8-KMaterial Agreements

OCCIDENTAL PETROLEUM CORP /DE/ 8-K Report, Material Agreement (Apr 22, 2005)

Filed April 22, 2005For Securities:OXYOXY-WT

Summary

Occidental Petroleum Corporation (OXY) filed an 8-K on April 22, 2005, to report on a new policy regarding its equity awards burn rate. Effective from 2005 through 2007, the company's average burn rate for equity awards will be capped at the greater of 2% of outstanding shares or the mean burn rate of its Global Industry Classification Standards (GICS) Peer Group in the Energy sector (1010 Energy). This policy applies to shares issued under the 1996 Restricted Stock Plan for Non-Employee Directors, the 2001 Incentive Compensation Plan, and the 2005 Long-Term Incentive Plan. The burn rate calculation methodology is clearly defined, excluding cash-settled awards and incorporating a conversion factor for full value awards relative to options. This initiative appears to be aimed at managing equity dilution and aligning compensation practices with industry peers.

Key Highlights

  • 1New equity award burn rate policy implemented for 2005-2007.
  • 2Burn rate capped at the greater of 2% of outstanding shares or peer group average.
  • 3Policy applies to shares issued under specific equity incentive plans.
  • 4Detailed methodology for calculating burn rate provided.
  • 5Cash-settled awards are excluded from the burn rate calculation.
  • 6One full value share is equivalent to four option shares for calculation purposes.

Frequently Asked Questions

The main purpose of this 8-K filing is to inform investors about Occidental Petroleum's new policy on its equity awards burn rate for the period of 2005 through 2007. This policy aims to manage the dilution associated with equity compensation by setting a cap based on a percentage of outstanding shares and industry peer averages.

The company's prospective three-year average burn rate will not exceed the greater of 2% of its outstanding shares or the mean burn rate of its GICS Energy (1010) peer group. This policy is in effect for the years 2005, 2006, and 2007.

The burn rate calculation includes shares granted under the 1996 Restricted Stock Plan for Non-Employee Directors, the 2001 Incentive Compensation Plan, and the 2005 Long-Term Incentive Plan. This encompasses stock options, stock-settled stock appreciation rights, restricted stock (units), and performance shares that are earned and delivered or deferred. Awards settled in cash are explicitly excluded.

The filing specifies that for calculation purposes, one full value share is equivalent to four option shares. This conversion helps standardize the impact of different award types on the burn rate metric.