Occidental Petroleum Corp., under fire for the outsized pay of its chief executive, Ray R. Irani, has agreed to give shareholders a limited voice in deciding how much the Los Angeles oil company pays its top executives.
The “say-on-pay” policy will give shareholders a nonbinding advisory vote on executive compensation decisions made by the company’s board of directors, Occidental said Monday. The new policy will go into effect at the company’s 2010 annual meeting.
After the board approved the policy, a group of corporate activists agreed to drop a say-on-pay proposal they planned to present at this year’s annual meeting. Similar proposals received significant support at Occidental’s 2007 and 2008 meetings but failed to pass.
“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,” Daniel Stranahan of the Needmor Fund, which led the campaign for the advisory vote resolution, said in a statement.
In addition, the American Federation of State, County & Municipal Employees and the AFL-CIO agreed to withdraw shareholder proposals affecting company policies on stock ownership and death benefits for top executives, Occidental said.
Irani, who received $77.6 million in compensation in 2007 and $55.5 million in 2006, has been a target of critics who contend that shareholders should have more power to rein in what some say is excessive pay.
The topic has caught the attention of Congress, which is seeking to put restrictions on executive pay at companies that receive money under the federal government’s current bailout programs. Occidental said Monday that it supports efforts in Washington to set a uniform standard on executive pay and to require advisory shareholder votes on pay at all U.S. public companies.
“Say on pay gives investors both small and large an opportunity to express directly to the company their view of executive compensation,” Occidental spokesman Richard Kline said.