Ray R. Irani

Chairman and chief executive officer, Occidental Petroleum Corporation

Nationality: American.

Born: January 13, 1935, in Beirut, Lebanon.

Education: American Institute of Beirut, BS, 1953; University of Southern California, PhD, 1957.

Family: Son of Rida and Naz Irani; children: three.

Career: Monsanto Company, 1957–1967, research scientist; Shamrock Corporation, 1967–1973, new-product developer and director of research; Olin Corporation, 1973–1983, variety of executive positions including COO and president; Occidental Petroleum Corporation, 1983–1984, executive vice president and subsidiary chairman; 1984–1990, president and COO; Canadian Occidental Petroleum, 1984–1999, chairman; Occidental Petroleum Corporation, 1990–1996, chairman, CEO, and president; 1996–, chairman and CEO.

Address: Occidental Petroleum Corporation, 10889 Wilshire Boulevard, Los Angeles, California 90024-4201; http://www.oxy.com.

■ Ray R. Irani became the CEO and chairman of Occidental Petroleum Corporation in 1990 following the death of the legendary company founder, chairman, and CEO Armand Hammer. Unlike Hammer, who had come to run Occidental as a type of personal fiefdom, Irani set out to stabilize and streamline the company while rerouting its direction. More than a decade passed before Irani's corporate discipline took root, but by 2003 analysts were commending his work. The senior energy analyst Fadel Gheit was quoted by American Intelligence Wire as saying, "You have to give the management credit. They went from the ugly frog to the handsome prince" (April 7, 2003). Industry analysts called Irani a hard-driving strategist who always remained committed to his business convictions.


Irani was born in Beirut, Lebanon, to a mathematics professor. By the time he was 18, he had graduated summa cum laude with a degree in chemistry from Beirut's American University; by 22 he had earned his doctorate in physical chemistry from the University of Southern California. Irani worked as a research scientist for Monsanto Corporation for a decade in the 1950s and 1960s, during which time he earned most of his 150 patents for products as varied as pesticides, food additives, and cleaning compounds.

Irani left Monsanto in 1967 and joined Shamrock Corporation, where he developed new products and directed research. In 1973 he went to Olin Corporation, a chemicals and metals conglomerate, where he served in a series of executive positions, eventually becoming COO and then president of the company. In 1983 Irani accepted an offer from Hammer to head Occidental's chemicals division, which had lost $38 million in sales that year.

Irani was restless at Olin but did not intend to let Hammer gain his services for less than he was worth. He negotiated to receive the same salary that he had been earning at Olin—a coup considering that he would be no more than a divisional head at Occidental. As quoted in Fortune , the attorney and Occidental director Louis Nizer called Irani's terms "harsh"; with respect to Irani's demanded salary he added, "Hammer saw in him a future top executive, and he told me, 'Give it to him'" (November 7, 1988).

Part of Irani's bargaining power extended from the fact that Occidental was not seen as a progressive company, and its chemical division, which Irani would head, had floundered badly. Fortune quoted Irani as saying, "Oxy, for its size, was probably the worst chemical company at that time. Most of my colleagues thought I'd flipped" (November 7, 1988).


Irani wasted little time in impressing the boss as he quickly masterminded a turnaround for the chemical division; by 1984 he was named company president. If some company insiders and analysts thought that he would not last long in that position, they had good reason: Hammer had fired all of the five previous company presidents over the preceding 20 years, largely due to what analysts called power struggles and disagreements. By 1988, however, Fortune was quoting a security analyst as saying, "Ray Irani and his team run the company. Hammer is very much a figurehead, a traveling spokesman" (November 7, 1988).

Hammer himself admitted as much at the time, noting that his confidence in Irani to run the company freed him to pursue other interests, such as raising $1 billion for cancer research and improving relations with both the United States and the Soviet Union. Analysts praised Irani for placing a firm hand on a company with a history of horrendous ups and downs; they noted that for the first time in its history it was being run more like a solid Fortune 500 corporation than a one-man operation—and an erratic one at that.

Nevertheless Occidental still failed to perform up to par during Irani's time as president through 1988. Only once between 1982 and 1988 did the company's operating earnings cover its $2.50 dividend, giving the stock a junk-bond-like yield of 10 percent. Total annual return (including stock price and dividend yield) also lagged compared to other oil companies for many years. Yet by the late 1980s industry analysts were recommending Occidental stock based on Irani's performance. They saw him as a stabilizing force whose mere presence had lessened the company's volatility. In terms of strategy, he was seen as a "petrochemical man," and he eventually set out to buy a series of chemical plants and companies; in 1988 he purchased Cain Chemical for $2.2 billion. By 1990 the analyst John H. Shaughness was able to tell John Evan Frook of the Los Angeles Business Journal , "In a sense, we've already seen the effect of Irani at Occidental. He is most responsible for developing a very neat, highly integrated business" (April 2, 1990).


With the mid-1990 announcement that Irani was heir apparent to the 91-year-old Hammer, not all stockholders were enamored with the choice. Although his appointment helped stop speculation that the still-troubled company would be targeted by a corporate raider, many analysts noted that Occidental's strong reliance on petrochemicals, which had been developed under Irani, resulted in its struggling to keep up with other oil companies in terms of profits. Many continued to see Hammer as the controlling force behind the company, but there could be little doubt that Irani was filling upper management with his own key people in anticipation of taking over the reins entirely. Some analysts noted that Irani had been allowed to take firm control of the company because Hammer had been planning for his eventual succession for some time.

On December 10, 1990, Hammer died, ending his 34-year reign as chairman and CEO of Occidental. A few days later Irani stepped in as chairman and CEO; industry analysts expected him to prove to be the competent new leader who would steer the company toward a bigger focus on chemical production. They noted that he was likely to sell off assets and businesses that had been more like "pet projects" to Hammer than genuine profit centers. The difference between the old and new leadership quickly became apparent when in June 1992, just six months after Hammer's death, Irani gave up the 25-year battle Hammer had fought with the city of Los Angeles over the right to drill for oil on a plot of land owned by the company in Pacific Palisades. Irani was developing a reputation as a practical businessman, which he solidified when he told Thomas Bancroft of Forbes , "It was a pragmatic decision, it wasn't tough for me to make. When you lose, you have to recognize it" (September 2, 1991).

In truth Irani had bigger things on his agenda than Hammer's stubborn fight with the city. As chairman and CEO he quickly began making substantive changes that caught the eyes of Wall Street and competitors alike. He sold more than $2 billion worth of assets and would lay off 2,300 staff by the end of 1991. He cut the company's stock dividend from $2.50 to $1.00, saving the company close to $450 million a year. He sold Occidental's subsidiary in the United Kingdom, receiving a good price of $1.5 billion for the company's oil and gas operations in the North Sea. He struck a deal to sell all of the company's natural-gas liquid assets and businesses in the United States for $700 million. Analysts estimated that these and other deals in total netted Irani and Occidental $1.8 billion in cash after taxes. Irani soon also sold IBP, the nation's largest beef and pork processor. Other divested assets included a phosphate business, a stake in a Chinese coal mine, and coal facilities and properties in Kentucky and West Virginia. Dale Hanson, the chief executive of CalPers and a major Oxy shareholder, told Bancroft of Forbes , "Ray Irani has to over come the Oxy-Hammer shadow. So far, he has made good decisions" (September 2, 1991).

Irani had started out on the right foot in the eyes of industry analysts. By 1992—nearly a year ahead of schedule—he had already hit his $3 billion debt-cutting goal. Furthermore he had completely turned around the company's chemical business, OxyChem, which had once been up for sale piecemeal but became one of Occidental's two core interests, along with oil and gas. Although Irani's decision to drop the company's dividend to $1 led to some stockholders' disgruntlement, analysts saw the move as proof that Irani was willing to make the tough decisions needed to get Occidental moving. In 1992 Kara Glover noted in the Los Angeles Business Journal , "Industry analysts hail Irani for getting Occidental on a more focused track," adding that he was viewed "as inspiring shareholder confidence with an effective management style and ability to get things done" (March 23, 1992).


Irani continued to improve the company's bottom line and reduce debt as he kept a wary eye on the possibility of another economic recession. He had abandoned Hammer's tangential "business" interests—such as the raising of Arabian horses, real estate, and hybrid-seed research. He focused on core energy assets, and before long the company's chemical business was booming, and the oil and gas operations were growing. Irani, however, remained dissatisfied. Lower crude oil prices and other factors led to Occidental posting a net loss of $36 million, on sales and operating revenues of $4.7 billion, in the first nine months of 1994. He told Robin Sidel of the Houston Chronicle , "The bottom line, as far as earnings-per-share results, has been disappointing to me" (November 20, 1994).

Irani was discovering that turning Occidental into a successful company would be tough. Analysts noted that he was struggling to find a strategy that would provide consistent growth in sales and earnings as well as the company's stock price. The stock languished in the mid-1990s, and Irani took heat for collecting more than $125 million in pay and other compensation over a span of several years. In 1995 the analyst Scott Black unceremoniously told Dan Dorfman of Money , "He's unimaginative and not aggressive enough. You've got to speed up the sale of energy properties with low returns and upgrade exploration to increase reserves. What's needed is a major company refocus" (June 1995).

In 1998, oil prices fell nearly $10 a barrel to their lowest level in 50 years. Oil-business earnings, which accounted for more than half of the company's $6.6 billion in total revenue in 1997, fell by $314 million in 1998 from the $694 million of the previous year. As chemical prices were also falling, Irani could seek no relief from the chemical division.

In 1999, analysts thought that they saw the company rebounding. The company's stock rose 20 percent—but still fell behind the 26 percent increase in the Standard & Poor's index of major oil-company stocks. In fact, Occidental stock was worth less in 1999 than it had been 20 years earlier. Although some analysts saw plenty of good signs in the company's growth, the analyst Christopher Stavros told James F. Peltz of the Los Angeles Times , "They still need to win back investor credibility" (August 29, 1999).

Industry watchers noted that Occidental had made a deal that might ultimately be critical to its turnaround: in 1998 the company bought the U.S. government's 78 percent interest in the Elk Hills oil field of Bakersfield, California, for $3.5 billion. Analysts pointed out that the site would be a good long-term source of oil and gas, which Occidental would be able to produce more efficiently as it incorporated the use of higher-technology production equipment. Nevertheless a poor overall 1998 showing, including a fourth-quarter loss of $35 million, led to Irani being denied his annual cash bonus.


Despite the perennial criticism, Irani remained focused on transforming Occidental, and by 2002 the former largely international oil and chemical company had become a domestic exploration and production company with a few highpotential international ventures. Having suffered through the worst sales period for the chemical sector in two decades, Irani was optimistic. In an interview with Barbara Shook of Oil Daily , Irani pointed out that his purchases of the Elk Hills reserve in California and the Altura properties in West Texas had made the company first in gas and third in oil production in California and second in gas production in Texas.

By mid-2003 all of Irani's work over the previous decadeplus started to pay off; he had turned the onetime profligate corporation into a disciplined company. He was reaping the benefits of correctly predicting a leap in domestic oil profits and had admirably squeezed profits from aging Texas and California gas and oil properties. Analysts noted that while other oil and gas companies were focusing on exploration efforts overseas, Irani had taken a contrarian direction in obtaining the domestic Elk Hills and Altura sites for a total of $7.1 billion. Although the wells had already reached maturity at the time of the purchase, aggressive new drilling and well-stimulation technologies enabled Irani to add to Occidental's domestic oil reserves. At the same time rising energy prices further increased the profitability of Occidental's close-to-home production.

Though analysts expected Occidental to be able to keep these aging sources active for another dozen years, Irani realized that he would not be able to squeeze oil and gas production from them forever; he soon began to focus on developing large overseas oil fields. A new pipeline in Ecuador and a 25 percent stake in the Dolphin Project, which could transport two billion cubic feet of natural gas per day from Qatar to the United Arab Emirates, were promising new sources of income for the company.

In 2004, Irani announced a deal with Libya shortly after President George W. Bush lifted the embargo on business dealings with the country. Occidental had long produced oil in Libya but had been forced to leave the country in the 1980s due to economic sanctions. Occidental owned a stake in Libya's Waha oil concession, and Irani quickly arranged high-level meetings with Libyan officials, including the President Muammar Qaddafi.

Between 1970 and 1986, Occidental had participated in discoveries in Libya totaling three billion barrels of oil. In 1985 the company had net production of 44,000 barrels per day from three fields and owned three exploration concessions. Irani noted that Oxy's frozen Libyan assets were producing at a gross rate of 85,000 barrels a day in 2004, a rate that had been declining rapidly due to a lack of investment and the application of modern technology. Irani told Paul Merolli of Oil Daily , "We are confident we can achieve a substantial increase in gross recovery" (April 26, 2004).


Analysts noted that Irani continually made the tough decisions necessary to turn Occidental around. Laying off workers and cutting dividends did not make him popular in the early years, but Irani had recognized that the company was mired in a period of instability and fierce competition. Jack Linder told Dara Glover of the Los Angeles Business Journal , "Ray is obviously a man of word and conviction" (March 23, 1992).

Analysts noted that Irani ran Occidental with an emphasis on following the hierarchical chain of command. While his predecessor Hammer was known to speak with anyone in the building, Irani was known to perhaps talk only to the executive vice president and let his thoughts and directions then be passed down. Colleagues and industry insiders noted that Irani was also different in that he did not have Hammer's charismatic free spirit but was much more businesslike and pragmatic. He gave his staff more responsibility and clearly defined goals for which they would be held accountable.

Many believed that Hammer took to Irani and designated him the heir of Occidental because he liked his toughness; while working at Olin, Irani had garnered a reputation for being feisty. Colleagues noted that when the company owner John Olin ignored his advice, Irani would snap at Olin and ask what he was being paid for; Hammer liked such spunk. Irani summed up the differences between himself and his Occidental predecessor for Bancroft of Forbes : "Dr. Hammer was more of a romantic. He could fall in love with businesses, where I don't" (September 2, 1991).


In the 2003 annual report Irani expressed optimism that Occidental had finally broken through and would succeed in the future. The company reported a net income of $1.53 billion, or $3.98 a share—the second-highest annual earnings in the company's history—up 51 percent from 2002. Occidental's year-end closing price of $42.24 per share was the company's highest in 30 years. In February 2004 Irani and Occidental announced an increase in the dividend rate for the second consecutive year.

In addition to his duties at Occidental, Irani served on the boards of the American Petroleum Institute, Oxy Oil and Gas USA, Occidental Oil and Gas Corporation, Occidental Petroleum Investment Corporation, Kaufman and Broad Home Corporation, and the Jonsson Cancer Center Foundation at UCLA. He was a member of the National Petroleum Council, the American Institute of Chemists, the Industrial Research Institute, the CEO Roundtable, and the U.S.-Russian Business Council, among others. He served as a vice chair for the American University of Beirut, a trustee of the University of Southern California, and a member of the Los Angeles Town Hall and the Los Angeles World Affairs Council.

See also entry on Occidental Petroleum Corporation in International Directory of Company Histories .

sources for further information

Bancroft, Thomas, "The Pragmatist," Forbes , September 2, 1991, p. 128.

Dorman, Dan, "Cranky Money Managers Try to Light a Fire under These 10 Big Stocks," Money , June 1995, p. 21.

Frook, John Evan, "New Heir Apparent at Occidental Doesn't Pacify Unhappy Shareholders, Analysts Say," Los Angeles Business Journal , April 2, 1990, p. 4.

Glover, Kara, "Ray Irani Brings New Ways to Occidental," Los Angeles Business Journal , March 23, 1992, p. 12.

Merolli, Paul, "Sanctions Lifted, Oxy Ready to Deal in Libya," Oil Daily , April 26, 2004.

"Occidental: From Excess to Success," America's Intelligence Wire, April 7, 2003.

Peltz, James F., "A New, Truly Improved Occidental Petroleum?" Los Angeles Times , August 29, 1999.

Ramirez, Anthony, "Hammer Hits 90! Oxy Grows Up Too," Fortune , November 7, 1988, p. 59.

Sidel, Robin, "Oxy Chief Still Unsatisfied with Results of Restructuring," Houston Chronicle , November 20, 1994, p. 11.

—David Petechuk

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