts is expensive. Oracle spent $55.7 billion on capital expenditures in the fiscal year, leaving free cash flow at negative $23.7 billion. To fund the build-out it issued $43 billion in senior notes and raised $20 billion in a stock offering over the summer priced at $141 a share, according to Fortune.

Context

Underwater options are designed to reward executives only if the share price recovers, so their current value to the recipients is low even though the grant-date figures are large. That makes Oracle's pay story as much a measure of market sentiment about AI infrastructure as of executive compensation itself. Oracle has signed some of the largest compute contracts in the industry, including its role in the Stargate project with OpenAI, which has tied its fortunes closely to a small number of AI customers and their ability to pay.

Fortune also reported that median employee pay at Oracle fell to $94,740 in fiscal 2026 from $98,899 the year before.

What to Watch

Shareholders vote on the executive pay plan on Nov. 18. Beyond the vote, investors will track whether capital spending begins to translate into cash flow as new capacity comes online, and whether the $638 billion backlog converts to revenue on schedule. Any repricing or new grants to replace the underwater options would draw scrutiny given the size of the original awards.