Oracle Appoints Dual CEOs Amid Cloud Growth, Stock Surge

In response to the rapid growth of its cloud business, Oracle has accelerated its succession planning and entered a "dual CEO era." The software giant promoted two executives, Clay Magouyrk and Mike Sicilia, to the position of president in June. Initially, the plan was to elevate them to co-CEOs in one to two years. However, this timeline was expedited, and on Monday, Clay Magouyrk and Mike Sicilia were appointed as Oracle's new co-CEOs to capitalize on a series of positive developments and to lead the company through significant changes.

In recent weeks, Oracle has signed a massive cloud services agreement with AI leader OpenAI, achieved its largest stock price increase since 1992, and is finalizing plans to keep the popular video app TikTok as a major cloud customer. The former CEO and current executive vice chairman of the board, Safra Catz, stated during a conference call with analysts on Monday, "You want to make such a transition when the company is doing well."

Now aged 39 and 54 respectively, Clay Magouyrk and Mike Sicilia must deliver on Oracle's substantial infrastructure agreements with clients like OpenAI, integrate AI into the company's extensive software suite, and safeguard Oracle's lucrative database business. Despite holding identical positions, Clay Magouyrk's compensation is higher. According to regulatory filings, he will receive stock awards valued at 2.5 billion, while Mike Sicilia will receive 1 billion in stock awards.

This disparity reflects the significance of Oracle's cloud infrastructure business. Wall Street expects this sector to contribute a substantial portion of the company's revenue by 2028. Much of this business's recent success is attributed to Clay Magouyrk, an engineering background executive who has led Oracle Cloud Infrastructure (OCI) since 2020 and is one of the earliest members of the department. He noted that the business has entered a phase of "super high growth."

Clay Magouyrk has long reported directly to Oracle Chairman Larry Ellison, who, at 81, is a co-founder and the chief technology officer. Despite stepping down as CEO over a decade ago, Larry Ellison remains a key decision-maker at the company. Those who have worked with Clay Magouyrk describe him as both efficient and prone to conflict. A 2021 lawsuit alleged that he once told a colleague in front of a room full of executives that their behavior was "stupid to the extreme." The lawsuit claimed that OCI had a toxic work culture. Such straightforward management styles are not uncommon in a company led by Larry Ellison, who has described his leadership approach as "sarcastic management."

Mike Sicilia joined the company in 2009 through Oracle's acquisition of Primavera Systems. At Oracle, he focused on developing and selling industry-specific applications, such as those for the banking sector. Insiders at Oracle consider Mike Sicilia an experienced operations and talent leader. He plans to help clients adopt Oracle's full suite of products and integrate AI into them.

The dual CEO model is controversial in the software industry. Marc Benioff of Salesforce lost both of his co-CEOs shortly after appointing them. Jennifer Morgan of SAP left less than a year after being named co-CEO, leaving Christian Klein as the sole CEO. KeyBanc analyst Jackson Ader wrote in a research note that given the extensive delivery tasks facing OCI, Oracle's division of labor announced on Monday might be a good thing. In Oracle's case, Larry Ellison's continued presence could help stabilize decision-making. However, this situation will not last forever. In late 2019, Safra Catz became the sole CEO after Mark Hurd's passing.

Meanwhile, Wall Street may worry that Oracle will lose Safra Catz's widely praised financial leadership, especially as the company is heavily investing in data center infrastructure. It is reported that Safra Catz continued to serve as the chief financial officer during her tenure as CEO. She was initially skeptical of the cloud infrastructure business due to the high operating costs and low profit margins of data centers. The current executive vice president of operations, Doug Kehring, has been promoted to chief financial officer to replace Safra Catz. Jefferies analyst Brent Thill stated, "It is currently unclear whether the strong cost discipline established during Safra Catz's tenure will be broken. Investor concerns about AI data center expansions putting pressure on profit margins may resurface."