Occidental Petroleum Corporation
Occidental Petroleum Corporation is responding to The Corporate Library’s June 6, 2006 publication, “The Opportunistic Timing of CEO Stock Option Awards.” This publication “suggests” that Occidental increases the value of executive stock option awards by “timing…value-relevant press releases around options grants.” The publication is clearly in error, for the reasons set forth below:
1. The publication alleges that, in July 2003, and again in July 2005, our second quarter earnings releases, which are published several days after stock options are granted, caused the option grants’ value to increase. That is incorrect. Our stock price fell after the 2003 and 2005 earnings releases.
2. We do not “time” press releases to increase the value of our option grants. For the past ten years, with only one exception, option grants have always been made by the Compensation Committee of the Board at its July meeting. Our second quarter earnings releases have always been made later in the month, when the second quarter results are ready. The exact date for each Compensation Committee meeting is set two years in advance, therefore, the timing of our option grants is not even susceptible to manipulation.
3. Many factors affect the price of a company’s shares at any given time. Historically, Occiental’s [sic] stock price correlates to the price of oil.
4. Under the terms of our Incentive Plans, our options are granted subject to a three-year vesting period. Approximately one-third of each grant becomes exercisable each year. The first one—third does not vest until one year after the date of the grant. Therefore, a short term increase in the value of our stock in the days, weeks or even months following our second quarter earnings release would not benefit the optionees.