Occidental Petroleum Corp. Chairman Ray R. Irani has the 15th most lucrative compensation package among L.A. executives, at $10.4 million until, that is, you add in his recent contract re-negotiation pay-out.
Then he shoots to No 1.
Irani's $95 million payment, which stunned compensation experts and industry analysts when it was announced last October, brought the Oxy chairman's total 1997 compensation to more than $105.4 million.
By comparison, top-ranked SunAmerica Inc. Chairman Eli Broad made less than half that, with a total compensation of $47 million.
In October, Occidental's board approved the $95 million payment to Irani in order to cancel the executive's old contract. (The Business Journal did not include the $95 million extraordinary payment in its compensation calculations.)
The old contract included such lavish perks as a guaranteed bonus of not less than 60 percent of Irani's annual salary, a minimum of 75,000 stock options a year and the equivalent of seven years of salary and stock options if Occidental is sold.
Under Irani's new contract, his salary was reduced from $1.9 million to $1.2 million, and bonuses will be determined by the company's board instead of being based on guaranteed minimums.
While Occidental officials argued that the contract re-negotiation put Irani's compensation more in line with other chieftains, compensation experts say the $95 million pay-out was extraordinary for an executive not leaving a company.
"It was an unusual movement that the board took and an unusually high amount of pay-out," said Judith Fischer, managing director of Springfield, Va.-based Executive Compensation Advisor Services. "I've seen situations like that where both parties agree to a new arrangement without a buyout factor. And if you consider the buyout factor and how much they paid him, that makes it even more extraordinary."
Fischer added that Irani's annual compensation under the new contract is on the high end. "He still is considered to be well-paid with opportunity to increase that pay," she said.
Company officials are being customarily tight-lipped about the whole thing. When the pay-out was first disclosed, the company issued a terse statement and little else. At Occidental's annual meeting earlier this month, Irani would not answer questions about his compensation, and instead referred the issue to board member Aziz D. Syriani.
Syriani said the buyout of Irani's old contract was necessary to instate a new contract that is more performance-based. "This is not a bonus, not a new compensation package, but a settlement of agreements," Syriani said.
An Occidental spokesman said Irani would not comment on the pay-out.
Certainly the timing wasn't great, coming in a year when Occidental had a particularly poor performance. The company reported a net loss of $390 million ($1.43 diluted loss per common share) in 1997, vs. a net income of $668 million ($1.73 per share) in 1996.
The poor performance was blamed on weak oil prices at the end of the year, and charges related to selling off MidCon Corp., a natural gas transmission and marketing business.
The Lebanese-born Irani, 63, joined the company in 1983 as chairman and chief executive of Occidental Chemical Corp., a subsidiary of Occidental Petroleum. He has been chairman and chief executive of the parent company since 1990, and additionally served as president from 1984 to 1996.
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