SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) December 5, 2000
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UNOCAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-8483 95-3825062
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(Commission File Number) (I.R.S. Employer Identification No.)
2141 Rosecrans Avenue, Suite 4000, El Segundo, California 90245
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(Address of Principal Executive Offices) (Zip Code)
(310) 726-7600
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(Registrant's Telephone Number, Including Area Code)
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Item 5. Other Events.
Enhanced Severance Program
The boards of directors of Unocal Corporation and its Union Oil
Company of California subsidiary have approved an enhanced
severance program for approximately 2,800 U.S.-payroll employees
not represented by collective bargaining agents in the event they
lose their jobs through a change of control of the company.
The company is not holding discussions with anyone concerning a
sale, merger or other acquisition of the company. The new program
is designed to ensure that employees would be treated fairly if a
change of control of the company were to occur in the future,
thus assisting the company in retaining and attracting key
employees in the current competitive labor market.
In the event of a "change of control" of the company, as defined
in the company's Long-term Incentive Plan of 1998 (see Exhibit 99
to this report), the program provides for the immediate vesting
of accrued benefits and/or accounts of all covered employees
under the company's retirement and savings plans and the
immediate payment to such employees in cash of bonuses under its
annual incentive compensation plans.
The following additional provisions of the program become
operative in the event of an employee's involuntary termination
(other than for death, disability or misconduct) or constructive
discharge within two years following a change of control.
"Constructive discharge" includes an employee's resignation
within 60 days following certain reductions in pay, benefits
and/or perquisites, or as a result of certain work location
changes.
The program provides four months of base pay for all eligible
employees, regardless of years of service. Employees with at
least five years of service also would receive credit for an
additional three years of service and three years of age under
the company's retirement plans plus the incremental difference in
value, if any, of three-fourths of a month of base pay for each
completed year of actual service, to a maximum of 20 months,
above the discounted present value of the enhancement to the
retirement benefit. Employees with less than five years of
service would receive the three-fourths of a month of base pay
for each completed year of service. Executive officers holding
employment agreements would be entitled to the enhanced benefit
if they agree to its offset against the change-of-control
benefits already provided under such agreements.
The program permits an eligible employee to elect an immediate
distribution or rollover of his or her total retirement plan
benefits, as enhanced (the amount of which would be based on the
highest consecutive 12 months of pensionable pay during the most
recent 120 months of service). The program also provides for
subsidized "COBRA" medical and dental coverage for 18 months, a
"three plus three" enhancement to criteria for determining
eligibility and contributions under the company's retiree and
special continuation medical coverages and eligibility under its
retiree life and AD&D insurance plans, as well as certain other
benefits.
The program includes a "tax gross-up" arrangement for employees
subject to the excise tax provided for by Section 280G of the
Internal Revenue Code. Under this section, excise taxes are
imposed on employees receiving change-of-control payments (as
defined) that exceed 2.99 times the employee's average annual
compensation (as defined). Under the arrangement, an employee
who is subject to the excise tax would receive a gross-up
payment, in addition to the amounts deemed change-of-control
payments, to eliminate the effect of the excise tax. This gross-
up arrangement would apply only if the employee's change-of-
control payments exceed
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the excise tax threshold amount of Section 280G by more
than 10 percent. Otherwise, such payments would be reduced
below the threshold.
The majority of the costs of the enhancements under the program,
over and above the costs of existing severance plans and change-
of-control arrangements, would be funded from the surplus
available under the company's qualified retirement plan.
The company has begun to review existing severance programs that
would apply to employees of international business units in case
a change of control were to occur. Recommendations for any
changes or enhancements to these programs will be made in line
with local laws and competitive practices.
Item 7. Financial Statements and Exhibits.
(c) Exhibits: The Exhibit Index on page 4 of this
report lists the exhibit filed as part of this report.
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Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
UNOCAL CORPORATION
(Registrant)
Date: December 5, 2000 By: /s/ TERRY G. DALLAS
Terry G. Dallas
Chief Financial Officer
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EXHIBIT INDEX
99 Excerpt from Long-Term Incentive Plan of 1998.
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EXHIBIT 99
LONG-TERM INCENTIVE PLAN OF 1998
1. General Description
The Long-Term Incentive Plan of 1998 provides for granting
Nonqualified Stock Options, Restricted Stock Awards,
Performance Shares and Performance Bonuses. The Plan
succeeds the Unocal Long-Term Incentive Plans of 1985 and
1991, with certain grants under the 1985 and 1991 Plans
subject to the provisions of the 1998 Plan as described
herein.
2. Definitions
The following definitions shall be applicable throughout
the Plan but shall not be deemed to apply in other contexts
unless specifically provided otherwise:
. . .
e. ''Change of Control'' means:
(i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the
''Exchange Act'')(a ''Person'') of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (A) the then
outstanding shares of common stock of the Company (the
''Outstanding Company Common Stock'') or (B) the combined
voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of
directors (the ''outstanding Company Voting
Securities''); provided, however, that for purposes of
this paragraph (i), the following acquisitions shall not
constitute a Change of Control: (A) any acquisition
directly from the Company, (B) any acquisition by the
Company, (C) any acquisition by an employee benefit plan
(or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (D) any
acquisition by any corporation pursuant to a transaction
which complies with clauses (A), (B) and (C) of paragraph
(iii) of this Section 2(e); or
(ii) Individuals who, as of June 1, 1998, constitute
the Board (the ''Incumbent Board'') cease for any reason
to constitute at least a majority of the Board; provided,
however, that any individual becoming a director
subsequent to June 1, 1998 whose election, or nomination
for election by the Company's shareholders, was approved
by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with
respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board; or
(i)
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(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company or the
acquisition of assets of another corporation (a ''Business
Combination''), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more
than 50% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the
corporation resulting from such Business Combination
(including, without limitation, a corporation which as a
result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may be,
(B) no Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or related
trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business
Combination and (C) at least a majority of the members of the
board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination;
or
(iv) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
. . .
(ii)
