UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

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Occidental Petroleum Corporation FPO 2018 Proxy Statement Notice of Annual Meeting of Stockholders Annual Meeting | Friday, May 4, 2018 Occidental Petroleum Conference Center | 5 Greenway Plaza, Houston, Texas

 

 

 

 

 

DEAR STOCKHOLDERS,

 

On behalf of the Board of Directors, we are pleased to invite you to attend Occidental’s 2018 Annual Meeting of Stockholders, which will be held at the Occidental Petroleum Conference Center, 5 Greenway Plaza, Houston, Texas 77046, on Friday, May 4, 2018, at 9:00 a.m. The meeting will include a report on operations and an opportunity for you to ask questions.

 

2017 was a year of performance, innovation and growth for Occidental. We finished the year with the highest-quality portfolio of assets in the company’s nearly 100-year history and continued to deliver on our value proposition of dividend and moderate production growth. We also implemented a strategic cash flow breakeven plan, positioning our company for sustained annual production growth in a lower price environment.

 

As part of our commitment to strong corporate governance practices, our senior management and Board continued to engage with Occidental’s stockholders and other stakeholders. This past fall, Occidental met with a broad range of investors and other stakeholders to discuss our long-term value proposition; environmental, social and governance issues; the executive compensation program; and matters related to board composition. Several of our independent directors participated in many of these engagements. These meetings were helpful in shaping our 2018 report, “Climate-Related Risks and Opportunities: Positioning for a Lower-Carbon Economy,” which is available for download at www.oxy.com/SocialResponsibility. More information regarding the report and other outcomes of our recent engagement efforts are detailed in this proxy statement.

 

A meeting agenda and details follow, as well as voting instructions. We encourage you to vote your shares promptly, and thank you for your continued support of Occidental.

 

Sincerely,

 

Vicki Hollub President and Chief Executive Officer

Eugene L. Batchelder Chairman of the Board

 

 

 

 

 

 

 

 

2018 ANNUAL MEETING

 

■ Notice of Annual Meeting of Stockholders

 

Occidental’s 2018 Annual Meeting of Stockholders will be held at 9:00 a.m. on Friday, May 4, 2018, at the Occidental Petroleum Conference Center, 5 Greenway Plaza, Houston, Texas 77046.

 

At the meeting, stockholders will act on the following matters and consider all other matters properly brought before the meeting:

  

		■	To elect the 11 directors named in the proxy statement to serve until the 2019 Annual Meeting;
		■	To act on an advisory vote to approve named executive officer compensation;
		■	To approve the Second Amendment to the 2015 Long-Term Incentive Plan (2015 LTIP);
		■	To ratify the selection of KPMG LLP (KPMG) as Occidental’s independent auditor for the fiscal year ending December 31, 2018; and
		■	To transact such other business as may properly come before the meeting.

  

A Notice of Internet Availability or proxy card is being mailed beginning on or about March 22, 2018 to each stockholder of record as of the close of business on March 9, 2018, which is the record date for the determination of stockholders entitled to receive notice of, attend and vote at the meeting. Admittance to the meeting will require an admission ticket. Please see ”Admission to the Annual Meeting” on page 64 for details.

 

Whether you plan to attend the meeting or not, we encourage you to vote by following the internet or telephone instructions provided in the Notice of Internet Availability. If you received a paper copy of the proxy materials or a voting instruction form, you may also vote by marking, signing and returning the proxy card or voting instruction form in the envelope provided. This will ensure that your shares are represented and will save Occidental additional expenses of soliciting proxies.

 

By Order of the Board,

 

 

 

H. Elliott Heide

Vice President and Corporate Secretary

 

Occidental Petroleum Corporation
5 Greenway Plaza, Suite 110
Houston, Texas 77046

 

March 22, 2018

 

 

 

 

 

TABLE OF CONTENTS

 

PROXY STATEMENT SUMMARY	5
PROPOSAL 1:   ELECTION OF DIRECTORS	9
Director Nominations	9
About the Director Nominees	9
Summary of Director Nominee Core Competencies and Composition Highlights	16
CORPORATE GOVERNANCE	17
Corporate Governance Highlights	17
Stockholder Engagement	17
Board Evaluation Process	18
Director Selection and Recruitment	18
Board of Directors and its Committees	18
Other Governance Matters	20
COMPENSATION DISCUSSION AND ANALYSIS	22
Overview	22
Highlights of Executive Compensation Program Features	22
Say-on-Pay Results and Stockholder Engagement	23
Recent Executive Compensation Program Changes	23
Overview of the 2017 Compensation Program	24
Executive Compensation Program Objectives	24
Elements of the 2017 Compensation Program	25
Participants in the Compensation Decision-Making Process	28
Individual Compensation Considerations	30
Other Compensation and Benefits	34
Additional Compensation Policies and Practices	34
Risk Assessment of Compensation Policies and Practices	36
Compensation Committee Report	36
EXECUTIVE COMPENSATION	37
Summary Compensation Table	37
Grants of Plan-Based Awards	39
Outstanding Equity Awards	41
Stock Vested in 2017	44
Nonqualified Deferred Compensation	44
Potential Payments upon Termination or Change in Control	45
Pay Ratio	48
NON-EMPLOYEE DIRECTOR COMPENSATION	49
Director Compensation Program	49
Compensation of Directors Table	50
Stock Ownership Guidelines	50
SECURITY OWNERSHIP	51
Certain Beneficial Owners and Management	51
Section 16(a) Beneficial Ownership Reporting Compliance	52
PROPOSAL 2:      ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION	53
PROPOSAL 3:      APPROVAL OF THE SECOND AMENDMENT TO THE 2015 LONG-TERM INCENTIVE PLAN	54
Description of the 2015 LTIP	55
Certain Federal Income Tax Consequences	59
PROPOSAL 4:      RATIFICATION OF SELECTION OF KPMG AS INDEPENDENT AUDITOR	62
Audit Related Matters	62
Ratification of Selection of Independent Auditor	62
Report of the Audit Committee	63
GENERAL INFORMATION	64
Information Available Online	64
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on May 4, 2018	64
Admission to the Annual Meeting	64
Voting Instructions and Information	64
Stockholder Proposals for the 2019 Annual Meeting of Stockholders	66
Nominations for Directors for Term Expiring in 2019	66
Annual Report	67
ANNEX A:              2015 LONG-TERM INCENTIVE PLAN	68
ANNEX B:              FIRST AMENDMENT TO THE 2015 LONG-TERM INCENTIVE PLAN	86
ANNEX C:              SECOND AMENDMENT TO THE 2015 LONG-TERM INCENTIVE PLAN	87

 

 

 

 

 

 

 

 

 

 

 

PROPOSAL 1:

ELECTION OF DIRECTORS

 

Director Nominations

 

The Board is committed to recruiting and nominating directors for election who will collectively provide the Board with the necessary diversity of skills, backgrounds and experiences to meet Occidental’s ongoing needs and support oversight of our business strategy and priorities. In recommending candidates for election to the Board, the Governance Committee evaluates a candidate’s character; judgment; their skill set and experience in light of Occidental’s needs; independence; other time commitments, including other public and private company board memberships; and any other factors that the Governance Committee deems relevant. In addition, in determining whether to recommend incumbent directors for re-election to the Board, the Governance Committee also reviews and considers the director’s board and committee meeting attendance; the level of support that the director’s nomination received at the most recent annual stockholders’ meeting; and the well-roundedness of the Board as a whole.

 

In 2018, the Governance Committee recommended to the Board, and the Board approved, the nomination of the eleven individuals identified below for election as directors. Unless you specify differently, proxies received will be voted FOR Spencer Abraham, Howard I. Atkins, Eugene L. Batchelder, John E. Feick, Margaret M. Foran, Carlos M. Gutierrez, Vicki Hollub, William R. Klesse, Jack B. Moore, Avedick B. Poladian and Elisse B. Walter to serve for a one-year term ending at the 2019 Annual Meeting, but in any event, until his or her successor is elected and qualified, unless ended earlier due to his or her death, resignation, disqualification or removal from office.

 

About the Director Nominees

 

All of the director nominees are currently directors of Occidental who were elected by stockholders at the 2017 Annual Meeting. In the event any nominee should be unavailable to serve at the time of the meeting, the proxies may be voted for a substitute nominee selected by the Board of Directors, or the Board of Directors may reduce the number of directors to eliminate the vacancy.

 

Biographical information with respect to each of the director nominees, together with a list of competencies that led to the conclusion that such person should serve as a director, is presented below. An overview of the core competencies of each director nominee are featured in a skills matrix on page 16.

 

The Board of Directors recommends a vote FOR each of the director nominees.

 

Occidental Petroleum Corporation   9

 

 

		SPENCER ABRAHAM Director since 2005 | Age 65 | Independent Committees of the Board: ■ Environmental, Health and Safety ■ Executive Compensation Current Public Company Directorships: ■ Chairman of the Board of Uranium Energy Corp. ■ PBF Energy Inc. ■ NRG Energy, Inc. ■ Two Harbors Investment Corp.		Core Competencies: ■ Corporate Governance ■ Environmental, Health, Safety & Sustainability ■ Executive Compensation ■ Government, Legal & Regulatory ■ International Experience ■ Risk Management ■ Technology/Cyber Security
	Secretary Abraham is Chairman and Chief Executive Officer of The Abraham Group, an international strategic consulting firm based in Washington, D.C. He represented Michigan in the United States Senate for six years, where he authored 22 pieces of legislation, including several pieces of ground-breaking technology legislation. President George W. Bush selected him as the tenth Secretary of Energy in 2001 and during his tenure at the Energy Department from 2001 through January 2005, he developed policies and regulations to ensure the nation’s energy security, was responsible for the U.S. Strategic Petroleum Reserve, oversaw domestic oil and gas development policy and developed relationships with international governments. Secretary Abraham is a member of the Board of Trustees of the California Institute of Technology; a member of the board of C3-IoT, a private technology company; the Chairman of the American Task Force for Lebanon; and a former board member of iCX Technology, a manufacturer of high-tech security products. Secretary Abraham holds a Juris Doctor degree from Harvard Law School and is the author of “Lights Out!: Ten Myths About (and Real Solutions to) America’s Energy Crisis.”

 

		HOWARD I. ATKINS Director since 2010 | Age 67 | Independent Committees of the Board: ■  Audit ■  Environmental, Health and Safety Former Public Company Directorships (within the last 5 years): ■ Ingram Micro Inc.		Core Competencies: ■ Finance/Capital Markets ■ Financial Reporting/Accounting Experience ■ Government, Legal & Regulatory ■ International Experience ■ Investor Relations ■ Public Company Executive Experience ■ Risk Management
	Mr. Atkins retired as the Senior Executive Vice President and Chief Financial Officer of Wells Fargo & Company, an international banking and financial services company, where he was responsible for Wells Fargo’s financial management functions, investment portfolios, investor relations, capital management and corporate properties functions from 2001 to 2011. A 37-year veteran of the financial services industry, Mr. Atkins previously served as Executive Vice President and Chief Financial Officer of New York Life Insurance Company; Chief Financial Officer of Midlantic Corporation; and Corporate Treasurer of Chase Manhattan Bank.

 

2018 Notice of Annual Meeting and Proxy Statement     10

 

 

		EUGENE L. BATCHELDER Director since 2013 | Age 70 | Independent Chairman since 2015 Committees of the Board: ■ Corporate Governance, Nominating and Social Responsibility		Core Competencies: ■ Executive Compensation ■ Finance/Capital Markets ■ Financial Reporting/Accounting Experience ■ Industry Background ■ Public Company Executive Experience ■ Risk Management ■ Technology/Cyber Security
	Mr. Batchelder retired in 2012 as the Senior Vice President and Chief Administrative Officer at ConocoPhillips, an integrated global energy company. In this role, from 2009 until his retirement, he was responsible for global shared services, human resources, facilities, information technology, security, aviation, executive services, and corporate affairs, which included investor relations, corporate communications and contributions. Mr. Batchelder served as Senior Vice President and Chief Information Officer of ConocoPhillips from 2002 to 2009. Prior to the merger of Conoco and Phillips Petroleum in 2002, Mr. Batchelder was promoted to increasingly senior positions within Phillips Petroleum companies, including information technology and financial management positions. Mr. Batchelder is a Director of Laurel’s Army Foundation, a past trustee and governor of the Oklahoma State University Foundation, and past president and board member of the Oklahoma State University Alumni Association. Mr. Batchelder holds a bachelor’s degree in Accounting from Oklahoma State University and is a certified public accountant (inactive).

 

		JOHN E. FEICK Director since 1998 | Age 74 | Independent Committees of the Board: ■ Environmental, Health and Safety (Chair) ■ Corporate Governance, Nominating and Social Responsibility ■ Executive Compensation		Core Competencies: ■ Corporate Governance ■ Environmental, Health, Safety & Sustainability ■ Executive Compensation ■ Finance/Capital Markets ■ Industry Background ■ Public Company Executive Experience ■ Risk Management
	Mr. Feick is the Executive Chairman and a significant stockholder of Matrix Solutions Inc., a provider of environmental remediation and reclamation services. Until 2011, he was Chairman and a significant stockholder of Kemex Engineering Services, Ltd., which offers engineering and design services to the petrochemical, refining and gas processing industries. From 1984 to 1994, Mr. Feick was President and Chief Operating Officer of Novacor Chemicals, a subsidiary of Nova Corporation. He previously served as Chairman of the Board of Directors of Oak Point Energy Ltd., an oil sands exploration and development company, and was a director of Veresen Inc., an energy infrastructure company, and Graham Construction. Mr. Feick holds a Bachelor of Science degree in chemical engineering from Queen’s University and a doctorate degree in chemical engineering from the University of Alberta.

 

Occidental Petroleum Corporation     11

 

 

		MARGARET M. FORAN Director since 2010 | Age 63 | Independent Committees of the Board: ■ Executive Compensation (Chair) ■ Corporate Governance, Nominating and Social Responsibility		Core Competencies: ■ Corporate Governance ■ Environmental, Health, Safety & Sustainability ■ Executive Compensation ■ Government, Legal & Regulatory ■ Investor Relations ■ Public Company Executive Experience ■ Risk Management
	Ms. Foran is Chief Governance Officer, Senior Vice President and Corporate Secretary of Prudential Financial, Inc., a global provider of insurance, investment management and financial products. Prior to joining Prudential, she was Executive Vice President, General Counsel and Corporate Secretary at Sara Lee Corporation from 2008 to 2009; Senior Vice President, Associate General Counsel and Corporate Secretary at Pfizer Inc. from 1997 to 2008; and Vice President and Assistant General Counsel at J.P. Morgan & Co. Ms. Foran is a former director of The MONY Group Inc. and MONY Life Insurance Company. She served as Co-Chair and a director of the Council of Institutional Investors (CII) and Co-Chair of the CII International Corporate Governance Committee. She is the former Chair of the American Bar Association Committee on Corporate Governance. Ms. Foran is the former Chair of the Coordinating Committee of the Business Roundtable Corporate Governance Task Force. She previously served two terms on the Standing Advisory Group of the Public Company Accounting Oversight Board (PCAOB) and is a member of the Economic Club of New York. Ms. Foran is a Trustee of the Committee for Economic Development, as well as a member of the Notre Dame Law School Advisory Council. Ms. Foran has a Juris Doctor degree from the University of Notre Dame.

 

		CARLOS M. GUTIERREZ Director since 2009 | Age 64 | Independent Committees of the Board: ■ Corporate Governance, Nominating and Social Responsibility (Chair) ■ Audit Current Public Company Directorships: ■ MetLife, Inc. ■ Time Warner Inc.		Core Competencies: ■ Executive Compensation ■ Financial Reporting/Accounting Experience ■ Government, Legal & Regulatory ■ International Experience ■ Investor Relations ■ Public Company Executive Experience ■ Risk Management
	Secretary Gutierrez is Co-Chair of Albright Stonebridge Group, a commercial diplomacy and strategic advisory firm. Prior to joining Albright Stonebridge in April 2013, Secretary Gutierrez was Vice Chairman of the Institutional Clients Group and a member of the Senior Strategic Advisory Group at Citigroup Inc. from 2011 to February 2013. He joined Citigroup from communications and public affairs consulting firm APCO Worldwide Inc., where he was Chairman of the Global Political Strategies division in 2010. He served as U.S. Secretary of Commerce from February 2005 to January 2009, where he worked with foreign government and business leaders to advance economic relationships and enhance trade. Prior to his government service, Secretary Gutierrez was with Kellogg Company, a global manufacturer and marketer of well-known food brands, for nearly 30 years. After assignments in Latin America, Canada, Asia, and the United States, he became President and Chief Executive Officer in 1999 and Chairman of the Board in 2000, positions he held until 2005. Secretary Gutierrez currently serves as an external director on the U.S. Board of PwC, a private professional services firm, and Viridis Technologies, a private technology company. He is Chairman of the National Foreign Trade Council, a member of the Human Freedom Advisory Council at the George W. Bush Institute and Chairman of the Board of Trustees of the Meridian International Center. He is also a co-founder of The Dream.US, a scholarship fund for undocumented students.

 

2018 Notice of Annual Meeting and Proxy Statement     12

 

 

		VICKI HOLLUB Director since 2015 | Age 58 President and Chief Executive Officer		Core Competencies: ■ Environmental, Health, Safety & Sustainability ■ Financial Reporting/Accounting Experience ■ Government, Legal & Regulatory ■ Industry Background ■ International Experience ■ Public Company Executive Experience ■ Risk Management
	Ms. Hollub became President and Chief Executive Officer of Occidental Petroleum Corporation in April 2016. She has been a member of Occidental’s Board of Directors since 2015. Ms. Hollub joined Occidental more than 30 years ago and has held a variety of management and technical positions with responsibilities on three continents, including roles in the United States, Russia, Venezuela and Ecuador. Most recently, she served as Occidental’s President and Chief Operating Officer, overseeing the company’s oil and gas, chemical and midstream operations. Ms. Hollub previously was Senior Executive Vice President, Occidental Petroleum Corporation, and President, Oxy Oil and Gas, where she was responsible for operations in the U.S., the Middle East region and Latin America. Prior to that, she held a variety of leadership positions, including Executive Vice President, Occidental Petroleum Corporation and President, Oxy Oil and Gas, Americas; Vice President, Occidental Petroleum Corporation and Executive Vice President, U.S. Operations, Oxy Oil and Gas; and Executive Vice President, California Operations. Ms. Hollub serves on the boards of the American Petroleum Institute and Khalifa University for Science and Technology in Abu Dhabi. She is the U.S. chair for the U.S.- Colombia Business Council. A graduate of the University of Alabama, Ms. Hollub holds a Bachelor of Science in Mineral Engineering. She was inducted into the University of Alabama College of Engineering 2016 class of Distinguished Engineering Fellows.

 

		WILLIAM R. KLESSE Director since 2013 | Age 71 | Independent Committees of the Board: ■ Environmental, Health and Safety ■ Executive Compensation Current Public Company Directorships: ■ MEG Energy Former Public Company Directorships (within the last 5 years): ■ Valero Energy Corporation		Core Competencies: ■ Executive Compensation ■ Finance/Capital Markets ■ Financial Reporting/Accounting Experience ■ Industry Background ■ Investor Relations ■ Public Company Executive Experience ■ Risk Management
	Mr. Klesse is the former Chief Executive Officer and former Chairman of the Board of Valero Energy Corporation (Valero), an international manufacturer and marketer of transportation fuels, other petrochemical products and power. He joined the Valero board as Vice Chairman in 2005 and served as Chairman of the Board from 2007 until his retirement in December 2014. From 2006 to May 2014, he served as Chief Executive Officer of Valero and served as President from 2008 to 2013. From 2003 to 2005, Mr. Klesse was Valero’s Executive Vice President and Chief Operating Officer. Prior to that, he served as Executive Vice President of Refining and Commercial Operations following Valero’s 2001 acquisition of Ultramar Diamond Shamrock Corporation, where he had been Executive Vice President of the company’s refining operations. Mr. Klesse began his 40-plus year career in the energy industry at Diamond Shamrock Corporation, which merged with Ultramar Corporation in 1996. Mr. Klesse is a trustee of the Texas Biomedical Research Institute and United Way of San Antonio and Bexar County and serves on the Advisory Board of the San Antonio Food Bank. Mr. Klesse holds a bachelor’s degree in Chemical Engineering from the University of Dayton and a Master of Business Administration with an emphasis in Finance from West Texas A&M University.

 

Occidental Petroleum Corporation     13

 

 

		JACK B. MOORE   Director since 2016 | Age 64 | Independent Committees of the Board: ■ Environmental, Health and Safety ■ Executive Compensation Current Public Company Directorships: ■ KBR Inc. ■ ProPetro Holding Corp. ■ Rowan Companies plc Former Public Company Directorships (within the last 5 years): ■ Cameron International Corporation		Core Competencies: ■ Environmental, Health, Safety & Sustainability ■ Executive Compensation ■ Financial Reporting/Accounting Experience ■ Industry Background ■ International Experience ■ Public Company Executive Experience ■ Risk Management
	Mr. Moore most recently served as President and Chief Executive Officer of Cameron International Corporation from April 2008 to October 2015 and served as Chairman of the Board of Cameron from May 2011 until its acquisition by Schlumberger in April 2016. Mr. Moore served as Cameron’s President and Chief Operating Officer from January 2007 to April 2008. Mr. Moore joined Cameron in 1999 and, prior to that, held various management positions at Baker Hughes Incorporated, where he was employed for over 20 years. Mr. Moore actively serves in leadership positions within the Petroleum Equipment and Services Association, the University of Houston, the United Way of Greater Houston and Memorial Assistance Ministries. Mr. Moore is a graduate of the University of Houston with a B.B.A. degree and attended the Advanced Management Program at Harvard Business School.

 

		AVEDICK B. POLADIAN Director since 2008 | Age 66 | Independent Committees of the Board: ■ Audit (Chair) ■ Corporate Governance, Nominating and Social Responsibility Current Public Company Directorships: ■ California Resources Corporation ■ Public Storage ■ Western Asset Management Company Funds		Core Competencies: ■ Corporate Governance ■ Executive Compensation ■ Finance/Capital Markets ■ Financial Reporting/Accounting Experience ■ Government, Legal & Regulatory ■ Risk Management ■ Technology/Cyber Security
	Mr. Poladian is a director and the former Executive Vice President and Chief Operating Officer of Lowe Enterprises, Inc., a privately-held diversified national real estate company active in commercial, residential and hospitality property investment, management and development. Mr. Poladian served in this position from December 2002 to December 2016, and is currently an advisor to the company. During his tenure as Chief Operating Officer, Mr. Poladian oversaw human resources, risk management, construction, finance and legal functions across the firm. Mr. Poladian was with Arthur Andersen from 1974 to 2002 becoming a Partner in 1984 and Managing Partner, Pacific Southwest in 1989, and is a certified public accountant (inactive). He is a past member of the Young Presidents Organization, and member of the California Society of CPAs, and the American Institute of CPAs. Mr. Poladian was appointed to the California State Board of Accountancy and served for nine years, and is a former Trustee of Loyola Marymount University. Mr. Poladian is currently Director Emeritus of the YMCA of Metropolitan Los Angeles, a member of the Board of Councilors of the University of Southern California Sol Price School of Public Policy, and a member of the Board of Advisors of the Ronald Reagan UCLA Medical Center. Mr. Poladian holds a Bachelor of Science degree in Accounting from Loyola Marymount University.

 

2018 Notice of Annual Meeting and Proxy Statement     14

 

 

		ELISSE B. WALTER Director since 2014 | Age 67 | Independent Committees of the Board: ■ Audit ■ Environmental, Health and Safety		Core Competencies: ■ Corporate Governance ■ Environmental, Health, Safety & Sustainability ■ Finance/Capital Markets ■ Financial Reporting/Accounting Experience ■ Government, Legal & Regulatory ■ Investor Relations ■ Risk Management
	Ms. Walter was appointed Commissioner of the U.S. Securities and Exchange Commission (SEC) by President George W. Bush, and served in that capacity from 2008 until 2013. President Barack Obama designated her as the 30th Chairman of the SEC in December 2012. Prior to her appointment as an SEC Commissioner, she was with the Financial Industry Regulatory Authority (FINRA) and its predecessor, the National Association of Securities Dealers (NASD), from 1996 to 2008. She served as Senior Executive Vice President, Regulatory Policy and Programs for FINRA and held the comparable position at NASD before its 2007 consolidation with NYSE Member Regulation. Earlier in her career, she served as the General Counsel of the Commodity Futures Trading Commission (CFTC) from 1994 to 1996 and as Deputy Director of the SEC Division of Corporation Finance from 1986 to 1994. Among the honors Ms. Walter has received are the Presidential Rank Award (Distinguished), the ASECA William O. Douglas Award, the SEC Chairman’s Award for Excellence and the Federal Bar Association’s Philip A. Loomis, Jr. and Manuel F. Cohen Awards. She is a member of the Academy of Women Achievers of the YWCA of the City of New York and the DirectWomen Institute. She serves on the SASB Foundation Board of Directors; the Board of Directors of the National Women’s Law Center; the Board of Directors of the FINRA Investor Education Foundation; the Board of Governors of FINRA; and as a member of the Securities and Exchange Commission’s Investor Advisory Committee and Fixed Income Market Structure Advisory Committee. Ms. Walter holds a B.A. in Mathematics, cum laude, from Yale University and a J.D., cum laude, from Harvard Law School.

 

Occidental Petroleum Corporation     15

 

 

Summary of Director Nominee Core Competencies and Composition Highlights

 

The following chart summarizes the competencies that the Board considers valuable to effective oversight of the Company, and illustrates how the current Board members individually and collectively represent these key competencies. The lack of an indicator for a particular item does not mean that the director does not possess that qualification, skill or experience. We look to each director to be knowledgeable in these areas; rather, the indicator represents that the item is a core competency that the director brings to the Board.

 

Abraham Atkins Batchelder Feick Foran Gutierrez Hollub Klesse Moore Poladian Walter CORPORATE GOVERNANCE contributes to the Board’s understanding of best practices in corporate governance matters • • • • • ENVIRONMENTAL, HEALTH, SAFETY & SUSTAINABILITY contributes to the Board’s oversight and understanding of EHS and sustainability issues and their relationship to the company’s business and strategy • • • • • • EXECUTIVE COMPENSATION contributes to the Board’s ability to attract, motivate and retain executive talent • • • • • • • • FINANCE/CAPITAL MARKETS valuable in evaluating Occidental’s financial statements, capital structure and financial strategy (dividends/stock repurchases/financing) • • • • • • FINANCIAL REPORTING/ACCOUNTING EXPERIENCE critical to the oversight of the company’s financial statements and financial reports • • • • • • • • GOVERNMENT, LEGAL & REGULATORY contributes to the Board’s ability to interpret regulations and understand complex legal matters and public policy issues • • • • • • • INDUSTRY BACKGROUND contributes to a deeper understanding of our business strategy, operations, key performance indicators and competitive environment • • • • • INTERNATIONAL EXPERIENCE critical to cultivating and sustaining business and governmental relationships internationally and providing oversight of our multinational operations • • • • • INVESTOR RELATIONS contributes to the Board’s understanding of investor concerns and perceptions • • • • • PUBLIC COMPANY EXECUTIVE EXPERIENCE contributes to the Board’s understanding of operations and business strategy and demonstrated leadership ability • • • • • • • • RISK MANAGEMENT contributes to the identification, assessment and prioritization of risks facing the company • • • • • • • • • • • TECHNOLOGY/CYBER SECURITY contributes to the Board’s understanding of information technology and cyber security risks • • •

  

INDEPENDENCE			TENURE			DIVERSITY
Occidental requires that at least two-thirds of its Board members must be independent. The Board has determined that all director nominees, other than Ms. Hollub, meet the independence standards set by the New York Stock Exchange (NYSE).			The average tenure of the director nominees is approximately eight years, which reflects a balance of company experience and new perspectives.			The Board is committed to achieving a diverse and broadly inclusive membership. Four of our 11 director nominees are diverse, based on gender and ethnicity.

 

2018 Notice of Annual Meeting and Proxy Statement  16

 

 

CORPORATE GOVERNANCE

 

The Board’s Corporate Governance Policies establish Occidental’s governance framework. The Corporate Governance Policies address the structure and operation of the Board of Directors, including matters related to director independence; retirement; outside board memberships; the role of the Board’s Independent Chairman; director stock ownership; and Board and Committee performance evaluations. In addition to the Corporate Governance Policies, the Board has established other stand-alone governance policies, such as a policy on stockholder rights plans, a confidential voting policy, a human rights policy and an independent compensation consultant policy. The Corporate Governance Policies are reviewed at least annually and are updated periodically, along with other governance policies, in light of changing regulations, evolving best practices and stockholder feedback.

 

Corporate Governance Highlights

 

Relating to the Board
	Independent Chairman of the Board			Annual evaluations of the Board, each committee, and individual directors
	Annual elections of the entire Board by majority votes cast in an uncontested election			Director retirement age policy of 75
	Mandatory resignation if a majority vote is not received in an uncontested election			Meaningful director stock ownership guidelines
	Demonstrated commitment to Board refreshment			Board committees comprised entirely of independent directors
Relating to Stockholder Rights
	Ability of stockholders to call a special meeting			Confidential Voting Policy
	Ability of stockholders to act by written consent			No stockholder rights (poison pill) or similar plan
	Stockholder right to proxy access			Nominating Committee Policy for stockholder-recommended director nominees
	Biannual stockholder engagement program			No super-majority voting requirements

 

Stockholder Engagement

 

Occidental is committed to regular and transparent communication and engagement with its stockholders and other stakeholders. Twice annually, Occidental reaches out to engage with stockholders collectively representing over a majority of shares outstanding. Feedback from engagement meetings is shared with the Board through senior management reports to the Board and its committees and by virtue of independent director participation in stockholder engagements. As discussed further below, stakeholder engagement in recent years has resulted in changes to Occidental’s practices and disclosures regarding environmental, health and safety matters; corporate governance; and executive compensation.

 

Recent Engagement Efforts. In the fall of 2017, we reached out to over 50 stockholders collectively representing a majority of Occidental’s shares outstanding to engage on environmental, social and governance issues, including climate-related risks and opportunities; executive compensation matters; and matters related to board composition. A cross-functional team of senior members from Occidental’s environmental, health and safety; investor relations; corporate secretary and legal departments met with over 30 investors and other stakeholders to discuss these topics. At a majority of these meetings, one or more of our independent directors participated, demonstrating the Board’s commitment to transparent engagement and the value the Board places on directly hearing the views of our stockholders.

 

These meetings helped shape our report, “Climate-Related Risks and Opportunities: Positioning for a Lower-Carbon Economy,” which is available for download at www.oxy.com/SocialResponsibility. The release of this report was, in part, in response to a majority-supported stockholder proposal presented at the 2017 Annual Meeting that sought details regarding how Occidental’s capital planning and business strategies incorporate the risks of a lower carbon economy, and a stockholder proposal that requested more transparency regarding Occidental’s efforts to mitigate and set reduction targets for methane emissions and flaring. Our recent stockholder engagement efforts also informed the director skills matrix that we have included in this proxy statement on page 16, which identifies each director’s particular core competencies in tabular format. Details regarding changes to the executive compensation program in light of stockholder feedback are described in more detail in the Compensation Discussion and Analysis section of this proxy statement, beginning on page 22.

 

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Board Evaluation Process

 

Led by the Governance Committee, the Board conducts a robust annual evaluation of its performance, the performance of each of the Board’s committees and the individual directors. The Governance Committee believes that board evaluations are a critical tool in assessing the composition and effectiveness of the Board, its committees and its directors, and presents an opportunity to identify areas of strength and areas capable of improvement. The Governance Committee also uses evaluation feedback in assessing whether the Board is of optimum size and to identify skills and qualifications to prioritize in board recruitment. The Governance Committee annually considers the format of its evaluation processes which, in recent years, have variously included anonymous questionnaires, one-on-one director interviews, and the use of a third-party facilitator. The 2017 board evaluation process is summarized below.

 

 

 

Director Selection and Recruitment

 

In recent years, the Board has identified director candidates through the use of independent search firms, third-party recommendations, and the recommendations of directors and executive officers. Additionally, it is the policy of the Governance Committee to consider director candidates recommended by stockholders pursuant to the Nominating Committee Policy, discussed further on page 66. For a discussion of the factors that the Governance Committee considers in recommending candidates for election to the Board, see “Proposal 1: Election of Directors – Director Nominations” on page 9.

 

Stockholder Nominations of Director Candidates

 

Occidental’s by-laws permit a group of up to 20 stockholders, collectively owning 3% or more of Occidental’s outstanding common stock continuously for at least three years, to nominate and include in Occidental’s proxy materials directors constituting up to 20% of the Board, but not less than two directors, provided that the stockholder(s) and the nominee(s) meet the requirements of Occidental’s by-laws. For more information on proxy access and other procedures to recommend candidates to Occidental’s Board of Directors, see “Nominations for Directors for Term Expiring in 2019” beginning on page 66.

 

Board of Directors and its Committees

 

Occidental is governed by its Board of Directors, which is led by an Independent Chairman, and its four committees, composed entirely of independent directors. The structure of the Board and the responsibilities of its committees are described in more detail below.

 

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Independent Board Leadership Structure

 

Occidental’s by-laws provide for the Board to annually elect one of its independent directors to be Chairman of the Board. In 2017, the Board elected Mr. Batchelder to serve in that position. The Chairman of the Board presides at Board meetings and meetings of stockholders and his responsibilities include, among other things:

 

■

Call meetings of the independent directors and chair executive sessions of the Board at which no members of management are present;

■

Approve the agendas for Board and committee meetings;

■

Propose a schedule of Board meetings and the information to be provided by management for Board consideration;

■

Recommend the retention of consultants who report directly to the Board;

■

Assist in assuring compliance with the Corporate Governance Policies and to recommend revisions to the policies;

■

Evaluate, along with the members of the Executive Compensation Committee and the other independent directors, the performance of the Chief Executive Officer;

■

Consult with other Board members as to recommendations on membership and chairpersons of the Board committees and discuss recommendations with the Corporate Governance, Nominating and Social Responsibility Committee;

■

Communicate the views of the independent directors and the Board committees with respect to objectives set for management by the Board: and

■

To serve as a liaison between the Board and Occidental’s stockholders.

 

Board Committees

 

The committees of the Board are composed entirely of independent directors. The primary responsibilities of the committees are described below. From time to time, the Board of Directors delegates additional duties to the committees.

Audit Committee	Primary Responsibilities:	Meetings in 2017: 6
Members: Avedick B. Poladian (Chair) Howard I. Atkins Carlos M. Gutierrez Elisse B. Walter	■  Hire the independent auditor to audit the consolidated financial statements of Occidental and its subsidiaries ■  Discuss the scope and results of the audit with the independent auditor and matters required to be discussed by the Public Company Accounting Oversight Board ■  Discuss Occidental’s financial accounting and reporting principles and the adequacy of Occidental’s internal accounting, financial and operating controls with the auditors and management ■  Review all reports of internal audits submitted to the Audit Committee and responsive actions by management ■  Review the appointment of the senior internal auditing executive ■  Review matters relating to financial risk ■  Evaluate performance and qualifications of individuals providing internal audit services ■  Evaluate the independent auditor’s qualifications, performance and independence ■  Oversee matters relating to Occidental’s Code of Business Conduct   The Audit Committee members are independent and the Board has determined that each Audit Committee member is an “audit committee financial expert” within the meaning of the SEC’s regulations.   The Audit Committee Report with respect to Occidental’s financial statements is on page 63.

 

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Corporate Governance, Nominating and Social Responsibility Committee Members: Carlos M. Gutierrez (Chair) Eugene L. Batchelder John E. Feick Margaret M. Foran Avedick B. Poladian	Primary Responsibilities: ■  Recommend candidates for election to the Board ■  Periodically review and interpret Occidental’s Corporate Governance Policies and consider other governance issues ■  Oversee the evaluation of the Board, its committees and the individual directors ■  Review Occidental’s policies, programs and practices on social responsibility ■  Oversee Occidental’s Human Rights Policy ■  Oversee certain charitable contributions made by Occidental and its subsidiaries ■  Evaluate and make recommendations to the Board regarding the compensation and benefits of non-employee directors ■  Review and approve related party transactions   See page 66 for information on how to recommend nominees or nominate candidates to the Board.	Meetings in 2017: 7
Environmental, Health and Safety Committee Members: John E. Feick (Chair) Spencer Abraham Howard I. Atkins William R. Klesse Jack B. Moore Elisse B. Walter	Primary Responsibilities: ■  Review and discuss with management the status of environmental, health and safety issues, including compliance with applicable laws and regulations ■  Review climate-related risks and opportunities and their potential impact on corporate strategy in consultation with the full Board ■  Review and discuss the results of internal compliance reviews and remediation projects ■  Review matters relating to operational risk ■  Report periodically to the Board on environmental, health and safety matters affecting Occidental and its subsidiaries	Meetings in 2017: 6
Executive Compensation Committee Members: Margaret M. Foran (Chair) Spencer Abraham John E. Feick William R. Klesse Jack B. Moore	Primary Responsibilities: ■  Review and approve the corporate goals and objectives relevant to the compensation of the Chief Executive Officer (CEO), evaluate the performance of the CEO and determine and approve CEO compensation ■  Review and approve the compensation of all other executive officers ■  Administer Occidental’s stock-based incentive compensation plans and periodically review the performance of the plans and their rules to assure purposes of the plans are being met ■  Make recommendations to the Board with respect to incentive compensation plans and equity-based plans ■  Review Occidental’s talent development processes and programs, including recruitment, selection and retention   The Compensation Committee’s report on executive compensation is on page 36.	Meetings in 2017: 6

 

Other Governance Matters

 

Director Education

 

Directors are provided with continuing education, including business-specific learning opportunities through site visits and briefing sessions led by internal experts or third parties on topics that are relevant to Occidental. In 2017, this included a third-party briefing on the outlook of the oil and gas industry under various potential future scenarios; cyber security updates; and the use of immersive, 3-D technology to demonstrate recent innovations in the oilfield.

 

2018 Notice of Annual Meeting and Proxy Statement  20

 

 

Directors are also encouraged to attend additional continuing education programs designed to enhance the performance and competencies of individual directors and the Board of Directors. In 2017, directors participated in various corporate director and compliance programs held by universities and corporate director, governance and investor organizations, including the NYSE and the National Association of Corporate Directors, as attendees or as presenters.

 

Director Attendance

 

The Board of Directors held seven meetings in 2017. All of the directors attended every regularly scheduled meeting of the Board in 2017, including the 2017 Annual Meeting of Stockholders, and each director attended at least 75% of the total number of Board and Board committee meetings on which he or she served. Attendance at the Annual Meeting of Stockholders is expected of directors as if it were a regular meeting of the Board.

 

Executive Sessions of the Independent Directors

 

The independent directors regularly meet in executive sessions at which no members of management are present. The independent directors held five executive sessions in 2017. The Board’s Independent Chairman, Mr. Batchelder, chaired the executive sessions in 2017.

 

Risk Oversight

 

The Board’s role in risk oversight recognizes the multifaceted nature of risk management. It is a control and compliance function, but it also involves strategic considerations in normal business decision-making. It covers legal and regulatory matters; finance; compensation; security; cybersecurity; and climate, environmental, health and safety concerns.

 

The Board has empowered its committees with risk oversight responsibilities. Each committee is integral to the control and compliance aspects of risk oversight by the Board. Each committee meets regularly with management to review, as appropriate, compliance with existing policies and procedures and to discuss changes or improvements that may be required or desirable. Every committee met at least six times in 2017. The frequency of committee meetings ensures that each committee has adequate time for in-depth review and discussion of all matters associated with each committee’s area of responsibility. Each committee makes regular reports to the full Board, sometimes without the Chief Executive Officer present, to apprise the Board of the committee’s discussion of issues and findings, as well as to make recommendations of appropriate changes or improvements.

 

Related Party Transactions

 

Pursuant to Occidental’s Conflict of Interest Policy and Code of Business Conduct, each director and executive officer has an obligation to avoid any activity, agreement, business investment or interest, or other situation that could be construed either as divergent to or in competition with Occidental’s interest or as an interference with such person’s primary duty to serve Occidental, unless prior written approval has been granted by the Audit Committee. All potential conflicts of interest must be reported to a designated compliance officer. A summary of the Conflict of Interest Policy is included in Occidental’s Code of Business Conduct which can be found at www.oxy.com/Investors/Governance.

 

Pursuant to Occidental’s written policy on related party transactions, the Governance Committee reviews relationships and transactions in which Occidental and its directors, executive officers, or their immediate family members participate if the amount involved exceeds $120,000. To help identify related party transactions, each director and executive officer must complete an annual questionnaire that requires disclosure of any transaction between Occidental and the director or executive officer or any of his or her affiliates or immediate family members. Additionally, the accounting department reviews Occidental’s financial records for payments made to, or received from, related parties and the entities with which the related parties are affiliated, and reports any identified transactions to the legal department. The Governance Committee reviews and approves, ratifies or rejects identified related party transactions. In approving, ratifying or rejecting a related party transaction, the Governance Committee considers such information as it deems appropriate to determine whether the transaction is on reasonable and competitive terms and is fair to Occidental and its stockholders.

 

Pursuant to the policy, the Governance Committee identified one transaction that qualified as a related party transaction. Brent Vangolen, the son of Mr. Glenn Vangolen, an executive officer, is employed by Occidental as a senior production engineer for the domestic oil and gas segment. His total compensation for 2017 (consisting of his annual base salary, annual bonus and stock-based compensation) was less than $200,000. He also participated in the general welfare and benefit plans of Occidental. Mr. Vangolen did not participate in the hiring of his son and does not participate in performance evaluations or compensation decisions regarding his son. Mr. Brent Vangolen’s compensation and benefits are comparable with similarly situated employees of Occidental.

 

Communications with Directors

 

Stockholders and other interested parties may communicate with any director by sending a letter to the director’s attention in care of Occidental’s Corporate Secretary, Occidental Petroleum Corporation, 5 Greenway Plaza, Suite 110, Houston, Texas 77046. The Corporate Secretary opens, logs and forwards all such correspondence (other than advertisements or other solicitations) to directors unless a director has requested the Corporate Secretary to forward correspondence unopened.

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Overview

 

This Compensation Discussion and Analysis (CD&A) describes the material elements, objectives and principles of Occidental’s 2017 executive compensation program for its named executive officers, recent compensation decisions and the factors the Executive Compensation Committee (the Compensation Committee) considered in making those decisions.

 

The named executive officers for 2017 are:

 

Name	Position(1)
Vicki Hollub	President and Chief Executive Officer
Edward A. Lowe	Executive Vice President and Group Chairman, Middle East
Marcia E. Backus	Senior Vice President, General Counsel and Chief Compliance Officer
Cedric W. Burgher	Senior Vice President and Chief Financial Officer
Glenn M. Vangolen	Senior Vice President, Business Support
Christopher G. Stavros	Former Senior Vice President and Chief Financial Officer

(1)

On May 30, 2017, Mr. Stavros retired as Senior Vice President and Chief Financial Officer. As a result of two individuals each serving as Chief Financial Officer for a portion of 2017, there are six named executive officers appearing in this proxy statement.

 

Highlights of Executive Compensation Program Features

 

The 2017 executive compensation program for the named executive officers includes many best-practice features that are intended to enhance the alignment of compensation with the interests of Occidental’s stockholders.

 

	What We Do	What We Don’t Do
	Majority of named executive officer compensation linked to performance		N automatic single-trigger vesting of equity awards in the event of a change in control
	Long-term incentive awards payable solely in shares of common stock		No individual change in control contracts
	Transparent, objective TSR metric underlying the performance-based portion of the long-term incentive award aligned with stockholder interests		No repricing of underwater stock options
	Meaningful stock ownership guidelines for executive officers		No payout of the TSR award if Occidental’s TSR ranks in the bottom quarter of the peer group
	Independent Compensation Consultant Policy requiring that the compensation consultant be independent from management		No hedging of Occidental’s stock
	Clawback provisions for Long-Term Incentive and Annual Cash Incentive awards for misconduct		No dividends or dividend equivalents on unearned performance-based awards issued under the 2015 LTIP

 

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Say-on-Pay Results and Stockholder Engagement

 

At the 2017 Annual Meeting, Occidental’s advisory vote to approve executive compensation received support from approximately 83% of the total votes cast. This level of support represented a decline from recent years and the Compensation Committee sought input from Occidental’s stockholders through the company’s stockholder engagement program to gain insight into the results. A prominent concern raised by some of Occidental’s stockholders was that the 2016 long-term incentive program did not include a performance metric tied to return on capital. Some stockholders questioned whether the de-emphasis of returns in the long-term incentive program reflected a shift in Occidental’s business strategy, which was, and remains, very returns-focused. During earnings presentations and in meetings with stockholders, Occidental’s senior management team emphasized their belief that recent operational and technological achievements, and actions to reduce costs and optimize the company’s asset portfolio, have positioned the company for industry-leading returns.

 

As a commitment to Occidental’s business strategy and in light of the views expressed by Occidental’s stockholders, the Compensation Committee determined that the addition of a second returns-based metric in the long-term incentive program, cash return on capital employed (CROCE), would ultimately enhance pay-for-performance by strengthening the link between executive pay and Occidental’s strategic business goals, and demonstrate responsiveness to the concerns of Occidental’s stockholders. The 2018 long-term incentive program for the executive officers includes a performance stock unit award based on Occidental’s CROCE over a three-year period. At grant, the CROCE award comprised 25% of Ms. Hollub’s 2018 long-term incentive award package and 20% for the other executive officers. Further details regarding the 2018 long-term incentive award program will be provided in Occidental’s 2019 proxy statement.

 

Recent Executive Compensation Program Changes

 

The Compensation Committee regularly evaluates the compensation program for the named executive officers to consider the views of Occidental’s stockholders, peer company and market pay practices and emerging compensation trends and best practices. Several of the recent changes to the compensation program for the named executive officers were the result of feedback from Occidental’s stockholders. The Compensation Committee regularly receives feedback on the executive compensation program through Occidental’s spring and fall stockholder engagement programs.

 

What The Committee Heard	Committee Actions in Response
The metrics underlying the short-term and long-term incentive program should more closely align with Occidental’s strategic goals.		The 2017 Annual Cash Incentive award includes cash flow neutrality and return on capital metrics, which are aligned with Occidental’s stated strategic goals.
		For 2018, a performance-based stock unit award based on CROCE was added to the long-term incentive program.
Disclosure of the process to determine the Annual Cash Incentive awards should be more transparent.		We have increased the level of detail and specificity of the metrics and targets underlying the Annual Cash Incentive award.
Off-cycle awards should only be used in exceptional circumstances.		We did not grant any off-cycle awards in 2017 and we affirm our commitment to limiting the use of off-cycle awards to extraordinary circumstances.

 

In addition, the Compensation Committee added threshold performance goals to the 2017 restricted stock unit (RSU) award and the company performance portion of the 2017 Annual Cash Incentive award, which were intended to qualify the awards as “performance-based compensation” for purposes of Section 162(m) of the Internal Revenue Code (the Code) as in effect at the time the awards were granted. For more information, see “Section 162(m) Performance Pool” on page 28.

 

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Overview of the 2017 Compensation Program

 

			Form of
	Element(1)	Objectives	Payout	How Target Values are Determined
FIXED	Base Salary	■  Provide a competitive level of fixed compensation to attract and retain employees.	Cash	In determining base salary levels, the Compensation Committee reviews compensation surveys, publicly available peer company data, internal pay equity, individual responsibilities and performance assessments.   Base salaries are reviewed annually and as circumstances warrant.
VARIABLE	Annual Cash Incentive	■  Motivate executives to achieve superior company performance over a one-year period. ■  Align executives with performance metrics that are critical to Occidental’s success.	Cash	A target Annual Cash Incentive award amount is set annually for each named executive officer based on compensation surveys, publicly available peer company data, the executive’s prior-year award value, retention considerations, the balance of short- and long-term pay, internal pay equity, recent company performance, and each executive’s ability to influence Occidental’s performance for the year.   Company performance accounted for 80% of Ms. Hollub’s target Annual Cash Incentive award and 60% for the other named executive officers. The remaining portion was dependent on the Compensation Committee’s assessment of each executive officer’s individual performance in 2017.
	Long-Term Total Shareholder Return (TSR) Award	■  Reward higher returns in Occidental’s common stock over a three-year performance period. ■  Align executives with the interests of stockholders.	Stock	The Compensation Committee sets a target long-term incentive package value for each of the named executive officers based on a review of compensation surveys, publicly available peer company data, the executive’s prior-year award value, retention considerations, the balance of short- and long-term pay, internal pay equity and recent company performance.   Pursuant to the Compensation Committee’s philosophy that a majority of compensation should be tied to company performance, the TSR award accounted for 70% of Ms. Hollub’s target long-term incentive package and 55% for the other named executive officers.   The RSU award accounted for 30% of Ms. Hollub’s long-term incentive package and 45% for the other named executive officers.
	Long-Term Restricted Stock Unit (RSU) Award	■  Provide a retention incentive that promotes sustained stock ownership. ■  Incentivize absolute stock price performance.	Stock

(1)

Mr. Burgher joined Occidental as Senior Vice President and Chief Financial Officer on May 31, 2017. As such, Mr. Burgher’s 2017 compensation arrangements were determined by a sign-on agreement between Mr. Burgher and Occidental, as approved by the Compensation Committee, and he did not participate in the 2017 long-term incentive program. For information regarding Mr. Burgher’s sign-on agreement, see “Individual Compensation Considerations – Cedric W. Burgher – Sign-on Agreement” on page 33.

 

Executive Compensation Program Objectives

 

The Compensation Committee strives to maintain a compensation program that will attract, retain and motivate outstanding executives by providing incentives to reward them for superior performance that supports Occidental’s long-term strategic objectives, whether in an up- or down-cycle commodity price environment, and is competitive with industry practices. The executive compensation program is intended to:

 

Align with stockholder interests;

 

Preserve performance accountability in both strong and weak commodity price environments;

 

Build long-term share ownership;

 

Provide a consistent retention incentive;

 

Be straightforward and transparent for the benefit of executives and stockholders; and

 

Match or exceed prevailing governance standards for performance-based compensation.

 

2018 Notice of Annual Meeting and Proxy Statement     24

 

 

Elements of the 2017 Compensation Program

 

Salary and “Other” Annual Compensation

 

The Compensation Committee believes that base salary should reward executives on a market-competitive basis for consistent performance of job requirements and achievement of short-term goals, which, over time, contribute to longterm growth of stockholder value. Salaries are reviewed by the Compensation Committee annually and as circumstances warrant. In determining base salary levels, the Compensation Committee reviews compensation surveys; publicly available peer company data; internal pay equity; individual responsibilities; and performance assessments. Base salary and “other” annual compensation (perquisites and certain other employee benefits) represented, on average, less than 15% of the 2017 compensation packages of the named executive officers. For information regarding salary decisions for the named executive officers in 2017, see “Individual Compensation Considerations” beginning on page 30.

 

Annual Cash Incentive

 

The Annual Cash Incentive award is intended to motivate executives to achieve superior company and individual performance over a one-year period. In the first quarter, the Compensation Committee approves individual target award amounts for each executive officer based on a review of compensation surveys; publicly available peer company data; the executive’s prioryear award value; retention considerations; the balance of short- and long-term pay; internal pay equity; and each executive’s ability to influence Occidental’s performance for the year. Potential payouts under the Annual Cash Incentive award range from 0% to 200% of the target award amount, based on actual company and individual performance. The amounts earned under the Annual Cash Incentive award for 2017, which were paid in the first quarter of 2018, are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table on page 37.

 

Setting the Annual Cash Incentive. The Compensation Committee annually reviews the metrics and targets underlying the Annual Cash Incentive award, and their relative weightings, with an aim to incentivize the named executive officers to excel in areas that are aligned with Occidental’s business objectives. In the first quarter of 2017, the Compensation Committee approved company performance metrics related to Occidental’s strategic goals and operational, financial, and safety/environmental performance. With respect to these metrics, the Compensation Committee set target performance goals that it believed were rigorous based on Occidental’s detailed capital program and business plan; projections from the strategic planning team and business unit heads; prior-year results; and third-party forecasts relating to future market conditions and other external market factors.

 

Weighting the Elements. The Compensation Committee determined that the company performance metrics would comprise 80% of Ms. Hollub’s target Annual Cash Incentive award, and 60% for the other named executive officers, with the remainder of the Annual Cash Incentive award opportunity linked to an assessment of the performance of the individual executive. The Compensation Committee determined to weight a larger portion of Ms. Hollub’s Annual Cash Incentive award opportunity toward key company performance metrics because, as Chief Executive Officer, her leadership directly affects all aspects of the company’s performance. The relative weightings of the Annual Cash Incentive award elements are shown below.

 

TARGET ANNUAL CASH INCENTIVE AWARD – ELEMENT WEIGHTINGS

 

 

 

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2017 Annual Cash Incentive Award – Company Performance Portion

 

 

(1)

In 2017, Occidental monetized non-core assets for proceeds of approximately $1.4 billion; purchased assets in core areas for approximately $1.1 billion, including the acquisition of a controlling interest in the Seminole-San Andres Unit, a premier CO2 flood that was immediately accretive to cash flow; allocated capital in accordance with stated cash usage priorities; and maintained a conservative balance sheet and investment grade credit ratings.

(2)

Threshold performance goals were added to the company performance portion of the Annual Cash Incentive award for 2017. For more information regarding the threshold performance goals, see “Section 162(m) Performance Pool” on page 28.

(3)

Does not reflect the individual portion of the Annual Cash Incentive award, as described on page 27.

 

2018 Notice of Annual Meeting and Proxy Statement     26

 

 

Annual Cash Incentive Award – Individual Performance Portion. The minority portion of the Annual Cash Incentive award opportunity for 2017 (20% for Ms. Hollub and 40% for the other named executive officers) was subject to the Compensation Committee’s assessment of each executive officer’s achievement in certain key performance areas within the executive’s area of responsibility, as well as the executive’s response to unanticipated challenges during the year. The individual performance portion of the Annual Cash Incentive award links incentive compensation directly to the performance of the particular executive. In evaluating performance, the Compensation Committee considered the following performance areas:

 

■

Effective organizational development within the executive’s department;

■

Contributions to succession planning efforts;

■

Functional and operating accomplishments within the executive’s department;

■

Demonstration of ethical conduct;

■

Commitment to health, environment and safety principles; and

■

Dedication to collaboration and inclusion.

 

For a detailed discussion of the Compensation Committee’s considerations with respect to each named executive officer’s individual performance and resulting payouts, please see “Individual Compensation Considerations” beginning on page 30.

 

Long-Term Incentive Compensation

 

The majority of named executive officer compensation is determined by Occidental’s long-term performance. In 2017, the long-term incentive program consisted of a performance-based TSR award and a time-based RSU award, which are each payable solely in shares of common stock. The long-term incentive awards are intended to provide incentives for achieving results consistent with the goal of maximizing stockholder value and to retain and motivate Occidental’s executives. The Compensation Committee believes that long-term compensation should represent the largest portion of each executive officer’s total compensation package and that the levels of payout should reflect Occidental’s performance, on a relative and absolute basis. During the process of determining each named executive officer’s long-term incentive compensation package for 2017, the Compensation Committee evaluated many factors, including:

 

■	Alignment of executive officer and stockholder interests in achieving long-term growth in stockholder value;

■	Linkage of any above-target payouts to superior performance and absolute returns;

■	Competitiveness with the compensation programs of peer companies;

■	Alignment of the named executive officers’ compensation with Occidental’s performance;

■	Impact of commodity prices on Occidental’s stock price and financial performance;

■	Allocation of total compensation between long-term and short-term components; and

■	For awards granted in 2017, tax deductibility under Section 162(m).

 

2017 Long-Term Incentive Program. The 2017 long-term incentive program consisted of a performance-based stock unit (PSU) award based on relative TSR, and a time-based RSU award, each payable solely in shares of common stock, with the majority of the target long-term incentive award opportunity weighted toward performance, as indicated below.

 

 

 

Total Shareholder Return (TSR) Award. The Compensation Committee believes that the comparison of Occidental’s three-year TSR to peer companies’ returns over that same period is an objective external measure of Occidental’s effectiveness in translating its results into stockholder returns. TSR is the change in price of a share of common stock plus reinvested dividends, over a specified period of time, and is an indicator of management’s achievement of long-term growth in stockholder value. Payout of the TSR award is based on Occidental’s three-year TSR as compared to the three-year TSR of the 11 performance peer companies identified on page 29. The TSR award is denominated in PSUs, each of which is equivalent to one share of common stock. The percentage of such number of PSUs that will be payable at the end of the three-year performance period, which began January 1, 2017 and ends December 31, 2019, will depend on Occidental’s relative TSR performance and Occidental’s absolute TSR performance. If Occidental’s absolute TSR is negative over the performance period, then, irrespective

 

Occidental Petroleum Corporation     27

 

 

of Occidental’s ranking within the peer group, the payout of the TSR award is capped at no more than target. A table illustrating the potential payouts based on relative and absolute TSR performance is set forth below:

 

TSR Ranking	% of Target PSUs Earned(1)
■    Top 1-2 ranked companies	200%
■    Top 3-8 ranked companies	Between 25% and 200%(2)
■    9th ranked company	25%
■    Bottom 3 ranked companies	0%

(1)

If Occidental’s absolute TSR is negative over the performance period, the payout of the TSR award is capped at no more than target, irrespective of Occidental’s ranking within the peer group.

(2)

Determined using linear interpolation.

 

The cap on payout of the TSR award in instances of negative TSR performance over the performance period is intended to reinforce the pay-for-performance nature of the compensation program. The TSR award comprised 70% and 55% of Ms. Hollub’s and the other named executive officers’ target long-term incentive award opportunity for 2017, respectively. Cumulative dividend equivalents will be paid in cash at the end of the three-year performance period and will be paid only on the number of PSUs earned. The TSR award was intended to satisfy the tax deductibility requirements of Section 162(m) as in effect at the time the award was granted. Forfeiture and change in control provisions applicable to the TSR award are discussed in more detail in the Potential Payments upon Termination or Change in Control table and the footnotes thereto, beginning on page 45.

 

Restricted Stock Unit (RSU) Award. The RSU award, which comprises the remainder of the 2017 long-term incentive package, vests ratably over three years with one-third vesting on each of February 28, 2018, 2019 and 2020, subject to continued employment. The RSU award is denominated in restricted stock units, each of which is equivalent to one share of common stock. Payment for a vested RSU award will be made solely in shares of common stock. The shares of stock ultimately received by the named executive officer pursuant to the RSU award are subject to a two-year holding period after the vest date and, after the expiration of the holding period, the named executive officer must continue to retain ownership of the shares until he or she satisfies the applicable stock ownership guidelines, as described on page 34. Prior to the certification of the achievement of the Section 162(m) performance condition, dividend equivalents were accumulated; thereafter, dividend equivalents are payable in cash at the time that dividends are paid on Occidental’s common stock. Forfeiture and change in control provisions applicable to the RSU award are discussed in more detail in the Potential Payments upon Termination or Change in Control table and the footnotes thereto, beginning on page 45.

 

2018 Long-Term Incentive Program Changes. In response to investor feedback, the Compensation Committee modified the long-term incentive program, beginning with 2018 awards, to link a portion of the long-term incentive award opportunity to Occidental’s CROCE performance over a three-year period. The addition of the CROCE award is intended to further align the executive compensation program with Occidental’s strategic business goals. At grant, the CROCE award comprised 25% of Ms. Hollub’s 2018 long-term incentive award package and 20% for the other executive officers. Further details regarding the 2018 long-term incentive award program will be provided in Occidental’s 2019 proxy statement.

 

Section 162(m) Performance Pool. In February 2017, the Compensation Committee established two independent threshold performance goals individually applicable to the company performance portion of the 2017 Annual Cash Incentive award and the 2017 RSU award: (a) achieving operating cash flow before working capital of $1.5 billion during 2017 (Performance Goal A), and (b) achieving production volume of 540,000 BOE/day during 2017, subject to adjustment in certain circumstances for asset divestitures (Performance Goal B). If either Performance Goal A or Performance Goal B was met in 2017, then a Section 162(m) “pool” would be funded, up to a maximum of $18 million, to cover any potential payout of the company performance portion of the Annual Cash Incentive award and the grant date fair value of the 2017 RSU awards. In February 2018, the Compensation Committee certified the attainment of Performance Goal A and Performance Goal B, and the Section 162(m) pool was funded. For more information regarding Section 162(m), see “Additional Compensation Policies and Practices – Section 162(m) Considerations” on page 35.

 

Participants in the Compensation Decision-Making Process

 

Role of the Independent Compensation Committee. The Compensation Committee, comprised of independent members of the Board, is responsible for annually reviewing and approving all aspects of the Chief Executive Officer’s compensation, as well as annually reviewing and approving the compensation of all other named executive officers. In performing these duties, the Compensation Committee obtains input, advice and information from senior management, members of Occidental’s Human Resources team and an independent compensation consultant, as further described below, throughout the year. The Compensation Committee also considers the views expressed by Occidental’s investors and stockholder advisory groups in making executive compensation decisions. The Compensation Committee uses publicly available data regarding the executive compensation practices of its peer group (as defined below) as an additional tool, but does not benchmark executive compensation to a specific percentile within the peer group.

 

2018 Notice of Annual Meeting and Proxy Statement     28

 

 

Role of Senior Management. Ms. Hollub, as Chief Executive Officer, makes recommendations regarding the compensation package for each of the other named executive officers to the Compensation Committee. Ms. Hollub and the senior executives responsible for Human Resources are present for a portion of each of the Compensation Committee meetings but no senior executive is present when decisions regarding his or her compensation is discussed and made. Ms. Hollub’s compensation package is set only by the Compensation Committee. Senior members of the Human Resources team and other members of senior management interact with the compensation consultant as necessary, and prepare materials for each Compensation Committee meeting to assist the Compensation Committee in its consideration and administration of executive compensation programs, plans and policies.

 

Role of the Independent Compensation Consultant. In 2017, the Compensation Committee engaged Meridian Compensation Partners, LLC (Meridian) as its compensation consultant to provide advice on various executive compensation matters. Meridian has served as the Compensation Committee’s compensation consultant since 2016. The Compensation Committee reviewed the independence of Meridian under SEC rules, the NYSE Listed Company Manual standards, and Occidental’s Independent Compensation Consultant Policy and found Meridian to be independent and without conflicts of interest. Occidental also participates in compensation surveys conducted by compensation consultants, including the Compensation Committee’s independent compensation consultant, in order to better understand general external compensation practices, including with respect to executive compensation.

 

Role of Stockholders. Occidental maintains an ongoing dialogue with its investors through its spring and fall stockholder engagement programs. During these programs, members of Occidental’s senior management team and, on a case-by-case basis, members of Occidental’s board of directors, meet with investors telephonically or in-person. Input from these meetings regarding Occidental’s executive compensation practices and policies is taken into account by the Compensation Committee in making future compensation decisions.

 

Role of Peer Companies. In order to evaluate how Occidental’s executive compensation program compares within the oil and gas industry, particularly with respect to award types, compensation mix, performance metrics, and reported levels of compensation, the Compensation Committee reviews the executive compensation practices, programs and policies of its “compensation peer” companies as identified below. The Compensation Committee also reviews and considers general industry compensation surveys and related materials. This information is used only as a reference and not to establish compensation benchmarks, as Occidental does not benchmark executive compensation to a specific percentile within the compensation peer group. The Compensation Committee also maintains a peer group of “performance peer” companies within the oil and gas industry, and the value of the long-term TSR awards is dependent on Occidental’s three-year TSR performance as compared to the three-year TSR performance of the performance peer companies. The Compensation Committee regularly reviews the peer companies to ensure that they have reasonably similar business strategies, represent a mix of integrated and independent oil and gas companies and generally compete against Occidental for investor dollars. Total S.A. and Canadian Natural Resources Limited are not compensation peer companies because we generally do not compete with them for executive talent, as they are headquartered outside of the United States.

 

Occidental’s peer groups consist of the following companies:

 

 

 

Occidental Petroleum Corporation     29

 

 

Individual Compensation Considerations

 

In making executive compensation decisions for a given year, the Compensation Committee considers, among other factors, the performance of Occidental and the individual contributions of each named executive officer to Occidental’s overall performance and the performance of the executive’s business unit. Details regarding the 2017 compensation decisions and performance evaluation of each named executive officer is presented below. Mr. Stavros retired as Senior Vice President and Chief Financial Officer from Occidental on May 30, 2017, and his compensation is described in “Potential Payments upon Termination or Change in Control” on page 45, and in the footnotes to the Executive Compensation Tables beginning on page 37.

 

Vicki Hollub, President and Chief Executive Officer

 

Ms. Hollub is the President and Chief Executive Officer of Occidental and has served as a member of the Board of Directors since December 2015. As Chief Executive Officer, Ms. Hollub is responsible for all operations, the financial management of Occidental, implementing Occidental’s strategy, and assisting the Board with, among other matters, corporate strategy development, executive succession planning and talent development, and executive compensation.

 

Tenure. Ms. Hollub joined Occidental over 30 years ago and, before her appointment as Chief Executive Officer in 2016, she held a variety of increasingly significant leadership and technical positions on three continents, including roles in the United States, Russia, Venezuela and Ecuador.

 

Performance Assessment. In assessing Ms. Hollub’s individual performance in 2017, the Compensation Committee considered the following accomplishments and actions:

 

Maintained focus on the Company’s commitment to safety, health, the environment, diversity and inclusion, corporate governance, social responsibility and the highest standards of ethical conduct, and continued to foster a collaborative culture. Under the leadership of Ms. Hollub, Occidental’s performance in these areas continued to excel, as evidenced by:

 

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Occidental’s 2017 employee injury and illness incidence rate (IIR) of 0.19 and contractor IIR of 0.29. For 22 consecutive years, Occidental’s worldwide employee IIR has been less than 1.0 recordable injury per 100 employees.

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The maintenance of oil and gas, midstream and chemical operations in a safe and efficient manner during and after Hurricane Harvey.

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Successful stockholder outreach and engagement activities.

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Occidental’s continued focus on diverse representation in leadership positions.

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Corporate Responsibility Magazine’s ranking of Occidental among the 100 Best Corporate Citizens for 2017, one of the world’s top corporate responsibility rankings. This is the eighth consecutive year that Occidental has made the list. Companies are evaluated on their performance in environment, climate change, human rights, employee relations, corporate governance, philanthropy, financial performance and community support.

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Newsweek’s ranking of Occidental among its U.S. 500 “Green Companies” in its annual assessment of the sustainability performance of the 500 largest publicly traded companies headquartered in the U.S. by revenue.

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Occidental’s recognition by the Association of Fundraising Professionals (AFP) with the Houston Business Journal Large Corporation Award as part of National Philanthropy Day®. The award recognized Occidental’s accomplishments in volunteerism and contributions to the Greater Houston community.

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Occidental’s recognition as a Top Ranked Socially Responsible Dividend Stock. Inclusion on the list recognizes a strong and sustained dividend yield, as well as recognition from prominent asset managers as a socially responsible investment.

 

Enhanced the value of Occidental’s portfolio of assets, with a focus on profitable development opportunities for all segments of the Company; and implemented the Board-approved strategic review action items in a timely, beneficial, and efficient manner. Those efforts included:

 

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Sold approximately $1.4 billion of non-core assets, which exceeded asset acquisition costs by approximately $340 million.

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Sold non-core assets in South Texas and redeployed the proceeds into accelerating the development of Permian Resources.

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Acquired a controlling interest in the Seminole-San Andres Unit, a premier CO2 flood. Seminole was immediately accretive to earnings and cash flow and has significant production and cost savings opportunities.

■

Deployed cutting-edge technologies to better develop and manage the reservoir over the full life of the reserve, resulting in record-breaking well results.

■

Added resource barrels through successful international exploration programs.

 

2018 Notice of Annual Meeting and Proxy Statement     30

 

 

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Increased production in Abu Dhabi by 11% year-over-year via plant optimization, which required no capital outlay.

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Surpassed total production milestones of 1 billion barrels in Oman and 7 Tcf of natural gas from Dolphin.

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Designed, tested and began construction of Very Large Crude Carrier (VLCC) capability at the Ingleside crude terminal. When completed, it will be the first land-based facility capable of VLCC loading in the U.S.

 

Focused on optimizing the long-term return on invested capital by investing strategically, with an emphasis on finding and development costs, operating costs and capital efficiency. Led by Ms. Hollub and relying on a disciplined business approach and returns-focused capital allocation decisions, Occidental:

 

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Allocated capital in accordance with stated cash usage priorities.

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Implemented a strategic plan that is expected to maintain production and sustain the dividend with average West Texas Intermediate (WTI) oil prices as low as $40 per barrel; and allow for production growth of 5 to 8 percent at WTI oil prices of $50 per barrel.

■

Invested capital in higher-return Permian Resources projects.

■

Achieved an all-in reserve replacement ratio of nearly 190% company-wide.

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Optimized drilling programs to make more efficient use of capital.

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Maintained Occidental’s investment grade credit ratings. Occidental’s strong credit is reflected in our low cost of borrowing.

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Maintained financial discipline and a strong balance sheet.

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Increased worldwide production volumes from ongoing operations by 3% to an average of 594,000 BOE per day for 2017.

■

Increased Permian Resources production by 14% to an average of 141,000 BOE per day for 2017.

■

Reached record high production at Al Hosn Gas, with an increase of 11% to an average 71,000 BOE per day for 2017.

 

Continued emphasis on identifying and developing the Company’s future leadership. Ms. Hollub has worked with senior management and the Board to ensure that the current and future leadership team is positioned to successfully meet the challenges of a dynamic industry. Specific accomplishments include:

 

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Continued an in-depth talent review within Occidental to ensure that the next generation of leaders have been identified and are being appropriately developed for increasingly responsible positions.

■

Appointed several key succession candidates into growth roles.

■

Continued to socialize Occidental’s core values and culture traits throughout the organization.

■

Named to Fortune Magazine’s 2017 “Most Powerful Women in Business” list.

 

Compensation Decisions 

 

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Base salary: Ms. Hollub’s base salary was unchanged in 2017.

■

Annual Cash Incentive: Ms. Hollub’s target Annual Cash Incentive award was set in February 2017 at $1,875,000, unchanged from 2016. The company performance portion of the Annual Cash Incentive award was earned at 130% of target. Based on Ms. Hollub’s individual achievements described above, the Compensation Committee determined that the individual performance portion of the Annual Cash Incentive award was earned at 140% of target.

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Long-Term Incentives: The target value of Ms. Hollub’s long-term incentive award package for 2017 was $8,500,000, an increase of approximately 6% as compared to 2016. 70% of Ms. Hollub’s long-term incentive package is dependent on the company’s TSR performance over a three-year performance period. For information regarding how the Compensation Committee determines individual long-term incentive award amounts, please see “Elements of the 2017 Compensation Program – Long-Term Incentive Compensation” on page 27.

 

Occidental Petroleum Corporation     31

 

 

Edward A. Lowe, Executive Vice President and Group Chairman, Middle East

 

Mr. Lowe has served as Executive Vice President of Occidental since February 2015 and Group Chairman, Middle East, since August 2016. Prior to that, Mr. Lowe served as President, Oxy Oil and Gas — International since 2009. Mr. Lowe is responsible for growing Occidental’s business in the Middle East, including strategy, business development, contract extensions and partner relationships.

 

Tenure. Mr. Lowe has been an employee of Occidental for over 30 years.

 

Performance Assessment. In assessing Mr. Lowe’s performance, the Compensation Committee considered his contributions to the success of Occidental’s operations in the Middle East, including the record-high production from Al Hosn Gas in 2017; his critical involvement in supporting the negotiation of agreements with the National Oil Companies and Petroleum Directorates in Abu Dhabi and Oman; and pursuit and achievement of additional opportunities in the region, including Occidental’s award of an exploration and production sharing agreement for Oman’s Block 30 and the 15-year extension of Oman’s Block 9.

 

Compensation Decisions 

 

■

Base salary: Mr. Lowe’s base salary was unchanged in 2017.

■

Annual Cash Incentive: Mr. Lowe’s target Annual Cash Incentive award was set at $750,000, unchanged from 2016. The company performance portion of the Annual Cash Incentive award was earned at 130% of target. Based on Mr. Lowe’s individual achievements described above, the Compensation Committee determined that the individual performance portion of the Annual Cash Incentive award was earned at 100% of target.

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Long-Term Incentives: The target value of Mr. Lowe’s long-term incentive award package for 2017 was $3,500,000, unchanged from 2016. For information regarding how the Compensation Committee determines individual long-term incentive award amounts, see “Elements of the 2017 Compensation Program – Long-Term Incentive Compensation” on page 27.

 

Marcia E. Backus, Senior Vice President, General Counsel and Chief Compliance Officer

 

Ms. Backus has served as General Counsel since October 2013, Senior Vice President since May 2014 and Chief Compliance Officer since February 2015. Ms. Backus is responsible for overseeing Occidental’s legal and compliance departments. Prior to joining Occidental, Ms. Backus was a partner at the law firm Vinson & Elkins L.L.P. heading the firm’s Energy Transactions/Projects Practice Group and serving in key leadership positions.

 

Tenure. Ms. Backus has been an employee of Occidental since October 2013.

 

Performance Assessment. In assessing Ms. Backus’s performance, the Compensation Committee considered her superior performance in handling ongoing litigation matters and development and implementation of proven litigation strategies; achievement of successful outcomes with respect to resolving litigation matters and other legal disputes; instrumental involvement in negotiations regarding several acquisitions and divestitures in 2017 that have enhanced the value of Occidental’s portfolio of assets; and leadership and oversight of the Company’s global legal department and compliance function.

 

Compensation Decisions 

 

■

Base salary: Ms. Backus’s base salary was unchanged in 2017.

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Annual Cash Incentive: Ms. Backus’s target Annual Cash Incentive award was set at $800,000, unchanged from 2016. The company performance portion of the Annual Cash Incentive award was earned at 130% of target. Based on Ms. Backus’s individual achievements described above, the Compensation Committee determined that the individual performance portion of the Annual Cash Incentive award was earned at 156% of target.

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Long-Term Incentives: The target value of Ms. Backus’s long-term incentive award package for 2017 was $3,000,000, unchanged from 2016. For information regarding how the Compensation Committee determines individual long-term incentive award amounts, see “Elements of the 2017 Compensation Program – Long-Term Incentive Compensation” on page 27.

 

Cedric W. Burgher, Senior Vice President and Chief Financial Officer

 

Mr. Burgher joined Occidental as Senior Vice President and Chief Financial Officer on May 31, 2017. Mr. Burgher previously served as Senior Vice President at EOG Resources, where he led investor relations and reported directly to the Chief Executive Officer. Mr. Burgher is a seasoned energy executive with more than 30 years of experience leading financial and investor functions at a number of global companies. Mr. Burgher is responsible for Occidental’s tax, treasury and controller functions as well as investor relations.

 

2018 Notice of Annual Meeting and Proxy Statement     32

 

 

Sign-on Agreement. Pursuant to a sign-on agreement between Mr. Burgher and Occidental, which was approved by the Compensation Committee, Mr. Burgher’s base salary was set at $600,000 and he was eligible to receive an Annual Cash Incentive award for 2017 on the same terms and conditions as the other executive officers, with a target Annual Cash Incentive award of $600,000. Mr. Burgher received a cash sign-on bonus of $125,000 and will receive a second payment of $125,000 on May 31, 2018, subject to continued employment. Mr. Burgher received a time-based RSU award with a target value of $2,500,000. Mr. Burgher’s RSU award is subject to the same terms and conditions as the 2017 RSU award granted to the other named executive officers, except that it was not subject to a 162(m) performance condition. Mr. Burgher did not participate in the 2017 long-term incentive program. The sign-on arrangements were intended, in part, to compensate Mr. Burgher for his forfeiture of awards that he had received from his prior employer. The Compensation Committee determined that these compensation elements and levels were appropriate based on Mr. Burgher’s experience, internal pay equity, peer company practices and general market data.

 

Performance Assessment. In assessing Mr. Burgher’s performance, the Compensation Committee considered his leadership and management of his functional areas of responsibility, as well as his leadership and support for Occidental’s overall strategic goals and performance objectives. Mr. Burgher’s contributions included his involvement in preserving a strong balance sheet, liquidity position and investment grade credit ratings; maintaining effective financial controls and reports; and sustaining open engagement with institutional investors and analysts.

 

Compensation Decisions 

 

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Base salary: Mr. Burgher’s salary was established in a sign-on agreement with Occidental, as reviewed and approved by the Compensation Committee.

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Annual Cash Incentive: Mr. Burgher’s target Annual Cash Incentive award was set at $600,000, pursuant to the terms of his sign-on agreement. The company performance portion of the Annual Cash Incentive award was earned at 130% of target. Based on Mr. Burgher’s individual achievements described above, the Compensation Committee determined that the individual performance portion of the Annual Cash Incentive award was earned at 140% of target.

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Long-Term Incentives: Mr. Burgher joined Occidental on May 31, 2017, and did not participate in the 2017 long-term incentive program. For information regarding Mr. Burgher’s sign-on long-term incentive award, see “Sign-on Agreement” above.

 

Glenn M. Vangolen, Senior Vice President, Business Support

 

Mr. Vangolen has been Senior Vice President, Business Support since February 2015, and, prior to that role, he held positions of increasing responsibility in the oil and gas and corporate segments. In his current role, Mr. Vangolen is responsible for human resources; health, environment and safety; government relations; security; and information technology functions.

 

Tenure. Mr. Vangolen has been an employee of Occidental for over 35 years.

 

Performance Assessment. In assessing Mr. Vangolen’s performance, the Compensation Committee considered his active oversight of Occidental’s Health, Environment, Safety and Security functions, which received various honors and achievements in 2017, including eight OxyChem and OxyVinyls plants recognized by The Vinyl Institute for excellence in worker safety and environmental protection, based on performance against guidelines and standards established by federal agencies; superior performance in the handling of matters related to Hurricane Harvey, including the establishment of programs for affected employees and their families, such as financial assistance programs, and coordinating volunteer clean-up, tear-down and displacement relief opportunities for employees; continued implementation and oversight of the Re-Imagined Oilfield (RIO) project, an initiative aimed at driving innovation in the oilfield, which contributed to Occidental’s implementation of new technologies in 2017 that have reduced costs and optimized well performance.

 

Compensation Decisions 

 

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Base salary: Mr. Vangolen’s base salary increased by approximately 9% in February 2017 to $625,000, which the Compensation Committee determined was appropriate in light of a review of Mr. Vangolen’s individual responsibilities and 2016 performance assessment, compensation surveys, publicly available peer company data and internal pay equity.

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Annual Cash Incentive: Mr. Vangolen’s target Annual Cash Incentive award was set at $700,000, an increase of approximately 17% from 2016, which the Compensation Committee determined was appropriate in light of a review of Mr. Vangolen’s individual responsibilities and 2016 performance assessment, compensation surveys, publicly available peer company data and internal pay equity. The company performance portion of the Annual Cash Incentive award was earned at 130% of target. Based on Mr. Vangolen’s individual achievements described above, the Compensation Committee determined that the individual performance portion of the Annual Cash Incentive award was earned at 180% of target.

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Long-Term Incentives: The target value of Mr. Vangolen’s long-term incentive award package for 2017 was $2,750,000, unchanged from 2016. For information regarding how the Compensation Committee determines individual long-term incentive award amounts, see “Elements of the 2017 Compensation Program – Long-Term Incentive Compensation” on page 27.

 

Occidental Petroleum Corporation     33

 

 

Other Compensation and Benefits

 

Qualified Defined Contribution Plans

 

Occidental does not have a defined benefit pension plan that provides named executive officers a fixed monthly retirement payment. Instead, all salaried employees on the U.S. dollar payroll, including the named executive officers, are eligible to participate in one or more tax-qualified defined contribution plans.

 

Savings Plan. For 2017, the defined contribution 401(k) savings plan (Savings Plan) permitted employees to save a percentage of their annual salary up to the $270,000 limit set by IRS regulations, and employee pre-tax contributions were limited to $18,000. Employees may direct their contributions to a variety of investments. Occidental matches two dollars for every one dollar the employee contributes up to 2% of eligible pay, plus an additional dollar-for-dollar match on the next 3% of eligible pay. The named executive officers are fully vested in their account balances under the Savings Plan. The amounts contributed by Occidental to the Savings Plan are included in the “All Other Compensation” column of the Summary Compensation Table on page 37.

 

Retirement Plan. The defined contribution retirement plan (Retirement Plan) is funded annually through a reallocation process from the employee’s Supplemental Retirement Plan II (SRP II) account balance (described below). Because it is not possible to determine the exact amount that could be contributed to the Retirement Plan without exceeding governmental limits until the end of the year, the reallocation process has been developed to maximize the amount contributed each year to a tax-qualified defined contribution plan. The Retirement Plan is company-funded, and employees may not contribute to the Retirement Plan. Except for Mr. Burgher, the named executive officers are fully vested in their account balances under the Retirement Plan. The amounts allocated to the Retirement Plan are included in the SRP II contributions by Occidental in the “All Other Compensation” column of the Summary Compensation Table on page 37.

 

Nonqualified Deferred Compensation Plans

 

Occidental maintains two nonqualified deferred compensation plans: (i) the SRP II, and (ii) the Modified Deferred Compensation Plan (MDCP). The purpose of the SRP II is to provide eligible employees, including the named executive officers, with benefits to compensate them for maximum limits imposed by law on the amount of contributions that may be made to Occidental’s tax-qualified defined contribution plans. The purpose of the MDCP is to provide key management and highly compensated employees the ability to accumulate additional retirement income through deferrals of compensation.

 

Additional information regarding the terms and conditions of the SRP II and the MDCP is described on page 44. Amounts contributed to the SRP II on behalf of the named executive officers are included in the “All Other Compensation” column of the Summary Compensation Table on page 37. Amounts of salary and bonus deferred by named executive officers who participate in the MDCP are included as compensation in the “Salary,” and “Non-Equity Incentive Plan Compensation” columns of the Summary Compensation Table on page 37, as applicable. In addition, the contributions, aggregate earnings, withdrawals and aggregate balances for the named executive officers in the SRP II and MDCP with respect to 2017 are shown in the Nonqualified Deferred Compensation table on page 45. No above market earnings were paid in 2017 under either the SRP II or the MDCP.

 

Perquisites

 

Occidental provides a limited number of perquisites for its named executive officers, which, in 2017, consisted principally of fees related to financial planning services and excess liability insurance.

 

Additional Compensation Policies and Practices

 

Stock Ownership Guidelines

 

Occidental’s stock ownership guidelines are intended to more closely align the interests of the named executive officers with those of the company’s stockholders. The ownership requirements range from six times to three times the officer’s annual base salary, based on position, as illustrated below:

 

Position	Multiple of Base Salary
■  Chief Executive Officer	6
■  Chief Financial Officer	4
■  Executive Vice Presidents	4
■  Senior Vice Presidents	3

 

2018 Notice of Annual Meeting and Proxy Statement     34

 

 

Unvested performance-based stock awards and performance-based stock units do not count toward satisfaction of the stock ownership guidelines. Officers subject to the guidelines are expected to comply within five years from the later of the effective date of the guidelines or the date the individual is named to a participating position. As of February 28, 2018, each of the named executive officers was in compliance with the guidelines.

 

Equity Grant Practices

 

The Compensation Committee made equity grants pursuant to the long-term incentive program at its regularly scheduled February meeting. The grant date fair value of the RSU award and TSR award is based on the closing price of Occidental’s common stock on the NYSE on the day the Compensation Committee granted the award, and the grant date fair value of the TSR award also incorporates the estimated payout percentage of the award as of the grant date. As specifically authorized by the terms of the 2015 LTIP, the Compensation Committee has delegated to Ms. Hollub the authority to grant equity awards in certain circumstances to new employees and to grant equity awards to Occidental’s employees that are not executive officers.

 

Section 162(m) Considerations

 

Section 162(m) of the Code, as in effect for 2017, limited to $1 million the amount of compensation a company may deduct for federal income tax purposes in any one year for compensation paid to the Chief Executive Officer and the three other most highly compensated executive officers employed at year-end, excluding the Chief Financial Officer. However, Section 162(m) as in effect for 2017 provided that the $1 million deduction limit generally did not apply to compensation that is performance-based and provided pursuant to a stockholder-approved plan. The TSR award and RSU award granted to the named executive officers, other than Mr. Burgher, and the company performance portion of the Annual Cash Incentive award, were intended to be tax deductible under Section 162(m) as in effect at the time those awards were granted. Because there are uncertainties regarding the application of Section 162(m) of the Code, it is possible that awards intended to qualify for deductions under Section 162(m) may be challenged or disallowed. In addition, as a result of changes to the tax laws enacted in December 2017 and effective beginning January 1, 2018, we expect that equity awards or other compensation granted or provided under arrangements entered into or modified after November 2, 2017 to any person who is or was a named executive officer will not be deductible to the extent such amounts exceed $1 million in any one year.

 

Although tax consequences are considered in making compensation decisions, the Compensation Committee has not adopted a policy requiring that certain compensation elements must be deductible. Rather, the Compensation Committee gives priority to the overall compensation objectives discussed in this CD&A.

 

Potential Recoupment of Compensation Due to Misconduct

 

Occidental may recoup certain compensation from the executive officers in the event of misconduct pursuant to the terms of Occidental’s Code of Business Conduct, the terms of the plan underlying the Annual Cash Incentive awards and the terms of the 2015 LTIP. Occidental’s Code of Business Conduct prohibits any officer, employee or director from violating or circumventing any law of the United States or a foreign country or engaging in unethical conduct during the course of his or her employment. The Audit Committee oversees compliance with the Code of Business Conduct and has put in place procedures, including a compliance hotline, to encourage prompt reporting of violations or suspected violations of the Code of Business Conduct, without fear of retaliation. In general, misconduct may have several consequences, including the following:

 

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If a named executive officer was found to have violated the Code of Business Conduct, the officer would be subject to disciplinary action, which may include termination, referral for criminal prosecution and reimbursement to Occidental or others for any losses or damages resulting from the violation.

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Stock awards may be forfeited in whole or in part in the case of an employee’s termination for cause.

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Stock awards and the Annual Cash Incentive award may be forfeited or reduced for violations of the Code of Business Conduct or other provisions of the award agreements.

 

In addition, the 2015 LTIP includes a provision that gives Occidental the contractual right to recoup awards (i) where a participant has breached Occidental’s Business Code of Conduct by violating applicable law or company policy or engaging in unethical conduct or (ii) pursuant to a policy to be adopted by Occidental to comply with Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which will generally require recoupment of incentive-based compensation if Occidental is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement.

 

Occidental Petroleum Corporation     35

 

 

Risk Assessment of Compensation Policies and Practices

 

Although the majority of the executive compensation pay program is performance-based, the Compensation Committee believes the program does not encourage unnecessary or excessive risk-taking. In reaching its conclusion, the Compensation Committee reviewed the findings of a risk-taking analysis performed by its independent compensation consultant, Meridian. The Compensation Committee concurred with Meridian’s finding that Occidental’s executive compensation program includes multiple features that appropriately control motivations for excessive risk-taking and that the compensation program does not encourage excessive risk-taking. The compensation features that are indicative of appropriate risk-taking include, among others:

 

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Total compensation featuring an effective balance of short- and long-term performance components;

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Use of a transparent, external performance metric, TSR, for a majority of the long-term incentive program opportunity;

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Diversified performance metrics, as the Annual Cash Incentive considers multiple performance criteria rather than a single metric;

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Capped Annual Cash Incentive and long-term incentive awards;

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Payouts of long-term incentive awards that are 100% in stock rather than cash;

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Claw-back provisions beyond legal requirements (forfeiture and recoupment provisions of awards in the event of violations of Occidental’s Code of Business Conduct); and

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Meaningful stock ownership guidelines for executives that encourage a long-term perspective.

 

Compensation Committee Report

 

The Compensation Committee has reviewed and discussed with management the preceding Compensation Discussion and Analysis section for the year ended December 31, 2017. Based on these reviews and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Proxy Statement for the 2018 Annual Meeting of Stockholders.

 

Respectfully submitted,

 

THE EXECUTIVE COMPENSATION COMMITTEE 

 

Margaret M. Foran (Chair) 

Spencer Abraham 

John E. Feick 

William R. Klesse 

Jack B. Moore

 

2018 Notice of Annual Meeting and Proxy Statement     36

 

 

EXECUTIVE COMPENSATION TABLES

 

Summary Compensation

 

SUMMARY COMPENSATION TABLE

 

Name and Principal Position		Year		Salary(1)			Bonus(2)			Stock Awards(3)			Option Awards(4)			Non-Equity Incentive Plan Compensation(5)			All Other Compensation(6)			Total
Vicki Hollub  President and Chief Executive Officer		2017		$	1,250,000		$	0		$	8,500,028		$	0		$	2,475,000		$	450,832		$	12,675,860
		2016		$	1,143,314		$	0		$	9,765,802		$	0		$	1,875,000		$	214,379		$	12,998,495
		2015		$	687,500		$	0		$	4,062,500		$	722,500		$	0		$	123,865		$	5,596,365
Edward Lowe  Executive Vice President and Group Chairman, Middle East		2017		$	625,000		$	1,250,000		$	3,500,078		$	0		$	885,000		$	214,541		$	6,474,619
		2016		$	625,000		$	0		$	4,029,783		$	0		$	750,000		$	127,035		$	5,531,818
		2015		$	625,000		$	0		$	3,250,000		$	170,000		$	0		$	147,973		$	4,192,973
Marcia Backus  Senior Vice President, General Counsel and Chief Compliance Officer		2017		$	700,000		$	0		$	3,000,090		$	0		$	1,124,000		$	219,370		$	5,043,460
		2016		$	646,970		$	0		$	4,059,535		$	0		$	800,000		$	118,336		$	5,624,841
		2015		$	541,667		$	500,000		$	1,787,500		$	170,000		$	0		$	135,841		$	3,135,008
Cedric Burgher Senior Vice President and Chief Financial Officer		2017		$	353,425		$	125,000		$	2,500,046		$	0		$	804,000		$	54,521		$	3,836,992
Glenn Vangolen Senior Vice President, Business Support		2017		$	617,192		$	0		$	2,750,068		$	0		$	1,050,000		$	195,004		$	4,612,264
		2016		$	575,000		$	0		$	3,258,557		$	0		$	600,000		$	103,097		$	4,536,654
Christopher Stavros (retired)  Former Senior Vice President and Chief Financial Officer		2017		$	444,006		$	2,100,000		$	3,000,090	(7)	$	0		$	356,000		$	493,484		$	6,393,580
		2016		$	650,000		$	0		$	4,059,535		$	0		$	800,000		$	185,777		$	5,695,312
		2015		$	600,000		$	0		$	2,437,500		$	425,000		$	0		$	795,794		$	4,258,294

(1)

Includes any salary amounts voluntarily deferred by the executive officer pursuant to Occidental’s Modified Deferred Compensation Plan (MDCP). For Mr. Stavros, salary includes a payment for accrued but unused vacation in connection with his retirement in accordance with Occidental’s vacation policy.

(2)

In 2017, pursuant to a February 2013 retention award, Mr. Lowe received a lump sum cash payment equal to two times, and Mr. Stavros three times, the executive’s annual base salary. The retention award was granted to certain key executive officers to ensure continuity of the senior management team in connection with Occidental’s former Chief Executive Officer’s pending retirement and the transition to a new Chief Executive Officer. The retention award was conditioned on the executive officer remaining an active employee in good standing through April 29, 2017, the one-year anniversary of the Chief Executive Officer transition.

Mr. Burgher commenced employment with Occidental on May 31, 2017 and received a $125,000 cash sign-on bonus payment pursuant to his sign-on agreement as described on page 33.

(3)

For 2017, amounts shown represent the aggregate grant date fair value of the long-term incentive awards granted to the named executive officers, other than Mr. Burgher, pursuant to the long-term incentive program. Mr. Burgher’s “Stock Award” value represents the grant date fair value of his sign-on RSU award as described on page 33.

The grant date fair value of each RSU award equals the number of restricted stock units granted multiplied by Occidental’s closing stock price on the grant date ($58.93 for Mr. Burgher’s sign-on RSU award and $67.21 for the RSU award granted to all other named executive officers).

The grant date fair value of each TSR award incorporates Occidental’s closing stock price on the grant date of $67.21, as well as the estimated payout percentage as of the grant date. See Note 12 to the Consolidated Financial Statements in Occidental’s Annual Report on Form 10-K regarding assumptions underlying the valuation of the TSR award. The maximum values of the TSR award as of the grant date for Ms. Hollub, Mr. Lowe, Ms. Backus, Mr. Vangolen and Mr. Stavros were approximately $14.2 million, $4.6 million, $3.9 million, $3.6 million, and $3.9 million, respectively. The RSU award has no above-target payout scenario.

(4)

The named executive officers did not receive stock option grants in 2016 or 2017.

(5)

The amount shown represents the amount paid pursuant to the Annual Cash Incentive award, including any amount voluntarily deferred by the executive officer under the MDCP. For more information regarding the 2017 Annual Cash Incentive award, see “Compensation Discussion and Analysis–Elements of the 2017 Compensation Program–Annual Cash Incentive” on page 25.

 

Occidental Petroleum Corporation     37

 

 

(6)

The following table shows “All Other Compensation” amounts for 2017 for the named executive officers. In accordance with SEC rules, benefits that are generally available to all full-time salaried U.S. dollar employees, such as medical, dental, life insurance, health savings, and flexible spending accounts are not shown.

 

		V. Hollub				E. Lowe				M. Backus				C. Burgher				G. Vangolen				C. Stavros
Savings Plan(a)		$	18,900			$	18,900			$	18,900			$	18,900			$	18,900			$	18,900
SRP II(b)		$	427,711			$	180,469			$	200,470			$	35,621			$	155,437			$	130,967
MDCP(c)		$	4,221			$	—			$	—			$	—			$	5,250			$	3,500
Personal Benefits		$	—			$	15,172	(d)		$	—			$	—			$	15,417	(e)		$	340,117	(f)
Total		$	450,832			$	214,541			$	219,370			$	54,521			$	195,004			$	493,484

(a)

The amount shown is Occidental’s contribution to the Occidental Petroleum Corporation Savings Plan (Savings Plan) described on page 34.

(b)

The amount shown is Occidental’s contribution to the Supplemental Retirement Plan II (SRP II) described on page 44.

(c)

The amount shown is Occidental’s contribution to the Modified Defined Contribution Plan (MDCP) described on page 44.

(d)

Includes financial planning, excess liability insurance and executive physical.

(e)

Includes financial planning, excess liability insurance and club membership dues.

(f)

Includes separation payments of $323,077, tax preparation, financial planning and excess liability insurance. For further information regarding amounts paid to Mr. Stavros pursuant to his separation agreement, see “Potential Payments upon Termination or Change in Control” on page 45.

 

(7)

Mr. Stavros retired as Senior Vice President and Chief Financial Officer on May 30, 2017. Pursuant to SEC rules, the amount shown reflects the grant date fair value of the stock awards granted to Mr. Stavros in 2017; however, due to Mr. Stavros’s retirement, pursuant to the terms of the awards, only a prorated portion of the stock units underlying the stock awards vested at the time of his retirement based on the number of days Mr. Stavros was employed during each award’s vesting or performance period, as applicable, with the balance of the awards forfeited. The grant date fair value of the stock awards, as prorated, is $423,256.

 

2018 Notice of Annual Meeting and Proxy Statement     38

 

 

Grants of Plan-Based Awards

 

The table below shows the plan-based awards granted by the Compensation Committee to the named executive officers in 2017. For a summary of the key terms of the awards granted pursuant to the 2017 long-term incentive program, see “Elements of the 2017 Compensation Program – Long-Term Incentive Compensation” beginning on page 27. For the actual amounts earned under the Annual Cash Incentive award, see the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table on page 37.

 

GRANTS OF PLAN-BASED AWARDS

 

																									All Other
					Estimated Possible Payouts											Estimated Future Payouts									Stock			Grant Date
					Under Non-Equity Incentive											Under Equity Incentive									Awards: # of			Fair Value of
					Plan Awards(1)											Plan Awards									Shares of			Stock
Name/Type		Grant			Threshold			Target				Maximum				Threshold			Target			Maximum			Stock or			Awards
of Grant		Date			$			$				$				# Shares			# Shares			# Shares			Units			($)
V. Hollub
ACI					$  0			$	1,875,000			$	3,750,000
RSU(2)		02/15/17																							37,941			$	2,550,015
TSR(3)		02/15/17														26,405			105,619			211,238						$	5,950,013
E. Lowe
ACI					$  0			$	750,000			$	1,500,000
RSU(2)		02/15/17																							23,435			$	1,575,066
TSR(3)		02/15/17														8,543			34,171			68,342						$	1,925,012
M. Backus
ACI					$  0			$	800,000			$	1,600,000
RSU(2)		02/15/17																							20,087			$	1,350,047
TSR(3)		02/15/17														7,323			29,290			58,580						$	1,650,043
C. Burgher
ACI					$  0			$	600,000			$	1,200,000
RSU(4)		05/31/17																							42,424			$	2,500,046
G. Vangolen
ACI					$  0			$	700,000			$	1,400,000
RSU(2)		02/15/17																							18,413			$	1,237,538
TSR(3)		02/15/17														6,712			26,849			53,698						$	1,512,530
C. Stavros (retired)(5)
ACI					$  0			$	900,000			$	1,800,000
RSU(2)		02/15/17																							20,087			$	1,350,047
TSR(3)		02/15/17														7,323			29,290			58,580						$	1,650,043

 

Occidental Petroleum Corporation     39

 

 

(1)

Amounts shown reflect the possible payout range of the 2017 Annual Cash Incentive award. For the actual amount paid to each executive pursuant to the Annual Cash Incentive award, see the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table on page 37. For 2017, payout of the Annual Cash Incentive award was based on Occidental’s performance with respect to a basket of key company performance metrics and the Compensation Committee’s assessment of each named executive officer’s individual performance. The Annual Cash Incentive is described further under “Elements of the 2017 Compensation Program–Annual Cash Incentive” on page 25.

(2)

The grant date fair value of the RSU award is equal to the number of restricted stock units granted multiplied by $67.21, the closing price of Occidental’s common stock on the NYSE on the grant date. The RSU award vests ratably over three years with one-third vesting on each of February 28, 2018, 2019 and 2020, subject to continued employment, and is payable in shares of common stock upon vesting. The vested shares are subject to a two-year holding period. The value of the RSU award at vesting will depend on the closing price of Occidental’s common stock on each vesting date multiplied by the number of stock units vested. For more information regarding the RSU award, see “Elements of the 2017 Compensation Program – Long-Term Incentive Compensation–Restricted Stock Unit (RSU) Award” on page 28.

(3)

The grant date fair value of the TSR award is based on a Monte Carlo simulation in accordance with FASB ASC 718. Actual payout of the TSR award may be zero or a range from 25% to 200% of the target number of PSUs granted based on Occidental’s TSR at the end of the three-year performance period as compared to the TSR of the performance peer companies and whether Occidental’s absolute TSR value for the performance period is positive. For more information regarding the payout possibilities of the TSR award, please see “Elements of the 2017 Compensation Program – Long- Term Incentive Compensation–Total Shareholder Return (TSR) Award” on page 27.

(4)

The grant date fair value of Mr. Burgher’s RSU award is equal to the number of restricted stock units granted multiplied by $58.93, the closing price of Occidental’s common stock on the NYSE on the grant date. Mr. Burgher’s RSU award was granted in connection with his commencement of employment on May 31, 2017. Mr. Burgher did not participate in the 2017 long-term incentive program.

(5)

Mr. Stavros retired as Senior Vice President and Chief Financial Officer on May 30, 2017. Pursuant to SEC rules, amounts shown reflect the grant date fair value of the TSR award and the RSU award; however, due to Mr. Stavros’s retirement, pursuant to the terms of the awards, only a prorated portion of the stock units underlying the stock awards vested at the time of his retirement based on the number of days Mr. Stavros was employed during each award’s vesting or performance period, as applicable, with the balance of the awards forfeited. The grant date fair value of the stock awards, as prorated, is $423,256.

 

 

2018 Notice of Annual Meeting and Proxy Statement     40

 

 

Outstanding Equity Awards

 

The table below sets forth the outstanding equity awards held by the named executive officers as of December 31, 2017.

 

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2017

 

Option Awards

Stock Awards

Equity incentive

Equity incentive

Market

plan awards:

plan awards:

Number

Number

Number of

value of

number of

market or

of securities

of securities

restricted

restricted

unearned

payout value of

underlying

underlying

Option

stock units

stock units

shares, units

unearned shares,

unexercised

unexercised

exercise

Option

that have not

that have

or other rights

units or other

options (#)

options (#)

price

expiration

vested

not vested

that have not

rights that have

Name/Type of Award

Grant Date

exercisable

un-exercisable

($)

date

(#)

(#)(1)

vested (#)

not vested ($)(1)

V. Hollub

NQSO(2)

02/11/2015

56,667

28,333

$

79.98

2/11/2022

RSU(3)

02/17/2016

16,666

$

1,227,618

RSU(3)

07/13/2016

20,825

$

1,533,970

RSU(3)

02/15/2017

37,941

$

2,794,734

RSI(4)

07/22/2013

4,470

$

329,260

RSI(4)

07/09/2014

13,955

$

1,027,925

ROCE(5)

07/08/2015

17,232

$

1,269,309

PRI(6)

07/08/2015

25,848

$

1,903,964

TSR(7)

07/08/2015

22,169

$

1,632,969

TSR(7)

07/13/2016

84,179

$

6,200,625

TSR(7)

02/15/2017

211,238

$

15,559,791

E. Lowe

NQSO(2)

02/11/2015

13,334

6,666

$

79.98

2/11/2022

RSU(3)

02/17/2016

5,000

$

368,300

RSU(3)

07/13/2016

13,666

$

1,006,638

RSU(3)

02/15/2017

23,435

$

1,726,222

RSI(4)

07/11/2012

19,938

$

1,468,633

RSI(4)

07/22/2013

15,469

$

1,139,447

RSI(4)

07/09/2014

13,955

$

1,027,925

ROA(5)

07/08/2015

690

$

50,789

ROA-MENA(8)

07/08/2015

22,058

$

1,624,792