Ray R. Irani
Ray R. Irani | |
|---|---|
| Born | January 13, 1935 Lebanon |
| Occupation(s) | Businessman, former CEO of Occidental Petroleum |
| Known for | Former chairman and CEO of Occidental Petroleum |
Ray R. Irani (born January 13, 1935) is the former chairman and chief executive officer of Occidental Petroleum. He joined the board in 1984, served as chief operating officer (president) from 1984 until 1990, and then assumed the roles of chairman and CEO starting in 1990. Early in his professional journey, he collaborated closely with Occidental's CEO Armand Hammer, who designated Irani as his successor in 1990. Forbes.com reported that Irani’s total earnings between 2001 and 2005 reached $127.4 million. In 2006, during a period of rising oil prices, his compensation totaled $460 million.
Personal life
Originating from Lebanon with Palestinian heritage, Irani obtained a Bachelor of Science degree in chemistry from the American University of Beirut in 1953. That same year, he relocated to Los Angeles, California and completed a PhD in physical chemistry at the University of Southern California by 1957. His early career included research work at the Monsanto Company until 1967, after which he joined Shamrock Corporation. Prior to joining Occidental, he held the position of president and COO at Olin Corporation, a firm specializing in chemicals and metals.
Irani holds the title of honorary fellow at the American Institute of Chemists and is a member of the Council on Foreign Relations. He acts as a trustee for USC and co-chairs the board of trustees at the American University of Beirut. In recognition, USC named its principal life sciences facility Ray R. Irani Hall in 2007. In 2012, he was inducted into the National Academy of Engineering for his leadership in petrochemical development and particulate system technologies, representing one of the highest honors in American engineering.
Career at Occidental
Irani entered Occidental in 1983 with the mission to turn around its underperforming chemicals division and was soon appointed president after several predecessors were replaced by founder Armand Hammer. By 1988, Irani and his leadership team effectively controlled daily company operations on behalf of Hammer, then aged 90. In 2008, he received stock options valued at $392 million.
In 2007, Irani’s compensation for the previous year surpassed $450 million, including a base salary of $1.3 million. Occidental justified this package by highlighting the stock price surge from $9 per share when Irani took over to $48.60 by the end of 2006, along with market capitalization growth from $32.1 billion to $42.5 billion within one year. His total earnings in 2009 amounted to $31.4 million, which included $24.8 million granted as stock awards. Over ten years, reports indicated that Irani accumulated $857 million.
Irani participated in an offshore tax shelter arranged by Deutsche Bank AG that was later declared an illegal tax avoidance scheme by the IRS. Despite receiving a subpoena from the U.S. Department of Justice and losing an appeal in 2006, Occidental’s board opted not to take disciplinary action against him, emphasizing that his involvement was personal and did not violate company policies.
He was awarded a discretionary cash bonus of $900,000 for spearheading cost reduction initiatives amid forecasts of a global economic slowdown. This bonus was granted independently from company performance outcomes. For fiscal year 2010, Irani earned $76.1 million—nearly twice his compensation from 2009—despite shareholder concerns regarding executive pay practices.
Irani stepped down as CEO on May 10, 2011, following opposition from major institutional investors such as the California State Teachers' Retirement System and Relational Investors who challenged executive remuneration levels and board structure. These investors condemned Irani’s pay package as a "corporate giveaway program" and pushed for changes among long-tenured board members.
Governance analysts had long criticized Irani’s remuneration as excessive and inadequately linked to performance metrics, noting that it exceeded that of ExxonMobil CEO Rex Tillerson despite Occidental’s considerably smaller market value.
In 2010, Stephen Chazen, formerly CFO and president, was appointed CEO to succeed Irani, who intended to continue as executive chairman until 2014.
Following shareholder dissatisfaction over leadership and compensation issues, Irani was removed from Occidental’s board on May 3, 2013.
KB Home stock option backdating controversy
Irani held a position on the KB Home board of directors for 15 years until November 2007 and led the executive compensation committee during the timeframe when CEO Bruce Karatz was involved in backdating stock options. In April 2010, Karatz was federally indicted and found guilty, and he also faced enforcement actions from the SEC in a corresponding civil matter. Shareholders of KB Home voiced notable opposition, with 19% voting against Irani, who subsequently stepped down from the board amid the controversy. Occidental did not clarify the reasons behind his departure in their proxy disclosures.