Occidental Shareholders Vote Out Long-Time Chairman Irani

The company had been forced to deny there was a fight at the top after the Wall Street Journal reported pressure from Irani for Chief Executive Steve Chazen to leave, even though Chazen had the support of several big investors.

More than three-quarters of the votes cast went against Irani, according to a tally released late on Friday. Earlier, Chazen had said at the annual shareholder meeting that Irani would step down from the board.

Edward Djerejian, a former ambassador, will take over as independent chairman of the Los Angeles-based company. A director since 1996, he most recently chaired the corporate governance, nominating, and social responsibility committee.

Shares of Occidental rose nearly 3 percent to close at $90.76 on the New York Stock Exchange.

"Ultimately this clears the path for Chazen to continue what he is focusing on so far, which is cost improvement," said Allen Good, an oil company analyst at Morningstar in Chicago. "It also might clear the way for the break-up of the company. They are much bigger now, so it might make sense to create a couple of different companies out of Oxy."

Chazen spoke at length on a conference call last week about the potential shape of a sale of its Middle East businesses, long more favored by Lebanon-born Irani.

On Friday, while still displaying his well-known sense of humor, Chazen talked emotionally of his two-decade relationship with the 78-year-old chairman. "I'm not going to say that every day was a trip to Disneyland," he said, before adding: "Every day I learned something."

Irani took over as CEO in 1990 from tycoon Armand Hammer - a time when Chazen said the nicest thing you could say about the company was it was "nearly insolvent" - and oversaw dramatic growth, while raising eyebrows with his lavish pay packages.

In a call at the meeting for better governance, shareholder John Chevedden pointed to what Irani received for financial planning: $390,000 last year. About 63 percent of shareholders backed the latest executive compensation plan in an advisory vote on Friday.

Chazen, 66, took over as CEO two years ago, having served in the executive suite since 1994. Occidental revealed in February it was seeking his replacement, and then said in April that he would continue through 2014, in order to reduce uncertainty.

Referring to the very public succession battle, Chazen said "it's been tough to tell the last few weeks" that oil and gas is the company's primary business.

Chazen received more shareholder support than any other boardmember, at 623.2 million votes - nearly 99 percent.

The CEO went on to say he would still ask Irani for advice regularly "because I'm addicted to it" and concluded his remarks by thanking his wife for "letting me fool around a little longer."

Influential advisory firm ISS this week had reaffirmed its recommendation to vote against Irani.

"I didn't see anybody predicting that he would be forced," said Jack Zwingli, leader of information services at Farient Advisors, an independent executive compensation consulting firm. "Most people would take it as a surprise."

Zwingli said investors would watch to see if the pay package of the next CEO is brought down to the level of Occidental's peers.

The chairman of Occidental's compensation committee, Aziz Syriani, withdrew his nomination prior to the election, and Chazen said that a search firm would start working on replacements for open board seats.

(Reporting by Braden Reddall, writing by Anna Driver; Editing by Kenneth Barry and David Gregorio)

Occidental Chairman Irani Agrees to Leave Company

The decision, announced at the company’s annual meeting, was the climax of a brutal boardroom struggle between Mr. Irani and Stephen I. Chazen, the chief executive during the last two years, over leadership and direction of the company. Earlier this week, the Occidental board bowed to investor pressure by announcing that Mr. Chazen would continue to serve in his position through the end of 2014 and help find a successor.

The company announced that Edward P. Djererjian, a former ambassador in the Middle East who has served as an independent director since 1996, will assume the role of independent chairman of the board, and that former Energy Secretary Spencer Abraham will become the independent vice chairmen. Both were elected by the board.

Mr. Irani has been chairman of Occidental since 1990, and many observers of the company believed he had been maneuvering to remove Mr. Chazen and retake the post of chief executive. He did not attend the shareholder meeting, held in Santa Monica, Calif.

Mr. Irani, 78, took over the Los Angeles-based company from Armand Hammer and stretched its reach across the Middle East, including Iraq, Oman and the United Arab Emirates. But he angered many investors by rewarding himself and some of his most senior executives with pay packages that were outsize even by the generous standards of large oil companies. Shareholders forced him to step down as chief executive two years ago.

Mr. Irani will be eligible for a severance payment of $38 million, which includes a life insurance payout, and additional annual payments of more than $2 million.

In recent years, Mr. Chazen tried to turn the company’s focus toward domestic oil fields to take advantage of the shale oil boom, but the financial results of his approach did not satisfy Mr. Irani. Occidental’s stock price has lagged those of competitors.

The shareholders had voted against Mr. Irani’s retention as chairman by more than 3 to 1.

“This means Chazen is really in charge until his time is up next year,” said Philip H. Weiss, a senior energy analyst at Argus Research. “This ends the battle at the top and clears a path for new leadership.”

In another sign of change, Aziz D. Syriani, the lead independent director, submitted his resignation. Mr. Syriani is the chief executive of the Olayan Group, a global trading and investment company, who received stock and cash worth $879,000 last year as an Occidental board member.

The developments were welcomed by activist investors who wanted Mr. Irani to retire.

“I am happy and cautiously optimistic but the devil’s in the details,” said Steven Romick, a managing partner of First Pacific Advisors and overseer of the $11 billion FPA Crescent fund, who attended the annual meeting. He said he hoped the company would now restructure its compensation policies for the board and senior management, and he was open to the possibility that Mr. Chazen might stay in his position longer.

Mr. Chazen is 66, two years younger than the new retirement age set for the chief executive just this week by the board.

Mr. Romick added, drawing a clear distinction with Mr. Irani’s direction, “My preference would be to be very circumspect about the Middle East.”

In February, Occidental surprised investors when it announced that it was creating a search committee to replace Mr. Chazen as chief executive. Fear spread among some investors that Mr. Irani was trying to put off his retirement and even return to his old post as chief executive. That stirred a revolt by the California State Teachers’ Retirement System and other shareholder activists who came out in favor of Mr. Chazen. They were supported by many Wall Street analysts who have complained that the company under Mr. Irani was often secretive.

Mr. Chazen, who previously served as chief financial officer, won the support of many investors because he was viewed as a smart allocator of capital and efficient manager of new projects.

Institutional Shareholder Services, the influential proxy adviser, had recommended that shareholders refuse to re-elect Mr. Irani or Mr. Syriani.