The company slashed the payout 86% after oil prices plunged this week, adding fuel to criticism from shareholders including billionaire investor Carl Icahn that Occidental took on too much debt and destroyed shareholder returns to buy Anadarko. Icahn plans to run a proxy battle against Chief Executive Officer Vicki Hollub and the board later this year.

The cut comes less than two weeks after Hollub said the payout was “one of the defining characteristics of our company” and vowed to protect it. The last time Occidental reduced payouts was 1990, after Iraqi leader Saddam Hussein’s invasion of Kuwait sent oil markets tumbling.

“This is genuinely frustrating and disappointing to see, especially after the repeatedly, consistently stated commitment to the dividend from management,” Raymond James analyst Pavel Molchanov wrote in a note.

Hollub’s pledge was conditioned on crude remaining at $40 to $50 a barrel, but the dividend was already looking tenuous at those price levels, and this week’s market crash forced her and the board to act fast. Oil futures that reached more than $60 a barrel early this year closed at $34.36 on Tuesday in New York, after dipping to $27.34 on Monday.

Occidental also reduced capital spending for the year by 32% to about $3.6 billion, the Houston-based company said in a statement Tuesday. The cuts will enable Occidental to break even on a cash basis with benchmark U.S. crude trading in the low $30-a-barrel range.

The move was a “necessary step” for Occidental, though it will result in production declines, Neal Dingmann, an analyst at Suntrust Robinson Humphrey, wrote in a note.

Occidental rose 15% to $14.34 on Tuesday, trimming some of Monday’s 53% collapse.

Still, major headaches lay ahead for Occidental. Icahn, who owned a 2.5% stake as of Dec. 31, is trying to replace the company’s entire board, arguing that they put their own interests ahead of investors and that they destroyed shareholder value in outbidding Chevron Corp. to buy Anadarko. In a letter to fellow shareholders just four weeks ago, the activist investor warned that if oil prices continued their decline, the dividend would be in jeopardy.

What Bloomberg Intelligence Says

The massive 86% cut of Occidental’s once-fortress-like dividend to a paltry 11 cents a quarter may not go over well with income-focused shareholders especially those alienated by management’s steps to acquire Anadarko.

— Vincent G. Piazza and Evan Lee, analysts

Click here to read the report.

Occidental’s market value is now just $12.9 billion, about a third of what it paid for Anadarko. It also has $39 billion of long term debt, according to SunTrust, making it one of the most-exposed major oil explorers to declining crude prices. Furthermore, the low oil price environment has caused a collapse in valuations of energy assets, making its target of selling $15 billion of assets by the middle of this year harder to achieve.

Hollub said Tuesday’s actions will position Occidental to succeed in a low commodity price environment.

Warren Buffett’s Berkshire Hathaway Inc. helped finance Occidental’s purchase of Anadarko last year with a $10 billion preferred stock investment. That stock generates dividends of 8% annually for Berkshire, which Occidental can pay in cash or shares. That arrangement isn’t affected by Tuesday’s dividend cut.

Other U.S. shale producers have announced cost cuts this week following the slump in oil prices, including Diamondback Energy Inc. and California Resources Corp. Oil giants Exxon Mobil Corp. and Chevron said Tuesday they’re reviewing plans to reduce their spending.