Texaco Inc. and its biggest stockholder, Carl Icahn, have reached a truce that management says will allow the oil giant to focus full attention on remaining a leader in the energy business.

Announcement of the pact came Sunday as Texaco took one of the final steps in its huge restructuring program by proposing to pay $1.9 billion in special dividends to shareholders, a step Icahn applauded.The company said it had signed a standstill agreement with Icahn, who hinted broadly in recent months he might try for a second time to gain control of Texaco. Similar bids failed last year.

"Why fight when management is doing the job for you?" Icahn said in a telephone interview.

The seven-year agreement provides that Icahn will not add to his estimated 17 percent stake in Texaco, and will not launch or support any proxy fights against management.

Texaco proposed to pay two special dividends, one of $4 a share in notes and a second of $3 a share in cash and $1 a share in preferred stock, for a total of $8 per share. The company has about 240 million shares outstanding.