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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) OCTOBER 6, 1997
OCCIDENTAL PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-9210 95-4035997
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
10889 WILSHIRE BOULEVARD, LOS ANGELES, CALIFORNIA 90024
(Address of principal executive offices) (ZIP code)
Registrant's telephone number, including area code:
(310) 208-8800
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ITEM 5. OTHER EVENTS.
On October 6, 1997, the Registrant (hereinafter, the
"Company" or "Occidental") announced the following
developments:
1. ACQUISITION OF ELK HILLS FIELD. The Company has signed
an agreement with the Department of Energy to acquire the
U.S. Government's 78 percent interest in the Elk Hills
Field. Occidental's bid was $3.65 billion.
The Elk Hills acquisition will be funded using
anticipated proceeds from the divestiture of MidCon Corp.
(described in paragraph 2 below) and an additional amount
that Occidental expects to raise from the sale of other non-
strategic assets that earn a lower rate of return than Elk
Hills. In the interim, the acquisition will be funded with
short-term debt.
The acquisition of the Elk Hills Field is effective
October 1, 1997, with closing, subject to congressional
review, expected in February 1998.
The Elk Hills Field is 15 miles west of Bakersfield,
California, and is approximately 15 miles long and 5 miles
wide. The field produces an average 31 degree API gravity
oil.
2. MIDCON DIVESTITURE. Occidental plans to divest MidCon
Corp., its natural gas pipeline subsidiary. The divestiture
is expected to be completed early next year. The Company
expects to raise at least $3 billion from the divestiture of
MidCon which will be used to fund an initial Occidental
Common Stock Repurchase Program (described in paragraph 3
below), and to partially fund the Elk Hills Field
acquisition (described in paragraph 1 above).
MidCon engages in interstate and intrastate natural gas
transmission and marketing and electric power marketing.
MidCon's subsidiaries purchase, transport, store and process
gas and sell gas to utilities, municipalities and industrial
and commercial users.
3. OPC COMMON STOCK REPURCHASE PROGRAM. The Company will
commence immediately a Common Stock Repurchase Program, in
which up to 40 million shares could be purchased. The
repurchase program will be funded initially by the issuance
of short-term debt, and subsequently with a portion of the
proceeds from the MidCon divestiture (described in
paragraph 2 above).
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The repurchases will be made in the open market or in
privately negotiated transactions at the discretion of
Occidental's management, depending upon financial and market
conditions or as otherwise provided by the Securities and
Exchange Commission and New York Stock Exchange rules and
regulations.
4. AMENDMENTS TO EMPLOYMENT AGREEMENTS OF CHIEF EXECUTIVE
OFFICER AND SENIOR OPERATING OFFICER. The Board of
Directors of Occidental authorized amendments to the
Employment Agreements of Dr. Ray R. Irani, Chairman and
Chief Executive Officer, and Dr. Dale R. Laurance, President
and Senior Operating Officer, which have been implemented.
The Board's objectives were to implement new performance
based compensation, significantly reduce or eliminate
Company financial obligations and continue to retain the
Company's most senior executives.
Dr. Irani's employment arrangements prior to this
amendment were specified in his 1991 Employment Agreement,
which was approved by the Board at that time, when the Board
determined that it was critical to the Company to retain
Dr. Irani as the new Chief Executive Officer. The 1991
Agreement was based in part on his 1983 Employment
Agreement, when he moved from Olin Corporation in
Connecticut to Occidental. The following provisions of his
1991 Employment Agreement were eliminated by this amendment:
(i) a seven-year automatic term "evergreen"
arrangement, entitling him to an annual salary of at least
$1.9 million;
(ii) an annual bonus of at least 60 percent of his
salary;
(iii) an annual restricted stock grant of at least 101
percent of his salary;
(iv) guaranteed annual stock option grants;
(v) a supplemental retirement benefit entitling him to
at least $2.6 million annually, adjusted for changes in the
Consumer Price Index;
(vi) a special surviving spouse benefit;
(vii) state/local income tax reimbursement, grossed up;
(viii) lump sum payment upon death equal to seven times
his annual aggregate compensation;
(ix) seven-year salary plus bonus payments in the event
of termination by the Company, adjusted for changes in the
Consumer Price Index; and
(x) change-in-control provisions.
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The Employment Agreement of Dr. Laurance was approved
by the Board in 1993. The following provisions of
Dr. Laurance's Employment Agreement were eliminated by these
amendments:
(i) a two-year automatic term "evergreen" arrangement,
entitling him to no decrease in salary;
(ii) a special supplemental retirement benefit; and
(iii) a special surviving spouse benefit, adjusted for
changes in the Consumer Price Index.
The Compensation Committee of the Board of Directors
decided that both Employment Agreements should be reassessed
at this time. The Committee retained actuarial and
compensation consultants and independent legal counsel to
assist and advise the Committee in analyzing the Employment
Agreements and to provide advice and counsel to the
Committee and to the Board on settling the obligations
created by the foregoing provisions and implementing new,
more progressive employment agreements.
The Committee recommended, and the outside directors of
the Board agreed, to settle the obligations of the existing
agreements and enter into amended and restated employment
agreements with the two senior executives. Payments were
made for the actuarially determined discounted value of
their retirement benefits and for the other eliminated
obligations. The settlement payments for these obligations
amounted to $95 million for Dr. Irani and $17 million for
Dr. Laurance. The Company expects to take an after-tax
charge of approximately $0.16 per share in the third quarter
of 1997 for the settlement of these contracts. After this
charge, Occidental expects to report net income of
approximately $0.40 per share for the third quarter of 1997.
As a result of the foregoing settlements and
amendments, Dr. Irani now has an Amended and Restated
Employment Agreement for a fixed five-year term, with a
reduced base salary of $1.2 million. His annual bonus and
long-term stock-based incentive compensation will be
determined at the discretion of the Compensation Committee
of the Board of Directors and will be dependent upon the
Company's performance. The contractual rights from his 1991
Agreement noted above have all been eliminated. Similarly,
Dr. Laurance now has an Amended and Restated Employment
Agreement for a five-year fixed term at his previous
compensation. The contractual rights from his 1993
Employment Agreement noted above have all been eliminated.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
10.1 Employment Agreement, dated as of September 11, 1997,
between Occidental Petroleum Corporation and Dr. Ray R.
Irani.
10.2 Receipt and Acknowledgment, dated September 11, 1997, of
Dr. Ray R. Irani and Ghada Irani.
10.3 Employment Agreement, dated as of September 11, 1997,
between Occidental Petroleum Corporation and Dr. Dale R.
Laurance.
10.4 Receipt and Acknowledgment, dated September 11, 1997, of
Dr. Dale R. Laurance and Lynda E. Laurance.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
OCCIDENTAL PETROLEUM CORPORATION
(Registrant)
DATE: October 6, 1997 S. P. Dominick, Jr.
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S. P. Dominick, Jr.,
Vice President and Controller
(Chief Accounting and Duly
Authorized Officer)
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EXHIBIT INDEX
EXHIBITS
10.1 Employment Agreement, dated as of September 11, 1997,
between Occidental Petroleum Corporation and Dr. Ray R.
Irani.
10.2 Receipt and Acknowledgment, dated September 11, 1997,
of Dr. Ray R. Irani and Ghada Irani.
10.3 Employment Agreement, dated as of September 11, 1997,
between Occidental Petroleum Corporation and Dr. Dale R.
Laurance.
10.4 Receipt and Acknowledgment, dated September 11, 1997,
of Dr. Dale R. Laurance and Lynda E. Laurance.