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Icahn letter to Occidental shareholders says leadership dodging accountability

Activist investor Carl Icahn has fired a new salvo at the leadership of Occidental Petroleum Corp., accusing CEO Vicki Hollub and the company's board of directors of being unconcerned by the destruction of shareholder value through the acquisition of Anadarko Petroleum Corp.

Icahn has been a vocal critic of the $57 billion merger and has launched an effort to replace four members of the board with a slate of his own nominees. In order for a vote to be called, company by-laws require 20% of shareholders to support the effort. Icahn has not reached that level, and Occidental's leadership has strenuously opposed his attempt.

In the letter posted on his website, Icahn attempted to rally further support by slamming Occidental's "four disastrous months" during and after its pursuit of Anadarko. He repeated complaints against Hollub's decision to make a deal with Berkshire Hathaway Inc. to fund the Anadarko merger and the lack of a shareholder vote; he also took aim at Occidental's sliding share price, which closed at $67.18 on April 11 but fell to $43.11 at the close of the NYSE on Aug. 28.

"[Hollub] oversaw Occidental's 37% stock collapse from April 11, 2019, the day OXY's acquisition interest in Anadarko was first announced … for an equity loss of almost $20 billion," he said. During the weeks leading up to and following the merger, which concluded Aug. 8, Hollub and Occidental have stayed largely silent. Icahn used his letter to claim that silence was an indication the company's leadership was unconcerned by the stock slide and felt no need to justify their actions.

"Will Hollub and her Board, who, in our view, failed to prudently exercise discipline in their relentless pursuit of Anadarko, make additional undisciplined mistakes, and possibly panic in a single-minded focus to support the dividend at any cost? Will they do anything in an attempt to try to prove that paying a massive premium for Anadarko was in fact a wise decision?" Icahn wrote. "Hollub and her board do not wish to be held accountable for anything."

This alleged lack of accountability, Icahn claimed, was the exact reason he believes shareholders should support his slate of candidates for the board.

"We have heard that OXY believes our directors would cause a distraction on the Board. Is it a distraction to ask tough questions, and challenge assumptions and the status quo, in order to build stockholder value?" he said. "A diversity of opinion, and board members willing to challenge management, ask questions and seek accountability is precisely what is needed at OXY right now."

Icahn accused Hollub and Occidental's leadership of opposing his slate of directors because they fear a group not under the CEO's control would entertain bids to purchase the company.

"Will … Hollub and her Board breach their fiduciary duties and reject, or fail to properly consider and bring to stockholders, any credible offers to acquire OXY? In our opinion, this is a very real risk," he said. "We believe that OXY's acquisition of Anadarko was in part motivated to create a de facto poison pill that would deter an interested buyer from bidding for OXY. With our representatives on the board … stockholders can be certain our directors will ensure the Board will work diligently to properly respond to any credible bids."