Occidental
Petroleum Corporation (NYSE: OXY) today announced that Steve Chazen
will continue to serve as Chief Executive Officer through the end of
2014 with the Board’s full support. Mr. Chazen immediately assumes
responsibility for all of the Company’s operations, including Oxy’s
international operations. Mr. Chazen will assist the Board with its
ongoing succession process and will work with the Board on corporate
strategy, succession planning, executive compensation and talent
development.
“Today’s announcement is consistent with my personal plans,” stated
Steve Chazen, Chief Executive Officer. “The Board and I have discussed
the importance of identifying new leadership for the next decade. I
support the Board and its efforts to move forward on succession and
corporate governance issues and look forward to working with them to
effect an orderly transition. For the past 20 years, Ray Irani and I
have had a productive partnership. Ray has devoted his career to this
company, and during his 20-year tenure as CEO, total shareholder return
increased more than 2,000 percent. As the Board and I have said many
times, Ray has made invaluable contributions to the Company and has
earned our respect and gratitude, as well as the respect and gratitude
of all the stakeholders in the Company. The Board and I look forward to
calling on Ray for advice, counsel and help in advancing the Company’s
business interests for the benefit of our shareholders, employees, and
business partners. We know that he will be forthcoming with all of the
wisdom and judgment he has always given us.”
The Board believes that this action reflects the extensive feedback the
Company has received from shareholders, who also indicated a strong
desire to move forward with other corporate governance and executive
compensation changes. Therefore, the Board is adopting the following
policies:
Corporate Governance
-
Going forward it will be the policy of the Board to have an
independent director serve as Chairman;
-
The chairs of each Board committee and the independent Chairman will
be rotated at least every five years;
-
The Board will add at least two new independent directors; emphasis
will be placed on industry knowledge;
-
Going forward, it will be the policy of the Board that former CEOs of
the Company will not be eligible to serve on the Board of Directors;
-
The mandatory retirement age for the Chief Executive Officer will be
fixed at 68 years of age;
-
The Board will create a Committee on Management Succession and Talent
Development. The Board is committed to CEO and executive succession
and development;
-
The independent directors will continue to hold at least one executive
session without management present during each Board meeting.
Director & Executive Compensation
-
The annual common stock grant to non-employee directors will
immediately be reduced by at least 20 percent, and the director
compensation program will be reviewed and revised this year to bring
director compensation levels in line with peers;
-
The discretionary portion of the CEO bonus will be reduced to no more
than 20 percent from 40 percent, and in evaluating the CEO’s
performance, emphasis will be placed on the Company’s financial
performance as well as succession planning, talent development and
maintaining and improving the Company's achievements on health, safety
and environmental matters;
-
The Total Shareholder Return (“TSR”) Award under the Company’s Long
Term Incentive Program will be limited to 50 percent of the maximum
target if TSR is negative over the performance period;
-
Future recruitment incentives/bonuses for senior executive officers
designed to provide recruits with benefits similar to what they would
forgo in order to accept a position with the Company will be paid
primarily in equity with retention periods; and
-
The design of the entire Long Term Incentive Program will be reviewed
and modified to fully align pay and performance, to align the Program
with those of top-performing Company peers and to reflect best
practices. In this regard, Mr. Chazen proposed that he will not be
eligible for any bonus or current earnings-based compensation during
his remaining tenure as CEO of Occidental. He also proposed that he
will not receive any grants under the existing TSR-based program. This
will allow the Board an opportunity to thoughtfully formulate a new
compensation plan for the CEO position.
Director Peggy Foran said, “We greatly value constructive input from our
shareholders and have spoken with many of them over the past several
weeks. After carefully evaluating all of the suggestions and feedback we
received from shareholders during the course of those conversations, we
have decided to adopt these policies, which are aimed at building
long-term value for shareholders.”
Spencer Abraham, Chairman of the Compensation Committee, added,
“Occidental is committed to revising its executive compensation program
to reflect shareholder feedback, as well as to insure that our
compensation program is in alignment with our peers and creates a very
strong linkage between pay and performance.”
About Oxy
Occidental
Petroleum Corporation (OXY) is an international oil and gas
exploration and production company with operations in the United States,
Middle East/North Africa and Latin America regions. Oxy is one of the
largest U.S. oil and gas companies, based on equity market
capitalization. Oxy's wholly owned subsidiary OxyChem manufactures and
markets chlor-alkali products and vinyls. Oxy is committed to
safeguarding the environment, protecting the safety and health of
employees and neighboring communities and upholding high standards of
social responsibility in all of the company's worldwide operations.