Ray Irani is the Executive Chairman of Occidental Petroleum, which is based in California. Occidental Petroleum is an extremely profitable Oil company, but certainly nowhere nearly as profitable as either Exxon Mobil or Chevron.
From Occidental Petroleum's Proxy Statement, filed with the SEC, here is Irani's Compensation disclosure.
| Three Year Total | ||||
| 2011 | 2010 | 2009 | 2009-11 | |
| thousands of $s | thousands of $s | thousands of $s | thousands of $s | |
| Base Salary | 1,300 | 1,192 | 1,170 | 3,662 |
| Bonus | 1,250 | 1,400 | 1,200 | 3,850 |
| Stock Awards | 26,458 | 40,250 | 24,759 | 91,467 |
| Non-equity Incentive Compensation | 19,058 | 31,575 | 2,553 | 53,186 |
| All Other Compensation | 1,700 | 1,690 | 1,720 | 5,110 |
| Total Compensation | 49,766 | 76,107 | 31,402 | 157,275 |
And yeah, Irani's Stock Awards Compensation is a massive 25 times his base salary in the most recent three years.
There is clearly a very extravagant situation here.
And when you analyze the details of the above All Other Compensation Category, included in the three year total of $5,110,000 are Personal Tax and Consulting Services of $1,085,000 (I'm not kidding), Security Services of $1,713,000 (Again, I'm not kidding), Life Insurance Premiums of $337,000, and Supplemental Retirement Plan Contributions of $1,932,000.
All of the above Other Compensation items seem extremely extravagant to me.
But it's not just Irani.
Stephen Chazen is Occidental Petroleum's CEO. From Occidental Petroleum's Proxy Statement, filed with the SEC, here is Chazen's Compensation disclosure.
| Three Year Total | |||||
| 2011 | 2010 | 2009 | 2009-2011 | ||
| thousands of $s | thousands of $s | thousands of $s |
|
||
| Base Salary | 1,267 | 767 | 720 | 2,754 | |
| Bonus | 1,340 | 800 | 420 | 2,560 | |
| Stock Awards | 18,137 | 21,800 | 11,004 | 50,941 | |
| Non-equity Incentive Compensation | 10,497 | 14,395 | 1,032 | 25,924 | |
| All Other Compensation | 486 | 319 | 309 | 1,114 | |
| Total Compensation | 31,727 | 38,081 | 13,485 | 83,293 |
When you add the Stock Awards in the most recent three years to both Irani and to Chazen, you get a total of a mind-boggling $142 mil. And that's just for two employees at one Oil and Gas company. Extravagant, you better believe it.....Extremely extravagant.
But it's not just these two top executives. Also from the Proxy Statement, it is just incredible how much Occidental Petroleum pays its Board of Directors.
The number of Directors included in Occidental Petroleum's Proxy varied from 12 to 14 in the most recent three years. These Directors were paid cash fees totaling $3.7 mil and were given Stock Awards which totaled $16.7 mil. Yeah, these are very lavish Directors' Compensation.
So what's the big deal? Who could possibly be harmed by this extremely extravagant spending by Occidental Petroleum?
Well, the country's energy costs, gas prices at the pump and other energy costs, would be lower if these extravagant costs were removed, and if Occidental Petroleum lowered their oil and gas prices that it charges by a like amount.
But another thing that bothers me here is why in the world should the US Government, and thus US taxpayers, be funding a good chunk of these extravagant costs? Specifically, Occidental Petroleum is getting a 35% US Federal Income Tax Benefit for the tax writeoffs it receives eventually for these Stock Awards.
Thus, my recommendation here is for all Oil & Gas Corps to have their US Federal Income Tax Benefit for all Stock Awards and Stock Option Awards be limited to a maximum 20% Tax Rate for all highly-paid employees with Total Compensation of more than $200,000 earned in the applicable year. And some of the money raised here should be used on Clean Energy tax incentives.
Below here are the Salary and Stock Awards and Stock Option Awards Compensation Disclosures in the most recent Proxy Statements for mainly just the CEOs of the larger Oil & Gas Corps.
| Ratio of Stock and | ||||
| 2011 | 2011 | Stock Option | ||
| Base | Stock and Stock | Awards | ||
| CEO | Corp | Salary | Option Awards | to Base Salary |
| thousands of $s | thousands of $s | |||
| Big Oil & Gas Corps | ||||
| Tillerson | Exxon Mobil | 2,387 | 17,891 | 7.5 |
| Humphreys (Sr VP) | Exxon Mobil | 1,170 | 9,860 | 8.4 |
| Watson | Chevron | 1,571 | 12,287 | 7.8 |
| Irani (Exec Chm) | Occidental Petroleum | 1,300 | 26,458 | 20.4 |
| Chazen | Occidental Petroleum | 1,267 | 18,137 | 14.3 |
| Kibsgaard | Schlumberger | 1,425 | 8,489 | 6.0 |
| Mulva | ConocoPhillips | 1,500 | 13,873 | 9.2 |
| Farris | Apache | 1,750 | 8,341 | 4.8 |
| Klesse | Valero Energy | 1,500 | 4,605 | 3.1 |
| Lesar | Halliburton | 1,430 | 5,633 | 3.9 |
| Brown (President) | Halliburton | 629 | 6,736 | 10.7 |
| Heminger | Marathon Petroleum | 1,031 | 6,118 | 5.9 |
| Caralot | Marathon Oil | 1,400 | 6,414 | 4.6 |
| Richels | Devon Energy | 1,396 | 10,851 | 7.8 |
| Miller | National Oilwell Varco | 950 | 6,554 | 6.9 |
| McClendon | Chesapeake Energy | 975 | 13,628 | 14.0 |
| Denton | Baker Hughes | 1,279 | 5,539 | 4.3 |
| Hess | Hess | 1,500 | 8,500 | 5.7 |
| Wood | Murphy Oil | 1,278 | 6,718 | 5.3 |
| Hackett | Anadarko Petroleum | 1,583 | 14,086 | 8.9 |
| Papa | EOG Resources | 940 | 12,075 | 12.8 |
| Davidson | Noble Energy | 1,070 | 6,364 | 5.9 |
| Total | 29,331 | 229,157 | 7.8 |
Yeah, the Total Compensation from Stock and Stock Option Awards is a massive 7.8 times the Total Base Salary. Not only is this extremely extravagant, but it also drives the massive stock buyback programs of some of these Big Oil & Gas Corps, like Exxon Mobil.
By buying back so much of their stock, these companies' EPS is enhanced. Further, when they increase their number of shares bought back each year, their EPS growth is enhanced. And both EPS and EPS growth drive stock prices, which further enhances the wealth of the executives of these companies.
Presently, there is nothing that prevents these Oil & Gas Corps from buying back as many shares as they want. I think there needs to be US Government legislation that prevents excessive stock buybacks.
Anyway, the money raised by the US Government from the above recommendation should be used to reduce the US Debt and for Clean Energy Tax Incentives..
