proxy statement

election of directors

(item 1 on the proxy card)

Each Director nominee who receives a majority of the votes cast (i.e., the number of shares voted FOR a Director nominee must exceed the number of shares voted AGAINST that Director nominee, excluding abstentions) will be elected a Director in an uncontested election.

Under Chevron’s By-Laws, in an uncontested election, any Director nominated for re-election who receives more AGAINST votes than FOR votes must submit an offer of

resignation to the Board. The BN&GC must then consider all relevant facts and circumstances, including the Director’s qualifications, past and expected future contributions, the overall composition of the Board, and whether Chevron would meet regulatory or similar requirements without the Director, and make a recommendation to the Board on the action to take with respect to the offer of resignation.

The BN&GC is responsible for recommending to the Board the qualifications for Board membership and for identifying, assessing, and recommending qualified Director candidates for the Board’s consideration. The Board membership qualifications and nomination procedures are set forth in Chevron’s Corporate Governance Guidelines, which are available on our website at www.chevron.com/investors/corporate-governance.

The BN&GC regularly reviews the appropriate skills and characteristics required of Directors in the context of the current composition of the Board, the operating requirements of the Company, and the long-term interests of stockholders.

In addition, a qualifying stockholder (or stockholders) may nominate director nominees by satisfying the requirements specified in our By-Laws, which are described in the “Voting and Additional Information—Submission of Stockholder Proposals for 2020 Annual Meeting” section of this Proxy Statement.

director compensation

Our compensation for non-employee Directors is designed to be competitive with compensation for directors of other large, global energy companies and other large, capital-intensive, international companies; to link rewards to business results and stockholder returns; and to align stockholder and Director interests through increased Director ownership of Chevron common stock. We do not have a retirement plan for non-employee Directors. Our Chief Executive Officer is not paid additional compensation for service as a Director.

The BN&GC evaluates and recommends to the non-employee Directors of the Board the compensation for non-employee Directors, and the non-employee Directors of the Board approve the compensation. Our executive officers have no role in determining the amount or form of non-employee Director compensation.

In 2018, the BN&GC retained the services of an independent compensation consultant, Pearl Meyer & Partners, LLC (“Pearl Meyer”), to assist the BN&GC with its periodic review of Chevron’s non-employee Director compensation program relative to Chevron’s Oil Industry Peer Group and Non–Oil Industry Peer Group, which are identified in “Use of Peer Groups” in the “Compensation Discussion and Analysis” section of this Proxy Statement.

Based on this review, the BN&GC recommended, and the non-employee Directors of the Board agreed, that no changes should be made to Director compensation in 2019.

Pearl Meyer and its lead consultant report directly to the BN&GC under the terms of the engagement, but may work cooperatively with management to develop analyses and proposals when requested to do so by the BN&GC. Pearl Meyer does not provide any services to the Company.

Non-employee Directors are reimbursed for out-of-pocket expenses incurred in connection with the business and affairs of Chevron. Non-employee Directors are eligible to participate in Chevron Humankind, our charitable matching gift and community involvement program, which is available

to any employee, retiree, or Director. For employees and Directors, we match contributions to eligible entities and grants for volunteer time, up to a maximum of $10,000 per year.

corporate governance

Chevron is governed by a Board of Directors and Board Committees that meet throughout the year. Directors discharge their responsibilities at Board and Committee meetings and through other communications with

management. Your Board is committed to strong corporate governance structures and practices that help Chevron compete more effectively, sustain its success, and build long-term stockholder value.

Your Board oversees and provides guidance for Chevron’s business and affairs. The Board oversees the development of Chevron’s strategy and business planning process and management’s implementation of them. It monitors corporate performance, the integrity of Chevron’s financial controls, and the effectiveness of its legal compliance and

enterprise risk management programs. This is generally a year-round process, culminating in Board reviews of Chevron’s strategic plan, its business plan, the next year’s capital expenditures budget, and key financial and operational indicators. Your Board also oversees management and the succession of key executives.

Under Chevron’s By-Laws, the positions of Chairman of the Board and Chief Executive Officer are separate positions that may be occupied by the same person at the discretion of the Board. Chevron’s independent Directors select the Chairman of the Board annually. Thus, the Board has great flexibility to choose its optimal leadership structure depending upon Chevron’s particular needs and circumstances and to organize its functions and conduct its business in the most effective manner.

Annually the Board Nominating and Governance Committee conducts an assessment of Chevron’s corporate governance structures and processes, which includes a review of Chevron’s Board leadership structure and whether combining or separating the roles of Chairman and CEO is in the best interests of Chevron’s stockholders. At present, Chevron’s Board believes that it is in the stockholders’ best interests for the CEO, Michael K. Wirth, to also serve as Chairman of the Board. The Board believes that having Mr. Wirth serve as Chairman fosters an important unity of leadership between the Board and management that is subject to effective oversight by the independent Lead Director and the other independent Directors. The Board believes that it benefits from the significant knowledge, insight, and perspective of Chevron and the energy industry that Mr. Wirth has gained throughout his 36 years with Chevron. Our business is highly complex, and our projects often have long lead times, with many of our major capital projects taking more than 10 years from the exploration phase to first production. The Board believes that Mr. Wirth’s in-depth knowledge of the Company,

coupled with his extensive industry expertise, makes him particularly qualified to lead discussions of the Board. Having Mr. Wirth serve as Chairman also promotes better alignment of Chevron’s long-term strategic development with its operational execution. Also, as a global energy company that negotiates concessions and leases with host-country governments around the world, it is advantageous to the Company for the CEO to represent the Chevron Board in such dialogues as its Chairman.

Significantly, the Board does not believe that combining the roles creates ambiguity about reporting relationships. Given the role of the independent Lead Director discussed below and the fact that the independent Directors, pursuant to their powers under the By-Laws, have affirmatively selected Mr. Wirth for the positions of Chairman and CEO, annually set his compensation, and regularly evaluate his performance, the Board believes it is clear that Mr. Wirth reports to and is accountable to the independent Directors. Moreover, the Board does not believe that having the CEO also serve as Chairman inhibits the flow of information and interactions between the Board, management, and other Company personnel. To the contrary, the Board has unfettered access to management and other Company personnel, and the Board believes that having Mr. Wirth in the roles of both Chairman and CEO facilitates the flow of information and communications between the Board and management, which enhances the Board’s ability to obtain information and to monitor management.

Your Board recognizes the importance of independent Board oversight of the CEO and management and has developed policies and procedures designed to ensure independent oversight. In addition to conducting an annual review of the CEO’s performance, the independent Directors meet in executive session at each Board meeting and discuss management’s performance and routinely formulate guidance and feedback, which the independent Lead Director provides to the CEO and other members of management.

Further, when the Board selects the CEO to also serve as Chairman, the independent Directors annually select an independent Lead Director, currently Dr. Sugar.

The Board routinely reviews the Lead Director’s responsibilities to ensure that these responsibilities enhance its independent oversight of the CEO and management and the flow of information and interactions between the Board, management, and other Company personnel. Accordingly, in 2017, the Board further enhanced the description of the Lead Director’s role in the Corporate Governance Guidelines. The Lead Director and Chairman collaborate closely on Board meeting schedules and agendas and information provided to the Board. These consultations and agendas and the information provided to the Board frequently reflect input and suggestions from other members of the Board and management. You can read more about these particular processes in the “Board Agenda and Meetings” section of Chevron’s Corporate Governance Guidelines.

Any stockholder can communicate with the Lead Director or any of the other Directors in the manner described in the “Communicating With the Board” section of this Proxy Statement.

Also, as discussed in more detail in the “Environmental, Social, and Governance Engagement” section of this Proxy Statement, the Board encourages a robust investor engagement program. During these engagements, Board leadership is a frequent topic of discussion. In general, investors, including those that are philosophically opposed to combining the positions of Chairman and CEO, have overwhelmingly communicated to Chevron that they have minimal, if any, concerns about your Board or individual Directors or about Chevron’s policies and leadership structure. More specifically, these investors have voiced confidence in the strong counterbalancing structure of the robust independent Lead Director role.

Human capital management is critical to ongoing business success. At Chevron “human energy” is the most important element of delivering reliable, affordable and ever-cleaner energy – which requires investing in our people. We strive to create a highly engaged and motivated workforce where employees are inspired by leadership, engaged in

purpose-driven, meaningful work, have growth opportunities, and thrive in an environment that embraces diversity and inclusion. Diversity and inclusion are cornerstones of Chevron’s corporate values, and set the tone for an inclusive work environment that values the diversity of our employees’ talents, experiences and ideas.

We conduct an annual employee survey to understand employees’ views, assess Chevron against the attributes of a high-performance organization, and measure the impact of our people development programs. An effective approach to human capital management requires that we invest in talent, training, culture and employee engagement.

In addition, the senior management team and the Board focus on our commitment to the areas where we work around the world by endorsing and monitoring strategic initiatives that enable sustainable development of local workforce, business partners, and communities through

investments in health, safety, education, and economic growth.

The Board is also actively involved in reviewing and approving executive compensation, selections and succession plans to ensure we have leadership in place with the requisite skills and experience to deliver results the right way. The CEO periodically provides the Board with an assessment of senior executives and their potential as successors for the CEO position, as well as perspectives on potential candidates for other senior management positions.

The Board of Directors and the Board Committees provide guidance and oversight to management with respect to Chevron’s business strategy throughout the year. The Board dedicates at least one Board meeting each year to focus on Chevron’s strategic plan. In 2018, the Board participated in an expanded strategy offsite session that included third party experts to discuss energy transition issues. In addition, various elements of strategy are discussed at every Board meeting, as well as at meetings of the Board’s Committees. The Board also dedicates one Board meeting each year to focus on Chevron’s three-year business plan and to endorse Chevron’s

business plan, performance objectives, and capital and exploratory budget for the coming year. Our strategic plan sets direction, aligns our organization, and differentiates us from the competition. It guides our actions to successfully manage risk and deliver stockholder value. The Board of Directors and the Board Committees oversee fundamental components of our strategic plan, and management is charged with executing the business strategy. In order to assess performance against our strategic plans, the Board receives regular updates on progress and execution and provides guidance and direction throughout the year.

The Board of Directors and the Board Committees oversee Chevron’s risk management policies, processes, and practices to ensure that the appropriate risk management systems are employed throughout the Company. Chevron faces a broad

array of risks, including market, operational, strategic, legal, regulatory, political, financial, and cybersecurity risks. The Board exercises its role of risk oversight in a variety of ways, including the following:

Chevron operates using four environmental principles that define how we develop energy in an environmentally responsible manner: include environmental impact in decision making, reduce our environmental footprint, operate responsibly, and steward our sites. A description of these principles can be found at www.chevron.com/corporate-responsibility/environment. The Board of Directors, and the Public Policy Committee in particular, provide oversight and guidance on environmental matters in connection with Chevron’s projects and operations and are regularly briefed by professionals whose focus is on environmental protection and stewardship. Members of the Board regularly visit Chevron operations across the globe and discuss

environmental matters specific and relevant to these locations. Significant environmental and process safety issues are reviewed by the Board to ensure compliance with the Company’s rigorous processes. The Public Policy Committee assists the Board in identifying, evaluating, and monitoring public policy trends and environmental issues that could impact the Company’s business activities and performance. It also reviews and makes recommendations for Chevron’s strategies related to corporate responsibility and reputation management. The Board of Directors and the Public Policy Committee regularly receive reports of stockholder engagements related to sustainability and incorporate these into the direction they provide to management.

For a Director to be considered independent, the Board must determine that the Director does not have any material relationship with Chevron, other than as a Director. In making its determinations, the Board adheres to the specific tests for independence included in the NYSE Corporate Governance Standards. In addition, the Board has determined that the following relationships of Chevron Directors occurring within the last fiscal year are categorically immaterial to a determination of independence if the relevant transaction was conducted in the ordinary course of business:

These categorical standards are contained in our Corporate Governance Guidelines, which are available on our website at www.chevron.com/investors/corporate-governance and are available in print upon request.

Drs. Moyo and Sugar, Ms. Reed-Klages, and Messrs. Hernandez, Moorman, Thulin, and Umpleby are directors of for-profit entities with which Chevron conducts business in the ordinary course. Other than Dr. Moyo, they and Drs. Austin and Gast are also directors or trustees of, or similar advisors to, not-for-profit entities to which Chevron makes contributions. The Board has determined that all of these transactions and contributions were below the thresholds set forth in the first and second categorical standards described above (except as noted below) and are, therefore, categorically immaterial to the particular Director’s independence. The Board reviewed the following relationships and transactions that existed or occurred in 2018 that are not covered by the categorical standards described above:

Chevron’s Board of Directors has four standing Committees: Audit; Board Nominating and Governance; Management Compensation; and Public Policy. The Audit, Board Nominating and Governance, and Management Compensation Committees are each constituted and operated according to the independence and other requirements of the Securities Exchange Act of 1934, as amended (“Exchange Act”) and the NYSE Corporate Governance Standards. Each independent Director, including each member of the Management Compensation Committee, is an “outside” Director for purposes of ensuring that certain pre-2018 grants meet the grandfather rule in Section 162(m) of the Internal Revenue Code of 1986, as amended. In addition, each member of the Audit Committee is financially literate and an “audit committee financial expert,” as such terms are defined under the Exchange Act and related rules and the NYSE Corporate Governance Standards.

Each Committee is chaired by an independent Director who determines the agenda, the frequency, and the length of the meetings and who has unlimited access to management, information, and independent advisors, as necessary. Each non-employee Director generally serves on one or two Committees. Committee members serve staggered terms, enabling Directors to rotate periodically to different Committees. Four- to six-year terms for Committee Chairs facilitate rotation of Committee Chairs while preserving experienced leadership.

Each Committee is governed by a written charter that can be viewed on Chevron’s website at www.chevron.com/investors/corporate-governance.

In 2018, your Board held six Board meetings, with each meeting including an executive session of independent Directors presided over by our independent Lead Director, and 22 Board Committee meetings, which included nine Audit Committee, five Board Nominating and Governance Committee, four Management Compensation Committee and three Public Policy Committee meetings and one joint meeting of the Board Nominating and Governance Committee and the Public Policy Committee. All incumbent Directors attended at least 82 percent of the Board and

Committee meetings during 2018. Chevron’s policy regarding Directors’ attendance at the Annual Meeting, as described in the “Board Agenda and Meetings” section of Chevron’s Corporate Governance Guidelines (available at www.chevron.com/investors/ corporate-governance), is that all Directors are expected to attend the Annual Meeting, absent extenuating circumstances. All incumbent Directors attended the 2018 Annual Meeting, other than Ms. Reed-Klages, who joined the Board following the meeting.

Each year, your Board and its Committees perform a rigorous self-evaluation. As required by Chevron’s Corporate Governance Guidelines, the Board Nominating and Governance Committee oversees this process. The performance evaluations solicit anonymous input from Directors regarding the performance and effectiveness of the Board, the Board Committees, and individual Directors and provide an opportunity for Directors to identify areas for improvement. In addition, the independent Lead Director has individual conversations with each member of the Board, providing further opportunity for dialogue and improvement. This year, the BN&GC determined to augment the individual Director evaluation by adding an individual Director performance evaluation questionnaire to more rigorously evaluate individual Director performance. Under this part of the process, each Director sent a confidential individual

Director performance evaluation for each independent Director to outside counsel retained by the Company at the BN&GC’s request. Outside counsel compiled the results of the evaluations into reports, which were sent to the Lead Director for consideration and use by the Lead Director during individual conversations with each independent Director (the Chair of the Audit Committee received the report on the Lead Director and met with the Lead Director regarding that report). The BN&GC reviews the results and feedback from the evaluation process and makes recommendations for improvements as appropriate. The independent Lead Director leads a discussion of the evaluation results during an executive session of the Board and communicates relevant feedback to the CEO. Your Board has successfully used this process to evaluate Board and Committee effectiveness and identify opportunities to strengthen the Board.

In order to continuously improve Chevron’s governance processes and communications, Chevron follows an Annual Engagement Plan and Process. Through this program, we are able to identify and address environmental, social, and governance topics that are raised by our stockholders.

Since Chevron’s last Annual Meeting, an engagement team consisting of senior executives, subject matter experts on governance, compensation, and environmental and social issues (“ESG Engagement Team”), and, when appropriate, our independent Lead Director have continued to lead our robust stockholder outreach program.

During these engagements, Chevron gained valuable feedback on several topics, including:

This feedback was shared with the Board and its relevant Committees. For more information about these engagements, see the “Board Leadership Structure,” “Independent Lead Director,” and “Compensation Discussion and Analysis” sections of the Proxy Statement.

review and approval of related person transactions

It is our policy that all employees and Directors must avoid any activity that is in conflict with, or has the appearance of conflicting with, Chevron’s business interests. This policy is included in our Business Conduct and Ethics Code. Directors and executive officers must inform the Chairman and the Corporate Secretary and Chief Governance Officer when confronted with any situation that may be perceived as a conflict of interest. In addition, at least annually, each Director and executive officer completes a detailed questionnaire specifying any business relationship that may give rise to a conflict of interest.

Your Board has charged the BN&GC with reviewing related person transactions as defined by U.S. Securities and Exchange Commission (“SEC”) rules. The BN&GC has adopted written guidelines to assist it with this review. Under these guidelines, all executive officers, Directors, and Director nominees must promptly advise the Corporate Secretary and Chief Governance Officer of any proposed or actual business and financial affiliations involving themselves or their immediate family members that, to the best of their knowledge after reasonable inquiry, could reasonably be expected to give rise to a reportable related person transaction. The Corporate Secretary and Chief Governance Officer will prepare a report summarizing any potentially reportable transactions, and the BN&GC will review these reports and determine whether to approve or ratify the identified transaction. The BN&GC has identified the following categories of transactions that are deemed to be preapproved by the BN&GC, even if the aggregate amount involved exceeds the $120,000 reporting threshold identified in the SEC rules:

The BN&GC reviews all relevant information, including the amount of all business transactions involving Chevron and the entity with which the Director or executive officer is associated, and determines whether to approve or ratify the transaction. A Director will abstain from decisions regarding transactions involving that Director or his or her family members.

related person transactions

An immediate family member of Mr. Joseph C. Geagea, Executive Vice President, Technology, Projects and Services, is employed by Chevron. Mr. Geagea’s son, Carl J. Geagea, is expected to receive compensation in 2019 of approximately $127,500, including salary, bonus, and customary employee benefits. This amount reflects compensation that is consistent with the total compensation provided to other employees of the same level with similar responsibilities.

The Board Nominating and Governance Committee (the “Committee”) is responsible for recommending to the Board the qualifications for Board membership, identifying, assessing, and recommending qualified Director candidates for the Board’s consideration, assisting the Board in organizing itself to discharge its duties and responsibilities, and providing oversight of Chevron’s corporate governance practices and policies, including an effective process for stockholders to communicate with the Board. The Committee is composed entirely of independent Directors as defined by the NYSE Corporate Governance Standards and operates under a written charter. The Committee’s charter is available on Chevron’s website at www.chevron.com/investors/corporate-governance/board-nominating-governance and is available in print upon request.

The Committee’s role in and process for identifying and evaluating prospective Director nominees, including nominees recommended by stockholders, is described in the “Election of Directors” section of this Proxy Statement. In addition, the Committee makes recommendations to the Board concerning Director independence, Board Committee assignments, Committee Chairs, Audit Committee “financial experts,” and the financial literacy of Audit Committee members. The Committee also reviews the process and the results of the annual performance evaluations of the Board, Board Committees, and individual Directors.

The Committee regularly reviews trends and recommends best practices, initiates improvements, and plays a leadership role in maintaining Chevron’s strong corporate governance structures and practices. Among the practices the Committee believes demonstrate the Company’s commitment to strong corporate governance are the following:

Stockholders can find additional information concerning Chevron’s corporate governance structures and practices in Chevron’s Corporate Governance Guidelines, By-Laws, and Restated Certificate of Incorporation, copies of which are available on Chevron’s website at www.chevron.com/investors/corporate-governance and are available in print upon request.

Respectfully submitted on March 26, 2019, by members of the Board Nominating and Governance Committee of your Board:

Ronald D. Sugar, Chair

Wanda M. Austin

Alice P. Gast

D. James Umpleby III

Roles and Responsibilities. The Audit Committee (the “Committee”) assists your Board in fulfilling its responsibility to provide independent, objective oversight of Chevron’s financial reporting and internal control processes. The Committee’s charter can be viewed on Chevron’s website at www.chevron.com under the tabs “Investors” and “Corporate Governance.”

Management is responsible for preparing Chevron’s financial statements in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and for developing, maintaining, and evaluating disclosure controls and procedures and internal control over financial reporting.

The Company’s independent registered public accounting firm—PricewaterhouseCoopers LLP (“PwC”)—is responsible for expressing an opinion on the conformity of Chevron’s financial statements with U.S. GAAP and on the effectiveness of Chevron’s internal control over financial reporting.

Required Disclosures and Discussions. In discharging its oversight role, the Committee reviewed and discussed with management and PwC the audited financial statements for the year ended December 31, 2018, as contained in the 2018 Annual Report on Form 10-K, and management’s and PwC’s evaluation of Chevron’s internal control over financial

reporting. The Committee routinely met privately with PwC and discussed issues deemed significant by PwC and/or the Committee. The Committee has discussed with PwC the matters required to be discussed by Auditing Standard 1301, “Communications With Audit Committees,” as adopted by the Public Company Accounting Oversight Board (“PCAOB”).

In addition, the Committee discussed with PwC its independence from Chevron and Chevron’s management; received the written disclosures required by the PCAOB regarding PwC’s independence; and considered whether the provision of nonaudit services was compatible with maintaining PwC’s independence.

Committee Recommendation. In reliance on the reviews and discussions outlined above, the Committee recommended to your Board that the audited financial statements be included in Chevron’s Annual Report on Form 10-K for the year ended December 31, 2018, for filing with the U.S. Securities and Exchange Commission.

Respectfully submitted on February 21, 2019, by the members of the Audit Committee of your Board:

Charles W. Moorman IV, Chair

John B. Frank

Dambisa F. Moyo

Inge G. Thulin

board proposal to ratify PricewaterhouseCoopers LLP as the independent registered public accounting firm for 2019

(item 2 on the proxy card)

The Audit Committee is responsible for the appointment, compensation, retention, and oversight of the independent registered public accounting firm that audits Chevron’s financial statements and internal control over financial reporting. The Audit Committee has selected PricewaterhouseCoopers LLP (“PwC”) as Chevron’s independent registered public accounting firm for 2019, and your Board has endorsed this appointment.

The Audit Committee annually reviews PwC’s performance and independence in deciding whether to retain PwC or engage a different independent registered public accounting firm. In the course of these reviews, the Audit Committee considers, among other things:

The Audit Committee believes that PwC’s tenure as Chevron’s independent registered public accounting firm confers distinct benefits, including:

The Audit Committee believes that any concerns with PwC’s tenure are mitigated by strong independence controls, specifically:

Based on this evaluation, the Audit Committee believes that PwC is independent and that it is in the best interests of Chevron and its stockholders to retain PwC as Chevron’s independent registered public accounting firm for 2019.

The Audit fees for the years ended December 31, 2018 and 2017, were for the audits of Chevron’s consolidated financial statements, statutory and subsidiary audits, issuance of consents, assistance with and review of documents filed with the U.S. Securities and Exchange Commission, and the audit of the effectiveness of internal control over financial reporting.

The Audit Related fees for the years ended December 31, 2018 and 2017, were for assurance and related services for employee benefit plan audits, accounting consultations and attest services that are not required by statute or regulation, and consultations concerning financial accounting and reporting standards.

Tax fees for the years ended December 31, 2018 and 2017, were for services related to tax compliance, including the preparation of tax returns and claims for refund, and for tax advice, including assistance with tax audits and appeals.

All Other fees for the years ended December 31, 2018 and 2017, included services rendered for software licenses, subscriptions, benchmark studies, and surveys.

All 2018 audit and nonaudit services provided by PwC were preapproved by the Audit Committee. The nonaudit services that were preapproved by the Audit Committee were also reviewed to ensure compatibility with maintaining PwC’s independence and compliance with SEC and other rules and regulations.

The Audit Committee has implemented preapproval policies and procedures related to the provision of audit and nonaudit

services. Under these procedures, the Audit Committee preapproves both the type of services to be provided by PwC and the estimated fees related to these services.

Throughout the year, the Audit Committee reviews any revisions to the estimates of audit and nonaudit fees initially approved.

executive compensation

Chevron is a fully integrated company involved in many facets of the energy industry. We explore for, produce, and transport crude oil and natural gas; process and transport liquified natural gas; refine, market, and distribute transportation fuels and lubricants; manufacture and sell petrochemicals and additives; generate power; and develop and deploy technologies that enhance business value in multiple aspects of the Company’s operations. Our business is capital-intensive and has long investment horizons—most of our resource and manufacturing investments span decades. Most of our product sales are commodities, whose prices can

be volatile, leading to fluctuating earnings and cash flow through price cycles. Following decade-low oil prices in 2016, crude prices recovered in 2017 and continued to strengthen in 2018, leading to improved earnings and cash flow. Brent oil prices in 2018 were more than 30 percent higher, on average, versus the prior year. However, Brent prices declined nearly 35 percent over the final three months of the year amid continued U.S. shale growth and unexpected temporary waivers from Iranian sanctions. Brent futures indicate lower oil prices could continue through 2019.

Chevron remains committed to delivering sustained stockholder value and exploring future opportunities in any business environment, supported by Chevron’s financial strength and advantaged portfolio. In 2018, Chevron reported solid financial and operational results, building upon its prior year performance, which demonstrated the Company’s resilience and sustainability in a lower price environment. Chevron also delivered on its key financial priorities in 2018:

In 2018, Chevron’s annual dividend payment per share increased for the 31^st consecutive year. Over the last 10 years, the Company’s dividend growth rate was more than four times the peer group¹ average dividend growth rate. Chevron’s dividend growth rate was slightly lower than the S&P 500 rate of growth over this period. However at year-end, Chevron’s dividend yield² exceeded 4 percent, higher than the S&P 500.

Chevron continued to deliver competitive total stockholder return (“TSR”) performance among large-cap integrated energy companies (BP, Chevron, ExxonMobil, Royal Dutch Shell, and Total) over the three-, five-, and 10-year periods through the end of 2018.

The large-cap integrated energy companies generally outperformed the S&P 500 in TSR over the three-year period but underperformed over the five- and 10-year periods, reflecting the significant drop in commodity prices since 2014. In one-year TSR performance, Chevron finished fourth among the companies in its peer group.

We remain well positioned for the future. Operational cash flow has been growing, and production is at an all-time high. We are focused on creating value for stockholders through a disciplined, returns-driven capital program, prioritizing efficient and accretive investments. We have a sustainable, advantaged Upstream portfolio composed of flexible, shorter cycle-time assets (e.g. Permian and other shale and tight, infill drilling, tie-backs, etc.) as well as long duration, low production decline assets (e.g. Australia, Kazakhstan, San Joaquin Valley, etc.). We also have an efficient, high return Downstream & Chemicals business that complements the Upstream. We are integrating digital technologies into our businesses which are intended to enhance safety, improve revenues, lower costs, and increase reliability. Finally, we have a strong management team, a talented organization, and a results-oriented culture, which enable us to adapt to a dynamic and evolving future, and to remain well positioned to win in any environment.

The overall objective of our executive compensation program is to attract and retain management who will deliver long-term stockholder value in any business environment. Our compensation programs are designed with several important values and objectives in mind:

The Management Compensation Committee (“MCC”) believes a majority of an executive’s pay should be composed of awards that are directly tied to Chevron and individual employee performance. The MCC considers all elements of pay when setting awards.

The large majority of each Named Executive Officer’s (“NEO”) target compensation is at risk based on Company

performance (approximately 91 percent for the CEO and 84 percent for the other NEOs), and the majority of this at-risk compensation is tied directly to Chevron’s stock price. The amount NEOs eventually earn from their at-risk compensation will align strongly with what stockholders earn over that same period from their investment in Chevron.

Chevron follows a robust process to systematically engage with its key stakeholders and proactively address issues of importance. Among the issues routinely discussed in these engagements are Chevron’s executive compensation practices.

In 2018, the Company continued its dialogue with stockholders. We had substantive engagements with stockholders representing more than 52 percent of Chevron’s outstanding common stock. These discussions covered a range of issues, including executive compensation. The CEO, Michael K. Wirth, and the independent Lead Director, Dr. Ron Sugar, participated in the engagements with certain major stockholders. Through these engagements, we continued to receive positive feedback for program changes made in 2017. These changes included modifying our LTIP award mix to be more performance-based, adding the S&P 500 Total Return Index to the LTIP Performance Share Peer Group, increasing weighting for key measures in the CIP performance measures, capping the CIP award, and strengthening the CEO’s ownership requirement. Stockholders also expressed support for our enhanced transparency in the CIP performance disclosure.

Chevron’s 2018 Say-on-Pay vote received over 93 percent support, which demonstrates stockholders’ strong support of our executive compensation practices and pay for performance alignment.

During our engagements, we also heard an appreciation for our voluntary climate change disclosure report and the appointment of a General Manager of Environmental, Social, and Governance Engagement to serve as the primary point of contact on these matters. Stockholders expressed a desire to see climate-related performance measures tied to executive compensation. The Board and the MCC took the feedback into account and have now updated the CIP scorecard for the 2019 performance year to include a flaring and methane performance measure.

Our stockholders’ views on executive compensation are important to us, and the MCC regularly considers the Say-on-Pay vote outcome and stockholder insights in assessing our executive compensation program. We remain committed to continuing the dialogue with stockholders on compensation issues as part of our ongoing engagement.

Chevron delivered robust financial and operational performance for the year, resulting in reported earnings of $14.8 billion and record production of 2.930 million barrels of oil-equivalent per day. The Company is positioned to sustain and grow production, earnings, and cash flow going forward.

Looking forward, the Company remains well positioned to generate competitive results in any business environment and deliver on its key commitments. The announced $20 billion organic C&E program for 2019 maintains current spending levels with lower execution risk relative to the past—a reflection of our disciplined approach to investment. The program is anchored in high-return, short-cycle projects, has more than two-thirds of its spend projected to generate cash within two years, and is expected to support steady production growth in the future. The Company is also investing in digital technologies to enhance safety, improve revenues, lower costs, and increase reliability. Chevron’s investment, production, reserves, and cash flow profile remain resilient and sustainable, even in a low commodity price environment. At the same time, we believe the Company is leveraged to benefit from any future commodity price increases.

Effective February 1, 2018, Michael K. Wirth succeeded John S. Watson as Chairman and CEO. In making a recommendation to the independent Directors of the Board with respect to Mr. Wirth’s target compensation in his new CEO position, the MCC applied an approach consistent with that used for the other NEOs. The MCC considered Mr. Wirth’s 2017 compensation level, increased responsibilities as a result of the promotion, and desired competitive position to both seasoned and new CEOs at oil industry peers and non–oil industry peers, adjusting for Chevron’s relative size, scope, and complexities. Mr. Wirth’s actual realized pay outcome is based largely on subsequent Company performance, especially stock price performance.

In 2018, under Mr. Wirth’s leadership, the Company met numerous financial and operational objectives, including significant growth in cash generation, a prudent level of investment, and record production. As a result, Chevron was able to both grow stockholder distributions and further strengthen the balance sheet in 2018. Additionally, performance on elements of the business within management’s control—such as project execution, expense management and HES performance—was strong. We believe Chevron remains well positioned for further growth in earnings and cash flow.

The MCC approved a 2018 CIP corporate performance rating of 1.40, against a target of 1.0 and a maximum of 2.0, based on the Company’s overall performance across four broad categories with assigned weightings. Refer to pages 41–43 for a detailed discussion of 2018 performance and CIP outcome.

The three-year performance period for performance shares granted in January 2016 ended on December 31, 2018. For this three-year period, Chevron ranked No. 3 in TSR when compared to the four companies in the LTIP Performance Share Peer Group¹. However, Chevron’s TSR for the performance period is less than 1 percentage point better than the fourth-ranked company, resulting in a deemed third and fourth place tie and a payout modifier of 75 percent (between 100 percent for third place and 50% for fourth place). Refer to page 46 for details of the 2016–2018 performance share payout.

Pay actions for Mr. Wirth in 2018 and early 2019 included:

Former CEO John S. Watson did not receive a salary increase, a CIP award, or an LTIP award due to his retirement on February 1, 2018.

The Oil Industry Peer Group companies most similar to Chevron in size, complexity, geographic reach, business lines, and location of operations are BP, ExxonMobil, Royal Dutch Shell, and Total. These companies are key competitors for stockholder investments within the larger global energy sector. We also compete for stockholder investment and employee talent with smaller U.S. companies, including the larger independent exploration and production companies and the larger independent refining and marketing companies.

The Non–Oil Industry Peer Group includes capital-intensive, global, large-scale, and high-complexity company comparators. The median market cap (as of 12/31/2018) of the Non–Oil Industry Peer Group was $103 billion (vs. $208 billion for Chevron), and the median sales for 2018 were $58 billion (vs. $159 billion for Chevron).

Base salaries are determined through market surveys of positions of comparable level, scope, complexity, and responsibility. There is no predetermined target or range within the Oil Industry Peer Group or the Non–Oil Industry Peer Group as an objective for Mr. Wirth’s base salary. Instead, the MCC takes into account the data provided by the MCC’s independent consultant, the relative size, scope, and complexity of our business, Mr. Wirth’s performance, tenure and the aggregate amount of Mr. Wirth’s compensation package. For the other NEOs, each executive officer is assigned a base salary grade. The MCC annually reviews the base salary grade ranges and may approve changes in the

ranges based on business conditions and comparative peer group data provided by the MCC’s independent consultant. Within each salary grade range, the MCC makes base salary determinations for each NEO taking into account qualitative considerations, such as individual performance, experience, skills, competitive positioning, retention objectives, and leadership responsibilities.

The independent Directors of the Board approve the compensation of the CEO and ratify the compensation of the other NEOs.

The independent Directors of the Board, upon recommendation of the MCC, increased Mr. Wirth’s salary when he assumed the Chairman and CEO position. The MCC also adjusted the NEO salary grade ranges by 1 percent for the 2018 compensation cycle after taking into account the market conditions and survey data. As to individual NEO salary changes, the MCC made salary adjustments reflective

of each NEO’s 2017 performance, experience and competitive benchmarks. Mr. Wirth’s salary change was effective February 1, 2018, aligned with the timing of his promotion.

Other NEOs’ salary increases were effective as part of the regular cycle on April 1, 2018.