LOS ANGELES--(BUSINESS WIRE)--Occidental
Petroleum Corporation (NYSE:OXY) today announced that its Board of
Directors has approved significant changes to its executive long-term
incentive compensation program that will substantially reduce the
Company’s overall compensation levels to be more in line with its peers.
The new program will neutralize the potential impact of commodity
pricing and further align the interests of senior executives with those
of Occidental shareholders.
The new program resulted from a comprehensive review of the Company’s
compensation practices, which included consultations with independent
compensation consultants and many productive discussions with a large
number of Occidental stockholders and their representatives.
The new program applies to Chairman and Chief Executive Officer Dr. Ray
R. Irani, President and Chief Operating Officer Stephen I. Chazen and
other senior Occidental executives. Highlights of the new compensation
program and the grants that were made available on October 13, 2010, are
The new executive long-term incentive compensation program utilizes a
combination of long-term incentives, a substantial portion of which
are performance-based Total Shareholder Return Incentives (“TSRIs”).
The TSRIs are based on a sliding scale, measured against the relative
performance of a 12-company industry peer group. For example, if
Occidental performs in the bottom 25 percent of its peer group over a
3-year period from the date of the award, Dr. Irani and Mr. Chazen
will not receive any TSRI-related compensation. Based on grant date
fair values, if the Company ranks 6th among the 12-company
peer group, their TSRIs will pay out at $8,000,000 and $6,400,000,
respectively, which are substantially lower than in previous years.
Maximum payout for the TSRIs, which will also be substantially lower
than in previous plans, will occur only if Occidental’s cumulative
3-year TSRI performance ranks 1st among its 12 peer
companies and outperforms the S&P 500. The maximum TSRI-related payout
for Dr. Irani and Mr. Chazen, if Occidental ranks 1st,
would be $20,000,000 and $16,000,000, respectively, as of the grant
The remaining portion of long-term incentives will be an allotment of
tax-qualified Restricted Shares. These shares will have a minimum
vesting period of three years and are valued as of the grant date at
$5,000,000 for Dr. Irani and $4,000,000 for Mr. Chazen.
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 based on the latest
publicly available data provided by these companies.
The new compensation program maintains Occidental’s overall approach of
incentivizing and rewarding superior performance in support of
Occidental’s long-term strategic goals by providing executives with a
substantial portion of long-term, at-risk compensation and relatively
low levels of non-performance-based compensation, including base
salaries that are lower than virtually all those reported by its peers.
Secretary Spencer Abraham, Chairman of the Compensation Committee,
stated, “At the 2010 Annual Meeting last May, the Board informed our
stockholders that Aziz Syriani, our Lead Independent Director, and I
would be meeting in the next several months with our stockholders to
assess their views of appropriate changes to our compensation program.
We also met with outside compensation consultants to seek their advice.
“This shareholder input and consultant advice has been extremely
valuable in helping us to redesign our compensation program, and we are
grateful for the feedback we have received over the past several months.
We look forward to continuing this constructive dialogue as we implement
our new policies.”
Secretary Abraham added, “Throughout this process, our goal has been to
redesign Occidental’s compensation program to bring compensation in the
ranges used by our peer companies, provide the proper incentives for our
executives, reflect current best practices, and address concerns raised
Petroleum Corporation is an international oil and gas exploration
and production company with operations in the United States, Middle
East/North Africa and Latin America regions. Oxy is the fourth-largest
U.S. oil and gas company, based on equity market capitalization. Oxy's
wholly owned subsidiary, OxyChem, manufactures and markets chlor-alkali
products and vinyls. Occidental is committed to safeguarding the
environment, protecting the safety and health of employees and
neighboring communities and upholding high standards of social
responsibility in all of the company's worldwide operations.
Portions of this press release contain forward-looking statements and
involve uncertainties that could materially affect expected results.
Words such as “intend”, “project”, “predict”, “will”, “would”, “should”,
“could”, “may”, “might”, “anticipate”, “plan”, “believe”, “expect” or
similar expressions that convey the uncertainty of future events or
outcomes generally indicate forward-looking statements. You should not
place undue reliance on these forward-looking statements, which speak
only as of the date of this release. Factors that could cause results to
differ materially include, but are not limited to: actions by third
parties, including actions by competitors, litigation, reconsideration
of decisions in light of new information or the passage of time and
increases in competition for leadership talent. Unless legally required,
Occidental does not undertake any obligation to update any
forward-looking statements, as a result of new information, future
events or otherwise.