Business software giant Oracle Corp. ORCL -0.32% is in the midst of a massive transition, taking on Inc. AMZN +12.96% and others in selling cloud-computing services. Helping lead the shift is Mark Hurd, the company’s chief executive officer.

In an interview with Wall Street Journal Financial Editor Dennis K. Berman, Mr Hurd discussed Oracle’s strategy and why shifting software operations to the cloud is in companies’ best interest.

Edited excerpts follow.

Generational change

MR. BERMAN: Let’s talk about year-end compensation, about how you are being incentivized. That has changed at Oracle, and I think that says a lot about the company.

MR. HURD: The compensation has always been about stock options, and people would only make money if the company was performing.

The problem with that methodology—low salaries, low bonuses, lots of stock options—has always been that when you do a Black-Scholes model against that, it gets you to crazy numbers, but you don’t get anything unless the stock performs.What we have done is tried to evolve that. We’re sticking with the mentality of the options-related comp, but aligning it to performance incentives, some of which are around our transition to the cloud. It’s a big deal.

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Article Credit: The Wall Street Journal

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