Occidental Petroleum’s move this week to address corporate governance issues raised by shareholders is the way many investors would like their companies to react. While history has shown that numerous companies simply ignore issues raised by shareholders (and maybe that is what they should do), Occidental decided its investors had some valid points.
All in one day, the company established a seccession plan with Steve Chazen, president and chief operating officer, set to become chief executive at the May 2011 annual shareholders meeting. It ended the exemptions for those past the retirement age of 75 on the board, leading two directors to say they would step down at that same meeting.
In addition, Occidental responded to calls for new faces on the board by immedately appointing Howard Atkins, chief financial officer of Wells Fargo. And, perhaps most importantly for shareholders, it approved a new compensation programme that brings executive pay down to the levels of those in the company’s peer group.