Occidental CEO earns $77.6 million in 2007

Occidental Petroleum Corp. Chief Executive Ray R. Irani reaped $77.6 million in 2007, continuing a long string of lucrative payouts that have often aggravated shareholder advocacy groups.

The compensation tally for last year represented a 40% increase from the $55.5 million Irani received in 2006, according to a securities filing by the company Tuesday.

Westwood-based Occidental, which has posted record-high earnings amid soaring prices for the oil and natural gas it produces, said 91% of Irani’s 2007 compensation was based on performance measurements.

“It comes down to superior pay for superior performance,” said spokesman Richard Kline, noting that Occidental’s stock price jumped 58% during 2007 to close the year at $76.99. On Tuesday the shares rose $3.29, or 4.7%, to $73.96.

Critics question whether the big performance awards being handed out to Irani and other oil executives are a function of high commodity prices rather than management skill.

“With all oil companies, the CEOs are price takers and not price makers” on oil, said Daniel Pedrotty, director of the AFL-CIO’s office of investment. “Given the extraordinary amount of shareholder money that has been paid to Irani and other oil CEOs, there’s a serious question as to whether this is pay for performance.”

Kline said the company’s results stood out even within the oil industry.

“We earned $21.30 per barrel of oil equivalent produced. That’s an industry-leading performance for the ninth consecutive year,” he said. “Clearly, Oxy is outperforming the industry.”

Irani’s compensation in 2007 included a salary of $1.3 million, the same as in 2006; a 23% higher bonus of $1.7 million; $2.6 million in non-equity incentive compensation; $584,000 in pension increases and above-market interest on deferred compensation; and $1.9 million for such things as life insurance, jet use, club dues, security services and personal accounting services.

The largest portion of Irani’s 2007 compensation came from stock and stock option awards totaling $69.6 million, or almost 90% of Irani’s total for the year. In 2006, Irani earned $48 million in stock and stock option awards.

Chief Financial Officer Stephen Chazen, who was given the additional title of president last year, received compensation worth about $30 million, up 51%. Also last year, Occidental extended Irani’s employment contract into 2015.

During the year, the company made several changes to its compensation approach, such as eliminating certain stock awards that could be earned with the passage of time and replacing them with awards based on various measures of company performance.

Pay remains an issue with some stockholders, despite the company’s recent changes, higher dividends and rising share price. At Occidental’s annual meeting in May, shareholders will consider three proposals aimed at reforming executive pay practices.

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elizabeth.douglass@latimes.com