As filed with the Securities and Exchange Commission on May 9, 2005
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
OCCIDENTAL PETROLEUM CORPORATION
(EXACT NAME OF ISSUER AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-4035997
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
10889 WILSHIRE BOULEVARD
LOS ANGELES, CALIFORNIA 90024
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
OCCIDENTAL PETROLEUM CORPORATION
1996 RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
(FULL TITLE OF THE PLAN)
DONALD P. DE BRIER, ESQ., GENERAL COUNSEL
OCCIDENTAL PETROLEUM CORPORATION
10889 WILSHIRE BOULEVARD
LOS ANGELES, CALIFORNIA
(310) 208-8800
(NAME, ADDRESS AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
CALCULATION OF REGISTRATION FEE
===================== ================== ================= ================== ==================
Proposed Proposed
Amount Maximum Maximum
Title of Securities to be Offering Price Aggregate Amount of
to be Registered Registered Per Share(1) Offering Price(1) Registration Fee
- --------------------- ------------------ ----------------- ------------------ ------------------
Common Stock,
$.20 par value
(including 17,000,000 (2) $69.28 $1,177,760,000.00 $138,622.35
Preferred Stock
Purchase Rights)
===================== ================== ================= ================== ==================
(1) Estimated pursuant to Rule 457 solely for the purpose of calculating the
amount of the registration fee based on the average of the high and low
price for the Common Stock on May 3, 2005.
(2) Includes an indeterminate number of additional shares which may be
necessary to adjust the number of shares reserved for issuance pursuant to
the plan as the results of any future stock split, stock dividend or
similar adjustment of the outstanding Common Stock of the Registrant.
PART II
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are hereby incorporated by reference in this
Registration Statement:
(a) The Annual Report on Form 10-K of Occidental Petroleum Corporation
("Occidental" or the "Registrant") for the year ended December 31, 2004;
(b) The Quarterly Report on Form 10-K of Occidental for the fiscal quarter
ended March 31, 2005;
(c) Current Reports on Form 8-K, dated January 5, 2005 (filed January 6,
2005), January 13, 2005 (filed January 15, 2005), January 24, 2005 (filed
January 24, 2005), February 3, 2005 (filed February 3, 2005), February 8, 2005
(filed February 9, 2005), February 10, 2005 (filed February 15, 2005), February
22, 2005 (filed February 22, 2005), April 6, 2005 (filed April 6, 2005), April
22, 2005 (filed April 22, 2005), April 21, 2005 (filed April 25, 2005) April 26,
2005 (filed April 26, 2005), and May 6, 2005 (filed May 6, 2005); and
(d) The description of the Common Stock contained in the Registration
Statement on Form 8-B, dated June 26, 1986 (as amended by Form 8, dated December
22, 1986, Form 8, dated February 3, 1988, Form 8-B/A, dated July 12, 1993, Form
8-B/A, dated March 21, 1994, and Form 8-B/A, dated November 2, 1995 and
including any amendment or report filed for the purpose of updating such
descriptions subsequent to the date of this Registration Statement).
All documents filed by the Registrant or the Occidental Petroleum
Corporation 1996 Restricted Stock Plan for Non-Employee Directors (the "Plan")
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934, as amended, after the date hereof prior to the filing of a
post-effective amendment which indicates that the securities offered hereby have
been sold or which deregisters the securities covered hereby then remaining
unsold, shall also be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the date of delivery of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein, or in any other subsequently filed document that also is or is
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The validity of the Common Stock registered pursuant hereto has been passed
upon by Linda S. Peterson, an Associate General Counsel of the Registrant. Ms.
Peterson beneficially owns, and has rights to acquire under employee stock
options, an aggregate of less than 1% of the outstanding shares of Common Stock
of Occidental.
1
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant, indemnity to directors
and officers under certain circumstances for liabilities incurred in connection
with their activities in such capacities (including reimbursement for expenses
incurred). Occidental's Restated Certificate of Incorporation, as amended,
provides for the elimination of personal liability of its directors to the full
extent permitted by the Delaware General Corporation Law and Occidental has
entered into indemnification agreements with each director and certain officers
providing for additional indemnification. Article VIII of Occidental's By-laws
provides that Occidental shall indemnify directors and officers under certain
circumstances for liabilities and expenses incurred by reason of their
activities in such capacities. In addition, Occidental has insurance policies
that provide liability coverage to directors and officers while acting in such
capacities.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
3.(i) Restated Certificate of Incorporation of Occidental, dated November 12,
1999 (incorporated by reference to Exhibit 3.(i) to the Annual Report
on Form 10-K of Occidental for the year ended December 31, 1999, File
No. 1-9210).
3.(i)(a) Certificate of Change of Location of Registered Office and of
Registered Agent, dated July 6, 2001 (incorporated by reference to
Exhibit 3.1(i) to the Registration Statement on Form S-3 of Occidental,
File No. 333-82246).
3.(ii) By-laws of Occidental, as amended through February 12, 2004 (filed as
Exhibit 3.(ii) to the Annual Report on Form 10-K of Occidental for the
year ended December 31, 2003, File No. 1-9210).
5.1 Opinion of Linda S. Peterson, Esq.
23.1 Consent of Linda S. Peterson, Esq. (Included in Exhibit 5.1).
23.2 Consent of KPMG LLP.
24.1 Power of Attorney (Reference is hereby made to page 4).
99.1 Occidental Petroleum Corporation 2005 Long-Term Incentive Plan.
ITEM 9. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
2
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
3
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Donald
P. de Brier, Robert E. Sawyer and Linda S. Peterson his or her true and lawful
attorneys-in-fact and agents, each acting alone, with full powers of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any or all Amendments (including
Post-Effective Amendments) to this Registration Statement and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, here ratifying and confirming all that said attorneys-in-fact and
agents, each acting along, or his or her substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Occidental
Petroleum Corporation certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, State of California, on May 9,
2005.
OCCIDENTAL PETROLEUM CORPORATION
By: /s/ RAY R. IRANI
---------------------------------------------
Ray R. Irani
Chairman of the Board of Directors, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ RAY R. IRANI Chairman of the Board of May 9, 2005
- ------------------------------- Directors, Preisdent and Chief
Ray R. Irani Executive Officer
/s/ STEPHEN I. CHAZEN Senior Executive Vice President May 9, 2005
- ------------------------------- and Chief Financial Officer
Stephen I. Chazen
/s/ JIM A. LEONARD Vice President and Controller May 9, 2005
- ------------------------------- (Chief Accounting Officer)
Jim A. Leonard
/s/ SPENCER ABRAHAM Director May 9, 2005
- -------------------------------
Spencer Abraham
/s/ RONALD W. BURKLE Director May 9, 2005
- -------------------------------
Ronald W. Burkle
SIGNATURE TITLE DATE
--------- ----- ----
/s/ JOHN S. CHALSTY Director May 9, 2005
- -------------------------------
John S. Chalsty
/s/ EDWARD P. DJEREJIAN Director May 9, 2005
- -------------------------------
Edward P. Djerejian
/s/ R. CHAD DREIER Director May 9, 2005
- -------------------------------
R. Chad Dreier
/s/ JOHN E. FEICK Director May 9, 2005
- -------------------------------
John E. Feick
/s/ IRVIN W. MALONEY Director May 9, 2005
- -------------------------------
Irvin W. Maloney
/s/ RODOLFO SEGOVIA Director May 9, 2005
- -------------------------------
Rodolfo Segovia
/s/ AZIZ SYRIANI Director May 9, 2005
- -------------------------------
Aziz Syriani
/s/ ROSEMARY TOMICH Director May 9, 2005
- -------------------------------
Rosemary Tomich
/s/ WALTER L. WEISMAN Director May 9, 2005
- -------------------------------
Walter L. Weisman
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
3.(i) Restated Certificate of Incorporation of Occidental, dated
November 12, 1999 (incorporated by reference to Exhibit 3.(i) to
the Annual Report on Form 10-K of Occidental for the fiscal year
ended December 31, 1999).
3.(i)(a) Certificate of Change of Location of Registered Office and of
Registered Agent, dated July 6, 2001 (incorporated by reference
to Exhibit 3.1(i) to the Registration Statement on Form S-3 of
Occidental, File No. 333-82246).
3.(ii) By-laws of Occidental, as amended through February 12, 2004
(filed as Exhibit 3.(ii) to the Annual Report on Form 10-K of
Occidental, File No. 1-9210).
5.1 Opinion of Linda S. Peterson, Esq.
23.1 Consent of Linda S. Peterson, Esq. (Included in Exhibit 5.1).
23.2 Consent of KPMG LLP.
24.1 Power of Attorney (Reference is hereby made to page 4).
99.1 Occidental Petroleum Corporation 2005 Long-Term Incentive Plan.
EXHIBIT 5.1
[OXY LOGO] OCCIDENTAL PETROLEUM CORPORATION 10889 WILSHIRE BOULEVARD
LOS ANGELES, CALIFORNIA 90024
TELEPHONE (310) 208-8800
FACSIMILE (310) 443-6690
LINDA S. PETERSON
ASSOCIATE GENERAL COUNSEL
Direct Telephone (310) 443-6189
Direct Facsimile (310) 443-6737
Email linda_peterson@oxy.com
May 9, 2005
Occidental Petroleum Corporation
10889 Wilshire Boulevard
Los Angeles, CA 90024
Re: Occidental Petroleum Corporation
Registration Statement on Form S-8
Occidental Petroleum Corporation
2005 Long-Term Incentive Plan
-----------------------------
Ladies and Gentlemen:
I am an Associate General Counsel of Occidental Petroleum Corporation, a
Delaware corporation ("Occidental"), and have acted as counsel to Occidental in
connection with the preparation of the above-referenced Registration Statement
on Form S-8, submitted by Occidental to the Securities and Exchange Commission
("Commission") on May 9, 2005 (the "Registration Statement"). The Registration
Statement relates to the registration under the Securities Act of 1933, as
amended (the "1933 Act"), of 17,000,000 shares (the "Shares") of Common Stock,
par value $.20 per share, of Occidental. The Shares are to be issued in
accordance with the Occidental Petroleum Corporation 2005 Long-Term Incentive
Plan (the "Plan").
In connection with this opinion, I have examined and am familiar with
originals or copies, certified or otherwise identified to my satisfaction, of
such records of Occidental and all such agreements, certificates of public
officials, certificates of officers or other representatives of Occidental and
others and such other documents, certificates and records as I have deemed
necessary or appropriate as a basis for the opinions set forth herein,
including, without limitation, (i) the Registration Statement (together with the
form of prospectus forming a part thereof), (ii) the Restated Certificate of
Incorporation and By-laws of Occidental, as amended to date, (iii) copies of
certain resolutions adopted by the Board of Directors of Occidental, relating to
the adoption of the Plan, the filing of the Registration Statement and any
amendments or supplements thereto, and the issuance of the Shares and related
matters, (iv) copies of the action adopted at the Annual Meeting of Stockholders
approving the amendment of the Plan to increase the number of shares available
for issuance and (v) the Plan. In my examination, I have assumed the genuineness
of all signatures, the legal capacity of natural persons, the authenticity of
all documents submitted to me as originals, the conformity to original documents
of all documents submitted to me as certified, conformed or photostatic copies
and the authenticity of the originals of such copies. As to any facts material
to the opinions expressed herein which I have not independently established or
verified, I have relied upon statements and representations of officers and
other representatives of Occidental and others.
Occidental Petroleum Corporation
May 9, 2005
Page 2
I am a member of the California and New York Bars and for purposes of this
opinion do not hold myself out as an expert on, nor do I express any opinion as
to, the laws of any jurisdiction other than the General Corporation Law of the
State of Delaware.
Based upon and subject to the foregoing, I am of the opinion that the
Shares have been duly authorized and, when issued and paid for in accordance
with the Plan, will be validly issued, fully paid and nonassessable.
This opinion is delivered in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the 1933 Act and is furnished to you solely
for your benefit in connection with the filing of the Registration Statement and
is not to be used, circulated, quoted or otherwise referred to for any other
purpose without my prior written consent. I hereby consent to the filing of this
opinion with the Commission as Exhibit 5 to the Registration Statement. I also
consent to the reference to me under the heading "Legal Matters" in the
Registration Statement. In giving this consent, I do not thereby admit that I am
included in the category of persons whose consent is required under Section 7 of
the 1933 Act or the rules and regulations of the Commission promulgated
thereunder.
Very truly yours,
/s/ LINDA S. PETERSON
Linda S. Peterson
[KPMG LOGO]
KPMG LLP
Suite 2000 Telephone 213 972 4000
355 South Grand Avenue Fax 213 622 1217
Los Angeles, CA 90071-1568 Internet www.us.kpmg.com
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
To the Board of Directors
Occidental Petroleum Corporation
We consent to the incorporation by reference in the registration statement
on Form S-8 of Occidental Petroleum Corporation of our reports dated February
25, 2005, with respect to the consolidated balance sheets of Occidental
Petroleum Corporation as of December 31, 2004 and 2003, and the related
consolidated statements of operations, stockholders' equity, comprehensive
income, and cash flows for each of the years in the three-year period ended
December 31, 2004 and the related financial statement schedule, management's
assessment of the effectiveness of internal control over financial reporting as
of December 31, 2004 and the effectiveness of internal control over financial
reporting as of December 31, 2004, which reports appear in the December 31, 2004
annual report on Form 10-K of Occidental Petroleum Corporation. Our report on
financial statements of Occidental Petroleum Corporation refers to (i) a change
in the method of accounting for inventories purchased from third parties, (ii) a
change in the method of accounting for asset retirement obligations, (iii) a
change in the method of accounting for the consolidation of variable interest
entities, (iv) a change in the method of accounting for certain financial
instruments with characteristics of both liabilities and equity, and (v) a
change in the method of accounting for the impairment of goodwill and other
intangibles.
/s/ KPMG LLP
Los Angeles
May 9, 2005
EXHIBIT 99.1
OCCIDENTAL PETROLEUM CORPORATION
2005 LONG-TERM INCENTIVE PLAN
1. PURPOSE
The purposes of this Plan are (i) to furnish a significant incentive to the
employees and non-employee Directors of the Company and its subsidiaries by
making available to them the benefits of increased ownership of Shares (ii) to
promote the alignment of the interests of employees and non-employee Directors
on the one hand and stockholders on the other hand and (iii) to assist in the
recruitment and retention of employees and non-employee Directors.
2. DEFINITIONS
"BOARD" means the Board of Directors of the Company.
"BUSINESS COMBINATION" means a merger, consolidation, or other reorganization,
with or into, or the sale of all or substantially all of the Company's business
and/or assets as an entirety to, one or more entities that are not subsidiaries
or other affiliates of the Company.
"CHANGE IN CONTROL" means the occurrence of any of the following events:
(a) Approval by the stockholders of the Company of the dissolution or
liquidation of the Company, other than in the context of a transaction that does
not constitute a Change in Control under clause (b) below;
(b) Consummation of a Business Combination, unless (1) as a result of the
Business Combination, more than 50 percent of the outstanding voting power of
the Successor Entity immediately after the reorganization is, or will be, owned,
directly or indirectly, by persons who were holders of the Company's voting
securities immediately before the Business Combination; (2) no "person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act), excluding the
Successor Entity or an Excluded Person, beneficially owns, directly or
indirectly, more than 20 percent of the outstanding shares or the combined
voting power of the outstanding voting securities of the Successor Entity, after
giving effect to the Business Combination, except to the extent that such
ownership existed prior to the Business Combination; and (3) at least 50 percent
of the members of the board of directors of the entity resulting from the
Business Combination were Directors at the time of the execution of the initial
agreement or of the action of the Board approving the Business Combination;
(c) Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act, but excluding any Excluded Person) is or becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing 20 percent or more of the combined
voting power of the Company's then outstanding voting securities, other than as
a result of (1) an acquisition directly from the Company; (2) an acquisition by
the Company; or (3) an acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or a Successor Entity; or
(d) During any period not longer than two consecutive years, individuals who at
the beginning of such period constituted the Board cease to constitute at least
a majority thereof, unless the election, or the nomination for election by the
Company's stockholders, of each new Director was approved by a vote of at least
two-thirds (2/3) of the Directors then still in office who were Directors at the
beginning of such period (including for these purposes, new members whose
election or nomination was so approved), but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of
Directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a person other than the Board.
"CODE" means the Internal Revenue Code of 1986, as amended from time to time.
"COMMITTEE" means the Executive Compensation and Human Resources Committee of
the Board or its successor, which shall be composed of not less than two members
of the Board, each of whom shall be a "non-employee director" within the meaning
of Rule 16b-3 and an "outside director" within the meaning of Section 162(m).
"COMPANY" means Occidental Petroleum Corporation, a Delaware corporation.
"DIRECTOR" means a member of the Board.
"DISABILITY" means permanent and total disability as defined in Section 22(e)(3)
of the Code.
"EFFECTIVE DATE" means May 6, 2005, or such later date as this Plan is approved
by the stockholders of the Company.
1
"ELIGIBLE PERSON" means any person who is an officer or employee of the Company
or any of its subsidiaries and any person who is a non-employee Director;
provided, however that a non-employee Director shall not be an Eligible Person
for purposes of awarding of ISOs.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time
to time.
"EXCLUDED PERSON" means any employee benefit plan of the Company and any trustee
or other fiduciary holding securities under a Company employee benefit plan or
any person described in and satisfying the conditions of Rule 13d-1(b)(i) of the
Exchange Act.
"FAIR MARKET VALUE" means the last reported sale price of a share of Common
Share on the New York Stock Exchange - Composite Transactions on the relevant
date or, if there are no reported sales on such date, then the last reported
sales price on the next preceding day on which such a sale is transacted.
"ISO" means an incentive stock option qualified under Section 422 of the Code.
"PERFORMANCE-BASED AWARD" means an award whose grant, vesting, exercisability or
payment depends upon on any one or more of the Performance Objectives, in each
case relative to Performance Goals, on an absolute or relative basis (including
comparisons to peer companies) or ratio with other Performance Objectives,
either as reported currency or constant currency, pre-tax or after-tax, before
or after special charges, for the Company on a consolidated basis or for one or
more subsidiaries, segments, divisions or business units, or any combination of
the foregoing. The applicable performance period may range from one to five
years.
"PERFORMANCE GOAL" means a preestablished targeted level or levels of any one or
more Performance Objectives.
"PERFORMANCE OBJECTIVES" mean any one or more of the following business
criteria: A/R day sales outstanding, A/R to sales, debt, debt to debt plus
stockholder equity, debt to EBIT or EBITDA, EBIT, EBITDA, EPS, EVA, expense
reduction, interest coverage, inventory to sales, inventory turns, net income,
operating cash flow, pre-tax margin, return on assets, return on capital
employed, return on equity, sales, stock price appreciation, and total
stockholder return (TSR), each as defined further in Appendix A. These terms are
used as applied under generally accepted accounting principles (if applicable)
and in the Company's financial reporting.
"PLAN" means this Occidental Petroleum Corporation 2005 Long-Term Incentive
Plan, as amended from time to time.
"QUALIFYING OPTIONS" mean options and stock appreciation rights granted with an
exercise price not less than Fair Market Value on the date of grant. Qualifying
Options are Performance-Based Awards.
"RULE 16B-3" means Rule 16b-3 under Section 16 of the Exchange Act.
"SECTION 162(m)" means Section 162(m) of the Code and the applicable regulations
and interpretations thereunder.
"SECTION 162(m) AWARD" means a Performance-Based Award intended to satisfy the
requirements for "performance-based compensation" within the meaning of Section
162(m).
"SHARE LIMIT" means the maximum number of Shares, as adjusted, that may be
delivered pursuant to all awards granted under this Plan.
"SHARES" mean the Company's Common Stock, par value $0.20 per share.
"SUCCESSOR ENTITY" means the surviving or resulting entity or a parent thereof
of a Business Combination.
3. SHARES SUBJECT TO THE PLAN
3.1 AGGREGATE SHARE LIMIT - Subject to adjustment as provided in or pursuant to
this Section 3 or Section 7, a total of seventeen million (17,000,000) Shares
shall be authorized for issuance pursuant to awards granted under this Plan. Any
Shares issued in connection with awards other than options and stock
appreciation rights shall be counted against the limit described above as three
(3) Shares for every one Share issued in connection with such award or by which
the award is valued by reference as three (3) Shares.
3.2 INDIVIDUAL LIMIT - No individual shall be granted options, stock
appreciation rights or other awards in any 36-month period covering more than
four million (4,000,000) Shares, and in the case of ISOs granted to any
individual who owns more than ten percent of the outstanding stock of the
Company within the meaning of Section 422 of the Code the maximum term may not
exceed five (5) years and the minimum exercise price may not be less than 110
percent of Fair Market Value on the date of grant.
3.3 REISSUE OF AWARDS AND SHARES - Awards payable in cash or payable in cash or
Shares, including restricted shares, that are forfeited, cancelled, or for any
reason do not vest under this Plan, and Shares that are subject to awards that
expire or for any reason are terminated, cancelled or fail to vest shall be
available for
2
subsequent awards under this Plan. If an award under this Plan is or may be
settled only in cash, such award need not be counted against any of the share
limits under this Section 3, except as may be required to preserve the status of
an award as "performance-based compensation" under Section 162(m). Shares
subject to options or stock appreciation rights that are exercised shall not be
available for subsequent awards. The following transactions involving Shares
will not result in additional Shares becoming available for subsequent awards
under this Plan: (i) Shares tendered in payment of an option; (ii) Shares
withheld for taxes; and (iii) Shares repurchased by the Company using option
proceeds.
4. PLAN ADMINISTRATION This Plan shall be administered by the Committee.
4.1 POWERS OF THE COMMITTEE - Subject to the express provisions of this Plan,
the Committee shall be authorized and empowered to do all things necessary or
desirable in connection with the authorization of awards and the administration
of this Plan within its delegated authority, including, without limitation, the
authority to:
(a) adopt, amend and rescind rules, regulations and procedures relating to
this Plan and its administration or the awards granted under this Plan and
determine the forms of awards;
(b) determine who is an Eligible Person and to which Eligible Persons, if
any, awards will be granted under this Plan;
(c) grant awards to Eligible Persons and determine the terms and
conditions of such awards, including but not limited to the number and
value of Shares issuable pursuant thereto, the times (subject to Section
5.5) at which and conditions upon which awards become exercisable or vest
or shall expire or terminate, and (subject to applicable law) the
consideration, if any, to be paid upon receipt, exercise or vesting of
awards;
(d) determine the date of grant of an award, which may be a designated
date after but not before the date of the Committee's action;
(e) determine whether, and the extent to which, adjustments are required
pursuant to Section 7 hereof;
(f) interpret and construe this Plan and the terms and conditions of any
award granted hereunder, whether before or after the date set forth in
Section 5;
(g) determine the circumstances under which, consistent with the
provisions of Section 8.2, any outstanding award may be amended and make
any amendments thereto that the Committee determines are necessary or
appropriate; and
(h) acquire or settle rights under options, stock appreciation rights or
other awards in cash, stock of equivalent value, or other consideration.
All authority granted herein (except as provided in Section 6) shall remain in
effect so long as any award remains outstanding under this Plan.
4.2 SPECIFIC COMMITTEE RESPONSIBILITY AND DISCRETION REGARDING AWARDS - Subject
to the express provisions of this Plan, the Committee, in its sole and absolute
discretion, shall determine all of the terms and conditions of each award
granted under this Plan, which terms and conditions may include, subject to such
limitations as the Committee may from time to time impose, among other things,
provisions that:
(a) permit the recipient of such award to pay the purchase price of the
Shares or other property issuable pursuant to such award, or any applicable
tax withholding obligation upon such issuance or in respect of such award
or Shares, in whole or in part, by any one or more of the following:
(i) cash, cash equivalent, or electronic funds transfer,
(ii) the delivery of previously owned shares of capital stock of the
Company (including shares acquired as or pursuant to awards) or other
property,
(iii) a reduction in the amount of Shares or other property otherwise
issuable pursuant to such award,
(iv) a cashless exercise, or
(v) any other legal consideration the Committee deems appropriate.
(b) qualify such award as an ISO;
(c) accelerate the receipt of benefits pursuant to an award or adjust the
exercisability, term (subject to other limits) or vesting schedule of any
or all outstanding awards, adjust the number of Shares subject to any
award, adjust the price of any or all outstanding awards or otherwise
change previously imposed terms and conditions, pursuant to a termination
of employment or an event referenced in Section 7 (in
3
which case the Committee's discretion shall be exercised in a manner
consistent with Section 7) or in other circumstances or upon the occurrence
of other events as deemed appropriate by the Committee, by amendment of an
outstanding award, by substitution of an outstanding award, by waiver or by
other legally valid means (which may result, among other changes, in a
greater or lesser number of shares subject to the award, a shorter or
longer vesting or exercise period, or, except as provided below, an
exercise or purchase price that is higher or lower than the original or
prior award), in each case subject to Sections 3 and 8.2; provided,
however, that in no case (other than an adjustment contemplated by Section
7.2) shall the exercise price of any option or stock appreciation right be
reduced by an amendment to the award or a cancellation and re-grant of the
award to effect a repricing of the award to a price below the Fair Market
Value of the underlying Shares on the grant date of the original option or
stock appreciation right unless specific stockholder consent is obtained;
(d) authorize (subject to Sections 7, 8, and 10) the conversion,
succession or substitution of one or more outstanding awards upon the
occurrence of an event of the type described in Section 7 or in other
circumstances or upon the occurrence of other events as deemed appropriate
by the Committee; and
(e) determine the value of and acquire or otherwise settle awards upon
termination of employment, upon such terms as the Committee (subject to
Sections 7, 8 and 10) deems appropriate.
4.3 DELEGATION - Subject to Section 4.5, the Board may delegate different
levels of authority to different committees with administrative and grant
authority under this Plan, provided that each designated committee granting any
awards hereunder shall consist exclusively of a member or members of the Board.
A majority of the members of the acting committee shall constitute a quorum. The
vote of a majority of the members present assuming the presence of a quorum or
the unanimous written consent of the Committee shall constitute action by the
committee. The Committee may delegate authority to grant awards under this Plan
for new employees to an officer of the Company who is also a director and may
delegate ministerial, non-discretionary functions to individuals who are
officers or employees of the Company or a subsidiary or to third parties.
4.4 BIFURCATION - Notwithstanding anything to the contrary in this Plan, the
provisions of this Plan may at any time be bifurcated by the Board or the
Committee in any manner so that provisions of any award agreement (or this Plan)
intended or required in order to satisfy the applicable requirements of Rule
16b-3, Section 162(m) or other applicable law, to the extent permitted thereby,
are applicable only to persons subject to those provisions and to those awards
to those persons intended to satisfy the requirements of the applicable legal
restriction.
4.5 AWARDS TO NON-EMPLOYEE DIRECTORS - Notwithstanding any provision in this
Plan to the contrary, the Board shall have the authority, in its sole and
absolute discretion, to select non-employee Directors to receive awards other
than ISOs under this Plan. The Board shall set the terms of any such awards in
its sole and absolute discretion, and the Board shall be responsible for
administering and construing such awards in substantially the same manner that
the Committee administers and construes awards to other Eligible Persons.
5. AWARDS
5.1 TYPE AND FORM OF AWARDS - All awards shall be evidenced in writing
(including electronic form), substantially in the form approved by the
Committee. The types of awards that the Committee may grant include, but are not
limited to, any of the following, on an immediate or deferred basis, either
singly, or in tandem or in combination with or in substitution for, other awards
of the same or another type: (i) Shares, (ii) options (ISOs or nonqualified
stock options), stock appreciation rights (including limited stock appreciation
rights), restricted stock (which shall vest over a period of not less than three
years), stock units, or similar rights to purchase or acquire shares, whether at
a fixed or variable price or ratio related to the Shares, upon the passage of
time, the occurrence of one or more events, or the satisfaction of Performance
Goals or other conditions, or any combination thereof, (iii) any similar
securities with a value derived from the value of or related to the Shares or
other securities of the Company and/or returns thereon, or (iv) cash.
Share-based awards may include (without limitation) stock options, stock
purchase rights, stock bonuses, stock units, stock appreciation rights, limited
stock appreciation rights, phantom stock, dividend equivalents (independently or
in tandem with any form of stock grant), dividend rights (independently or in
tandem with any form of stock grant), Shares, any of which may be payable in
Shares or cash, and may consist of one or more of such features in any
combination.
5.2 PERFORMANCE-BASED AWARDS - Any of the types of awards listed in Section 5.1
may be granted as Performance-Based Awards.
5.2.1 SECTION 162(m) AWARDS. The Committee has discretion to determine if
any Performance-Based Award is intended to be a Section 162(m) Award. The
specific Performance Goals in respect of Section 162(m) Awards, other than
Qualifying Options, must be approved by the Committee in advance of any
4
applicable deadlines under Section 162(m) and while the performance
relating to those goals remains substantially uncertain within the meaning
thereof. The persons eligible for Section 162(m) Awards shall be executive
officers of the Company and its subsidiaries and, in the discretion of the
Committee, other employees of the Company or its subsidiaries who are
designated by the Committee to receive a Section 162(m) Award because they
may be executive officers of the Company or its subsidiaries by the time
their awards are exercised, vested or paid. Except as otherwise permitted
under Section 162(m), before any Section 162(m) Award is paid, the
Committee must certify that the Performance Goal and any other material
terms of the Section 162(m) Award were in fact satisfied.
5.2.2 RESERVATION OF DISCRETION - The Committee shall have discretion to
determine the conditions, restrictions or other limitations, in accordance
with the terms of this Plan and, in the case of Section 162(m) Awards, the
limitations of Section 162(m), on the payment of individual
Performance-Based Awards under this Section 5.2.
5.2.3 ADJUSTMENTS - Performance Goals or other features of an award under
this Section 5.2 may be (i) adjusted to reflect a change in corporate
capitalization, a corporate transaction (such as a reorganization,
combination, separation, merger, acquisition, or any combination of the
foregoing) or a complete or partial corporate liquidation, or (ii)
calculated either without regard for or to reflect any change in accounting
policies or practices affecting the Company and/or the Performance
Objectives or Performance Goals, or (iii) adjusted for any other
circumstances or event, or (iv) any combination of (i) through (iii), but
only to the extent in each case that such adjustment or determination in
respect of Section 162(m) Awards would be consistent with the requirements
of Section 162(m) to qualify as performance-based compensation.
5.3 CONSIDERATION FOR SHARES - Shares may be issued pursuant to an award for
any lawful consideration as determined by the Committee, including, without
limitation, services rendered by the recipient of such award, but shall not be
issued for less than the minimum lawful consideration. Awards may be payable in
cash, stock or other consideration or any combination thereof, as the Committee
shall designate in or (except as required by Section 5.2) by amendment to the
terms and conditions governing such award.
5.4 LIMITED RIGHTS - Except as otherwise expressly authorized by the Committee
or this Plan or in the applicable award terms and conditions, a participant will
not be entitled to any privilege of stock ownership as to any Shares not
actually delivered to and held of record by the participant. No adjustment will
be made for dividends or other rights as a stockholder for which a record date
is prior to such date of delivery.
5.5 OPTION/STOCK APPRECIATION RIGHT PRICING AND TERM LIMITS - The purchase
price per share of the Shares covered by any option or the base price of any
stock appreciation right shall be determined by the Committee at the time of the
grant, but shall not be less than 100 percent of the Fair Market Value of the
Shares on the date of grant. Any option, stock appreciation right, warrant or
similar right shall expire and any other award shall vest not more than 10 years
after the date of grant. An award may be converted or convertible,
notwithstanding the foregoing limits, into or payable in, Shares or another
award that otherwise satisfies the requirements of this Plan.
5.6 TRANSFER RESTRICTIONS - Unless otherwise expressly provided in or permitted
by this Section 5.6, by applicable law or by the award terms and conditions (i)
all awards are nontransferable and shall not be subject in any manner to sale,
transfer, anticipation, alienation, assignment, pledge, encumbrance or charge;
(ii) awards shall be exercised only by the holder; and (iii) amounts payable or
shares issuable pursuant to an award shall be delivered only to (or for the
account of) the holder.
5.6.1 EXCEPTIONS BY COMMITTEE ACTION - The Committee, in its sole
discretion, may permit an award to be transferred for estate and/or tax
planning purposes and on a basis consistent with the Company's lawful issue
of securities and the incentive purposes of the award and this Plan.
Notwithstanding the foregoing, awards intended as ISOs or restricted stock
awards for purposes of the Code shall be subject to any and all additional
transfer restrictions necessary to preserve their status as ISOs or
restricted shares, as the case may be, under the Code.
5.6.2 EXCLUSIONS - The exercise and transfer restrictions in this Section
5.6 shall not apply to:
(a) transfers to the Company,
(b) the designation of a beneficiary to receive benefits in the event
of the participant's death or, if the participant has died, transfers
to or exercise by the participant's beneficiary, or, in the absence of
a validly designated beneficiary, transfers by will or the laws of
descent and distribution,
(c) transfers pursuant to a domestic relations order (if approved or
ratified by the Committee), if (in the case of ISOs) permitted by the
Code,
5
(d) if the participant has suffered a Disability, permitted transfers
to or exercises on behalf of the holder by his or her legal
representative, or
(e) the authorization by the Committee of "cashless exercise"
procedures with third parties who finance or who otherwise facilitate
the exercise of awards consistent with applicable laws and the express
authorization of the Committee.
5.7 TAX WITHHOLDING - Upon any exercise, vesting, or payment of any award, the
Company shall:
(a) require the recipient (or his or her heirs, personal representatives
or beneficiaries, as the case may be) to pay or provide for payment of the
amount of any taxes which the Company or any subsidiary may be required to
withhold with respect to such transaction; or
(b) deduct from any amount payable in cash the amount of any taxes that
the Company or any subsidiary may be required to withhold with respect to
such cash amount.
5.8 POSSIBLE SHARE OFFSET - In any case where a tax is required to be withheld
in connection with the delivery of Shares under this Plan, the Committee may
require or may permit the holder the right to offset, pursuant to such rules and
subject to such conditions as the Committee may establish, the number of shares
to be delivered by (or otherwise reacquire) the appropriate number of shares
valued at their then Fair Market Value, to satisfy the minimum statutory
withholding taxes with respect thereto.
5.9 CASH AWARDS - The Committee shall have the express authority to pay awards
in cash under this Plan, whether in lieu of, in addition to or as part of
another award.
5.10 TERMINATION OF EMPLOYMENT OR SERVICE - If an Eligible Person's employment
with or service to the Company or to any parent or subsidiary terminates for any
reason, his or her outstanding awards may thereafter be exercised (if at all) to
the extent provided in the agreement evidencing such award, or as otherwise
determined by the Committee.
6. TERM OF PLAN
No award shall be granted under this Plan after the tenth anniversary of the
Effective Date of this Plan. After that date, this Plan shall continue in effect
as to then outstanding awards. Any then outstanding award may be amended
thereafter in any manner that would have been permitted earlier, except that no
such amendment shall increase the number of Shares subject to, comprising or
referenced in the award or reduce the exercise or base price of an option or
stock appreciation right or permit cash payments in an amount that exceeds the
limits of Section 3 (as adjusted pursuant to Section 7.2).
7. ADJUSTMENTS; CHANGE IN CONTROL
7.1 CHANGE IN CONTROL; ACCELERATION AND TERMINATION OF AWARDS - Unless prior to
a Change in Control, the Committee determines that, upon its occurrence,
benefits under any or all awards will not accelerate or determines that only
certain or limited benefits under any or all awards will be accelerated and the
extent to which they will be accelerated, or establishes a different time in
respect of such Change in Control for such acceleration, then upon the
occurrence of a Change in Control:
(a) each option and stock appreciation right shall become immediately
exercisable,
(b) restricted stock shall immediately vest free of restrictions,
(c) each award under Section 5.2 shall become payable to the participant,
(d) the number of Shares covered by each stock unit account shall be
issued to the participant, and
(e) any other rights of a participant under any other award will be
accelerated to give the participant the benefit intended under any such
award.
The Committee may override the limitations on acceleration in this Section 7.1
by express provision in the award agreement and may accord any Eligible Person a
right to refuse any acceleration, whether pursuant to the award agreement or
otherwise, in such circumstances as the Committee may approve. Any acceleration
of awards shall comply with applicable legal and regulatory requirements.
Without limiting the generality of the foregoing, the Committee may deem an
acceleration to occur immediately prior to or up to 30 days before the
applicable event and/or reinstate the original terms of an award if an event
giving rise to an acceleration does not occur.
If any option or other right to acquire Shares under this Plan has been fully
accelerated as required or permitted by this Plan but is not exercised prior to
(i) a dissolution of the Company, or (ii) an event described in this Section 7.1
that the Company does not survive, or (iii) the consummation of an event
described in Section 7.2 involving a Change in Control approved by the Board,
such option or right will terminate, subject to any provision
6
that has been expressly made by the Committee or the Board through a plan of
reorganization approved by the Board or otherwise for the survival,
substitution, assumption, exchange or other settlement of such option or right.
7.2 ADJUSTMENTS - The following provisions will apply if any extraordinary
dividend or other extraordinary distribution occurs in respect of the Shares
(whether in the form of cash, Shares, other securities, or other property), or
any reclassification, recapitalization, stock split (including a stock split in
the form of a stock dividend), reverse stock split, reorganization, merger,
combination, consolidation, split-up, spin-off, repurchase, or exchange of
Shares or other securities of the Company, or any similar, unusual or
extraordinary corporate transaction (or event in respect of the Shares) or a
sale of substantially all the assets of the Company as an entirety occurs. The
Committee will, in such manner and to such extent (if any) as it deems
appropriate and equitable:
(a) proportionately adjust any or all of (i) the number and type of Shares
(or other securities) that thereafter may be made the subject of awards
(including the specific maxima and numbers of shares set forth elsewhere in
this Plan), (ii) the number, amount and type of shares (or other securities
or property) subject to any or all outstanding awards, (iii) the grant,
purchase, or exercise price of any or all outstanding awards, (iv) the
securities, cash or other property deliverable upon exercise of any
outstanding awards, or (v) the Performance Goals or Performance Objectives
appropriate to any outstanding awards, or
(b) in the case of an extraordinary dividend or other distribution,
recapitalization, reclassification, merger, reorganization, consolidation,
combination, sale of assets, split-up, exchange, or spin-off, make
provision for a cash payment or for the substitution or exchange of any or
all outstanding awards or the cash, securities or property deliverable to
the holder of any or all outstanding awards based upon the distribution or
consideration payable to holders of the Shares of the Company upon or in
respect of such event.
In each case, with respect to awards of ISOs, no such adjustment will be made
that would cause this Plan to violate Section 422 or 424 of the Code or any
successor provisions without the written consent of holders materially adversely
affected thereby. In any of such events, the Committee may take such action
sufficiently prior to such event if necessary or deemed appropriate to permit
the participant to realize the benefits intended to be conveyed with respect to
the underlying shares in the same manner as is available to stockholders
generally.
8. PLAN AMENDMENT AND TERMINATION
8.1 AUTHORITY OF THE BOARD - Subject to Sections 8.2 and 8.3 and New York Stock
Exchange Rules applicable to companies listed on such Exchange, the Board may
amend or terminate this Plan at any time and in any manner.
8.2 RESTRICTIONS - No amendment or termination of this Plan or change in or
affecting any outstanding award shall deprive in any material respect the
holder, without the consent of the holder, of any of his or her rights or
benefits under or with respect to the award. Adjustments contemplated by Section
7 shall not be deemed to constitute a change requiring such consent.
8.3 STOCKHOLDER APPROVAL - Stockholder approval shall be required for any
amendment to this Plan that would:
(a) materially increase the benefits accruing to participants under this
Plan,
(b) materially increase the number of securities which may be issued under
this Plan, or
(c) materially modify the requirements as to eligibility for participation
in this Plan.
9. LEGAL MATTERS
9.1 COMPLIANCE AND CHOICE OF LAW; SEVERABILITY - This Plan, the granting and
vesting of awards under this Plan and the issuance and delivery of Shares and/or
the payment of money under this Plan or under awards granted hereunder are
subject to compliance with all applicable federal and state laws, rules and
regulations and to such approvals by any listing, regulatory or governmental
authority as may, in the opinion of counsel for the Company, be necessary or
advisable in connection therewith. This Plan, the awards, all documents
evidencing awards and all other related documents shall be governed by, and
construed in accordance with the laws of the state of Delaware. If any provision
shall be held by a court of competent jurisdiction to be invalid and
unenforceable, the remaining provisions of this Plan shall continue in effect.
7
9.2 NON-EXCLUSIVITY OF PLAN - Nothing in this Plan shall limit or be deemed to
limit the authority of the Board or the Committee to grant awards or authorize
any other compensation, with or without reference to the Shares, under any other
plan or authority.
9.3 NO EMPLOYMENT CONTRACT - Nothing contained in this Plan (or in any other
documents relating to this Plan or to any award) shall confer upon any Eligible
Person or other participant any right to continue in the employ or other service
of the Company or any subsidiary or constitute any contract or agreement of
employment or other service, nor shall interfere in any way with the right of
the Company or any subsidiary to change such person's compensation or other
benefits or to terminate the employment of such person, with or without cause.
10. MISCELLANEOUS
10.1 UNFUNDED PLAN - Unless otherwise determined by the Committee, this Plan
shall be unfunded and shall not create (or be construed to create) a trust or a
separate fund or funds. This Plan shall not establish any fiduciary relationship
between the Company or any subsidiary and any participant or other person. To
the extent any person holds any rights by virtue of awards granted under this
Plan, such rights shall be no greater than the rights of an unsecured general
creditor of the Company.
10.2 AWARDS NOT COMPENSATION - Unless otherwise determined by the Committee,
settlements of awards received by participants under this Plan shall not be
deemed a part of a participant's regular, recurring compensation for purposes of
calculating payments or benefits from any Company benefit plan, severance
program or severance pay law of any country.
10.3 FRACTIONAL SHARES - The Company shall not be required to issue any
fractional Shares pursuant to this Plan. The Committee may provide for the
elimination of fractions or for the settlement thereof in cash.
10.4 FOREIGN PARTICIPANTS - No award shall be made to a participant who is a
foreign national or who is employed by the Company or any subsidiary outside the
United States of America if such award would violate applicable local law. In
order to facilitate the making of an award, the Committee may provide for such
special terms for awards to participants who are foreign nationals, or who are
employed by the Company or any subsidiary outside of the United States of
America, as the Committee may consider necessary or appropriate to accommodate
differences in local law, tax policy or custom. Moreover, the Committee may
approve such supplements to or amendments to this Plan as it may consider
necessary or appropriate for such purposes unless stockholder approval for any
such change would be required in accordance with the provisions of Section 8.
8
APPENDIX A TO 2005 LONG-TERM INCENTIVE PLAN
PERFORMANCE OBJECTIVES
The Performance Objectives shall have the meanings set forth below, in each case
as reported in the financial statements of the Company or applicable subsidiary,
division, segment, or unit ("financial statements").
"A/R DAY SALES OUTSTANDING" means trade accounts receivable (A/R)(net of
reserves) divided by latest historical day Sales.
"A/R TO SALES" means the ratio of accounts receivable to Sales.
"DEBT" means all accounts classified as such in the financial statements.
"DEBT TO DEBT PLUS STOCKHOLDER EQUITY" means the ratio of Debt to Debt plus
stockholder equity.
"DEBT TO EBIT OR EBITDA" means the ratio of Debt to EBIT or EBITDA.
"EBIT" means Net Income before interest expense and taxes, which may be adjusted
for special charges, if any.
"EBITDA" means Net Income before interest expense, taxes, depreciation and
amortization, which may be adjusted for special charges, if any.
"EPS" means Net Income divided by the weighted average number of Shares
outstanding. The Shares outstanding may be adjusted to include the dilutive
effect of stock options, restricted stock and other dilutive financial
instruments as required by generally accepted accounting principles.
"EVA" means operating profit after tax (OPAT) (which is defined as Net Income
after tax but before tax adjusted interest income and expense and goodwill
amortization), less a charge for the use of capital (average total capital as
such term is used below under "Return on Capital Employed"). Net Income may be
adjusted for special charges and acquisition activity costs, if any. The charge
for capital is the percentage cost of capital times the average total capital.
The cost of capital is the weighted average cost of capital as calculated for
the Company.
"EXPENSE REDUCTION" means reduction in actual expense or an improvement in the
expense to Sales ratio compared to a target or prior year actual expense to
Sales ratio, which may be adjusted for special charges, if any.
"INTEREST COVERAGE" means the ratio of EBIT or EBITDA to interest expense.
Net Income may be adjusted for special charges.
"INVENTORY TO SALES" means the ratio of total inventory to Sales.
"INVENTORY TURNS" means the ratio of total cost of goods sold on a historical
basis to average net inventory. This ratio may be adjusted for special charges,
if any.
"NET INCOME" means the difference between total Sales plus other revenues and
net total costs and expenses, including income taxes.
"OPERATING CASH FLOW" means the net cash provided by operating activities less
net cash used by operations and investing activities as shown on the statement
of cash flows. The numbers relating to the foregoing may be adjusted for special
charges, if any.
"PRE-TAX MARGIN" means the ratio of earnings before income taxes to Sales.
Earnings may be adjusted for special charges, if any.
"RETURN ON ASSETS" means the ratio of Net Income to total average assets
including goodwill. Earnings may be adjusted for special charges and goodwill
amortization for comparative purposes.
"RETURN ON CAPITAL EMPLOYED" means the ratio of Net Income plus tax-effected
interest expense to long-term Debt plus stockholder equity.
"RETURN ON EQUITY" means the ratio of Net Income to stockholder equity.
"SALES" means sales, service and rental income from third parties net of
discounts, returns and allowances.
"STOCK PRICE APPRECIATION" means an increase, or an average annualized increase,
in the stock price or market value of the Shares of the Company after purchase
of, or the date of grant of, an award or above a specified stock price.
"TOTAL STOCKHOLDER RETURN OR TSR" means the appreciation in the price of a
Common Share plus reinvested dividends over a specified period of time.
9