8-KLeadership ChangesExhibits & Filings

OCCIDENTAL PETROLEUM CORP /DE/ 8-K Report, Executive Changes (Jul 21, 2009)

Filed July 21, 2009For Securities:OXYOXY-WT

Summary

Occidental Petroleum Corporation (OXY) filed an 8-K on July 21, 2009, disclosing the authorization of incentive awards under its 2005 Long-Term Incentive Plan for its executive officers. These awards, granted on July 15, 2009, are performance-based and designed to align executive compensation with the company's future performance. The grants include a Return on Equity Incentive (ROEI) and a Total Shareholder Return Incentive (TSRI), with specific performance metrics and vesting conditions tied to defined periods.

Key Highlights

  • 1Executive officers received performance-based, at-risk incentive awards under the 2009 Long-Term Incentive Plan.
  • 2Awards include a Return on Equity Incentive (ROEI) payable in cash, contingent on cumulative Return on Equity over a three-year period (July 1, 2009 - June 30, 2012).
  • 3A minimum cumulative Return on Equity of 33% is required for any ROEI payout, with a maximum payout of 200% of the target for cumulative ROE of 54% or higher.
  • 4Awards also include a Total Shareholder Return Incentive (TSRI) denominated in performance shares, with payout determined by a four-year comparison against a peer group of major oil and gas companies (July 15, 2009 - July 14, 2013).
  • 5TSRI payouts range from 0% to 200% of target performance shares, payable 60% in stock and 40% in cash, with a forfeiture condition if OXY's TSR underperforms the S&P 500.
  • 6Dividend equivalents are paid on target performance shares during the TSRI performance period.
  • 7Awards are subject to forfeiture upon termination for cause or voluntary termination by the employee; pro-rata payouts may be forfeited in cases of death, disability, retirement, or termination for convenience.
  • 8In the event of a Change in Control, both ROEI and TSRI awards will vest at their target amounts.

Frequently Asked Questions

The incentive awards consist of two main components: a Return on Equity Incentive (ROEI), which is cash-based, and a Total Shareholder Return Incentive (TSRI), which is equity-based and settled in stock and cash. Both are designed to be performance-based and at-risk.

The ROEI award will vest and become payable after a three-year performance period (July 1, 2009, to June 30, 2012). Payout depends on the company's cumulative Return on Equity over this period. A minimum cumulative ROE of 33% is required for any payout, with payouts increasing up to 200% of the target amount for a cumulative ROE of 54% or higher.

The TSRI is measured over a four-year period (July 15, 2009, to July 14, 2013) by comparing Occidental Petroleum's total shareholder return against a defined peer group of companies. The payout can range from 0% to 200% of the target performance shares, paid 60% in stock and 40% in cash. A critical condition is that OXY's total shareholder return must outperform the S&P 500 Index to receive payouts above the target level.

Awards are generally forfeited if an executive is terminated for cause or resigns voluntarily. In cases of death, disability, retirement, or termination for the company's convenience, a pro-rata portion of the award may be forfeited. However, in the event of a Change in Control, both ROEI and TSRI awards will vest immediately at their target amounts.