Activist shareholders backed off submitting reform proposals at Occidental Petroleum Corp.'s annual meeting after the oil company board said Monday it would give shareholders a non-binding vote on executive compensation starting in 2010.
Los Angeles-based Occidental has come under criticism in recent years for the rich compensation packages granted Chief Executive Ray Irani, whose total compensation package rose from $55.6 million to $77.6 million in 2007. But in 2006 Irani actually took home $464 million, the bulk of it from exercised stock options, and in 2007 had $46.9 million worth of stock grants from previous years vest.
"We are now taking an additional significant step forward by adopting 'say on pay,' providing for a regular advisory vote," Irani said in a statement.
The company said it also supports Congress establishing clear guidelines, setting a common standard and adopting legislation to mandate an advisory vote on executive compensation at all U.S. companies.
As a result of the board's action, the Needmor Fund said it withdrew its own 'say on pay' stockholder proposal it had planned to present at Oxy's annual meeting.
Similar shareholder proposals sponsored by AFL-CIO and other union pension funds also were dropped after the board agreed to expand its disclosure to include equity retention and death benefits.
"Allowing shareholders to provide input on executive compensation packages is more important than ever in the current economic environment," said Daniel Pedrotty, director at the AFL-CIO office of investment, in the statement.
Occidental shares closed up $1.28, or 2 percent, to $56.82 on the New York Stock Exchange. As oil prices have fallen, company's share price is down 43 percent from its 52-week high last May.
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