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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to Section 240.14a-12
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Occidental Petroleum Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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March 24, 2011
Dear Stockholders:
On behalf of the Board of Directors, it is my pleasure to invite you to Occidental’s 2011 Annual Meeting of Stockholders, which will be held once again at the Starlight Ballroom, The Fairmont Miramar Hotel, Santa Monica, California. Before the meeting begins, there will be an informal opportunity to meet members of Occidental’s management team.
Enclosed are the Notice of Meeting and the Proxy Statement, which provides the time and date of the meeting and describes in detail the matters on which you are being asked to vote. These matters include electing the directors, ratifying the selection of independent auditors, advisory vote approving executive compensation, advisory vote on the frequency of the advisory vote on executive compensation, and transacting any other business that properly comes before the meeting, including any stockholder proposals.
The Board especially encourages you to read the immediately following Letter to Stockholders from the Lead Independent Director and the Chairman of the Executive Compensation and Human Resources Committee. The Board has taken the views expressed by stockholders on key issues very seriously and has worked diligently to address stockholder concerns. The letter summarizes the highlights of the significant changes made in response to feedback and input received from stockholders and their representatives.
Also enclosed are a Report to Stockholders, which discusses highlights of the year, and Occidental’s Annual Report on Form 10-K. As in the past, at the meeting there will be a report on operations and an opportunity for you to ask questions.
Whether you plan to attend the meeting or not, I encourage you to vote promptly so that your shares will be represented and properly voted at the meeting.
Sincerely,
Ray R. Irani
Chairman and Chief Executive Officer
Occidental Petroleum Corporation
10889 Wilshire Boulevard
Los Angeles, CA 90024
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March 24, 2011
Dear Occidental Stockholders:
In October your Board of Directors approved significant changes to Occidental’s executive long-term incentive compensation program that will substantially reduce the Company’s overall compensation levels. The new program aligns the interests of senior executives with those of Occidental stockholders.
At the 2010 Annual Meeting, stockholders voted 54%–46% against the Say on Pay proposal on executive compensation. The Board takes your views very seriously and in the months following the meeting we have taken a number of actions designed to respond to the concerns you have voiced.
First, we retained a leading independent compensation consultant to provide advice and counsel to the Board and to compile information about the executive compensation policies and practices of other companies. Second, in our capacities as Lead Independent Director and Chairman of the Executive Compensation and Human Resources Committee, we met personally with a number of stockholders and their representatives to hear their opinions and advice on appropriate changes to our compensation program. At these meetings we sought suggestions both prior to and after formulating a draft of a new compensation program. This input was extremely valuable in helping us to redesign our compensation program, and we are grateful for the feedback we have received.
After taking these actions, the Compensation Committee, and then the Board, adopted a series of significant changes to our executive compensation program based in large part on this feedback and the input provided by our independent compensation consultants.
Highlights of the new compensation program, which are described in detail in the Proxy Statement, are:
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The potential long-term incentive award opportunity for the Chairman and Chief Executive Officer was reduced substantially from last year in terms of both the maximum, which is reduced by over 70% to $25 million, and the mid-point which is reduced by over 70% to $13 million, in each case based on the price of Occidental stock on the grant dates. Similarly, the potential long-term incentive award opportunity for the President and Chief Operating Officer was reduced, and grants for the other named executive officers were realigned.
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Overall executive compensation granted under the new program is consistent with that reported by peer companies and the overwhelming majority of compensation will continue to be long-term and performance-based, meeting the goal of providing appropriate incentives to reward high levels of performance and retain talented performers. |
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The peer group was expanded from nine to twelve companies for the comparative total stockholder return performance measure for the long-term total stockholder return incentive award, providing a broader comparison of the company’s performance within the oil and gas industry.
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In the following pages, you will have the chance to review this program in more detail. As you study these materials, we would point out that our new program was implemented on a prospective basis, effective October 2010. Long-term incentive awards granted in 2010 are based on company performance starting in that year and through subsequent years. Consequently, the payouts of these long-term incentive awards will not be known until earned in 2013 and beyond.
Because the new program is prospective, and NOT retroactive, these changes do not affect awards made in previous years. Therefore, when you look at the Summary Compensation Table on page 31 of the proxy statement, you will see total compensation amounts that include amounts not only for the new grants (to be paid as earned in the future), but also for payouts of awards made under the prior compensation program, which are the majority of the total amounts shown in that table for Dr. Irani and Mr. Chazen. We point this out to underscore the fact that the current and future compensation program is much different than the past one, but the amounts reported still reflect certain payouts made under the old program. For a comparison of the compensation packages for Dr. Irani approved in 2009 and 2010, see page 19 of the proxy.
Additionally, in our discussions with stockholders, we heard concerns voiced on other matters. We took those views back to the Board and the Board then took the following actions:
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At the May 2011 Annual Meeting, Dr. Irani will become the Executive Chairman and Mr. Chazen will be elected President and Chief Executive Officer.
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The Board will not waive the retirement policy for directors age 75 or older, with the exception that Dr. Irani will receive a waiver through 2014 and Mr. Weisman will receive a one-year waiver.
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We sincerely hope that you will continue to communicate with the Board on compensation and other issues of importance and we pledge to continue our outreach efforts to make sure that our decisions reflect the input of our most important constituents—our stockholders.
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Very truly yours,
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Aziz Syriani
Lead Independent Director
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Spencer Abraham
Chairman, Executive Compensation and
Human Resources Committee
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March 24, 2011
To Our Stockholders:
Occidental’s 2011 Annual Meeting of Stockholders will be held at 10:30 a.m. on Friday, May 6, 2011, in the Starlight Ballroom, The Fairmont Miramar Hotel, 101 Wilshire Boulevard, Santa Monica, California.
At the meeting, stockholders will act on the following matters:
1. Election of directors;
2. Ratification of selection of KPMG LLP as independent auditors;
3. Advisory vote approving executive compensation;
4. Advisory vote on the frequency of the advisory vote on executive compensation; and
5. Consideration of other matters properly brought before the meeting, including stockholder proposals. The Board of Directors knows of two stockholder proposals that may be presented.
These matters are described in detail in the Proxy Statement. The Board of Directors recommends a vote FOR Proposals 1, 2 and 3; and AGAINST Proposals 5 and 6. The Board of Directors has not made a recommendation with respect to Proposal 4.
Stockholders of record at the close of business on March 15, 2011, are entitled to receive notice of, to attend and to vote at the meeting.
Whether you plan to attend or not, it is important that you read the Proxy Statement and follow the instructions on your proxy card to submit a proxy by mail, telephone or Internet. This will ensure that your shares are represented and will save Occidental additional expenses of soliciting proxies.
Sincerely,
Donald P. de Brier
Executive Vice President, General Counsel and Secretary
Occidental Petroleum Corporation
10889 Wilshire Boulevard
Los Angeles, CA 90024
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General Information
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1
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Proposal 1: Election of Directors
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2
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Information Regarding the Board of Directors and its Committees
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7
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Compensation of Directors
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11
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Section 16(a) Beneficial Ownership Reporting Compliance
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11
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Security Ownership of Certain Beneficial Owners and Management
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Executive Compensation
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Compensation Discussion and Analysis
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Executive Summary of Occidental’s Executive Compensation
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Compensation Program
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Individual Compensation Considerations
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Succession Planning
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25
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Participants in Executive Compensation Process
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25
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Risk Management of Compensation Policies and Practices
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Certification of Previously Granted Performance Stock Awards
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Other Compensation and Benefits
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Stock Ownership Guidelines
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Equity Grant Practices
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Consequences of Misconduct
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Tax Deductibility Under Section 162(m)
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Compensation Committee Report
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2010 Performance Highlights
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Executive Compensation Tables
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Summary Compensation Table
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Grants of Plan-Based Awards
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Outstanding Equity Awards at December 31, 2010
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Option Exercises and Stock Vested in 2010
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Nonqualified Deferred Compensation
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Potential Payments Upon Termination or Change of Control
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Proposal 2: Ratification of Independent Auditors
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Audit and Other Fees
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Report of the Audit Committee
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Ratification of Selection of Independent Auditors
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Proposal 3: Advisory Vote Approving Executive Compensation
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Proposal 4: Advisory Vote on Frequency of Advisory Vote on Executive Compensation
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Stockholder Proposals
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48
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Proposal 5: Report on Political Expenditures and Spending Processes
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49
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Proposal 6: Required Nomination of Director with Environmental Expertise
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50
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Stockholder Proposals for the 2012 Annual Meeting of Stockholders
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Nominations for Directors for Term Expiring in 2013
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Annual Report
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Exhibit A: Corporate Governance Policies and Other Governance Measures
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A-1
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GENERAL INFORMATION
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FOR all nominees for directors (see page 2);
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FOR ratification of the independent auditors (see page 45);
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FOR advisory vote approving executive compensation (see page 47);
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ABSTAIN for advisory vote on the frequency of the advisory vote on executive compensation (see page 48); and
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AGAINST Proposals 5 and 6 (see page 49).
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PROPOSAL 1: ELECTION OF DIRECTORS
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SPENCER ABRAHAM, 58
Director since 2005
Member of the Charitable Contributions Committee, Environmental, Health and Safety Committee, and Executive Compensation and Human Resources Committee (Chair)
Secretary Abraham is Chairman and Chief Executive Officer of The Abraham Group, an international strategic consulting firm based in Washington, D.C. He represented Michigan in the United States Senate prior to President Bush selecting him as the tenth Secretary of Energy in U.S. history. During his tenure at the Energy Department from 2001 through January 2005, he developed policies and regulations to ensure the nation's energy security, was responsible for the U.S. Strategic Petroleum Reserve, oversaw domestic oil and gas development policy and developed relationships with international governments, including members of the Organization of the Petroleum Exporting Countries. Secretary Abraham holds a Juris Doctor degree from Harvard Law School and recently wrote a book on U.S. energy challenges, Lights Out!: Ten Myths About (and Real Solutions to) America’s Energy Crisis. Secretary Abraham serves as the Non-Executive Chairman of AREVA, Inc., the U.S. subsidiary of the French-owned nuclear company and was previously a Director and a member of the Nominating and Governance and Compensation Committees of ICx Technologies. He also serves on the boards or advisory committees of several companies: C3, Deepwater Wind, PetroTiger, Green Rock Energy, Duet India Infrastructure Ltd., Sindicatum Carbon Capital, International Battery, Inc. and Lynx Global Real Asset Fund. Secretary Abraham is a trustee of the Churchill Center.
Qualifications: Secretary Abraham's nearly two decades at the highest levels of domestic and international policy and politics shaped the insights he brings to Occidental's Board of Directors. As a former U.S. Senator and former U.S. Secretary of Energy who directed all aspects of the country’s energy strategy, Secretary Abraham provides the Board unique insight into public policy and energy-related issues. In addition, Secretary Abraham is a Harvard-trained attorney who, while directing the Energy Department, oversaw a budget of nearly $24 billion (FY 2005) and was responsible for the management of senior department personnel. Secretary Abraham’s legal training, and his government service managing complex policy, personnel and strategic issues provide Occidental with exceptional knowledge and perspective in the areas of health, environment and safety, strategy and policy, personnel management and community relations.
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HOWARD I. ATKINS, 60
Director since 2010
Mr. Atkins was Senior Executive Vice President and Chief Financial Officer of Wells Fargo & Company, where he was responsible for Wells Fargo’s financial management functions, investment portfolios and corporate properties functions from 2001 to February 2011. A 37-year veteran of the financial services industry, Mr. Atkins previously served as Executive Vice President and Chief Financial Officer of New York Life Insurance Company, Chief Financial Officer of Midlantic Corporation and Corporate Treasurer of Chase Manhattan Bank. Mr. Atkins serves on the Board of Directors of Ingram Micro Inc. where he is a member of the Audit Committee and the Human Resources Committee.
Qualifications: With his experience as Chief Financial Officer of Wells Fargo, one of the largest banking institutions in the United States, Mr. Atkins brings to the Board a deep understanding of financial oversight and accountability. In his nearly four decades in the financial services industry, Mr. Atkins has had responsibilities in the areas of financial reporting, tax management, asset-liability management, treasury, corporate development, investor relations and mergers and acquisitions. This experience provides the Board insight into financial management and analysis. Mr. Atkins' financial acumen, combined with his senior management expertise provides the Board valuable perspective in helping to guide the fiscal management policies that further Occidental’s strategic business goals.
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STEPHEN I. CHAZEN, 64
Director since 2010
Mr. Chazen has been the President and Chief Operating Officer of Occidental since 2010 and will succeed to the role of President and Chief Executive Officer in May 2011. Previously, he had been the President and Chief Financial Officer of Occidental Petroleum Corporation since 2007. Prior to being named President and Chief Financial Officer, Mr. Chazen was Chief Financial Officer and Senior Executive Vice President from 2004 to 2007, Chief Financial Officer and Executive Vice President-Corporate Development from 1999 to 2004, and Executive Vice President-Corporate Development from 1994 to 1999. Prior to joining Occidental, Mr. Chazen was a Managing Director and Head of Corporate Finance at Merrill Lynch. Mr. Chazen is a Director of the American Petroleum Institute and has been a member of the Boards of Directors of Lyondell Chemical Company, Premcor Inc. and Washington Mutual, Inc. Mr. Chazen holds a Ph.D. in Geology from Michigan State University, a master’s degree in Finance from the University of Houston and a bachelor’s degree in Geology from Rutgers College.
Qualifications: Mr. Chazen has implemented the company’s acquisition and divestiture strategy, which has been a key factor in Occidental’s transformation into a major oil and gas company. As President and Chief Operating Officer, Mr. Chazen is responsible for the domestic oil and gas operations; the worldwide oil and gas exploration function; corporate development; the midstream, market and other segment; and the chemical segment. He is also responsible for the overall financial management of the company. Additionally, Mr. Chazen has been a successful executive in the financial services industry. This financial and management expertise, coupled with his more than thirty years of experience in the oil and gas industry, demonstrate the valuable expertise and perspective that he brings to the Board.
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EDWARD P. DJEREJIAN, 72
Director since 1996
Member of the Charitable Contributions Committee, Corporate Governance, Nominating and Social Responsibility Committee, Environmental, Health and Safety Committee, and Executive Compensation and Human Resource Committee
Ambassador Djerejian is the founding Director of the James A. Baker III Institute for Public Policy at Rice University. His career in public service has spanned the administrations of eight U.S. Presidents from John F. Kennedy to William J. Clinton. During the Reagan Administration, he was Special Assistant to the President and Deputy Press Secretary for Foreign Affairs in the White House. He served as the U.S. Ambassador to the Syrian Arab Republic from 1988 to 1991 under Presidents Reagan and Bush, and then served Presidents Bush and Clinton as Assistant Secretary of State for Near Eastern affairs from 1991 to 1993. President Clinton named him U.S. Ambassador to Israel in 1993. Ambassador Djerejian was a Senior Advisor to the Iraq Study Group, a bipartisan panel mandated by the Congress to assess the current and prospective situation in Iraq in 2006. Ambassador Djerejian is a Director of Baker Hughes, Inc., where he is a member of the Governance and Compensation Committees, and Global Industries, Ltd, where he is Chairman of the Governance Committee. He is the recipient of Presidential and State Department awards.
Qualifications: Ambassador Djerejian is a leading expert on the complex political, security, economic, religious and ethnic issues of the Middle East. His experience brings valuable insight that enhances the Board's ability to assess operations and business opportunities in the company’s important Middle East/North Africa region. Throughout his distinguished career, he has developed an in-depth knowledge of a broad range of public policy issues, and expertise in foreign policy, geopolitics of energy and corporate governance. He serves on several public, private and nonprofit boards.
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JOHN E. FEICK, 67
Director since 1998
Member of the Audit Committee, Environmental, Health and Safety Committee, Executive Committee, and Finance and Risk Management Committee
Mr. Feick is the Chairman and a major stockholder of Matrix Solutions Inc., a provider of environmental remediation and reclamation services. He also serves as Chairman and a partner in Kemex Engineering Services, Ltd., which offers engineering and design services to the petrochemical, refining and gas processing industries. From 1984 to 1994, Mr. Feick was President and Chief Operating Officer of Novacor Chemicals, a subsidiary of Nova Corporation. He serves on the Board of Directors of Veresen Inc., of which he is Chairman of the Compensation Committee and a member of the Governance Committee, as well as on the Board of Directors of Graham Construction.
Qualifications: Mr. Feick possesses a deep understanding of both the oil and gas and chemicals industries along with broad experience in environmental compliance and remediation. He has served as Chairman of a company specializing in environmental services and led an oil and gas and petrochemicals specialty engineering firm. As President and Chief Operating Officer of NOVA Chemicals, he was responsible for the company's investments and operations and established the company as a leader in plant reliability, utilization rates, occupational health and safety, and environmental performance in North America. In addition to industry knowledge and expertise, Mr. Feick’s experience brings the Board exceptionally valuable insight into the environmental, health and safety area.
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MARGARET M. FORAN, 56
Director since 2010
Member of the Corporate Governance, Nominating and Social Responsibility Committee
Ms. Foran is Chief Governance Officer, Vice President and Corporate Secretary of Prudential Financial, Inc. Prior to joining Prudential, she was Executive Vice President, General Counsel and Corporate Secretary at Sara Lee Corporation from 2008 to 2009; Senior Vice President, Associate General Counsel and Corporate Secretary at Pfizer Inc. from 1997 to 2008; and Vice President and Assistant General Counsel at J.P. Morgan & Co. Ms. Foran is a former Director of The MONY Group Inc. and MONY Life Insurance Company. She served as Co-Chair and a Director of the Council of Institutional Investors (CII) and is the current Co-Chair of the CII International Corporate Governance Committee. She is the former Chair of the American Bar Association Committee on Corporate Governance and presently sits on the ABA’s Business Council. Ms. Foran is the former Chair of the Coordinating Committee of the Business Roundtable Corporate Governance Task Force. Her professional affiliations include the Standing Advisory Group of the Public Company Accounting Oversight Board (PCAOB) and the Economic Club of New York.
Qualifications: Ms. Foran is an accomplished attorney with deep expertise in legal affairs and corporate governance. She has held positions of increasing responsibility at four U.S.-based global companies, where for more than a decade she has had a leading role in strengthening corporate governance principles and practices, ensuring regulatory compliance and developing programs to broaden investor communications. Having been a senior executive in the financial services, food and beverage and pharmaceutical industries, Ms. Foran has a broad range of experience in shareholder services, mergers and acquisitions, SEC reporting, capital markets, derivatives, risk management, internal audit procedures and insurance matters as well as environmental, safety and sustainability programs. Ms. Foran’s corporate experience, in addition to her work with various investor groups and corporate trade associations, provides the Board exceptional acumen and insight on governance, investor and legal policies and practices.
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CARLOS M. GUTIERREZ, 57
Director since 2009
Member of the Environmental, Health and Safety Committee, and Finance and Risk Management Committee
Secretary Gutierrez is Vice Chairman of the Institutional Clients Group and a member of the Senior Strategic Advisory Group at Citigroup Inc. He joined Citigroup in January 2011 from communications and public affairs consulting firm APCO Worldwide Inc., where he was appointed Chairman of the Global Political Strategies division in 2010. He served as U.S. Secretary of Commerce in the administration of President George W. Bush from February 2005 to January 2009. Prior to his government service, Secretary Gutierrez was with Kellogg Company for 30 years. He became Kellogg’s Chief Executive Officer in 1999 and was named Chairman of the Board from 2000 to 2005. He previously served as a Director of Corning Incorporated, Lighting Science Group Corp. and United Technologies Corporation. In addition to serving as a trustee of the Woodrow Wilson International Center for Scholars and a National Trustee to the University of Miami Board of Trustees, Secretary Gutierrez is a non-resident scholar at the University of Miami’s Institute for Cuban and Cuban-American Studies and a member of the board of ImmigrationWorks USA, an organization dedicated to achieving comprehensive immigration reform.
Qualifications: Secretary Gutierrez’s highly successful service as Chief Executive Officer and Chairman of Kellogg Company provides him deep insight into the complex challenges faced by a growing organization in a highly competitive business environment. Additionally, his experience as U.S. Secretary of Commerce provides the Board exceptional knowledge and insight into the complex environment of international commerce. Secretary Gutierrez brings valuable business management and operational experience and an international commerce and global economic perspective to the Board.
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DR. RAY R. IRANI, 76
Director since 1984
Member of the Executive Committee (Chair)
Dr. Ray R. Irani has been Chairman and Chief Executive Officer of Occidental Petroleum Corporation since 1990 and held the additional title of President from 2005 to 2007. He will become Executive Chairman in May 2011. He has been a Director of the company since 1984, and served as President and Chief Operating Officer of Occidental from 1984 to 1990. Dr. Irani joined the company in 1983 as Chairman and Chief Executive Officer of Occidental Chemical Corporation. He served as Chairman of the Board of Canadian Occidental Petroleum Ltd. (now Nexen Inc.) from 1987 to 1999. Prior to working for Occidental, Dr. Irani was President, Chief Operating Officer and a Director of Olin Corporation. Dr. Irani serves on the Boards of Directors of The TCW Group, Inc. and Wynn Resorts, Limited. He is a Trustee of the University of Southern California and Chairman of USC’s Board Personnel Committee, and Vice Chairman of the Board of the American University of Beirut.
Qualifications: Since becoming Chairman and Chief Executive Officer of Occidental Petroleum Corporation in 1990, Dr. Irani has built Occidental into the fourth-largest oil and gas company in the United States, based on equity market capitalization. His distinguished professional, educational and career experience led him to transform Occidental from a conglomerate of unrelated business entities into a major oil and gas and chemical company and, as described below beginning on page 18, continues to motivate superior performance. Dr. Irani has developed extensive personal relationships with government leaders throughout the Middle East/North Africa and across the world. Under his leadership, Occidental has earned respect for its integrity, acuity and capabilities, creating opportunities for growth in the company’s core regions.
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AVEDICK B. POLADIAN, 59
Director since 2008
Member of the Audit Committee, Executive Compensation and Human Resources Committee, and Finance and Risk Management Committee
Mr. Poladian is Executive Vice President and Chief Operating Officer of Lowe Enterprises, Inc., a diversified national real estate company active in commercial, residential and hospitality property investment, management and development. In this role, Mr. Poladian oversees human resources, risk management, construction, finance and legal functions across the firm. Mr. Poladian previously served as Executive Vice President, Chief Financial Officer and Chief Administrative Officer for Lowe from 2003 to 2006. Mr. Poladian was with Arthur Andersen from 1974 to 2002 and is a certified public accountant (inactive). He is a past member of the Young Presidents Organization, the Chief Executive Organization, the California Society of CPAs and the American Institute of CPAs. Mr. Poladian is a director of the YMCA of Metropolitan Los Angeles, a member of the Board of Councilors of the University of Southern California School of Policy, Planning, and Development and a former Trustee of Loyola Marymount University. He serves as a director of Western Asset Management Company where he is a member of the Audit Committee and as a member of the Board of Trustees of Public Storage. He was a director of California Pizza Kitchen through May 2008.
Qualifications: As a certified public accountant with extensive business experience, Mr. Poladian qualifies as one of Occidental’s Audit Committee financial experts and provides the Board expert perspective in financial management and analysis. Having served in a senior management position at one of the world’s leading accounting firms, combined with his experience as Chief Operating Officer and Chief Financial Officer of a diversified real estate company, Mr. Poladian has deep knowledge of key business issues, including personnel and asset utilization, in addition to all aspects of fiscal management.
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RODOLFO SEGOVIA, 74
Director since 1994
Member of the Charitable Contributions Committee, Corporate Governance, Nominating and Social Responsibility Committee, Environmental, Health and Safety Committee (Chair), Executive Committee, Executive Compensation and Human Resources Committee, and Finance and Risk Management Committee
Mr. Segovia is a Director and serves on the Executive Committee of Inversiones Sanford, a diversified investment group with emphasis in specialty chemicals and plastics, with which he has been affiliated since 1965. He was a Senator of the Republic of Colombia from 1990 to 1993 and the Minister of Public Works and Transportation from 1985 to 1986. He was President of the Colombian national oil company (Ecopetrol) from 1982 to 1985 and had previously spent many years in the petrochemical industry. Mr. Segovia is a Trustee of the University of Andes and serves on the Global Council of Lehigh University, where he was a visiting professor. Later, as a visiting scholar at Lehigh, he presented a public address entitled “The Oxy Story: From the Brink to Excellence.” He is a member of the Colombian Academy of History. Mr. Segovia is a recipient of the Colombia Distinguished Engineers Award, the Boyaca Cross, Colombia’s highest award and the Order of Merit of the French Republic.
Qualifications: As former President of Colombia’s national oil company and with extensive expertise in the chemicals industry, Mr. Segovia provides the Board strategic insight into the management and acquisition strategies of both Occidental's oil and gas and chemicals businesses. His extensive experience as a former lawmaker and distinguished business leader in Colombia includes management leadership of large organizations specializing in petrochemicals. Mr. Segovia provides the Board valuable insight and counsel on issues and strategy in the Americas region, where Occidental has significant oil and gas operations, as well as significant insight gained from his financial management, policy, environmental and social issues expertise, in both the private and public sectors.
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AZIZ D. SYRIANI, 68
Director since 1983
Lead Independent Director since 1999
Member of the Audit Committee (Chair), Corporate Governance, Nominating and Social Responsibility Committee, and Executive Committee
Mr. Syriani is President and Chief Executive Officer of The Olayan Group, a global, diversified trading, services and investment organization that operates more than 40 businesses and financial enterprises. He has been with The Olayan Group since 1974 and helped it become one of the world's largest privately held companies, in terms of shareholder equity. Mr. Syriani was named President and Chief Operating Officer in 1978 and Chief Executive Officer in 2002. Born in Lebanon, Mr. Syriani received an accounting degree from the American University of Beirut, followed by French and Lebanese law degrees in 1965 from the University of St. Joseph, an affiliate of the University of Lyon. Following five years of legal practice in Beirut, he obtained his LL.M. degree from Harvard Law School in 1972. He practiced law in New York and Beirut before joining The Olayan Group. From 1974-1976, he served on the Board of American Express Middle East Development Company, the Lebanese subsidiary of American Express. Mr. Syriani is a Director of The Credit Suisse Group, where he was Chairman of the Audit Committee from April 2002 until April 2004, and since April 2004 has been Chairman of its Compensation Committee.
Qualifications: Mr. Syriani's experience both leading and serving on the board of successful global organizations brings broad and extensive international business and corporate governance acumen to the Board and, in particular, to his role as Lead Independent Director. With extensive experience as President and CEO of one of the world’s leading trading, services and investment organizations, directing all aspects of its business, Mr. Syriani provides unique global market insight to the Board. Mr. Syriani’s educational and professional experience in the Middle East/North Africa, the Americas and Europe, his Harvard legal training, and his broad experience in business organization leadership provide the Board a knowledgeable, acculturated global perspective that helps to effectively shape Occidental’s worldwide growth and governance strategies.
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ROSEMARY TOMICH, 73
Director since 1980
Member of the Audit Committee, Charitable Contributions Committee (Chair), Corporate Governance, Nominating and Social Responsibility Committee (Chair), Environmental, Health and Safety Committee, Executive Committee, and Executive Compensation and Human Resources Committee
Miss Tomich owns the Hope Cattle Company and the A. S. Tomich Construction Company. Additionally, she is Chairman of the Board of Directors and Chief Executive Officer of Livestock Clearing, Inc. and was a founding Director of the Palm Springs Savings Bank. Miss Tomich serves on the Advisory Board of the University of Southern California Marshall School of Business and the Board of Councilors for the College of Letters, Arts and Sciences at the University of Southern California and is a Trustee Emeritus of the Salk Institute.
Qualifications: Miss Tomich’s experience in the construction and commodity-based arenas, as well as in the social cause arena, give her insight into matters critical to asset development, corporate governance and human relations strategy, policy and practice. Miss Tomich's extensive experience as an ardent advocate for community, social, minority and women’s causes has contributed to the Board an important perspective and understanding that is highly valued in today’s business environment. Occidental also benefits from the keen insights gained from Miss Tomich’s service on the boards of social, cultural and educational institutions, which enables her to provide strategic counsel to the Board on governance and human relations policies.
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WALTER L. WEISMAN, 75
Director since 2002
Member of the Audit Committee, Corporate Governance, Nominating and Social Responsibility Committee, Environmental, Health and Safety Committee, and Finance and Risk Management Committee
Mr. Weisman was Chairman and Chief Executive Officer of American Medical International, a multinational hospital firm, until his retirement in 1998. Since then, Mr. Weisman has used his expertise in leading a global company to guide his private investments, volunteer activities and service on numerous business and non-profit boards of directors. Mr. Weisman is a Board Director of Fresenius Medical Care AG, for which he chairs the Audit Committee and serves on the Corporate Governance Committee. He also is Chairman of the Board of the Sundance Institute and a Senior Trustee of the Board of Trustees of the California Institute of Technology, where he serves on a number of committees, including the Institute's Oversight Committee for the Jet Propulsion Laboratory. He previously served as Chairman of Maguire Properties Inc., an owner, developer and manager of office properties in Southern California, and is a past Chairman of the Los Angeles County Museum of Art, on which he continues to serve as a Life Trustee.
Qualifications: As a former Chairman and Chief Executive Officer, Mr. Weisman has expertise in corporate resource maximization and a depth of understanding in governance, financial management, risk management and health-related matters. In addition, the Board benefits from Mr. Weisman’s experience as a trustee of respected business, educational, intellectual and community service organizations. This provides added perspective into strategic business issues and maintaining entrepreneurial spirit, while focusing on people, profit and performance.
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Ÿ
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The Board added two additional independent directors, Howard I. Atkins, former Senior Executive Vice President and Chief Financial Officer of Wells Fargo & Company, in October 2010, and Margaret M. Foran, Chief Governance Officer, Vice President and Corporate Secretary of Prudential Financial, Inc., in December 2010.
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Ÿ
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The Board announced that at the May 2014 Annual Meeting of Stockholders, a proposal to amend the company’s by-laws to split the roles of Chairman of the Board and Chief Executive Officer will be submitted to stockholders. The Board will either recommend that stockholders vote for the proposal or take a neutral position on the proposal.
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Ÿ
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The Board announced that it will not waive the retirement requirement of the director retirement policy for directors age 75 or older, with the exception that Mr. Weisman will receive a one-year waiver and Dr. Irani will receive a waiver through 2014.
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Ÿ
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The Board modified the company’s by-laws to adopt a majority vote standard for the election of directors. Any director receiving a greater number of votes “against” than “for” his or her election in an uncontested election will tender a resignation that will be effective October 31 of that year unless accepted earlier by the Board.
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Ÿ
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Effective at the May 2011 Annual Meeting of Stockholders, Dr. Irani will become the full-time Executive Chairman and Mr. Chazen will be elected President and Chief Executive Officer.
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Ÿ
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In August 2010, the Board promoted Mr. Chazen to President and Chief Operating Officer and elected Mr. Lienert as Chief Financial Officer.
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Name and Members
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Responsibilities
|
Meetings or Written
Actions in 2010
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||
Lead Independent Director
Aziz D. Syriani
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Ÿ
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advises the Chairman or Executive Chairman as to an appropriate schedule of Board meetings and the information that shall be provided by management for Board consideration
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Not applicable
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Ÿ
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approves the agendas for the Board and Committee meetings after consultation with the Chairman or Executive Chairman
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Ÿ
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recommends to the Chairman or Executive Chairman the retention of consultants who report directly to the Board
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Ÿ
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assists in assuring compliance with the corporate governance policies and recommends revisions to the policies
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Ÿ
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calls, coordinates and develops the agenda for and moderates executive sessions of the independent directors at which no members of management are present
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evaluates, along with the members of the Executive Compensation and Human Resources Committee and the other independent directors, the performance of the Chairman or Executive Chairman and the Chief Executive Officer
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communicates to the Chairman or Executive Chairman and the Chief Executive Officer the views of the independent directors and the Board committees with respect to objectives set for management by the Board
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Ÿ
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consults with the Chairman or Executive Chairman and other members of the Board as to recommendations on membership and chairpersons of all the Board Committees and discusses such recommendations with the Corporate Governance, Nominating and Social Responsibility Committee and the Board
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Ÿ
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serves as liaison between the Board and stockholders, communicating their views to the Board
|
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Audit Committee
John S. Chalsty (1)
John E. Feick
Irvin W. Maloney (1)
Avedick B. Poladian
Aziz D. Syriani (Chair)
Rosemary Tomich
Walter L. Weisman
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All of the members of the Audit Committee are independent, as defined in the New York Stock Exchange Listed Company Manual. All of the members of the Audit Committee are financially literate and the Board has determined that Messrs. Chalsty and Poladian meet the Securities and Exchange Commission’s definition of “audit committee financial expert.” The Audit Committee Report with respect to Occidental's financial statements is on page 46.
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8 meetings
including 8 executive sessions with no members of management present
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||
The primary duties of the Audit Committee are as follows:
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||||
Ÿ
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hires the independent auditors to audit the consolidated financial statements of Occidental and its subsidiaries
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Ÿ
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discusses the scope and results of the audit with the independent auditors
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Ÿ
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discusses Occidental's financial accounting and reporting principles and the adequacy of Occidental's internal accounting, financial and operating controls with the auditors and with management
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Ÿ
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reviews all reports of internal audits submitted to the Audit Committee and management's actions with respect thereto
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Ÿ
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reviews the appointment of the senior internal auditing executive
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oversees all matters relating to Occidental’s Code of Business Conduct compliance program
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Charitable Contributions
Committee
Spencer Abraham
Edward P. Djerejian
Irvin W. Maloney (1)
Rodolfo Segovia
Rosemary Tomich (Chair)
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Ÿ
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oversees charitable contributions made by Occidental and its subsidiaries
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5 meetings
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Corporate Governance,
Nominating and Social
Responsibility Committee
John S. Chalsty (1)
Edward P. Djerejian
Margaret M. Foran (2)
Rodolfo Segovia
Aziz D. Syriani
Rosemary Tomich (Chair)
Walter L. Weisman
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Ÿ
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recommends candidates for election to the Board
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5 meetings
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Ÿ
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is responsible for the periodic review and interpretation of Occidental's Corporate Governance Policies and consideration of other governance issues
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Ÿ
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oversees the evaluation of the Board and management
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Ÿ
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reviews Occidental’s policies, programs and practices on social responsibility
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oversees compliance with Occidental’s Human Rights Policy
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|||
See page 51 for information on how director nominees are selected and instructions on how to recommend nominees for the Board.
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Name and Members
|
Responsibilities
|
Meetings or Written
Actions in 2010
|
||
Environmental, Health
and Safety Committee
Spencer Abraham
Edward P. Djerejian
John E. Feick
Carlos M. Gutierrez
Rodolfo Segovia (Chair)
Rosemary Tomich
Walter L. Weisman
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Ÿ
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reviews and discusses with management the status of environmental, health and safety issues, including compliance with applicable laws and regulations
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5 meetings
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Ÿ
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reviews the results of internal compliance reviews and remediation projects
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Ÿ
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reports periodically to the Board on environmental, health and safety matters affecting Occidental and its subsidiaries
|
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Executive Committee
John S. Chalsty (1)
John E. Feick
Dr. Ray R. Irani (Chair)
Irvin W. Maloney (1)
Rodolfo Segovia
Aziz D. Syriani
Rosemary Tomich
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Ÿ
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exercises the powers of the Board with respect to the management of the business and affairs of Occidental between meetings of the Board
|
None
(Eliminated effective May 2011)
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|
Executive Compensation
and Human Resources
Committee
Spencer Abraham (Chair)
John S. Chalsty (1)
Edward P. Djerejian
Avedick B. Poladian
Rodolfo Segovia
Rosemary Tomich
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Ÿ
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reviews and approves the corporate goals and objectives relevant to the compensation of the Chairman or Executive Chairman and the Chief Executive Officer (CEO), evaluates the performance of the Chairman or Executive Chairman and the CEO and determines and approves the compensation of the Chairman or Executive Chairman and the CEO
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5 meetings
including 2 executive sessions with no members of management present
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Ÿ
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reviews and approves the annual salaries, bonuses and other executive benefits of all other executive officers
|
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administers Occidental's stock-based incentive compensation plans and periodically reviews the performance of the plans and their rules
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reviews new executive compensation programs
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periodically reviews the operation of existing executive compensation programs as well as policies for the administration of executive compensation
|
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reviews director compensation annually
|
|||
The Executive Compensation and Human Resources Committee's report on executive compensation is on page 28.
|
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Finance and Risk
Management Committee
John S. Chalsty (Chair) (1)
John E. Feick
Carlos M. Gutierrez
Avedick B. Poladian
Rodolfo Segovia
Walter L. Weisman
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Ÿ
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recommends to the Board the annual capital plan, and any changes thereto, and significant joint ventures, long-term financial commitments and acquisitions
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5 meetings
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Ÿ
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approves policies for authorization of expenditures, cash management and investment and for hedging of commodities and interest rates
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Ÿ
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reviews Occidental’s financial strategies, risk management policies (including insurance coverage levels) and financial plans (including planned issuances of debt and equity)
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(1)
|
Not standing for re-election to the Board of Directors.
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(2)
|
Member as of February 2011.
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Ÿ
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was paid a retainer of $60,000 per year, plus $2,000 for each meeting of the Board of Directors or of its committees he or she attended in person or telephonically; and
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Ÿ
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received an annual grant of 5,000 restricted shares of common stock (pro-rated for directors who are appointed mid-term), plus an additional 800 restricted shares of common stock for each committee he or she chaired (other than the Executive Compensation and Human Resources Committee), plus an additional 3,000 restricted shares of common stock for serving as Lead Independent Director. In recognition of the significant increase in the duties of the Chair of the Executive Compensation and Human Resources Committee over the last several years, in December 2010, the Board of Directors increased the annual grant to the Chair of the Executive Compensation and Human Resources Committee to 1,800 restricted shares of common stock effective May 2011 with respect to service beginning in 2010.
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Compensation of Directors
|
|||||||||||||||
Name
|
Fees Earned
or Paid in Cash
|
Stock Awards
|
All Other Compensation
|
Total
|
|||||||||||
($)
|
($) (1)
|
($) (2)
|
($)
|
||||||||||||
Spencer Abraham
|
$
|
106,000
|
$
|
528,525
|
$
|
4,757
|
$
|
639,282
|
|||||||
Howard I. Atkins (3)
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$
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21,903
|
$
|
283,190
|
$
|
0
|
$
|
305,093
|
|||||||
Ronald W. Burkle (4)
|
$
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17,968
|
$
|
0
|
$
|
0
|
$
|
17,968
|
|||||||
John S. Chalsty
|
$
|
122,000
|
$
|
488,128
|
$
|
32,129
|
$
|
642,257
|
|||||||
Edward P. Djerejian
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$
|
110,000
|
$
|
420,800
|
$
|
9,870
|
$
|
540,670
|
|||||||
John E. Feick
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$
|
112,000
|
$
|
420,800
|
$
|
4,020
|
$
|
536,820
|
|||||||
Margaret M. Foran (5)
|
$
|
10,710
|
$
|
232,600
|
$
|
0
|
$
|
243,310
|
|||||||
Carlos M. Gutierrez
|
$
|
92,000
|
$
|
420,800
|
$
|
4,088
|
$
|
516,888
|
|||||||
Irvin W. Maloney
|
$
|
102,000
|
$
|
420,800
|
$
|
746
|
$
|
523,546
|
|||||||
Avedick B. Poladian
|
$
|
112,000
|
$
|
420,800
|
$
|
0
|
$
|
532,800
|
|||||||
Rodolfo Segovia
|
$
|
126,000
|
$
|
488,128
|
$
|
39,182
|
$
|
653,310
|
|||||||
Aziz D. Syriani
|
$
|
102,000
|
$
|
740,608
|
$
|
8,287
|
$
|
850,895
|
|||||||
Rosemary Tomich
|
$
|
132,000
|
$
|
555,456
|
$
|
0
|
$
|
687,456
|
|||||||
Walter L. Weisman
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$
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122,000
|
$
|
420,800
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$
|
66,000
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$
|
608,800
|
(1)
|
Restricted Stock Awards are granted to each non-employee director on the first business day following the Annual Meeting or, in the case of a new non-employee director, the first business day following the election of the director. The shares subject to these awards are fully vested on the date of grant, but may not be sold or transferred for three years except in the case of death or disability. The dollar amounts shown reflect $84.16 per share for all directors except Mr. Atkins and Ms. Foran, which reflect $84.94 and $93.04 per share, respectively, which in each case, is the respective grant date fair value.
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(2)
|
None of the non-employee directors received any fees or payment for services other than as a director. Amounts shown include personal benefits in excess of $10,000, all tax gross-ups regardless of amount and matching charitable contributions. For Messrs. Abraham, Feick, Gutierrez, Maloney and Syriani, the amount shown is the tax gross-up related to reimbursement of spousal travel cost. For Mr. Weisman, the amount shown is the charitable contribution pursuant to Occidental’s Matching Gift Program, including $25,000 in matches for 2009 contributions. For Messrs. Chalsty, Djerejian and Segovia, $7,129, $3,045 and $4,182, respectively, of the amount shown is for the tax gross-up related to reimbursement for spousal travel and $25,000, $6,825 (including $500 in matches for 2009 contributions) and $35,000, respectively, of the amount shown is the charitable contribution pursuant to Occidental’s Matching Gift Program.
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(3)
|
Mr. Atkins commenced service as a director in October 2010.
|
(4)
|
Mr. Burkle served as a director through the 2010 Annual Meeting.
|
(5)
|
Ms. Foran commenced service as a director in December 2010.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
Name and Address
|
Number of Shares
Owned
|
Percent of
Outstanding
Common Stock
|
Sole Voting Shares
|
Shared Voting
Shares
|
Sole Investment
Shares
|
Shared
Investment
Shares
|
BlackRock, Inc.
40 East 52nd Street
New York, NY 10022
|
46,416,695 (1)
|
5.71 (1)
|
46,416,695 (1)
|
__(1)
|
46,416,695 (1)
|
__(1)
|
(1)
|
Pursuant to Schedule 13G filed with the Securities and Exchange Commission on February 7, 2011.
|
Beneficial Ownership of Directors and Executive Officers
|
||||||||||||||
Name
|
Sole Voting and
Investment
Shares (1)
|
Restricted
Shares (2)
|
Exercisable
Options (3)
|
Total Shares
Beneficially Owned (4)
|
Percent of
Outstanding
Common Stock (5)
|
Restricted/
Performance
Stock Units (6)
|
||||||||
Spencer Abraham
|
6,924
|
14,734
|
0
|
21,658
|
0
|
|||||||||
William E. Albrecht
|
6,490
|
16,610
|
0
|
23,100
|
58,143
|
|||||||||
Howard I. Atkins
|
0
|
3,334
|
0
|
3,334
|
0
|
|||||||||
John S. Chalsty
|
40,232
|
21,174
|
0
|
61,406
|
0
|
|||||||||
Stephen I. Chazen
|
2,009,110
|
47,456
|
0
|
2,056,566
|
429,706
|
|||||||||
Donald P. de Brier
|
688,119
|
18,983
|
0
|
707,102
|
99,998
|
|||||||||
Edward P. Djerejian
|
31,393
|
17,500
|
0
|
48,893
|
0
|
|||||||||
John E. Feick
|
20,000
|
20,000
|
0
|
40,000
|
0
|
|||||||||
Margaret M. Foran
|
1,004
|
2,500
|
0
|
3,504
|
0
|
|||||||||
Carlos M. Gutierrez
|
0
|
8,334
|
0
|
8,334
|
0
|
|||||||||
Ray R. Irani
|
7,670,032
|
(7)
|
59,320
|
0
|
7,729,352
|
(7)
|
890,907
|
|||||||
James M. Lienert
|
131,012
|
11,864
|
0
|
142,876
|
51,889
|
|||||||||
Edward A. Lowe
|
11,884
|
16,610
|
500
|
28,994
|
45,306
|
|||||||||
Irvin W. Maloney
|
36,438
|
20,000
|
0
|
56,438
|
0
|
|||||||||
Avedick B. Poladian
|
0
|
15,000
|
0
|
15,000
|
0
|
|||||||||
Rodolfo Segovia
|
69,741
|
(8)
|
22,033
|
0
|
91,774
|
(8)
|
0
|
|||||||
Aziz D. Syriani
|
44,820
|
20,020
|
0
|
64,840
|
0
|
|||||||||
Rosemary Tomich
|
44,836
|
19,546
|
0
|
64,382
|
0
|
|||||||||
Walter L. Weisman
|
15,134
|
20,000
|
0
|
35,134
|
0
|
|||||||||
All executive officers and
directors as a group
(21 persons)
|
10,865,916
|
392,578
|
100,500
|
11,358,994
|
1.4%
|
1,630,699
|
(1)
|
Includes shares held through the Occidental Petroleum Corporation Savings Plan as of February 28, 2011.
|
(2)
|
For non-employee directors, includes shares for which investment authority has not vested under the 1996 Restricted Stock Plan for Non-Employee Directors and the 2005 Long-Term Incentive Plan.
|
(3)
|
Includes options and stock appreciation rights which will be exercisable within 60 days.
|
(4)
|
Represents the sum of the first three columns.
|
(5)
|
Unless otherwise indicated, less than 1 percent.
|
(6)
|
Includes performance stock awards at target level, or for 2010 awards, at the mid-point performance level (Occidental rank of six out of twelve peer group companies). Until the performance period ends and the awards are certified, no shares of common stock are issued. However, grant recipients receive dividend equivalents on the target share amount of performance stock awards during the performance period for awards granted prior to 2010.
|
(7)
|
Includes 272,000 shares beneficially owned by Dr. Irani through a limited partnership and the Irani Family Foundation.
|
(8)
|
Includes 15,377 shares held by Mr. Segovia as trustee for the benefit of his children.
|
COMPENSATION DISCUSSION AND ANALYSIS
|
Ÿ
|
Maintain the focus on long-term performance-based awards;
|
|
Ÿ
|
Incentivize senior management to continue to achieve long-term success;
|
|
Ÿ
|
Support the alignment of executive and stockholder interests; and
|
|
Ÿ
|
Grant awards consistent with peer company programs1 in terms of award type and reported value2.
|
Ÿ
|
Compared to 2009, the Chairman and Chief Executive Officer’s potential long-term incentive award opportunity for 2010 was reduced substantially in terms of both the maximum, which is reduced by over 70% to $25 million2, and the mid-point which is reduced by over 70% to $13 million2. As a result, the Chairman and the Chief Executive Officer’s total compensation awarded in 2010 is consistent with that of other Chief Executive Officers in the company’s peer group1,2.
|
|
Ÿ
|
Overall executive compensation granted in 2010 is comparable to peers1,2 and the overwhelming majority of compensation will continue to be long-term and performance-based.
|
|
Ÿ
|
Executive long-term incentive awards were allocated 80% to a Total Shareholder Return Incentive award (TSRI) and 20% to a Restricted Stock Incentive award (RSI) using maximum payout levels.
|
|
Ÿ
|
Payouts for the new TSRI awards are determined by Occidental’s total stockholder return (TSR) ranking within a peer group of twelve companies. Hurdles for payouts were made more difficult with the maximum payout made only if Occidental ranks first within the peer group and no payout if Occidental ranks in the bottom three out of the twelve peer companies. Additionally, all payouts at higher than 50% of the maximum require that the company’s TSR be higher than the S&P 500 TSR.
|
|
Ÿ
|
The executive compensation program uses types of awards and performance metrics which are widely used by peer companies.
|
|
Ÿ
|
As of 2010, all new grants of executive long-term incentive equity awards vest on a pro rata basis in the event of a change of control, with the new TSRI awards vesting based on 50% of the performance share units granted.
|
|
Ÿ
|
Return on equity awards granted to Dr. Irani and Mr. Chazen in 2007 and vested in 2010 were paid 50% in common stock and 50% in cash instead of 100% in cash. A number of shares equal to the net after-tax shares received must be retained for at least three years after the vesting date.
|
|
Ÿ
|
Long-term performance-based awards granted in 2010 to senior executives will be paid at least 50% in common stock and the remainder in cash irrespective of the award type.
|
|
Ÿ
|
The peer group was expanded from nine to twelve companies for the TSRI performance metric, providing a broader comparison of the company’s performance within the oil and gas industry.
|
1
|
Based on 2009 information reported for peer companies. See page 14 for information on peer companies.
|
2
|
Comparative value based on Occidental common stock price on grant date and for mid-point performance, based on a rank of six out of twelve peer companies. Actual value of the payout depends on number of share units earned based on level of achievement of performance measures and stock price on date of certification of performance achieved.
|
Ÿ
|
Total cumulative stockholder returns of 35% over the past 3 years, 168% over the past 5 years, and 914% over the past 10 years;
|
|
Ÿ
|
Growth in Occidental’s market capitalization from $9 billion at year end 2000 to $80 billion at year end 2010;
|
|
Ÿ
|
Improved balance sheet, particularly reduced debt to capital ratios from 57% to 14%, over the 10-year period from December 31, 2000 to December 31, 2010;
|
|
Ÿ
|
Oil and gas reserve replacement of 150% in 2010, with an average of 173% each year over the past 5 years; and
|
|
Ÿ
|
Increasing pipeline of production projects and acquisitions that propel the company’s growth.
|
Ÿ
|
Companies recommended by stockholder groups in the course of discussions with them regarding the compensation program;
|
|
Ÿ
|
Investors’ alternatives for energy sector investment choices, including level of investment analyst reporting coverage;
|
|
Ÿ
|
Global competitors for projects and acquisitions;
|
|
Ÿ
|
Global competitors for employees;
|
|
Ÿ
|
Proportion of oil and natural gas each as a percentage of total proved reserves and total production;
|
|
Ÿ
|
Oil and gas production and reserves;
|
|
Ÿ
|
Total revenue and the percentage derived from upstream (exploration and production) activities; and
|
|
Ÿ
|
Market capitalization.
|
Ÿ
|
Anadarko Petroleum Corporation
|
Ÿ
|
Apache Corporation
|
Ÿ
|
Canadian Natural Resources Limited
|
Ÿ
|
Chevron Corporation
|
||||
Ÿ
|
ConocoPhilips
|
Ÿ
|
Devon Energy Corporation
|
Ÿ
|
EOG Resources, Inc.
|
Ÿ
|
ExxonMobil Corporation
|
||||
Ÿ
|
Hess Corporation
|
Ÿ
|
Marathon Oil Corporation
|
Ÿ
|
Royal Dutch Shell plc
|
Summary of Incentive Compensation
|
|||||||||||||
Compensation
Component
|
Performance
Period
|
Form of
Payout
|
Performance Basis
|
Payout Range
|
|||||||||
Minimum Payout (1)
|
Performance Resulting in Minimum
Payout
|
Maximum
Payout (1)
|
Performance
Required for
Maximum
Payout
|
||||||||||
Total Shareholder Return
Incentive Award (TSRI) (2)
|
3 Years
|
50% Stock
50% Cash
|
TSR ranking within peer group
and, for payout above 50%, must
exceed TSR of S&P 500 Index
|
0%
|
Bottom three
TSR ranking
|
100% of performance
share units
granted
|
Number one TSR
ranking and out -
perform S&P 500
Index
|
||||||
Restricted Stock Incentive
Award (RSI)
|
3-7 Years (3)
|
Stock
|
Cumulative Net Income
|
0%
|
Cumulative
Net Income
< $10 billion (3)
|
100% of
shares
granted
|
Cumulative Net
Income ≥ $10
billion
|
||||||
Executive Incentive Compensation Plan
(EICP)
|
|||||||||||||
Non-Equity Incentive
(NEI) (Performance-
based Portion) –
60% of target
|
1 Year
|
Cash
|
Earnings Per Share
|
0% (4)
|
EPS ≤ $4.50
|
200% (4) of
target value
|
EPS ≥ $6.25
|
||||||
Bonus (Discretionary
Portion) – 40% of
target
|
1 Year
|
Cash
|
Key performance areas:
Governance and ethical conduct
Functional and operating accomplishments
Health, environment and safety
Diversity
Organizational development
|
0%
|
Subjective
performance
assessment
|
200% of
target value
|
Subjective
performance
assessment
|
(1)
|
Percent of grant for TSRI and RSI and of target payout for EICP.
|
(2)
|
Payout percent for TSRI is determined by ranking within peer group as set forth in the chart on page 16.
|
(3)
|
The shares become non-forfeitable on the later of October 12, 2013, through which date the executive must remain employed by the company, and the date the Compensation Committee certifies the achievement of the Cumulative Net Income threshold. If the threshold is not met by September 30, 2017, the shares are forfeited entirely.
|
(4)
|
Target payout is achieved at $5.10 per share. Payout percent for EPS of $4.50-$5.10 is based on a linear interpolation of values between 0 percent and 100 percent and for EPS of $5.10-$6.25 is based on a linear interpolation of values between 100 percent and 200 percent.
|
Ÿ
|
Alignment of executive and stockholder interests in achieving long-term growth in stockholder value;
|
|
Ÿ
|
Ensuring that maximum payouts are attained only for exceptional performance;
|
|
Ÿ
|
The named executive compensation packages being consistent with the programs of peer companies3; and
|
|
Ÿ
|
The appropriate allocation of total compensation between long-term and short-term components.
|
3
|
Based on available 2009 information for peer companies.
|
○
|
Align executive rewards with stockholder returns over a three-year period, which encourages executive focus on achieving higher long-term stockholder returns.
|
|
○
|
Reward higher returns in Occidental’s stock relative to the peer group stock returns, based on a sliding scale ranking of the TSR performance of each company in the peer group. This neutralizes major market variables that impact the entire oil and gas industry, thereby rewarding the executives for superior performance compared to the peer group companies.
|
|
○
|
Incentivize performance resulting in stockholder returns greater than the S&P 500 by requiring that Occidental’s TSR exceed the TSR of the S&P 500 Index in order to receive payouts in excess of 50% of the maximum payout. If this condition is not met, the payout that would otherwise be made is capped at 50% of the performance share units granted.
|
|
○
|
Satisfy the tax deductibility requirements of Section 162(m) of the Internal Revenue Code.
|
TSR Ranking
|
Payout as a
% of Maximum
|
Illustrative Payout for
Chairman and Chief Executive Officer
|
||||
Value(4)
|
Number of Units
|
|||||
1st
|
100%
|
$
|
20,000,000
|
237,277
|
||
2nd
|
85%
|
$
|
17,000,000
|
201,685
|
||
3rd
|
70%
|
$
|
14,000,000
|
166,094
|
||
4th
|
60%
|
$
|
12,000,000
|
142,366
|
||
5th
|
50%
|
$
|
10,000,000
|
118,639
|
||
6th
|
40%
|
$
|
8,000,000
|
94,911
|
||
7th
|
30%
|
$
|
6,000,000
|
71,183
|
||
8th
|
20%
|
$
|
4,000,000
|
47,456
|
||
9th
|
10%
|
$
|
2,000,000
|
23,728
|
||
10th
|
0%
|
$
|
0
|
0
|
||
11th
|
0%
|
$
|
0
|
0
|
||
12th
|
0%
|
$
|
0
|
0
|
4
|
Value shown based on Occidental stock price on grant date. Actual value of the payout depends on number of share units earned based on level of achievement of performance measures and stock price on date of certification of performance achieved.
|
○
|
Non-Equity Incentive Award (Performance-based Portion) – The Non-Equity Incentive (NEI) portion (60% of target value) is a performance-based cash award that is based on Occidental’s performance during the year as measured against Core, Basic Earnings Per Share5 (EPS) targets established in the first quarter of the year. EPS was chosen as the financial target for all corporate executives because it directly impacts stockholder value, is a readily determinable measure of annual performance and rewards the executives for current operating performance. The Compensation Committee set the 2010 EPS targets (see table on page 15) based on consideration of management’s financial-results scenarios, as well as a review of analysts’ estimates of Occidental’s earnings per share for 2010 and early 2010 estimates of West Texas Intermediate (“WTI”) oil prices for 2010. The EPS for 2010 as certified by the Compensation Committee was $5.735, which resulted in a payout percentage of 155%.
|
|
○
|
Bonus Award (Discretionary Portion) – The Bonus portion (40% of target value) is a discretionary cash award that is based on the Compensation Committee’s subjective assessment of an executive’s handling of certain key performance areas, as well as the executive’s response to unanticipated challenges during the year. Key performance areas include organizational development; succession planning; governance and ethical conduct; functional and operating accomplishments; health, environment and safety responsibilities; and encouragement of diversity.
|
5
|
For the purposes of the EICP Award, Core, Basic Earnings Per Share (EPS) is computed by excluding the “Significant Items Affecting Earnings” from Occidental’s Net Income Attributable to Common Stock and dividing this amount by the weighted-average basic shares outstanding. For a discussion of “Significant Items Affecting Earnings,” see “Management Discussion and Analysis of Financial Condition and Results of Operations” in Occidental’s Annual Report on Form 10-K for the year ended December 31, 2010.
|
Ÿ
|
Enhanced Value Creation and Consistent Performance: As shown under the 2010 Performance Highlights beginning on page 29, Occidental’s 2010 performance, as demonstrated by key financial measures, has been consistent with recent years’ achievements and continues to place Occidental among the best performers in the oil and gas industry. Led by Dr. Irani and relying on a disciplined business approach and return-focused capital allocation decisions, the company:
|
|||
○
|
Replaced 150% of its 2010 oil and gas production.
|
|||
○
|
Increased overall oil and gas production volume by 5% to an average of 753,000 BOE per day for 2010, which is a company record.
|
|||
○
|
Ended the year with diluted earnings per share of $5.56.
|
|||
○
|
Increased the annualized dividend by 15% in 2010, the ninth consecutive annual increase since 2002.
|
|||
○
|
Maintained a “Single A” credit rating by all rating agencies.
|
|||
Ÿ
|
Enhanced Prospects for Future Growth: Through a series of asset acquisitions and divestitures and international partnership agreements, the company has continued to accumulate an inventory of oil and gas development projects that are intended to fuel future growth. Under Dr. Irani’s leadership, the following were announced:
|
|||
○
|
The selection of Occidental by the Government of Abu Dhabi to participate in the development of Abu Dhabi’s Shah gas field, one of the largest gas fields in the Middle East; Occidental will hold a 40% participating interest in a 30-year contract.
|
|||
○
|
The achievement, together with its consortium partners Eni S.p.A. and Korea Gas Corporation, of an initial 10% increase in oil production at the Zubair field in southern Iraq. This production milestone allows the consortium to commence expenditure cost recovery and is a significant step towards an eventual production increase of over 1 million BOE.
|
|||
○
|
The $1.8 billion purchase of south Texas assets from Royal Dutch Shell plc.
|
|||
○
|
The $1.4 billion purchase of 174,000 net contiguous acres in North Dakota giving Occidental increased access to the Bakken shale formation.
|
|||
○
|
The acquisition from various sources of an additional 380,000 acres in California, solidifying Occidental’s position in the state by bringing its total holdings in the state to approximately 1.6 million acres.
|
|||
Ÿ
|
Implementation of the Succession Plan: Consistent with prior years’ strategic succession plans which were reviewed and approved by the Board of Directors, Dr. Irani has initiated a series of organizational moves and programs that will ensure, with his continued stewardship as Executive Chairman through 2014, that the company will successfully meet the challenges and opportunities associated with maintaining Occidental as an industry leader, including the following:
|
|||
○
|
Election of Mr. Chazen as President and Chief Operating Officer and Mr. Lienert as Chief Financial Officer in August 2010.
|
|||
○
|
Announcement in October 2010 that Mr. Chazen will be elected President and Chief Executive Officer effective at the 2011 Annual Meeting.
|
|||
○
|
In-depth talent reviews within the company to ensure that the next generation of leaders have been indentified and are being appropriately developed for increasingly responsible positions.
|
|||
○
|
Increase in external recruiting activity and internal development programs to assist in protecting against situations where potential demographic shifts may result in managerial or technical resource deficiencies.
|
|||
Ÿ
|
Organizational Effectiveness: Under Dr. Irani’s leadership, Occidental’s performance in the areas of Health, Environment, and Safety; Corporate Governance; and Social Responsibility continued to receive high praise in 2010 as evidenced by:
|
|||
○
|
Occidental’s 2010 employee injury and illness incidence rate (IIR) was 0.40, its second best level ever. The company consistently ranks among the safest companies in the U.S. For 15 consecutive years, Occidental’s worldwide IIR has been less than 1.0 recordable injuries per 100 employees.
|
|||
○
|
Governance Metrics International overall score of 10 out of 10 in June 2010
|
|||
○
|
Fortune World’s Most Admired Companies: No. 1, Mining, Crude Oil Production
|
|||
○
|
Forbes List of the 20 Most Responsible Companies
|
|||
○
|
Corporate Responsibility Magazine 100 Best Corporate Citizen List
|
Compensation
Element
|
Range Of Value on Grant Date
|
Rationale
|
||||||||
Minimum
|
Grant Date
Fair Value(1)
|
Maximum
|
||||||||
Base Salary
|
$
|
1,300,000
|
Dr. Irani's base salary is in the bottom of the range of peer company Chief Executive Officers(2), consistent with the Compensation Committee's emphasis on long-term and performance-based compensation. See page 17.
|
|||||||
Annual Incentive
|
||||||||||
Non-Equity Incentive
(Performance-Based
Portion)
|
$
|
0
|
$
|
1,500,000
|
$
|
3,000,000
|
An annual EICP Award target of $2,500,000 was established with a performance range of 0 to 200%, allocated between a Non-Equity Incentive and a discretionary Bonus portion as described on page 17. The annual incentive target represents approximately 15% of his grant date fair value total compensation as shown in the middle column of this table and, when combined with base salary, is within the peer group range for salary and bonus(2). Actual payouts for both components are shown in the Summary Compensation Table on page 31(3).
|
|||
Bonus
(Discretionary Portion)
|
$
|
0
|
$
|
1,000,000
|
$
|
2,000,000
|
||||
Long-Term Incentive
|
||||||||||
Total Shareholder
Return Incentive(4)
|
$
|
0
|
$
|
6,000,000
|
$
|
20,000,000
|
(5)
|
The Compensation Committee set Dr. Irani's long-term incentive award value at a level that is consistent with peer company Chief Executive Officer awards. At all performance levels, total compensation value on the date of grant was in the range of values for Chief Executive Officers within Occidental's peer group(2,5). Long-term incentives are intended to represent over 75% of maximum potential total compensation(5). After reviewing peer group published data, company performance and Dr. Irani’s performance, the Compensation Committee determined that a maximum total long-term incentive opportunity of $25 million(5) on the grant date, split between TSRIs (80%) and RSIs (20%), met the company’s objectives.
|
||
Restricted Stock
Incentive(6)
|
$
|
0
|
$
|
5,000,000
|
$
|
5,000,000
|
(5)
|
|||
Retirement Plans
|
$
|
659,466
|
Dr. Irani participates in the company’s benefit plans on the same basis as all U.S. salaried employees (see page 26).
|
|||||||
Other Compensation
|
Under the terms of his employment agreement, Dr. Irani received:
|
|||||||||
Life Insurance
|
$
|
112,084
|
Life insurance premiums for coverage at a level of three times his highest career annual salary. | |||||||
Personal Benefits
|
$
|
918,793
|
Personal benefits for security services ($572,937) and financial planning ($345,856). | |||||||
Total Compensation
|
$
|
2,990,343
|
$
|
16,490,343
|
$
|
32,990,343
|
(1)
|
Long-Term Incentive values are shown at grant date fair values as described on the Grants of Plan Based Awards table on page 33. Annual Bonus values are shown at target values. All other values are shown at December 31, 2010 values.
|
(2)
|
References to peer group values are for the peer companies listed on page 14 and are based on 2009 published information available at the time compensation decisions were made, including the reported minimum, midpoint and maximum values for long-term incentive awards.
|
(3)
|
Payouts of the Discretionary Portion are based on the Compensation Committee’s subjective assessment of Dr. Irani’s accomplishments for the year, including the key performance areas for bonuses described on page 17.
|
(4)
|
TSRI award details are described on page 34.
|
(5)
|
Values shown were calculated using Occidental’s common stock price on the grant date and the maximum number of share units that can be earned. Actual payout values will depend on the number of share units earned based on the level of achievement of performance measures and the stock price on the date of certification of the performance level achieved.
|
(6)
|
RSI award details are described on page 34.
|
Performance-Based Incentive Awards
|
Non-Performance-Based
Compensation
|
Total Compensation Value
|
|||||||||||||||||||||||||
Year
|
Non-Equity
Incentive
Target
|
Return on
Equity
|
Total
Stockholder
Return
|
Restricted
Stock
|
Salary and
Other
|
Bonus Target
|
Minimum
|
Grant Date
Fair Value
|
Maximum
|
||||||||||||||||||
2010
|
$
|
1,500,000
|
$
|
0
|
$
|
6,000,000
|
$
|
5,000,000
|
$
|
2,990,343
|
$
|
1,000,000
|
$
|
2,990,343
|
$
|
16,490,343
|
$
|
32,990,343
|
|||||||||
2009
|
$
|
1,365,000
|
$
|
22,500,000
|
$
|
24,758,827
|
$
|
0
|
$
|
2,889,979
|
$
|
910,000
|
$
|
2,889,979
|
$
|
52,423,806
|
$
|
97,439,979
|
Ÿ
|
Mr. Chazen’s successful implementation of Occidental’s strategy over a number of years as President and Chief Financial Officer.
|
|
Ÿ
|
The promotion of Mr. Chazen to President and Chief Operating Officer with greater operational accountabilities in preparation for future leadership responsibilities as President and Chief Executive Officer.
|
|
Ÿ
|
Mr. Chazen’s current responsibilities while anticipating his planned transition to President and Chief Executive Officer.
|
Compensation
Element
|
Range Of Value on Grant Date
|
Rationale
|
||||||||
Minimum
|
Grant Date
Fair Value(1)
|
Maximum
|
||||||||
Base Salary
|
$
|
1,000,000
|
Mr. Chazen’s base salary was increased to $1,000,000, effective November 1, 2010, reflecting his increased operational responsibilities as President and Chief Operating Officer. See page 17.
|
|||||||
Annual Incentive
|
||||||||||
Non-Equity Incentive
(Performance-Based
Portion)
|
$
|
0
|
$
|
900,000
|
$
|
1,800,000
|
An annual EICP Award target of $1,500,000 was established with a performance range of 0 to 200%, allocated between a Non-Equity Incentive and a discretionary Bonus portion as described on page 17. The annual incentive target represents less than 15% of his grant date fair value total compensation as shown in the middle column of this table and, when combined with base salary, is within the peer group range for salary and bonus(2). Actual payouts for both components are shown in the Summary Compensation Table on page 31(3).
|
|||
Bonus
(Discretionary Portion)
|
$
|
0
|
$
|
600,000
|
$
|
1,200,000
|
||||
Long-Term Incentive
|
||||||||||
Total Shareholder
Return Incentive(4)
|
$
|
0
|
$
|
4,800,000
|
$
|
16,000,000
|
(5)
|
The Compensation Committee determined that Mr. Chazen’s long-term incentive value should be based on internal equity compared to the Chairman and Chief Executive Officer and determined that a maximum total long-term incentive opportunity of $20,000,000(5) on the grant date, equal to 80% of the amount for the Chairman and Chief Executive Officer, met the company’s objectives. This level is consistent with internal equity levels for the peer group companies.
|
||
Restricted Stock
Incentive(6)
|
$
|
0
|
$
|
4,000,000
|
$
|
4,000,000
|
(5)
|
|||
Retirement Plans
|
$
|
306,929
|
Mr. Chazen participates in the company’s benefit plans on the same basis as all U.S. salaried employees (see page 26).
|
|||||||
Other Compensation
|
||||||||||
Life Insurance
|
$
|
11,748
|
All U.S. salaried employees receive coverage of two times their base salary.
|
|||||||
Total Compensation
|
$
|
1,318,677
|
$
|
11,618,677
|
$
|
24,318,677
|
(1)
|
Long-Term Incentive values are shown at grant date fair values as described on the Grants of Plan Based Awards table on page 33. Annual Bonus values are shown at target values. All other values are shown at December 31, 2010 values.
|
(2)
|
References to peer group values are for the peer companies listed on page 14 and are based on 2009 published information available at the time compensation decisions were made, including the reported minimum, midpoint and maximum values for long-term incentive awards.
|
(3)
|
Payouts of the Discretionary Portion are based on the Compensation Committee’s consideration of Dr. Irani’s recommendation which is based on a subjective assessment of the executive’s accomplishments for the year, including the key performance areas for bonuses described on page 17.
|
(4)
|
TSRI award details are described on page 34.
|
(5)
|
Values shown were calculated using Occidental’s common stock price on the grant date and the maximum number of share units that can be earned. Actual payout values will depend on the number of share units earned based on the level of achievement of performance measures and the stock price on the date of certification of the performance level achieved.
|
(6)
|
RSI award details are described on page 34.
|
Compensation
Element
|
Range Of Value on Grant Date
|
Rationale
|
||||||||
Minimum
|
Grant Date
Fair Value(1)
|
Maximum
|
||||||||
Base Salary
|
$
|
495,900
|
As discussed on page 17, Mr. de Brier’s base salary was restored to $550,000, effective January 1, 2011.
|
|||||||
Annual Incentive
|
||||||||||
Non-Equity Incentive
(Performance-Based
Portion)
|
$
|
0
|
$
|
240,000
|
$
|
480,000
|
An annual EICP Award target of $400,000 was established with a performance range of 0 to 200%, allocated between a Non-Equity Incentive and a discretionary Bonus portion as described on page 17. Actual payouts for both components are shown in the Summary Compensation Table on page 31(2).
|
|||
Bonus
(Discretionary Portion)
|
$
|
0
|
$
|
160,000
|
$
|
320,000
|
||||
Long-Term Incentive
|
||||||||||
Total Shareholder
Return Incentive(3)
|
$
|
0
|
$
|
1,920,000
|
$
|
6,400,000
|
(4)
|
The Compensation Committee determined Mr. de Brier’s long-term incentive value based on a number of factors, including his individual performance, internal equity compared to other senior executives and a review of industry practices based on commercially available compensation surveys and other publicly available information.
|
||
Restricted Stock
Incentive(5)
|
$
|
0
|
$
|
1,600,000
|
$
|
1,600,000
|
(4)
|
|||
Retirement Plans
|
$
|
156,253
|
Mr. de Brier participates in the company’s benefit plans on the same basis as all U.S. salaried employees (see page 26).
|
|||||||
Other Compensation
|
Under the terms of his employment agreement, Mr. de Brier received:
|
|||||||||
Life Insurance
|
$
|
57,291
|
Life insurance premiums for coverage at a level of three times his base salary.
|
|||||||
Personal Benefits
|
$
|
37,589
|
Personal benefits for security services, tax preparation and financial counseling, club dues and excess liability insurance.
|
|||||||
Total Compensation
|
$
|
747,033
|
$
|
4,667,033
|
$
|
9,547,033
|
(1)
|
Long-Term Incentive values are shown at grant date fair values as described on the Grants of Plan Based Awards table on page 33. Annual Bonus values are shown at target values. All other values are shown at December 31, 2010 values.
|
(2)
|
Payouts of the Discretionary Portion are based on the Compensation Committee’s consideration of Dr. Irani’s recommendation which is based on a subjective assessment of the executive’s accomplishments for the year, including the key performance areas for bonuses described on page 17.
|
(3)
|
TSRI award details are described on page 34.
|
(4)
|
Values shown were calculated using Occidental’s common stock price on the grant date and the maximum number of share units that can be earned. Actual payout values will depend on the number of share units earned based on the level of achievement of performance measures and the stock price on the date of certification of the performance level achieved.
|
(5)
|
RSI award details are described on page 34.
|
Compensation
Element
|
Range Of Value on Grant Date
|
Rationale
|
||||||||
Minimum
|
Grant Date
Fair Value(1)
|
Maximum
|
||||||||
Base Salary
|
$
|
400,500
|
Mr. Lienert’s base salary was restored, as discussed on page 17, and increased to $450,000, effective January 1, 2011, reflecting his increased responsibilities as Chief Financial Officer.
|
|||||||
Annual Incentive
|
||||||||||
Non-Equity Incentive
(Performance-Based
Portion)
|
$
|
0
|
$
|
210,000
|
$
|
420,000
|
An annual EICP Award target of $350,000 was established with a performance range of 0 to 200%, allocated between a Non-Equity Incentive and a discretionary Bonus portion as described on page 17. Actual payouts for both components are shown in the Summary Compensation Table on page 31(2).
|
|||
Bonus
(Discretionary Portion)
|
$
|
0
|
$
|
140,000
|
$
|
280,000
|
||||
Long-Term Incentive
|
||||||||||
Total Shareholder
Return Incentive(3)
|
$
|
0
|
$
|
1,200,000
|
$
|
4,000,000
|
(4)
|
The Compensation Committee determined Mr. Lienert’s long-term incentive value based on a number of factors, including his individual performance, internal equity compared to other senior executives and a review of industry practices based on commercially available compensation surveys and other publicly available information.
|
||
Restricted Stock
Incentive(5)
|
$
|
0
|
$
|
1,000,000
|
$
|
1,000,000
|
(4)
|
|||
Retirement Plans
|
$
|
129,750
|
Mr. Lienert participates in the company’s benefit plans on the same basis as all U.S. salaried employees (see page 26).
|
|||||||
Other Compensation
|
||||||||||
Life Insurance
|
$
|
3,875
|
All U.S. salaried employees receive coverage at a level of two times their base salary.
|
|||||||
Personal Benefits
|
$
|
27,205
|
Mr. Lienert received personal benefits for tax preparation and financial counseling, club dues and excess liability insurance.
|
|||||||
Total Compensation
|
$
|
561,330
|
$
|
3,111,330
|
$
|
6,261,330
|
(1)
|
Long-Term Incentive values are shown at grant date fair values as described on the Grants of Plan Based Awards table on page 33. Annual Bonus values are shown at target values. All other values are shown at December 31, 2010 values.
|
(2)
|
Payouts of the Discretionary Portion are based on the Compensation Committee’s consideration of Dr. Irani’s recommendation which is based on a subjective assessment of the executive’s accomplishments for the year, including the key performance areas for bonuses described on page 17.
|
(3)
|
TSRI award details are described on page 34.
|
(4)
|
Values shown were calculated using Occidental’s common stock price on the grant date, and the maximum number of share units that can be earned. Actual payout values will depend on the number of share units earned based on the level of achievement of performance measures and the stock price on the date of certification of the performance level achieved.
|
(5)
|
RSI award details are described page 34.
|
Compensation
Element
|
Range Of Value on Grant Date
|
Rationale
|
||||||||
Minimum
|
Grant Date
Fair Value(1)
|
Maximum
|
||||||||
Base Salary
|
$
|
500,000
|
Base salaries are reviewed annually based on several factors including individual performance, internal equity and information from commercially available compensation surveys and other publicly available information.
|
|||||||
Annual Incentive
|
||||||||||
Non-Equity Incentive
(Performance-Based
Portion)
|
$
|
0
|
$
|
300,000
|
$
|
600,000
|
An annual EICP Award target of $500,000 was established with a performance range of 0 to 200%, allocated between a Non-Equity Incentive and a discretionary Bonus portion as described on page 17. Actual payouts for both components are shown in the Summary Compensation Table on page 31(2).
|
|||
Bonus
(Discretionary Portion)
|
$
|
0
|
$
|
200,000
|
$
|
400,000
|
||||
Long-Term Incentive
|
||||||||||
Total Shareholder
Return Incentive(3)
|
$
|
0
|
$
|
1,680,000
|
$
|
5,600,000
|
(4)
|
The Compensation Committee determined Mr. Albrecht’s long-term incentive value based on a number of factors including his individual performance, internal equity compared to other senior executives and a review of industry practices based on commercially available compensation surveys and other publicly available information.
|
||
Restricted Stock
Incentive(5)
|
$
|
0
|
$
|
1,400,000
|
$
|
1,400,000
|
(4)
|
|||
Retirement Plans
|
$
|
164,916
|
Mr. Albrecht participates in the company’s benefit plans on the same basis all U.S. salaried employees (see page 26).
|
|||||||
Other Compensation
|
||||||||||
Life Insurance
|
$
|
4,902
|
All U.S. salaried employees receive coverage at a level of two times their base salary.
|
|||||||
Personal Benefits
|
$
|
22,428
|
Mr. Albrecht received tax gross-ups related to spousal travel.
|
|||||||
Total Compensation
|
$
|
692,246
|
$
|
4,272,246
|
$
|
8,692,246
|
(1)
|
Long-Term Incentive values are shown at grant date fair values as described on the Grants of Plan Based Awards table on page 33. Annual Bonus values are shown at target values. All other values are shown at December 31, 2010 values.
|
(2)
|
Payouts of the Discretionary Portion are based on the Compensation Committee’s consideration of Dr. Irani’s recommendation which is based on a subjective assessment of the executive’s accomplishments for the year, including the key performance areas for bonuses described on page 17.
|
(3)
|
TSRI award details are described on page 34.
|
(4)
|
Values shown were calculated using Occidental’s common stock price on the grant date and the maximum number of share units that can be earned. Actual payout values will depend on the number of share units earned based on the level of achievement of performance measures and the stock price on the date of certification of the performance level achieved.
|
(5)
|
RSI award details are described on page 34.
|
Compensation
Element
|
Range Of Value on Grant Date
|
Rationale
|
||||||||
Minimum
|
Grant Date
Fair Value(1)
|
Maximum
|
||||||||
Base Salary
|
$
|
460,000
|
Base salaries are reviewed annually based on several factors including individual performance, internal equity, and information from commercially available compensation surveys and other publicly available information. Based on this review, Mr. Lowe’s base salary was increased to $500,000, effective January 1, 2011.
|
|||||||
Annual Incentive
|
||||||||||
Non-Equity Incentive
(Performance-Based
Portion)
|
$
|
0
|
$
|
276,000
|
$
|
552,000
|
An annual EICP Award target of $460,000 was established with a performance range of 0 to 200%, allocated between a Non-Equity Incentive and a discretionary Bonus portion as described on page 17. Actual payouts for both components are shown in the Summary Compensation Table on page 31(2).
|
|||
Bonus
(Discretionary Portion)
|
$
|
0
|
$
|
184,000
|
$
|
368,000
|
||||
Long-Term Incentive
|
||||||||||
Total Shareholder
Return Incentive(3)
|
$
|
0
|
$
|
1,680,000
|
$
|
5,600,000
|
(4)
|
The Compensation Committee determined Mr. Lowe’s long-term incentive value based on a number of factors, including his individual performance, internal equity compared to other senior executives and a review of industry practices based on commercially available compensation surveys and other publicly available information.
|
||
Restricted Stock
Incentive(5)
|
$
|
0
|
$
|
1,400,000
|
$
|
1,400,000
|
(4)
|
|||
Retirement Plans
|
$
|
159,060
|
Mr. Lowe participates in the company’s benefit plans on the same basis as all U.S. salaried employees (see page 26).
|
|||||||
Other Compensation
|
||||||||||
Life Insurance
|
$
|
4,489
|
All U.S. salaried employees receive coverage at a level of two times their base salary.
|
|||||||
Personal Benefits
|
$
|
17,015
|
Mr. Lowe received tax gross-ups related to spousal travel.
|
|||||||
Total Compensation
|
$
|
640,564
|
$
|
4,180,564
|
$
|
8,560,564
|
(1)
|
Long-Term Incentive values are shown at grant date fair values as described on the Grants of Plan Based Awards table on page 33. Annual Bonus values are shown at target values. All other values are shown at December 31, 2010 values.
|
(2)
|
Payouts of the Discretionary Portion are based on the Compensation Committee’s consideration of Dr. Irani’s recommendation which is based on a subjective assessment of the executive’s accomplishments for the year, including the key performance areas for bonuses described on page 17.
|
(3)
|
TSRI award details are described on page 34.
|
(4)
|
Values shown were calculated using Occidental’s common stock price on the grant date and the maximum number of share units that can be earned. Actual payout values will depend on the number of share units earned based on the level of achievement of performance measures and the stock price on the date of certification of the performance level achieved.
|
(5)
|
RSI award details are described page 34.
|
Ÿ
|
In August 2010, Mr. Chazen was promoted to President and Chief Operating Officer and Mr. Lienert was appointed Chief Financial Officer.
|
|
Ÿ
|
In October 2010, the Board announced the implementation of its strategic succession plan effective at the May 2011 Annual Meeting of Stockholders, with Dr. Irani becoming full-time Executive Chairman through 2014 and Mr. Chazen becoming President and Chief Executive Officer.
|
Ÿ
|
Program elements that utilize both annual and longer-term performance periods, with the most substantial portion having terms of three years.
|
|
Ÿ
|
Transparent performance metrics that utilize absolute and relative measures which are readily ascertainable from public information.
|
|
Ÿ
|
External, not internal, performance metrics, such as TSR, are used for the substantial majority of the incentive awards.
|
Ÿ
|
Comparative nature of TSR performance measure neutralizes the potential impact that volatile world oil prices could otherwise have on the company’s TSR alone.
|
|
Ÿ
|
Payouts of long-term incentive awards are intended to be weighted more heavily toward stock than to cash.
|
|
Ÿ
|
Stringent share ownership guidelines for executives and the additional requirement that named executive officers retain at least 50% of net after-tax shares acquired through equity awards granted after 2008 for at least three years following vesting of such awards. Dr. Irani is Occidental’s largest individual shareholder and Occidental holdings represent sizable portions of the personal net worths of Messrs. Chazen, de Brier, Lienert, Albrecht and Lowe.
|
|
Ÿ
|
Forfeiture provisions for unvested awards in the event of violations of Occidental’s Code of Business Conduct.
|
Ÿ
|
Qualified Defined Contribution Plans – All salaried employees on the U.S. dollar payroll, including the named executive officers, are eligible to participate in one or more tax-qualified, defined contribution plans. The defined contribution retirement plan, which provides for periodic contributions by Occidental based on annual cash compensation and age, up to certain levels pursuant to Internal Revenue Service (IRS) regulations, was implemented as a successor plan to the defined benefit pension plan that was terminated in 1983. For 2010, the defined contribution 401(k) savings plan permitted employees to save a percentage of their annual salary up to the $245,000 limit set by IRS regulations, and the employee pre-tax contribution was limited to $16,500. Employees may direct their contributions to a variety of investments. Occidental generally matches employee contributions with Occidental common stock on a dollar-for-dollar basis, in an amount up to 6 percent of the employee’s base salary. The amounts contributed to the qualified plans on behalf of the named executive officers are detailed under “All Other Compensation” in the Summary Compensation Table on page 31. As of December 31, 2010, the aggregate balances under the qualified plans were $6,442,935 for Dr. Irani, $1,785,095 for Mr. Chazen, $2,141,561 for Mr. Lienert, $2,900,349 for Mr. de Brier, $178,564 for Mr. Albrecht and $2,443,373 for Mr. Lowe. The named executive officers are fully vested in their account balances under the qualified plans.
|
|
Ÿ
|
Nonqualified Defined Contribution Retirement Plan – Occidental’s nonqualified retirement plan is described on page 38. The amounts contributed to the nonqualified retirement plan on behalf of the named executive officers are detailed under “All Other Compensation” in the Summary Compensation Table on page 31. Company contributions, aggregate earnings and aggregate balances for the named executive officers in the nonqualified retirement plan are included in the Nonqualified Deferred Compensation table on page 38.
|
|
Ÿ
|
Nonqualified Deferred Compensation Plan – Occidental’s nonqualified deferred compensation plan is described on page 38. The amounts of salary and bonuses deferred by the named executive officers are included as compensation in the “Salary,” “Bonus” and “Non-Equity Incentive Compensation” columns of the Summary Compensation Table on page 31, as appropriate, in the year of deferral. The above-market portion of the accrued interest on deferred amounts is reported in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table.
|
6
|
The peer companies in addition to Occidental were: Amerada Hess Corporation (now known as Hess Corporation), Anadarko Petroleum Corporation, Apache Corporation, Chevron Corporation, ConocoPhillips, Devon Energy Corporation, Exxon Mobil Corporation and Kerr-McGee Corporation (acquired by Anadarko Petroleum Corporation in 2006 and, so, removed from the peer group by the terms of the award).
|
7
|
The peer companies in addition to Occidental were: Anadarko Petroleum Corporation, Apache Corporation, Chevron Corporation, ConocoPhillips, Devon Energy Corporation, ExxonMobil Corporation and Hess Corporation.
|
Contributions, aggregate earnings and aggregate balances for the named executive officers for the nonqualified deferred compensation plans are shown in the Nonqualified Deferred Compensation table on page 38.
|
||
Ÿ
|
Employment Agreements – Employment agreements may be offered to key executives for recruitment and retention purposes and to ensure the continuity and stability of management. The employment agreements for Dr. Irani, Mr. Chazen and Mr. de Brier, the only named executive officers with employment agreements, are discussed under “Potential Payments Upon Termination or Change of Control” beginning on page 39.
|
|
Ÿ
|
Security – Personal security services, including home detection and alarm systems and personal security guards, are provided to certain executives to address perceived risks, at costs which are presented to the Compensation Committee.
|
|
Ÿ
|
Tax Preparation and Financial Planning – A select group of executives, including each of the named executive officers, is eligible to receive reimbursement for financial planning and investment advice, including legal advice related to tax and financial matters, and in Dr. Irani’s case, investment services. Eligible executives are required to have their personal tax returns prepared by a tax professional qualified to practice before the Internal Revenue Service in order to ensure compliance with applicable tax laws.
|
|
Ÿ
|
Corporate Aircraft Use – Executives and directors may use corporate aircraft for personal travel, if space is available. The named executive officers and directors reimburse Occidental for personal use of company aircraft, including any guests accompanying them, at not less than the standard industry fare level rate (which is determined in accordance with IRS regulations).
|
|
Ÿ
|
Insurance – Occidental offers a variety of health coverage options to all employees. Senior executives participate in these plans on the same terms as other employees. In addition, for all employees above a certain job level, Occidental pays for an annual physical examination. The company provides all salaried employees with life insurance equal to twice the employee’s base salary. For certain senior employees, Occidental increases that to three times base salary. Occidental also provides senior executives with excess liability insurance coverage.
|
|
Ÿ
|
Other – Other benefits are included under “All Other Compensation” in the Summary Compensation Table on page 31.
|
EXECUTIVE STOCK OWNERSHIP GUIDELINES
|
||||||||||
Executive Ownership as of February 28, 2011 | ||||||||||
Target Ownership Requirement
|
Actual Ownership
|
|||||||||
Name
|
Multiple of Base
Salary
|
Multiple Expressed in
Dollars
|
Multiple of Base
Salary(1)
|
Value of Shares Held by
Executive(2)
|
||||||
Ray R. Irani
|
10
|
$
|
13,000,000
|
676
|
$
|
879,007,810
|
||||
Stephen I. Chazen
|
5
|
$
|
5,000,000
|
254
|
$
|
253,525,156
|
||||
Donald P. de Brier
|
5
|
$
|
2,750,000
|
150
|
$
|
82,299,987
|
||||
James M. Lienert
|
5
|
$
|
2,250,000
|
44
|
$
|
19,860,187
|
||||
William E. Albrecht
|
5
|
$
|
2,500,000
|
17
|
$
|
8,284,349
|
||||
Edward A. Lowe
|
5
|
$
|
2,500,000
|
15
|
$
|
7,525,386
|
(1)
|
The following forms of stock ownership are counted toward satisfaction of the guidelines:
|
|||
Ÿ
|
Direct stock holdings, including shares held in a living trust or by a family partnership or corporation controlled by the officer unless the officer expressly disclaims beneficial ownership of such shares.
|
|||
Ÿ
|
Shares held in the Occidental Petroleum Corporation Savings Plan.
|
|||
Ÿ
|
Outstanding long-term stock awards, including, without limitation, restricted stock awards, restricted stock units, performance stock awards and performance stock units, valued at target or midpoint performance level, as applicable. Stock options and stock appreciation rights are not included.
|
|||
(2)
|
Value is based on the closing price on the New York Stock Exchange of the Common Stock as of February 28, 2011, which was $101.97.
|
Ÿ
|
If a named executive officer were found to have violated the Code of Business Conduct, the officer would be subject to disciplinary action, which may include termination, referral for criminal prosecution and reimbursement to Occidental or others for any losses or damages resulting from the violation.
|
|
Ÿ
|
Stock awards may be forfeited in whole or in part in the case of an employee’s termination for cause.
|
|
Ÿ
|
Beginning with the awards granted in 2008, awards for continuing employees may be forfeited in whole or in part for violations of the Code of Business Conduct or other provisions of the award agreement.
|
COMPENSATION COMMITTEE REPORT
|
2010 PERFORMANCE HIGHLIGHTS
|
2010 PERFORMANCE HIGHLIGHTS
|
COMPARATIVE TOTAL RETURN
|
||||||||||||
12/31/05
|
12/31/06
|
12/31/07
|
12/31/08
|
12/31/09
|
12/31/10
|
|||||||
Occidental
|
$100
|
$124
|
$199
|
$158
|
$218
|
$268
|
||||||
Current Peer Group (1)
|
100
|
127
|
165
|
123
|
132
|
156
|
||||||
Prior Peer Group (1)
|
100
|
124
|
155
|
117
|
127
|
142
|
||||||
S&P 500
|
100
|
116
|
122
|
77
|
97
|
112
|
(1)
|
The total cumulative return of each peer group companies’ common stock includes the cumulative total return of Occidental’s common stock.
|
||
The information provided in this performance table and in the graphs on page 29 shall not be deemed "soliciting material" or "filed" with the Securities and Exchange Commission or subject to Regulation 14A or 14C under the Securities Exchange Act of 1934 (Exchange Act), other than as provided in Item 201 to Regulation S-K under the Exchange Act, or subject to the liabilities of Section 18 of the Exchange Act and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act except to the extent Occidental specifically requests that it be treated as soliciting material or specifically incorporates it by reference.
|
EXECUTIVE COMPENSATION TABLES
|
SUMMARY COMPENSATION TABLE
|
THE 2010 AMOUNTS IN THE TABLE BELOW INCLUDE PAYOUTS FOR AWARDS THAT WERE GRANTED IN 2007 UNDER THE PRIOR COMPENSATION PROGRAM, WHICH COMPRISE APPROXIMATELY 75%, 68% AND 50% OF THE TOTAL AMOUNTS SHOWN FOR DR. IRANI AND MESSRS. CHAZEN AND DE BRIER, RESPECTIVELY.
|
Summary Compensation Table
|
|||||||||||||||||||||||||
Name and
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($) (1)
|
Stock Awards
($) (2)
|
Option
Awards
($)
|
Non-Equity Incentive
Plan Compensation
($) (3)
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($) (4)
|
All Other
Compensation
($)
|
Total
($)
|
||||||||||||||||
Ray R. Irani,
Chairman
and Chief
Executive
Officer
|
2010
|
$
|
1,191,667
|
$
|
1,400,000
|
$
|
40,250,000
|
(5)
|
$
|
0
|
$
|
31,575,000
|
(6)
|
$
|
0
|
$
|
1,690,343
|
(7)
|
$
|
76,107,010
|
(8)
|
||||
2009
|
$
|
1,170,000
|
$
|
1,200,000
|
$
|
24,758,827
|
$
|
0
|
$
|
2,552,550
|
$
|
0
|
$
|
1,719,979 |
$
|
31,401,356
|
|||||||||
2008
|
$
|
1,300,000
|
$
|
900,000
|
$
|
15,747,997
|
$
|
0
|
$
|
2,730,000
|
$
|
0
|
$
|
1,849,627 |
$
|
22,527,624
|
|||||||||
Stephen I.
Chazen,
President
and Chief
Operating
Officer
|
2010
|
$
|
766,667
|
$
|
800,000
|
$
|
21,800,000
|
(9)
|
$
|
0
|
$
|
14,395,000
|
(6)
|
$
|
0
|
$
|
318,677
|
(10)
|
$
|
38,080,344
|
(8)
|
||||
2009
|
$
|
720,000
|
$
|
420,000
|
$
|
11,003,956
|
$
|
0
|
$
|
1,032,240
|
$
|
0
|
$
|
309,269 |
$
|
13,485,465
|
|||||||||
2008
|
$
|
800,000
|
$
|
346,000
|
$
|
6,999,161
|
$
|
0
|
$
|
1,104,000
|
$
|
47,540
|
$
|
353,252 |
$
|
9,649,953
|
|||||||||
Donald P.
de Brier,
Executive
Vice
President,
General
Counsel and
Secretary
|
2010
|
$
|
495,900
|
$
|
160,000
|
$
|
3,520,000
|
(11)
|
$
|
0
|
$
|
5,312,000
|
(6)
|
$
|
0
|
$
|
251,133
|
(12)
|
$
|
9,739,033
|
(8)
|
||||
2009
|
$
|
495,900
|
$
|
170,000
|
$
|
2,200,850
|
$
|
0
|
$
|
432,755
|
$
|
0
|
$
|
253,178 |
$
|
3,552,683
|
|||||||||
2008
|
$
|
551,000
|
$
|
137,160
|
$
|
1,399,832
|
$
|
0
|
$
|
462,840
|
$
|
0
|
$
|
255,266 |
$
|
2,806,098
|
|||||||||
James M.
Lienert,
Executive
Vice
President
and Chief
Financial
Officer
|
2010
|
$
|
400,500
|
$
|
140,000
|
$
|
2,200,000
|
(13)
|
$
|
0
|
$
|
326,000
|
$
|
185
|
$
|
160,830
|
(14)
|
$
|
3,227,515
|
||||||
William E.
Albrecht,
Vice
President
and
President,
Oxy Oil and
Gas, USA
|
2010
|
$
|
500,000
|
$
|
200,000
|
$
|
3,080,000
|
(15)
|
$
|
0
|
$
|
465,000
|
$
|
0
|
$
|
192,246
|
(16)
|
$
|
4,437,246
|
||||||
2009
|
$
|
400,000
|
$
|
220,000
|
$
|
1,650,637
|
$
|
0
|
$
|
448,800
|
$
|
0
|
$
|
122,944
|
$
|
2,842,381
|
|||||||||
Edward A.
Lowe,
Vice
President
and
President,
Oxy Oil and
Gas, Int’l
Production
|
2010
|
$
|
460,000
|
$
|
240,000
|
$
|
3,080,000
|
(17)
|
$
|
0
|
$
|
428,000
|
$
|
0
|
$
|
180,564
|
(18)
|
$
|
4,388,564
|
(1)
|
The amounts shown represent the discretionary portion of the executive’s annual Executive Incentive Compensation Plan award.
|
(2)
|
Awards that are payable in stock or based on stock value are stated at the grant date fair value, which incorporates the value of Occidental’s stock as well as the estimated payout percentage as of the grant date. See Note 12 to Consolidated Financial Statements in Occidental’s Annual Report on Form 10-K for the year ended December 31, 2010 regarding assumptions underlying valuation of equity awards. The 2010 amounts for Dr. Irani and Mr. Chazen include the value of the stock portion of the payout of the ROEI award that was granted in 2007 and paid in 2010. The award was initially granted as a cash award and then modified by the Compensation Committee for the amount earned to be paid to Dr. Irani and Mr. Chazen 50% in shares of common stock and 50% in cash. For information on the payment of the 2007 ROEI awards, see page 26.
|
(3)
|
The amounts represent the performance-based portion of the executive’s annual Executive Incentive Compensation Plan award and, for 2010, the cash portion of the payout of the ROEI award that was granted in 2007 and paid in 2010 for Dr. Irani and Messrs. Chazen and de Brier. The payout related to the EICP was determined based on Occidental’s attainment of specified earnings per share targets. For information on the payment of these awards, see "Compensation Discussion and Analysis" on page 13.
|
(4)
|
The amounts represent the above-market portion of interest the executives earned during the year on their nonqualified deferred compensation balances (see page 26 for a description of the nonqualified deferred compensation plan).
|
(5)
|
The amount shown includes $29,250,000 attributable to the stock portion of the payout of the 2007 ROEI award. For information on the payment of the 2007 ROEI awards, see page 26. The amount shown also includes the grant date fair values of the 2010 TSRI and RSI awards. The maximum number of Occidental stock and share equivalents that can be issued under the TSRI award is 237,277 shares which, using $84.29, the closing price of Occidental common stock on the New York Stock Exchange on the grant date, would have a value of approximately $20 million.
|
(6)
|
The amount shown includes the cash portion of the payout of the ROEI award that was granted in 2007 and paid in 2010 (Dr. Irani - $29,250,000; Mr. Chazen - $13,000,000; and Mr. de Brier - $4,940,000). For information on the payment of the 2007 ROEI awards, see page 26. The balance in each case is the performance-based portion of the annual EICP award.
|
(7)
|
The amount includes $14,700 credited pursuant to the Occidental Petroleum Corporation Savings Plan (the “Savings Plan”); $644,766 credited pursuant to the Occidental Petroleum Corporation Supplemental Retirement Plan II (the “Supplemental Retirement Plan II”) described on page 38; $112,084 for life insurance premiums; and $918,793 in the aggregate for personal benefits. Personal benefits include security services ($572,937) and tax preparation and financial planning services ($345,856).
|
(8)
|
The amount shown includes the total payout of the ROEI award that was granted in 2007 and paid in 2010 (Dr. Irani - $58,500,000; Mr. Chazen - $26,000,000; and Mr. de Brier - $4,940,000).
|
(9)
|
The amount shown includes $13,000,000 attributable to the stock portion of the payout of the 2007 ROEI award. For information on the payment of the 2007 ROEI awards, see page 26. The amount shown also includes the grant date fair values of the 2010 TSRI and RSI awards. The maximum number of Occidental stock and share equivalents that can be issued under the TSRI award is 189,821 shares which, using $84.29, the closing price of Occidental common stock on the New York Stock Exchange on the grant date, would have a value of approximately $16 million.
|
(10)
|
The amount includes $14,700 credited pursuant to the Savings Plan; $292,229 credited pursuant to the Supplemental Retirement Plan II; and $11,748 for life insurance premiums.
|
(11)
|
The maximum number of Occidental stock and share equivalents that can be issued under the TSRI award is 75,929 shares which, using $84.29, the closing price of Occidental common stock on the New York Stock Exchange on the grant date, would have a value of approximately $6.4 million.
|
(12)
|
The amount includes $14,700 credited pursuant to the Savings Plan; $141,553 credited pursuant to the Supplemental Retirement Plan II; $57,291 for life insurance premiums; and $37,589 in the aggregate for personal benefits. Personal benefits include security services; tax preparation and financial counseling; club dues; and excess liability insurance.
|
(13)
|
The maximum number of Occidental stock and share equivalents that can be issued under the TSRI award is 47,456 shares which, using $84.29, the closing price of Occidental common stock on the New York Stock Exchange on the grant date, would have a value of approximately $4 million.
|
(14)
|
The amount includes $14,700 credited pursuant to the Savings Plan; $115,050 credited pursuant to the Supplemental Retirement Plan II; and $3,875 for life insurance premiums; and $27,205 in the aggregate for personal benefits. Personal benefits include tax preparation and financial counseling; club dues; and excess liability insurance.
|
(15)
|
The maximum number of Occidental stock and share equivalents that can be issued under the TSRI award is 66,438 shares which, using $84.29, the closing price of Occidental common stock on the New York Stock Exchange on the grant date, would have a value of approximately $5.6 million.
|
(16)
|
The amount includes $14,700 credited pursuant to the Savings Plan; $150,216 credited pursuant to the Supplemental Retirement Plan II; $22,428 in tax gross-ups related to the amounts paid by Occidental for spousal travel; and $4,902 for life insurance premiums
|
(17)
|
The maximum number of Occidental stock and share equivalents that can be issued under the TSRI award is 66,438 shares which, using $84.29, the closing price of Occidental common stock on the New York Stock Exchange on the grant date, would have a value of approximately $5.6 million.
|
(18)
|
The amount includes $14,700 credited pursuant to the Savings Plan; $144,360 credited pursuant to the Supplemental Retirement Plan II; $17,015 in tax gross-ups related to the amounts paid by Occidental for spousal travel; and $4,489 for life insurance premiums.
|
GRANTS OF PLAN-BASED AWARDS
|
Grants of Plan-Based Awards
|
||||||||||||||||||||||||
Name/
Type
of
Grant
|
Grant
Date
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
|
Estimated Future Payouts Under
Equity Incentive Plan Awards
|
All Other
Stock
Awards
Number of
Shares or
Units
(# Shares)
|
All Other
Option
Awards:
Number of
Securities
Underlying
ptions
(# Shares)
|
Exercise or
Base Price of
Option
Awards
($)
|
Grant Date Fair
Value of Stock and
Option Awards ($)
|
|||||||||||||||||
Threshold
$
|
Target
$
|
Maximum
$
|
Threshold
# Shares
|
Target
# Shares
|
Maximum
# Shares
|
|||||||||||||||||||
Ray R. Irani
|
||||||||||||||||||||||||
EICP
|
(1)
|
$
|
25,000
|
$
|
1,500,000
|
$
|
3,000,000
|
|
||||||||||||||||
TSRI
|
(2)
|
10/13/10
|
23,728
|
94,911
|
237,277
|
$
|
6,000,000
|
|||||||||||||||||
RSI
|
(3)
|
10/13/10
|
59,320
|
$
|
5,000,000
|
|||||||||||||||||||
Stephen I. Chazen
|
||||||||||||||||||||||||
EICP
|
(1)
|
$
|
15,000
|
$
|
900,000
|
$
|
1,800,000
|
|||||||||||||||||
TSRI
|
(2)
|
10/13/10
|
18,982
|
75,929
|
189,821
|
$
|
4,800,000
|
|||||||||||||||||
RSI
|
(3)
|
10/13/10
|
47,456
|
$
|
4,000,000
|
|||||||||||||||||||
Donald P. de Brier
|
||||||||||||||||||||||||
EICP
|
(1)
|
$
|
4,000
|
$
|
240,000
|
$
|
480,000
|
|||||||||||||||||
TSRI
|
(2)
|
10/13/10
|
7,593
|
30,372
|
75,929
|
$
|
1,920,000
|
|||||||||||||||||
RSI
|
(3)
|
10/13/10
|
18,983
|
$
|
1,600,000
|
|||||||||||||||||||
James M. Lienert
|
||||||||||||||||||||||||
EICP
|
(1)
|
$
|
3,500
|
$
|
210,000
|
$
|
420,000
|
|||||||||||||||||
TSRI
|
(2)
|
10/13/10
|
4,746
|
18,983
|
47,456
|
$
|
1,200,000
|
|||||||||||||||||
RSI
|
(3)
|
10/13/10
|
11,864
|
$
|
1,000,000
|
|||||||||||||||||||
William E. Albrecht
|
||||||||||||||||||||||||
EICP
|
(1)
|
$
|
5,000
|
$
|
300,000
|
$
|
600,000
|
|||||||||||||||||
TSRI
|
(2)
|
10/13/10
|
6,644
|
26,576
|
66,438
|
$
|
1,680,000
|
|||||||||||||||||
RSI
|
(3)
|
10/13/10
|
16,610
|
$
|
1,400,000
|
|||||||||||||||||||
Edward A. Lowe
|
||||||||||||||||||||||||
EICP
|
(1)
|
$
|
4,600
|
$
|
276,000
|
$
|
552,000
|
|||||||||||||||||
TSRI
|
(2)
|
10/13/10
|
6,644
|
26,576
|
66,438
|
$
|
1,680,000
|
|||||||||||||||||
RSI
|
(3)
|
10/13/10
|
16,610
|
$
|
1,400,000
|
(1)
|
Payout at threshold assumes EPS of $4.51.
|
(2)
|
Actual payout may range from 0 to the maximum number of performance share units. Awards will be paid out 50 percent in stock and 50 percent in cash in an amount equal to the product of the number of performance share units earned and the closing price of the common stock on the New York Stock Exchange on the date of certification of the attainment of the performance goals. The target shares represent the mid-point performance level (Occidental’s rank of six out of twelve peer companies), resulting in a payout of 40% of the maximum. Threshold shares represent Occidental’s rank of nine out of twelve peer companies, resulting in a payout of 10% of the maximum. The estimated fair value of the TSR at the grant date is based on the projected ranking at the grant date for Occidental of seventh out of twelve peer companies for a payout of 30% of the maximum. See Note 12 to Consolidated Financial Statements in Occidental’s Annual Report on Form 10-K for the year ended December 31, 2010, regarding assumptions underlying valuation of equity awards.
|
(3)
|
Dollar value shown represents the estimated grant date fair value of the full number of shares granted which become non-forfeitable on the later of October 12, 2013, through which date the executive must remain employed by the company, and the date the Compensation Committee certifies the achievement of the performance goal, which must be met no later than September 30, 2017. The RSI award does not have threshold to maximum payout ranges.
|
Summary of Award Terms
|
|||
Executive Incentive
Compensation Plan
(Non-Equity Incentive Portion)
|
Total Shareholder Return
Incentive Awards
|
Restricted Stock
Incentive Awards
|
|
PERFORMANCE
MEASURE
|
Earnings per Share
|
Total Stockholder Return
|
Cumulative Net Income
|
PERFORMANCE PERIOD
|
1 year
|
3 years (1)
|
3 – 7 years
|
FORM OF
PAYMENT
|
Cash
|
Stock/Cash (2)
|
Stock
|
FORFEITURE
PROVISIONS
|
The Chief Executive Officer may determine eligibility for target awards and any payout to participants who exit employment during the Plan year.
|
If the grantee dies, becomes disabled, retires or is terminated for the convenience of Occidental during the performance period, then the grantee will forfeit a pro rata portion of the payout based on the days remaining in the performance period after the termination event.
If the grantee fails to comply with any provision of Occidental’s Code of Business Conduct or any provision of the grant agreement, the company may reduce the award.
|
Shares of stock will become non-forfeitable on the later of October 12, 2013 and the certification by the Compensation Committee of the achievement of reported Cumulative Net Income of $10 billion for the period beginning with October 1, 2010. The Cumulative Net Income threshold must be reached by September 30, 2017, or the shares will be forfeited in their entirety.
If the grantee dies, becomes disabled, retires or is terminated for the convenience of Occidental prior to October 12, 2013, then the grantee will forfeit a pro rata portion of the shares based on the days remaining until October 12, 2013 after the termination event.
If the grantee fails to comply with any provision of Occidental’s Code of Business Conduct or any provision of the grant agreement, the company may reduce the award.
|
CHANGE IN
CONTROL
|
The Plan may be amended as a result of acquisition, divestiture or merger with Occidental.
|
In the event of a Change in Control(3) during the performance period, the grantee's right to receive payment for fifty percent of the number of performance shares, payable fifty percent in stock and fifty percent in cash, becomes non-forfeitable.
|
In the event of a Change in Control(3) prior to October 12, 2013, a pro rata portion of the shares based on the days elapsed from the grant date to the Change in Control will become non-forfeitable. The remaining shares will be forfeited.
In the event of a Change in Control after October 12, 2013, but prior to certification of the performance threshold, the shares of stock will become non-forfeitable.
|
ADDITIONAL HOLDING
REQUIREMENT FOR STOCK
|
50% of net after-tax shares required to be retained for 3 years after vesting.
|
50% of net after-tax shares required to be retained for 3 years after vesting.
|
(1)
|
Performance period begins on award grant date and ends on the day before the third anniversary of the grant date.
|
(2)
|
Fifty percent of the performance shares earned will be paid out in cash in an amount equal to the closing price of the common stock on the New York Stock Exchange on the date when attainment of the performance goals is certified multiplied by such number of performance shares, and the balance will be paid in shares of common stock. Dividend equivalents are paid following certification of the attainment of the performance goal, adjusted to reflect the same payment percentage used to determine the payment of the performance shares.
|
(3)
|
A Change in Control Event under the 2005 Long-Term Incentive Plan generally includes a 20 percent or more change in ownership, certain changes in a majority of the Board, certain mergers or consolidations, sale of substantially all of Occidental’s assets or stockholder approval of a liquidation of Occidental.
|
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2010
|
Ÿ
|
Values shown in the far right column represent the maximum number of share units that can be earned, calculated at $98.10, the closing stock price on December 31, 2010.
|
|
Ÿ
|
However, the actual payout values of these awards will depend upon the actual number of share units earned over their three to seven-year performance periods and the actual stock price on the payout date.
|
|
Ÿ
|
When reviewing this table in conjunction with the Summary Compensation Table on page 31, please note that the 2008 - 2010 awards presented below are also included in the Summary Compensation Table, but the values below differ in that the "Stock Award" column of the Summary Compensation Table shows grant date fair values.
|
Outstanding Equity Awards at December 31, 2010
|
||||||||||||||||||||
Option Awards
|
Stock Awards
|
|||||||||||||||||||
Name /
Type
of Award
|
Grant
Date
|
Number of Securities Underlying Unexercised
Options
(#)
Exercisable
|
Number of Securities Underlying Unexercised
Options
(#)
Unexercisable
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number of
Shares or Units
of
Stock That
Have Not
Vested
(#)
|
Market Value
of Shares
or Units of
Stock That
Have Not
Vested
($) (1)
|
Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
(#)
|
Equity Incentive Plan
Awards: Market or
Payout Value of
Unearned Shares, Units
or Other Rights That
Have Not Vested
($) (1)
|
|||||||||||
Ray R. Irani
|
||||||||||||||||||||
RSI
|
10/13/10
|
|
59,320
|
(2)
|
$
|
5,819,292
|
(2)
|
|||||||||||||
PSA
|
1/1/07
|
87,856
|
(3)
|
$
|
8,618,674
|
(3)
|
||||||||||||||
TSRI
|
7/18/07
|
381,480
|
(4,5)
|
$
|
37,423,188
|
(4)
|
||||||||||||||
TSRI
|
7/16/08
|
306,819
|
(4,6)
|
$
|
30,098,944
|
(4)
|
||||||||||||||
TSRI
|
7/15/09
|
674,260
|
(4,7)
|
$
|
66,144,906
|
(4)
|
||||||||||||||
TSRI
|
10/13/10
|
237,277
|
(4,8)
|
$
|
23,276,874
|
(4)
|
||||||||||||||
Stephen I. Chazen
|
||||||||||||||||||||
RSI
|
10/13/10
|
|
47,456
|
(2)
|
$
|
4,655,434
|
(2)
|
|||||||||||||
PSA
|
1/1/07
|
29,492
|
(3)
|
$
|
2,893,165
|
(3)
|
||||||||||||||
TSRI
|
7/18/07
|
169,547
|
(4,5)
|
$
|
16,632,561
|
(4)
|
||||||||||||||
TSRI
|
7/16/08
|
136,365
|
(4,6)
|
$
|
13,377,407
|
(4)
|
||||||||||||||
TSRI
|
7/15/09
|
299,672
|
(4,7)
|
$
|
29,397,823
|
(4)
|
||||||||||||||
TSRI
|
10/13/10
|
189,821
|
(4,8)
|
$
|
18,621,440
|
(4)
|
||||||||||||||
Donald P. de Brier
|
||||||||||||||||||||
RSI
|
10/13/10
|
|
18,983
|
(2)
|
$
|
1,862,232
|
(2)
|
|||||||||||||
PSA
|
1/1/07
|
15,798
|
(3)
|
$
|
1,549,784
|
(3)
|
||||||||||||||
TSRI
|
7/18/07
|
32,214
|
(4,5)
|
$
|
3,160,193
|
(4)
|
||||||||||||||
TSRI
|
7/16/08
|
27,273
|
(4,6)
|
$
|
2,675,481
|
(4)
|
||||||||||||||
TSRI
|
7/15/09
|
59,936
|
(4,7)
|
$
|
5,879,722
|
(4)
|
||||||||||||||
TSRI
|
10/13/10
|
75,929
|
(4,8)
|
$
|
7,448,635
|
(4)
|
||||||||||||||
James M. Lienert
|
||||||||||||||||||||
LTI
|
7/16/08
|
2,597
|
(9)
|
$
|
254,766
|
(9)
|
||||||||||||||
RSI
|
10/13/10
|
|
11,864
|
(2)
|
$
|
1,163,858
|
(2)
|
|||||||||||||
PSA
|
1/1/07
|
10,568
|
(3)
|
$
|
1,036,721
|
(3)
|
||||||||||||||
TSRI
|
7/18/07
|
17,441
|
(4,5)
|
$
|
1,710,962
|
(4)
|
||||||||||||||
TSRI
|
7/16/08
|
11,690
|
(4,6)
|
$
|
1,146,789
|
(4)
|
||||||||||||||
TSRI
|
7/15/09
|
26,972
|
(4,7)
|
$
|
2,645,953
|
(4)
|
||||||||||||||
TSRI
|
10/13/10
|
47,456
|
(4,8)
|
$
|
4,655,434
|
(4)
|
William E. Albrecht
|
||||||||||||||||||||
RSI
|
10/13/10
|
|
16,610
|
(2)
|
$
|
1,629,441
|
(2)
|
|||||||||||||
TSRI
|
7/16/08
|
13,637
|
(4,6)
|
$
|
1,337,790
|
(4)
|
||||||||||||||
TSRI
|
7/15/09
|
44,952
|
(4,7)
|
$
|
4,409,791
|
(4)
|
||||||||||||||
TSRI
|
10/13/10
|
66,438
|
(4,8)
|
$
|
6,517,568
|
(4)
|
||||||||||||||
Edward A. Lowe
|
||||||||||||||||||||
Options
|
7/16/03
|
500
|
$
|
15.565
|
7/16/13
|
|||||||||||||||
LTI
|
7/16/08
|
1,731
|
(9)
|
$
|
169,811
|
(9)
|
||||||||||||||
RSI
|
10/13/10
|
|
16,610
|
(2)
|
$
|
1,629,441
|
(2)
|
|||||||||||||
PSA
|
1/1/07
|
2,418
|
(3)
|
$
|
237,206
|
(3)
|
||||||||||||||
TSRI
|
7/15/09
|
37,460
|
(4,7)
|
$
|
3,674,826
|
(4)
|
||||||||||||||
TSRI
|
10/13/10
|
66,438
|
(4,8)
|
$
|
6,517,568
|
(4)
|
(1)
|
The amounts shown represent the product of the number of shares or units shown in the column immediately to the left and the closing price on December 31, 2010 of Occidental common stock as reported in the NYSE Composite Transactions, which was $98.10.
|
(2)
|
The shares are forfeitable until the later of October 12, 2013 and the certification by the Compensation Committee that the achievement of the performance threshold is met no later than September 30, 2017.
|
(3)
|
Payout for all PSAs depends upon the ranking of Occidental’s Total Stockholder Return compared to the peer companies specified in the award agreement. The performance period for the PSAs ended December 31, 2010. Payout of the PSA at the number of shares shown (200 percent of target for all of the named executives) was certified at the February 2011 meeting of the Compensation Committee. See Compensation Discussion and Analysis on page 13.
|
(4)
|
Payout value as shown assumes maximum payout. However, the ultimate payout may be significantly less than the amounts shown, with the possibility of no payout, depending on the outcome of the performance criteria and the value of Occidental stock at payout.
|
(5)
|
The performance period for the TSRI ends July 17, 2011.
|
(6)
|
The performance period for the TSRI ends July 15, 2012.
|
(7)
|
The performance period for the TSRI ends July 14, 2013.
|
(8)
|
The performance period for the TSRI ends October 12, 2013.
|
(9)
|
The Long-Term Incentive (LTI) Award is an equity-based incentive, earned and paid over a three-year term. The grantee is awarded a number of units each of which is equal to the value of one share of Occidental common stock. On each anniversary date of the grant, the grantee receives a cash payment equal to the number of units vested multiplied by the closing price on the New York Stock Exchange of one share of Occidental common stock. During the term that the award is outstanding, the grantee receives dividend equivalents on the LTI units. The vesting period for the LTI ends July 15, 2011.
|
OPTION EXERCISES AND STOCK VESTED IN 2010
|
Previously Granted Vested Option Awards Exercised and Previously Granted Stock Awards Vested in 2010
|
||||||||||||
Option Awards
|
Stock Awards
|
|||||||||||
Name
|
Number of Shares
Acquired on Exercise
(#)
|
Value Realized
on Exercise
($) (1)
|
Number of Shares
Acquired on Vesting
(#)
|
Value Realized
on Vesting
($)(2)
|
||||||||
Ray R. Irani
|
0
|
$
|
0
|
138,212
|
$
|
11,245,619
|
||||||
Stephen I. Chazen
|
0
|
$
|
0
|
47,256
|
$
|
3,853,918
|
||||||
Donald P. de Brier
|
565,946
|
$
|
26,826,522
|
(3)
|
21,716
|
$
|
1,734,357
|
|||||
James M. Lienert
|
0
|
$
|
0
|
13,348
|
$
|
1,046,350
|
||||||
William E. Albrecht
|
0
|
$
|
0
|
3,000
|
$
|
260,940
|
||||||
Edward A. Lowe
|
0
|
$
|
0
|
2,244
|
$
|
175,907
|
(1)
|
The amount represents the difference between the closing price of the common stock on the New York Stock Exchange on the exercise date and the option exercise price multiplied by the number of shares exercised.
|
(2)
|
The amount represents the product of the number of shares vested and the closing price of the common stock on the New York Stock Exchange on the vesting date. The following table shows the number of shares of each type of award that vested:
|
Name
|
Number of Shares of
Performance Stock
Awards(a)
|
Number of Shares of
Restricted Stock Units
|
|||||
Ray R. Irani
|
107,412
|
30,800
|
|||||
Stephen I. Chazen
|
36,056
|
11,200
|
|||||
Donald P. de Brier
|
19,316
|
2,400
|
|||||
James M. Lienert
|
13,348
|
0
|
|||||
William E. Albrecht
|
0
|
3,000
|
|||||
Edward A. Lowe
|
2,244
|
0
|
(a)
|
Payout is split fifty percent in stock and fifty percent in cash.
|
(3)
|
The Options and Stock Appreciation Rights exercised were granted in 2003, 2004, 2005 and 2006 with exercise prices of $15.565, $24.66, $40.805 and $50.445 per share, respectively. Includes $12,523,090, which represents the value of shares canceled to satisfy taxes.
|
NONQUALIFIED DEFERRED COMPENSATION
|
Ÿ
|
Annual plan allocations for each participant restore the amounts that would have accrued for salary, bonus and non-equity incentive compensation under the qualified plans, but for the tax law limitations.
|
|
Ÿ
|
Account balances are fully vested after three years of service and are payable following separation from service, or upon attainment of a specified age elected by the participant, as described below.
|
|
Ÿ
|
Interest on nonqualified retirement plan accounts is allocated monthly to each participant’s account, based on the opening balance of the account in each monthly processing period. The amount of interest earnings is calculated using a rate equal to the five-year U.S. Treasury Note rate on the last business day of the processing month plus 2 percent, converted to a monthly allocation factor.
|
Ÿ
|
Under the Modified Deferred Compensation Plan, the maximum amount that may be deferred for any one year is limited to $75,000.
|
|
Ÿ
|
A participant’s overall plan balance must be less than $1 million at the end of any given year to enable a participant to defer compensation for the subsequent year.
|
|
Ÿ
|
Deferred amounts earn interest at a rate equal to the five-year U.S. Treasury Note rate plus 2 percent, except for amounts deferred prior to 1994, which will continue to earn interest at a minimum interest rate of 8 percent.
|
Nonqualified Deferred Compensation
|
|||||||||||||||||
Name
|
Plan
|
Executive
Contributions
in 2010
($) (1)
|
Occidental
Contributions
in 2010
($)
|
Aggregate Earnings
in 2010
($)
|
Aggregate Withdrawals/
Distributions in 2010
($)
|
Aggregate Balance
at 12/31/10
($)
|
|||||||||||
Ray R. Irani (2)
|
SRP II
|
$
|
0
|
$
|
644,766
|
$
|
19,604
|
$
|
148,415
|
(8)
|
$
|
657,027
|
|||||
Stephen I. Chazen (3)
|
SRP II
|
$
|
0
|
$
|
292,229
|
$
|
8,533
|
$
|
85,374
|
(8)
|
$
|
296,265
|
|||||
MDCP
|
$
|
0
|
$
|
0
|
$
|
64,467
|
$
|
0
|
$
|
1,709,722
|
|||||||
Donald P. de Brier (4)
|
SRP II
|
$
|
0
|
$
|
141,553
|
$
|
3,964
|
$
|
53,980
|
(8)
|
$
|
142,437
|
|||||
James M. Lienert (5)
|
SRP II
|
$
|
0
|
$
|
115,050
|
$
|
38,735
|
$
|
0
|
$
|
1,058,511
|
||||||
MDCP
|
$
|
0
|
$
|
0
|
$
|
117,269
|
$
|
0
|
$
|
3,099,441
|
|||||||
William E. Albrecht (6)
|
SRP II
|
$
|
0
|
$
|
150,216
|
$
|
10,424
|
$
|
0
|
$
|
320,411
|
||||||
Edward A. Lowe (7)
|
SRP II
|
$
|
0
|
$
|
144,360
|
$
|
18,542
|
$
|
0
|
$
|
530,678
|
||||||
MDCP
|
$
|
75,000
|
$
|
0
|
$
|
22,396
|
$
|
0
|
$
|
606,817
|
(1)
|
No employee contributions are permitted to the SRP II.
|
(2)
|
Occidental’s 2010 contribution to the SRP II of $644,766 is reported elsewhere in this proxy statement.
|
(3)
|
Occidental’s 2010 contribution to the SRP II of $292,229 is reported elsewhere in this proxy statement.
|
(4)
|
Occidental’s 2010 contribution to the SRP II of $141,553 is reported elsewhere in this proxy statement.
|
(5)
|
Occidental’s 2010 contribution to the SRP II of $115,050 is reported elsewhere in this proxy statement.
|
(6)
|
Occidental’s 2010 contribution to the SRP II of $150,216 is reported elsewhere in this proxy statement.
|
(7)
|
Occidental’s 2010 contribution to the SRP II of $144,360 is reported elsewhere in this proxy statement.
|
(8)
|
Distribution made in February 2010 in accordance with the specified age elections described under Nonqualified Defined Contribution Retirement Plan above.
|
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
|
Ÿ
|
Amounts vested under the Qualified Plans (see page 26 for the named executive officers’ balances as of year end).
|
|
Ÿ
|
Amounts vested under the Nonqualified Deferred Compensation arrangements (see page 38 for the named executive officers’ balances as of year-end).
|
|
Ÿ
|
Bonus and non-equity incentive compensation (collectively, “bonus”) under the Executive Incentive Compensation Plan that is earned as of year-end. Any Plan participant who leaves on or after that date for any reason is entitled to such amounts when payment is made in the first quarter of the following year. The amounts that were earned in 2010 by the named executive officers are included in the Summary Compensation Table on page 31.
|
|
Ÿ
|
Equity awards for which the performance period was completed at year-end. Equity awards with performance periods that ended on December 31, 2010 were certified for payout in the first quarter of 2011.
|
|
Ÿ
|
Short-term disability benefits. During any period of disability, all salaried employees are eligible for six months of continued salary at half pay, full pay or a combination thereof, depending on years of service.
|
|
Ÿ
|
Long-term disability benefits. Occidental provides a Long-Term Disability Plan, which makes third-party disability insurance coverage available to all salaried employees. Premiums are paid through salary deductions by the employees who elect to participate.
|
|
Ÿ
|
Medical benefits are available to all eligible employees during periods of disability at the same premium rates as active employees. Following termination of employment, other than for cause, medical benefits are available pursuant to the requirements of the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) for up to 18 months at premium rates equal to 102 percent of the full cost of coverage. Retiree medical coverage is available if the employee satisfies the eligibility requirements. Premiums paid by retirees depend on age and years of service.
|
Ÿ
|
Retirement with the Consent of Occidental. If Dr. Irani had retired with the consent of Occidental, he would have been entitled to receive:
|
|||
1.
|
Long-term incentive awards payable at the end of the performance period subject to attainment of performance goals:
|
|||
○
|
TSRI shares reduced on a pro rata basis as of the termination date — $46,705,312 (1)
|
|||
○
|
ROEI target incentive amount reduced on a pro rata basis as of the termination date — $35,685,598 (2)
|
|||
○
|
RSI shares reduced on a pro rata basis as of the termination date — $424,773 (3)
|
|||
2.
|
Unused vacation pay (one-time lump-sum payment of $650,000);
|
|||
3.
|
Life insurance coverage of $5,700,000 for the remainder of his life — current annual premium of $112,084;
|
|||
4.
|
Comparable medical and dental benefits for Dr. Irani and his spouse to those provided to all eligible salaried employees; and
|
|||
5.
|
The personal benefits he is entitled to receive under his current employment agreement. These include security services ($460,000), tax preparation and financial planning services ($420,000), administrative assistance, certain travel benefits
|
and club dues, for life, having a total estimated annual cost of $1,200,000. Under his employment agreement, following retirement or termination from employment, he is also entitled to be made whole for those benefits (estimated at $800,000 annually).
|
||||
Ÿ
|
Payments in the Event of Disability. Dr. Irani may be terminated if he is disabled for an aggregate of six months in any 18-month period. If Occidental had terminated him for disability, he would have been entitled to receive:
|
|||
1.
|
A lump sum payment equal to three times his highest annual salary and bonus ($16,770,000); and
|
|||
2.
|
The payments and benefits disclosed under “Retirement with the Consent of Occidental.”
|
|||
Ÿ
|
Payments in the Event of Death. In the event of Dr. Irani’s death, his beneficiaries would have been entitled to receive:
|
|||
1.
|
Proceeds in the amount of approximately $5.7 million from life insurance policies for which premiums are disclosed above under “Retirement with the Consent of Occidental;”
|
|||
2.
|
Proceeds in the amount of $7.6 million from insurance policies purchased under a 1994 split-dollar arrangement. Occidental has the right to receive any proceeds in excess of the death benefit; and
|
|||
3.
|
The payments and benefits disclosed in items 1, 2 and 4 under “Retirement with the Consent of Occidental.”
|
|||
Ÿ
|
Termination by Occidental. If Occidental had terminated Dr. Irani for any reason other than retirement or death, Dr. Irani would have been entitled to receive:
|
|||
1.
|
The payments and benefits disclosed under “Retirement with the Consent of Occidental,” and the payment under item 1 of “Payments in the Event of Disability.”
|
|||
Ÿ
|
Termination by Dr. Irani. Dr. Irani may terminate his agreement in the event of a material breach by Occidental, which is not cured within 15 days of notice of the breach. If Dr. Irani had terminated the agreement, he would have been entitled to receive:
|
|||
1.
|
The payments and benefits disclosed under “Termination by Occidental.”
|
|||
Ÿ
|
Change of Control. Had a change of control occurred, Dr. Irani would have been entitled to receive:
|
|||
1.
|
All unvested long-term incentive awards as disclosed under “Retirement with the Consent of Occidental” except that certain performance awards would have vested fully at target or at 50% of the maximum, as applicable, and the right to receive the amounts in excess of those amounts would have been forfeited. Such vesting would increase the values shown under “Retirement with the Consent of Occidental” by:
|
|||
○
|
TSRIs — $43,020,382 (4)
|
|||
○
|
ROEIs — $16,064,402 (5)
|
|||
2.
|
A tax gross-up for all effects of any excise and other taxes payable by Dr. Irani by reason of the change of control ($0); and
|
|||
3.
|
If the change of control resulted in a material breach of his agreement that was not cured within 15 days of notice of the breach, Dr. Irani would have been entitled to receive the other payments and benefits disclosed in items 2, 3, 4 and 5 under “Retirement with the Consent of Occidental” and in item 1 under “Payments in the Event of Disability.”
|
|||
Ÿ
|
Maximum Payout. The maximum payable to Dr. Irani under any of the scenarios was $159,320,467 (representing cash and equity payments) and $2,112,084 (representing the estimated value per year for continuation of other benefits) which would have occurred in the Change of Control situation followed by a material breach of his employment agreement.
|
Ÿ
|
Retirement with the Consent of Occidental. If Mr. Chazen had retired, he would have been entitled to receive:
|
|||
1.
|
Long-term incentive awards, payable at the end of the performance period subject to attainment of performance goals:
|
|||
○
|
TSRI shares reduced on a pro rata basis as of the termination date — $20,999,777 (1)
|
|||
○
|
ROEI target incentive amount reduced on a pro rata basis as of the termination date — $15,860,266 (2)
|
|||
○
|
RSI shares reduced on a pro rata basis as of the termination date — $339,818 (3)
|
|||
2.
|
Upon approval of the Compensation Committee, with respect to the portion of awards that have not vested at the time of termination, cash payments equal to what he would have received, and made at the time such awards would have been settled, had he remained employed. The additional amounts of such payments would have been:
|
|||
○
|
TSRIs — $21,154,382 (6)
|
|||
○
|
ROEIs — $7,139,734 (7)
|
|||
○
|
RSIs —$4,315,616 (8)
|
|||
3.
|
Unused vacation pay (one-time lump-sum payment of $937,982).
|
|||
Ÿ
|
Termination by Occidental with Cause. Occidental may discharge Mr. Chazen for material cause at any time upon 30 days’ written notice. Mr. Chazen would not have received severance or other pay and he would have forfeited any unvested long-term incentive awards, but he would have been entitled to receive:
|
|||
1.
|
The unused vacation pay as disclosed under “Retirement with the Consent of Occidental.”
|
Ÿ
|
Termination by Occidental without Cause. If Occidental had terminated Mr. Chazen for any reason other than cause, retirement or death, Mr. Chazen would have been entitled to receive:
|
|||
1.
|
The payments and benefits disclosed under “Retirement with the Consent of Occidental,” except that the payments described in item 2 of that section would not be subject to approval of the Compensation Committee;
|
|||
2.
|
Two times his highest annual base salary, payable over a two-year period between January 1, 2011, and December 31, 2012 (the “compensation period”) ($1,000,000 annually);
|
|||
3.
|
Within 90 days following the end of each calendar year during the compensation period, a lump sum payment equal to the annual contribution he would have received under the defined contribution retirement plans had he not been terminated:
|
|||
○
|
Savings Plan — $14,700 (annually)
|
|||
○
|
SRP II — $159,960 (annually)
|
|||
4.
|
Continued coverage under general liability insurance during the compensation period — $ 2,000.
|
|||
Ÿ
|
Payments in the Event of Disability. Mr. Chazen may be terminated if he is disabled for an aggregate of 180 days in any 12-month period. If Occidental had terminated him for disability, he would have been entitled to receive:
|
|||
1.
|
The payments and benefits disclosed under “Retirement with the Consent of Occidental.”
|
|||
Ÿ
|
Payments in the Event of Death. In the event of Mr. Chazen’s death, his beneficiaries would have been entitled to receive:
|
|||
1.
|
Life insurance proceeds equal to two times his base salary ($2,000,000); and
|
|||
2.
|
The payments and benefits disclosed in items 1 and 3 under “Retirement with the Consent of Occidental.”
|
|||
Ÿ
|
Termination by Mr. Chazen. Mr. Chazen may terminate his agreement at any time upon 90 days’ written notice. If Mr. Chazen had terminated the agreement, he would have been entitled to receive:
|
|||
1.
|
The payments and benefits disclosed under “Retirement with the Consent of Occidental.”
|
|||
Ÿ
|
Change of Control. Had a change of control occurred, Mr. Chazen would have been entitled to receive:
|
|||
1.
|
All unvested long-term incentive awards as disclosed in item 1 under “Retirement with the Consent of Occidental,” except that such awards would have vested fully at target or at 50% of the maximum, as applicable, and the right to receive amounts in excess of those amounts would have been forfeited. The additional amounts attributable to such vesting would have been:
|
|||
○
|
TSRIs — $23,016,516 (9)
|
|||
○
|
ROEIs — $7,139,734 (10)
|
|||
2.
|
If he were terminated as part of the change of control, instead of the payments and benefits disclosed in item 1 above, the payments and benefits shown under “Termination by Occidental without Cause.”
|
|||
Ÿ
|
Maximum Payout. The maximum payable to Mr. Chazen under any of the scenarios was $74,961,029 (representing cash and equity payments) which would have occurred in the Termination by Occidental without Cause and the Change of Control situation with his termination as part of the change of control.
|
Ÿ
|
Retirement with the Consent of Occidental. If Mr. de Brier had retired with the consent of Occidental, he would have been entitled to receive:
|
|||
1.
|
Long-term incentive awards payable at the end of the performance period subject to attainment of performance goals:
|
|||
○
|
TSRI shares reduced on a pro rata basis as of the termination date — $4,212,905 (1)
|
|||
○
|
ROEI target incentive amount reduced on a pro rata basis as of the termination date — $3,172,053 (2)
|
|||
○
|
RSI shares reduced on a pro rata basis as of the termination date — $135,967 (3)
|
|||
2.
|
Unused vacation pay (one-time lump-sum payment of $109,192); and
|
|||
3.
|
Life insurance for the remainder of his life equal to his highest career annual salary ($551,000) (current annual premium of approximately $34,005).
|
|||
Ÿ
|
Termination by Occidental with Cause. If Occidental had terminated Mr. de Brier for cause, Mr. de Brier would not have received severance or other pay and he would have forfeited any unvested long-term incentive awards, but he would have been entitled to receive:
|
|||
1.
|
The unused vacation pay as disclosed under “Retirement with the Consent of Occidental.”
|
|||
Ÿ
|
Termination by Occidental without Cause. If Occidental had terminated Mr. de Brier for any reason other than cause, retirement or death, Mr. de Brier would have been entitled to receive:
|
|||
1.
|
The payments and benefits disclosed under “Retirement with the Consent of Occidental;”
|
|||
2.
|
Two times his highest annual salary and annual cash bonus target payable over a two-year period between January 1, 2011, and December 31, 2012 (the “compensation period”) ($936,700 annually). During the compensation
|
period, Mr. de Brier may not accept employment with, or act as a consultant or perform services for any entity engaged in any energy-related business without Occidental’s consent;
|
||||
3.
|
Within 90 days following the end of each calendar year during the compensation period, a lump sum payment equal to the annual contribution he would have received under the defined contribution retirement plans had he not been terminated:
|
|||
○
|
Savings Plan — $14,700
|
|||
○
|
SRP II — $148,566
|
|||
4.
|
Cash payments in lieu of the forfeited portion of all long-term performance-based incentive awards granted prior to his termination that would have vested during the compensation period resulting in the following additional value to that shown under “Retirement with the Consent of Occidental” at the time and subject to the attainment and certification of the underlying performance objectives:
|
|||
○
|
TSRIs — $4,429,902 (6)
|
|||
○
|
ROEIs — $1,427,947 (7)
|
|||
○
|
RSIs— $1,242,142 (8)
|
|||
5.
|
Continued coverage under general liability insurance during the compensation period — $2,000.
|
|||
Ÿ
|
Payments in the Event of Disability. If Occidental were to have terminated Mr. de Brier for disability, he would have been entitled to receive:
|
|||
1.
|
The payments and benefits disclosed under “Retirement with the Consent of Occidental;” and
|
|||
2.
|
Sixty percent of his salary less the amount paid annually pursuant to Occidental’s Long-Term Disability Plan through age 70 (assuming the disability continues for the maximum covered period) — $117,540 annually.
|
|||
Ÿ
|
Termination by Mr. de Brier. If Mr. de Brier terminated his contract, he would have been entitled to receive:
|
|||
1.
|
The unused vacation pay as disclosed under “Retirement with the Consent of Occidental.”
|
|||
Ÿ
|
Payments in the Event of Death. In the event of Mr. de Brier’s death, his beneficiaries would have been entitled to receive:
|
|||
1.
|
Life insurance proceeds equal to three times his base salary ($1,487,700); and
|
|||
2.
|
The payments and benefits disclosed in items 1 and 2 under “Retirement with the Consent of Occidental.”
|
|||
Ÿ
|
Change of Control. Had a change of control occurred, Mr. de Brier would have been entitled to receive:
|
|||
1.
|
All unvested long-term incentive awards as disclosed under “Retirement with the Consent of Occidental” and in item 4 under “Termination by Occidental without Cause,” except that performance awards would have vested fully at target or at 50% of the maximum, as applicable, and the right to receive amounts in excess of those amounts would have been forfeited. The additional amounts attributable to such vesting would have been:
|
|||
○
|
TSRIs — $1,911,870 (9)
|
|||
2.
|
If he were terminated as part of the change of control, instead of payments disclosed in item 1 above, the payments and benefits shown under “Termination by Occidental without Cause.”
|
|||
Ÿ
|
Maximum Payout. The maximum payable to Mr. de Brier under any of the scenarios was $18,843,910 (representing cash and equity payments) and $34,005 (representing the estimated value per year for continuation of other benefits) which would have occurred in the Change of Control situation and his termination as part of the change of control.
|
Ÿ
|
Retirement with the Consent of Occidental. If Mr. Lienert had retired with the consent of Occidental, he would have been entitled to receive:
|
|||
1.
|
Long-term incentive awards payable at the end of the performance period subject to attainment of performance goals:
|
|||
○
|
TSRI shares reduced on a pro rata basis as of the termination date — $2,077,071 (1)
|
|||
○
|
ROEI target incentive amount reduced on a pro rata basis as of the termination date — $1,118,584(2)
|
|||
○
|
LTI units reduced on a pro rata basis as of the termination date — $118,014 (11)
|
|||
○
|
RSI shares reduced on a pro rata basis as of the termination date — $84,955 (3)
|
|||
2.
|
Unused vacation pay (one-time lump-sum payment of $56,995).
|
|||
Ÿ
|
Termination by Occidental with Cause. If Occidental had terminated Mr. Lienert for cause, Mr. Lienert would not have received severance or other pay and he would have forfeited any unvested long-term incentive awards, but he would have been entitled to receive:
|
|||
1.
|
The unused vacation pay as disclosed under “Retirement with the Consent of Occidental.”
|
|||
Ÿ
|
Termination by Occidental without Cause. If Occidental had terminated Mr. Lienert for any reason other than cause, retirement or death, Mr. Lienert would have been entitled to receive:
|
|||
1.
|
The payments and benefits disclosed under “Retirement with the Consent of Occidental;” and
|
2.
|
Notice and severance pay equal to 12 months base salary ($400,500) pursuant to the Occidental Notice and Severance Pay Plan and, as provided in such Plan, two months of contributions pursuant to the Savings Plan ($4,005) and the SRP II ($4,673) and continued medical and dental coverage for the 12 month notice and severance period at the active employee rate.
|
|||
Ÿ
|
Payments in the Event of Disability. If Occidental were to have terminated Mr. Lienert for disability, he would have been entitled to receive:
|
|||
1.
|
The payments and benefits disclosed under “Retirement with the Consent of Occidental.”
|
|||
Ÿ
|
Termination by Mr. Lienert. If Mr. Lienert terminated his employment, he would have been entitled to receive:
|
|||
1.
|
The unused vacation pay as disclosed under “Retirement with the Consent of Occidental.”
|
|||
Ÿ
|
Payments in the Event of Death. In the event of Mr. Lienert’s death, his beneficiaries would have been entitled to receive:
|
|||
1.
|
Life insurance proceeds equal to two times his base salary ($801,000); and
|
|||
2.
|
The payments and benefits disclosed in items 1 and 2 under “Retirement with the Consent of Occidental.”
|
|||
Ÿ
|
Change of Control. Had a change of control occurred, Mr. Lienert would have been entitled to receive:
|
|||
1.
|
All unvested long-term incentive awards as disclosed under “Retirement with the Consent of Occidental” except that performance awards would have vested fully at target or at 50% of the maximum, as applicable, and the right to receive amounts in excess of those amounts would have been forfeited. The additional amounts attributable to such vesting would have been:
|
|||
○
|
TSRIs — $3,478,724 (4)
|
|||
○
|
ROEIs — $581,416 (5)
|
|||
○
|
LTIs —$136,752 (12)
|
|||
2.
|
If he were terminated as part of the change of control he would also receive the unused vacation pay as disclosed under “Retirement with the Consent of Occidental;” and
|
|||
3.
|
If he were terminated as part of the change of control he would also receive the severance pay and benefits disclosed in item 2 under “Termination by Occidental without Cause.”
|
|||
Ÿ
|
Maximum Payout. The maximum payable to Mr. Lienert under any of the scenarios was $8,061,689 (representing cash and equity payments) which would have occurred in the Change of Control situation with his termination as part of the change of control.
|
Ÿ
|
Retirement with the Consent of Occidental. If Mr. Albrecht had retired with the consent of Occidental, he would have been entitled to receive:
|
|||
1.
|
Long-term incentive awards payable at the end of the performance period subject to attainment of performance goals:
|
|||
○
|
TSRI shares reduced on a pro rata basis as of the termination date — $1,546,547 (1)
|
|||
○
|
ROEI target incentive amount reduced on a pro rata basis as of the termination date — $1,836,483 (2)
|
|||
○
|
RSI shares reduced on a pro rata basis as of the termination date — $118,995 (3)
|
|||
2.
|
Unused vacation pay (one-time lump-sum payment of $59,409).
|
|||
Ÿ
|
Termination by Occidental with Cause. If Occidental had terminated Mr. Albrecht for cause, Mr. Albrecht would not have received severance or other pay and he would have forfeited any unvested long-term incentive awards, but he would have been entitled to receive:
|
|||
1.
|
The unused vacation pay as disclosed under “Retirement with the Consent of Occidental.”
|
|||
Ÿ
|
Termination by Occidental without Cause. If Occidental had terminated Mr. Albrecht for any reason other than cause, retirement or death, Mr. Albrecht would have been entitled to receive:
|
|||
1.
|
The payments and benefits disclosed under “Retirement with the Consent of Occidental;” and
|
|||
2.
|
Notice and severance pay equal to 12 months base salary ($500,000) pursuant to the Occidental Notice and Severance Pay Plan and, as provided in such Plan, two months of contributions pursuant to the Savings Plan ($5,000) and the SRP II ($5,833) and continued medical and dental coverage for the 12 month notice and severance period at the active employee rate.
|
|||
Ÿ
|
Payments in the Event of Disability. If Occidental were to have terminated Mr. Albrecht for disability, he would have been entitled to receive:
|
|||
1.
|
The payments and benefits disclosed under “Retirement with the Consent of Occidental.”
|
|||
Ÿ
|
Termination by Mr. Albrecht. If Mr. Albrecht terminated his employment, he would have been entitled to receive:
|
|||
1.
|
The unused vacation pay as disclosed under “Retirement with the Consent of Occidental.”
|
|||
Ÿ
|
Payments in the Event of Death. In the event of Mr. Albrecht’s death, his beneficiaries would have been entitled to receive
|
|||
1.
|
Life insurance proceeds equal to two times his base salary ($1,000,000); and
|
2.
|
The payments and benefits under “Retirement with the Consent of Occidental.”
|
|||
Ÿ
|
Change of Control. Had a change of control occurred, Mr. Albrecht would have been entitled to receive:
|
|||
1.
|
All unvested long-term incentive awards as disclosed under “Retirement with the Consent of Occidental” except that performance awards would have vested fully at target or at 50% of the maximum, as applicable, and the right to receive amounts in excess of those amounts would have been forfeited. The additional amounts attributable to such vesting would have been:
|
|||
○
|
TSRIs — $4,808,960 (4)
|
|||
○
|
ROEIs —$963,517 (5)
|
|||
2.
|
If he were terminated as part of the change of control he would also receive the unused vacation pay as disclosed under “Retirement with the Consent of Occidental;” and
|
|||
3.
|
If he were terminated as part of the change of control he would also receive the severance pay and benefits disclosed in item 2 under “Termination by Occidental without Cause.”
|
|||
Ÿ
|
Maximum Payout. The maximum payable to Mr. Albrecht under any of the scenarios was $9,822,085 (representing cash and equity payments) which would have occurred in the Change of Control situation with his termination as part of the change of control.
|
Ÿ
|
Retirement with the Consent of Occidental. If Mr. Lowe had retired with the consent of Occidental, he would have been entitled to receive:
|
|||
1.
|
Long-term incentive awards payable at the end of the performance period subject to attainment of performance goals:
|
|||
○
|
TSRI shares reduced on a pro rata basis as of the termination date — $863,182 (1)
|
|||
○
|
ROEI target incentive amount reduced on a pro rata basis as of the termination date — $1,043,492 (2)
|
|||
○
|
LTI units reduced on a pro rata basis as of the termination date — $76,676 (11)
|
|||
○
|
RSI shares reduced on a pro rata basis as of the termination date — $118,995 (3)
|
|||
2.
|
Unused vacation pay (one-time lump-sum payment of $45,779).
|
|||
Ÿ
|
Termination by Occidental with Cause. If Occidental had terminated Mr. Lowe for cause, Mr. Lowe would not have received severance or other pay and he would have forfeited any unvested long-term incentive awards, but he would have been entitled to receive:
|
|||
1.
|
The unused vacation pay as disclosed under “Retirement with the Consent of Occidental.”
|
|||
Ÿ
|
Termination by Occidental without Cause. If Occidental had terminated Mr. Lowe for any reason other than cause, retirement or death, Mr. Lowe would have been entitled to receive:
|
|||
1.
|
The payments and benefits disclosed under “Retirement with the Consent of Occidental;” and
|
|||
2.
|
Notice and severance pay equal to 12 months base salary ($460,000) pursuant to the Occidental Notice and Severance Pay Plan and, as provided in such Plan, two months of contributions pursuant to the Savings Plan ($4,600) and the SRP II ($5,367) and continued medical and dental coverage for the 12 month notice and severance period at the active employee rate.
|
|||
Ÿ
|
Payments in the Event of Disability. If Occidental were to have terminated Mr. Lowe for disability, he would have been entitled to receive:
|
|||
1.
|
The payments and benefits disclosed under “Retirement with the Consent of Occidental.”
|
|||
Ÿ
|
Termination by Mr. Lowe. If Mr. Lowe terminated his employment, he would have been entitled to receive:
|
|||
1.
|
The unused vacation pay as disclosed under “Retirement with the Consent of Occidental.”
|
|||
Ÿ
|
Payments in the Event of Death. In the event of Mr. Lowe’s death, his beneficiaries would have been entitled to receive:
|
|||
1.
|
Life insurance proceeds equal to two times his base salary ($920,000); and
|
|||
2.
|
The payments and benefits disclosed under “Retirement with the Consent of Occidental.”
|
|||
Ÿ
|
Change of Control. Had a change of control occurred, Mr. Lowe would have been entitled to receive:
|
|||
1.
|
All unvested long-term incentive awards as disclosed under “Retirement with the Consent of Occidental” except that performance awards would have vested fully at target or at 50% of the maximum, as applicable, and the right to receive amounts in excess of those amounts would have been forfeited. The additional amounts attributable to such vesting would have been:
|
|||
○
|
TSRIs — $4,233,015 (4)
|
|||
○
|
ROEIs —$706,508 (5)
|
|||
○
|
LTI —$91,135 (12)
|
|||
2.
|
If he were terminated as part of the change of control he would also receive the unused vacation pay as disclosed under “Retirement with the Consent of Occidental;” and
|
3.
|
If he were terminated as part of the change of control he would also receive the severance pay and benefits disclosed in item 2 under “Termination by Occidental without Cause.”
|
||
Ÿ
|
Maximum Payout. The maximum payable to Mr. Lowe under any of the scenarios was $7,648,749 (representing cash and equity payments) which would have occurred in the Change of Control situation with his termination as part of the change of control.
|
(1)
|
Represents the product of the year-end price of $98.10, and the pro rata shares of TSRIs, assuming performance at target level, or for 2010 awards, at the mid-point performance level (Occidental rank of 6 out of 12 peer group companies). Depending on the year of grant, actual payout will vary from zero to 100 percent of maximum, zero to 150 percent of target or zero to 200 percent of target depending on attainment of performance objectives and the price of common stock at payout.
|
(2)
|
Actual payout will vary from zero to 200 percent of target depending on attainment of performance objectives.
|
(3)
|
Represents the product of the year-end price of $98.10 and the pro rata number of RSIs.
|
(4)
|
Represents the product of the year-end price of $98.10, and the additional number of TSRIs that will further vest. In the event of termination without cause, depending on the year of grant, actual payout will vary from zero to 100 percent of maximum, zero to 150 percent of pro-rated target or zero to 200 percent of target depending on attainment of performance objectives and the price of common stock at payout.
|
(5)
|
Represents the additional ROEI target incentive amount that will further vest. In the event of termination without cause, actual payout will vary from zero to 200 percent of pro-rated target depending on attainment of performance objectives.
|
(6)
|
Represents the product of the year-end price of $98.10, and the additional number of TSRIs that could further vest.
|
(7)
|
Represents the additional ROEI target incentive amount that will further vest.
|
(8)
|
Represents the product of the year-end price of $98.10 and the additional number of RSIs that will further vest.
|
(9)
|
Represents the product of the year-end price of $98.10, and the additional number of TSRIs that will further vest.
|
(10)
|
Represents the additional ROEI incentive amount that will further vest.
|
(11)
|
Represents the product of the year-end price of $98.10 and the pro rata number of the LTIs that will vest.
|
(12)
|
Represents the product of the year-end price of $98.10 and the additional number of LTIs that will further vest.
|
PROPOSAL 2: RATIFICATION OF INDEPENDENT AUDITORS
|
PROPOSAL 3: ADVISORY VOTE APPROVING EXECUTIVE COMPENSATION
|
Ÿ
|
Maintain the focus on long-term performance-based awards;
|
|
Ÿ
|
Incentivize senior management to continue to achieve long-term success;
|
|
Ÿ
|
Support the alignment of executive and stockholder interests; and
|
|
Ÿ
|
Grant awards consistent with peer company programs8 in terms of award type and reported value9.
|
Ÿ
|
Compared to 2009, the Chairman and Chief Executive Officer’s potential long-term incentive award opportunity for 2010 was reduced substantially in terms of both the maximum, which is reduced by over 70% to $25 million9, and the mid-point which is reduced by over 70% to $13 million9. As a result, the Chairman and Chief Executive Officer’s total compensation awarded in 2010 is consistent with that of other Chief Executive Officers in the company’s peer group8,9.
|
|
Ÿ
|
Overall executive compensation granted in 2010 is comparable to peers8,9 and the overwhelming majority of compensation will continue to be long-term and performance-based.
|
|
Ÿ
|
Executive long-term incentive awards were allocated 80% to a Total Shareholder Return Incentive award (TSRI) and 20% to a Restricted Stock Incentive award (RSI) using maximum payout levels.
|
|
Ÿ
|
Payouts for the new TSRI awards are determined by Occidental’s total stockholder return (TSR) ranking within a peer group of twelve companies. Hurdles for payouts were made more difficult with the maximum payout made only if Occidental ranks first within the peer group and no payout if Occidental ranks in the bottom three out of the twelve peer companies. Additionally, all payouts at higher than 50% of the maximum require that the company’s TSR be higher than the S&P 500 TSR.
|
|
Ÿ
|
The executive compensation program uses types of awards and performance metrics which are widely used by peer companies.
|
|
Ÿ
|
As of 2010, all new grants of executive long-term incentive equity awards vest on a pro rata basis in the event of a change of control, with the new TSRI awards vesting based on 50% of the performance share units granted.
|
|
Ÿ
|
Return on equity awards granted to Dr. Irani and Mr. Chazen in 2007 and vested in 2010 were paid 50% in common stock and 50% in cash instead of 100% in cash. A number of shares equal to the net after-tax shares received must be retained for at least three years after the vesting date.
|
|
Ÿ
|
Long-term performance-based awards granted in 2010 to senior executives will be paid at least 50% in common stock and the remainder in cash irrespective of the award type.
|
|
Ÿ
|
The peer group was expanded from nine to twelve companies for the TSRI performance metric, providing a broader comparison of the company’s performance within the oil and gas industry.
|
8
|
Based on 2009 information reported for peer companies. See page 14 for information on peer companies.
|
9
|
Comparative value based on Occidental common stock price on grant date and for mid-point performance, based on a rank of six out of twelve peer companies.
Actual value of the payout depends on number of share units earned based on level of achievement of performance measures and stock price on date of certification of performance achieved.
|
PROPOSAL 4: ADVISORY VOTE ON FREQUENCY OF ADVISORY VOTE ON EXECUTIVE COMPENSATION
|
STOCKHOLDER PROPOSALS
|
PROPOSAL 5: REPORT ON POLITICAL EXPENDITURES AND SPENDING PROCESSES
|
Ÿ
|
The process used for determining the approval of expenditures supporting or opposing candidates and an assessment of the impact such expenditures may have on the company’s reputation, sales and profitability;
|
|
Ÿ
|
Direct or indirect expenditures, including payments made to trade associations such as the U.S. Chamber of Commerce, social welfare organizations and political organizations, supporting or opposing candidates or for issue ads aimed at affecting political races;
|
|
Ÿ
|
Expenditures for state-level ballot initiatives, including an analysis of the impact on the company and the environment of any such initiative;
|
|
Ÿ
|
Oversight processes by management and the Board for all political spending.
|
PROPOSAL 6: REQUIRED NOMINATION OF DIRECTOR WITH ENVIRONMENTAL EXPERTISE
|
Ÿ
|
Discharged an estimated nine billion barrels of toxic wastewater into local rivers and streams (The Independent(UK), 5/4/07 “Oil Company Accused of Dumping Waste in Amazon”),
|
|
Ÿ
|
Stored wastes in unlined earthen pits(Occidental’s Pollution Prevention Practices in Block 1AB Violated Industry Standards From Inception of Operations in 1975.E-Tech International,2006.p.2),
|
|
Ÿ
|
Organizations representing the indigenous Achuar population of the region have accused Occidental of violations of the Peruvian General Health Law (Law 26842) and the Peruvian General Water Law(Decree 17752), prohibiting the dumping of waste that might contaminate water and endanger human health,
|
|
Ÿ
|
Occidental has been accused in a pending civil action brought by Achuar plaintiffs of causing harm to the Achuar people by its environmental practices.(Tomas Maynas Carijano et al v. Occidental Petroleum Corporation et al, California Central District Court).
|
Ÿ
|
Has a high level of expertise relating to the environmental impacts of hydrocarbon exploration and production and is widely recognized in the business and environmental communities as an authority in such field, in each case as reasonably determined by the company’s board, and
|
|
Ÿ
|
Will qualify, subject to limited exceptions in extraordinary circumstances explicitly specified by the board, as an independent director under the standards applicable to the company as an NYSE listed company.
|
STOCKHOLDER PROPOSALS FOR THE 2012 ANNUAL MEETING OF STOCKHOLDERS
|
NOMINATIONS FOR DIRECTORS FOR TERM EXPIRING IN 2013
|
Ÿ
|
Whether the candidate is independent as defined in Occidental’s Corporate Governance Policies and as applied with respect to Occidental and the stockholder recommending the nominee, if applicable;
|
|
Ÿ
|
Whether the candidate has the business experience, character, judgment, acumen and time to commit in order to make an ongoing positive contribution to the Board;
|
|
Ÿ
|
Whether the candidate would contribute to the Board achieving a diverse and broadly inclusive membership, including the achievement of the diversity goals set forth in Occidental’s corporate governance policies further described beginning on page A-1, Exhibit A: Corporate Governance Policies and Other Governance Measures; and
|
|
Ÿ
|
Whether the candidate has the specialized knowledge or expertise, such as financial or audit experience, necessary to satisfy membership requirements for committees where specialized knowledge or expertise may be desirable.
|
1.
|
As to each person whom the stockholder proposes for election or re-election as a director:
|
|
Ÿ
|
The name, age, business address and residence address of the person;
|
|
Ÿ
|
The principal occupation or employment of the person;
|
|
Ÿ
|
The class or series and number of shares of capital stock of Occidental which are owned beneficially or of record by the person; and
|
|
Ÿ
|
Any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to the Rules and Regulations of the Securities and Exchange Commission.
|
|
2.
|
As to the stockholder making the recommendation:
|
|
Ÿ
|
The name and address of record of such stockholder; and
|
|
Ÿ
|
The class or series and number of shares of capital stock of Occidental which are beneficially owned by the stockholder.
|
ANNUAL REPORT
|
EXHIBIT A:
|
CORPORATE GOVERNANCE POLICIES AND OTHER GOVERNANCE MEASURES
|
Ÿ
|
Has not been employed by Occidental within the last five years;
|
|
Ÿ
|
Has not been an employee or affiliate of any present or former internal or external auditor of Occidental within the last three years;
|
|
Ÿ
|
Has not received more than $60,000 in direct compensation from Occidental, other than director and committee fees, during the current fiscal year or any of the last three completed fiscal years;
|
|
Ÿ
|
Has not been an executive officer or employee of a company that made payments to, or received payments from, Occidental for property or services in an amount exceeding the greater of $1 million or 2 percent of such other company’s consolidated gross revenues during the current fiscal year or any of the last three completed fiscal years;
|
|
Ÿ
|
Has not been employed by a company of which an executive officer of Occidental has been a director within the last three years;
|
|
Ÿ
|
Is not affiliated with a not-for-profit entity that received contributions from Occidental exceeding the greater of $1 million or 2 percent of such charitable organization’s consolidated gross revenues during the current fiscal year or any of the last three completed fiscal years;
|
|
Ÿ
|
Has not had any of the relationships described above with an affiliate of Occidental; and
|
|
Ÿ
|
Is not a member of the immediate family of any person described above. An “immediate family member” includes a person’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law and anyone (other than domestic employees) who shares such person’s home.
|
Ÿ
|
Advise the Chairman or Executive Chairman as to an appropriate schedule of Board meetings and the information that shall be provided by management for Board consideration;
|
|
Ÿ
|
Approve the agendas for the Board and Committee meetings after consultation with the Chairman or Executive Chairman;
|
|
Ÿ
|
Recommend to the Chairman or Executive Chairman the retention of consultants who report directly to the Board;
|
|
Ÿ
|
Assist in assuring compliance with the corporate governance policies and recommend revisions to the policies;
|
|
Ÿ
|
Call, coordinate, develop the agenda for, and moderate executive sessions of, the independent directors at which no members of management are present;
|
Ÿ
|
Evaluate, along with the members of the Executive Compensation and Human Resources Committee and the other independent directors, the performance of the Executive Chairman and the Chief Executive Officer;
|
|
Ÿ
|
Communicate to the Executive Chairman and the Chief Executive Officer the views of the independent directors and the Board committees with respect to objectives set by the Board for management;
|
|
Ÿ
|
Serve as a liaison between the Board and stockholders, communicating their views to the Board; and
|
|
Ÿ
|
Consult with the Chairman or Executive Chairman and other members of the Board as to recommendations on membership and chairpersons of all the Board committees and discuss such recommendations with the Nominating and Corporate Governance Committee and the Board.
|