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Filed by Chevron Corporation Pursuant to Rule 425 under the Securities Act
of 1933 and deemed filed pursuant to Rule 14a-12 under
the Securities Exchange Act of 1934
Subject Company: Texaco Inc.
Commission File No. 333-54240
Date: February 21, 2001
Except for the historical and present factual information contained
herein, the matters set forth in this filing, including statements as to the
expected benefits of the merger such as efficiencies, cost savings, market
profile and financial strength, and the competitive ability and position of the
combined company, and other statements identified by words such as "expects,"
"projects," "plans," and similar expressions are forward-looking statements
within the meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are subject to
risks and uncertainties that may cause actual results to differ materially,
including the possibility that the anticipated benefits from the merger cannot
be fully realized, the possibility that costs or difficulties related to the
integration of our businesses will be greater than expected, the impact of
competition and other risk factors relating to our industry as detailed from
time to time in each of Chevron's and Texaco's reports filed with the SEC.
Chevron and Texaco disclaim any responsibility to update these forward-looking
statements.
Chevron has filed a Registration Statement on Form S-4 with the SEC
containing a preliminary joint proxy statement/prospectus regarding the proposed
merger transaction. Investors are urged to read the definitive joint proxy
statement/prospectus when it becomes available and any other relevant documents
filed with the SEC because they will contain important information. The
definitive joint proxy statement/prospectus will be sent to the stockholders of
Chevron and Texaco seeking their approval of the proposed transaction. In
addition, you may obtain the documents free of charge at the website maintained
by the SEC at www.sec.gov. Also, you may obtain documents filed with the SEC by
Chevron free of charge by requesting them in writing from Chevron Corporation,
575 Market Street, San Francisco, CA 94105, Attention: Corporate Secretary, or
by telephone at (415) 894-7700. You may obtain documents filed with the SEC by
Texaco free of charge by requesting them in writing from Texaco Inc., 2000
Westchester Avenue, White Plains, New York 10650, Attention: Secretary, or by
telephone at (914) 253-4000.
Chevron and Texaco, and their respective directors and executive
officers, may be deemed to be participants in the solicitation of proxies from
the stockholders of Chevron and Texaco in connection with the merger.
Information about the directors and executive officers of Chevron and their
ownership of Chevron stock is set forth in the proxy statement for Chevron's
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2000 annual meeting of stockholders. Information about the directors and
executive officers of Texaco and their ownership of Texaco stock is set forth in
the proxy statement for Texaco's 2000 annual meeting of stockholders. Investors
may obtain additional information regarding the interests of such participants
by reading the definitive joint proxy statement/prospectus when it becomes
available.
* * *
[Letter to all Chevron employees from John Watson, Vice President, Finance, and
Chief Financial Officer]
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Dear Fellow Employees:
Our momentum in launching the new ChevronTexaco picked up dramatically last week
as members of the new leadership team spent two days together at an off-site
meeting here in Northern California. The meeting was a huge success, with
excitement about building a truly new entity and about the tremendous value
potential of ChevronTexaco capturing the group's imagination.
While just getting together for the first time as a team was valuable, our
broader objectives included having the new leaders understand and commit to:
o their pre-merger and post-merger roles;
o achieving our synergy and other merger goals;
o supporting the "4+1" strategies and what will become The ChevronTexaco Way;
and
o the importance of becoming the high-performance leadership team that will
be so crucial to success.
We talked about selecting the best team possible at all levels, and we heard
about plans for cultural integration, the selection process, performance and
accountability. The new process is designed to ensure selections that are based
on performance, that value diversity globally, and which help retain and develop
top talent. The new leaders will be involved in choosing the next round of
management appointments, which we expect to announce by mid-April. The Decision
Review Board - which now includes Dave O'Reilly, Glenn Tilton, Dick Matzke, Pat
Lynch and myself -- will monitor the process closely.
Ensuring "business readiness" - the new company's ability to operate effectively
from the first day it's in business - was another key element we discussed. The
new leaders committed to building on what the integration teams have already
accomplished, with priority given to capturing quickly the synergy opportunities
the merger will present. The group discussed the fact that reducing costs isn't
the only way to achieve synergies; looking for ways to enhance revenues and
generally grow the business after the merger will also be important.
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Dave O'Reilly outlined his expectations for the new company to create a "legacy
of performance." He said the new ChevronTexaco will be a company whose hallmarks
include:
o business integrity, partnership and teamwork;
o respect for individuals, cultures, diversity and the environment;
o collaboration, results and rigorous accountability;
o the "4+1" strategies leading to world-class performance; and
o the enduring primary objective to become No. 1 in total stockholder return.
ChevronTexaco can become a "growth machine" over the longer term, he said,
working from superior assets coupled with a strong performance culture. Growth
will come from: strengthened production; capitalizing on our best exploration
and technology options; expanded opportunities in the downstream global
businesses; and having the right strategies in place.
Glenn Tilton stressed the need for us to be "global in our approach to building
the organization," and the need to keep the base business running well while we
integrate the companies. He cautioned the group to keep a careful watch on the
competition, which "won't be standing still while we build the new company."
I hope I've conveyed the energy and excitement about ChevronTexaco we shared at
the meeting. We were all impressed by the group's commitment to a successful
future together.
Two brief reminders before I close: First, while we are moving forward in an
exciting way with merger planning, Chevron and Texaco remain competitors. Until
the merger is approved, all employees should maintain the same business
relationships and protocols with Texaco that they would with any competitor.
Second, we all need to stay focused on our current business plans. That's the
best way for employees to contribute not only to Chevron's success, but also to
the early success we envision for ChevronTexaco.
It's clear from our experience last week that the new company will have
tremendous opportunities -- not only for the corporation, but for the many
thousands of employees from Chevron, Texaco and Caltex who will help launch and
operate the new ChevronTexaco.
JOHN WATSON
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[Questions & answers and additional merger related information provided to
Chevron employees]
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Q. WHEN WILL I KNOW WHETHER I'LL HAVE A JOB, AND IF SO, WHAT MY JOB WILL BE?
A. The timing of selections (beyond the ChevronTexaco leadership team) will be
driven by the U.S. Federal Trade Commission (FTC) approval date. This means that
most job decisions won't take place for some time.
We expect to announce some additional management appointments by mid-April, but
we cannot continue staffing the proposed new organization beyond a certain point
prior to FTC approval.
It's important to point out that many jobs throughout the new company will not
change. Where there is little or no functional or geographic overlap among the
three companies, those current organizations - and the people who hold the jobs
in those organizations - may change very little. In areas of significant
overlapping activity and geography, jobs will generally be open for selection.
Once the selection process is completed, local management will develop a
transition plan for the new organization that includes timing of selection
implementation and office relocations, where appropriate. Overall, our intent is
for all employees to know their status as soon as possible after completion of
the merger.
Q. WILL EMPLOYEES BE ABLE TO POST FOR OPEN JOBS?
A. It is important to our business that the new organization is finalized
quickly and efficiently, and with minimal disruption to the business. Given the
timing and objective of having employees know their status as soon as possible
following completion of the merger, posting of merger-related open positions is
unlikely.
Q. WHO WILL BE MAKING THE SELECTIONS? HOW CAN I BE SURE I'LL BE CONSIDERED?
A. Management is responsible for establishing a process that rapidly,
consistently and comprehensively identifies all qualified candidates. This
process includes forming Selection Teams for all open positions, providing data
about candidates for those positions, and deciding which candidates are best
suited for the positions.
Q. WHAT HAPPENS IF I AM NOT SELECTED FOR A JOB?
A. If you are not selected for a job, you may be eligible for redeployment and,
if not placed through redeployment, you would be eligible for severance and
other related benefits that are competitive in your location or country.
Q. WHAT WOULD THE SEVERANCE BENEFIT BE IF I LOSE MY JOB AS A RESULT OF THE
MERGER?
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A. U.S. dollar paid eligible employees will receive a severance pay benefit
equal to four weeks of compensation for each year of service. When calculating a
severance pay benefit, "compensation" is defined as regular pay plus 50 percent
of the maximum possible Chevron Success Sharing award for the year. The minimum
severance pay benefit is 12 weeks of compensation. The maximum severance pay
benefit is 104 weeks of compensation.
If you are a non-U.S. employee, severance plans are still under review and will
be based on applicable laws and competitive practices in your country. More
information will be provided as decisions are made in each location.
Q. HOW WILL I KNOW WHETHER THE JOB I'M IN IS GOING TO BE DECLARED "OPEN?"
A. There are no plans to announce open positions. Management, with support from
Human Resources, will decide which positions to open in each location based on
the Selection Process Guidelines. Generally, a position will be considered open
if it is new or if it has significant changes in responsibilities, scope or
complexity requiring new or different competencies. A position can also be
considered open if like jobs are combined and fewer positions are needed.
Where there is little or no functional or geographic overlap among the three
companies, those current organizations - and the people who hold the jobs in
those organizations - may change very little. In areas of significant
overlapping activity and geography, jobs will generally be open for selection.
Merger integration teams are working to identify the functions and locations
where the three companies overlap. Obviously, there will be some overlap in
corporate functions and in locations where two or all three of the companies
conduct business.
Q. WHAT EXACTLY IS AN "OPEN" POSITION?
A. Generally, a position can be considered open if it is new, has significant
changes in responsibilities, scope or complexity requiring new or different
competencies; the organizational structure changes resulting in fewer or more
positions; or where positions have become vacant, and a decision has been made
to fill them.
Q. I'M A U.S. EMPLOYEE. WHAT HAPPENS IF I'M OFFERED A DEMOTION OR A TRANSFER
AND I TURN IT DOWN?
A. If an employee is offered and then turns down a demotion or transfer, and
subsequently becomes surplus as a result of the merger, the employee would be
eligible for a merger severance benefit. Generally, a job offer is considered a
demotion if it results in a reduction in your regular pay. A job offer is
considered a transfer if the new work location is more than 50 miles from your
current job site.
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Q. WHAT IF I'M OFFERED A TRANSFER AND I HAVE TO RELOCATE AS A RESULT OF THE
MERGER? WHAT WILL THE RELOCATION POLICY BE?
A. In the new company, ChevronTexaco employees who are relocated as a result of
the merger will do so under locally competitive relocation plans.
For instance, U.S.-dollar paid employees who accept a merger-related domestic
relocation of more than 50 miles from their current work location will relocate
under the Chevron relocation policy, which will be adopted by ChevronTexaco.
Q. WHAT KINDS OF SEVERANCE RELATED SERVICES WILL BE AVAILABLE FOR EMPLOYEES
TERMINATED DUE TO THE MERGER?
A. We recognize the importance of having a transition process in place to assist
employees who may be terminated as a result of the merger. Services will be
available to employees who are involuntarily terminated due to the merger
according to local custom and practices.
U.S.-Dollar Paid Employees Only
Employees who are not selected for positions in the new company will be eligible
to enter redeployment for a specified time frame. During this period, management
will coordinate with the Selection Coordinators, Human Resources and
Redeployment Coordinators to identify opportunities where employees in
redeployment may be selected for open positions. If a new position is not found
within the redeployment period, management will set a termination date based on
merger integration plans and business needs.
Career transition services will also be available to employees who are
terminated as a result of the merger. A professional outplacement firm that has
developed a customized, comprehensive program for ChevronTexaco is providing
these services.
Educational assistance will also be available.
Q. WHAT INFORMATION WILL BE USED FOR SELECTION?
A. Using the criteria for the position, it is a Selection Team's responsibility
to determine the type of employee data that need to be gathered for
decision-making, subject to legal guidelines. Management, along with Selection
Coordinators, is responsible for collecting available data on employees for
positions.
Q. WHO APPROVES THE NEXT LEVEL OF MANAGEMENT SELECTIONS?
A. The newly appointed ChevronTexaco leadership will be involved in selecting
the next round of management appointments, which will be reviewed and approved
by the Decision Review Board -- Dave O'Reilly, Glenn Tilton, Dick Matzke, John
Watson, and Pat Lynch.
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Q. WILL ALL OPEN POSITIONS BE FILLED USING THE SELECTION PROCESS?
A. Every position will be filled through the selection process. The selection
guidelines provide different ways to fill positions. For example, there will be
some positions filled as a developmental assignment or to repatriate an employee
from an international assignment.
Q. WHO ARE THE "CORPORATE SELECTION COORDINATORS?" HOW WERE THEY SELECTED?
WHO ARE THE "LOCAL SELECTION COORDINATORS" AND HOW WERE THEY SELECTED?
A. A Corporate Selection Coordinator has been appointed by management for each
company - Chevron, Texaco and Caltex. The three coordinators are all Human
Resources employees in their respective companies, and their role will be to
help coordinate the process, rather than actually make selections. Local
Selection Coordinators will be appointed by management.
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SELECTION GUIDELINES
Selection guidelines have been developed to ensure timely and effective staffing
of ChevronTexaco. The guidelines provide a consistent framework to allow local
management to staff their organizations to meet business needs and accomplish
goals. As we seek to build a strong and committed team, candidates will be
selected using relevant job-related performance information and competencies.
One of the guiding principles is to ensure that all aspects of the selection
process value diversity.
To fill positions as quickly as possible, the selection process generally will
cascade through the organization. Now that we have announced the executive
positions, the selection process for certain positions in the next level of
management will occur from now until April. Since we are limited as to the
number of positions we can identify in the next round prior to merger approval
by the U.S. Federal Trade Commission, those in the next round will include
positions most critical to the merger integration process. Selection for all
remaining positions will begin after we receive FTC approval. Those leaders
selected in each group will participate in the selection of the next group of
positions. Our goal is for all employees to know their status as soon as
possible after the merger is completed.
Selection Process
All active Chevron, Texaco and Caltex employees are covered by the selection
guidelines. Candidates will be considered for open positions based on individual
qualifications. Employees located in offices that are closing will receive
consideration for available open positions elsewhere.
Corporate Selection Coordinators from Chevron, Texaco and Caltex have been
appointed to work with Human Resources to provide guidance on the selection
guidelines and to assist local Selection Coordinators. Human Resources will
provide guidance on which jobs to open and the
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best method for filling jobs, including what type of employee data to gather and
the timing of selections.
The selection process in each business unit within ChevronTexaco will follow
these steps:
1. IDENTIFY OPEN POSITIONS
Management, with support from Human Resources, will determine which jobs to open
based on their new organizational design. Where there is little or no functional
or geographic overlap among the three companies, those current organizations -
and the people who hold the jobs in those organizations - may change very
little. In areas of significant overlapping activity and geography, jobs
generally will be open for selection.
Positions considered open generally will include:
o new positions;
o positions with significant changes in:
- responsibilities, scope and/or complexity that require new or different
competencies;
- organizational structure, resulting in fewer or more positions;
o vacated positions, where a decision has been made to fill them.
2. IDENTIFY AND ASSESS CANDIDATES
Management, with support from Human Resources, is responsible for establishing a
process that rapidly, consistently and comprehensively identifies all qualified
candidates and provides data about candidates for open positions. Open positions
identified through the merger selection process are unlikely to be posted.
The process involves:
o forming a diverse and representative Selection Team to work as a group to
assess employee data. The teams will include representatives from the
organizations involved -- Chevron, Texaco and Caltex -- where
appropriate.
o collecting available data on employees eligible for the positions.
o gathering additional input from supervisors or internal customers as needed.
o deciding which candidate is best suited for the position, using criteria
established for the position, and based on employee information collected.
3. MAKE JOB OFFERS
Successful candidates will receive a confidential job offer.
Individuals who will not receive offers will be advised by management. Detailed
information about severance and related programs will be provided at that time.
Actual termination dates will be driven by merger implementation schedules and
by business needs.
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TIMING OF SELECTION FOR ALL REMAINING POSITIONS
Once the merger is approved by the FTC and the selection process is ready to
begin in your area, further information will be provided by your local
management about how the selection guidelines will be used in your respective
organizations and the expected timing of selection.
Work is continuing on organization and staffing designs, as well as Human
Resources programs and policies for the new company. When we can, we will
provide additional information about these programs and policies for your
location.
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