The largest part of Ray Irani's 2006 payout was $270.2 million from the exercise of options awarded from 1997 to 2006, representing more than 7.1 million shares, according to the company's annual proxy statement, which was filed with the Securities and Exchange Commission in March.
In the proxy, the company said that from December 1990 -- when Irani succeeded Armand Hammer as chief executive -- through 2005, the company's stock rose to about $40 a share from $9 and its total shareholder return was 699 percent.
"When you look at this, this is solid pay for performance," said Richard Kline, an Occidental spokesman. "It serves the best interest of the corporation and the best interest of the shareholder."
Let's look into this "pay for performance" claim. Here's a graph of Occidental Petroleum's stock price (ticker symbol: OXY) from Yahoo:
The performance of the stock was essentially flat from the time Irani took over (1990) until about 2002. Now we all know that something important happened in the Middle East early in 2003, so let's take a look at the price of crude oil over the same time period:
As the price of crude oil goes up, so does Occidental's profits and the share price. The increase in crude oil prices since 2001 is mostly due to the Iraq War, not anything Mr. Irani did during that time.
Posts
No comments:
Post a Comment