OCCIDENTAL PETROLEUM CORPORATION DEFERRED COMPENSATION PLAN

 

                                                                   EXHIBIT 10.14

 

 

 

 

 

                        OCCIDENTAL PETROLEUM CORPORATION

                           DEFERRED COMPENSATION PLAN

 

       (Second Amendment and Restatement Effective as of January 1, 2003)

 

 

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                        OCCIDENTAL PETROLEUM CORPORATION

                           DEFERRED COMPENSATION PLAN

 

       (Second Amendment and Restatement Effective as of January 1, 2003)

 

                                   ARTICLE I

                                     PURPOSE

 

          This document sets forth the terms of the Occidental Petroleum

Corporation Deferred Compensation Plan (the "Plan") as amended and restated

effective as of January 1, 2003. The prior Plan document, which was effective

January 1, 1999, constituted the amendment, restatement and merger of the

Occidental Petroleum Corporation 1988 Deferred Compensation Plan (the "1988

DCP") and the Occidental Petroleum Corporation Senior Executive Deferred

Compensation Plan (the "SEDCP").

 

          The purpose of the Plan is to provide a tax-deferred opportunity for

key management and highly compensated employees of the Occidental Petroleum

Corporation and its Affiliates (as defined below) to accumulate additional

retirement income through deferrals of compensation.

 

                                   ARTICLE II

                                   DEFINITIONS

 

          Whenever the following words and phrases are used in this Plan with

the first letter capitalized, they shall have the meanings specified below:

 

          Affiliate. "Affiliate" means: (i) any corporation that is a member of

a controlled group of corporations (within the meaning of Code Section 1563(a),

determined without regard to Code Sections 1563(a)(4) and (e)(3)(C), and with

the phrase "more than 50%" substituted for the phrase "at least 80%" each place

it appears in Code Section 1563(a)) of which Occidental Petroleum Corporation is

a component member, or (ii) any entity (whether or not incorporated) that is

under common control with Occidental Petroleum Corporation (as defined in Code

Section 414(c) and the Treasury Regulations thereunder, and with the phrase

"more than 50%" substituted for the phrase "at least 80%" each place it appears

in the Treasury Regulations under Code Section 414(c)).

 

          Alternate Payee. "Alternate Payee" means a former spouse of a

Participant who is recognized by a Divorce Order as having a right to receive

all, or a portion of, the benefits payable under this Plan with respect to such

Participant.

 

          Amortization Method. "Amortization Method" means an annual installment

method of paying a Participant's benefits under which the Company will pay the

Participant an initial payment in an amount equal to (i) plus (ii) divided by

(iii), where (i) is the value of the Participant's Deferral Accounts as of the

end of the month preceding such payment, (ii) is the amount of interest that

would accrue during the entire payout period on the unpaid balance credited to

the Participant's Deferral Accounts immediately following such initial payment

if the Declared Rate then in effect remained unchanged and (iii) is the number

of years over which annual installments are to be paid. For each Plan Year after

the initial benefit payment is made,

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the annual benefit payment will be determined under the same equation where (i)

is the value of the Participant's Deferral Accounts as of the end of the month

preceding the benefit payment, (ii) is the amount of interest that would accrue

during the remaining payout period on the unpaid balance credited to the

Participant's Deferral Accounts immediately following such annual payment if the

Declared Rate then in effect remained unchanged and (iii) is the number of

annual payments remaining.

 

          Base Salary. "Base Salary" means the base salary earned by a

Participant during pay periods beginning in a Plan Year, excluding Bonus, all

severance allowances, forms of incentive compensation, Savings Plan, Retirement

Plan or other Company qualified plan contributions or benefits, retainers,

insurance premiums or benefits, reimbursements, and all other payments, prior to

reduction for any deferrals under this Plan or any other plan of the Company or

reductions under the Company's Savings Plan allowed under Section 401(k) of the

Code.

 

          Beneficiary. "Beneficiary" means the person or persons designated as

such in accordance with Article VI.

 

          Beneficiary Benefit. "Beneficiary Benefit" means the payment to a

Participant's Beneficiary of the value of the Participant's Deferral Accounts

pursuant to Section 5.2 on account of the Participant's death.

 

          Board. "Board" means the Board of Directors of the Company.

 

          Bonus. "Bonus" means the bonus earned by a Participant under a regular

annual incentive compensation plan (excluding without limitation a special

individual or group bonus, a project bonus, and any other special bonus) during

a Plan Year prior to reduction for any deferral under this Plan or any other

plan of the Company.

 

          Code. "Code" means the Internal Revenue Code of 1986, as amended.

 

          Committee. "Committee" means the administrative committee appointed to

administer the Plan pursuant to Article III.

 

          Company. "Company" means Occidental Petroleum Corporation, or any

successor thereto, and any Affiliates.

 

          Company Management. "Company Management" means the Chairman of the

Board, President or any Executive Vice President of Occidental Petroleum

Corporation.

 

          Compensation. "Compensation" means Base Salary and/or Bonus.

 

          DCP Deferral Account. "DCP Deferral Account" means the account

maintained on the books of account of the Company for each Participant pursuant

to Article IV to account for amounts deferred under the 1988 DCP prior to

January 1, 1999 and amounts deferred under this Plan after that date.

 

 

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          DCP Deferral Amount. "DCP Deferral Amount" means an amount of a

Participant's Base Salary and/or Bonus that is deferred under the Plan,

including both amounts deferred under the 1988 DCP prior to January 1, 1999, and

amounts deferred under this Plan after that date.

 

          Declared Rate. "Declared Rate" with respect to any Plan Year means the

rate at which interest will be credited on Deferral Accounts for such Plan Year.

The Declared Rate for each Plan Year commencing in 1999 and thereafter will be

equal to the greater of: (i) (A) plus (B) where (A) is the Moody's Long-Term

Corporate Bond Index Monthly Average Corporates as published by Moody's Investor

Services, Inc. (or successor thereto) for the month of July in the year prior to

the Plan Year in question, and (B) is 3% ("Moodys Plus Three"), or (ii) the

highest yield on any unsecured debt or preferred stock of the Company that was

outstanding on the last day of July in the year prior to the Plan Year in

question. The Declared Rate will be announced on or before January 1 of the

applicable Plan Year. Notwithstanding the foregoing, the Declared Rate for DCP

Deferral Amounts that were earned and deferred prior to 1994 under the 1988 DCP

(including bonuses which were earned for 1993), together with accumulated

interest thereon, will in no event be less than 8% for any Plan Year.

Accordingly, the Declared Rate for any Plan Year may be different for DCP

Deferral Amounts that were earned and deferred under the 1988 DCP prior to

January 1, 1994 than for DCP Deferral Amounts earned and deferred after such

date.

 

          Deferral Account(s). "Deferral Account(s)" means a Participant's DCP

Deferral Account and/or SEDCP Deferral Account (if any) and/or Savings Plan

Restoration Account (if any) maintained on the books of account of the Company

for each Participant pursuant to Article IV.

 

          Deferral Election Form. "Deferral Election Form" means a paper or

electronic election form provided by the Committee on which an Eligible Employee

may elect to defer Base Salary and/or Bonus and may elect to receive an Early

Payment Benefit in accordance with Article IV.

 

          Disability. "Disability" means a condition that qualifies as a

disability under the Company's Retirement Plan and is approved by the Committee.

 

          Disability Benefit. "Disability Benefit" means the payment to a

Participant of the value of the Participant's Deferral Accounts pursuant to

Section 5.1 on account of the Participant's termination of employment due to a

Disability.

 

          Distribution Election Form. "Distribution Election Form" means a paper

or electronic election form provided by the Committee on which a Participant may

elect the form of payment of his Retirement Benefits and/or the form of payment

of Beneficiary Benefits to his Beneficiary in accordance with Article V.

 

          Divorce Order. "Divorce Order" means any judgment, decree, or order

(including judicial approval of a property settlement agreement) that relates to

the settlement of marital property rights between a Participant and his or her

former spouse pursuant to state domestic relations law (including, without

limitation and if applicable, community property law).

 

 

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          Early Payment Benefit. "Early Payment Benefit" means the payment to a

Participant of part or all of the Participant's DCP Deferral Account on an Early

Payment Date prior to Retirement pursuant to Section 5.4.

 

          Early Payment Date. "Early Payment Date" means any year prior to

Retirement that a Participant elects pursuant to Section 4.1(b) to have an Early

Payment Benefit paid or commenced to be paid.

 

          Early Payment Date Subaccount. "Early Payment Date Subaccount" means

any subaccount of a Participant's DCP Deferral Account established to separately

account for deferred Compensation (and interest credited thereto) that is

subject to an Early Payment Benefit election.

 

          Eligible Employee. "Eligible Employee" means each key management or

other highly compensated employee of the Company who is selected by Company

Management to participate in the Plan.

 

           Emergency Benefit. "Emergency Benefit" means the payment to a

Participant of part or all of his Deferral Accounts in the event that the

Participant has an unforeseeable financial emergency pursuant to Section 5.5.

 

          Fractional Method. "Fractional Method" means an installment method of

paying a Participant's Retirement Benefit under which the Company will determine

the amount of each annual installment by dividing the value of the Participant's

Deferral Accounts as of the end of the month preceding the payment date by the

number of annual installments remaining to be paid.

 

          1988 DCP. "1988 DCP" means the Occidental Petroleum Corporation 1988

Deferred Compensation Plan.

 

          Participant. "Participant" means (i) each individual who, as of

December 31, 1998, was a participant in the 1988 DCP or the SEDCP and has not

received a complete distribution of the benefits accrued under those plans, (ii)

an Eligible Employee who has filed a completed and fully executed Deferral

Election Form with the Committee and is participating in the Plan in accordance

with the provisions of Article IV or (iii) any person who has a Deferral Account

by reason of his prior status as an Eligible Employee. Under no circumstances

shall "Participant" mean any Alternate Payee.

 

          Plan Year. "Plan Year" means the calendar year beginning on January 1

and ending on December 31.

 

          Qualified Divorce Order. "Qualified Divorce Order" means a Divorce

Order that (a) creates or recognizes the existence of an Alternate Payee's right

to, or assigns to an Alternate Payee the right to, receive all or a portion of

the benefits payable to a Participant under this Plan; (b) clearly specifies (i)

the name and the last known mailing address of the Participant and the name and

mailing address of the Alternate Payee covered by the order, (ii) the amount or

percentage of the Participant's benefits to be paid by this Plan to the

Alternate Payee, or the manner in which such amount or percentage is to be

determined, (iii) the number of payments or period to which such

 

 

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order applies, and (iv) that it applies to this Plan; and (c) does not (i)

require this Plan to provide any type or form of benefit, or any option, not

otherwise provided under the Plan, (ii) require this Plan to provide increased

benefits, or (iii) require the payment of benefits to an Alternate Payee that

are required to be paid to another Alternate Payee under another Divorce Order

previously determined to be a Qualified Divorce Order.

 

          Retirement. "Retirement" means: (i) the termination of a Participant's

employment with the Company for reasons other than Disability or death after the

Participant attains age 65, (ii) the termination of a Participant's employment

with the Company for reasons other than Disability or death after the

Participant attains age 55 and completes five (5) Years of Service or (iii)

effective January 1, 2001, the Participant's attainment of age 55 following the

Participant's termination of employment with the Company for reasons other than

Disability or death prior to attainment of age 55 if the Participant qualifies

for retiree medical coverage under the Occidental Petroleum Corporation Medical

Plan on the date of the Participant's termination of employment.

 

          Retirement Benefit. "Retirement Benefit" means the payment to a

Participant of the value of the Participant's Deferral Accounts pursuant to

Section 5.1 following Retirement.

 

          Retirement Plan. "Retirement Plan" means the Occidental Petroleum

Corporation Retirement Plan, as amended from time to time.

 

          Savings Plan. "Savings Plan" means the Occidental Petroleum

Corporation Savings Plan, as amended from time to time.

 

          Savings Plan Restoration Account. "Savings Plan Restoration Account"

means the account maintained on the books of account of the Company to reflect

Savings Plan Restoration Contributions made by the Company pursuant to Section

4.6.

 

          Savings Plan Restoration Contribution. "Savings Plan Restoration

Contribution" means the amount credited to a Participant's Savings Plan

Restoration Account pursuant to Section 4.6.

 

          SEDCP. "SEDCP" means the Occidental Petroleum Corporation Senior

Executive Deferred Compensation Plan under which certain Company executives

deferred compensation.

 

          SEDCP Deferral Account. "SEDCP Deferral Account" means the account

maintained on the books of account of the Company for certain Participants

pursuant to Article IV to account for amounts deferred under the SEDCP.

 

          Termination Benefit. "Termination Benefit" means the payment to a

Participant of the value of the Participant's Deferral Accounts pursuant to

Section 5.1 on account of the Participant's termination of employment other than

due to Retirement, Disability or death.

 

          Termination Event. "Termination Event" means any of the following:

 

 

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               (a)   Approval by the stockholders of the Company (or, if no

     stockholder approval is required, by the Board) of the dissolution or

     liquidation of the Company, other than in the context of a transaction that

     does not constitute a Termination Event under clause (b) below;

 

               (b)   Consummation of a merger, consolidation, or other

     reorganization, with or into, or the sale of all or substantially all of

     the Company's business and/or assets as an entirety to, one or more

     entities that are not subsidiaries or other affiliates of the Company (a

     "Business Combination"), unless (i) as a result of the Business

     Combination, more than 50% of the outstanding voting power of the surviving

     or resulting entity or a parent thereof (the "Successor Entity")

     immediately after the Business Combination is, or will be, owned, directly

     or indirectly, by holders of the Company's voting securities immediately

     before the Business Combination; (ii) no "person" (as such term is used in

     Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended

     from time (the "Exchange Act")), excluding the Successor Entity or any

     employee benefit plan of the Company and any trustee or other fiduciary

     holding securities under a Company employee benefit plan or any person

     described in and satisfying the conditions of Rule 13d-1(b)(i) of the

     Exchange Act (an "Excluded Person"), beneficially owns, directly or

     indirectly, more than 20% of the outstanding shares or the combined voting

     power of the outstanding voting securities of the Successor Entity, after

     giving effect to the Business Combination, except to the extent that such

     ownership existed prior to the Business Combination; and (iii) at least 50%

     of the members of the board of directors of the entity resulting from the

     Business Combination were members of the Board at the time of the execution

     of the initial agreement or of the action of the Board approving the

     Business Combination;

 

               (c)   Any "person" (as such term is used in Sections 13(d) and

     14(d) of the Exchange Act, but excluding any Excluded Person) is or becomes

     the beneficial owner (as defined in Rule 13d-3 under the Exchange Act),

     directly or indirectly, of securities of the Company representing 20% or

     more of the combined voting power of the Company's then outstanding voting

     securities, other than as a result of (i) an acquisition directly from the

     Company; (ii) an acquisition by the Company; or (iii) an acquisition by any

     employee benefit plan (or related trust) sponsored or maintained by the

     Company or a Successor Entity; or

 

               (d)   During any period not longer than two consecutive years,

     individuals who at the beginning of such period constituted the Board cease

     to constitute at least a majority thereof, unless the election, or the

     nomination for election by the Company's stockholders, of each new Board

     member was approved by a vote of at least two-thirds (2/3) of the Board

     members then still in office who were Board members at the beginning of

     such period (including for these purposes, new members whose election or

     nomination was so approved), 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.

 

 

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               (e)   Notwithstanding the foregoing, a Termination Event shall not

     occur if, prior to the Termination Event, the Executive Compensation and

     Human Resources Committee of the Board deems such an event to not be a

     Termination Event for the purposes of this Plan.

 

          Years of Service. "Years of Service" means the number of full years

credited to a Participant under the Retirement Plan for vesting purposes.

 

                                  ARTICLE III

                           ADMINISTRATION OF THE PLAN

 

          A Committee shall be appointed by the Board to administer the Plan and

establish, adopt, or revise such rules and regulations as the Committee may deem

necessary or advisable for the administration of the Plan and to interpret the

provisions of the Plan, and, except as otherwise indicated herein, any such

interpretations shall be conclusive and binding. All decisions of the Committee

shall be by vote of at least two of the Committee members and shall be final.

The Committee may appoint any agent and delegate to such agent such powers and

duties in connection with the administration of the Plan as the Committee may

from time to time prescribe.

 

          Members of the Committee shall be eligible to participate in the Plan

while serving as members of the Committee, but a member of the Committee shall

not vote or act upon any matter which relates solely to such member's interest

in the Plan as a Participant.

 

 

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                                   ARTICLE IV

                                  PARTICIPATION

 

     4.1   Election to Participate.

 

          (a)   Deferral Elections. An Eligible Employee may elect to participate

in the Plan and elect to defer annual Base Salary and/or Bonus under the Plan by

filing a completed and fully executed Deferral Election Form prior to the

beginning of the Plan Year during which such Base Salary and Bonus are to be

earned or at such other time as the Committee may permit. Deferral Election

Forms must be filed in accordance with the instructions set forth in the

Deferral Election Forms.

 

          Various deferral options will be made available to Eligible Employees

under the Plan, subject to such limitations and conditions as the Committee may

impose from time to time, in its complete and sole discretion. A Deferral

Election Form filed for the Plan Year beginning January 1, 2003, or for any

subsequent Plan Year shall be effective for Base Salary and/or Bonus to be

earned during that Plan Year and shall remain in effect for that Plan Year and

subsequent Plan Years, notwithstanding any change in the Participant's Base

Salary or Bonus, until changed or terminated in accordance with the terms of

this Section 4.1; provided, however, that such election shall terminate if the

Participant ceases to be an Eligible Employee. Subject to the minimum deferral

requirements and maximum deferral limitations set forth below, a Participant may

increase, decrease or terminate his deferral election effective for Compensation

to be earned during any Plan Year by filing a new Deferral Election Form with

the Committee prior to January 1 of such Plan Year.

 

          Each Deferral Election Form will designate the DCP Deferral Amounts as

a fixed dollar amount or fixed percentage (in increments of 1%) of Base Salary

and/or (i) a fixed dollar amount or a fixed percentage of Bonus, or (ii) 100% of

any Bonus exceeding a specified dollar amount, as elected by the Participant.

Deferrals of Base Salary will normally be deducted ratably during the Plan Year.

In its sole discretion, the Committee may also permit amounts that an Eligible

Employee has previously elected to defer under other plans or agreements with

the Company to be transferred to this Plan and credited to his Deferral Accounts

that are maintained hereunder.

 

               (A)   Minimum Deferral. For each Plan Year, the minimum amount of

     Base Salary that a Participant may elect to defer is $5,000, if expressed

     as a dollar amount, or 5% of Base Salary, if expressed as a percentage, and

     the minimum amount of Bonus that a Participant may elect to defer is any of

     the following: (I) $5,000, (II) 5% of Bonus, or (III) 100% of that portion

     of any Bonus that exceeds a dollar amount specified by the Participant on

     his Deferral Election Form.

 

               (B)   Maximum Deferral. For each Plan Year, the maximum amount of

     Base Salary that a Participant may elect to defer is 75% of Base Salary,

     and the maximum amount of Bonus that a Participant may elect to defer is

     100% of Bonus.

 

          (b)   Early Payment Benefit Election. On the Deferral Election Form

filed pursuant to Section 4.1(a), an Eligible Employee may irrevocably elect to

receive the

 

 

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Compensation deferred pursuant to that election in a lump sum payment or in

annual installments over two (2) to five (5) years commencing prior to

Retirement on an Early Payment Date. If a Participant fails to designate the

form of distribution for an Early Payment Benefit, the distribution shall be in

the form of a lump sum. The Early Payment Date elected must be a year that

begins at least two (2) years after the end of the first Plan Year to which the

election applies. An Early Payment Benefit election filed for the Plan Year

beginning January 1, 2003, or for any subsequent Plan Year, shall be effective

for Compensation earned and deferred during that Plan Year and each subsequent

Plan Year until terminated in accordance with the terms of this Section 4.1;

provided, however, that deferrals of Compensation earned during any Plan Year

that ends less than two (2) years prior to the Early Payment Date will not be

subject to the Early Payment Benefit election and shall be paid upon the

Participant's termination of employment as set forth in Section 5.1 or 5.2, as

the case may be. A Participant may terminate an election for an Early Payment

Benefit with respect to Compensation deferred in any future Plan Year by filing

a new Deferral Election Form with the Committee prior to January 1 of such Plan

Year. A Participant may not, however, change the form of benefit or time of

commencement of Early Payment Benefit with respect to Compensation deferred

pursuant to a Deferral Election Form after that Deferral Election is filed

pursuant to Section 4.1(a).

 

          A Participant may not at any time have more than two Early Payment

Dates scheduled. However, after an Early Payment Date has occurred and all

payments with respect to the corresponding Early Payment Date election have been

completed, a Participant may elect a new Early Payment Date for future deferrals

of Compensation.

 

     4.2   DCP Deferral Accounts. The Committee shall establish and maintain a

separate DCP Deferral Account for each Participant. The amount credited to a

Participant's Deferral Account under the 1988 DCP as of December 31, 1998

remained credited to his DCP Deferral Account under this Plan as of January 1,

1999. A DCP Deferral Amount shall be credited by the Company to the

Participant's DCP Deferral Account as of the date that the Participant's Base

Salary or Bonus would otherwise have been paid. Such DCP Deferral Account shall

be debited by the amount of any payments made by the Company to the Participant

or the Participant's Beneficiary therefrom as of the date of payment. The

Committee shall establish an Early Payment Date Subaccount within a

Participant's DCP Deferral Account for each Early Payment Date elected by that

Participant. Any such Early Payment Date Subaccount shall be debited by the

amount of any Early Payment Benefit paid by the Company to the Participant on or

beginning on such Early Payment Date pursuant to Section 5.4 as of the date of

payment.

 

     4.3   SEDCP Deferral Accounts. The Committee shall maintain a separate SEDCP

Deferral Account for each Participant who was a participant in the SEDCP on

December 31, 1998. The balance of su