Occidental Petroleum 2006 Annual Report Download - page 73
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The following is a summary of Option and SAR transactions during 2006:
Certain employees are awarded the right to receive RSUs that vest ratably three and five years after the grant date and can be forfeited or
accelerated under certain conditions. Dividend equivalents are paid during the vesting period. Compensation expense for RSUs is measured on
the grant date using the quoted market price of Occidental's common stock on the grant date. The weighted average grant date fair values of the
RSUs granted in 2006 and 2005 were $50.45 and $40.91, respectively.
A summary of changes in Occidental’s unvested RSUs during the year ended December 31, 2006, is presented below:
PRSUs
Certain executives are awarded PRSUs with a performance measure based on Occidental’s three-year cumulative return on equity with
payout amounts varying from zero to 200 percent of the target award. The PRSUs vest at the end of the three-year period following the grant date if
performance targets are certified as being met. Compensation expense is measured on the grant date using the quoted market price of
Occidental’s common stock and the number of shares expected to be issued based on the performance criteria. Compensation expense is adjusted
during the vesting period only for changes in expected share payout. Cumulative dividend equivalents are paid in cash at the end of the
performance period for the number of shares certified for payout.
A summary of Occidental’s PRSUs issued during the year ended December 31, 2006, is presented below:
PSAs
Certain executives are awarded PSAs that vest at the end of the four-year period following the grant date if performance targets are certified as
being met, with payouts that range from zero to 200 percent of the target award. Dividend equivalents for target shares are paid during the
performance period. In June 2005, the holders of substantially all of Occidental’s unvested PSAs agreed to modify the settlement provisions to
provide that the first 100 percent payout will be settled only in stock and any payout in excess of 100 percent will be settled only in cash. There
was no incremental compensation expense recorded at the time of the modification.
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