Edgar Filing: CHEVRON CORP

DEF 14A

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. )

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Definitive Additional Materials

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Soliciting Material Pursuant to §.240.14a-12

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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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LOGO

2017 Proxy Statement

Notice of 2017 Annual Meeting of Stockholders

to Be Held on May 31, 2017

2017 Notice of the Chevron Corporation

Annual Meeting of Stockholders

Wednesday, May 31, 2017

8:00 a.m. CDT

Chevron U.S.A., Inc., 6301 Deauville Boulevard, Midland, TX 79706

Record Date

Monday, April 3, 2017

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 a Board proposal to determine, on an advisory basis, the frequency of future advisory votes on named executive officer compensation;

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Vote on seven Rule 14a-8 stockholder proposals, if properly presented; and

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Transact any other business that may be properly brought before the Annual Meeting by or at the direction of the Board.

Admission

Stockholders or their legal proxy holders may attend the Annual Meeting. Due to space constraints and other security considerations, we are not able to admit the guests of either stockholders or their legal proxy holders.

Important Notice Regarding Admission to the 2017 Annual Meeting

Stockholders or their legal proxy holders who wish to attend the Annual Meeting must preregister with and obtain an admission ticket from Chevron’s Corporate Governance Department. Tickets will be distributed on a first-come, first-served basis. Requests for admission tickets must be received by Chevron no later than 5:00 p.m. PDT on Thursday, May 25, 2017. For complete instructions for preregistering and obtaining an admission ticket, see page 81 of this Proxy Statement.

Voting

Stockholders owning Chevron common stock at the close of business on Monday, April 3, 2017, or their legal proxy holders, are entitled to vote at the Annual Meeting. Please refer to pages 1 through 3 of this Proxy Statement for information about voting at the Annual Meeting.

Distribution of Proxy Materials

On Tuesday, April 11, 2017, we will commence distributing to our stockholders (1) a copy of this Proxy Statement, a proxy card or voting instruction form, and our Annual Report (the Proxy Materials), (2) a Notice Regarding the Availability of Proxy Materials, with instructions to access our Proxy Materials and vote on the Internet, or (3) for stockholders who receive materials electronically, an email with instructions to access our Proxy Materials and vote on the Internet.

By Order of the Board of Directors,

LOGO

Mary A. Francis

Corporate Secretary and Chief Governance Officer

Table of Contents



Voting Information			1
Items of Business			1
Vote Results			1
Appointment of Proxy Holders			2
Record Date; Who Can Vote			2
Quorum			2
How to Vote			2
Revoking Your Proxy or Voting Instructions			3
Confidential Voting			3

Election of Directors (Item 1 on the Proxy Card)			4
Director Election Requirements			4
Director Qualifications and Nomination Processes			4
Nominees for Director			5
Vote Required			14
Your Board’s Recommendation			14

Director Compensation			15
Overview			15
Cash or Stock Options (at the Director’s Election)			15
Restricted Stock Units			15
Expenses and Charitable Matching Gift Program			15
Compensation During the Fiscal Year Ended December 31, 2016			16

Corporate Governance			18
Overview			18
Role of the Board of Directors			18
Board Leadership and Independent Lead Director			18
Director Independence			19
Board Committees			20
Board and Committee Meetings and Attendance			22
Board and Committee Oversight of Risk			22
Board and Committee Evaluations			23
Succession Planning and Leadership Development			23
Corporate Governance Guidelines			23
Business Conduct and Ethics Code			23
Engagement			24
Communicating With the Board			24
Related Person Transactions			24
Board Nominating and Governance Committee Report			25
Management Compensation Committee Report			26
Audit Committee Report			26


TABLE OF CONTENTS



Board Proposal to Ratify PricewaterhouseCoopers LLP as the Independent Registered Public Accounting Firm for 2017 (Item 2 on the Proxy Card)			27
Auditor Review and Engagement			27
PwC’s Fees and Services			28
Audit Committee Preapproval Policies and Procedures			28
PwC’s Attendance at the Annual Meeting			28
Vote Required			28
Your Board’s Recommendation			28

Executive Compensation			29
Compensation Discussion and Analysis			29
Summary Compensation Table			47
Grants of Plan-Based Awards in Fiscal Year 2016			49
Outstanding Equity Awards at 2016 Fiscal Year-End			51
Option Exercises and Stock Vested in Fiscal Year 2016			52
Pension Benefits Table			53
Nonqualified Deferred Compensation Table			54
Potential Payments Upon Termination or Change-in-Control			56

Equity Compensation Plan Information			59

Stock Ownership Information			60
Security Ownership of Certain Beneficial Owners and Management			60
Section 16(a) Beneficial Ownership Reporting Compliance			60

Board Proposal to Approve, on an Advisory Basis, Named Executive Officer Compensation (Item 3 on the Proxy Card)			61
Vote Required			61
Your Board’s Recommendation			61

Board Proposal to Determine, on an Advisory Basis, the Frequency of Future Advisory Votes on Named Executive Officer Compensation (Item 4 on the Proxy Card)			62
Vote Required			62
Your Board’s Recommendation			62

Rule 14a-8 Stockholder Proposals (Items 5 through 11 on the Proxy Card)			63
Rule 14a-8 Stockholder Proposals			63
Vote Required			63
Your Board’s Recommendation			63
Stockholder Proposals			64


								TABLE OF CONTENTS



Additional Information			78
Notice and Access			78
Method and Cost of Soliciting and Tabulating Votes			78
Householding Information			78
Email Delivery of Future Proxy Materials			79
Stockholder of Record Account Maintenance			79
Submission of Stockholder Proposals for 2018 Annual Meeting			79
Preregistering for and Attending the Annual Meeting			81

Voting Information

Chevron Corporation

6001 Bollinger Canyon Road

San Ramon, CA 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 2017 Annual Meeting of Stockholders to be held on Wednesday, May 31, 2017, at 8:00 a.m. CDT at Chevron U.S.A., Inc., 6301 Deauville Boulevard, 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,” “the Company,” or “the Corporation.”

Items of Business

Your Board is asking you to take the following actions at the Annual Meeting:


Item(s)	Your Board’s Recommendation	Vote Required
• Item 1: Elect 12 Directors named in this Proxy Statement	Vote FOR	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.
• Item 2: Vote to ratify the appointment of the independent registered public accounting firm	Vote FOR	Except Item 4, these items are approved if the number of shares voted FOR exceeds the number of shares voted AGAINST. For Item 4, the choice that receives the most votes is approved.
• Item 3: Vote to approve, on an advisory basis, named executive officer compensation	Vote FOR
• Item 4: Vote to determine, on an advisory basis, the frequency of future advisory votes on named executive officer compensation	Vote 1 Year
• Items 5–11: Vote on seven stockholder proposals, if properly presented	Vote AGAINST

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 11, 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 11 (whether by abstention, broker nonvote, or otherwise) will have no impact on that particular item.

We are not aware of any matters that are expected to be presented for a vote at the Annual Meeting other than those described above. If any other matter should properly be brought before the Annual Meeting by or at the direction of the Board, the proxy holders identified in the “Voting Information—Appointment of Proxy Holders” section of this Proxy Statement intend to vote the proxies in accordance with their best judgment. When conducting the Annual Meeting, the Chairman or his designee may refuse to allow a vote on any matter not made in compliance with our By-Laws and the procedures described in the “Additional Information—Submission of Stockholder Proposals for 2017 Annual Meeting” section of the 2016 Proxy Statement.

Vote Results

At the Annual Meeting, we will announce preliminary vote 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.


Chevron Corporation—2017 Proxy Statement		1


VOTING INFORMATION

Appointment of Proxy Holders

Your Board asks you to appoint John S. Watson, R. Hewitt Pate, and Mary A. Francis 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 by or at the direction of the Board for action at the Annual Meeting.

Record Date; Who Can Vote

Stockholders owning Chevron common stock at the close of business on Monday, April 3, 2017, 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 1,894,561,619 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.

Stockholders of Record

Street Name Stockholders

Employee Plan Participants

If you hold your shares in your own name as reflected in the records of 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 30, 2017.

You can vote in person at the Annual Meeting by completing, signing, dating, and returning your proxy card during the meeting.

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 30, 2017.

You can vote in person at the Annual Meeting ONLY if you obtain and present a proxy, executed in your favor, from the bank, broker, or other holder of record of your shares.

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 mail.

All votes must be received by the plan trustee or fiduciary by 11:59 p.m. EDT on Thursday, May 25, 2017, 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 and present a proxy, executed in your favor, from the trustee or fiduciary of the plan through which you hold your shares.

We encourage you to vote by telephone or on the Internet. Both are designed to record your vote immediately and enable you to confirm that your vote has been properly recorded.


2		Chevron Corporation—2017 Proxy Statement


								VOTING INFORMATION

Revoking Your Proxy or Voting Instructions

Stockholders can revoke their proxy or voting instructions as follows.


Stockholders of Record	Street Name Stockholders	Employee Plan Participants
• Send a written statement revoking your proxy to: Chevron Corporation, Attn: Corporate Secretary and Chief Governance Officer, 6001 Bollinger Canyon Road, San Ramon, CA 94583-2324;	Notify your bank, broker, or other holder of record in accordance with that entity’s procedures for revoking your voting instructions.	Notify the trustee or fiduciary of the plan through which you hold your shares in accordance with its procedures for revoking your voting instructions.
• Submit a proxy card with a later date and signed as your name appears on your account;
• Vote at a later time by telephone or the Internet; or
• Vote in person at the Annual Meeting.

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.


Chevron Corporation—2017 Proxy Statement		3

Election of Directors

(Item 1 on the Proxy Card)

Your Board is nominating the 12 individuals identified 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. Your Board has determined that each non-employee Director is independent in accordance with the New York Stock Exchange (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.

Director Election Requirements

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 Qualifications and Nomination Processes

The Board Nominating and Governance Committee (the 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 our website at www.chevron.com.

All Directors should have the following attributes:

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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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a commitment to building stockholder value;

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business acumen and broad experience and expertise at the policy-making level in one or more of the areas of particular consideration indicated below;

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the ability to provide insights and practical wisdom based on the individual’s experience or expertise;

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sufficient time to effectively carry out duties as a Director; and

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independence (at least a majority of the Board must consist of independent Directors, as defined by the NYSE Corporate Governance Standards).

The Committee uses a skills and qualifications matrix to ensure that the Board maintains a balance of knowledge and experience. The Committee regularly reviews the appropriate skills and characteristics required of Directors in the context of the current composition of the Board, the operating requirements of the Company, and the long-term interests of stockholders.

When conducting its review of the appropriate skills and qualifications desired of Directors, the Committee particularly considers:

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leadership experience in business as a chief executive officer, senior executive, or leader of significant business operations;

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expertise in science, technology, engineering, research, or academia;

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extensive knowledge of governmental, regulatory, legal, or public policy issues;

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expertise in finance, financial disclosure, or financial accounting;

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experience in global business or international matters;

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experience in environmental affairs;

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service as a public company director;

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diversity of age, gender, and ethnicity; and

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such other factors as the Committee deems appropriate, given the current needs of the Board and the Company, to maintain a balance of knowledge, experience, background, and capability.

The Committee considers Director candidates suggested for nomination to the Board from stockholders, Directors, and other sources. Directors 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.


4		Chevron Corporation—2017 Proxy Statement


								ELECTION OF DIRECTORS

The Committee considers all potential nominees recommended by our stockholders.

•

Stockholders may recommend potential nominees by writing to the Corporate Secretary at 6001 Bollinger Canyon Road, San Ramon, CA 94583-2324, stating the candidate’s name and qualifications for Board membership.

•

When considering potential nominees recommended by stockholders, the Committee follows the same Board membership qualifications evaluation and nomination procedures discussed in this section.

In addition, a qualifying stockholder (or stockholders) may nominate director nominees for inclusion in our Proxy Statement if the nominating stockholder satisfies the requirements specified in our proxy access By-Laws, which are described in the “Additional Information—Submission of Stockholder Proposals for 2018 Annual Meeting” section of this Proxy Statement.

Nominees for Director

For the 2017 Annual Meeting, the Committee recommended and the Board concurred with a Board size of 12 Directors. Each of the Director nominees is a current Director.

Your Board recommends that you vote FOR each of these Director nominees.

Wanda M. Austin

Retired President and Chief Executive Officer, The Aerospace Corporation

Age: 62

Director Since: December 2016

Independent: Yes

Chevron Committees:

• Board Nominating and Governance

• Public Policy

Current Public Company Directorships:

• None

Prior Public Company Directorships

(within last five years):

• None

Other Directorships and Memberships:

• Horatio Alger Association

• National Academy of Engineering

• University of Southern California

Dr. Austin has held an adjunct Research Professor appointment at the University of Southern California’s Viterbi School’s Department of Industrial and Systems Engineering since 2007. She served as President and Chief Executive Officer of The Aerospace Corporation, a leading architect for the United States’ national security space programs, from 2008 until her retirement in 2016. From 2004 to 2007, she was Senior Vice President, National Systems Group at Aerospace. Dr. Austin joined Aerospace in 1979.

Skills and Qualifications

Business Leadership / Operations: Eight years as CEO of The Aerospace Corporation. Thirty-seven-year career with The Aerospace Corporation included numerous senior management and executive positions.

Finance: Over a decade of financial responsibility and experience at The Aerospace Corporation.

Global Business / International Affairs: Internationally recognized for her work in satellite and payload system acquisition, systems engineering and system simulation. Former CEO of a company that provides space systems expertise to international organizations.

Government / Regulatory / Public Policy: Served on President’s Council of Advisors on Science and Technology and President’s Review of U.S. Human Space Flight Plans Committee. Appointed to the Defense Science Board and the NASA Advisory Council.

Research / Academia: Research Professor at the University of Southern California’s Viterbi School of Engineering.

Science / Technology / Engineering: PhD in Industrial and Systems Engineering from the University of Southern California, Master of Science in both Systems Engineering and Mathematics from the University of Pittsburgh. Thirty-seven-year career in national security space programs. Fellow of the American Institute of Aeronautics and Astronautics.


Chevron Corporation—2017 Proxy Statement		5

ELECTION OF DIRECTORS

LOGO

Linnet F. Deily

Former Deputy U.S. Trade Representative and U.S. Ambassador to the World Trade Organization

Age: 71

Director Since: January 2006

Independent: Yes

Chevron Committees:

• Board Nominating and Governance

• Public Policy (Chair)

Current Public Company Directorships:

• Honeywell International Inc.

Prior Public Company Directorships

(within last five years):

• None

Other Directorships and Memberships:

• Episcopal Health Foundation (Executive Chair)

• Houston Endowment, Inc.

• Houston Museum of Fine Arts

• University of Texas MD Anderson Cancer Center Board of Visitors

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, a brokerage and financial services company, from 2000 until 2001, President of Schwab Retail Group from 1998 until 2000, and President of Schwab Institutional Services for Investment Managers from 1996 until 1998. Prior to joining Schwab, Ms. Deily was Chairman, Chief Executive Officer, and President from 1990 until 1996 and President and Chief Operating Officer from 1988 until 1990 of First Interstate Bank of Texas.

Skills and Qualifications

Business Leadership / Operations: Former Vice Chairman, Charles Schwab; President, Schwab Retail Group; and President, Schwab Institutional Services for Investment Managers. Former Chairman, CEO, President, and COO, First Interstate Bank of Texas.

Environmental Affairs: As Deputy U.S. Trade Representative and U.S. Ambassador to the WTO, oversaw negotiation of various environmental issues.

Finance: More than 20 years of experience in the banking and financial services industry.

Global Business / International Affairs: Served as Deputy U.S. Trade Representative and U.S. Ambassador to the WTO. Current and former director of companies with international operations.

Government / Regulatory / Public Policy: More than 20 years of experience in the highly regulated banking and financial services industry. Served as Deputy U.S. Trade Representative and U.S. Ambassador to the WTO.

LOGO

Robert E. Denham

Partner, Munger, Tolles & Olson LLP

Age: 71

Director Since: April 2004

Independent: Yes

Chevron Committees:

• Audit – audit committee financial expert

• Management Compensation

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 last five years):

• UGL Limited

Other Directorships and Memberships:

• Good Samaritan Hospital of Los Angeles (Vice Chair)

• James Irvine Foundation (Vice Chair)

• MDRC

• New Village Girls Academy

• Professional Ethics Executive Committee of the American Institute of Certified Public Accountants (Public Member)

Mr. Denham has been a Partner of Munger, Tolles & Olson LLP, a law firm, since 1998 and from 1973 until 1991. He was Chairman and Chief Executive Officer of Salomon Inc, a financial services holding company, from 1992 until 1998. Mr. Denham joined Salomon in 1991, as General Counsel of Salomon and its subsidiary, Salomon Brothers.

Skills and Qualifications

Business Leadership / Operations: Served six years as CEO of Salomon Inc, whose principal businesses included investment banking and securities trading (Salomon Brothers), commodities trading (Phibro), and oil refining (Basis Petroleum).

Environmental Affairs: Former Trustee of Natural Resources Defense Council, an international environmental nonprofit organization that works to protect the world’s natural resources. Former Chairman of the John D. and Catherine T. MacArthur Foundation, which funds environmental and sustainable development programs. Unique experience with environmental issues by representing buyers and sellers in complex mergers and acquisitions.

Finance: Former CEO of a global financial services company. Served as Chairman and President of the Financial Accounting Foundation. Has represented numerous buyers and sellers in complex mergers and acquisitions and financing transactions.

Government / Regulatory / Public Policy: Serves as a public member of the Professional Ethics Executive Committee of the American Institute of Certified Public Accountants. Served as presidential appointee to the APEC Business Advisory Council and the Bipartisan Commission on Entitlement and Tax Reform.

Legal: Partner of Munger, Tolles & Olson LLP. Extensive experience with mergers and acquisitions and strategic, financial, and corporate governance issues. Law degree from Harvard Law School.


6		Chevron Corporation—2017 Proxy Statement


								ELECTION OF DIRECTORS

LOGO

Alice P. Gast

President, Imperial College London

Age: 58

Director Since: December 2012

Independent: Yes

Chevron Committees:

• Board Nominating and Governance

• Public Policy

Current Public Company Directorships:

• None

Prior Public Company Directorships (within last five years):

• None

Other Directorships and Memberships:

• Global Science and Innovation Advisory Council to the Prime Minister of Malaysia

• King Abdullah University of Science and Technology in Thuwal, Saudi Arabia

• National Academy of Engineering

Dr. Gast has been President of Imperial College London, a public research university specializing in science, engineering, medicine, and business, since 2014. She was President of Lehigh University, a private research university, from 2006 until 2014 and Vice President for Research, Associate Provost, and Robert T. Haslam Chair in Chemical Engineering at Massachusetts Institute of Technology from 2001 until 2006. Dr. Gast was professor of chemical engineering at Stanford University and the Stanford Synchrotron Radiation Laboratory from 1985 until 2001.

Skills and Qualifications

Environmental Affairs: At Imperial College London, oversees environmental institutes and centers and leads the university crisis management group. At Lehigh University, presided over environmental centers, advisory groups, and crisis management. Expertise in chemical and biological terrorism issues gained through service on several governmental committees.

Finance: Eleven years of service as president of leading educational institutions, with ultimate responsibility for finance, fundraising, and endowment management.

Global Business / International Affairs: Served as a U.S. Science Envoy for the U.S. Department of State to advise on ways to foster and deepen relationships with the Caucasus and Central Asia. Serves on the Singapore Ministry of Education’s Academic Research Council and on the Board of Trustees for the King Abdullah University of Science and Technology in Saudi Arabia. Serves on the Global Federation of Competitiveness Councils and on the Global Science and Innovation Advisory Council to the Prime Minister of Malaysia.

Government / Regulatory / Public Policy: Served on the Homeland Security Science and Technology Advisory Committee. Chaired the scientific review committee empaneled by the National Research Council at the request of the FBI to conduct an independent review of the investigatory methods used by the FBI in the criminal case involving the mailing of anthrax spores.

Research / Academia: More than three decades of service in academia and research at leading educational institutions.

Science / Technology / Engineering: M.A. and Ph.D. in chemical engineering from Princeton University. Former Vice President for Research, Associate Provost, and Robert T. Haslam Chair in Chemical Engineering at Massachusetts Institute of Technology and professor of chemical engineering at Stanford University and the Stanford Synchrotron Radiation Laboratory.


Chevron Corporation—2017 Proxy Statement		7


ELECTION OF DIRECTORS

LOGO

Enrique Hernandez, Jr.

Chairman, Chief Executive Officer and President, Inter-Con Security Systems, Inc.

Age: 61

Director Since: December 2008

Independent: Yes

Chevron Committees:

• Management Compensation (Chair)

• Public Policy

Current Public Company Directorships:

• McDonald’s Corporation

• Nordstrom, Inc. (retiring May 16, 2017)

• Wells Fargo & Company

Prior Public Company Directorships (within last five years):

• None

Other Directorships and Memberships:

• Harvard College Visiting Committee

• Harvard University Resources Committee

• John Randolph Haynes and Dora Haynes Foundation

• University of Notre Dame

Mr. Hernandez has been Chairman, Chief Executive Officer, and President of Inter-Con Security Systems, Inc., a global provider of security and facility support services to governments, utilities, and industrial customers, since 1986. He was Executive Vice President and Assistant General Counsel of Inter-Con from 1984 until 1986 and an associate of the law firm of Brobeck, Phleger & Harrison from 1980 until 1984.

Skills and Qualifications

Business Leadership / Operations: Three decades of service as CEO of Inter-Con Security Systems, Inc. Co-founder of Interspan Communications, a television broadcasting company. Chairman of the Board of McDonald’s Corporation.

Finance: Three decades of financial responsibility and experience at Inter-Con Security Systems, Inc. Chaired the audit committee at McDonald’s Corporation. Chair of the finance committee and risk committee at Wells Fargo & Company. Former audit committee member at Great Western Financial Corporation, Nordstrom, Inc., Washington Mutual, Inc., and Wells Fargo & Company.

Global Business / International Affairs: CEO of a company that conducts business worldwide. Director of companies with international operations.

Government / Regulatory / Public Policy: Trustee of the John Randolph Haynes Foundation, which has funded hundreds of important urban studies in education, transportation, local government elections, public safety, and other public issues. Former appointee and Commissioner and President of the Los Angeles Police Commission. Served on the U.S. National Infrastructure Advisory Committee.

Legal: Served as EVP and Assistant General Counsel of Inter-Con Security Systems. Former litigation associate of the law firm of Brobeck, Phleger & Harrison. Law degree from Harvard Law School.


8		Chevron Corporation—2017 Proxy Statement


								ELECTION OF DIRECTORS

LOGO

Jon M. Huntsman Jr.

Former U.S. Ambassador to China and former Governor of Utah

Age: 57

Director Since: January 2014

Independent: Yes

Chevron Committees:

• Audit – audit committee financial expert

Current Public Company Directorships:

• Caterpillar, Inc.

• Ford Motor Company

• Hilton Worldwide Holdings Inc.

Prior Public Company Directorships (within last five years):

• Huntsman Corporation

Other Directorships and Memberships:

• Atlantic Council (Chair)

• Huntsman Cancer Foundation (Chair)

• National Committee on U.S.-China Relations

• No Labels (Co-Chair)

• Ronald Reagan Presidential Foundation and Library

• U.S. Naval Academy Foundation

Governor Huntsman has been Chairman of the Atlantic Council, a nonprofit that promotes leadership and engagement in international affairs, since 2014 and Chairman of the 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. He was a candidate for the Republican nomination for president of the United States in 2011. Governor Huntsman 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, he served as U.S. Ambassador to Singapore, Deputy U.S. Trade Representative, and Deputy Assistant Secretary of Commerce for Asia. Between these appointments, Governor Huntsman was employed by Huntsman Corporation, a global manufacturer and marketer of differentiated chemicals, in various capacities, including Vice Chairman, and as Chairman and Chief Executive Officer of Huntsman Holdings Corporation, until his resignation in 2005.

Skills and Qualifications

Business Leadership / Operations: Served eight years as Vice Chairman of Huntsman Corporation and Chairman and CEO of Huntsman Holdings Corporation.

Environmental Affairs: As Governor of Utah, oversaw environmental policy, including signing the Western Climate Initiative, by which Utah joined with other U.S. state governments to pursue targets for reduced greenhouse gas emissions. Significant experience overseeing environmental practices and related matters as Vice Chairman of Huntsman Corporation and Chairman and CEO of Huntsman Holdings Corporation.

Finance: Former executive officer of Huntsman Corporation and Huntsman Holdings Corporation.

Global Business / International Affairs: Chairman of the Atlantic Council. Trustee of the National Committee on US-China Relations and of the Carnegie Endowment for International Peace. Former U.S. Ambassador to China. Former two-term Governor of Utah. Former U.S. Ambassador to Singapore, Deputy U.S. Trade Representative, and Deputy Assistant Secretary of Commerce for Asia. Founding director of the Pacific Council on International Policy. Current and former director of companies with international operations.

Government / Regulatory / Public Policy: Former two-term Governor of Utah. Former Deputy U.S. Trade Representative and Deputy Assistant Secretary of Commerce for Asia. Co-Chair of No-Labels, a nonprofit organization that works across political party lines to reduce gridlock and create policy solutions.


Chevron Corporation—2017 Proxy Statement		9


ELECTION OF DIRECTORS

LOGO

Charles W. Moorman IV

President and Chief Executive Officer, Amtrak

Age: 65

Director Since: May 2012

Independent: Yes

Chevron Committees:

• Audit (Chair) – audit committee financial expert

Current Public Company Directorships:

• Duke Energy Corporation

Prior Public Company Directorships (within last five years):

• Norfolk Southern Corporation

Other Directorships and Memberships:

• Georgia Tech Foundation Inc.

• National Academy of Engineering

• Nature Conservancy of Virginia (Chair)

Mr. Moorman has been the President and Chief Executive Officer of Amtrak, a passenger rail service provider since September 2016. He was previously Chairman from 2006, and Chief Executive Officer from 2004, of Norfolk Southern Corporation, a freight and transportation company until his retirement in 2015. He served as President of Norfolk Southern from 2004 until 2013. Prior to that, Mr. Moorman was Senior Vice President of Corporate Planning and Services from 2003 until 2004 and Senior Vice President of Corporate Services in 2003. Mr. Moorman joined Norfolk Southern in 1975.

Skills and Qualifications

Business Leadership / Operations: Served more than a decade as CEO of Norfolk Southern Corporation. Forty-year career with Norfolk Southern included numerous senior management and executive positions, with emphasis on operations.

Environmental Affairs: At Norfolk Southern Corporation, gained experience with environmental issues related to transportation of coal, automotive and industrial products. Serves as Virginia chapter chair of The Nature Conservancy, a global conservation organization. Served as a trustee of the Chesapeake Bay Foundation, whose mission is to protect the environmental integrity of the bay.

Finance: Former CEO of Fortune 500 company. More than three decades of financial responsibility and experience at Norfolk Southern Corporation.

Government / Regulatory / Public Policy: More than three decades of experience in the highly regulated freight and transportation industry.

Science / Technology / Engineering: Forty-year career with Norfolk Southern included numerous senior management and executive positions requiring expertise in engineering and technology. Norfolk Southern builds and maintains track and bridges, operates trains and equipment, and designs and manages complex information technology systems.

LOGO

Dambisa F. Moyo

Chief Executive Officer, Mildstorm LLC

Age: 48

Director Since: October 2016

Independent: Yes

Chevron Committees:

• Audit – audit committee financial expert

Current Public Company Directorships:

• Barclays plc

• Barrick Gold Corporation

• Seagate Technology

Prior Public Company Directorships

(within last five years):

• Lundin Petroleum AB

• SABMiller plc

Other Directorships and Memberships:

• None

Dr. Moyo has been Chief Executive Officer of Mildstorm since she founded it in 2015, where she is a global economist and commentator analyzing the macroeconomy and international affairs. From 2001 to 2008, she worked at Goldman Sachs in various roles, including as an economist. Prior to that she worked at the World Bank in Washington, D.C. from 1993 until 1995.

Skills and Qualifications

Environmental Affairs: As director at Barrick Gold Corporation, served on the committee that considered and provided oversight on environmental matters.

Finance: Ten years of experience at Goldman Sachs and the World Bank. PhD in economics from the University of Oxford and MBA in finance from The American University. Audit Committee member at Barrick Gold Corporation and Seagate Technology.

Global Business / International Affairs: Traveled to more than 70 countries over the last decade, with a particular focus on the interplay of international business and the global economy, while highlighting key opportunities for investment. Director of companies with international operations.

Government / Regulatory / Public Policy: Ten years of experience in the highly regulated banking and financial services industry. MPA in Public Administration from John F. Kennedy School of Government, Harvard.

Research / Academia: Author of three New York Times bestsellers. Writing regularly appears in economic and finance-related publications.


10		Chevron Corporation—2017 Proxy Statement


								ELECTION OF DIRECTORS

Ronald D. Sugar

Retired Chairman and Chief Executive Officer, Northrop Grumman Corporation

Lead Director since: 2015

Age: 68

Director Since: April 2005

Independent: Yes

Chevron Committees:

• Board Nominating and Governance (Chair)

• Management Compensation

Current Public Company Directorships:

• Air Lease Corporation

• Amgen Inc.

• Apple Inc.

Prior Public Company Directorships

(within last five years):

• None

Other Directorships and Memberships:

• Alliance College-Ready Public Schools

• BeyondTrust

• 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

Dr. Sugar is a senior advisor to various businesses and organizations, including Ares Management LLC, a leading private investment firm; Bain & Company, a global consulting firm; Temasek Americas Advisory Panel, a private investment company based in Singapore; 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. He was previously Chairman and Chief Executive Officer from 2003 until his retirement in 2010 and President and Chief Operating Officer from 2001 until 2003 of Northrop Grumman Corporation, a global security and defense company. He joined Northrop Grumman in 2001, having previously served as President and Chief Operating Officer of Litton Industries, Inc., a developer of military products, and earlier as an executive of TRW Inc., a developer of missile systems and spacecraft.

Skills and Qualifications

Business Leadership / Operations: Served seven years as CEO of Northrop Grumman Corporation. Senior management and executive positions, including service as COO, at Northrop Grumman, Litton Industries, Inc., and TRW Inc.

Environmental Affairs: As Chairman, CEO, and President of Northrop Grumman Corporation, oversaw environmental assessments and remediations at shipyards and aircraft and electronics factories.

Finance: Former CFO of Fortune 500 company. More than three decades of financial responsibility and experience at Northrop Grumman, Litton Industries, Inc., and TRW Inc. Current audit committee chair at Apple Inc. and former audit committee chair at Chevron.

Global Business / International Affairs: Former CEO of Fortune 500 company with extensive international operations. Current and former director of companies with international operations.

Government / Regulatory / Public Policy: At Northrop Grumman Corporation, a key government contractor, oversaw development of weapons and other technologies. Appointed by President of the United States to the National Security Telecommunications Advisory Committee. Former director of World Affairs Council of Los Angeles.

Science / Technology / Engineering: Ph.D. in electrical engineering from the University of California at Los Angeles. Served in a variety of senior management and executive positions at Northrop Grumman, Litton Industries, Inc., and TRW Inc., requiring expertise in engineering and technology. Director at Amgen Inc., a biotechnology company; Apple Inc., a manufacturer and seller of, among other things, personal computers, mobile communication, and media devices; and BeyondTrust, a global cybersecurity company.


Chevron Corporation—2017 Proxy Statement		11


ELECTION OF DIRECTORS

LOGO

Inge G. Thulin

Chairman, President, and Chief Executive Officer, 3M Company

Age: 63

Director Since: January 2015

Independent: Yes

Chevron Committees:

• Board Nominating and Governance

• Management Compensation

Current Public Company Directorships:

• 3M Company

Prior Public Company Directorships

(within last five years):

• The Toro Company

Other Directorships and Memberships:

• The Business Council

• Business Roundtable

• Council on Foreign Relations

• World Economic Forum, International Business Council

Mr. Thulin has been Chairman, President, and Chief Executive Officer of 3M Company, a diversified technology company, since 2012. He was Executive Vice President and Chief Operating Officer of 3M from 2011 until 2012, with responsibility for all of 3M’s business segments and international operations. From 2004 until 2011, Mr. Thulin was Executive Vice President of International Operations. He joined 3M Sweden in 1979, working in sales and marketing, and has held numerous leadership positions in Asia Pacific, Europe, and the Middle East, and across multiple businesses.

Skills and Qualifications

Business Leadership / Operations: Five years of service as CEO of 3M Company. More than three decades of experience in senior management and executive positions at 3M Company, including responsibility for international operations.

Environmental Affairs: As Chairman, President, and CEO of 3M Company, oversees all aspects of 3M’s environmental and sustainability policies and strategies, which include initiatives to address challenges like energy availability and security, raw material scarcity, human health, and environmental safety, education and development.

Finance: CEO of Fortune 500 company. More than three decades of financial responsibility and experience at 3M Company.

Global Business / International Affairs: Chairman, CEO, and President of Fortune 500 company with extensive international operations. At 3M Company, served as EVP for International Operations and Managing Director, 3M Russia. Member of the International Business Council of the World Economic Forum. Serves on the President’s Advisory Committee for Trade Policy and Negotiations.

Science / Technology / Engineering: Has served in a variety of senior management and executive positions at 3M Company, requiring expertise in engineering and technology. 3M is a diversified technology company.


12		Chevron Corporation—2017 Proxy Statement


								ELECTION OF DIRECTORS

LOGO

John S. Watson

Chairman and Chief Executive Officer, Chevron Corporation

Age: 60

Director Since: April 2009

Independent: No

Chevron Committees:

• None

Current Public Company Directorships:

• None

Prior Public Company Directorships

(within last five years):

• None

Other Directorships and Memberships:

• American Petroleum Institute

• American Society of Corporate Executives

• The Business Council

• Business Roundtable

• National Petroleum Council

• University of California Davis Chancellor’s Board of Advisors

Mr. Watson has been Chairman and Chief Executive Officer of Chevron since 2010. He was Vice Chairman in 2009 and Executive Vice President of Strategy and Development from 2008 until 2009. From 2005 until 2008, Mr. Watson 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 and mergers and acquisitions. Mr. Watson joined Chevron in 1980.

Skills and Qualifications

Business Leadership / Operations: Seven years of service as CEO of Chevron. As Vice Chairman, responsible for business development, mergers and acquisitions, strategic planning, corporate compliance, policy, government and public affairs. More than three decades of experience in senior management and executive positions at Chevron.

Environmental Affairs: As CEO of Chevron, oversees all aspects of Chevron’s environmental policies and strategies. Oversaw development of Chevron’s four environmental principles (include the environment in decision making; reduce environmental footprint; operate responsibly; steward sites), Operational Excellence Management System (a standardized approach for achieving outstanding environmental performance), and Environmental, Social and Health Impact Assessment process for capital projects within Chevron’s operational control.

Finance: CEO of Fortune 500 company. Three decades of financial responsibility and experience at Chevron. Served as CFO. Led Chevron’s integration effort following its successful acquisition of Texaco Inc.

Global Business / International Affairs: CEO of Fortune 500 company with extensive international operations. Served as EVP of Strategy and Development, and President of Chevron International Exploration and Production Company.

Government / Regulatory / Public Policy: More than three decades of experience in highly regulated industry. As CEO of Chevron, oversees all aspects of Chevron’s government, regulatory, and public policy affairs.


Chevron Corporation—2017 Proxy Statement		13


ELECTION OF DIRECTORS

LOGO

Michael K. Wirth

Vice Chairman and Executive Vice President, Chevron Corporation

Age: 56

Director Since: February 2017

Independent: No

Chevron Committees:

• None

Current Public Company Directorships:

• None

Prior Public Company Directorships

(within last five years):

• None

Other Directorships and Memberships:

• Dean’s Engineering Advisory Committee, University of Colorado

Mr. Wirth has been Vice Chairman of Chevron since February 2017 and Executive Vice President of Midstream and Development since 2016, with responsibility for supply and trading, and Chevron’s midstream operating units engaged in transportation and power, as well as corporate strategy; business development; and policy, government and public affairs. He served as Executive Vice President of Downstream and Chemicals from 2006 to 2015. From 2003 until 2006, Mr. Wirth was President of Global Supply and Trading, responsible for leading Chevron’s worldwide supply and trading operations as well as its aviation, marine and asphalt businesses. Mr. Wirth joined Chevron in 1982.

Skills and Qualifications

Business Leadership / Operations: Ten years of service as Executive Vice President of Chevron. More than three decades of experience in senior management and executive positions at Chevron.

Environmental Affairs: As Executive Vice President of Chevron, oversees all aspects of Midstream’s environmental policies and strategies. Oversaw environmental policies and strategies of Chevron’s Downstream and Chemicals.

Global Business / International Affairs: Executive Vice President of Fortune 500 company with extensive international operations. Former President of Marketing for Chevron’s Asia/Middle East/Africa marketing business based in Singapore, and former director of Caltex Australia Ltd. and GS Caltex in South Korea.

Government / Regulatory / Public Policy: More than three decades of experience in highly regulated industry. As Executive Vice President of Chevron, responsible for Chevron’s government, regulatory, and public policy affairs.

Science / Technology / Engineering: Bachelor’s degree in Chemical Engineering from the University of Colorado. More than three decades of experience at Chevron having joined as a design engineer and advancing through a number of engineering, construction, and operation roles.

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 recommends that you vote FOR the 12 Director nominees named in this Proxy Statement.


14		Chevron Corporation—2017 Proxy Statement

Director Compensation

Overview

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

The Board Nominating and Governance Committee evaluates and recommends to the non-employee Directors of the Board the compensation for non-employee Directors, and the non-employee Directors of the Board set the compensation. Our executive officers have no role in determining the amount or form of non-employee Director compensation. The Committee may retain the services of an independent compensation consultant to assist the Committee with its work.

In 2016, the Committee retained the services of an independent compensation consultant, Pearl Meyer & Partners (Pearl Meyer), to assist the Committee with its biennial review of Chevron’s non-employee Director compensation program. Pearl Meyer and its lead consultant report directly to the Committee under the terms of the engagement, but may work cooperatively with management to develop analyses and proposals when requested to do so by the Committee.

Pearl Meyer conducted a comprehensive review of the non-employee Director compensation program, including a review of Director compensation arrangements at Chevron’s domestic oil

peers (i.e., Anadarko Petroleum, ConocoPhillips, Devon Energy, ExxonMobil, Hess, Marathon Oil, Marathon Petroleum, Occidental Petroleum, Phillips 66, Tesoro, and Valero Energy) and Non-Oil Industry Peer Group Companies, which are identified in “Use of Peer Groups” in the “Compensation Discussion and Analysis” section of this Proxy Statement. Pearl Meyer does not provide any services to the Company.

Following its biennial review of the non-employee Director compensation program and based upon the market data provided from the Pearl Meyer review, the non-employee Directors of the Board approved, effective as of the 2017 Annual Meeting, a $30,000 annual cash retainer for the independent Lead Director (increased from $25,000), $25,000 annual cash retainer for the Chair of the Audit Committee and $20,000 annual cash retainer for the Chair of the Management Compensation Committee, which Committee Chair retainers were each increased from $15,000. The Chairs of the Board Nominating and Governance and Public Policy Committees will continue to receive, without change, a $15,000 annual cash retainer. For 2016, in addition to the $25,000 Lead Director and $15,000 committee Chair fees, the non-employee Directors continued to receive a 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. This total annual compensation amount remains unchanged for 2017.

Below, we describe the non-employee Directors’ 2016 annual compensation in more detail.

Cash or Stock Options (at the Director’s Election)

•

$150,000 annual cash retainer, paid in monthly installments beginning with the date the Director is elected to the Board.

•

For 2016, $15,000 additional annual cash retainer for each Board committee chair and $25,000 additional annual cash retainer for the independent Lead Director, paid in monthly installments beginning with the date the Director becomes a committee chair and/or independent Lead Director.

•

Directors can elect to receive nonstatutory/nonqualified stock options instead of any portion of their cash compensation. Stock options are granted under the Chevron Corporation Non-Employee Directors’ Equity Compensation and Deferral Plan (NED Plan).

•

Directors can also elect to defer receipt of any portion of their cash compensation under the NED Plan.

Restricted Stock Units

•

$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 at which the Director is elected.

•

If a Director is elected to the Board between annual meetings, a prorated grant can be made.

•

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 following the date of the grant.

•

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

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

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


Chevron Corporation—2017 Proxy Statement		15


DIRECTOR COMPENSATION

Compensation During the Fiscal Year Ended December 31, 2016

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 chairs, who received an additional $15,000 cash retainer, and the independent Lead Director, who received an additional $25,000 cash retainer). Specifically, three Directors—Messrs. Denham, Hernandez and Thulin—elected to receive stock options for all or a portion of their annual cash retainer.

The following table sets forth the compensation of our non-employee Directors for the fiscal year ended December 31, 2016. Drs. Austin and Moyo joined the Board on December 1, 2016 and October 11, 2016, respectively. Messrs. Cummings and Stumpf resigned from the Board on April 27, 2016 and October 17, 2016, respectively. Mr. Ware retired from the Board on May 25, 2016. The compensation for these Directors was prorated accordingly.


Name	Fees Earned or Paid in Cash			Stock Awards⁽¹⁾			Option Awards⁽²⁾			All Other Compensation⁽³⁾		Total
Wanda M. Austin	$	–	⁽⁴⁾	$	109,770		$	–		$	71	$	109,841
Alexander B. Cummings Jr.	$	61,096	⁽⁵⁾	$	–	⁽⁵⁾	$	–		$	242	$	61,338
Linnet F. Deily	$	165,000	⁽⁶⁾	$	225,000		$	–		$	10,856	$	400,856
Robert E. Denham	$	72,177	⁽⁷⁾	$	225,000		$	150,000		$	10,856	$	458,033
Alice P. Gast	$	150,000	⁽⁷⁾	$	225,000		$	–		$	21,969	$	396,969
Enrique Hernandez, Jr.	$	–		$	225,000		$	165,000	⁽⁶⁾	$	10,856	$	400,856
Jon M. Huntsman Jr.	$	150,000		$	225,000		$	–		$	856	$	375,856
Charles W. Moorman IV	$	165,000	⁽⁶⁾⁽⁷⁾	$	225,000		$	–		$	10,856	$	400,856
Dambisa F. Moyo	$	20,991	⁽⁸⁾	$	140,700		$	–		$	198	$	161,889
John G. Stumpf	$	131,873	⁽⁹⁾	$	225,000		$	–		$	671	$	357,544
Ronald D. Sugar	$	190,000	^(6)(7)(10)	$	225,000		$	–		$	10,856	$	425,856
Inge G. Thulin	$	–		$	225,000		$	150,000		$	856	$	375,856
Carl Ware	$	72,177	⁽¹¹⁾	$	–	⁽¹¹⁾	$	–		$	22,754	$	94,931

(1)

Amounts reflect the grant date fair value for restricted stock units granted in 2016 under the NED Plan. 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), for financial reporting purposes. The grant date fair value of these RSUs was $100.19 per unit, the closing price of Chevron common stock on May 24, 2016, except for the prorated awards for Drs. Austin and Moyo. For Dr. Austin, the grant date fair value was $113.29 per unit, the closing price of Chevron common stock on December 1, 2016, the day she joined the Board and received a prorated grant of 968 RSUs for the compensation period covering December 1, 2016, through May 30, 2017. For Dr. Moyo, the grant date fair value was $103.04 per unit, the closing price of Chevron common stock on October 11, 2016, the day she joined the Board and received a prorated grant of 1,365 RSUs for the compensation period covering October 11, 2016, through May 30, 2017. For Mr. Stumpf, the RSUs granted in 2016 were forfeited upon his resignation. 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, 2016, the following Directors had the following number of shares subject to outstanding stock awards or deferrals:


Name	Restricted Stock^(a)		Stock Units^(a)		Restricted Stock Units^(a)		Stock Units From Director’s Deferral of Cash Retainer^(b)		Total
Wanda M. Austin		–		–		968		–		968
Alexander B. Cummings Jr.		–		–		–		–		–
Linnet F. Deily		–		3,513		2,290		–		5,803
Robert E. Denham		3,601		11,171		25,550		21,334		61,656
Alice P. Gast		–		–		6,658		–		6,658
Enrique Hernandez, Jr.		–		–		14,942		1,151		16,093
Jon M. Huntsman Jr.		–		–		2,290		–		2,290
Charles W. Moorman IV		–		–		10,885		6,641		17,526
Dambisa F. Moyo		–		–		1,378		–		1,378
John G. Stumpf		–		–		–		–		–
Ronald D. Sugar		2,364		7,235		25,550		14,893		50,042
Inge G. Thulin		–		–		5,392		545		5,937
Carl Ware		–		19,858		23,260		470		43,588

(a)

Non-employee Directors received awards of restricted stock and stock units from 2001 through 2006 and awards of RSUs beginning in 2007. Awards of restricted stock are fully vested and are settled in shares of Chevron common stock upon retirement. Awards of stock units are settled in shares of Chevron common stock in one to ten annual installments following the Director’s retirement, resignation, or death. The terms of awards of RSUs are described above.

(b)

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.


16		Chevron Corporation—2017 Proxy Statement


								DIRECTOR COMPENSATION

(2)

For Directors electing stock options in lieu of all or a portion of the annual cash retainer, the stock options are granted on the date of the Annual Meeting that the Director is elected. The stock 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 a stock option on the date of grant. Elections to receive stock options in lieu of any portion of cash compensation must be made by December 31 in the year preceding the year in which the stock options are granted. The stock 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 25, 2016. The grant date fair value was determined in accordance with ASC Topic 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 25, 2016 have an exercise price of $101.77 and a grant date fair value of $11.51. The assumptions used in the Black-Scholes model to calculate this grant date fair value were: an expected life of 6.3 years, a volatility rate of 22.2 percent, a risk-free interest rate of 1.60 percent and a dividend yield of 4.73 percent. For purposes of this table only, estimates of forfeitures related to service-based vesting conditions have been disregarded.

Messrs. Denham, Hernandez and Thulin all elected to receive all or a portion of their 2016 annual cash compensation in the form of stock options. The number of stock options granted in 2016 was 13,032 to Messrs. Denham and Thulin and 14,335 to Mr. Hernandez. One-half of the stock options vests 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 following the date of grant. Stock options expire after 10 years.

At December 31, 2016, Mr. Denham had 13,032, Mr. Hernandez had 65,389, and Mr. Thulin had 24,650 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.

(3)	All Other Compensation for 2016 includes the following items:


	Insurance^(a)		Perquisites^(b)		Charitable^(c)
Wanda M. Austin	$	71	$	—	$	—
Alexander B. Cummings Jr.	$	242	$	—	$	—
Linnet F. Deily	$	856	$	—	$	10,000
Robert E. Denham	$	856	$	—	$	10,000
Alice P. Gast	$	856	$	11,113	$	10,000
Enrique Hernandez, Jr.	$	856	$	—	$	10,000
Jon M. Huntsman Jr.	$	856	$	—	$	—
Charles W. Moorman IV	$	856	$	—	$	10,000
Dambisa F. Moyo	$	198	$	—	$	—
John G. Stumpf	$	671	$	—	$	—
Ronald D. Sugar	$	856	$	—	$	10,000
Inge G. Thulin	$	856	$	—	$	—
Carl Ware	$	306	$	22,448	$	—

(a)

Amounts reflect the annualized premium for accidental death and dismemberment insurance coverage paid by Chevron.

(b)

Amounts reflect perquisites and personal benefits received by a Director in 2016 to the extent that the total value of such perquisites and personal benefits was equal to or exceeded $10,000. For Dr. Gast, this amount reflects the aggregate incremental actual cost incurred in connection with her spouse’s attendance at the Board of Directors’ September 2016 trip to Australia, including commercial air travel in lieu of corporate air travel, lodging, meals, and tours. Generally, every two years, the Board travels to an international Chevron location of operation to gain additional insight into Chevron’s operations in such location and to meet with local and expatriate Chevron management and personnel, as well as local, state and national officials. Board member spouses are invited to attend the international Board trip to learn about Chevron’s operations, foster social interaction among the Directors and executives, attend receptions with local and expatriate Chevron employees and their families and with local government officials, tour Chevron facilities, and participate in community engagement and other goodwill activities on behalf of Chevron. For Mr. Ware, this amount includes the aggregate cost of a milestone service award, retirement gifts, and attendance at a company sponsored event.

(c)

Amounts reflect payments made to charitable organizations under Chevron Humankind, our charitable matching gift and grant for volunteer time program, to match donations made by the Directors in 2016. This program is available to any employee, retiree or Director of Chevron. See “Expenses and Charitable Matching Gift Program.”

(4)	Dr. Austin joined the Board on December 1, 2016, and her first cash retainer payment was made in January 2017.

(5)	Mr. Cummings resigned from the Board on April 27, 2016 and did not receive a stock award in 2016. Unvested RSUs were forfeited upon his resignation.

(6)	Amount includes the additional retainer for serving as a Board committee chair during 2016.

(7)	The Director has elected to defer some or all of the annual cash retainer under the NED Plan in 2016. None of the earnings under the NED Plan are above market or preferential.

(8)	Dr. Moyo joined the Board on October 11, 2016.

(9)	Mr. Stumpf resigned from the Board on October 17, 2016.

(10)	Amount includes the additional retainer for serving as Lead Director during 2016.

(11)	Mr. Ware retired from the Board on May 25, 2016 and did not receive a stock award in 2016.


Chevron Corporation—2017 Proxy Statement		17

Corporate Governance

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 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 guidance on Chevron’s business and affairs. It monitors 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 also 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 operational indicators.

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 at the discretion of the Board. Chevron’s independent Directors select the Chairman of the Board annually. Thus, the Board has great flexibility to choose its optimal leadership structure depending upon Chevron’s particular needs and circumstances and to organize its functions and conduct its business in the most effective manner.

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

Significantly, the Board does not believe that combining the roles creates ambiguity about reporting relationships. Given the role of the independent Lead Director discussed below and the fact that the independent Directors, pursuant to their powers under the By-Laws, have affirmatively selected Mr. Watson for the positions of Chairman and CEO, annually set his compensation, and regularly evaluate his performance, the Board believes it is clear that Mr. Watson reports to and is accountable to the independent Directors. Moreover, the Board does not believe that having the CEO also serve as Chairman inhibits the flow of information and

interactions between the Board, management, and other Company personnel. To the contrary, the Board has unfettered access to management and other Company personnel, and the Board believes that having Mr. Watson in the roles of both Chairman and CEO facilitates the flow of information and communications between the Board and management, which enhances the Board’s ability to obtain information and to monitor management.

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

Further, when the Board selects the CEO to also serve as Chairman, the independent Directors annually select an independent Lead Director, currently Dr. Sugar. As described in the “Board Leadership and Lead Director” section of Chevron’s Corporate Governance Guidelines, the Lead Director’s responsibilities are to:

•

chair all meetings of the Board in the Chairman’s absence, including executive sessions;

•

serve as liaison between the Chairman and the independent Directors;

•

consult with the Chairman on and approve meeting agendas and schedules and information sent to the Board;

•

consult with the Chairman on other matters pertinent to Chevron and the Board;

•

call meetings of the independent Directors; and

•

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,


18		Chevron Corporation—2017 Proxy Statement


								CORPORATE GOVERNANCE

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 of this Proxy Statement.

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

Director Independence


Your Board has determined that each non-employee Director and non-employee 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 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:

•

a director of another entity if business transactions between Chevron and that entity do not exceed $5 million or 5 percent of the receiving entity’s consolidated gross revenues, whichever is greater;

•

a director of another entity if Chevron’s discretionary charitable contributions to that entity do not exceed $1 million or 2 percent of that entity’s gross revenues, whichever is greater, and if the charitable contributions are consistent with Chevron’s philanthropic practices; and

•

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 2 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, Drs. Moyo and Sugar, and Messrs. Denham, Hernandez, Huntsman, Moorman, and Thulin are directors of for-profit

entities with which Chevron conducts business in the ordinary course. Other than Dr. Moyo, they and Drs. Austin and Gast are also directors or trustees of, or similar advisors to, not-for-profit entities to which Chevron makes contributions. The Board has determined that all of these transactions and contributions were below the thresholds set forth in the first and second categorical standards described above (except as noted below) and are, therefore, categorically immaterial to the particular Director’s independence. The Board reviewed the following relationships and transactions that existed or occurred in 2016 that are not covered by the categorical standards described above:

•

For Dr. Gast, the Board considered that in 2016, Chevron purchased services from Imperial College London amounting to less than 0.013 percent of Imperial College’s most recently reported annual gross revenues. Dr. Gast is the President of Imperial College. The Board concluded that these transactions would not impair Dr. Gast’s independence.

•

For Mr. Hernandez, the Board considered that in 2016, Chevron purchased services from Inter-Con Security Systems of Ghana Ltd., 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 and President and a significant stockholder of Inter-Con, a privately held business. The Board concluded that these transactions would not impair Mr. Hernandez’s independence.

•

For Mr. Thulin, the Board considered that in 2016, Chevron purchased products and services from 3M Company, in the ordinary course of business, amounting to less than 0.002 percent of 3M Company’s most recently reported annual consolidated gross revenues, and 3M Company purchased products and services from Chevron, in the ordinary course of business, amounting to less than 0.001 percent of Chevron’s most recently reported annual consolidated gross revenues. Mr. Thulin is the Chairman, President, and Chief Executive Officer of 3M Company. The Board concluded that these transactions would not impair Mr. Thulin’s independence.


Chevron Corporation—2017 Proxy Statement		19


CORPORATE GOVERNANCE

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. 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 financially literate and an “audit committee financial expert,” as such terms are defined under the Exchange Act and related rules and the NYSE Corporate Governance Standards.

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

Each Committee is governed by a written charter that can be viewed on Chevron’s website at www.chevron.com under the tabs “Investors” and “Corporate Governance.”


20		Chevron Corporation—2017 Proxy Statement


								CORPORATE GOVERNANCE


Committees and Membership		Committee Functions
Audit Charles W. Moorman IV, Chair Robert E. Denham Jon M. Huntsman Jr. Dambisa F. Moyo		• Selects the independent registered public accounting firm for endorsement by the Board and ratification by the stockholders • Reviews reports of the independent registered public accounting firm and internal auditors • Reviews and approves the scope and cost of all services (including nonaudit services) provided by the independent registered public accounting firm • Monitors the effectiveness of the audit process and financial reporting • Reviews the adequacy of financial and operating controls • Monitors implementation and effectiveness of Chevron’s compliance policies and procedures • Assists the Board in fulfilling its oversight of financial risk as part of Chevron’s broad enterprise risk management program • Evaluates the effectiveness of the Audit Committee
Board Nominating and Governance Ronald D. Sugar, Chair Wanda M. Austin Linnet F. Deily Alice P. Gast Inge G. Thulin		• Evaluates the effectiveness of the Board and its committees and recommends changes to improve Board, Board committee, and individual Director effectiveness • Assesses the size and composition of the Board • Recommends prospective Director nominees • Reviews and approves non-employee Director compensation • Reviews and recommends changes as appropriate in Chevron’s Corporate Governance Guidelines, Restated Certificate of Incorporation, By-Laws, and other Board-adopted governance provisions • Reviews stockholder proposals and recommends Board responses to proposals • Assists the Board in fulfilling its oversight of enterprise risk management, particularly risks in connection with Chevron’s corporate governance structures and processes • Evaluates the effectiveness of the Board Nominating and Governance Committee
Management Compensation Enrique Hernandez, Jr., Chair Robert E. Denham Ronald D. Sugar Inge G. Thulin		• Conducts an annual review of the CEO’s performance • Reviews and recommends to the independent Directors the salary and other compensation for the CEO • Reviews and approves salaries and other compensation for executive officers other than the CEO • Administers Chevron’s executive incentive and equity-based compensation plans • Reviews Chevron’s strategies and supporting processes for management succession planning, leadership development, executive retention, and diversity • Assists the Board in fulfilling its oversight of enterprise risk management, particularly risks in connection with Chevron’s compensation programs • Evaluates the effectiveness of the Management Compensation Committee
Public Policy Linnet F. Deily, Chair Wanda M. Austin Alice P. Gast Enrique Hernandez, Jr.		• Identifies, monitors, and evaluates domestic and international social, political, human rights, and environmental trends and issues that affect Chevron’s activities and performance • Recommends to the Board policies, programs, and strategies concerning such issues • Recommends to the Board policies, programs, and practices concerning support of charitable, political, and educational organizations • Reviews annually the policies, procedures, and expenditures for Chevron’s political activities, including political contributions and direct and indirect lobbying • Reviews stockholder proposals and recommends Board responses to proposals • 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 • Evaluates the effectiveness of the Public Policy Committee


Chevron Corporation—2017 Proxy Statement		21


CORPORATE GOVERNANCE

Board and Committee Meetings and Attendance

In 2016, your Board held six Board meetings, with each meeting including an executive session of independent Directors presided over by our independent Lead Director, and 24 Board committee meetings, which included nine Audit Committee, six Board Nominating and Governance Committee, five Management Compensation Committee, and four Public Policy Committee meetings. Chevron’s incumbent directors, on average, attended 94 percent of the Board and Committee meetings during 2016. No director attended less than 75 percent of such meetings.

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 attended the 2016 Annual Meeting, other than Drs. Austin and Moyo, who joined the Board following the 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, regulatory, political, and financial risks. The Board exercises its role of risk oversight in a variety of ways, including the following:


Board of Directors	•	Monitors overall corporate performance, the integrity of financial and other controls, and the effectiveness of the Company’s legal compliance and enterprise risk management programs, risk governance practices, and risk mitigation efforts, particularly with regard to those risks specified by the Company as “Risk Factors” in its Annual Report on Form 10-K
	•	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 and considers risk matters in the context of the Company’s strategic, business, and operational planning and decision making
	•	Receives reports from management on and routinely considers critical risk topics, including: operational, financial, geopolitical/legislative, strategic, geological, security, commodity trading, skilled personnel, capital project execution, civil unrest, legal, and technology/cybersecurity risk
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 certain members 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 registered public accounting firm 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
Board Nominating and Governance Committee	•	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
Management Compensation Committee	•	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, human rights, 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 nongovernmental organization relations, and Chevron’s reputation
	•	Reports its discussions to the full Board for consideration and action when appropriate


22		Chevron Corporation—2017 Proxy Statement


								CORPORATE GOVERNANCE

Board and Committee Evaluations

Each year, your Board and its committees perform a rigorous self-evaluation. As required by Chevron’s Corporate Governance Guidelines, the Board Nominating and Governance Committee oversees this process. The performance evaluations solicit anonymous input from Directors regarding the performance and effectiveness of the Board, the Board committees, and individual Directors and provide an opportunity for Directors to identify improvements. In addition, the independent Lead Director has individual conversations with each member of the Board,

providing further opportunity for dialogue and improvement. The Board Nominating and Governance Committee reviews the results and feedback from the evaluation process and makes recommendations for improvements as appropriate. The independent Lead Director leads a discussion of the evaluation results during an executive session of the Board and communicates relevant feedback to the CEO. Your Board has successfully used this process to evaluate Board and committee effectiveness and identify opportunities to strengthen the Board.

Succession Planning and Leadership Development

Succession planning and leadership development are top priorities for your Board and management. Annually, the non-employee 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 non-employee 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. They address, among other topics:

•

the role of the Board

•

Board membership criteria

•

Director independence

•

Board size

•

Director terms of office

•

the election of Directors

•

other Board memberships

•

Director retirement policy

•

number and composition of Board committees

•

Board leadership and Lead Director

•

business conduct and ethics code

•

confidentiality

•

succession planning

•

Board compensation

•

Board access to management

•

Director orientation and education

•

evaluation of Board performance

•

Chief Executive Officer performance review

•

Director and officer stock ownership guidelines

•

Board agenda and meetings

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.


Chevron Corporation—2017 Proxy Statement		23


CORPORATE GOVERNANCE

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, human rights, and other current and emerging issues. In addition, we have an extensive investor relations outreach effort, in which members of senior management routinely meet with major investors to review Company strategies, financial and operating performance, capital allocation priorities, and near-term outlook. We use all of these sessions to ensure that the Board and management 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.

Since Chevron’s last Annual Meeting, 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 and the Chair of our Management Compensation Committee, conducted more than 45 in-depth discussions with stockholders representing more than 36 percent of Chevron’s outstanding common stock. Of those meetings, our Lead Director and Chairman of our Management Compensation Committee met with stockholders comprising 29 percent of our outstanding stock. In addition, our engagement team met with many of the stockholders who submitted proposals for inclusion in our Proxy Statement to discuss their concerns and areas of agreement and disagreement. Chevron gained valuable feedback during these engagements, and this feedback was shared with the Board and its relevant committees. For more information about these engagements, see the “Board Leadership and Independent Lead Director” and “Compensation Discussion and Analysis” sections of the Proxy Statement.

Communicating With the Board

The Board Nominating and Governance Committee reviews interested-party communications, including stockholder inquiries directed to non-employee Directors. The Corporate Secretary and Chief Governance Officer compiles the communications, summarizes lengthy or repetitive communications, and regularly compiles the communications received, the responses sent, and further action, if any. All communications are available to the Directors.


Interested parties wishing to communicate their concerns or questions about Chevron to the independent Lead Director or any other non-employee Directors may do so by mail addressed to the Lead Director or Non-employee 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.

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:

•

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;

•

compensation paid to a Director for service as a Director if that compensation is otherwise reportable in our Proxy Statement;

•

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;

•

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);


24		Chevron Corporation—2017 Proxy Statement


								CORPORATE GOVERNANCE

•

transactions involving services as a common or contract carrier or public utility in which rates or charges are fixed by law;

•

transactions involving certain banking-related services under terms comparable with similarly situated transactions;

•

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 5 percent (whichever is greater) of the receiving entity’s consolidated gross revenues for that year;

•

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 2 percent (whichever is greater) of that entity’s gross revenues for that year; and

•

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 2 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 Director will abstain from decisions regarding transactions involving that Director or his or her family members.

Related Person Transactions

There were no related person transactions for the period covered by this Proxy Statement.

Board Nominating and Governance Committee Report

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

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

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

•

annual election of all Directors;

•

supermajority of independent Directors;

•

majority vote standard for the election of Directors in uncontested elections, coupled with a Director resignation policy;

•

annual election of the Chairman of the Board by independent Directors;

•

annual election of an independent Lead Director by independent Directors when the Chief Executive Officer is elected as Chairman;

•

annual performance assessment of the Board, Board committees, and individual Directors;

•

Director retirement policy;

•

annual succession planning sessions;

•

confidential stockholder voting policy;

•

minimum stockholding guidelines for Directors and executive officers;

•

review and approval or ratification of “related person transactions” as defined by SEC rules;

•

policy to obtain stockholder approval of any stockholder rights plan;

•

proxy access;

•

right of stockholders to call for a special meeting; and

•

no supermajority voting provisions in the 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 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 28, 2017, by members of the Board Nominating and Governance Committee of your Board:

Ronald D. Sugar, Chair

Wanda M. Austin

Linnet F. Deily

Alice P. Gast

Inge G. Thulin


Chevron Corporation—2017 Proxy Statement		25


CORPORATE GOVERNANCE

Management Compensation Committee Report

The Management Compensation Committee (the Committee) of Chevron has reviewed and discussed with management the Compensation Discussion and Analysis beginning on page 29 of this Proxy Statement. 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 28, 2017, by members of the Management Compensation Committee of your Board:

Enrique Hernandez, Jr., Chair

Robert E. Denham

Ronald D. Sugar

Inge G. Thulin

Audit Committee Report

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

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

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

Required Disclosures and Discussions. In discharging its oversight role, the Committee reviewed and discussed with management and PwC the audited financial statements for the year ended December 31, 2016, as contained in the 2016 Annual Report on Form 10-K, and management’s and PwC’s evaluation of Chevron’s internal control over financial reporting. The Committee routinely met privately with PwC and discussed

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

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

Committee Recommendation. In reliance on the reviews and discussions outlined above, the Committee recommended to your Board that the audited financial statements be included in Chevron’s Annual Report on Form 10-K for the year ended December 31, 2016, for filing with the U.S. Securities and Exchange Commission.

Respectfully submitted on February 22, 2017, by the members of the Audit Committee of your Board:

Charles W. Moorman IV, Chair

Robert E. Denham

Jon M. Huntsman Jr.

Dambisa F. Moyo


26		Chevron Corporation—2017 Proxy Statement

Board Proposal to Ratify PricewaterhouseCoopers LLP as the
Independent Registered Public Accounting Firm for 2017

(Item 2 on the Proxy Card)

Auditor Review and Engagement

The Audit Committee (the Committee) is responsible for the appointment, compensation, retention, and oversight of the independent registered public accounting firm that audits Chevron’s financial statements and internal control over financial reporting. The Committee has selected PricewaterhouseCoopers LLP (PwC) as Chevron’s independent registered public accounting firm for 2017, and your Board has endorsed this appointment.

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

• the quality and efficiency of PwC’s historical and recent audit plans and performance on the Chevron audit;

• PwC’s capability and expertise in handling the breadth and complexity of Chevron’s worldwide operations;

• PwC’s expertise in and knowledge of the global oil and gas industry and its network of partners and managers in Chevron’s key areas of operation;

• the desired balance of PwC’s experience and fresh perspective occasioned by mandatory audit partner rotation and PwC’s periodic rotation of other audit management;

• external data on audit quality and performance, including recent Public Company Accounting Oversight Board (PCAOB) reports on PwC and its peer firms;

• the appropriateness of PwC’s fees for audit and nonaudit services;

• the quality and candor of PwC’s communications with the Committee and management;

• PwC’s independence and objectivity; and

• PwC’s tenure as our independent registered public accounting firm, including the benefits of having a long-tenured auditor, and controls and processes that help safeguard PwC’s independence.

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

•

Enhanced audit quality. Through many years of experience with Chevron, PwC has gained significant institutional knowledge of

and a deep expertise regarding Chevron’s global business and operations, accounting policies and practices, and internal control over financial reporting.

•

Effective audit plans and efficient fee structures. PwC’s extensive knowledge of Chevron’s business and control framework enables them to design effective audit plans that cover key risk areas while capturing cost efficiencies in audit scope and internal control testing.

•

Maintaining continuity avoids disruption. Bringing on a new auditor, without reasonable cause, would require extensive education and a significant period of time for the new auditor to reach a comparable level of knowledge and familiarity with Chevron’s business and control framework. Many of the efficiencies gained over the course of Chevron’s relationship with PwC could be lost.

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

•

Thorough Committee oversight. The Committee’s oversight includes frequent private meetings with PwC, a comprehensive annual evaluation by the Committee in determining whether to engage PwC, and a Committee-directed process for selecting the lead engagement partner.

•

Robust preapproval policies and procedures and limits on nonaudit services. The Committee must preapprove all audit and nonaudit services, including the type of services to be provided and the estimated fees related to those services. Categories of permissible nonaudit services are limited to those not affecting PwC’s independence or otherwise not barred by regulation.

•

Strong internal PwC independence procedures. PwC conducts periodic internal quality reviews of its audit work and rotates lead partners every five years.

•

Strong regulatory framework. PwC is an independent registered public accounting firm and is subject to PCAOB inspections, “Big 4” peer reviews, and PCAOB and SEC oversight.

Based on this evaluation, the Committee believes that PwC is independent and that it is in the best interests of Chevron and its stockholders to retain PwC as Chevron’s independent registered public accounting firm for 2017.


Chevron Corporation—2017 Proxy Statement		27


Board Proposal to Ratify PricewaterhouseCoopers LLP as the Independent Registered Public Accounting Firm for 2017

PwC’s Fees and Services

PwC audited Chevron’s consolidated financial statements and effectiveness of internal control over financial reporting during the years ended December 31, 2016 and 2015. During these periods, PwC provided both audit and nonaudit services. Aggregate fees for professional services rendered to Chevron by PwC for the years ended December 31, 2016 and 2015, were as follows (millions of dollars):


Services Provided	2016		2015
Audit	$	25.8	$	27.9
Audit Related	$	2.1	$	1.4
Tax	$	1.0	$	1.0
All Other	$	0.5	$	0.6
TOTAL	$	29.4	$	30.9

The Audit fees for the years ended December 31, 2016 and 2015, 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, 2016 and 2015, were for assurance and related services for employee benefit plan audits, accounting consultations and attest services

that are not required by statute or regulation, and consultations concerning financial accounting and reporting standards.

Tax fees for the years ended December 31, 2016 and 2015, 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, 2016 and 2015, included services rendered for software licenses, subscriptions, benchmark studies, and surveys.

Audit Committee Preapproval Policies and Procedures

All 2016 audit and nonaudit services provided by PwC were preapproved by the Committee. The nonaudit services that were preapproved by the Committee were also reviewed to ensure compatibility with maintaining PwC’s independence and compliance with SEC and other rules and regulations.

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

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

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

PwC’s Attendance at the Annual Meeting

Representatives of PwC will be present at the Annual Meeting. They will have an opportunity to make a statement if they desire and will be available to respond to appropriate questions.

Vote Required

This proposal is ratified 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 recommends that you vote FOR the ratification of the appointment of PricewaterhouseCoopers LLP as Chevron’s independent registered public accounting firm.


28		Chevron Corporation—2017 Proxy Statement

Executive Compensation

Compensation Discussion and Analysis

Executive Summary

Business Description and Context

Chevron is an integrated company involved in virtually every facet of the energy industry. We explore for, produce and transport crude oil and natural gas; refine, market and distribute transportation fuels and lubricants; manufacture and sell petrochemicals and additives; generate power; and develop and deploy technologies that enhance business value in every aspect of the Company’s operations. Our business is capital-intensive and has long investment horizons—most of our resource and

manufacturing investments span decades. Most of our product sales are commodities, whose prices can be volatile, leading to fluctuating earnings and cash flow through the price cycles. Oil prices have declined 50 percent or more five times in the last 35 years and were particularly volatile in 2016, reaching decade lows as shown in the chart below. This resulted in sharp reductions in industry earnings and cash flow in 2016.

Note:

Brent futures prices are as of February 28, 2017.

Chevron responded to lower prices with decisive actions. To balance cash inflow with outflow by 2017 and improve overall Company performance, we implemented plans to:

•

Finish key projects under construction to enhance revenue and reduce capital outlays;

•

Increase investments in shorter cycle time opportunities, including shale and tight rock reservoirs;

•

Reduce capital and operating expenses;

•

Selectively sell assets; and

•

Prudently use available balance sheet debt capacity in the transition to balanced cash flows in 2017.

In 2016, Chevron increased its dividend payments for the 29th consecutive year, resulting in a dividend growth profile over the last 10 years that has far outpaced the S&P 500 and peer group¹ average rates of growth. At year-end 2016, the Company’s 10-year cumulative dividend growth was 113 percent, 36 percent and 97 percent higher than the S&P 500 and peer group averages, respectively.

¹Peer group: BP, ExxonMobil, Royal Dutch Shell, and Total


Chevron Corporation—2017 Proxy Statement		29


EXECUTIVE COMPENSATION

In 2016, Chevron’s stock price rose nearly 31 percent and we posted the best total shareholder return (TSR) among large-cap integrated energy companies (BP, ExxonMobil, Royal Dutch Shell, and Total), well above the S&P 500 Total Return Index. We also posted the best TSR performance among peers over the five- and

10-year periods through the end of 2016. Relative to the S&P 500 Total Return Index, the Company’s TSR underperformed in the five-year period, reflecting the significant drop in commodity prices, and outperformed in the 10-year period.

Pay Philosophy and Plan Design

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

•

Pay competitively across all salary grades and all geographies; our target compensation is determined by benchmarking comparable positions at other companies of equivalent size, scale, complexity, capital intensity, and geographic footprint. We reference both industry peers¹ and nonindustry peers² in this analysis;

•

Incentivize balanced short- and long-term decision making in support of a long-cycle-time business with a career-oriented employment model;

•

Pay for absolute and competitive performance, in alignment with stockholder returns; and

•

Apply compensation program rules in a manner that is internally consistent.

¹	ExxonMobil, Royal Dutch Shell, BP, ConocoPhillips, Occidental, Phillips 66, Valero, Marathon Oil, Anadarko, Hess, Tesoro, Devon, and Marathon Petroleum

²	GE, Johnson & Johnson, AT&T, Pfizer, Verizon, Intel, Merck, PepsiCo, IBM, Boeing, 3M, Honeywell, Lockheed Martin, Dow Chemical, Ford, Duke Energy, Caterpillar, Northrop Grumman, AEP, HP Inc., International Paper Company, and Alcoa Inc.


30		Chevron Corporation—2017 Proxy Statement


								EXECUTIVE COMPENSATION

The material components of our executive compensation program are summarized in the following chart.

LOGO

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

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

(approximately 90 percent for the CEO and 84 percent for the other NEOs), and the large majority of this at-risk compensation is tied to Chevron’s stock price. What NEOs eventually earn from their at-risk compensation will align strongly with what stockholders earn over that same period from their investment in Chevron.

LOGO


Chevron Corporation—2017 Proxy Statement		31


EXECUTIVE COMPENSATION

Response to 2016 Say-on-Pay Advisory Vote and Compensation Program Changes for 2017

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

Our executive compensation programs have historically received strong stockholder support (averaging 95 percent from 2011 to 2015). Following the challenging conditions of the recent industry downturn, a number of stockholders expressed concern about the alignment of Chevron’s compensation structure with stockholder interests. This concern was reflected in the 54 percent stockholder support in the 2016 Say-on-Pay vote.

In response, our Board conducted significant outreach to stockholders. The Company’s Lead Director, Dr. Ronald D. Sugar, and the Chairman of the MCC, Mr. Enrique Hernandez, Jr., met with stockholders representing approximately 29 percent of Chevron’s outstanding stock to convey our compensation philosophy and listen to comments and suggestions for improvements in our compensation practices. Senior management of the Company conducted additional stockholder engagements. In total, we conducted 25 stockholder engagement meetings representing 36 percent of our outstanding shares. Input from these stockholder engagement sessions elicited the following suggestions:

•

Compose the majority of long-term equity awards of performance shares, rather than options;

•

Place greater weighting on return on capital employed (ROCE) performance, in addition to TSR;

•

Provide more transparency in the determination of annual incentive plan awards;

•

Formally cap annual incentive plan awards;

•

Require more meaningful and sustained stock ownership by the CEO; and

•

Limit the use of special equity grants.

In response to the feedback, we made a number of changes. Effective with 2017 compensation decisions, the Company:

•

Modified the composition of LTIP awards to 50 percent performance shares, 25 percent stock options, and 25 percent restricted stock units, a change from prior equity grants that awarded 60 percent stock options and 40 percent performance shares; these changes are to dampen volatility associated with potential option values and ensure longer equity holding periods;

•

Added the S&P 500 Total Return Index as a fifth competitor in the relative TSR competitor group to ensure a broader, market-based hurdle to performance shares payout;

•

Increased the weighting and visibility of ROCE and project execution in the annual Chevron Incentive Plan (CIP) measure, to further strengthen accountability for project performance and capital management;

•

Increased the specificity and detail provided in the discussion of annual incentive measures and results that support the CIP awards;

•

Capped CIP bonus awards at 200 percent of target;

•

Increased the CEO equity holding requirement from five times to six times base salary; and

•

Committed to limited use of supplemental restricted stock unit grants to executive officers, except for extraordinary circumstances.

Chevron and the MCC believe these changes are responsive to the views expressed by our stockholders and are consistent with the Company’s long-standing overall compensation objectives. We will continue our dialogue with stockholders on compensation issues as part of our ongoing engagement.

2016 Performance

The year 2016 was one of very low oil and natural gas prices. Brent oil prices were the lowest in more than a decade, averaging just $44 per barrel. This compares with $52 per barrel in 2015 and $99 per barrel in 2014. Natural gas prices also declined in most markets. As a result, we recorded a loss of $0.5 billion, or $0.27 per share.

Chevron took significant actions in 2016 to transition the Company to being cash balanced in 2017 and to improve earnings going forward:

•

We made substantial progress completing and ramping up production of major oil and gas development capital projects, notably the Gorgon Liquefied natural gas (LNG) project, where at year-end, two LNG trains were online and the third was nearing completion.

•

We reduced capital spending to $22 billion, nearly $12 billion below 2015 spending levels and more than $4 billion under our Business Plan (refer to Business Plan description on page 37). The announced capital program for 2017 reflects an additional reduction of more than $2 billion, to an annual investment level of less than $20 billion.

•

We reduced operating expenses and selling, general and administrative expenses to $25 billion, more than $2 billion below 2015 levels and under the Business Plan. Additional reductions are planned in 2017.

•

Asset sale proceeds totaled slightly under $3 billion and are on track to meet our stated target of $5 billion to $10 billion over the two-year period 2016–2017.


32		Chevron Corporation—2017 Proxy Statement


								EXECUTIVE COMPENSATION

Notes:

(1)	Total capital and exploratory expenditures includes equity in affiliates.

(2)	Operating expenses and selling, general and administrative expenses as reported on income statement (excludes affiliate spend).

These and other actions enabled us to preserve our balance sheet, ending the year with a prudent 24 percent debt ratio. At the same time, the Company increased the annual dividend by $0.01 per share to $4.29, representing the 29th consecutive annual payment increase.

The actions taken contributed to our stock price rising nearly 31 percent during 2016. Chevron ranked No. 1 in TSR relative to our peer group for any annualized holding period from year-end 2016 going back 25 years. Over both near-term and long-term investment horizons, Chevron stockholders have benefited from their investment in our Company.

CEO Pay Outcome

Chevron CEO John S. Watson’s overall target compensation, which only represents a pay opportunity, differs from his realized pay outcomes. The MCC establishes Mr. Watson’s target compensation, including long-term equity awards, based on several factors, including an external comparison of compensation opportunities awarded to CEOs at comparably sized companies and a consistent application of Chevron’s internal compensation policies and structure. His realized pay outcome is based largely on subsequent Company performance, especially stock price performance.

Management is accountable for Chevron’s financial results, which were weak for 2016 in an absolute sense largely because oil prices averaged only $44 per barrel, a trough in prices not seen in more than a decade. At the same time, Chevron met numerous operational objectives during the year and took decisive actions to improve results. Financial results in the second half of 2016 were significantly stronger than in the first half and we are well positioned to achieve our goal of becoming cash balanced in 2017. Performance on elements of the business within our control—such as project execution, capital spending, and expense management—were well received by our investors and led to stronger performance on TSR versus peers.

The MCC approved a 2016 CIP corporate performance rating of 0.75, against a target of 1.0 and a maximum of 2.0, based on the Company’s overall performance across four broad categories with assigned weightings. Refer to pages 38-39 for a detailed discussion of 2016 performance and CIP outcome.

The three-year performance period for performance shares granted in January 2014 ended on December 31, 2016. For this three-year period, Chevron ranked No. 1 in TSR among the five companies in the Long-Term Incentive Plan (LTIP) Performance Share Peer Group. This resulted in a payout modifier of 200 percent. Refer to page 41 for details of the 2014–2016 performance share payout.

Against this backdrop, pay actions for our CEO in 2016 and early 2017 included:

•

No salary increase in either 2016 or 2017.

•

A 2016 CIP award of $2,096,400, 25 percent under his target award of $2,795,300 and a 14 percent reduction from his 2015 CIP award of $2,450,000. His 2017 CIP award target was set at 150 percent of base salary, consistent with 2016.

•

Holding the target value of his LTIP award flat for 2015, 2016 and 2017. The 2016 LTIP award granted at the beginning of the year reflected the prior equity mix of 60 percent options and 40 percent performance shares. The 2017 award reflected the updated mix of 50 percent performance shares, 25 percent stock options, and 25 percent restricted stock units.

Despite outstanding TSR performance and the significant achievements in transitioning the Company to improve cash flow and earnings in 2017, the MCC felt these conservative actions were consistent with a low 2016 commodity price environment and poor earnings. As a result of these compensation actions, Mr. Watson’s reported pay was reduced by 2.4% before adjustment for pension.


Chevron Corporation—2017 Proxy Statement		33


EXECUTIVE COMPENSATION

Compensation Discussion and Analysis in Detail

2016 Named Executive Officers

Chevron’s Named Executive Officers, or NEOs

John S. Watson, Chairman and Chief Executive Officer

Patricia E. Yarrington, Vice President and Chief Financial Officer

Michael K. Wirth, Vice Chairman and Executive Vice President, Midstream and Development

James W. Johnson, Executive Vice President, Upstream

Joseph C. Geagea, Executive Vice President, Technology, Projects and Services

Our Pay Philosophy

Our compensation programs have been designed with several important values and objectives in mind:

•

Pay competitively across all salary grades and all geographies; our target compensation is determined by benchmarking comparable positions at other companies of equivalent size, scale, complexity, capital intensity, and geographic footprint. We reference both oil industry peers and non-oil industry peers in this analysis;

•

Incentivize balanced short- and long-term decision-making in support of a long-cycle-time business with a career-oriented employment model;

•

Pay for absolute and competitive performance, in alignment with stockholder returns; and

•

Apply compensation program rules in a manner that is internally consistent.

The MCC believes that a majority of an executive’s pay should be composed of awards that are directly tied to Company and individual performance and considers all elements of pay together when setting awards.

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 compensation ranges among both industry and nonindustry peers to ensure that we continue to offer a reasonable and competitive executive pay program each year. Our core peer group is reviewed regularly by the MCC and has had very few changes over the years. Throughout this Compensation Discussion and Analysis, we refer to three distinct peer groups, as described below. We source peer company data from compensation consultant surveys and public disclosures.


Peer Group		Description
Oil Industry Peer Group (13 companies)		Companies with substantial U.S. or global operations that closely approximate the size, scope, and complexity of our business or segments of our business. This is the primary peer group used to understand how each NEO’s total compensation compares with the total compensation for reasonably similar industry-specific positions at these companies.
Non-Oil Industry Peer Group (22 companies)		Companies that are of significant financial and operational size and that have, among other features, 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. This is the secondary peer group used to periodically compare our overall compensation practices (and those of the oil and energy industry, generally) against a broader mix of non-oil companies that are similar to Chevron in size, complexity and scope of operations.
LTIP Performance Share Peer Group (4 companies and 1 stock index)		Companies used to compare our TSR for the purpose of determining performance share payout: • For LTIP grants issued prior to 2017: BP, ExxonMobil, Royal Dutch Shell, and Total • Effective with 2017 LTIP grant: BP, ExxonMobil, Royal Dutch Shell, Total, and S&P 500 Total Return Index The inclusion of S&P 500 Total Return Index broadens the performance benchmark beyond industry peers and requires Chevron to outperform both industry peers and a market-based index in order to receive maximum payout. The MCC believes this further aligns executive pay with long-term stockholder interests.


34		Chevron Corporation—2017 Proxy Statement


								EXECUTIVE COMPENSATION

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

The Non-Oil Industry Peer Group includes capital-intensive, global, large-scale, and high-complexity company comparators. The median market cap (as of 12/31/2016) of the Non-Oil Industry Peer Group was $92 billion (vs. $222 billion for Chevron) and the median sales for 2016 were $48 billion (vs. $103 billion for Chevron).

Components of Executive Compensation

The material components of our executive compensation program and their purposes and key characteristics are as follows:

•

Base salary

•

Annual incentive plan (Chevron Incentive Plan)

•

Long-Term Incentive Plan, including performance shares, stock options and restricted stock units

•

Benefits, including retirement plans, savings plans and other perquisites

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 Base Salaries Are Determined

Base salaries are determined through market surveys of positions of comparable level, scope, complexity, and responsibility. There is no pre-determined target or range within the Oil Industry Peer Group or the Non-Oil Industry Peer Group as an objective for Mr. Watson’s base salary. Instead, the MCC takes into account the data provided by the MCC’s independent consultant, the relative size, scope, and complexity of our business, Mr. Watson’s performance and the aggregate amount of Mr. Watson’s compensation package.

For the other NEOs, each executive officer is assigned a base salary grade. The MCC annually reviews the base salary grade

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

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


Chevron Corporation—2017 Proxy Statement		35


EXECUTIVE COMPENSATION

Adjustments in 2016 Base Salaries

After taking into account the market conditions and survey data, the MCC made no changes to any of the NEO salary grade ranges for 2016 compensation. As to individual salary changes, the MCC

held the CEO’s base salary flat and adjusted our other NEOs’ base salaries in 2016 reflective of their 2015 performance, experience and competitive benchmarks.


NEO	Position	2015 Base salary		2016 Base salary		Adjustment for 2016
John S. Watson	Chairman and Chief Executive Officer	$	1,863,500	$	1,863,500		0.0%
Patricia E. Yarrington	Vice President and Chief Financial Officer	$	1,059,500	$	1,078,900		1.8%
Michael K. Wirth	Vice Chairman and Executive Vice President, Midstream and Development	$	1,085,000	$	1,098,400		1.2%
James W. Johnson	Executive Vice President, Upstream	$	960,000	$	1,034,000		7.7%
Joseph C. Geagea	Executive Vice President, Technology, Projects and Services	$	865,000	$	923,400		6.8%

Adjustments in 2017 Base Salaries

After taking into account the market condition and survey data, the MCC made no changes to any of the NEO salary grade ranges for 2017 compensation. As to individual salary changes, the MCC held CEO base salary flat and adjusted our other NEOs’ base salaries in 2017 (ranging from 3.8 percent to 13.8 percent) reflective of their 2016 performance, experience, and competitive

benchmarks. Mike Wirth received a 13.8 percent increase in base salary due to his increased responsibility as a result of his promotion in 2017.

See page 47 in the Compensation Tables for base salary changes over time.

Annual Incentive Plan (Chevron Incentive Plan)

The Chevron Incentive Plan is designed to recognize annual performance achievements based on the MCC’s assessment of Company performance across four broad categories: financial, capital management, operating performance, and health, environment and safety. Each category contains multiple performance measures, reflecting outcomes on both short-term and long-term measures on absolute, relative, and time-series performance. The CIP also recognizes individual leadership

through measurable individual contributions. The award is delivered as an annual cash bonus based on a percentage of base salary and makes up approximately 11 percent of the CEO’s annual compensation and on average 14 percent of all other NEOs’ annual compensation. The CIP award determination process is consistent across more than 50,000 CIP-eligible Chevron employees, with the award target varying by pay grade.

The CIP award for the CEO and the other NEOs is calculated as follows:

Base Salary

Award Target

Corporate Performance Rating

Individual Performance Factor

Before the beginning of each performance year, the MCC establishes a CIP Award Target for the CEO and the other NEOs, which is based on a percentage of the NEO’s base salary.

The MCC sets award target with reference to 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 systematically reviews and assesses Company performance metrics, and sets the Corporate Performance Rating based on a range of measures in four categories.

Performance is viewed across multiple parameters (absolute results; results vs. plan; results vs. Oil Industry Peer Group and/or general industry; performance trends over time). The performance metrics are also assessed taking into account the elements that may be market driven or otherwise beyond the control of management. See pages 38-39 for a discussion of 2016 performance.

The minimum Corporate Performance Rating is zero (i.e., no award), and the maximum is two (i.e., 200 percent of target).

The MCC also takes into account individual performance. This is largely a personal leadership dimension, recognizing the individual’s effort, initiative and impact.

The CEO recommends to the MCC an Individual Performance Factor (IPF) for each NEO other than himself.

The MCC determines the final IPF for the CEO and the other NEOs. The independent directors of the Board approve the IPF for the CEO and ratify the IPF for the other NEOs.


36		Chevron Corporation—2017 Proxy Statement


								EXECUTIVE COMPENSATION

Chevron goes through a rigorous goal-setting and performance review process to determine the CIP Corporate Performance Rating. Annually, Business Plan targets are determined after thorough reviews and approvals by the Strategy and Planning Committee (S&PC), a subcommittee of the Executive Committee, and the Board. The S&PC is responsible for setting targets that challenge the Company to optimize strategies and portfolio composition and to improve operational performance to create

stockholder value. Robust annual performance measures, weightings, and goals are established alongside the Business Plan subject to review and approval by the MCC. Mid-year and end-of-year reviews by the Board and the MCC systematically assess progress against these measures. The MCC has the discretion to adjust the CIP award downward if it determines that business or economic considerations warrant such an adjustment.

Changes to the CIP

In response to extensive stockholder engagements, the MCC approved the following changes to our CIP program beginning with the 2016 performance year:

•

CIP awards are capped at 200 percent of target.

•

The corporate performance components and weightings have been revised to place more emphasis on project performance and capital management.

•

We established “capital management” as its own category with 30 percent weighting.

•

We expanded the ROCE metrics to include annual and rolling five-year performance against peers.

•

We identified specific, targeted project development objectives to measure progress on key capital investment programs.

Our CIP disclosure on pages 38 to 39 provides additional details to explain the performance results and the corporate performance rating.

2016 CIP Corporate Performance Rating

In January 2017, the MCC evaluated Chevron’s 2016 performance across the four categories—financial, capital management, operating performance, and health, environment and safety—and assigned an overall CIP corporate performance rating of 0.75.

In order to determine the 2016 Corporate Performance Rating, a raw score range was assigned based on the Company’s actual performance with respect to the particular performance measures comprising each category as measured against the Company’s Business Plan objectives. This raw score can span from zero (reflecting very poor performance) to two (reflecting outstanding performance) for each category. Category weights are then applied to the raw score ranges to determine an overall range. When determining the Corporate Performance Rating, the MCC may apply discretion when assessing the Company’s absolute performance against the Business Plan objectives and the Company’s performance relative to competitors.


Chevron Corporation—2017 Proxy Statement		37


EXECUTIVE COMPENSATION

Specific inputs to the MCC’s evaluation are summarized below.

Category

Weight

Performance measures

Year-end results vs. Plan
highlights

“Plan” refers to Board-approved Business Plan

Results⁽¹⁾

Raw Score
(0.00 - 2.00)

Weighted
Score

Financials

40%

Earnings per share (EPS)

($0.27) EPS; low prices impacted earnings. Met Plan⁽²⁾. Impairments offset cost reductions.

0.60 - 0.70

0.24 - 0.28

Net cash flow⁽³⁾

$(11.8) B; low prices impacted cash flow. Exceeded Plan⁽²⁾. Implemented actions to achieve cash flow breakeven in 2017⁽⁴⁾.

Divestiture proceeds

$2.8 B; Below 2016 Plan; Progressed transactions—expect to realize upper end of $5-10 B range for 2016-2017.

Capital

management

30%

Return on capital employed⁽⁵⁾

(ROCE)

(0.1)%; Met Plan⁽²⁾; performance vs. peers impacted by upstream / liquids weighting.

0.60 - 0.70

0.18 - 0.21

Capital and exploratory expenditures (C&E), including equity in affiliates.

$22.4 B; less than $26.6 B Plan.

Major milestones

Gorgon

Trains 1 & 2 started-up; Train 3 on schedule. Gaps in Train 1 ramp-up.

LOGO

Wheatstone

On schedule for mid-2017 start up.

Angola LNG

Repairs and improvements completed and online. Sustained production achieved, with delay.

Other Projects

Chuandongbei, Alder, Bangka start-ups achieved. Mafumeira Sul delayed until 1Q 2017.

Operating

performance

15%

Net production, including impact of divestments

Slightly under 0-4% targeted growth range. Partitioned Zone restart delayed. Gorgon Train 1 ramp-up slow. Permian growth exceeded Plan.

0.90 - 1.00

0.14 - 0.15

Operating expenses + selling, general and administrative expenses

$25.0 B; under Plan. Down $2.5 B versus 2015.

Refining utilization, including joint ventures and affiliates

Exceeded Plan by 1.4%.

Health,

environment

and safety

15%

Personal safety

World-class 0.016 Days Away From Work Rate; some gaps in severity.

0.80 - 0.90

0.12 - 0.14

Process safety and environmental

Continued reduction in Loss of Containment events. Record low spills.

Corporate Performance Rating Range

0.68 - 0.78

Final Corporate Performance Rating

0.75

Notes:

(1)	Results refer to met / exceeded Business Plan (green), met Business Plan with some gaps (yellow) or did not meet Business Plan (red).

(2)	Normalized to exclude impact of factors that are beyond the control of management, including price, exchange rates, and other market effects; basis for comparison vs. the Business Plan as it more accurately measures operational performance.

(3)	Cash flow after dividends = change in cash and marketable securities and change in debt.

(4)	Cash flow breakeven in 2017 assumes a $50 per barrel Brent price.

(5)	See “Definitions of Selected Financial Terms” in Exhibit 99.1 of the Chevron Annual Report on Form 10-K for the year ended December 31, 2016.

Financials—40 Percent

•

Earnings—2016 earnings and earnings per share met Business Plan targets, excluding the impact of low commodity prices and other market-driven elements beyond management control. Strong operational asset performance and significant

efforts to lower costs mostly offset impairment charges, which were in part triggered by the low price environment. On an absolute basis, Chevron reported a loss of $0.5 billion and a loss of $0.27 per share, reflecting low commodity prices.


38		Chevron Corporation—2017 Proxy Statement


								EXECUTIVE COMPENSATION

•

Net cash flow—We remain on target to be cash flow breakeven at $50 Brent in 2017. Absent the impact of commodity prices, 2016 net cash flow was better than the Business Plan because of actions taken to lower operating expenses, restructure staff, and curtail capital investments. On an absolute basis, net cash flow was $(11.8) billion, reflecting low commodity prices.

•

Divestiture proceeds—$2.8 billion in sales proceeds were realized in 2016. Although less than the original Business Plan, several transactions progressed in 2016 that are expected to close within the first half of 2017, and we expect to attain the upper end of the targeted $5 billion to $10 billion in asset sale proceeds over the 2016–2017 timeframe.

•

Based on the preceding, the raw score range assigned to this category for the 2016 performance year was 0.60–0.70 out of a maximum of 2.0.

Capital Management—30 Percent

•

Return on capital employed (ROCE)—2016 annual ROCE performance beat the Business Plan objective, excluding commodity price impacts. Reported ROCE for 2016 was (0.1) percent, reflecting very weak commodity prices. The Company’s relative five-year ROCE performance vs. peers deteriorated slightly, reflecting Chevron’s Upstream–weighted and, within Upstream, oil-weighted (vs. natural gas–weighted) portfolio.

•

Capital and exploratory expenditures (C&E)—C&E totaled $22.4 billion in 2016, $4.2 billion or 16 percent lower than the Business Plan. Deliberate pacing, prioritizing and high-grading of investments in response to the weak commodity price environment occurred.

•

Major milestones:

•

Gorgon—First cargo for Gorgon Train 1 loaded in first quarter per the Business Plan. Some production interruptions occurred in subsequent months. Gorgon Train 2 loaded its first cargo in fourth quarter per the Business Plan and has delivered a quick ramp-up and steady, high plant utilization since then. Gorgon Train 3 was on track for first production in mid 2017, per Business Plan, and started up ahead of schedule in first quarter 2017.

•

Wheatstone—On track to deliver first production in mid-2017 per the Business Plan. Some slippage in platform commissioning occurred. Total project cost increased to $34 billion.

•

Angola LNG—Substantial repair program completed, though some delays were encountered. Stable plant performance achieved in the fourth quarter.

•

Other projects—Chuandongbei (China), Alder (U.K. North Sea) and Bangka (Indonesia) projects were started on time. Mafumeira Sul (Angola) startup was delayed by one quarter, into the first quarter of 2017.

•

Based on the preceding, the raw score range assigned to this category for the 2016 performance year was 0.60–0.70 out of a maximum of 2.0.

Operating Performance—15 Percent

•

Net production of 2.594 million barrels of oil-equivalent per day was slightly below the external guidance provided at the beginning of the year, for which management is held accountable. A large shortfall occurred in the Partitioned Zone, where production was not re-started midyear, as originally anticipated. There were some delays in the ramp-ups and timing of certain major capital projects, but these impacts were largely offset by higher production from our U.S. shale and tight assets, where production exceeded the Business Plan.

•

Operating expenses and selling, general and administrative expenses totaled $25.0 billion, well under the Business Plan and $2.5 billion lower than 2015. Over the past two years, our costs have declined 16 percent.

•

Refining unit utilization rates exceeded the Business Plan by 1.4 percent.

•

Based on the preceding, the raw score range assigned to this category for the 2016 performance year was 0.90–1.00 out of a maximum of 2.0.

Health, Environment and Safety—15 Percent

•

Maintained industry-leading personal safety rates, better than the Business Plan and achieving record lows on most measures, including the Days Away From Work Rate and Total Recordable Incidents Rate. The opportunity for improvements is still evident in lowering the incidence of high-consequence, low-probability events.

•

Achieved record low spills and had continued improvement in lowering both the number and the impact of loss of containment incidents.

•

Based on the preceding, the raw score range assigned to this category for the 2016 performance year was 0.80–0.90 out of a maximum of 2.0.

2016 NEO CIP Awards

The MCC and the independent Directors of the Board assessed corporate and individual performance in making CIP awards based on 2016 performance. The MCC would normally consider individual adjustments for the CEO and the other NEOs based on review of the individual’s impact on the financial and operational success during the year. However, given the significant transformation that took place in all of Chevron’s business segments in 2016 and many Company achievements in a

challenging year, the MCC chose to recognize the collective effort and treat the executive leadership as one team. Therefore, the CEO and the other NEOs all received a 1.0 Individual Performance Factor (IPF) and their bonuses were equally impacted by the overall 2016 company performance. This does not represent a change in overall compensation philosophy. The MCC desires and will continue to evaluate individual performance and make appropriate differentiation in compensation decisions in future years.


NEO	Base Salary		x	CIP Award Target Percentage		x	Corporate Performance Rating		=	Total Award
John S. Watson	$	1,863,500			150%			0.75		$	2,096,400
Patricia E. Yarrington	$	1,078,900			110%			0.75		$	890,100
Michael K. Wirth	$	1,098,400			110%			0.75		$	906,200
James W. Johnson	$	1,034,000			120%			0.75		$	930,600
Joseph C. Geagea	$	923,400			110%			0.75		$	761,800


Chevron Corporation—2017 Proxy Statement		39


EXECUTIVE COMPENSATION

Long-Term Incentive Plan

The key objective of our Long-Term Incentive Plan is to encourage performance that drives stockholder value over the long-term. The target value of an NEO’s LTIP award at grant time is determined by the MCC, with input from its independent compensation consultant and referencing external benchmark comparisons. The objective is to ensure that Chevron is competitive against its industry peer companies on the overall target compensation (cash plus equity), after allowing for appropriate differentiation based on size, scale, scope, and job responsibilities.

Each year in January, the MCC determines a target value of LTIP awards for the CEO and the other NEOs based on industry competitive data. These awards provide incentive compensation opportunities tied to Chevron’s future long-term performance.

In setting the LTIP target value for the CEO, the MCC relies on input from its independent compensation consultant and benchmark research, focusing on the form and amount of similar compensation opportunities in the Oil Industry Peer Group. The MCC also considers the CEO’s demonstrated performance and the Company’s size, scope, and complexity relative to the comparison companies. Similarly, for the other NEOs, the MCC sets an annual LTIP target value for each salary grade as a multiple of salary, referencing median incentive opportunities for executives in similar positions at companies in the Oil Industry Peer Group.

The LTIP award represents a pay opportunity. The ultimate realized value of equity-based awards is determined by absolute and relative stock price performance over a three- to 10-year period.

Changes to LTIP Components

Based on recent input from stockholders, Chevron adopted three changes for the 2017 LTIP program, described below and further in the table:

•

Restricted stock units (RSUs) are now a routine component of equity awards, and the proportion of performance shares, stock options and restricted stock units has changed;

•

The S&P 500 Total Return Index will be added as a fifth competitor in determining performance share awards. The inclusion of the S&P 500 Total Return Index broadens the peer

group and imposes a stringent market-based performance hurdle for payout. It reflects the fact that stockholders have a wide range of investment choices, inside and outside the energy industry; and

•

Performance shares and RSUs now accrue dividend equivalents that are reinvested as additional shares and/or units and are paid at the end of the vesting period. The inclusion of dividends aligns better with Chevron’s stockholder value strategy and is a common practice among oil industry and non-oil industry peers.


Component	2016 Proportion	2017 Proportion	How It Works
Performance Shares	40%	50%	• Payout is dependent on Chevron’s TSR over a three-year period, compared with our LTIP Performance Share Peer Group. Peer group includes S&P 500 Total Return Index for 2017 and forward.
				Relative TSR ranking	1		2		3		4		5		6
				2016 grant payout as a % of target	200	%	150	%	100	%	50	%	0	%	N/	A
				2017 grant payout as a % of target	200	%	160	%	120	%	80	%	40	%	0	%
			• Performance shares accrue dividend equivalents that are reinvested as additional shares, to be paid at the end of the performance period, and subject to the performance modifier. • MCC can exercise negative discretion to reduce payout. • Actual number of shares granted is determined by dividing the proportionate value of the NEO’s LTIP award by Chevron’s closing common stock price on the grant date. • Payment is made in cash. Refer to page 52 footnote 2 for calculation details.
Stock Options	60%	25%	• Strike price is equal to the closing common stock price on the grant date. • Options 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. • Gain realized depends on the common stock price at the exercise date compared with the strike price. • Actual number of stock options granted is determined by dividing the proportionate value of the NEO’s LTIP award by the Black-Scholes option value on the grant date in accordance with Grant Date Fair Value calculation as defined by the Securities and Exchange Commission (SEC).
Restricted Stock Units	0%	25%	• Actual number of RSUs granted is determined by dividing the proportionate value of the NEO’s LTIP award by Chevron’s closing common stock price on the grant date. • Five-year cliff vesting lengthens equity holding time. • RSUs accrue dividend equivalents that are reinvested as additional units, to be paid at the time of vesting. • Payment is made in cash based on closing common stock price on the vesting date.


40		Chevron Corporation—2017 Proxy Statement


								EXECUTIVE COMPENSATION

Supplemental RSUs: Prior to 2017, RSUs were not a component of the annual equity award mix, but from time to time the Board approved selective RSU grants to recognize exceptional individual performance that had a direct impact on Chevron’s results and to serve as an additional retention tool for such individuals. Historically, these RSUs vested at the end of three

years. Beginning in 2017, we committed to limited use of supplemental RSU grants for executive officers, except in extraordinary circumstances. Supplemental RSUs, if awarded, will accrue dividend equivalents that are reinvested as additional units and paid at the end of three years.

LTIP Metrics

The MCC continues to believe that TSR is the best overall pay-for-performance measure to align our CEO and other NEOs’ performance with stockholder interests. TSR is the standard metric for stockholders to use in measuring the Company’s 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. The MCC believes that Company performance on other measures—operational and financial, over the short-term and long-term—is ultimately reflected in TSR results.

The majority of the LTIP award derives value directly from TSR (relative and absolute). For the CEO and the other NEOs to earn the originally targeted compensation, Chevron must show sustained competitive performance and Chevron’s stockholders must be rewarded with competitive TSR results.

A Closer Look at the LTIP Mix: Why a Mix of Options, Performance Shares and RSUs?

The MCC believes the new LTIP mix (50 percent performance shares, 25 percent stock options and 25 percent restricted stock units) offers an improved combination of incentive opportunities. It aligns better with our business objectives and is consistent with prevailing standards. Each vehicle has its own risk-reward profile and a different time horizon (three-year performance period for performance shares, five-year cliff vesting for restricted stock units and 10-year term of stock options). Together, these vehicles align our executives with stockholder interests over the long-term and reward them for absolute and competitive stock performance.

LOGO

2014–2016 Performance Share Payout

The three-year performance period for performance shares granted in January 2014 ended on December 31, 2016. For this three-year period, Chevron ranked No. 1 in TSR among the five companies in the LTIP Performance Share Peer Group. This resulted in a payout modifier of 200 percent. Refer to “Option Exercises and Stock Vested in Fiscal Year 2016” on pages 52 and 53 for details on the performance payout calculation.

LOGO

(1)	Per program rules, based on average stock price for the 20-trading days prior and up to the listed dates.


Chevron Corporation—2017 Proxy Statement		41


EXECUTIVE COMPENSATION

2016 LTIP Grants

In January 2016, the MCC approved the following LTIP awards to the CEO and other NEOs:


NEO	2016 LTIP Target Value		Stock Options*		Performance Shares*		RSUs*
John S. Watson		$15,322,000		964,800		73,600		—
Patricia E. Yarrington		$ 3,810,240		239,900		18,300		—
Michael K. Wirth		$ 5,334,340		239,900		18,300		18,300
James W. Johnson		$ 4,950,000		311,700		23,800		—
Joseph C. Geagea		$ 3,810,240		239,900		18,300		—

Number of awarded stock options, performance shares, and RSUs was determined based on the Company’s common stock price on January 27, 2016, the grant date Black-Scholes value for stock options, and a performance share factor of 100 percent reflecting expected performance at target. As these inputs may vary from those used for financial reporting, the target value shown above may not match the values presented in the “Summary Compensation Table” or the “Grants of Plan-Based Awards in Fiscal Year 2016” table in this Proxy Statement on pages 47 and 49, respectively.

During 2016 and in prior years, the Board has occasionally approved the grant of RSUs in recognition of exceptional individual performance. Mr. Wirth received an RSU grant in January 2016, in recognition of outstanding performance and

achievements while leading our Downstream business to its best year ever ($7.6 billion in earnings in 2015). Starting in 2017, we committed to limited use of supplemental RSU grants except for extraordinary circumstances.

2017 LTIP Grants

In January 2017, the MCC approved the following LTIP awards to the CEO and other NEOs. The composition of the equity awards has changed, as described on pages 40–41. The new compensation program is reflective of recent stockholder input.

The Board feels that the new program represents an improved combination of incentive opportunities, is aligned with our business objectives and is consistent with prevailing standards.

Although the composition of the equity awards has changed, the target value has remained flat for both the CEO and the other NEOs with the exception of Mike Wirth, who received a supplemental RSU grant in 2016. None of the NEOs received a 2017 supplemental RSU grant.


NEO	2017 LTIP Target Value		Stock Options*		Performance Shares*		Standard RSUs*
John S. Watson		$15,322,000		250,000		65,340		32,670
Patricia E. Yarrington		$ 3,810,240		62,200		16,250		8,120
Michael K. Wirth		$ 4,950,000		80,800		21,110		10,560
James W. Johnson		$ 4,950,000		80,800		21,110		10,560
Joseph C. Geagea		$ 3,810,240		62,200		16,250		8,120

Number of awarded stock options, performance shares and RSUs was determined based on the Company’s common stock price on January 25, 2017, the grant date Black-Scholes value for stock options, and a performance share factor of 100 percent reflecting expected performance at target. As these inputs may vary from those used for financial reporting, the target value shown above may not match the values to be presented in the 2018 Proxy Statement’s “Summary Compensation Table” or the “Grants of Plan-Based Awards in Fiscal Year 2017” table.

Why Option Quantities Differ Between Years

The MCC has granted the same level of LTIP target value to the CEO for the last three years—2015, 2016, and 2017.

Chevron determines the number of options by dividing the proportionate value of the NEO’s LTIP award by the Black-Scholes option value on the grant date. The methodology is

consistent with Grant Date Fair Value as defined by the SEC and as reported in the “Summary Compensation Table.” Black-Scholes values are influenced by stock price at grant date. Lower Black-Scholes values lead to a higher number of shares being granted. Conversely, higher Black-Scholes values lead to a lower number of shares being granted.

The table below shows options awarded to the CEO over the past three years. As part of compensation program revisions adopted by Chevron, options compose a smaller percentage of the overall equity award in 2017. This too contributed to the large reduction in options being granted between 2016 and 2017.


	John S. Watson LTIP Target Value		Grant Price		Black- Scholes Value		Options
2017		$15,322,000		$117.24		$15.32	250,000 (25% of LTIP award value)
2016		$15,322,000		$ 83.29		$ 9.53	964,800 (60% of LTIP award value)
2015		$15,322,000		$103.71		$13.89	662,000 (60% of LTIP award value)

See pages 47 and 49, respectively, for the “Summary Compensation Table” and the “Grants of Plan-Based Awards in Fiscal Year 2016” table for value and terms of the LTIP awards granted in early 2016. The 2017 grant information will be discussed in the 2018 Proxy Statement.


42		Chevron Corporation—2017 Proxy Statement


								EXECUTIVE COMPENSATION

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:

•

Support our long-term investment cycle; and

•

Encourage retention and long-term employment.

Retirement Programs

All of our employees, including our NEOs, have access to retirement programs that are designed to enable them to accumulate retirement income. The defined benefit (pension) and defined contribution (401(k) savings) plans allow highly compensated employees to receive the same benefits they would have earned without the IRS limitations on qualified retirement plans under the Employee Retirement Income and Security Act. The deferred compensation plan allows eligible employees to defer salary, CIP awards, and LTIP payouts.


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 the “Pension Benefits Table” in this Proxy Statement, we report the change in pension value in 2016 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)	Nonqualified 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)	Nonqualified 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 footnotes to the “Nonqualified Deferred Compensation Table” in this Proxy Statement, we describe how the ESIP-RP works. In the “Summary Compensation Table” and the “Nonqualified Deferred Compensation Table,” we present Chevron’s contributions to each NEO’s ESIP-RP account.
Deferred Compensation Plan (DCP)	Nonqualified Defined Contribution	Participants can defer up to: • 90 percent of CIP awards and LTIP performance share payouts; and • 40 percent 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 2016.

(1)	Employees whose compensation exceeds the limits established by the IRS for covered compensation and benefit levels. IRS annual compensation limit was $265,000 in 2016.

(2)

Participants who contribute at least 2 percent of their annual compensation to the ESIP receive a Company matching contribution of 8 percent (or 4 percent if they contribute 1 percent). The annual limit for both employer and employee contributions to a qualified defined contribution plan was $53,000 in 2016.

(3)	Participants who contribute at least 2 percent of their annual compensation to the Deferred Compensation Plan receive a Company matching contribution of 8 percent 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 employees on our 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 2016.


Chevron Corporation—2017 Proxy Statement		43


EXECUTIVE COMPENSATION

Best Practice in Compensation Governance

To ensure independent oversight, stockholder alignment and long-term sustainability, our executive compensation program has the following governance elements in place.


WHAT WE DO		WHAT WE DO NOT DO

✓	Stock ownership guidelines for the Chief Executive Officer, five times base salary increasing to six times effective 2017; for the Executive Vice Presidents and Chief Financial Officer, four times base salary	û	No excessive perquisites; all have a specific business rationale

✓	Deferred accounts are inaccessible until a minimum of one year following termination	û	No individual supplemental executive retirement plans

✓	Clawback provisions are included in the CIP, LTIP, Deferred Compensation Plan, Retirement Restoration Plan and Employee Savings Investment Plan-Restoration Plan for misconduct	û	No stock option repricing, reloads or exchanges without stockholder approval

✓	Significant CEO pay at risk (90 percent)	û	No loans or purchases of Chevron equity securities on margin

✓	Thorough assessment of Company and individual performance	û	No transferability of equity securities (except in the case of death or a qualifying court order)

✓	Robust succession planning process with Board review twice a year	û	No stock options granted below fair market value

✓	MCC composed entirely of independent Directors	û	No hedging or pledging of Chevron equity securities

✓	Independent compensation consultant, hired by and reports directly to the MCC	û	No change-in-control agreements for NEOs

✓	MCC has discretion to reduce performance share payouts	û	No tax gross-ups for NEOs

✓	CIP and certain LTIP awards (i.e., performance-based compensation) intended to qualify for deduction under Section 162(m) of Internal Revenue Code	û	No “golden parachutes” or “golden coffins” for NEOs

✓	Annual assessment of incentive compensation risks


44		Chevron Corporation—2017 Proxy Statement


								EXECUTIVE COMPENSATION

Compensation Governance: Oversight and Administration of the Executive Compensation Program

Role of the Board of Directors’ Management Compensation Committee

The Board of Directors’ Management Compensation Committee oversees the executive compensation program. The MCC works closely with its independent compensation consultant, Meridian Compensation Partners, LLC. and management to review pay and performance relative to the Business Plan approved by the Board and to industry peers. The MCC solicits input from the CEO concerning the performance and compensation of other NEOs.

The CEO does not participate in discussion about his own pay; and 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.

Independent Compensation Advice

The MCC retains an independent compensation consultant—Meridian Compensation Partners LLC—to assist with its duties. The MCC first engaged Meridian in mid-2014, following a comprehensive request-for-proposal process and subsequent screening and selection. The MCC has the exclusive right to select, retain and terminate Meridian, as well as to approve any fees, terms and other conditions of its service. Meridian and its lead consultant report directly to the MCC, but, when directed to do so by the MCC, they work cooperatively with Chevron’s management to develop analyses and proposals for the MCC. Meridian provides the following services to the MCC:

•

Education on executive compensation trends within and across industries;

•

Recommendation regarding compensation philosophy and compensation levels;

•

Selection of compensation comparator groups; and

•

Identification and resolution of technical issues associated with executive compensation plans, including tax, accounting, and securities regulations.

Meridian does not provide any services to the Company. The MCC is not aware of any work performed by Meridian that raised any conflicts of interest.

Compensation Risk Management

The MCC annually undertakes a risk assessment of Chevron’s compensation programs to ensure these programs are appropriately designed and do not motivate individuals or groups to take risks that are reasonably likely to have a material adverse effect on the Company. Following its most recent comprehensive

review of the design, administration and controls of these programs, the MCC was satisfied that Chevron’s programs are well structured with strong governance and oversight mechanisms in place to minimize and mitigate potential risks.

Stock Ownership Guidelines

We require our NEOs to hold prescribed levels of Chevron common stock, further linking their interests with those of our stockholders. Executives have five years to attain their stock ownership guideline.

As shown in the table below, for fiscal year 2017, we have strengthened our CEO stock ownership guidelines from five times base salary to six times base salary. Further, beginning in fiscal year 2017, NEOs who have not attained their stock ownership guidelines will be required to hold shares acquired under the LTIP program until such ownership requirements are met.


Position	2016 Ownership Guidelines	2017 Ownership Guidelines
CEO	Five times base salary	Six times base salary
Executive Vice Presidents, and Chief Financial Officer	Four times base salary	Four times base salary
All Other Executive Officers	Two times base salary	Two times base salary

Based upon our 250-day trailing average stock price ending December 31, 2016 ($99.96), our CEO had a stock ownership base salary multiple of 8.9, and all other NEOs had an average stock ownership base salary multiple of 4.8. The MCC believes these ownership levels provide adequate focus on our long-term business model.

Employment, Severance and 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 available to 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” table in this Proxy Statement.


Chevron Corporation—2017 Proxy Statement		45


EXECUTIVE COMPENSATION

Compensation Recovery Policies

The Chevron Incentive Plan, Long-Term Incentive Plan, Deferred Compensation Plan for Management Employees, Retirement Restoration Plan, and Employee Savings Investment Plan–Restoration Plan include provisions permitting us to “claw back” certain amounts of cash and equity awarded to an NEO at any time if the 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; and 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. We do provide standard expatriate packages, which include tax equalization payments, to all employees of the Company who serve on overseas assignments, including executive officers.

Tax Deductibility of NEO Compensation

We have structured our CIP and certain LTIP awards with the intention of meeting the requirements for deductibility 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 our Chief Financial Officer) if such compensation in excess of $1 million is performance-based. Although the MCC considers the deductibility of the compensation of our executives, in order to maintain flexibility and retain and motivate our executive officers, it does not require all compensation to be deductible. For example, the portion of the base salaries in excess of $1 million for our covered officers is not deductible; however, the MCC considers these salaries to be in the best interests of Chevron and its stockholders. Further, time-based RSUs are not qualified under Section 162(m) and therefore are not deductible.


46		Chevron Corporation—2017 Proxy Statement


								EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth the compensation of our named executive officers, or NEOs, for the fiscal year ended December 31, 2016, and for the fiscal years ended December 31, 2015, and December 31, 2014, if they were NEOs in those years. The primary components of each NEO’s compensation are also described in our “Compensation Discussion and Analysis” in this Proxy Statement.


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 and CEO⁽⁷⁾		2016	$	1,863,500	$	5,397,824	$	9,194,544		$ 2,096,400		$ 5,894,429		$ 210,794	$	24,657,491
		2015	$	1,855,479	$	5,484,480	$	9,195,180		$ 2,450,000		$ 2,805,467		$ 239,203	$	22,029,809
		2014	$	1,825,500	$	4,816,500	$	8,586,240		$ 3,100,000		$ 7,364,392		$ 277,785	$	25,970,417
P.E. Yarrington, Vice President and Chief Financial Officer		2016	$	1,073,242	$	1,342,122	$	2,286,247		$ 890,100		$ 863,855		$ 85,859	$	6,541,425
		2015	$	1,056,729	$	1,364,160	$	2,286,294		$ 1,025,600		$ 1,556,120		$ 90,964	$	7,379,867
		2014	$	1,035,417	$	1,107,795	$	2,246,400		$ 1,309,800		$ 3,981,814		$ 100,131	$	9,781,357
M.K. Wirth, Vice Chairman and Executive Vice President, Midstream and Development⁽⁷⁾		2016	$	1,094,492	$	2,866,329	$	2,286,247		$ 906,200		$ 1,845,887		$ 130,490	$	9,129,645
		2015	$	1,080,392	$	2,888,697	$	2,286,294		$ 1,092,300		$ 675,731		$ 100,426	$	8,123,840
		2014	$	1,063,600	$	1,107,795	$	2,246,400		$ 1,526,400		$ 2,414,629		$ 128,417	$	8,487,241

J.W. Johnson, Executive Vice President, Upstream		2016	$	1,012,417	$	1,745,492	$	2,970,501		$ 930,600		$ 2,640,381		$ 116,929	$	9,416,320
		2015	$	929,667	$	2,888,697	$	2,286,294		$ 985,300		$ 1,639,327		$ 226,413	$	8,955,698

J.C. Geagea, Executive Vice President, Technology, Projects and Services		2016	$	906,367	$	1,342,122	$	2,286,247		$ 761,800		$ 2,551,179		$ 97,479	$	7,945,194

(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 the years in which each person was an NEO and the amounts deferred under the Deferred Compensation Plan for Management Employees II (DCP).


Name	Salary Effective Date		Salary		Total Salary Deferred Under the DCP
J.S. Watson		April 2016	$	1,863,500		$ 186,350
		April 2015	$	1,863,500		$ 185,548
		April 2014	$	1,836,000		$ 182,550
P.E. Yarrington		April 2016	$	1,078,900		$ 16,165
		April 2015	$	1,059,500		$ 15,835
		April 2014	$	1,050,000		$ 15,508
M.K. Wirth		April 2016	$	1,098,400		$ 16,590
		April 2015	$	1,085,000		$ 16,308
		April 2014	$	1,069,200		$ 16,072
J.W. Johnson		April 2016	$	1,034,000		$ 14,948
		April 2015	$	960,000		$ 13,293
J.C. Geagea		April 2016	$	923,400		$ 12,827

We explain the amount of salary and non-equity incentive plan compensation in proportion to total compensation in our “Compensation Discussion and Analysis—Pay Philosophy and Plan Design.”

(2)

Amounts for each fiscal year reflect the aggregate grant date fair value of performance shares and restricted stock units (RSUs) granted under the Long-Term Incentive Plan of Chevron Corporation (LTIP) on January 27, 2016. 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 23, “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, 2016. These RSUs and performance shares do not accrue dividends or dividend equivalents. For purposes of this table only, estimates of forfeitures related to service-based vesting conditions for awards have been disregarded.

For performance shares granted on January 27, 2016, the per-share grant date fair value was $73.34. 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) 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 (January 2016 through December 2018). Payout is calculated in the manner described in Footnote 2 to the “Option Exercises and Stock Vested in Fiscal Year 2016” table in this Proxy Statement.

For Mr. Wirth, the 2016 amount also includes the aggregate grant date fair value of RSUs granted under the LTIP on January 27, 2016. The per-unit grant date fair value of the restricted stock units was $83.29, the closing price of Chevron common stock on the grant date. These RSUs are paid in cash upon vesting and are payable following the third annual anniversary of the grant date. Total payout will be based on the Chevron common stock closing price on the vesting date.


Chevron Corporation—2017 Proxy Statement		47


EXECUTIVE COMPENSATION

The material terms of performance shares and RSUs granted in 2016 are described in the “Grants of Plan-Based Awards in Fiscal Year 2016” and “Outstanding Equity Awards at 2016 Fiscal Year-End” tables in this Proxy Statement.

(3)

Amounts for each fiscal year reflect the aggregate grant date fair value of nonstatutory/nonqualified stock options granted under the LTIP on January 27, 2016. The per-option grant date fair value was $9.53. We calculate the grant date fair value of these stock options in accordance with ASC Topic 718, as described in Note 23, “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, 2016. Stock options do not accrue dividends or dividend equivalents. For purposes of this table only, estimates of forfeitures related to service-based vesting conditions for awards have been disregarded. The material terms of stock options granted in 2016 are described in the “Grants of Plan-Based Awards in Fiscal Year 2016” and “Outstanding Equity Awards at 2016 Fiscal Year-End” tables in this Proxy Statement.

(4)

2016 amounts reflect Chevron Incentive Plan (CIP) awards for the 2016 performance year that were paid in March 2017. The following NEOs elected to defer portions of their awards to the DCP as follows: Mr. Watson, 25 percent, or $524,100; and Ms. Yarrington, 1 percent, or $8,901. See “Compensation Discussion and Analysis—Components of Executive Compensation—Annual Incentive Plan (Chevron Incentive Plan)” for a detailed description of CIP awards.

(5)

2016 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, 2016, through December 31, 2016, 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.) For purposes of this disclosure, we have used the same amounts required to be disclosed in the “Pension Benefits Table” in this Proxy Statement.

2016 changes in the actuarial present value of an NEO’s pension value are attributable to five factors.

Increases in highest average earnings (HAE)

HAE is the highest consecutive 36-month average base salary and CIP awards.

Interest and discount rate assumptions used to estimate the value of the benefit

Generally, a higher interest rate produces a lower pension value, and a lower interest rate produces a higher 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 are lower in 2016 than those used in 2015. In addition, 2016’s discount rate, 3.9 percent, is lower than 2015’s discount rate, 4.0 percent.

An additional year of age

The Chevron Retirement Plan and Retirement Restoration Plan provide an unreduced benefit at age 60 for eligible participants. Generally, being a year older results in an increase in pension value due to a shorter discount period from the current age to the assumed retirement age of 60. Once an NEO reaches age 60, the discount rate no longer applies. Furthermore, the pension value can be negatively impacted when the assumed duration of future payments is shorter based on age and actuarial assumptions.

An additional year of benefit service earned in 2016

All of the NEOs worked for a full year in 2016, and their pension benefits increased because they earned an additional year of benefit service.

Mortality projections

When mortality tables project longer life spans, pension benefits increase.

The following table provides a breakdown of the percent change in the NEO’s pension values:


			Factors
Name	Total Percent Change in Pension Value, Jan. to Dec. 2016^(a)		Higher HAE		Change in Interest Rate and Discount Rate Assumptions		One Year Older		One Additional Year of Service		Mortality
J.S. Watson		14.9%		0.0%		6.9%		4.8%		3.1%		0.1%
P.E. Yarrington		4.6%		0.2%		3.5%		-2.1%		2.9%		0.1%
M.K. Wirth		15.1%		0.3%		5.9%		5.3%		3.5%		0.1%
J.W. Johnson		24.8%		9.6%		6.3%		5.3%		3.4%		0.2%
J.C. Geagea		31.1%		15.7%		6.3%		5.5%		3.5%		0.1%

(a)

Calculated as follows: (actuarial present value of accumulated benefit at December 31, 2016 (reported in the “Pension Benefits Table” in this Proxy Statement)—actuarial present value of accumulated benefit at December 31, 2015 (reported in the “Pension Benefits Table” in last year’s Proxy Statement)) / actuarial present value of accumulated benefit at December 31, 2015 (reported in the “Pension Benefits Table” in last year’s Proxy Statement).

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 2016 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 medical, dental, disability, and group life insurance programs.


	J.S. Watson		P.E. Yarrington		M.K. Wirth		J.W. Johnson		J.C. Geagea
ESIP Company Contributions^(a)	$	21,200	$	21,200	$	21,200	$	21,200	$	21,200
ESIP-RP Company Contributions^(a)	$	127,880	$	64,659	$	66,359	$	59,793	$	51,309
Perquisites^(b)
Financial Counseling^(c)	$	19,305	$	–	$	13,959	$	14,128	$	10,200
Motor Vehicles^(d)	$	7,271	$	–	$	–	$	–	$	–
Air Travel^(e)	$	32,513	$	–	$	9,731	$	467	$	3,070
Residential Security^(f)	$	326	$	–	$	444	$	13,943	$	–
Executive Physical^(g)	$	–	$	–	$	–	$	4,367	$	1,500
Expatriate Tax Equalization^(h)	$	–	$	–	$	–	$	–	$	9,412
International Board Trip⁽ⁱ⁾	$	2,299	$	–	$	16,014	$	2,243	$	–
Other^(j)	$	–	$	–	$	2,783	$	788	$	788
TOTAL, ALL OTHER COMPENSATION	$	210,794	$	85,859	$	130,490	$	116,929	$	97,479


48		Chevron Corporation—2017 Proxy Statement


								EXECUTIVE COMPENSATION

(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 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 ($265,000 of income in 2016) 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 DCP, and the Company will match those funds with a contribution to the nonqualified ESIP-RP. Company contributions to the ESIP-RP are described further in the “Nonqualified Deferred Compensation Table” of this Proxy Statement.

(b)

Reflects perquisites and personal benefits received by an NEO in 2016 to the extent that the total value of such perquisites and personal benefits was equal to or exceeded $10,000. 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; however, we do in certain cases pay expatriate and tax equalization benefits in connection with overseas assignments, as described further in footnote (h). Except in the case of motor vehicles (footnote (d)) and air travel (footnote (e)), aggregate incremental cost is the same as actual cost.

(c)

In the case of Messrs. Johnson and Geagea, includes amounts paid on their behalf for preparation of tax returns in connection with expatriate assignments.

(d)

Aggregate incremental cost reflects the sum of (i) annual lease value multiplied by the percentage of mileage attributable to personal use and (ii) the cost of fuel for mileage attributable to personal use.

(e)

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, including instances of travel deemed personal. 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, meals and other fees, as applicable. For Mr. Watson, includes aggregate incremental cost for personal use of corporate aircraft. For everyone else, includes the cost of spousal travel on commercial aircraft when the spouse accompanies the NEO on Chevron-related travel.

(f)

Reflects home security, monitoring and maintenance for Messrs. Watson, Wirth, and Johnson.

(g)

For Mr. Johnson, includes both the cost of the executive physical, as well as the travel-related costs of airfare and lodging associated with the executive physical.

(h)

Mr. Johnson and Mr. Geagea served on expatriate assignments in prior years, during which they received customary expatriate and tax equalization benefits intended to place expatriate employees in a similar net tax position as a similarly compensated employee in the United States. Amounts shown above for Mr. Geagea reflect amended tax equalization and similar payments in 2016, including adjustments to prior years’ earnings based on the tax reporting and filing process. Mr. Johnson’s equalization benefits are not reflected above, as estimated taxes plus prior years’ amendments results in a net negative value.

(i)

Reflects the aggregate incremental actual cost incurred in connection with the NEO’s spouses’ attendance at the Board of Directors’ September 2016 trip to Australia, including commercial air travel in lieu of corporate air travel, lodging, meals, and tours. Generally, every two years, the Board travels to an international Chevron location of operation to gain additional insight into Chevron’s operations in such location and to meet with local and expatriate Chevron management and personnel, as well as local, state, and national officials. Officers’ spouses are invited to attend the international Board trip to learn about Chevron’s operations, foster social interaction among the Directors and executives, attend receptions with local and expatriate Chevron employees and their families and with local government officials, tour Chevron facilities, and participate in community engagement and other goodwill activities on behalf of Chevron.

(j)

Includes aggregate incremental cost of meals, activities, and other amenities for NEOs’ spouses’ participation in corporate events.

(7)	Mr. Watson and, effective February 2017, Mr. Wirth are also Directors of the Company, but they do not receive any additional compensation for their Board-related service.

Grants of Plan-Based Awards in Fiscal Year 2016

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 2016. Non-equity incentive plan awards are made under our Chevron Incentive Plan (CIP), and equity incentive plan awards (performance shares, stock options, and restricted stock unit 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. Page 32 also includes a summary of compensation program changes made by Chevron in 2017 to respond to stockholder feedback.

Estimated Future Payouts

Under Non-Equity Incentive
Plan Awards⁽¹⁾

Estimated Future Payouts

Under Equity Incentive Plan
Awards⁽²⁾

All Other

Stock

Awards:

Number of

Shares of

Stock

or Units

(#)⁽³⁾

All Other

Option

Awards:

Number of

Securities

Underlying

Options

(#)⁽⁴⁾

Exercise

or Base

Price of

Option

Awards

($/Sh)⁽⁵⁾

Grant

Date

Fair

Value

of Stock

and

Option

Awards⁽⁶⁾

Name

Award

Type

Grant

Date

Threshold

($)

Target
($)

Maximum
($)

Threshold
(#)

Target
(#)

Maximum
(#)

J.S. Watson

CIP

–

2,795,250

5,590,500

–

Perf Shares

1/27/2016

–

18,400

73,600

147,200

–

5,397,824

Options

1/27/2016

–

964,800

83.29

9,194,544

P.E. Yarrington

CIP

–

1,186,790

2,373,580

–

Perf Shares

1/27/2016

–

4,575

18,300

36,600

–

1,342,122

Options

1/27/2016

–

239,900

83.29

2,286,247

M.K. Wirth

CIP

–

1,208,240

2,416,480

–

Perf Shares

1/27/2016

–

4,575

18,300

36,600

–

1,342,122

Options

1/27/2016

–

239,900

83.29

2,286,247

RSUs

1/27/2016

–

18,300

–

1,524,207

J.W. Johnson

CIP

–

1,240,800

2,481,600

–

Perf Shares

1/27/2016

–

5,950

23,800

47,600

–

1,745,492

Options

1/27/2016

–

311,700

83.29

2,970,501

J.C. Geagea

CIP

–

1,015,740

2,031,480

–

Perf Shares

1/27/2016

–

4,575

18,300

36,600

–

1,342,122

Options

1/27/2016

–

239,900

83.29

2,286,247

(1)

The CIP is an annual incentive plan that pays a cash award for performance and is paid in March following the performance year. See our “Compensation Discussion and Analysis—Components of Executive Compensation—Annual Incentive Plan (Chevron Incentive Plan)” for a detailed description of CIP awards, including the criteria for determining the amounts payable. “Target” is a dollar value based on a percentage of the NEO’s base salary set by the Management Compensation Committee prior to the beginning of the performance year. Actual 2016 performance-year award results, which are approved in January 2017 and paid in March 2017, are reported in the “Summary Compensation Table” in the “Non-Equity Incentive Plan Compensation” column. Under the 2016 CIP, there is no threshold award. The maximum award is 200% of target for all CIP eligible employees.


Chevron Corporation—2017 Proxy Statement		49


EXECUTIVE COMPENSATION

(2)

Reflects performance shares granted under the LTIP. See our “Compensation Discussion and Analysis—Components of Executive Compensation—Long-Term Incentive Plan” for a detailed description of performance share awards, including the criteria for determining the cash amounts payable. “Target” is the number of performance shares awarded in 2016. 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 out in cash, and the cash payout, if any, will occur at the end of the three-year performance period (January 2016 through December 2018). Payout is calculated in the manner described in Footnote 2 to the “Option Exercises and Stock Vested in Fiscal Year 2016” table in this Proxy Statement. These performance share awards do not accrue dividends or dividend equivalents.

(3)

Reflects RSUs granted under the LTIP. See our “Compensation Discussion and Analysis—Components of Executive Compensation—Long-Term Incentive Plan” for a detailed description of RSU awards. These RSUs are paid in cash upon vesting and the payout will occur following the third annual anniversary of the grant date. Total payout will be based on the Chevron common stock closing price on the vesting date multiplied by the number of vested RSUs. These RSUs do not accrue dividends or dividend equivalents.

(4)

Reflects nonstatutory/nonqualified stock options granted under the LTIP. See our “Compensation Discussion and Analysis—Components of Executive Compensation—Long-Term Incentive Plan” for a description of stock option awards. Stock options have a 10-year term and vest at the rate of 33.33 percent per year, with vesting occurring on the first, second, and third annual anniversary of the grant date. The value of stock options realized upon exercise is determined by multiplying the number of stock options by the difference between the fair market value at the time of exercise and the exercise price of the stock options. Stock option awards do not accrue dividends or dividend equivalents.

(5)	The exercise price is the closing price of Chevron common stock on the grant date.

(6)

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.


50		Chevron Corporation—2017 Proxy Statement


								EXECUTIVE COMPENSATION

Outstanding Equity Awards at 2016 Fiscal Year-End

The following table sets forth information concerning the outstanding equity incentive awards at December 31, 2016, for each of our named executive officers, or NEOs.


	Option Awards										Stock Awards
Name⁽¹⁾	Grant Date of Option Awards		Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable⁽²⁾		Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested ($)⁽³⁾		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)⁽⁴⁾		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)⁽⁵⁾
J.S. Watson		1/27/2016				964,800	$	83.29		1/27/2026		–		–		73,600	$	17,325,440
		1/28/2015		220,666		441,334	$	103.71		1/28/2025						59,100	$	13,912,140
		1/29/2014		229,333		114,667	$	116.00		1/29/2024
		1/30/2013		377,000			$	116.45		1/30/2023
		1/25/2012		420,000			$	107.73		1/25/2022
		1/26/2011		340,000			$	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		1/27/2016				239,900	$	83.29		1/27/2026		–		–		18,300	$	4,307,820
		1/28/2015		54,866		109,734	$	103.71		1/28/2025						14,700	$	3,460,380
		1/29/2014		60,000		30,000	$	116.00		1/29/2024
		1/30/2013		103,000			$	116.45		1/30/2023
		1/25/2012		105,000			$	107.73		1/25/2022
		1/26/2011		132,000			$	94.64		1/26/2021
		1/27/2010