Or it was until mid-February, when a bit of boardroom weirdness erupted at Occidental Petroleum, the oil and gas exploration and production company based in Los Angeles and one of Mr. Romick’s holdings.
On Feb. 14, out of the blue, Occidental issued a terse, two-paragraph news release. In it, the company announced the creation of a search committee to identify possible successors for Stephen I. Chazen, the C.E.O. It was the first that shareholders had heard about replacing Mr. Chazen, and Mr. Romick said he felt that there was more to the story than Occidental stated.
Then a Wall Street Journal article pointed to boardroom intrigue at the company and suggested Mr. Chazen was being pushed out. Mr. Romick took action.
“I don’t disagree with the idea that there has to be better succession planning at the company,” Mr. Romick, 49, said last week, “but it was putting the wrong guy out to pasture.” The right guy, he contended, would have been Ray R. Irani, the executive chairman of Occidental’s board and its chief executive before Mr. Chazen for 21 years.
Dr. Irani, 78, has ignited controversy at Occidental before. When he was C.E.O., his rich compensation was criticized, and three years ago, 53 percent of Occidental shares voted at the annual meeting rejected the company’s pay policies. A group of shareholders also threatened to mount a proxy fight to oust four independent directors at the company. Afterward, in 2011, Dr. Irani stepped down as C.E.O., and Mr. Chazen took over.
The current plan is for Dr. Irani to retire altogether from the company in 2014. But when the board released its surprise succession statement regarding Mr. Chazen, some investors became concerned that removing him would allow Dr. Irani to postpone his exit. Trying to tamp down this speculation, the company in early April denied any boardroom strife and said Dr. Irani would retire next year, on schedule.
“This is not the time to ask Dr. Irani to step down,” said Dale Petroskey, a spokesman for Occidental. “He can help to ensure continuity and good execution during this period of transition.” He declined to make any board members available for comment.
Nevertheless, the boardroom imbroglio has drawn investor scrutiny to Occidental’s directors just ahead of its annual meeting on May 3 in Santa Monica, Calif. Under its bylaws, any board member who does not receive support from a majority of voted shares has to resign.
Mr. Romick is among the investors who say it’s about time that Occidental’s board is scrutinized. Its directors are among the most highly paid in corporate America: the nine current directors who served for all of 2012 received an average of $640,000 in annual compensation, most of it in stock.
Aziz D. Syriani, 71, is the lead independent director. The C.E.O. of the Olayan Group, a global trading, services and investment organization, he received stock and cash worth $879,000 last year as an Occidental director.
This year’s proxy statement says the board as a whole met five times in 2012. (The audit committee, which Mr. Syriani heads, met eight times.)
“There is no justification for what they earn,” Mr. Romick said. Moreover, the rich pay may induce directors to put managements’ interests ahead of shareholders’, he said.
Mr. Petroskey of Occidental disagrees. “Directors’ compensation is primarily based on an annual stock grant,” he said. “While the directors have not voted themselves an increase in the amount of shares awarded in the annual grant in more than a decade, the value of the grant has increased in recent years due to the very strong performance of Oxy stock.”
Then there is the lengthy tenure of Occidental’s directors — an average of 12 years. Mr. Syriani has served since 1983, which raises questions among some investors about whether his allegiances lie more with the company than with shareholders. As an April 7 research report by Deutsche Bank noted, under governance guidelines in Britain, such longevity would deem the Occidental board “not independent.”
Mr. Petroskey noted that the New York Stock Exchange, where the company’s shares trade, has no such measure of independence. “There are advantages to having a long-serving director with deep knowledge of the company and its operations,” he said. “The board is united under Mr. Syriani’s leadership on continuing to make the difficult but necessary decisions to move this company toward a strong future.”
Article source: http://www.nytimes.com/2013/04/21/business/a-shareholder-challenges-an-occidental-petroleum-move.html?partner=rss&emc=rss
