UPDATE 2-Occidental says seeking replacement for CEO Chazen

* Having been CFO for decade, Chazen became CEO in mid-2011

* Chairman Irani stepping down at end of 2014

* Shares down in past year, dividend raised 18.5 pct

By Braden Reddall

Feb 14 (Reuters) - Occidental Petroleum Corp has started looking for someone to replace Chief Executive Stephen Chazen, the fourth-largest U.S. oil company said on Thursday, after the 66-year-old spent less than two years in the top job.

"Succession planning and best corporate governance practices have been a high priority for the Board over the past number of years," said Margaret Foran, an Occidental director since late 2010. "We look forward to a thoughtful and smooth process that will yield the best result for Oxy and all of its constituencies."

A wise-cracking former Merrill Lynch banker, Chazen joined Occidental in 1994 and took over as CEO in mid-2011 after serving as chief financial officer for more than a decade.

With executive chairman and ex-CEO Ray Irani due to retire at the end of 2014, a Chazen departure would mark the end of an era for the Los Angeles-based company. Both executives found themselves targeted over their high compensation, until a shareholder effort to take board seats sparked reform in 2010.

Chazen ended up earning compensation worth $31.7 million in 2011, down from $38.1 million the year before, while Irani made $49.8 million in 2011, down from $76.1 million. The disclosures for 2012 have not yet been made.

Chazen is only Occidental's third CEO in half a century. Irani had been named CEO in 1990 by Armand Hammer, a flamboyant tycoon who spent three decades building the company from a small firm of just three employees.

Shares of Occidental have fallen 15 percent in the past year, compared with a 10 percent rise for California rival Chevron Corp and 6 percent for giant Exxon Mobil Corp .

A sweeping cost-cutting effort by Chazen over the past quarter helped the company report a fourth-quarter profit well ahead of analysts' estimates last month.

Earlier on Thursday, Occidental had announced an 18.5 percent increase in its annual dividend to $2.56 per share, for a compound annual dividend growth rate of 16 percent since 2002.