How is the interest rate determined for deferred compensation under the 2005 DCP?

The interest rate for amounts deferred under the 2005 DCP is set at the greater of (i) Moody's Long-Term Corporate Bond Index Monthly Average Corporates plus 3%, or (ii) the highest yield on Occidental's unsecured debt or preferred stock. The plan allows for potential reductions in this rate, but such changes are not effective for two years and the rate cannot fall below the highest yield on the company's unsecured debt or preferred stock.

What happens to company contributions to employee savings plans when an employee defers salary under the 2005 DCP?

If an employee's base salary deferrals under the 2005 DCP reduce the company's contribution to their Occidental Savings Plan, the company will contribute an equal amount to a 'savings plan restoration account' for that employee. Vesting in this restoration account follows the same schedule as under the original Savings Plan.

Do employees have voting rights or receive dividends on shares deferred under the 2005 DSP?

No, participants in the 2005 DSP do not have voting rights for deferred shares. However, they are entitled to 'dividend equivalents,' which can be paid in cash or as additional deferred shares, and adjustments are made to their holdings in the event of corporate actions like stock splits.

OXY/OXY-WT 8-K: Material Agreements

Q: What is the primary purpose of the new Occidental 2005 Deferred Compensation Plan (2005 DCP) and 2005 Deferred Stock Program (2005 DSP)?

The primary purpose of these plans is to provide eligible employees with options to defer the receipt of a portion of their compensation (salary and bonuses) and their equity awards (stock awards) to a future date. This allows for tax planning and potential long-term wealth accumulation for the participants.

Summary

Occidental Petroleum Corporation (OXY) filed an 8-K on October 20, 2004, reporting on the adoption of two new compensation plans: the Occidental 2005 Deferred Compensation Plan (2005 DCP) and the 2005 Deferred Stock Program (2005 DSP). These plans, approved by the Board of Directors on October 14, 2004, are designed to provide employees with options for deferring compensation and stock awards. The 2005 DCP allows selected employees to defer a significant portion of their base salary and bonuses, with deferral elections becoming irrevocable for the following calendar year. The deferred amounts are credited with interest based on a formula tied to long-term corporate bond yields and the company's debt. The plan also includes provisions for company contributions to a savings plan restoration account to offset any reduction in company contributions to the standard savings plan due to salary deferrals. Distributions are generally made in a lump sum or installments within the first 90 days of the year following retirement or termination, with specific provisions for death, disability, change in control, and a 6-month waiting period for key employees after termination (unless due to death or disability). The 2005 DSP offers alternate settlement options for employees holding qualifying restricted stock, performance stock, or restricted share unit awards. Employees can elect to defer settlement of these awards, provided it's done at least 12 months before vesting, unless a longer period is legally required. Deferred shares do not carry voting rights but are adjusted for corporate actions like stock splits. Participants have the option to receive dividend equivalents in cash or as additional deferred shares. Distributions of deferred shares typically occur within the first 90 days of the year following termination of employment, with options for lump sum or installment payments for retirees. Similar to the DCP, key employees face a 6-month waiting period post-termination.

Key Highlights

1OXY adopted the 2005 Deferred Compensation Plan (DCP) and 2005 Deferred Stock Program (DSP).
2The 2005 DCP allows employees to defer up to 75% of base salary and 100% of bonuses.
3Deferred compensation under the 2005 DCP accrues interest based on a formula linked to corporate bond yields and OXY's debt.
4The 2005 DCP includes a savings plan restoration account to compensate for reduced employer contributions.
5The 2005 DSP provides options for deferring settlement of restricted stock, performance stock, and restricted share units.
6Both plans outline distribution methods, timing (generally first 90 days post-termination/retirement), and include provisions for death, disability, and change in control.
7Key employees are subject to a 6-month waiting period for distributions upon termination, excluding death or disability.

OCCIDENTAL PETROLEUM CORP /DE/ 8-K Report, Material Agreement (Oct 20, 2004)

Summary

Key Highlights

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