<PAGE>
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 [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
UNOCAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $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 transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] 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:
-------------------------------------------------------------------------
Notes:
<PAGE>
NOTICE OF 1996 ANNUAL MEETING AND PROXY STATEMENT
[UNOCAL LOGO]
BACKGROUND REPRESENTS PARTIAL WORLD GLOBE SHOWING THE EASTERN HEMISPHERE
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Invitation from the Chairman................................................ I
Notice of 1996 Annual Meeting of Stockholders............................... II
General Information......................................................... 1
Item 1: Election of Directors............................................... 2
Board and Committee Meetings................................................ 4
Directors' Compensation..................................................... 5
Security Ownership of Management............................................ 6
Compliance with Section 16(a) of the Securities Exchange Act of 1934........ 6
Executive Compensation
Report of the Management Development and
Compensation Committee................................................... 7
Performance Graph--Cumulative Return to
Stockholders............................................................. 10
Compensation of Executive Officers......................................... 11
Security Ownership of Certain Beneficial Owners............................. 15
Item 2: Ratification of Appointment of Independent
Accountants............................................................... 16
Stockholder Proposals
Item 3: Review and Report on Company's
International Code of Conduct............................................ 16
Item 4: Report on a Gas Plant in Northern Alberta, Canada.................. 20
Item 5: Review and Report Annually on Pollution
Prevention Options....................................................... 22
Item 6: Other Matters....................................................... 25
Stockholder Proposals for 1997 Annual Meeting............................... 25
</TABLE>
<PAGE>
Unocal Corporation
2141 Rosecrans Avenue, Suite
4000
El Segundo, California 90245
[LOGO OF UNOCAL]
April 22, 1996
Dear Stockholder:
Please accept my personal invitation to attend our Annual Meeting of
Stockholders on Monday, June 3, 1996. This year's meeting will be held in the
auditorium at the Company's Hartley Center, 376 South Valencia Avenue in Brea,
California at 10:00 A.M.
Your vote is important. I urge you to complete, sign, and return the enclosed
proxy card. If you plan to attend the Stockholders Meeting, please complete and
return the business reply card enclosed with the Proxy Statement. That card
also provides space for any comments you may have on matters concerning Unocal.
I welcome your comments and assure you they will be considered.
Auditorium seating is limited. If you are a beneficial owner of Unocal stock
held by a bank, broker, or investment plan (with your stock held in "street
name") you may need proof of ownership to be admitted to the meeting. A recent
brokerage statement or a letter from the bank or broker are examples of proof
of ownership. Stockholders of record may be asked for identification for
admission to the meeting.
I look forward to seeing you on June 3.
Sincerely,
/s/ Roger C. Beach
-----------------------------------------
Roger C. Beach
Chairman and Chief Executive Officer
I
<PAGE>
NOTICE OF 1996
ANNUAL MEETING
OF STOCKHOLDERS
[LOGO OF UNOCAL]
Unocal Corporation
The Annual Meeting of Stockholders of Unocal Corporation (the "Company"), a
Delaware corporation, will be held in the auditorium at The Hartley Center, 376
South Valencia Avenue in Brea, California, on Monday, June 3, 1996, at 10:00
A.M., Pacific Daylight Time, for the following purposes:
(1) To elect three directors for three-year terms that expire at the annual
meeting in 1999;
(2) To ratify the action of the Board of Directors in appointing Coopers &
Lybrand L.L.P. as the Company's independent accountants for 1996;
(3) To consider and act upon the stockholder proposals described in the
accompanying Proxy Statement, if presented at the meeting; and
(4) To consider and act upon such other matters as may properly be brought
before the meeting and any adjournment thereof.
Only stockholders of record at the close of business on April 4, 1996 are
entitled to vote at the Annual Meeting and any adjournment thereof.
By Order of the Board of Directors
/s/ Dennis P. R. Codon
-------------------------------------
Dennis P. R. Codon
Vice President, Chief Legal Officer,
and Corporate Secretary
April 22, 1996
El Segundo, California
II
<PAGE>
PROXY STATEMENT
[LOGO OF UNOCAL]
Unocal Corporation
2141 Rosecrans Avenue, Suite
4000
El Segundo, California 90245
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Unocal Corporation (the "Company" or
"Unocal"), a Delaware corporation, for use at the Annual Meeting of
Stockholders of the Company to be held on June 3, 1996 and any adjournment
thereof, pursuant to the Notice of the Meeting.
The Notice of Annual Meeting and this Proxy Statement, together with the
enclosed proxy card and the Company's 1995 Annual Report, are being mailed to
stockholders commencing on or about April 22, 1996.
As of March 31, 1996, the Company had 248,113,092 shares of common stock
outstanding. Only Common stockholders of record on the books of the Company at
the close of business on April 4, 1996 are entitled to vote at the meeting. A
stockholder of record is entitled to one vote for each share of common stock
owned. Pursuant to Delaware law, shares voted by brokers as to discretionary
matters only and shares abstaining will be counted as present for the purpose
of determining whether there is a quorum. With regard to the election of
directors, votes that are withheld will be excluded entirely from the vote and
will have no effect. Abstentions on items 2 (ratification of appointment of
independent accountants), 3, 4, and 5 (stockholder proposals) will have the
effect of negative votes. The New York Stock Exchange has informed the Company
that the three stockholder proposals are "non-discretionary," and brokers who
have received no instructions from their clients do not have discretion to vote
on these items. Such broker "non votes" will not be counted as votes cast in
determining the outcome of the stockholder proposals.
GENERAL INFORMATION
This proxy is solicited by the Board of Directors. The cost of soliciting
proxies will be borne by the Company. In addition to solicitation by mail,
certain directors, officers, and regular and temporary employees of the Company
and its subsidiaries may solicit proxies by telephone, personal interview,
electronic mail, facsimile and other written communication. The Company also
has retained D. F. King & Co., Inc., New York, New York, to assist in the
solicitation of proxies for a fee estimated to be $15,000 plus reimbursement of
out of pocket expenses. The Board of Directors has appointed directors Mr.
MacDonald G. Becket, Dr. Donald P. Jacobs, and Mr. Frank C. Herringer as the
proxy holders for the 1996 meeting of stockholders.
The Company's general proxy voting policy is:
"Unocal's Board of Directors wishes to encourage stockholder participation
in corporate governance by ensuring the confidentiality of stockholder
votes. Therefore, the Company shall retain an independent third party to
receive and tabulate stockholder proxy votes. The manner in which any
stockholder votes on any particular issue shall, subject to any federal or
state law requirements, be strictly confidential."
The Board of Directors considers that some stockholders may wish the Company to
know how they have voted and the Company, where possible, may wish to inquire
as to how stockholders have voted.
1
<PAGE>
If you wish the Company to have access to your proxy card, you may check the
box marked "OPEN BALLOT" on the proxy card and your proxy will be made
available to the Company. Your vote will remain confidential if you do not
check the "OPEN BALLOT" box.
A stockholder who has returned a proxy may revoke it at any time before it is
voted at the meeting by executing a later-dated proxy, by voting by ballot at
the meeting, or by filing an instrument of revocation with the Inspector of
Elections.
ITEM 1.
ELECTION OF DIRECTORS
On December 4, 1995, the Board of Directors unanimously adopted an amendment to
the Bylaws decreasing the number of directors from 13 to 12, effective June 3,
1996. The Board is divided into three classes. Directors in each class are
normally elected for three-year terms or until their successors are duly
elected and qualified. Three directors will be elected at the Annual Meeting
for terms expiring in 1999.
Each of the three nominees has complied with the requirements of Article III,
Section 6 of the Company's Bylaws, which reads in part as follows:
". . . A nomination shall be accepted, and votes cast for a proposed
nominee shall be counted by the inspectors of election, only if the
Secretary of the Corporation has received at least 30 days prior to the
meeting a statement over the signature of the proposed nominee that such
person consents to being a nominee and, if elected, intends to serve as a
director. Such statement shall also contain the Unocal stock ownership of
the proposed nominee, occupations and business history for the previous
five years, other directorships, names of business entities of which the
proposed nominee owns a 10 percent or more equity interest, listing of any
criminal convictions, including federal or state securities violations, and
all other information required by the federal proxy rules in effect at the
time the proposed nominee submits said statement."
If the Corporate Secretary of the Company advises the Board that information
provided by any nominee is incomplete, that nominee may be disqualified to
stand for election as a director. If any nominee becomes unavailable to serve
as a director, and if the Board designates a substitute nominee, the proxy
holders will vote for the substitute nominee designated by the Board.
Information about the persons nominated for election as directors, as well as
those directors continuing in office, is set forth on the following pages.
Directors are elected by a plurality of the votes of the shares entitled to
vote on the election and present, in person or by proxy, at the Annual Meeting.
THE PROXY HOLDERS WILL VOTE THE PROXIES RECEIVED BY THEM FOR ALL THREE NOMINEES
UNLESS AUTHORIZATION TO VOTE FOR THE ELECTION OF ONE OR MORE NOMINEES HAS BEEN
WITHHELD.
NOMINEES FOR DIRECTOR--TERMS TO EXPIRE 1999
MALCOLM R. CURRIE
Former Chairman and Chief Executive Officer of
Hughes Aircraft Company (now Hughes Electronics)
Age: 69
Director since 1990
Dr. Currie was Chairman and Chief Executive Officer of Hughes Aircraft Company
(now Hughes Electronics), a wholly-owned subsidiary of General Motors
Corporation, from 1988 through 1992. Dr. Currie has been a director of
Investment Company of America since 1991, L.S.I. Logic Corporation since 1991,
Moltech Corporation since 1995, and U.S. Electricar since 1995. He is Chairman
of The Board of Trustees of The University of Southern California.
NEAL E. SCHMALE
Chief Financial Officer of the Company
Age: 49
Director since 1991
Mr. Schmale has been Chief Financial Officer since 1994 when he joined the
Office of the Chief Executive Officer. He served as Senior Vice President from
1988 to 1994. Mr. Schmale was President of the Petroleum Products and Chemicals
Division (which encompassed refining, marketing, chemicals and minerals
operations) from 1992 to 1994. He was President of the Unocal Chemicals &
Minerals Division from 1991 to 1992.
2
<PAGE>
CHARLES R. WEAVER
Former Chairman of the Board and Chief Executive Officer of The Clorox Company
(household consumer products)
Age: 67
Director since 1990
Mr. Weaver was Chairman of the Board of The Clorox Company from 1986 and Chief
Executive Officer of The Clorox Company from 1985 until his retirement in 1992.
He has also been a director of Potlatch Corporation since 1987.
CONTINUING DIRECTORS--TERMS TO EXPIRE 1998
FRANK C. HERRINGER
Chairman and Chief Executive Officer of Transamerica Corporation (insurance and
financial services)
Age: 53
Director since 1989
Mr. Herringer has been Chairman of the Board of Transamerica Corporation since
January 1996. He has also been President of Transamerica Corporation since
1986, Chief Executive Officer of Transamerica Corporation since 1991 and a
director of Transamerica Corporation since 1986. Mr. Herringer has also been a
director of Pacific Telesis Group since 1994 and was a director of Sedgwick
Group plc from 1985 to 1994.
JOHN F. IMLE, JR.
President of the Company
Age: 55
Director since 1988
Mr. Imle has been President since 1994. He directs the Company's growth and
corporate planning activities, and is a member of the Office of the Chief
Executive Officer. From 1992 to 1994 he served as Executive Vice President and
President of the Energy Resources Division, which encompassed the Company's
worldwide oil, gas, and geothermal businesses. Mr. Imle was Senior Vice
President from 1988 until his appointment as Executive Vice President.
DONALD P. JACOBS
Dean, J. L. Kellogg Graduate School of Management,
Northwestern University
Age: 68
Director since 1972
Dr. Jacobs has also been a director of Commonwealth Edison Company since 1979,
First Chicago Corporation and its subsidiary, First National Bank of Chicago,
since 1982, Hartmarx Corporation since 1980, and Whitman Corporation since
1988.
J. STEVEN WHISLER
Senior Vice President of Phelps Dodge Corporation (copper mining)
Age: 41
Director since 1995
Mr. Whisler has been a Senior Vice President of Phelps Dodge Corporation, a
major international mining and manufacturing company, since 1988, and President
of Phelps Dodge Mining Company, its largest division, since 1991. He was a Vice
President of Phelps Dodge Corporation from 1987 until 1988 and the General
Counsel of the Corporation from 1987 until 1991. Mr. Whisler has been a
director of Phelps Dodge Corporation since 1995, Burlington Northern Santa Fe
Corporation since 1995, and the Southern Peru Copper Corporation since 1995.
MARINA V.N. WHITMAN
Professor of Business Administration and Public Policy, University of Michigan
Age: 61
Director since 1993
Dr. Whitman has been a Professor at the University of Michigan since 1992.
Prior thereto, she spent 13 years at General Motors Corporation -- six years as
Vice President and Chief Economist and seven years as Vice President and Group
Executive, Public Affairs Staff. She was a member of the President's Advisory
Committee on Trade Policy and Negotiations from 1987 to 1993. She has been a
director of Aluminum Company of America since 1994, Procter & Gamble Company
since 1976, Manufacturer's Hanover Trust Company from 1973 to 1992 and its
successor, Chemical Banking Corporation, since 1992, and Browning-Ferris
Industries, Inc. since 1992, and is a member, director or trustee of several
educational and professional organizations.
CONTINUING DIRECTORS--TERMS TO EXPIRE 1997
JOHN W. AMERMAN
Chairman and Chief Executive Officer of Mattel, Inc. (children's toys)
Age: 64
Director since 1991
Mr. Amerman has been Chairman of the Board and Chief Executive Officer of
Mattel, Inc. since 1987 and a director of Mattel, Inc. since 1985.
3
<PAGE>
ROGER C. BEACH
Chairman and Chief Executive Officer of the Company
Age: 59
Director since 1988
Mr. Beach has been Chairman of the Board of Directors of the Company since
April 1995 and Chief Executive Officer since 1994. He heads the Office of the
Chief Executive Officer, formed in 1994. He served as President and Chief
Operating Officer from 1992 until 1994. Mr. Beach was President of the Unocal
Refining & Marketing Division from 1986 to 1992, and from 1987 to 1992 also
served as Senior Vice President.
MACDONALD G. BECKET, F.A.I.A.
Former Chairman and Chief Executive Officer of The Becket Group (architects and
engineers)
Age: 67
Director since 1988
Mr. Becket was Chairman and Chief Executive Officer of The Becket Group from
1969 to 1988. Welton Becket Associates, a subsidiary of The Becket Group, was a
major architectural and engineering firm. The firm merged in 1987 with Ellerbe,
Inc., forming Ellerbe Becket, now the largest architectural firm in the United
States. At the present time, Mr. Becket is acting as a consulting architect on
various architectural, construction and real estate related projects.
JOHN W. CREIGHTON, JR.
President and Chief Executive Officer of Weyerhaeuser Company (forest products)
Age: 63
Director since 1995
Mr. Creighton has been President and a director of Weyerhaeuser Company since
1988 and Chief Executive Officer of Weyerhaeuser Company since 1991. He has
also been a director of Washington Energy Company since 1989, Portland General
Corporation since 1990, and Quality Food Centers, Inc. since 1989.
BOARD AND COMMITTEE MEETINGS
The Board of Directors had seven meetings in 1995. All directors attended at
least 88% of the total number of meetings of the Board and the committees on
which they served.
The Board of Directors has the following standing committees:
Accounting, Auditing & Ethics Committee. Messrs. Weaver (Chairman), Becket,
Creighton, and Dr. Whitman. The Committee, composed entirely of non-employee
directors, met seven times in 1995. Its primary functions are (a) to
periodically review the Company's accounting, financial reporting, and control
policies and procedures, (b) to recommend to the Board of Directors the firm of
certified public accountants to be retained as the Company's independent
auditors, and (c) to review Company policies and procedures relating to
business conduct and conflicts of interest. The Committee meets separately with
the Company's independent certified public accountants and the internal audit
staff.
Board Governance Committee. Messrs. Herringer (Chairman), Amerman, Currie, Dr.
Jacobs and Mr. Whisler. The Committee, composed of five non-employee directors,
met five times in 1995. The Committee recommends the composition, role,
structure and procedures of the Board of Directors and Board committees, and
makes recommendations to improve the functionality and effectiveness of the
Board and the committees. The Committee also identifies and presents candidates
for election as directors of the Company. The Committee's policy is to consider
qualified candidates, including those submitted by stockholders. Stockholders
may recommend candidates by writing to the Corporate Secretary.
Executive Committee. Messrs. Beach (Chairman), Amerman, Currie and Herringer.
The Committee, composed of three non-employee Directors and the Chief Executive
Officer, met once in 1995. During the periods between Board meetings, the
Executive Committee has the powers and authority of the Board, except for those
powers specifically reserved to the full Board by the Delaware General
Corporation Law and the Bylaws.
Health, Environment & Safety Committee. Messrs. Becket (Chairman), Creighton,
Weaver and Dr. Whitman. The Committee, composed entirely of non-employee
directors, met five times in 1995. Its primary functions are to review (a)
activities of the Health, Environment & Safety Department, (b) with the
Company's General Counsel, any legal or other matter involving health,
environment or safety that could significantly impact the Company, (c) existing
and projected future material expenditures related to health, environment or
safety, and (d) the HES audit function including the audit plans and audit
results.
4
<PAGE>
Management Committee. Messrs. Beach (Chairman), Imle and Schmale. The
Committee, composed of three employee directors, met 48 times in 1995. During
the periods between Board meetings, the Management Committee generally has the
powers and authority of the Board, except for those powers specifically
reserved to the full Board by the Delaware General Corporation Law and the
Bylaws, and subject to approval limits established by the Board.
Management Development & Compensation Committee. Drs. Jacobs (Chairman), Currie
and Messrs. Amerman, Herringer, and Whisler. The Committee, composed entirely
of non-employee directors, met six times in 1995. Its primary functions are
establishing the base salaries of senior officers and administering all
executive incentive compensation programs. The Committee also reviews the
performance of and succession plans for senior management. The Committee
retains an outside consultant to advise it.
Retirement Plan Committee. Dr. Currie (Chairman),
Mr. Becket, Dr. Jacobs, and Mr. Richard J. Stegemeier. The Committee is
composed of three non-employee directors. Mr. Stegemeier served as an officer
through April 1994. The Committee met four times in 1995. Its primary function
is to control and manage the assets of the Company's Retirement Plan, which
includes setting investment objectives, establishing asset allocation strategy,
and selecting and replacing investment managers, consultants, and trustees.
DIRECTORS' COMPENSATION
Directors who are also employees of the Company receive no additional
compensation for services as directors. Except as described in the following
paragraph, during 1995 each non-employee director received an annual retainer
fee of $18,000. Each non-employee director also received a fee of $1,500 for
each half-day Board meeting attended, and $6,000 for each two-day Board meeting
attended. Non-employee committee members received a fee of $1,000 for each
committee meeting attended. In addition, each non-employee committee chairman
received an annual retainer fee of $6,000. All directors are reimbursed for
actual out-of-pocket expenses incurred in attending meetings and Company
business. The compensation for non-employee directors for 1996 remains the same
as the 1995 fees.
Mr. Stegemeier, who is retiring this year, had a contract effective May 1994
through May 1995 under which he was compensated for continuing as Chairman of
the Board subsequent to his retirement as an officer of the Company. This
compensation was in lieu of the compensation provided to non-employee directors
described in the preceding paragraph. The contract provided for $110,000 to be
paid in equal monthly installments, a secretary, and reimbursement of expenses.
Subsequent to May 1995, Mr. Stegemeier received the same cash compensation as
the other non-employee directors, and retained the secretary.
The Directors' Restricted Stock Plan (the "Plan") for non-employee directors
was approved by the Company's stockholders in 1991 for a term of 10 years. The
Plan is administered by the Management Committee with an aggregate of 300,000
shares available for issuance.
Under the Plan, annual grants of restricted shares of common stock equal in
value to 20 percent of the director's fees have been made to each outside
director.
The Plan also allows each outside director to make an annual election to defer
all or a portion of his or her cash fees. This gives non-employee directors an
opportunity to increase their stockholdings, which further aligns the interests
of non-employee directors with those of other stockholders. In return for
forgoing immediate cash compensation, elective restricted stock grants equal
120 percent of the compensation deferred. Six non-employee directors elected to
defer 100% of their director cash fees for the period June 1, 1995 to July 1,
1996, and one non-employee director elected to defer 70% of cash compensation
for that period.
Restricted stock cannot be sold, transferred, or pledged during the restriction
period and is subject to forfeiture if the director resigns or chooses not to
stand for election during the restriction period of from five to ten years.
The Plan was amended to provide that after August 31, 1996, restricted stock
units will replace restricted shares. The restriction period for the units, as
elected by each director, is from five years to as late as when the director
ceases to be a director of the Company. The restricted stock units will
accumulate in accounts for each director, and dividends payable during the
restriction period will be credited as additional restricted stock units. At
the end of the restriction period, shares of common stock will be issued equal
to the number of accumulated restricted stock units. Restricted stock units are
forfeited if the director resigns or does not stand for election other than for
good cause. If proposed changes to certain Securities and Exchange Commission
rules become effective, the value of compensation deferred will be reduced from
the current 120% to 110%.
5
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the beneficial ownership of shares of the Company's
common stock as of March 15, 1996 by all directors and nominees for directors,
named executive officers, and by all directors and executive officers as a
group.
<TABLE>
<CAPTION>
Sole Voting Shared Voting
or or Acquirable
Investment Investment Within 60
Name Power Power Days(D)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
JOHN W. AMERMAN 6,048 1,000
ROGER C. BEACH 27,995 25,719 164,584
MACDONALD G. BECKET 3,705
JOHN W. CREIGHTON, JR. 2,020
MALCOLM R. CURRIE 8,123 1,200
FRANK C. HERRINGER 13,775(A)
LAWRENCE M. HIGBY 333 12,723
JOHN F. IMLE, JR. 42,886(B) 152,842(E)
DONALD P. JACOBS 16,634 3,483(C)
JOHN W. SCHANCK 20,167 28,496
NEAL E. SCHMALE 29,480 21,991 108,378
RICHARD J. STEGEMEIER 55,610 158,945 293,958
CHARLES R. WEAVER 13,150
J. STEVEN WHISLER 2,714
MARINA V.N. WHITMAN 3,861
ALL DIRECTORS, NOMINEES FOR DIRECTORS
AND EXECUTIVE OFFICERS AS
A GROUP (17 PERSONS, INCLUDING THOSE
LISTED ABOVE)(F) 265,088 212,338 822,692
</TABLE>
- --------------------------------------------------------------------------------
(A)Includes 400 shares held by Mr. Herringer as custodian for his daughter.
(B)Includes 3,575 shares of restricted stock relinquished pursuant to a
property settlement agreement.
(C)Dr. Jacobs disclaims beneficial ownership of these shares, which are held
directly by his wife.
(D)Reflects the number of shares that could be purchased by exercise of options
presently exercisable or exercisable within 60 days from March 15, 1996.
(E)Includes 53,380 shares subject to options relinquished pursuant to a
property settlement agreement.
(F)Shares beneficially owned by all directors, director nominees and executive
officers as a group are less than 1 percent of the common stock outstanding. No
shares of the Company's $3.50 convertible preferred stock are owned by
directors, director nominees or executive officers.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 and related Securities and
Exchange Commission rules require that directors and executive officers report
to the Commission changes in their beneficial ownership of Unocal stock, and
that any late filings must be disclosed.
Mr. Charles S. McDowell, Vice-President and Comptroller of the Company,
exercised a stock option on May 1, 1995 and on that same date sold the shares
received upon the exercise. The report of the sale of the stock was timely
filed, but the exercise of the option was inadvertently omitted from that
report and subsequently reported late.
The reporting of shares acquired in 1994 by Dr. Jacobs from the reinvestment of
dividends on his shares under the Company's Dividend Reinvestment and Common
Stock Purchase Plan was inadvertently omitted from a year-end filing for 1994
and was included in the year-end filing for 1995.
6
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
This report of the Management Development and Compensation Committee of the
Board of Directors (the "Committee") describes the executive compensation
programs and policies of the Company, including its short-term and long-term
incentive compensation plans. Key elements of the compensation program are:
. Compensation Committee members are non-employees
. Salaries are based on comparison with petroleum industry averages
. Short-term and long-term incentives are linked to share price performance
. Annual bonus plan and performance share program are based on the
Company's return to stockholders compared to that of a peer group of
companies
. Stock option program mandates share ownership after exercise, except for
participants age 60 and older
. Committee retains and is assisted by an outside consultant
The Committee, composed entirely of non-employee directors, is responsible for
setting and administering the annual and long-term compensation programs. The
Committee reviews and determines executive officer salaries and short-term and
long-term incentive compensation awards under the Management Incentive Program
approved by the stockholders in 1991. The Committee is assisted by an outside
consultant. The consultant and the Chief Executive Officer ("CEO") are present
at Committee meetings but cannot vote. The Committee meets outside the presence
of the CEO on certain matters, including CEO compensation and certain
succession issues. The Committee met six times in 1995.
The Management Incentive Program, consisting of the Revised Incentive
Compensation Plan and the Long-Term Incentive Plan of 1991, was developed to
reinforce the goal of creating value for the stockholders. The Program
explicitly links short- term and long-term incentive compensation to the
Company's share price and its return to stockholders (share price appreciation
plus dividends) compared to that of a group of 18 companies in energy and
energy-related businesses (the "Peer Group").
The Peer Group as a whole is designed to have a business mix that is similar to
that of the Company. Therefore, the effects of commodity prices and other
external events should be similar for the Company and the Peer Group. The
companies comprising the Peer Group are reviewed periodically and changed as
the lines of business of these companies, and of Unocal, change. Prior to 1993
the Peer Group consisted of 16 companies and had been increased to 19 by the
end of 1994. As the result of the acquisition of one of the Peer Group
companies by another company in early 1995, the Peer Group currently consists
of 18 companies.
The Committee has been advised that stock options granted under the Long-Term
Incentive Plan of 1991 currently satisfy Internal Revenue Service guidelines
and thus remain deductible expenses under the performance-based compensation
requirements of Section 162(m) of the Internal Revenue Code. The Committee has
taken steps to make performance share awards under the Long-Term Incentive Plan
and awards under the Revised Incentive Compensation Plan consistent with IRS
requirements for deductibility. It is the Committee's belief and intention that
all executive compensation under the Management Incentive Program will be fully
deductible in 1995 and 1996 under current guidelines and assumptions.
SALARY
The base salaries of the CEO and the other named executive officers are
established annually and are subject to adjustment when there is a significant
change in the executive's responsibilities. The Committee reviews the
responsibilities, experience and performance of the executive officers. The
Committee also examines survey data on the compensation paid by petroleum
companies for similar positions. Prior to 1996 the survey data used was for a
group of thirteen integrated petroleum companies that voluntarily participate
in a salary survey compiled by a third-party consultant. Because of increased
availability of compensation data for the Peer Group in 1996, the Committee
will use compensation data for the Peer Group instead of the 13-company group
for comparative purposes. Nine companies are currently part of both the Peer
Group and the 13-company group.
7
<PAGE>
The objective of the Committee is to establish base salaries that are near the
mean paid by these surveyed petroleum companies, with adjustments for reporting
relationships, responsibilities and job scope since the last survey data. After
increases to the base salaries of the executive officers as a group and for the
CEO were made in 1995, the salaries of those officers as a group and that of
the CEO were slightly below the estimated mean of comparative salaries for the
13 companies.
REVISED INCENTIVE COMPENSATION PLAN
The Revised Incentive Compensation Plan is the Company's annual bonus plan for
senior and middle management. Each award period under the Plan is one year.
Total cash awards under the Plan are determined in part by comparing the
Company's return to stockholders with the average return achieved by the Peer
Group.
The Committee establishes individual target awards for the CEO, the named
executive officers, and the other participants. The sum of these awards is the
target fund for the annual award period. Each target award is based on the
executive's position, responsibilities and the annual bonuses awarded by the
companies used for comparing executive compensation.
The actual fund available for awards is initially established by how the
Company's return to stockholders compares to that of the Peer Group. For 1995
the Company's comparative return to stockholders was below that of the Peer
Group, resulting in a potential maximum payout of 92.8 percent of the target.
The Committee may then reduce the fund if the Company's adjusted return on
average stockholder equity does not meet the requirement established by the
Committee, which was 6.9 percent for 1995. The Company's adjusted return on
average stockholder equity for 1995 was 9.3 percent. Therefore, the fund was
not reduced further below the target. The available fund is allocated to
participants based on individual performance and achievement of established
goals. Mr. Beach's award of $359,971 for 1995 was 92.8 percent of his target
award.
A recipient may elect to receive up to 50 percent of the award in the form of
restricted stock. The restriction period is five years. The award is forfeited
if the recipient resigns or is terminated for cause prior to the end of the
restriction period. The forfeiture provision does not apply to participants
retiring at or after age 65. Amounts deferred into restricted stock are
augmented by 20 percent to compensate for the risk of forfeiture. In 1994,
Mr. Beach elected to have the maximum, 50 percent, of his 1995 award deferred
into restricted stock. The Company's executive officers, seven as of the end of
1995, including the CEO, elected to receive an average of 33 percent of their
1995 awards as restricted stock. Beginning with respect to awards for 1996,
once a participant defers 50 percent of an award into restricted stock, he or
she can elect to defer up to an additional 50 percent of the award to be paid
in cash at a future date selected by the participant. This deferral is not
augmented by the Company and will accrue interest at the 10-year Treasury note
rate plus 2 percent.
LONG-TERM INCENTIVE PLAN OF 1991
The Long-Term Incentive Plan of 1991 (the "1991 Plan") has a term of 10 years
and is administered by the Committee. Awards may be in the form of non-
qualified stock options, performance shares and restricted stock. For each type
of award, compensation is linked to the performance of the Company's common
stock and increases in stockholder value.
In 1992, the Committee awarded a target number of performance share units to
the CEO and the named executive officers for the 1992 through 1995 performance
period. Each unit is the equivalent of one share of the Company's common stock.
The target awards are dependent on the executive's level of responsibility and
base compensation. Mr. Beach's target was 7,978 units.
The actual payout of awards at the end of the four-year performance period is
determined by how the Company's return to stockholders for the period compares
to that of the Peer Group. The maximum percentage of the award that can be paid
out is 200 percent. During the 1992 to 1995 performance period, the Company's
average annual return to stockholders was slightly above that of the Peer
Group. Therefore, for that performance period, 108 percent of the target number
of performance shares was paid out to the participants, including the CEO.
These payouts were made one-half in cash and one-half in shares of Company
stock.
The CEO and named executive officers have also received non-qualified stock
options under the 1991 Plan as well as under the predecessor plan--the Long-
Term Incentive Plan of 1985. The Committee determines eligible participants and
the number of options to be granted. Option grants are normally made in March.
Prior option grants are not
8
<PAGE>
considered in making these awards. The only numerical restriction on grants is
the total number of shares available under the Plan. The option exercise price
is the fair market value on the date of grant. Exercise of the option results
in compensation to the employee only if the fair market value on the date of
exercise exceeds the price on the date granted.
The number of options granted to the executive officers as a group is
determined by reviewing option grants for similar level positions by the
surveyed companies. The compensation value of the option grants to the
executive officers as a group is also compared to option grants and
compensation data available from the proxy statements of other large public
companies. Since the total number of shares available under the 1991 Plan is
less than 5 percent of the outstanding shares, individual grants during the
term of the plan are not of such magnitude as to warrant review of possible
dilutive effects on the Company's stock.
In order to further promote share ownership by management for grants made in
1991 and thereafter, 50 percent of the gain realized upon exercise is paid as
restricted stock. The restriction period is five years and the award is
forfeited if the recipient resigns or is terminated for cause prior to the end
of the restriction period. A recipient who is 60 years or older at the date of
exercise receives unrestricted shares. In 1995, Mr. Beach did not exercise any
options.
PAY FOR PERFORMANCE
In 1994 the Company adopted a Pay for Performance Program covering
substantially all regular full-time U.S.-payroll employees and most non-U.S.
employees. Under the program, employees can receive up to 12 percent of their
base pay if performance and cash flow targets are met. The target awards of
participants in the Incentive Compensation Plan were reduced by 6 percent of
base pay to reflect potential payments under this program. In 1996,
participants in the Incentive Compensation Plan will no longer be eligible for
this program and, consequently, their target awards will be increased
accordingly. This change should improve management's oversight of the program.
For 1995, Pay for Performance payouts averaged 4.4 percent of base pay. This
reflected the attainment of performance goals that were aligned with increasing
stockholder value. The 1995 payout for Mr. Beach was $31,607.
As described above, Unocal aligns management and stockholder interests by
linking executive incentive compensation programs directly to share price and
the creation of stockholder value. The Long-Term Incentive Plan of 1991 also
provides for grants of restricted stock to middle managers whose performance
and potential is exceptional. The restriction period is 10 years and the award
is forfeited if the recipient resigns or is removed for cause prior to the end
of the restriction period. In addition, the Company has incentive programs for
other employees that focus on real contributions to the success of the Company
and its stockholders.
Management Development
and Compensation Committee
of the Board of Directors
John W. Amerman
Malcolm R. Currie
Frank C. Herringer
Donald P. Jacobs
J. Steven Whisler
9
<PAGE>
PERFORMANCE GRAPH
CUMULATIVE RETURN TO STOCKHOLDERS*
December 31, 1990 to December 31, 1995
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
S&P DOMESTIC
Measurement Period S&P 500 INTERATED OIL
(Fiscal Year Covered) UNOCAL COMPOSITE COPANIES
- --------------------- ------- --------- -------------
<S> <C> <C> <C>
1990 $100.00 $100.00 $100.00
1991 $ 91.00 $130.00 $ 89.00
1992 $103.00 $140.00 $ 95.00
1993 $115.00 $154.00 $100.00
1994 $116.00 $156.00 $105.00
1995 $127.00 $215.00 $120.00
</TABLE>
*Share price changes plus reinvested dividends.
NOTE: The S&P Domestic Integrated Oil Index consists of 11 companies,
including Unocal, eight of which are also part of the Peer Group. The
S&P index is used for this presentation because the SEC-mandated
methodology for the performance graph differs from that used to compare
Unocal and Peer Group performance for certain compensation purposes.
The preceding report of the Compensation Committee and performance graph shall
not be deemed incorporated by reference into any filing under the Securities
Act of 1933 or the Securities Exchange Act of 1934, notwithstanding any general
incorporation by reference of this Proxy Statement into any other document or
its inclusion as an exhibit thereto.
10
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation(A) Long-Term Compensation
---------------------- ------------------------------------
Awards Payouts
----------------------- ------------
Securities
Name and Restricted Underlying All Other
Principal Salary Bonus Stock Awards Options LTIP Payouts Compensation
Position Year (Dollars) (Dollars)(B) (Dollars)(C) (Number) (Dollars)(D) (Dollars)(E)
- ----------------------- ---- --------- ------------ ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ROGER C. BEACH 1995 $718,333 $211,593 $250,210 60,000 $243,590 $ 9,000
CHAIRMAN AND CHIEF 1994 641,667 170,042 165,279 46,436 166,023 9,000
EXECUTIVE OFFICER 1993 541,667 210,000 109,918 34,080 133,392 12,988
JOHN F. IMLE, JR. 1995 453,533 107,288 121,404 30,000 239,895 9,000
PRESIDENT 1994 438,333 171,862 None 30,512 163,306 9,000
1993 416,667 205,000 None 25,466 130,871 12,915
NEAL E. SCHMALE 1995 353,333 79,431 88,884 21,000 171,105 9,000
CHIEF FINANCIAL OFFICER 1994 333,333 71,667 65,018 22,095 125,189 9,000
1993 313,333 85,000 103,813 17,917 96,086 12,788
LAWRENCE M. HIGBY 1995 330,333 101,892 None 25,445 None 9,000
GROUP VICE-PRESIDENT 1994 155,000 55,835 None None None None
76 PRODUCTS COMPANY
JOHN W. SCHANCK 1995 296,667 71,070 35,468 17,000 99,414 3,000
GROUP VICE-PRESIDENT 1994 232,500 48,020 43,762 11,145 67,329 7,690
OIL & GAS OPERATIONS 1993 195,504 40,000 48,868 8,321 31,110 9,059
</TABLE>
- --------------------------------------------------------------------------------
(A)Perquisites are excluded as their value did not meet the reporting threshold
of the lesser of $50,000 or 10 percent of salary plus bonus.
(B)Amounts consist of cash payments pursuant to the Revised Incentive
Compensation Plan and the Pay for Performance program. Amounts deferred into
restricted stock under the Revised Incentive Compensation Plan appear in the
"Restricted Stock Awards" column. See also footnote C. The Pay for Performance
program, applicable to nearly all Company employees, became effective in 1994.
The program provides payments to employees when specific goals, including a
cash flow threshold, are met.
(C)Restricted stock awards may be elected in lieu of cash bonus payments under
the Revised Incentive Compensation Plan. Amounts deferred into restricted stock
are augmented by 20 percent to compensate for the risk of forfeiture. The
number of restricted shares is determined using the average closing price of
the last 30 trading days of the year. Valuation for purposes of this disclosure
is based on the closing market price on the date of the award. Aggregate
restricted stockholdings and value (at closing market price on December 29,
1995): Mr. Beach 23,120 shares, $673,370; Mr. Imle 10,856 shares, $316,181; Mr.
Schmale 13,865 shares, $403,818; and Mr. Schanck 11,629 shares, $338,695.
Dividends are paid on restricted stock.
(D)Represents payout of performance share units under the Long-Term Incentive
Plan of 1991. The dollar values listed were paid out one-half in cash and one-
half in restricted shares of Unocal common stock.
(E)Allocation of Company's contributions to Unocal Savings Plan.
11
<PAGE>
OPTION GRANTS IN 1995
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Percent of Annual Rates of Stock
Number of Total Price Appreciation
Securities Options for Option
Underlying Granted to Exercise Term(C)(Dollars)
Options Employees Price Expiration ---------------------
Name Granted(A) in 1995(B) ($/Share) Date 5% 10%
- ---- ---------- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
MR. BEACH 60,000 7.00% $28.50 3/27/2005 $1,075,410 $2,725,300
MR. IMLE 30,000 3.50 $28.50 3/27/2005 537,705 1,362,650
MR. SCHMALE 21,000 2.45 $28.50 3/27/2005 376,393 953,855
MR. HIGBY 25,445 2.97 $28.50 3/27/2005 456,063 1,155,754
MR. SCHANCK 17,000 1.99 $28.50 3/27/2005 304,699 772,168
</TABLE>
<TABLE>
<CAPTION>
Assumed Price Appreciation
------------------------------
5% 10%
-------------- ---------------
<S> <C> <C>
Assumed price per share on 3/27/2005 $ 46.42 $ 73.92
Gain on one share valued at $28.50 on 3/27/95 $ 17.92 $ 45.42
Gain on all shares (based on 247,310,375 shares
outstanding at 12/31/95) $4,432,666,731 $11,233,247,796
Gain for all 1995 optionees (based on 856,189
options) $ 15,345,901 $ 38,889,526
Optionee gain as a percentage of total share-
holder gain 0.3% 0.3%
</TABLE>
- --------------------------------------------------------------------------------
(A)The options were granted pursuant to the Long-Term Incentive Plan of 1991.
The exercise price of the options is the average of the highest and lowest
trading price of transactions in Unocal common stock as reported in the New
York Stock Exchange Composite Transactions quotations for the date of grant.
The maximum option exercise period is ten years from the date of the grant. The
optionees may pay for option stock with cash, Unocal stock they already own, or
with proceeds from the sale of stock acquired by exercise of the option (a
cashless exercise). The options become exercisable in four equal installments:
on 9/27/95, 3/27/96, 3/27/97 and 3/27/98. For options granted to Mr. Higby,
17,000 options follow the above vesting schedule, and the remaining 8,445
options become exercisable as follows: 50% on 7/1/95, 25% on 7/1/96, and 25% on
7/1/97. Vesting of options ceases upon termination of employment. A participant
who exercises an option prior to age 60 receives 50% of the share price
appreciation in the form of restricted stock. The options cease to be
exercisable upon termination of employment, with the following exceptions: a
participant who retires at or after age 65 or under conditions determined by
the Committee to be for the convenience of the Company is granted three years
in which to exercise the options.
(B)Total options granted in 1995: 856,189.
(C)Use of the assumed stock price appreciation of 5% and 10% each year for the
option period is required by Securities and Exchange Commission Regulation S-K.
No valuation method can accurately predict future stock price or option values
because there are too many unknown factors. If the stock price does not
increase, the options will have no value.
12
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN 1995
AND DECEMBER 31, 1995 OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of In-the-
Shares Underlying Unexercised Money Options at
Acquired on Value Options at 12/31/95(A) 12/31/95(B)(Dollars)
Exercise Realized -------------------------- -------------------------
Name (Number) (Dollars) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
MR. BEACH 129,455 76,738 $379,883 $91,975
MR. IMLE 136,040(C) 44,122 562,622 56,017
MR. SCHMALE 5,340 $89,278 93,126 31,275 391,237 40,220
MR. HIGBY 8,473 16,972 5,296 10,608
MR. SCHANCK 28,873 20,402 78,868 23,292
</TABLE>
- --------------------------------------------------------------------------------
(A)Includes options with exercise prices greater than market price on December
29, 1995.
(B)The price of $29.125, which was the closing price of Unocal common stock as
reported in the New York Stock Exchange Composite Transaction quotations on
December 29, 1995, was used to value options.
(C)Includes 53,380 options relinquished pursuant to a property settlement
agreement
LONG-TERM INCENTIVE PLANS--AWARDS IN 1995
<TABLE>
<CAPTION>
Performance Period Threshold Target Maximum
Share Units Until Maturation Number Number of Number
Name (Number)(A) or Payout of Shares Shares of Shares
- ---- ----------- ---------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
MR. BEACH 20,000 12/31/98 0 20,000 40,000
MR. IMLE 10,000 12/31/98 0 10,000 20,000
MR. SCHMALE 7,000 12/31/98 0 7,000 14,000
MR. HIGBY 6,200 12/31/98 0 6,200 12,400
MR. SCHANCK 6,000 12/31/98 0 6,000 12,000
</TABLE>
- --------------------------------------------------------------------------------
(A)The actual number of performance shares paid out is based on the Company's
return to stockholders for the four year performance period compared to that of
a group of peer companies selected by the Compensation Committee. The formula
for determining the payout percentage is: [1 + (5 times Unocal's average annual
return to stockholders)] divided by [1 + (5 times the average annual return to
stockholders for the 18 peer group companies)]. Return to stockholders is
defined as share price appreciation plus reinvested dividends.
13
<PAGE>
PENSION PLAN BENEFITS
ESTIMATED ANNUAL RETIREMENT BENEFITS
<TABLE>
<CAPTION>
Years of Service
Covered ------------------------------------------------
Compensation(A) 25 30 35 40 45
--------------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 30,100 $ 32,900 $ 36,100 $ 40,100 $ 44,100
100,000 50,100 56,900 64,100 72,100 80,100
200,000 90,100 104,900 120,100 136,100 152,100
400,000 170,100 200,900 232,100 264,100 296,100
600,000 250,100 296,900 344,100 392,100 440,100
800,000 330,100 392,900 456,100 520,100 584,100
1,000,000 410,100 488,900 568,100 648,100 728,100
1,200,000 490,100 584,900 680,100 776,100 872,100
1,400,000 570,100 680,900 792,100 904,100 1,016,100
1,600,000 650,100 776,900 904,100 1,032,100 1,160,100
</TABLE>
- --------------------------------------------------------------------------------
(A)Covered compensation is the annual average compensation in the three highest
paid years out of the last ten years preceding retirement.
The Company has a noncontributory defined benefit retirement plan covering
substantially all employees that provides participants with retirement benefits
based on a formula relating such benefits to compensation and years of service.
The amount of these benefits is limited by the Employee Retirement Income
Security Act of 1974 and the Internal Revenue Code. Where that occurs, the
Company has a retirement supplement designed to maintain total retirement
benefits at the Retirement Plan formula level. The estimated annual benefits
from the plans described above and Social Security to participants at age 65 or
older, including all persons named in the Summary Compensation Table, are shown
in the table above. The benefits shown are payable in the form of a straight
life annuity.
The compensation used for pension purposes consists of the amounts shown in the
Salary and Bonus columns of the Summary Compensation Table. Also included in
covered compensation is the amount of bonus that the participant elected to
defer into restricted stock. Covered compensation is the annual average
compensation in the three highest paid years out of the last ten years
preceding retirement.
Covered compensation and credited full years of service under the Plan as of
year-end 1995 for individuals named in the Summary Compensation table are as
follows: $968,701 and 34 years for Mr. Beach; $644,672 and 29 years for Mr.
Imle: $331,754 and 19 years for Mr. Schanck; and $494,345 and 26 years for Mr.
Schmale. Mr. Higby is not vested yet.
14
<PAGE>
EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
The Company has a three-year employment agreement with Mr. Higby that became
effective July 1, 1994. The agreement provides for a base salary of $25,833 per
calendar month, with subsequent salary increases considered in accordance with
Company practices. Under the agreement, Mr. Higby is entitled to consideration
for grants of stock options, performance share units and bonuses. If his
employment is terminated for any reason other than misconduct, death, or
inability or unwillingness to continue rendering services to the Company,
Mr. Higby will be entitled to his base salary with benefits for the greater of
one year or the remaining term of the agreement.
The Company does not have employment contracts with any other named executive
officers, nor does it have any arrangements with executive officers concerning
a change-in-control. However, the Management Incentive Program allows the
Compensation Committee to accelerate the vesting of restricted stock, declare
previously granted options immediately exercisable, and accelerate the payment
of previously granted performance shares in certain situations. These are: a
public tender for all or part of the Company's stock; a proposal submitted to
the stockholders to merge, consolidate, or otherwise combine the Company with
another company; or another situation that the Compensation Committee
determines is similar.
The Company maintains a Termination Allowance Plan applicable to almost all
employees. The plan generally provides for 2 weeks of pay for each year of
service, up to a maximum of 52 weeks of pay, if an employee's job is
eliminated.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of December 31, 1995, the following entities were known by the Company to
own beneficially more than 5% of the Company's common stock:
<TABLE>
<CAPTION>
Name and Address of Amount and Nature Percent of
Beneficial Owner of Beneficial Ownership Class
------------------- ----------------------- ----------
<S> <C> <C>
THE CAPITAL GROUP COMPANIES, INC. 15,290,880(A) 6.10
333 SOUTH HOPE STREET, LOS ANGELES,
CALIFORNIA 90071
WELLINGTON MANAGEMENT COMPANY 12,836,437(B) 5.19
75 STATE STREET, BOSTON, MASSACHUSETTS 02109
FMR CORP. 12,793,590(C) 5.12
82 DEVONSHIRE STREET, BOSTON, MASSACHUSETTS
02109
</TABLE>
- --------------------------------------------------------------------------------
(A)Based on a Schedule 13G dated February 9, 1996. The Capital Group Companies,
Inc. beneficially owned all of the 15,290,880 shares through affiliates. This
number included 2,954,600 shares resulting from the assumed conversion of
1,817,100 shares of Unocal's $3.50 convertible preferred stock. The Capital
Group Companies Inc. had the sole power to vote or to direct the vote of
1,650,180 shares, and had sole power to dispose or to direct the disposition of
all 15,290,880 shares. Capital Research and Management Company, a registered
investment adviser and a wholly-owned subsidiary of The Capital Group
Companies, Inc., had sole power to dispose of or to direct the disposition of
12,680,870 shares. Other operating subsidiaries of The Capital Group Companies,
Inc. exercised investment discretion over various institutional accounts
holding the remaining shares.
(B)Based on a Schedule 13G dated February 9, 1996. Wellington Management
Company beneficially owned all 12,836,437 shares in its capacity as investment
adviser to numerous investment counseling clients. It does not have sole voting
or dispositive power over any of the shares. Wellington Management Company has
shared voting power over 5,222,465 shares, and shared power to dispose or to
direct the disposition of all 12,836,437 shares.
(C)Based on a Schedule 13G dated February 14, 1996. FMR Corp. beneficially
owned all of the 12,793,590 shares through affiliates. This number included
2,914,605 shares resulting from the assumed conversion of 1,792,500 shares of
Unocal's $3.50 convertible preferred stock. FMR Corp. had the sole power to
vote or to direct the vote of 2,612,529 shares. The voting of the remaining
shares is carried out under written guidelines established by the Boards of
Trustees of the funds for which Fidelity Management & Research Company serves
as investment adviser. FMR Corp. has sole power to dispose of or to direct the
disposition of all 12,793,590 shares.
15
<PAGE>
ITEM 2.
RATIFICATION OF APPOINTMENT OF
COOPERS & LYBRAND L.L.P. AS INDEPENDENT ACCOUNTANTS
The stockholders will be asked to ratify the appointment of the firm of Coopers
& Lybrand L.L.P. as independent accountants for 1996. This appointment was made
by the Board of Directors on the recommendation of its Accounting, Auditing &
Ethics Committee.
Coopers & Lybrand L.L.P., one of the nation's largest public accounting firms,
has served as the Company's independent accountants for the past 51 years.
Representatives of the firm are expected to be present at the Annual Meeting
and will have the opportunity to make a statement if so desired and will be
available to respond to questions.
The affirmative vote of a majority of the shares present in person or by proxy
at the meeting, and entitled to vote on this item, is required for ratification
of the appointment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT ACCOUNTANTS FOR 1996.
THE PROXY HOLDERS WILL VOTE ALL PROXIES RECEIVED FOR RATIFICATION UNLESS
INSTRUCTED OTHERWISE.
ITEM 3.
STOCKHOLDER PROPOSAL
A stockholder has given notice that the following proposal will be presented at
the meeting:
"WHEREAS: Unocal's Statement of Principles functions as the company's code of
conduct for doing business internationally. In it Unocal promotes:
. Conduct for doing business in a way that engenders pride in our employees
and respect from the world community;
. A safe and healthful work place and equal opportunity employment;
. Improving the quality of life in communities where we do business so that
Unocal's 'presence enhances people's lives in long lasting, meaningful
ways';
. Protecting the Environment and encouraging meaningful dialogue with
shareholders, employees, media and the public.
. "Be a Good Corporate Citizen' Unocal's code concludes.
We commend Unocal for creating such a set of forward looking guidelines.
However we believe those guidelines fall short in vitally important areas and
that in fact Unocal's international conduct at times is in direct conflict with
the company's own guidelines.
For example, take the case of Unocal's expanding involvement in the police
state of Burma, one of the world's most repressive countries, as confirmed by
Amnesty International and the U.S. State Department. Human rights monitors
agree that the July, 1995 release of Burma leader, Aung San Suu Kyi, has not
lessened human rights violations against her or against the Burmese people.
Many human rights groups believe Unocal'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
Unocal'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, providing legitimacy to an
ostracized government by investing there and portraying the country in a
positive light which helps counter growing international criticism. This is in
direct conflict with the company's pledge to enhance people's lives in
meaningful ways.
But Burma is only one example. Unocal also does business in other countries
with controversial human rights records: Azerbaijan, Indonesia, China and
Thailand.
Thus we believe the Unocal Principles need significant expansion. Entirely
absent from the present Principles is clear human rights criteria. For example
Levi Strauss, in its Guidelines of Country Selection, states, 'We should not
initiate or renew contractual relationships in countries where there are
pervasive violations of human rights.'
16
<PAGE>
RESOLVED That shareholders request the Board of Directors to review and update
the Unocal Principles and report their revisions to shareholders and employees
by September 1996. In its review the Board shall include a section advising
Unocal on making decisions on investing in or withdrawing from countries where
there is a pattern of on-going and systemic violations 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."
DIRECTORS' RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
. Unocal is committed to meeting the highest ethical standards in all of
our operations, at home and abroad. Our respect for human rights is
absolute. This commitment underlies our entire Statement of Principles,
which was reviewed and published in 1994.
. We believe that our Statement of Principles, which is our code of conduct
for doing business internationally, is fully adequate and current.
Its key principles include treating everyone fairly and with respect,
maintaining a safe and healthful workplace, and improving the quality of
life in the countries where we do business.
. Unocal's presence has generated positive change in developing nations,
regardless of their political leadership. Over the past 30 years, we've
seen our activities improve the quality of life for many thousands of
families and their communities in Indonesia, the Philippines and
Thailand. Energy development has been essential to the growth of these
economies.
. This same resolution presented last year by the same proponents was
overwhelmingly rejected by more than 94 percent of voting stockholders at
the Company's 1995 Annual Meeting.
OVERVIEW
The proposed resolution asks the Board of Directors to review and update
Unocal's Statement of Principles and to incorporate various political and
social criteria as prerequisites for doing business internationally. The
proposal specifically discusses our project in Myanmar.
STATEMENT OF PRINCIPLES
UNOCAL'S CODE OF CONDUCT FOR DOING
BUSINESS INTERNATIONALLY
. Meet the highest ethical standards in all of our business activities.
Conduct business in a way that engenders pride in our employees and respect
from the world community.
. Treat everyone fairly and with respect.
Offer equal employment opportunity for all host country nationals,
regardless of race, ethnic group or sex.
Make sure that a very high percentage of the work force is made up of
nationals.
Train and develop national employees so they have full access to
opportunities for professional advancement and positions at higher levels
in the organization.
. Maintain a safe and healthful workplace.
As employees, value and protect each other's health and safety as highly
as we do our own.
. Use local goods and services as much as practical, whenever they're
competitive and fit our needs.
. Improve the qualify of life in the communities where we do business.
Contribute--and not just economically--to local communities so that our
presence enhances people's lives in long-lasting, meaningful ways.
. Protect the environment.
Take our environmental responsibilities seriously and abide by all
environmental laws of our host country, as we do in the United States.
.Communicate openly and honestly.
Maintain our policy of encouraging meaningful dialogue with concerned
shareholders, employees, the media and members of the public.
. Be a good corporate citizen and a good friend of the people of our
host country.
17
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Unocal is one of four co-venturers in a major natural gas project to develop
the Yadana field offshore Myanmar. Total, SA, of France is the project
operator. The Yadana project includes construction of four platforms and a 254-
mile pipeline from the offshore gas field to the Myanmar-Thailand border. The
Petroleum Authority of Thailand is responsible for a 161-mile connecting
pipeline from the border to a power plant to be built southwest of Bangkok.
Graphic: Map. The map shows the location of offshore wells in the Andaman Sea,
and the routes of the Yadana export pipeline to Ratchaburi, Thailand, and the
proposed domestic pipeline to Myanmar (near Yangon). The Yadana pipeline is
labeled as 416 miles (669 km) long, and the proposed domestic pipeline is
labeled 162 miles (260 km) long. The locations of the proposed power plant and
proposed fertilizer plant are indicated near Yangon.
The Yadana project is also expected to supply--through a domestic pipeline--a
proposed 200-megawatt power plant and a 1,750-metric-ton/day fertilizer
manufacturing facility near Yangon, Myanmar's capital. Yadana gas may also fuel
a possible 75-megawatt power plant in southern Myanmar. Together, these
projects will provide significant economic benefits for a country that is
heavily agrarian and short on energy supplies.
Unocal joined the project as a co-venturer in 1993 and has a 28.26 percent
interest in the $1 billion venture. Total has a 31.24 percent interest in the
project, while Thailand's PTT Exploration & Production Public Co., Ltd. (PTTEP)
and Myanma Oil and Gas Enterprise (MOGE) have 25.5 percent and 15 percent
interests, respectively.
As an investor in the Yadana project, Unocal is complying fully with its
Statement of Principles. Total follows a similar corporate standard and has
established an additional code of conduct specifically for the Yadana project.
The project will be completed in accordance with the laws of the host country,
as well as international environmental, humanitarian and industry standards.
EMPLOYMENT POLICIES
1. Contract Labor: All work conducted on the Yadana project is paid and is
documented accordingly. This has been the case since the project began. Neither
Unocal nor Total will accept any other type of labor arrangements.
2. Pay Scales: Wages--which are superior to prevailing local average wage
scales--have been set for all those working on this project. All work
arrangements are formalized through labor contracts. Workers receive their pay
directly and are required to sign pay records.
3. Workplace Standards and Safety: Specific standards have been set for work
sites and contractors. All contract workers are provided food, potable water,
lodging, hygiene facilities, ongoing medical and preventive health care, safety
clothing and equipment.
4. Third-party Contractors: Third-party contractors are under the strict
supervision of Total. All contractors must commit to fair hiring practices.
They also must show evidence of an ongoing, comprehensive health and safety
management system. Thorough documentation must be maintained of work team
activities, worker status, job planning and weekly salary payments.
5. Hiring Targets: Employment targets have been set for villages in the
vicinity of the pipeline route to ensure that each village--and the Burman,
Karen, Mon and other ethnic groups they represent--has an equal opportunity to
participate in the local project work force.
6. Employment Requirements: Applicants must be at least 18 years of age and
must pass a free, project-sponsored physical examination. They must also
complete basic first aid, work safety and fire-fighting training.
7. Compliance Audits: Regular audits are conducted by Total to ensure
compliance with the project's employment, and health and safety management
policies.
THE YADANA PROJECT: ENHANCING LOCAL QUALITY OF LIFE
The Yadana project has a socio-economic development component specifically
designed to provide job opportunities, improve living standards and promote
viable, long-term economic development for villages in the pipeline region.
These projects, underwritten
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through a special fund financed by the four co-venturers, include:
1. A demonstration livestock breeding program. This will help local farmers
refine their cattle and pig farming practices, increase milk production and
improve livestock nutrition.
2. A 2.5-acre shrimp farm. This is expected to produce about four tons of black
tiger shrimp annually. The earthen dikes required for the shrimp farm were
hand-built by local villagers, all of whom have earned an equity interest in
the project.
3. A new elementary school and adjoining health center. This is being
constructed in the seaside village of Daminseik, near landfall for the Yadana
pipeline.
4. Upgrading/staffing of medical facilities. A full-time doctor is now assigned
to the Kanbauk village hospital, which serves a region that has lacked adequate
medical care. The hospital has been completely renovated and expanded to
include a contagious disease isolation ward. Eight additional full-time doctors
have been recruited to provide medical care in this remote region.
Graphic: Map. The map shows the route of the onshore segment of the Yadana
export pipeline and the locations of 13 different sites along the route where
there are villages with community development projects sponsored by Yadana
co-venturers.
POLITICAL NEUTRALITY
Unocal's operations in Southeast Asia are undertaken in cooperation with
government agencies of the host countries. Many of these relationships--
particularly in Thailand, Indonesia and the Philippines--were established in
the 1960s, during a period of rapid political change throughout the region. Our
reputation for integrity, our commitment to political neutrality and our
technical and operational expertise have allowed us to expand these
partnerships and maintain a strong competitive position in this dynamic region.
At the same time, we have seen first-hand how our activities have significantly
helped improve the quality of life for many families and communities in
Thailand, Indonesia and the Philippines. Over the past 30 years, Unocal has
helped create thousands of jobs, provided career development opportunities, and
spurred the development of vital new downstream industries and businesses. In
addition, we've sponsored a wide range of human and community improvement
programs. These range from schools and educational scholarships to water
systems projects and income enhancement programs.
Like other Unocal energy development projects in Southeast Asia, our
participation in the Yadana project is based strictly on resource potential,
business economics and technical expertise--not political factors. We believe
that Unocal--and U.S. corporations, in general--must not serve as instruments
of foreign policy or political interest groups. Foreign relations activities
are best conducted through international diplomatic channels.
BOARD OVERSIGHT
The Board regularly reviews and evaluates the Yadana project in order to
validate compliance with both our Statement of Principles and policy of
political neutrality for international operations. Senior Unocal management and
employees involved with the project regularly conduct comprehensive, objective
evaluations of all aspects of this project and report their findings to the
Board. We also undertake regular first-hand, in-field evaluations; the most
recent was in January 1996.
At its January 1996 meeting, the Board passed a formal resolution stating that
the "Yadana project is a critical part of the company's long-range Southeast
Asia operating strategy and represents a positive investment that will enhance
stockholder value. . . . From moral, ethical, economic and human development
perspectives, the Yadana project represents a significant opportunity to bring
sustainable, long-term benefits to the people of Myanmar."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS PROPOSAL. THE
PROXY HOLDERS WILL VOTE ALL PROXIES RECEIVED AGAINST THIS PROPOSAL UNLESS
INSTRUCTED OTHERWISE.
The affirmative vote of a majority of the shares present in person or by proxy
at the meeting, and entitled to vote on this item, is required for approval of
this proposal.
19
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ITEM 4.
STOCKHOLDER PROPOSAL
A stockholder has given notice that the following proposal will be presented at
the meeting:
"WHEREAS Unocal Canada Management Limited has constructed a sour gas processing
plant in northern Alberta on the contested aboriginal lands of the Lubicon Lake
Indian Nation;
And whereas the Lubicon Lake Indian Nation publicly opposes operation of Unocal
Canada's sour gas processing plant for environmental and health reasons;
And whereas both levels of Canadian government have publicly acknowledged that
the Lubicon Lake Indian Nation has rights to traditional Lubicon lands although
there remains disagreement as to the exact nature and extent of those rights;
And whereas the dispute over Lubicon land rights has attracted international
attention including a decision by the U.N. Human Rights Committee that
development activity in the unceded Lubicon territory violates the civil and
political rights of the Lubicons and charges by the World Council of Churches
that development activities in the unceded Lubicon territory could have
genocidal consequences for the Lubicon people;
And whereas the history of the Lubicon dispute and the support which the
Lubicon people enjoy both within Canada and internationally ensures that the
Unocal Canada sour gas processing plant will remain a source of continuing
controversy for as long as it is located in the unceded Lubicon territory
including the possibility of triggering an international consumer boycott of
Unocal;
And whereas the Unocal Canada sour gas processing plant in northern Alberta is
part of the larger question facing Unocal of the impact and implications of
Unocal activities upon Indigenous societies worldwide;
And whereas opposition to the operation of Unocal Canada's sour gas processing
plant in the unceded Lubicon territory may therefore create continuing negative
publicity for Unocal operations and an unstable investment climate jeopardizing
returns to Unocal shareholders:
NOW THEREFORE BE IT RESOLVED that the shareholders of Unocal request the Board
of Directors to prepare a full written report to all shareholders (omitting
proprietary information) within three months of the 1996 Annual Meeting
providing information on Unocal Canada's involvement in the Lubicon territory,
the newly constructed sour gas processing plant, alternatives to continuing
this sour gas processing plant in operation, the likely consequences for Unocal
if this sour gas processing plant is kept in operation in the Lubicon territory
and the impact and implications of Unocal activities upon Indigenous societies
worldwide. This report should contain information on the situation provided
directly by the Lubicons as well as by the officials of Unocal Canada."
DIRECTORS' RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
. Unocal Canada's new sour gas processing unit at the Slave field has been
operating routinely, effectively and without incident since April 1995.
. Unocal holds all necessary permits and has full regulatory approval to
operate at the Slave field.
. Regulatory authorities concluded that the proposed processing operations
"pose no health, safety or environmental threat to either people or
wildlife in the region."
. Unocal carefully monitors sulfur emissions at the plant site on a daily
basis; these emissions are consistently below the permitted level.
. Unocal has made every good faith effort to communicate openly with our
Lubicon neighbors and be a good corporate citizen. Several Lubicons are
employed at our plant site.
. 95% of Unocal's voting stockholders rejected this exact proposal at last
year's Annual Meeting.
OVERVIEW
The proposal requests the Board to prepare a report to shareholders on the sour
gas processing unit that Unocal Canada Limited added in mid-1994 to the
company's existing facilities at its Slave oil and gas field in Northern
Alberta.
We do not believe this report is necessary. Unocal's operations at this field
are entirely routine and conducted in a manner that protects the health,
environment and safety of our employees and our
20
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neighbors--a small group of Lubicons living in Little Buffalo, about 12 miles
from the plant site. Our permits and activities at the Slave field have
undergone intense scrutiny and received complete approval by Canadian
regulatory authorities. The Alberta Energy & Utilities Board (formerly the
Energy Resources Conservation Board, or ERCB), the agency responsible for all
energy issues affecting the province, concluded that Unocal's sour gas
processing ". . . will not represent any substantive risk to the people living
in the area or their future lifestyle . . ."
Unocal, from the onset, has freely and willingly shared information about our
activities, including our plans to expand the plant and process sour gas. We've
met with Lubicon representatives on a number of occasions in an attempt to
discuss their concerns. The Lubicons and their supporters were given every
opportunity to express their views in an extensive public forum convened by the
ERCB. We've offered, and we continue to offer, a variety of technical
assistance, jobs, training and other support. In fact, we employed several
Lubicons at the Slave field before plant construction; at present, two Lubicons
work at the site.
SLAVE FIELD: ROUTINE, ENERGY EFFICIENT OPERATIONS
Unocal Canada Limited has been operating at the remote Slave field since 1981.
Current field production is 2,640 barrels of oil per day and 27 million
standard cubic feet of gas per day. The addition of a sour gas processing unit
is a routine, energy-efficient and environmentally viable way to recover gas
that would otherwise not be recovered (i.e., left in the ground) or previously
was flared. More than 200 sour gas plants are now operating in the province of
Alberta alone, most of which are considerably larger in terms of sulfur
emissions than our Slave sour gas plant. Average concentration of H/2/S
entering our plant is approximately 150 parts per million (0.015%) and no
sulfur is manufactured. (Whereas a typical sour gas feed stream may have
concentrations of 25% H/2/S or more in plants that actually manufacture
sulfur). We carefully monitor sulfur emissions at the plant site every day. A
record of these emissions shows they are consistently less than half the
permitted levels.
AVERAGE DAILY SO/2/ EMISSION RATE
vs. Permitted Level (2,800 pounds per day)
Graphic: Bar Chart. The chart shows the average daily SO2 emissions by month for
April 1995 through February 1996, represented by vertical bars on the chart. The
emissions limit is shown by a horizontal line.
<TABLE>
<CAPTION>
Apr-95 May-95 Jun-95 Jul-95 Aug-95 Sep-95 Oct-95 Nov-95 Dec-95 Jan-96 Feb-96
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AVG 772 875 719 829 964 1,155 1,081 1,036 1,036 1,014 1,058
LIMIT 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800 2,800
</TABLE>
PERSPECTIVE ON THE LUBICON'S LAND DISPUTE
Because our Slave field gas plant comes within 2.5 miles of a proposed reserve
area tentatively set aside for the Lubicons by the Canadian government in 1988,
Unocal has unfortunately become caught in the middle of the Lubicons' decades-
old land rights dispute with provincial and federal authorities.
At various times in the past years, government authorities have attempted to
settle the Lubicon's claim. Several groups of Lubicons have broken away from
the main band, formed separate bands and negotiated their own settlements (land
and compensation) with the government. As a result, membership in the original
band--those still living near the Slave field--is thought to be considerably
reduced. Authorities have noted that this could affect any further settlement,
since an Indian reserve size and amount of compensation are calculated
according to its population base.
21
<PAGE>
Graphic: Map. The map shows the outlines of the proposed Lubicon Lake Indian
Reserve and Unocal's lease area. The locations of the Slave Gas Plant and Little
Buffalo (Lubicon Lake Indian Settlement) are indicated, with the notation that
the two are 12 miles apart.
OUR POSITION
We believe all issues surrounding our plant operations have been examined and
reported on extensively. Unocal policy stresses strict adherence to safety and
environmental compliance. We take this commitment very seriously. We stand by
our conviction that our sour gas operations at the Slave field are entirely
safe and routine, and pose no threat to the region's people or environment.
Resolving this land dispute with the Lubicon Indians does not involve Unocal in
any way. Neither the jurisdictional/territorial concerns of a foreign country,
nor census matters relating to indigenous populations are within the scope of
Unocal's operations or responsibilities.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS PROPOSAL. THE
PROXY HOLDERS WILL VOTE ALL PROXIES RECEIVED AGAINST THIS PROPOSAL UNLESS
INSTRUCTED OTHERWISE.
The affirmative vote of a majority of the shares present in person or by proxy
at the meeting, and entitled to vote on this item, is required for approval of
this proposal.
ITEM 5.
STOCKHOLDER PROPOSAL
A stockholder has given notice that the following proposal will be presented at
the meeting:
WHEREAS As shareholders we believe it is important for our company to assume
leadership on limiting pollution in the environment. Such an approach is good
for business and for our company's public image;
We believe that the responsible implementation of pollution prevention
procedures result in benefits to the corporation and its shareholders by
increased efficiencies, reduced costs from potential enforcement and liability
actions, and long term elimination of environmental compliance costs;
We also believe that pollution prevention is the best approach to reducing
pollution because it seeks an efficient and cost effective means of reducing
pollution at its source. Pollution prevention can keep a company's products
from leaking into air, land or water and thereby reduces the amount of wasted
products. A study conducted by the New Jersey Department of Environmental
Protection concluded that companies will save five to eight dollars for every
dollar they spend reducing the amount of hazardous chemicals that they use.
In response to concerns expressed by local residents, the Chevron refinery in
Richmond, California, performed a pollution prevention audit of their
wastewater processes, resulting in a 70-90 percent reduction of toxic
discharges to San Francisco Bay. Many other companies have also engaged in
effective pollution prevention planning through internal and external reviews.
RESOLVED: Shareholders request that the company adopt a policy requiring each
of its major facilities to conduct an annual review of available pollution
prevention options for high priority pollution sources, especially those on
which stakeholder groups have raised concerns, and to provide a summary report
to shareholders of these reviews.
Supporting Statement:
We believe that our company would benefit from annual pollution prevention
assessments that identify options to eliminate or greatly reduce toxic hazards
at
22
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the source. This process would help restore public confidence in the company's
commitment to reduce undesirable impacts on workers, neighbors and the
environment. Recent public concerns about high levels of toxic selenium
discharges from the Unocal refinery into San Francisco Bay, despite other
refineries' successful reduction of such pollution, demonstrates the need for
increased prevention efforts at our company.
DIRECTORS' RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF THIS PROPOSAL
FOR THE FOLLOWING REASONS:
. Unocal already has clearly defined health, environment and safety
policies that promote pollution prevention and hazardous waste reduction.
. We already have effective pollution prevention programs in place and have
made significant improvements in recent years.
. Unocal has already developed and implemented comprehensive health,
environment and safety management systems and we conduct audits of our
operating facilities on a regular basis.
. We already participate in a range of government and industry programs to
monitor and reduce the use of and exposure to hazardous chemicals. Among
these is a joint industry research project aimed at reducing selenium
discharge in the San Francisco Bay.
. We have already published an "Environmental Report to Stockholders"
detailing the Company's numerous health, safety and environmental
initiatives, including our pollution reduction efforts. We plan to update
this report regularly.
. We already have a public communications program that shares information
about the health and environmental impact of our activities on
communities near our major facilities.
OVERVIEW
The proposal requests that the Company adopt a policy requiring its major
facilities to conduct an annual review of pollution prevention options (and
provide a summary report to shareholders) with particular focus on "high
priority pollution sources, especially those on which stakeholder groups have
raised concerns."
Unocal agrees that responsible pollution prevention procedures can be cost
effective, resulting in benefits to stockholders. However, we believe this
proposal is neither necessary nor appropriate, and would subject the company to
the needless expense of producing and distributing over 100,000 copies of a
technical report each year.
The Company is committed to environmental compliance. We already have good
programs in place at our facilities that promote pollution prevention and
hazardous waste reduction, and we're continuing to improve them. These measures
have been carefully developed and implemented to meet the particular needs of
each facility.
OUR COMPANYWIDE ENVIRONMENTAL COMMITMENT
Unocal takes its commitment to addressing the environmental impacts of our
products, operations and activities very seriously. Our first Environmental
Report discussed some of the challenges we face, as well as our numerous
programs for environmental compliance, pollution control and emissions
reduction. Pollution prevention is just one part of our overall effort to
address the environmental impacts of our operations.
The Board's Health, Environment and Safety Committee is responsible for overall
review of Unocal's environmental performance. At the executive officer level,
we've created a Compliance Policy Team that includes our chief executive and
financial officers, general counsel, and vice president for health, environment
and safety, as well as group vice-presidents for the major operating groups.
Our Compliance Policy Team is responsible for ensuring that our policies,
procedures, training programs and audits for environmental matters are up-to-
date and effective. Each Unocal operating unit and subsidiary appoints an
environmental manager whose primary responsibility is to coordinate and monitor
environmental affairs. In addition, we have started to hold public forums and
more systematically share information about our activities with local
communities.
COMPREHENSIVE AUDIT PROGRAM
We are proud of our newly strengthened management and control systems. These
include a comprehensive auditing program that extends through all levels of the
organization. The core of this program involves regular, in-depth
investigations designed to ensure that Unocal's facilities comply with
environmental laws and are using specific management and operating practices to
assure this compliance.
23
<PAGE>
UNOCAL'S STATEMENT OF ENVIRONMENTAL
PRINCIPLES
. Recognize and respond to community concerns about our products and operations
. Develop and produce products that can be manufactured, transported, used and
disposed of safely
. Make health, environmental and safety considerations a priority in our
planning for all existing and new products, processes and facilities
. Report promptly to officials employees, customers and the public, information
on product-related health, environmental or safety hazards and to recommend
protective measures
. Counsel customers on the safe use, transportation and disposal of our
products
. Operate our refineries, plants and facilities in a manner that protects the
health, environment and safety of our employees and the public
. Extend knowledge by conducting or supporting research on the health,
environmental and safety effects of our products, processes and waste
materials
. Work with others to resolve problems created by past handling and disposal of
hazardous substances
. Participate with the government and others in creating responsible laws,
regulations and standards to safeguard the community, workplace and
environment
. Promote the principles and practices of "Health, Environment and Safety
Programs" by sharing experiences and offering assistance to others who
produce handle, use, transport or dispose of products similar to ours
POLLUTION PREVENTION AND ENVIRONMENTAL IMPROVEMENT PROGRAMS
Unocal participates in a number of industry-wide programs for pollution
prevention. Among these is the U.S. Environmental Protection Agency's "33/50
Program." This is a voluntary pollution prevention program to reduce releases
of 17 priority chemicals by 33 percent by 1992, and 50 percent by 1995. Unocal
met those targets ahead of schedule.
Another program is the protocol for management practices for pollution
prevention adopted by the American Petroleum Institute. API members, including
Unocal, agree to "periodically review and identify pollution prevention options
and opportunities, and develop approaches for reducing releases considering
community concerns, technology and economics, and impact on human health and
the environment."
In California, where our three major refineries and the majority of our branded
service stations are located, we comply with the Hazardous Waste Source
Reduction and Management Review Act of 1989. This requires us to conduct a
review of our processes, operations, and procedures every four years to reduce
hazardous wastes at each site. It also requires us to determine any
alternatives to (or modifications of) processes, operations and procedures that
may be implemented to reduce hazardous materials generated at our sites,
including source reduction measures.
POLLUTION PREVENTION MEASURES IN THE SAN FRANCISCO BAY AREA
Unocal has a major environmental protection and pollution prevention initiative
under way at our refinery in the San Francisco Bay area. This ambitious project
is directed toward reducing selenium from the process effluent.
The refinery is in compliance with current discharge permit limits for selenium
set by the Regional Water Board. We are now developing and testing breakthrough
process technology that should reduce the selenium in our effluent by about 85
percent from our current permit level. We expect the new system to be in place
ahead of the Water Board's deadline for meeting new selenium discharge limits.
OUR POSITION
Unocal has already implemented a vigorous and comprehensive series of programs
to reduce and prevent pollution from our facilities. We published an
Environmental Report in 1995 that discussed our programs and results in detail.
Updates to this report will be available to interested stockholders. While we
welcome dialogue with stockholders on issues of concern, this proposal is
neither necessary nor cost-effective.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THIS PROPOSAL. THE
PROXY HOLDERS WILL VOTE ALL PROXIES RECEIVED AGAINST THIS PROPOSAL UNLESS
INSTRUCTED OTHERWISE.
The affirmative vote of a majority of the shares present in person or by proxy
at the meeting, and entitled to vote on this item, is required for approval of
this proposal.
The names and addresses of the stockholder proponents, and information
regarding their Unocal common stockholdings, will be furnished promptly upon
receipt of any telephone or written request to the Secretary of the Company.
24
<PAGE>
ITEM 6.
OTHER MATTERS
In accordance with Article III, Section 7 of the Company's Bylaws, for business
to be properly brought before an annual meeting by a stockholder, the Corporate
Secretary must have received written notice at least 30 days prior to the
meeting. The notice shall set forth the matters proposed to be brought before
the meeting including a brief description of the business and the reasons for
conducting such business, the stockholder's name and address and the number of
shares represented, and any material interest of the stockholder in such
business. Notwithstanding anything in the Bylaws to the contrary, no business
shall be conducted at an annual meeting except in accordance with these
procedures.
If other business, of which the Board of Directors has no knowledge at the time
of this printing, properly comes up for action at said meeting or any
adjournment thereof, the proxies will be voted with respect thereto in
accordance with the discretion of the proxy holders. The proxy holders will
also vote the proxies in their discretion with respect to other matters
described in Rule 14a-4(c) under the Securities and Exchange Act of 1934.
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Stockholder proposals for inclusion in the Company's Proxy Statement for the
1997 Annual Meeting must be received by the Corporate Secretary at 2141
Rosecrans Avenue, Suite 4000, El Segundo, California 90245, on or before
December 20, 1996.
By Order of the Board of Directors
/s/ Dennis P. R. Codon
----------------------------------
Dennis P. R. Codon
Vice President, Chief Legal
Officer, and Corporate Secretary
April 22, 1996
El Segundo, California
25
<PAGE>
[FACING IDENTIFICATION MARK]
NO POSTAGE
NECESSARY IF
MAILED IN THE
UNITED STATES
BUSINESS REPLY MAIL
FIRST CLASS MAIL PERMIT NO. 4035 Los Angeles, CA
POSTAGE WILL BE PAID BY ADDRESSEE
UNOCAL CORPORATION
ATTN: CORPORATE SECRETARY, DEPT. R
P. O. BOX 2390
LOS ANGELES, CA 92622-2390
[POSTNET BARCODE]
<PAGE>
UNOCAL CORPORATION
[_] I plan to attend the Annual Stockholders Meeting on Monday, June 3, 1996.
- --------------------------------------------------------------------------------
Name (Please print)
- --------------------------------------------------------------------------------
Address
( )
- --------------------------------------------------------------------------------
City State Zip Telephone No.
STOCKHOLDER COMMENTS
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
It may not be possible to respond individually to all comments.
<PAGE>
[FACING IDENTIFICATION MARK]
NO POSTAGE
NECESSARY IF
MAILED IN THE
UNITED STATES
BUSINESS REPLY MAIL
FIRST CLASS MAIL PERMIT NO. 4035 Los Angeles, CA
POSTAGE WILL BE PAID BY ADDRESSEE
UNOCAL CORPORATION
ATTN: CORPORATE SECRETARY, DEPT. B
P. O. BOX 2390
BREA, CA 92622-2390
[POSTNET BARCODE]
<PAGE>
UNOCAL CORPORATION
[_] I plan to attend the Annual Stockholders Meeting on Monday, June 3, 1996.
- --------------------------------------------------------------------------------
Name (Please print)
- --------------------------------------------------------------------------------
Address
( )
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City State Zip Telephone No.
STOCKHOLDER COMMENTS
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It may not be possible to respond individually to all comments.
<PAGE>
UNOCAL [LOGO OF UNOCAL]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF Please mark
DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS OF UNOCAL your votes as [X]
indicated in
this example
The Board of Directors recommends votes FOR Items 1 and 2
Item 1. Election of the following FOR ALL [ ] WITHHOLD AUTHORITY [ ]
nominees as directors for Nominees to vote for ALL
three-year terms to expire nominees.
in 1999:
Malcolm R. Currie,
Neal E. Schmale,
Charles R. Weaver
Withhold authority to vote for the following nominee(s):
- -------------------------------------------------------
Item 2: Ratification of appointment of Coopers & FOR AGAINST ABSTAIN
Lybrand L.L.P. as independent accountants [_] [_] [_]
The Board of Directors recommends votes AGAINST Items 3,4, and 5
Item 3: Stockholder proposal: Review and report on FOR AGAINST ABSTAIN
Company's international code of conduct [_] [_] [_]
Item 4: Stockholder proposal: Report on a gas FOR AGAINST ABSTAIN
plant in Northern Alberta, Canada [_] [_] [_]
Item 5: Stockholder proposal: Review and report FOR AGAINST ABSTAIN
annually on pollution prevention options [_] [_] [_]
CHECK THIS BOX FOR OPEN BALLOT [_]
(If you check this box, the
company will be given access
to your proxy)
Please mark, date and sign as your name appears to the left and return in
the enclosed envelope. If acting as executor, administrator, trustee or
guardian, you should so indicate when signing. If the signer is a corporation,
please sign the full corporate name, by duly authorized officer. If shares are
held jointly, each stockholder should sign.
Dated
-------------------------------------
Signature(s)
------------------------------
- ------------------------------------------
see other side for important information
FOLD AND DETACH HERE
Return the business reply card from inside the proxy statement
if you plan to attend
ADMISSION TICKET
UNOCAL [LOGO OF UNOCAL]
1996 Annual Meeting of Stockholders
Monday, June 3, 1996
10:00 A.M.
376 South Valencia Avenue
Brea, California 92621
PLEASE ADMIT NON-TRANSFERABLE
<PAGE>
UNOCAL CORPORATION
C/O CHEMICAL MELLON SHAREHOLDER SERVICES
P.O. Box 1474, Church Street Station
New York, NY 10277-1474
[LOGO OF UNOCAL]
Board of Directors Proxy
1996 ANNUAL MEETING OF STOCKHOLDERS
MacDonald G. Becket, Frank C. Herringer and Donald P. Jacobs, or any of them,
with full power of substitution, are hereby appointed by the signatory of
this Proxy to vote all shares of Common Stock held by the signatory on
April 4, 1996, at the June 3, 1996 Annual Meeting of Stockholders of Unocal
Corporation, and any adjournment thereof, on each of the items on the reverse
side and in accordance with the directions given there and, in their
discretion, on all other matters that may properly come before the Annual
Meeting and any adjournment thereof.
THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED ON THE REVERSE SIDE, OR IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR ITEMS 1 AND 2 AND AGAINST ITEMS 3, 4
--- -------
AND 5.
(Continued, and to be dated and signed on reverse side)
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT TO THE COMPANY
PLEASE SIGN AND RETURN YOUR PROXY BY
TEARING OFF THE TOP PORTION OF THIS SHEET
AND RETURNING IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE
<PAGE>
- --------------------------------------------------------------------------------
[LOGO OF UNOCAL] BOARD OF DIRECTORS PROXY
ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 1996
UNOCAL CORPORATION
C/O CHEMICAL MELLON SHAREHOLDER SERVICES
P.O. BOX 1474 CHURCH STREET STATION,
NEW YORK, NY 10277-1474
MacDonald G. Becket, Frank C. Herringer and Donald P. Jacobs, or any of them,
with full power of substitution, are hereby appointed by the signatory of this
proxy to vote all shares of Common Stock held by the signatory on April 4, 1996
at the 1996 Annual Meeting of Stockholders of Unocal Corporation, and any
adjournment thereof, on each of the items on the reverse side and in accordance
with the directions given there and, in their discretion, on all other matters
that may properly come before the Annual Meeting and any adjournment thereof.
THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED ON THE REVERSE SIDE AND, IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR ITEMS 1 AND 2 AND AGAINST ITEMS 3, 4 AND
5.
(Continued and to be dated and signed on reverse side)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Continued from other side) THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS
[LOGO OF UNOCAL] FOR THE JUNE 3, 1996 ANNUAL
MEETING OF STOCKHOLDERS
UNOCAL CORPORATION'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTES FOR ITEMS 1
- --------------------------------------------------------------------------------
AND 2
- -----
Item 1: Election of the following nominees as directors:
- ------
Malcolm R. Currie, Neal E. Schmale and Charles R. Weaver for three-year
terms that expire in 1999
[_] FOR ALL [_] WITHHOLD AUTHORITY
NOMINEES TO VOTE FOR ALL OF THE NOMINEES
WITHHOLD AUTHORITY TO VOTE FOR THE FOLLOWING NOMINEE(S):
--------------------------------------------------------
Item 2: Ratification of appointment of Coopers & Lybrand L.L.P. as independent
- ------
accountants
[_] FOR [_] AGAINST [_] ABSTAIN
UNOCAL CORPORATION'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTES AGAINST
- ----------------------------------------------------------------------------
ITEMS 3, 4 AND 5
- ----------------
Item 3: Stockholder proposal:
- ------
Review and report on Company's international code of conduct.
[_] FOR [_] AGAINST [_] ABSTAIN
Item 4: Stockholder proposal:
- ------
Report on a gas plant in Northern Alberta, Canada
[_] FOR [_] AGAINST [_] ABSTAIN
Item 5: Stockholder proposal:
- ------
Review and report annually on pollution prevention options
[_] FOR [_] AGAINST [_] ABSTAIN
This Proxy is limited to................ Shares
Signature(s).....................
.................................
Dated: ............, 1996
PERSONS SIGNING IN REPRESENTATIVE CAPACITY SHOULD INDICATE TITLE AS SUCH.
- --------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
LONG-TERM INCENTIVE PLANS OF 1985 AND 1991, AND
REVISED INCENTIVE COMPENSATION PLAN
Annual Meeting of Stockholders-Voting Instructions
Please mark your votes as indicated in this example [X]
- -------------------------------------------------------------------------------
The Board of Directors recommends votes FOR items 1 and 2
- -------------------------------------------------------------------------------
Item 1: Election of the following nominees as directors for three-year terms to
expire in 1999:
Malcolm R. Currie,
Neal E. Schmale,
Charles R. Weever
FOR ALL Nominees [_] WITHHOLD AUTHORITY to vote for ALL nominees [_]
Withhold authority to vote for the following nominee(s):
- ---------------------------------------
Item 2: Ratification of appointment of Coopers & Lybrand L.L.P. as Independent
accountants
FOR [_] AGAINST [_] ABSTAIN [_]
- -------------------------------------------------------------------------------
The Board of Directors recommends votes AGAINST items 3, 4, and 5
- -------------------------------------------------------------------------------
Item 3: Stockholder proposal: Review and report on Company's International
code of conduct
FOR [_] AGAINST [_] ABSTAIN [_]
Item 4: Stockholder proposal: Report on a gas plant in Northern Alberta,
Canada
FOR [_] AGAINST [_] ABSTAIN [_]
Item 5: Stockholder proposal: Review and report annually on pollution
prevention options
FOR [_] AGAINST [_] ABSTAIN [_]
CHECK THIS BOX FOR OPEN BALLOT [_]
(If you check this box, the Company will be given access to your proxy)
Signature __________________________________
Signature __________________________________
Date __________________________________
Please mark, date and sign as your name appears above and return in the enclosed
envelope. If acting as executor, administrator, trustee or guardian, you should
so indicate when signing. If the signer is a corporation, please sign the full
corporate name, by duly authorized officer. If shares are held jointly, each
stockholder should sign.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
TO: PARTICIPANTS IN UNOCAL'S LONG-TERM INCENTIVE PLANS OF 1985 AND 1991, AND
THE REVISED INCENTIVE COMPENSATION PLAN
Your voting instructions are solicited on behalf of the Board of Directors of
Unocal Corporation for the Annual Meeting of Stockholders to be held on June 3,
1996. The shares in your account will be voted as directed. In the absence of
such direction, the Compensation Committee of the Board of Directors has
authority to vote those shares in its discretion, except as limited by law. It
is understood that the Compensation Committee will have the authority to vote on
all other matters which may properly come before the meeting and at any
adjournment.
YOUR VOTE IS IMPORTANT
PLEASE SIGN AND RETURN YOUR VOTING INSTRUCTIONS BY
TEARING OFF THE TOP PORTION OF THIS CARD AND RETURNING
IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE
