In Focus

Dr. Ray Irani

News from Occidental Petroleum (NYSE:OXY) often has been more about their now deceased founder and their current Chairman/CEO than it has been about oil. The late and controversial Dr. Armand Hammer's successor seems to have stepped into Hammer's role quite nicely, perhaps even donning the same shoes. Dr. Ray R. Irani's reputation is contradictory: he's either an incredibly intelligent businessman, or a heartless, money-hungry racist. It just depends on whom you talk to. Let's see what we can figure out. In the words of my favorite news network, FOX, we report... you decide.

Dr. Irani has held several positions with Oxy. He has been the Chairman/CEO since 1990 and a director since 1984. He served as President from 1984 to July of 1996 and then as Chief Operating Officer from 1984 to 1990 as well. "Chairman of The Board of Directors of Canadian Occidental" was another title he wore, from 1987 to 1999. So he knows the business well.

Perhaps the most notable controversy involving the good doctor (although some activists disagree vehemently) is the huge salary he receives for what many consider to be a second-rate performance. Not originally a performance-based compensation package, he began his latest position making a minimum of $7.5 million per year. Add to that stock options and a nifty little plan that ultimately covered any income taxes he would incur and you've got yourself a nice little combination for pure utopia. Must be nice.

But don't get too excited; gear up for this one, Chickies. It would have seemed as though Oxy's board eventually saw the light on this unbelievable package when they determined it was time to change this compensation calculation to one that was performance-based. Obviously they would have to buy out Irani's previous package. And they did. To the tune of $95 million! (Yes, you read that right.) So his new contract will now pay him $1.2 million annually and his bonus is at the discretion of the board. He also will receive medical benefits among other benefits, and another nifty little plan to pay for those darn income taxes on the value of those benefits, should he be terminated. Wow.

Now let's move on to the other soap opera involving Dr. Irani and Occidental. (Again, activists everywhere are shaking their heads) The U'wa, a nomadic group in Colombia, are accusing Occidental of trying to drill on their reservation. According to the Colombian government, the U'wa may have at some time lived on that land, but they have no claim to it now. According to U'wa religious beliefs, however, the fact that their ancestors lived there makes it theirs. The law disagrees; only land you actually purchased is land you own, and just because your Great-Great-Great's lived there, it doesn't make it yours. The U'wa's then threatened to have a mass suicide, and the response to that from various American activists has been extremely vocal and steady. So steady, it has forced Dr. Irani to fear for his life.

Groups such as The Rainforest Action-Network, U'wa Defense Working Group, Action Resource Center, Amazon Watch, Project Underground, and SAFE, an environmental group of Students from The University of Southern California, have been involved either directly or indirectly in protests outside Dr. Irani's home. The situation in Colombia has been extremely violent in nature and in effect, Irani has received two anonymous, chilling death threats. His family members are also being tormented. His plea to the courts for restraining orders fell on semi-deaf ears, with the court merely ruling that the protestors cannot stand in his driveway. To make an already hostile situation even more so, the stories being spewed by both Oxy and the protestors are remarkably different (surprise, surprise) and therefore terribly difficult to sort out.

So there you have it. Some pretty sticky situations for Dr. Ray R. Irani. Have you decided what you think yet? Well hang on; let me add one more thing to the equation. Is it true that Oxy hasn't performed as well as it should? Is the major controversy in Colombia affecting the bottom line for this oil giant? Not exactly. On January 24, 2001, Occidental Petroleum announced their fourth quarter earnings, and baby, they're the greatest! Earnings were $349 million compared to $192 million for the fourth quarter of 1999. Can you say 80% increase? Fourth quarter sales were up 50% from $2.6 billion to $3.9 billion. They also reduced their debt by $2.8 billion. This report boasted the highest annual earnings in company history before special items. Doesn't exactly sound like Dr. Irani has been resting on his laurels. As long as the company performs at its peak, no one will be complaining. Or will they?

Like I said, we report... you decide!