April 8 (Bloomberg) -- Occidental Petroleum Corp., the largest oil producer in the continental U.S., said Chairman Ray Irani played no role in the decision to find a replacement for Chief Executive Officer Stephen Chazen less than two years after he took over.
Irani wasn’t involved in the unanimous decision by the company’s independent directors in February to find a new CEO, Los Angeles-based Occidental said in a statement today. The company also said its business strategy remains unchanged, suggesting directors are against spinning off or selling assets such as the chemical business or overseas oilfields, said Leo Mariani, an RBC Capital Markets LLC analyst.
Occidental lost almost one-fifth of its market value in 2012 as costs escalated and production growth lagged expectations. Today’s statement failed to calm investors’ concern about a power struggle in the corporate boardroom that may be delaying efforts to boost the stock price, said David Neuhauser, a managing director at Livermore Partners Inc.
“That statement is a complete fabrication because every investor knows there’s definitely infighting at the top,” Neuhauser said in a telephone interview. “It’s troubling because shareholders know there is so much more value in this company that has yet to be unlocked.”
In today’s statement, Irani, 78, reiterated plans to retire at the end of next year. “There were no schisms, nor philosophical divisions in the directors’ decision” to replace the CEO, the company said.
Irani needs to leave by the May 3 annual shareholders’ meeting to dispel concern that he’s attempting to reassert control over the company he led for two decades, Neuhauser said.
“It sounds like Irani is trying to push his way back into the situation at the top,” said Neuhauser, whose Northbrook, Illinois-based firm owns Occidental shares among the $100 million it has under management. “The board needs to do something in the very short run to make it crystal clear who’s in charge.”
In an April 5 letter to the board, shareholder First Pacific Advisors LLC urged the company to end its CEO search, keep Chazen in the job and have Irani retire immediately.
The board hasn’t set a deadline or timetable for indentifying the next CEO, Melissa Schoeb, an Occidental spokeswoman, said in a separate e-mailed statement today.
Irani stepped down as CEO in 2011 and agreed to retire from his role as chairman in 2014 amid shareholder unrest over his compensation, which was more than $200 million in the past four years, including in 2011 and 2012 after he was no longer chief executive, according to proxy filings.
After Irani handed Chazen the reins, Occidental shares declined in both 2011 and 2012, the first time shares have fallen in back-to-back years since 1992, according to data compiled by Bloomberg.
Occidental declined for the first time in eight trading sessions, falling 0.9 percent to $81.12 at the close in New York.
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