Under heavy criticism from shareholders over his high compensation, Occidental Petroleum Corp.'s longtime chief executive said Thursday he'll relinquish his role as CEO next year and take a pay cut.
Ray Irani will remain as chairman and will focus on corporate strategy, Middle East operations and international business development for the Los Angeles oil and gas producer.
He plans to retire at the end of 2014, according to a regulatory filing.
Irani will be succeeded as CEO by Stephen Chazen, who is currently the company's president and chief operating officer.
The change will be effective May 2011, when Occidental holds its annual meeting.
Irani received compensation worth $31.4 million, the highest amount for any energy company CEO according to a calculation by The Associated Press. In comparison, Exxon Mobil Corp., the largest publicly traded oil company, paid chief Rex Tillerson a compensation package worth $21.7 million in 2009.
Occidental shareholders fought Irani's pay package at the company's annual meeting this year. An investor group led by the California State Teachers' Retirement System (CalSTRS) and Relational Investors LLC said in a letter to the company that Irani's pay "wastes shareholder money and creates enormous pay disparities."
Irani's pay was more than three-times the average for his peer group, the investors said.
CalSTRS and Relational Investors called for cutting compensation for top executives and urged the board of directors to better explain how and why it sets certain compensation targets.
After holding meetings with investors, Occidental agreed, saying Thursday that its top executives will receive smaller compensation packages that are more in line with the industry standard. The company's long-term incentive compensation program was changed to neutralize the impact of commodity prices and focus more on comparing the executive's performance with a peer group.
Irani joined Occidental in 1983 and has held the company's top executive position since 1990. He has been credited with transforming Occidental from a collection of unrelated businesses into one of the largest petroleum companies in the U.S. Occidental's market value increased during the past 20 years from $5 billion to more than $68 billion.
Occidental shares rose $1.01 to $85.30 in morning trading Thursday.
© 2010 The Associated Press.