Occidental Petroleum Corp. (OXY:US) investors should depose Chairman Ray Irani and the lead independent director amid a push to replace Chief Executive Officer Stephen Chazen, proxy adviser Institutional Shareholder Services Inc. said.
Shareholders should oppose the re-election of Irani and board member Aziz Syriani at the company’s May 3 annual meeting in Los Angeles, ISS said in a report dated yesterday. ISS is the first proxy adviser to advocate for board changes after Occidental stock fell for two consecutive years, the worst performance in more than two decades, according to data compiled by Bloomberg.
Investors such as First Pacific Advisors LLC have called forIrani to quit after the board’s decision in February to seek a replacement for Chazen less than two years after his promotion to CEO of the largest oil producer in the continental U.S. Shareholders can’t discern who’s in charge at the Los Angeles- based company and the boardroom turmoil is delaying moves to boost the share price, said David Neuhauser, a managing director at Livermore Partners Inc.
“It’s crystal clear that Ray Irani should remove himself from the situation and allow Chazen to retain full operational control,” Neuhauser, who helps oversee $100 million in assets, including Occidental shares, at Northbrook, Illinois-based Livermore, said in an e-mail. “Occidental must address this issue and not allow for this to become a sideshow.”
Ten of the company’s 11 directors are up for re-election at the meeting. Rosemary Tomich, who has served on the board since 1980, isn’t running for re-election.
Chazen, Occidental’s third CEO since 1957, took over in 2011 after Irani agreed to step down amid a shareholder revolt over executive compensation. Irani’s pay totaled more than $200 million for the past four years, according to proxy filings.
Occidental said in an April 8 statement that Irani played no role in the decision to oust Chazen. A group of independent directors met without Irani present for those discussion and were unanimous in their decision to seek a new chief, according to the statement.
Occidental directors have been the highest paid in the energy industry and second-highest among all companies in the Standard & Poor’s 500 Index, according to the 2012 Spencer Stuart Board Index Report. Board members made an average of $754,000 each in 2011, more than at Amazon.com Inc., Goldman Sachs Group Inc. and Exxon Mobil Corp. (XOM:US), the report said.
Occidental has fallen 23 percent since Chazen became CEO with a focus on boosting crude output in Texas and California rather than the Middle East and North Africa.
Investors and analysts including Cambiar Investors LLC and Oppenheimer & Co. and have said Occidental should consider selling or spinning off assets outside the U.S. that are more susceptible to political upheaval, in a breakup that might be worth $35 billion.
The shares have increased 6.2 percent this year as Chazen, a geologist and former investment banker, targeted a drilling- cost reduction of 15 percent for 2013.
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