SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
TEXACO INC.
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
N/A
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Resgistrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
(2) Aggregate number of securities to which transactions applies:
________________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (1)
________________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
________________________________________________________________________________
(2) Form, schedule or registration statement no.:
________________________________________________________________________________
(3) Filing party:
________________________________________________________________________________
(4) Date filed:
________________________________________________________________________________
-----------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
[LOGO]
TEXACO INC.
2000 WESTCHESTER AVENUE
WHITE PLAINS, NY 10650
NOTICE OF ANNUAL MEETING
To Stockholders:
The Annual Meeting of the Stockholders of Texaco Inc. will be held at the
Rye Town Hilton, 699 Westchester Ave., Rye Brook, NY on Tuesday, May 9, 1995, at
10:00 a.m. for the purpose of transacting such business as may properly come
before the meeting.
The management intends to present for action at this meeting (1) the
election of four directors and (2) the approval of the appointment of auditors
for the year 1995. In addition, certain stockholders have notified the company
that they intend to present to the meeting proposals regarding classification of
the Board of Directors, executive compensation, employment opportunity and
corporate conduct guidelines.
The Board of Directors has fixed March 10, 1995, as the record date for
determination of the stockholders entitled to notice of, and to vote at, this
meeting. The list of stockholders entitled to vote will be open to the
examination of any stockholder at the Rye Town Hilton for ten days prior to May
9, 1995.
To assure your representation at the meeting, please complete, sign and mail
promptly the enclosed proxy card which is being solicited on behalf of the
management, whether or not you plan to attend the meeting. A return envelope
which requires no postage is enclosed for that purpose. ONLY THOSE STOCKHOLDERS
OR THEIR PROPERLY IDENTIFIED PROXIES WITH VALIDATED ADMISSION TICKETS WILL BE
ADMITTED TO THE MEETING. IF YOU PLAN TO ATTEND THE MEETING, PLEASE MARK THE BOX
PROVIDED ON YOUR PROXY CARD.
Carl B. Davidson
Vice President and Secretary
March 27, 1995
PROXY STATEMENT
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This proxy statement and accompanying proxy card are first being mailed to
stockholders on or about March 27, 1995. The proxies are being solicited by
order of the Board of Directors of Texaco Inc. and all expenses incident thereto
will be borne by the company. Proxies may be solicited by mail, telephone,
telegram, facsimile, or in person. The company will request persons holding
stock in their names for others, or in the names of nominees for others, to
obtain voting instructions from the beneficial owner, and the company will
reimburse such persons for their reasonable out-of-pocket expenses in obtaining
voting instructions. Morrow & Co., Inc. has been retained to assist in
soliciting proxies at a fee not to exceed $25,000, plus reasonable out-of-pocket
expenses. A copy of the Annual Report for 1994, including audited financial
statements, is being sent to stockholders with this Proxy Statement. It is not
to be regarded as proxy soliciting material.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of a majority of the voting power of the shares present
in person or represented by proxy at the meeting and entitled to vote on the
subject matter is required for approval of matters presented to the meeting,
except for the election of directors, which requires a plurality of the votes of
the shares present in person or represented by proxy at the meeting and entitled
to vote on the election of directors. Your executed proxy will be voted at the
meeting, unless you revoke it at any time before the vote by filing with the
Secretary of the company an instrument revoking it, duly executing a proxy card
bearing a later date, or appearing at the meeting and voting in person.
Signed, unmarked proxy cards are voted in accordance with management's
recommendations. The number of shares abstaining on each proposal are counted
and reported as a separate total. Abstentions are included in the tally of
shares represented, but are not included in the determination of the number of
votes cast for or against a particular item. Therefore, abstentions have the
effect of a vote cast against a particular item. Shares not voted simply as a
consequence of brokers voting less than all of their entitlement on
non-discretionary items under the provisions of New York Stock Exchange Rule 452
are not included in the tally of the number of shares cast for, against or
abstained from any proposal, and will, therefore, have the effect of reducing
the number of shares needed to approve any item.
It is the policy of the company that all voted proxies and ballots be
handled in a manner that protects employee and individual shareholder voting
privacy, and no such vote shall be disclosed except: as necessary to meet any
legal requirements; in limited circumstances such as a proxy contest in
opposition to the Board of Directors; to permit independent Inspectors of
Election to tabulate and certify the vote; and to respond to shareholders who
have written comments on their proxy cards.
Unless otherwise indicated on any proxy card, the persons named as your
proxies in the proxy card intend to vote the shares it represents FOR all the
nominees for director, FOR Item 2, and AGAINST Items 3, 4, 5 and 6.
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INFORMATION CONCERNING THE BOARD OF DIRECTORS;
ITS GOVERNANCE PROCEDURES, COMMITTEES AND COMPENSATION
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GOVERNANCE
The company's Certificate of Incorporation provides that the number of
directors shall be fixed from time to time by or pursuant to the by-laws. These
by-laws currently provide for a Board of 13, which, as provided by the
Certificate, is divided into three classes.
Consistent with its historic practice, the preponderance of the Board
consists of outside, independent directors, currently 11.
. The Board established a Committee of Non-Management Directors in 1949
which is responsible for management incentive awards, appraisal and compensation
of officer-directors and executive development, organization and succession.
Among other responsibilities, the Committee Chairman leads the personal
performance appraisals of the Chief Executive Officer and also serves as a
contact point on Board issues.
. The Audit, Nominating, Compensation, Pension and Public Responsibility
Committees are also composed entirely of outside directors.
. The Public Responsibility Committee reviews and makes recommendations
regarding the company's role as a responsible corporate citizen, including those
related to equal employment opportunity, health, environmental and safety
matters, the company's relationships with its several constituencies and the
company's philanthropic programs.
. The Compensation Committee regularly reviews the company's compensation
structure, including the use of audit reviews and consultations by outside
independent sources, to insure that executive compensation is competitive,
closely linked to financial performance, motivates performance which will best
serve the stockholders' interest and is in full compliance with Texaco's "Vision
and Values."
. Texaco established its independent Audit Committee in 1939, 38 years
before the New York Stock Exchange imposed this requirement on listed companies.
. The by-laws provide for shareholder nominations of director candidates.
This process includes discussion with shareholders and the adoption of,
publication and distribution in 1988 to shareholders of guidelines and
qualifications for directors with the highest personal and professional ethics,
integrity and values; education and breadth of experience to understand business
problems and evaluate and postulate solutions; personality to work well with
others with depth and wide perspective in dealing with people and situations;
respect for the views of others and not rigid in approach to problems; a
reasoned and balanced commitment to the social responsibilities of the company;
an interest and availability of time to be involved with the company and its
employees over a sustained period; stature to represent the company before the
public, shareholders and the other various individuals and groups that affect
the company; the willingness to objectively appraise management performance in
the interest of the shareholders; an open mind on all policy issues and areas of
activity affecting overall interests of the company and its shareholders; and
involvement only in other activities or interests that do not create a conflict
with the director's responsibilities to the company and its shareholders.
. The Board, working with management, has established a series of procedures
to assure a flow of information
2
about the company's business. New directors participate in orientation programs,
which include visits to company facilities and discussions with management
personnel. Pre-meeting materials include supporting data and write-ups of items
coming before the Board, as well as operational and financial information.
Senior officers routinely attend at least a portion of every Board meeting and
they and other members of management frequently brief the Board. Board members
take these and other opportunities to discuss company business with these
officers.
. Under the company's total quality program, the Board and management
discuss and define quality guidelines for each. Those of the Board include
loyalty to and pride in Texaco and its reputation; independence and integrity;
representation of the total stockholder constituency; good understanding of the
business; study and understanding of Board issues; active, objective and
constructive participation at meetings of the Board and its committees;
collective breadth of experience; appraisal of executive management; management
succession planning and review; assistance in representing Texaco to the outside
world; and individual availability for consultation on corporate issues.
. Texaco has a policy of open communication with institutional investors,
other stockholders and the press, in annual public sessions and in smaller
sessions.
. Texaco's Board periodically evaluates its effectiveness and has identified
the following nine areas of Board involvement and responsibility as benchmarks
for their focus on the creation and protection of value for the stockholders:
1. The review and approval of Texaco's tactical plans, monitoring their
accomplishment and comparing Texaco's competitive positioning.
2. The review of Texaco's strategic plan and its long range goals, the
evaluation of Texaco's performance against such plan and goals and the
competition, and the evaluation of the desirability, as appropriate, of
modifications to such plans and goals.
3. The oversight of Texaco's financial health.
4. The monitoring of such activities of Texaco as pose significant risks and
of the company's programs to respond to and contain such risks.
5. The review of the performance of the Chief Executive Officer and other
senior officers, and their compensation relative to performance.
6. The review of Texaco's adherence to its corporate "Vision and Values"
which include its responsibilities to its stockholders, employees,
customers and the community.
7. Preparedness for the selection of a successor Chief Executive Officer,
and the monitoring of the company's development and selection of key
personnel.
8. The selection process for Board membership and the overall quality and
preparedness of its members.
9. The availability of the information which the Board and management
believe is needed for the Board to perform its duties effectively.
. Each Committee of Texaco's Board annually assesses its performance to
confirm that it is meeting its responsibilities under its charter. Some of the
items which Board committees consider in their self-evaluation are:
appropriateness of matters presented for information; appropriateness of matters
presented for approval; sufficiency of time for consideration of agenda items;
frequency of
3
meetings; length of meetings; quality and length of written materials; and
quality of oral presentations.
ORGANIZATION OF THE BOARD
Texaco's Board is organized so that a significant portion of its business is
conducted through its committees. The composition and function of each committee
of the Board is as follows:
The Committee of Non-Management Directors, of which Mr. Murphy is Chairman,
is composed of all of the non-employee directors and is responsible for
interpreting and administering company incentive plans and reviewing the
Compensation Committee's recommendations for awards made under these plans, the
handling of compensation for employee directors, and the company's organization,
personnel development, and key management replacement programs with special
focus on Chief Executive succession. This committee held two meetings in 1994
and provides a forum for the non-management directors to openly discuss the
performance of management.
The Public Responsibility Committee met three times in 1994. The members are
Dr. Brademas (Chairman), Dr. Jenifer, Ms. Smith and Mr. Steere. As noted above,
the committee reviews and makes recommendations regarding the policies and
procedures affecting the company's role as a responsible corporate citizen,
including those related to corporate governance, equal employment opportunity,
health, environmental and safety matters, the company's relationship with its
several constituencies and the company's philanthropic programs.
The Audit Committee held two meetings in 1994. Its members are Mr.
Vanderslice (Chairman), Mr. Murphy, Ms. Smith, Dr. Brademas and Dr. Jenifer.
Depending on the nature of the matters under review, the outside auditors, and
such officers and other employees as necessary, attend all or part of the
meetings of the committee. The committee reviews and evaluates the scope of the
audit, accounting policies and reporting practices, internal auditing, internal
controls, security procedures and other matters deemed appropriate. The
committee also reviews the performance by Arthur Andersen LLP in their audit of
the company's financial statements and evaluates their independence and
professional competence.
The Compensation Committee, which met five times in 1994, is composed of
Messrs. Beck (Chairman), Butcher, Carpenter, Price and Vanderslice. This
committee has the responsibility of reviewing the company's compensation
structure. To this end, along with other studies, the committee surveys and
reviews compensation practices in industry to make certain that the company
remains competitive and able to recruit and retain highly qualified personnel,
and that the company's compensation structure incorporates programs which
reflect the company's performance and contribute to the achievement of the
company's objectives. The committee establishes the criteria for bonus and other
compensation packages.
The Finance Committee consists of Messrs. DeCrane (Chairman), Beck, Butcher,
Carpenter, Price and Wrigley. The committee met three times in 1994 to review
and to make recommendations to the Board concerning the company's financial
strategies, policies and structure.
The Nominating Committee, consisting of Messrs. Butcher (Chairman), Beck,
Murphy, Vanderslice and Wrigley, met four times in 1994. This committee
maintains
oversight of Board operation and effectiveness,
reviews the size and composition of the Board, reviews qualifications of
possible candidates for Board membership and
4
recommends candidates to the Board as nominees for election as directors.
Candidates are selected on the basis of the contributions such individuals can
make in providing advice and guidance to the Board and management. The Board is
committed to a membership composed of outstanding persons irrespective of gender
or race. The criteria for director candidates detailed above, which were
developed in consultation with individual and institutional holders and
published by the company to its stockholders, continue to be the guidelines for
the committee. The Nominating Committee also will consider proposals for
nomination from stockholders of record which are made in writing to the
Secretary, are timely, contain sufficient background information concerning the
nominee to enable a proper judgment to be made as to his or her qualifications
and include a written consent of the proposed nominee to stand for election if
nominated and to serve if elected. The requirements for making nominations are
set forth in the company's by-laws.
The Pension Committee met three times in 1994. The members are Messrs.
Wrigley (Chairman), Murphy, Price and Steere. The committee approves investment
policy and guidelines, reviews investment performance, and appoints and retains
trustees, insurance carriers and investment managers for the company's
retirement plans.
The Board of Directors also has an Executive Committee, which may exercise
all of the powers of the Board in the management and direction of the business
and affairs of the company, except those which by statute are reserved to the
Board of Directors. This committee, consisting of Messrs. DeCrane (Chairman),
Butcher, Carpenter, Krowe, Murphy and Vanderslice, and Ms. Smith, met once in
1994.
The Board of Directors held thirteen meetings in 1994. Each director, except
for Mr. Beck, who was ill, attended at least 75% of the total number of meetings
of the Board and its committees on which the director served.
COMPENSATION OF THE DIRECTORS
Employee directors receive no compensation for service on the Board or its
committees. Non-employee directors receive an annual retainer of $30,000, and
$1,250 for each Board and committee meeting attended. The Chairmen of the Audit
Committee and the Compensation Committee receive annual retainers of $7,000. The
Chairmen of the Committee of Non-Management Directors and the Nominating,
Pension and Public Responsibility Committee receive annual retainers of $5,000.
The first $10,000 of the annual retainer and $250 of each meeting fee is paid in
Texaco Common Stock. Directors may elect to receive all or any part of the
remaining retainers and fees in Texaco Common Stock. Directors may also elect to
defer payment of fees, in cash, in Common Stock or in restricted units.
Non-employee directors who have neither received nor are eligible to receive
a benefit from any retirement, pension or other similar plan of the company and
who retire either with five or more years of service on the Board or as a result
of death, disability or acceptance of a position in public service are eligible
to receive an annual retirement benefit equal to the annual retainer in effect
at the time of their retirement. This will be paid to the director or the
director's surviving spouse for the number of years which the director served on
the Board.
As part of its overall program to promote charitable giving, the company has
established a directors' planned gift program funded by life insurance policies
on directors. Upon the death of an individual director, the company will donate
the one million dollar proceeds from such life insurance policies to one or more
qualifying charitable
5
organizations recommended by the individual director. Individual directors
derive no financial benefit from this program, since all charitable deductions
accrue solely to the company. During 1994, the company paid $669,862 in premiums
for these policies.
VOTING SECURITIES
Excluding 14,672,369 shares of the company's Common Stock held in the
company's treasury, there were outstanding, at March 10, 1995, the following
series of voting securities: 259,621,048 shares of Common Stock, 774,558.89
shares of Series B ESOP Convertible Preferred Stock and 62,550.69 shares of
Series F ESOP Convertible Preferred Stock. Each outstanding share of Common
Stock is entitled to one vote, each outstanding share of Series B Preferred
Stock is entitled to 12.9 votes and each outstanding share of Series F Preferred
Stock is entitled to ten votes, on all matters properly brought before the
meeting. All the shares of the Series B and Series F Preferred Stock are voted
by State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02104-1389, the independent trustee of the company's Employee
Stock Ownership Plans. State Street Bank and Trust Company filed a Schedule 13G
disclosing that as of December 31, 1994, it had voting and dispositive power
over 14,934,706 shares, or approximately 5.6% of the company's outstanding
voting securities, as trustee of the foregoing plans (as well as various
collective investment funds and personal trust accounts). Under the terms of
these plans, State Street Bank and Trust Company is required to vote shares
attributable to any participant in accordance with confidential instructions
received from the participant and to vote all shares for which it shall not have
received instructions in the same ratio as the shares with respect to which
instructions were received.
OTHER RELATIONSHIPS
Tugboat and barge services provided to Texaco in 1994 by Wilmington
Transportation Company totaled $84,889, which is less than 5% of that company's
total revenue. Mr. Wrigley is controlling stockholder and Chairman of the Board
of Santa Catalina Island Company, of which Wilmington Transportation Company is
a wholly owned subsidiary. Payments of $4,262,961 for advertising were made to
broadcasting entities and publications owned by Capital Cities/ABC, Inc., of
which Mr. Murphy is Chairman and Chief Executive Officer.
These transactions were effected in the ordinary course of business on terms
at least as favorable to the company as those obtainable in similar transactions
with unaffiliated parties.
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The table on the following page sets forth, as of January 1, 1995,
information with respect to the company's voting securities beneficially owned
by directors, executive officers included in the "Summary Compensation Table" on
page 26 and all directors and executive officers of the company as a group. The
total beneficial ownership of all directors and executive officers as a group
represented less than 1% of each class of shares outstanding.
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NUMBER OF SHARES
-------------------------
SERIES B
NAMES OF BENEFICIAL OWNERS COMMON STOCK PREFERRED
-------------------------------------------------- ------------ ---------
[S] [C] [C]
Robert A. Beck.................................... 3,480 --
Peter I. Bijur.................................... 24,983 118
C. Robert Black................................... 29,377 116
John Brademas..................................... 1,109 --
Willard C. Butcher................................ 1,705(1) --
Edmund M. Carpenter............................... 1,175 --
Alfred C. DeCrane, Jr............................. 134,137 282
James L. Dunlap................................... 47,632 130
Franklyn G. Jenifer............................... 365 --
Allen J. Krowe.................................... 47,431 225
Thomas S. Murphy.................................. 18,758 --
Charles H. Price, II.............................. 2,628 --
Robin B. Smith.................................... 903 --
William C. Steere, Jr............................. 2,454 --
Thomas A. Vanderslice............................. 14,380 --
William Wrigley................................... 28,595(2) --
Directors and Executive Officers as a group....... 606,493 2,360
(1) Does not include 21 shares held by Mr. Butcher's wife as custodian for their
minor son, as to which Mr. Butcher disclaims beneficial interest.
(2) Does not include 124,796 shares owned of record by Wm. Wrigley Jr. Company
Foundation, of which Mr. Wrigley is among the officers authorized to vote
the shares held by the Foundation, or 1,000 shares held in a trust, of which
Mr. Wrigley is the trustee, for the benefit of his son. Mr. Wrigley
disclaims any beneficial interest in such shares.
-------------------------------------------
ITEM 1--ELECTION OF DIRECTORS
The Board is divided into three classes of directors. At each annual meeting
of stockholders, members of one of the classes, on a rotating basis, are elected
for a three-year term.
In accordance with the company's Restated Certificate of Incorporation and
by-laws, the Board of Directors by resolution fixed the total number of
directors at 13.
The four persons designated by the Board as nominees for election as
directors at the Annual Meeting for three-year terms expiring in 1998 are Dr.
Brademas and Messrs. DeCrane, Murphy and Price. It is the policy of the Board
that officers who serve as Directors of the company retire from the Board on the
date they retire as employees. Mr. DeCrane's normal retirement date as an
employee is July 1, 1996, and he is scheduled to retire from the Board on that
date after having served slightly more than one year of his three-year term.
Upon his retirement the Board could reduce the number of members or nominate
another candidate. All of the nominees are currently directors and were
previously elected by the stockholders.
The company has no reason to believe that any of the nominees will be
disqualified or unable or unwilling to serve if elected. However, if any nominee
should become unavailable for any reason, proxies may be voted for another
person nominated by the present Board of Directors to fill the vacancy, or the
size of the Board may be reduced.
Following is certain biographical information concerning the nominees, as
well as those directors whose terms of office are continuing after the meeting.
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NOMINEES FOR THREE-YEAR TERM EXPIRING
AT THE 1998 ANNUAL MEETING
JOHN BRADEMAS, 68, President Emeritus of New York University, became a director
in 1989. He served eleven terms in Congress as a Representative from Indiana, the
[PHOTO] last two as Majority Whip. He is a graduate of Harvard and Oxford Universities,
where he was a Rhodes Scholar. He is a director of Loews Corporation, Scholastic,
Inc. and NYNEX Corporation, Chairman of the President's Committee on the Arts and
Humanities, and is active in numerous academic and philanthropic organizations.
ALFRED C. DECRANE, JR., 63, Chairman of the Board and Chief Executive Officer of
Texaco Inc., has had 36 years of service with the company and has been a director
since 1977. Mr. DeCrane assumed the position of Chief Executive Officer in 1993,
[PHOTO] and has served as Chairman of the Board since January 1, 1987. Prior to that he
had been President since March 1, 1983. He is a trustee of the Committee for
Economic Development and The Conference Board, a director of CIGNA Corporation,
CPC International Inc., Dean Witter, Discover & Co., and the American Petroleum
Institute, and a member of the Board of Trustees of the University of Notre Dame.
THOMAS S. MURPHY, 69, is Chairman of the Board and Chief Executive Officer of
Capital Cities/ABC, Inc., which operates the ABC Television Network and eight
affiliated television stations, radio networks and radio stations; provides
[PHOTO] programming for cable television; is partnered with international broadcasters in
program production and distribution ventures as well as broadcast and cable
television services overseas and publishes daily and weekly newspapers and trade
publications. He has been a director since 1977. He is Chairman of the New York
University Medical Center Board of Trustees, a member of the Board of Overseers
of Harvard College and a director of Johnson & Johnson and IBM Corporation.
CHARLES H. PRICE, II, 64, Chairman, Mercantile Bank of Kansas City and former
United States Ambassador to the United Kingdom (1983-1989) and Belgium
(1981-1983), became a director in 1989. He is a director of the Mercantile
[PHOTO] Bancorporation, Inc., Sprint Corporation, The New York Times Company, Hanson PLC
and British Airways PLC. Prior to service as a United States Ambassador, he had
been Chairman of the Board of the Price Candy Company, American Bancorporation
and American Bank and
Trust Company.
8
DIRECTORS CONTINUING IN OFFICE UNTIL
THE 1997 ANNUAL MEETING
ROBERT A. BECK, 69, Chairman Emeritus since 1987 and former Chairman of the Board
and Chief Executive Officer of The Prudential Insurance Company of America, has
[PHOTO] been a director since 1984. He joined Prudential in 1951, was elected President
in 1974, and Chairman and Chief Executive Officer in 1978. He is a director of
The Prudential Insurance Company of America, Campbell Soup Co., Xerox Corporation
and The Boeing Company, and is a Trustee of Syracuse University.
WILLARD C. BUTCHER, 68, former Chairman of the Board and Chief Executive Officer
of the Chase Manhattan Bank, N.A., has been a director since 1981. He is a
Trustee Emeritus of the American Enterprise Institute for Public Policy Research,
[PHOTO] and a Fellow Emeritus of Brown University, and is a member of The Business
Council, a member of the Advisory Committee of Daimler-Benz of North America,
Vice Chairman of the Board of Lincoln Center for the Performing Arts, Inc. as
well as a trustee of the Business Committee for the Arts, Inc. He is also a
director of ASARCO Incorporated, M.I.M. Holdings Ltd. Australia, International
Paper Company and Olympia & York Companies (U.S.A.).
EDMUND M. CARPENTER, 53, Chairman and Chief Executive Officer of General Signal
Corporation since 1988, was elected a director in 1991. Prior to serving with
[PHOTO] General Signal, Mr. Carpenter was President, Chief Operating Officer and a
director of ITT Corporation. He is a director of Campbell Soup Company and Dana
Corporation.
FRANKLYN G. JENIFER, 55, President of the University of Texas at Dallas, became a
Director on November 1, 1993. Following an academic career as a professor of
biology, Dr. Jenifer was President of Howard University from 1990 to 1994. Prior
to that he was chancellor of the Massachusetts Board of Regents of Higher
[PHOTO] Education, and from 1979 to 1986, vice chancellor of the New Jersey Department of
Higher Education. He is Vice Chair and Chair-elect of the American Council on
Education and serves on the board of Chesapeake & Potomac Telephone Company, the
Council for Aid to Education, the Corporation of Woods Hole Oceanographic
Institution, the Public Broadcasting Service, the National Foundation for
Biomedical Research and the Massachusetts Higher Education Assistance
Corporation.
THOMAS A. VANDERSLICE, 63, Chairman of the Board, President and Chief Executive
Officer of M/A-COM, Inc., has been a director since 1980. He was formerly
Chairman and Chief Executive Officer of Apollo Computer, Inc., President and
[PHOTO] Chief Operating Officer of GTE Corporation, and an officer of General Electric
Company. He is a member of the Board of Trustees of Boston College and of the
Board of Directors of the National Academy of Engineering, the American Chemical
Society, and the American Institute of Physics, and Chairman of the Massachusetts
High Technology Council.
9
DIRECTORS CONTINUING IN OFFICE UNTIL
THE 1996 ANNUAL MEETING
ALLEN J. KROWE, 62, Vice Chairman of the Board of Texaco Inc., was elected a
director on April 1, 1993. He joined Texaco in 1988 as Senior Vice President and
[PHOTO] Chief Financial Officer, after having served as Executive Vice President and a
director of IBM Corporation. Mr. Krowe is a director of PPG Industries, Inc., IBJ
Schroder Bank & Trust Company and the University of Maryland Foundation.
ROBIN B. SMITH, 55, President of Publishers Clearing House since 1981 and also
Chief Executive Officer since 1988, was elected a director in 1992. Prior to
joining Publishers Clearing House, Ms. Smith served with Doubleday & Co., Inc.,
as President and General Manager of its Dell Publishing subsidiary. During her
16-year career with Doubleday, she served in positions of increasing
[PHOTO] responsibility, including Director of Marketing for the Book Clubs Division and
Corporate Vice President, President and General Manager of the Book Clubs
Division. She is a director of Springs Industries, Inc., BellSouth Corporation,
Huffy Corporation, Omnicom Group, Inc. and several Prudential mutual funds, and
is a member of the Visiting Committee of the Harvard Board of Overseers to the
Harvard Business School.
WILLIAM C. STEERE, JR., 58, Chairman and Chief Executive Officer of Pfizer, Inc.,
was elected a director in 1992. Mr. Steere began his career with Pfizer, a
diversified health care company with global operations, and assumed positions of
increasing responsibility, including President of Pfizer Pharmaceutical Group and
[PHOTO] President and Chief Executive Officer, before elevation to his present position
in 1992. He is a director of the Federal Reserve Bank of New York, the New York
Botanical Garden, Minerals Technologies, Inc., WNET-Thirteen, the Business
Council, the Business Roundtable and the New York University Medical Center. He
is also past chairman of the Board of Directors of the Pharmaceutical
Manufacturers Association.
WILLIAM WRIGLEY, 62, President, Chief Executive Officer and a director of Wm.
Wrigley Jr. Company, has been a director since 1974. He is Chairman of the Board,
[PHOTO] Chairman of the Executive Committee and a director of Santa Catalina Island
Company, and a director of American Home Products Corporation, Wrigley Memorial
Garden Foundation and Grocery Manufacturers of America, Inc. He also serves as a
Trustee of the University of Southern California and is a Benefactor and Life
Member of the Santa Catalina Island Conservancy.
10
ITEM 2--APPROVAL OF AUDITORS
The following resolution concerning the appointment of independent auditors
will be offered at the meeting:
"RESOLVED, that the appointment by the Board of Directors of the
company of Arthur Andersen LLP to audit the accounts of the company and
its subsidiaries for the fiscal year 1995 is hereby ratified and
approved."
Arthur Andersen LLP has been auditing the accounts of the company and its
subsidiaries for many years. In recommending the approval by the stockholders of
the appointment of that firm, the Board of Directors is acting upon the
recommendation of the Audit Committee, which has satisfied itself as to the
firm's professional competence and standing.
Representatives of Arthur Andersen LLP will be present at the meeting with
the opportunity to make a statement and to respond to appropriate questions.
STOCKHOLDER PROPOSALS
The stockholder proposals contained in Items 3, 4, 5 and 6 were submitted by
religious groups affiliated with the Interfaith Center for Corporate
Responsibility, 475 Riverside Drive, New York, NY and are quoted directly from
their submissions. The names, addresses and shareholdings of the proponents may
be obtained upon oral or written request to the Secretary of the company.
ITEM 3--STOCKHOLDER PROPOSAL RELATING TO CLASSIFICATION OF THE BOARD OF
DIRECTORS
RESOLVED: That the stockholders of Texaco request that the Board of
Directors take the steps necessary to declassify the elections of Directors by
providing that at future Board elections new directors be elected annually and
not by classes as is now provided. The declassification shall be phased in in a
manner that does not affect the unexpired terms of Directors previously elected.
Supporting Statement
This resolution requests that the Board end the staggered Board system in
place at Texaco and instead have all our Directors elected annually. Presently
Texaco has 3 classes of Directors and 1/3 of our Board is elected each year and
each Director now serves a 3 year term.
Increasingly, institutional investors are calling for the end of this system
of staggered voting. They believe it makes a Board less accountable to
shareholders when directors do not stand for annual election. Significant
institutional investors such as the Public Employees Retirement System of the
State of California, New York City pension funds, New York State pension funds
and many others have been supporting this position. As a result shareholder
resolutions to end this staggered system of voting have been receiving
increasingly large votes and numerous companies have demonstrated leadership by
changing practice. Among them Westinghouse, Chemical Bank, Commonwealth Edison
of Chicago, the Equitable companies.
11
Last year this resolution received an exceptionally strong showing of 37% of
the vote. Similar resolutions with other companies also received large votes. We
believe shareholders feel this is a reform whose time has come.
The election of corporate directors is the primary avenue for shareholders
to influence corporate affairs and exert accountability on management. We
strongly believe that our Company's financial performance is closely linked to
its corporate governance policies and procedures and the level of management
accountability they impose. Therefore, as shareholders concerned about the value
of our investment, we are disturbed by our Company's current system of electing
only one-third of the Board of Directors each year. We believe this staggering
of director terms prevents shareholders from annually registering their views on
the performance of the Board collectively and each Director individually.
Most alarming is that the staggered Board can help insulate Directors and
senior executives from the consequences of poor performance by denying
shareholders the opportunity to replace an entire Board which is pursuing failed
policies.
In addition socially concerned investors also have reason to support this
reform. For example religious investors have expressed concerns about Texaco's
environmental accountability. In addition we are deeply disturbed by reports of
discrimination against individual female and minority employees and a number of
court suits charging discrimination.
Finally, an internal survey by Texaco discovered that 1/3 of employees were
fearful of publicly sharing opinions within the company. If there is a climate
of fear or suspicion inside Texaco, it should be addressed.
These types of issues cry out for Board attention. To hold the Board
annually accountable on financial and/or social performance we believe the
staggered board system should be ended at Texaco.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE
FOLLOWING REASONS:
The company's practice of having a classified Board was approved
overwhelmingly by stockholders by a vote of 86.4% and instituted in 1984, as
part of a corporate governance system that would help Texaco carry out its
long-term business strategy and also assist in protecting the interests of
stockholders against raids on their stock value by possible hostile approaches.
A classified Board offers a number of advantages to a corporation,
especially one like Texaco, that must plan effectively over the long term. The
company's Board structure helps assure stability, since a majority of the
directors at any one time will have prior experience as directors of the
company, and helps the company to attract and retain highly qualified
individuals willing to commit the time and dedication necessary to understand
the company, its operations and its competitive environment.
Directors on the company's classified Board can best properly represent the
interests of all stockholders. For example, this structure can give the Board
needed time to evaluate any proposal to acquire the company, study alternative
proposals, and help ensure that the best price will be obtained in any
transaction involving the company. A classified Board also encourages persons
seeking to acquire control of the
12
company to initiate such an acquisition through arm's-length negotiations with
the Board, which would then be in a position to negotiate a transaction that is
fair to all stockholders.
Contrary to the implication in the proponents' statement, a number of
leading institutional investors, including the Teachers Insurance and Annuity
Association - College Retirement Equities Fund, have concluded that a classified
Board is in full accordance with the principles of good corporate governance,
and have recognized and supported the right of a Board to organize its functions
and its business in the manner it deems most efficient.
Nor do we believe that there is significant evidence to support the
implication by the proponents of this proposal that directors elected for a
three-year term are any less accountable to shareholders; accountability being a
function of the selection of qualified, experienced and responsive individuals
and not whether they serve one- or three-year terms.
As noted in comments on other proposals, the company's record of social
concern on environmental matters is audited by independent sources, reported to
the Board and its committees, as well as all stockholders, on a regular basis
and reflects sound performance and compliance. Similarly, as we continue to
strive to improve our diversity performance, the progress on numbers and
position of women and minorities in our work force has been steady and strong.
As detailed in the Section providing information concerning the Board of
Directors beginning on page 2, Texaco has been a consistent leader in
implementing corporate governance policies that ensure responsiveness and
accountability to stockholders. In recognition of this leadership role, in 1992
the California Public Employees Retirement System honored Texaco's Chief
Executive Officer with its Excellence in Corporate Governance Award and in
November 1994 Chief Executive magazine named Texaco's Board of Directors as one
of the five best boards of the 200 companies examined.
The Board continues to believe that a classified Board is appropriate and
prudent in protecting the interests of all of Texaco's stockholders, and that
the continuity and quality of leadership that results from a classified Board
provides the proper environment in which to foster the creation of long-term
value for stockholders. The stockholders strongly agreed with this position when
originally asked to vote on the issue in 1984, and nothing has led the Board to
conclude that the reasons advanced to support that approach then do not continue
to be valid.
THE BOARD OF DIRECTORS, FOR THESE REASONS, RECOMMENDS A VOTE AGAINST THIS
PROPOSAL.
ITEM 4--STOCKHOLDER PROPOSAL RELATING TO EXECUTIVE COMPENSATION
WHEREAS: We believe financial, social and environmental criteria should all
be taken into account in fixing compensation packages for corporate officers.
Public scrutiny on compensation is reaching a new intensity--not just for the
Chief Executive Officer, but for all executives. Concerns expressed include the
following:
Too often top executives receive considerable increases in
compensation packages, even when corporate financial performance is
13
mediocre or poor and stockholders watch dividends slip and stock prices
drop.
Executive compensation, even when it decreases in a bad year, is
usually not proportional to a year's poor financial returns and the
financial burden borne by stockholders. Professor Graef Crystal, a
national authority on executive compensation, argues that CEOs, get paid
"hugely in good years," and "if not hugely, then merely wonderfully in
bad years."
When top officers' compensation packages are compared to those of
the lowest paid employees, Professor Crystal notes many U.S. CEOs make
160 times more than the average employee, while in Japan that ratio is
16:1.
The relationship between compensation and the social and
environmental impact of a company's decisions is an important question.
For instance, should top officers' pay for a given year be reduced if
the company is found guilty of systemic sexual harassment or race
discrimination or poor environmental performance, especially if it
results in costly fines or expensive protracted litigation? Should
responsible officers pay be on a business-as-usual scale in the year of
a major environmental accident? Should compensation for Texaco's CEO
reflect the company's record of oil spills and illegal discharges that
incur large fines or pollute groundwater or seepage that threatens
drinking water supplies?
We believe that these questions deserve the careful scrutiny of our Board
and its Compensation Committee. A number of companies including Procter &
Gamble, Bristol-Myers Squibb and Westinghouse have reported to shareholders on
how they integrate these factors into their compensation packages.
RESOLVED: Shareholders request that a committee of outside Directors of the
Board institute an Executive Compensation Review, and prepare a report available
to shareholders by October 1995 with the results of the Review and recommended
changes in practice. The review shall cover pay, benefits, perks, stock options
and special arrangements in the compensation packages for all the company's top
officers.
Supporting Statement
We recommend that the Board study and report on the following in its review:
1. Ways to link executive compensation more closely to financial performance
with proposed criteria and formulae.
2. Ways to link compensation to environmental and social corporate
performance (e.g. lower base pay with incentives given for meeting or
surpassing certain environmental and social standards).
3. Ways to link financial viability of the company to long-term
environmental and social sustainability (e.g. linkages that avoid
short-range thinking, and instead encourage long-range planning).
4. A description of social and environmental criteria to take into
14
account (e.g. environmental performance standards environmental law
suits, settlements, penalties, violations, results of internal or
independent environment audits).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE
FOLLOWING REASONS:
This identical proposal was considered at last year's Annual Meeting and was
rejected by more than 92% of the stockholders voting on it.
We believe that the principle reason for the overwhelming rejection of the
proposal was the recognition by our stockholders that it asked the Board to do
what is already being done:
* Executive compensation is in fact linked very closely to financial
performance based on criteria and formulae selected by the Board of
Directors to motivate performance which it believes will best serve the
stockholders' interest. Major portions of "at risk" compensation are
directly tied to specific, measurable performance standards--all as more
fully stated in the report beginning on page 22.
* Compensation is already linked to environmental and social corporate
performance in several ways. Most importantly, the company's strong
commitment to the environment, health and safety is a core value of the
company--beyond being good policy and good business. To help meet this
commitment, Texaco spent almost one billion dollars in 1994 alone on
environmental programs and has since 1989 maintained a separate corporate
division specifically charged with protecting the environment, health and
safety.
* Upholding the company's responsibility to the environment and to the
communities in which it works is as central to its operations, and rated
as highly as other facets of its business. Because it is so integral, a
positive environmental record is important to the company's overall
performance and financial results--and thus directly impacts individual
bonus awards.
* The integrated impact of environmental performance on compensation also
affects long-term compensation which is based on share value and
dividends, that are inevitably affected by the company's environmental
performance.
* Ensuring superior company performance in all areas of operation is a
primary responsibility of the Board of Directors. In this regard, the
Board has established a Public Responsibility Committee whose charter
mandates monitoring of policies, procedures and performance in areas such
as equal opportunity, health, environment and safety. The Committee
receives reports on performance in these areas and provides the Board and
management with its assessments and expectations. The Committee, the
Board, and executive management are committed to full dialogue with regard
to the company's performance in these areas. Open communication regarding
the company's performance, the Committee believes, can only help Texaco's
results and enhance shareholder value.
15
* Texaco is an Equal Opportunity Employer and its units have 36 separate
written Action Plans in effect throughout the United States. Performance
is reported periodically to appropriate government agencies as required by
law.
Additionally, Texaco plans to prepare this year for the information of
stockholders and others, a comprehensive report on equal employment opportunity
programs, policies and results, updating the report prepared in 1993.
We believe the company's commitment to a performance-based compensation
system, as well as the incorporation of adherence to its Corporate Conduct
Guidelines and its "Visions and Values" statement, which emphasize the
centrality of environmental and social responsibility to the company's values in
the evaluation process for individual annual performance ratings, meet the
concerns raised in support of this proposal. Texaco's "Vision and Values"
statement makes this commitment clear:
"We acknowledge a major
responsibility to meet the needs and
satisfy the concerns of the national
and world communities of which
we are a part.
We actively seek effective and
efficient ways to protect the
environment in which we live and
operate.
We encourage employees to
fulfill their obligation as private
citizens by working to better their
own communities."
In affirmation of these values, the company has recently released its third
Environment, Health and Safety Review, a comprehensive evaluation of Texaco's
efforts to protect the natural environment and the safety and health of its
employees and neighbors worldwide. Accordingly, the cost and effort of yet
another report on these matters, which would overlap the current widely
circulated Environment, Health and Safety Review, the forthcoming report on
equal employment opportunity and the Compensation Committee Report, do not
appear to us to be warranted.
THE BOARD OF DIRECTORS, FOR THESE REASONS, RECOMMENDS A VOTE AGAINST THIS
PROPOSAL.
ITEM 5--STOCKHOLDER PROPOSAL RELATING TO EMPLOYMENT OPPORTUNITY
We believe there is a strong need for corporate commitment to equal
employment opportunity. We also believe a clear policy opposing all forms of
discrimination is a sign of a socially responsible corporation. Since a
substandard Equal Employment Opportunity record leaves a company open to
expensive legal action, poor employee morale and even the loss of certain
business, it is in the company's and shareholder's interests to have a strong
record and adequate information available on our equal employment record.
We share the concern of the 1991 United States Congressional Civil Rights
and Glass Ceiling Acts that ". . . additional remedies under Federal law are
needed to deter harassment and intentional discrimination in the workplace
. . .". We support the statement, "We continue to find that if the CEO is
committed to ensuring diversity, it can happen," as published in the U.S. Labor
Department's report "Pipelines of Progress."
We believe non-discrimination policies and Affirmative Action issues are
important to shareholder value. Our goal is to encourage our management to
improve our
16
corporation's Equal Employment record and that of the industry. As a major
employer we are in a position to take the lead in ensuring that diverse
employees receive fair employment opportunities. We believe the review requested
in this resolution keeps the issue high on management's agenda and reaffirms our
public commitment to Equal Employment Opportunity and programs responsive to the
concerns of all employees.
We are a major employer with a responsibility for ensuring that women and
minority employees receive fair employment opportunities and promotions. The
review requested in this resolution keeps the issue high on management's agenda
and reaffirms our public commitment to Equal Employment Opportunity and programs
responsive to the concerns of women and minorities.
We believe Texaco's management must improve its record with regard to
discrimination lawsuits and our relationship to the Office of Federal Contract
Compliance. Our company is still plagued with a number of discrimination suits
and Conciliation Agreements with the Office of Federal Contract Compliance.
RESOLVED: The shareholders request the Board initiate a review of Texaco's
policies and practices related to equal employment opportunity and recommend
constructive changes. The Public Responsibility Committee shall oversee this
review and make a summary report available to shareholders by September, 1995.
This report shall be prepared at reasonable cost and may exclude confidential
information. This review shall focus on the following areas:
1. Affirmative action/equal employment and implementation plans.
2. If our company's hiring and performance evaluation/grading processes
ensure non-discriminatory, comparable rewards for all employees and how
they can be improved.
3. Analysis of efforts to attain realistic minority representation at the
middle, upper middle and executive levels of managerial employees and
plans for improvement.
4. Description of the number of discrimination complaints and discrimination
lawsuits brought by employees as well as age discrimination. The
company's potential financial legal liability from these lawsuits and
whether Texaco needs to take steps to deal with these issues more
creatively before they become matters for legal action.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE
FOLLOWING REASONS:
Texaco is in full agreement that a strong commitment to equal employment
opportunity is the responsibility of every company. It is Texaco's policy to
treat every employee with respect and dignity, and to provide each employee with
the opportunity for fair employment and promotion so as to develop and advance
to the utmost of his or her abilities. Company policy also stresses the
importance of open and honest communication among all employees. Texaco is proud
of the progress it has made in building a valued, diverse work force and is
fully committed to continuous improvement.
The Board agrees that close monitoring and evaluation of our work force is
an important element in ensuring that advancement continues in this area. Indeed
at its January 1995 meeting, the Public
17
Responsibility Committee of the Board reviewed in depth the status of the
company's equal employment opportunity activities including all of the areas
listed by the proponents in points 1 to 4 above. Texaco presently conducts
numerous reviews, analyses and employee surveys, including a diversity
assessment survey which was completed in 1994. These are all designed to help
the company better understand its work environment, and further a culture that
promotes an all-inclusive work force and creative energy from all its employees.
Texaco also ensures that the company's commitment to equal opportunity is
regularly communicated clearly to employees through such means as the statement
of policy issued by the Chief Executive Officer, Texaco's "Vision and Values"
and articles in "Texaco Today," our corporate magazine. In addition, in 1994 the
company completely revised and updated its Corporate Conduct Guidelines, which
include equal employment opportunity and other human resources guidelines. Each
director, officer and U.S. employee has acknowledged that he or she has read the
Guidelines and to the best of their knowledge is in compliance with them. A
twenty-four hour per day, seven day a week toll-free telephone line is available
to employees to ask any questions about, or to report any violations of, the
Guidelines.
Implementation of the company's human resources policy goes well beyond
communication. It includes:
* Human Resources Committees which continue to review the development of
minorities and women within the company;
* Written Action Plans for 36 different company locations which are
specifically designed to achieve equal employment opportunity at each such
location;
* Diversity and equal employment opportunity training for managers and
supervisors;
* A revised Job Posting Program, which provides interested employees with
the information they need to take advantage of opportunities within the
company;
* Establishment of relationships with a variety of organizations
representing minority groups, so as to support their efforts in the
business community in general;
* Texaco's Employee Problem Resolution Procedure, designed to provide
employees with an easy and common-sense way to raise and resolve workplace
differences and improve manager/employee communication; and
* The Texaco Foundation, which reaches out through its contributions to
support programs designed to help the career development of women and
minorities. For example, recently the Foundation contributed over $1
million to the United Negro College Fund.
The company's commitment to equal opportunity and to the success of our
human resources programs continue to yield positive results, even in the face of
extensive downsizing. A review of the consolidated data filed with the Equal
Employment Opportunity Commission for 1994 compared with 1988 shows:
* A 24 percent increase in the percentage of minorities in Texaco's
full-time U.S. work force;
18
* A 31 percent increase in the percentage of women in the company's
full-time U.S. workforce;
* A 68 percent increase in the percentage of women and a 36 percent increase
in the percentage of minorities in the EEOC job category, officials and
managers.
The Proposal asks about lawsuits and complaints against the company. In
order to protect shareholder value, if the company believes that a claim is
unjust, it must defend against it. The favorable results of the few instances
where litigation was deemed appropriate support this conclusion.
In February 1995 we advised the proponents that the company has determined
to undertake a review and prepare a detailed report on its equal employment
activities. The preparation of this report is now well underway and a summary
will be available to the stockholders and others by year end. In spite of the
company's commitment to conduct this review and prepare a complete report of the
review, the proponents have insisted that the company publish their proposal in
the proxy statement and have the shareholders vote on it, action which the
company views as redundant and wasteful of corporate resources.
Furthermore, because the proposal ignores Texaco's strong and continuous
commitment and significant progress toward achieving equal employment
opportunity and diversity; because the proposal calls for action already
underway; because the Board feels strongly that individual stockholders should
not dictate the contents, time frame, procedure and other specifics of reviews
such as that requested in the proposal; and because virtually the same proposal
was submitted by one of the same stockholders last year and rejected by more
than 92% of the stockholders, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE PROPOSAL.
ITEM 6--STOCKHOLDER PROPOSAL RELATING TO CORPORATE CONDUCT GUIDELINES
WHEREAS: Texaco's Corporate Conduct Guidelines function as the company's
statement of policy governing business internationally. In it, Texaco states our
company:
-- cooperates with federal, state and local governments in analyzing
emerging environmental issues, finding solutions to environmental problems
and developing cost-effective, scientifically based environmental
standards.
-- promotes employee safety and health, both on and off the job.
-- demonstrates commitment to environment, health and safety matters by
scheduling auditing/compliance assurance visits developed annually.
-- believes a work environment which reflects diversity and is free of all
forms of discrimination, intimidation and harassment is essential for a
productive and efficient work force.
-- respects each employee's right to engage in or refrain from engaging in
activities associated with representation by a labor organization.
We commend Texaco for creating such forward looking guidelines. However, we
believe these guidelines fall short in vitally important areas and that, in
fact, Texaco's international conduct, at times, is in direct conflict with the
company's own guidelines.
For example, take the case of Texaco's expanding involvement in the police
state of
19
Burma, one of the world's most repressive countries, as confirmed by Amnesty
International and the U.S. State Department. Many human rights groups believe
Texaco's controversial connection with the illegitimate military junta in fact
hurts our reputation more than it builds respect in the world community.
Furthermore, a clear case can be made that Texaco's Burma involvement
strengthens the repressive military government through the payment of tens of
millions of dollars as payment for exploration rights, goods and services now
and in the future. We believe Texaco also provides legitimacy to an ostracized
government by investing there and portrays the country in a positive light which
helps counter growing international criticism.
But Burma is only one example. Texaco also does business in other countries
with controversial human rights records: Indonesia, China and Thailand.
Thus, we believe that Texaco's principles need significant expansion.
Entirely absent from the present guidelines, for example, are clear human rights
criteria. For example, Levi Strauss, in its Guidelines for Country Selection,
states, "We should not initiate or renew contractual relationships in countries
where there are pervasive violations of human rights."
RESOLVED: The shareholders request the Board of Directors to review and
update the Texaco Corporate Conduct Guidelines and report their revisions to
shareholders and employees by September 1995. In its review, the Board shall
include a section with guidelines on maintaining investments in or withdrawing
from countries where there is a pattern of on-going and systematic violation of
human rights, where a government is illegitimate or where there is a call by
human rights advocates, pro-democracy organizations or legitimately elected
representatives for economic sanctions against their country.
Supporting Statement
We believe our company policy has a major loophole that needs to be
addressed as it does business internationally. This resolution urges our
Directors to take leadership and add to our Guidelines.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE
FOLLOWING REASONS:
As the proponents suggest, the company has adopted a set of Corporate
Conduct Guidelines which have been distributed to, and acknowledged by all of
its directors, officers and employees, and which function as a policy statement
governing our approach to business world wide. Therefore, the concerns of the
proponents in large measure are being addressed. In addition to the Guidelines'
policies quoted by the proponents, the Guidelines also state:
"[s]ince Texaco was organized in 1902, company policy has been to comply with
all laws (both domestic and foreign), in letter and in spirit, and to adhere
to the highest ethical standards in the conduct of our business. That is
still our policy. We follow it enthusiastically, because we believe it is
the soundest approach to business and personal success in a complex and
competitive world."
Consistent with our Guidelines, in those instances where the United States
government has, for human rights or other reasons, mandated that U.S. companies
refrain from commerce with or in various countries, the company has scrupulously
20
complied--oftentimes at a significant exposure or loss of property and earnings.
The company does not believe that it is appropriate to attempt to define a
specific set of "rights" which must be adhered to politically, administratively
and culturally by a country, that the company would use as a test before entry
into that particular country. The company strives to ensure that its conduct
throughout the world is in full compliance with the Guidelines, and believes
that this can and is being done in ways more practicable than any effort to
delineate specific rights which must exist in every society, political
situation, or cultural circumstances before the company will become active
there.
Furthermore, the company has, and will continue to steadfastly adhere to its
high standards, as set forth in the Guidelines, for the conduct of Texaco
operations in the areas in which it operates around the world.
In aspects of its business, such as where it will explore for hydrocarbons,
Texaco's choices are not unlimited. It must compete in those areas where geology
indicates hydrocarbons might be or have already been found. Texaco's presence in
areas such as China, Indonesia, Myanmar and Thailand not only helps create value
for our shareholders, it also allows the company to be a constructive force in
building the economy of these areas, creating employment opportunities, and
opening the area to further international trade, commerce, information flows and
transfers of technology and know-how.
The very nature of our investments in exploration and development,
gasification and power generation, refining and licensing can have a lasting,
positive impact through exchange of culture, economic and technological
information, exposure to other social practices and values and access to world
markets. In addition to plants and technology, Texaco also invests in people by
providing tangible benefits through competitive wages, advanced training and
other personnel support and advancement programs. The Public Responsibility
Committee of the Board of Directors, composed of independent members of the
Board, oversees the policies, practices and programs reflected in the
Guidelines, including those related to equal employment opportunity and the
company's relationship with its domestic and foreign constituencies, and reports
on these matters to the full Board.
Texaco's investment policy is, of course, aimed primarily at enhancing the
competitive position and value of the company for its shareholders. In doing so,
the company remains committed to enhancing the welfare of those in the nations
in which it operates by its policy of respect for human dignity.
FOR THESE REASONS, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE
PROPOSAL.
21
EXECUTIVE COMPENSATION
--------------------------------------------------------------------------------
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors is composed entirely of
independent outside directors. The Committee is responsible for establishing and
administering the compensation policies applicable to the company's officers and
senior personnel.
In 1988 the Committee commissioned an independent outside consulting firm to
undertake a comprehensive review of Texaco's total executive compensation
program. At that time, the company was engaged in a major program of asset and
operational restructuring in order to repay debt, improve productivity and
increase stockholder value, all with the objective of regaining its position as
a fully competitive challenger in the international petroleum industry.
Management had advised the Committee of its desire to have the compensation
package more directly tied to corporate performance, including earnings, return
on stockholders' equity, return on capital employed and total stockholder
return. This compensation review, and the compensation program which resulted
from it, were designed to produce a performance-oriented result and have, in
fact, done so each year since then.
As part of the compensation program, each year the company and the Committee
test Texaco's performance since its restructuring (one of the earliest in
industry) against the results of its competitors. That comparison is reflected
in the graphs on page 29.
The company's management pay structure and award opportunities are targeted
to be competitive in the mid-range with a mixed group of twenty oil and non-oil
companies (the "Comparable Companies"). The Comparable Companies were selected
based on size, complexity and operational challenge in relation to Texaco. All
of the Comparable Companies, except for the U.S. subsidiary of one foreign based
oil company, are included in the S&P 500 Index and four of these companies are
also included in the S&P 500 Integrated International Oil Index, both of which
are used in the comparison graphs on page 29.
The compensation program is composed of three elements: salary at a
competitive level to attract and retain the highest caliber of employees;
performance bonus; and long-term stock-based incentives. The bonus is
performance-based, and the long-term awards are tied to stock price performance
and total stockholder return. This mix of compensation elements places more of
total compensation at risk and emphasizes performance. Both the bonus and stock
elements of the plan were presented to and approved by stockholders in 1989, and
the stock-based incentives were approved by the stockholders again in 1993.
As a person's level of responsibility in the company increases, a greater
portion of potential total compensation opportunity is shifted from salary to
performance incentives and to greater reliance on the value of the company's
Common Stock, through stock-based awards. This increasingly aligns the long-term
interests of these managers with the interests of stockholders. The total of
salary and bonus is intended to provide cash compensation which is to be
competitive in a mid-range when performance meets goals.
22
The overall salary range structure including midpoints and progression
between grade levels is maintained at a mid-range competitive level to attract
and retain the highest caliber of employees. Individual salary rates are based
on the salary range for the position as well as the length of service in grade
and the quality of performance in that position.
The performance-based bonus program is funded only to the extent earnings
generate sufficient funds to establish an Incentive Bonus Reserve. The annual
reserve is an amount equal to not more than 1% of the consolidated net income of
the company up to 6% of the company's return on equity, plus 3% of the
consolidated net income of the company in excess of 6% of the company's return
on equity. The unawarded portion of the reserve is carried over for possible use
in future years at the discretion of the Committee. Competitive target bonus
opportunities are established for each position grade level. The level of each
plan participant's bonus is based on achievement for that year of corporate
and/or divisional objectives established each year by the Committee which the
Committee believes underpin stockholder value and which support the strategic
goals of the company.The objectives for corporate officers, including the five
individuals listed in the compensation table on page 26, include: change in
year-to-year earnings and return on capital employed versus nine companies in
the integrated oil industry which are also included in the Comparable Companies;
performance versus the annual plan of operating and financial objectives
approved each year by the Board of Directors; and performance versus the prior
year's results. The potential amount of an award to the individuals named in the
table on page 26 is determinable under an objective formula and not subject to
discretion in excess of that amount. For those below the more senior levels
there is also a subjective element in the bonus formula under which participants
are rated with respect to initiative, managerial ability, overall contribution
to corporate and/or unit performance, fostering the company's "Vision and
Values" and compliance with the Corporate Conduct Guidelines. While performance
against financial objectives is a major determinant of incentive-based
compensation, the successful Texaco manager must perform effectively in many
areas which are not measured specifically by financial results. Performance is
also assessed against standards of business conduct reflecting social values and
the expectations of the company's key constituencies including its employees and
stockholders, the consumers of its products, suppliers and customers, the
communities in which it operates and the countries where it does business. Among
the corporate values and Corporate Conduct Guidelines considered are those which
promote equal employment opportunity and diversity, safeguarding of the
environment and protection of the health and safety of the company's employees.
Adherence to these high standards are understood to have direct effect on the
company's profitability, and the performance of the company's managers is
appraised in this regard.
The long-term incentive program consists of stock options and performance
restricted shares (which do not vest unless goals targeted to the performance of
the company's competitors are met), emphasizes total return to stockholders,
motivates stock ownership by the management by requiring that vested benefits be
received in stock and not cash, and encourages retention and continuity of
management. While the company has no obligatory levels for equity
23
holdings by management personnel, long-term incentive awards are designed and
administered to encourage share ownership and have done so. The Committee
reviews the ownership by officers each year. In general, the officers have stock
holdings in excess of typical levels established by companies in industry. The
five officers named in the table on page 26 had on average holdings in Texaco
stock of 6.25 times salary as of December 31, 1994. The values of the packages
of long-term incentive awards comprised of performance shares and options at
each grade level are established by the Committee and are intended to be fully
competitive with the programs offered by the Comparable Companies. Generally,
the number of options and performance shares awarded to any participant are
determined by grade level without direct relationship to awards in prior years.
The compensation of the Chief Executive Officer and any other
officer/director is established by the Committee, and reviewed with and approved
by the Committee of Non-Management Directors--which consists of all the outside
directors and is chaired by Mr. Murphy. The compensation for Mr. DeCrane for
1994 was determined by the Compensation Committee in the same general manner as
for other members of the management team. Mr. DeCrane's annual salary rate was
increased in 1994. The interval of time between increases was consistent with
the general practice applicable to all non-represented employees and the gross
annualized amount was within the established guidelines for merit compensation
actions throughout the company. Reference was also made to the salary rate of
chief executive officers of the Comparable Companies and his salary was at the
mid-range of that group. Two-thirds of the increase was in salary and one-third
in an award of performance stock options and performance restricted shares,
under the terms and with the objectives described in the preceding paragraph.
Mr. DeCrane's bonus for 1994 was determined solely by the performance of the
company with respect to the established Incentive Bonus Plan objectives as
applied to the target level for his position grade. His bonus and those for the
other named executives were less than 40% of the maximum possible had all
corporate objectives been exceeded, which they were not, and were some 26% below
the prior year. Long-term awards granted in 1994 were based on the targets set
under the same guidelines established by the Compensation Committee for all
members of the management team. In establishing the overall compensation for Mr.
DeCrane, the Committee compared Texaco's performance with the Comparable
Companies, considering a range of performance factors including normalized
earnings, return on capital employed, return on average stockholders' equity,
total return to stockholders, net income per share, and worldwide reserve
replacement without assigning any particular weight to any of these factors. His
total compensation was at or below the mid-range of compensation paid by these
companies and without regard to length of service or time in grade and reflected
his success in meeting objectives and setting strategies for the longer range.
In 1992, the Committee commissioned a second independent study of the
company's executive compensation programs by a nationally-known compensation
consulting firm different from the one which helped design the program in 1988.
In connection with this further review the consultant was asked to answer four
specific questions:
24
1. Is the overall reward program reasonable and are the individual pay
elements that make up the total program also reasonable?
2. Are the risk/reward relationships in all of the variable pay elements
appropriate and fair?
3. Are variable pay elements sufficiently responsive to changes in
performance, both on the upside and downside?
4. Is the pay package sufficiently sensitive to stockholder interests and
supportive of Texaco's strategic plan?
The Consultant answered: "Our examination of all the executive pay data
covering several years for Texaco and its group of peer companies leads us to
conclude that with respect to each of the specific questions posed by the
Committee, Texaco's overall compensation program is designed and administered to
achieve its objectives." The Committee continues to administer the compensation
programs to maintain these standards.
On December 1, 1994, the Internal Revenue Service issued amended regulations
pursuant to Internal Revenue Code section 162(m), which was added to the Code by
the Omnibus Budget Reconciliation Act of 1993. Section 162(m) limits the amount
of compensation a corporation may deduct as a business expense. That limit,
which applies to up to five executives individually, is $1 million per
individual, per year, subject to certain specified exceptions. One of these
exceptions is compensation which is "performance based." Because Texaco's
incentive bonus and stock incentive plans are deemed to be performance-based,
the new rules have no impact on the company for 1994, and all compensation paid
in 1994 is fully deductible.
CONCLUSION
The Committee believes that the quality and motivation of all of Texaco's
employees, including its managers, make a significant difference in the
long-term performance of the company. The Committee also believes that
compensation programs which reward performance that meets or exceeds high
standards also benefit the stockholders, so long as there is an appropriate
downside risk element to compensation when performance falls short of such
standards and that the Committee has appropriate flexibility in administering
the program to achieve the objectives of the program. The Committee is of the
opinion that Texaco's management compensation programs meet these requirements,
have contributed to the company's success, and are deserving of stockholder
support.
/s/Robert A. Beck /s/Willard C. Butcher
Robert A. Beck Willard C. Butcher
Chairman
/s/Edmund M. Carpenter /s/Charles H. Price, II
Edmund M. Carpenter Charles H. Price, II
/s/Thomas S. Vanderslice
Thomas S. Vanderslice
25
The following compensation information is furnished for service performed by
the company's Chief Executive Officer and its four other most highly compensated
Executive Officers for the three years indicated.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------ ---------------------------------------
AWARDS
---------------------------
SECURITIES PAYOUTS
OTHER RESTRICTED UNDERLYING ---------- ALL
NAME AND PRINCIPAL ANNUAL STOCK OPTIONS/ LTIP OTHER
POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARDS($)(1)(2) SARS(#)(2) PAYOUTS($) COMPENSATION($)(3)
------------------ ---- --------- -------- --------------- --------------- ---------- ---------- ------------------
A.C. DeCrane, Jr. 1994 927,500 595,135 9,818 769,107 149,859 -0- 57,834
Chairman of 1993 875,000 807,008 12,127 762,976 75,099 -0- 55,317
the Board/CEO 1992 783,333 509,876 98,132 515,768 74,676 1,810,577 48,874
A.J. Krowe 1994 633,000 390,705 8,865 534,964 71,068 -0- 168,751
Vice Chairman 1993 588,750 528,815 4,031 534,657 86,609 -0- 166,096
and CFO 1992 525,500 408,726 5,060 321,625 46,196 -0- 162,221
J.L. Dunlap 1994 408,333 173,390 27,889 199,357 37,093 -0- 61,665
Senior Vice 1993 383,333 216,966 2,055 206,029 36,038 -0- 25,817
President 1992 347,500 266,091 21,025 198,750 28,693 239,249 22,360
P.I. Bijur 1994 382,500 140,879 3,351 154,063 21,481 -0- 25,134
Senior Vice 1993 355,000 201,984 4,010 159,219 41,353 -0- 25,888
President 1992 326,667 189,005 24,356 153,594 24,786 327,615 21,444
C.R. Black 1994 373,333 140,879 12,294 154,063 26,792 -0- 35,150
Senior Vice 1993 355,000 192,844 44,411 159,219 29,913 -0- 74,478
President 1992 324,000 172,862 27,924 153,594 24,317 309,745 21,314
<FN>
(1) Messrs. DeCrane, Krowe, Dunlap, Bijur and Black have restricted
stockholdings of 68,939; 40,590; 15,025; 11,033; and 15,621 shares,
respectively, as of December 31, 1994. The shares had a market value of
$4,127,723; $2,430,326; $899,622; $660,601; and $935,307, respectively, at
December 31, 1994, based on a value of $59.875 per share. These share
numbers and values include the 1994 award reported in the "Restricted Stock"
column above. Dividends are paid on the restricted stock at the same time
and rate as dividends paid to holders of unrestricted stock.
(2) In order to provide assurances to certain current and retired employees that
they will be provided with the benefits to which they are entitled under the
company's incentive plans, the company has obtained insurance on portions of
the amounts shown against its failure to provide these benefits.
(3) Matching contributions to the Employees Thrift Plan and moving expenses
associated with job reassignment are provided on the same basis for all
employees. Mr. Krowe became entitled to Texaco retirement benefits
commencing in July 1992, the month after he attained age 60, for the period
October 1988 through June 1992, which are no less than he would have been
entitled to under his previous employer's retirement plan, reduced by the
amount actually received from that previous employer's plan. Included in the
amounts shown for Mr. Krowe is $130,771 received pursuant to the
aforementioned arrangement in 1994.
</FN>
26
OPTION GRANTS IN 1994
INDIVIDUAL GRANTS OF OPTIONS AND RESTORED OPTIONS
------------------------------------------------------------------------------------------------------------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL EXERCISE OR GRANT DATE
OPTIONS OPTIONS BASE EXPIRATION PRESENT
NAME DATE GRANTED(#) GRANTED PRICE($/SH.) DATE VALUE $ **
------------------------ --------- ---------- ---------- ------------ ---------- ----------
A.C. DeCrane, Jr. 06/24/94 59,900 4.52% 61.6250 06/24/04 377,370
07/22/94 2,450 0.19% 62.9375 07/22/04 16,121
*01/06/94 32,804 2.48% 66.1250 01/02/00 186,983
*02/01/94 19,174 1.44% 67.2500 06/26/02 111,784
*11/01/94 15,770 1.19% 65.2500 06/22/00 119,537
*11/01/94 19,761 1.49% 65.2500 06/26/02 149,788
A.J. Krowe 06/24/94 41,975 3.16% 61.6250 06/24/04 264,443
07/22/94 1,400 0.11% 62.9375 07/22/04 9,212
*01/06/94 9,378 0.71% 66.1250 01/02/00 53,455
*11/01/94 4,873 0.37% 65.2500 01/02/00 36,937
*11/01/94 1,119 0.08% 65.2500 06/22/00 8,482
*11/01/94 12,323 0.93% 65.2500 06/26/02 93,408
J.L. Dunlap 06/24/94 16,175 1.22% 61.6250 06/24/04 101,903
*01/06/94 13,112 0.99% 66.1250 01/02/00 74,738
*11/01/94 7,806 0.59% 65.2500 06/26/02 59,169
P.I. Bijur 06/24/94 12,500 0.94% 61.6250 06/24/04 78,750
*01/31/94 6,186 0.47% 66.5000 01/02/00 35,013
*10/20/94 2,795 0.21% 63.3750 01/02/00 19,956
C.R. Black 06/24/94 12,500 0.94% 61.6250 06/24/04 78,750
*01/07/94 8,407 0.63% 66.2500 01/02/00 47,163
*11/01/94 5,885 0.44% 65.2500 06/26/02 44,608
<FN>
* Restored Options. Restoration of options originally granted and reported in
1990 and 1992. All options include a restoration feature, by which options
are granted to replace shares that are exchanged by participants as full or
partial payment to the company of the purchase price of shares being
acquired through the exercise of a stock option or withheld by the company
in satisfaction of tax withholding obligations. Since restored options are
granted at an exercise price which is equal to the market price of the
company's Common Stock on the day of grant, they are issued at an exercise
price which is at a higher price than the exercise price of the original
grant. Options vest 50% after one year and are fully exercisable after two
years. Restored options are fully exercisable after six months.
** Valuation. All options are granted at an exercise price equal to the market
value of the company's Common Stock on the date of grant. Therefore, if
there is no appreciation in the market value, no value will be realizable.
In accordance with Securities and Exchange Commission rules, the Black-
Scholes option pricing model was chosen to estimate the grant date present
value of the options set forth in this table. The company's use of this
model should not be construed as an endorsement of its accuracy at valuing
options. All stock option valuation models, including the Black-Scholes
model, require a prediction about the future movement of the stock price.
The following assumptions were made for purposes of calculating the Grant
Date Present Value: for all grants the option term is assumed to be three
years, volatility at 15%, dividend yield of 5% and interest rates of 4.37%
to 7.16%. The real value of the options in this table depends solely upon
the actual performance of the company's stock during the applicable period.
</FN>
27
AGGREGATED OPTION EXERCISES IN 1994 AND YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT YEAR-END(#)* AT YEAR-END($) **
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------------------------------------- ----------- ----------- ------------- ----------- -------------
A.C. DeCrane, Jr. 7,702 509,855 160,243 127,831 -0- -0-
A.J. Krowe 2,625 172,330 89,984 82,677 -0- -0-
J.L. Dunlap 2,059 135,738 63,126 32,068 -0- -0-
P.I. Bijur 997 65,616 48,004 21,545 -0- -0-
C.R. Black 1,458 96,228 44,154 24,635 -0- -0-
<FN>
* Includes options reported in the chart entitled "Option Grants in 1994".
** Based on year-end price of $59.875.
</FN>
PERFORMANCE GRAPHS
The two graphs on the following page compare the cumulative total
stockholder return on Texaco's Common Stock with the cumulative total return of
the Standard & Poor's 500 Stock Index and the Standard & Poor's Integrated
International Oil Index during five-year and seven-year periods. The measurement
period in the first graph begins on December 31, 1989, and the second graph
begins two years earlier on December 31, 1987. The second graph fully reflects
the results of the extensive restructuring undertaken by the company in 1988.
28
FIVE-YEAR COMPARISON
CUMULATIVE RETURN TO STOCKHOLDERS
(Price Appreciation and the Reinvestment of Dividends)
TEXACO VS. S&P INDICES TOTAL RETURN
ANNUAL GROWTH
1989 1990 1991 1992 1993 1994 RATE
-------------------------------------------------------------------- -----------
TEXACO $100.00 108.15 115.26 118.48 134.86 131.40 5.6%
S&P 500 $100.00 96.88 126.28 135.88 149.52 151.55 8.7%
S&P 500 OILS $100.00 106.95 123.28 126.39 151.57 160.99 10.0%
SEVEN-YEAR COMPARISON
CUMULATIVE RETURN TO STOCKHOLDERS
(Price Appreciation and the Reinvestment of Dividends)
TEXACO VS. S&P INDICES TOTAL RETURN
ANNUAL GROWTH
1987 1988 1989 1990 1991 1992 1993 1994 RATE
--------------------------------------------------------------------- ----------
TEXACO $100.00 143.84 204.05 220.68 235.17 241.75 275.18 268.12 15.1%
S&P 500 $100.00 116.50 153.30 148.52 193.58 208.31 229.20 232.31 12.8%
S&P 500 OILS $100.00 119.41 160.99 172.18 198.47 203.47 244.01 259.18 14.6%
29
RETIREMENT PLAN
Over 16,000 employees of the company and its subsidiaries, including the 21
elected officers, are eligible to participate in the Retirement Plan. The plan
is a qualified plan under the Internal Revenue Code, and provides benefits
funded by company contributions. In addition, participants have the option of
making contributions to the plan and receiving greater pension benefits.
Contributions are paid to a Master Trustee and to insurance companies for
investment.
For purposes of calculating pension benefits for the named executive
officers, the plans recognize salary and bonus only and do not take into account
other forms of compensation. For the named executive officers, salary and bonus
for the last three years are shown in the salary and bonus columns of the
Summary Compensation Table. Effective January 1, 1995, IRS regulations provide
that covered remuneration cannot exceed $150,000 per year (as indexed for
inflation) for purposes of this plan. The amount of an employee's pension is the
greater of a benefit based upon a final pay formula (applicable in most cases),
a career average formula, or a minimum retirement benefit.
PENSION PLAN TABLE
YEARS OF BENEFIT SERVICE
COVERED REMUNERATION* 15 20 25 30 35 40 45
--------------------- --------------------------------------------------------------------------------------------
$ 100,000 $ 22,500 $ 30,000 $ 37,150 $ 44,150 $ 51,150 $ 58,150 $ 65,150
200,000 45,000 60,000 74,300 88,300 102,300 116,300 130,300
400,000 90,000 120,000 148,600 176,600 204,600 232,600 260,600
600,000 135,000 180,000 222,900 264,900 306,900 348,900 390,900
800,000 180,000 240,000 297,200 353,200 409,200 465,200 521,200
1,000,000 225,000 300,000 371,500 441,500 511,500 581,500 651,500
1,200,000 270,000 360,000 445,800 529,800 613,800 697,800 781,800
1,400,000 315,000 420,000 520,100 618,100 716,100 814,100 912,100
1,600,000 360,000 480,000 594,400 706,400 818,400 930,400 1,042,400
1,800,000 405,000 540,000 668,700 794,700 920,700 1,046,700 1,172,700
2,000,000 450,000 600,000 743,000 883,000 1,023,000 1,163,000 1,303,000
<FN>
* "Covered Remuneration" means the highest three-year average salary and bonus,
if any, during the last ten years of employment. The years of benefit service
for the following individuals are: Mr. DeCrane, 36; Mr. Krowe, 6; Mr. Dunlap,
32; Mr. Bijur, 28; and Mr. Black, 37. With respect to the plan, annual pension
benefits are based on the non-contributory final pay formula (up to 1.5% of
final average pay times benefit service) and assume the participant retires at
age 65 and has been a non-contributory member of the plan throughout the
period of service. These amounts, however, do not reflect a reduction for
Social Security benefits pursuant to the provisions of the plan. They do
include those additional sums, if any, payable under a Supplemental Pension
Plan to compensate those employees who have earned annual pension benefits
payable under the plan but which are limited by Section 415 of the Internal
Revenue Code.
</FN>
30
STOCKHOLDER PROPOSALS
Stockholders may present proposals to be considered for inclusion in the
1996 Proxy Statement, provided they are received at the company's principal
executive office no later than November 28, 1995, and are in compliance with
applicable laws and Securities and Exchange Commission regulations. Any such
proposals should be addressed to: Secretary, Texaco Inc., 2000 Westchester
Avenue, White Plains, New York 10650.
OTHER BUSINESS
The management is not aware of any matters, other than those indicated
above, that will be presented for action at the meeting. If other proper matters
are introduced, the persons named in the accompanying proxy will vote the shares
they represent in accordance with their judgment.
By order of the Board of Directors.
CARL B. DAVIDSON
Vice President and Secretary.
March 27, 1995
31
[TEXACO INC.]
[LOGO]
[TEXACO]
[LOGO]
Dear Texaco Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders to be
held in the Westchester Ballroom of the Rye Town Hilton in Rye Brook, New York,
on Tuesday, May 9, 1995, at 10:00 a.m. If you plan to attend, please carry the
attached admission ticket with you to the meeting.
Please keep in mind that your vote is important. Whether or not you are able
to attend the meeting in person, PLEASE MARK THE ATTACHED PROXY TO INDICATE YOUR
VOTING PREFERENCES AND SIGN, DETACH AND RETURN THE PROXY CARD IN THE
ACCOMPANYING POSTAGE PAID ENVELOPE.
I also welcome any comments or questions you have concerning the Company's
activities. For your convenience in providing such comments, space is provided
on the reverse side of this card, which you can enclose and return with your
signed proxy. In view of the large number of comments and questions we generally
receive, IT WILL NOT BE POSSIBLE TO RESPOND TO THEM INDIVIDUALLY. However, I
assure you that each one will be read and that subjects of general interest will
be covered at the meeting or in other information from the Company.
/s/ Alfred C. DeCrane, Jr.
Chairman of the Board &
Chief Executive Officer
ADMISSION TICKET
TO
TEXACO'S 1995 ANNUAL MEETING OF STOCKHOLDERS
This is your ADMISSION TICKET to gain access to Texaco's 1995 Annual Meeting of
Stockholders to be held in the Westchester Ballroom of the Rye Town Hilton in
Rye Brook, New York, on Tuesday, May 9, 1995, at 10:00 a.m. Please present this
Admission Ticket at one of the registration stations where YOU WILL BE ASKED TO
DISPLAY SOME FORM OF PERSONAL INDENTIFICATION. The directions to the meeting
are on the reverse side of this admission ticket. Stockholders will be admitted
through the hotel's Westchester Ballroom entrance.
THIS TICKET IS NOT TRANSFERABLE
(DETACH AND RETURN IN THE ENCLOSED ENVELOPE)
--------------------------------------------------------------------------
Please specify your choices by clearly marking the appropriate boxes.
Unless specified, this proxy will be voted FOR items 1 and 2, AGAINST
P items 3,4,5 and 6 and will be voted in the discretion of the proxies on
such other matters as may properly come before the meeting or any
adjournment thereof.
R --------------------------------------------------------------------------
DIRECTORS 1. Election of directors for a three year term:
RECOMMEND Nominees are: J. Brademas, A.C. DeCrane, Jr.,
O A VOTE FOR T.S. Murphy, C.H. Price, II
ITEMS 1 & 2
/ / FOR all listed nominees
X / / WITHHOLD vote for all nominees
/ / WITHHOLD vote only from_____________
Y 2. Approval of Arthur Anderson LLP as Auditors
for the year 1995.
FOR AGAINST ABSTAIN
/ / / / / /
--------------------------------------------------------------------------
DIRECTORS FOR AGAINST ABSTAIN
RECOMMEND 3.Stockholder proposal relating to
A VOTE classification of directors....../ / / / / /
AGAINST 4.Stockholder proposal relating to
ITEMS 3,4, executive compensation.........../ / / / / /
5 & 6 5.Stockholder proposal relating to
employment opportunity.........../ / / / / /
6.Stockholder proposal relating to
corporate conduct guidelines...../ / / / / /
--------------------------------------------------------------------------
ACCOUNT NO. PROXY NO.
----------- ---------
CUSIP 881694 10 3
SEE REVERSE SIDE
PLEASE SIGN, DATE
AND RETURN _________________________________________DATE______________1995
(Sign exactly as name appears, indicating
position or representative capacity,
where applicable)
FOR YOUR COMMENTS...
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
As part of the Company's continuing efforts to eliminate unnecessary
expenses, we are attempting to stop duplicate mailing of Annual Reports to the
same family residence. If more than one member of your household is receiving
copies of the Annual Report, please help us economize by completing the
following authorization:
/ / Discontinue mailing the Annual Report to my account because I have a copy
available to me from another source.
Name:_________________________________Signature:________________________________
Account Number(shown on face of proxy card):____________________________________
(DETACH AND RETURN WITH YOUR PROXY CARD IN THE ENCLOSED ENVELOPE)
DIRECTIONS TO RYE TOWN HILTON
-----------------------------
FROM NEW YORK CITY
West Side Highway (Henry Hudson Parkway Rt.9A) to George Washington Bridge and
Rt.95 North and East. Follow to Exit 1C, Rt.87 North (Major Deegan Expressway
and Gov. Thomas E. Dewey, NY Thruway). Follow NY Thruway North to Exit 4, Cross
County Parkway. Proceed to Hutchinson River Parkway North and continue to Exit
26E (Westchester Ave). Continue on Westchester Avenue, following signs for
Village of Rye Brook and turn left at entrance to Rye Town Hilton.
FDR Drive to Triboro Bridge to Bruckner Expressway (Rt.278). Proceed to Rt.95
North and Exit 21. Follow Rt. 287 West to Exit 10 (Webb Avenue, Bowman Avenue).
Take Exit 10 go straight off the ramp to your second traffic light and bear
right onto Westchester Avenue. Proceed to your third traffic light and turn left
at entrance.
FROM CONNECTICUT
Follow Rt.95 South to Exit 21 N.Y. Follow Rt.287 West to Exit 10 (Webb Avenue,
Bowman Avenue). Take Exit 10, go straight off the ramp to your second traffic
light and bear right onto Westchester Avenue. Proceed to your third traffic
light and turn left at entrance.
FROM TAPPAN ZEE BRIDGE
Rt.87 South to Exit 8, Rt.287 East. Proceed on Rt.287 East to Exit 10
Westchester Avenue. Continue East on Westchester Avenue following signs for
Village of Rye Brook. Fourth traffic light on Westchester Avenue, turn left at
entrance to Rye Town Hilton.
(DETACH AND RETURN IN THE ENCLOSED ENVELOPE)
[LOGO]
TEXACO INC.
2000 Westchester Ave.
White Plains, NY 10650
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
A.J. Krowe, R.B. Smith, W.C. Steere, Jr., W. Wrigley, and each of them,
as proxies, with full power of substitution, are hereby authorized to represent
and to vote, as designated on the reverse side, all Common Stock of Texaco Inc.
held of record by the undersigned on March 10, 1995, at the Annual Meeting of
Stockholders to be held in the Westchester Ballroom of the Rye Town Hilton, in
Rye Brook, New York, on Tuesday, May 9, 1995, at 10:00 a.m.
IF YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE CHECK THE APPROPRIATE
BOX BELOW. IF YOU AND A FAMILY MEMBER ARE ATTENDING, PLEASE PROVIDE TEXACO WITH
THE FAMILY MEMBER'S NAME.
/ / STOCKHOLDER WILL ATTEND THE ANNUAL MEETING
/ / STOCKHOLDER AND A FAMILY MEMBER WILL ATTEND THE ANNUAL MEETING
----------------------------------------------------------
Family member's name (Please Print)