YOUR VOTES REALLY COUNTS!
Unocal looks to markets across Asia for much of the
company's growth over the next several decades. We know
that the energy is needed. Electricity generating capacity
has been identified as one of East Asia's most critical
infrastructure needs. Many countries across the continent
are welcoming investment to develop their economies, provide
energy to meet the basic needs of their people, and so bring
substantial improvements in standards of living.
Having operated in Southeast Asia for more than 30
years, we've seen first-hand that meeting the energy needs
of emerging nations is a crucial first step on the long road
to their economic and social development.
For example, the Yadana Gas Project represents the
first-of-a-kind partnership between Thailand and Myanmar,
providing additional gas supplies for Thailand and laying
the groundwork for Myanmar's energy infrastructure. The
project creates new jobs and opportunities in an extremely
poor and undeveloped area of Myanmar.
We believe that our current involvement in the Yadana
project will not be materially affected by recent U.S.
sanctions against new investment in Myanmar -- but the
controversy remains. Two stockholder proposals on the proxy
ballot this year reflect this controversy. It's important
that you review these proposals, Items 4 and 5 on your
proxy, and the arguments both for and against them -- along
with the other items you're asked to consider. Then, vote
your shares.
You have an investment in the success of this company,
both as an employee or retiree -- and as a stockholder. Not
voting your proxy simply means that someone else may vote
for you. You cannot assume that the trustees will
automatically vote in support of management's
recommendations.
Take the Unocal Savings Plan, for example, which held
about 5 percent of the company's common shares outstanding
at year-end 1996. The USP trustees are required to cast
unvoted shares in the same proportion -- both for and
against the proxy items -- as the plan shares that are
voted.
That's why it's so important that you make the choice
about how your shares are voted. Your votes in USP and ESOP
are confidential -- and they really count!
/s/ Roger Beach
<PAGE>
TELEPHONE SURVEY SHOWS NEED FOR
IMPROVED EMPLOYEE STOCKHOLDER COMMUNICATIONS
In an important finding from the employee telephone
survey conducted last fall, 64 percent of the
respondents reported that employees don't think it's
important to vote their stock every year. Answers also
showed that most employees don't understand how their
unvoted shares are counted.
Employee votes do count. The Unocal Savings Plan
and ESOP (Employee Stock Ownership Plan) together hold
nearly 15 million shares (year-end 1996), which
represents about 6 percent of the shares outstanding of
common stock.
WHO VOTES IF YOU DON'T?
Every share counts as a vote -- it's not just one
vote for one person. If an employee chooses not to
vote, then the trustees will vote those shares
according to the plan rules -- and the two employee
plans have different rules. While the survey showed
that most employees support management recommendations,
the employee plan trustees do not cast all unvoted
shares with management.
For example, unvoted shares held in the Unocal
Savings Plan (USP) must be voted by the trustee in the
same proportion as the shares that are voted. This
means that those who do vote their shares decide how
the entire vote for the plan shares will go. The more
employees who vote, the more representative the final
tally will be. USP holds most of the stock in the
employee plans -- nearly 12 million shares.
About 3 million shares are held in the Employee
Stock Ownership Plan. ESOP shares not voted by
employees may be voted at the discretion of the
trustee, the Bank of New York, in accordance with its
fiduciary responsibility to support the shareholders'
best interests.
The telephone survey, in which 600 employees were
contacted at random, also showed that employees
generally look to management for guidance on
stockholder issues. Although about three quarters of
those questioned last fall reported that morale at the
company was low, there was strong support for the
changes in the company that are taking place.
RATE OF CHANGE ABOUT RIGHT
Sixty-five percent reported that the changes were
taking Unocal in the right direction, half said the
rate of change was about right-- and 16 percent said
they thought the changes should be happening faster.
Communications in the company -- at both the
corporate and business unit levels -- were rated better
than at comparable companies, according to Paul Holm,
president of the independent firm that conducted this
survey. However, it was apparent that corporate needs
to do a better job of communicating about stockholder
issues and the importance of voting shares.
Employees were also asked about PFP. Sixty-one
percent said they thought the program had improved
employee understanding of the company's financial
performance, but that it still needed better linking to
job performance. Plan improvements for 1997 are
announced on page 2 of this issue of SeventySix News.
Holm reports that the survey has a statistical
error margin of plus or minus 4 percent.
UNOCAL'S DIRECTION
[GRAPHIC: PIE CHART HERE]
Right direction 65%
Wrong track 25%
Don't know 10%
SPEED OF CHANGE
[GRAPHIC: PIE CHART HERE]
Right pace 46%
Too slow 16%
Too fast 33%
Don't know 5%
GENERAL ATTITUDES
ON STOCKHOLDER
ISSUES
[GRAPHIC: PIE CHART HERE]
For management 73%
Against management 20%
Don't know 8%
OPINION ABOUT WHY
EMPLOYEES DON'T
VOTE THEIR SHARES
[GRAPHIC: PIE CHART HERE]
Vote doesn't matter 64%
Dissatisfaction with management 23%
Other 7%
Don't know 6%
HOW DO YOU RATE
COMMUNICATIONS
AT UNOCAL?
[GRAPHIC: PIE CHART HERE]
Good 54%
Average 22%
Poor 23%
Don't now 1%
DO EMPLOYEES
UNDERSTAND
PFP?
[GRAPHIC: PIE CHART HERE]
Yes 70%
No 27%
Don't know 3%
