CRC DEF 14A Report ended May 7, 2015

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.             )

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If you owned shares of our common stock at the close of business on March 10, 2015, you are entitled to one vote per share upon each matter presented at our 2015 annual meeting of stockholders to be held on May 7, 2015. Stockholders whose shares are held in an account at a brokerage firm, bank or other nominee (i.e., in "street name") will need to obtain a proxy from the broker, bank or other nominee that holds their shares authorizing them to vote at the annual meeting.

Your broker is not permitted to vote on your behalf on the election of directors and other matters to be considered at the annual meeting, except on ratification of the appointment of KPMG LLP as our independent registered public accounting firm for fiscal 2015, unless you provide specific instructions by completing and returning the voting instruction form or following the instructions provided to you to vote your shares via telephone or the Internet. For your vote to be counted, you will need to communicate your voting decisions to your broker, bank or other nominee before the date of the annual meeting.

Your vote is important. Our Board of Directors strongly encourages you to exercise your right to vote. Voting early helps ensure that we receive a quorum of shares necessary to hold the annual meeting.

If you have any questions about the proxy voting process, please contact the broker, bank or other nominee where you hold your shares. The Securities and Exchange Commission also has a website ( www.sec.gov/spotlight/proxymatters.shtml ) with more information about your rights as a stockholder. You also may contact our Investor Relations Department by phone at 310-443-6348 or by e-mail at IR@crc.com.

Only stockholders of record or their legal proxy holders as of March 10, 2015 or our invited guests may attend the annual meeting in person. If you plan to attend the annual meeting in person, you must present a valid form of government-issued photo identification, such as a driver's license or passport. In addition to such personal identification, you will need an admission ticket or proof of ownership of CRC stock to enter the annual meeting. If your shares are registered in your name, you will find an admission ticket attached to the notice regarding the internet availability of proxy materials or the proxy card sent to you. If your shares are held in street name with a broker, bank or other nominee, you will need to bring a copy of your brokerage statement or other documentation reflecting your stock ownership as of the record date for the meeting.

The Notice of the 2015 Annual Meeting of Stockholders, the Proxy Statement for the 2015 Annual Meeting of Stockholders and the 2014 Annual Report to Stockholders (which includes the Annual Report on Form 10-K for the fiscal year ended December 31, 2014) of California Resources Corporation are available at http://www.astproxyportal.com/ast/19727/.

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This summary highlights information contained in the proxy statement. This summary does not contain all of the information you should consider, and you should read the entire proxy statement carefully before voting.

The following table summarizes the items that will be brought for a vote of our stockholders at the annual meeting, along with the recommendation of our Board of Directors as to how stockholders should vote on each item.

The Board of Directors is comprised of eight independent directors, our Executive Chairman, and our President and CEO. The following table provides summary information about each director, including the director nominees and whether the Board of Directors considers each

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director to be independent under the New York Stock Exchange's independence standards. Each director is elected by a plurality of votes cast.

Our Board of Directors is temporarily divided into three classes. One of the three classes is elected each year on a rotating basis to succeed the directors of the subject class whose terms are expiring. In this manner, as of the 2015 Annual Meeting, the term of the directors in Classes I, II and III of the board expire in 2015, 2016 and 2017, respectively. However, commencing with the election of the directors at the 2018 Annual Meeting, the Board of Directors will cease to be classified, and the directors elected at the 2018 Annual Meeting (and each annual meeting thereafter) shall be elected for a one year term.

On November 30, 2014, Occidental Petroleum Corporation ("Occidental") completed the spin-off (the "Spin-off") of its California oil and gas operations and related assets, liabilities and obligations, which we assumed in connection with the Spin-off from Occidental. As a result, we became a separate, publicly traded company called California Resources Corporation (together with its subsidiaries, referred to herein as "we," "our," "us," "Company" or "CRC"). The Spin-off was effected through a pro rata distribution to Occidental stockholders of 309,889,779 shares of our common stock. Occidental retained 71,500,000 shares of our common stock, which it has stated it intends to divest within 18 months after November 30, 2014. Occidental also granted us a

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proxy to vote the shares of our common stock that Occidental retained immediately after the distribution in proportion to the votes cast by our stockholders.

In order to have an initial executive compensation program in place at the time of the Spin-off and to allow appropriate time for the formation of the CRC Compensation Committee, Occidental's Executive Compensation Committee made decisions regarding our executive compensation program in effect for 2014 and immediately following the Spin-off. Following our Spin-off, the CRC Compensation Committee began designing an executive compensation program based on CRC's long-term strategic objectives and compensation philosophy.

Our initial compensation program encompasses the concept that overall executive compensation should include: (i) elements that provide an appropriate level of fixed compensation necessary to attract and retain employees; (ii) annual incentive compensation that links annual cash compensation to the achievement of key short-term performance goals; and (iii) long-term compensation linked to goals that contribute to long-term growth of shareholder value.

With a goal of emphasizing long-term compensation, salary and other annual compensation represents the smaller portion of the compensation program for our named executive officers. Occidental designed our initial executive compensation program to be consistent with industry practice, linking executive compensation with our performance by providing appropriate incentives to reward executives for performance that maximizes value creation for stockholders, while also enhancing retention efforts during our transition to a separately-traded public company.

Compensation decisions by Occidental's Executive Compensation Committee with respect to our initial executive compensation program included the determination of:

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A compensation peer group for purposes of understanding market practices;



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Initial salaries based on market practices;



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Initial annual incentive opportunities based on market practices; and



•

Design and amount of long-term incentive awards granted in 2014.

CRC's Compensation Committee was formed in connection with the completion of the Spin-off and has engaged its own independent compensation consultant to assist in the evaluation and design of our program for 2015 and beyond.

In February 2015, the CRC Compensation Committee adopted an annual incentive plan for 2015 based on the following performance objectives which will be measured against pre-determined targets:

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Value Creation Index (VCI), which will measure the performance of our total capital program executed during the year



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Production



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Unit costs



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Health, Safety and Environmental performance, consistent with CRC's commitment to the communities in which we live and operate



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Other strategic and operational objectives

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		California Resources Corporation 10889 Wilshire Boulevard Los Angeles, CA 90024

Purposes of the 2015 annual meeting of stockholders:

(1)

To elect Messrs. Gannon, Poladian and Sloan, the three Class I director candidates nominated by the Board of Directors, each to serve a three-year term and until his successor has been elected and qualified;



(2)

To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2015;



(3)

To hold an advisory vote to approve named executive officer compensation;



(4)

To hold an advisory vote on the frequency of future stockholder advisory votes to approve named executive officer compensation; and



(5)

To transact such other business as may properly come before the annual meeting or any adjournment or postponement thereof.

Information relevant to these matters is set forth in the accompanying proxy statement.

The close of business on March 10, 2015 was fixed as the record date for the determination of stockholders entitled to receive notice of and to vote at the annual meeting or any adjournment or postponement thereof. Only our stockholders or their legal proxy holders as of the record date or our invited guests may attend the annual meeting in person.

Beginning on or about March 20, 2015, we mailed a Notice of Internet Availability of Proxy Materials to our stockholders containing instructions on how to access the proxy statement and vote online and made our proxy materials available to our stockholders over the Internet.

By Order of the Board of Directors,

Michael L. Preston
Executive Vice President, General Counsel and Corporate Secretary

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2015 PROXY STATEMENT

This proxy statement is furnished to you in connection with the solicitation of proxies by and on behalf of the Board of Directors of California Resources Corporation (together with its subsidiaries, referred to herein as "we," "our," "us," "Company" or "CRC") for use at the 2015 annual meeting of stockholders to be held on May 7, 2015 at 11:00 a.m., local time, at the Bakersfield Marriott at the Convention Center, 801 Truxtun Avenue, Bakersfield, California 93301, or at any adjournment or postponement thereof (the "Annual Meeting").

The agenda for the Annual Meeting includes the following items:

On or about March 20, 2015, we mailed a Notice of Internet Availability of Proxy Materials to our stockholders of record and beneficial owners who owned shares of our common stock at the close of business on March 10, 2015. The Notice of Internet Availability of Proxy Materials contained instructions on how to access the proxy materials and vote online. We have made these proxy materials available to you over the Internet or, upon your request, have delivered paper versions of these materials to you by mail, in connection with the solicitation of proxies by our Board of Directors for the Annual Meeting.

Choosing to receive your future proxy materials by e-mail will save us the cost of printing and mailing documents to you. If you choose to receive future proxy materials by e-mail, you will receive an e-mail next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by e-mail will remain in effect until you terminate it.

At the close of business on March 10, 2015, the "Record Date" for the determination of stockholders entitled to receive notice of and to vote at the Annual Meeting, there were 385,631,190 shares of common stock outstanding, each share of which is entitled to one vote. Common stock is the only class of our outstanding securities entitled to receive notice of and to vote at the Annual Meeting.

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Our Board of Directors asks you to appoint Todd A. Stevens and William E. Albrecht as your proxy holders ("Proxy Holders") to vote your shares at the Annual Meeting. You make this appointment by using one of the voting methods described below.

The presence at the Annual Meeting of a majority of shares of our common stock issued and outstanding and entitled to vote, present in person or by proxy, is necessary to constitute a quorum in order to transact business at the Annual Meeting. Your shares are counted as present at the Annual Meeting if you attend the Annual Meeting and vote in person or if you properly return a proxy by Internet, telephone or mail. Abstentions and broker non-votes will be counted for purposes of establishing a quorum at the Annual Meeting.

If less than a quorum is represented at the Annual Meeting, the Chairman of the meeting or, if directed by the chairperson of the meeting, a majority of the shares so represented, may adjourn the Annual Meeting from time to time, whether or not there is such a quorum, and the Proxy Holders will vote the proxies they have been authorized at the Annual Meeting in favor of such an adjournment. In the event a quorum is present at the Annual Meeting but sufficient votes to approve any of the items proposed by our Board of Directors have not been received, the Chairman of the meeting or the Proxy Holders may propose one or more adjournments of the Annual Meeting to permit further solicitation of proxies. A stockholder vote may be taken on one or more of the proposals in this proxy statement prior to such adjournment if sufficient proxies have been received and it is otherwise appropriate.

Our Board of Directors does not know of any other matters that are to be presented for action at the Annual Meeting. However, if other matters properly come before the Annual Meeting, the proxies solicited by the Board of Directors will provide the Proxy Holders with the authority to vote on those matters and nominees in accordance with such persons' discretion. Where a stockholder has appropriately specified how a proxy is to be voted, it will be voted by the Proxy Holders in accordance with the specification.

If you own shares that are registered in your own name, you are a "registered stockholder" and you may attend the Annual Meeting and vote in person. You also may vote by proxy without attending the Annual Meeting in any of the following ways:

•

By Internet .    You may submit a proxy electronically on the Internet by following the instructions provided in the Notice of Internet Availability of Proxy Materials. Please have the Notice of Internet Availability of Proxy Materials in hand when you log onto the website. Internet voting facilities will be available 24 hours a day, 7 days a week, and will close at 11:59 p.m., Eastern Time, on May 6, 2015.



•

By Telephone .    If you request paper copies of the proxy materials by mail, you may submit a proxy by telephone using the toll-free number listed on the proxy card. Please have your proxy card in hand when you call. Telephone voting facilities will close and no longer be available on the date and time specified on the proxy card.



•

In Person .    You may vote in person at the Annual Meeting by completing a ballot, which will be available at the Annual Meeting. Please note that attending the Annual Meeting without completing a ballot will not count as a vote.

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By Mail .    If you request paper copies of the proxy materials by mail, you may indicate your vote by completing, signing and dating your proxy card and returning it in the reply envelope provided.

For stockholders who have their shares voted by duly submitting a proxy by Internet, telephone or mail, the Proxy Holders will vote all shares represented by such valid proxies in accordance with the Board of Directors' recommendations as set forth above, unless a stockholder appropriately specifies otherwise.

If you received more than one Notice of Internet Availability of Proxy Materials, your shares are likely registered in different names or with different addresses or are in more than one account. You must separately vote the shares shown on each Notice of Internet Availability of Proxy Materials that you receive in order for all of your shares to be voted at the Annual Meeting.

If you hold shares through a brokerage firm, trustee, bank, other financial intermediary or nominee (known as shares held in "street name"), you will receive from that broker, trustee, bank, financial intermediary or other nominee (the "intermediary") a voting instruction form that will explain how to direct the voting of your shares through the intermediary, which may include the ability to provide voting instructions via the Internet or by telephone.

If your shares are held in street name through a brokerage firm that is a member of the New York Stock Exchange ("NYSE") and you want to vote on any of the proposals to be submitted to a vote at the Annual Meeting (except as to Proposal 2), you MUST indicate how you wish your shares to be voted. The broker will vote shares held by you in street name in accordance with your voting instructions, as indicated on your signed voting instruction form or by the instructions you provide via the Internet or by telephone. Absent such instructions, the proxy submitted by the broker with respect to your shares will indicate that the broker is not able to cast a vote with respect to the matter, which is commonly referred to as a "broker non-vote." Accordingly, if your shares are held in street name, it is important that you provide voting instructions to the broker or other intermediary so that your vote will be counted. Under NYSE rules, Proposal 2 would be considered a "routine matter," and thus a broker would be permitted in its discretion to cast a vote on that proposal as to your shares in the event that you do not provide the broker with voting instructions.

If you hold shares in street name and wish to vote your shares in person at the Annual Meeting, you must first obtain a valid proxy from the intermediary. To attend the Annual Meeting in person (regardless of whether you intend to vote your shares in person at the Annual Meeting), you should follow the instructions under "Attending the Annual Meeting in Person" below.

If you received more than one voting instruction form, your shares are likely registered in different names or with different addresses or are in more than one account. You must separately follow the foregoing voting procedures for each voting instruction form that you receive in order for all of your shares to be voted at the Annual Meeting.

If you are a registered stockholder, you may revoke your proxy at any time before your shares are voted at the Annual Meeting by:

•

voting again through the Internet or by telephone prior to 11:59 p.m., Eastern Time on May 6, 2015;

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requesting, completing and mailing in a new paper proxy card, as outlined in the Notice of Internet Availability of Proxy Materials;



•

voting in person at the Annual Meeting by completing a ballot; however, attending the Annual Meeting without completing a ballot will not revoke any previously submitted proxy; or



•

submitting a written notice of revocation to the Corporate Secretary of California Resources Corporation at 10889 Wilshire Boulevard, Los Angeles, California 90024 no later than May 6, 2015.

If you are a street-name stockholder and you vote by proxy, you may change your vote by submitting new voting instructions to your broker, bank or other nominee in accordance with that entity's procedures.

Proposal 1. Election of Directors

Pursuant to the Company's Bylaws, a nominee will be elected to the Board of Directors if such nominee receives the highest number of votes cast "FOR" a particular position on the Board of Directors. Withheld votes and broker non-votes will have no effect on the outcome of Proposal 1.

Proposal 2. Ratification of the Appointment of the Independent Registered Public Accounting Firm

The affirmative vote of a majority of the shares present in person, or represented by proxy at the Annual Meeting, and entitled to vote on the matter at the Annual Meeting, is required to approve Proposal 2. Proposal 2 involves a matter on which a broker (or other nominee) does have "discretionary" authority to vote. Even if you do not instruct your broker how to vote with respect to this item, your broker may vote your shares with respect to this proposal in its discretion. With respect to Proposal 2, a vote of "ABSTAIN" will have the same effect as a vote "AGAINST."

Proposal 3. Advisory Vote to Approve Named Executive Officer Compensation

The affirmative vote of a majority of the shares present in person, or represented by proxy at the Annual Meeting, and entitled to vote on the matter at the Annual Meeting, is required to approve the recommendation in Proposal 3. Proposal 3 involves a matter on which a broker (or other nominee) does not have "discretionary" authority to vote. If you do not instruct your broker how to vote with respect to this item, your broker may not vote your shares with respect to this proposal. In such case, a broker non-vote may occur, which will have no effect on the outcome of Proposal 3. With respect to Proposal 3, a vote of "ABSTAIN" will have the same effect as a vote "AGAINST."

Proposal 4. Advisory Vote on the Frequency of Future Stockholder Advisory Votes to Approve Named Executive Officer Compensation

Pursuant to the Company's Bylaws, in a non-binding advisory matter with more than two possible vote choices such as Proposal 4, the option that receives the most affirmative votes of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the matter shall be the recommendation of the stockholders. If you do not instruct your broker how to vote with respect to this item, your broker may not vote your shares with respect to this proposal. Abstentions and broker non-votes will have no effect on the outcome of Proposal 4.

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With respect to both Proposal 3 and Proposal 4, while these votes are required by law, they will neither be binding on the Company or the Board of Directors nor will they create or imply any change in the fiduciary duties of, or impose any additional fiduciary duty on, the Company or the Board of Directors. However, the views of our stockholders are important to us, and our Compensation Committee will take into account the outcome of the votes when considering future executive compensation decisions. We urge you to read the section entitled "Compensation Discussion and Analysis," which discusses in detail how our executive compensation program implements our compensation philosophy.

The Board of Directors is providing these proxy materials to you in connection with the solicitation by the Board of Directors of proxies to be voted at the Annual Meeting. In addition to solicitation by mail, our officers, directors and employees may solicit proxies personally or by telephone, facsimile or electronic means. These officers, directors and employees will not receive any extra compensation for these services. In addition, we will make arrangements with brokerage houses, custodians, nominees and other fiduciaries to send proxy materials to the beneficial owners of our stock, and we will reimburse them for postage and clerical expenses. We will bear the costs of the solicitation, including the cost of the preparation, assembly, printing and, where applicable, mailing of the Notice of Internet Availability of Proxy Materials, the Notice of the 2015 Annual Meeting of Stockholders, this proxy statement, the proxy card and any additional information furnished by us to our stockholders. In addition, we have hired D.F. King & Co., Inc. to assist us in soliciting proxies, which it may do by telephone or in person. We will pay a fee of $7,500, plus expenses.

Only stockholders of record or their legal proxy holders as of the Record Date or our invited guests may attend the Annual Meeting in person. If you plan to attend the Annual Meeting in person, you must present a valid form of government-issued photo identification, such as a driver's license or passport. In addition to such personal identification, you will need an admission ticket or proof of ownership of CRC stock to enter the annual meeting. If your shares are registered in your name, you will find an admission ticket attached to the notice regarding the internet availability of proxy materials or the proxy card sent to you. If your shares are held in street name with a broker, bank or other nominee, you will need to bring a copy of your brokerage statement or other documentation reflecting your stock ownership as of the Record Date.

No cameras, telephones, recording equipment, electronic devices, large bags, briefcases or packages will be permitted at the Annual Meeting. No banners, signs, firearms or weapons will be allowed in the meeting room. We reserve the right to inspect all items entering the meeting room.

The Annual Meeting will be held at the Bakersfield Marriott at the Convention Center, located at 801 Truxtun Avenue, Bakersfield, California 93301.

CRC's principal executive offices are currently located at 10889 Wilshire Boulevard, Los Angeles, California 90024, which is the address used for contact purposes throughout this proxy statement. However, on or about June 15, 2015, CRC anticipates moving its principal executive offices to 9200 Oakdale Avenue, Suite 900, Chatsworth, California 91311.

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Prior to November 30, 2014, CRC was a wholly-owned subsidiary of Occidental. On November 30, 2014, Occidental distributed 309,889,779 shares of our common stock on a pro rata basis to Occidental stockholders and we became an independent, publicly traded company. No consideration was paid by Occidental stockholders for shares of our common stock received in the Spin-off. Occidental retained 71,500,000 shares of our common stock, which Occidental has stated it intends to divest within 18 months after November 30, 2014. Occidental also granted us a proxy to vote the shares of our common stock that Occidental retained immediately after the distribution in proportion to the votes cast by our other stockholders. As of December 31, 2014, Occidental owned approximately 18.5% of our common stock and the remaining 81.5% of our shares were publicly traded.

CRC entered into several agreements with Occidental on November 25, 2014 that governed the Spin-off and the relationship of the parties following the Spin-off. For a discussion of the agreements between CRC and Occidental, please read "Certain Relationships and Related Transactions."

As a result of the Spin-off, CRC became an independent oil and natural gas exploration and production company operating properties exclusively in California. Our business is focused on conventional and unconventional assets, which can generate positive cash flow throughout the oil and natural gas price cycle and have the capacity to provide significant production and cash flow growth in a higher price environment. We are the largest producer in California on a gross operated basis. We produced on average approximately 159,000 Boe/d net in 2014. And, as of December 31, 2014, we had proved reserves of 768 MMBoe.

California is one of the most prolific oil and natural gas producing regions in the world and is the third largest oil producing state in the nation. It has 5 of the 12 largest fields in the lower 48 states based on estimated proved reserves as of 2009, and our portfolio includes interests in four of these fields.

We are committed to good corporate governance. In furtherance thereof, the Board of Directors has adopted several governance documents to guide the operation and direction of the board and its committees, which include Corporate Governance Guidelines, a Business Ethics Policy (which applies to all directors and employees, including the Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer) and charters for the Audit, Compensation, Nominating and Governance and Health, Safety and Environmental Committees. Each of these documents is available on our website ( www.crc.com ), and stockholders may obtain a printed copy, free of charge, by sending a written request to California Resources Corporation, Attention: Corporate Secretary, 10889 Wilshire Boulevard, Los Angeles, California 90024. We will also promptly post on our website any amendments to these documents and any waivers from the Business Ethics Policy for our directors and principal executive, financial and accounting officers.

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Our Board of Directors is temporarily divided into three classes. One of the three classes is elected each year on a rotating basis to succeed the directors of the subject class whose terms are expiring. In this manner, as of the 2015 Annual Meeting, the term of the directors in Classes I, II and III of the board expire in 2015, 2016 and 2017, respectively. However, commencing with the election of the directors at the 2018 Annual Meeting, the Board of Directors will cease to be classified, and the directors elected at the 2018 Annual Meeting (and each annual meeting thereafter) shall be elected for a one year term.

Set forth below is biographical information regarding each of our directors as well as the specific experience, qualifications, attributes and skills that led to the conclusion that such individual should serve as director. There are no family relationships between any of our directors and executive officers. In addition, there are no arrangements or understandings between any of our executive officers or directors and any other person pursuant to which any person was selected as a director or an executive officer, respectively.

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To qualify as "independent" under the NYSE listing standards, the Board of Directors must affirmatively determine that the director has no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with us) that would interfere with his or her exercise of independent judgment in carrying out his or her responsibilities as a director. The NYSE independent director criteria include that the director not be our employee and not have engaged in various types of business dealings with us.

The Board of Directors has reviewed all direct or indirect business relationships between each director (including his or her immediate family) and us, including those relationships described under "Related Party Transactions" below, as well as each director's relationships with charitable organizations, to assess director independence as defined in the listing standards of the NYSE. Based on this evaluation, the Board of Directors has determined that Messrs. Gannon, Havner, Korell, Moncrief, Poladian, Sloan, Sinnott and Ms. Kehr are independent directors as that term is defined in the listing standards of the NYSE. Neither Mr. Albrecht, the Executive Chairman of the Board, nor Mr. Stevens, the President and Chief Executive Officer, is considered by the Board of Directors to be an independent director because of his employment with CRC.

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Chairman

The Board of Directors' leadership structure separates the CEO and Chairman of the Board positions. Mr. Stevens currently serves as our President and CEO, and Mr. Albrecht currently holds the position of Executive Chairman. The Board of Directors retains the authority to modify this structure to best address our unique circumstances as and when appropriate.

The Board of Directors believes that there is no single, generally accepted approach to providing board leadership and that each of the possible leadership structures for a board must be considered in the context of the individuals involved and the specific circumstances facing a company, as the right leadership structure may vary as circumstances change. The Board of Directors believe it is in the best interest of the Company and its stockholders at this time to have separate CEO and Chairman positions, and have an independent director serve as Lead Independent Director working in conjunction with the Chairman, which enables the CEO to focus on operation of the Company's business, while the Chairman and Lead Independent Director focus on leading the Board of Directors in its oversight role.

Lead Independent Director

The Board of Directors has created the position of Lead Independent Director, selected annually by the board from among the independent directors. The Board of Directors selected Mr. Korell as Lead Independent Director in December 2014 in connection with the first meeting of the board after the Spin-off. The Board of Directors believes that the Lead Independent Director position provides additional independent oversight for the board and management. The responsibilities of the Lead Independent Director include acting as chair at meetings of the Board of Directors when the Chairman is not present, and preparing the agenda and presiding over executive sessions of the non-management directors of the Board of Directors.

During 2014, the Board of Directors held two meetings, one prior to the Spin-off and one after the Spin-off, and the Nominating and Governance Committee, the Compensation Committee and the Audit Committee each held one meeting. The Health, Safety and Environmental Committee did not have a meeting in 2014. Each director attended 100% of the meetings of the Board of Directors and the standing committees on which he or she served that occurred during such directors' terms in 2014. Pursuant to our Corporate Governance Guidelines, directors are encouraged to attend our annual meetings of stockholders.

The Board of Directors intends to hold regularly scheduled meetings of independent directors in executive session without management present in conjunction with each regular board meeting. In addition to these regularly scheduled meetings, executive sessions may be called upon the request of any independent director.

As of the date of this proxy statement, our Board of Directors has four separately designated standing committees. The membership and purposes of each of the committees are described below. Each of the committees operates under a written charter adopted by the board. The Board of Directors and each committee has the power to hire independent legal, financial or other experts and advisors as it may deem necessary, without consulting or obtaining the approval of any officers of the Company in advance.

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No member of our Compensation Committee is now, or at any time since the beginning of 2014 has been, employed by or served as an officer of CRC or any of its subsidiaries or had any relationships requiring disclosure with CRC or any of its subsidiaries. None of our executive officers is now, or at any time has been, since the beginning of 2014, a member of the compensation committee or board of directors of another entity one of whose executive officers has been a member of our Board of Directors or Compensation Committee.

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Our Board of Directors welcomes communications from our stockholders and other interested parties. Communications to our Board of Directors, to any committee of our board, to the Lead Independent Director (who presides over the executive sessions of our independent and non-management directors), or to any director in particular, should be sent to:

Board of Directors, Committee Name or director's name, as appropriate
California Resources Corporation
10889 Wilshire Boulevard
Los Angeles, California 90024

We will forward all correspondence directly to the committee or individual director, as appropriate. Our independent directors approved our process for collecting and organizing stockholder communications to the Board of Directors.

If any stockholder or third party has a complaint or concern regarding accounting, internal accounting controls or auditing matters at CRC, they should send their complaint in writing to Mr. Gannon, the Chairman of the Audit Committee, at the address listed above.

Our Company's management is responsible for the day-to-day management of risks to the Company. The Board of Directors has broad oversight responsibility for our risk management programs.

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Identifying and Evaluating Nominees for Directors

Our Nominating and Governance Committee is responsible for leading the search for individuals qualified to serve as directors and for recommending to the board nominees as directors to be presented for election at meetings of the stockholders or of the Board of Directors. Our Nominating and Governance Committee evaluates candidates for nomination to the Board of Directors, including those recommended by stockholders, and conducts appropriate inquiries into the backgrounds and qualifications of possible candidates. Our Nominating and Governance Committee may retain outside consultants to assist in identifying director candidates in its sole discretion, but it did not engage any outside consultants in connection with selecting the nominees for election at the Annual Meeting.

Director Criteria, Qualifications, Experience and Diversity

Our Corporate Governance Guidelines contain qualifications that apply to director nominees recommended by our Nominating and Governance Committee. The Nominating and Governance Committee will consider and review the candidate's following qualifications:

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relevant skills, qualifications and experience;



•

independence under applicable standards;



•

business judgment;



•

service on boards of directors of other companies;



•

personal and professional integrity, including commitment to the Company's core values;



•

willingness to commit the required time to serve as a Board of Directors member;



•

familiarity with the Company and its industry; and



•

such other matters as the committee deems appropriate.

The Nominating and Governance Committee also will consider the diversity of, and the optimal enhancement of the current mix of talent and experience on, the Board of Directors.

Our Board of Directors adopted policies restricting related party transactions. We review all relationships and transactions in which we and our directors and executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest. Our Corporate Secretary's office implements procedures to obtain information from the directors and executive officers with respect to related party transactions. Determinations as to whether an executive officer or director has a direct or indirect material interest and whether such an interest is permissible are determined by the Audit Committee of our Board of Directors. Agreements that embody transactions that are material in amount or significance are filed with the SEC as required.

Our business ethics and corporate policies prohibit significant conflicts of interest. Any waivers of these policies require approval by a compliance officer, the corporate compliance committee or uninvolved members of the Audit Committee (in the case of conflicts of our executive officers or directors). Under our business ethics and corporate policies, conflicts of

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interest generally are deemed to occur when private or family interests interfere or compete with the interests of our Company.

We have multiple processes for reporting conflicts of interests, including related party transactions. Under the business ethics and corporate policies, all our directors and employees are required to report any known or apparent conflict of interest, or potential conflict of interest, to their supervisors, a compliance officer, the corporate compliance committee or the Audit Committee as appropriate. As part of any review, the following factors are generally considered:

•

the nature of the related person's interest in the transaction;



•

the material terms of the transaction;



•

the importance of the transaction to the related person;



•

the importance of the transaction to us;



•

whether the transaction would impair the judgment of a director or executive officer to act or their ability to act in our best interest;



•

whether the transaction might affect a director's independence under NYSE standards; and



•

any other matters deemed appropriate with respect to the particular transaction.

We also have other policies and procedures to prevent conflicts of interest, including related person transactions. For example, the charter of our Nominating and Governance Committee requires that the committee members assess the independence of the non-management directors at least annually, including a requirement that it determine whether any such directors have a material relationship with us, either directly or indirectly, as defined therein and as further described above under "Director Independence Determinations."

Separation and Distribution Agreement

The Separation and Distribution Agreement governs the terms of the separation of Occidental's California oil and gas exploration and production operations and related assets, liabilities and obligations (the "California business") from Occidental's other businesses. Generally, the Separation and Distribution Agreement includes the agreements of Occidental and us on the steps taken to complete the separation, including the assets and rights transferred, liabilities assumed or retained, contracts assigned and related matters. The Separation and Distribution Agreement provided for Occidental and us to transfer specified assets and liabilities between the two companies to separate the California business from Occidental's remaining businesses. As a result of this transfer, we own all assets exclusively related to the California business, including the assets reflected on our balance sheet as of September 30, 2014 other than assets disposed of after such date, and certain other assets related to the California business specifically allocated to us. We are also responsible for all liabilities, including environmental liabilities, to the extent relating to the operation or ownership of the California business or any of the assets allocated to us in the separation, as well as all liabilities arising out of, relating to or resulting from our new financing arrangements or reflected as liabilities on our balance sheet as of September 30, 2014, subject to the discharge of any such liabilities after September 30, 2014. Occidental retained all other assets and liabilities, including assets and liabilities related to discontinued businesses (other than those businesses that were a part of the California business prior to being discontinued). For

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purposes of allocating assets and liabilities between us and Occidental, the Separation and Distribution Agreement provides that the California business generally means:

•

the exploration for and development and production of crude oil and condensate, NGLs and natural gas in the State of California and in state waters offshore California, including all California operations of Occidental's oil and gas segment;



•

the ownership and operation of our power plants at Elk Hills Field and in a portion of the Wilmington Field;



•

the marketing and trading of crude oil and condensate, NGL, natural gas, water, steam and electricity produced in the operations described in the prior two bullet points; and



•

the abandonment, monitoring and remediation of oil and gas properties and operations utilized therein.

The Separation and Distribution Agreement also provides that the California business does not include the existing third-party gas marketing business of Occidental's non-California midstream and marketing segment, which participates in various U.S. markets, including California.

Unless otherwise provided in the Separation and Distribution Agreement or any of the related ancillary agreements, all assets were transferred on an "as is, where is" basis.

The Separation and Distribution Agreement required Occidental and us to endeavor to obtain consents, approvals and amendments required to novate or assign the assets and liabilities that are to be transferred pursuant to the Separation and Distribution Agreement as soon as reasonably practicable. Generally, if the transfer of any assets or liabilities required a consent that would not be obtained before the distribution, or if any assets or liabilities were erroneously transferred or if any assets or liabilities were erroneously not transferred, each party agreed to hold the relevant assets or liabilities for the intended party's use and benefit (at the intended party's expense) until they could be transferred to the intended party.

The Separation and Distribution Agreement also governs the treatment of all aspects relating to indemnification and insurance, and generally provides for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of our business with us and financial responsibility for the obligations and liabilities of the remaining Occidental business with Occidental. The Separation and Distribution Agreement also established procedures for handling claims subject to indemnification and related matters. We and Occidental generally released each other from all claims arising prior to the Spin-off other than claims arising under the transaction agreements, including the indemnification provisions described above.

Transition Services Agreement

The Transition Services Agreement sets forth the terms on which Occidental will provide to us, and we will provide to Occidental, on an as-needed basis for 12 to 18 months from the Spin-off, certain services or functions that the companies historically have shared.

Tax Sharing Agreement

The Tax Sharing Agreement governs the respective rights, responsibilities, and obligations of Occidental and us with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings, and other matters regarding taxes. The Tax Sharing Agreement will remain in effect until the parties agree in writing to its termination; however, notwithstanding such termination, the Tax Sharing Agreement will remain in effect with respect to any payments or indemnification due for all taxable periods prior to such termination during which the agreement was in effect.

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In general, pursuant to the Tax Sharing Agreement:

•

CRC and Occidental agreed to cooperate in the preparation of tax returns, refund claims and with regard to audits concerning matters covered by the agreement;



•

the Tax Sharing Agreement assigns responsibilities for administrative matters, such as the filing of tax returns, payment of taxes due, retention of records and conduct of audits, examinations, or similar proceedings;



•

with respect to any periods (or portions thereof) ending prior to the distribution and periods that begin on or before but end after the distribution, Occidental will pay any U.S. federal income taxes of the affiliated group of which Occidental is the common parent and, if CRC (including any of its subsidiaries) is included in that affiliated group, CRC will pay Occidental an amount equal to the amount of additional U.S. federal income taxes payable by Occidental resulting from Occidental's election to capitalize some or all of certain CRC intangible drilling costs. Occidental has sole discretion to make the election but will likely elect to capitalize intangible drilling costs only to the extent that higher CRC taxable income is needed to ensure that distributions paid by CRC to Occidental or its subsidiaries are not taxable. CRC will also be responsible for any increase in Occidental's federal tax liability for any period in which CRC or any CRC subsidiaries are combined or consolidated with Occidental if such increase results from audit adjustments attributable to CRC's business;



•

with respect to any periods (or portions thereof) ending prior to the distribution and periods that begin on or before but end after the distribution, Occidental will pay any state or local franchise or income taxes that are determined on a consolidated, combined, or unitary basis and, if CRC (including any of its subsidiaries) is included in such determination, CRC will pay Occidental an amount equal to the amount of additional taxes payable by Occidental resulting from Occidental's election to capitalize some or all of certain CRC intangible drilling costs. CRC will also be responsible for any increase in Occidental's state tax liability for any period in which CRC or any CRC subsidiaries are combined or consolidated with Occidental if such increase results from audit adjustments attributable to CRC's business;



•

with respect to any periods (or portions thereof) beginning after the distribution, CRC will be responsible for any U.S. federal, state or local income taxes of CRC and its subsidiaries;



•

Occidental will be responsible for any U.S. federal, state, local, or foreign taxes due with respect to tax returns that include only Occidental and/or its subsidiaries (excluding CRC and its subsidiaries), and CRC will be responsible for any U.S. federal, state, local or foreign taxes due with respect to tax returns that include only CRC and/or its subsidiaries;



•

to the extent that any gain or income is recognized by Occidental (including its subsidiaries) in connection with the failure of the Spin-off or certain transactions undertaken in preparation for, or in connection with, the Spin-off, to qualify for tax-free treatment under the relevant provisions of the Code, CRC will indemnify Occidental for any taxes on such gain or income to the extent such failure is attributable to:



o

inaccurate covenants, representations, or warranties by CRC (or any CRC subsidiaries) made in connection with the Tax Sharing Agreement or any tax ruling requested or received from the IRS or opinions of Occidental's outside tax advisors;



o

any breach by CRC (or any CRC subsidiaries) of certain restrictive covenants in the Tax Sharing Agreement; or



o

certain other actions taken by CRC; and

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•

CRC will bear 50% of the amount of any taxes resulting from gain or income that is recognized by Occidental (including its subsidiaries) in connection with the failure of the Spin-off or a related transaction to qualify for tax-free treatment under the relevant provisions of the Code, to the extent such failure is not attributable to the fault of either party; however, if CRC receives an increase in the tax basis of its depletable, depreciable or amortizable assets as a result of any such tax being imposed, CRC will pay to Occidental an amount equal to any reduction in its tax liability attributable to such basis increase when such reduction in tax liability arises.

Occidental received a private letter ruling from the IRS substantially to the effect that certain aspects of the transactions that were undertaken in preparation for, or in connection with, the Spin-off will not cause the distribution to be taxable to Occidental or its affiliates for federal income tax purposes.

CRC agreed to certain restrictions intended to preserve the tax-free status of certain transactions related to the Spin-off. During the two-year period following Occidental's disposition of the 71,500,000 shares of CRC common stock retained in the Spin-off, these covenants restrict CRC's ability to: (a) voluntarily liquidate or dissolve; (b) merge, convert or consolidate with or into another entity; (c) issue any capital stock or other equity interests, options or rights to acquire capital stock or other equity interests, or any other instruments convertible into or exchangeable for, or that could otherwise result in the issuance of, capital stock or other equity interests; (d) redeem or otherwise repurchase any outstanding capital stock or other equity interests, rights or instruments, other than pursuant to open market stock repurchase programs meeting certain requirements; (e) recapitalize, reclassify, or alter the voting rights of one or more shares of capital stock or other equity interests, rights or instruments; (f) take certain other actions inconsistent with any representation made in any materials provided in connection with any private letter ruling request or opinions of Occidental's outside tax advisors; (g) increase or decrease the number of members of the board of directors of CRC or any pre-Spin-off CRC subsidiary, alter in any way the procedures for the nomination, election, and termination of members of the board, or expand, contract, or otherwise modify the rights of the board to govern the affairs of CRC except in certain circumstances; (h) sell, exchange, distribute, or otherwise dispose of any pre-Spin-off CRC subsidiary or all or a substantial part of the assets of any of the trades or businesses conducted by CRC and the pre-Spin-off CRC subsidiaries (other than sales or transfers of inventory in the ordinary course of business) before the Spin-off except in certain circumstances; (i) take, or fail to take, any action that causes the trades or businesses conducted by CRC or any pre-Spin-off CRC subsidiary to cease to be actively conducted in substantially the manner conducted pre-Spin-off; (j) sell, transfer or agree to sell or transfer to any corporate subsidiary any assets held by certain Occidental subsidiaries before Occidental's internal reorganization in connection with the Spin-off; (k) enter into any negotiations, agreements, understandings, or arrangements with respect to any of the foregoing; and (l) take, or fail to take, any action that could reasonably be expected to cause the Spin-off to fail to qualify as a tax-free transaction under Sections 355, 361 and/or 368(a)(1)(D) of the Code. CRC may take certain actions otherwise subject to these restrictions only if Occidental consents to the taking of such action or if CRC obtains, and provides to Occidental, a private letter ruling from the IRS and/or an opinion from an independent law firm or accounting firm, in either case, reasonably acceptable to Occidental, to the effect that such action would not jeopardize the tax-free status of certain transactions related to the Spin-off.

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Employee Matters Agreement

The Employee Matters Agreement governs Occidental's and our compensation and employee benefit obligations with respect to the current and former employees of each company, and generally allocates liabilities and responsibilities relating to employee compensation and benefit plans and programs. The Employee Matters Agreement provides for the following:

•

the transfer of all employees who, following the Spin-off, work for the California business ("transferred employees") to us or one of our subsidiaries;



•

the assumption (or retention) by us and our subsidiaries of all liabilities and obligations relating to current and former employees of the California business (excluding, with respect to current employees, certain pension obligations and, with respect to former employees, certain pension, retiree medical and nonqualified deferred compensation plan obligations);



•

the retention by Occidental of all employee and benefit plan-related liabilities and obligations not relating to current or former employees of the California business;



•

the establishment by us and our subsidiaries of new employee benefit plans for purposes of providing benefits to transferred employees;



•

the cessation of active participation by transferred employees under all benefit plans sponsored by Occidental;



•

the conversion of Occidental equity and equity-based awards held by transferred employees into awards with respect to our common stock;



•

the adjustment of Occidental equity and equity-based awards not held by transferred employees to reflect the effect of the Spin-off;



•

the transfer of all assets held in trusts maintained by Occidental which relate to benefits payable under certain defined benefit plans maintained by our subsidiaries to a trust (or trusts) maintained by the respective subsidiaries;



•

the transfer of liabilities and other obligations relating to benefits accrued by transferred employees pursuant to Occidental's supplemental retirement and nonqualified deferred compensation plans from Occidental to us and our subsidiaries;



•

that the Spin-off is not intended to constitute a "change in control" or similar transaction under Occidental or our benefit and compensation plans;



•

the crediting of transferred employees for their service with Occidental for purposes of determining eligibility, vesting and benefit levels under our benefit plans; and



•

general cooperation and sharing of information between us and Occidental on matters relating to the transfers of employees and employee benefit plan-related liabilities and obligations.

AMI Agreement

The Area of Mutual Interest Agreement ("AMI Agreement") has a five-year term and sets forth the terms upon which Occidental may acquire an interest in and rights with respect to certain oil and gas properties (the "AMI Interests") in the United States (excluding California and federal waters offshore California) (the "AMI Area"). Pursuant to the terms of the AMI Agreement, for a period of one year after notice from us, Occidental may elect to exercise an option to acquire an interest in the AMI Interests. Upon exercise, Occidental will acquire an undivided 51% interest in the subject AMI Interests for consideration equal to the sum of (i) 51% of the net acquisition price paid by us for such AMI Interests and (ii) 51% of the drilling and/or operating

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costs paid by us (net of any reimbursements) in respect of such AMI Interests attributable to any periods after the date of our acquisition of such AMI Interests, and less (iii) 51% of the revenue attributable to such AMI Interests after the date of our acquisition of such AMI Interests, subject to certain limited exceptions. If applicable, in connection with the exercise of Occidental's option, we will resign as operator and vote for Occidental or its designee as the replacement operator.

Confidentiality and Trade Secret Protection Agreement

Pursuant to the Confidentiality and Trade Secret Protection Agreement, we agreed to keep confidential certain information we learned about Occidental prior to the Spin-off. In order to preserve Occidental's trade secrets and confidential information and to protect the goodwill transferred to us in connection with the Spin-off, among other things, CRC and Occidental agreed (i) not to hire the other party's employees for a period of one year following the completion of the Spin-off and (ii) not to solicit the other party's employees for an additional four years following the expiration of the non-hire restrictions.

Intellectual Property License Agreement

The Intellectual Property License Agreement sets forth the terms on which Occidental, on behalf of itself and its affiliates, licensed certain intellectual property and documentation to us and our affiliates, including software owned by Occidental and its affiliates. We have the right to create derivative works of the software and documentation and use them for our internal business purposes. The Intellectual Property License Agreement also sets forth the terms on which we licensed Occidental and its affiliates certain data and documentation. Occidental and its affiliates have the right to create derivative works of such data and documentation and use them for their internal business purposes.

Stockholder's and Registration Rights Agreement

Prior to the distribution, we and Occidental entered into a Stockholder's and Registration Rights Agreement pursuant to which we agreed that, upon the request of Occidental, we will use our reasonable best efforts to effect the registration under applicable federal and state securities laws of the disposition of shares of our common stock retained by Occidental after the distribution and to cooperate with Occidental to facilitate its disposition of the retained securities through one or more exchanges for Occidental common stock. In addition, we agreed to certain restrictions on our ability to file registration statements during any exchange offer or grant registration rights to third parties during the term of the Stockholder's and Registration Rights Agreement. Occidental also granted us a proxy to vote the shares of our common stock that Occidental retained immediately after the distribution in proportion to the votes cast by our other stockholders. This proxy, however, will be automatically revoked as to a particular share upon any transfer of such share from Occidental to a person other than Occidental, and neither the voting agreement nor the proxy will limit or prohibit any transfer.

In addition to the related party transactions described in "Arrangements between CRC and Occidental" above, this section discusses other transactions and relationships with related persons since the beginning of our most recently completed fiscal year.

Marketing Transactions

Substantially all of our marketing of oil, gas and NGLs had historically been transacted through Occidental's marketing subsidiaries. For the years ended December 31, 2014, 2013 and

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2012, sales through Occidental's marketing subsidiaries accounted for approximately $2.7 billion, $4.2 billion and $4.0 billion of our net sales, respectively.

In August 2014, we began to market products through a wholly-owned marketing subsidiary and, through January 31, 2015, we entered into contracts for approximately $70 million in net sales with subsidiaries of Plains All American Pipeline, L.P. ("Plains"). In addition, we have a ship-or-pay agreement with Plains that provides us with capacity to transport 10,000 barrels per day of NGLs starting the second quarter of 2015. Occidental owns approximately 13% of the general partner of Plains. Funds managed by Kayne Anderson Capital Advisors L.P. and affiliates ("Kayne Anderson") own approximately 20% of the general partner of Plains, approximately 3.4% of the limited partner units of Plains and an additional approximately 4.5% general partner interest in Plains GP Holdings, L.P. (the public portion of the general partner). Occidental appoints a director, and Mr. Sinnott serves as a director, for the general partner of Plains and Mr. Sinnott also serves as a director for Plains.

Transactions with Related Persons, Promoters and Certain Control Persons

Certain funds controlled by Kayne Anderson Investment Management, Inc., of which Mr. Sinnott serves as President, purchased, and subsequently sold, $5 million in aggregate principal amount of our 6% senior notes due 2024.

Wells Fargo & Company, of which Mr. Sloan currently serves as Senior Executive Vice President Wholesale Banking, or its affiliates ("Wells") acted as a Joint Book-Running Manager for, and initial purchaser for approximately $430 million in aggregate principal amount of, our senior unsecured notes. Wells currently holds none of such notes. Wells is acting as trustee under the indenture and as the exchange agent under the Company's exchange offer of the notes for registered notes, and as a lender and Documentation Agent under our Revolving Credit Facility and Term Loan Facility. Wells' portion of the total commitments, and the maximum aggregate principal amount outstanding in 2014, under our Revolving Credit Facility and Term Loan collectively was approximately $235 million and $114 million, respectively. As of February 9, 2015, Wells' portion of the amount outstanding under the Revolving Credit Facility is $38 million. Wells received interest of approximately $210,000 under the Revolving Credit Facility and Term Loan in 2014 at interest rates varying between 2.15% and 4.25%.

The Audit Committee of the Board of Directors of California Resources Corporation ("CRC") approves the appointment of the independent registered public accounting firm, and monitors (1) the integrity of the financial statements of CRC; (2) the independent registered public accounting firm's qualifications, independence and performance; (3) the effectiveness and performance of CRC's internal audit function; and (4) the compliance by CRC with legal and regulatory requirements.

The Board of Directors has determined that each of the members of the Audit Committee satisfies the standards of independence established under the Securities and Exchange Commission's ("SEC") rules and regulations and listing standards of the New York Stock Exchange. The Board of Directors has further determined that each of the members of the Audit Committee is financially literate and that Mr. Gannon is an "audit committee financial expert" as defined by the rules and regulations of the SEC.

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In connection with our financial statements for the year ended December 31, 2014, the Audit Committee has:

•

reviewed and discussed with management the audited financial statements contained in CRC's Annual Report on Form 10-K for the fiscal year ended December 31, 2014;



•

discussed with CRC's independent registered public accounting firm, KPMG LLP, the matters required to be discussed by Auditing Standard No. 16;



•

received the written disclosures from KPMG LLP as required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the Audit Committee concerning independence;



•

discussed with KPMG LLP its independence from CRC and its management; and



•

had an executive session with KPMG LLP to provide them with the opportunity to discuss any other matters that they desired to raise without management present.

Based on the review and discussions with CRC's management and independent registered public accounting firm, as set forth above, the Audit Committee recommended to CRC's Board of Directors that the audited consolidated financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, for filing with the SEC.

Audit Committee,

Justin A. Gannon
Ronald L. Havner, Jr.
Richard W. Moncrief

February 26, 2015

For purposes of the following Compensation Discussion and Analysis and Executive Compensation disclosures, the following sets forth our "named executive officers" for the year ended December 31, 2014:

Compensation Program

The CRC Compensation Committee was formed in December of 2014 following our Spin-off from Occidental which occurred on November 30, 2014.

In order to avoid disruptions to our executive compensation program and ensure an orderly transition of CRC's new management team, our initial executive compensation program was approved by Occidental's Executive Compensation Committee ("Occidental's Compensation Committee") and was in effect at the time of our Spin-off in November. As such, all executive

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compensation decisions for our named executive officers prior to and in conjunction with the Spin-off were made by Occidental. Pay Governance LLC, Occidental's independent compensation consultant, assisted in the design and implementation of our initial compensation program.

In early 2014, Pay Governance LLC assisted Occidental's Compensation Committee in developing an initial compensation peer group for purposes of conducting market analyses and to determine the level and form of executive and broad-based compensation immediately following the Spin-off.

Executive compensation decisions following the Spin-off have been made by the CRC Compensation Committee. In January 2015, the CRC Compensation Committee engaged Meridian Compensation Partners ("Meridian") as its independent compensation consultant to assist with the review and development of the 2015 compensation program. In February 2015 the CRC Compensation Committee approved a new annual incentive program, as described in "2015 Annual Incentive Design" below.

Compensation Philosophy

The following core principles form the foundation of the initial compensation program for our executives, including the named executive officers.

First , compensation programs should motivate our executives to take actions that are aligned with our short- and long-term strategic objectives, and appropriately balance risk versus potential reward.

Second , a high percentage of senior executive's pay should be based on performance to ensure the highest level of accountability to stockholders.

Third , performance pay should offer an opportunity for above average compensation when our performance exceeds our goals balanced by the risk of below average compensation when it does not.

Fourth, a focus on the long-term performance of the Company, thereby more closely aligning their interests with those of our stockholders.

Compensation Objectives

Our initial executive compensation program was designed to provide competitive compensation levels generally targeted to market median, with flexibility to adjust these levels based on individual factors such as experience, performance, and internal equity. The following matters were important to the development of our compensation program:

•

Market practices.



•

The need for a smooth transition and retention of talent from Occidental to us.



•

The need to attract executive talent from outside of Occidental.



•

The need to provide CRC with an initial program immediately following the Spin-off, recognizing that our Board of Directors (or a committee thereof) and management will be responsible for program design following the Spin-off.

The descriptions below reflect our initial compensation program for our named executive officers following the Spin-off, which we inherited from Occidental. During 2015, the CRC Compensation Committee will review the compensation program and make adjustments as it deems appropriate to support our long-term strategic objectives.

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Peer Companies for Initial Compensation Program Design

Since we considered market practices in designing our initial compensation program, Pay Governance LLC, in its role for the Occidental Compensation Committee, helped to develop a peer group of companies on which to base market practice. This market data was considered in the design of our initial compensation program. Our compensation peer group was developed using a multi-step screening process based on the following criteria:

•

Industry—Companies in the Global Industry Classification Standard sub-industry of oil and gas exploration and production.



•

Scope—Companies in the range of 25%—400% of our expected market capitalization and 40%—250% of our expected revenue.



•

Geography—U.S.-listed companies focused on U.S. exploration and production.

Based on these factors, the following compensation peer group was selected by the Occidental Compensation Committee, which includes companies generally similar in operations and scope to CRC, as well as companies that may have some operational or scope differences to CRC, but are in the same industry and provide a more robust peer group:

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Components of the Initial Compensation Program

Our initial compensation program encompasses the concept that overall executive compensation should include elements that provide an appropriate level of fixed compensation necessary to attract and retain employees; annual incentive compensation that links annual cash compensation to the achievement of key short-term performance goals; and long-term compensation linked to goals that contribute to long-term growth of shareholder value.

The following tables describe the components of our initial compensation program and the objectives of each component.

Annual Compensation

Long-Term Compensation

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Salary —The salaries for our named executive officers were established by Occidental based on peer group market data, as well as individual factors including experience, internal pay equity, and the need to attract and retain exceptional executives from inside and outside of Occidental.

Annual Incentive —The annual incentive component of our initial compensation program was designed to promote the achievement of financial, operating and strategic goals that are aligned with creation of shareholder value, including specific activities related to the Spin-off. Under the annual incentive plan, each named executive officer had a target annual incentive opportunity expressed as a percentage of salary. The bonus targets were based on the position and scope of responsibilities of each named executive officer. Award opportunities ranged from 0% to 200% of target to be paid in cash.

Because the Spin-off of the California business was announced by Occidental in February 2014 and completed on November 30, 2014, our named executive officers spent the majority of 2014 focused on establishing us as an independent public company, while also managing our California operations to produce strong results in the deteriorating oil price environment in the second half of the year. Thus, our named executive officers' focus in 2014 was different than that of other Occidental executives. The CRC Compensation Committee considered this and the timing of the Spin-off and determined that the 2014 annual incentive for the named executive officers should recognize both the results related to the execution of the Spin-off and the results of the California business in 2014, independent of Occidental's 2014 results.

Specifically, the CRC Compensation Committee considered the following factors in its determination of the 2014 annual incentive payouts for the named executive officers (see Annex A for a reconciliation of GAAP and non-GAAP figures and other information with respect to core income, EBITDAX, reserve replacement ratio, and finding and development costs):

Financial and Operating Results

•

Delivered strong full year results in spite of a sharp decline in oil prices in the last half of 2014 (average price of Brent declined from $108.76 in 2014 to $99.51 in 2013 (8.5% decline), realized prices were $92.30 in 2014 versus $104.16 in 2013 and $68.54 in fourth quarter 2014 versus $99.32 in fourth quarter 2013):



o

Core income of $650 million in 2014 versus $869 million in 2013



o

EBITDAX of $2.5 billion in 2014 versus $2.7 billion in 2013



o

Cash flow from operations of $2.4 billion in 2014 versus $2.5 billion in 2013



•

Delivered total average 2014 production of 159 MBOEPD versus 154 MBOEPD in 2013 (3% increase)



•

Increased average oil production to 99 MBOEPD in 2014 from 90 MBOEPD in 2013 (10% increase)

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•

Achieved record average quarterly total production of 165 MBOEPD in fourth quarter 2014 (5% over fourth quarter 2013, 3% over third quarter 2014)



•

Achieved record average quarterly oil production of 105 MBOEPD in fourth quarter 2014 (12% over fourth quarter 2013, 5% over third quarter 2014)



•

Delivered organic reserve replacement ratio from our capital program of 203%



•

Increased 2014 year-end reserves to 768 million BOE versus 744 million BOE in 2013



•

Reduced finding and development costs to $17.68 per BOE in 2014 versus $19.16 per BOE in 2013



•

Quickly responded to the deteriorating oil price environment by:



o

Starting an aggressive cost containment program toward the end of 2014, contributing to a decline in production costs to $16.07 per BOE in the fourth quarter of 2014 versus $17.74 per BOE in the third quarter of 2014



o

Reducing our drilling rig count from 27 in November 2014 to 6 at year end 2014



o

Implementing a hedging program covering almost all of our oil production for the first six months of 2015 to protect against our down-side risk and preserve our ability to execute our capital program

Health, Safety and Environment (HSE)

•

Improved HSE performance, as indicated by a combined employee and contractor injury and illness incidence rate IIR of 0.46 in 2014 versus 0.53 in 2013



•

Enhanced CRC's reputation in California by supplying a record 2 billion gallons of water from our steamflood operations to California's agriculture industry and, as a result, CRC provided more water for irrigation than the amount of fresh water we purchased for our statewide operations

Execution of Spin-off

•

Recruited a highly qualified group of outside directors



•

Recruited a senior management team both from within Occidental and with external hires in key positions



•

Established independent financial systems and functions, information technology infrastructure and support groups, trading and marketing operations and supply chain groups



•

Placed $6.0 billion of long-term debt at favorable interest rates



•

Established a $2.0 billion unsecured revolving credit facility



•

Met with over 180 investors prior to Spin-off



•

Successfully executed the Spin-off despite a dramatic downturn in commodity prices

Based on an overall evaluation of these factors, the Compensation Committee determined that payout of the 2014 annual incentives in the range of the target incentive amounts with modest upward adjustments for significant individual contributions, as shown in the table below, would appropriately reward the named executive officers for their 2014 performance. The CRC Compensation Committee believes that these payouts appropriately reflect the outstanding

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operational performance, HSE accomplishments, and successful Spin-off while also recognizing the adverse impact of the oil price decline on financial results and shareholder value.

Long-Term Incentives —Our initial compensation program provides the majority of each named executive officer's compensation package through long-term incentives. The long-term incentive portion of the initial compensation program used two types of awards in 2014:

•

Stock Options —Stock options represent 50%-60% of the total long-term incentive award value for our named executive officers. These awards are intended to incentivize executive behaviors that drive value creation that leads to long-term growth of shareholder value. The stock options will vest in equal annual installments over three years from the grant date and will have a seven-year exercise term. To provide additional incentive to named executive officers to achieve meaningful stock price appreciation, initial awards of stock options to named executive officers in connection with the Spin-off were granted with an exercise price that was 10% above the fair market value of our common stock at the time of the grant.



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Performance-Based Restricted Stock Awards —Restricted stock represents 40%-50% of the total long-term incentive award value for our named executive officers. These awards are intended primarily to enhance retention and development of ownership in the new organization and will vest, subject to attainment of a minimum level of earnings before interest, taxes, depreciation and amortization ("EBITDA") as an established performance goal, as early as the end of three years from the grant date if the performance criteria are met, or as late as the end of seven years from the grant date. If the performance goal is not attained by the end of seven years, the award will forfeit in its entirety.

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The following table summarizes key features of the long-term incentive components of the initial compensation program for the 2014 grants for our named executive officers.

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2015 Annual Incentive Design

In February 2015, the CRC Compensation Committee enlisted the services of Meridian to help design the 2015 annual incentive. The new annual incentive is designed to align individual bonus awards with overall Company performance with a focus on key metrics and appropriate operational and strategic decisions intended to increase shareholder value. Prominent in the design is the Value Creation Index (VCI), a measure that the Compensation Committee believes is an effective indicator of shareholder value creation.

Under the approved design, payout of the 2015 annual incentive will be evaluated based on the following performance components and weightings against pre-determined targets:

Award opportunities under the 2015 annual incentive will range from 0% - 200% of target incentive amounts approved for each executive and will be paid in cash.

Individual Compensation Arrangements

Set forth below are descriptions of the initial annual compensation program for our named executive officers, as approved by the Occidental Compensation Committee prior to the Spin-off. Base salaries and annual incentive targets reflect the annual rates that were in effect at the time of the Spin-off. Long-term incentives reflect the grant date values of awards made in 2014.

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Todd A. Stevens—President and Chief Executive Officer

For biographical information regarding Mr. Stevens, see "Our Board of Directors" above.