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:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e) (2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 14a-11(c) or Rule 14a-12
TEXACO INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[TEXACO LOGO]
Texaco Inc.
2000 Westchester Avenue
White Plains, NY 10650
NOTICE OF ANNUAL MEETING
Dear Stockholder:
Your Board of Directors and your management cordially invite you to attend
the 1999 Annual Meeting of Stockholders. Our meeting will be held at the Rye
Town Hilton, 699 Westchester Avenue, Rye Brook, New York on Tuesday, April 27,
1999, at 2:00 p.m.
We intend to present for your approval at this meeting
(1) the election of six directors,
(2) the appointment of auditors for 1999, and
(3) an amendment to the Certificate of Incorporation to increase the number
of authorized shares of Common Stock.
In addition, certain stockholders have notified us that at the meeting,
they intend to present to the meeting proposals regarding:
(4) an independent Chairperson, and
(5) classification of the Board of Directors.
If you were a stockholder of record at the close of business on February
26, 1999, you are entitled to vote at this meeting. You can examine the list of
stockholders entitled to vote at the meeting at the Rye Town Hilton during the
ten days prior to April 27, 1999.
Whether or not you plan to attend the meeting, please complete, sign and
mail promptly in the return envelope the enclosed proxy card. If you are a
stockholder of record, you can also vote over the Internet or use the toll-free
telephone number noted on the proxy card to have your shares voted.
You must have an admission card to be admitted to the meeting. If you are a
stockholder of record, an admission card is included with your proxy card. If
you are not a stockholder of record, you should contact the bank or broker
holding your shares for an admission card.
Kjestine M. Anderson
Secretary
March __, 1999
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
Proxy Statement
General Information 1
Description of Capital Stock 1
Voting of Shares 2
Confidential Voting 2
The Board of Directors
Governance 3
Committees 5
Compensation of Directors 7
Transactions With Directors and Officers 7
Security Ownership of Directors and Management 9
Section 16(a) Reporting Compliance 9
Proposals Before the Meeting
Management Proposals
Item 1 - Election of Directors 10
Item 2 - Approval of Auditors 15
Item 3 - Amendment to the Certificate of Incorporation 15
Stockholder Proposals Relating to:
Item 4 - An Independent Chairperson 16
Item 5 - Classification of the Board of Directors 17
Executive Compensation
Compensation Committee Report 20
Summary Compensation Table 23
Option Grants in 1998 24
Aggregated Option Exercises in 1998 and Year-End Option Values 27
Performance Graph 27
Retirement Plan 28
Stockholder Proposals and Nominations for Directors for the 2000 Annual Meeting 29
</TABLE>
<PAGE>
PROXY STATEMENT
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General Information
We are mailing this proxy statement and accompanying proxy card to you
beginning March __, 1999. The Board of Directors of Texaco Inc. is soliciting
the proxy, and the Company will bear the cost. We may solicit proxies by mail,
telephone, the Internet, facsimile, or in person. We will request persons
holding stock in their names for others, or in the names of nominees for others,
to obtain voting instructions from the beneficial owner, and we will reimburse
them for their reasonable out-of-pocket expenses in obtaining voting
instructions. We have retained Morrow & Co., Inc. to assist us in soliciting
proxies at a fee not to exceed $28,000, plus reasonable out-of-pocket expenses.
We are sending you with this Proxy Statement a copy of our Annual Report to
Stockholders for 1998, including audited financial statements. The Annual Report
is not proxy soliciting material.
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Description of Capital Stock
Excluding __________shares of the Company's Common Stock held in the
Company's treasury, there were outstanding, at February 26, 1999, the following
series of voting securities: ________ shares of Common Stock, and __________
shares of Series B ESOP Convertible Preferred Stock. Each outstanding share of
Common Stock is entitled to one vote, and each outstanding share of Series B
Preferred Stock is entitled to 25.7 votes on all matters properly brought before
the meeting. All the shares of the Series B Preferred Stock are voted by State
Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02104-1389, the independent Trustee of the Company's Employee Stock Ownership
Plan. State Street filed a Schedule 13G with the Securities and Exchange
Commission disclosing that, as of December 31, 1998, it had voting and
dispositive power over 48,620,572 shares, or approximately 8.8% of the Company's
outstanding voting securities, as Trustee of the foregoing plan (as well as
various collective investment funds and personal trust accounts). Under the
terms of this plan, State Street is required to vote shares it holds for the
plan participants in accordance with confidential instructions received from the
participants and to vote all shares for which it shall not have received
instructions in the same ratio as the shares with respect to which instructions
were received.
We have established a grantor trust and contributed to such trust 9,200,000
shares of Common Stock. These shares are held by the Trustee to ensure that we
satisfy our obligations under certain nonqualified deferred compensation plans
and arrangements. The Trustee votes the shares in the trust as the beneficiaries
of the trust instruct it, and it votes shares for which no instructions are
received in the same ratio as the shares with respect to which instructions are
received.
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1
<PAGE>
Voting of Shares
In the election of directors, the six persons receiving the highest number
of "for" votes will be elected. Our proposal to amend our Certificate of
Incorporation requires the "for" votes of both a majority of all issued and
outstanding shares and a majority of the issued and outstanding shares of Common
Stock voting as a separate class. All other proposals require the "for" vote of
a majority of those shares present in person or represented by proxy and
entitled to vote on the subject matter.
Whether you hold shares directly as the stockholder of record or
beneficially in street name, you may direct your vote without attending the
meeting. You may vote by granting a proxy or, for shares you hold in street
name, by submitting voting instructions to your broker or nominee. In most
instances, you will be able to do this over the Internet, by telephone or by
mail. Please refer to the summary instructions below and those included on your
proxy card or, for shares you hold in street name, the voting instruction card
included by your broker or nominee.
By Internet - If you have Internet access, you may submit your proxy from any
location in the world by following the "Vote by Internet" instructions on the
proxy card.
By Telephone - If you live in the United States or Canada, you may submit your
proxy by following the instructions on the proxy card.
By Mail - You may do this by signing your proxy card or, for shares you hold in
street name, the voting instruction card included by your broker or nominee and
mailing it in the enclosed, postage prepaid and addressed envelope.
You may change your proxy instructions at any time prior to the vote at the
annual meeting. For shares held directly in your name, you may do this by
granting a new proxy or by attending the annual meeting and voting in person.
Attendance at the meeting will not cause your previously granted proxy to be
revoked, unless you specifically so request. For shares held beneficially by
you, you may change your proxy instructions by submitting new voting
instructions to your broker or nominee.
Signed, unmarked proxy cards are voted as the Board recommends. The number
of shares abstaining on each proposal are counted and reported as a separate
total. Abstentions are included in the tally of shares represented, but are not
included in the determination of the number of votes cast for or against a
particular item. Therefore, abstentions have the effect of a vote cast against a
particular item. Shares not voted simply as a consequence of brokers voting less
than all of their entitlement on non-discretionary items under the provisions of
New York Stock Exchange Rule 452 are not included in the tally of the number of
shares cast for, against or abstained from any proposal, and will, therefore,
have the effect of reducing the number of shares needed to approve any item.
Unless otherwise indicated on any proxy card, the persons named as your
proxies in the proxy card intend to vote the shares it represents FOR all the
nominees for director, FOR Items 2 and 3 and AGAINST Items 4 and 5.
Confidential Voting
All voted proxies and ballots are handled so as to protect employee and
individual stockholder voting privacy. No such vote shall be disclosed except:
* as necessary to meet any legal requirements;
* in limited circumstances such as a proxy contest in opposition to the Board
of Directors;
* to permit independent Inspectors of Election to tabulate and certify the
vote; and
* to respond to stockholders who have written comments on their proxy cards.
2
<PAGE>
THE BOARD OF DIRECTORS
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Governance
We believe that the cornerstone of good governance is the integrity and
quality of leadership - the Board of Directors and those who the Board chooses
to manage the Company. To help implement this belief, we have established the
following policies and practices:
* Currently 14 of 15 members of the Board are outside, independent
directors, and the following Committees are composed entirely of outside
directors:
- Non-Management Directors
- Audit
- Compensation
- Pension
- Public Responsibility
- Directors and Board Governance
* We ensure that Directors receive a free flow of information about the
Company's business. New directors participate in orientation programs, which
include visits to Company facilities and discussions with management personnel.
Pre-meeting materials include written summaries and supporting data of items
coming before the Board, as well as operational and financial information.
Directors are immediately notified of events and occurrences which are
significant to the company. Senior officers routinely attend Board meetings, and
they and other members of management frequently brief the Board. Board members
take these and other opportunities to discuss company business with these
officers.
* The Board and management discuss and define mutual expectations and
requirements for each other. Guidelines for the Board include:
- loyalty to and pride in Texaco and its reputation;
- independence and integrity;
- representation of the total stockholder constituency;
- good understanding of the business;
- study and understanding of Board issues;
- active, objective and constructive participation at meetings of the
Board and its committees;
- collective breadth of experience;
- appraisal of executive management;
- management succession planning and review;
- assistance in representing Texaco to the outside world; and
- individual availability for consultation on corporate issues.
* The Board has clearly delineated its role and that of management. Its
role is to provide guidance and strategic oversight to management, collectively
and individually, to realize the mutual objective of increasing shareholder
wealth. It is management's responsibility and obligation to conduct the
day-to-day operations in a way that will meet this objective. The Board, in
discharging its fiduciary duty to the owners of the Company, holds management
strictly accountable for the financial results and has delegated to management
the power and responsibility to achieve superior results, while assuring that
management can call on the Board's support, advice and experience.
* We strive for open and continuous communication with institutional
investors, other stockholders and the press.
* The Board periodically evaluates its effectiveness in creating and
protecting value for our stockholders as measured against the following nine
areas of Board involvement and responsibility:
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<PAGE>
1. Review and approval of our tactical plans, monitoring their
accomplishment and comparing our competitive positioning.
2. Review of our strategic plan and our long range goals, the
evaluation of our performance against such plan and goals and
against the competition, and the evaluation of the desirability,
as appropriate, of modifications to such plan and goals.
3. Oversight of our financial health.
4. Monitoring of our activities that pose significant risks and
of our programs to respond to and contain such risks.
5. Review of the performance of our Chief Executive Officer and other
senior officers and their compensation relative to performance.
6. Review of our adherence to our corporate "Vision and Values" which
include our responsibilities to our stockholders, employees, customers
and the community.
7. Preparedness for the selection of a successor Chief Executive Officer,
and the monitoring of our development and selection of key personnel.
8. Selection process for Board membership and the overall quality and
preparedness of its members.
9. Availability of sufficient, accurate and timely information and
appropriate reporting systems to allow senior management and the Board
to reach informed judgments about both our compliance with the law and
our business performance.
* Each committee of our Board annually assesses its performance to
confirm that it is meeting its responsibilities under its charter. Some of the
items that Board committees consider in their self-evaluation are:
- the appropriateness of the scope of its charter;
- appropriateness of matters presented for information and for approval;
- sufficiency of time for consideration of agenda items;
- frequency of meetings;
- length of meetings;
- quality and length of written materials; and
- quality of oral presentations.
* Director candidates are selected on the basis of the contributions they
can make in providing advice and guidance to the Board and management. We are
committed to an inclusive Board with a diversity of experience and outlook. We
have published the following guidelines and criteria for director candidates.
Candidates should have:
- the highest personal and professional ethics, integrity and values;
- the education and breadth of experience to understand business problems
and evaluate and postulate solutions;
- the personality to work well with others with depth and wide
perspective in dealing with people and situations;
- respect for the views of others and not be rigid in approach to
problems;
- a reasoned and balanced commitment to the social responsibilities of
the Company;
- an interest and availability of time to be involved with the Company
and its employees over a sustained period;
- the stature to represent the Company before the public, stockholders
and the other various individuals and groups that affect the Company;
4
<PAGE>
- the willingness to objectively appraise management performance in the
interest of the stockholders;
- an open mind on all policy issues and areas of activity affecting
overall interests of the Company and its stockholders; and
- no involvement in other activities or interests that create a conflict
with the director's responsibilities to the Company and its
stockholders.
* The Board has adopted a compilation of our Corporate Governance Policies,
specifically addressing thirty distinct issues. This compilation is available
from the Secretary.
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Committees
The Board is organized so that a significant portion of its business is
conducted through the following committees:
The Committee of Non-Management Directors, composed of all of the
non-employee directors, was established in 1949. The Chairman, Mr. William
Wrigley, leads the personal performance appraisals of the Chief Executive
Officer and also serves as a contact point on Board issues. It consults on such
matters as the Chief Executive Officer or the Chairman of the committee shall
bring before it with special emphasis on, but not limited to, organization,
executive development, management succession and corporate structure. It reviews
the recommendations of the Compensation Committee concerning the compensation of
Officer-Directors and gives final approval to the salaries for these
individuals. It provides advice and counsel to the Compensation Committee with
respect to our incentive awards programs. This committee provides a forum for
the non-management directors to privately discuss the performance of management.
It held four meetings in 1998.
The Public Responsibility Committee, consisting of Dr. Brademas (Chair),
Mr. Hawley, Dr. Jenifer, Sen. Nunn, Mrs. Smith and Mr. Steere, met three times
in 1998. It reviews and makes recommendations regarding the policies and
procedures affecting our role as a responsible corporate citizen, including
those related to equal employment opportunity, health, environmental and safety
matters, our relationship with our many constituencies and our philanthropic
programs.
The Audit Committee has been composed of non-management directors since its
formation in 1939, 38 years before the New York Stock Exchange imposed this
requirement on listed companies. It held two meetings in 1998. Its members are
Mr. Vanderslice (Chair), Mr. Hawley, Sen. Nunn, Mr. Shoemate, Mrs. Smith, and
Drs. Brademas and Jenifer. Depending on the nature of the matters under review,
outside auditors, and such officers and other employees as necessary, attend all
or part of the meetings of the committee. The committee reviews and evaluates
the scope of the audit, accounting policies and reporting practices, internal
auditing, internal controls, security procedures and other matters deemed
appropriate. The committee also reviews the performance by Arthur Andersen LLP
in their audit of the Company's financial statements and evaluates their
independence and professional competence. It reserves time at each meeting to
meet separately with outside auditors to discuss issues of importance, including
the sufficiency of management cooperation.
The Compensation Committee, which met four times in 1998, is composed of
Messrs. Butcher (Chair), Carpenter, Hawley, Steere,
5
<PAGE>
Vanderslice and Amb. Price. It surveys and reviews compensation practices in
industry to make certain that we remain competitive and able to recruit and
retain highly qualified personnel, and that our compensation structure
incorporates programs that reflect operating and financial performance, motivate
performance that will best serve the stockholders' interest and are in full
compliance with Texaco's "Vision and Values." The committee approves the
compensation of elected officers, incentive plan awards, and may approve any
special benefit plans.
The Finance Committee, consisting of Mr. Bijur (Chair), Mr. Baillie, Ms.
Bush, Amb. Price and Messrs. Butcher, Carpenter, and Wrigley, met three times in
1998. It reviews and makes recommendations to the Board concerning our financial
strategies, policies and structure including: the current and projected
financial position and capital structure; the obtaining of funds necessary for
general operation; cash management activities, such as investment guidelines,
the investment portfolio and cash mobilization systems; exposure to fluctuation
in foreign currency exchange rates and interest rates; and changes in dividend
policy.
The Committee on Directors and Board Governance, consisting of Mrs. Smith
(Chair) and Messrs. Butcher, Carpenter, Vanderslice and Wrigley, met twice in
1998. It maintains oversight of Board governance, operation and effectiveness,
reviews the size and composition of the Board, reviews the qualifications of a
broad range of candidates for Board membership identified from many sources and
recommends candidates to the Board as nominees for election as directors.
The Pension Committee met twice in 1998. The members are Amb. Price
(Chair), Ms. Bush, Mr. Steere and Mr. Wrigley. It approves investment policy and
guidelines, reviews investment performance, and appoints and retains trustees,
insurance carriers and investment managers for funds allocated to our retirement
plans.
The Board of Directors also has an Executive Committee, which may exercise
all of the powers of the Board in the management and direction of the business
and affairs of the Company, except those that by statute are reserved to the
Board of Directors. This committee, consisting of Messrs. Bijur (Chair),
Butcher, Carpenter, and Vanderslice, and Amb. Price, Dr. Jenifer and Mrs. Smith,
met once in 1998.
The Board of Directors held nine meetings in 1998. Overall attendance by
directors at meetings of the Board and its committees on which the directors
served exceeded 95%.
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6
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Compensation of Directors
Employee directors receive no compensation for service on the Board or its
committees. Non-employee directors receive an annual retainer of $30,000, and
$1,250 for each Board and committee meeting attended, as well as an annual fee
of 900 restricted stock-equivalent units which have significant vesting and
transferability restrictions. Committee Chairs receive annual retainers of
$7,000. We pay one half of each annual retainer in Common Stock or restricted
stock-equivalent units. Directors may elect to receive all or any part of the
remaining retainers and fees in Common Stock and to defer payment of fees, in
cash, in Common Stock or in restricted stock-equivalent units.
Directors may participate in a group personal liability and property damage
insurance program which we administer and partially fund.
As part of our corporate-wide effort to encourage charitable giving, we
have established a directors' gift program. Only institutions that are qualified
recipients of grants from the Texaco Foundation may receive gifts under the
directors' program. Upon the death of a director, we will donate up to a total
of one million dollars to one or more qualifying charitable organizations
designated by the director. The directors' program is funded entirely by
insurance policies on the life of each director. We own the policies, pay the
premiums for such insurance ($104,525 for 1998) and are entitled to all tax
deductions resulting from such contributions to charitable organizations.
Individual directors derive no financial benefit from this program.
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Transactions With Directors and Officers
Wilmington Transportation Company provided $568,540 of barge services to us
in 1998. Mr. Wrigley is controlling stockholder and Chairman of the Board of
Santa Catalina Island Company, which, until October 1998, owned all of the stock
of Wilmington Transportation Company.
Sen. Nunn is a member of the law firm of King & Spalding, which has
provided legal services to us for many years.
Mr. Wicker has a three-year employment agreement that commenced on August
1, 1997. The agreement provides for, in addition to participation in benefit
plans and programs for someone at his level, (a) an annual salary of not less
than $400,000; (b) an additional nine years of service credit for Texaco
employee benefit purposes; and (c) a signing bonus consisting of stock options
and Performance Restricted Shares. If his employment is terminated without cause
as the result of a "change of control," in addition to the benefits provided for
officers, he will be entitled to an additional award under the Stock Incentive
Plan so that he receives at least three annual awards.
Mr. O'Connor has an employment agreement that commenced on January 1, 1998,
and is terminable at will. The agreement provides for salary and benefits in
accordance with his position grade, the award of stock options and Performance
Restricted Shares, and an in-service date of January 1, 1978 for welfare benefit
plan purposes.
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In order to encourage executive officers and other key employees selected
by the Board to continue their dedication to their assigned duties in the face
of the possibility of a "change of control," we have entered into three-year
agreements with virtually all executive officers. The agreements will be
automatically extended for one-year periods thereafter, unless terminated by the
Board. They provide that in the event the Company terminates the employee's
employment without just cause, or the employee resigns for good reason,
following a change of control, the employee will be entitled to certain
severance benefits.
A "change of control" would take place if
* at any time during a period of two consecutive years, a majority of the
Board does not consist of "incumbent directors;"
* at any time during a twelve-month period persons who were directors at
the beginning of such period cease to constitute a majority of the Board;
* any person acquires 25% or more of our voting securities; or
* if following a merger or corporate combination Texaco shareholders,
determined prior to the merger or corporate combination, do not own 55% or more
of the merged or combined entity.
The severance benefits, which replace benefits otherwise payable under the
Separation Pay Plan, are:
* three years' base pay;
* three times the highest bonus paid to the employee in the last five
years;
* three times the annual value of benefits accrued under the retirement
plan (deemed to be 10% of three years' base pay and bonus) and the thrift plan
(deemed to be 6% of three years' base pay); and
* continuation of coverage under the company's medical, dental and life
insurance plans. We will gross up such payments to account for any excise taxes
that the Internal Revenue Service may impose on such payments.
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<PAGE>
Security Ownership of Directors and Management
The table below sets forth, as of February 1, 1999, information on Texaco
stock and units owned by our directors and executive officers. Each person has
sole voting and investment power over the shares listed, except as otherwise
noted. Directors and executive officers as a group own less than 1% of each
class of shares outstanding.
Section 16(a) Reporting Compliance
The rules of the Securities and Exchange Commission require that we
disclose late filings of reports of stock ownership (and changes in stock
ownership) by its directors and executive officers. To the best of our
knowledge, based on a review of the relevant forms and written representations
from the directors and officers, there were no late filings during 1998.
<TABLE>
<CAPTION>
Number of Shares or Units
----------------------------------------------------------------------------------
Shares Underlying Stock-Equivalent
Total Stock Common Options Exercisable Series B Restricted
Beneficial Owners Interest Stock Within 60 Days Preferred(1) Units
- ----------------- ----------- ------ ------------------- ------------ -----------------
<S> <C> <C> <C> <C> <C>
A. Charles Baillie 3,390 3,000 -- -- 390
Peter I. Bijur 550,683 274,447 268,618 296 --
C. Robert Black 294,788 144,595 144,042 239 --
John Brademas 7,117 3,768 -- -- 3,349
Mary K. Bush 2,106 30 -- -- 2,076
Willard C. Butcher 8,745(2) 5,396 -- -- 3,349
Edmund M. Carpenter 7,721 776 -- -- 6,945
Michael C. Hawley 7,587 400 -- -- 7,187
Franklyn G. Jenifer 5,585 200 -- -- 5,385
Patrick J. Lynch 254,665 135,347 113,605 222 --
Sam Nunn 3,061 416 -- -- 2,645
John J. O'Connor 31,212 12,214 18,998 -- --
Charles H. Price, II 13,334 3,467 -- -- 9,867
Charles R. Shoemate 3,029 2,500 -- -- 529
Robin B. Smith 6,868(3) 600 -- -- 6,268
William C. Steere, Jr. 14,121 1,400 -- -- 12,721
Glenn F. Tilton 265,761 142,121 118,519 199 --
Thomas A. Vanderslice 41,702 22,948 -- -- 18,754
William M. Wicker 27,144 11,661 15,483 -- --
William Wrigley 66,976(4) 63,627 -- -- 3,349
Directors and Executive
Officers as a group 3,165,562 1,528,854 1,472,774 3,152 82,814
<FN>
(1) Each share of Series B Preferred Stock is convertible into 25.7 shares
of Common Stock.
(2) Does not include 42 shares held by Mr. Butcher's wife as custodian for
their minor son, as to which Mr. Butcher disclaims beneficial interest.
(3) Mrs. Smith may be deemed to share voting and investment power as to
00,000,000 shares of Common Stock, owned by one or more of the
Prudential Investments mutual funds of which she is a director.
(4) Does not include 249,592 shares owned of record by the Wm. Wrigley Jr.
Company Foundation, of which Mr. Wrigley is Chairman of the Board and
among the officers authorized to vote the shares held by the
Foundation, or 2,000 shares held in a trust, of which Mr. Wrigley is
the trustee with sole voting and investment power, for the benefit of
his son. Mr. Wrigley disclaims any beneficial interest in such shares.
</FN>
</TABLE>
9
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PROPOSALS BEFORE THE MEETING
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Item 1-Election of Directors
Our Board is divided into three classes of directors. At each annual
meeting of stockholders, members of one of the classes, on a rotating basis, are
elected for a three-year term.
In accordance with our Certificate of Incorporation and By-Laws, the Board
of Directors fixed the total number of directors at 13, effective April 27,
1999.
The Board has designated six persons as nominees for election as directors
at the Annual Meeting. All of the nominees are currently directors and, except
for A. Charles Baillie and Charles R. Shoemate, were previously elected by the
stockholders.
We have no reason to believe that any of the nominees will be disqualified
or unable or unwilling to serve if elected. However, if any nominee should
become unavailable for any reason, proxies may be voted for another person
nominated by the present Board of Directors to fill the vacancy, or we may
reduce the size of the Board.
Following is certain biographical information concerning the nominees, as
well as those directors whose terms of office are continuing after the meeting.
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NOMINEES FOR THE THREE-YEAR TERM EXPIRING AT
THE 2002 ANNUAL MEETING
[photo]
Michael C. Hawley, 61, President, Chief Executive Officer designate
and a director of The Gillette Company since April 1995, has been a
director since 1995. After joining Gillette in 1961, he held management
positions of increasing responsibility in a variety of countries and
returned to Boston in 1985 when he was appointed Vice President, Operations
Services, and elected a corporate Vice President. In 1989 he was elected
President of Oral-B Laboratories, a Gillette subsidiary, and in 1993 was
elected Executive Vice President, International Group. He is also a
director of Arthur D. Little, Inc. and the John Hancock Mutual Life
Insurance Co.
[photo]
Charles R. Shoemate, 59, Chairman, President and Chief Executive Officer of
Bestfoods was elected to the Board on October 23, 1998. He joined
Bestfoods, formerly CPC International, in 1962 and progressed through a
variety of positions in manufacturing, finance and business management
within the consumer foods and corn refining businesses. He was elected
President and a member of its Board of Directors in 1988; Chief Executive
Officer in August 1990 and Chairman in September 1990. He is a director of
CIGNA Corporation, International Paper and chairman of the Conference
Board. He is a member of the Business Roundtable and the Board of Directors
of the Grocery Manufacturers of America.
[photo]
Robin B. Smith, 59, Chairman and Chief Executive Officer of Publishers
Clearing House since August 1996 and President and Chief Executive Officer
since 1988, was elected a director in 1992. Prior to joining Publishers
Clearing House in 1981 as President and Chief Operating Officer, she
concluded her sixteen year career with Doubleday & Co., Inc. as President
and General Manager of its Dell Publishing subsidiary. She is a director of
Springs Industries, Inc., BellSouth Corporation, Kmart Corporation and a
number of Prudential mutual funds.
11
<PAGE>
[photo]
William C. Steere, Jr., 62, Chairman and Chief Executive Officer of Pfizer
Inc., was elected a director in 1992. Mr. Steere began his career with
Pfizer, a diversified pharmaceutical company with global operations, and
attained the positions of President of Pfizer Pharmaceutical Group and
President and Chief Executive Officer before elevation to his present
position in 1992. He is a director of Metropolitan Life Insurance Company,
Dow Jones & Company, Inc., the New York Botanical Garden, Minerals
Technologies Inc., WNET-Thirteen, The Business Roundtable and the New York
University Medical Center. He is also past chairman of the Board of
Directors of the Pharmaceutical Manufacturers Association.
[photo]
William Wrigley, 66, President, Chief Executive Officer and a director of
Wm. Wrigley Jr. Company, has been a director since 1974. He is Chairman of
the Board, Chairman of the Executive Committee and a director of Santa
Catalina Island Company; a director of American Home Products Corporation
and Grocery Manufacturers of America, Inc. He also serves as a Trustee of
the University of Southern California and is a Benefactor and Life Member
of the Santa Catalina Island Conservancy.
12
<PAGE>
NOMINEE FOR THE TERM EXPIRING AT
THE 2000 ANNUAL MEETING
[photo]
A. Charles Baillie, 59, Chairman and Chief Executive Officer of the
Toronto-Dominion Bank was elected a Director on December 11, 1998. He was
elected Chief Executive Officer of Toronto Dominion Bank in 1997 and
Chairman of the Board earlier this year. He joined the financial
institution in 1964 and progressed through a variety of assignments both in
the United States and Toronto. He was elected Vice Chairman in 1992 and
President in 1995. Baillie serves as a director of the Dana Corporation and
Cadillac Fairview Corporation. He is on the Executive Committee of the
British-North American Committee, an honorary governor of The Shaw Festival
and a board member of the Calmeadow Foundation. Baillie will serve as the
Chairperson of Toronto's United Way Campaign and currently is on the
Executive Committee of the University of Toronto's campaign.
DIRECTORS CONTINUING IN OFFICE UNTIL
THE 2000 ANNUAL MEETING
[photo]
Edmund M. Carpenter, 57, President and Chief Executive Officer of Barnes
Group, Inc., was elected a director in 1991. He was Sr. Managing Director
of Clayton, Dubilier & Rice, Inc. since 1997 and Chairman and Chief
Executive Officer of General Signal Corporation from 1988 to 1995. Prior to
serving with General Signal, he was President, Chief Operating Officer and
a director of ITT Corporation. He is a director of Campbell Soup Company
and Dana Corporation.
[photo]
Franklyn G. Jenifer, 59, President of the University of Texas at Dallas,
has been a Director since 1993. Following an academic career as a professor
of biology, he was President of Howard University from 1990 to 1994. Prior
to that he was Chancellor of the Massachusetts Board of Regents of Higher
Education, and from 1979 to 1986, Vice Chancellor of the New Jersey
Department of Higher Education. He serves on the Board of the Corporation
of Woods Hole Oceanographic Institution, the Board of Trustees of
Universities Research Association, Inc. and of the Texas Health Research
Institute, the Board of Directors of the United Way of Metropolitan Dallas,
the Monitoring Committee for the Louisiana Desegregation Settlement
Agreement, and the Texas Science and Technology Council.
[photo]
Thomas A. Vanderslice, 67, a private investor, has been a director since
1980. He was formerly President of TAV Associates, Chairman of the Board,
President and Chief Executive Officer of M/A-COM, Inc., Chairman and Chief
Executive Officer of Apollo Computer, Inc., President and Chief Operating
Officer of GTE Corporation, and an officer of General Electric Company. He
is a member of the Board of Trustees of Boston College and of the Board of
Directors of W. R. Grace & Co., the National Academy of Engineering, the
American Chemical Society, and the American Institute of Physics.
13
<PAGE>
DIRECTORS CONTINUING IN OFFICE UNTIL
THE 2001 ANNUAL MEETING
[photo]
Peter I. Bijur, 56, Chairman of the Board and Chief Executive Officer of
Texaco Inc., was elected a director in 1996. He joined the Company in 1966
and was elected a Vice President in 1983. In 1990 he was appointed
President of Texaco Europe. He was elected a Senior Vice President of
Texaco Inc. in 1992. He is a Director of International Paper Company and
the American Petroleum Institute. He is also a member of The Business
Council, The Business Roundtable, The Conference Board, the National
Petroleum Council, and the Council on Foreign Relations. In addition, he
currently serves on the Board of Trustees of Middlebury College and New
York University Medical Center. He is a Managing Director of the
Metropolitan Opera Association, Inc., Director of the New York Botanical
Garden and a Fellow both of the Institute of Petroleum and the Royal
Society of Arts in London.
[photo]
Mary K. Bush, 50, President of Bush & Company, an international financial
consulting firm, joined the Board in 1997. Prior to founding Bush &
Company, she served from 1989 to 1991 as Managing Director of the U.S.
Federal Housing Board. Prior to that position, she was Vice President -
International Finance at the Federal National Mortgage Associate (Fannie
Mae). From 1984 to 1988, she served as U.S. Alternate Executive Director of
the International Monetary Fund (IMF). She serves on a number of boards and
advisory boards, including Mortgage Guaranty Insurance Corporation, a
number of Pioneer mutual funds, Novecon Management Company, Washington
Mutual Investors Fund, March of Dimes, Hoover Institution, Wilberforce
University, the Folger Shakespeare Library, Project 2000, Inc., Small
Enterprise Assistance Funds and the Bretton Woods Committee.
[photo]
Sam Nunn, 60, former U.S. Senator from Georgia, was elected to the Board in
1997. He was a member of the U.S. Senate from 1972 to 1997, where he served
as chairman of the Senate Armed Services Committee. He is a senior partner
in the Atlanta law firm of King & Spalding, where his practice focuses on
international and corporate matters. He is also a distinguished professor
in the Sam Nunn School of International Affairs at Georgia Tech. Among the
non-profit boards on which he serves are the Center for Strategic and
International Studies, the Aspen Strategy Group, the Carnegie Corporation
of New York and Emory University. He also serves on the boards of The
Coca-Cola Company, General Electric Company, National Service Industries,
Inc., Total System Services, Inc. and Scientific-Atlanta, Inc.
[photo]
Charles H. Price, II, 67, former Chairman of Mercantile Bank of Kansas City
and former United States Ambassador to the United Kingdom (1983-1989) and
Belgium (1981-1983), became a director in 1989. He is an advisory director
of the Mercantile Bancorporation, Inc. and of Mercantile Bank of Kansas
City, The New York Times Company, Hanson PLC and U.S. Industries, Inc.
Prior to service as a United States Ambassador, he had been Chairman of the
Board of the Price Candy Company, American Bancorporation and American Bank
and Trust Company.
14
<PAGE>
Item 2-Approval of Auditors
We will present the following resolution concerning the appointment of
independent auditors at the meeting:
"RESOLVED, that the appointment by the Board of Directors of the
Company of Arthur Andersen LLP to audit the financial statements of the
Company and its subsidiaries for the fiscal year 1999 is hereby ratified
and approved."
Arthur Andersen LLP has been auditing our accounts for many years. In
recommending the approval by the stockholders of the appointment of that firm,
the Board of Directors is acting upon the recommendation of the Audit Committee,
which has satisfied itself as to the firm's professional competence and
standing.
Representatives of Arthur Andersen LLP will be present at the meeting with
the opportunity to make a statement and to respond to questions.
Item 3-Amendment to the Certificate of Incorporation
The Board of Directors has unanimously adopted and recommends that you
consider and approve an amendment to Article IV of our Restated Certificate of
Incorporation. This amendment would (1) increase the total number of shares of
all classes of stock which the company shall have authority to issue from
730,000,000 to 880,000,000, and (2) increase the number of authorized shares of
Common Stock from 700,000,000 to 850,000,000.
We consider it desirable to have the flexibility to authorize and issue an
additional amount of Common Stock without further stockholder action, unless we
are required to obtain stockholder approval by applicable law or stock exchange
regulations. This will enable us to act quickly, if we have the opportunity to
make an acquisition or raise capital on terms that we deem to be in the best
interests of the company and its stockholders.
If the stockholders approve the amendment, the first paragraph of Article
IV of the Certificate would be replaced in its entirety by the following:
The total number of shares of all classes of stock which the
company shall have the authority to issue is 880,000,000, consisting of
30,000,000 shares of Preferred Stock of the par value of $1.00 each and
850,000,000 shares of Common Stock of the par value of $3.125 each.
As of February 26, 1999, 000,000,000 shares of Common Stock were
outstanding and 00,000,000 shares were held in treasury. The proposed amendment
would not increase the number of authorized preferred shares, which would remain
at 30,000,000.
In March 1998, we announced a program to repurchase up to $1 billion of our
Common Stock. Through March 00,1999, we had repurchased $000 million of our
stock under this program. We have temporarily suspended purchases under that
program.
Each share of Common Stock currently has one vote, shares equally on
liquidation and does not have preemptive rights to subscribe to additional
securities that we may issue.
Approval of Item 3 requires both (1) a majority of the issued and
outstanding shares of Common Stock and Series B ESOP Convertible Preferred Stock
entitled to notice of and to vote at the meeting voting together as a class, and
(2) the majority of the issued and outstanding shares of Common Stock voting as
a separate class.
15
<PAGE>
The Board of Directors recommends that you vote FOR Item 3.
----------
Stockholder Proposals
Following are two proposals submitted by stockholders, contained in Items
4 and 5. You may obtain the names, addresses and shareholdings of the
proponents by calling or writing our Secretary.
Item 4-Stockholder Proposal Relating to an Independent Chairperson
RESOLVED, that the stockholders of Texaco Inc. (the "Company") recommend
that the Board of Directors take steps necessary to amend the Company's Bylaws
to require that the Board's Chairperson be an Independent Director. For purposes
of this proposal, the stockholders further recommend that the term "Independent
Director" means a director who: (i) has not been employed by the Company in an
executive capacity within the last five years; (ii) is not, and is not
affiliated with a company that is, an advisor or consultant to the Company;
(iii) is not affiliated with a significant customer or supplier of the Company;
(iv) has no personal services contract(s) with the Company; (v) is not
affiliated with a not-for-profit entity that receives significant contributions
from the Company; (vi) within the last five years, has not had any business
relationship with the Company (other than service as a director) for which the
Company has been required to make disclosure under Regulation S-K of the
Securities and Exchange Commission; (vii) is not employed by a public company at
which an executive officer of the Company serves as a director; (viii) has not
had a relationship described in (i) through (vii) above with any affiliate of
the Company; and (ix) is not a member of the immediate family of any person
described in (i) through (viii) above. This provision may only be amended by the
affirmative vote of the holders of the outstanding common stock of the Company.
Supporting Statement
It's obvious that the Board - and most particularly its Chairperson - is of
paramount importance to the success of the Corporation. This is why I am
sponsoring this proposal which urges the Board to amend the Company's bylaws so
that the Board's leader will be a person who is independent of the Company and
its officers. Through this proposal we seek to promote strong, objective
leadership on the Board.
A Board of Directors must formulate corporate policies and monitor
management's implementations of those policies. The Chairperson is responsible
for leading the Board in these tasks, and ensuring that directors are given the
information necessary to perform their duties. In our view, when the Board's
Chairperson is also an officer, employee or otherwise closely related to the
Company's management, it is difficult to objectively perform this monitoring and
evaluation function. We believe that an independent Chairperson would best
ensure that the interests of the stockholders are served, rather than the
interests of the management.
The benefits of independent directors are generally well accepted. The New
York Stock Exchange, for example, requires that at least two members of the
board of a listed company, and all members of the Company's audit committee,
must meet the Exchange's standards of independence. The Investment Company Act
of 1940 (the law that governs the activities of investment companies) also
includes an independent director provision, generally requiring investment
company boards to be comprised of at least 40% "disinterested" directors.
The support for this proposal, which
16
<PAGE>
was first submitted for consideration at the 1998 meeting, resulted in a
positive vote of 108,171,418 shares or 25.7% of all shares voted.
Your positive consideration of this proposal is appreciated.
The Board of Directors recommends a vote AGAINST this proposal for the
following reasons:
* Stockholders rejected a similar proposal last year.
* We believe Texaco is currently best served by having one person,
Mr. Bijur, serve as both Chairman and CEO, to act as a bridge between the
Board and the operating organization and provide critical leadership for
our strategic and tactical initiatives.
* There is no need to separate the two offices, because the independent
director who chairs the Non-Management Committee serves as the "lead
director," a function similar to that of an independent Chairman.
* 14 of the 15 current directors on our Board, or 93%, are
independent directors from outside the company. There are no retired
Texaco officers or employees on the Board. This proportion far exceeds the
40% provision of the Investment Company Act of 1940 cited by the
shareholder proponent.
* Six of our Board committees are composed entirely of outside directors.
These are the Audit, Compensation, Pension, Public Responsibility,
Non-Management and Board Governance committees.
* The proposed by-law is mandatory and would diminish the ability of our
Board to organize its functions and conduct business in the manner it deems
most efficient. Our Board should retain the discretion to make the
determination to separate the positions of Chairman and Chief Executive
Officer if the interests of the stockholders would be best served by the
separation.
* This responsibility of the Board to organize its own business is
specifically recognized in the "Policy Statement on Corporate Governance"
of the Teachers Insurance and Annuity Association - College Retirement
Equities Fund, a major institutional investor widely recognized for its
leadership in Corporate Governance.
In summary, we oppose the resolution because 1) we have already taken steps
to assure the independence of our Board by having 14 out of 15 independent
directors and a lead director, and 2) the proposal would reduce the Board's
flexibility to select a style of leadership depending on the circumstances.
Therefore, the Board of Directors recommends a vote AGAINST this proposal.
----------
Item 5-Stockholder Proposal Relating to Classification of the Board
of Directors
RESOLVED: That the stockholders of Texaco request that the Board of
Directors take the steps necessary to declassify the elections of Directors by
providing that at future Board elections new directors be elected annually and
not by classes as is now provided. The declassification shall be phased in that
it does not affect the unexpired terms of Directors previously elected.
Supporting Statement
This resolution requests that the Board end the staggered board system in
place at Texaco and instead have all our Directors
17
<PAGE>
elected annually. Presently Texaco has 3 classes of Directors and 1/3 of our
Board is elected each year and each Director now serves a 3 year term.
Increasingly, institutional investors are calling for the end of this
system of staggered voting. They believe it makes a Board less accountable to
shareholders when directors do not stand for annual election. Significant
institutional investors such as the Public Employees Retirement System of the
State of California, New York City pension funds, New York State pension funds
and many others have been supporting this position. As a result shareholder
resolutions to end this staggered system of voting have been receiving
increasingly large votes. In fact this resolution received a massive vote at
Texaco's 1996 and 1997 stockholder meeting of over 43% indicating that many
Texaco shareholders feel the time has come for this reform. Numerous companies
have demonstrated leadership by changing this practice. Included among them are
Westinghouse, Chemical Bank, Commonwealth Edison of Chicago, and the Equitable
companies.
We believe this is a practice in which corporations seeking to be
accountable to their investors are increasingly putting into place. Studies by
the Chief Economist of the SEC have shown that adoption of a classified Board
tends to depress a company's stock price and may be contrary to shareholder
interests.
The election of corporate directors is a primary avenue for shareholders to
influence corporate affairs and exert accountability on management. We strongly
believe that our company's financial performance is linked to its corporate
governance policies and procedures and the level of management accountability
they impose. Therefore, as shareholders concerned about the value of our
investment, we're concerned by our company's current system of electing only
one-third of the Board of Directors each year. On other governance issues Texaco
is often considered a leader. We believe this staggering of director terms
prevents shareholders from annually registering their views on the performance
of the board collectively and each director individually.
Most alarming, a staggered board can help insulate directors and senior
executives from the consequences of poor financial or social performance by
denying shareholders the opportunity to challenge an entire Board which is
pursuing failed policies.
In addition, socially concerned investors also support this reform
believing the Board should annually be accountable on issues like diversity and
the environment as well as on financial performance.
Please vote for this important corporate governance reform or your vote
will be cast against it.
The Board of Directors recommends a vote AGAINST this proposal for the
following reasons:
* Stockholders rejected a similar proposal last year.
* Our classified Board structure was overwhelmingly approved by our
stockholders in 1984 by a vote of 86.4% as part of a corporate governance
system to help us carry out our long-term business strategy and protect
stockholders against raids on their stock value by a hostile acquisition.
* In the event of a bid to acquire the Company, the "classified"
structure encourages the persons seeking control to initiate arm's-length
negotiations with the Board. The Board is then in a better position to
negotiate a transaction to achieve the best price for all stockholders, not
just those with a large block or a certain class of shares.
18
<PAGE>
* A classified Board structure helps ensure stability because, at any given
time, a majority of Directors possess the experience and depth of
understanding which comes from service on the Board.
* Leading institutional investors and commentators have recognized the
benefits inherent in a classified Board. For example, the Teacher's
Insurance and Annuity Association - College Retirement Equities Fund has
concluded that a classified Board is in full accordance with the principles
of good corporate governance, and has recognized and supported the right of
a Board to organize its functions and business in the manner it deems most
efficient.
We believe that a classified Board protects the interests of all Texaco's
stockholders. The continuity and depth of knowledge that results from a
classified Board provides the proper environment in which to foster the creation
of long-term value for all stockholders.
Therefore, the Board of Directors recommends a vote AGAINST this proposal.
----------
19
<PAGE>
EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
Compensation Committee Report
The Compensation Committee of the Board of Directors is composed entirely
of independent outside directors. We are responsible for the compensation of the
Company's officers and the incentive programs for all management personnel.
The management pay structure and award opportunities are designed to be
competitive with a group of five other oil companies. In addition, we survey the
compensation practices of a group of non-oil companies, selected based on size,
complexity and operational challenge in relation to Texaco to benchmark Texaco's
compensation practices. All of these companies were included in the S&P 500
Index, and four of the oil companies were also included in the S&P Integrated
International Oil Index.
In addition, each year we compare Texaco's return to stockholders with that
of Texaco's competitors. That comparison is reflected in the graph on page 27.
The Compensation Program
The compensation program is composed of three elements:
* Salary
* Performance bonus
* Long-term stock-based incentives.
Salary is fixed at a competitive level to attract and retain the highest
caliber of employees. Bonuses are based on performance with respect to financial
objectives, as well as objectives relating to respect for the individual, safety
and workforce diversity. Long-term awards are tied to total return to
stockholders compared to other oil companies. This mix of compensation elements
places more of total compensation at risk and emphasizes performance.
As a person's level of responsibility increases, a greater portion of
potential total compensation opportunity is shifted from salary to
performance-based incentives and to greater reliance on growing total return to
stockholders through stock-based awards. This directly aligns the interests of
these managers with the interests of stockholders.
Salary. We set executive level salary ranges consistent with the ranges for
all Texaco salaried employees. We adjust the ranges, as necessary, to maintain
their competitiveness with those of the other five comparator oil companies. We
maintain individual salaries within the appropriate range for a position and
review them annually. We determine actual salaries based on individual
performance, experience and position in the range.
In accordance with these guidelines, we raised executive salary ranges by
3% for 1998. We set Mr. Bijur's salary in 1998 in the same general manner as for
other members of the management team. Mr. Bijur's annual salary was increased in
1998 by 11.8%. This merit increase reflected Mr. Bijur's 1997 successes in
achieving record operating earnings, progress toward diversity objectives,
reserve replacements exceeding 160% of production and acquisition of new
reserves, and the completion of a downstream alliance in the U.S. with the Shell
Oil Company. We also considered the fact that Mr. Bijur's salary was below the
median of the salaries of chief executive officers of the comparator companies.
For 1999, Mr. Bijur and the entire executive management team, which includes all
bonus eligible employees, will forego any merit increase due to the performance
of the Company.
20
<PAGE>
Performance Bonus. We established competitive target bonus opportunities
for each position grade level. Participants in the incentive bonus program can
earn more or less than the target bonus, depending on the achievement of certain
financial and non-financial objective measures such as:
Financial Measures
* Earnings Growth vs. Peers
* Cash Growth vs. Peers
* Return on Capital Employed vs. Peers
* Earnings vs. Plan
Non-Financial Measures
* Respect for the Individual
* Safety
* Contributions in Fostering Diversity
The bonus formula for non-officer participants also contains additional
subjective elements:
* Overall contribution to corporate and/or business unit performance
* Managerial ability
* Initiative
* Fostering the Company's "Visions and Values"
* Compliance with the Corporate Conduct Guidelines
* Fostering Diversity
We based Mr. Bijur's bonus and those of the other elected officers entirely
on the Company's performance with respect to the 1998 objective measures. Mr.
Bijur's bonus and those of the other corporate officers were less than 64% of
the target bonus. Target bonus represents the bonus had all the corporate
objectives been met, which they were not. The 1998 bonus was 54% below the 1997
bonus.
Long-Term Stock-Based Incentives. The long-term incentive program consists
of stock options and performance restricted shares. Performance restricted
shares vest based on the Company's total return to stockholders versus the S&P
Integrated International Oil Index. This program:
* Emphasizes total return to stockholders
* Motivates stock ownership by the management by awarding them stock
rather than cash
* Encourages retention and continuity of management.
While we have not established obligatory levels for equity holdings by
management personnel, we have designed and administered the long-term incentive
award program to encourage share ownership. We review the officers' stock
ownership each year. In general, the officers have stock holdings in excess of
typical targets or mandatory levels that have been established by some
companies. At December 31, 1998, the nineteen officers had, on average, holdings
in Texaco stock in excess of 11 times their 1998 salaries. The value of the
long-term incentive awards are intended to be fully competitive with the
programs offered by the comparator companies.
1998 Review. During 1998, we specifically requested an outside independent
consultant to study and advise us with respect to the following:
* The appropriate measures and weighting of the performance factors for the
Incentive Bonus Plan
* The appropriate Stock Incentive Plan target award levels based on
comparator company practices
* The composition of the comparator group.
As a result of the consultant's report and recommendations, we concluded
that the target levels of awards under the Incentive Bonus Plan were competitive
and the Stock Incentive Plan target had fallen below competitive levels.
Therefore, we increased the level of long-term awards for 1998. We also changed
the composition of
21
<PAGE>
the comparator groups to reflect changed circumstances.
Deductibility. Texaco's incentive bonus and stock incentive plans are
performance-based plans. Therefore, under Internal Revenue Code Section 162 (m),
compensation paid in 1998 under these plans is fully deductible and it is our
intention to continue to maximize deductibility to the extent practicable.
Our Conclusion. In conclusion, we firmly believe that the quality and
motivation of all of Texaco's employees, including its managers, make a
significant difference in Texaco's long-term performance. We also believe that
stockholders directly benefit from compensation programs that:
* Reward superior performance
* Contain an appropriate downside risk element when performance falls short
of clearly defined standards
* Give appropriate flexibility to administer these programs to achieve
their objectives.
We believe that Texaco's management compensation programs meet these
requirements and will continue to be an important factor in driving the
Company's success.
Willard C. Butcher
Chairman
Edmund M. Carpenter
Michael C. Hawley Charles H. Price, II
William C. Steere Thomas A. Vanderslice
22
<PAGE>
The following compensation information is furnished for service performed
by the Chief Executive Officer and the five other most highly compensated
Executive Officers for the three years indicated.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation Awards
-------------------------------------- ------------------------
Securities
Other Restricted Underlying All
Name and Principal Annual Stock Options/ Other
Position Year Salary($) Bonus($)Compensation($)(2) Awards($)(3) SARs(#) Compensation($)(4)
- ------------------ ---- --------- ------- ----------------- ------------ --------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
P.I. Bijur 1998 925,000 5,407 1,853,438 546, 797 55,500
Chairman of the 1997 825,000 1,046,047 5,139 1,291,547 326,304 49,500
Board/CEO 1996 638,833 939,089 4,985 971,904 310,146 38,322
C.R. Black 1998 431,500 61,901 419,248 194,089 25,890
Senior Vice 1997 418,250 275,634 7,604 315,020 213,895 25,095
President 1996 406,667 278,634 7,206 179,341 133,808 24,420
P.J. Lynch 1998 428,750 5,573 501,911 174,560 25,725
Senior Vice 1997 410,000 321,710 5,288 315,020 161,157 24,600
President/CFO 1996 366,667 278,634 4,994 188,337 129,934 21,888
J.J. O'Connor 1998 450,000 49,515 710,324 85,498 63,989
Senior Vice
President
G.F. Tilton 1998 400,250 12,709 419,248 186,053 24,015
Senior Vice 1997 379,750 298,701 28,343 318,871 173,988 96,483
President 1996 360,000 342,934 39,279 230,351 140,630 52,415
W.M. Wicker 1998 409,000 4,533 419,248 52,026 8,240
Senior Vice 1997 166,665(1) 321,710 -0- 260,130 31,668 -0-
President
<FN>
(1) Mr. Wicker commenced employment on 8/4/97 at a salary of $400,000 per year.
(2) This column includes our aggregate incremental cost of providing various
perquisites and personal benefits in excess of reporting thresholds
including, for Mr. Black in 1998, $25,394 for financial planning services
and $20,970 for personal use of Company aircraft and $15,537
attributable to country club membership.
(3) Messrs. Bijur, Black, Lynch, O'Connor, Tilton and Wicker had restricted
stockholdings of 244,829; 113,091; 115,843; 12,214; 131,900; and 11,661
shares, respectively, as of December 31, 1998. The shares had a market
value of $12,975,937; $5,993,823; $6,139,679; $647,342; $6,990,700; and
$618,033, respectively, at December 31, 1998, based on a value of $53.00
per share. These share numbers and values include the awards since the last
proxy statement which are reported in the "Restricted Stock Awards" column
above. Dividends are paid on the restricted stock at the same time and rate
as dividends paid to holders of unrestricted stock.
(4) Matching contributions to the qualified and nonqualified Employees Thrift
Plan and moving expenses associated with job reassignment are provided on
the same basis for all employees.
</FN>
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
OPTION GRANTS IN 1998
Individual Grants of Options
- ---------------------------------------------------------------------------------------------------------------
Number
of
Securities
Underlying % of Total Exercise or Grant Date
Options Options Base Expiration Present
Name Date Granted(#) Granted Price($/Sh.) Date Value $*
- ---- ---- ---------- ------- ------------ ---- --------
<S> <C> <C> <C> <C> <C> <C>
P.I. Bijur 06/26/98 210,000 2.263% 61.78125 06/26/2008 1,824,900
C.R. Black 06/26/98 47,502 0.466% 61.78125 06/26/2008 412,792
P.J. Lynch 06/26/98 56,868 0.558% 61.78125 06/26/2008 494,183
J.J. O'Connor 01/02/98 37,996 0.373% 53.62500 01/02/2008 277,371
06/26/98 47,502 0.466% 61.78125 06/26/2008 412,792
G.F. Tilton 06/26/98 47,502 0.466% 61.78125 06/26/2008 412,792
W.M.Wicker 06/26/98 47,502 0.466% 61.78125 06/26/2008 412,792
</TABLE>
Individual Grants of Restored Options
- --------------------------------------------------------------------------------
All options include a restoration feature, by which participants receive
options to replace shares that they are using to either (1) pay the Company for
shares they are acquiring when they exercise a stock option or (2) satisfy their
tax withholding obligations. Since restored options are granted at an exercise
price which is equal to the market price of the Company's Common Stock on the
day of grant, they are issued at an exercise price which is at a higher price
than the exercise price of the original grant. Options vest 50% after one year
and are fully exercisable after two years. Restored options are fully
exercisable after six months and expire at the date of the original grant. All
of the option grants listed below are restored options.
<TABLE>
<CAPTION>
Number
of
Securities
Underlying % of Total Exercise or Grant Date
Options Options Base Expiration Present
Name Date Granted(#) Granted Price($/Sh.) Date Value $*
- ---- ---- ---------- ------- ------------ ---- --------
<S> <C> <C> <C> <C> <C> <C>
P.I. Bijur 01/02/98 5,615 0.055% 54.65625 01/02/2000 42,000
01/02/98 3,913 0.038% 54.65625 06/28/2001 29,269
01/02/98 7,403 0.073% 54.65625 06/26/2002 55,374
01/02/98 8,379 0.082% 54.65625 06/24/2004 62,674
01/02/98 5,846 0.057% 54.65625 02/24/2005 43,728
01/02/98 12,834 0.126% 54.65625 06/23/2005 95,998
03/12/98 2,578 0.025% 57.90625 05/09/1999 20,624
03/12/98 3,689 0.036% 57.90625 01/02/2000 29,512
03/12/98 4,751 0.047% 57.90625 06/22/2000 38,008
03/12/98 3,349 0.033% 57.90625 06/26/2002 26,792
03/12/98 58,746 0.577% 57.90625 06/28/2006 469,968
04/28/98 5,501 0.054% 61.62500 05/09/1999 48,244
04/28/98 1,222 0.012% 61.62500 01/02/2000 10,717
04/28/98 3,899 0.038% 61.62500 06/22/2000 34,194
04/28/98 5,366 0.053% 61.62500 06/28/2001 47,060
04/28/98 3,089 0.030% 61.62500 06/26/2002 27,091
04/28/98 13,157 0.129% 61.62500 06/25/2003 115,387
04/28/98 5,078 0.050% 61.62500 06/24/2004 44,534
04/28/98 11,379 0.112% 61.62500 06/23/2005 99,794
07/02/98 5,060 0.050% 60.65625 01/01/2000 42,808
07/02/98 3,526 0.035% 60.65625 06/28/2001 29,830
07/02/98 5,281 0.052% 60.65625 06/26/2002 44,677
07/02/98 56,081 0.550% 60.65625 06/28/2006 474,445
09/14/98 1,401 0.014% 60.21875 06/26/2002 11,236
09/14/98 7,606 0.075% 60.21875 06/24/2004 60,968
09/14/98 5,306 0.052% 60.21875 02/24/2005 42,554
09/14/98 11,649 0.114% 60.21875 06/23/2005 93,425
09/14/98 50,904 0.500% 60.21875 07/01/2007 408,250
10/28/98 22,351 0.219% 60.15625 07/01/2007 171,879
10/28/98 1,838 0.018% 60.15625 07/02/2007 14,134
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Number
of
Securities
Underlying % of Total Exercise or Grant Date
Options Options Base Expiration Present
Name Date Granted(#) Granted Price($/Sh.) Date Value $*
- ---- ---- ---------- ------- ------------ ---- --------
<S> <C> <C> <C> <C> <C> <C>
C.R. Black 03/12/98 3,022 0.030% 57.90625 01/02/2000 24,176
03/12/98 2,935 0.029% 57.90625 06/22/2000 23,480
03/12/98 6,545 0.064% 57.90625 06/26/2002 52,360
03/12/98 3,353 0.033% 57.90625 06/25/2003 26,824
03/12/98 2,390 0.023% 57.90625 06/24/2004 19,120
04/28/98 8,231 0.081% 61.62500 05/09/1999 72,186
04/28/98 6,511 0.064% 61.62500 01/02/2000 57,101
04/28/98 4,459 0.044% 61.62500 06/22/2000 39,105
04/28/98 8,658 0.085% 61.62500 06/28/2001 75,931
04/28/98 4,471 0.044% 61.62500 06/26/2002 39,211
04/28/98 7,535 0.074% 61.62500 06/25/2003 66,082
04/28/98 10,974 0.108% 61.62500 06/24/2004 96,242
04/28/98 5,371 0.053% 61.62500 02/24/2005 47,104
04/28/98 19,252 0.189% 61.62500 06/23/2005 168,840
04/28/98 10,704 0.105% 61.62500 06/28/2006 93,874
05/05/98 591 0.006% 62.65625 06/22/2000 5,260
05/05/98 3,641 0.036% 62.65625 06/25/2003 32,405
05/07/98 1,778 0.017% 61.43750 06/22/2000 15,397
05/07/98 512 0.005% 61.43750 06/28/2001 4,434
05/07/98 4,057 0.040% 61.43750 06/26/2002 35,134
07/01/98 9,498 0.093% 60.21875 06/28/2006 79,688
09/14/98 2,992 0.029% 60.21875 06/28/2006 23,996
09/14/98 16,562 0.163% 60.21875 07/01/2007 132,827
10/28/98 1,558 0.015% 60.15625 07/01/2007 11,981
10/28/98 987 0.010% 60.15625 07/02/2007 7,590
P.J. Lynch 03/12/98 2,354 0.023% 57.90625 06/24/2004 18,832
03/12/98 4,336 0.043% 57.90625 06/23/2005 34,688
04/28/98 5,763 0.057% 61.62500 05/09/1999 50,542
04/28/98 7,618 0.075% 61.62500 01/02/2000 66,810
04/28/98 6,138 0.060% 61.62500 06/22/2000 53,830
04/28/98 6,210 0.061% 61.62500 06/28/2001 54,462
04/28/98 7,657 0.075% 61.62500 06/26/2002 67,152
04/28/98 7,938 0.078% 61.62500 06/25/2003 69,616
04/28/98 8,222 0.081% 61.62500 06/24/2004 72,107
04/28/98 4,326 0.042% 61.62500 02/24/2005 37,939
04/28/98 14,363 0.141% 61.62500 06/23/2005 125,964
04/28/98 10,699 0.105% 61.62500 06/28/2006 93,830
07/01/98 13,116 0.129% 60.21875 06/28/2006 110,043
07/01/98 14,865 0.146% 60.21875 07/01/2007 124,717
10/28/98 3,133 0.031% 60.15625 07/01/2007 23,939
10/28/98 954 0.009% 60.15625 07/02/2007 7,336
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Number
of
Securities
Underlying % of Total Exercise or Grant Date
Options Options Base Expiration Present
Name Date Granted(#) Granted Price($/Sh.) Date Value $*
- ---- ---- ---------- ------- ------------ ---- --------
<S> <C> <C> <C> <C> <C> <C>
G.F. Tilton 03/12/98 1,581 0.016% 57.90625 05/09/1999 12,648
03/12/98 83 0.001% 57.90625 06/22/2000 664
03/12/98 8,012 0.079% 57.90625 06/25/2003 64,096
03/12/98 2,301 0.023% 57.90625 02/24/2005 18,408
04/28/98 5,056 0.050% 61.62500 05/09/1999 44,341
04/28/98 6,031 0.059% 61.62500 01/02/2000 52,892
04/28/98 3,446 0.034% 61.62500 06/22/2000 30,221
04/28/98 6,082 0.060% 61.62500 06/28/2001 53,339
04/28/98 3,829 0.038% 61.62500 06/26/2002 33,580
04/28/98 1,076 0.011% 61.62500 06/25/2003 9,437
04/28/98 6,160 0.060% 61.62500 06/24/2004 54,023
04/28/98 14,399 0.141% 61.62500 06/23/2005 126,279
04/28/98 13,085 0.128% 61.62500 06/28/2006 114,755
05/05/98 629 0.006% 62.65625 01/02/2000 5,598
05/05/98 1,571 0.015% 62.65625 06/22/2000 13,982
05/05/98 118 0.001% 62.65625 06/28/2001 1,050
05/05/98 4,201 0.041% 62.65625 06/24/2004 37,389
05/05/98 2,128 0.021% 62.65625 02/24/2005 18,939
05/05/98 8,225 0.081% 62.65625 06/23/2005 73,203
05/12/98 985 0.010% 60.68750 06/22/2000 8,422
05/12/98 3,892 0.038% 60.68750 06/26/2002 33,277
05/12/98 2,213 0.022% 60.68750 06/25/2003 18,921
07/01/98 13,389 0.131% 60.21875 06/28/2006 112,334
07/01/98 8,977 0.088% 60.21875 07/01/2007 75,317
09/14/98 8,381 0.082% 60.21875 07/01/2007 67,216
09/14/98 1,177 0.012% 60.21875 07/02/2007 9,440
09/15/98 1,501 0.015% 61.00000 05/09/1999 12,248
09/15/98 79 0.001% 61.00000 06/22/2000 645
09/15/98 1,889 0.019% 61.00000 06/25/2003 15,414
11/03/98 5,828 0.057% 59.84375 06/25/2003 44,992
11/03/98 2,227 0.022% 59.84375 02/24/2005 17,192
W.M. Wicker 08/21/98 4,524 0.044% 61.96875 08/04/2007 38,771
<FN>
* Valuation. All options are granted at an exercise price equal to the
market value of the Company's Common Stock on the date of grant. Therefore,
if there is no appreciation in that market value, no value will be
realizable. In accordance with Securities and Exchange Commission rules, we
chose the Black-Scholes option pricing model to estimate the grant date
present value of the options set forth in this table. Our use of this model
should not be construed as an endorsement of its accuracy at valuing
options. All stock option valuation models, including the Black-Scholes
model, require a prediction about the future movement of the stock price.
We made the following assumptions for purposes of calculating the Grant
Date Present Value: the option term is assumed to be two years, volatility
at 22.5%, dividend yield of 3.09% per share and interest rate of 5.4%. The
real value of the options in this table depends solely upon the actual
performance of the Company's stock during the applicable period.
</FN>
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1998 AND
YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options
Acquired Options at Year-End(#)* at Year-End($) **
on Value ------------------------- -------------------------
Name Exercise(#) Realized($)Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
P.I. Bijur 46,150 2,769,950 121,804 463,169 - -
C.R. Black 15,324 932,228 114,990 99,140 - -
P.J. Lynch 14,354 872,910 85,624 108,977 - -
J.J. O'Connor - - - 85,498 - -
G.F. Tilton 16,390 996,428 83,126 111,236 - -
W.M. Wicker 351 21,751 10,959 67,860 - -
<FN>
* Includes options reported in the chart entitled "Option Grants in 1998".
** Based on the 1998 year-end price of $53.00.
</FN>
</TABLE>
Performance Graph
The following graph compares the cumulative total stockholder return on
Texaco's Common Stock with the cumulative total return of the Standard & Poor's
500 Stock Index and the Standard & Poor's Integrated International Oil Index
during the five-year period from December 31, 1993 through December 31, 1998.
<TABLE>
<CAPTION>
Five-Year Comparison
Cumulative Return to Shareholders
(Price Appreciation and the Reinvestment of Dividends)
Texaco vs. S&P Indices
DOLLARS (END-OF-PERIOD)
Total Return
Annual Growth
1993 1994 1995 1996 1997 1998 Rate
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Texaco $100.00 $ 97.44 $133.83 $173.52 $198.38 $199.36 14.8%
S&P 500 $100.00 $101.36 $139.31 $171.21 $228.26 $293.36 24.0%
S&P Oils $100.00 $106.23 $142.56 $176.22 $218.87 $248.50 20.0%
</TABLE>
27
<PAGE>
Retirement Plan
Approximately 11,300 employees, including the 19 elected officers, are
eligible to participate in the Retirement Plan. The plan is a qualified plan
under the Internal Revenue Code and provides benefits funded by company
contributions. In addition, participants have the option of making contributions
to the plan and receiving greater retirement benefits. Contributions are paid to
a Master Trustee and to insurance companies for investment.
For purposes of calculating pension benefits for the named executive
officers, the plan recognizes salary only and does not take into account other
forms of compensation. For the executive officers, salary and bonus for the last
three years are shown in the salary and bonus columns of the Summary
Compensation Table. The Internal Revenue Code provides that qualified plans may
not consider remuneration exceeding $160,000 per year (as indexed for inflation)
for purposes of calculating benefits under the retirement plan. The amount of an
employee's retirement benefit is the greater of a benefit based upon a final pay
formula (applicable in most cases), a career average formula or a minimum
retirement benefit. In addition to the qualified retirement plan, we sponsor
Supplemental Plans which take into account bonuses paid to a participant and pay
excess benefits which would have been paid from the qualified plan but for the
limitations imposed by the Internal Revenue Code.
<TABLE>
<CAPTION>
RETIREMENT PLAN TABLE
YEARS OF BENEFIT SERVICE
COVERED REMUNERATION* 15 20 25 30 35 40 45
- --------------------- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 22,500 $ 30,000 $ 37,500 $ 44,550 $ 51,550 $ 58,550 $ 65,550
200,000 45,000 60,000 75,000 89,100 103,100 117,100 131,100
400,000 90,000 120,000 150,000 178,200 206,200 234,200 262,200
600,000 135,000 180,000 225,000 267,300 309,300 351,300 393,300
800,000 180,000 240,000 300,000 356,400 412,400 468,400 524,400
1,000,000 225,000 300,000 375,000 445,500 515,500 585,500 655,500
1,200,000 270,000 360,000 450,000 534,600 618,600 702,600 786,600
1,400,000 315,000 420,000 525,000 623,700 721,700 819,700 917,700
1,600,000 360,000 480,000 600,000 712,800 824,800 936,800 1,048,800
1,800,000 405,000 540,000 675,000 801,900 927,900 1,053,900 1,179,900
2,000,000 450,000 600,000 750,000 891,000 1,031,000 1,171,000 1,311,000
<FN>
* "Covered Remuneration" means the highest three-year average salary and bonus,
if any, during the last ten years of employment. The company recognizes the
following years of benefit service for the following individuals: Mr. Bijur,
32; Mr. Black, 41; Mr. Lynch, 37; Mr. O'Connor, 1; Mr. Tilton, 29; and Mr.
Wicker, 10. With respect to the plans, annual pension benefits are based on
the non-contributory final pay formula (up to 1.5% of final average covered
remuneration times benefit service) and assume the participant retires
at age 65 and has been a non-contributory member of the plan throughout
the period of service. These amounts, however, do not reflect a reduction
for Social Security benefits pursuant to the provisions of the Retirement
Plan. They do include those additional sums, if any, payable under a
Supplemental Retirement Plan to compensate those employees who have earned
annual retirement benefits payable under the Retirement Plan but which are
limited by the Internal Revenue Code.
</FN>
</TABLE>
28
<PAGE>
Stockholder Proposals and Nominations for Directors for the 2000 Annual Meeting
You may present a proposal to be considered for inclusion in our 2000 Proxy
Statement, provided we receive it at our principal executive office no later
than November __, 1999, and that it complies with applicable laws and Securities
and Exchange Commission regulations. In addition, our by-laws allow you to bring
business before the Annual Meeting of Stockholders, if you have given us written
notice not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's Annual Meeting of Stockholders (subject to
adjustment if the subsequent year's meeting date is substantially moved). Your
notice must include the proposed business and your interest in it, your address,
and your stockholdings.
You may also nominate candidates for election to the Board of Directors at
the stockholders meeting. Our by-laws require you to give written notice to the
Secretary of your intention to do so. We must receive your notice not later than
ninety days before our annual stockholders' meeting, or with respect to a
special meeting, by the close of business on the seventh day following the date
we first notify stockholders of the meeting. Your notice of nomination must
contain the information about you and the nominee that is listed in our by-laws.
We may require that a proposed nominee furnish other information to determine
that person's eligibility to serve as director. We cannot consider a nomination
which does not comply with the above procedure.
You should address your proposal or nomination to: Secretary, Texaco Inc.,
2000 Westchester Avenue, White Plains, New York 10650.
KJESTINE M. ANDERSON
Secretary
March __, 1999
29
<PAGE>
[LOGO]
TEXACO INC.
2000 WESTCHESTER AVENUE
WHITE PLAINS, NY 10650
Admission Ticket
This is your Admission Ticket to Texaco's 1999 Annual Meeting of Stockholders.
The meeting will be held in the Westchester Ballroom of the Rye Town Hilton in
Rye Brook, New York, on Tuesday, April 27, 1999, at 2:00 p.m. Please present
this Admission Ticket at one of the registration stations where you will be
asked to display some form of personal identification. You should enter through
the Hotel's Westchester Ballroom entrance.
1999 Proxy Voting
Your Vote is Important
This year you can vote by telephone, through the Internet, or by mail. Please
refer to the enclosed instruction sheet if you would like to vote by telephone
or through the Internet.
The shares represented by this Proxy will be voted in accordance with your
specifications below. In the absence of specifications, this Proxy will be voted
FOR items 1,2, and 3, AGAINST items 4,5,6, and will be voted in the discretion
of the proxies on such matters as may properly come before the meeting or any
adjournment thereof.
IF YOU WISH TO VOTE BY TELEPHONE OR INTERNET,
PLEASE READ THE INSTRUCTIONS BELOW
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a week.
Have your proxy card in hand when you call. You will be prompted to enter your
12-digit Control Number, which is located below, and then follow the simple
instructions the Vote Voice provides you.
VOTE BY INTERNET - WWW.PROXYVOTE.COM
Use the Internet to vote your proxy 24 hours a day, 7 days a week. Have your
proxy card in hand when you access the web site. You will be prompted to enter
your 12-digit Control Number, which is located below, to obtain your records and
create an electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to Texaco, Inc, c/o ADP, 51 Mercedes Way, Edgewood,
NY 11717.
If you vote by phone or vote using the Internet, please do
not mail your proxy.
THANK YOU FOR VOTING.
TO VOTE, MARK BLOCKS BELOW IN
BLUE OR BLACK INK AS FOLLOWS: TEXACO KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
TEXACO PROXY
[ ] Stockholder will attend the Annual Meeting
[ ] Stockholder and a family member will attend the Annual Meeting
Please provide family member's name --------------------------
[ ] Discontinue mailing the Annual Report to my account because I
have a copy available to me from another source.
Please answer important
questions on reverse
<TABLE>
<CAPTION>
DIRECTORS RECOMMEND A VOTE FOR
ITEMS 1, 2 AND 3.
Election of Directors for the terms indicated in the Proxy Statement:
<S> <C> <C> <C> <C>
For Withhold For All To withhold authority to vote, mark "For All Except" and
All All Except write the nominee's number on the line below.
1. Nominees are: (01)P.I. Bijur, [ ] [ ] [ ] --------------------------------------------------------
(02) E.M. Carpenter,
(03) F.G. Jenifer,
(04) T.A. Vanderslice
Vote On Proposals
2. Approval of Arthur Andersen LLP
as Auditors for the year 1999: [ ] [ ] [ ] 5. Stockholder Proposal Relating
3. Approval of Amendment to the to Classification of the
Certificate of Incorporation Board of Directors: [ ] [ ] [ ]
to increase authorized shares: [ ] [ ] [ ]
DIRECTORS RECOMMEND A VOTE AGAINST
ITEMS 4, 5, 6.
4. Stockholder Proposal Relating to
an Independent Chairperson: [ ] [ ] [ ]
<FN>
- ------------------------------------------------------------ --------------------------------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
</FN>
</TABLE>
Texaco Inc.
2000 Westchester Avenue
White Plains, NY 10650
Dear Texaco Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders to be
held at the Rye Town Hilton, 699 Westchester Avenue, Rye Brook, New York, on
Tuesday, April 27, 1999 at 2:00 p.m. If you plan to attend, please carry your
admission ticket (this form) with you to the meeting.
Please keep in mind that your vote is important to us. Whether or not you are
able to attend the meeting in person, please either use our telephone voting
system or our internet voting system to direct your vote, or mark the attached
proxy card to indicate your voting preferences, then sign, detach and return the
proxy card in the accompanying postage paid envelope
I also welcome any comments or questions you have concerning our activities. For
your convenience in providing such comments, we have provided space on the proxy
card below. In view of the large number of comments and questions we generally
receive, we will not be able to respond to them individually. However, I assure
you that we will read each one and that we will cover subjects of general
interest at the meeting or in other materials we send you.
Also, please tell us if you plan to attend the Annual Meeting by checking the
appropriate box on the proxy card.
Peter I. Bijur
Chairman of the Board &
Chief Executive Officer
This Proxy is solicited on behalf of the Board of Directors
I hereby appoint XXXXXXXXXX, XXXXXXXXXX, XXXXXXXXXX, XXXXXXXXXX, XXXXXXXXXX, and
each of them, as my proxies, with full power of substitution. My proxies are
authorized to represent and to vote, as designated on the reverse Proxy, all
Common Stock of Texaco Inc. which I held of record on February 26, 1999, at the
Annual Meeting of Stockholders to be held at the Rye Town Hilton, 699
Westchester Avenue, Rye Brook, NY on Tuesday April 27, 1999 at 2:00 p.m
For your comments.....
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature:_________________________________________
Telephone or Internet? Your choice.
Two other ways to vote!
In addition to the traditional voting by mail.
Vote by Telephone
It's fast, convenient, and your voting instruction is immediately confirmed and
posted.
Call toll-free on a touch-tone phone 1-800-690-6903
24 hours a day, 7 days a week
Follow these four easy steps:
1. Read the Proxy Statement and Proxy Voting Card you received.
2. Call 1-800-690-6903.
3. Enter your 12-digit Control Number located on your Proxy Voting Card.
4. Follow the recorded instructions.
Your vote is important!
Call 1-800-690-6903
Anytime before the meeting!
Vote by Internet
It's fast, convenient, and your voting instruction is immediately confirmed and
posted.
Connect from your computer http://www.proxyvote.com
24 hours a day, 7 days a week
In addition, after you direct your vote, you will have the opportunity to sign
up to receive future shareholder communications via the Internet.
Follow these four easy steps:
1. Read the Proxy Statement and Proxy Voting Card you received.
2. Go to the website http://www.proxyvote.com
3. Enter your 12-digit Control Number located on your Proxy Voting Card.
4. Follow the instructions provided.
Your vote is important!
http://www.proxyvote.com
Anytime before the meeting!
You need not return your Proxy Voting Card if you are voting by telephone or
Internet.
