Summary
Occidental Petroleum Corporation (OXY) announced significant changes to its corporate governance and executive compensation policies in an 8-K filing dated April 29, 2013. Key among these is the confirmation that CEO Stephen Chazen will continue in his role through the end of 2014, providing leadership continuity. The company's Board of Directors is implementing a series of reforms aimed at enhancing governance, including the policy of having an independent director serve as Chairman, rotating committee chairs and the independent chairman every five years, and adding at least two new independent directors with an emphasis on industry knowledge. Further governance enhancements include a policy against former CEOs serving on the Board, a fixed mandatory retirement age of 68 for the CEO, and the creation of a Committee on Management Succession and Talent Development. Compensation adjustments are also notable, with a reduction in annual common stock grants to non-employee directors and a significant decrease in the discretionary portion of the CEO bonus. Notably, CEO Stephen Chazen has proposed foregoing bonus and current earnings-based compensation during his remaining tenure, as well as not receiving grants under the existing TSR-based program, to allow for the thoughtful formulation of a new CEO compensation plan.
Key Highlights
- 1CEO Stephen Chazen's tenure extended through the end of 2014.
- 2Board policy to appoint an independent director as Chairman going forward.
- 3Commitment to rotate committee chairs and independent Chairman at least every five years.
- 4Plan to add at least two new independent directors, focusing on industry expertise.
- 5Former CEOs will not be eligible to serve on the Board.
- 6Mandatory retirement age of 68 for the CEO established.
- 7CEO Stephen Chazen voluntarily forgoes bonus and current earnings-based compensation for his remaining tenure.