OXY Occidental Petroleum Corporation

 

Change in Control Severance Plan

On May 29, 2020, Occidental Petroleum Corporations (the “Company”) adopted the Occidental Petroleum Corporation Executive Change in Control Severance Plan (the “CIC Severance Plan”), which provides enhanced severance benefits to the Company’s executive officers upon qualifying terminations of employment within two years following a Change in Control (as defined in the CIC Severance Plan).

The CIC Severance Plan will complement the Company’s existing Executive Severance Plan, which provides severance benefits upon qualifying terminations before a Change in Control and after the two-year protection period following the Change in Control, but does not provide for enhanced change-in-control protections.  No executive officer is party to an individual employment or other agreement that provides for enhanced change-in-control severance benefits.

The purpose of adopting the CIC Severance Plan is to allow the Company’s executives to continue to exercise their judgment and perform their responsibilities without the potential for distraction that can arise from concerns regarding their personal circumstances in the event of a Change in Control.  In reviewing the CIC Severance Plan, the Executive Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) consulted with its independent compensation consultant, Meridian Compensation Partners, LLC, to develop market-based severance benefits that are competitive within the oil and gas industry and that reflect broader U.S. industry practices.  The Compensation Committee also reviewed the plan and determined that it did not provide benefits in excess of the Company’s long-established Golden Parachute Policy.

Severance benefits are payable under the CIC Severance Plan if an eligible executive’s employment with the Company and its subsidiaries is terminated within two years following a Change in Control either (a) by the Company (other than for “cause” (as defined in the CIC Severance Plan)) or (b) by the eligible executive for “good reason” (as defined in the CIC Severance Plan).  The severance benefits are as follows:

(1) Cash Severance. The executive would receive a cash severance amount equal to 2.00 times (or, in the case of the Company’s chief executive officer, 2.99 times) the sum of (A) the executive’s base salary (based on the highest base salary in effect at any time during the three-year period preceding the Change in Control or at any time on or after the Change in Control) and (B) the executive’s target annual bonus.

(2) Pro Rata Bonus.  The executive would receive a pro rata portion of the executive’s annual bonus, determined based on the greater of (A) the executive’s target annual bonus and (B) the amount of such bonus that would have been due for the full year based on actual results for such year, had the executive remained employed through the payment date.

(3) Welfare Benefits.  For two years following the termination date, the executive would receive continued participation of the executive (and eligible dependents) in the basic life, medical and dental plans in which the executive participated immediately before the termination date at the same rates and levels in accordance with the terms of such plans.  For purposes of determining the executive’s eligibility for retiree medical and dental benefits, the executive would be considered to have remained employed until two years after the executive’s termination date and to have retired on the last day of such period.

(4) Accelerated Vesting of Long-Term Incentive Awards.  The executive would receive vesting of all outstanding long-term incentive awards.  Any performance-based awards would vest at the greater of target performance and actual performance, except that any individual performance goals that are not based on objective financial performance criteria would be deemed earned at target performance.

(5) Outplacement.  The executive would receive outplacement services for up to nine months following the termination date.

The foregoing severance benefits are subject to the executive’s execution of a release of any claims against the Company, as well as any restrictive covenants that the Compensation Committee determines in its discretion.  Under the CIC Severance Plan, severance benefits to any executive cannot exceed the amount permitted under the Company’s Golden Parachute Policy unless approved by a vote of the Company’s stockholders.  Further, if any of the executive’s payments under the CIC Severance Plan or otherwise would be subject to “golden parachute” excise taxes under the Internal Revenue Code, the payments to the executive will be reduced in order to limit or avoid the “golden parachute” excise tax if and to the extent such reduction would produce an expected better after-tax result for the executive.

The foregoing description is only a summary and is qualified in its entirety by reference to the full text of the CIC Severance Plan, a copy of which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020.

Named Executive Officer Change

Effective May 29, 2020, Edward A. Lowe began serving the Company in a non-executive officer capacity as Group Chairman, Middle East.