A painting by the old master Rubens no longer hangs in the chairman's office at Occidental Petroleum Corp., the office from which company patriarch and art connoisseur Armand Hammer once presided over a far-flung empire.
In its place hangs a $1,000 oil of an Alpine meadow--a painting so undistinguished that Hammer's successor, Ray R. Irani, can't even remember where he got it.
Hammer "would be shocked," Irani conceded last week in an interview at Occidental's Westwood headquarters.
But Irani doesn't seem to mind. Hammer's artworks have been moved next door, to the new museum that bears his name, and Irani finds his own painting soothing and serviceable. He freely admits that, unlike Hammer, his interests lie elsewhere.
The change in artwork is one of many signs that Occidental Petroleum under Irani is undergoing a transformation that would have been unthinkable under Hammer, who died in December at age 92 after running Occidental for more than 30 years.
Irani, who was anointed by Hammer to fill his shoes, wasted no time in formulating a bold restructuring plan, announced last month, to redress many of the problems at the diversified energy and chemical company.
Though Irani refuses to criticize Hammer's management even after his death, many analysts and investors say the problems resulted from bad decisions by the strong-willed, charismatic "Doctor"--and that Irani is just the man to fix them.
Wall Street analysts applaud both Irani's credentials and his restructuring plan, but they reserve opinion on whether he can pull it off. They especially question whether Occidental can generate enough cash to meet its ambitious debt-reduction goals simply by selling off unwanted assets, considering the economy is in recession and that the assets include such unpopular items as Libyan oil fields and a deep-pit coal mine in China.
"I have to take a wait-and-see attitude to see whether the company can do what it says it can do," said Frederick P. Leuffer Jr., an analyst with C. J. Lawrence, Morgan Grenfell Inc. in New York, whose comments reflected those of many other analysts.
For his part, Irani is confident that Occidental can reach its goals, without offering any details. "We think we have a good program, and it's going to be successful," Irani said simply. "Time will tell."
Analysts agree that the changes at the company are directly attributable to the differences in management style between Hammer and Irani.
Hammer was the visionary entrepreneur in love with the deal and a man who spent as much time collecting art and organizing disaster relief as he spent tweaking the company's balance sheets.
Irani, by contrast, is viewed as the consummate professional manager--a man with little interest in getting his name on museum walls, but an executive with a firm grasp of the details in running the nation's sixth-largest energy company in terms of 1990 sales.
In that, Irani is the right man at the right time, analysts said. "Irani is an example of the kind of management needed in the second or third generations, when a company is too large to be run as a private fiefdom or a hobby any longer," said Bernard J. Picchi, an analyst with Salomon Bros. in New York.
"What's coming to fore now is a realistic, professional managerial approach," added Eugene L. Nowak, an oil analyst with Dean Witter in New York.
Irani refuses to discuss such distinctions between himself and the man who was his mentor from the time he came to Occidental from Olin Corp. in 1983. Instead, Irani attributes the restructuring plan to changes in the economy.
"The 1980s were a period when credit and money were readily available," he said. "We perceive at least the early 1990s . . . (as) a period when people are going to consolidate and watch their balance sheets, and I think it's in that spirit that we did the restructuring."
Still, the centerpiece of Irani's plan is to reduce Occidental's massive debt of $8.5 billion by $3 billion in the next two years mainly by selling off non-strategic assets--including many businesses that Hammer entered into almost as a whim. Those include film production, Arabian horse breeding and hotel management in Africa.
Irani's plan also slashes the longstanding dividend and focuses the company on its core operations in oil, gas and chemicals. Last week, the company announced layoffs of more than 1,000 employees to save $100 million in costs. In addition to cutting debt, the plan is intended to boost earnings by $200 million a year, raise cash flow by $600 million and bolster the stock, which has languished below $20 a share until recently.
As part of the plan, the company took a massive, $2.046-billion charge against fourth-quarter earnings, reflecting restructuring costs and write-offs of unprofitable ventures. With the charge, the company reported a net loss of $1.695 billion in 1990, compared with net income of $285 million the year before.