Unocal Corporation
2141 Rosecrans Avenue
Suite 4000
El Segundo, California 90245
Telephone (310) 726-7651
Facsimile (310) 726-7815
Unocal [Logo]
Dennis P.R. Codon
Vice President, Chief Legal Officer
And General Counsel
April 21, 1998
[Name and Address Here]
Re: Unocal's Annual Meeting June 1, 1998
Dear [name here]:
Since your organization is a substantial investor in the
Common Stock of Unocal Corporation, I am enclosing with this
letter a copy of the proxy statement and annual report for the
upcoming Annual Meeting of Stockholders, to be held on Monday,
June 1, 1998. Knowing that your shares are held through a
custodian and that the normal path of distribution of these items
could result in some delay, I thought you would appreciate
receiving your personal copy of the materials at the same time they
are being sent to holders of record.
We would welcome the opportunity to personally discuss
the proxy statement items with you, and we will be contacting you
shortly in this regard. In particular, we would like to answer any
questions you may have regarding the 1998 Management Incentive
Program. Unocal is in the forefront of innovative compensation in
the petroleum industry with the use of performance options for
senior executives. The performance options are high-risk and will
be a significant part of senior management compensation. They
will more closely align the interests of senior management with
those of our stockholders as they offer rewards only if the
Company achieves exceptional returns.
The strike price for the initial grants of performance
options will be the higher of $50 per share or 133-1/3 percent of
the average Unocal Common Stock price for the period January
26, 1998 to May 29, 1998. The options are not exercisable until
March 2001, the end of the performance period, and they become
exercisable only if Unocal's stock price is at or above the strike
price for 10 out of 20 consecutive trading days during the
performance period, or the comparative return to stockholders
places Unocal in the top quartile of its peer group companies for
the performance period; otherwise, they are forfeited.
<PAGE>
[name here]
April 21 1998
Page 2
A total of 8.25 million shares are to be approved for the
Program. Of that total, performance options for 3 million shares
have been granted to senior executives, subject to stockholder
approval, and 500,000 shares will be available for future grants.
Of the remaining 4.75 million shares, no more than 1.75 million
shares will be granted for restricted stock or performance shares.
Unocal currently has 241.3 million shares outstanding and 4.6
million shares reserved for outstanding grants under the previous
Management Incentive Program.
We look forward to talking with you soon.
Regards,
/s/ Dennis P.R. Codon
