Definitive Proxy Statement
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the
Registrant
Filed by a Party other than the Registrant
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Check the appropriate box: |
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to
§.240.14a-12 |
CHEVRON CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box): |
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11. |
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(1) Title of each class of securities to which transaction applies: |
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(2) Aggregate number of securities to which transaction applies: |
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(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): |
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(4) Proposed maximum aggregate value of transaction: |
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(5) Total fee paid: |
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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(1) Amount Previously Paid: |
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(2) Form, Schedule or Registration Statement No.: |
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(4) Date Filed: |
Notice of the 2014 Annual Meeting and 2014 Proxy Statement
Wednesday, May 28, 2014, at 8:00 a.m. CDT
Permian Basin Petroleum Museum, 1500 Interstate 20 West, Midland, Texas 79701
Notice of the 2014
Annual Meeting of Stockholders
Wednesday, May 28, 2014
8:00 a.m. CDT
Permian Basin Petroleum Museum, 1500 Interstate 20
West, Midland, Texas 79701
Record Date
Wednesday, April 2, 2014
Agenda
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Elect 12 Directors named in this Proxy Statement; |
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Vote on a Board proposal to ratify the appointment of the independent registered public accounting firm; |
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Vote on a Board proposal to approve, on an advisory basis, named executive officer compensation; |
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Vote on seven stockholder proposals, if properly presented; and |
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Transact any other business that may be properly brought before the Annual Meeting. |
Admission
Stockholders or
their legal proxy holders may attend the Annual Meeting. Seating is available on a first-come basis. Due to space constraints and other security considerations, we are not able to admit the guests of either stockholders or their legal proxy holders.
To be admitted, you must present a form of government–issued photo identification and an admission ticket, valid proof of ownership of Chevron common stock, or a valid legal proxy. Please refer to page 76 of this Proxy Statement for information
about attending the Annual Meeting and the rules for admission that we will observe.
Voting
Stockholders owning Chevron common stock at the close of business on Wednesday, April 2, 2014, or their legal proxy holders, are entitled to
vote at the Annual Meeting. Please refer to pages 1 through 2 of this Proxy Statement for information about voting at the Annual Meeting.
On or about Thursday, April 10, 2014, we will mail to our stockholders either (1) a copy of this Proxy Statement, a proxy card, and our
Annual Report or (2) a Notice Regarding the Availability of Proxy Materials, which will indicate how to access our proxy materials and vote on the Internet.
By Order of the Board of Directors,
Lydia I. Beebe
Corporate Secretary and Chief Governance Officer
Chevron Corporation
6001 Bollinger Canyon Road
San Ramon, California 94583-2324
Your Board of Directors is providing you with these proxy materials in connection with its solicitation of proxies to be voted at Chevron
Corporation’s 2014 Annual Meeting of Stockholders to be held on Wednesday, May 28, 2014, at 8:00 a.m. CDT at the Permian Basin Petroleum Museum, 1500 Interstate 20 West, Midland, Texas, and at any postponement or adjournment of the Annual
Meeting. In this Proxy Statement, Chevron and its subsidiaries may also be referred to as “we,” “our,” “Company” or “the Corporation.”
Items of Business
Your Board is asking you to take the
following actions at the Annual Meeting:
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Your Board’s Recommendation |
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Vote Required |
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Item 1: Elect 12 Directors named in this Proxy Statement |
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Vote FOR |
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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. |
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Item 2: Vote to ratify the appointment of the independent registered public accounting firm |
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Vote FOR |
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These items are approved if the number of shares voted FOR exceeds the number of
shares voted AGAINST. |
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Item 3: Vote to approve, on an advisory basis, named executive officer compensation |
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Vote FOR |
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Items 4 – 10: Vote on seven stockholder proposals, if properly presented |
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Vote AGAINST |
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If you are a street name stockholder (i.e., you own your shares through a bank, broker, or other holder of record)
and do not vote your shares, your bank, broker, or other holder of record can vote your shares at its discretion ONLY on Item 2. If you do not give your bank, broker, or other holder of record instructions on how to vote your shares on
Item 1 or Items 3 through 10, your shares will not be voted on those matters. If you have shares in an employee stock or retirement benefit plan and do not vote those shares, the plan trustee or fiduciary may or may not vote your shares, in
accordance with the terms of the plan. Any shares not voted on Item 1 or Items 3 through 10 (whether by abstention, broker nonvote, or otherwise) will have no impact on that particular item.
Vote Results
At the Annual Meeting we will announce preliminary voting results for those items of business properly presented. Within four business days of the Annual Meeting, we will disclose the preliminary results (or final
results, if available) in a Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission.
Appointment of Proxy Holders
Your Board asks you to appoint John S. Watson, R. Hewitt Pate, and Lydia I. Beebe as your proxy
holders, each with full power of substitution, to represent and to vote your shares at the Annual Meeting. You make this appointment by voting the proxy card provided to you using one of the voting methods described in “How to Vote” in
this section.
If you sign and return a proxy card with voting instructions, the proxy holders will vote your shares as you direct on the
matters
described in this Proxy Statement. If you sign and return a proxy card without voting instructions, they will vote your shares as recommended by your Board.
Unless you indicate otherwise on the proxy card, you also authorize the proxy holders to vote your shares on any matters that are not known by your
Board as of the date of this Proxy Statement and that may be properly presented for action at the Annual Meeting.
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| Chevron Corporation—2014 Proxy Statement |
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Record
Date; Who Can Vote
Stockholders owning Chevron common stock at the close of business on Wednesday, April 2, 2014, the Record Date,
or their legal proxy holders, are entitled to vote at the Annual Meeting. At the close of business on the Record Date, there were 1,903,663,421 shares of Chevron common stock outstanding. Each outstanding share of Chevron common stock is entitled to
one vote.
Quorum
A quorum, which is a majority of the outstanding shares of Chevron common stock as of the Record Date, must be present to hold the Annual Meeting. A quorum is calculated based on the number of shares represented at
the meeting, either by the stockholders attending in person or by the proxy holders. If you indicate an abstention as your voting preference in any matter, your shares will be counted toward a quorum but will not be voted on any such matter.
How to Vote
Stockholders can vote by mail, telephone, Internet, or in person at the Annual Meeting.
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Street Name Stockholders |
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Employee Plan Participants |
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in your own name through Chevron’s transfer agent, Computershare Shareowner Services LLC, you can most conveniently vote by telephone, Internet, or mail. Please review the voting instructions on your proxy card.
If you vote by telephone or on the Internet, you do not need to return your proxy card.
Telephone and Internet voting are available 24 hours a day and will close at 11:59 p.m. EDT on Tuesday, May 27, 2014.
You can vote in person at the Annual Meeting by completing, signing, dating, and returning your proxy card. |
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If you own your shares through a bank, broker, or other holder of record,
you can most conveniently vote by telephone, Internet, or mail. Please review the voting instructions on your voting instruction form.
If you vote by telephone or on the Internet, you do not need to return your voting instruction form. Telephone and Internet voting are available 24 hours a day and
will close at 11:59 p.m. EDT on Tuesday, May 27, 2014. You can vote in person
at the Annual Meeting ONLY if you obtain a proxy, executed in your favor, from the bank, broker, or other holder of record of your shares. |
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If you own your shares through participation in a
Chevron employee stock or retirement benefit plan, you can most conveniently vote by telephone, Internet, or mail. Please review the voting instructions contained in the email sent to your work address or in the materials you receive through the
U.S. Postal Service. All votes must be received by the plan trustee or fiduciary by
11:59 p.m. EDT on Thursday, May 22, 2014, or other cutoff date as determined by the plan trustee or fiduciary. You can vote in person at the Annual Meeting ONLY if you obtain a proxy, executed in your favor, from the trustee or fiduciary of the plan through which you hold your shares.
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We encourage you to vote by telephone or on the Internet. Both are convenient and designed to record your
vote immediately and allow you to confirm that your vote has been properly recorded.
Revoking Your Voting
Instructions
Stockholders can revoke their proxy or voting instructions as follows.
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Ÿ Send a written statement revoking your proxy to: Chevron Corporation, Attn: Corporate Secretary and Chief Governance Officer, 6001
Bollinger Canyon Road, San Ramon, California 94583-2324; |
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Notify your bank, broker, or other holder of record in accordance with that entity’s procedures for
revoking your voting instructions. |
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Notify the trustee of the plan through which you hold your shares in accordance with its
procedures for revoking your voting instructions. |
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Ÿ Submit a proxy card with a later date and signed as your name appears on your account; |
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Ÿ Vote at a later time by telephone or the Internet; or |
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in person at the Annual Meeting. |
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Confidential Voting
Chevron has a confidential voting policy to protect the privacy of your votes. Under this policy,
ballots, proxy cards, and voting instructions returned to banks, brokers, and other holders of record are kept confidential. Only the proxy solicitor, the proxy tabulator, and the Inspector of Election have access to the ballots, proxy cards, and
voting instructions. Anyone who processes or
inspects the ballots, proxy cards, and voting instructions signs a pledge to treat them as confidential. None of these persons is a Chevron Director, officer, or employee. The proxy solicitor and
the proxy tabulator will disclose information taken from the ballots, proxy cards, and voting instructions only in the event of a proxy contest or as otherwise required by law.
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Chevron Corporation—2014 Proxy Statement |
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| Election of Directors
(Item 1 on the Proxy Card)
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Your Board is nominating the 12 individuals identified below for election as Directors. Directors are elected
annually and serve for a one-year term or until their successors are elected. If any nominee is unable to serve as a Director, a circumstance we do not anticipate, the Board by resolution may reduce the number of Directors or choose a substitute.
Director Election Requirements
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 nominee who receives more AGAINST votes than FOR votes must submit an offer of resignation to the Board. The Board
Nominating and Governance Committee must then consider all relevant facts and circumstances, including the Director’s qualifications and 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.
Director Nomination Process
The Board Nominating and Governance Committee 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 Chevron’s website at www.chevron.com. Generally, the Board is seeking individuals with the following qualifications:
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the highest professional and personal ethics and values, consistent with The Chevron Way and our Business Conduct and Ethics Code, both of which are available
on Chevron’s website at www.chevron.com; |
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broad experience or expertise at the policy-making level in business, governmental, educational, technological, environmental, or public interest issues;
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the ability to provide insights and practical wisdom based on the individual’s experience and expertise; |
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a commitment to enhancing stockholder value; |
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sufficient time to effectively carry out duties as a Director (service on boards of public companies should be limited to no more than five); and
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independence (at least a majority of the Board must consist of independent Directors, as defined by the New York Stock Exchange (NYSE) Corporate Governance
Standards). |
The Committee uses a skills and qualifications matrix to ensure that the overall Board maintains a balance
of knowledge and experience. The Committee carefully reviews all Director candidates, including current Directors, in light of these qualifications based on the context of the current and anticipated composition of the Board, the current and
anticipated operating requirements of the Company, and the long-term interests of stockholders. In conducting this assessment, the Committee considers diversity, education, experience, length of service and
such other factors as it deems appropriate given the current and anticipated needs of the Board and the Company. The Committee and Board define diversity broadly to include diversity of
professional experience (policy, business, government, education, technology, environment or public interest), geographical location, and viewpoint, as well as diversity of race, gender, nationality, and ethnicity.
The Committee considers all candidates recommended by our stockholders. Stockholders may recommend candidates by writing to the Corporate Secretary
and Chief Governance Officer at 6001 Bollinger Canyon Road, San Ramon, California 94583-2324, stating the candidate’s name and qualifications for Board membership. When considering candidates recommended by stockholders, the Committee follows
the same Board membership qualifications evaluation and nomination procedures discussed in this section.
In addition to stockholder
recommendations, the Committee considers Director candidates identified for consideration for nomination to the Board from other sources. Board members periodically suggest possible candidates, and from time to time, the Committee may engage a
third-party consultant to assist in identifying potential candidates. The Committee has retained Russell Reynolds Associates to assist it with identifying potential candidates. Russell Reynolds has interviewed current Directors, evaluated the
Board’s current and future makeup and needs, and worked with the Committee to develop a list of potential candidates.
After the
2013 Annual Meeting, at which 11 of the current nominees for Director were elected, the Committee recommended and the Board concurred in electing Jon M. Huntsman, Jr. to the Board, effective January 15, 2014. Mr. Huntsman was identified by
our current nonemployee Directors as part of the Committee’s regular process for identifying potential Directors. For the 2014 Annual Meeting, the Committee recommended and the Board concurred in maintaining a Board size of 12 Directors. Each
of the Director nominees is a current Director.
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| Chevron Corporation—2014 Proxy Statement |
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Nominees
for Director
Your Board unanimously recommends that you vote FOR each of these Director nominees.
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Linnet F. Deily Director since 2006
Ms. Deily, age 68, is a former Deputy U.S. Trade Representative and U.S. Ambassador to the World Trade Organization and retired financial
services industry executive. |
Prior Positions Held: Ms. Deily served as Deputy U.S. Trade Representative and U.S. Ambassador to the
World Trade Organization (WTO) from 2001 until 2005. She was Vice Chairman of Charles Schwab Corporation from 2000 until 2001, President of the Schwab Retail Group from 1998 until 2000 and President of Schwab Institutional Services for Investment
Managers from 1996 until 1998. Prior to joining Schwab, she was Chairman, Chief Executive Officer and President from 1990 until 1996 and President and Chief Operating Officer from 1988 until 1990 of the First Interstate Bank of Texas.
Current Public Company Directorships: Honeywell International Inc.
Prior Public Company Directorships (within the last five years): None.
Other Directorships, Trusteeships, and Memberships: Chair, Episcopal Health Foundation; Chair, Houston Endowment, Inc.; Vice Chair, Houston
Zoo; Houston Museum of Fine Arts; Jung Center of Houston.
Qualifications, Experience, Attributes, and Skills: Ms. Deily
brings to the Board significant policy-making and international affairs experience, including experience with environmental issues, based in part on her work as a Deputy U.S. Trade Representative and U.S. Ambassador to the WTO. In the latter role,
she oversaw the negotiation of various environmental issues before the WTO. In addition, Ms. Deily has extensive board and senior executive-level experience having served as Chairman, Chief Executive Officer and President of the First Interstate
Bank of Texas, as Vice Chairman of Charles Schwab Corporation, and as a director of several large public companies in various industries. In these and predecessor roles, she also gained significant financial expertise.
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Robert E. Denham Lead Director; Director since 2004
Mr. Denham, age 68, has been a Partner of Munger, Tolles & Olson
LLP, a law firm, since 1998 and from 1973 until 1991. |
Prior Positions Held: Mr. Denham was Chairman and Chief Executive Officer of Salomon Inc. from 1992
until 1998. He joined Salomon in 1991, as General Counsel of Salomon and its subsidiary, Salomon Brothers.
Current Public Company
Directorships: Fomento Económico Mexicano, S.A. de C.V.; The New York Times Company; Oaktree Capital Group, LLC.
Prior
Public Company Directorships (within the last five years): UGL Limited; Wesco Financial Corporation.
Other Directorships, Trusteeships, and Memberships: Vice Chairman, Good Samaritan Hospital of
Los Angeles; James Irvine Foundation; New Village Charter School; Chairman, Russell Sage Foundation.
Qualifications, Experience,
Attributes, and Skills: Mr. Denham brings to the Board extensive board and senior executive–level expertise in accounting, law, business, and finance as a result of his nearly 44-year career as a lawyer, senior executive, and director
of several large public companies in various industries. From 2004 until 2009, he served as Chairman and President of The Financial Accounting Foundation. In addition, Mr. Denham has extensive experience with environmental issues: representing
buyers and sellers in complex mergers and acquisitions; as CEO of Salomon Inc., then owner of refiner Basis Petroleum; as a former Trustee of the Natural Resources Defense Council; and as the former Chairman of the Board of the John D. and Catherine
T. MacArthur Foundation, which funds environmental and sustainable development programs.
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Chevron Corporation—2014 Proxy Statement |
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Alice P. Gast
Director since 2012
Dr. Gast, age 55, has been the President of Lehigh University since 2006. She is the President-elect of Imperial College London, a position she
will assume in August 2014. |
Prior Positions Held: Dr. Gast served as Vice President for Research, Associate Provost, and Robert T.
Haslam Chair in Chemical Engineering at Massachusetts Institute of Technology from 2001 until 2006 and, prior to that, was professor of Chemical Engineering at Stanford University and the Stanford Synchrotron Radiation Laboratory from 1985 until
2001.
Current Public Company Directorships: None.
Prior Public Company Directorships (within the last five years): None.
Other Directorships, Trusteeships, and Memberships: 2010 science envoy to the Caucasus and
Central Asia appointed by the U.S. Department of State; King Abdullah University of Science and Technology; Lehigh Valley Association of Independent Colleges: The New York Academy of Sciences; Patriot League Council of Presidents.
Qualifications, Experience, Attributes, and Skills: Dr. Gast brings to the Board an extensive engineering and science background gained
during the course of her own education and 24-year career in leading educational institutions. In addition, she has policy-making and international affairs experience, having served as a 2010 science envoy to the Caucasus and Central Asia and on the
Academic Research Council for the Singapore Ministry of Education and the Committee of U.S. Manufacturing Competitiveness. Dr. Gast also has valuable experience in environmental matters. At Lehigh, she presided over the establishment of STEPS,
an initiative on science, technology, environment, policy and society, and she oversees the university’s Environmental Advisory Group and emergency and crisis management planning, which includes preparedness for environmental emergencies.
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Enrique Hernandez, Jr. Director since 2008
Mr. Hernandez, age 58, has been Chairman, Chief Executive Officer and President of Inter-Con Security Systems, Inc., a global provider of
physical and facility security services to local, state, federal and foreign governments, utilities and major corporations, since 1986. |
Prior Positions Held: Mr. Hernandez was Executive Vice President and Assistant General Counsel of
Inter-Con Security Systems from 1984 until 1986 and an associate in the law firm of Brobeck, Phleger & Harrison from 1980 until 1984.
Current Public Company Directorships: McDonald’s Corporation; Nordstrom, Inc.; Wells Fargo & Company.
Prior Public Company Directorships (within the last five years): None.
Other Directorships, Trusteeships, and Memberships: City of Hope National Medical Center;
Harvard College Visiting Committee; Harvard University Resources Committee; John Randolph Haynes and Dora Haynes Foundation; University of Notre Dame.
Qualifications, Experience, Attributes, and Skills: Mr. Hernandez brings to the Board extensive board and senior executive–level experience in international business as a result of his nearly
29-year career with Inter-Con Security Systems, Inc. and as a director of several large public companies in various industries. In addition, he also has significant financial expertise gained as a former member of the boards and audit committees of
Great Western Financial Corporation from 1993 until 1997 and Washington Mutual, Inc. from 1997 until 2002. Mr. Hernandez also provides expertise in international security from his role leading Inter-Con Security Systems, as well as expertise in
communications and community affairs from his role as co-founder of Interspan Communications, a television broadcasting company serving Spanish-language audiences.
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| Chevron Corporation—2014 Proxy Statement |
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Jon M. Huntsman, Jr. Director since 2014
Mr. Huntsman, age 54, has been Chairman of the Board of Directors of Huntsman Cancer Foundation, a nonprofit organization that financially
supports research, education and patient care initiatives at Huntsman Cancer Institute at the University of Utah, since 2012. |
Prior Positions Held: Mr. Huntsman was a candidate for the Republican nomination for President of the
United States in 2011. He served as U.S. Ambassador to China from 2009 until 2011 and two consecutive terms as Governor of Utah from 2005 until 2009. Prior to his service as Governor, Mr. Huntsman served as U.S. Ambassador to Singapore, Deputy
U.S. Trade Representative and Deputy Assistant Secretary of Commerce for Asia. Between these appointments, Mr. Huntsman was employed by Huntsman Corporation in various capacities, including Vice Chairman and Chairman and Chief Executive Officer
of Huntsman Holdings Corporation, until his resignation in 2005.
Current Public Company Directorships: Caterpillar, Inc.; Ford
Motor Company; Huntsman Corporation.
Prior Public Company Directorships (within the last five years): None.
Other Directorships, Trusteeships, and Memberships: Chairman, Atlantic Council of the United States; Distinguished Fellow, Brookings
Institution; Carnegie Endowment for International Peace; National Committee on U.S.-China Relations; Pacific Council on International Policy; Ronald Reagan Presidential Foundation and Library; University of Pennsylvania; U.S. Naval Academy
Foundation.
Qualifications, Experience, Attributes and Skills: Mr. Huntsman brings to the Board extensive experience in
public policy and international affairs as a result of his service as U.S. Ambassador to China, U.S. Ambassador to Singapore, Governor of Utah and Deputy U.S. Trade Representative. As Deputy U.S. Trade Representative, he oversaw all trade policy and
negotiations with Asia, South Asia, and Africa, including several free trade agreements and regional initiatives. As Governor of Utah, Mr. Huntsman oversaw environmental policy decisions and other matters. He also brings extensive board and
senior executive-level experience, in particular, significant experience overseeing environmental practices and related matters as Vice Chairman of Huntsman Corporation and Chairman and Chief Executive Officer of Huntsman Holdings Corporation.
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George L. Kirkland Director since 2010
Mr. Kirkland, age 63, has been Vice Chairman of the Board since 2010 and Executive Vice President of Upstream since 2005.
Prior Positions Held: Mr. Kirkland was previously
President of Chevron Overseas Petroleum from |
2002 through 2004. From 2000 until 2001, he was President of Chevron U.S.A. Production Company. Mr. Kirkland
joined Chevron in 1974.
Current Public Company Directorships: None.
Prior Public Company Directorships (within the last five years): None.
Other Directorships, Trusteeships, and Memberships: Africa- America Institute; Corporate
Council on Africa; US-ASEAN Business Council; U.S.-Kazakhstan Business Association.
Qualifications, Experience, Attributes, and
Skills: Mr. Kirkland brings to the Board extensive senior executive–level experience at Chevron and in the energy industry with a strong knowledge of Chevron’s Upstream business and operations, as well as strategy, markets,
competitors, financial matters, energy policy and regulation, and environmental matters. His 40-year career at Chevron has at various times included principal responsibility for Upstream research and technology, production and operations in Nigeria,
the United States, and Canada, international exploration and production, and, since 2005, global exploration, production, and gas activities. Mr. Kirkland is also active in a number of associations and organizations focusing on business, energy
industry policy, and international relations.
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Charles W. Moorman IV Director since 2012
Mr. Moorman, age 62, has been since 2006 Chairman of the Board and since 2005 Chief Executive Officer of Norfolk Southern Corporation, a
freight transportation company. |
Prior Positions Held: Mr. Moorman served as President at Norfolk Southern from 2004 until 2013, Senior
Vice President of Corporate Planning and Services from 2003 until 2004, and Senior Vice President of Corporate Services in 2003. From 1999 until 2004, he was President of Thoroughbred Technology and Telecommunications, Inc., a subsidiary
of Norfolk Southern.
Current Public Company Directorships: Norfolk Southern Corporation.
Prior Public Company Directorships (within the last five years): None.
Other Directorships, Trusteeships, and Memberships: American Society of Corporate Executives;
Chesapeake Bay Foundation; Hampton Roads Community Foundation; Nature Conservancy of Virginia; University of Virginia Medical Center Operating Board; Chairman, Virginia Business Council.
Qualifications, Experience, Attributes, and Skills: Mr. Moorman brings to the Board extensive board and senior executive–level
experience in logistics services, technology, strategy, safety, and environmental issues as a result of his 32-year career in the freight railroad and transportation industries. In addition, he serves as Chairman and Chief Executive Officer of a
Fortune 500 public company, providing him insight into and experience with the operations, challenges and complex issues facing large corporations. Mr. Moorman is also active in a number of associations and organizations focusing on business,
public policy, and governance.
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Chevron Corporation—2014 Proxy Statement |
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Kevin W. Sharer Director since 2007
Mr. Sharer, age 66, has been a Senior Lecturer of Business Administration at the Harvard Business School since 2012.
Prior Positions Held: Mr. Sharer was Chairman of the
Board from 2001 and Chief Executive Officer from 2000 |
of Amgen Inc., a global biotechnology medicines company, until his retirement in 2012. From 1992 until 2000, he
served as President and Chief Operating Officer of Amgen. From 1989 until 1992, Mr. Sharer was President of the Business Markets Division of MCI Communications Corporation. From 1984 until 1989, he served in numerous executive capacities at
General Electric Company.
Current Public Company Directorships: Northrop Grumman Corporation.
Prior Public Company Directorships (within the last five years): Amgen Inc.
Other Directorships, Trusteeships, and Memberships: National Parks Conservancy; U.S. Naval Academy Foundation.
Qualifications, Experience, Attributes, and Skills: Mr. Sharer brings to the Board extensive board and senior executive–level
expertise in business and finance. In particular, he served as Chairman and Chief Executive Officer of a Fortune 500 public company, providing him insight into and experience with the operations, challenges, and complex issues facing large
corporations. Mr. Sharer has significant expertise in technology, research and development, long investment cycles, human resources and compensation, as well as extensive experience dealing with regulatory agencies. Having served as a director
of Unocal Corporation, he also brings to the Board a strong knowledge of energy industry strategy, markets, competitors, and financial matters. Mr. Sharer is also a former officer of the U.S. Navy.
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John G. Stumpf Director since 2010
Mr. Stumpf, age 60, has been since 2010 Chairman of the Board, since 2007 Chief Executive Officer, and since 2005 President of Wells
Fargo & Company, a nationwide, diversified, community-based financial services company.
Prior Positions Held: From 2002 until 2005, Mr. Stumpf served as Group Executive Vice President of Community Banking at Wells Fargo. In
2000, he led |
the integration of Wells Fargo’s $23 billion acquisition of First Security Corporation. Beginning in 1982,
Mr. Stumpf served in numerous executive capacities at Norwest Corporation until its merger with Wells Fargo in 1998, at which time he became head of Wells Fargo’s Southwestern Banking Group.
Current Public Company Directorships: Target Corporation; Wells Fargo & Company.
Prior Public Company Directorships (within the last five years): None.
Other Directorships, Trusteeships, and Memberships: The Clearing House; Financial Services Roundtable; San Francisco Museum of Modern Art.
Qualifications, Experience, Attributes, and Skills: Mr. Stumpf brings to the Board extensive board and senior
executive–level expertise in business and finance. In particular, he serves as Chairman, Chief Executive Officer, and President of a Fortune 500 public company, providing him insight into and experience with the operations, challenges and
complex issues facing large corporations. In addition, Mr. Stumpf has significant expertise in finance, strategy, and marketing as a result of his 32-year career in the banking and financial services industries and his service on the boards of
Visa USA, Visa International, and Inovant LLC. He is also active in a number of associations and organizations focusing on business and public policy.
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Ronald D. Sugar Director since 2005
Dr. Sugar, age 65, is the retired Chairman of the Board and Chief Executive Officer of Northrop Grumman Corporation, a global defense and
technology company. He currently serves as a senior-level advisor to various businesses and organizations, including Ares Management LLC, an asset manager and registered |
investment advisor; Bain & Company, a global management consulting firm; and the G100 Network and the World
50, peer-to-peer exchanges for current and former senior executives from some of the world’s largest companies.
Prior Positions
Held: Dr. Sugar was Chairman of the Board and Chief Executive Officer of Northrop Grumman Corporation from 2003 until 2010 and President and Chief Operating Officer from 2001 until 2003. He was President and Chief Operating Officer of
Litton Industries, Inc., from 2000 until 2001.
Current Public Company Directorships: Air Lease Corporation; Amgen Inc.; Apple
Inc.
Prior Public Company Directorships (within the last five years): Northrop Grumman Corporation.
Other Directorships, Trusteeships, and Memberships: Alliance College-Ready Public Schools; Boys & Girls Clubs of
America; Los Angeles Philharmonic Association; National Academy of Engineering; UCLA Anderson School of Management Board of Visitors; University of Southern California.
Qualifications, Experience, Attributes, and Skills: Dr. Sugar brings to the Board extensive board and senior executive–level expertise in business and finance. In particular, he served as Chairman
and Chief Executive Officer of a Fortune 500 public company, providing him insight into and experience with the operations, challenges and complex issues facing large corporations. In addition, Dr. Sugar has significant expertise in
manufacturing, technology, finance, government affairs, international marketing, long investment cycles, and environmental issues. While Chairman and Chief Executive Officer of Northrop Grumman, he oversaw environmental assessments and remediations
at shipyards and aircraft and electronics factories. Dr. Sugar’s career has included service as Chief Financial Officer of TRW, Inc., providing additional financial expertise.
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| Chevron Corporation—2014 Proxy Statement |
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7 |
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Carl Ware Director since 2001
Mr. Ware, age 70, is a retired Executive Vice President of The Coca-Cola Company, a manufacturer of beverages.
Prior Positions Held: Mr. Ware was a Senior Advisor to the
Chief Executive Officer of The Coca-Cola Company from 2003 until 2005 |
and was Executive Vice President, Global Public Affairs and Administration, from 2000 until 2003. He was President of The Coca-Cola Company’s Africa Group, with operational responsibility
for 50 countries in sub-Saharan Africa, from 1991 until 2000.
Current Public Company
Directorships: None.
Prior Public Company Directorships (within the last five years): Coca-Cola Bottling Co.
Consolidated; Cummins, Inc.
Other Directorships, Trusteeships, and Memberships: Clark Atlanta University; PGA TOUR Golf Course
Properties, Inc.
Qualifications, Experience, Attributes, and Skills: Mr. Ware brings to the Board extensive senior
executive–level expertise in operations, manufacturing, marketing, and public and international affairs as a result of his nearly 28-year career with The Coca-Cola Company. In addition, his tenure as President and Chief Operating Officer of
Coca-Cola Africa provided in-depth knowledge of one of Chevron’s key areas of operations, and his tenure as Executive Vice President for Public Affairs and Administration provided additional public policy and environmental experience. In that
position, Mr. Ware supervised companywide environmental policies, programs, and practices.
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John S. Watson Director since 2009
Mr. Watson, age 57, has been Chairman of the Board and Chief Executive Officer of Chevron since 2010.
Prior Positions Held: Mr. Watson was previously Vice
Chairman of the Board from 2009 until 2010. He was Executive Vice President of Strategy and Development from 2008 until 2009. |
From 2005 until 2008, he was President of Chevron International Exploration and Production Company, and from 2001
until 2005, he was Chief Financial Officer. In 1998, he was named Vice President with responsibility for strategic planning. Mr. Watson joined Chevron Corporation in 1980.
Current Public Company Directorships: None.
Prior Public Company Directorships (within the
last five years): None.
Other Directorships, Trusteeships, and Memberships: American Petroleum Institute; American
Society of Corporate Executives; The Business Council; Business Roundtable; JPMorgan International Council; National Petroleum Council; University of California Davis Chancellor’s Board of Advisors.
Qualifications, Experience, Attributes, and Skills: Mr. Watson brings to the Board extensive senior executive–level expertise at
Chevron and in the energy industry with a strong knowledge of business, operations, strategy, markets, competitors, financial matters, energy policy, and environmental matters. In addition, his 33-year career at Chevron has at various times included
principal responsibility for corporatewide finance, strategic planning, mergers and acquisitions, and international exploration and production. In 2000, Mr. Watson led Chevron’s integration effort following its successful acquisition of
Texaco Inc., after which he became Chief Financial Officer. He is also active in a number of associations and organizations focusing on business, energy industry policy, and international relations.
Vote Required
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. Any shares not voted (whether by abstention or otherwise) will have no impact on the elections. If you are a street name
stockholder and do not vote your shares, your bank, broker, or other holder of record cannot vote your shares at its discretion in these elections.
If the number of Director nominees exceeds the number of Directors to be elected—a circumstance we do not anticipate—the Directors shall be elected by a plurality of the shares present in person or by
proxy at the Annual Meeting or any adjournment or postponement thereof and entitled to vote on the election of Directors.
Your Board’s Recommendation
Your Board unanimously recommends that you vote FOR the 12 Director nominees named in this
Proxy Statement.
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| 8 |
|
Chevron Corporation—2014 Proxy Statement |
Overview
Our compensation for nonemployee Directors is designed to be competitive with our largest global
energy competitors and other large, capital-intensive international companies across industries, to link rewards to business results and stockholder returns, and to facilitate increased ownership of Chevron common stock. We do not have a retirement
plan for nonemployee Directors. Our executive officers are not paid additional compensation for their service as Directors.
The Board
Nominating and Governance Committee evaluates and recommends to the nonemployee Directors of the Board the compensation for nonemployee Directors, and the nonemployee Directors of the Board set the compensation. Our executive officers have no role
in determining the amount or form of
nonemployee Director compensation. The Committee may retain the services of an independent compensation consultant to assist the Committee with its work. The Committee did not do so in 2013.
The nonemployee Directors of the Board approved an increase in nonemployee Director compensation, effective as of the 2013 Annual
Meeting, as described in last year’s proxy statement. As a result, nonemployee Directors receive total annual compensation of $375,000 per Director, with 40 percent paid in cash (or stock options at the Director’s election) and
60 percent paid in restricted stock units. Committee chairmen receive an additional $15,000 in cash for their services. Below, we describe the nonemployee Directors’ 2013 annual compensation in more detail.
Cash
or Stock Options (at the Director’s Election)
| |
Ÿ |
|
$150,000 annual cash retainer, paid in monthly installments beginning with the date the Director is elected to the Board. |
| |
Ÿ |
|
$15,000 additional annual cash retainer for each Board committee chairman, paid in monthly installments beginning with the date the Director becomes a
committee chairman. |
| |
Ÿ |
|
Directors can elect to receive nonstatutory/nonqualified stock options instead of any portion of their cash compensation. Options are granted under the
Chevron Corporation Nonemployee Directors’ Equity Compensation and Deferral Plan (NED Plan). |
| |
Ÿ |
|
Directors can also elect to defer receipt of any portion of their cash compensation under the NED Plan.
|
Restricted Stock Units
| |
Ÿ |
|
$225,000 of the annual compensation is paid in the form of restricted stock units (RSUs) that are granted on the date of the annual meeting of stockholders at
which the Director is elected. |
| |
Ÿ |
|
If a Director is elected to the Board between annual meetings, a prorated grant can be made.
|
| |
Ÿ |
|
RSUs are subject to forfeiture (except when the Director dies, reaches mandatory retirement age of 72, becomes disabled, changes primary occupation, or enters
government service) until the earlier of 12 months or the day preceding the first annual meeting of stockholders following the date of the grant. |
| |
Ÿ |
|
RSUs are paid out in shares of Chevron common stock unless the Director has elected to defer the payout until retirement under the NED Plan.
|
Expenses and Charitable Matching Gift Program
Nonemployee Directors are reimbursed for out-of-pocket expenses incurred in connection with the
business and affairs of Chevron. Nonemployee Directors are eligible to participate in
Humankind, our charitable matching gift program, which is available to all our employees. We will match any contributions to eligible entities up to a maximum of $10,000 per year.
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| Chevron Corporation—2014 Proxy Statement |
|
9 |
Compensation During the Fiscal Year Ended December 31, 2013
The above-described choices available to Directors result in slight differences in reportable
compensation, even though each Director was awarded the same amount (except for committee chairmen, who receive an additional $15,000). Specifically, one Director—Mr. Hernandez—elected to receive stock options for all of his annual cash
retainer.
The following table sets forth the compensation of our nonemployee Directors for the fiscal year
ended December 31, 2013. On February 26, 2013, Mr. Hagel resigned from the Board of Directors due to his appointment as U.S. Secretary of Defense. Mr. Huntsman joined the Board on January 15, 2014.
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| Name |
|
Fees Earned or
Paid in Cash |
|
|
Stock
Awards(1) |
|
|
Option
Awards(2) |
|
|
All
Other Compensation(3) |
|
|
Total |
|
| Linnet F. Deily |
|
$ |
148,647 |
(4) |
|
$ |
225,000 |
|
|
|
– |
|
|
$ |
10,980 |
|
|
$ |
384,627 |
|
| Robert E. Denham |
|
$ |
148,647 |
(4)(5) |
|
$ |
225,000 |
|
|
|
– |
|
|
$ |
980 |
|
|
$ |
374,627 |
|
| Alice P. Gast |
|
$ |
133,605 |
|
|
$ |
225,000 |
|
|
|
– |
|
|
$ |
10,980 |
|
|
$ |
369,585 |
|
| Charles T. Hagel |
|
$ |
28,309 |
(6) |
|
$ |
– |
|
|
|
– |
|
|
$ |
140 |
|
|
$ |
28,449 |
|
| Enrique Hernandez, Jr. |
|
$ |
– |
|
|
$ |
225,000 |
|
|
$ |
149,995 |
|
|
$ |
10,980 |
|
|
$ |
385,975 |
|
| Jon M. Huntsman, Jr. |
|
$ |
– |
(7) |
|
$ |
– |
|
|
|
– |
|
|
$ |
– |
|
|
$ |
– |
|
| Charles W. Moorman IV |
|
$ |
133,605 |
(5) |
|
$ |
225,000 |
|
|
|
– |
|
|
$ |
5,980 |
|
|
$ |
364,585 |
|
| Kevin W. Sharer |
|
$ |
133,605 |
(5) |
|
$ |
225,000 |
|
|
|
– |
|
|
$ |
10,980 |
|
|
$ |
369,585 |
|
| John G. Stumpf |
|
$ |
133,605 |
|
|
$ |
225,000 |
|
|
|
– |
|
|
$ |
980 |
|
|
$ |
359,585 |
|
| Ronald D. Sugar |
|
$ |
148,647 |
(4)(5) |
|
$ |
225,000 |
|
|
|
– |
|
|
$ |
5,980 |
|
|
$ |
379,627 |
|
| Carl Ware |
|
$ |
148,647 |
(4) |
|
$ |
225,000 |
|
|
|
– |
|
|
$ |
980 |
|
|
$ |
374,627 |
|
| (1) |
Amounts reflect the grant date fair value for restricted stock units (RSUs) granted in 2013 under the NED Plan. The grant date fair value of these RSUs was
$126.43 per unit, the closing price of Chevron common stock on May 28, 2013. RSUs accrue dividend equivalents, the value of which is factored into the grant date fair value. For purposes of this table only, estimates of forfeitures related to
service-based vesting conditions have been disregarded. RSUs are payable in Chevron common stock. |
| |
At December 31, 2013, the following nonemployee Directors had the following number of shares subject to outstanding stock awards or deferrals:
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|
| Name |
|
Restricted
Stock |
|
|
Stock
Units |
|
|
Restricted
Stock Units |
|
|
Stock Units
From Director’s
Deferral of Cash
Retainer(a) |
|
|
Total |
|
| Linnet F. Deily |
|
|
– |
|
|
|
3,103 |
|
|
|
1,808 |
|
|
|
– |
|
|
|
4,911 |
|
| Robert E. Denham |
|
|
3,181 |
|
|
|
9,869 |
|
|
|
16,690 |
|
|
|
15,088 |
|
|
|
44,828 |
|
| Alice P. Gast |
|
|
– |
|
|
|
– |
|
|
|
1,808 |
|
|
|
– |
|
|
|
1,808 |
|
| Charles T. Hagel |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
| Enrique Hernandez, Jr. |
|
|
– |
|
|
|
– |
|
|
|
12,986 |
|
|
|
1,017 |
|
|
|
14,003 |
|
| Jon M. Huntsman, Jr. |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
| Charles W. Moorman IV |
|
|
– |
|
|
|
– |
|
|
|
3,734 |
|
|
|
1,561 |
|
|
|
5,295 |
|
| Kevin W. Sharer |
|
|
– |
|
|
|
– |
|
|
|
16,690 |
|
|
|
9,505 |
|
|
|
26,195 |
|
| John G. Stumpf |
|
|
– |
|
|
|
– |
|
|
|
1,808 |
|
|
|
– |
|
|
|
1,808 |
|
| Ronald D. Sugar |
|
|
2,088 |
|
|
|
6,392 |
|
|
|
16,690 |
|
|
|
13,156 |
|
|
|
38,326 |
|
| Carl Ware |
|
|
6,697 |
|
|
|
17,544 |
|
|
|
16,690 |
|
|
|
415 |
|
|
|
41,346 |
|
| |
(a) |
Deferral elections must be made by December 31 in the year preceding the year in which the cash to be deferred is earned. Deferrals are credited, at the
Director’s election, into accounts tracked with reference to the same investment fund options available to participants in the Chevron Deferred Compensation Plan for Management Employees II, including a Chevron Common Stock Fund. Distribution
of deferred amounts is in cash except for amounts valued with reference to the Chevron Common Stock Fund, which are distributed in shares of Chevron common stock. Distribution will be made in either one or 10 annual installments for
compensation deferred after December 31, 2004, and distributions will be made in one to 10 annual installments for compensation deferred prior to January 1, 2005. Any deferred amounts unpaid at the time of a Director’s death are
distributed to the Director’s beneficiary. |
| (2) |
For Directors electing stock options in lieu of all or a portion of the annual cash compensation, the options are granted on the date of the annual meeting of
stockholders that the Director is elected. The options are exercisable for that number of shares of Chevron common stock determined by dividing the amount of the cash retainer subject to the election by the Black-Scholes value of an option on
the date of grant. Elections to receive options in lieu of any portion of cash compensation must be made by December 31 in the year preceding the year in which the options are granted. The options have an exercise price based on the closing
price of Chevron common stock on the date of grant. |
| |
Amounts reported here reflect the grant date fair value for stock options granted on May 29, 2013. The grant date fair value was determined in accordance
with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (ASC 718) for financial reporting purposes. The grant date fair value of each option is calculated using the Black-Scholes
model. Stock options granted on May 29, 2013, have an exercise price of $125.49 and a grant date fair value of $25.79. The assumptions used in the Black-Scholes model to calculate this grant date fair value were: an expected life of
6.0 years, a volatility rate of 31.2 percent, a risk-free interest rate of 1.35 percent and a dividend yield of 3.56 percent. For purposes of this table only, estimates of forfeitures related to service-based vesting conditions have been
disregarded. |
| |
Mr. Hernandez elected to receive all of his 2013 annual cash compensation in the form of stock options. The number of stock options granted in 2013 to
Mr. Hernandez was 5,816. One-half of the options vest six months following the date of grant, and the remaining half vests on the earlier of 12 months or the day preceding the first annual meeting of stockholders following the date of
grant. Options expire after 10 years. |
| |
At December 31, 2013, Ms. Deily had 1,456 outstanding and vested stock options, and Mr. Hernandez had 32,291 outstanding, vested and unvested
stock options. Under the rules governing awards of stock options under the NED Plan, Directors who retire in accordance with Chevron’s Director Retirement Policy have until 10 years from the date of grant to exercise any outstanding option.
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| 10 |
|
Chevron Corporation—2014 Proxy Statement |
| (3) |
All Other Compensation for 2013 includes the following items. |
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|
|
|
|
|
| |
|
Insurance(a)
|
|
|
Charitable Gift(b) |
|
| Linnet F. Deily |
|
$ |
980 |
|
|
$ |
10,000 |
|
| Robert E. Denham |
|
$ |
980 |
|
|
$ |
– |
|
| Alice P. Gast |
|
$ |
980 |
|
|
$ |
10,000 |
|
| Charles T. Hagel |
|
$ |
140 |
|
|
$ |
– |
|
| Enrique Hernandez, Jr. |
|
$ |
980 |
|
|
$ |
10,000 |
|
| Jon M. Huntsman, Jr. |
|
$ |
– |
|
|
$ |
– |
|
| Charles W. Moorman IV |
|
$ |
980 |
|
|
$ |
5,000 |
|
| Kevin W. Sharer |
|
$ |
980 |
|
|
$ |
10,000 |
|
| John G. Stumpf |
|
$ |
980 |
|
|
$ |
– |
|
| Ronald D. Sugar |
|
$ |
980 |
|
|
$ |
5,000 |
|
| Carl Ware |
|
$ |
980 |
|
|
$ |
– |
|
| |
(a) |
Amounts reflect the annualized premium for accidental death and dismemberment insurance coverage paid by Chevron, which has been prorated for Mr. Hagel.
|
| |
(b) |
Amounts paid in 2013 in the Director’s name under Humankind, our charitable matching gift program. |
| (4) |
Amount includes the additional retainer for serving as a Board committee chairman during 2013. |
| (5) |
The Director has elected to defer some or all of the annual cash retainer under the NED Plan in 2013. None of the earnings under the NED Plan are above market
or preferential. |
| (6) |
Mr. Hagel resigned from the Board on February 26, 2013, due to his appointment as U.S. Secretary of Defense. |
| (7) |
Mr. Huntsman joined the Board on January 15, 2014. |
|
|
|
| Chevron Corporation—2014 Proxy Statement |
|
11 |
Overview
Chevron is governed by a Board of Directors and committees of the Board that meet throughout the
year. Directors discharge their responsibilities at Board and committee meetings and also through other communications with management. Your Board is
committed to corporate governance structures and practices that help Chevron compete more effectively, sustain its success, and build long-term stockholder value.
Role
of the Board of Directors
Your Board oversees and provides policy guidance on Chevron’s business and affairs. It monitors
overall corporate performance, the integrity of Chevron’s financial controls, and the effectiveness of its legal compliance and enterprise risk management programs. Your Board oversees management and plans for the
succession of key executives. It oversees Chevron’s strategic and business planning process. 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 supplemental indicators.
Director Independence
Your Board has determined that each nonemployee Director who served in 2013 and each current
nonemployee Director and nonemployee Director nominee is independent in accordance with the NYSE Corporate Governance Standards and that no material relationship exists that would interfere with the exercise of independent judgment in carrying out
the responsibilities of a Director.
For a Director to be considered independent, the Board must determine that the Director does not
have any direct or indirect 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:
| |
Ÿ |
|
a director of another entity if business transactions between Chevron and that entity do not exceed $5 million or five percent of the receiving
entity’s consolidated gross revenues, whichever is greater; |
| |
Ÿ |
|
a director of another entity if Chevron’s discretionary charitable contributions to that entity do not exceed $1 million or two percent of that
entity’s gross revenues, whichever is greater, and if the charitable contributions are consistent with Chevron’s philanthropic practices; and |
| |
Ÿ |
|
a relationship arising solely from a Director’s ownership of an equity or limited partnership interest in a party that engages in a transaction with
Chevron as long as the Director’s ownership interest does not exceed two percent of the total equity or partnership interest in that other party. |
These categorical standards are contained in our Corporate Governance Guidelines, which are available on our website at www.chevron.com and are available in print upon request.
Ms. Deily and Messrs. Denham, Hagel (resigned 2013), Hernandez, Huntsman, Moorman, Sharer, Stumpf, Sugar, and Ware are directors of for-profit
entities with which Chevron conducts business in the ordinary course. They and Dr. Gast are also directors or trustees of, or similar advisors to, not-for-profit entities to which Chevron contributes funds. The Board 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 2013 that are not covered by the categorical standards
described above:
| |
Ÿ |
|
For Dr. Gast, the Board considered that in 2013, Chevron contributed and matched various employee contributions to Lehigh University amounting to less
than 0.007 percent of the University’s most recently reported annual gross revenues. Dr. Gast is the president of the University. The Board concluded that these transactions would not impair Dr. Gast’s independence.
|
| |
Ÿ |
|
For Mr. Hernandez, the Board considered that in 2013, Chevron purchased services from Inter-Con Security Systems of Liberia Limited, a subsidiary of
Inter-Con Security Systems, Inc., in the ordinary course of business, amounting to less than one percent of Inter-Con’s most recent annual consolidated gross revenues. Mr. Hernandez is Chairman, Chief Executive Officer, President and a
significant shareholder of Inter-Con, a privately held business. The Board concluded that these transactions would not impair Mr. Hernandez’s independence. |
| |
Ÿ |
|
For Mr. Moorman, the Board considered that in 2013, Chevron purchased products and services from Norfolk Southern Corporation, in the ordinary course of
business, amounting to less than 0.025 percent of Norfolk Southern’s most recently reported annual consolidated gross revenues and Norfolk Southern purchased products and services from Chevron, in the ordinary course of business, amounting to
less than 0.022 percent of Chevron’s most recently reported annual consolidated gross revenues. Mr. Moorman is the Chairman and Chief Executive Officer of Norfolk Southern. The Board concluded that these transactions would not impair
Mr. Moorman’s independence. |
| |
Ÿ |
|
For Mr. Stumpf, the Board considered that in 2013, Chevron utilized Wells Fargo & Company for commercial banking, brokerage, and other services,
in the ordinary course of business, amounting to less than 0.011 percent of Wells Fargo’s most recently reported annual consolidated gross revenues and Wells Fargo paid to Chevron interest in connection with time deposits and similar
transactions in the ordinary course of business, amounting to less than 0.002 percent of Chevron’s most recently reported annual consolidated gross revenues. Mr. Stumpf is the Chairman, Chief Executive Officer and President of Wells Fargo.
The Board concluded that these transactions would not impair Mr. Stumpf’s independence. |
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| 12 |
|
Chevron Corporation—2014 Proxy Statement |
Board Leadership and Independent Lead Director
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. Chevron’s Directors select the Chairman of the Board annually. Thus, the Board has great flexibility to choose the optimal leadership structure depending upon Chevron’s particular
needs and circumstances and to organize its functions and conduct its business in the most efficient and effective manner.
The Board
Nominating and Governance Committee conducts an annual 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, Mr. Watson, to also serve as Chairman of the Board. The Board
believes that having the CEO also serve as Chairman at this time fosters an important unity of leadership between the Board and the Company that is nevertheless subject to effective oversight by the independent Lead Director and the other
independent Directors. The Board does not believe that having the CEO also serve as Chairman at this time inhibits the flow of information and interactions between the Board, management, and other Company personnel.
Your Board does recognize the importance of independent Board oversight of the CEO and management and for this reason follows policies and
procedures designed to ensure independent oversight. For example, the independent Directors conduct an annual review of the CEO’s performance. In addition, at each meeting, the independent Directors meet in executive session. During executive
sessions, the independent Directors discuss management performance and routinely formulate guidance and feedback for the CEO and other members of management.
Further, when the Board selects the CEO to also serve as Chairman, the independent Directors select a Lead Director from among themselves, currently Mr. Denham. As described in the
“Board Leadership and Lead Director” section of Chevron’s Corporate Governance Guidelines, the Lead Director’s responsibilities are to:
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|
chair all meetings of the Board in the Chairman’s absence, including executive sessions; |
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|
serve as liaison between the Chairman and the independent Directors; |
| |
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|
consult with the Chairman on and approve meeting agendas and schedules and information sent to the Board; |
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Ÿ |
|
consult with the Chairman on other matters pertinent to Chevron and the Board; |
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|
call meetings of the independent Directors; and |
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Ÿ |
|
if requested by major stockholders, be available as appropriate for consultation and direct communication. |
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. In this respect, 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 in this Proxy Statement.
Board Committees
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 New York Stock Exchange (NYSE) Corporate Governance Standards. Each Committee is governed by a written charter that can be
viewed on Chevron’s website at www.chevron.com and is available in print upon request. In addition, each member of the Compensation Committee is an “outside” Director
for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended, and each member of the Audit Committee is independent, financially literate and, other than Dr. Gast, an “audit committee financial expert,” as such
terms are defined under the Exchange Act and related rules and the NYSE Corporate Governance Standards.
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| Chevron Corporation—2014 Proxy Statement |
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13 |
|
|
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|
|
| Committees and Membership |
|
Committee Functions |
| Audit
Ronald D. Sugar, Chairman Alice P.
Gast Enrique Hernandez, Jr. * John G. Stumpf |
|
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|
Selects the independent registered public accounting firm for endorsement by the Board and ratification
by the stockholders |
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|
Reviews reports of independent and internal auditors |
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|
Reviews and approves the scope and cost of all services (including nonaudit services) provided by the independent
registered public accounting firm |
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|
Monitors the effectiveness of the audit process and financial reporting |
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|
Reviews the adequacy of financial and operating controls |
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|
Monitors implementation and effectiveness of Chevron’s compliance policies
and procedures |
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|
Assists the Board in fulfilling its oversight of enterprise risk management, particularly financial risk
exposures |
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|
Evaluates the effectiveness of the Committee |
| Board Nominating and Governance
Robert E. Denham, Chairman Jon M.
Huntsman, Jr. Kevin W. Sharer * Carl Ware |
|
Ÿ |
|
Evaluates the effectiveness of the Board and its committees and recommends changes to improve Board, Board
committee, and individual Director effectiveness |
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|
Assesses the size and composition of the Board |
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Recommends prospective Director nominees |
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|
Reviews and approves nonemployee Director compensation |
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|
Reviews and recommends changes as appropriate in Chevron’s Corporate Governance Guidelines, Restated
Certificate of Incorporation, By-Laws, and other Board-adopted governance provisions |
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Reviews stockholder proposals and recommends Board responses to proposals |
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|
Assists the Board in fulfilling its oversight of enterprise risk management, particularly risks in connection
with Chevron’s corporate governance structures and processes |
| Management Compensation
Carl Ware, Chairman Linnet F.
Deily Robert E. Denham
Charles W. Moorman IV Kevin W.
Sharer * |
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Ÿ |
|
Conducts an annual review of the CEO’s performance |
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Reviews and recommends to the independent Directors the salary and other compensation matters for the
CEO |
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|
Reviews and approves salaries and other compensation matters for executive officers other than the
CEO |
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|
Administers Chevron’s executive incentive and equity-based compensation plans |
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|
Reviews Chevron’s strategies and supporting processes for management succession planning, leadership
development, executive retention, and diversity |
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|
Assists the Board in fulfilling its oversight of enterprise risk management, particularly risks in connection
with Chevron’s compensation programs |
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|
Evaluates the effectiveness of the Committee |
| Public
Policy Linnet F. Deily, Chairman Enrique Hernandez, Jr. Jon M. Huntsman, Jr.
Charles W. Moorman IV |
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|
Identifies, monitors, and evaluates domestic and international social, political, human rights, and environmental
trends and issues that affect Chevron’s activities and performance |
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Recommends to the Board policies, programs, and strategies concerning such issues |
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Recommends to the Board policies, programs, and practices concerning support of charitable, political, and
educational organizations |
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|
Reviews annually the policies, procedures, and expenditures for Chevron’s political activities, including
political contributions and direct and indirect lobbying |
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Reviews stockholder proposals and recommends Board responses to proposals |
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Assists the Board in fulfilling its oversight of enterprise risk management, particularly risks in connection
with the social, political, environmental, and public policy aspects of Chevron’s business |
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Evaluates the effectiveness of the
Committee |
| * |
Effective May 27, 2014, Mr. Hernandez will rotate off the Audit Committee and join the Board Nominating and Governance Committee, and
Mr. Sharer will rotate off the Board Nominating and Governance Committee and Management Compensation Committee and join the Audit Committee. |
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| 14 |
|
Chevron Corporation—2014 Proxy Statement |
Board and Committee Meetings and Attendance
In 2013, your Board held six Board meetings, with each meeting including an executive session of
independent Directors presided over by Mr. Denham, our independent Lead Director, and 24 Board committee meetings, which included nine Audit Committee, seven Board Nominating and Governance Committee, five Management Compensation Committee, and
three Public Policy Committee meetings.
All current Directors, other than Mr. Huntsman, who joined the Board in January 2014, attended
83 percent or more of the Board
meetings and their Board Committee meetings during 2013. 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), is that all Directors are expected to attend the Annual Meeting, absent extenuating circumstances. All current Directors, other
than Mr. Huntsman, who joined the Board in January 2014, attended the 2013 Annual Meeting.
Board and Committee Oversight of Risk
One of the many duties of your Board is to oversee Chevron’s risk management policies 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, political, and financial risks. The Board exercises its role of risk oversight in a variety of ways, including the following:
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|
|
| Board of Directors |
|
• Monitors overall corporate performance, the integrity of Chevron’s
financial controls, and the effectiveness of its legal compliance and enterprise risk management programs, risk governance practices, and risk mitigation efforts
• Oversees management’s implementation and utilization of appropriate risk management systems at all levels of the Company, including operating companies, business units, corporate
departments, and service companies
• Reviews specific facilities and operational risks as part of visits to Company operations
• Reviews portfolio, capital allocation, and geopolitical risks in the context of the Board’s annual strategy session and the annual business plan and capital budget
review • Receives reports from management on risk matters in the context of the Company’s strategic, business, and operational planning and decision making
• Receives reports from various centers of management-level risk expertise, including Corporate Strategic Planning, Legal, Corporate Compliance, Health Environment and Safety, Security,
Global Exploration and • Reserves, Corporation Finance, and others |
| Audit Committee |
|
• Assists the Board in fulfilling its oversight of financial risk
exposures and implementation and effectiveness of Chevron’s compliance programs • Discusses Chevron’s policies with respect to financial risk assessment and financial risk
management • Meets with Chevron’s Chief Compliance Officer and representatives of Chevron’s Compliance Policy Committee to receive information regarding compliance policies and
procedures and internal controls
• Meets with and reviews reports from Chevron’s independent and internal auditors
• Reports its discussions to the full Board for consideration and action when appropriate |
| Board Nominating and Governance Committee |
|
• Assists the Board in fulfilling its oversight of risks that may arise in
connection with the Company’s governance structures and processes • Conducts an annual evaluation of the Company’s governance practices with the help of the Corporate
Governance department • Discusses risk management in the context of general governance matters, including, among other topics, Board and management succession planning, delegations of authority and internal
approval processes, stockholder proposals and activism, and Director and officer liability insurance • Reports its discussions to the full Board for consideration and action
when appropriate |
| Management Compensation Committee |
|
• Assists the Board in fulfilling its oversight of risks that may arise in
connection with Chevron’s compensation programs and practices • Reviews the design and goals of Chevron’s compensation programs and practices in the context of possible
risks to Chevron’s financial and reputational well-being • Reviews Chevron’s strategies and supporting processes for management succession planning, leadership
development, executive retention, and diversity • Reports its discussions to the full Board for consideration and action when appropriate |
| Public Policy Committee |
|
• Assists the Board in fulfilling its oversight of risks that may arise in
connection with the social, political, environmental, and public policy aspects of Chevron’s business and the communities in which it operates
• Discusses risk management in the context of, among other things, legislative and regulatory initiatives, safety and environmental stewardship, community relations, government and
nongovernment organization relations, and Chevron’s reputation • Reports its discussions to the full Board for consideration and action when appropriate |
|
|
|
| Chevron Corporation—2014 Proxy Statement |
|
15 |
Succession Planning and Leadership Development
Succession planning and leadership development are top priorities for your Board and management.
Semi-annually, the nonemployee Directors review candidates for all senior management positions to ensure that qualified candidates are available for all positions and that development plans are being utilized to strengthen the skills and
qualifications of candidates.
To assist the nonemployee Directors, the CEO periodically provides them with an assessment of senior executives and their potential to succeed to the position of CEO, as well as perspectives on
potential candidates for other senior management positions.
Corporate Governance Guidelines
Your Board has adopted Corporate Governance Guidelines to provide a transparent framework for the effective governance of Chevron. The Corporate Governance Guidelines are reviewed regularly and updated as
appropriate. The full text of the Corporate Governance Guidelines can be found on our website at www.chevron.com, and address, among other topics:
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Board membership criteria |
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the selection of new Directors |
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|
Director terms of office |
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|
the election of Directors |
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|
Board leadership and the independent Lead Director |
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|
Board access to senior management |
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|
Board performance evaluations |
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|
stock ownership guidelines |
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|
communicating with the Board
|
Business Conduct and Ethics Code
We have adopted a code of business conduct and ethics for Directors, officers (including the Company’s Chief Executive Officer, Chief Financial Officer and Comptroller), and employees, known as the Business
Conduct and Ethics Code. The code is available on our website at www.chevron.com and is available in print upon request. We will post any amendments to the code on our website.
Engagement
Your Board believes that fostering long-term and institution-wide relationships with stockholders and
maintaining their trust and goodwill is a core Chevron objective. Chevron conducts extensive engagements with key stockholders. These engagements routinely cover governance, compensation, social, safety, environmental, and other issues to ensure
that management and the Board understand and address the issues that are important to our stockholders. In an effort to continuously improve Chevron’s governance processes and communications, Chevron has developed and follows an Annual
Engagement Plan and Process to systematically identify and plan its engagements and to proactively address important issues. The Annual Engagement Plan and Process is supervised by an Engagement Steering Committee, which is composed of senior
executive officers. The
Engagement Steering Committee meets periodically to discuss engagement efforts and key issues and trends.
During 2013, an engagement team consisting of senior executives, subject matter experts on governance, compensation, and environmental and social issues, and, when appropriate, our independent Lead Director,
conducted over 50 formal in-depth discussions with stockholders representing nearly 35 percent of Chevron’s common stock outstanding. In addition, our engagement team met with many of the stockholders who submitted proposals for inclusion in
our Proxy Statement in order to understand their concerns and discuss areas of agreement and disagreement. Chevron gained valuable feedback during these engagements, and this feedback was shared with the Board and its relevant committees.
Communicating with the Board
The Board Nominating and Governance Committee reviews interested-party communications, including stockholder inquiries directed to nonemployee Directors. The Corporate Secretary and Chief Governance Officer
compiles the communications, summarizes lengthy or repetitive communications, and regularly summarizes the communications received, the responses sent, and further disposition, if any. All communications are available to the Directors.
|
| Interested parties wishing to communicate their concerns or questions about Chevron to the Chairman
of the Board Nominating and Governance Committee or any other nonemployee Directors may do so by U.S. mail addressed to Nonemployee Directors, c/o Office of the Corporate Secretary and Chief Governance Officer, 6001 Bollinger Canyon Road, San Ramon,
CA 94583-2324, or by email to corpgov@chevron.com. |
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| 16 |
|
Chevron Corporation—2014 Proxy Statement |
Related Person Transactions
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 Board Nominating and Governance Committee to review related person transactions as defined by U.S. Securities and
Exchange Commission (SEC) rules. The Committee has adopted 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 Committee will review these reports and determine whether to approve or ratify the
identified transaction. The Committee has identified the following categories of transactions that are deemed to be preapproved by the Committee, even if the aggregate amount involved exceeds the $120,000 reporting threshold identified in the SEC
rules:
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|
compensation paid to an executive officer if that executive officer’s compensation is otherwise reported in our Proxy Statement or if the executive
officer is not an immediate family member of another Chevron executive officer or Director; |
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|
compensation paid to a Director for service as a Director if that compensation is otherwise reportable in our Proxy Statement; |
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|
transactions in which the related person’s interest arises solely as a stockholder and all stockholders receive the same benefit on a pro-rata basis;
|
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transactions involving competitive bids (unless the bid is awarded to a related person who was not the lowest bidder or unless the bidding process did not
involve the use of formal procedures normally associated with our competitive bidding procedures);
|
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transactions involving services as a common or contract carrier or public utility in which rates or charges are fixed by law; |
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|
transactions involving certain banking-related services under terms comparable with similarly situated transactions; |
| |
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|
transactions conducted in the ordinary course of business in which our Director’s interest arises solely because he or she is a director of another
entity and the transaction does not exceed $5 million or five percent (whichever is greater) of the receiving entity’s consolidated gross revenues for that year; |
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Ÿ |
|
charitable contributions by Chevron to an entity in which our Director’s interest arises solely because he or she is a director, trustee, or similar
advisor to the entity and the contributions do not exceed, in the aggregate, $1 million or two percent (whichever is greater) of that entity’s gross revenues for that year; and |
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Ÿ |
|
transactions conducted in the ordinary course of business and our Director’s interest arises solely because he or she owns an equity or limited
partnership interest in the entity and the transaction does not exceed two percent of the total equity or partnership interests of the entity. |
The Committee 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 Committee member will abstain from decisions regarding transactions involving that Director or his or her family members.
Related Person Transactions
The stepmother of Chairman and Chief Executive Officer
John S. Watson and Mr. Watson’s late father’s estate (of which Mr. Watson, his stepmother, and several of his immediate family members are beneficiaries) are receiving payments from a law firm in connection with the
firm’s buyout in January 2008 of Mr. Watson’s father’s partnership and real property interests. In late 2008, subsequent to Mr. Watson’s father’s withdrawal from this law firm and death, Chevron retained the firm.
In 2013, Chevron paid the firm approximately $615,000 and does not expect the firm to provide legal services in 2014.
Samuel W. Johnson,
son of Mr. Jay Johnson, Senior Vice President, Upstream, is employed by Chevron with annual compensation of approximately $154,000 plus employee benefits.
The Board Nominating and Governance Committee has reviewed and ratified these transactions under the standards described above.
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| Chevron Corporation—2014 Proxy Statement |
|
17 |
Board
Nominating and Governance Committee Report
The Board Nominating and Governance 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 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 under “Director Nomination Process” in this Proxy Statement. In addition, the Committee makes recommendations to the Board concerning Director independence, Board committee assignments, committee chairman
positions, Audit Committee “financial experts” and the financial literacy of Audit Committee members.
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:
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annual election of all Directors; |
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|
supermajority of independent Directors; |
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|
majority vote standard for the election of Directors in uncontested elections, coupled with a Director resignation policy; |
| |
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|
annual election of the Chairman of the Board by Directors;
|
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|
annual election of an independent Lead Director by independent Directors; |
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|
annual assessment of Board, committee, and Director performance; |
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Director retirement policy; |
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annual succession planning sessions; |
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|
confidential stockholder voting policy; |
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minimum stockholding requirements for Directors and officers; |
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review and approval or ratification of “related person transactions” as defined by SEC rules; |
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policy to obtain stockholder approval of any stockholder rights plan; |
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right of stockholders to call for a special meeting; and |
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no supermajority voting provisions in Restated Certificate of Incorporation or By-Laws. |
Stockholders can find additional information concerning Chevron’s corporate governance structures and practices in Chevron’s Corporate
Governance Guidelines, By-Laws and the Restated Certificate of Incorporation, copies of which are available on Chevron’s website at www.chevron.com and are available in print upon request.
Respectfully submitted on March 25, 2014, by members of the Board Nominating and Governance Committee of your Board:
Robert E. Denham, Chairman
Jon M.
Huntsman, Jr.
Kevin W. Sharer
Carl Ware
Management Compensation Committee Report
The Management Compensation Committee of Chevron has reviewed and discussed with management the Compensation Discussion and Analysis beginning on page 21 of this Proxy Statement, and based on such review and
discussion, the Committee recommended to the Board of Directors of the Corporation that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Corporation’s Annual Report on Form
10-K.
Respectfully submitted on March 25, 2014, by members of the Management Compensation Committee of your Board:
Carl Ware, Chairman
Linnet F. Deily
Robert E. Denham
Charles W. Moorman IV
Kevin W. Sharer
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| 18 |
|
Chevron Corporation—2014 Proxy Statement |
Audit Committee Report
The Audit Committee assists your Board in fulfilling its responsibility to oversee management’s
implementation of Chevron’s financial reporting process. The Audit Committee charter can be viewed on the Chevron website at www.chevron.com and is available in print upon request.
In discharging its oversight role, the Audit Committee reviewed and discussed the audited financial statements contained in the 2013 Annual Report
on Form 10-K with Chevron’s management and its independent registered public accounting firm. Management is responsible for the financial statements and the reporting process, including the system of disclosure controls and procedures and
internal control over financial reporting. The independent registered public accounting firm is responsible for expressing an opinion on the conformity of Chevron’s financial statements with accounting principles generally accepted in the
United States and on the effectiveness of the Company’s internal control over financial reporting.
The Audit Committee met
privately with the independent registered public accounting firm and discussed issues deemed significant by the accounting firm, and the Audit Committee has discussed with the independent auditors the matters required to be discussed by Auditing
Standard No. 16, “Communications with Audit Committees,” as adopted by the Public Company Accounting Oversight Board.
In addition, the Audit Committee discussed with the independent registered public accounting firm its
independence from Chevron and its management; received the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the
Audit Committee concerning independence; and considered whether the provision of nonaudit services was compatible with maintaining the accounting firm’s independence.
In reliance on the reviews and discussions outlined above, the Audit Committee has 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, 2013, for filing with the U.S. Securities and Exchange Commission.
Respectfully submitted on
February 20, 2014, by the members of the Audit Committee of your Board:
Ronald D. Sugar, Chairman
Alice P. Gast
Enrique Hernandez,
Jr.
John G. Stumpf
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| Chevron Corporation—2014 Proxy Statement |
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19 |
|
| Board Proposal to Ratify the
Appointment of the Independent Registered Public Accounting Firm
(Item 2 on the Proxy Card) |
Principal Accountant Fees and Services
The Audit Committee, which is composed entirely of independent Directors, has selected
PricewaterhouseCoopers LLP (PricewaterhouseCoopers) as our independent registered public accounting firm to audit the consolidated financial statements of Chevron and its subsidiaries for 2014 and the effectiveness of Chevron’s internal control
over financial reporting. Your Board has endorsed this appointment. PricewaterhouseCoopers
previously audited the consolidated financial statements of Chevron during the years ended December 31, 2013 and 2012, and the effectiveness of Chevron’s internal control over financial
reporting as of December 31, 2013. During the years ended December 31, 2013 and 2012, PricewaterhouseCoopers provided both audit and nonaudit services.
Aggregate fees for
professional services rendered to us by PricewaterhouseCoopers for the years ended December 31, 2013 and 2012, were as follows (millions of dollars):
|
|
|
|
|
|
|
|
|
| Services Provided |
|
2013 |
|
|
2012 |
|
| Audit |
|
$ |
26.6 |
|
|
$ |
25.2 |
|
| Audit Related |
|
$ |
1.8 |
|
|
$ |
2.0 |
|
| Tax |
|
$ |
1.2 |
|
|
$ |
1.1 |
|
| All Other |
|
$ |
0.5 |
|
|
$ |
0.3 |
|
| TOTAL |
|
$ |
30.1 |
|
|
$ |
28.6 |
|
The Audit fees for the years ended December 31, 2013 and 2012, 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, 2013 and 2012, were for assurance and
related services for employee benefit plan audits, due diligence related to mergers and acquisitions, 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, 2013 and 2012, were for services related to tax compliance, including the preparation of tax returns and claims for refund, and tax advice, including assistance with
tax audits and appeals.
All Other fees for the years ended December 31, 2013 and 2012, included services rendered for software
licenses, subscriptions, benchmark studies and surveys.
Audit Committee Preapproval Policies and Procedures
All 2013 audit and nonaudit services provided by PricewaterhouseCoopers were preapproved by the Audit
Committee. The nonaudit services that were approved by the Audit Committee were also reviewed to ensure compatibility with maintaining the accounting firm’s independence.
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 PricewaterhouseCoopers and the estimated fees related to these services. During the approval process, the Audit Committee considers the impact of the types of services and the related fees on the independence of the accounting firm.
The services and
fees must be deemed compatible with the maintenance of the accounting firm’s independence, including compliance with SEC rules and regulations.
Throughout the year, the Audit Committee reviews any revisions to the estimates of audit and nonaudit fees initially approved.
Representatives of PricewaterhouseCoopers will be present at the Annual Meeting, will have an opportunity to make statements if they desire, and
will be available to respond to questions, as appropriate. If stockholders do not ratify the appointment of PricewaterhouseCoopers, the Audit Committee will select another independent registered public accounting firm for the following year.
Vote
Required
This proposal is approved if the number of shares voted FOR exceeds the number of shares voted AGAINST. Any shares not voted
on this proposal (whether by abstention or otherwise) will have no impact on this proposal. If you are a street name stockholder and do not vote your shares, your bank, broker, or other holder of record can vote your shares at its discretion
on this proposal.
Your Board’s Recommendation
Your Board unanimously recommends that you vote FOR the ratification of the appointment of PricewaterhouseCoopers LLP as Chevron’s independent registered public accounting firm.
|
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| 20 |
|
Chevron Corporation—2014 Proxy Statement |
Compensation Discussion and Analysis
A Message to Our Stockholders
“Chevron’s executive compensation program ensures alignment between stockholders, executives, and the
Company.”
Carl Ware
Chairman of the Management Compensation Committee
Dear Chevron Stockholder,
The Management Compensation Committee (MCC) carefully considers your views about how we pay our executives. The MCC is composed solely of
independent Directors, and we are accountable for ensuring that the links between pay and our business goals are responsible, appropriate, and strongly aligned with your interests as a Chevron stockholder.
We annually review our compensation programs, including our compensation-related risk profile, to ensure that our compensation-related risks are not
likely to have a material adverse effect on the Company. Our programs are designed to be externally competitive and sufficiently flexible in order to attract, motivate, and retain top-tier talent in this highly competitive industry. To assist us, we
engage an independent compensation consultant, Exequity LLP, which performs no other consulting or other services for Chevron.
Each
year, we take into account the result of the “say-on-pay” vote cast by you. In 2013, approximately 95 percent of those who voted approved the compensation of Chevron’s named executive officers (NEOs). We interpreted this strong level
of support as affirmation of the current design, purposes, and direction of our compensation programs. We also solicited input from a number of our largest stockholders to get specific feedback.
Our leadership team continues to achieve challenging performance milestones and to produce strong stockholder returns over medium- and longer-term
investment horizons. Our existing compensation plans have supported that success. While we did not make substantive changes to our program in 2013, we continually review our approach and make improvements when appropriate.
Chevron is proud to be part of your portfolio, and we look forward to many successful years ahead.
Sincerely,
Management Compensation
Committee
|
|
|
| Chevron Corporation—2014 Proxy Statement |
|
21 |
Objectives of Our Executive
Compensation Program
The overarching objective of our executive compensation program is to attract and retain seasoned management who
will deliver long-term stockholder value. Our success is driven by our people.
The global energy business is the largest industry in the
world and is very competitive. As measured by net income, four out of the top 10 global companies operate in this business segment. The lead times and project life spans in our business are generally very long. The development cycle of a large,
major capital project, from exploration to first production, can be 10 years or longer. Equally important, the productive life spans of our assets can be very long—several decades in most cases and in excess of 100 years for some assets.
Accordingly, we have designed our compensation programs to reward career employees. This reflects the fact that the productive life of
our asset base spans generations of employees and that the development cycle of many current investment projects are longer than an NEO’s tenure in a particular executive position.
Our management and employees have routinely delivered superior long-term stockholder returns. The stock performance graph that follows shows how an
investment in Chevron common stock would have performed versus an equal investment in either the S&P 500 Index or a hypothetical portfolio of BP, ExxonMobil, Royal Dutch Shell and Total equity securities over a five-year period ending
December 31, 2013.
The comparison includes the reinvestment of all dividends and is adjusted for stock splits, if any. The relative
weightings of the constituent equity securities for this hypothetical portfolio match the relative market capitalizations of BP, ExxonMobil, Royal Dutch Shell and Total as of the beginning of each year.
Our Pay Philosophy
Our
compensation programs have been designed with several important values in mind. These include:
| |
Ÿ |
|
structuring our compensation programs in a manner that ensures strong alignment of the interests of our stockholders, the Company, and our employees and
executives; |
| |
Ÿ |
|
paying for performance; |
| |
Ÿ |
|
structuring our compensation programs to reward career employees; |
| |
Ÿ |
|
paying competitively, across all salary grades and across all geographies;
|
| |
Ÿ |
|
applying compensation program rules in a manner that is internally consistent; and |
| |
Ÿ |
|
being metrics-driven and properly balanced in our emphasis on short-term and long-term objectives and our use of measures based on absolute performance,
relative performance against industry peers, historical performance, and progress on key business initiatives.
|
|
|
|
| 22 |
|
Chevron Corporation—2014 Proxy Statement |
Components of Compensation
The material components of our executive compensation program and their purposes and key characteristics are summarized in the following chart.
|
|
|
| Chevron Corporation—2014 Proxy Statement |
|
23 |
Pay-for-Performance Framework
Our compensation program is designed to pay NEOs for Company and individual performance. To support this objective, the majority of
executive pay is “at-risk” and comes from long-term incentives, which reward performance that drives stockholder value over the long term.
Significant Pay at Risk
Approximately 91 percent of the total direct compensation (base salary, CIP and LTIP) delivered to
our CEO and 85 percent delivered to our NEOs is at risk. By “at risk,” we mean there is no guarantee that the compensation values expected at the time individual awards were granted will be realized. The MCC has complete discretion to
severely restrict, and even score at zero, the Corporate Performance Rating and Individual Performance Modifier for the annual cash bonus program, the CIP, discussed in more detail below. Stock options can be rendered worthless if the Company has
not performed well and if stock price appreciation
has not occurred within 10 years of the grant date. Performance share awards can be rendered worthless as well if Chevron ranks last in relative total shareholder return (TSR) for any given
three-year period. Lastly, restricted stock units can deteriorate markedly in value from the grant date if Chevron performs poorly. Therefore, for the NEOs to sustain competitive pay relative to industry peers, Chevron must show sustained
competitive performance and Chevron’s stockholders must be rewarded with competitive TSR results. This “at risk” feature demonstrates management’s alignment with stockholders’ interests.
In 2013, the portion of
Mr. Watson’s total compensation that was at risk, along with the other NEOs, is illustrated as follows:
Emphasis on Long-Term Incentives That Are Tied to Performance
Long-term incentive awards are typically awarded as 60 percent stock options and 40 percent
performance shares. This combination provides a balance of awards, which the MCC believes appropriately serves performance incentive and executive retention objectives. Options gain value when absolute stock prices rise, but can be rendered
worthless through macroeconomic factors unrelated to the energy industry (e.g., the recent financial recession and the accompanying significant decline in equity values) or through poor company performance.
Performance shares are awarded based on relative company performance against peers and, although they can lose value during general market declines, they are much less likely to be rendered
worthless by general, unfavorable equity market declines. Both LTIP awards derive value directly from the Company’s stock price appreciation, and both are in total alignment with stockholder interests.
|
|
|
| 24 |
|
Chevron Corporation—2014 Proxy Statement |
Use of Peer Groups
We are always competing for the best talent with our direct industry peers and with the broader market. Accordingly, the MCC regularly reviews the market data, pay practices, and ranges of specific comparator, or
“peer,” companies to ensure that we continue to offer a relevant and competitive executive pay program each year. Throughout this Compensation Discussion and Analysis, we refer to three distinct peer groups, as described below.
|
|
|
|
|
|
|
| Peer Group |
|
Description |
|
Purpose |
|
Source |
| Oil Industry Peer Group
(13 companies) |
|
Represents companies with substantial U.S. or global operations that most nearly approximate the size, scope, and complexity of our business or
segments of our business. |
|
To understand how each NEO’s total compensation compares with the total compensation for reasonably similar positions at these
companies. |
|
Gathered from the Oil Industry Job Match Survey, an annual survey published by Towers Watson, and
from these companies’ proxy statements and other public disclosures. |
| Non-Oil Industry Peer Group
(22 companies) |
|
Represents companies of significant financial and operational size whose products are primarily commodities and that have, among other things, global
operations, significant assets and capital requirements, long-term project investment cycles, extensive technology portfolios, an emphasis on engineering and technical skills, and extensive distribution channels. |
|
To periodically compare our overall compensation practices (and those of the oil and energy industry, generally) against a broader mix
of companies to ensure that our compensation practices are reasonable when compared with non-energy companies that are similar to Chevron in size, complexity, and scope of operations. |
|
Gathered from the Total Compensation Measurement Database, a proprietary source of compensation and
data analysis developed by Aon Hewitt. |
| LTIP Performance Share Peer Group
(4 companies) |
|
A subset of our Oil Industry Peer Group: BP, ExxonMobil, Royal Dutch Shell, and Total.* |
|
To compare our total shareholder return over a three-year period to determine the payout value, if any, of performance share awards under our Long-Term
Incentive Plan. |
|
Gathered from the Oil Industry Job Match Survey, an annual survey published by Towers Watson, and
from these companies’ proxy statements and other public disclosures. |
| * |
Total replaced ConocoPhillips/Phillips 66 for 2012 and future awards. |
Oil Industry Peer Group (in order of decreasing market capitalization)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
Market Cap
($ Millions) |
|
|
Sales and Other
Operating
Revenues
($ Millions)(1) |
|
|
Net Income
($ Millions) |
|
| Company Name |
|
Company Ticker |
|
12/31/13 |
|
|
FY 2013 |
|
|
FY 2013 |
|
| ExxonMobil Corporation |
|
XOM |
|
|
438,702 |
|
|
|
407,666 |
|
|
|
32,580 |
|
| Chevron Corporation |
|
CVX |
|
|
239,028 |
|
|
|
211,665 |
|
|
|
21,423 |
|
| Royal Dutch Shell plc |
|
RDSA |
|
|
224,337 |
|
|
|
451,235 |
|
|
|
16,371 |
|
| BP plc |
|
BP |
|
|
150,784 |
|
|
|
379,136 |
|
|
|
23,681 |
|
| ConocoPhillips |
|
COP |
|
|
86,553 |
|
|
|
54,413 |
|
|
|
9,156 |
|
| Occidental Petroleum Corporation |
|
OXY |
|
|
75,700 |
|
|
|
24,455 |
|
|
|
5,903 |
|
| Phillips 66 |
|
PSX |
|
|
45,521 |
|
|
|
157,730 |
|
|
|
3,726 |
|
| Anadarko Petroleum Corporation |
|
APC |
|
|
39,977 |
|
|
|
14,867 |
|
|
|
801 |
|
| Hess Corporation |
|
HES |
|
|
27,747 |
|
|
|
22,284 |
|
|
|
5,052 |
|
| Valero Energy Corporation |
|
VLO |
|
|
27,298 |
|
|
|
138,074 |
|
|
|
2,720 |
|
| Marathon Petroleum Corporation |
|
MPC |
|
|
27,216 |
|
|
|
93,897 |
|
|
|
2,112 |
|
| Devon Energy Corporation |
|
DVN |
|
|
25,119 |
|
|
|
10,588 |
|
|
|
(20 |
) |
| Marathon Oil Corporation |
|
MRO |
|
|
24,569 |
|
|
|
14,501 |
|
|
|
1,753 |
|
| Tesoro Corporation |
|
TSO |
|
|
7,751 |
|
|
|
37,601 |
|
|
|
412 |
|
| (1) |
Excludes excise, value-added and similar taxes. |
The Oil Industry Peer Group companies most similar to Chevron in size, complexity, geographic reach,
business lines, and location of operations are BP, ExxonMobil, and Royal Dutch Shell. These companies are key competitors for stockholder investments within the larger global energy sector. We also compete for
stockholder interest with smaller companies, including the larger independent exploration and production companies (ConocoPhillips, Occidental, Anadarko, etc.) and the larger independent refining
and marketing companies (Valero, Tesoro, etc.). We compete with all of these companies for executive talent.
|
|
|
| Chevron Corporation—2014 Proxy Statement |
|
25 |
Non–Oil Industry Peer Group
(in order of decreasing market capitalization)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
Market Cap
($ Millions) |
|
|
Sales and Other
Operating Revenues
($ Millions)(1) |
|
|
Net Income
($ Millions) |
|
| Company Name |
|
Company Ticker |
|
12/31/13 |
|
|
FY 2013 |
|
|
FY 2013 |
|
| General Electric Company |
|
GE |
|
|
282,823 |
|
|
|
100,542 |
|
|
|
14,055 |
|
| Johnson & Johnson |
|
JNJ |
|
|
258,341 |
|
|
|
71,312 |
|
|
|
13,831 |
|
| Chevron Corporation |
|
CVX |
|
|
239,028 |
|
|
|
211,665 |
|
|
|
21,423 |
|
| Pfizer Inc. |
|
PFE |
|
|
197,349 |
|
|
|
51,584 |
|
|
|
22,003 |
|
| International Business Machines Corporation |
|
IBM |
|
|
196,949 |
|
|
|
97,250 |
|
|
|
16,483 |
|
| AT&T Inc. |
|
T |
|
|
183,746 |
|
|
|
128,752 |
|
|
|
18,249 |
|
| Merck & Co. Inc. |
|
MRK |
|
|
146,477 |
|
|
|
44,033 |
|
|
|
4,404 |
|
| Verizon Communications Inc. |
|
VZ |
|
|
140,639 |
|
|
|
120,550 |
|
|
|
11,497 |
|
| Intel Corporation |
|
INTC |
|
|
128,918 |
|
|
|
52,708 |
|
|
|
9,620 |
|
| Pepsico Inc. |
|
PEP |
|
|
126,815 |
|
|
|
66,415 |
|
|
|
6,740 |
|
| The Boeing Company |
|
BA |
|
|
102,013 |
|
|
|
86,623 |
|
|
|
4,585 |
|
| 3M Company |
|
MMM |
|
|
93,027 |
|
|
|
30,871 |
|
|
|
4,659 |
|
| Honeywell International Inc. |
|
HON |
|
|
71,616 |
|
|
|
39,055 |
|
|
|
3,924 |
|
| Ford Motor Co. |
|
F |
|
|
60,853 |
|
|
|
139,400 |
|
|
|
7,155 |
|
| Caterpillar Inc. |
|
CAT |
|
|
57,921 |
|
|
|
52,694 |
|
|
|
3,789 |
|
| The Dow Chemical Company |
|
DOW |
|
|
53,513 |
|
|
|
57,080 |
|
|
|
4,787 |
|
| Hewlett-Packard Company2 |
|
HPQ |
|
|
53,383 |
|
|
|
111,851 |
|
|
|
5,113 |
|
| Duke Energy Corporation |
|
DUK |
|
|
48,721 |
|
|
|
24,598 |
|
|
|
2,665 |
|
| Lockheed Martin Corporation |
|
LMT |
|
|
47,423 |
|
|
|
45,358 |
|
|
|
2,981 |
|
| Northrop Grumman Corporation |
|
NOC |
|
|
24,939 |
|
|
|
24,661 |
|
|
|
1,952 |
|
| American Electric Power Co. Inc. |
|
AEP |
|
|
22,762 |
|
|
|
15,357 |
|
|
|
1,480 |
|
| International Paper Company |
|
IP |
|
|
21,593 |
|
|
|
29,080 |
|
|
|
1,395 |
|
| Alcoa Inc. |
|
AA |
|
|
11,385 |
|
|
|
23,032 |
|
|
|
(2,285 |
) |
| (1) |
Excludes excise, value-added and similar taxes. |
| (2) |
Hewlett-Packard’s fiscal year ends on October 31. Accordingly, market capitalization reflects October 31, 2013, shares outstanding and
December 31, 2013, stock price. Sales and Other Operating Revenues and Net Income both reflect the fiscal year ended October 31, 2013. |
How Compensation Is Delivered
As described above in “Pay for Performance Framework,” our compensation program is designed
to deliver competitive pay in the current year (base salary plus CIP awards) and in future years (LTIP awards) based on the longer-term—largely stock price—performance of the Company. For NEOs, primary emphasis is on long-term, at-risk
compensation, i.e., LTIP awards such as stock options, performance shares and, from time to time, restricted stock units, the value of which move in direct relation to our stock price and returns provided to our stockholders.
| |
Ÿ |
|
Stock options have value only if Chevron’s stock price advances above the grant-day price. |
| |
Ÿ |
|
Performance shares capture value in direct relation to Chevron’s relative ranking versus our LTIP Performance Share Peer Group on total shareholder
return (stock price appreciation plus dividends). |
| |
Ÿ |
|
Restricted stock units, which are used infrequently, hold value in direct relation to Chevron’s stock price. |
Stock options can be rendered worthless if the Company’s stock price falls below the grant-day price. Performance shares can be
rendered worthless if Chevron ranks last in TSR for the designated three-year performance period.
This mix of award elements serves a retention objective in that it diversifies grant-recipient compensation risks. Stock options provide strong incentives for absolute, long-term stock price appreciation, but offer
no protection of value against broad-based or energy-industry specific market declines, even if Company performance under those adverse conditions is competitive relative to peers. Performance shares are likely to retain at least some value for
recipients, reflecting relative performance versus the LTIP Performance Share Peer Group. This will apply when broad, macroeconomic factors result in a general decline in equity values (e.g., the recent financial recession) or the industry sector
(e.g., a broad-based decline in commodity prices).
As described above in “Significant Pay at Risk,” the vast majority of our
NEOs’ compensation is delivered through LTIP and only nine percent of our CEO’s pay is in the form of guaranteed compensation.
Below we describe in detail the material components of our compensation program for our NEOs.
|
|
|
| 26 |
|
Chevron Corporation—2014 Proxy Statement |
|
| Chevron’s Named Executive Officers, or “NEOs” |
| John Watson, Chairman and Chief Executive
Officer |
| George Kirkland, Vice Chairman and Executive Vice President,
Upstream |
| Mike Wirth, Executive Vice President, Downstream &
Chemicals |
| Pat Yarrington, Vice President and Chief Financial
Officer |
| Hew Pate, Vice President and
General Counsel |
Base Salary
Base salary is a fixed, competitive component of pay based on responsibilities, skills, and experience. Base salaries are reviewed periodically in light of market practices and changes in responsibilities.
How the CEO’s Base Salary Is Determined
The MCC’s independent consultant reviews and reports to the MCC on the relationship of
Mr. Watson’s base salary to that of his peers in our Oil Industry and Non–Oil Industry Peer Groups. The MCC does not have a predetermined target or range within the Oil Industry Peer Group or Non–Oil Industry Peer Group as an
objective for Mr. Watson’s base salary. Instead, the MCC exercises its discretion, taking into account the data provided by the MCC’s
independent consultant, the relative size, scope, and complexity of our business, Mr. Watson’s performance, and the aggregate amount of Mr. Watson’s compensation package.
After considering the totality of these elements, the MCC makes a recommendation to the independent Directors, and the independent Directors determine Mr. Watson’s base salary.
How the Other NEOs’ Base
Salaries Are Determined
For our other NEOs, base salary is a function of two things: the NEO’s assigned base salary
grade and individual qualitative considerations, such as individual performance, experience, skills, competitive positioning, retention objectives, and leadership responsibilities relative to other NEOs.
Mr. Watson makes recommendations to the MCC as to the base salaries for each of our other NEOs. The MCC makes base salary determinations for
all NEOs, and the independent Directors of the Board review and ratify the determinations.
Each NEO is assigned to a base salary grade. Each grade has a base salary minimum, midpoint, and
maximum that constitute the salary range for that grade, except for the CEO and Vice Chairman positions, which do not have salary grade ranges because they are single incumbent positions. Salary grades and the appropriate salary ranges are
determined through market surveys of positions of comparable level, scope, complexity, and responsibility. The MCC annually reviews the base salary grade ranges and may approve increases in the ranges if it determines that adjustments are necessary
to maintain competitiveness.
Adjustments in 2013 Base
Salaries
The MCC adjusted our NEOs’ base salaries in 2013 as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NEO |
|
Position |
|
2012
Base Salary |
|
|
2013
Base Salary |
|
|
Adjustment
for 2013 |
|
| John Watson |
|
Chairman and CEO |
|
$ |
1,700,000 |
|
|
$ |
1,800,000 |
|
|
|
5.9% |
|
| George Kirkland |
|
Vice Chairman and
Executive Vice President,
Upstream |
|
$ |
1,400,000 |
|
|
$ |
1,450,000 |
|
|
|
3.6% |
|
| Mike Wirth |
|
Executive Vice President, Downstream & Chemicals |
|
$ |
1,000,000 |
|
|
$ |
1,050,000 |
|
|
|
5.0% |
|
| Pat Yarrington |
|
Vice President and Chief Financial Officer |
|
$ |
930,000 |
|
|
$ |
1,000,000 |
|
|
|
7.5% |
|
| Hew Pate |
|
Vice President and General Counsel |
|
$ |
781,000 |
|
|
$ |
825,000 |
|
|
|
5.6% |
|
The MCC determined that these adjustments were appropriate to maintain compensation competitiveness in base salary
structure and in light of each NEO’s 2013 individual performance highlights noted below.
|
|
|
| Chevron Corporation—2014 Proxy Statement |
|
27 |
Chevron Incentive Plan (CIP)
The CIP is designed to recognize annual performance achievements. Annual operating and financial results figure prominently into this
assessment, along with demonstrated progress on key business initiatives. Individual leadership is also recognized through this award. The award is delivered as an annual cash bonus based on a percentage of base salary and makes up approximately 16
percent of the CEO’s annual compensation and 21 percent of all other NEOs’ annual compensation. The CIP award calculation is consistent for all CIP-eligible Chevron employees, with the award target varying by pay grade. The award is
calculated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| Base Salary
|
|
x
|
|
Award Target
|
|
x
|
|
Corporate Performance
Rating |
|
x
|
|
Individual Performance Modifier
|
|
|
|
|
À |
|
|
|
À |
|
|
|
À |
|
|
|
|
Before the beginning of
each performance year, the MCC establishes a CIP Award Target for each NEO, which is based on a percentage of the NEO’s base salary.
The MCC sets target awards based on the median award of our Oil Industry Peer Group. All individuals in the same salary grade have the same
target, which provides internal equity and consistency. |
|
|
|
After the end of the
performance year, the MCC sets the Corporate Performance Rating. This rating reflects the MCC’s overall assessment of the Company’s performance for that year, based on a range of measures used to evaluate performance against plan in four
broad categories: Ÿ
Financial Ÿ
Health, Environment and Safety Ÿ
Operating Performance Ÿ
Milestones and Commercial The MCC has discretion on weighting the
categories and on weighting the measures within each category. Performance is viewed across multiple parameters (absolute results; results versus plan; results versus Oil Industry Peer Group and/or general industry; performance trends over time) and
distinctions are made between the controllable and noncontrollable aspects of the measures. With these measures as the foundation, the MCC exercises its discretion in setting the Corporate Performance Rating. The minimum Corporate Performance Rating
is zero and the maximum is 200 percent. |
|
|
|
The
MCC also takes into account individual performance. This is largely a personal leadership dimension, recognizing the individual effort and initiative expended and demonstrated progress on key business initiatives during the course of the year. The
MCC uses its judgment in analyzing the individual performance of each NEO, his or her enterprise and business segment leadership, and how the business units reporting to the NEO performed.
Mr. Watson makes recommendations to the MCC as to the Individual
Performance Modifier of each of our other NEOs. |
|
|
|
| 28 |
|
Chevron Corporation—2014 Proxy Statement |
2013 CIP Results—Corporate Performance Rating
Our annual performance measures are reviewed in comparison to prior years, current-year plans, and
the results of our Oil Industry Peer Group. The MCC also reviews actual annual cash award payments for the prior year for Chevron and our Oil Industry Peer Group, compared with actual business performance for Chevron and for our Oil Industry Peer
Group. This comparison assures that our process for determining the Corporate Performance Rating is
consistent with our Oil Industry Peer Group and that actual awards are consistent with both Chevron performance and performance relative to our peers. The MCC reviews performance in the following
four broad categories, which contain a range of performance measures that reinforce the importance of both short-term and long-term performance.
|
|
|
|
|
| Category |
|
Key Performance Measures |
| Financial |
|
Ÿ
Ÿ
Ÿ
|
|
Earnings/ Earnings per
Share
Return on Capital Employed
Total Shareholder Return (TSR) (1, 3, and 5 year) |
| Health, Environment and Safety |
|
Ÿ Ÿ Ÿ |
|
Process Safety
Personal Safety
Environmental |
| Operating Performance |
|
Ÿ Ÿ Ÿ Ÿ Ÿ |
|
Operating Expenses
Segment Earnings per Barrel
Production Reserves
Asset Utilization Rates |
| Milestones and Commercial |
|
Ÿ Ÿ |
|
Major Capital Projects
Commercial Transactions |
The key performance measures against the business plan are agreed to with the Board and the MCC at
the beginning of the performance year. Mid-year and end-of-year reviews by the Board and MCC assess progress against this balanced set of performance measures.
The Corporate Performance Rating influences compensation outcomes, in a consistent manner, for most employees
worldwide. Therefore, in setting the overall corporate rating, the MCC also takes into account the need to provide competitive overall compensation not only for the NEOs, but also for the
employee base as a whole.
The MCC set a Corporate Performance Rating of 108 percent for 2013. This overall rating is based on the
following assessment of Chevron’s 2013 performance.
2013 Performance
2013 was a solid performance year for the Company.
We continued to lead the industry in many financial and safety performance measures. We progressed several key major capital projects (Gorgon,
Wheatstone, Jack/St. Malo and Bigfoot in the Upstream and several key projects in Downstream & Chemicals), which underpin the Company’s medium-term growth profile. We also continued to acquire resources that we believe will add to our
growth prospects later in the decade.
Below we highlight the Company’s performance both in the four broad categories that form the
basis of CIP award decisions and as compared with our LTIP Performance Share Peer Group (BP, ExxonMobil, Royal Dutch Shell, and Total, with Total replacing ConocoPhillips/Phillips 66 for 2012 and future awards). In the graphs that follow, earnings
have been adjusted to exclude externally disclosed, significant items or activities that are not representative of underlying business operations, such as gains or losses associated with divestitures, asset impairments, and restructurings. We
present a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures in Appendix A to this Proxy Statement.
|
|
|
| Chevron Corporation—2014 Proxy Statement |
|
29 |
Financial Highlights
| |
Ÿ |
|
Achieved earnings of $21.4 billion, fourth highest in the Company’s history |
| |
Ÿ |
|
Posted a return on capital employed (ROCE) of 13.5 percent, second best in the LTIP Performance Share Peer Group |
| |
Ÿ |
|
Increased the quarterly dividend 11 percent, the 26th consecutive annual increase
|
| |
Ÿ |
|
Led the LTIP Performance Share Peer Group in total shareholder return for five-year and 10-year periods |
| |
Ÿ |
|
Led the LTIP Performance Share Peer Group on rolling five-year earnings-per-share growth for the fourth consecutive year
|
Health, Environment and Safety Highlights
| |
Ÿ |
|
Among the industry leaders in Days Away From Work Rate |
| |
Ÿ |
|
Among the industry leaders in Total Recordable Incident Rate |
| |
Ÿ |
|
Lowered volume of spills, posting the second-best Company performance ever |
| |
Ÿ |
|
Reduced Tier 1 Loss of Containment events (i.e., unplanned or uncontrolled release of material from primary containment that results in a serious outcome),
posting the best Company performance ever |
| |
Ÿ |
|
Incurred lower number of process fires than 2012 |
| |
Ÿ |
|
Incurred higher number of fatalities than 2012
|
Operating Performance
Highlights
| |
Ÿ |
|
Led the industry in earnings per barrel in our Upstream segment (fourth consecutive year) |
| |
Ÿ |
|
Led the industry in cash margins per barrel in our Upstream segment (fourth consecutive year) |
| |
Ÿ |
|
Achieved 85 percent reserves replacement ratio for 2013, 123 percent for the three-year period, and 100 percent for the five-year period
|
| |
Ÿ |
|
2013 production impacted by delayed startup of a liquefied natural gas (LNG) plant in Angola, and higher decline and lower gas well deliverability in Thailand
|
| |
Ÿ |
|
Was ranked No. 2 in earnings per barrel in our Downstream segment |
| |
Ÿ |
|
Lower refinery utilization rates than 2012
|
|
|
|
| 30 |
|
Chevron Corporation—2014 Proxy Statement |
Milestones and Commercial Highlights
Significant progress was made throughout the year on important capital projects.
For Upstream, one major capital project started up—Angola LNG. New wells were brought online at Agbami 2 and Usan in Nigeria, and first oil was
achieved at Papa Terra in Brazil. Progress on the Kitimat LNG project continued through engineering design, with early works and site preparation under way in western Canada. We also signed a Memorandum of Understanding with the Republic of
Kazakhstan enabling us to advance our Future Growth and Wellhead Pressure Management Projects in that country. Progress was also made on four other key projects that underpin our medium-term production growth:
| |
Ÿ |
|
Gorgon LNG (Australia) – Plant start-up and first cargo is planned for mid-2015; this project was about 75 percent complete as of December 2013; and
nearly all modules for the first of three anticipated liquefaction facilities were installed. |
| |
Ÿ |
|
Wheatstone LNG (Australia) – Start-up of the first train is expected in 2016; we also continued site preparation and fabrication of key equipment; the
project was about 25 percent complete as of December 2013. |
| |
Ÿ |
|
Jack/St. Malo (Gulf of Mexico) – First production is scheduled for late 2014; the facility was safely moored on location for commissioning.
|
| |
Ÿ |
|
Big Foot (Gulf of Mexico) – First production is scheduled in 2015; the facility is undergoing integration of the completed modules.
|
In the Downstream segment, the Heavy Oil Upgrade Project, which further strengthens the competiveness of GS
Caltex’s Yeosu Refinery in South Korea, started up several months ahead of schedule. Our joint venture with Chevron Phillips Chemical announced a final investment decision on its U.S. Gulf Coast Petrochemicals Project, which is designed to
capitalize on advantaged feedstock sourced from emerging shale gas development in North America. At year-end, construction was nearing completion on the Pascagoula Base Oil Plant, with startup planned in 2014. The addition of this plant positions
the Company as the worldwide industry leader in premium base-oil production.
In addition to progress on these key capital projects, we
made significant resource additions and concluded several commercial transactions that served to strengthen our portfolio and provide future development opportunities. Highlights include establishing a participating interest in Argentina’s
Neuquén Basin, finalizing our agreements in the Liard and Horn River Basins in Canada and assuming operatorship of the corresponding Kitimat LNG plant and pipeline, acquiring new acreage with exploration potential in the Kurdistan Region of
Iraq and in the Bight Basin and Cooper Basin of Australia. We also acquired deepwater acreage in the Gulf of Mexico and Brazil, as well as new acreage in the Delaware Basin (New Mexico) and in the Duvernay in Canada.
CIP Awards for 2013 Performance
Year
The MCC and independent Directors of the Board assessed corporate and individual performance in
making CIP awards based on 2013 performance.
As described above, performance is assessed against key performance measures on historical
and relative competitive performance of the Company against our Oil Industry Peer
Group. In the MCC’s and the independent Directors’ assessment, the following CIP awards demonstrate the crucial connection between pay and performance, reinforce management’s
accountability for the full spectrum of operating results, and support the objective of attracting and retaining seasoned management who will deliver long-term stockholder value.
2013 CIP
Results—Individual Performance Highlights
|
|
|
| NEO |
|
Performance Highlights |
| John Watson |
|
Ÿ Fourth-highest earnings and earnings per share in the Company’s history and top-tier return on capital employed (ROCE) and earnings-per-barrel results
Ÿ Led the LTIP Performance Share Peer Group in total shareholder
return for the three-year and five-year periods
Ÿ Development and implementation of value-creating strategies,
investments, and commercial transactions
Ÿ Led the LTIP Performance Share Peer Group in personal injury
rate and reduced process safety events; overall results adversely impacted by certain operating incidents |
| George Kirkland |
|
Ÿ Continued competitor-leading performance in Upstream earnings-per-barrel and segment ROCE
Ÿ Significant portfolio additions of producing and prospective
acreage, exceeding target Ÿ Production slightly below target, but aided by strong base
business results Ÿ Otherwise industry-leading safety performance adversely
impacted by an operating incident |
| Mike Wirth |
|
Ÿ Downstream earnings short of plan due to unplanned downtime at key refineries Ÿ Ranked second in earnings-per-barrel in our Downstream segment Ÿ Ranked second in ROCE among peer group Ÿ On
track for majority of capital projects |
| Pat Yarrington |
|
Ÿ Outstanding internal controls performance Ÿ Excellent
cash and balance sheet management, as reflected by key financial decisions Ÿ Very
effective relationship development and engagement with the investor and finance communities |
| Hew Pate |
|
Ÿ Continued reduction in outstanding litigation docket through successful case resolution
Ÿ Outstanding management of international cases and other major
litigation matters Ÿ Effective support of major transactions and commercial
activity |
|
|
|
| Chevron Corporation—2014 Proxy Statement |
|
31 |
2013 CIP Results
Mr. Watson received an award of $3,200,000. This amount reflects the amount of his base salary
($1,800,000) multiplied by his CIP Award Target percentage of 150 percent multiplied by the Corporate Performance Rating of 108 percent, resulting in an award of $2,916,000. The remaining $284,000 of Mr. Watson’s award is attributable
to the MCC’s and independent Directors’ assessment of his individual performance, as described above.
Mr. Kirkland
received an award of $2,200,000. This amount reflects the amount of his base salary ($1,450,000) multiplied by his CIP Award Target percentage of 130 percent multiplied by the Corporate Performance Rating of 108 percent, resulting in an award
of $2,035,800. The remaining $164,200 of Mr. Kirkland’s award is attributable to the MCC’s and independent Directors’ assessment of his individual performance, as described above.
Mr. Wirth received an award of $1,222,500. This amount reflects the amount of his base salary ($1,050,000) multiplied by his CIP Award Target
percentage of 110 percent multiplied by the Corporate Performance Rating of 108 percent, resulting in an
award of $1,247,400. Mr. Wirth’s final award amount of $1,222,500 is attributable to the MCC’s and independent Directors’ assessment of his individual performance, as described
above.
Ms. Yarrington received an award of $1,366,200. This amount reflects the amount of her base salary ($1,000,000) multiplied
by her CIP Award Target percentage of 110 percent multiplied by the Corporate Performance Rating of 108 percent, resulting in an award of $1,188,000. The remaining $178,200 of Ms. Yarrington’s award is attributable to the MCC’s
and independent Directors’ assessment of her individual performance, as described above.
Mr. Pate received an award of
$953,400. This amount reflects the amount of his base salary ($825,000) multiplied by his CIP Award Target percentage of 100 percent multiplied by the Corporate Performance Rating of 108 percent, resulting in an award of $891,000. The remaining
$62,400 of Mr. Pate’s award is attributable to the MCC’s and independent Directors’ assessmentof his individual performance, as described above.
Long-Term Incentive Plan (LTIP)
The key objective of our LTIP awards is to encourage performance that drives stockholder value over
the long term. LTIP awards give our NEOs a meaningful equity stake in the business, an equity stake that vests over time. The amount of an NEO’s LTIP award at grant time is determined by the MCC with input from its independent compensation
consultant, using Oil
Industry Peer Group compensation comparisons. The objective is to ensure Chevron is competitive against the Oil Industry Peer Group on total compensation (cash plus equity), after allowing for
appropriate distinctions based on size, scale, scope, and job responsibilities. Our LTIP awards typically consist of two equity components:
|
|
|
|
|
| Component |
|
Weight |
|
How It Works |
| Stock Options1 |
|
60%
|
|
Ÿ Strike price is equal to the closing stock price on the grant
date Ÿ Vest
and become exercisable one-third per year, based on continued service for the first three years, and expire 10 years after the grant date
Ÿ Gain realized depends on the stock price at the exercise date
compared with the strike price Ÿ Actual number of options granted is determined by dividing 60 percent of the value of the NEO’s LTIP award by an estimated Black-Scholes option value |
| Performance Shares2 |
|
40% |
|
Ÿ Payout is dependent on Chevron’s total shareholder return
(TSR) over a three-year period, compared with our LTIP Performance Share Peer Group (BP, ExxonMobil, Royal Dutch Shell, and Total) Ÿ Payout can vary from 0 percent to 200 percent of the target number of shares, depending on this relative TSR ranking
Ÿ Payout of 200 percent is earned only if Chevron’s TSR is
better than all of our LTIP Performance Share Peer Group Ÿ
Payout of 0 percent is earned if Chevron’s TSR is last relative to all of our LTIP Performance Share Peer Group Ÿ Actual number of shares granted is determined by dividing 40 percent of the value of the NEO’s LTIP award by Chevron’s 90-day trailing average stock price
Ÿ Payment is made in
cash |
| 1 |
We report the value of each NEO’s 2013 stock option exercises in the “Option Exercises and Stock Vested in Fiscal Year 2013” table in this
Proxy Statement. |
| 2 |
We report the value of each NEO’s 2013 performance share payout in the “Option Exercises and Stock Vested in Fiscal Year 2013” table in this
Proxy Statement. |
|
|
|
| 32 |
|
Chevron Corporation—2014 Proxy Statement |
From time to time, the Board may approve the grant of restricted stock units for special retention or
incentive purposes.
We use LTIP awards because they are directly linked to stockholder returns. To have value, stock options require
increases in the Chevron stock price. Performance shares require Chevron to provide greater stockholder returns than our LTIP Performance Share Peer Group (BP, ExxonMobil, Royal Dutch Shell, and Total). Because grants are made each year based on the
stock price at that time, executives continue to realize value from these compensation elements only if stockholder returns are sustained over a long period.
The 60/40 split of stock options and performance shares serves a retention objective in that it diversifies grant-recipient compensation risks. Performance shares provide some level of performance incentives even
during periods of adverse equity market conditions, provided the Company performs favorably against its peers. Stock options, on the other hand, do not retain value if macroeconomic or industry-specific conditions force an overall decline in equity
values, irrespective of individual company performance results.
With stock options and performance shares as key compensation elements,
our NEOs are:
| |
Ÿ |
|
fully aligned with the economic interests of our stockholders, on both a medium- and longer-term time horizon; |
| |
Ÿ |
|
significantly leveraged, from an ultimate compensation standpoint, to Chevron stock price performance; and
|
| |
Ÿ |
|
rewarded based on a balance between relative (performance shares) and absolute (stock options) pay-for-performance measures. |
The average hold time prior to exercising stock options is approximately six years for our LTIP population, reinforcing the long-term focus of our
senior leaders on achieving sustainable, superior performance. Although stock options comprise more than half of the potential value of an individual’s LTIP grant, the MCC does not believe a performance award structure tied solely to equity
market valuations is appropriate, given that equity market fluctuations can be driven by macro factors completely unrelated to the energy industry and company performance.
Term of LTIP Awards
A Closer Look at Performance Shares: Why Total Shareholder Return (TSR)?
The MCC believes that TSR is the best overall pay-for-performance measure to align our NEOs’
performance with stockholder interests. TSR is the standard metric for stockholders to use in measuring Company performance because it easily allows for meaningful comparisons of our performance relative to other companies within our same industry,
and it also allows for easy comparison with our stockholders’ other investment alternatives. It is objectively determined by third-party market participants independent of the Company’s judgment.
In addition, the MCC believes that Company performance on other measures—operational and financial, as well as short-term and long-term—is
ultimately reflected in TSR results. Thus, over time, TSR offers the best indication of sustained performance across a series of important measures. It is also the measure that encourages the Company to adopt strategies and execute against those
strategies to sustain its performance against key
industry competitors and against the broader market. Finally, TSR as an incentive metric is not vulnerable, as other financial metrics can be, to actions that optimize short-term gains at the
expense of long-term value creation.
The value of the performance share payout depends on how our TSR ranks relative to that of our LTIP
Performance Share Peer Group over a three-year performance period. TSR combines stock price appreciation and dividends paid to show the total return to stockholders, expressed as an annualized percentage. The calculation assumes that dividends are
reinvested in additional shares. The three-year period tracks the average holding period our key institutional investors typically hold a stock (three years).
Depending on our TSR rank compared with that of our LTIP Performance Share Peer Group, the payout is calculated as follows:
|
|
|
|
|
| Our Relative TSR Rank |
|
Payout as a Percentage of Target |
|
|
1 |
|
|
200% |
|
|
2 |
|
|
150% |
|
|
3 |
|
|
100% |
|
|
4 |
|
|
50% |
|
|
5 |
|
|
0%
|
|
Performance share payouts reported in the “Option Exercises and Stock Vested in Fiscal Year
2013” table in this Proxy Statement relate to performance shares granted in January 2011. For the three-year performance period ending December 31, 2013, Chevron ranked second in TSR among the five companies in the LTIP Performance Share
Peer Group. This resulted in a payout of 150 percent of target.
For awards granted after January 1, 2011, the MCC may, in its discretion, adjust the cash payout
of performance shares downward if it determines that business or economic considerations warrant such an adjustment.
|
|
|
| Chevron Corporation—2014 Proxy Statement |
|
33 |
Performance shares awarded in January 2013 are not eligible for payout (if any) until expiration of
the three-year performance period on December 31, 2015.
Additional details about performance share payouts can be found in the footnotes to the “Option
Exercises and Stock Vested in Fiscal Year 2013” table in this Proxy Statement.
2013 LTIP Grants
In the “Summary Compensation Table” and the “Grants of Plan-Based Awards in Fiscal
Year 2013” table in this Proxy Statement, we report the value and terms of the following LTIP awards granted in early 2013 to each NEO.
| |
Ÿ |
|
The CEO. In determining the value of an annual LTIP award for the CEO, the MCC relies upon input from our independent consultant and the compensation
comparison data from the Oil Industry Peer Group. The CEO’s grant is based on the size, scope and complexity of our business, as well as Mr. Watson’s performance. The MCC does not, however, fix predetermined targets for award values.
In 2013, the MCC recommended, and the independent Directors of the Board approved, an annual LTIP award for Mr. Watson as follows: |
|
|
|
|
|
|
|
|
|
| Stock Options |
|
Performance
Shares |
|
|
LTIP Value
at Grant Date |
|
| 377,000 |
|
|
47,000 |
|
|
$ |
15.04 MM |
|
| |
Ÿ |
|
NEOs other than the CEO. For NEOs other than the CEO, the value of an annual LTIP award is a function of the NEO’s salary grade. At the beginning
of the performance year, the MCC sets the annual LTIP award value for each salary grade, which is generally the median of the value of LTIP awards to persons in similar positions at companies in our Oil Industry Peer Group. The MCC does not,
however, fix predetermined targets for award values. Mr. Watson makes recommendations to the MCC as to the LTIP awards for each of our other NEOs. In 2013, the
|
| |
|
MCC approved annual LTIP awards for each of the NEOs other than the CEO, as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| NEO |
|
Stock
Options |
|
|
Performance
Shares |
|
|
LTIP Value
at Grant Date |
|
| George Kirkland |
|
|
149,000 |
|
|
|
21,500 |
|
|
$ |
6.38 MM |
|
| Mike Wirth |
|
|
93,000 |
|
|
|
12,400 |
|
|
$ |
3.82 MM |
|
| Pat Yarrington |
|
|
103,000 |
|
|
|
13,500 |
|
|
$ |
4.19 MM |
|
| Hew Pate |
|
|
77,500 |
|
|
|
10,200 |
|
|
$ |
3.16 MM |
|
All NEOs, including Mr. Watson, have held their stock options approximately 6.4 years on average.
|
|
|
| 34 |
|
Chevron Corporation—2014 Proxy Statement |
Retirement Programs and Other Benefits
NEOs, like all other employees, have retirement programs and other benefits as part of their overall compensation package at Chevron. We believe that these programs and benefits:
| Ÿ |
|
support our long-term investment cycle; |
| Ÿ |
|
complement our career employment model; and |
| Ÿ |
|
encourage retention and long-term employment. |
Retirement Programs
All of our employees, including our NEOs, have access to
retirement programs that are designed to allow them to accumulate retirement income. These programs include defined benefit (pension) and defined contribution (401(k) savings) plans, as well as other plans, which allow highly compensated
employees to receive the same benefits they would have earned without the IRS limitations on qualified retirement plans under ERISA.
|
|
|
|
|
|
|
| Plan Name |
|
Plan Type |
|
How It Works |
|
What’s Disclosed |
| Chevron Retirement Plan (CRP) |
|
Qualified
Defined
Benefit (IRS
§401(a)) |
|
Participants are eligible for a pension benefit when they leave the Company as long as they meet age, service, and other provisions under the
plan. |
|
In the “Summary Compensation Table” and “Pension Benefits Table” in this Proxy
Statement, we report the change in pension value in 2013 and the present value of each NEO’s accumulated benefit under the CRP. The increase in pension value is not a current cash payment. It represents the increase in the value of the
NEOs’ pensions, which are paid only after retirement. |
| Chevron Retirement Restoration Plan (RRP) |
|
Non-Qualified
Defined
Benefit |
|
Provides participants with
retirement income that cannot
be paid from the CRP due
to
IRS limits on compensation
and benefits.1 |
|
In the “Pension Benefits Table” and accompanying narrative in this Proxy Statement, we
describe how the RRP works and present the current value of each NEO’s accumulated benefit under the RRP. |
| Employee Savings Investment Plan (ESIP) |
|
Qualified
Defined
Contribution
(IRS §401(k)) |
|
Participants who contribute a percentage of their annual compensation (i.e., base salary and CIP award) are eligible for a Company-matching
contribution, up to annual IRS limits.2 |
|
In the footnotes to the “Summary Compensation Table” in this Proxy Statement, we describe
Chevron’s contributions to each NEO’s ESIP account. |
| Employee Savings Investment Plan Restoration Plan (ESIP-RP) |
|
Non-Qualified
Defined
Contribution |
|
Provides participants with an additional Company-matching contribution that cannot be paid into the ESIP due to IRS limits on compensation and
benefits.3 |
|
In the “Nonqualified Deferred Compensation Table” and accompanying narrative in this Proxy
Statement, we describe how the ESIP-RP works and Chevron’s contributions to each NEO’s ESIP-RP account. |
| Deferred Compensation Plan (DCP) |
|
Non-Qualified
Defined
Contribution |
|
Participants can defer up to:
Ÿ 90% of CIP awards and LTIP
performance share awards
Ÿ 40% of base salary above the IRS
limit (IRS §401(a)(17))
for payment after retirement or
separation from service. |
|
In the “Nonqualified Deferred Compensation Table” in this Proxy Statement, we report the
aggregate NEO deferrals and earnings in 2013. |
| 1 |
Employees whose compensation exceeds the limits established by the IRS for covered compensation and benefit levels. The 2013 IRS annual compensation limit was
$255,000. |
| 2 |
Participants who contribute at least 2% of their annual compensation to the ESIP receive a Company-matching contribution of 8% (or 4% if they contribute 1%).
The annual limit for both employer and employee contributions to a qualified defined contribution plan was $51,000 in 2013. |
| 3 |
Participants who contribute at least 2% of their annual compensation to the Deferred Compensation Plan receive a Company-matching contribution of 8% of their
base salary that exceeds the IRS annual compensation limit. |
Benefit Programs
The same health and welfare programs, including post-retirement health care, that are broadly available to our employees on U.S. payroll also
apply to NEOs, with no other special programs except executive physicals (as described below under Perquisites).
Perquisites
Perquisites for NEOs are limited and consist principally of financial counseling fees, executive physicals, home security, and the
aggregate incremental costs to Chevron for personal use of Chevron automobiles and aircraft. The MCC periodically reviews our policies with respect to perquisites. In the “Summary Compensation Table” in this Proxy Statement, we report the
value of each NEO’s perquisites for 2013.
|
|
|
| Chevron Corporation—2014 Proxy Statement |
|
35 |
Compensation Governance
The MCC works very closely with its independent compensation consultant, Exequity LLP, and management
to examine pay and performance matters throughout the year, carefully assessing pay based on progress against business plans, individual performance and contributions, as well as Chevron’s performance relative to industry peers. The MCC then
applies its judgment to make its decisions. The MCC solicits input from the CEO concerning the performance and compensation of other NEOs. The CEO does
not participate in discussions about his own pay; any proposed change to the compensation of the CEO is recommended by the MCC and approved by the independent Directors of the Board.
A complete description of the MCC’s authority and responsibility is provided in its charter, which is available on our website at
www.chevron.com and in print upon request.
Best-Practice Features
Embedded in our overall compensation program are additional features that strengthen the links between the interests of our NEOs and
stockholders.
|
|
|
|
|
|
|
|
|
| WHAT WE DO |
|
|
|
WHAT WE DO NOT DO |
| ü |
|
Stock ownership guidelines, for CEO,
five times base salary; Vice Chairman, Executive Vice Presidents, and Chief Financial Officer, four times base salary |
|
|
|
û
|
|
No excessive perquisites, all with a
specific business rationale |
| ü |
|
Deferred accounts are inaccessible
until a minimum of one year following termination |
|
|
|
û |
|
No individual Supplemental Executive Retirement Plans |
| ü |
|
Clawback provisions in the CIP, LTIP,
DCP, RRP and ESIP-RP for misconduct |
|
|
|
û |
|
No stock option repricing, reloads or
exchange without stockholder approval |
| ü |
|
Over 90 percent of CEO’s pay is at risk |
|
|
|
û |
|
No loans or purchases of Chevron securities on margin |
| ü |
|
Thorough assessment of
performance |
|
|
|
û |
|
No transferability of equity (except in
the case of death or a qualifying court order) |
| ü |
|
Robust succession planning process with
Board review twice a year |
|
|
|
û |
|
No stock options granted below fair market value |
| ü |
|
MCC composed entirely of outside, independent Directors |
|
|
|
û |
|
No hedging in or pledging of Chevron securities |
| ü |
|
Independent compensation consultant,
hired by and reporting directly to the MCC |
|
|
|
û |
|
No change-in-control agreements for
NEOs |
| ü |
|
Negative discretion on performance share payouts for awards granted after January 1, 2011 |
|
|
|
û |
|
No tax gross-ups for
NEOs |
| ü |
|
CIP and certain LTIP awards intended to qualify for deduction (i.e., performance-
based compensation) under Section 162(m) of Internal Revenue Code |
|
|
|
û |
|
No “golden parachutes” or “golden coffins” for NEOs |
Independent Executive Compensation Advice
The MCC retains an independent compensation consultant—Exequity LLP—to assist it with its
duties. The MCC has the exclusive right to select, retain, and terminate Exequity, as well as to approve any fees, terms, and other conditions of its service. Exequity, and its lead consultant, reports directly to the MCC, but when directed to do so
by the MCC, works cooperatively with Chevron’s management to develop analyses and proposals for the MCC. Exequity provides the following services to the MCC:
| |
Ÿ |
|
Education on executive compensation trends within and across industries
|
| |
Ÿ |
|
Development of compensation philosophy and guiding principles and recommendations concerning compensation levels |
| |
Ÿ |
|
Selection of compensation comparator groups |
| |
Ÿ |
|
Identification and resolution of technical issues associated with executive compensation plans, including tax, legal, accounting, and securities regulations
|
Exequity does not provide any services to the Company. The MCC is not aware that any work performed by Exequity raised
any conflicts of interest.
|
|
|
| 36 |
|
Chevron Corporation—2014 Proxy Statement |
Stock Ownership Guidelines
We require our NEOs to hold prescribed levels of Chevron common stock, further linking their interests with those of our stockholders.
|
|
|
| Position |
|
Ownership Requirements
|
| CEO |
|
Five times base salary |
| Vice Chairman, Executive Vice Presidents, and Chief Financial
Officer |
|
Four times base salary |
| All other executive officers |
|
Two times base
salary |
Executives have five years to attain their stock ownership guideline. Based upon our closing stock price on
December 31, 2013, our CEO had a stock ownership base-salary multiple of 10.6 times, and all other NEOs met their requirement with an average stock ownership base-salary multiple of 7.5 times. The MCC believes these ownership levels provide
adequate focus on our long-term business model.
Employment, Severance, or Change-in-Control Agreements
In general, we do not maintain employment, severance, or change-in-control agreements with our NEOs. Upon retirement or separation from service for
other reasons, NEOs are entitled to certain accrued benefits and payments generally afforded other employees. We describe these benefits and payments in the “Pension Benefits Table,” the “Nonqualified Deferred Compensation Table”
and the “Potential Payments Upon Termination or Change-in-Control” tables in this Proxy Statement.
In February 2012,
Mr. Pate and Chevron mutually terminated his employment agreement described in our 2011 proxy statement in favor of an agreement relating solely to the vesting of Mr. Pate’s outstanding equity awards, if any, if Mr. Pate’s
employment is terminated for any reason on or after August 1, 2019. We describe the effect of this agreement in the footnotes to Mr. Pate’s “Potential Payments Upon Termination or Change-in-Control” table in this Proxy
Statement.
Compensation Recovery Policies
The CIP, LTIP, Chevron Deferred Compensation Plan for Management Employees, Chevron Retirement Restoration Plan, and Employee Savings Investment Plan-Restoration Plan include provisions permitting us to “claw
back” certain amounts of compensation awarded to an NEO at any time after June 2005 if an NEO engages in certain acts of misconduct, including among other things: embezzlement; fraud or theft; disclosure of confidential information or other
acts that harm our business, reputation, or employees; misconduct resulting in Chevron having to prepare an accounting restatement; or failure to abide by post-termination agreements respecting confidentiality, noncompetition, or nonsolicitation.
Tax Gross-Ups
We do
not pay tax gross-ups to our NEOs.
Tax Deductibility of NEO Compensation
We have designed awards under the CIP and awards under the LTIP (other than awards of restricted stock units or restricted stock that vest solely
based on the passage of time) to qualify for deduction under Section 162(m) of the Internal Revenue Code, which permits Chevron to deduct certain compensation paid to our CEO and other three most highly paid executives (excluding the Chief
Financial Officer) if compensation in excess of $1 million is performance-based. The performance-based criteria in the CIP were reapproved by stockholders in 2009, and the performance-based criteria in the LTIP was reapproved by stockholders in
2013. The MCC intends to continue seeking a tax deduction for all qualifying compensation within the Section 162(m) limits to the extent that the MCC determines it is in the best interests of Chevron and its stockholders to do so.
|
|
|
| Chevron Corporation—2014 Proxy Statement |
|
37 |
Summary
Compensation Table
The following table sets forth the compensation of our named executive officers, or “NEOs,” for the fiscal
years ending December 31, 2013, December 31, 2012, and December 31, 2011. The primary components of each NEO’s compensation are also described in our “Compensation Discussion and Analysis” in this Proxy Statement.
|
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|
Name and
Principal Position |
|
Year |
|
|
Salary
($)(1)
|
|
|
Stock
Awards
($)(2) |
|
|
Option
Awards
($)(3) |
|
|
Non-Equity
Incentive Plan
Compensation
($)(4) |
|
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)(5) |
|
|
All Other
Compensation ($)(6) |
|
|
Total
($) |
|
| J.S. Watson, Chairman &
CEO(7) |
|
|
2013 |
|
|
$ |
1,770,833 |
|
|
$ |
5,807,790 |
|
|
$ |
9,228,960 |
|
|
$ |
3,200,000 |
|
|
$ |
3,777,809 |
|
|
$ |
231,911 |
|
|
$ |
24,017,303 |
|
| |
|
2012 |
|
|
$ |
1,670,833 |
|
|
$ |
7,095,660 |
|
|
$ |
9,807,000 |
|
|
$ |
3,480,000 |
|
|
$ |
9,948,194 |
|
|
$ |
225,435 |
|
|
$ |
32,227,122 |
|
| |
|
2011 |
|
|
$ |
1,570,833 |
|
|
$ |
5,064,680 |
|
|
$ |
7,221,600 |
|
|
$ |
4,000,000 |
|
|
$ |
6,592,206 |
|
|
$ |
277,397 |
|
|
$ |
24,726,716 |
|
| P.E. Yarrington, Vice President
& Chief Financial
Officer |
|
|
2013 |
|
|
$ |
979,583 |
|
|
$ |
1,668,195 |
|
|
$ |
2,521,440 |
|
|
$ |
1,366,200 |
|
|
$ |
1,368,897 |
|
|
$ |
78,825 |
|
|
$ |
7,983,140 |
|
| |
|
2012 |
|
|
$ |
909,583 |
|
|
$ |
1,827,670 |
|
|
$ |
2,451,750 |
|
|
$ |
1,339,200 |
|
|
$ |
3,785,547 |
|
|
$ |
95,294 |
|
|
$ |
10,409,044 |
|
| |
|
2011 |
|
|
$ |
842,500 |
|
|
$ |
3,572,160 |
|
|
$ |
2,803,680 |
|
|
$ |
1,425,000 |
|
|
$ |
2,577,459 |
|
|
$ |
67,790 |
|
|
$ |
11,288,589 |
|
| G.L. Kirkland, Vice Chairman &
Executive Vice President, Upstream(7) |
|
|
2013 |
|
|
$ |
1,435,417 |
|
|
$ |
2,725,775 |
|
|
$ |
3,655,080 |
|
|
$ |
2,200,000 |
|
|
$ |
899,106 |
|
|
$ |
144,656 |
|
|
$ |
11,060,034 |
|
| |
|
2012 |
|
|
$ |
1,370,833 |
|
|
$ |
2,956,525 |
|
|
$ |
4,086,250 |
|
|
$ |
2,200,000 |
|
|
$ |
8,008,957 |
|
|
$ |
132,153 |
|
|
$ |
18,754,718 |
|
| |
|
2011 |
|
|
$ |
1,270,833 |
|
|
$ |
2,866,800 |
|
|
$ |
4,035,600 |
|
|
$ |
2,600,000 |
|
|
$ |
5,571,418 |
|
|
$ |
168,112 |
|
|
$ |
16,512,763 |
|
| M.K.
Wirth, Executive Vice President, Downstream & Chemicals |
|
|
2013 |
|
|
$ |
1,035,417 |
|
|
$ |
1,546,072 |
|
|
$ |
2,278,260 |
|
|
$ |
1,222,500 |
|
|
$ |
178,937 |
|
|
$ |
140,828 |
|
|
$ |
6,402,014 |
|
| |
|
2012 |
|
|
$ |
986,875 |
|
|
$ |
1,827,670 |
|
|
$ |
2,451,750 |
|
|
$ |
1,260,000 |
|
|
$ |
2,196,949 |
|
|
$ |
115,224 |
|
|
$ |
8,838,468 |
|
| |
|
2011 |
|
|
$ |
938,958 |
|
|
$ |
3,572,160 |
|
|
$ |
2,803,680 |
|
|
$ |
1,500,000 |
|
|
$ |
2,474,409 |
|
|
$ |
89,583 |
|
|
$ |
11,378,790 |
|
| R.H. Pate Vice President
& General Counsel |
|
|
2013 |
|
|
$ |
812,167 |
|
|
$ |
1,260,414 |
|
|
$ |
1,897,200 |
|
|
$ |
953,400 |
|
|
$ |
145,100 |
|
|
$ |
82,448 |
|
|
$ |
5,150,729 |
|
| |
|
2012 |
|
|
$ |
768,750 |
|
|
$ |
1,290,120 |
|
|
$ |
1,821,300 |
|
|
$ |
948,900 |
|
|
$ |
145,851 |
|
|
$ |
101,333 |
|
|
$ |
5,076,254 |
|
| |
|
2011 |
|
|
$ |
725,875 |
|
|
$ |
3,781,500 |
|
|
$ |
2,017,800 |
|
|
$ |
1,075,000 |
|
|
$ |
132,686 |
|
|
$ |
79,711 |
|
|
$ |
7,812,572 |
|
| (1) |
Reflects actual salary earned during the fiscal year covered. Compensation is reviewed after the end of each year, and salary increases, if any, are generally
effective April 1 of the following year. The following table reflects the annual salary rate and effective date for 2013, 2012 and 2011 and the amounts deferred under the Deferred Compensation Plan for Management Employees II (DCP).
|
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|
|
| Name |
|
Salary Effective
Date |
|
|
Salary |
|
|
Total Salary Deferred
Under the DCP |
|
| J.S. Watson |
|
|
April 2013 |
|
|
$ |
1,800,000 |
|
|
$ |
177,083 |
|
| |
|
|
April 2012 |
|
|
$ |
1,700,000 |
|
|
$ |
167,083 |
|
| |
|
|
April 2011 |
|
|
$ |
1,600,000 |
|
|
$ |
534,083 |
|
| P.E. Yarrington |
|
|
April 2013 |
|
|
$ |
1,000,000 |
|
|
$ |
14,492 |
|
| |
|
|
April 2012 |
|
|
$ |
930,000 |
|
|
$ |
13,192 |
|
| |
|
|
April 2011 |
|
|
$ |
860,000 |
|
|
$ |
337,000 |
|
| G.L. Kirkland |
|
|
April 2013 |
|
|
$ |
1,450,000 |
|
|
$ |
23,608 |
|
| |
|
|
April 2012 |
|
|
$ |
1,400,000 |
|
|
$ |
22,417 |
|
| |
|
|
April 2011 |
|
|
$ |
1,300,000 |
|
|
$ |
20,517 |
|
| M.K. Wirth |
|
|
April 2013 |
|
|
$ |
1,050,000 |
|
|
$ |
15,608 |
|
| |
|
|
April 2012 |
|
|
$ |
1,000,000 |
|
|
$ |
14,737 |
|
| |
|
|
April 2011 |
|
|
$ |
955,000 |
|
|
$ |
13,879 |
|
| R.H. Pate |
|
|
April 2013 |
|
|
$ |
825,000 |
|
|
$ |
97,460 |
|
| |
|
|
April 2012 |
|
|
$ |
781,000 |
|
|
$ |
10,375 |
|
| |
|
|
April 2011 |
|
|
$ |
739,000 |
|
|
$ |
9,617 |
|
| |
We explain the amount of salary in proportion to total compensation in our “Compensation Discussion and Analysis—Pay-for-Performance
Framework—Significant Pay at Risk.” |
|
|
|
| 38 |
|
Chevron Corporation—2014 Proxy Statement |
| (2) |
Amounts for each fiscal year reflect the aggregate grant date fair value of performance shares granted under the Long-Term Incentive Plan of Chevron
Corporation (LTIP). We calculate the grant date fair value of these awards in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (ASC Topic 718), as described in
Note 20, “Stock Options and Other Share-Based Compensation,” to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2013. For purposes of this table only, estimates of
forfeitures related to service-based vesting conditions have been disregarded. |
| |
For performance shares, the per-share grant date fair value was as follows: $158.08 for the March 2013 grant, $123.57 for the January 2013 grant, $107.51 for
the 2012 grant and $95.56 for the 2011 grant. We use a Monte Carlo approach to calculate estimated grant date fair value. To derive estimated grant date fair value per share, this valuation technique simulates total shareholder return (TSR) for the
Company and our LTIP Performance Share Peer Group (BP, ExxonMobil, Royal Dutch Shell and Total, with Total replacing ConocoPhillips starting with the 2012 grant) using market data for a period equal to the term of the performance period, correlates
the simulated returns within the peer group to estimate a probable payout value, and discounts the probable payout value using a risk-free rate for Treasury bonds having a term equal to the performance period. Performance shares are paid in cash,
and the cash payout, if any, is based on market conditions at the end of the performance period and calculated in the manner described in Footnote 2 to the “Option Exercises and Stock Vested in Fiscal Year 2013” table in this Proxy
Statement. The material terms of performance shares granted in 2013 are described in the “Grants of Plan-Based Awards in Fiscal Year 2013” and “Outstanding Equity Awards at 2013 Fiscal Year-End” tables in this Proxy Statement.
|
| (3) |
Amounts reflect the aggregate grant date fair value for nonstatutory/nonqualified stock options granted under the LTIP. The per-option grant date fair value
was as follows: $25.02 for the March 2013 grant, $24.48 for the January 2013 grant, $23.35 for the 2012 grant and $21.24 for the 2011 grant. We calculate the grant date fair value of these options in accordance with ASC Topic 718, as described in
Note 20, “Stock Options and Other Share-Based Compensation,” to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2013. For purposes of this table only, estimates of
forfeitures related to service-based vesting conditions have been disregarded. The terms of stock options granted in 2013 are described in the “Grants of Plan-Based Awards in Fiscal Year 2013” and “Outstanding Equity Awards at 2013
Fiscal Year-End” tables in this Proxy Statement. |
| (4) |
2013 amounts reflect Chevron Incentive Plan (CIP) awards for the 2013 performance year that were awarded in April 2014. The named executive officers
elected to defer portions of their awards to the Deferred Compensation Plan for Management Employees II as follows: Mr. Watson, 25 percent, or $800,000; Ms. Yarrington, 90 percent, or $1,229,580; Mr. Wirth, 90 percent, or $1,100,250;
and Mr. Pate, 25 percent, or $238,350. See “Compensation Discussion and Analysis—How Compensation Is Delivered—Chevron Incentive Plan (CIP)” for a detailed description of CIP awards. |
| (5) |
2013 amounts represent the aggregate change in the actuarial present value of the NEO’s pension value for the Chevron Retirement Plan (CRP) and the
Chevron Retirement Restoration Plan (RRP) from January 1, 2013, through December 31, 2013, expressed as a lump sum. (The Deferred Compensation Plan for Management Employees and Deferred Compensation Plan for Management Employees II (both,
the DCP) and ESIP Restoration Plan (ESIP-RP) do not pay above-market or preferential earnings and are not represented in this table.) |
| |
2013 changes in the actuarial present value of an NEO’s pension value are attributable to four factors. |
| |
First, increases in highest consecutive 36-month average base salary and CIP awards, or highest average earnings (HAE). |
| |
Second, higher interest and discount rate assumptions were used to estimate the value of the benefit. A higher interest rate produces a lower pension value.
The lump sum interest rates for determining the actuarial present values of the pension benefit are based on the Pension Protection Act of 2006 lump sum interest rates, and such rates for 2014 are equivalent to a rate that is approximately 1 percent
higher than the 2013 rates. In addition, this year’s discount rate, 4.30 percent, is 0.70 percent higher than last year’s discount rate, 3.60 percent. |
| |
Third, an additional year of age resulting in a shorter discount period from the assumed retirement age to current age. For all of the NEOs (except for
Mr. Kirkland, who attained age 60 in 2010 and for whom the discount no longer applies because there is no period of time from the assumed retirement age to his current age), the discount period from the assumed retirement age to current age was
shorter as of December 31, 2013. The result of a shorter discount period to retirement age is an increase in pension values. |
| |
Fourth, an additional year of benefit service earned in 2013. All of the NEOs worked for a full year in 2013, and therefore their pension benefits increased
because they earned an additional year of benefit service. For Mr. Pate, the impact of an additional year of service is larger relative to the other NEO’s since he has significantly fewer years of service. |
| |
The following table provides a breakdown of the percent change in the NEO’s pension values: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Factors |
|
| Name |
|
Total Percent
Change in
Pension Value,
2012 to 2013 |
|
|
Higher HAE |
|
|
Higher Interest
Rate and
Discount Rate
Assumptions |
|
|
One Year
Older |
|
|
One Additional
Year of Service |
|
| J.S. Watson |
|
|
15% |
|
|
|
18% |
|
|
|
–10% |
|
|
|
4% |
|
|
|
3% |
|
| P.E. Yarrington |
|
|
11% |
|
|
|
13% |
|
|
|
–9% |
|
|
|
4% |
|
|
|
3% |
|
| G.L. Kirkland |
|
|
3% |
|
|
|
9% |
|
|
|
–6% |
|
|
|
–2% |
|
|
|
2% |
|
| M.K. Wirth |
|
|
2% |
|
|
|
5% |
|
|
|
–7% |
|
|
|
2% |
|
|
|
2% |
|
| R.H. Pate |
|
|
41% |
|
|
|
12% |
|
|
|
–6% |
|
|
|
4% |
|
|
|
31% |
|
| |
Additional information concerning the present value of benefits accumulated by our NEOs under these defined benefit retirement plans is included in the
“Pension Benefits Table” in this Proxy Statement. |
| (6) |
All Other Compensation for 2013 includes the following items but excludes other arrangements that are generally available to our salaried employees on the
U.S. payroll and do not discriminate in scope, terms, or operation in favor of our NEOs, such as our relocation, medical, dental, disability, and group life insurance programs. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
J.S. Watson |
|
|
P.E. Yarrington |
|
|
G.L. Kirkland |
|
|
M.K. Wirth |
|
|
R.H. Pate |
|
| ESIP Company Contributions(a) |
|
$ |
20,400 |
|
|
$ |
20,400 |
|
|
$ |
20,400 |
|
|
$ |
20,400 |
|
|
$ |
20,400 |
|
| ESIP-RP Company Contributions(a) |
|
$ |
121,267 |
|
|
$ |
57,967 |
|
|
$ |
94,433 |
|
|
$ |
62,433 |
|
|
$ |
44,573 |
|
|
Perquisites(b) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Financial Counseling |
|
$ |
25,390 |
|
|
$ |
– |
|
|
$ |
19,320 |
|
|
$ |
14,880 |
|
|
$ |
14,880 |
|
| Motor Vehicles |
|
$ |
3,759 |
|
|
$ |
– |
|
|
$ |
2,872 |
|
|
$ |
– |
|
|
$ |
– |
|
| Corporate Aircraft(c) |
|
$ |
43,381 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
41,574 |
|
|
$ |
– |
|
| Residential Security(d) |
|
$ |
15,982 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
405 |
|
|
$ |
900 |
|
| Executive Physical |
|
$ |
1,000 |
|
|
$ |
– |
|
|
$ |
6,899 |
|
|
$ |
678 |
|
|
$ |
1,237 |
|
| Other (Business Incidentals) |
|
$ |
732 |
|
|
$ |
458 |
|
|
$ |
732 |
|
|
$ |
458 |
|
|
$ |
458 |
|
| TOTAL, ALL OTHER
COMPENSATION |
|
$ |
231,911 |
|
|
$ |
78,825 |
|
|
$ |
144,656 |
|
|
$ |
140,828 |
|
|
$ |
82,448 |
|
|
|
|
| Chevron Corporation—2014 Proxy Statement |
|
39 |
| |
(a) |
The Employee Savings Investment Plan (ESIP) is a tax-qualified defined contribution plan open to employees on the U.S. payroll. The Company provides a company
matching contribution of 8 percent of annual compensation when an employee contributes 2 percent of annual compensation, or 4 percent if they contribute 1 percent. Employees may also choose to contribute an amount above 2 percent, but none
of the amount above 2 percent is matched. The Company match up to IRS limits ($255,000 of income in 2013) is made to the qualified ESIP account. For amounts above the IRS limit, the executive can elect to have 2 percent of base pay directed
into the Deferred Compensation Plan, and the Company will match those funds with a contribution to the nonqualified ESIP-RP. |
| |
(b) |
Items deemed perquisites are valued on the basis of their aggregate incremental cost to the Company. We do not provide tax gross-ups to our NEOs for any
perquisites. Except in the case of corporate aircraft and motor vehicles, aggregate incremental cost is the same as actual cost. |
| |
(c) |
Generally, executives are not allowed to use Company planes for personal use. For security reasons, the CEO has been requested to use a Company plane in most
instances of travel. On a very limited basis, the CEO may authorize the personal use of a Company plane by other persons if, for example, it is in relation to and part of a trip that is otherwise business related or it is in connection
with a personal emergency. Aggregate incremental cost was determined by multiplying the operating hours attributable to personal use by the average estimated direct operating costs and the addition of crew costs for overnight lodging and meals and
other fees, as applicable. |
| |
(d) |
Reflects actual costs of development and implementation of a security system for Mr. Watson’s residence and home security monitoring and maintenance
for Messrs. Wirth and Pate. |
| (7) |
Messrs. Watson and Kirkland are also Directors of the Company, but do not receive any additional compensation for their service. |
|
|
|
| 40 |
|
Chevron Corporation—2014 Proxy Statement |
Grants of Plan-Based Awards in Fiscal Year 2013
The following table sets forth information concerning the grants of non-equity and equity incentive plan awards to our named executive officers, or
“NEOs,” in 2013. Non-equity incentive plan awards are made under our Chevron Incentive Plan (CIP), and equity incentive plan awards (performance shares and stock option awards) are made under our Long-Term Incentive Plan of Chevron
Corporation (LTIP). These awards are also described in our “Compensation Discussion and Analysis” in this Proxy Statement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
Estimated Future Payouts
Under
Non-Equity Incentive Plan
Awards(1) |
|
|
Estimated Future Payouts
Under
Equity Incentive Plan
Awards(2) |
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(3) |
|
|
Exercise
or Base
Price of
Option
Awards
($/Sh)(4) |
|
|
Grant
Date
Fair
Value of
Stock
and
Option
Awards(5) |
|
| Name |
|
Award Type |
|
Grant Date |
|
|
Threshold ($) |
|
|
Target
($) |
|
|
Maximum
($) |
|
|
Threshold
(#) |
|
|
Target
(#) |
|
|
Maximum
(#) |
|
|
|
|
| J.S. Watson(6) |
|
CIP |
|
|
|
|
|
|
– |
|
|
$ |
2,700,000 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
| |
|
Perf Shares |
|
|
1/30/2013 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
11,750 |
|
|
|
47,000 |
|
|
|
94,000 |
|
|
|
– |
|
|
|
– |
|
|
$ |
5,807,790 |
|
| |
|
Options |
|
|
1/30/2013 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
377,000 |
|
|
$ |
116.45 |
|
|
$ |
9,228,960 |
|
| P.E. Yarrington |
|
CIP |
|
|
|
|
|
|
– |
|
|
$ |
1,100,000 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
| |
|
Perf Shares |
|
|
1/30/2013 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
3,375 |
|
|
|
13,500 |
|
|
|
27,000 |
|
|
|
– |
|
|
|
– |
|
|
$ |
1,668,195 |
|
| |
|
Options |
|
|
1/30/2013 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
103,000 |
|
|
$ |
116.45 |
|
|
$ |
2,521,440 |
|
| G.L. Kirkland(6) |
|
CIP |
|
|
|
|
|
|
– |
|
|
$ |
1,885,000 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
| |
|
Perf Shares |
|
|
3/27/2013 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
500 |
|
|
|
2,000 |
|
|
|
4,000 |
|
|
|
– |
|
|
|
– |
|
|
$ |
316,160 |
|
| |
|
Perf Shares |
|
|
1/30/2013 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
4,875 |
|
|
|
19,500 |
|
|
|
39,000 |
|
|
|
– |
|
|
|
– |
|
|
$ |
2,409,615 |
|
| |
|
Options |
|
|
3/27/2013 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
14,000 |
|
|
$ |
120.19 |
|
|
$ |
350,280 |
|
| |
|
Options |
|
|
1/30/2013 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
135,000 |
|
|
$ |
116.45 |
|
|
$ |
3,304,800 |
|
| M.K. Wirth(6) |
|
CIP |
|
|
|
|
|
|
– |
|
|
$ |
1,155,000 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
| |
|
Perf Shares |
|
|
3/27/2013 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
100 |
|
|
|
400 |
|
|
|
800 |
|
|
|
– |
|
|
|
– |
|
|
$ |
63,232 |
|
| |
|
Perf Shares |
|
|
1/30/2013 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
3,000 |
|
|
|
12,000 |
|
|
|
24,000 |
|
|
|
– |
|
|
|
– |
|
|
$ |
1,482,840 |
|
| |
|
Options |
|
|
3/27/2013 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
3,000 |
|
|
$ |
120.19 |
|
|
$ |
75,060 |
|
| |
|
Options |
|
|
1/30/2013 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
90,000 |
|
|
$ |
116.45 |
|
|
$ |
2,203,200 |
|
| R.H. Pate |
|
CIP |
|
|
|
|
|
|
– |
|
|
$ |
825,000 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
| |
|
Perf Shares |
|
|
1/30/2013 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
2,550 |
|
|
|
10,200 |
|
|
|
20,400 |
|
|
|
– |
|
|
|
– |
|
|
$ |
1,260,414 |
|
| |
|
Options |
|
|
1/30/2013 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
77,500 |
|
|
$ |
116.45 |
|
|
$ |
1,897,200 |
|
| (1) |
The CIP is an annual incentive plan that pays a cash award for performance and is paid in April following the performance year. See our “Compensation
Discussion and Analysis—How Compensation Is Delivered—Chevron Incentive Plan (CIP)” for a detailed description of CIP awards, including the criteria to be applied in determining the amounts payable. “Target” is the
percentage of the NEO’s base salary set by the Management Compensation Committee prior to the beginning of the performance year. Actual 2013 performance-year awards are shown in the “Summary Compensation Table” in the “Non-Equity
Incentive Plan Compensation” column. Under the CIP, there is no threshold or maximum award. |
| (2) |
Reflects performance share awards issued under the LTIP. See our “Compensation Discussion and Analysis—How Compensation Is Delivered—Long-Term
Incentive Plan (LTIP)” for a detailed description of performance share awards, including the criteria to be applied in determining the amounts payable. “Target” is the number of performance shares awarded in 2013. If there is a
payout, “threshold” represents the lowest possible payout (25 percent of the grant), and “Maximum” reflects the highest possible payout (200 percent of the grant). Performance shares are paid in cash, and the payout, if any, will
occur at the end of the three-year performance period (January 2013 through December 2015) and is calculated in the manner described in Footnote 2 to the “Option Exercises and Stock Vested in Fiscal Year 2013” table in this Proxy
Statement. The material terms of performance shares granted in 2013 are also described in the “Outstanding Equity Awards at 2013 Fiscal Year-End” table in this Proxy Statement. Performance share awards do not accrue dividends or dividend
equivalents. |
| (3) |
Reflects nonstatutory/nonqualified stock options granted under the LTIP. See our “Compensation Discussion and Analysis—How Compensation Is
Delivered—Long-Term Incentive Plan (LTIP)” for a description of stock option awards. Options have a 10-year term and vest 33.33 percent at each anniversary of the date of grant over three years. The material terms of stock options granted
in 2013 are also described in the “Outstanding Equity Awards at 2013 Fiscal Year-End” table in this Proxy Statement. Stock option awards do not accrue dividends or dividend equivalents. |
| (4) |
The exercise price is the closing price of Chevron common stock on the grant date. |
| (5) |
We calculate the grant date fair value of each award in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718,
Compensation—Stock Compensation (ASC Topic 718) and as described in Footnotes 2 and 3 to the “Summary Compensation Table” in this Proxy Statement. |
| (6) |
For Mr. Watson, reflects the corrected number of performance shares and stock options granted in January 2013 to correct an administrative error in
calculating the number of performance shares and stock options awarded, as explained in Chevron’s Current Report on Form 8-K, filed with the U.S. Securities and Exchange Commission on April 2, 2013. The correction reduced the grant date
fair value of these awards. For Messrs. Kirkland and Wirth, reflects supplemental awards of performance shares and stock options in March 2013 to correct an administrative error in calculating the number of performance shares and stock options
awarded in January 2013, as explained in Chevron’s Current Report on Form 8-K, filed on April 2, 2013. These corrections delivered the grant value the independent Directors of the Board intended to deliver with the January 2013 awards.
|
|
|
|
| Chevron Corporation—2014 Proxy Statement |
|
41 |
Outstanding Equity Awards at 2013 Fiscal Year-End
The following table sets forth information concerning the outstanding equity incentive awards at December 31, 2013, for each of our named
executive officers, or “NEOs.”
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Option Awards |
|
|
Stock Awards |
|
| Name |
|
Grant Date
of Option
Awards |
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable |
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable |
|
|
Option
Exercise
Price
($) |
|
|
Option
Expiration
Date |
|
|
Number of
Shares
or
Units of Stock
That Have Not
Vested (#) |
|
|
Market Value
of Shares
or Units of
Stock That
Have Not
Vested ($)(1) |
|
|
Equity
Incentive
Plan Awards:
Number
of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#) |
|
|
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or
Other
Rights That
Have Not
Vested ($)(2) |
|
| J.S. Watson |
|
|
1/30/2013 |
|
|
|
|
|
|
|
377,000 |
(3) |
|
$ |
116.45 |
|
|
|
1/30/2023 |
|
|
|
– |
|
|
|
– |
|
|
|
113,000 |
(4) |
|
$ |
28,229,660 |
|
| |
|
|
1/25/2012 |
|
|
|
140,000 |
|
|
|
280,000 |
(5) |
|
$ |
107.73 |
|
|
|
1/25/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
1/26/2011 |
|
|
|
226,666 |
|
|
|
113,334 |
(6) |
|
$ |
94.64 |
|
|
|
1/26/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
1/27/2010 |
|
|
|
340,000 |
|
|
|
|
|
|
$ |
73.70 |
|
|
|
1/27/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
3/25/2009 |
|
|
|
170,000 |
|
|
|
|
|
|
$ |
69.70 |
|
|
|
3/25/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
3/26/2008 |
|
|
|
112,000 |
|
|
|
|
|
|
$ |
84.96 |
|
|
|
3/26/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
3/28/2007 |
|
|
|
125,000 |
|
|
|
|
|
|
$ |
74.08 |
|
|
|
3/28/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| P.E. Yarrington |
|
|
1/30/2013 |
|
|
|
|
|
|
|
103,000 |
(3) |
|
$ |
116.45 |
|
|
|
1/30/2023 |
|
|
|
7,999 |
(7) |
|
$ |
999,112 |
|
|
|
30,500 |
(8) |
|
$ |
7,619,510 |
|
| |
|
|
1/25/2012 |
|
|
|
35,000 |
|
|
|
70,000 |
(5) |
|
$ |
107.73 |
|
|
|
1/25/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
1/26/2011 |
|
|
|
88,000 |
|
|
|
44,000 |
(6) |
|
$ |
94.64 |
|
|
|
1/26/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
1/27/2010 |
|
|
|
135,000 |
|
|
|
|
|
|
$ |
73.70 |
|
|
|
1/27/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
3/25/2009 |
|
|
|
130,000 |
|
|
|
|
|
|
$ |
69.70 |
|
|
|
3/25/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
3/26/2008 |
|
|
|
39,000 |
|
|
|
|
|
|
$ |
84.96 |
|
|
|
3/26/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
3/28/2007 |
|
|
|
44,000 |
|
|
|
|
|
|
$ |
74.08 |
|
|
|
3/28/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
3/23/2006 |
|
|
|
38,000 |
|
|
|
|
|
|
$ |
56.63 |
|
|
|
3/23/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| G.L. Kirkland |
|
|
3/27/2013 |
|
|
|
|
|
|
|
14,000 |
(9) |
|
$ |
120.19 |
|
|
|
3/27/2023 |
|
|
|
– |
|
|
|
– |
|
|
|
49,000 |
(10) |
|
$ |
12,241,180 |
|
| |
|
|
1/30/2013 |
|
|
|
|
|
|
|
135,000 |
(3) |
|
$ |
116.45 |
|
|
|
1/30/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
1/25/2012 |
|
|
|
58,333 |
|
|
|
116,667 |
(5) |
|
$ |
107.73 |
|
|
|
1/25/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
1/26/2011 |
|
|
|
126,666 |
|
|
|
63,334 |
(6) |
|
$ |
94.64 |
|
|
|
1/26/2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
1/27/2010 |
|
|
|
190,000 |
|
|
|
|
|
|
$ |
73.70 |
|
|
|
1/27/2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
3/25/2009 |
|
|
|
170,000 |
|
|
|
|
|
|
$ |
69.70 |
|
|
|
3/25/2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
3/26/2008 |
|
|
|
112,000 |
|
|
|
|
|
|
$ |
84.96 |
|
|
|
3/26/2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| M.K. Wirth |
|
|
3/27/2013 |
|
|
|
|
|
|
|
3,000 |
(9) |
|
$ |
120.19 |
|
|
|
3/27/2023 |
|
|
|
7,999 |
(11) |
|
$ |
999,112 |
|
|
