Stephen Chazen’s promotion at Occidental Petroleum Corp. last week marked a key step forward in the company’s plan for the succession of longtime Chief Executive Ray Irani.
Chazen was named chief operating officer at the Westwood-based oil giant, and James Lienert replaced him as chief financial officer.
Chazen, 63, who became CFO in 1999 and added the title of president in 2007, now holds the titles that Irani had before his ascension to the chief executive post in 1990.
“This formalizes what we’ve known for a while on the street, that Mr. Chazen is the successor,” said Pavel Molchanov, an analyst with St. Petersburg, Fla.-based Raymond James Financial Inc. “The only issue is exactly when the succession will take place.”
The management change was announced as criticism mounted over Irani’s hefty compensation package. Last week, the giant California State Teachers’ Retirement System pension fund and Relational Investors LLC announced they were launching a proxy fight to place a new slate of four directors on Occidental’s 13-member board. The investors cited dissatisfaction with what they believe is the company’s overly generous executive pay policy and what they termed as a lack of a clear succession plan.
Last year, Irani received $31.4 million in total compensation, defined as salary, bonus, stock and options awards, and other compensation. That was the most among chief executives at L.A.’s largest publicly traded companies, according to Business Journal research. Irani has received $857 million in total compensation during the last decade, the Wall Street Journal reported in July.
The increases in his compensation package have made Irani a lightning rod for criticism, especially as median wages in the country have remained stagnant or declined.
Irani’s defenders said the pay is merited, pointing out that Occidental has consistently met or exceeded industry performance averages during his tenure.
However, Chazen’s compensation last year, though substantially less than Irani’s, still puts him in the top ranks of executives in Los Angeles County.
At its most recent annual shareholders meeting, Occidental held a nonbinding “say-on-pay” vote, asking whether investors approved of the company’s compensation polices. A majority disapproved.
Occidental spokesman Richard Kline said that the board’s compensation committee is reviewing the company’s pay policies and is expected to make recommendations soon in response to investors’ concerns.
CalStrs and Relational also complained that the board has waived its guidelines for retirement at 75 to allow Irani, 75, to remain on the board. His employment contract as chief executive runs through 2015.
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