UPDATE 1-Occidental CEO to resign next May; to cut exec pay

* Irani to step down in May, COO Chazen to take over

* Plans to bring exec pay in line with peers

* Names Wells Fargo CFO to board; two members to retire

* CalSTRS and Relational Investors endorse actions

* Irani to continue as Executive Chairman (Rewrites with details from company statements)

Oct 14 (Reuters) - Occidental Petroleum (OXY.N) said Chief Executive Ray Irani will step down next May, and that it would cut the salaries of its top executives to bring them more in line with peers.

The salary cuts would "substantially" reduce the pay of its CEO, COO and other senior executives, Occidental said in a statement adding that Chief Operating Officer Stephen Chazen will take over as CEO.

"Under the new program, at all performance levels, the compensation for Occidental's chairman and chief executive officer is expected to be lower than that of one or more peer companies," the company said.

Irani's pay has garnered media attention over the years, and in July he was featured in the Wall Street Journal's front page for earning $857 million in the past decade, making him third on the list of best-paid public company executives in that time.

Meanwhile, Irani's agreement to step down follows months of negotiations between Occidental directors and a pair of prominent funds - Relational Investors LLC and the California State Teachers' Retirement System (CalSTRS) - waging a proxy fight for seats on the company's board, the Wall Street Journal said. [ID:nN02110415]

CalSTRS and Relational Investors endorsed the succession plan and the executive compensation reforms.

Occidental also said two board members, John Chalsty and Irvin Maloney, would not stand for re-election. The company named Wells Fargo & Co's (WFC.N) CFO, Howard Atkins to its board and said that it would name its second nominee later.

"These initiatives together with the anticipated election to the board, later this year, of a director proposed by CalSTRS and Relational, fully resolve the concerns expressed during the two institutions' discussions with the company over the past several months," CalSTRS and Relational Investors said in a joint statement.

Occidental said Irani will continue as executive chairman, and focus on Middle East operations and international business development. He will retire at the end of 2014.

Shares of the company closed at $84.29 Wednesday on the New York Stock Exchange. (Reporting by Adveith Nair and Anand Basu in Bangalore; Editing by Anshuman Daga and Savio D'Souza)