Exhibit 10.27

 

Description of the Fiscal Year 2006 Executive Bonus Plan

 

Eligibility. Participants in the Bonus Plan are chosen solely at the discretion
of the Compensation Committee. Our Chairman, Chief Executive Officer, our
Presidents, all of our Executive Vice Presidents and certain of our Senior Vice
Presidents are eligible to be considered for participation in the Bonus Plan. As
of August 24, 2005, there were twelve persons chosen to participate for fiscal
year 2006. No person is automatically entitled to participate in the Bonus Plan
in any Bonus Plan year. Oracle may also pay discretionary bonuses, or other
types of compensation, outside the Bonus Plan which may or may not be
deductible. However, no employee has a guaranteed right to such
discretionary compensation as a substitute for a performance award in the event
that performance targets are not met or that stockholders fail to approve the
material terms of the Bonus Plan.

 

History. The Compensation Committee approved the adoption of the Bonus Plan,
which is part of the overall compensation program for our executives, at a
meeting held on August 24, 2005.

 

Purpose. The purpose of the Bonus Plan is to motivate the participants to
achieve our financial performance objectives and to reward them when those
objectives are met with bonuses that are intended to be deductible to the
maximum extent possible as “performance-based compensation” within the meaning
of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

 

Administration. The Bonus Plan will be administered by the Compensation
Committee, consisting of no fewer than two members of the Board, each of whom
qualifies as an “outside director” within the meaning of Section 162(m) of the
Code.

 

Determination of Awards. Under the Bonus Plan, participants will be eligible to
receive awards based upon the attainment, in fiscal year 2006, and certification
of certain performance criteria established by the Compensation Committee. For
fiscal year 2006:

 

  (a) Mr. Ellison, our Chief Executive Officer; Mr. Henley, our Chairman of the
Board; Ms. Catz, a President; Mr. Phillips, a President; and Mr. Maffei, a
President and Chief Financial Officer, will each receive an award based on
Oracle’s improvement in its pre-tax profit on a non-GAAP basis from fiscal year
2005 to fiscal year 2006;

 

  (b) each Executive Vice President and one Senior Vice President directly
responsible for sales and consulting (collectively, the “Sales and Consulting
Participants”) will each receive an award based upon improvement in license and
outsourcing revenue growth in their respective areas of responsibility from
fiscal year 2005 to fiscal year 2006 and upon reaching and exceeding targets
with respect to licensing, outsourcing and consulting margins in their
respective areas of responsibility for fiscal year 2006; and

 

  (c) the Executive Vice Presidents and one Senior Vice President not directly
responsible for sales or consulting will each receive an award based on
improvement in profit in their respective areas of responsibility from fiscal
year 2005 to fiscal year 2006.

 

The Compensation Committee adopted the performance criteria on August 24, 2005,
within 90 days after the start of fiscal year 2005. Each Sales and Consulting
Participant’s total bonus under the Bonus Plan is calculated by summing the
applicable bonus for each target. For all participants, the applicable bonus for
their target or targets is related to the amount by which each target is
exceeded or missed. If the target bonus calculation results in a negative
number, the bonus for such target is zero. The details of each of the formulas
with respect to the criteria have not been included in this proxy statement in
order to maintain the confidentiality of our revenue, profit and margin
expectations, which we believe are confidential commercial or business
information, the disclosure of which would adversely affect Oracle. In the event
of the termination or resignation of a participant during fiscal year 2006, we
intend to have the person who assumes the responsibilities of that participant
assume the same bonus structure as that participant, but adjusted, as determined
by the Compensation Committee, to take into account that such person did not
serve in that capacity for the entire fiscal year.

 

Payment of Awards. All awards will be paid in cash as soon as is practicable
following determination of the award, unless the Committee has, prior to the
grant of an award, received and approved, in its sole discretion, a request by a
participant to defer receipt of an award in accordance with the Bonus Plan.

 

Maximum Award. The amounts that will be paid pursuant to the Bonus Plan are not
currently determinable. The maximum bonus payment that our Chief Executive
Officer may receive under the Bonus Plan for fiscal year 2006 would be
$9,680,000. The maximum bonus payment that any other participant may receive
under the Bonus Plan for fiscal year 2006 is based on a fixed multiple of a
target bonus for such participant and would be less than the maximum bonus
payment that our Chief Executive Officer may receive under the Bonus Plan.

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Amendment and Termination. The Compensation Committee may terminate the Bonus
Plan, in whole or in part, suspend the Bonus Plan, in whole or in part from time
to time, and amend the Bonus Plan, from time to time, including the adoption of
amendments deemed necessary or desirable to correct any defect or supply omitted
data or reconcile any inconsistency in the Bonus Plan or in any award granted
thereunder, so long as stockholder approval has been obtained, if required in
order for awards under the Bonus Plan to qualify as “performance-based
compensation” under Section 162(m) of the Code. The Compensation Committee may
amend or modify the Bonus Plan in any respect, or terminate the Bonus Plan,
without the consent of any affected participant. However, in no event may such
amendment or modification result in an increase in the amount of compensation
payable pursuant to any award.

 

Termination of Employment. Should a participant’s employment with us terminate
for any reason during fiscal year 2006, the participant will not be eligible to
receive an award under the Bonus Plan.

 

Federal Income Tax Consequences. Under present federal income tax law,
participants will realize ordinary income equal to the amount of the award
received in the year of receipt. That income will be subject to applicable
income and employment tax withholding by Oracle. We will receive a deduction for
the amount constituting ordinary income to the participant, provided that the
Bonus Plan satisfies the requirements of Section 162(m) of the Code, which
limits the deductibility of nonperformance-related compensation paid to certain
corporate executives, and otherwise satisfies the requirements for deductibility
under federal income tax law.