‘Extraordinarily Well’

For Oracle, the distorting factor in its stock price has been the belief that the Redwood City, California-based company was late to enter the cloud computing market, Richard Davis Jr., an analyst at Canaccord Genuity Group Inc., wrote in a January letter to shareholders.

The company fell 35 cents, or 0.8 percent, to $41.47 yesterday in New York.

Focusing on Oracle’s stock returns may be short-sighted, Davis said, given its recent growth and investments. The company’s revenue surged 43 percent from fiscal 2010 through 2014 and its net income margin improved by almost 6 percentage points, according to data compiled by Bloomberg. It increased its research and development budget by $1.9 billion to $5.2 billion and spent $19 billion acquiring more than 40 companies, the data show.

“Larry has done extraordinarily well,” said Bill George, the former chief executive officer of Medtronic Plc and a member of Exxon Mobil Corp.’s board of directors. “He has acquired a lot of potential and actual competitors and he’s built a lot of shareholder value.”

Better Metric

In economic profit, expenses such as research and development as well as employee training are classified as investments for the company’s future sustainability. It measures how efficiently businesses acquire and deploy financing, said Julie Gorte, senior vice president for sustainable investing at Pax World Management LLC, which manages $3 billion.

It’s a preferable metric for a company like Exxon, which is focused on making longer term investment decisions, said George, who also sits on the compensation committee at Goldman Sachs Group Inc.

Exxon CEO Rex Tillerson’s $28.9 million pay in 2013 is 0.4 percent of his company’s $7.4 billion three-year average economic profit through that year, the 13th-best ratio in the S&P 100, according to data compiled by Bloomberg based on the most recently disclosed proxy statements. Google Inc. co-founder Larry Page, who makes $1 a year in total compensation, has the best economic profit-to-CEO pay ratio in the index.

Return on Equity