An impressive display of shareholder might occurred Monday April 29th, as the board of Occidental Petroleum announced plans to retain current CEO Stephen Chazen until the end of 2014. The Company’s previous decision to replace Mr. Chazen was met with intense opposition by a number of significant, and vocal, shareholders. Monday’s press release also disclosed a number of corporate governance and compensation policies that will be adopted by the board, including an independent chairman policy, mandatory board and committee chair rotation, an increase in the number of independent directors, an immediate 20% decrease in director stock compensation, and several improvements to the executive compensation program.
The announcement comes after an onslaught of shareholder criticism for a perceived power grab by former CEO Ray Irani, who was ousted as CEO in a separate shareholder bout just two years prior (Mr. Chazen took his place, though Mr. Irani retained a higher-paying executive chairman position). On March 30th, The Wall Street Journal reported on board in-fighting at Occidental, and Mr. Irani’s purported strong-arm removal of Mr. Chazen. Shareholders lashed out. After the hard won governance gains of 2010, the perceived bad faith on the part of the board ignited calls for Mr. Irani’s resignation and led to increased criticism of the board’s composition and governance and compensation decisions.
The board’s decision to retain Mr. Chazen and implement governance and compensation improvements comes just five days before the Company’s annual meeting. Whether or not the board’s actions will prove sufficient to appease shareholders will have to wait until Friday.