Oxy Adopts 'Say-on-Pay' Policy Starting 2010
Occidental has approved a 'say on pay' policy. Under this new policy stockholders will have a non-binding advisory vote on executive compensation starting at the company's 2010 annual meeting.
The advisory vote gives stockholders the ability to advise the Board on its philosophy on the annual compensation of the most highly compensated executives at the company.
"We welcome ongoing input from our stockholders. Oxy's Board of Directors strives to maintain an ongoing, constructive dialogue with the goal of achieving continuous improvement in all aspects of our corporate governance, including executive compensation," said Dr. Ray R. Irani, Chairman and Chief Executive Officer of Occidental.
"In recent years, we have engaged in direct discussions with stockholders on various important governance issues, including 'say-on-pay,' put a significant amount of executive compensation 'at risk' based on the company's performance and expanded and improved the executive compensation disclosures in our proxy statements. We are now taking an additional significant step forward by adopting 'say on pay,' providing for a regular advisory vote," said Dr. Irani.
Additionally, Oxy supports Congress establishing clear guidelines, setting a common standard and adopting legislation to mandate an advisory vote on executive compensation at all U.S. companies. This would enable investors to have a consistent tool to give feedback at all companies in which they invest.
As a result of the Oxy Board's action, The Needmor Fund, the lead proponent, along with its co-filers, have withdrawn the 'say on pay' stockholder proposal they had planned to present at Oxy's upcoming 2009 Annual Meeting of Stockholders. If this proposal had been approved by stockholders, it could not have taken effect until the 2010 meeting. A similar proposal received significant support, but did not pass, at the company's 2007 and 2008 annual meetings.
"We believe one important way to ensure that shareholders maintain a meaningful voice in executive compensation decisions is to submit executive pay packages to a non-binding shareholder vote," stated Tim Smith of Walden Asset Management, the investment manager for The Needmor Fund and a leader in the movement for an Advisory Vote. "When tied to a robust investor communication program on executive compensation which provides an avenue for detailed shareowner feedback, the vote has additional meaning," said Smith.
"We are extremely pleased that Occidental's Board recognizes the importance of shareholder input on compensation decisions that have the potential to affect their investments," stated Daniel Stranahan of the Needmor Fund. The 2009 resolution seeking the Advisory Vote was led by the Needmor Fund and co-filed by Academy of Our Lady of Lourdes; Christus Health; Providence Trust; Mount St. Scholastica, Benedictine Sisters; Congregation of Benedictine Sisters of Perpetual Adoration; and Convent Academy of the Incarnate World.
In addition, AFSCME and the AFL-CIO, together with its co-filer, The Firefighters' Pension Fund of the City of Kansas City, Missouri, have agreed to withdraw their 'hold through retirement' and 'golden coffin' stockholder proposals they submitted related to Occidental's executive compensation practices. This was a result of the Board's agreement to expand the proxy statement intent on equity retention and death benefits.
Richard Ferlauto, Director, Corporate Governance & Pension Investment of AFSCME, stated, "We are encouraged by the adoption of 'say on pay' at Occidental and commend the Board for taking this and the other important steps to improve transparency and accountability to shareholders."
"Allowing shareholders to provide input on executive compensation packages is more important than ever in the current economic environment. As long-term shareholders, we are pleased that Occidental has adopted these reforms and given investors a critical tool to hold the board accountable," said Daniel F. Pedrotty, Director, AFL-CIO Office of Investment.
During the past three years, Oxy's total shareholder return was 58 percent, compared to (-23) percent and 37 percent, respectively, for the S&P 500 Index and the S&P 500 Integrated Oil and Gas Index. During the past five years, Oxy's total shareholder return was 210 percent compared to (-10.5) percent and 108 percent, respectively, for the S&P 500 Index and the S&P 500 Integrated Oil and Gas Index.
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