Sign up for regular news, views and insights about corporate governance

Name
Email
Company
Job title
Industry

Close

Setting the benchmark in corporate integrity

OXY’s chairman ousted by shareholders


The oil and gas company is to have undergone a recent change of personnel, the chairman herein being forcibly made to step aside by activist shareholders

After having been opposed by 76 percent of shareholders on their considering his re-election, Occidental Petroleum’s (OXY) chairman, Ray Irani has been shown the door. Though not without taking a customarily large share of the pie, the longstanding oil executive presently stands to receive a $50m exit package on his dismissal.


The colossal sum, as reported by WSJ, is a sizeable increase on the $20m retirement package offered at the close of 2012, herein further fueling an unceasing backlash from OXY shareholders.

After being forced to step aside as CEO two years ago over concerns of outsized pay, shareholders were more recently triggered by his apparent willingness to oust the company’s current chief executive – a matter the board has since fervently denied.

Forbes statistics editor, Scott DeCarlo tallied Irani’s pay since his becoming CEO, as well as his resulting compensation at $1.2bn – amounting to an average annual pay of $54m a year for over two decades. The sum consisting of $32m in salary, $50m in short-term bonuses, $93m in long-term bonuses, $132m in ‘other’ compensation, $554m in value realised from exercised stock option, and $362m in value realised from vested shares.

Through 2012, Irani’s total take amounted to $46m, after $50m in 2011 and $76m in 2010 respectively. The 78-year-old’s largest sum being in 2006, wherein he earned $321m, mostly exercised stock options.

The departure is the latest demonstration of growing investor clout, previous cases including the April departure of Ray Lane as chairman of HP; founder and chief executive of Chesapeake Energy, Aubrey McClendon being supplanted by shareholders; and Angela Braly of Wellpoint Inc., who last summer fell under fire from shareholders over the insurance company’s dimming financial health.

Speaking on shareholder power in these circumstances, Charles Elson of the Weinberg Centre for Corporate Governance at the University of Delaware’s business school said: “It’s a pretty amazing thing… It happens very rarely, particularly for a company of this size and reputation.”

Activist shareholders – once seen as a negligible force – are being more so backed by mainstream shareholders: those who previously deferred to companies’ management on matters of governance. WSJ in May of this year labeling the circumstances as being incited by “a rise of shareholder activism.”

 

News

Eurosif report calls for better ESG engagement

Eurosif release a report that highlights benefits of better shareholder engagement over ESG policies

IASB chairman defends stance on prudence

Despite criticism, accountancy regulator’s chairman says the downgrading of prudence from a fundamental concept is justified

Notable reports

Some of the leading reportage in corporate governance

FRC report reveals highs and lows of UK governance

A recent report by the FRC reveals the extent by which recent reforms have changed corporate governance in the UK, as well as the effect non-compliance has had on the organisation’s finances

Diversity: missing the wood for the trees?

Much has been made of the lack of women on boards recently. But positive discrimination has it’s flaws, writes Melanie Wadsworth

Mandatory auditor rotation unnecessary, says Canadian business institute

Calls to make rotation of auditing firm’s compulsory are rejected by Canada’s Institute of Corporate Directors

Podcast information and links

Podcast subscription information below

Energy Management Software new ‘must have’ for large businesses

There has been an emergence of energy management software since the passing of new European legislation that large businesses must undertake energy use audits

Moody’s appoints new head of internal audits

New vice president of internal audit will be in charge of corporate governance, risk management and internal control processes

Redefining corporate responsibility: award winners 2013

Organisations are seeking to correct past workplace models, taking stock and embarking upon a new age of responsibility. Here, the Corporate Governance Report celebrates those firms carrying the governance torch

Hedge fund group sues Cayman Islands over corporate governance reform

As local authorities strive to make hedge funds based in the islands more transparent, some mangers object

SASB set ambitious targets for reforming sustainability reporting

Sustainability advocate SASB is aiming to transform the way a number of core US industries report on their environmental and social practices

IASB publish the ‘Red Book’

The International Accounting Standards Board (IASB) has announced the availability of the 2013 edition of the Bound Volume of International Financial Reporting Standards (IFRS)

EADS says shareholders to get higher dividends in future

Airbus owner signals change in strategy that may benefit shareholders