There is no "fight at the top" between Occidental Petroleum Corp. Chairman Ray Irani and CEO Stephen Chazen, according to a statement issued Monday by the oil and gas company's board of directors.
The statement appears aimed at convincing investors to dismiss previous reports by The Wall Street Journal that Mr. Irani and directors who support him pushed a plan to dismiss Mr. Chazen and replace him with a former executive from the Los Angeles oil and gas company.
The company's independent directors decided to seek a replacement for Mr. Chazen, in a search announced Feb. 14, after less-than-hoped for financial results in 2012, according to the statement.
"All decisions regarding succession planning for Mr. Chazen's eventual successor have been made over many meetings by Occidental's independent directors alone in Executive Session and in accordance with best governance practices," the statement said.
But two sources familiar with the situation say the company's statement doesn't accurately reflect the situation inside the company. One of the sources says "the tension is still there" between the company's CEO and executive chairman. "And it's high."
Some shareholders have discussed voting against the re-election of board members at the annual meeting May 3 as a protest against the plan to replace Mr. Chazen, according to people familiar with the situation.
In Monday's statement Mr. Chazen is quoted as saying he did not ask to leave the company but would continue to work with the board of directors until a successor is named.
"Ray and I continue to meet to discuss issues, and work well together on the Company's business and strategies, as we have done over the past 19 years," Mr. Chazen says in the statement. He could not immediately be reached for comment.
On Friday a long-time Occidental Petroleum Corp. investor wrote an open letter to the board of directors saying it believes the company should keep Mr. Chazen and that Mr. Irani should retire.
"As reflected in The Wall Street Journal, the current situation reflects poorly on the company and the board," wrote Steven Romick, a managing director at First Pacific Advisors LLC in the letter. "This is the wrong time to transition to a new CEO. We believe that Oxy has in place an effective and respected CEO who should be empowered to manage an orderly transition in the future."
Despite Mr. Chazen's popularity among shareholders and Wall Street, it may be difficult to stop the process to replace him, Deutsche Bank Securities Inc. analyst Paul Sankey wrote in a research note issued Monday.
So far no shareholder has stepped forward to take an activist role and rally support to vote against Mr. Irani or other members of the board, Mr. Sankey wrote, noting that the Occidental chairman and board received strong votes of support during last year's annual meeting.
Copyright (c) 2012 Dow Jones & Company, Inc.
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