8-KLeadership ChangesShareholder MattersCorporate Changes+1

OCCIDENTAL PETROLEUM CORP /DE/ 8-K Report, Executive Changes (Jun 3, 2020)

Filed June 3, 2020For Securities:OXYOXY-WT

Summary

Occidental Petroleum Corp. (OXY) filed an 8-K on June 3, 2020, detailing two significant corporate actions. First, the company adopted an Executive Change in Control Severance Plan (CIC Severance Plan) effective May 29, 2020. This plan provides enhanced severance benefits to executive officers in the event of a qualifying termination within two years following a change in control, aiming to ensure executive focus during potential transitions. Benefits include substantial cash severance (up to 2.99 times salary plus target bonus for the CEO), pro-rata bonus, continued welfare benefits for two years, accelerated vesting of long-term incentive awards, and outplacement services. Second, the filing reports on outcomes from the 2020 Annual Meeting of Shareholders held on May 29, 2020. Key shareholder approvals include an increase in authorized shares of common stock, amendments to the company's charter to facilitate shareholder actions by written consent and lower the threshold for calling special meetings, and the approval of the issuance of common stock underlying the Berkshire Hathaway warrant. Additionally, shareholders ratified the appointment of KPMG as independent auditor and approved the company's long-term incentive plan and a Rights Agreement.

Key Highlights

  • 1Occidental Petroleum adopted an Executive Change in Control Severance Plan (CIC Severance Plan) offering enhanced benefits to executives following a change in control.
  • 2The CIC Severance Plan provides up to 2.99 times salary plus target bonus for the CEO in cash severance, along with other benefits like accelerated vesting and continued welfare coverage.
  • 3Shareholders approved an increase in the number of authorized shares of common stock.
  • 4Amendments to the company's charter were approved to lower the threshold for shareholders to request special meetings (from 25% to 15%) and to modify procedures for shareholder actions by written consent.
  • 5Shareholder approval was granted for the issuance of common stock related to the Berkshire Hathaway warrant.
  • 6KPMG was ratified as the independent auditor for the year ending December 31, 2020.
  • 7The company's 2020 Annual Meeting saw shareholders elect all eleven director nominees and approve the company's Rights Agreement.

Frequently Asked Questions

The purpose of the CIC Severance Plan is to provide enhanced severance benefits to executive officers upon qualifying terminations within two years following a Change in Control. This is intended to allow executives to continue to exercise their judgment and perform their responsibilities without the potential for distraction that can arise from concerns regarding their personal circumstances in the event of a Change in Control.

Shareholders approved amendments to the Restated Certificate of Incorporation to increase the number of authorized shares of common stock, implement changes to the process for shareholder actions by written consent, and lower the threshold for shareholders to request a special meeting from 25% to 15% of outstanding shares.

The severance benefits include cash severance equal to 2.00 times (or 2.99 times for the CEO) the executive's base salary plus target annual bonus, a pro-rata portion of the annual bonus, continued welfare benefits (medical, dental, life) for two years, accelerated vesting of all outstanding long-term incentive awards, and outplacement services for up to nine months.

While most proposals received strong majority support, the advisory vote to approve named executive officer compensation (Say-on-Pay) and the proposal to approve the company's Amended and Restated 2015 Long-Term Incentive Plan received approximately 76% and 77% 'For' votes respectively, indicating a notable minority of opposition. The proposals regarding shareholder action by written consent and the threshold for special meetings also saw a larger percentage of 'Against' votes compared to other charter amendments.