What is the main purpose of this shareholder rights plan?

The primary purpose is to deter hostile takeovers and coercive acquisition tactics by making it more expensive for any single entity or group to acquire a controlling stake in Occidental Petroleum without the Board of Directors' approval. It aims to protect all shareholders by ensuring they receive appropriate compensation for any change in control.

When do these Rights become exercisable and what triggers them?

The Rights are not initially exercisable. They become exercisable upon the occurrence of a 'Distribution Date,' which is generally triggered when a person or group acquires beneficial ownership of 15% or more (20% for passive institutional investors) of Occidental's outstanding common stock, or if the Board becomes aware of such accumulation. This event is termed the accumulation of an 'Acquiring Person' status.

What happens if the Rights are triggered?

If triggered, holders of the Rights (excluding the acquiring person) will be entitled to purchase shares of Occidental Petroleum common stock with a market value of twice the exercise price of the Right. This action is designed to significantly dilute the ownership stake of the acquiring person, thereby deterring the takeover attempt.

Will this plan affect my current stock ownership?

Initially, no. The Rights are distributed to all stockholders of record as of March 23, 2020, and are attached to your existing common stock. They only become separately exercisable under specific hostile takeover scenarios. The plan is designed to protect the value of your investment in the long term.

OXY 8-K: Material Agreements, Shareholder Matters & More

Q: Is this plan permanent, and do shareholders have a say?

No, the plan is not permanent. The Rights Agreement will be submitted for shareholder approval at the 2020 annual meeting. If not approved, the Rights will expire. If approved, the Rights Agreement will generally expire in one year, unless redeemed earlier by the Board or upon specific corporate events.

Summary

Occidental Petroleum Corporation (OXY) announced on March 13, 2020, the adoption of a shareholder rights plan, commonly known as a 'poison pill.' This plan involves issuing one preferred share purchase right (a 'Right') for each outstanding share of common stock. These Rights are designed to deter hostile takeovers and coercive tactics by allowing existing shareholders to purchase preferred stock at a discounted price if a party acquires a significant stake (15% or 20% for passive institutional investors) without the board's approval. The primary objective is to protect stockholders from attempts to capitalize on current market volatility and macroeconomic conditions to gain control of the company on unfavorable terms. The plan is subject to shareholder approval at the 2020 annual meeting, and if not approved, the Rights will expire. If approved, the Rights Agreement will generally be in effect for one year. The adoption of this plan aims to provide the Board with sufficient time and leverage to make informed decisions and ensure any potential acquisition offers fair compensation to all stockholders.

Key Highlights

1Adoption of a shareholder rights plan ('poison pill') effective March 12, 2020.
2Dividend of one preferred share purchase right per outstanding common share declared.
3Rights become exercisable if an 'Acquiring Person' accumulates 15% (or 20% for passive institutional investors) of OXY's common stock without board approval.
4Upon triggering, Rights holders can purchase OXY common stock worth double the exercise price, causing significant dilution to the acquirer.
5The plan aims to protect against hostile takeovers, especially during periods of market volatility.
6The Rights Agreement and dividend are subject to approval by OXY's stockholders at the 2020 annual meeting.
7The Rights Agreement has an initial expiration date of March 11, 2021, or upon shareholder meeting outcome, and if approved, typically lasts one year.

OCCIDENTAL PETROLEUM CORP /DE/ 8-K Report, Material Agreement (Mar 13, 2020)

Summary

Key Highlights

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