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UNOCAL CORPORATION
2141 Rosecrans Avenue
Suite 4000
El Segundo, California 90245
Telephone (310) 726-7601
[UNOCAL LOGO]
April 25, 1997
ROGER C. BEACH
Chairman of the Board
and Chief Executive Officer
Dear Unocal employees and retirees:
By now you should have received Unocal's 1996 annual report
and proxy statement, together with a proxy card (or voting
instruction card) for you to vote your shares at the upcoming
annual meeting.
This year's proxy contains two stockholder proposals.
- The first requires the Board of Directors to issue a
report on the actual and potential costs and benefits of doing
business in Myanmar.
- The second calls for a group of outside directors to
investigate and publish a report on the allegations that
the Myanma Oil and Gas Enterprise (a co-venturer in the Yadana
natural gas project) is a conduit for money laundering in
Myanmar.
The issues surrounding these proposals have broad
implications, and we want all stockholders to be fully
informed about them. The enclosed Proxy Fact Sheet summarizes
the proposals and presents the viewpoints and recommendations
of your company's Board of Directors. I also encourage you to
review the proxy statement, which provides more detailed
information on the proposals.
As a Unocal stockholder, you are an owner of the company.
Your views and your votes are important. Please be sure to
vote by marking and signing your proxy card or voting
instruction card and returning it in the postage-paid envelope
provided with the proxy statement.
Very truly yours,
/s/ Roger C. Beach
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[UNOCAL LOGO]
PROXY FACT SHEET
YOUR
VOTE
COUNTS
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ITEM 4
PROPOSAL SUMMARY
----------------
Requests that the Board of Directors appoint a committee of
outside directors to issue a report on the actual and
potential economic and public relations costs to Unocal of
opposition to its business in Myanmar (Burma). The report
should include actual and potential benefits of continuing to
do business in Burma as well as the costs to Unocal.
VOTE NO
The Board of Directors recommends a VOTE AGAINST the adoption
of Proxy Item 4 for the following reasons:
The expenses that would be incurred in producing such an
economic report are unnecessary.
There has been no significant impact o Unocal from consumer
boycotts or selective purchasing resolutions.
With the sale of 76 Products Co., the Company's exposure to
consumer boycotts or selective purchasing resolutions will
virtually cease.
In 1996, total non-operating expenses Unocal incurred to
support its investments in Myanmar - about $1 million - were
immaterial from a Long-term investment perspective.
UNOCAL'S VIEW
--------------
The expenses that would be incurred in producing such an
economic report are unjustified. There has been no
significant impact on Unocal from consumer boycotts or
selective purchasing resolutions. Given the sale of 76
Products Co., our exposure to consumer boycotts or selective
purchasing resolutions will virtually cease. From a long-term
investment perspective, Unocal's total non-operating expenses
-- about $1 million -- associated with our investments in
Myanmar are immaterial.
PUTTING MYANMAR IN PERSPECTIVE
------------------------------
Unocal's Myanmar operations are held under two wholly owned
subsidiaries. At year-end 1996, they had assets of $115
million, compared with Unocal's total assets of $9.1 billion.
The Company's activities in Myanmar are reported in its 1996
Annual Report and Form 10-K. Additionally, the Company has
issued three reports about the Yadana project, the most recent
of which was published in March 1997.
BUSINESS IMPACT OF MYANMAR PROTESTS
------------------------------------
76 Products Co., the business unit with the most visible
exposure to boycotts or purchasing resolutions, had a limited
presence in the municipal markets where selective purchasing
resolutions were enacted. Given the sale of 76 Products Co.,
no further impact is expected.
In 1996, 76 Products maintained its existing municipal
contracts. (The prior year, one municipal contract valued at
about $44,000 was not renewed.)
There has been no significant or material impact on the sales
(retail, wholesale or commercial) of gasoline and diesel fuel.
In fact, sales increased by 9 percent in 1996.
The number of retail and commercial credit card accounts
closed because of Unocal's investments in Myanmar were
insignificant. (In 1996, the number of new credit card
accounts grew by over 33 percent, compared with the prior
year.)
There has been no measurable impact on The UNO-VEN Company
from consumer boycotts or selective purchasing resolutions.
MYANMAR NON-OPERATING EXPENSES
-------------------------------
During 1996, Unocal incurred approximately $1 million in non-
operating expenses for government relations, public
communications and legal support related to its Myanmar
activities. These costs are insignificant when compared with
the anticipated returns during the 30-year life of the Yadana
project.
CONCLUSION
-----------
The expenses required to produce such a report are neither
necessary nor cost-effective. The sale of our 76 Products
Co. assets will virtually end Unocal's exposure to
consumer boycotts and selective purchasing resolutions. Non-
operating expenses associated with the Company's Myanmar
operations are, from a long-term perspective, immaterial.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST
THIS PROPOSAL
REMEMBER THAT EVERY VOTE COUNTS. IF THIS PROPOSAL IS NOT
DEFEATED BY MORE THAN 97 PERCENT OF THE TOTAL STOCKHOLDER
VOTE, IT CAN BE SUBMITTED AGAIN NEXT YEAR.
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ITEM 5
PROPOSAL SUMMARY
-----------------
Requests that a committee comprised of outside directors
conduct extensive research and publish a written report on the
allegations that the Myanma Oil and Gas Enterprise (MOGE) is a
conduit for illegal drug-money laundering in Myanmar (Burma);
the extent to which company officials have been aware of any
facts linking MOGE to drug-money laundering; and a recommended
course of action for the Board of Directors to take based on
the findings.
VOTE NO
The Board of Directors recommends a VOTE AGAINST the adoption
of Proxy Item 5 for the following reasons:
The proposal implies that Unocal officials may have knowledge
of drug-money laundering activities allegedly conducted by the
Myanma Oil and Gas Enterprise (MOGE). This is absolutely
false.
Unocal is not involved in the internal financial operations of
MOGE. We do not have access to the financial or operating
records of MOGE, nor do we have the legal authority to review
those records.
It is illegal under Myanmar law - and against Unocal's policy
- to conduct the investigation called for by this stockholder
proposal. Such an investigation also would expose Unocal
officers and directors to significant criminal penalties.
Enacting this stockholder resolution could jeopardize Unocal's
investments in Myanmar. At immediate risk would be $115
million in assets of two wholly owned Unocal subsidiaries
under which those investments are held. Longer term,
stockholders may fail to realize the anticipated returns
expected to be generated by the 30-year Yadana project.
UNOCAL'S VIEW
--------------
The resolution implies that Unocal officials may have
knowledge that the Myanma Oil and Gas Enterprise (MOGE) is
engaged in the drug-money laundering activities alleged in the
proposal. This is absolutely false. Proving or disproving
those allegations would require an extensive investigation
that would subject Unocal's officers and directors to criminal
penalties under Myanmar law, under which two of the Company's
wholly owned subsidiaries must operate.
PROPOSAL VIOLATES OUR CODE OF CONDUCT
--------------------------------------
Unocal's operations are strictly guided by our Statement of
Principles, as well as our Code of Ethics and Compliance
Guidelines. In Myanmar, as in every country where we operate,
our policy is to comply with all laws, rules and regulations
applicable to the conduct of our business. Every Unocal
employee must avoid any activity which could involve or lead
to the involvement of Unocal or its personnel in any unlawful
practice.
CONCLUSION
----------
Unocal is committed to meeting the highest ethical standards
in all of our operations, at home and abroad. We have
explicit policies against any type of involvement in unethical
or illegal behavior.
Moreover, as an international energy company, Unocal is not
legally authorized to conduct an investigation into the
financial activities of a state-owned company such as MOGE.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST
THIS PROPOSAL.
REMEMBER THAT EVERY VOTE COUNTS. IF THIS PROPOSAL IS NOT
DEFEATED BY MORE THAN 97 PERCENT OF THE TOTAL STOCKHOLDER
VOTE, IT CAN BE SUBMITTED AGAIN NEXT YEAR.
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VOTING
YOUR SHARES
All stockholders are encouraged to vote their shares of Unocal
common stock on the issues outlined in the proxy or brought
before the annual meeting. Here is how the voting of shares
in employee stock plans are handled:
- UNOCAL SAVINGS PLAN PARTICIPANTS
The trustee of the Unocal Savings Plan will vote your shares
in accordance with the direction received from you. If you do
not vote, your shares will be voted by the trustee in the same
proportion as those shares for which it received voting
directions.
- EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) PARTICIPANTS
The trustee of the ESOP will vote your shares in accordance
with the direction received from you. If the trustee does not
receive instructions from you, then the trustee will vote your
shares on proxy issues at its discretion.
