On Friday, Occidental Petroleum became the second U.S. company to fail to win majority support during a non-binding vote on its pay practices. The vote is further evidence that a significant number of investors are using “say on pay” votes this proxy season to express their displeasure with executive compensation.
The Los Angeles-based company said shareholders did not approve the management proposal to approve Occidental's executive compensation philosophy, objectives, and policies. The company said it would release final vote results on May 13.
"The board compensation committee will continue to expand its dialogue with institutional investors to assess the views and we'll use that input to re-evaluate the company's compensation philosophy, objectives and policies in a manner which will address stockholder concerns," said Occidental spokesman Richard Kline, according to The Wall Street Journal.
In recent years, CEO Ray Irani has been one of the highest-paid chief executives in the United States; he received $52.2 million in compensation in 2009. Shareholder protests are not new at Occidental, where compensation committee members have received significant opposition in the past. In response to these investor concerns, the company agreed to hold its first advisory vote this year. About 70 U.S. companies have pledged to hold voluntary pay votes or have done so already.
"Shareholders are blowing the whistle, and they're saying enough is enough," Ralph Whitworth of Relational Investors, which owns about 1 percent of Occidental shares, told the Journal.
On May 3, Motorola, which held its second voluntary vote, also failed to win majority support for its compensation practices. The votes at Occidental and Motorola indicate that companies with pay concerns will not be able to fully appease shareholders by simply agreeing to conduct advisory votes.