The decision, announced at the company’s annual meeting, was the climax of a brutal boardroom struggle between Mr. Irani and Stephen I. Chazen, the chief executive during the last two years, over leadership and direction of the company. Earlier this week, the Occidental board bowed to investor pressure by announcing that Mr. Chazen would continue to serve in his position through the end of 2014 and help find a successor.
The company announced that Edward P. Djererjian, a former ambassador in the Middle East who has served as an independent director since 1996, will assume the role of independent chairman of the board, and that former Energy Secretary Spencer Abraham will become the independent vice chairmen. Both were elected by the board.
Mr. Irani has been chairman of Occidental since 1990, and many observers of the company believed he had been maneuvering to remove Mr. Chazen and retake the post of chief executive. He did not attend the shareholder meeting, held in Santa Monica, Calif.
Mr. Irani, 78, took over the Los Angeles-based company from Armand Hammer and stretched its reach across the Middle East, including Iraq, Oman and the United Arab Emirates. But he angered many investors by rewarding himself and some of his most senior executives with pay packages that were outsize even by the generous standards of large oil companies. Shareholders forced him to step down as chief executive two years ago.
Mr. Irani will be eligible for a severance payment of $38 million, which includes a life insurance payout, and additional annual payments of more than $2 million.
In recent years, Mr. Chazen tried to turn the company’s focus toward domestic oil fields to take advantage of the shale oil boom, but the financial results of his approach did not satisfy Mr. Irani. Occidental’s stock price has lagged those of competitors.
The shareholders had voted against Mr. Irani’s retention as chairman by more than 3 to 1.
“This means Chazen is really in charge until his time is up next year,” said Philip H. Weiss, a senior energy analyst at Argus Research. “This ends the battle at the top and clears a path for new leadership.”
In another sign of change, Aziz D. Syriani, the lead independent director, submitted his resignation. Mr. Syriani is the chief executive of the Olayan Group, a global trading and investment company, who received stock and cash worth $879,000 last year as an Occidental board member.
The developments were welcomed by activist investors who wanted Mr. Irani to retire.
“I am happy and cautiously optimistic but the devil’s in the details,” said Steven Romick, a managing partner of First Pacific Advisors and overseer of the $11 billion FPA Crescent fund, who attended the annual meeting. He said he hoped the company would now restructure its compensation policies for the board and senior management, and he was open to the possibility that Mr. Chazen might stay in his position longer.
Mr. Chazen is 66, two years younger than the new retirement age set for the chief executive just this week by the board.
Mr. Romick added, drawing a clear distinction with Mr. Irani’s direction, “My preference would be to be very circumspect about the Middle East.”
In February, Occidental surprised investors when it announced that it was creating a search committee to replace Mr. Chazen as chief executive. Fear spread among some investors that Mr. Irani was trying to put off his retirement and even return to his old post as chief executive. That stirred a revolt by the California State Teachers’ Retirement System and other shareholder activists who came out in favor of Mr. Chazen. They were supported by many Wall Street analysts who have complained that the company under Mr. Irani was often secretive.
Mr. Chazen, who previously served as chief financial officer, won the support of many investors because he was viewed as a smart allocator of capital and efficient manager of new projects.
Institutional Shareholder Services, the influential proxy adviser, had recommended that shareholders refuse to re-elect Mr. Irani or Mr. Syriani.
Article source: http://www.nytimes.com/2013/05/04/business/occidental-chairman-irani-agrees-to-leave-company.html?partner=rss&emc=rss