8-KLeadership ChangesExhibits & Filings

OCCIDENTAL PETROLEUM CORP /DE/ 8-K Report, Executive Changes (Apr 2, 2020)

Filed April 2, 2020For Securities:OXYOXY-WT

Summary

Occidental Petroleum Corporation (OXY) announced the adoption of an Executive Severance Plan on March 29, 2020, which will apply to its executive officers. This marks the company's first formal severance arrangement for this group. The plan aims to ensure executives can focus on their responsibilities without personal financial concerns, especially given the challenging industry conditions. The Severance Plan provides for cash severance (1.5x to 2x base salary plus bonus), a pro-rata bonus, continued welfare benefits for two years, accelerated vesting of long-term incentive awards (service-based portion), and outplacement services. Notably, the benefits are more generous for terminations occurring on or before December 31, 2021, reflecting recent executive salary reductions and a commitment to performance-based bonuses. The plan is designed to be competitive within the oil and gas sector and align with broader U.S. industry practices, while also adhering to the company's existing Golden Parachute Policy.

Key Highlights

  • 1Occidental Petroleum has implemented its first Executive Severance Plan for executive officers, effective March 29, 2020.
  • 2The plan provides for cash severance of 1.5x (or 2x for CEO) of base salary plus bonus upon termination without cause.
  • 3Severance benefits are more favorable for terminations occurring on or before December 31, 2021, accounting for recent salary cuts and performance-based bonus structures.
  • 4Eligible executives will receive continued welfare benefits for two years post-termination and accelerated vesting of service-based long-term incentive awards.
  • 5The plan is designed to be market-competitive and align with industry practices, ensuring executives can focus on their duties.
  • 6Severance benefits are contingent upon the executive executing a release of claims and adhering to restrictive covenants.
  • 7Payments are subject to the Company's Golden Parachute Policy and potential reductions to avoid excise taxes.

Frequently Asked Questions

The primary purpose is to provide a safety net for executive officers, allowing them to continue performing their duties without the distraction of personal financial concerns, particularly in light of current industry challenges. It aims to ensure stability and continuity in leadership.

The package includes cash severance (1.5x or 2x base salary plus bonus), a pro-rata bonus for the year of termination, two years of continued welfare benefits (medical, dental, life insurance), accelerated vesting of the service-based portion of long-term incentive awards, and up to nine months of outplacement services.

Yes, benefits are provided only in the event of termination without 'cause'. Executives must execute a release of claims against the company and abide by any restrictive covenants. The total severance cannot exceed the limits set by the company's Golden Parachute Policy unless stockholder approval is obtained. Payments may also be reduced to avoid excise taxes.

The more favorable terms for terminations on or before December 31, 2021, are a direct response to the company's decision to significantly reduce executive base salaries and its commitment to making annual bonuses contingent on actual performance, reflecting the challenging macroeconomic environment.