Unocal Digs for Treasures in Gandpa

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Company Press Release

SOURCE: Unocal Corporation

Unocal Stockholders Elect Directors, Approve New Premium Option Plan for 
Senior Officers

EL SEGUNDO, Calif., June 1 /PRNewswire/ -- Unocal Corporation 
stockholders today elected three directors at the company's annual 
stockholders' meeting and approved a new management incentive program 
that includes an innovative premium option plan for the company's top 
officers. 
Stockholders also ratified the appointment of Coopers & Lybrand L.L.P., 
as independent accountants for 1998 and overwhelmingly rejected three 
stockholder proposals, two of which had been defeated by wide margins at 
last year's annual meeting. 

Election of Directors At the meeting, Frank C. Herringer, chairman, 
president and chief executive officer of Transamerica Corporation, John 
F. Imle, Jr., president, Unocal Corporation, and Marina v.N. Whitman, 
professor of business administration and public policy, University of 
Michigan, were re-elected as directors for three-year terms expiring in 
2001. 

The Unocal board of directors has nine members, of which seven are non- 
employee directors. 

1998 Management Incentive Program Stockholders also approved the 1998 
Management Incentive Program, which includes a Performance Stock Option 
Plan (PSOP). The PSOP provides premium options to certain senior company 
officers to further align the interests of senior management with those 
of the stockholders. 

Premium options are options granted at an exercise price that is higher 
than the current stock price. ``We believe that this innovative plan 
sends a strong message that Unocal is serious about creating value for 
the company's stockholders,'' said Roger C. Beach, Unocal chairman and 
chief executive officer. ``It is a high risk plan that offers high 
potential rewards if the company meets certain stock price or stockholder 
return performance conditions.'' 

Unocal is one of the first companies in the petroleum industry to adopt 
such a premium option plan. The premium option grants replace annual 
grants of market-priced stock options to participants for 1998 through 
2000. Options for 3 million shares have been granted under the plan. 
Options for an additional 500,000 may be granted in the future at a 
premium of at least 25 percent over the fair market value on the date of 
the grant. 
The price for the initial premium options granted under the new plan is 
$51.012. This is one-third higher than the average share price during the 
period of Jan. 26 to May 29, 1998, and 43 percent higher than the closing 
price on Friday. 

The options will be forfeited unless one of the two following conditions 
are met: 
1. The option price of $51.012 per share is maintained for at least 10 
out of 20 consecutive trading days within three years of the grant date 
(March 30, 1998) 
2. Unocal's comparative return to stockholders places the company in the 
top quartile of the peer group companies for the three-year period. The 
other parts of the Management Incentive Program approved by stockholders 
include a Revised Incentive Compensation Plan and a Long-Term Incentive 
Plan, which replace similar plans that were in existence in 1997. 

Stockholder Proposals 
Stockholders overwhelmingly rejected three stockholder proposals. 
The first proposal, which was rejected by 92.1 percent of the votes cast 
at the meeting, asked the board to prepare a report on executive 
compensation. 
Stockholders also rejected by more than 94.5 percent of the votes cast a 
proposal requesting an investigation into the financial operations of a 
state- owned energy company involved in the Yadana natural gas 
development project. This was the second year that stockholders had 
rejected this proposal. 
The third proposal requested a report on the actual and potential 
economic and public relations costs to Unocal of opposition to the 
company's investments in Myanmar. This proposal, which had been defeated 
at the 1997 annual meeting, was rejected by 94 percent of the votes cast 
at the meeting. Unocal is a leading global oil and gas exploration and 
production company with significant pipeline and power plant project 
developments worldwide. 

Note: An audio broadcast and transcript of the annual meeting remarks by 
Roger C. Beach, Unocal chairman and chief executive officer, will be 
available on Unocal's web site, www.unocal.com.