Exhibit 10.4(L)

 

Summary of Change-of-Control and other Executive Officer

Compensatory Arrangements

 

Set forth below are summaries of certain compensatory arrangements regarding the
executive officers of Unocal Corporation (“Unocal”). For additional information
regarding executive officers’ compensatory arrangements, please refer to
Unocal’s most recent proxy statement filed with the Securities and Exchange
Commission. For additional information regarding executive officers’ 2005
compensatory arrangements, please refer to Unocal’s Current Report on Form 8-K
filed February 14, 2005, File No. 1-08483.

 

Change of Control Provisions

 

Upon a “change in control” of Unocal, as defined in our incentive plans and
related agreements and in certain employment agreements, annual cash bonuses
will be paid, restricted stock will become vested and payable, unvested options
will become vested, and performance shares will become vested and payable.
Performance shares will be paid out at not less than the target number of
shares, subject to the limitation that the fair market value of the shares paid
out may not exceed 400% of the fair market value of the initial award of
performance shares. Annual cash bonuses under the Incentive Compensation Plan
and under the Annual Incentive Plan will pay out at not less than the target
amount, prorated by the ratio that the shortened award period bears to the
calendar year. As a result of the JOBS Act, certain provisions of these plans
and agreements may need to be revised. We expect to amend these plans and
agreements during 2005 to conform to the requirements of the JOBS Act.

 

In 2000, our Board of Directors and the Board of our Union Oil Company of
California subsidiary each approved an enhanced severance program for U.S.
payroll employees not represented by collective bargaining agents in the event
of a change of control of Unocal occurring before 2005. The Boards of Unocal and
Union Oil have extended this enhanced severance program until such time as the
program is effectively terminated by the Boards in accordance with the terms of
our benefits plans. In the event of a “change of control,” as defined in our
Long-Term Incentive Plan of 2004, the program provides for the immediate vesting
of accrued benefits and/or accounts of all covered employees under our qualified
and nonqualified retirement and savings plans. Also, employees with at least
five years of vesting service in the Unocal Retirement Plan whose employment
terminates within two years after a change of control either involuntarily
(other than for death, disability or misconduct) or due to “constructive
discharge” are entitled to immediate payment of their qualified and nonqualified
retirement plan balances and immediate cash payment of bonuses under our
incentive compensation plan. Under our Deferred Compensation Plan, eligible
employees are allowed to receive payouts of plan balances upon a change of
control if such employees elected to receive those payouts. For purposes of the
Deferred Compensation Plan, “change of control” for contributions made before
December 31, 2004 is defined as set forth in the Long Term Incentive Plan of
2004 and for contributions made after December 31, 2004 and Mr. Bryant’s company
contribution under our Deferred Compensation Plan pursuant to his employment
agreement, is defined as set forth in the

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JOBS Act. However, for purposes of payouts under our nonqualified plans, the
definition of “change of control” is as found in the JOBS Act. Also, payments to
key employees under our non-qualified plans is delayed for six months after
termination of employment. Interest is paid on the balances during the six-month
delay.

 

The program also provides the following in the event of an eligible employee’s
involuntary termination of employment (other than for death, disability or
misconduct) or “constructive discharge” within two years following a change of
control:

 

  •   Employees with less than five years of service in the Unocal Retirement
Plan would receive four months of base pay plus three-fourths of a month of base
pay for every year of service.

 

  •   Employees with five or more years of service in the Unocal Retirement Plan
would receive four months of base pay plus an enhanced retirement benefit which
offsets the remainder of the severance payment. The enhanced retirement benefit
would add three years to the employee’s service and age, plus the benefit would
utilize the highest consecutive 12 months of pensionable pay in the most recent
120 months of service.

 

Although all current executive officers are entitled to the benefits described
in the preceding paragraphs, payment of such benefits would reduce the amounts
payable to Messrs. Williamson, Bryant, Dallas, Gillespie and Howard under their
employment agreements.

 

The program permits an eligible terminated employee to elect an immediate
distribution or rollover of his or her total qualified and nonqualified
retirement plan benefits. A key employee, as defined in the JOBS Act, must wait
six months to receive nonqualified retirement and savings benefits and interest
on the unpaid benefit is paid by us during that time period. The program also
provides for subsidized “COBRA” medical and dental coverage for 18 months after
termination of employment, adds three years to the employee’s age and service
for determining eligibility and contributions under our retiree and special
continuation medical coverages and for determining eligibility under our retiree
life and AD&D insurance plans, as well as certain other benefits.

 

The program includes a “tax gross-up” arrangement for employees who are subject
to the excise tax provided for by Section 280G of the Internal Revenue Code,
including the named executive officers. Under this section, excise taxes are
imposed on employees receiving change-of-control payments (as defined) that
exceed 2.99 times the employee’s average annual compensation (as defined). Under
the arrangement, an employee who is subject to the excise tax would receive a
gross-up payment, in addition to the amounts deemed change-of-control payments,
to eliminate the effect of the excise tax. This gross-up arrangement would apply
only if the employee’s change-of-control payments exceed the excise tax
threshold amount of Section 280G by more than 10%. Otherwise, such payments
would be reduced below the threshold.

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In addition, the Unocal Phantom Stock Plan (the “Phantom Stock Plan”) provides
for the grant to selected key employees of Incentive Units, each equivalent for
bookkeeping purposes to the market value of one outstanding share of Unocal
common stock. The Incentive Units are credited to an Incentive Account for the
participant, together with dividend equivalents. The Incentive Account of a
participant becomes completely mature and payable in cash upon a “change of
control,” as defined in such Phantom Stock Plan. None of our executive officers
currently participate in the Phantom Stock Plan.

 

Other Executive Compensation

 

Unocal provides company-paid financial counseling for key executives, including
through the end of the year in which the executive retires. Such services
include executive compensation planning, investment planning, income tax
planning and return preparation, and cash flow and debt management. We provide a
tax gross-up payment equal to 47 percent of the cost of the services provided.

 

Certain key executive officers have the use of the company jet. We also provide
club memberships for certain management employees.