Ray Irani, once the highest paid executive in the oil industry, is getting a $14-million lump sum as part of a $26-million settlement after being ousted as chairman of Occidental Petroleum Corp.
Irani, who joined the Los Angeles oil company in 1983 and was pushed out as chairman in May, also will continue receiving lifetime security and financial planning services estimated at as much as $1.3 million a year, Occidental said Monday in a securities regulatory filing.
The 78-year-old former executive has been paid an average of $90 million a year in total compensation since 2002, according to data compiled by The Los Angeles Times. Last year, he earned nearly $46 million after he gave up his role as chief executive.
Some analysts said the severance agreement was an excessive final goodbye to an executive known for accepting lavish pay packages.
"The settlement is vintage Ray, well over the top," said Brian Foley, managing director of compensation consulting firm Brian Foley & Co. "God knows, if there is anybody who can afford to pay for his own tax prep and financial planning and security, it's Ray."
Such lifetime perks "hearkens back to another decade when people were more aggressive about what they got," Foley said. "That would stick in my craw if I was a shareholder."
Compensation experts said the severance deal reflected a previously undisclosed dispute between Irani and Occidental over the nature of his exit from the company.
"Typically severances are intended to compensate an individual if they lose a job through no fault of their own," said Mark Borges, a principal at pay consulting firm Compensia Inc.
"In this case, Irani has made a lot of money as the chairman of the company. You could argue that someone making seven-, eight-, nine-figure compensation each year doesn't have to worry about not having any income if he is terminated," Borges said.
The deal was less than the $16.8 million that Irani originally wanted, according to the filing with the Securities and Exchange Commission. It also does not include a performance bonus for 2013.
For a person known for receiving massive pay packages, Irani ended up with a severance deal that was less than what some other former oil executives won to leave their companies.
Tom Ward, former chief executive of SandRidge Energy Inc., for instance, was given a $90-million pay package when he was ousted this year. And Aubrey McClendon, Chesapeake Energy Corp. co-founder and former chief executive, received severance of about $35 million along with other benefits.
Irani's perks include financial planning and accounting services up to $430,000 a year, security services amounting to $470,000 a year and reimbursement of travel expenses for his "travel security professional" up to $50,000 annually, the company said. The total rises every year with inflation.
In addition to the lump-sum payment, Occidental also will cover $12 million worth of Irani's ongoing insurance, benefits, welfare plan payments and other awards, bringing the total package, minus the annual perks, to about $26 million.
The payout signals the end of a tumultuous year for Occidental marked by a private boardroom spat that turned public and raised questions about the company's future and long-term strategy.
In February, the board said it would seek a successor to onetime Irani protege Stephen Chazen, who took the helm as chief executive in 2011 after Irani bowed to investor outrage over his soaring compensation and stepped aside.
Industry watchers said Irani, who was unhappy about Occidental's falling stock price, may have been angling to return as CEO.
Activist shareholders sided with Chazen and ended up voting out Irani in a dramatic annual meeting in May, a surprising conclusion to his nearly three decades as a director of Occidental.
Irani is credited with helping lead the company to becoming the nation's fourth-largest oil firm. But he couldn't escape the notoriety of huge paychecks that surpassed many of his peers. In 2006, for example, Irani took home more than $460 million in salary, gains in executing stock options and other benefits.
The relatively quick fall of Irani, first being forced out as CEO in 2011 and then as chairman in May stemmed from the growing sway of activist shareholders, who increasingly had been able to influence decisions on executive compensation, said Amy Myers Jaffe, executive director of energy and sustainability at UC Davis.
"Is the Ray Irani situation a sign of something to come?" she said. "Are we going to see any change in these wild golden handshakes and parachutes that we have seen in the oil industry? Or is it just an isolated case?"
Analysts said Irani's exit already has ushered in a new direction at Occidental. In October, the oil giant said it was selling a minority stake in Middle East and North Africa oil fields in an attempt to boost profitability and streamline operations.
"It's certainly a new era, more reform-minded," said Pavel Molchanov, an energy analyst with Raymond James. "Ray Irani lost the power struggle earlier this year because he was an impediment to the kinds of strategic restructuring opportunities that the company is now pursuing."
At the time, Chazen said the company's goal was to "become a somewhat smaller company with more manageable exposure to political risk."
Although Irani's official ties with Occidental will be severed Dec. 31, he may be hanging out at company headquarters a while longer. The deal includes access to his office and two assistants until April 30. Irani's company parking spot, the SEC filing said, is his "for the remainder of his life."