UPDATE 3-Occidental Petroleum says CEO to remain until 2014

Tue Apr 30, 2013 12:52am EDT

Related Topics

* To cut CEO bonus, director compensation

* Former CEOs to be ineligible for board

* Company sets maximum age of 68 for CEOs

* Analysts say moves are positive for the stock

April 29 (Reuters) - Occidental Petroleum Corp said Chief Executive Steve Chazen would continue in his role through 2014 with the full support of the board, reducing uncertainty surrounding its CEO succession plans.

Last year was a challenging year for the fourth-largest U.S. oil company, including a disappointing stock performance, and Occidental said in mid-February it was seeking a replacement for Chazen.

The Wall Street Journal said in March there was pressure from Chairman and former CEO Ray Irani for Chazen to leave the post immediately but added that Chazen had the support of several big investors. The company had denied any fight at the top.

Morningstar analyst Allen Good called the latest move a positive for the stock as it cleared a lot of uncertainty around Chazen's tenure.

"Giving him more time to execute on his plans certainly should reassure investors at this point," Good said.

Occidental's shares rose 1 percent to $87.68 in morning trade on the New York Stock Exchange.

Occidental also said former CEOs would not be eligible to serve on the board "going forward". It did not specify whether this rule would apply to 78-year-old Irani, who has said that he plans to retire as chairman at the end of 2014.

In addition, it announced cuts in director and CEO compensation among a range of governance measures that also included an upper age limit of 68 for CEOs to retire. Chazen, 66, said the measures were consistent with his personal plans.

Investor advisory firm ISS, in a statement issued late on Monday, reaffirmed its recommendation to vote against the election of Irani to the board, saying his role as executive chairman could complicate the board's succession planning.

It also recommended that shareholders vote for the company's executive compensation plan, and called the new policies a move in a "positive direction".

However, the advisory firm advised shareholders to wait and see how the policies are implemented, highlighting the Occidental's previous conflicts with the board and on the issue of compensation.

In the past, both Chazen and Irani found themselves targeted over their high compensation, until a shareholder effort to take board seats sparked reform in 2010.

Occidental also said the discretionary portion of the CEO's bonus would be reduced to "no more than 20 percent" from 40 percent, and that the company's financial performance would be used to evaluate his performance.

The annual common stock grant to non-employee directors would be reduced by at least 20 percent immediately and the director-compensation program would be reviewed this year, the company added.

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