(Reuters) - The board of Occidental Petroleum Corp (OXY.N), which has said it is searching for an eventual replacement for Chief Executive Stephen Chazen, denied on Monday that there was a “fight at the top” over the succession.
The Wall Street Journal reported recently that Ray Irani, the oil company’s chairman and former long-time CEO, was pushing to replace Chazen, who is 66 years old.
“All decisions regarding CEO succession planning were made over many meetings by the independent directors alone in executive session, in accordance with best governance practices,” the Occidental board said in a statement. “Dr. Irani did not attend, and did not play any role in, these meeting deliberations.”
Shares of Occidental, the fourth-largest U.S. oil company, gave up an early gain to trade 1 percent lower on Monday following the announcement.
Occidental said in mid-February that it was seeking a replacement for its CEO, who joined Occidental in 1994 and took over as CEO in mid-2011 after serving under Irani as chief financial officer for more than a decade.
With Irani due to retire next year, a Chazen departure would mark the end of an era for the Los Angeles-based company. Irani took over in 1990 after tycoon Armand Hammer built it up from a small firm over three decades.
“I am not aware of any differences between me and the Board as to the Company`s strategies,” Chazen said in the statement on Monday. “I did not ask to leave at this time, but I respect the Board`s decision to seek a new generation of leadership.”
Irani, who is 78, confirmed that he would retire as executive chairman and as a board member at the end of 2014.
The board said its deliberations over CEO succession did not involve or consider a change in the company’s strategy or long-term goals. “There were no schisms, nor philosophical divisions in the directors` decision,” the statement said.
The company acknowledged that 2012 had presented challenges, including a disappointing stock performance and execution inefficiencies as the company ramped up production.
Chazen acknowledged the ballooning costs publicly last October and set aggressive targets to reduce them, with early efforts yielding higher-than-expected profits for the fourth quarter.
The board said its independent directors, responding to the turmoil of 2012, decided it was time to seek new leadership for the longer term, and retained a search firm to assist it. With Chazen up for re-election to the board at the May 3 annual meeting, the company disclosed the succession planning to investors.
Deutsche Bank analyst Paul Sankey said shareholders, in his team’s experience, “overwhelmingly favor” Chazen, and they might register their disapproval of the chairman and board by voting against them ahead of the meeting, though he noted both the chairman and board had strong support last year.
Shares of Occidental were down 1 percent at $81.03 in early afternoon trading on the New York Stock Exchange. The stock has shed 14 percent since the start of 2012, having slipped 7 percent since the announcement of the Chazen replacement search on February 14.
But the shares had been rallying recently on the prospect of a shareholder vote for change prompting a restructuring, Sankey said in a research note.
Reporting by Braden Reddall in San Francisco; Editing by Maureen Bavdek and Phil Berlowitz