This announcement ends months of speculation about when Henley, who lives in Santa Barbara, Calif., would leave his post at the company, which is based south of San Francisco.
Safra Catz and Chuck Phillips, both executive vice presidents, will serve as co-presidents and report to CEO Larry Ellison, who had also served as the company's chairman. The changes are effective immediately.
Phillips will also be joining Oracle's board of directors; Catz and Henley are already directors.
"The Oracle board of directors believes these changes will enable the company's deep management talent to better serve customers, run the company with excellence and integrity and complement its good corporate governance," said a statement from Michael Boskin, an Oracle director and chairman of the company's nomination and governance committee.
Henley's move into the chairman spot should please corporate watchdogs and investors who are worried about all-powerful CEOs, said Cameron Steele, a securities analyst at RBC Capital. "Based on (Ellison's) ownership of the company and his dual roles, he has quite a bit of power," Steele said. "I would expect this to be more of a trend" with other companies.
But the management changes announced on Monday don't clarify whom, if anyone, the company is grooming to succeed Ellison as CEO, Steele said. "The good news is that Larry is young and seems very energized with the business."
Oracle has been operating without a clear heir apparent to Ellison sinceand left the company in 2000. That lack has caused concern among investors, given that Ellison flies his own airplane and engages in sailboat racing, which nearly during a race in Australia in 1998.
Catz will continue to head global operations, which she has done for the past five years. Before joining Oracle, she was an investment banker.
Phillips' role will be expanded, and he will take on responsibility for field operations, including sales, marketing and consulting. That represents the bulk of the company's operations, except for engineering and finance. Phillips was hired last year to handle areas that would affect customers and partners and to aid in setting corporate strategy and business development. He previously worked as a Wall Street analyst.
"I would question putting Safra and Chuck in those roles. They have no prior operating experience, and it would divide the company. It seems like a strange announcement and one that makes you go, 'Huh?'" said a former Oracle executive, who declined to be named. "It would make more sense if Safra was named as CFO."
However, Jennifer Glass, an Oracle spokeswoman, said: "These promotions are not a succession plan. They're based on Chuck and Safra's contributions to the company. They are merit-based promotions."
She added that the primary reason for replacing Ellison as chairman--which he has been since 1995--is to improve corporate governance.
"There are a lot of corporate governance advocates who think it's a good idea to separate the roles of chairman and CEO," Glass said.
Oracle, as with other large companies, is required to add outside, or independent, chief financial officers to its board.
"This move is more of a corporate cultural shift than a specific requirement under Sarbanes-Oxley," said Horace Nash, an attorney with Fenwick & West and chairman of the firm's securities law practice.
The new accounting rules required by the Sarbanes-Oxley Act deal with corporate governance issues. And although they do not require the positions of chairman and CEO to be given to two different people, a number of companies have recently made a transition to separating the two.
Oracle is currently in the process of interviewing executive search firms to handle the task of finding the company a new chief financial officer, said Glass.
"It makes sense to have Jeff as the outside chairman for Oracle. He's been interested in retiring for a while and is spending more and more time at his home in Santa Barbara," said the former Oracle executive.