Two analysts who follow Occidental Petroleum Corp. say that a recent remark by Chief Executive Stephen Chazen indicates he will be holding that post beyond the end of this year, when he was supposed to step down, and possibly further into the future.
During an earnings conference call last month, the Westwood oil giant’s chief executive was asked about the company’s search for his successor. He said the board would have an announcement this month and added: “But I expect to be doing significantly more earnings calls than I had planned.”
The Business Journal asked Pavel Molchanov, analyst in the Houston office of Raymond James & Associates Inc. of St. Petersburg, Fla., what Chazen meant.
“Steve Chazen clearly seems to be revising his previous plan,” Molchanov said.
Both Molchanov and Tim Rezvan, a Stern Agee Group analyst in New York, said such a move would make sense given the restructuring of the company that is under way. In the fall, Occidental announced it intends to sell much of its Middle East operations as well as its stake in a domestic pipeline company. It is also exploring the sale or spinoff of oil and gas holdings in the United States.
The goal of the restructuring is to turn Occidental into a leaner company more focused on domestic oil and gas operations in the hopes of raising the company’s stock price, which was lagging its peers.
“He may want to stay on to see the strategic changes he recommended play out,” Rezvan said.
But staying on as chief executive past the end of this year could go against two provisions in an announcement that Occidental made last April as former CEO Ray Irani was in a losing battle to regain the post. Irani had been forced out as chief executive in 2011 after institutional shareholders rebelled against his high pay.
The first provision was that Chazen would serve as chief executive through 2014. This was interpreted as meaning Chazen would step down at the end of 2014.
The second provision was that the mandatory retirement age for chief executive is 68. Chazen will turn 68 in August.
Occidental spokeswoman Melissa Schoeb said the company would not comment on questions regarding the provisions.
Chazen could assume another executive post with the company – such as executive chairman – and would still participate in earnings teleconference calls. After stepping down as chief executive, Irani became executive chairman and participated in earnings calls.
But Molchanov said that arrangement gave Irani a platform to mount his failed bid to regain the chief executive post.
“The challenge in that case would be how to divide the authority with the future CEO,” Molchanov said. “This can be a delicate process, and of course Occidental has its own history with that.”
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