By Braden Reddall
SANTA MONICA, California (Reuters) - Occidental Petroleum Corp
The company had been forced to deny there was a fight at the top after the Wall Street Journal reported pressure from Irani for Chief Executive Steve Chazen to leave, even though Chazen had the support of several big investors.
More than three-quarters of the votes cast went against Irani, according to a tally released late on Friday. Earlier, Chazen had said at the annual shareholder meeting that Irani would step down from the board.
Edward Djerejian, a former ambassador, will take over as independent chairman of the Los Angeles-based company. A director since 1996, he most recently chaired the corporate governance, nominating, and social responsibility committee.
Shares of Occidental rose nearly 3 percent to close at $90.76 on the New York Stock Exchange.
"Ultimately this clears the path for Chazen to continue what he is focusing on so far, which is cost improvement," said Allen Good, an oil company analyst at Morningstar in Chicago. "It also might clear the way for the break-up of the company. They are much bigger now, so it might make sense to create a couple of different companies out of Oxy."
Chazen spoke at length on a conference call last week about the potential shape of a sale of its Middle East businesses, long more favored by Lebanon-born Irani.
On Friday, while still displaying his well-known sense of humor, Chazen talked emotionally of his two-decade relationship with the 78-year-old chairman. "I'm not going to say that every day was a trip to Disneyland," he said, before adding: "Every day I learned something."
Irani took over as CEO in 1990 from tycoon Armand Hammer - a time when Chazen said the nicest thing you could say about the company was it was "nearly insolvent" - and oversaw dramatic growth, while raising eyebrows with his lavish pay packages.
In a call at the meeting for better governance, shareholder John Chevedden pointed to what Irani received for financial planning: $390,000 last year. About 63 percent of shareholders backed the latest executive compensation plan in an advisory vote on Friday.
Chazen, 66, took over as CEO two years ago, having served in the executive suite since 1994. Occidental revealed in February it was seeking his replacement, and then said in April that he would continue through 2014, in order to reduce uncertainty.
Referring to the very public succession battle, Chazen said "it's been tough to tell the last few weeks" that oil and gas is the company's primary business.
Chazen received more shareholder support than any other boardmember, at 623.2 million votes - nearly 99 percent.
The CEO went on to say he would still ask Irani for advice regularly "because I'm addicted to it" and concluded his remarks by thanking his wife for "letting me fool around a little longer."
Influential advisory firm ISS this week had reaffirmed its recommendation to vote against Irani.
"I didn't see anybody predicting that he would be forced," said Jack Zwingli, leader of information services at Farient Advisors, an independent executive compensation consulting firm. "Most people would take it as a surprise."
Zwingli said investors would watch to see if the pay package of the next CEO is brought down to the level of Occidental's peers.
The chairman of Occidental's compensation committee, Aziz Syriani, withdrew his nomination prior to the election, and Chazen said that a search firm would start working on replacements for open board seats.
(Reporting by Braden Reddall, writing by Anna Driver; Editing by Kenneth Barry and David Gregorio)