Overview
Our compensation for nonemployee Directors is designed to be competitive with our largest global
energy competitors and other large, capital-intensive international companies across industries, to link rewards to business results and stockholder returns, and to facilitate increased ownership of Chevron common stock. We do not have a retirement
plan for nonemployee Directors. Our executive officers are not paid additional compensation for their service as Directors.
The Board
Nominating and Governance Committee evaluates and recommends to the nonemployee Directors of the Board the compensation for nonemployee Directors, and the nonemployee Directors of the Board set the compensation. Our executive officers have no role
in determining the amount or form of
nonemployee Director compensation. The Committee may retain the services of an independent compensation consultant to assist the Committee with its work. The Committee did not do so in 2013.
The nonemployee Directors of the Board approved an increase in nonemployee Director compensation, effective as of the 2013 Annual
Meeting, as described in last years proxy statement. As a result, nonemployee Directors receive total annual compensation of $375,000 per Director, with 40 percent paid in cash (or stock options at the Directors election) and
60 percent paid in restricted stock units. Committee chairmen receive an additional $15,000 in cash for their services. Below, we describe the nonemployee Directors 2013 annual compensation in more detail.
Cash
or Stock Options (at the Directors Election)
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$150,000 annual cash retainer, paid in monthly installments beginning with the date the Director is elected to the Board.
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$15,000 additional annual cash retainer for each Board committee chairman, paid in monthly installments beginning with the date the Director becomes a
committee chairman.
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Directors can elect to receive nonstatutory/nonqualified stock options instead of any portion of their cash compensation. Options are granted under the
Chevron Corporation Nonemployee Directors Equity Compensation and Deferral Plan (NED Plan).
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Directors can also elect to defer receipt of any portion of their cash compensation under the NED Plan.
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Restricted Stock Units
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$225,000 of the annual compensation is paid in the form of restricted stock units (RSUs) that are granted on the date of the annual meeting of stockholders at
which the Director is elected.
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If a Director is elected to the Board between annual meetings, a prorated grant can be made.
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RSUs are subject to forfeiture (except when the Director dies, reaches mandatory retirement age of 72, becomes disabled, changes primary occupation, or enters
government service) until the earlier of 12 months or the day preceding the first annual meeting of stockholders following the date of the grant.
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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.
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Expenses and Charitable Matching Gift Program
Nonemployee Directors are reimbursed for out-of-pocket expenses incurred in connection with the
business and affairs of Chevron. Nonemployee Directors are eligible to participate in
Humankind, our charitable matching gift program, which is available to all our employees. We will match any contributions to eligible entities up to a maximum of $10,000 per year.
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Chevron Corporation2014 Proxy Statement
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9
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Compensation During the Fiscal Year Ended December 31, 2013
The above-described choices available to Directors result in slight differences in reportable
compensation, even though each Director was awarded the same amount (except for committee chairmen, who receive an additional $15,000). Specifically, one DirectorMr. Hernandezelected to receive stock options for all of his annual cash
retainer.
The following table sets forth the compensation of our nonemployee Directors for the fiscal year
ended December 31, 2013. On February 26, 2013, Mr. Hagel resigned from the Board of Directors due to his appointment as U.S. Secretary of Defense. Mr. Huntsman joined the Board on January 15, 2014.
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Name
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Fees Earned or
Paid in Cash
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Stock
Awards
(1)
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Option
Awards
(2)
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All
Other
Compensation
(3)
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Total
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Linnet F. Deily
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$
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148,647
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(4)
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$
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225,000
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$
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10,980
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$
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384,627
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Robert E. Denham
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$
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148,647
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(4)(5)
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$
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225,000
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$
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980
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$
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374,627
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Alice P. Gast
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$
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133,605
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$
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225,000
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$
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10,980
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$
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369,585
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Charles T. Hagel
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$
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28,309
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(6)
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$
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$
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140
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$
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28,449
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Enrique Hernandez, Jr.
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$
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$
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225,000
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$
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149,995
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$
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10,980
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$
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385,975
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Jon M. Huntsman, Jr.
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$
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(7)
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$
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$
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$
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Charles W. Moorman IV
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$
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133,605
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(5)
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$
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225,000
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$
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5,980
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$
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364,585
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Kevin W. Sharer
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$
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133,605
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(5)
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$
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225,000
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$
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10,980
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$
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369,585
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John G. Stumpf
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$
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133,605
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$
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225,000
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$
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980
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$
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359,585
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Ronald D. Sugar
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$
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148,647
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(4)(5)
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$
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225,000
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$
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5,980
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$
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379,627
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Carl Ware
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$
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148,647
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(4)
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$
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225,000
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$
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980
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$
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374,627
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(1)
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Amounts reflect the grant date fair value for restricted stock units (RSUs) granted in 2013 under the NED Plan. The grant date fair value of these RSUs was
$126.43 per unit, the closing price of Chevron common stock on May 28, 2013. RSUs accrue dividend equivalents, the value of which is factored into the grant date fair value. For purposes of this table only, estimates of forfeitures related to
service-based vesting conditions have been disregarded. RSUs are payable in Chevron common stock.
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At December 31, 2013, the following nonemployee Directors had the following number of shares subject to outstanding stock awards or deferrals:
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Name
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Restricted
Stock
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Stock
Units
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Restricted
Stock Units
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Stock Units
From Directors
Deferral of Cash
Retainer
(a)
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Total
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Linnet F. Deily
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3,103
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1,808
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4,911
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Robert E. Denham
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3,181
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9,869
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16,690
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15,088
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44,828
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Alice P. Gast
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1,808
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1,808
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Charles T. Hagel
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Enrique Hernandez, Jr.
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12,986
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1,017
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14,003
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Jon M. Huntsman, Jr.
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Charles W. Moorman IV
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3,734
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1,561
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5,295
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Kevin W. Sharer
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16,690
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9,505
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26,195
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John G. Stumpf
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1,808
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1,808
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Ronald D. Sugar
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2,088
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6,392
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16,690
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13,156
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38,326
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Carl Ware
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6,697
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17,544
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16,690
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415
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41,346
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(a)
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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
Directors 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 Directors death are
distributed to the Directors beneficiary.
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(2)
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For Directors electing stock options in lieu of all or a portion of the annual cash compensation, the options are granted on the date of the annual meeting of
stockholders that the Director is elected. The options are exercisable for that number of shares of Chevron common stock determined by dividing the amount of the cash retainer subject to the election by the Black-Scholes value of an option on
the date of grant. Elections to receive options in lieu of any portion of cash compensation must be made by December 31 in the year preceding the year in which the options are granted. The options have an exercise price based on the closing
price of Chevron common stock on the date of grant.
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Amounts reported here reflect the grant date fair value for stock options granted on May 29, 2013. The grant date fair value was determined in accordance
with Financial Accounting Standards Board Accounting Standards Codification Topic 718, CompensationStock Compensation (ASC 718) for financial reporting purposes. The grant date fair value of each option is calculated using the Black-Scholes
model. Stock options granted on May 29, 2013, have an exercise price of $125.49 and a grant date fair value of $25.79. The assumptions used in the Black-Scholes model to calculate this grant date fair value were: an expected life of
6.0 years, a volatility rate of 31.2 percent, a risk-free interest rate of 1.35 percent and a dividend yield of 3.56 percent. For purposes of this table only, estimates of forfeitures related to service-based vesting conditions have been
disregarded.
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Mr. Hernandez elected to receive all of his 2013 annual cash compensation in the form of stock options. The number of stock options granted in 2013 to
Mr. Hernandez was 5,816. One-half of the options vest six months following the date of grant, and the remaining half vests on the earlier of 12 months or the day preceding the first annual meeting of stockholders following the date of
grant. Options expire after 10 years.
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At December 31, 2013, Ms. Deily had 1,456 outstanding and vested stock options, and Mr. Hernandez had 32,291 outstanding, vested and unvested
stock options. Under the rules governing awards of stock options under the NED Plan, Directors who retire in accordance with Chevrons Director Retirement Policy have until 10 years from the date of grant to exercise any outstanding option.
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10
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Chevron Corporation2014 Proxy Statement
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(3)
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All Other Compensation for 2013 includes the following items.
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Insurance
(a)
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Charitable Gift
(b)
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Linnet F. Deily
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$
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980
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$
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10,000
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Robert E. Denham
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$
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980
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$
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Alice P. Gast
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$
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980
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$
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10,000
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Charles T. Hagel
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$
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140
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$
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Enrique Hernandez, Jr.
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$
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980
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$
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10,000
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Jon M. Huntsman, Jr.
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$
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$
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Charles W. Moorman IV
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$
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980
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$
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5,000
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Kevin W. Sharer
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$
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980
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$
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10,000
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John G. Stumpf
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$
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980
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$
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Ronald D. Sugar
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$
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980
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$
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5,000
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Carl Ware
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$
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980
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$
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(a)
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Amounts reflect the annualized premium for accidental death and dismemberment insurance coverage paid by Chevron, which has been prorated for Mr. Hagel.
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(b)
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Amounts paid in 2013 in the Directors name under Humankind, our charitable matching gift program.
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(4)
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Amount includes the additional retainer for serving as a Board committee chairman during 2013.
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(5)
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The Director has elected to defer some or all of the annual cash retainer under the NED Plan in 2013. None of the earnings under the NED Plan are above market
or preferential.
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(6)
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Mr. Hagel resigned from the Board on February 26, 2013, due to his appointment as U.S. Secretary of Defense.
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(7)
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Mr. Huntsman joined the Board on January 15, 2014.
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Chevron Corporation2014 Proxy Statement
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11
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Overview
Chevron is governed by a Board of Directors and committees of the Board that meet throughout the
year. Directors discharge their responsibilities at Board and committee meetings and also through other communications with management. Your Board is
committed to corporate governance structures and practices that help Chevron compete more effectively, sustain its success, and build long-term stockholder value.
Role
of the Board of Directors
Your Board oversees and provides policy guidance on Chevrons business and affairs. It monitors
overall corporate performance, the integrity of Chevrons financial controls, and the effectiveness of its legal compliance and enterprise risk management programs. Your Board oversees management and plans for the
succession of key executives. It oversees Chevrons strategic and business planning process. This is generally a year-round process, culminating in Board reviews of Chevrons strategic
plan, its business plan, the next years capital expenditures budget, and key financial and supplemental indicators.
Director Independence
Your Board has determined that each nonemployee Director who served in 2013 and each current
nonemployee Director and nonemployee Director nominee is independent in accordance with the NYSE Corporate Governance Standards and that no material relationship exists that would interfere with the exercise of independent judgment in carrying out
the responsibilities of a Director.
For a Director to be considered independent, the Board must determine that the Director does not
have any direct or indirect material relationship with Chevron, other than as a Director. In making its determinations, the Board adheres to the specific tests for independence included in the NYSE Corporate Governance Standards. In addition, the
Board has determined that the following relationships of Chevron Directors occurring within the last fiscal year are categorically immaterial to a determination of independence if the relevant transaction was conducted in the ordinary course of
business:
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a director of another entity if business transactions between Chevron and that entity do not exceed $5 million or five percent of the receiving
entitys consolidated gross revenues, whichever is greater;
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a director of another entity if Chevrons discretionary charitable contributions to that entity do not exceed $1 million or two percent of that
entitys gross revenues, whichever is greater, and if the charitable contributions are consistent with Chevrons philanthropic practices; and
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a relationship arising solely from a Directors ownership of an equity or limited partnership interest in a party that engages in a transaction with
Chevron as long as the Directors ownership interest does not exceed two percent of the total equity or partnership interest in that other party.
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These categorical standards are contained in our Corporate Governance Guidelines, which are available on our website at
www.chevron.com
and are available in print upon request.
Ms. Deily and Messrs. Denham, Hagel (resigned 2013), Hernandez, Huntsman, Moorman, Sharer, Stumpf, Sugar, and Ware are directors of for-profit
entities with which Chevron conducts business in the ordinary course. They and Dr. Gast are also directors or trustees of, or similar advisors to, not-for-profit entities to which Chevron contributes funds. The Board determined that all of
these transactions and contributions were below the thresholds set forth in the first and second categorical standards described above (except as noted below) and are,
therefore, categorically immaterial to the particular Directors independence.
The Board reviewed the following relationships and transactions that existed or occurred in 2013 that are not covered by the categorical standards
described above:
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For Dr. Gast, the Board considered that in 2013, Chevron contributed and matched various employee contributions to Lehigh University amounting to less
than 0.007 percent of the Universitys most recently reported annual gross revenues. Dr. Gast is the president of the University. The Board concluded that these transactions would not impair Dr. Gasts independence.
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For Mr. Hernandez, the Board considered that in 2013, Chevron purchased services from Inter-Con Security Systems of Liberia Limited, a subsidiary of
Inter-Con Security Systems, Inc., in the ordinary course of business, amounting to less than one percent of Inter-Cons most recent annual consolidated gross revenues. Mr. Hernandez is Chairman, Chief Executive Officer, President and a
significant shareholder of Inter-Con, a privately held business. The Board concluded that these transactions would not impair Mr. Hernandezs independence.
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For Mr. Moorman, the Board considered that in 2013, Chevron purchased products and services from Norfolk Southern Corporation, in the ordinary course of
business, amounting to less than 0.025 percent of Norfolk Southerns most recently reported annual consolidated gross revenues and Norfolk Southern purchased products and services from Chevron, in the ordinary course of business, amounting to
less than 0.022 percent of Chevrons most recently reported annual consolidated gross revenues. Mr. Moorman is the Chairman and Chief Executive Officer of Norfolk Southern. The Board concluded that these transactions would not impair
Mr. Moormans independence.
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For Mr. Stumpf, the Board considered that in 2013, Chevron utilized Wells Fargo & Company for commercial banking, brokerage, and other services,
in the ordinary course of business, amounting to less than 0.011 percent of Wells Fargos most recently reported annual consolidated gross revenues and Wells Fargo paid to Chevron interest in connection with time deposits and similar
transactions in the ordinary course of business, amounting to less than 0.002 percent of Chevrons most recently reported annual consolidated gross revenues. Mr. Stumpf is the Chairman, Chief Executive Officer and President of Wells Fargo.
The Board concluded that these transactions would not impair Mr. Stumpfs independence.
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12
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Chevron Corporation2014 Proxy Statement
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Board Leadership and Independent Lead Director
Under Chevrons By-Laws, the positions of Chairman of the Board and Chief Executive Officer are
separate positions that may be occupied by the same person. Chevrons Directors select the Chairman of the Board annually. Thus, the Board has great flexibility to choose the optimal leadership structure depending upon Chevrons particular
needs and circumstances and to organize its functions and conduct its business in the most efficient and effective manner.
The Board
Nominating and Governance Committee conducts an annual assessment of Chevrons corporate governance structures and processes, which includes a review of Chevrons Board leadership structure and whether combining or separating the roles of
Chairman and CEO is in the best interests of Chevrons stockholders. At present, Chevrons Board believes that it is in the stockholders best interests for the CEO, Mr. Watson, to also serve as Chairman of the Board. The Board
believes that having the CEO also serve as Chairman at this time fosters an important unity of leadership between the Board and the Company that is nevertheless subject to effective oversight by the independent Lead Director and the other
independent Directors. The Board does not believe that having the CEO also serve as Chairman at this time inhibits the flow of information and interactions between the Board, management, and other Company personnel.
Your Board does recognize the importance of independent Board oversight of the CEO and management and for this reason follows policies and
procedures designed to ensure independent oversight. For example, the independent Directors conduct an annual review of the CEOs performance. In addition, at each meeting, the independent Directors meet in executive session. During executive
sessions, the independent Directors discuss management performance and routinely formulate guidance and feedback for the CEO and other members of management.
Further, when the Board selects the CEO to also serve as Chairman, the independent Directors select a Lead Director from among themselves, currently Mr. Denham. As described in the
Board Leadership and Lead Director section of Chevrons Corporate Governance Guidelines, the Lead Directors responsibilities are to:
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chair all meetings of the Board in the Chairmans absence, including executive sessions;
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serve as liaison between the Chairman and the independent Directors;
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consult with the Chairman on and approve meeting agendas and schedules and information sent to the Board;
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consult with the Chairman on other matters pertinent to Chevron and the Board;
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call meetings of the independent Directors; and
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if requested by major stockholders, be available as appropriate for consultation and direct communication.
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The Board routinely reviews the Lead Directors responsibilities to ensure that these responsibilities enhance its independent oversight of the
CEO and management and the flow of information and interactions between the Board, management, and other Company personnel. In this respect, the Lead Director and Chairman collaborate closely on Board meeting schedules and agendas and information
provided to the Board. These consultations and agendas and the information provided to the Board frequently reflect input and suggestions from other members of the Board and management. You can read more about these particular processes in the
Board Agenda and Meetings section of Chevrons Corporate Governance Guidelines.
Any stockholder can communicate with
the Lead Director or any of the other Directors in the manner described in the Communicating with the Board section in this Proxy Statement.
Board Committees
Chevrons Board of Directors has four standing committees: Audit; Board Nominating and
Governance; Management Compensation; and Public Policy. The Audit, Board Nominating and Governance, and Management Compensation Committees are each constituted and operated according to the independence and other requirements of the Securities
Exchange Act of 1934, as amended (Exchange Act) and the New York Stock Exchange (NYSE) Corporate Governance Standards. Each Committee is governed by a written charter that can be
viewed on Chevrons website at
www.chevron.com
and is available in print upon request. In addition, each member of the Compensation Committee is an outside Director
for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended, and each member of the Audit Committee is independent, financially literate and, other than Dr. Gast, an audit committee financial expert, as such
terms are defined under the Exchange Act and related rules and the NYSE Corporate Governance Standards.
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Chevron Corporation2014 Proxy Statement
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13
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Committees and Membership
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Committee Functions
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Audit
Ronald D. Sugar, Chairman
Alice P.
Gast
Enrique Hernandez, Jr. *
John G. Stumpf
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Selects the independent registered public accounting firm for endorsement by the Board and ratification
by the stockholders
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Reviews reports of independent and internal auditors
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Reviews and approves the scope and cost of all services (including nonaudit services) provided by the independent
registered public accounting firm
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Monitors the effectiveness of the audit process and financial reporting
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Reviews the adequacy of financial and operating controls
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Monitors implementation and effectiveness of Chevrons compliance policies
and procedures
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Assists the Board in fulfilling its oversight of enterprise risk management, particularly financial risk
exposures
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Evaluates the effectiveness of the Committee
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Board Nominating and Governance
Robert E. Denham, Chairman
Jon M.
Huntsman, Jr.
Kevin W. Sharer *
Carl Ware
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Evaluates the effectiveness of the Board and its committees and recommends changes to improve Board, Board
committee, and individual Director effectiveness
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Assesses the size and composition of the Board
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Recommends prospective Director nominees
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Reviews and approves nonemployee Director compensation
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Reviews and recommends changes as appropriate in Chevrons Corporate Governance Guidelines, Restated
Certificate of Incorporation, By-Laws, and other Board-adopted governance provisions
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Reviews stockholder proposals and recommends Board responses to proposals
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Assists the Board in fulfilling its oversight of enterprise risk management, particularly risks in connection
with Chevrons corporate governance structures and processes
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Management Compensation
Carl Ware, Chairman
Linnet F.
Deily
Robert E. Denham
Charles W. Moorman IV
Kevin W.
Sharer *
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Conducts an annual review of the CEOs performance
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Reviews and recommends to the independent Directors the salary and other compensation matters for the
CEO
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Reviews and approves salaries and other compensation matters for executive officers other than the
CEO
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Administers Chevrons executive incentive and equity-based compensation plans
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Reviews Chevrons strategies and supporting processes for management succession planning, leadership
development, executive retention, and diversity
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Assists the Board in fulfilling its oversight of enterprise risk management, particularly risks in connection
with Chevrons compensation programs
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Evaluates the effectiveness of the Committee
|
Public
Policy
Linnet F. Deily, Chairman
Enrique Hernandez, Jr.
Jon M. Huntsman, Jr.
Charles W. Moorman IV
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Identifies, monitors, and evaluates domestic and international social, political, human rights, and environmental
trends and issues that affect Chevrons activities and performance
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Recommends to the Board policies, programs, and strategies concerning such issues
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Recommends to the Board policies, programs, and practices concerning support of charitable, political, and
educational organizations
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Reviews annually the policies, procedures, and expenditures for Chevrons political activities, including
political contributions and direct and indirect lobbying
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Reviews stockholder proposals and recommends Board responses to proposals
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Assists the Board in fulfilling its oversight of enterprise risk management, particularly risks in connection
with the social, political, environmental, and public policy aspects of Chevrons business
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Evaluates the effectiveness of the
Committee
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*
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Effective May 27, 2014, Mr. Hernandez will rotate off the Audit Committee and join the Board Nominating and Governance Committee, and
Mr. Sharer will rotate off the Board Nominating and Governance Committee and Management Compensation Committee and join the Audit Committee.
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14
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Chevron Corporation2014 Proxy Statement
|
Board and Committee Meetings and Attendance
In 2013, your Board held six Board meetings, with each meeting including an executive session of
independent Directors presided over by Mr. Denham, our independent Lead Director, and 24 Board committee meetings, which included nine Audit Committee, seven Board Nominating and Governance Committee, five Management Compensation Committee, and
three Public Policy Committee meetings.
All current Directors, other than Mr. Huntsman, who joined the Board in January 2014, attended
83 percent or more of the Board
meetings and their Board Committee meetings during 2013. Chevrons policy regarding Directors attendance at the Annual Meeting, as described in the Board Agenda and
Meetings section of Chevrons Corporate Governance Guidelines (available at
www.chevron.com
), is that all Directors are expected to attend the Annual Meeting, absent extenuating circumstances. All current Directors, other
than Mr. Huntsman, who joined the Board in January 2014, attended the 2013 Annual Meeting.
Board and Committee Oversight of Risk
One of the many duties of your Board is to oversee Chevrons risk management policies and
practices to ensure that the appropriate risk management systems are employed throughout the Company. Chevron faces a broad array of risks, including
market, operational, strategic, legal, political, and financial risks. The Board exercises its role of risk oversight in a variety of ways, including the following:
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Board of Directors
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Monitors overall corporate performance, the integrity of Chevrons
financial controls, and the effectiveness of its legal compliance and enterprise risk management programs, risk governance practices, and risk mitigation efforts
Oversees managements 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 Boards annual strategy session and the annual business plan and capital budget
review
Receives reports from management on risk matters in the context of the Companys strategic, business, and operational planning and decision making
Receives reports from various centers of management-level risk expertise, including Corporate Strategic Planning, Legal, Corporate Compliance, Health Environment and Safety, Security,
Global Exploration and
Reserves, Corporation Finance, and others
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Audit Committee
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|
Assists the Board in fulfilling its oversight of financial risk
exposures and implementation and effectiveness of Chevrons compliance programs
Discusses Chevrons policies with respect to financial risk assessment and financial risk
management
Meets with Chevrons Chief Compliance Officer and representatives of Chevrons Compliance Policy Committee to receive information regarding compliance policies and
procedures and internal controls
Meets with and reviews reports from Chevrons independent and internal auditors
Reports its discussions to the full Board for consideration and action when appropriate
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Board Nominating and Governance Committee
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Assists the Board in fulfilling its oversight of risks that may arise in
connection with the Companys governance structures and processes
Conducts an annual evaluation of the Companys 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
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Assists the Board in fulfilling its oversight of risks that may arise in
connection with Chevrons compensation programs and practices
Reviews the design and goals of Chevrons compensation programs and practices in the context of possible
risks to Chevrons financial and reputational well-being
Reviews Chevrons 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
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Public Policy Committee
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Assists the Board in fulfilling its oversight of risks that may arise in
connection with the social, political, environmental, and public policy aspects of Chevrons business and the communities in which it operates
Discusses risk management in the context of, among other things, legislative and regulatory initiatives, safety and environmental stewardship, community relations, government and
nongovernment organization relations, and Chevrons reputation
Reports its discussions to the full Board for consideration and action when appropriate
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Chevron Corporation2014 Proxy Statement
|
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15
|
Succession Planning and Leadership Development
Succession planning and leadership development are top priorities for your Board and management.
Semi-annually, the nonemployee Directors review candidates for all senior management positions to ensure that qualified candidates are available for all positions and that development plans are being utilized to strengthen the skills and
qualifications of candidates.
To assist the nonemployee Directors, the CEO periodically provides them with an assessment of senior executives and their potential to succeed to the position of CEO, as well as perspectives on
potential candidates for other senior management positions.
Corporate Governance Guidelines
Your Board has adopted Corporate Governance Guidelines to provide a transparent framework for the effective governance of Chevron. The Corporate Governance Guidelines are reviewed regularly and updated as
appropriate. The full text of the Corporate Governance Guidelines can be found on our website at
www.chevron.com
, and address, among other topics:
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Board membership criteria
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the selection of new Directors
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Director terms of office
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the election of Directors
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Board leadership and the independent Lead Director
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Board access to senior management
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Board performance evaluations
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stock ownership guidelines
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communicating with the Board
|
Business Conduct and Ethics Code
We have adopted a code of business conduct and ethics for Directors, officers (including the Companys Chief Executive Officer, Chief Financial Officer and Comptroller), and employees, known as the Business
Conduct and Ethics Code. The code is available on our website at
www.chevron.com
and is available in print upon request. We will post any amendments to the code on our website.
Engagement
Your Board believes that fostering long-term and institution-wide relationships with stockholders and
maintaining their trust and goodwill is a core Chevron objective. Chevron conducts extensive engagements with key stockholders. These engagements routinely cover governance, compensation, social, safety, environmental, and other issues to ensure
that management and the Board understand and address the issues that are important to our stockholders. In an effort to continuously improve Chevrons governance processes and communications, Chevron has developed and follows an Annual
Engagement Plan and Process to systematically identify and plan its engagements and to proactively address important issues. The Annual Engagement Plan and Process is supervised by an Engagement Steering Committee, which is composed of senior
executive officers. The
Engagement Steering Committee meets periodically to discuss engagement efforts and key issues and trends.
During 2013, an engagement team consisting of senior executives, subject matter experts on governance, compensation, and environmental and social issues, and, when appropriate, our independent Lead Director,
conducted over 50 formal in-depth discussions with stockholders representing nearly 35 percent of Chevrons common stock outstanding. In addition, our engagement team met with many of the stockholders who submitted proposals for inclusion in
our Proxy Statement in order to understand their concerns and discuss areas of agreement and disagreement. Chevron gained valuable feedback during these engagements, and this feedback was shared with the Board and its relevant committees.
Communicating with the Board
The Board Nominating and Governance Committee reviews interested-party communications, including stockholder inquiries directed to nonemployee Directors. The Corporate Secretary and Chief Governance Officer
compiles the communications, summarizes lengthy or repetitive communications, and regularly summarizes the communications received, the responses sent, and further disposition, if any. All communications are available to the Directors.
|
Interested parties wishing to communicate their concerns or questions about Chevron to the Chairman
of the Board Nominating and Governance Committee or any other nonemployee Directors may do so by U.S. mail addressed to Nonemployee Directors, c/o Office of the Corporate Secretary and Chief Governance Officer, 6001 Bollinger Canyon Road, San Ramon,
CA 94583-2324, or by email to
corpgov@chevron.com
.
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16
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|
Chevron Corporation2014 Proxy Statement
|
Related Person Transactions
Review and Approval of Related Person Transactions
It is our policy that all employees and Directors must avoid any activity that is in conflict with, or has the appearance of conflicting with,
Chevrons business interests. This policy is included in our Business Conduct and Ethics Code. Directors and executive officers must inform the Chairman and the Corporate Secretary and Chief Governance Officer when confronted with any situation
that may be perceived as a conflict of interest. In addition, at least annually, each Director and executive officer completes a detailed questionnaire specifying any business relationship that may give rise to a conflict of interest.
Your Board has charged the Board Nominating and Governance Committee to review related person transactions as defined by U.S. Securities and
Exchange Commission (SEC) rules. The Committee has adopted guidelines to assist it with this review. Under these guidelines, all executive officers, Directors and Director nominees must promptly advise the Corporate Secretary and Chief Governance
Officer of any proposed or actual business and financial affiliations involving themselves or their immediate family members that, to the best of their knowledge after reasonable inquiry, could reasonably be expected to give rise to a reportable
related person transaction. The Corporate Secretary and Chief Governance Officer will prepare a report summarizing any potentially reportable transactions, and the Committee will review these reports and determine whether to approve or ratify the
identified transaction. The Committee has identified the following categories of transactions that are deemed to be preapproved by the Committee, even if the aggregate amount involved exceeds the $120,000 reporting threshold identified in the SEC
rules:
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compensation paid to an executive officer if that executive officers compensation is otherwise reported in our Proxy Statement or if the executive
officer is not an immediate family member of another Chevron executive officer or Director;
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compensation paid to a Director for service as a Director if that compensation is otherwise reportable in our Proxy Statement;
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transactions in which the related persons interest arises solely as a stockholder and all stockholders receive the same benefit on a pro-rata basis;
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transactions involving competitive bids (unless the bid is awarded to a related person who was not the lowest bidder or unless the bidding process did not
involve the use of formal procedures normally associated with our competitive bidding procedures);
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transactions involving services as a common or contract carrier or public utility in which rates or charges are fixed by law;
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transactions involving certain banking-related services under terms comparable with similarly situated transactions;
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transactions conducted in the ordinary course of business in which our Directors interest arises solely because he or she is a director of another
entity and the transaction does not exceed $5 million or five percent (whichever is greater) of the receiving entitys consolidated gross revenues for that year;
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charitable contributions by Chevron to an entity in which our Directors interest arises solely because he or she is a director, trustee, or similar
advisor to the entity and the contributions do not exceed, in the aggregate, $1 million or two percent (whichever is greater) of that entitys gross revenues for that year; and
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transactions conducted in the ordinary course of business and our Directors interest arises solely because he or she owns an equity or limited
partnership interest in the entity and the transaction does not exceed two percent of the total equity or partnership interests of the entity.
|
The Committee reviews all relevant information, including the amount of all business transactions involving Chevron and the entity with which the Director or executive officer is associated, and determines whether
to approve or ratify the transaction. A Committee member will abstain from decisions regarding transactions involving that Director or his or her family members.
Related Person Transactions
The stepmother of Chairman and Chief Executive Officer
John S. Watson and Mr. Watsons late fathers estate (of which Mr. Watson, his stepmother, and several of his immediate family members are beneficiaries) are receiving payments from a law firm in connection with the
firms buyout in January 2008 of Mr. Watsons fathers partnership and real property interests. In late 2008, subsequent to Mr. Watsons fathers withdrawal from this law firm and death, Chevron retained the firm.
In 2013, Chevron paid the firm approximately $615,000 and does not expect the firm to provide legal services in 2014.
Samuel W. Johnson,
son of Mr. Jay Johnson, Senior Vice President, Upstream, is employed by Chevron with annual compensation of approximately $154,000 plus employee benefits.
The Board Nominating and Governance Committee has reviewed and ratified these transactions under the standards described above.
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Chevron Corporation2014 Proxy Statement
|
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17
|
Board
Nominating and Governance Committee Report
The Board Nominating and Governance Committee is responsible for recommending to the Board the
qualifications for Board membership, identifying, assessing, and recommending qualified Director candidates for the Boards consideration, assisting the Board in organizing itself to discharge its duties and responsibilities, and providing
oversight of Chevrons 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 Committees charter is available on Chevrons website at
www.chevron.com
and is available in print upon request.
The Committees role in and process for identifying and evaluating prospective Director nominees, including nominees recommended by
stockholders, is described under Director Nomination Process in this Proxy Statement. In addition, the Committee makes recommendations to the Board concerning Director independence, Board committee assignments, committee chairman
positions, Audit Committee financial experts and the financial literacy of Audit Committee members.
The Committee regularly
reviews trends and recommends best practices, initiates improvements, and plays a leadership role in maintaining Chevrons strong corporate governance structures and practices. Among the practices the Committee believes demonstrate the
Companys commitment to strong corporate governance are:
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annual election of all Directors;
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supermajority of independent Directors;
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majority vote standard for the election of Directors in uncontested elections, coupled with a Director resignation policy;
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annual election of the Chairman of the Board by Directors;
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annual election of an independent Lead Director by independent Directors;
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|
annual assessment of Board, committee, and Director performance;
|
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Director retirement policy;
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annual succession planning sessions;
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|
confidential stockholder voting policy;
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|
minimum stockholding requirements for Directors and officers;
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|
review and approval or ratification of related person transactions as defined by SEC rules;
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policy to obtain stockholder approval of any stockholder rights plan;
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right of stockholders to call for a special meeting; and
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no supermajority voting provisions in Restated Certificate of Incorporation or By-Laws.
|
Stockholders can find additional information concerning Chevrons corporate governance structures and practices in Chevrons Corporate
Governance Guidelines, By-Laws and the Restated Certificate of Incorporation, copies of which are available on Chevrons website at
www.chevron.com
and are available in print upon request.
Respectfully submitted on March 25, 2014, by members of the Board Nominating and Governance Committee of your Board:
Robert E. Denham, Chairman
Jon M.
Huntsman, Jr.
Kevin W. Sharer
Carl Ware
Compensation Discussion and Analysis
A Message to Our Stockholders
Chevrons executive compensation program ensures alignment between stockholders, executives, and the
Company.
Carl Ware
Chairman of the Management Compensation Committee
Dear Chevron Stockholder,
The Management Compensation Committee (MCC) carefully considers your views about how we pay our executives. The MCC is composed solely of
independent Directors, and we are accountable for ensuring that the links between pay and our business goals are responsible, appropriate, and strongly aligned with your interests as a Chevron stockholder.
We annually review our compensation programs, including our compensation-related risk profile, to ensure that our compensation-related risks are not
likely to have a material adverse effect on the Company. Our programs are designed to be externally competitive and sufficiently flexible in order to attract, motivate, and retain top-tier talent in this highly competitive industry. To assist us, we
engage an independent compensation consultant, Exequity LLP, which performs no other consulting or other services for Chevron.
Each
year, we take into account the result of the say-on-pay vote cast by you. In 2013, approximately 95 percent of those who voted approved the compensation of Chevrons named executive officers (NEOs). We interpreted this strong level
of support as affirmation of the current design, purposes, and direction of our compensation programs. We also solicited input from a number of our largest stockholders to get specific feedback.
Our leadership team continues to achieve challenging performance milestones and to produce strong stockholder returns over medium- and longer-term
investment horizons. Our existing compensation plans have supported that success. While we did not make substantive changes to our program in 2013, we continually review our approach and make improvements when appropriate.
Chevron is proud to be part of your portfolio, and we look forward to many successful years ahead.
Sincerely,
Management Compensation
Committee
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Chevron Corporation2014 Proxy Statement
|
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21
|
Objectives of Our Executive
Compensation Program
The overarching objective of our executive compensation program is to attract and retain seasoned management who
will deliver long-term stockholder value. Our success is driven by our people.
The global energy business is the largest industry in the
world and is very competitive. As measured by net income, four out of the top 10 global companies operate in this business segment. The lead times and project life spans in our business are generally very long. The development cycle of a large,
major capital project, from exploration to first production, can be 10 years or longer. Equally important, the productive life spans of our assets can be very longseveral decades in most cases and in excess of 100 years for some assets.
Accordingly, we have designed our compensation programs to reward career employees. This reflects the fact that the productive life of
our asset base spans generations of employees and that the development cycle of many current investment projects are longer than an NEOs tenure in a particular executive position.
Our management and employees have routinely delivered superior long-term stockholder returns. The stock performance graph that follows shows how an
investment in Chevron common stock would have performed versus an equal investment in either the S&P 500 Index or a hypothetical portfolio of BP, ExxonMobil, Royal Dutch Shell and Total equity securities over a five-year period ending
December 31, 2013.
The comparison includes the reinvestment of all dividends and is adjusted for stock splits, if any. The relative
weightings of the constituent equity securities for this hypothetical portfolio match the relative market capitalizations of BP, ExxonMobil, Royal Dutch Shell and Total as of the beginning of each year.
Our Pay Philosophy
Our
compensation programs have been designed with several important values in mind. These include:
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structuring our compensation programs in a manner that ensures strong alignment of the interests of our stockholders, the Company, and our employees and
executives;
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paying for performance;
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structuring our compensation programs to reward career employees;
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paying competitively, across all salary grades and across all geographies;
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applying compensation program rules in a manner that is internally consistent; and
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being metrics-driven and properly balanced in our emphasis on short-term and long-term objectives and our use of measures based on absolute performance,
relative performance against industry peers, historical performance, and progress on key business initiatives.
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22
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|
Chevron Corporation2014 Proxy Statement
|
Components of Compensation
The material components of our executive compensation program and their purposes and key characteristics are summarized in the following chart.
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Chevron Corporation2014 Proxy Statement
|
|
23
|
Pay-for-Performance Framework
Our compensation program is designed to pay NEOs for Company and individual performance. To support this objective, the majority of
executive pay is at-risk and comes from long-term incentives, which reward performance that drives stockholder value over the long term.
Significant Pay at Risk
Approximately 91 percent of the total direct compensation (base salary, CIP and LTIP) delivered to
our CEO and 85 percent delivered to our NEOs is at risk. By at risk, we mean there is no guarantee that the compensation values expected at the time individual awards were granted will be realized. The MCC has complete discretion to
severely restrict, and even score at zero, the Corporate Performance Rating and Individual Performance Modifier for the annual cash bonus program, the CIP, discussed in more detail below. Stock options can be rendered worthless if the Company has
not performed well and if stock price appreciation
has not occurred within 10 years of the grant date. Performance share awards can be rendered worthless as well if Chevron ranks last in relative total shareholder return (TSR) for any given
three-year period. Lastly, restricted stock units can deteriorate markedly in value from the grant date if Chevron performs poorly. Therefore, for the NEOs to sustain competitive pay relative to industry peers, Chevron must show sustained
competitive performance and Chevrons stockholders must be rewarded with competitive TSR results. This at risk feature demonstrates managements alignment with stockholders interests.
In 2013, the portion of
Mr. Watsons total compensation that was at risk, along with the other NEOs, is illustrated as follows:
Emphasis on Long-Term Incentives That Are Tied to Performance
Long-term incentive awards are typically awarded as 60 percent stock options and 40 percent
performance shares. This combination provides a balance of awards, which the MCC believes appropriately serves performance incentive and executive retention objectives. Options gain value when absolute stock prices rise, but can be rendered
worthless through macroeconomic factors unrelated to the energy industry (e.g., the recent financial recession and the accompanying significant decline in equity values) or through poor company performance.
Performance shares are awarded based on relative company performance against peers and, although they can lose value during general market declines, they are much less likely to be rendered
worthless by general, unfavorable equity market declines. Both LTIP awards derive value directly from the Companys stock price appreciation, and both are in total alignment with stockholder interests.
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24
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Chevron Corporation2014 Proxy Statement
|
Use of Peer Groups
We are always competing for the best talent with our direct industry peers and with the broader market. Accordingly, the MCC regularly reviews the market data, pay practices, and ranges of specific comparator, or
peer, companies to ensure that we continue to offer a relevant and competitive executive pay program each year. Throughout this Compensation Discussion and Analysis, we refer to three distinct peer groups, as described below.
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Peer Group
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Description
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Purpose
|
|
Source
|
Oil Industry Peer Group
(13 companies)
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Represents companies with substantial U.S. or global operations that most nearly approximate the size, scope, and complexity of our business or
segments of our business.
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To understand how each NEOs total compensation compares with the total compensation for reasonably similar positions at these
companies.
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Gathered from the Oil Industry Job Match Survey, an annual survey published by Towers Watson, and
from these companies proxy statements and other public disclosures.
|
Non-Oil Industry Peer Group
(22 companies)
|
|
Represents companies of significant financial and operational size whose products are primarily commodities and that have, among other things, global
operations, significant assets and capital requirements, long-term project investment cycles, extensive technology portfolios, an emphasis on engineering and technical skills, and extensive distribution channels.
|
|
To periodically compare our overall compensation practices (and those of the oil and energy industry, generally) against a broader mix
of companies to ensure that our compensation practices are reasonable when compared with non-energy companies that are similar to Chevron in size, complexity, and scope of operations.
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Gathered from the Total Compensation Measurement Database, a proprietary source of compensation and
data analysis developed by Aon Hewitt.
|
LTIP Performance Share Peer Group
(4 companies)
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A subset of our Oil Industry Peer Group: BP, ExxonMobil, Royal Dutch Shell, and Total.*
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To compare our total shareholder return over a three-year period to determine the payout value, if any, of performance share awards under our Long-Term
Incentive Plan.
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Gathered from the Oil Industry Job Match Survey, an annual survey published by Towers Watson, and
from these companies proxy statements and other public disclosures.
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*
|
Total replaced ConocoPhillips/Phillips 66 for 2012 and future awards.
|
Oil Industry Peer Group (in order of decreasing market capitalization)
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Market Cap
($ Millions)
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Sales and Other
Operating
Revenues
($ Millions)
(1)
|
|
|
Net Income
($ Millions)
|
|
Company Name
|
|
Company Ticker
|
|
12/31/13
|
|
|
FY 2013
|
|
|
FY 2013
|
|
ExxonMobil Corporation
|
|
XOM
|
|
|
438,702
|
|
|
|
407,666
|
|
|
|
32,580
|
|
Chevron Corporation
|
|
CVX
|
|
|
239,028
|
|
|
|
211,665
|
|
|
|
21,423
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|
Royal Dutch Shell plc
|
|
RDSA
|
|
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224,337
|
|
|
|
451,235
|
|
|
|
16,371
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|
BP plc
|
|
BP
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|
|
150,784
|
|
|
|
379,136
|
|
|
|
23,681
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|
ConocoPhillips
|
|
COP
|
|
|
86,553
|
|
|
|
54,413
|
|
|
|
9,156
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|
Occidental Petroleum Corporation
|
|
OXY
|
|
|
75,700
|
|
|
|
24,455
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|
|
|
5,903
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|
Phillips 66
|
|
PSX
|
|
|
45,521
|
|
|
|
157,730
|
|
|
|
3,726
|
|
Anadarko Petroleum Corporation
|
|
APC
|
|
|
39,977
|
|
|
|
14,867
|
|
|
|
801
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|
Hess Corporation
|
|
HES
|
|
|
27,747
|
|
|
|
22,284
|
|
|
|
5,052
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|
Valero Energy Corporation
|
|
VLO
|
|
|
27,298
|
|
|
|
138,074
|
|
|
|
2,720
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|
Marathon Petroleum Corporation
|
|
MPC
|
|
|
27,216
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|
|
|
93,897
|
|
|
|
2,112
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|
Devon Energy Corporation
|
|
DVN
|
|
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25,119
|
|
|
|
10,588
|
|
|
|
(20
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)
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Marathon Oil Corporation
|
|
MRO
|
|
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24,569
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|
|
|
14,501
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|
1,753
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|
Tesoro Corporation
|
|
TSO
|
|
|
7,751
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|
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37,601
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412
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(1)
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Excludes excise, value-added and similar taxes.
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The Oil Industry Peer Group companies most similar to Chevron in size, complexity, geographic reach,
business lines, and location of operations are BP, ExxonMobil, and Royal Dutch Shell. These companies are key competitors for stockholder investments within the larger global energy sector. We also compete for
stockholder interest with smaller companies, including the larger independent exploration and production companies (ConocoPhillips, Occidental, Anadarko, etc.) and the larger independent refining
and marketing companies (Valero, Tesoro, etc.). We compete with all of these companies for executive talent.
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|
|
Chevron Corporation2014 Proxy Statement
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|
25
|
NonOil Industry Peer Group
(in order of decreasing market capitalization)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market Cap
($ Millions)
|
|
|
Sales and Other
Operating
Revenues
($ Millions)
(1)
|
|
|
Net Income
($ Millions)
|
|
Company Name
|
|
Company Ticker
|
|
12/31/13
|
|
|
FY 2013
|
|
|
FY 2013
|
|
General Electric Company
|
|
GE
|
|
|
282,823
|
|
|
|
100,542
|
|
|
|
14,055
|
|
Johnson & Johnson
|
|
JNJ
|
|
|
258,341
|
|
|
|
71,312
|
|
|
|
13,831
|
|
Chevron Corporation
|
|
CVX
|
|
|
239,028
|
|
|
|
211,665
|
|
|
|
21,423
|
|
Pfizer Inc.
|
|
PFE
|
|
|
197,349
|
|
|
|
51,584
|
|
|
|
22,003
|
|
International Business Machines Corporation
|
|
IBM
|
|
|
196,949
|
|
|
|
97,250
|
|
|
|
16,483
|
|
AT&T Inc.
|
|
T
|
|
|
183,746
|
|
|
|
128,752
|
|
|
|
18,249
|
|
Merck & Co. Inc.
|
|
MRK
|
|
|
146,477
|
|
|
|
44,033
|
|
|
|
4,404
|
|
Verizon Communications Inc.
|
|
VZ
|
|
|
140,639
|
|
|
|
120,550
|
|
|
|
11,497
|
|
Intel Corporation
|
|
INTC
|
|
|
128,918
|
|
|
|
52,708
|
|
|
|
9,620
|
|
Pepsico Inc.
|
|
PEP
|
|
|
126,815
|
|
|
|
66,415
|
|
|
|
6,740
|
|
The Boeing Company
|
|
BA
|
|
|
102,013
|
|
|
|
86,623
|
|
|
|
4,585
|
|
3M Company
|
|
MMM
|
|
|
93,027
|
|
|
|
30,871
|
|
|
|
4,659
|
|
Honeywell International Inc.
|
|
HON
|
|
|
71,616
|
|
|
|
39,055
|
|
|
|
3,924
|
|
Ford Motor Co.
|
|
F
|
|
|
60,853
|
|
|
|
139,400
|
|
|
|
7,155
|
|
Caterpillar Inc.
|
|
CAT
|
|
|
57,921
|
|
|
|
52,694
|
|
|
|
3,789
|
|
The Dow Chemical Company
|
|
DOW
|
|
|
53,513
|
|
|
|
57,080
|
|
|
|
4,787
|
|
Hewlett-Packard Company
2
|
|
HPQ
|
|
|
53,383
|
|
|
|
111,851
|
|
|
|
5,113
|
|
Duke Energy Corporation
|
|
DUK
|
|
|
48,721
|
|
|
|
24,598
|
|
|
|
2,665
|
|
Lockheed Martin Corporation
|
|
LMT
|
|
|
47,423
|
|
|
|
45,358
|
|
|
|
2,981
|
|
Northrop Grumman Corporation
|
|
NOC
|
|
|
24,939
|
|
|
|
24,661
|
|
|
|
1,952
|
|
American Electric Power Co. Inc.
|
|
AEP
|
|
|
22,762
|
|
|
|
15,357
|
|
|
|
1,480
|
|
International Paper Company
|
|
IP
|
|
|
21,593
|
|
|
|
29,080
|
|
|
|
1,395
|
|
Alcoa Inc.
|
|
AA
|
|
|
11,385
|
|
|
|
23,032
|
|
|
|
(2,285
|
)
|
(1)
|
Excludes excise, value-added and similar taxes.
|
(2)
|
Hewlett-Packards fiscal year ends on October 31. Accordingly, market capitalization reflects October 31, 2013, shares outstanding and
December 31, 2013, stock price. Sales and Other Operating Revenues and Net Income both reflect the fiscal year ended October 31, 2013.
|
How Compensation Is Delivered
As described above in Pay for Performance Framework, our compensation program is designed
to deliver competitive pay in the current year (base salary plus CIP awards) and in future years (LTIP awards) based on the longer-termlargely stock priceperformance of the Company. For NEOs, primary emphasis is on long-term, at-risk
compensation, i.e., LTIP awards such as stock options, performance shares and, from time to time, restricted stock units, the value of which move in direct relation to our stock price and returns provided to our stockholders.
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Stock options have value only if Chevrons stock price advances above the grant-day price.
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Performance shares capture value in direct relation to Chevrons relative ranking versus our LTIP Performance Share Peer Group on total shareholder
return (stock price appreciation plus dividends).
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Restricted stock units, which are used infrequently, hold value in direct relation to Chevrons stock price.
|
Stock options can be rendered worthless if the Companys stock price falls below the grant-day price. Performance shares can be
rendered worthless if Chevron ranks last in TSR for the designated three-year performance period.
This mix of award elements serves a retention objective in that it diversifies grant-recipient compensation risks. Stock options provide strong incentives for absolute, long-term stock price appreciation, but offer
no protection of value against broad-based or energy-industry specific market declines, even if Company performance under those adverse conditions is competitive relative to peers. Performance shares are likely to retain at least some value for
recipients, reflecting relative performance versus the LTIP Performance Share Peer Group. This will apply when broad, macroeconomic factors result in a general decline in equity values (e.g., the recent financial recession) or the industry sector
(e.g., a broad-based decline in commodity prices).
As described above in Significant Pay at Risk, the vast majority of our
NEOs compensation is delivered through LTIP and only nine percent of our CEOs pay is in the form of guaranteed compensation.
Below we describe in detail the material components of our compensation program for our NEOs.
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26
|
|
Chevron Corporation2014 Proxy Statement
|
|
Chevrons Named Executive Officers, or NEOs
|
John Watson, Chairman and Chief Executive
Officer
|
George Kirkland, Vice Chairman and Executive Vice President,
Upstream
|
Mike Wirth, Executive Vice President, Downstream &
Chemicals
|
Pat Yarrington, Vice President and Chief Financial
Officer
|
Hew Pate, Vice President and
General Counsel
|
Base Salary
Base salary is a fixed, competitive component of pay based on responsibilities, skills, and experience. Base salaries are reviewed periodically in light of market practices and changes in responsibilities.
How the CEOs Base Salary Is Determined
The MCCs independent consultant reviews and reports to the MCC on the relationship of
Mr. Watsons base salary to that of his peers in our Oil Industry and NonOil Industry Peer Groups. The MCC does not have a predetermined target or range within the Oil Industry Peer Group or NonOil Industry Peer Group as an
objective for Mr. Watsons base salary. Instead, the MCC exercises its discretion, taking into account the data provided by the MCCs
independent consultant, the relative size, scope, and complexity of our business, Mr. Watsons performance, and the aggregate amount of Mr. Watsons compensation package.
After considering the totality of these elements, the MCC makes a recommendation to the independent Directors, and the independent Directors determine Mr. Watsons base salary.
How the Other NEOs Base
Salaries Are Determined
For our other NEOs, base salary is a function of two things: the NEOs assigned base salary
grade and individual qualitative considerations, such as individual performance, experience, skills, competitive positioning, retention objectives, and leadership responsibilities relative to other NEOs.
Mr. Watson makes recommendations to the MCC as to the base salaries for each of our other NEOs. The MCC makes base salary determinations for
all NEOs, and the independent Directors of the Board review and ratify the determinations.
Each NEO is assigned to a base salary grade. Each grade has a base salary minimum, midpoint, and
maximum that constitute the salary range for that grade, except for the CEO and Vice Chairman positions, which do not have salary grade ranges because they are single incumbent positions. Salary grades and the appropriate salary ranges are
determined through market surveys of positions of comparable level, scope, complexity, and responsibility. The MCC annually reviews the base salary grade ranges and may approve increases in the ranges if it determines that adjustments are necessary
to maintain competitiveness.
Adjustments in 2013 Base
Salaries
The MCC adjusted our NEOs base salaries in 2013 as follows:
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NEO
|
|
Position
|
|
2012
Base Salary
|
|
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2013
Base Salary
|
|
|
Adjustment
for 2013
|
|
John Watson
|
|
Chairman and CEO
|
|
$
|
1,700,000
|
|
|
$
|
1,800,000
|
|
|
|
5.9%
|
|
George Kirkland
|
|
Vice Chairman and
Executive Vice President,
Upstream
|
|
$
|
1,400,000
|
|
|
$
|
1,450,000
|
|
|
|
3.6%
|
|
Mike Wirth
|
|
Executive Vice President, Downstream & Chemicals
|
|
$
|
1,000,000
|
|
|
$
|
1,050,000
|
|
|
|
5.0%
|
|
Pat Yarrington
|
|
Vice President and Chief Financial Officer
|
|
$
|
930,000
|
|
|
$
|
1,000,000
|
|
|
|
7.5%
|
|
Hew Pate
|
|
Vice President and General Counsel
|
|
$
|
781,000
|
|
|
$
|
825,000
|
|
|
|
5.6%
|
|
The MCC determined that these adjustments were appropriate to maintain compensation competitiveness in base salary
structure and in light of each NEOs 2013 individual performance highlights noted below.
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|
|
Chevron Corporation2014 Proxy Statement
|
|
27
|
Chevron Incentive Plan (CIP)
The CIP is designed to recognize annual performance achievements. Annual operating and financial results figure prominently into this
assessment, along with demonstrated progress on key business initiatives. Individual leadership is also recognized through this award. The award is delivered as an annual cash bonus based on a percentage of base salary and makes up approximately 16
percent of the CEOs annual compensation and 21 percent of all other NEOs annual compensation. The CIP award calculation is consistent for all CIP-eligible Chevron employees, with the award target varying by pay grade. The award is
calculated as follows:
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|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
x
|
|
Award Target
|
|
x
|
|
Corporate Performance
Rating
|
|
x
|
|
Individual Performance Modifier
|
|
|
|
|
À
|
|
|
|
À
|
|
|
|
À
|
|
|
|
|
Before the beginning of
each performance year, the MCC establishes a CIP Award Target for each NEO, which is based on a percentage of the NEOs base salary.
The MCC sets target awards based on the median award of our Oil Industry Peer Group. All individuals in the same salary grade have the same
target, which provides internal equity and consistency.
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|
|
|
After the end of the
performance year, the MCC sets the Corporate Performance Rating. This rating reflects the MCCs overall assessment of the Companys performance for that year, based on a range of measures used to evaluate performance against plan in four
broad categories:
Financial
Health, Environment and Safety
Operating Performance
Milestones and Commercial
The MCC has discretion on weighting the
categories and on weighting the measures within each category. Performance is viewed across multiple parameters (absolute results; results versus plan; results versus Oil Industry Peer Group and/or general industry; performance trends over time) and
distinctions are made between the controllable and noncontrollable aspects of the measures. With these measures as the foundation, the MCC exercises its discretion in setting the Corporate Performance Rating. The minimum Corporate Performance Rating
is zero and the maximum is 200 percent.
|
|
|
|
The
MCC also takes into account individual performance. This is largely a personal leadership dimension, recognizing the individual effort and initiative expended and demonstrated progress on key business initiatives during the course of the year. The
MCC uses its judgment in analyzing the individual performance of each NEO, his or her enterprise and business segment leadership, and how the business units reporting to the NEO performed.
Mr. Watson makes recommendations to the MCC as to the Individual
Performance Modifier of each of our other NEOs.
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|
|
|
28
|
|
Chevron Corporation2014 Proxy Statement
|
2013 CIP ResultsCorporate Performance Rating
Our annual performance measures are reviewed in comparison to prior years, current-year plans, and
the results of our Oil Industry Peer Group. The MCC also reviews actual annual cash award payments for the prior year for Chevron and our Oil Industry Peer Group, compared with actual business performance for Chevron and for our Oil Industry Peer
Group. This comparison assures that our process for determining the Corporate Performance Rating is
consistent with our Oil Industry Peer Group and that actual awards are consistent with both Chevron performance and performance relative to our peers. The MCC reviews performance in the following
four broad categories, which contain a range of performance measures that reinforce the importance of both short-term and long-term performance.
|
|
|
|
|
Category
|
|
Key Performance Measures
|
Financial
|
|
|
|
Earnings/ Earnings per
Share
Return on Capital Employed
Total Shareholder Return (TSR) (1, 3, and 5 year)
|
Health, Environment and Safety
|
|
|
|
Process Safety
Personal Safety
Environmental
|
Operating Performance
|
|
|
|
Operating Expenses
Segment Earnings per Barrel
Production
Reserves
Asset Utilization Rates
|
Milestones and Commercial
|
|
|
|
Major Capital Projects
Commercial Transactions
|
The key performance measures against the business plan are agreed to with the Board and the MCC at
the beginning of the performance year. Mid-year and end-of-year reviews by the Board and MCC assess progress against this balanced set of performance measures.
The Corporate Performance Rating influences compensation outcomes, in a consistent manner, for most employees
worldwide. Therefore, in setting the overall corporate rating, the MCC also takes into account the need to provide competitive overall compensation not only for the NEOs, but also for the
employee base as a whole.
The MCC set a Corporate Performance Rating of 108 percent for 2013. This overall rating is based on the
following assessment of Chevrons 2013 performance.
2013 Performance
2013 was a solid performance year for the Company.
We continued to lead the industry in many financial and safety performance measures. We progressed several key major capital projects (Gorgon,
Wheatstone, Jack/St. Malo and Bigfoot in the Upstream and several key projects in Downstream & Chemicals), which underpin the Companys medium-term growth profile. We also continued to acquire resources that we believe will add to our
growth prospects later in the decade.
Below we highlight the Companys performance both in the four broad categories that form the
basis of CIP award decisions and as compared with our LTIP Performance Share Peer Group (BP, ExxonMobil, Royal Dutch Shell, and Total, with Total replacing ConocoPhillips/Phillips 66 for 2012 and future awards). In the graphs that follow, earnings
have been adjusted to exclude externally disclosed, significant items or activities that are not representative of underlying business operations, such as gains or losses associated with divestitures, asset impairments, and restructurings. We
present a reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures in Appendix A to this Proxy Statement.
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|
|
Chevron Corporation2014 Proxy Statement
|
|
29
|
Financial Highlights
|
|
|
Achieved earnings of $21.4 billion, fourth highest in the Companys history
|
|
|
|
Posted a return on capital employed (ROCE) of 13.5 percent, second best in the LTIP Performance Share Peer Group
|
|
|
|
Increased the quarterly dividend 11 percent, the 26th consecutive annual increase
|
|
|
|
Led the LTIP Performance Share Peer Group in total shareholder return for five-year and 10-year periods
|
|
|
|
Led the LTIP Performance Share Peer Group on rolling five-year earnings-per-share growth for the fourth consecutive year
|
Health, Environment and Safety Highlights
|
|
|
Among the industry leaders in Days Away From Work Rate
|
|
|
|
Among the industry leaders in Total Recordable Incident Rate
|
|
|
|
Lowered volume of spills, posting the second-best Company performance ever
|
|
|
|
Reduced Tier 1 Loss of Containment events (i.e., unplanned or uncontrolled release of material from primary containment that results in a serious outcome),
posting the best Company performance ever
|
|
|
|
Incurred lower number of process fires than 2012
|
|
|
|
Incurred higher number of fatalities than 2012
|
Operating Performance
Highlights
|
|
|
Led the industry in earnings per barrel in our Upstream segment (fourth consecutive year)
|
|
|
|
Led the industry in cash margins per barrel in our Upstream segment (fourth consecutive year)
|
|
|
|
Achieved 85 percent reserves replacement ratio for 2013, 123 percent for the three-year period, and 100 percent for the five-year period
|
|
|
|
2013 production impacted by delayed startup of a liquefied natural gas (LNG) plant in Angola, and higher decline and lower gas well deliverability in Thailand
|
|
|
|
Was ranked No. 2 in earnings per barrel in our Downstream segment
|
|
|
|
Lower refinery utilization rates than 2012
|
|
|
|
30
|
|
Chevron Corporation2014 Proxy Statement
|
Milestones and Commercial Highlights
Significant progress was made throughout the year on important capital projects.
For Upstream, one major capital project started upAngola LNG. New wells were brought online at Agbami 2 and Usan in Nigeria, and first oil was
achieved at Papa Terra in Brazil. Progress on the Kitimat LNG project continued through engineering design, with early works and site preparation under way in western Canada. We also signed a Memorandum of Understanding with the Republic of
Kazakhstan enabling us to advance our Future Growth and Wellhead Pressure Management Projects in that country. Progress was also made on four other key projects that underpin our medium-term production growth:
|
|
|
Gorgon LNG (Australia) Plant start-up and first cargo is planned for mid-2015; this project was about 75 percent complete as of December 2013; and
nearly all modules for the first of three anticipated liquefaction facilities were installed.
|
|
|
|
Wheatstone LNG (Australia) Start-up of the first train is expected in 2016; we also continued site preparation and fabrication of key equipment; the
project was about 25 percent complete as of December 2013.
|
|
|
|
Jack/St. Malo (Gulf of Mexico) First production is scheduled for late 2014; the facility was safely moored on location for commissioning.
|
|
|
|
Big Foot (Gulf of Mexico) First production is scheduled in 2015; the facility is undergoing integration of the completed modules.
|
In the Downstream segment, the Heavy Oil Upgrade Project, which further strengthens the competiveness of GS
Caltexs Yeosu Refinery in South Korea, started up several months ahead of schedule. Our joint venture with Chevron Phillips Chemical announced a final investment decision on its U.S. Gulf Coast Petrochemicals Project, which is designed to
capitalize on advantaged feedstock sourced from emerging shale gas development in North America. At year-end, construction was nearing completion on the Pascagoula Base Oil Plant, with startup planned in 2014. The addition of this plant positions
the Company as the worldwide industry leader in premium base-oil production.
In addition to progress on these key capital projects, we
made significant resource additions and concluded several commercial transactions that served to strengthen our portfolio and provide future development opportunities. Highlights include establishing a participating interest in Argentinas
Neuquén Basin, finalizing our agreements in the Liard and Horn River Basins in Canada and assuming operatorship of the corresponding Kitimat LNG plant and pipeline, acquiring new acreage with exploration potential in the Kurdistan Region of
Iraq and in the Bight Basin and Cooper Basin of Australia. We also acquired deepwater acreage in the Gulf of Mexico and Brazil, as well as new acreage in the Delaware Basin (New Mexico) and in the Duvernay in Canada.
CIP Awards for 2013 Performance
Year
The MCC and independent Directors of the Board assessed corporate and individual performance in
making CIP awards based on 2013 performance.
As described above, performance is assessed against key performance measures on historical
and relative competitive performance of the Company against our Oil Industry Peer
Group. In the MCCs and the independent Directors assessment, the following CIP awards demonstrate the crucial connection between pay and performance, reinforce managements
accountability for the full spectrum of operating results, and support the objective of attracting and retaining seasoned management who will deliver long-term stockholder value.
2013 CIP
ResultsIndividual Performance Highlights
|
|
|
NEO
|
|
Performance Highlights
|
John Watson
|
|
Fourth-highest earnings and earnings per share in the Companys history and top-tier return on capital employed (ROCE) and earnings-per-barrel results
Led the LTIP Performance Share Peer Group in total shareholder
return for the three-year and five-year periods
Development and implementation of value-creating strategies,
investments, and commercial transactions
Led the LTIP Performance Share Peer Group in personal injury
rate and reduced process safety events; overall results adversely impacted by certain operating incidents
|
George Kirkland
|
|
Continued competitor-leading performance in Upstream earnings-per-barrel and segment ROCE
Significant portfolio additions of producing and prospective
acreage, exceeding target
Production slightly below target, but aided by strong base
business results
Otherwise industry-leading safety performance adversely
impacted by an operating incident
|
Mike Wirth
|
|
Downstream earnings short of plan due to unplanned downtime at key refineries
Ranked second in earnings-per-barrel in our Downstream segment
Ranked second in ROCE among peer group
On
track for majority of capital projects
|
Pat Yarrington
|
|
Outstanding internal controls performance
Excellent
cash and balance sheet management, as reflected by key financial decisions
Very
effective relationship development and engagement with the investor and finance communities
|
Hew Pate
|
|
Continued reduction in outstanding litigation docket through successful case resolution
Outstanding management of international cases and other major
litigation matters
Effective support of major transactions and commercial
activity
|
|
|
|
Chevron Corporation2014 Proxy Statement
|
|
31
|
2013 CIP Results
Mr. Watson received an award of $3,200,000. This amount reflects the amount of his base salary
($1,800,000) multiplied by his CIP Award Target percentage of 150 percent multiplied by the Corporate Performance Rating of 108 percent, resulting in an award of $2,916,000. The remaining $284,000 of Mr. Watsons award is attributable
to the MCCs and independent Directors assessment of his individual performance, as described above.
Mr. Kirkland
received an award of $2,200,000. This amount reflects the amount of his base salary ($1,450,000) multiplied by his CIP Award Target percentage of 130 percent multiplied by the Corporate Performance Rating of 108 percent, resulting in an award
of $2,035,800. The remaining $164,200 of Mr. Kirklands award is attributable to the MCCs and independent Directors assessment of his individual performance, as described above.
Mr. Wirth received an award of $1,222,500. This amount reflects the amount of his base salary ($1,050,000) multiplied by his CIP Award Target
percentage of 110 percent multiplied by the Corporate Performance Rating of 108 percent, resulting in an
award of $1,247,400. Mr. Wirths final award amount of $1,222,500 is attributable to the MCCs and independent Directors assessment of his individual performance, as described
above.
Ms. Yarrington received an award of $1,366,200. This amount reflects the amount of her base salary ($1,000,000) multiplied
by her CIP Award Target percentage of 110 percent multiplied by the Corporate Performance Rating of 108 percent, resulting in an award of $1,188,000. The remaining $178,200 of Ms. Yarringtons award is attributable to the MCCs
and independent Directors assessment of her individual performance, as described above.
Mr. Pate received an award of
$953,400. This amount reflects the amount of his base salary ($825,000) multiplied by his CIP Award Target percentage of 100 percent multiplied by the Corporate Performance Rating of 108 percent, resulting in an award of $891,000. The remaining
$62,400 of Mr. Pates award is attributable to the MCCs and independent Directors assessmentof his individual performance, as described above.
Long-Term Incentive Plan (LTIP)
The key objective of our LTIP awards is to encourage performance that drives stockholder value over
the long term. LTIP awards give our NEOs a meaningful equity stake in the business, an equity stake that vests over time. The amount of an NEOs LTIP award at grant time is determined by the MCC with input from its independent compensation
consultant, using Oil
Industry Peer Group compensation comparisons. The objective is to ensure Chevron is competitive against the Oil Industry Peer Group on total compensation (cash plus equity), after allowing for
appropriate distinctions based on size, scale, scope, and job responsibilities. Our LTIP awards typically consist of two equity components:
|
|
|
|
|
Component
|
|
Weight
|
|
How It Works
|
Stock Options
1
|
|
60%
|
|
Strike price is equal to the closing stock price on the grant
date
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 stock price at the exercise date
compared with the strike price
Actual number of options granted is determined by dividing 60 percent of the value of the NEOs LTIP award by an estimated Black-Scholes option value
|
Performance Shares
2
|
|
40%
|
|
Payout is dependent on Chevrons total shareholder return
(TSR) over a three-year period, compared with our LTIP Performance Share Peer Group (BP, ExxonMobil, Royal Dutch Shell, and Total)
Payout can vary from 0 percent to 200 percent of the target number of shares, depending on this relative TSR ranking
Payout of 200 percent is earned only if Chevrons TSR is
better than all of our LTIP Performance Share Peer Group
Payout of 0 percent is earned if Chevrons TSR is last relative to all of our LTIP Performance Share Peer Group
Actual number of shares granted is determined by dividing 40 percent of the value of the NEOs LTIP award by Chevrons 90-day trailing average stock price
Payment is made in
cash
|
1
|
We report the value of each NEOs 2013 stock option exercises in the Option Exercises and Stock Vested in Fiscal Year 2013 table in this
Proxy Statement.
|
2
|
We report the value of each NEOs 2013 performance share payout in the Option Exercises and Stock Vested in Fiscal Year 2013 table in this
Proxy Statement.
|
|
|
|
32
|
|
Chevron Corporation2014 Proxy Statement
|
From time to time, the Board may approve the grant of restricted stock units for special retention or
incentive purposes.
We use LTIP awards because they are directly linked to stockholder returns. To have value, stock options require
increases in the Chevron stock price. Performance shares require Chevron to provide greater stockholder returns than our LTIP Performance Share Peer Group (BP, ExxonMobil, Royal Dutch Shell, and Total). Because grants are made each year based on the
stock price at that time, executives continue to realize value from these compensation elements only if stockholder returns are sustained over a long period.
The 60/40 split of stock options and performance shares serves a retention objective in that it diversifies grant-recipient compensation risks. Performance shares provide some level of performance incentives even
during periods of adverse equity market conditions, provided the Company performs favorably against its peers. Stock options, on the other hand, do not retain value if macroeconomic or industry-specific conditions force an overall decline in equity
values, irrespective of individual company performance results.
With stock options and performance shares as key compensation elements,
our NEOs are:
|
|
|
fully aligned with the economic interests of our stockholders, on both a medium- and longer-term time horizon;
|
|
|
|
significantly leveraged, from an ultimate compensation standpoint, to Chevron stock price performance; and
|
|
|
|
rewarded based on a balance between relative (performance shares) and absolute (stock options) pay-for-performance measures.
|
The average hold time prior to exercising stock options is approximately six years for our LTIP population, reinforcing the long-term focus of our
senior leaders on achieving sustainable, superior performance. Although stock options comprise more than half of the potential value of an individuals LTIP grant, the MCC does not believe a performance award structure tied solely to equity
market valuations is appropriate, given that equity market fluctuations can be driven by macro factors completely unrelated to the energy industry and company performance.
Term of LTIP Awards
A Closer Look at Performance Shares: Why Total Shareholder Return (TSR)?
The MCC believes that TSR is the best overall pay-for-performance measure to align our NEOs
performance with stockholder interests. TSR is the standard metric for stockholders to use in measuring Company performance because it easily allows for meaningful comparisons of our performance relative to other companies within our same industry,
and it also allows for easy comparison with our stockholders other investment alternatives. It is objectively determined by third-party market participants independent of the Companys judgment.
In addition, the MCC believes that Company performance on other measuresoperational and financial, as well as short-term and long-termis
ultimately reflected in TSR results. Thus, over time, TSR offers the best indication of sustained performance across a series of important measures. It is also the measure that encourages the Company to adopt strategies and execute against those
strategies to sustain its performance against key
industry competitors and against the broader market. Finally, TSR as an incentive metric is not vulnerable, as other financial metrics can be, to actions that optimize short-term gains at the
expense of long-term value creation.
The value of the performance share payout depends on how our TSR ranks relative to that of our LTIP
Performance Share Peer Group over a three-year performance period. TSR combines stock price appreciation and dividends paid to show the total return to stockholders, expressed as an annualized percentage. The calculation assumes that dividends are
reinvested in additional shares. The three-year period tracks the average holding period our key institutional investors typically hold a stock (three years).
Depending on our TSR rank compared with that of our LTIP Performance Share Peer Group, the payout is calculated as follows:
|
|
|
|
|
Our Relative TSR Rank
|
|
Payout as a Percentage of Target
|
|
1
|
|
|
200%
|
|
2
|
|
|
150%
|
|
3
|
|
|
100%
|
|
4
|
|
|
50%
|
|
5
|
|
|
0%
|
|
Performance share payouts reported in the Option Exercises and Stock Vested in Fiscal Year
2013 table in this Proxy Statement relate to performance shares granted in January 2011. For the three-year performance period ending December 31, 2013, Chevron ranked second in TSR among the five companies in the LTIP Performance Share
Peer Group. This resulted in a payout of 150 percent of target.
For awards granted after January 1, 2011, the MCC may, in its discretion, adjust the cash payout
of performance shares downward if it determines that business or economic considerations warrant such an adjustment.
|
|
|
Chevron Corporation2014 Proxy Statement
|
|
33
|
Performance shares awarded in January 2013 are not eligible for payout (if any) until expiration of
the three-year performance period on December 31, 2015.
Additional details about performance share payouts can be found in the footnotes to the Option
Exercises and Stock Vested in Fiscal Year 2013 table in this Proxy Statement.
2013 LTIP Grants
In the Summary Compensation Table and the Grants of Plan-Based Awards in Fiscal
Year 2013 table in this Proxy Statement, we report the value and terms of the following LTIP awards granted in early 2013 to each NEO.
|
|
|
The CEO.
In determining the value of an annual LTIP award for the CEO, the MCC relies upon input from our independent consultant and the compensation
comparison data from the Oil Industry Peer Group. The CEOs grant is based on the size, scope and complexity of our business, as well as Mr. Watsons performance. The MCC does not, however, fix predetermined targets for award values.
In 2013, the MCC recommended, and the independent Directors of the Board approved, an annual LTIP award for Mr. Watson as follows:
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
Performance
Shares
|
|
|
LTIP Value
at Grant Date
|
|
377,000
|
|
|
47,000
|
|
|
$
|
15.04 MM
|
|
|
|
|
NEOs other than the CEO.
For NEOs other than the CEO, the value of an annual LTIP award is a function of the NEOs salary grade. At the beginning
of the performance year, the MCC sets the annual LTIP award value for each salary grade, which is generally the median of the value of LTIP awards to persons in similar positions at companies in our Oil Industry Peer Group. The MCC does not,
however, fix predetermined targets for award values. Mr. Watson makes recommendations to the MCC as to the LTIP awards for each of our other NEOs. In 2013, the
|
|
|
MCC approved annual LTIP awards for each of the NEOs other than the CEO, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEO
|
|
Stock
Options
|
|
|
Performance
Shares
|
|
|
LTIP Value
at Grant Date
|
|
George Kirkland
|
|
|
149,000
|
|
|
|
21,500
|
|
|
$
|
6.38 MM
|
|
Mike Wirth
|
|
|
93,000
|
|
|
|
12,400
|
|
|
$
|
3.82 MM
|
|
Pat Yarrington
|
|
|
103,000
|
|
|
|
13,500
|
|
|
$
|
4.19 MM
|
|
Hew Pate
|
|
|
77,500
|
|
|
|
10,200
|
|
|
$
|
3.16 MM
|
|
All NEOs, including Mr. Watson, have held their stock options approximately 6.4 years on average.
|
|
|
34
|
|
Chevron Corporation2014 Proxy Statement
|
Retirement Programs and Other Benefits
NEOs, like all other employees, have retirement programs and other benefits as part of their overall compensation package at Chevron. We believe that these programs and benefits:
|
|
support our long-term investment cycle;
|
|
|
complement our career employment model; 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 allow them to accumulate retirement income. These programs include defined benefit (pension) and defined contribution (401(k) savings) plans, as well as other plans, which allow highly compensated
employees to receive the same benefits they would have earned without the IRS limitations on qualified retirement plans under ERISA.
|
|
|
|
|
|
|
Plan Name
|
|
Plan Type
|
|
How It Works
|
|
Whats Disclosed
|
Chevron Retirement Plan (CRP)
|
|
Qualified
Defined
Benefit (IRS
§401(a))
|
|
Participants are eligible for a pension benefit when they leave the Company as long as they meet age, service, and other provisions under the
plan.
|
|
In the Summary Compensation Table and Pension Benefits Table in this Proxy
Statement, we report the change in pension value in 2013 and the present value of each NEOs accumulated benefit under the CRP. The increase in pension value is not a current cash payment. It represents the increase in the value of the
NEOs pensions, which are paid only after retirement.
|
Chevron Retirement Restoration Plan (RRP)
|
|
Non-Qualified
Defined
Benefit
|
|
Provides participants with
retirement income that cannot
be paid from the CRP due
to
IRS limits on compensation
and benefits.
1
|
|
In the Pension Benefits Table and accompanying narrative in this Proxy Statement, we
describe how the RRP works and present the current value of each NEOs 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
Chevrons contributions to each NEOs ESIP account.
|
Employee Savings Investment Plan Restoration Plan (ESIP-RP)
|
|
Non-Qualified
Defined
Contribution
|
|
Provides participants with an additional Company-matching contribution that cannot be paid into the ESIP due to IRS limits on compensation and
benefits.
3
|
|
In the Nonqualified Deferred Compensation Table and accompanying narrative in this Proxy
Statement, we describe how the ESIP-RP works and Chevrons contributions to each NEOs ESIP-RP account.
|
Deferred Compensation Plan (DCP)
|
|
Non-Qualified
Defined
Contribution
|
|
Participants can defer up to:
90% of CIP awards and LTIP
performance share awards
40% of base salary above the IRS
limit (IRS §401(a)(17))
for payment after retirement or
separation from service.
|
|
In the Nonqualified Deferred Compensation Table in this Proxy Statement, we report the
aggregate NEO deferrals and earnings in 2013.
|
1
|
Employees whose compensation exceeds the limits established by the IRS for covered compensation and benefit levels. The 2013 IRS annual compensation limit was
$255,000.
|
2
|
Participants who contribute at least 2% of their annual compensation to the ESIP receive a Company-matching contribution of 8% (or 4% if they contribute 1%).
The annual limit for both employer and employee contributions to a qualified defined contribution plan was $51,000 in 2013.
|
3
|
Participants who contribute at least 2% of their annual compensation to the Deferred Compensation Plan receive a Company-matching contribution of 8% of their
base salary that exceeds the IRS annual compensation limit.
|
Benefit Programs
The same health and welfare programs, including post-retirement health care, that are broadly available to our employees on U.S. payroll also
apply to NEOs, with no other special programs except executive physicals (as described below under Perquisites).
Perquisites
Perquisites for NEOs are limited and consist principally of financial counseling fees, executive physicals, home security, and the
aggregate incremental costs to Chevron for personal use of Chevron automobiles and aircraft. The MCC periodically reviews our policies with respect to perquisites. In the Summary Compensation Table in this Proxy Statement, we report the
value of each NEOs perquisites for 2013.
|
|
|
Chevron Corporation2014 Proxy Statement
|
|
35
|
Compensation Governance
The MCC works very closely with its independent compensation consultant, Exequity LLP, and management
to examine pay and performance matters throughout the year, carefully assessing pay based on progress against business plans, individual performance and contributions, as well as Chevrons performance relative to industry peers. The MCC then
applies its judgment to make its decisions. The MCC solicits input from the CEO concerning the performance and compensation of other NEOs. The CEO does
not participate in discussions about his own pay; any proposed change to the compensation of the CEO is recommended by the MCC and approved by the independent Directors of the Board.
A complete description of the MCCs authority and responsibility is provided in its charter, which is available on our website at
www.chevron.com
and in print upon request.
Best-Practice Features
Embedded in our overall compensation program are additional features that strengthen the links between the interests of our NEOs and
stockholders.
|
|
|
|
|
|
|
|
|
WHAT WE DO
|
|
|
|
WHAT WE DO NOT DO
|
ü
|
|
Stock ownership guidelines,
for CEO,
five times base salary; Vice Chairman, Executive Vice Presidents, and Chief Financial Officer, four times base salary
|
|
|
|
û
|
|
No excessive perquisites,
all with a
specific business rationale
|
ü
|
|
Deferred accounts
are inaccessible
until a minimum of one year following termination
|
|
|
|
û
|
|
No individual Supplemental Executive Retirement Plans
|
ü
|
|
Clawback provisions
in the CIP, LTIP,
DCP, RRP and ESIP-RP for misconduct
|
|
|
|
û
|
|
No stock option repricing,
reloads or
exchange without stockholder approval
|
ü
|
|
Over 90 percent of CEOs pay is at risk
|
|
|
|
û
|
|
No loans or purchases of Chevron securities on margin
|
ü
|
|
Thorough assessment of
performance
|
|
|
|
û
|
|
No transferability of equity
(except in
the case of death or a qualifying court order)
|
ü
|
|
Robust succession planning process
with
Board review twice a year
|
|
|
|
û
|
|
No stock options granted below fair market value
|
ü
|
|
MCC composed entirely of outside, independent Directors
|
|
|
|
û
|
|
No hedging in or pledging of Chevron securities
|
ü
|
|
Independent compensation consultant,
hired by and reporting directly to the MCC
|
|
|
|
û
|
|
No change-in-control agreements
for
NEOs
|
ü
|
|
Negative discretion on performance share payouts
for awards granted after January 1, 2011
|
|
|
|
û
|
|
No tax gross-ups
for
NEOs
|
ü
|
|
CIP and certain LTIP awards intended to qualify for deduction (i.e., performance-
based compensation)
under Section 162(m) of Internal Revenue Code
|
|
|
|
û
|
|
No golden parachutes or golden coffins
for NEOs
|
Independent Executive Compensation Advice
The MCC retains an independent compensation consultantExequity LLPto assist it with its
duties. The MCC has the exclusive right to select, retain, and terminate Exequity, as well as to approve any fees, terms, and other conditions of its service. Exequity, and its lead consultant, reports directly to the MCC, but when directed to do so
by the MCC, works cooperatively with Chevrons management to develop analyses and proposals for the MCC. Exequity provides the following services to the MCC:
|
|
|
Education on executive compensation trends within and across industries
|
|
|
|
Development of compensation philosophy and guiding principles and recommendations concerning compensation levels
|
|
|
|
Selection of compensation comparator groups
|
|
|
|
Identification and resolution of technical issues associated with executive compensation plans, including tax, legal, accounting, and securities regulations
|
Exequity does not provide any services to the Company. The MCC is not aware that any work performed by Exequity raised
any conflicts of interest.
|
|
|
36
|
|
Chevron Corporation2014 Proxy Statement
|
Stock Ownership Guidelines
We require our NEOs to hold prescribed levels of Chevron common stock, further linking their interests with those of our stockholders.
|
|
|
Position
|
|
Ownership Requirements
|
CEO
|
|
Five times base salary
|
Vice Chairman, Executive Vice Presidents, and Chief Financial
Officer
|
|
Four times base salary
|
All other executive officers
|
|
Two times base
salary
|
Executives have five years to attain their stock ownership guideline. Based upon our closing stock price on
December 31, 2013, our CEO had a stock ownership base-salary multiple of 10.6 times, and all other NEOs met their requirement with an average stock ownership base-salary multiple of 7.5 times. The MCC believes these ownership levels provide
adequate focus on our long-term business model.
Employment, Severance, or Change-in-Control Agreements
In general, we do not maintain employment, severance, or change-in-control agreements with our NEOs. Upon retirement or separation from service for
other reasons, NEOs are entitled to certain accrued benefits and payments generally afforded other employees. We describe these benefits and payments in the Pension Benefits Table, the Nonqualified Deferred Compensation Table
and the Potential Payments Upon Termination or Change-in-Control tables in this Proxy Statement.
In February 2012,
Mr. Pate and Chevron mutually terminated his employment agreement described in our 2011 proxy statement in favor of an agreement relating solely to the vesting of Mr. Pates outstanding equity awards, if any, if Mr. Pates
employment is terminated for any reason on or after August 1, 2019. We describe the effect of this agreement in the footnotes to Mr. Pates Potential Payments Upon Termination or Change-in-Control table in this Proxy
Statement.
Compensation Recovery Policies
The CIP, LTIP, Chevron Deferred Compensation Plan for Management Employees, Chevron Retirement Restoration Plan, and Employee Savings Investment Plan-Restoration Plan include provisions permitting us to claw
back certain amounts of compensation awarded to an NEO at any time after June 2005 if an NEO engages in certain acts of misconduct, including among other things: embezzlement; fraud or theft; disclosure of confidential information or other
acts that harm our business, reputation, or employees; misconduct resulting in Chevron having to prepare an accounting restatement; or failure to abide by post-termination agreements respecting confidentiality, noncompetition, or nonsolicitation.
Tax Gross-Ups
We do
not pay tax gross-ups to our NEOs.
Tax Deductibility of NEO Compensation
We have designed awards under the CIP and awards under the LTIP (other than awards of restricted stock units or restricted stock that vest solely
based on the passage of time) to qualify for deduction under Section 162(m) of the Internal Revenue Code, which permits Chevron to deduct certain compensation paid to our CEO and other three most highly paid executives (excluding the Chief
Financial Officer) if compensation in excess of $1 million is performance-based. The performance-based criteria in the CIP were reapproved by stockholders in 2009, and the performance-based criteria in the LTIP was reapproved by stockholders in
2013. The MCC intends to continue seeking a tax deduction for all qualifying compensation within the Section 162(m) limits to the extent that the MCC determines it is in the best interests of Chevron and its stockholders to do so.
|
|
|
Chevron Corporation2014 Proxy Statement
|
|
37
|
Summary
Compensation Table
The following table sets forth the compensation of our named executive officers, or NEOs, for the fiscal
years ending December 31, 2013, December 31, 2012, and December 31, 2011. The primary components of each NEOs compensation are also described in our Compensation Discussion and Analysis in this Proxy Statement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and
Principal Position
|
|
Year
|
|
|
Salary
($)
(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 &
CEO
(7)
|
|
|
2013
|
|
|
$
|
1,770,833
|
|
|
$
|
5,807,790
|
|
|
$
|
9,228,960
|
|
|
$
|
3,200,000
|
|
|
$
|
3,777,809
|
|
|
$
|
231,911
|
|
|
$
|
24,017,303
|
|
|
|
2012
|
|
|
$
|
1,670,833
|
|
|
$
|
7,095,660
|
|
|
$
|
9,807,000
|
|
|
$
|
3,480,000
|
|
|
$
|
9,948,194
|
|
|
$
|
225,435
|
|
|
$
|
32,227,122
|
|
|
|
2011
|
|
|
$
|
1,570,833
|
|
|
$
|
5,064,680
|
|
|
$
|
7,221,600
|
|
|
$
|
4,000,000
|
|
|
$
|
6,592,206
|
|
|
$
|
277,397
|
|
|
$
|
24,726,716
|
|
P.E. Yarrington,
Vice President
& Chief Financial
Officer
|
|
|
2013
|
|
|
$
|
979,583
|
|
|
$
|
1,668,195
|
|
|
$
|
2,521,440
|
|
|
$
|
1,366,200
|
|
|
$
|
1,368,897
|
|
|
$
|
78,825
|
|
|
$
|
7,983,140
|
|
|
|
2012
|
|
|
$
|
909,583
|
|
|
$
|
1,827,670
|
|
|
$
|
2,451,750
|
|
|
$
|
1,339,200
|
|
|
$
|
3,785,547
|
|
|
$
|
95,294
|
|
|
$
|
10,409,044
|
|
|
|
2011
|
|
|
$
|
842,500
|
|
|
$
|
3,572,160
|
|
|
$
|
2,803,680
|
|
|
$
|
1,425,000
|
|
|
$
|
2,577,459
|
|
|
$
|
67,790
|
|
|
$
|
11,288,589
|
|
G.L. Kirkland,
Vice Chairman &
Executive Vice
President, Upstream
(7)
|
|
|
2013
|
|
|
$
|
1,435,417
|
|
|
$
|
2,725,775
|
|
|
$
|
3,655,080
|
|
|
$
|
2,200,000
|
|
|
$
|
899,106
|
|
|
$
|
144,656
|
|
|
$
|
11,060,034
|
|
|
|
2012
|
|
|
$
|
1,370,833
|
|
|
$
|
2,956,525
|
|
|
$
|
4,086,250
|
|
|
$
|
2,200,000
|
|
|
$
|
8,008,957
|
|
|
$
|
132,153
|
|
|
$
|
18,754,718
|
|
|
|
2011
|
|
|
$
|
1,270,833
|
|
|
$
|
2,866,800
|
|
|
$
|
4,035,600
|
|
|
$
|
2,600,000
|
|
|
$
|
5,571,418
|
|
|
$
|
168,112
|
|
|
$
|
16,512,763
|
|
M.K.
Wirth,
Executive Vice President,
Downstream & Chemicals
|
|
|
2013
|
|
|
$
|
1,035,417
|
|
|
$
|
1,546,072
|
|
|
$
|
2,278,260
|
|
|
$
|
1,222,500
|
|
|
$
|
178,937
|
|
|
$
|
140,828
|
|
|
$
|
6,402,014
|
|
|
|
2012
|
|
|
$
|
986,875
|
|
|
$
|
1,827,670
|
|
|
$
|
2,451,750
|
|
|
$
|
1,260,000
|
|
|
$
|
2,196,949
|
|
|
$
|
115,224
|
|
|
$
|
8,838,468
|
|
|
|
2011
|
|
|
$
|
938,958
|
|
|
$
|
3,572,160
|
|
|
$
|
2,803,680
|
|
|
$
|
1,500,000
|
|
|
$
|
2,474,409
|
|
|
$
|
89,583
|
|
|
$
|
11,378,790
|
|
R.H. Pate
Vice President
& General
Counsel
|
|
|
2013
|
|
|
$
|
812,167
|
|
|
$
|
1,260,414
|
|
|
$
|
1,897,200
|
|
|
$
|
953,400
|
|
|
$
|
145,100
|
|
|
$
|
82,448
|
|
|
$
|
5,150,729
|
|
|
|
2012
|
|
|
$
|
768,750
|
|
|
$
|
1,290,120
|
|
|
$
|
1,821,300
|
|
|
$
|
948,900
|
|
|
$
|
145,851
|
|
|
$
|
101,333
|
|
|
$
|
5,076,254
|
|
|
|
2011
|
|
|
$
|
725,875
|
|
|
$
|
3,781,500
|
|
|
$
|
2,017,800
|
|
|
$
|
1,075,000
|
|
|
$
|
132,686
|
|
|
$
|
79,711
|
|
|
$
|
7,812,572
|
|
(1)
|
Reflects actual salary earned during the fiscal year covered. Compensation is reviewed after the end of each year, and salary increases, if any, are generally
effective April 1 of the following year. The following table reflects the annual salary rate and effective date for 2013, 2012 and 2011 and the amounts deferred under the Deferred Compensation Plan for Management Employees II (DCP).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Salary Effective
Date
|
|
|
Salary
|
|
|
Total Salary Deferred
Under the DCP
|
|
J.S. Watson
|
|
|
April 2013
|
|
|
$
|
1,800,000
|
|
|
$
|
177,083
|
|
|
|
|
April 2012
|
|
|
$
|
1,700,000
|
|
|
$
|
167,083
|
|
|
|
|
April 2011
|
|
|
$
|
1,600,000
|
|
|
$
|
534,083
|
|
P.E. Yarrington
|
|
|
April 2013
|
|
|
$
|
1,000,000
|
|
|
$
|
14,492
|
|
|
|
|
April 2012
|
|
|
$
|
930,000
|
|
|
$
|
13,192
|
|
|
|
|
April 2011
|
|
|
$
|
860,000
|
|
|
$
|
337,000
|
|
G.L. Kirkland
|
|
|
April 2013
|
|
|
$
|
1,450,000
|
|
|
$
|
23,608
|
|
|
|
|
April 2012
|
|
|
$
|
1,400,000
|
|
|
$
|
22,417
|
|
|
|
|
April 2011
|
|
|
$
|
1,300,000
|
|
|
$
|
20,517
|
|
M.K. Wirth
|
|
|
April 2013
|
|
|
$
|
1,050,000
|
|
|
$
|
15,608
|
|
|
|
|
April 2012
|
|
|
$
|
1,000,000
|
|
|
$
|
14,737
|
|
|
|
|
April 2011
|
|
|
$
|
955,000
|
|
|
$
|
13,879
|
|
R.H. Pate
|
|
|
April 2013
|
|
|
$
|
825,000
|
|
|
$
|
97,460
|
|
|
|
|
April 2012
|
|
|
$
|
781,000
|
|
|
$
|
10,375
|
|
|
|
|
April 2011
|
|
|
$
|
739,000
|
|
|
$
|
9,617
|
|
|
We explain the amount of salary in proportion to total compensation in our Compensation Discussion and AnalysisPay-for-Performance
FrameworkSignificant Pay at Risk.
|
|
|
|
38
|
|
Chevron Corporation2014 Proxy Statement
|
(2)
|
Amounts for each fiscal year reflect the aggregate grant date fair value of performance shares granted under the Long-Term Incentive Plan of Chevron
Corporation (LTIP). We calculate the grant date fair value of these awards in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, CompensationStock Compensation (ASC Topic 718), as described in
Note 20, Stock Options and Other Share-Based Compensation, to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2013. For purposes of this table only, estimates of
forfeitures related to service-based vesting conditions have been disregarded.
|
|
For performance shares, the per-share grant date fair value was as follows: $158.08 for the March 2013 grant, $123.57 for the January 2013 grant, $107.51 for
the 2012 grant and $95.56 for the 2011 grant. We use a Monte Carlo approach to calculate estimated grant date fair value. To derive estimated grant date fair value per share, this valuation technique simulates total shareholder return (TSR) for the
Company and our LTIP Performance Share Peer Group (BP, ExxonMobil, Royal Dutch Shell and Total, with Total replacing ConocoPhillips starting with the 2012 grant) using market data for a period equal to the term of the performance period, correlates
the simulated returns within the peer group to estimate a probable payout value, and discounts the probable payout value using a risk-free rate for Treasury bonds having a term equal to the performance period. Performance shares are paid in cash,
and the cash payout, if any, is based on market conditions at the end of the performance period and calculated in the manner described in Footnote 2 to the Option Exercises and Stock Vested in Fiscal Year 2013 table in this Proxy
Statement. The material terms of performance shares granted in 2013 are described in the Grants of Plan-Based Awards in Fiscal Year 2013 and Outstanding Equity Awards at 2013 Fiscal Year-End tables in this Proxy Statement.
|
(3)
|
Amounts reflect the aggregate grant date fair value for nonstatutory/nonqualified stock options granted under the LTIP. The per-option grant date fair value
was as follows: $25.02 for the March 2013 grant, $24.48 for the January 2013 grant, $23.35 for the 2012 grant and $21.24 for the 2011 grant. We calculate the grant date fair value of these options in accordance with ASC Topic 718, as described in
Note 20, Stock Options and Other Share-Based Compensation, to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2013. For purposes of this table only, estimates of
forfeitures related to service-based vesting conditions have been disregarded. The terms of stock options granted in 2013 are described in the Grants of Plan-Based Awards in Fiscal Year 2013 and Outstanding Equity Awards at 2013
Fiscal Year-End tables in this Proxy Statement.
|
(4)
|
2013 amounts reflect Chevron Incentive Plan (CIP) awards for the 2013 performance year that were awarded in April 2014. The named executive officers
elected to defer portions of their awards to the Deferred Compensation Plan for Management Employees II as follows: Mr. Watson, 25 percent, or $800,000; Ms. Yarrington, 90 percent, or $1,229,580; Mr. Wirth, 90 percent, or $1,100,250;
and Mr. Pate, 25 percent, or $238,350. See Compensation Discussion and AnalysisHow Compensation Is DeliveredChevron Incentive Plan (CIP) for a detailed description of CIP awards.
|
(5)
|
2013 amounts represent the aggregate change in the actuarial present value of the NEOs pension value for the Chevron Retirement Plan (CRP) and the
Chevron Retirement Restoration Plan (RRP) from January 1, 2013, through December 31, 2013, expressed as a lump sum. (The Deferred Compensation Plan for Management Employees and Deferred Compensation Plan for Management Employees II (both,
the DCP) and ESIP Restoration Plan (ESIP-RP) do not pay above-market or preferential earnings and are not represented in this table.)
|
|
2013 changes in the actuarial present value of an NEOs pension value are attributable to four factors.
|
|
First, increases in highest consecutive 36-month average base salary and CIP awards, or highest average earnings (HAE).
|
|
Second, higher interest and discount rate assumptions were used to estimate the value of the benefit. A higher interest rate produces a lower pension value.
The lump sum interest rates for determining the actuarial present values of the pension benefit are based on the Pension Protection Act of 2006 lump sum interest rates, and such rates for 2014 are equivalent to a rate that is approximately 1 percent
higher than the 2013 rates. In addition, this years discount rate, 4.30 percent, is 0.70 percent higher than last years discount rate, 3.60 percent.
|
|
Third, an additional year of age resulting in a shorter discount period from the assumed retirement age to current age. For all of the NEOs (except for
Mr. Kirkland, who attained age 60 in 2010 and for whom the discount no longer applies because there is no period of time from the assumed retirement age to his current age), the discount period from the assumed retirement age to current age was
shorter as of December 31, 2013. The result of a shorter discount period to retirement age is an increase in pension values.
|
|
Fourth, an additional year of benefit service earned in 2013. All of the NEOs worked for a full year in 2013, and therefore their pension benefits increased
because they earned an additional year of benefit service. For Mr. Pate, the impact of an additional year of service is larger relative to the other NEOs since he has significantly fewer years of service.
|
|
The following table provides a breakdown of the percent change in the NEOs pension values:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Factors
|
|
Name
|
|
Total Percent
Change in
Pension Value,
2012 to 2013
|
|
|
Higher HAE
|
|
|
Higher Interest
Rate and
Discount Rate
Assumptions
|
|
|
One Year
Older
|
|
|
One Additional
Year of Service
|
|
J.S. Watson
|
|
|
15%
|
|
|
|
18%
|
|
|
|
10%
|
|
|
|
4%
|
|
|
|
3%
|
|
P.E. Yarrington
|
|
|
11%
|
|
|
|
13%
|
|
|
|
9%
|
|
|
|
4%
|
|
|
|
3%
|
|
G.L. Kirkland
|
|
|
3%
|
|
|
|
9%
|
|
|
|
6%
|
|
|
|
2%
|
|
|
|
2%
|
|
M.K. Wirth
|
|
|
2%
|
|
|
|
5%
|
|
|
|
7%
|
|
|
|
2%
|
|
|
|
2%
|
|
R.H. Pate
|
|
|
41%
|
|
|
|
12%
|
|
|
|
6%
|
|
|
|
4%
|
|
|
|
31%
|
|
|
Additional information concerning the present value of benefits accumulated by our NEOs under these defined benefit retirement plans is included in the
Pension Benefits Table in this Proxy Statement.
|
(6)
|
All Other Compensation for 2013 includes the following items but excludes other arrangements that are generally available to our salaried employees on the
U.S. payroll and do not discriminate in scope, terms, or operation in favor of our NEOs, such as our relocation, medical, dental, disability, and group life insurance programs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J.S. Watson
|
|
|
P.E. Yarrington
|
|
|
G.L. Kirkland
|
|
|
M.K. Wirth
|
|
|
R.H. Pate
|
|
ESIP Company Contributions
(a)
|
|
$
|
20,400
|
|
|
$
|
20,400
|
|
|
$
|
20,400
|
|
|
$
|
20,400
|
|
|
$
|
20,400
|
|
ESIP-RP Company Contributions
(a)
|
|
$
|
121,267
|
|
|
$
|
57,967
|
|
|
$
|
94,433
|
|
|
$
|
62,433
|
|
|
$
|
44,573
|
|
Perquisites
(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Counseling
|
|
$
|
25,390
|
|
|
$
|
|
|
|
$
|
19,320
|
|
|
$
|
14,880
|
|
|
$
|
14,880
|
|
Motor Vehicles
|
|
$
|
3,759
|
|
|
$
|
|
|
|
$
|
2,872
|
|
|
$
|
|
|
|
$
|
|
|
Corporate Aircraft
(c)
|
|
$
|
43,381
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
41,574
|
|
|
$
|
|
|
Residential Security
(d)
|
|
$
|
15,982
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
405
|
|
|
$
|
900
|
|
Executive Physical
|
|
$
|
1,000
|
|
|
$
|
|
|
|
$
|
6,899
|
|
|
$
|
678
|
|
|
$
|
1,237
|
|
Other (Business Incidentals)
|
|
$
|
732
|
|
|
$
|
458
|
|
|
$
|
732
|
|
|
$
|
458
|
|
|
$
|
458
|
|
TOTAL, ALL OTHER
COMPENSATION
|
|
$
|
231,911
|
|
|
$
|
78,825
|
|
|
$
|
144,656
|
|
|
$
|
140,828
|
|
|
$
|
82,448
|
|
|
|
|
Chevron Corporation2014 Proxy Statement
|
|
39
|
|
(a)
|
The Employee Savings Investment Plan (ESIP) is a tax-qualified defined contribution plan open to employees on the U.S. payroll. The Company provides a company
matching contribution of 8 percent of annual compensation when an employee contributes 2 percent of annual compensation, or 4 percent if they contribute 1 percent. Employees may also choose to contribute an amount above 2 percent, but none
of the amount above 2 percent is matched. The Company match up to IRS limits ($255,000 of income in 2013) is made to the qualified ESIP account. For amounts above the IRS limit, the executive can elect to have 2 percent of base pay directed
into the Deferred Compensation Plan, and the Company will match those funds with a contribution to the nonqualified ESIP-RP.
|
|
(b)
|
Items deemed perquisites are valued on the basis of their aggregate incremental cost to the Company. We do not provide tax gross-ups to our NEOs for any
perquisites. Except in the case of corporate aircraft and motor vehicles, aggregate incremental cost is the same as actual cost.
|
|
(c)
|
Generally, executives are not allowed to use Company planes for personal use. For security reasons, the CEO has been requested to use a Company plane in most
instances of travel. On a very limited basis, the CEO may authorize the personal use of a Company plane by other persons if, for example, it is in relation to and part of a trip that is otherwise business related or it is in connection
with a personal emergency. Aggregate incremental cost was determined by multiplying the operating hours attributable to personal use by the average estimated direct operating costs and the addition of crew costs for overnight lodging and meals and
other fees, as applicable.
|
|
(d)
|
Reflects actual costs of development and implementation of a security system for Mr. Watsons residence and home security monitoring and maintenance
for Messrs. Wirth and Pate.
|
(7)
|
Messrs. Watson and Kirkland are also Directors of the Company, but do not receive any additional compensation for their service.
|
|
|
|
40
|
|
Chevron Corporation2014 Proxy Statement
|
Grants of Plan-Based Awards in Fiscal Year 2013
The following table sets forth information concerning the grants of non-equity and equity incentive plan awards to our named executive officers, or
NEOs, in 2013. Non-equity incentive plan awards are made under our Chevron Incentive Plan (CIP), and equity incentive plan awards (performance shares and stock option awards) are made under our Long-Term Incentive Plan of Chevron
Corporation (LTIP). These awards are also described in our Compensation Discussion and Analysis in this Proxy Statement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
Under
Non-Equity Incentive Plan
Awards
(1)
|
|
|
Estimated Future Payouts
Under
Equity Incentive Plan
Awards
(2)
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
(3)
|
|
|
Exercise
or Base
Price of
Option
Awards
($/Sh)
(4)
|
|
|
Grant
Date
Fair
Value
of
Stock
and
Option
Awards
(5)
|
|
Name
|
|
Award
Type
|
|
Grant
Date
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
|
|
J.S. Watson
(6)
|
|
CIP
|
|
|
|
|
|
|
|
|
|
$
|
2,700,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perf Shares
|
|
|
1/30/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,750
|
|
|
|
47,000
|
|
|
|
94,000
|
|
|
|
|
|
|
|
|
|
|
$
|
5,807,790
|
|
|
|
Options
|
|
|
1/30/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
377,000
|
|
|
$
|
116.45
|
|
|
$
|
9,228,960
|
|
P.E. Yarrington
|
|
CIP
|
|
|
|
|
|
|
|
|
|
$
|
1,100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perf Shares
|
|
|
1/30/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,375
|
|
|
|
13,500
|
|
|
|
27,000
|
|
|
|
|
|
|
|
|
|
|
$
|
1,668,195
|
|
|
|
Options
|
|
|
1/30/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103,000
|
|
|
$
|
116.45
|
|
|
$
|
2,521,440
|
|
G.L. Kirkland
(6)
|
|
CIP
|
|
|
|
|
|
|
|
|
|
$
|
1,885,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perf Shares
|
|
|
3/27/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500
|
|
|
|
2,000
|
|
|
|
4,000
|
|
|
|
|
|
|
|
|
|
|
$
|
316,160
|
|
|
|
Perf Shares
|
|
|
1/30/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,875
|
|
|
|
19,500
|
|
|
|
39,000
|
|
|
|
|
|
|
|
|
|
|
$
|
2,409,615
|
|
|
|
Options
|
|
|
3/27/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,000
|
|
|
$
|
120.19
|
|
|
$
|
350,280
|
|
|
|
Options
|
|
|
1/30/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
135,000
|
|
|
$
|
116.45
|
|
|
$
|
3,304,800
|
|
M.K. Wirth
(6)
|
|
CIP
|
|
|
|
|
|
|
|
|
|
$
|
1,155,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perf Shares
|
|
|
3/27/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100
|
|
|
|
400
|
|
|
|
800
|
|
|
|
|
|
|
|
|
|
|
$
|
63,232
|
|
|
|
Perf Shares
|
|
|
1/30/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
12,000
|
|
|
|
24,000
|
|
|
|
|
|
|
|
|
|
|
$
|
1,482,840
|
|
|
|
Options
|
|
|
3/27/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
$
|
120.19
|
|
|
$
|
75,060
|
|
|
|
Options
|
|
|
1/30/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
|
|
$
|
116.45
|
|
|
$
|
2,203,200
|
|
R.H. Pate
|
|
CIP
|
|
|
|
|
|
|
|
|
|
$
|
825,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perf Shares
|
|
|
1/30/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,550
|
|
|
|
10,200
|
|
|
|
20,400
|
|
|
|
|
|
|
|
|
|
|
$
|
1,260,414
|
|
|
|
Options
|
|
|
1/30/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,500
|
|
|
$
|
116.45
|
|
|
$
|
1,897,200
|
|
(1)
|
The CIP is an annual incentive plan that pays a cash award for performance and is paid in April following the performance year. See our Compensation
Discussion and AnalysisHow Compensation Is DeliveredChevron Incentive Plan (CIP) for a detailed description of CIP awards, including the criteria to be applied in determining the amounts payable. Target is the
percentage of the NEOs base salary set by the Management Compensation Committee prior to the beginning of the performance year. Actual 2013 performance-year awards are shown in the Summary Compensation Table in the Non-Equity
Incentive Plan Compensation column. Under the CIP, there is no threshold or maximum award.
|
(2)
|
Reflects performance share awards issued under the LTIP. See our Compensation Discussion and AnalysisHow Compensation Is DeliveredLong-Term
Incentive Plan (LTIP) for a detailed description of performance share awards, including the criteria to be applied in determining the amounts payable. Target is the number of performance shares awarded in 2013. If there is a
payout, threshold represents the lowest possible payout (25 percent of the grant), and Maximum reflects the highest possible payout (200 percent of the grant). Performance shares are paid in cash, and the payout, if any, will
occur at the end of the three-year performance period (January 2013 through December 2015) and is calculated in the manner described in Footnote 2 to the Option Exercises and Stock Vested in Fiscal Year 2013 table in this Proxy
Statement. The material terms of performance shares granted in 2013 are also described in the Outstanding Equity Awards at 2013 Fiscal Year-End table in this Proxy Statement. Performance share awards do not accrue dividends or dividend
equivalents.
|
(3)
|
Reflects nonstatutory/nonqualified stock options granted under the LTIP. See our Compensation Discussion and AnalysisHow Compensation Is
DeliveredLong-Term Incentive Plan (LTIP) for a description of stock option awards. Options have a 10-year term and vest 33.33 percent at each anniversary of the date of grant over three years. The material terms of stock options granted
in 2013 are also described in the Outstanding Equity Awards at 2013 Fiscal Year-End table in this Proxy Statement. Stock option awards do not accrue dividends or dividend equivalents.
|
(4)
|
The exercise price is the closing price of Chevron common stock on the grant date.
|
(5)
|
We calculate the grant date fair value of each award in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718,
CompensationStock Compensation (ASC Topic 718) and as described in Footnotes 2 and 3 to the Summary Compensation Table in this Proxy Statement.
|
(6)
|
For Mr. Watson, reflects the corrected number of performance shares and stock options granted in January 2013 to correct an administrative error in
calculating the number of performance shares and stock options awarded, as explained in Chevrons Current Report on Form 8-K, filed with the U.S. Securities and Exchange Commission on April 2, 2013. The correction reduced the grant date
fair value of these awards. For Messrs. Kirkland and Wirth, reflects supplemental awards of performance shares and stock options in March 2013 to correct an administrative error in calculating the number of performance shares and stock options
awarded in January 2013, as explained in Chevrons Current Report on Form 8-K, filed on April 2, 2013. These corrections delivered the grant value the independent Directors of the Board intended to deliver with the January 2013 awards.
|
|
|
|
Chevron Corporation2014 Proxy Statement
|
|
41
|
Outstanding Equity Awards at 2013 Fiscal Year-End
The following table sets forth information concerning the outstanding equity incentive awards at December 31, 2013, for each of our named
executive officers, or NEOs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Grant Date
of Option
Awards
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares
or
Units of Stock
That Have Not
Vested
(#)
|
|
|
Market Value
of Shares
or Units of
Stock That
Have Not
Vested
($)
(1)
|
|
|
Equity
Incentive
Plan Awards:
Number
of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)
|
|
|
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or
Other
Rights That
Have Not
Vested ($)
(2)
|
|
J.S. Watson
|
|
|
1/30/2013
|
|
|
|
|
|
|
|
377,000
|
(3)
|
|
$
|
116.45
|
|
|
|
1/30/2023
|
|
|
|
|
|
|
|
|
|
|
|
113,000
|
(4)
|
|
$
|
28,229,660
|
|
|
|
|
1/25/2012
|
|
|
|
140,000
|
|
|
|
280,000
|
(5)
|
|
$
|
107.73
|
|
|
|
1/25/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/2011
|
|
|
|
226,666
|
|
|
|
113,334
|
(6)
|
|
$
|
94.64
|
|
|
|
1/26/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/27/2010
|
|
|
|
340,000
|
|
|
|
|
|
|
$
|
73.70
|
|
|
|
1/27/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/25/2009
|
|
|
|
170,000
|
|
|
|
|
|
|
$
|
69.70
|
|
|
|
3/25/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/26/2008
|
|
|
|
112,000
|
|
|
|
|
|
|
$
|
84.96
|
|
|
|
3/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/28/2007
|
|
|
|
125,000
|
|
|
|
|
|
|
$
|
74.08
|
|
|
|
3/28/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P.E. Yarrington
|
|
|
1/30/2013
|
|
|
|
|
|
|
|
103,000
|
(3)
|
|
$
|
116.45
|
|
|
|
1/30/2023
|
|
|
|
7,999
|
(7)
|
|
$
|
999,112
|
|
|
|
30,500
|
(8)
|
|
$
|
7,619,510
|
|
|
|
|
1/25/2012
|
|
|
|
35,000
|
|
|
|
70,000
|
(5)
|
|
$
|
107.73
|
|
|
|
1/25/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/2011
|
|
|
|
88,000
|
|
|
|
44,000
|
(6)
|
|
$
|
94.64
|
|
|
|
1/26/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/27/2010
|
|
|
|
135,000
|
|
|
|
|
|
|
$
|
73.70
|
|
|
|
1/27/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/25/2009
|
|
|
|
130,000
|
|
|
|
|
|
|
$
|
69.70
|
|
|
|
3/25/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/26/2008
|
|
|
|
39,000
|
|
|
|
|
|
|
$
|
84.96
|
|
|
|
3/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/28/2007
|
|
|
|
44,000
|
|
|
|
|
|
|
$
|
74.08
|
|
|
|
3/28/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/23/2006
|
|
|
|
38,000
|
|
|
|
|
|
|
$
|
56.63
|
|
|
|
3/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G.L. Kirkland
|
|
|
3/27/2013
|
|
|
|
|
|
|
|
14,000
|
(9)
|
|
$
|
120.19
|
|
|
|
3/27/2023
|
|
|
|
|
|
|
|
|
|
|
|
49,000
|
(10)
|
|
$
|
12,241,180
|
|
|
|
|
1/30/2013
|
|
|
|
|
|
|
|
135,000
|
(3)
|
|
$
|
116.45
|
|
|
|
1/30/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/2012
|
|
|
|
58,333
|
|
|
|
116,667
|
(5)
|
|
$
|
107.73
|
|
|
|
1/25/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/2011
|
|
|
|
126,666
|
|
|
|
63,334
|
(6)
|
|
$
|
94.64
|
|
|
|
1/26/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/27/2010
|
|
|
|
190,000
|
|
|
|
|
|
|
$
|
73.70
|
|
|
|
1/27/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/25/2009
|
|
|
|
170,000
|
|
|
|
|
|
|
$
|
69.70
|
|
|
|
3/25/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/26/2008
|
|
|
|
112,000
|
|
|
|
|
|
|
$
|
84.96
|
|
|
|
3/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M.K. Wirth
|
|
|
3/27/2013
|
|
|
|
|
|
|
|
3,000
|
(9)
|
|
$
|
120.19
|
|
|
|
3/27/2023
|
|
|
|
7,999
|
(11)
|
|
$
|
999,112
|
|
|
|
29,400
|
(12)
|
|
$
|
7,344,708
|
|
|
|
|
1/30/2013
|
|
|
|
|
|
|
|
90,000
|
(3)
|
|
$
|
116.45
|
|
|
|
1/30/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/25/2012
|
|
|
|
35,000
|
|
|
|
70,000
|
(5)
|
|
$
|
107.73
|
|
|
|
1/25/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/2011
|
|
|
|
88,000
|
|
|
|
44,000
|
(6)
|
|
$
|
94.64
|
|
|
|
1/26/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/27/2010
|
|
|
|
135,000
|
|
|
|
|
|
|
$
|
73.70
|
|
|
|
1/27/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/25/2009
|
|
|
|
130,000
|
|
|
|
|
|
|
$
|
69.70
|
|
|
|
3/25/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/26/2008
|
|
|
|
112,000
|
|
|
|
|
|
|
$
|
84.96
|
|
|
|
3/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/28/2007
|
|
|
|
125,000
|
|
|
|
|
|
|
$
|
74.08
|
|
|
|
3/28/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/23/2006
|
|
|
|
75,000
|
|
|
|
|
|
|
$
|
56.63
|
|
|
|
3/23/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.H. Pate
|
|
|
1/30/2013
|
|
|
|
|
|
|
|
77,500
|
(3)
|
|
$
|
116.45
|
|
|
|
1/30/2023
|
|
|
|
23,996
|
(13)
|
|
$
|
2,997,335
|
|
|
|
22,200
|
(14)
|
|
$
|
5,546,004
|
|
|
|
|
1/25/2012
|
|
|
|
26,000
|
|
|
|
52,000
|
(5)
|
|
$
|
107.73
|
|
|
|
1/25/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/2011
|
|
|
|
63,333
|
|
|
|
31,667
|
(6)
|
|
$
|
94.64
|
|
|
|
1/26/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/27/2010
|
|
|
|
102,000
|
|
|
|
|
|
|
$
|
73.70
|
|
|
|
1/27/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Market value is based upon number of restricted stock units (RSUs) that have not vested multiplied by $124.91, which was the closing price of Chevron common
stock on 12/31/13.
|
(2)
|
Represents estimated payout value of performance shares and is based upon the number of performance shares multiplied by the assumed performance modifier of
200 percent multiplied by $124.91, the closing price of Chevron common stock on 12/31/13. The performance modifier for the most recent payout was 150 percent, which exceeded the threshold. Accordingly, the estimated payout value is based upon 200
percent performance modifier, the next-highest performance modifier that exceeds the previous fiscal years performance modifier. The estimated payout value may not necessarily reflect the final payout, which will be calculated in the manner
described in Footnote 2 to the Option Exercises and Stock Vested in Fiscal Year 2013 table in this Proxy Statement.
|
(3)
|
Stock options vest at the rate of 33.33 percent per year, with the vesting dates of 1/30/14, 1/30/15 and 1/30/16.
|
(4)
|
Represents performance shares that vest at the end of the applicable three-year performance period; 66,000 shares vest on 12/31/14, and 47,000 shares vest on
12/31/15.
|
(5)
|
Stock options vest at the rate of 33.33 percent per year, with the vesting dates of 1/25/13, 1/25/14 and 1/25/15.
|
(6)
|
Stock options vest at the rate of 33.33 percent per year, with the vesting dates of 1/26/12, 1/26/13 and 1/26/14.
|
(7)
|
Represents unvested portion of 15,000 RSUs granted on 12/6/11 and subsequent dividend equivalents credited as additional RSUs. Fifty percent vested on
12/6/13, and 50 percent will vest on 12/6/15 if Ms. Yarrington is employed through the vesting date.
|
(8)
|
Represents performance shares that vest at the end of the applicable three-year performance period; 17,000 shares vest on 12/31/14, and 13,500 shares vest on
12/31/15.
|
(9)
|
Stock options vest at the rate of 33.33 percent per year, with the vesting dates of 3/27/14, 3/27/15 and 3/27/16.
|
(10)
|
Represents performance shares that vest at the end of the applicable three-year performance period; 27,500 shares vest on 12/31/14, and 21,500 shares vest on
12/31/15.
|
(11)
|
Represents unvested portion of 15,000 RSUs granted on 12/6/2011 and subsequent dividend equivalents credited as additional RSUs. Fifty percent vested on
12/6/13, and 50 percent will vest on 12/6/15 if Mr. Wirth is employed through the vesting date.
|
(12)
|
Represents performance shares that vest at the end of the applicable three-year performance period; 17,000 shares vest on 12/31/14, and 12,400 shares vest on
12/31/15.
|
(13)
|
Represents unvested portion of 22,500 RSUs granted on 12/6/11 and subsequent dividend equivalents credited as additional RSUs, 30 percent of which will vest
on 12/6/14, 30 percent on 12/6/16 and 40 percent on 12/6/18 if Mr. Pate is employed through the respective vesting dates.
|
(14)
|
Represents performance shares that vest at the end of the applicable three-year performance period; 12,000 shares vest on 12/31/14, and 10,200 shares vest on
12/31/15.
|
|
|
|
42
|
|
Chevron Corporation2014 Proxy Statement
|
Option Exercises and Stock Vested in Fiscal Year 2013
The following table sets forth information concerning the cash value realized by each of our named executive officers, or NEOs, upon
exercise of options or vesting of restricted stock units and performance share awards in 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of Shares
Acquired on Exercise
(#)
|
|
|
Value Realized
on
Exercise
($)
(1)
|
|
|
Number of Shares
Acquired on Vesting
(#)
(2)
|
|
|
Value Realized
on
Vesting
($)
(2)
|
|
J.S. Watson
|
|
|
|
|
|
$
|
|
|
|
|
79,500
|
|
|
$
|
9,737,955
|
|
P.E. Yarrington
|
|
|
40,000
|
|
|
$
|
2,669,768
|
|
|
|
39,434
|
|
|
$
|
4,836,678
|
(3)
|
G.L. Kirkland
|
|
|
125,000
|
|
|
$
|
6,310,388
|
|
|
|
45,000
|
|
|
$
|
5,512,050
|
|
M.K. Wirth
|
|
|
40,000
|
|
|
$
|
2,729,600
|
|
|
|
53,634
|
|
|
$
|
6,486,718
|
(3)
|
R.H. Pate
|
|
|
|
|
|
$
|
|
|
|
|
22,500
|
|
|
$
|
2,756,025
|
|
(1)
|
Value realized upon exercise was determined by multiplying the number of stock options exercised by the difference between the weighted average fair market
value of Chevron common stock on the exercise date and the exercise price of the stock options.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Shares Acquired
on Exercise
|
|
|
Grant
Date
|
|
|
Exercise
Price
|
|
|
Exercise
Date
|
|
|
Weighted Average
Fair Market Value
on Exercise
Date
|
|
|
Value Realized
on Exercise
|
|
P.E. Yarrington
|
|
|
40,000
|
|
|
|
6/29/2005
|
|
|
$
|
56.76
|
|
|
|
5/03/2013
|
|
|
$
|
123.5042
|
|
|
$
|
2,669,768
|
|
G.L. Kirkland
|
|
|
125,000
|
|
|
|
3/28/2007
|
|
|
$
|
74.08
|
|
|
|
5/20/2013
|
|
|
$
|
124.5631
|
|
|
$
|
6,310,388
|
|
M.K. Wirth
|
|
|
40,000
|
|
|
|
6/29/2005
|
|
|
$
|
56.76
|
|
|
|
5/21/2013
|
|
|
$
|
125.0000
|
|
|
$
|
2,729,600
|
|
(2)
|
Represents the cash value of vested restricted stock units and/or performance shares granted in 2011 for the performance period January 2011 through
December 2013.
|
RSUs
|
RSUs are valued by multiplying the number of units vested (including dividend equivalents credited as additional RSUs, if any) by the closing price of Chevron
common stock on the vesting date, or, if the New York Stock Exchange is not open on the vesting date, by the closing price on the last date prior to the vesting date that the New York Stock Exchange is open. The following RSU grants vested in 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Shares Acquired
on Vesting
|
|
|
Grant
Date
|
|
|
Vest
Date
|
|
|
Closing Price Used
to Value Shares
|
|
|
Value Realized
on Vesting
|
|
P.E. Yarrington
|
|
|
7,934
|
|
|
|
12/06/2011
|
|
|
|
12/06/2013
|
|
|
$
|
122.29
|
|
|
$
|
978,243
|
|
M.K. Wirth
|
|
|
14,200
|
|
|
|
1/27/2010
|
|
|
|
1/27/2013
|
|
|
$
|
116.20
|
|
|
$
|
1,650,040
|
|
M.K. Wirth
|
|
|
7,934
|
|
|
|
12/06/2011
|
|
|
|
12/06/2013
|
|
|
$
|
122.29
|
|
|
$
|
978,243
|
|
|
All RSUs were paid out in cash. For Ms. Yarrington and Mr. Wirth, the value of their vested 12/6/2011 grants also includes a cash payment of $7,994
for the 12/10/2013 dividends and fractional shares that were accrued and payable after the 12/6/2013 vesting date.
|
Performance Shares
|
We calculate the cash value of performance share payouts as follows:
|
|
First
, we calculate our total shareholder return (TSR)
and the TSR of our LTIP Performance Share Peer Group (BP, ExxonMobil, Royal Dutch Shell and ConocoPhillips/Phillips 66*) for the three-year performance period. We calculate TSR for the three-year performance period as follows:
|
|
|
|
TSR =
|
|
(20-day average ending stock price () 20-day average beginning stock price (+) reinvested dividend
value)
|
|
|
20-day average beginning stock price
|
|
Ending refers to the last 20 days and Beginning refers to the first 20 days of the performance period that the New York Stock Exchange
is open. In each instance we use closing prices to calculate the 20-day average.
|
|
*ConocoPhillips was split into ConocoPhillips and Phillips 66 in 2012, and their three-year TSR ranking was modeled based on a unified ConocoPhillips by
adding the price of one share of ConocoPhillips to half a share of Phillips 66. This reflects the structure of the spin-off: integrated ConocoPhillips stockholders received half a share of Phillips 66 for every one share of ConocoPhillips.
For 2012 and future awards, we have replaced ConocoPhillips/Phillips 66 with Total. The results are expressed as an annualized average compound rate of return.
|
|
Second,
we rank our TSR against the TSR of our LTIP Performance Share Peer Group (BP, ExxonMobil, Royal
Dutch Shell and ConocoPhillips/Phillips 66) to determine the performance modifier applicable to the awards. Our rank then determines what the performance modifier will be, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our Rank
|
|
|
1st
|
|
|
|
2nd
|
|
|
|
3rd
|
|
|
|
4th
|
|
|
|
5th
|
|
Performance Modifier
|
|
|
200
|
%
|
|
|
150
|
%
|
|
|
100
|
%
|
|
|
50
|
%
|
|
|
|
%
|
|
For example, if we rank first in TSR as compared with our LTIP Performance Share Peer Group (BP, ExxonMobil, Royal Dutch Shell and
ConocoPhillips/Phillips 66), then the performance modifier would be 200 percent. Under the rules of the Long-Term Incentive Plan of Chevron Corporation (LTIP) relating to performance shares, in the event our measured TSR is within 1 percent of the
nearest competitor(s), the results will be considered a tie, and the performance modifier will be the average of the tied ranks. For example, if Chevron ranks fifth in TSR and ties with the TSR of the company that ranks fourth, it will result in a
modifier of 25 percent (the average of 50 percent and 0 percent).
|
|
|
|
Chevron Corporation2014 Proxy Statement
|
|
43
|
Third,
we determine the cash
value and payout of the performance share award, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of Performance
Shares Granted
|
|
x
|
|
Performance
Modifier
|
|
x
|
|
20-Day Trailing Average Price of Chevron Common Stock at the End of the
Performance Period
|
|
=
|
|
Cash Value/Payout
|
For awards of performance shares made in 2011, the three-year performance period ended December 2013.
Chevron ranked second in TSR among our LTIP Performance Share Peer Group (BP, ExxonMobil, Royal Dutch Shell and ConocoPhillips/Phillips 66). Accordingly, the performance share value vested in 2013 for 2011 awards was calculated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
Granted
|
|
|
x
|
|
Modifier
|
|
|
=
|
|
Shares
Acquired on
Vesting
|
|
|
x
|
|
20-Day Trailing
Average Price
|
|
|
=
|
|
Cash
Value/
Payout
|
|
J.S. Watson
|
|
|
53,000
|
|
|
|
|
|
150%
|
|
|
|
|
|
79,500
|
|
|
|
|
$
|
122.49
|
|
|
|
|
$
|
9,737,955
|
|
P.E. Yarrington
|
|
|
21,000
|
|
|
|
|
|
150%
|
|
|
|
|
|
31,500
|
|
|
|
|
$
|
122.49
|
|
|
|
|
$
|
3,858,435
|
|
G.L. Kirkland
|
|
|
30,000
|
|
|
|
|
|
150%
|
|
|
|
|
|
45,000
|
|
|
|
|
$
|
122.49
|
|
|
|
|
$
|
5,512,050
|
|
M.K. Wirth
|
|
|
21,000
|
|
|
|
|
|
150%
|
|
|
|
|
|
31,500
|
|
|
|
|
$
|
122.49
|
|
|
|
|
$
|
3,858,435
|
|
R.H. Pate
|
|
|
15,000
|
|
|
|
|
|
150%
|
|
|
|
|
|
22,500
|
|
|
|
|
$
|
122.49
|
|
|
|
|
$
|
2,756,025
|
|
(3)
|
Ms. Yarrington and Mr. Wirth elected to defer 90 percent, or $3,472,592, of their 2011 performance share grant to the Deferred Compensation Plan for
Management Employees II (DCP). Provisions of the DCP and Ms. Yarringtons and Mr. Wirths distribution elections are described in the footnotes to the Nonqualified Deferred Compensation Table in this Proxy Statement.
|
|
|
|
44
|
|
Chevron Corporation2014 Proxy Statement
|
Pension Benefits Table
The following table sets forth information concerning the present value of benefits accumulated by our named executive officers, or
NEOs, under our defined benefit retirement plans, or pension plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Number of Years
Credited Service
(1)
|
|
|
Present Value of
Accumulated Benefit
(2)
|
|
|
Payments During
Last Fiscal Year
|
|
J.S. Watson
|
|
Chevron Retirement Plan
|
|
|
32
|
|
|
$
|
1,331,308
|
|
|
$
|
|
|
|
|
Chevron Retirement Restoration Plan
|
|
|
|
|
|
$
|
28,000,147
|
|
|
|
|
|
P.E. Yarrington
|
|
Chevron Retirement Plan
|
|
|
32
|
|
|
$
|
1,444,802
|
|
|
$
|
|
|
|
|
Chevron Retirement Restoration Plan
|
|
|
|
|
|
$
|
11,953,523
|
|
|
|
|
|
G.L. Kirkland
|
|
Chevron Retirement Plan
|
|
|
38
|
|
|
$
|
1,943,982
|
|
|
$
|
|
|
|
|
Chevron Retirement Restoration Plan
|
|
|
|
|
|
$
|
28,863,167
|
|
|
|
|
|
M.K. Wirth
|
|
Chevron Retirement Plan
|
|
|
28
|
|
|
$
|
935,429
|
|
|
$
|
|
|
|
|
Chevron Retirement Restoration Plan
|
|
|
|
|
|
$
|
8,183,664
|
|
|
|
|
|
R. H. Pate
|
|
Chevron Retirement Plan
|
|
|
4
|
|
|
$
|
88,566
|
|
|
$
|
|
|
|
|
Chevron Retirement Restoration Plan
|
|
|
|
|
|
$
|
412,599
|
|
|
|
|
|
(1)
|
Credited service is computed as of the same pension plan measurement date used for financial statement reporting purposes with respect to Chevrons
audited 2013 financial statements and is generally the period that an employee is a participant in the plan for which he or she is an eligible employee and receives pay from a participating company. It is not Chevrons policy to grant extra
years of credited service to participants. However, credited service may include similar service with certain companies acquired in the past by Chevron. Mr. Kirklands years of credited service include six years of service with Caltex, the
former joint venture between Chevron and Texaco, prior to the 2001 merger. His benefit includes an additional 0.3 percent for this foreign service. Credited service does not include service prior to July 1, 1986, if employees were under age 25.
Ms. Yarrington and Messrs. Watson, Kirkland, and Wirth have such preJuly 1, 1986, age 25 service. Their actual years of service are as follows: Mr. Watson, 33 years; Ms. Yarrington, 33 years; Mr. Kirkland,
40 years; and Mr. Wirth, 31 years.
|
(2)
|
Reflects the present value of the accumulated benefit as of December 31, 2013, computed as of the same pension plan measurement date used for financial
statement reporting purposes with respect to Chevrons audited 2013 financial statements. A present value of the benefit is determined at the earliest age when participants may retire without any benefit reduction due to age (age 60, or current
age if older, for the NEOs), using service and compensation as of December 31, 2013. This present value is then discounted with interest to the date used for financial reporting purposes. Except for the assumption that the retirement age is the
earliest retirement without a benefit reduction due to age, the assumptions used to compute the present value of accumulated benefits are the assumptions described in Note 21, Employee Benefit Plans, to the Consolidated Financial
Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2013. These assumptions include the discount rate of 4.30 percent as of December 31, 2013. This rate reflects the rate at which benefits could be effectively
settled and is equal to the equivalent single rate resulting from yield curve analysis as described in Note 21. The present values reflect the lump sum forms of payment based on the lump sum interest rate assumptions used for financial
reporting purposes on December 31, 2013, which are representative of the Pension Protection Act of 2006 lump sum interest rates. The present value of Mr. Pates accumulated benefit has been calculated assuming that he has attained the
required five years of vesting and eligibility service as of December 31, 2013. Mr. Pate will not be vested in the Chevron Retirement Plan or the Retirement Restoration Plan benefit until August 3, 2014.
|
|
See Footnote 5 to the Summary Compensation Table in this Proxy Statement for a description of the factors related to the change in the present
value of the pension benefit.
|
Our NEOs are eligible for a pension after retirement and participate in both the Chevron
Retirement Plan (CRP) (a defined-benefit pension plan that is intended to be tax-qualified under Internal Revenue Code section 401(a)) and the Chevron Retirement Restoration Plan (RRP) (an unfunded, nonqualified defined-benefit pension plan).
The RRP is designed to provide benefits comparable with those provided by the CRP but that cannot be paid from the CRP because of Internal Revenue Code limitations on benefits and earnings.
For employees hired prior to January 1, 2008, including Ms. Yarrington and Messrs. Watson, Kirkland, and Wirth, the age 65 retirement
benefits are calculated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Highest average base salary and CIP
awards for 36 consecutive months, not
limited by Internal Revenue
Code
(1)
|
|
x
|
|
Benefit
Accrual
Service used by
the CRP
|
|
x
|
|
1.6%
|
|
|
|
Social Security
offset used by the
CRP
|
|
=
|
|
Total retirement
benefit,
expressed as a single
life annuity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Highest average base salary and CIP
awards for 36 consecutive
months, as
limited by Internal Revenue Code
(2)
|
|
x
|
|
Benefit Accrual
Service used by the
CRP
|
|
x
|
|
1.6%
|
|
|
|
Social Security
offset used by the
CRP
|
|
=
|
|
Total CRP benefit after IRS
limitations,
expressed as a
single life annuity
|
|
|
|
|
|
|
|
|
|
Total retirement benefit
|
|
|
|
Total CRP benefit
|
|
=
|
|
Total RRP benefit,
expressed as a
single
life annuity
|
The age 65 retirement benefits for employees hired prior to January 1, 2008, are reduced
by early retirement discount factors of zero percent per year above age 60 and five percent per year from age 60 to age 50 and are actuarially reduced below age 50 as prescribed by the plans.
|
|
|
Chevron Corporation2014 Proxy Statement
|
|
45
|
For employees hired after
December 31, 2007, including Mr. Pate, the age 65 retirement benefits are calculated as follows:
|
|
|
|
|
|
|
|
|
Highest five-year average base salary
and CIP awards, not limited
by
Internal Revenue Code
(1)
|
|
x
|
|
Actual
number of years
of Benefit Accrual Service:
before age 60 x 11%
PLUS
after age 60 x 14%
|
|
=
|
|
Total retirement benefit,
expressed as a lump sum
|
|
|
|
|
|
|
|
|
|
Highest five-year average base salary and CIP awards,
as limited
by Internal Revenue Code
(2)
|
|
x
|
|
Actual
number of years
of Benefit Accrual Service:
before age 60 x 11%
PLUS
after age 60 x 14%
|
|
=
|
|
Total CRP benefit
after IRS limitations,
expressed as a lump sum
|
|
|
|
|
|
|
|
|
|
Total retirement benefit
|
|
|
|
Total CRP benefit
|
|
=
|
|
Total RRP benefit, expressed
as a lump
sum
|
(1)
|
CIP refers to Chevron Incentive Plan. On December 31, 2013, the applicable average was: Mr. Watson, $5,168,333; Ms. Yarrington,
$2,184,733; Mr. Kirkland, $3,679,167; Mr. Wirth, $2,325,833; and Mr. Pate, $1,440,268.
|
(2)
|
CIP refers to Chevron Incentive Plan. On December 31, 2013, the applicable average, after reflecting the Internal Revenue Code compensation
limitation, was $250,000 for Ms. Yarrington and Messrs. Watson, Kirkland, and Wirth and $247,075 for Mr. Pate.
|
For employees hired after December 31, 2007, the amount of the benefit is reduced by
4.5 percent annual compound interest if payment commences prior to age 60.
A participant is eligible for an early retirement
benefit if he or she is vested on the date employment ends. Generally, a participant is vested after completing five years of service. All NEOs except Mr. Pate are eligible for an early retirement benefit, calculated as described above.
Mr. Pate will be eligible for an early retirement benefit on August 3, 2014.
The benefit under the CRP is initially calculated
as a single life annuity for participants hired before January 1, 2008. For participants hired after December 31, 2007, the benefit is initially calculated as a lump sum. In either case, all retirees can elect to have their benefits
paid in the form of a single life annuity or lump
sum. Joint and survivor annuity, life and term-certain annuity, and uniform income annuity options are also available under the CRP. The equivalent of optional forms of annuity payment are
calculated by multiplying the early retirement benefit by actuarial factors, based on age, in effect on the benefit calculation date. The Internal Revenue Code applicable interest rate and applicable mortality table are used for converting from one
form of benefit to an actuarially equivalent optional form of benefit. Employees can elect to have their CRP benefit commence prior to normal retirement age, which is age 65, but no earlier than when employment ends. CRP participants do not
make distribution elections until or following separation from service.
The RRP may be paid one year following separation from service.
Retirees may elect to receive the RRP lump sum equivalent in a single payment or in up to 10 annual installments.
Our NEOs made the following RRP
distribution elections:
|
|
|
|
|
|
|
|
Name
|
|
# of Annual
Installments Elected
|
|
Time of First Payment
|
J.S. Watson
|
|
|
|
1
|
|
|
First January that is at least one year following separation
from service
|
P.E. Yarrington
|
|
|
|
1
|
|
|
First quarter that is at least one year following separation
from service
|
G.L. Kirkland
|
|
|
|
5
|
|
|
First quarter that is at least one year following separation
from service
|
M.K. Wirth
|
|
|
|
1
|
|
|
First quarter that is at least one year following separation
from service
|
R.H. Pate
|
|
|
|
1
|
|
|
First quarter that is at
least one year following separation from service
|
|
|
|
46
|
|
Chevron Corporation2014 Proxy Statement
|
Nonqualified Deferred Compensation Table
The following table sets forth information concerning the value of each named executive officers, or
NEOs, compensation deferred pursuant to our Deferred Compensation Plan for Management Employees and our Deferred Compensation Plan for Management Employees II (both, the DCP) and our Employee Savings Investment Restoration
Plan (ESIP-RP).
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions
in the Last
Fiscal Year
(2)
|
|
|
Registrant
Contributions
in the Last
Fiscal Year
(3)
|
|
|
Aggregate
Earnings in
the Last
Fiscal
Year
(4)
|
|
|
Aggregate
Withdrawals/
Distributions
(5)
|
|
|
Aggregate
Balance at
Last Fiscal
Year-End
(6)
|
|
J.S. Watson
|
|
$
|
177,083
|
|
|
$
|
121,267
|
|
|
$
|
1,575,514
|
|
|
$
|
|
|
|
$
|
8,686,420
|
|
P.E. Yarrington
|
|
$
|
4,274,201
|
|
|
$
|
57,967
|
|
|
$
|
2,477,650
|
|
|
$
|
|
|
|
$
|
20,467,598
|
|
G.L. Kirkland
|
|
$
|
23,608
|
|
|
$
|
94,433
|
|
|
$
|
261,428
|
|
|
$
|
|
|
|
$
|
1,711,121
|
|
M.K. Wirth
|
|
$
|
15,608
|
|
|
$
|
62,433
|
|
|
$
|
327,229
|
|
|
$
|
|
|
|
$
|
2,127,193
|
|
R.H. Pate
|
|
$
|
97,460
|
|
|
$
|
44,573
|
|
|
$
|
49,549
|
|
|
$
|
|
|
|
$
|
361,016
|
|
(1)
|
The DCP is an unfunded and nonqualified defined contribution plan that permits NEOs to defer up to 90 percent of Chevron Incentive Plan (CIP) awards and
Long-Term Incentive Plan of Chevron Corporation (LTIP) performance share awards and up to 40 percent of salary. The DCP is intended to qualify as an unfunded pension plan maintained by an employer for a select group of management or highly
compensated employees within the meaning of the Employee Retirement Income and Security Act.
|
|
DCP deferrals accrue earnings based upon an NEOs selection of investments from 18 different funds that are designated by the Management
Compensation Committee of the Board of Directors and that are also available in the Employee Savings Investment Plan, Chevrons tax-qualified defined contribution plan open to employees on the U.S. payroll. DCP funds and their annual rates of
return, as of December 31, 2013, were:
|
|
|
|
|
|
Chevron Common Stock Fund
|
|
|
19.24
|
%
|
American Funds EuroPacific Growth Fund Class R-6
|
|
|
20.58
|
%
|
Artisan Mid Cap Fund Investor Class
|
|
|
37.39
|
%
|
Artisan Small Cap Value Fund Investor Class
|
|
|
27.49
|
%
|
Vanguard Balanced Index Fund Institutional Shares
|
|
|
18.11
|
%
|
Vanguard Developed Markets Index Fund Institutional Plus Shares
|
|
|
22.02
|
%
|
Dodge & Cox Income Separate Account
|
|
|
0.73
|
%
|
Vanguard Extended Market Index Fund Institutional Plus Shares
|
|
|
38.43
|
%
|
Vanguard Institutional Index Fund Institutional Plus Shares
|
|
|
32.37
|
%
|
Vanguard Institutional Total Stock Market Index Fund Institutional Plus Shares
|
|
|
33.63
|
%
|
Neuberger Berman Genesis Fund Institutional Class
|
|
|
37.23
|
%
|
Vanguard Prime Money Market Fund Institutional Shares
|
|
|
0.06
|
%
|
Vanguard PRIMECAP Fund Admiral Shares
|
|
|
39.86
|
%
|
Vanguard Short-Term Bond Index Fund Institutional Plus Shares
|
|
|
0.22
|
%
|
SSgA U.S. Inflation Protected Bond Index Fund Class C
|
|
|
-8.70
|
%
|
Vanguard Total Bond Market Index Fund Institutional Plus Shares
|
|
|
-2.12
|
%
|
Vanguard Total World Stock Index Fund Institutional Shares
|
|
|
23.00
|
%
|
Vanguard Windsor II Fund Admiral Shares
|
|
|
30.80
|
%
|
|
NEOs may transfer into and out of funds daily, except that they may not make opposite-way transfers within 60 days. NEOs and other insiders may only
transact in the Chevron Common Stock Fund during a 20-business day period that begins on the first business day that is at least 24 hours after the public release of quarterly and annual earnings (an Insider Trading Window). Deferrals
for NEOs and other insiders who elect that their deferrals be tracked with reference to Chevron common stock are, upon deferral, tracked with reference to the Vanguard Federal Money Market Fund. At the close of the Insider Trading Window, the
balance of the Vanguard Federal Money Market Fund is transferred to the Chevron Common Stock Fund. The 2013 annual rate of return for the Vanguard Federal Money Market Fund was 0.02 percent.
|
|
DCP payments are made after the end of employment in up to 10 annual installments. Amounts tracked in Chevron common stock are paid in stock, and all other
amounts are paid in cash. Participants may elect payment to commence as early as the quarter that is 12 months following separation from service. The DCP was amended for post-2004 deferrals in accordance with Section 409A of the Internal
Revenue Code. As a result, NEOs may make different elections for pre-2005 and post-2004 deferrals. If a plan participant engages in misconduct, DCP balances related to awards made under the LTIP or the CIP on or after June 29, 2005, may be
forfeited.
|
|
The ESIP-RP is a nonqualified defined contribution restoration plan that provides for the Company contribution that would have been paid into the ESIP but for
the fact that the NEOs base salary exceeded the Internal Revenue Code 401(a)(17) limit ($255,000 in 2013). A minimum 2 percent deferral of base pay over the tax codes annual compensation limit is required in order to receive a Company
contribution in the ESIP-RP. Contributions are tracked in phantom Chevron common stock units. Participants receive phantom dividends on these units, based on the dividend rate as is earned on Chevron common stock. Plan balances may be forfeited
if a participant engages in misconduct. Accounts are paid out in cash, commencing as early as the quarter that is 12 months following separation from service, in up to 10 or 15 annual installments.
|
|
|
|
Chevron Corporation2014 Proxy Statement
|
|
47
|
|
Below are the payment elections made by each of the NEOs with respect to their DCP and ESIP-RP plan balances:
|
|
|
|
|
|
|
|
Name
|
|
Plan
|
|
# of Annual
Installments Elected
|
|
Time of First Payment
|
J.S. Watson
|
|
DCP
|
|
1
|
|
First January that is at least one year
following separation from service
|
|
|
ESIP-RP
|
|
1
|
|
First January that is at
least one year following separation from service
|
P.E. Yarrington
|
|
DCP
|
|
1
|
|
First quarter that is at least one year
following separation from service
|
|
|
ESIP-RP
|
|
1
|
|
First quarter that is at
least one year following separation from service
|
G.L. Kirkland
|
|
DCP
|
|
3
|
|
First quarter that is at least one year
following separation from service
|
|
|
ESIP-RP
pre-2005
|
|
5
|
|
First quarter that is at least one year following separation from
service
|
|
|
ESIP-RP
post-2004
|
|
3
|
|
First quarter
that is at least one year following separation from service
|
M.K. Wirth
|
|
DCP
|
|
1
|
|
First quarter that is at least one year following separation
from service
|
|
|
ESIP-RP
|
|
1
|
|
First
quarter that is at least one year following separation from service
|
R.H. Pate
|
|
DCP
|
|
1
|
|
First quarter that is at least one year following separation
from service
|
|
|
ESIP-RP
|
|
1
|
|
First
quarter that is at least one year following separation from service
|
(2)
|
Reflects salary deferrals for each NEO into the DCP in 2013. These amounts are also included in the Salary column that is reported in the
Summary Compensation Table in this Proxy Statement, and quantified as Total Salary Deferred Under the DCP in Footnote 1 to that table. For Ms. Yarrington, the amount reported also includes deferral of $1,205,280 of her
2012 CIP award (received in April 2013) and $3,054,429 of her 2010 LTIP performance share award payout (received in January 2013).
|
(3)
|
Represents ESIP-RP contributions by the Company for 2013. These amounts are also reflected in the All Other Compensation column in the
Summary Compensation Table in this Proxy Statement.
|
(4)
|
Represents the difference between DCP and ESIP-RP balances at December 31, 2013, and December 31, 2012, less CIP, LTIP and salary deferrals in the
DCP and Company contributions in the ESIP-RP. 2013 earnings in the DCP and ESIP-RP were as follows:
|
|
|
|
|
|
|
|
|
|
Name
|
|
DCP Earnings
|
|
|
ESIP-RP Earnings
|
|
J.S. Watson
|
|
$
|
1,311,759
|
|
|
$
|
263,755
|
|
P.E. Yarrington
|
|
$
|
2,366,259
|
|
|
$
|
111,391
|
|
G.L. Kirkland
|
|
$
|
28,641
|
|
|
$
|
232,787
|
|
M.K. Wirth
|
|
$
|
227,966
|
|
|
$
|
99,263
|
|
R.H. Pate
|
|
$
|
21,388
|
|
|
$
|
28,161
|
|
(5)
|
In-service withdrawals are not permitted from the DCP or the ESIP-RP.
|
(6)
|
Represents DCP and ESIP-RP balances as of December 31, 2013, as follows:
|
|
|
|
|
|
|
|
|
|
Name
|
|
DCP Balance
|
|
|
ESIP-RP Balance
|
|
J.S. Watson
|
|
$
|
6,960,547
|
|
|
$
|
1,725,873
|
|
P.E. Yarrington
|
|
$
|
19,731,905
|
|
|
$
|
735,693
|
|
G.L. Kirkland
|
|
$
|
196,370
|
|
|
$
|
1,514,751
|
|
M.K. Wirth
|
|
$
|
1,463,485
|
|
|
$
|
663,708
|
|
R.H. Pate
|
|
$
|
151,360
|
|
|
$
|
209,656
|
|
|
These balances include amounts reported in this Proxy Statement and in prior proxy statements for: (i) NEO deferrals of salary reported as Salary
Deferred in the footnotes to the Summary Compensation Table; (ii) Chevrons ESIP-RP (and predecessor plans) contributions reported as All Other Compensation in the Summary Compensation Table;
(iii) NEO deferrals of CIP awards reported in footnotes to the Summary Compensation Table and the Nonqualified Deferred Compensation Table; and (iv) NEO deferrals of LTIP performance share awards reported in
footnotes to the Option Exercises and Stock Vested Table and the Nonqualified Deferred Compensation Table, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Salary Deferred
Amounts Previously
Reported
|
|
|
ESIP-RP Amounts
Previously Reported
|
|
|
CIP
Amounts
Previously
Reported
|
|
|
LTIP
Amounts
Previously
Reported
|
|
J.S. Watson
|
|
$
|
948,090
|
|
|
$
|
765,901
|
|
|
$
|
|
|
|
$
|
|
|
P.E. Yarrington
|
|
$
|
958,434
|
|
|
$
|
238,084
|
|
|
$
|
4,539,420
|
|
|
$
|
7,324,767
|
|
G.L. Kirkland
|
|
$
|
130,517
|
|
|
$
|
617,483
|
|
|
$
|
|
|
|
$
|
|
|
M.K. Wirth
|
|
$
|
57,257
|
|
|
$
|
229,033
|
|
|
$
|
|
|
|
$
|
|
|
R.H. Pate
|
|
$
|
126,175
|
|
|
$
|
159,436
|
|
|
$
|
|
|
|
$
|
|
|
|
Deferrals of the 2013 CIP awards and the LTIP performance shares for the 20112013 performance period are not reflected in the DCP balance at
December 31, 2013, as they were not deferred until the underlying awards were settled in 2014. They were reported in footnotes to the Summary Compensation Table and the Option Exercises and Stock Vested in Fiscal Year
2013 table in this Proxy Statement, as follows:
|
|
|
|
|
|
|
|
|
|
Name
|
|
CIP Amounts
Previously
Reported
and Credited
to the
DCP in
2014
|
|
|
LTIP Amounts
Previously
Reported and
Credited to
the DCP
in
2014
|
|
J.S. Watson
|
|
$
|
800,000
|
|
|
$
|
|
|
P.E. Yarrington
|
|
$
|
1,229,580
|
|
|
$
|
3,472,592
|
|
G.L. Kirkland
|
|
$
|
|
|
|
$
|
|
|
M.K. Wirth
|
|
$
|
1,100,250
|
|
|
$
|
3,472,592
|
|
R.H. Pate
|
|
$
|
238,350
|
|
|
$
|
|
|
|
|
|
48
|
|
Chevron Corporation2014 Proxy Statement
|
Potential Payments Upon Termination or Change-in-Control
Our named executive officers, or NEOs, do not have employment contracts or other
agreements or arrangements that provide for enhanced severance, special guaranteed payments, or other benefits upon retirement, termination, or change-in-control, except for Mr. Pate, whose arrangement is described below and in our
Compensation Discussion and AnalysisCompensation GovernanceEmployment, Severance, or Change-in-Control Agreements in this Proxy Statement. In addition, in the event of a change-in-control our NEOs are not eligible for
accelerated vesting of outstanding equity awards under the Long-Term Incentive Plan of Chevron Corporation (LTIP). However, upon termination in the circumstances described below, our NEOs are entitled to accrued and vested interests (and in some
cases deemed vesting of unvested interests) in their outstanding equity awards, retirement plan benefits, and certain limited perquisites.
Termination for reasons other than cause may result in full or partial vesting of equity grants. Full
or partial vesting, if any, is a function of the sum of an NEOs age plus his or her time in service and the reasons for termination. Our policy of full or partial vesting for outstanding equity grants based on an NEOs age and time in
service is a reflection of our belief that our equity and benefit programs should be based upon a career employment model designed to encourage retention and long-term employment. Many of our business decisions have long-term horizons and, to ensure
our executives have a vested interest in our future profitability, such programs enable executives with long service to continue to share in our success. The terms and effect of full or partial vesting of outstanding but unvested equity grants is
illustrated by the following table.
|
|
|
|
|
Termination Circumstance
|
|
Effect of Termination on Stock Options
|
|
Effect of
Termination
on Performance Shares
|
Employed less than one year after grant date, and termination without
misconduct
|
|
Forfeit 100% of grant.
|
Employed for
at least one year after grant date and on termination date, and termination without misconduct, either:
have at least 90 points (sum of age and service)
or
are
at least age 65
|
|
Vest 100% of grant.
|
|
Remaining term to exercise
vested stock options.
|
|
Award will be based on and paid at the
end of the full
performance period(s).
|
|
|
Total amount of grant deemed vested is calculated as
follows:
|
Employed for at least one year after grant
date and on termination date, and termination without misconduct, either:
have at least 75 points (sum of age and service)
or
are
at least age 60
|
|
Total number of options subject to the grant
multiplied by
Number of whole months from the grant date to the termination
date,
up to a maximum of 36 months
divided by 36 months.
|
|
Number of performance shares
granted
multiplied by
Number of whole months from the
performance period start date to
the
termination date, up to a maximum
of 36 months
divided by 36 months.
|
|
|
|
|
|
|
|
|
|
Exercisable options shall be reduced by the number of options previously
exercised.
|
|
|
|
|
The lesser of five years from termination or remaining term to exercise.
|
|
Award will be based on and paid at the
end of the full performance period(s).
|
Other
termination
|
|
Forfeit all unvested options. The lesser of 180 days from termination or remaining term to exercise vested
stock options.
|
|
Forfeit all outstanding awards.
|
Misconduct
|
|
Forfeit all outstanding grants, whether vested or unvested.
|
|
Forfeit all outstanding awards.
|
In the tables that follow, we have assumed that each NEO terminated his or her employment on
December 31, 2013. Amounts reported do not include the value of vested and unexercised stock options reported in the Outstanding Equity Awards at 2013 Fiscal Year End table or accrued retirement and other benefits reported in the
Pension Benefits Table and
Nonqualified Deferred Compensation Table in this Proxy Statement, as well as benefits that would be available generally to all or substantially all salaried employees on the U.S.
payroll and do not discriminate in scope, terms or operations in favor of our NEOs, such as accrued vacation, group life insurance, and post-retirement health care.
|
|
|
Chevron Corporation2014 Proxy Statement
|
|
49
|
John S. Watson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits and Payments
Upon Termination
|
|
Termination
for Any Reason
Other
Than
Death, Disability
or Misconduct
(1)
|
|
|
Termination
Due to
Disability
|
|
|
Termination
Due to Death
|
|
|
Termination
for Misconduct
(2)
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Chevron Incentive Plan
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Severance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Long-Term Incentivesunvested but deemed vested upon termination:
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
$
|
8,241,020
|
|
|
$
|
8,241,020
|
|
|
$
|
8,241,020
|
|
|
$
|
|
|
Restricted Stock Units
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Performance Shares
|
|
$
|
8,244,060
|
|
|
$
|
8,244,060
|
|
|
$
|
8,244,060
|
|
|
$
|
|
|
Benefits and Perquisites:
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office and Secretarial Services
(5)
|
|
$
|
200,000
|
|
|
$
|
200,000
|
|
|
$
|
|
|
|
$
|
|
|
TOTAL:
|
|
$
|
16,685,080
|
|
|
$
|
16,685,080
|
|
|
$
|
16,485,080
|
|
|
$
|
|
|
(1)
|
Includes normal or early retirement and voluntary or involuntary (other than for misconduct) termination, including termination following a change-in-control.
We do not maintain separate change-in-control programs for our NEOs.
|
(2)
|
Termination for misconduct results in cancellation of all outstanding LTIP grants, vested or unvested. For grants during or after 2005 that have been
exercised, the Board has the ability to claw back any gains, as described in our Compensation Discussion and AnalysisCompensation GovernanceCompensation Recovery Policies in this Proxy Statement.
|
(3)
|
Reflects values of deemed vested options and performance shares under the LTIP. Whether an otherwise unvested option or performance share is deemed vested
upon termination is based on the number of points (sum of age and number of years of service) at the time of termination. Mr. Watson has more than 90 points, which results in deemed vesting of all unvested LTIP grants held at least one
year from the date of grant, or the remaining one-third of the 2011 stock option grant, the remaining two-thirds of the 2012 stock option grant and 100 percent of the 2012 performance share grant. The 2013 stock option and performance share grants
would have been forfeited upon a 12/31/2013 termination.
|
|
Stock option values are calculated based on the difference between $124.91, the 12/31/13 closing price of Chevron common stock, and the option exercise price
as reported in the Outstanding Equity Awards at 2013 Fiscal Year-End table in this Proxy Statement, multiplied by the deemed vested options. The value of previously vested options is calculated in a similar manner. The deemed vested
options may be exercised within the remaining term and expire on the 10th anniversary of the grant date.
|
|
Performance share values are calculated based on $124.91, the 12/31/13 closing price of Chevron common stock, and a performance modifier of 100 percent. For a
description of how we calculate the payout value of performance shares and the effect of the performance modifier, see Footnote 2 to the Option Exercises and Stock Vested in Fiscal Year 2013 table in this Proxy Statement. The
estimated payout value may not necessarily reflect the final payout. A lump sum cash payment is made at the end of the performance period.
|
(4)
|
Mr. Watson is eligible to receive early retirement benefits from the Chevron Retirement Plan and payment from the Chevron Retirement Restoration Plan
upon separation from service. His distribution elections and the present value of his accumulated benefits are disclosed in the Pension Benefits Table, in this Proxy Statement.
|
|
Mr. Watson is also eligible to receive payment from the ESIP Restoration Plan and from the Deferred Compensation Plan upon separation from service. His
distribution elections and the aggregate balance as of 12/31/13 are disclosed in the Nonqualified Deferred Compensation Table in this Proxy Statement.
|
(5)
|
Former Chairmen and Vice Chairmen of the Board of Directors are provided with post-retirement office and secretarial services.
|
|
|
|
50
|
|
Chevron Corporation2014 Proxy Statement
|
Patricia E. Yarrington
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits and Payments Upon Termination
|
|
Termination
for Any Reason
Other Than
Death, Disability
or
Misconduct
(1)
|
|
|
Termination
Due to
Disability
|
|
|
Termination
Due to Death
|
|
|
Termination
for Misconduct
(2)
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Chevron Incentive Plan
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Severance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Long-Term Incentivesunvested but deemed vested upon termination:
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
$
|
2,534,480
|
|
|
$
|
2,534,480
|
|
|
$
|
2,534,480
|
|
|
$
|
|
|
Restricted Stock Units
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Performance Shares
|
|
$
|
2,123,470
|
|
|
$
|
2,123,470
|
|
|
$
|
2,123,470
|
|
|
$
|
|
|
Benefits
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
4,657,950
|
|
|
$
|
4,657,950
|
|
|
$
|
4,657,950
|
|
|
$
|
|
|
(1)
|
Includes normal or early retirement and voluntary or involuntary (other than for misconduct) termination, including termination following a change-in-control.
We do not maintain separate change-in-control programs for our NEOs.
|
(2)
|
Termination for misconduct results in cancellation of all outstanding LTIP grants, vested or unvested. For grants during or after 2005 that have been
exercised, the Board has the ability to claw back any gains, as described in our Compensation Discussion and AnalysisCompensation GovernanceCompensation Recovery Policies, in this Proxy Statement.
|
(3)
|
Reflects values of deemed vested options and performance shares under the LTIP. Whether an otherwise unvested option or performance share is deemed vested
upon termination is based on the number of points (sum of age and number of years of service) at the time of termination. Ms. Yarrington has more than 90 points, which results in deemed vesting of all unvested LTIP grants held at least one
year from the date of grant, or the remaining one-third of the 2011 stock option grant, the remaining two-thirds of the 2012 stock option grant and 100 percent of the 2012 performance share grant. The 2013 stock option and performance share grants
would have been forfeited upon a 12/31/2013 termination.
|
|
Stock option values are calculated based on the difference between $124.91, the 12/31/13 closing price of Chevron common stock, and the option exercise price
as reported in the Outstanding Equity Awards at 2013 Fiscal Year-End table in this Proxy Statement, multiplied by the deemed vested options. The value of previously vested options is calculated in a similar manner. The deemed vested
options may be exercised within the remaining term and expire on the 10th anniversary of the grant date.
|
|
Performance share values are calculated based on $124.91, the 12/31/13 closing price of Chevron common stock, and a performance modifier of 100 percent. For a
description of how we calculate the payout value of performance shares and the effect of the performance modifier, see Footnote 2 to the Option Exercises and Stock Vested in Fiscal Year 2013 table in this Proxy Statement. The
estimated payout value may not necessarily reflect the final payout. A lump sum cash payment is made at the end of the performance period.
|
|
Ms. Yarringtons remaining restricted stock units would have been forfeited if her employment had terminated on December 31, 2013.
|
(4)
|
Ms. Yarrington is eligible to receive early retirement benefits from the Chevron Retirement Plan and payment from the Chevron Retirement Restoration Plan
upon separation from service. Her distribution elections and the present value of her accumulated benefits are disclosed in the Pension Benefits Table in this Proxy Statement.
|
|
Ms. Yarrington is also eligible to receive payment from the ESIP-RP and from the Deferred Compensation Plan upon separation from service. Her
distribution elections and the aggregate balance as of 12/31/2013 are disclosed in the Nonqualified Deferred Compensation Table in this Proxy Statement.
|
|
|
|
Chevron Corporation2014 Proxy Statement
|
|
51
|
George L. Kirkland
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits and Payments Upon Termination
|
|
Termination
for Any Reason
Other Than
Death, Disability
or
Misconduct
(1)
|
|
|
Termination
Due to
Disability
|
|
|
Termination
Due to Death
|
|
|
Termination
for Misconduct
(2)
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Chevron Incentive Plan
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Severance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Long-Term Incentivesunvested but deemed vested upon termination:
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
$
|
3,921,459
|
|
|
$
|
3,921,459
|
|
|
$
|
3,921,459
|
|
|
$
|
|
|
Restricted Stock Units
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Performance Shares
|
|
$
|
3,435,025
|
|
|
$
|
3,435,025
|
|
|
$
|
3,435,025
|
|
|
$
|
|
|
Benefits and Perquisites:
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office and Secretarial Services
(5)
|
|
$
|
200,000
|
|
|
$
|
200,000
|
|
|
$
|
|
|
|
$
|
|
|
TOTAL
|
|
$
|
7,556,484
|
|
|
$
|
7,556,484
|
|
|
$
|
7,356,484
|
|
|
$
|
|
|
(1)
|
Includes normal or early retirement and voluntary or involuntary (other than for misconduct) termination, including termination following a change-in-control.
We do not maintain separate change-in-control programs for our NEOs.
|
(2)
|
Termination for misconduct results in cancellation of all outstanding LTIP grants, vested or unvested. For grants during or after 2005 that have been
exercised, the Board has the ability to claw back any gains, as described in our Compensation Discussion and AnalysisCompensation GovernanceCompensation Recovery Policies, in this Proxy Statement.
|
(3)
|
Reflects values of deemed vested options and performance shares under the LTIP. Whether an otherwise unvested option or performance share is deemed vested
upon termination is based on the number of points (sum of age and number of years of service) at the time of termination. Mr. Kirkland has more than 90 points, which results in deemed vesting of all unvested LTIP grants held at least one
year from the date of grant, or the remaining one-third of the 2011 stock option grant, the remaining two-thirds of the 2012 stock option grant and 100 percent of the 2012 performance share grant. The 2013 stock option and performance share grants
would have been forfeited upon a 12/31/2013 termination.
|
|
Stock option values are calculated based on the difference between $124.91, the 12/31/13 closing price of Chevron common stock, and the option exercise price
as reported in the Outstanding Equity Awards at 2013 Fiscal Year-End table in this Proxy Statement, multiplied by the deemed vested options. The value of previously vested options is calculated in a similar manner. The deemed vested
options may be exercised within the remaining term and expire on the 10th anniversary of the grant date.
|
|
Performance share values are calculated based on $124.91, the 12/31/13 closing price of Chevron common stock, and a performance modifier of 100 percent. For a
description of how we calculate the payout value of performance shares and the effect of the performance modifier, see Footnote 2 to the Option Exercises and Stock Vested in Fiscal Year 2013 table in this Proxy Statement. The
estimated payout value may not necessarily reflect the final payout. A lump sum cash payment is made at the end of the performance period.
|
(4)
|
Mr. Kirkland is eligible to receive early retirement benefits from the Chevron Retirement Plan and the Chevron Retirement Restoration Plan upon
separation from service. His distribution elections and the present value of his accumulated benefits are disclosed in the Pension Benefits Table in this Proxy Statement.
|
|
Mr. Kirkland is also eligible to receive payment from the ESIP-RP and from the Deferred Compensation Plan upon separation from service. His distribution
elections and the aggregate balance as of 12/31/13 are disclosed in the Nonqualified Deferred Compensation Table in this Proxy Statement.
|
(5)
|
Former Chairmen and Vice Chairmen of the Board of Directors are provided with post-retirement office and secretarial services.
|
|
|
|
52
|
|
Chevron Corporation2014 Proxy Statement
|
Michael K. Wirth
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits and Payments Upon Termination
|
|
Termination
for Any Reason
Other
Than
Death, Disability
or Misconduct
(1)
|
|
|
Termination
Due to
Disability
|
|
|
Termination
Due to Death
|
|
|
Termination
for Misconduct
(2)
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Chevron Incentive Plan
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Severance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Long-Term Incentivesunvested but deemed vested upon termination:
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
$
|
1,772,066
|
|
|
$
|
1,772,066
|
|
|
$
|
1,772,066
|
|
|
$
|
|
|
Restricted Stock Units
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Performance Shares
|
|
$
|
1,415,605
|
|
|
$
|
1,415,605
|
|
|
$
|
1,415,605
|
|
|
$
|
|
|
Benefits
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
3,187,671
|
|
|
$
|
3,187,671
|
|
|
$
|
3,187,671
|
|
|
$
|
|
|
(1)
|
Includes normal or early retirement and voluntary or involuntary (other than for misconduct) termination, including termination following a change-in-control.
We do not maintain separate change-in-control programs for our NEOs.
|
(2)
|
Termination for misconduct results in cancellation of all outstanding LTIP grants, vested or unvested. For grants during or after 2005 that have been
exercised, the Board has the ability to claw back any gains, as described in our Compensation Discussion and AnalysisCompensation GovernanceCompensation Recovery Policies in this Proxy Statement.
|
(3)
|
Reflects values of deemed vested options and performance shares under the LTIP. Whether an otherwise unvested option or performance share is deemed vested
upon termination is based on the number of points (sum of age and number of years of service) at the time of termination. Mr. Wirth has more than 75 points but less than 90 points, which results in pro-rata vesting of all unvested
LTIP grants held at least one year from the date of grant. Mr. Wirths stock options held at least one year vest based on the number of whole months from the grant date to 12/31/13. Eleven thirty-sixths of his 2011 and 2012 grant are deemed
vested. The remainder of the unvested options, including the entire 2013 grant, is forfeited.
|
|
Stock option values are calculated based on the difference between $124.91, the 12/31/2013 closing price of Chevron common stock, and the option exercise
price as reported in the Outstanding Equity Awards at 2013 Fiscal Year-End table in this Proxy Statement, multiplied by the deemed vested options. The value of previously vested options is calculated in a similar manner. The deemed
vested stock options may be exercised within the lesser of five years from termination or the remaining term of the option.
|
|
Performance shares held at least one year vest based on the number of whole months from the performance period start date to 12/31/13. Two-thirds of
Mr. Wirths 2012 grant is deemed vested. The remainder of the unvested shares, including the entire 2013 grant, is forfeited. Values are calculated based on $124.91, the 12/31/13 closing price of Chevron common stock, and a performance
modifier of 100 percent. For a description of how we calculate the payout value of performance shares and the effect of the performance modifier, see Footnote 2 to the Option Exercises and Stock Vested in Fiscal Year 2013 table in
this Proxy Statement. The estimated payout value may not necessarily reflect the final payout. A lump sum cash payment is made at the end of the performance period.
|
|
Mr. Wirths remaining restricted stock units would have been forfeited if his employment had terminated on December 31, 2013.
|
(4)
|
Mr. Wirth is eligible to receive early retirement benefits from the Chevron Retirement Plan and the Chevron Retirement Restoration Plan upon separation
from service. His distribution elections and the present value of his accumulated benefits are disclosed in the Pension Benefits Table in this Proxy Statement.
|
|
Mr. Wirth is also eligible to receive payment from the ESIP-RP and from the Deferred Compensation Plan upon separation from service. His distribution
elections and aggregate balance as of 12/31/13 are disclosed in the Nonqualified Deferred Compensation Table in this Proxy Statement.
|
|
|
|
Chevron Corporation2014 Proxy Statement
|
|
53
|
R. Hewitt Pate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits and Payments Upon Termination
|
|
Termination
for Any Reason
Other Than
Death,
Disability
or Misconduct
(1)
|
|
|
Termination
Due to
Disability
|
|
|
Termination
Due to Death
|
|
|
Termination
for Misconduct
(2)
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Chevron Incentive Plan
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Severance
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Long-Term Incentivesunvested but deemed vested upon termination:
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Restricted Stock Units
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Performance Shares
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Benefits
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
(1)
|
Includes normal or early retirement and voluntary or involuntary (other than for misconduct) termination, including termination following a change-in-control.
We do not maintain separate change-in-control programs for our NEOs.
|
(2)
|
Termination for misconduct results in cancellation of all outstanding LTIP grants, vested or unvested. For grants during or after 2005 that have been
exercised, the Board has the ability to claw back any gains, as described in our Compensation Discussion and AnalysisCompensation GovernanceCompensation Recovery Policies in this Proxy Statement.
|
(3)
|
Reflects values of deemed vested options and performance shares under the LTIP. Whether an otherwise unvested option or performance share is deemed vested
upon termination is based on the number of points (sum of age and number of years of service) at the time of termination. Mr. Pate has less than 75 points, which would have resulted in forfeiture of unvested stock options and performance
shares upon a December 31, 2013, termination. Mr. Pates restricted stock units would have been forfeited upon a December 31, 2013, termination.
|
|
In February 2012, Mr. Pate and Chevron mutually terminated his employment agreement described in our 2011 Proxy Statement in favor of an agreement
relating solely to the vesting of Mr. Pates outstanding equity awards, if any, if Mr. Pates employment is terminated for any reason on or after August 1, 2019. If Mr. Pates employment is terminated on or after
that date, Mr. Pate will be subject to the termination provisions of the LTIP as if he had 75 points (the sum of age and years of service), which would result in the deemed pro-rata vesting of stock options and performance shares held at least
one year from the date of grant.
|
(4)
|
Mr. Pate will not be vested in the Chevron Retirement Plan or the Chevron Retirement Restoration Plan if he terminates within five years of his
August 3, 2009, employment start date. His distribution elections and the present value of his accumulated benefits are disclosed in the Pension Benefits Table in this Proxy Statement.
|
|
Mr. Pate is eligible to receive payment from the ESIP-RP and from the Deferred Compensation Plan upon separation from service. His distribution elections and
aggregate balance as of 12/31/13 are disclosed in the Nonqualified Deferred Compensation Table in this Proxy Statement.
|
|
|
|
54
|
|
Chevron Corporation2014 Proxy Statement
|
|
Equity Compensation Plan
Information
|
The following table provides certain information as of December 31, 2013, with respect to Chevrons
equity compensation plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Category
(1)
|
|
Number of Securities to
Be Issued Upon
Exercise
of Outstanding Options,
Warrants and Rights
(a)
|
|
|
Weighted-Average
Exercise Price
of
Outstanding Options,
Warrants and Rights
(b)
|
|
|
Number of Securities
Remaining Available for
Future
Issuance Under
Equity Compensation
Plan (excluding securities
reflected in column (a))
(c)
|
|
Equity compensation plans approved by security holders
(2)
|
|
|
75,625,562
|
(3)
|
|
$
|
88.58
|
(4)
|
|
|
143,216,995
|
(5)
|
Equity compensation plans not approved by security holders
(6)
|
|
|
576,815
|
(7)
|
|
|
|
(8)
|
|
|
|
(9)
|
TOTAL
|
|
|
76,202,377
|
|
|
$
|
88.58
|
(4)
|
|
|
143,216,995
|
|
(1)
|
The table does not include information for employee benefit plans of Chevron and subsidiaries intended to meet the tax qualification requirements of
section 401(a) of the Internal Revenue Code and certain foreign employee benefit plans that are similar to section 401(a) plans or information for equity compensation plans assumed by Chevron in mergers and securities outstanding
thereunder at December 31, 2013. The number of shares to be issued upon exercise of outstanding options, warrants, and rights under plans assumed in mergers and outstanding at December 31, 2013, was 331,096, and the weighted-average
exercise price (excluding restricted stock units and other rights for which there is no exercise price) was $46.63. The weighted average remaining term of the stock options is 1.92 years. No further grants or awards can be made under these assumed
plans.
|
(2)
|
Consists of two plans: the Long Term Incentive Plan of Chevron Corporation (LTIP) and the Chevron Corporation Nonemployee Directors Equity Compensation
and Deferral Plan (Directors Plan). Stock options and restricted stock units may be awarded under the LTIP and shares may be issued under the subplans of the LTIP for certain non-U.S. locations. Restricted stock, restricted stock units, and
retainer stock options may be awarded under the Directors Plan.
|
(3)
|
Consists of 75,389,173 shares subject to stock options (granted under the LTIP or the Directors Plan), and 236,389 shares subject to restricted stock
units and stock units under the Directors Plan. Does not include grants that are payable in cash only, such as performance shares, stock appreciation rights, and some restricted stock units granted under the LTIP.
|
(4)
|
The price reflects the weighted average exercise price of stock options under both the LTIP and the Directors Plan. The weighted average remaining term
of the stock options is 6.13 years.
|
(5)
|
An amended and restated LTIP was approved by the stockholders on May, 29, 2013. The maximum number of shares that can be issued under the amended and restated
LTIP is 260,000,000. The LTIP has 143,012,607 securities that remain available for issuance pursuant to awards. An aggregate of 2,129,373 shares issued under the employee stock purchase plans for non-U.S. locations were counted against the limit.
Awards granted under the LTIP that are settled in cash or that are deferred under the Deferred Compensation Plan for Management Employees or Deferred Compensation Plan for Management Employees II (both, the DCP) will not deplete the maximum number
of shares that can be issued under the plan. The maximum number of shares that can be issued under the Directors Plan is 800,000. The Directors Plan has 204,388 shares that remain available for issuance pursuant to awards.
|
(6)
|
Consists of the DCP, which is described in the Nonqualified Deferred Compensation Table and related footnotes.
|
(7)
|
Reflects number of Chevron Common Stock Fund units allocated to participant accounts in the DCP as of December 31, 2013.
|
(8)
|
There is no exercise price for outstanding rights under the DCP.
|
(9)
|
Current provisions of the DCP do not provide for a limitation on the number of shares available under the plan. The total actual distributions under the DCP
were 53,247 shares in 2013, 54,183 shares in 2012 and 149,551 shares in 2011.
|
|
|
|
Chevron Corporation2014 Proxy Statement
|
|
55
|
|
Stock Ownership
Information
|
2014 Qualifying Stockholder Proposals
Your Board welcomes dialogue on the topics presented in the stockholder proposals on the following
pages. Chevron strives to communicate proactively and transparently on these and other issues of interest to the Company and its stockholders. Some of the following stockholder proposals may contain assertions about Chevron that we believe are
incorrect. Your Board has not attempted to refute all such assertions. However, your Board has considered each proposal and recommended a vote based on the specific reasons set forth in each Board response.
We received a number of proposals requesting specific reports. As a general principle, your Board opposes developing specially requested reports
because producing them is a poor use of Chevrons resources when the issues are addressed sufficiently through existing communications. Moreover, your Board believes that stockholders benefit from reading about these issues in the context of
Chevrons other activities rather than in isolation. Many of the issues raised in the following stockholder proposals are
discussed in Chevrons Corporate Responsibility Report, our Annual Report, and this Proxy Statement. Additional information on Chevrons corporate governance and corporate social
responsibility philosophies and initiatives is available on our website at
www.chevron.com
.
Your Board urges stockholders
to read this Proxy Statement, the Annual Report, and the Corporate Responsibility Report, as well as the other information presented on Chevrons website.
Article VII of Chevrons Restated Certificate of Incorporation precludes taking actions on any proposals or other items of business that have not been included in the Notice of 2014 Annual Meeting of
Stockholders and this Proxy Statement, unless the Board decides to waive this restriction.
We will provide the name, address, and share
ownership of the stockholder who submitted a qualifying proposal upon a stockholders request.
Vote
Required
Stockholder proposals are approved if the number of shares voted FOR exceeds the number of shares voted AGAINST. Any shares
not voted on these proposals (whether by abstention or otherwise) will have no impact on these proposals. 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 on these proposals.
Your Boards Recommendation
Your Board unanimously recommends that you vote
AGAINST
each of the stockholder proposals on the following pages.
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Chevron Corporation2014 Proxy Statement
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Statement Regarding The Ecuador Litigation
Some of this years stockholder proposals refer to the Ecuador litigation involving Chevron.
Your Board will address each of these proposals individually, but believes stockholders will benefit from a general statement about the handling of the Ecuador litigation and its relation to stockholder proposals.
Your Board believes that the Ecuador litigation and related actions against Chevron are a fraudulent and extortionate scheme. Protecting
Chevrons reputation and its stockholders interests requires the Company to defend itself. Stockholders should be aware that several assertions or suggestions with respect to the Ecuador litigation made in support of the stockholder
proposals are misleading or contrary to the facts.
In this regard, stockholders should be aware that on March 4, 2014, Judge Lewis
A. Kaplan of the United States District Court for the Southern District of New York entered judgment for Chevron in the Companys Racketeer Influenced and Corrupt Organizations Act (RICO) case relating to the Ecuadorian judgment and the attempt
to extort the Company based on that judgment,
Chevron Corp. v. Donziger et al.
, Case No. 11-cv-0691. The courts decision followed a six-week trial. In a nearly 500-page opinion, the court found that defendant Steven
Donzigerthe lead American lawyer for the Lago Agrio plaintiffs (LAPs)and his team of U.S. and Ecuadorian lawyers obtained the Ecuadorian judgment against Chevron by corrupt means, and in the process Donziger violated U.S.
federal laws prohibiting attempted extortion, wire fraud, money laundering, witness tampering, and obstruction of justice, as well as the Foreign Corrupt Practices Act. As the court summarized its factual findings:
[Donziger] and the Ecuadorian lawyers he led corrupted the Lago Agrio case. They submitted fraudulent evidence. They coerced
one judge, first to use a court-appointed, supposedly impartial, global expert to make an overall damages assessment and, then, to appoint to that important role a man whom Donziger hand-picked and paid to totally play ball
with the LAPs. They then paid a Colorado consulting firm secretly to write all or most of the global experts report, falsely presented the report as the work of the court-appointed and supposedly impartial expert, and told half-truths or worse
to U.S. courts in attempts to prevent exposure of that and other wrongdoing. Ultimately, the LAP team wrote the Lago Agrio courts Judgment themselves and promised $500,000 to the Ecuadorian judge to rule in their favor and sign their judgment.
If ever there were a case warranting equitable relief with respect to a judgment procured by fraud, this is it.
The court entered
judgment for Chevron and imposed an injunction and other equitable relief designed to ensure that the defendants here may not be allowed to benefit from [the Ecuadorian judgment] in any way.
In addition to the RICO trial, numerous other courts have found that the proceedings in Ecuador have been tainted by fraud.
See, for example,
Chevron Corp. v. Champ
(W.D.N.C. Aug. 30, 2010) (While this court is unfamiliar with the practices of the Ecuadorian judicial system, the court must believe that the concept of fraud is universal, and that what has blatantly occurred
in this matter would in fact be considered fraud by any court. If such conduct does not amount to fraud in a particular
country, then that country has larger problems than an oil spill.);
In re Chevron Corp.
(S.D. Fla. June 12, 2012) ([M]ounds of evidence...suggest[ ] that the
judgment [obtained in Ecuador was]...ghostwritten [and includes] verbatim passages that were taken from various pieces of the [plaintiffs] lawyers internal, unfiled, work product.).
Stockholders should also be aware that the fraudulent Ecuadorian proceedings against Chevron are barred by releases granted by national and local
authorities in Ecuador to Texaco Petroleum Company (TexPet) following completion of an agreed remediation program in Ecuador in the 1990s. In arbitral proceedings against the Republic of Ecuador initiated under the terms of the
Bilateral Investment Treaty between the Republic of Ecuador and the United States, a unanimous tribunal issued a First Partial Award ruling in favor of Chevron and its subsidiary, TexPet. The tribunal held that the Settlement and Release Agreements
released TexPet and its affiliates of any liability for all public interest or collective environmental claims. In further proceedings, Chevron will present evidence demonstrating that the claims advanced in the fraudulent Ecuadorian litigation are
public interest or collective claims.
Your Board carefully reviews the status and conduct of the Ecuador litigation on an ongoing basis.
We expect Chevrons management to defend the Company vigorously in this matter because we believe that the Ecuador courts judgment against the Company is illegitimate and the product of fraud on the part of the LAPs lawyers and some
members of the Ecuador judiciary. This is why the Company vigorously prosecuted fraud and racketeering claims against the LAPs lawyers and other parties in federal court in New York. The Company has repeatedly stated that it would welcome
constructive discussions about this litigation with the government of Ecuador, the only party that can move this matter toward a cooperative resolution, which it can do by living up to its obligations under the settlement agreement entered into when
TexPet completed its share of environmental remediation in Ecuador during the 1990s.
Your Board believes that Chevron has an obligation
to defend itself against meritless claims that can compromise stockholder value. It is the clearly stated intent of the LAPs and their allies to harm the Company and the value of stockholders shares to pressure the Company to settle the
litigation. We do not believe that the interests of the vast majority of the Companys stockholders are well served when a small group of stockholders (or nonstockholders working through their stockholder allies) attempt to pressure the Company
into settling litigation or paying judgments that are the product of fraud and bribery.
For these reasons, and given the significant
interest in these matters, Chevron strives to be transparent in communicating to its stockholders and the public its views on the Ecuador and related litigation and the conduct of the LAPs lawyers and their supporters. Chevron has provided
substantial information on these matters in our required and voluntary disclosures, including Chevrons quarterly and annual U.S. Securities and Exchange Commission reports, and on our website. At
www.chevron.com/ecuador
, stockholders
and the public can find background materials, press releases, media articles, legal filings, scientific reports, videos and other information. We encourage all stockholders to familiarize themselves with these materials.
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Chevron Corporation2014 Proxy Statement
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Stockholder Proposal Regarding Corporate Charitable Contributions Disclosure
(Item 4 on the Proxy Card)
Whereas,
charitable contributions should enhance the image of our Company in the eyes of the
public. Increased disclosure of these contributions would serve to create greater goodwill for our Company. It would also allow the public to better voice their opinion on our corporate giving strategy. Inevitably, some organizations might be viewed
more favorably than others. This could be useful in guiding our Companys philanthropic decision
making in the future. Corporate giving should ultimately enhance shareholder value.
Resolved:
That the shareholders request the Company to list the recipients of corporate charitable contributions or merchandise vouchers of
$5,000 or more on the Company website.
Supporting Statement
Current disclosure is insufficient to allow the Companys Board and shareholders to evaluate the
proper use of corporate assets by outside organizations and how those assets should be used. Chevron uses funds directly for many causes that show us in a good light:
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turning decommissioned oil platforms into artificial reefs in Louisiana
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efforts to reduce flaring in Kazakhstan
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showing that economic development and conservation can exist, and the people benefit from it
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a general commitment to health and education in the countries where we operate
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Our charitable contributions should also reflect the Companys values and can gain or cost us good will. If we mention the Anti Cruelty
Society, we might get the support of those who like to
find homes for companion animals. If we support the Marine Mammal Center, we may get the good will of those who like dolphins and other sea life. If we support the Girl Scouts, we might get the
favor of former members. Some activities are more controversial. Our corporate support of LBGT groups is a cause for concern among some Christian, Jewish and Muslim groups. Our corporate contributions to Planned Parenthood have drawn down upon our
Company a boycott by the prominent group Life Decisions International.
Corporate charitable gifts come from the fruit of all of our
employees labor and belong to all of the shareholders. Fuller disclosure would provide enhanced feedback opportunities from which our Company could make more fruitful decisions. Unlike personal giving, which can be done anonymously, corporate
philanthropy should be quite visible to better serve the interests of the shareholders.
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Chevron Corporation2014 Proxy Statement
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Board of Directors Response
Your Board recommends a vote AGAINST this proposal because the Board believes that
providing the requested disclosure would incur unnecessary expense without providing meaningful benefit to stockholders.
Investing in communities is one of Chevrons core values and supports Chevrons vision to be the global energy company
most admired for its people, partnership, and performance. Chevrons social investment program aims to foster economic stability and improve the quality of life in the communities where it works.
In support of local business objectives and community needs, Chevrons social investment extends to thousands of diverse
organizations, operating in the broad array of communities where we work and live. In the past seven years, Chevron has invested nearly $1.2 billion in partnerships and programs in support of local communities, with a focus in the areas of health,
education, and economic development. We are proud to communicate our major social investment activity through press releases and on our website at
www.chevron.com/corporateresponsibility
. Highlights of our past and current investments
include:
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More than $77 million since 2008 to build capacity and deliver lasting gains in the fight against devastating diseases such as HIV/AIDS, tuberculosis,
malaria, and sickle cell anemia, including $60 million to the Global Fund.
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More than $100 million since 2010 in the United States alone to support education programs focused on K-12 and university-level Science, Technology,
Engineering, and Math (STEM) initiatives, including more than $13 million to Donors Choose through our Fuel Your School Program, $10 million to Eagles for Education, and more than $5 million to Project Lead the Way.
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More than $110 million since 2010 in support of major economic development initiatives in areas of operation such
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as Nigeria, western Pennsylvania, Kazakhstan and Richmond, California, including a $50 million five-year commitment to the Niger Delta Partnership Initiative.
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You can learn more about Chevrons social and corporate
responsibility investments and partnerships at
www.chevron.com/corporateresponsibility
.
Given that
Chevron has substantial business activities in more than 30 countries across the world and has matched employee and retiree contributions to more than 15,000 nonprofit organizations, the effort to maintain a complete and up-to-date website list of
social investments over $5,000 would be substantial and unnecessarily burdensome. The proposed cataloging and disclosure of all of these investments in order to facilitate feedback would not be an efficient or appropriate use of the Companys
resources, particularly given that many of Chevrons major social investment initiatives are already discussed on
www.chevron.com
.
Our social investment program is driven by our business interests and the societal needs where we operate. Chevron does not support favoring specific political perspectives or points of view in the determination of
our social investments. Chevrons senior management oversees the social investment program, with periodic reviews by the Boards Public Policy Committee. This Committee is also responsible for recommending to the Board policies, programs,
and practices concerning corporate support of charitable organizations. We believe this approach will continue to result in social investment activity that is in the best interests of our stockholders.
Given the size and scope of Chevrons social investment programs and the strong governance surrounding Chevrons
corporate giving, the Board believes the requested disclosure is unnecessary and inefficient and would provide little benefit to stockholders.
Therefore, your Board unanimously recommends that you vote
AGAINST
this
proposal.
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Chevron Corporation2014 Proxy Statement
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61
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Stockholder Proposal Regarding Lobbying Disclosure
(Item 5 on the Proxy Card)
Whereas,
corporate lobbying exposes our company to risks that could adversely affect the
companys stated goals, objectives, and ultimately shareholder value, and
Whereas,
we rely on the information provided by
our company to evaluate goals and, therefore, have a strong interest in full disclosure of our companys lobbying to evaluate whether it is consistent with our companys expressed goals and in the best interests of stockholders and
long-term value;
Resolved,
the stockholders of Chevron Corp. (Chevron) request that the Board authorize the
preparation of a report, updated annually, disclosing:
1.
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Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications.
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2.
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Payments by Chevron used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the
payment and the recipient.
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3.
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Chevrons membership in and payments to any tax-exempt organization that writes and endorses model legislation.
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4.
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Description of managements and the Boards decision making process and oversight for making payments described in sections 2 and 3 above.
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For purposes of this proposal, a grassroots lobbying communication is a communication directed to the
general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or
regulation. Indirect lobbying is lobbying engaged in by a trade association or other organization of which Chevron is a member.
Both direct and indirect lobbying and grassroots lobbying communications include efforts at the local, state and federal levels.
The report shall be presented to the Audit Committee or other relevant oversight committees and posted on Chevrons website.
Supporting Statement
As stockholders, we encourage transparency and accountability in our companys use of corporate
funds to influence legislation and regulation. Chevron is listed as a member of American Petroleum Institute, which spent more than $7 million lobbying in 2012. In 2012, Chevron made a $1 million political contribution to the Chamber of Commerce,
which is characterized as by far the most muscular business lobby group in Washington (Chamber of Secrets,
Economist
, April 21, 2012) and has spent over $1 billion on lobbying since 1998. Chevron does not disclose
its memberships in, or payments to, trade associations, or the portions of such amounts used for lobbying.
Chevron spent more than $19
million in 2011 and 2012 on direct federal lobbying activities (opensecrets.org). This figure does not
include Chevrons lobbying expenditures to influence legislation in states. Chevron does not disclose its membership in or contributions to tax-exempt organizations that write and endorse
model legislation, such as the American Legislative Exchange Council (ALEC) (Corporations ties to voter ID laws
San Francisco Chronicle
, August 26, 2012). At least 50 companies have publicly left ALEC because their
business objectives and values did not align with ALECs activities, including Entergy and EnergySolutions.
We urge stockholders to
vote for this proposal.
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Chevron Corporation2014 Proxy Statement
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Board of Directors Response
Your Board recommends a vote AGAINST this proposal because the Board believes that a
special report beyond Chevrons current voluntary and mandatory disclosures would be unnecessary and an inefficient use of Chevrons resources. Chevron already discloses to the public extensive information about its political contributions
and lobbying activities. In many cases, this disclosure goes beyond what is required by law. At Chevrons 2012 and 2013 annual meetings, an average of 76 percent of votes cast opposed this proposal.
Energyits production and consumptionis one of the most important public policy issues today, both domestically and
internationally. Public policy decisions in this and related areas can significantly affect Chevrons operations, strategy, and stockholder value. Accordingly, Chevron exercises its fundamental right and responsibility to participate in the
political process and to further the interests of the Company and protect stockholder value by making political contributions, engaging in lobbying, and participating in various business and policy organizations that advocate positions designed to
support free markets and fair legislation and regulations that pertain to the energy industry. Chevron is committed to adhering to the highest ethical standards when engaging in political activities and to complying with the letter and spirit of all
laws and regulations governing lobbying activities and disclosure.
Chevron agrees that transparency and accountability
are important aspects of corporate political activity. That is why Chevron extensively discloses the nature of its political activities. At
www.chevron.com/investors/corporategovernance/businessconductethics/politicalcontributions
, you can find:
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Information about Chevrons political contributions and lobbying philosophy and oversight mechanisms;
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ii.
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Chevrons most recent annual Corporate Political Contributions report and Chevron Employees Political Action Committee (CEPAC) Contributions report.
Itemized in each report are contributions to all candidates, organizations, committees and ballot measures that received contributions designated specifically for political involvement;
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Chevrons prior-year federal quarterly lobbying reports and a link to the federal lobbying disclosure website, which contains current and previous
years reports (
http://disclosures.house.gov/ld/ldsearch.aspx
). These reports disclose total corporate expenditures related to lobbying and issues lobbied. The Companys lobbying activities in the United States are strictly
regulated by federal, state and local lobbying laws. Each governing jurisdiction determines its own regulation regarding lobbying compliance and also establishes the policies and guidelines associated with reporting and disclosure; and
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iv.
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Links to the federal lobbying contributions search website, which contains the details of Chevrons current and previous years contributions and
prior-year California quarterly lobbying reports, and to the Federal Election Commission website, which contains current and previous years reports for CEPAC.
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Chevrons political activities are subject to thorough review
and oversight. All corporate political contributions are centrally controlled, budgeted and reviewed for compliance with the law. Once each contribution has been made, it is reported as required by law in the applicable jurisdiction where the
contribution is made. The Boards Public Policy Committee annually reviews the policies, procedures and expenditures for Chevrons political activities, including political contributions and direct and indirect lobbying. In addition,
Chevrons employees are required to complete political and lobbying compliance training.
Your Board is confident
that the Companys political activities are aligned with its stockholders long-term interests. The Board encourages you to review the reports and other materials described above and on Chevrons website and judge for yourself whether
Chevrons efforts and your interests are aligned. Given the current extensive disclosure described above, the Board believes the preparation and publication of the report called for in this proposal is unnecessary.
Therefore, your Board unanimously recommends that you vote
AGAINST
this
proposal.
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Chevron Corporation2014 Proxy Statement
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63
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Stockholder Proposal Regarding Report on Shale Energy Operations
(Item 6 on the Proxy Card)
Whereas,
Extracting oil and gas from shale formations, using horizontal drilling and hydraulic
fracturing technology, is a controversial public issue. Leaks, spills, explosions and community impacts have led to bans and moratoria in the US and around the globe, putting the industrys social license to operate at risk. Of particular
concern are risks to local water resources.
Measurement and disclosure of best management practices and impacts is the primary means by
which investors can gauge how companies are managing risks and rewards of their operations. The Department of Energys Shale Gas Production Subcommittee recommended in 2011 that companies adopt a more visible commitment to using
quantitative measures
as a means of achieving best practice and demonstrating to the public that there is continuous improvement in reducing the environmental impact of shale gas production. (emphasis in original).
The 2011 report, Extracting the Facts: An Investor Guide to Disclosing Risks from Hydraulic Fracturing Operations, articulates investor
expectations for best management practices and key performance in these areas. It has been publicly supported by investors on three continents representing $1.3 trillion in assets under management and by various companies.
Chevron is among the top 10 natural gas producers in the United States, yet fails to quantify the
impacts of its hydraulic fracturing operations on air, water, land, and communities to shareholders. Chevrons Operational Excellence Management System provides a general framework for all company operations but contains no language
specific to shale energy operations, although Chevrons CEO has publicly acknowledged the need to address concerns specific to hydraulic fracturing operations. The absence of systematic reporting using quantifiable metrics makes it difficult
for investors to evaluate company risk management practices and identify performance trends on this controversial issue.
Therefore be
it resolved,
that: Shareholders request the Board of Directors to report to shareholders via quantitative indicators by September 30, 2014, and annually thereafter, the results of company policies and practices, above and beyond regulatory
requirements, to minimize the adverse water resource and community impacts from the companys hydraulic fracturing operations associated with shale formations. Such reports should be prepared at reasonable cost, omitting confidential
information.
Supporting Statement
Proponents suggest the reports include a breakdown by geographic region, such as each shale play in
which the company engages in substantial extraction operations, addressing at a minimum:
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Quantity of fresh water used for shale operations by region, including source;
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Percentage of recycled water used by region;
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Systematic post-drilling groundwater quality assessments;
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Percentage of drilling residuals managed in closed-loop systems;
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Goals to eliminate the use of open pits for storage of drilling fluid and flowback water, with updates on progress;
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A system for managing naturally occurring radioactive materials; and
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A systematic approach to assessing and managing community and human rights impacts, including quantifying numbers and categories of community complaints of
alleged impacts, and portion resolved.
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64
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Chevron Corporation2014 Proxy Statement
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Board of Directors Response
Your Board recommends a vote AGAINST this proposal because Chevron has in place
well-developed risk management systems in its natural gas from shale development operations that help ensure water is sourced, used, managed, and protected. We also maintain a strong commitment to stakeholder engagement and disclosure that supports
these operations and addresses public concerns. Activities to develop natural gas from shale are regulated and reported at the local, state, and federal level, and the production of a special report would be duplicative of Chevrons current
extensive reporting and would not result in meaningful additional information. At Chevrons three most recent annual meetings, an average of 67 percent of votes cast opposed this proposal.
As part of its broad oversight responsibilities, your Board frequently reviews Chevrons shale gas development efforts and the
risks associated with this line of business. Your Board understands that communities have concerns surrounding the development of natural gas from shale. For Chevrons employees, communities, and environment, the only acceptable development is
safe, clean, and responsible development.
To promote safe and environmentally sound operations wherever it operates,
Chevron follows an Operational Excellence Management System, available at
www.chevron.com/about/operationalexcellence
, that prescribes rigorous assessments, audits and reviews to identify and reduce health, environment, and safety
risks. Chevrons global shale operations practices are focused on complying with local, state, and federal regulations and laws, protecting groundwater, managing water use, preserving air quality, improving access to information, and engaging
the communities where it operates.
Chevron minimizes adverse water resource and community impacts by:
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Designing and maintaining wells to protect groundwater. Chevrons wells in the northeastern United States have up to eight layers of steel casing and
cement forming a barrier between the wellbore and surrounding formations. In the Marcellus region, we conduct pre-drill water tests on water wells within 3,000 feet of the wellhead, and we conduct well tests over the life of the well to verify
long-term integrity.
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Reducing freshwater use. In Chevrons northeastern United States operations we have reduced freshwater use by 50 percent and are reusing essentially all
flowback and produced water. We have also developed patent-pending technology to treat and reuse produced water on-site. This reduces freshwater consumption as well as the need for water
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trucking, transfer and disposal. Since 2011, Chevron has recycled more than 8 million barrels of water.
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Utilizing centralized water facilities and pipelines and reducing truck traffic and emissions.
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Eliminating open water pits by developing patent-pending water tanks and reducing temporary well pad sites from 20 acres to 10 acres.
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Improving public access to information on natural gas development and supporting disclosure of chemicals used in hydraulic fracturing. Water and sand
constitute more than 99 percent of fracturing fluid, and Chevron voluntarily discloses the chemicals used in all of its natural gas from shale operations in the United States at
www.FracFocus.org
.
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Engaging and consulting with the communities in which Chevron operates. Chevron has established Community Advisory Councils and a regularly monitored
community hotline so that its neighbors in the northeastern United States can voice their concerns.
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In addition, Chevrons Environmental, Social and Health Impact
Assessment process requires that for new capital projects business units evaluate and manage potentially significant environmental, social, and health impacts during planning, construction, operation, and decommissioning. Chevron also collaborates
with its industry peers and constructively engages communities and local, state, and national governments to help develop guidelines and recommended practices that ensure responsible natural gas from shale development by all operators. For example,
Chevron is a strategic partner of the Center for Sustainable Shale Development (
www.sustainableshale.org
), a nonprofit organization dedicated to continuous improvement and innovative practices in natural gas from shale development
through performance standards and third-party certification.
Finally, Chevron publishes information about how it
mitigates regulatory, legal, reputational, and financial risks in a number of communications and regulatory filings. Chevrons Corporate Responsibility Report includes additional examples and data on how Chevron protects the environment.
This report and others, such as Natural Gas and the New American Economy and Partnering in the Marcellus and Fact Sheet on Gas in the Northeastern U.S., are available at
www.chevron.com/shale
.
Given Chevrons well-developed risk management systems and stakeholder transparency efforts, your Board believes that the
proposed special report would unnecessarily duplicate existing efforts.
Therefore, your Board unanimously recommends that you vote
AGAINST
this
proposal.
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Chevron Corporation2014 Proxy Statement
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65
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Stockholder Proposal to Designate an Independent Chairman
(Item 7 on the Proxy Card)
Resolved
: The shareholders of Company
(Company) request the Board of Directors to adopt a policy, and amend the bylaws as necessary, to require the Chair of the Board of Directors to be an independent member of the Board. This independence requirement shall apply
prospectively so as not to violate any Company contractual obligation at the time this resolution is adopted. The policy should provide that if the Board determines that a Chair who was independent when selected is no longer independent, the Board
shall select a new Chair who satisfies the requirements of the policy within 60 days of this determination. Compliance with this policy is waived if no independent director is available and willing to serve as Chair.
Supporting Statement
Chevron faces many environmental, legal, and governance issues, the most pressing of which is the
ongoing legal efforts to enforce the $9.5 billion judgment in Ecuador against the company for oil pollution. Events leading to the $9.5 billion Ecuadorian judgment and subsequent enforcement actions in Argentina, Brazil, and Canada have raised
investor concerns about the costin reputation, market position and shareholder valueof inadequate board oversight of the Chevron executive teams management of the Ecuadorian case.
Chevron management has acknowledged the serious risk to the company from enforcement of the $9.5 billion Ecuadorian judgment. Chevron Deputy
Controller, Rex Mitchell, has testified that such legal actions to seek seizures anywhere around the world and generate maximum publicity for such acts would cause significant, irreparable damage to Chevrons business reputation and
business relationships.
Investors have requested the Securities and Exchange Commission (SEC) to investigate whether Chevron is
violating securities laws by repeatedly making misrepresentations and material omissions regarding the risks to shareholder of the $9.5 billion Ecuadorian judgment.
We believe that independent board leadership is required given managements serious legal misstepsincluding moving the case
from New York to Ecuadorand its unprecedented use of subpoenas against shareholders who have questioned managements legal strategy.
An independent Chair provides an important layer of checks and balances to improve board oversight. In June 2012, GMI Ratings found additional
practical considerations that would support the separation of the positions of CEO and Chair. In The Costs of a Combined Chair/CEO, GMI Ratings found that companies with a combined CEO and Chair:
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Pay more in compensation, since those serving in both positions typically are paid more than even the combined cost of a CEO and a separate Chair.
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Appear to present a greater risk of environmental, social, governance and accounting risk to companies.
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Appear to present a greater risk to shareholders and provide lower stock returns over the long term.
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Shareholder discontent with the current board structure is evidenced by the results of Chevrons 2012 shareholder meeting at which 38% of
shareholders voted in favor of the resolution to separate the positions of CEO and Board Chair with the support of the proxy advisory firms, Glass Lewis and ISS.
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66
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Chevron Corporation2014 Proxy Statement
|
Board of Directors Response
Your Board recommends a vote AGAINST this proposal because the Board believes that
stockholder interests are best served when Directors have the flexibility to determine the best person to serve as Chairman, whether that person is an independent Director or the CEO. At Chevrons 2012, 2008, and 2007 annual meetings, at which
this proposal was last considered, an average of 70 percent of votes cast opposed this proposal.
As required by
Chevrons By-Laws, your Board elects the Board Chairman annually and, as part of this election, reviews whether to combine or separate the positions of Chairman and CEO. The Board thus has great flexibility to exercise its business judgment on
behalf of stockholders and to choose the optimal leadership for the Board depending upon Chevrons particular needs and circumstances. Implementing this proposal would deprive the Board of its ability to organize and structure its functions in
a manner that is most effective and in the best interests of stockholders at any given time.
Right now, your Directors
believe that Chevron and its stockholders benefit from the unity of leadership and companywide strategic alignment associated with combining the positions of Chairman and CEO. These benefits are demonstrated, in part, by Chevrons strong
financial performance and competitive returns to investors over the past five years, with total shareholder return exceeding 14 percent for the five-year period through December 31, 2013more than 2.5 percent ahead of the nearest peer
competitor.
Your Board does recognize the importance of independent oversight of the CEO and management, and it has
instituted structures and practices to enhance such oversight. At each Board meeting, the independent Directors meet in executive session following which the independent Lead Director provides feedback to the Chairman. Annually, the independent
Directors conduct a review of the CEOs performance. In addition, the independent Directors annually elect a Lead Director from among themselves, whose responsibilities are to:
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chair all meetings of the Board in the Chairmans absence, including executive sessions;
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serve as liaison between the Chairman and the independent Directors;
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consult with the Chairman on and approve meeting agendas, schedules, and information sent to the Board;
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consult with the Chairman on other matters pertinent to Chevron and the Board;
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call meetings of the independent Directors; and
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if requested by major stockholders, be available as appropriate for consultation and direct communication.
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A fixed policy requiring a separation of the roles of Chairman and
CEO is also unnecessary because of Chevrons strong corporate governance practices, including: a strong independent Lead Director function, a declassified Board, a majority vote requirement in uncontested elections of Directors, annual election
of the Chairman by the Board, an overwhelming majority of independent Directors, regular executive sessions for independent Directors, independent Director access to senior management and publicly available Corporate Governance Guidelines. This
proposal erroneously implies that there is a positive correlation between long-term Company performance and separating the roles of Chairman and CEO. Most reputable studies that have examined this question have failed to find any such correlation.
Finally, although the proposal purports to concern itself with an independent Board Chairman, the supporting statement
suggests that the proposal is really a vehicle to discuss the Ecuador litigation and related actions against Chevron. Your Board encourages all stockholders to review the Boards position on these matters by reading the Boards
Statement Regarding The Ecuador Litigation on page 59 of this Proxy Statement.
Given strong
independent Board oversight of the CEO and management and the Companys corporate governance practices, including a very effective independent Lead Director, your Board does not believe that a fixed policy requiring an independent Chairman is
in the best interests of stockholders.
Therefore, your Board unanimously recommends that you vote
AGAINST
this
proposal.
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Chevron Corporation2014 Proxy Statement
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Stockholder Proposal Regarding Special Meetings
(Item 8 on the Proxy Card)
Resolved:
Shareowners request that the Board of Chevron Corporation (Chevron or
Company) take all possible steps to amend Company bylaws and appropriate governing documents to give holders of 10% of outstanding common stock the power to call a special shareowners meeting. To the fullest extent
permitted by law, such bylaw text in regard to calling a special meeting will not contain any exceptions or exclusion conditions that apply only to shareowners but not to management or the Board.
Supporting Statement
This Proposal does not alter the Boards power to itself call special meetings; rather, it
grants shareowners the ability to consider important matters which may arise between annual meetings. In 2013 this Proposal garnered 32.6%, representing $78.6 billion in stock.
We believe that management has mishandled a number of issues in ways that significantly increase risk to shareholders. Therefore, shareholders would benefit from greater access to special meetings as circumstances
require.
When Chevron acquired Texaco in 2001, it acquired significant legal, financial, and reputational liabilities that stemmed from
oil pollution of the water and lands of communities in the Ecuadorian Amazon. For twenty years the affected communities brought suit against Texaco (and later Chevron). Their case reached its final conclusion in November 2013 when the Ecuadorian
National Court (equivalent to the U.S. Supreme Court) confirmed a judgment against Chevron, of $9.5 billion.
This decision makes
possible the seizure of Chevron assets worldwide, and Ecuadorian plaintiffs have already initiated legal action in Argentina, Brazil, and Canada to seize Company assets.
Chevrons Deputy Controller, Rex Mitchell, testified under oath that enforcement of the multi-billion dollar Ecuadorian judgment could cause irreparable injury to [Chevrons] business reputation and
business relationships.
However, Chevron has reported these risks in neither public filings nor statements to shareholders. As a
result, investors requested that the U.S. Securities and Exchange Commission investigate whether Chevron violated securities laws by these misrepresentations or material omissions regarding the $9.5 billion Ecuadoran judgment.
Instead of negotiating an expedient, fair, and comprehensive settlement with Ecuador, Chevron
persisted in an unsuccessful legal challenge and also subpoenaed and harassed shareholders who questioned the Companys actionsat an estimated expenditure rate of $6.9 million per month over the past 12 years.
Additionally, substantial liabilities may result from other Company operations. Regarding Chevrons Myanmar/Burma project (acquired in the
Unocal merger of 2005), the IMF reported that the Burmese government diverted billions of dollar of revenue from the Chevron partnership away from the national budget. These billions may instead have landed in the private accounts of individuals
whom the U.S. Government has suspected of crimes against humanity.
Because John Watson, current Chevron CEO, oversaw both the Texaco and
Unocal mergers (and is thus a significantly responsible party), it is clear that greater shareholder protections are warranted.
Therefore, please vote FOR this common-sense governance reform that offers shareholders the critical right to address substantive concerns in a
timely way.
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Board of Directors Response
Your Board recommends a vote AGAINST this proposal because stockholders have
consistently supported Chevrons current By-Law regarding special meetings and the Board continues to believe this By-Law is in the stockholders best interests and provides appropriate and reasonable limitations on the right to call
special meetings. In 2010, stockholders representing approximately 80 percent of Chevrons common stock outstanding approved an amendment to Chevrons By-Laws that permits stockholders owning 15 percent of Chevrons common stock
outstanding to call for special meetings. At Chevrons 2013 and 2012 annual meetings, an average of 68 percent of votes cast opposed this stockholder proposal to reduce the special meetings threshold to 10 percent.
Your Board continues to believe that Chevrons 15 percent threshold to hold a special meeting provides stockholders assurance
that a reasonable number of stockholders consider a matter important enough to merit a special meeting. Preparing for and holding special meetings is, like annual meetings, time-consuming and expensive. The 15 percent threshold helps avoid
waste of Chevron and stockholder resources on addressing narrow or special interests.
In addition to a lower threshold,
the proposal would permit a special meeting without any appropriate and reasonable limitations. Chevrons By-Laws currently contain two important limitations. A special meeting cannot be called if (i) the Board has already called or will
call an annual meeting of stockholders for the same purposes specified in the special meeting request or (ii) an annual or special meeting was held not more than 12 months before the request for a special meeting was received and included the
purpose specified in the special meeting request. Given the time and cost associated with special meetings, your Board believes that these are appropriate and reasonable limitations. Moreover, the issues raised by the proponents in support of this
proposal already are consistently discussed at Chevrons annual meetings.
Stockholders can be assured that their right to be apprised of and vote on
significant matters is protected not only by their existing right to call for special meetings and participate in Chevrons annual meetings, but also by state law and other regulations. Chevron is incorporated in Delaware, which requires that
major corporate actions, such as a merger or a sale of all or substantially all of Chevrons assets, be approved by stockholders. Chevron is also listed on the New York Stock Exchange (NYSE), and the NYSE requires, among other things, that
listed companies obtain stockholder approval for equity compensation plans and significant issuances of securities to related parties or when such issuances represent more than 20 percent of an issuers voting power.
Finally, although the proposal purports to concern itself with special meetings, the supporting statement suggests that the
proposal is really a vehicle to discuss the Ecuador litigation and related actions against Chevron and Chevrons interests in Myanmar. In the case of Ecuador, your Board encourages all stockholders to review the Boards position on these
matters by reading the Boards Statement Regarding The Ecuador Litigation on page 59 of this Proxy Statement. In the case of Myanmar, to support further reform in Myanmar, the U.S. government has restored full diplomatic
relations and eased financial and investment sanctions. More information can be found on Chevrons website at
www.chevron.com/globalissues/humanrights
and in your Boards response to the stockholder proposal regarding Country
Selection Guidelines, Item 10 in this Proxy Statement.
Your Board believes that the 2010 stockholder vote to
establish a 15 percent threshold for special meetings should be respected. The By-Law then approved by stockholders responds to the essence of the proposal.
Therefore, your Board unanimously recommends that you vote
AGAINST
this
proposal.
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Chevron Corporation2014 Proxy Statement
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Stockholder Proposal Regarding Independent Director with Environmental Expertise
(Item 9 on the Proxy Card)
Environmental expertise is critical to the success of companies in the energy industry because of the
significant environmental issues associated with their operations. Shareholders, lenders, host country governments and regulators, and affected communities are focused on these impacts. A companys inability to demonstrate that policies and
practices are in line with internationally accepted environmental standards can lead to difficulties in raising new capital and obtaining the necessary licences from regulators.
Chevron has been repeatedly cited for allegedly harmful environmental practices:
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In November, 2013, Ecuadors highest court, upholding a 2011 judgement, found Chevron liable for $9.5 billion in damages arising from widespread
contamination of Amazonian land and water resources by Texaco between 1964 and 1992.
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A serious oil spill off the coast of Brazil caused the Brazilian government to suspend Chevrons off-shore oil exploration in November, 2011. In 2013,
the company agreed to pay fines of $17.3 million and $128 million in compensatory expenses in settlement of charges made by Brazilian authorities.
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Chevron is accused of polluting land and water resources by its Niger Delta operations, and seriously damaging the local fishing economy through the dredging
of waterways.
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We believe that Chevron would benefit by addressing the environmental impact of its business at the most
strategic level by appointing an environmental specialist to the board. An authoritative figure with acknowledged expertise and standing could perform a valuable role for by enabling Chevron to more effectively address the environmental issues
inherent in its business. It would also help ensure that the highest levels of attention focus on the development of environmental standards for new projects.
Therefore,
Be It Resolved: Shareholders request that, as elected board directors terms
of office expire, at least one candidate is recommended who:
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has a high level of expertise and experience in environmental matters relevant to hydrocarbon exploration and production and is widely recognized in the
business and environmental communities as an authority in such field, as reasonably determined by the companys board, and
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will qualify, subject to exceptions in extraordinary circumstances explicitly specified by the board, as an independent director.*
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For these purposes, a director shall not be considered independent if, during the last three years, he or she
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was, or is affiliated with a company that was an advisor or consultant to the Company;
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was employed by or had a personal service contract(s) with the Company or its senior management;
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was affiliated with a company or non-profit entity that received the greater of $2 million or 2% of its gross annual revenues from the Company;
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had a business relationship with the Company worth at least $100,000 annually;
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has been employed by a public company at which an executive officer of the Company serves as a director;
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had a relationship of the sorts described herein with any affiliate of the Company; and
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was a spouse, parent, child, sibling or in-law of any person described above.
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Chevron Corporation2014 Proxy Statement
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Board of Directors Response
Your Board recommends a vote AGAINST this proposal because the Board believes that
its current membership possesses significant environmental experience and that each Board member should possess a broad range of skills, qualifications, and attributes. At Chevrons four most recent annual meetings an average of 76 percent of
votes cast opposed this proposal.
This Proxy Statement and Chevrons Corporate Governance Guidelines (available at
www.chevron.com/investors/corporategovernance/governanceguidelines
) discuss Chevrons Board membership criteria. These criteria include environmental expertise or experience in the list of skills that are desirable when
identifying candidates for the Board. Your Board currently includes a number of independent Directors with significant environmental experience, including Ms. Deily, Ms. Gast, and Messrs. Denham, Huntsman, Sugar, and Ware. You can learn
more about these Directors experience by reviewing their biographies in this Proxy Statement or at
www.chevron.com/about/leadership/boardofdirectors
.
In addition to individual experience, your Board has access to extensive internal and external expertise on environmental matters.
Your Board frequently reviews environmental matters and is briefed by professionals whose primary focus is on environmental protection and stewardship in connection with Chevrons operations and products. During 2013, the Board received 10 such
reports or presentations. Environmental professionals within Chevron have expertise at the facility, strategic, business unit, and operating company levels, and Chevron routinely accesses external resources to keep apprised of best practices
and technology advances.
This proposal would require that in an uncontested election at least one Board seat be set
aside for an environmental specialist, presumably a Director with at least the implied responsibility on the Board for environmental matters. Your Board does not believe that setting aside a Board seat for such a special-purpose Director
is a good corporate governance practice. Boards make decisions as a group, with collective responsibility. All of your Directors have fiduciary duties to Chevron and its stockholders that oblige them to educate themselves and make decisions on an
informed and deliberative basis. Given the broad range of issues related to Chevrons operations, your Board needs Directors who can integrate knowledge about a variety of subjects, often at the same time and affecting the same issue.
Chevron strongly disagrees with the allegations on which the proposal is premised. Chevron is committed to seeing that
all
projects and products are developed in an environmentally sound manner and that its operations and products continue to reduce their environmental impacts. To ensure Chevrons operations are
environmentally sound, Chevron has established rigorous standards for protecting the environment everywhere it operates. Chevrons Operational Excellence Management System (OEMS) and Environmental, Social and Health Impact Assessment process
help Chevron to identify, analyze and manage social, environmental, health, and safety issues, including environmental stewardship. These are regularly reviewed by the Board and management to ensure compliance with the Companys rigorous
standards and are described in Chevrons annual Corporate Responsibility Report and available on Chevrons website at
www.chevron.com/corporateresponsibility
. Lloyds Register Quality Assurance, Inc. (LRQA) has provided
assurance that OEMS design meets the requirements of ISO14001 environmental management standard and Occupational Health and Safety Assessment Series 18001 and that as of 2009 is fully implemented. In 2012, LRQA concluded that Chevrons OEMS is
effectively driving continued improvement.
These standards and processes have helped Chevron drive strong
environmental performance. For example, Chevron:
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is a leader among its peers in spill prevention;
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has invested billions of dollars since 2003 to reduce its equity greenhouse gas emissions from flaring and venting by 38 percent;
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has an environmental management company dedicated to environmental stewardship of Chevrons legacy sites of operation;
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spends approximately $1 billion annually on environmental matters; and
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supports biodiversity and protection by sponsoring and supporting numerous flora and fauna conservation projects around the world.
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Finally, with respect to the references to the Ecuador litigation and
related actions against Chevron contained in this proposal, your Board encourages all stockholders to read the Boards Statement Regarding The Ecuador Litigation on page 59 of this Proxy Statement.
Your Board already includes members with broad experience in environmental issues, and does not believe that it would be in the
best interests of stockholders or be appropriate to select a Director exclusively on the basis of a single criterion or area of expertise.
Therefore, your Board unanimously recommends that you vote
AGAINST
this
proposal.
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Chevron Corporation2014 Proxy Statement
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Stockholder Proposal Regarding Country Selection Guidelines
(Item 10 on the Proxy Card)
Whereas:
Chevron, in partnership with Total, the Petroleum Authority of Thailand, and Myanmar
Oil and Gas Enterprise (MOGE), holds equity in one of Burmas largest investment projects: The Yadana gas-field and pipeline that transports gas to Thailand, generating billions of dollars for the Burmese regime;
Following the Burmese militarys multiple crackdowns on and imprisonment of pro-democracy and human rights activists, Chevron has faced
negative publicity, consumer boycotts, and operational risks concerning its investment in Burma;
Human rights organizations have
documented egregious human rights abuses by Burmese troops employed to secure the pipeline area, including forcible relocation of villagers and use of forced labor;
In March 2005, Unocal settled a case for a reported multi-million dollar amount in which it was claimed that Unocal was complicit in human rights abuses by Burmese troops hired by the Yadana project to provide
security;
By purchasing Unocal, Chevron acquired Unocals investment in Burma including its legal, moral, and political
liabilities;
Nobel Peace Prize Laureate Aung San Suu Kyi, leader of the National League for Democracy, stated in June 2012, that
MOGE The Myanmar Oil and Gas Enterprise (MOGE)
with which all foreign participation in the energy sector takes place through joint venture arrangements, lacks both transparency and accountability at present. She further stated:
Other countries could help by not allowing their own companies to partner MOGE unless it was signed up to such codes;
According to a 2009 International Monetary Fund report, Burmas rulers added revenues from
natural gas exports to the budget at the 30-year-old official exchange rate, causing the gas money to account for under one percent of budget revenue in 2007-08 instead of 57 percent if valued at market rates;
In July 2012, U.S. lawmakers, including Sens. John McCain and Joseph Lieberman, called on the U.S. Administration to retain bans on U.S.
companies working with MOGE. We share Aung San Suu Kyis concerns that MOGEs operations lack transparency, that it remains overly influenced by the Burmese military, and that the large amounts of foreign investment flowing into MOGE
are not sufficiently accountable to the Burmese people or its parliament, the senators stated;
In 2012, Chevron sponsored oil and
gas industry conferences in Burma and is reported to be exploring new investments in the country;
Chevron does business in other
countries with controversial human rights records: Angola, Kazakhstan, and Nigeria;
Be it Resolved:
The shareholders request the
Board to make available by the 2015 annual meeting a report, omitting proprietary information and at reasonable cost, on Chevrons criteria for (i) investment in; (ii) continued operations in; and, (iii) withdrawal from specific
high-risk countries.
Supporting Statement
We believe Chevrons current country selection process is opaque, leaving unclear how Chevron
determines whether to invest in or withdraw from countries where:
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the government has engaged in ongoing, systematic human rights violations;
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there is a call for economic sanctions by human rights and democracy advocates; and,
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Chevrons presence exposes it to government sanctions, negative publicity, and consumer boycotts.
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Chevron Corporation2014 Proxy Statement
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Board of Directors Response
Your Board recommends a vote AGAINST this proposal because Chevron has in place
rigorous policies and processes to identify and manage in-country issues and risks and already reports on them. At Chevrons six most recent annual meetings an average of 78 percent of votes cast opposed this proposal.
In order to find, produce, and provide energy supplies, Chevron must be willing to make long-term commitments to go where energy
resources may exist. This may require conducting business in countries with cultural, economic, social, and political institutions and practices that are very different from those in the United States. The long-term costs and value of building,
maintaining and operating wells, pipelines, refineries, and distribution channels in any particular country are substantial, and it is not practical for Chevron to start or stop operations or abandon its assets every time a countrys government
or political conditions change. For example, Chevron has maintained operations in South Africa since 1911, Nigeria since 1913, Australia since 1918, Indonesia since 1925, Colombia since 1926 and Canada since 1935. In these and other countries,
governments and political situations have periodically changed during the course of Chevrons investments.
In
Myanmar, Chevron holds a minority, nonoperating interest in the Yadana Project. Myanmar has experienced dramatic political changes in 2012, leading the United States to restore full diplomatic relations, ease financial and investment sanctions, and
make the first-ever U.S. presidential visit to the country. In 2013, the European Union lifted the last of its trade, economic, and individual sanctions against Myanmar, and the World Bank resumed lending to the country. These changes have the
potential to significantly advance Myanmars development and present opportunities to collaborate with new organizations in country.
Independent of these developments in Myanmar, the Yadana Project has already contributed substantively to local socioeconomic development through various programs. Chevron and Yadana Project operating partner Total
SA have trained and hired 95 percent of the projects workforce locally and provided free health care and immunizations, as well as access to education and economic support. CDA Collaborative Learning Projects, a U.S. nonprofit
organization that has been visiting the pipeline area since 2002, publishes independent reports that are available at
www.CDAinc.com
. As one indication of the projects positive impact, Aung San Suu Kyi, a member of Myanmars
Parliament and Nobel Peace Prize laureate, referred to Total, the operator of the Yadana Project, as a responsible investor in Myanmar.
Myanmar illustrates that Chevron has been able to exercise a positive influence in
its host countries. Chevron has provided sustainable economic opportunities through active community engagement initiatives and by working with communities to improve health care, advance educational goals, create jobs, and strengthen civil society.
In 2013 alone, Chevron allocated approximately $100 million in social investment spending for the four countries specifically cited in this proposal.
In addition to exercising a positive influence in the countries where we operate, Chevron operates legally and in accordance with the values outlined in The Chevron Way. These values are implemented through
numerous policies and processes, including Chevrons Business Conduct and Ethics Code, Operational Excellence Management System (OEMS), Environmental, Social and Health Impact Assessment, and Human Rights Policy. Chevrons policies
reaffirm its commitment to conducting global operations consistent with the intent of the United Nations Universal Declaration of Human Rights, the International Labour Organization Declaration on Fundamental Principles and Rights at Work, and the
Voluntary Principles on Security and Human Rights. All employees are required to comply with these policies. Chevrons consistent approach to operating around the world is discussed in greater detail in
Global Operations, One
Approach
, available at
www.chevron.com/corporateresponsibility/approach
.
These policies and
processes help Chevron to identify, analyze and manage security, social, environmental, health, and safety issues incident to its operations and major capital projects; reinforce its commitment to respect human rights; and set strict compliance
policies for foreign corrupt practices and anticorruption laws. Lloyds Register Quality Assurance, Inc. (LRQA), has provided assurance that OEMS design meets the requirements of ISO 14001 environmental management standard and Occupational
Health and Safety Assessment Series 18001 and that as of 2009 is fully implemented. In 2012, LRQA concluded that Chevrons OEMS is effectively driving continued improvement.
The proposed report would not improve Chevrons current procedures for managing and evaluating in-country issues and risks,
which are described in Chevrons annual Corporate Responsibility Report and on Chevrons website at
www.chevron.com
.
Therefore, your Board unanimously recommends that you vote
AGAINST
this
proposal.
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Chevron Corporation2014 Proxy Statement
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Notice and Access
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 28, 2014:
The Notice of 2014 Annual Meeting, 2014 Proxy Statement, and 2013 Annual Report are available at
www.proxyvote.com
.
This year, we are again furnishing proxy materials over the Internet to a number of our stockholders
under the U.S. Securities and Exchange Commissions notice and access rules. Many of our stockholders will receive a Notice Regarding the Availability of Proxy Materials in the mail instead of a paper copy of this Proxy Statement, a proxy card
or voting instruction card, and our 2013 Annual Report. We believe that this process will conserve natural resources and reduce the costs of printing and distributing our proxy materials.
The Notice contains instructions on how to access our proxy materials and vote over the Internet at
www.proxyvote.com
and
how stockholders can receive a paper copy of our proxy materials, including this Proxy Statement, a proxy card or voting instruction card, and our 2013 Annual Report. At
www.proxyvote.com
stockholders can also request to receive future proxy materials in printed form by mail or electronically by email.
All
stockholders who do not receive a Notice will receive a paper copy of the proxy materials by mail unless they have previously elected to receive proxy materials by email.
We remind stockholders who receive a Notice that the Notice is not itself a
proxy card and should not be returned with voting instructions.
Method and Cost of Soliciting and Tabulating Votes
Chevron will bear the costs of soliciting proxies and tabulating your votes. Proxies may be solicited
by mail, Notice and Access (described in Notice and Access, above), email, telephone, or other means. Chevron has retained Broadridge Financial Solutions, Inc., to assist in distributing these proxy materials. Georgeson Inc. will act as
our proxy solicitor in soliciting votes at an estimated cost of $27,000 plus additional fees for telephone and other solicitation of proxies, if needed, and its reasonable out-of-pocket expenses. Chevron employees may solicit your votes without
additional compensation.
Chevron will reimburse banks, brokers, and other holders of record for reasonable, out-of-pocket expenses for
forwarding
these proxy materials to you, according to certain regulatory fee schedules. We estimate that this reimbursement will cost Chevron approximately $2 million. The actual amount will depend on
variables such as the number of proxy packages mailed, the number of stockholders receiving electronic delivery, and postage costs. See Email Delivery of Future Proxy Materials in this section for information on how you can help
reduce printing and mailing costs.
Broadridge Financial Solutions, Inc., will be the proxy tabulator, and IVS Associates, Inc.,
will act as the Inspector of Election.
Householding Information
We have adopted a procedure approved by the U.S. Securities and Exchange Commission called
householding. Under this procedure, stockholders of record who have the same address and last name and do not participate in electronic delivery of proxy materials will receive only one copy of the Annual Report and Proxy Statement or
Notice Regarding the Availability of Proxy Materials. This procedure will reduce our printing costs and postage fees.
If you or another
stockholder of record with whom you share an address are receiving multiple copies of the Annual Report and Proxy Statement or Notice Regarding the Availability of Proxy Materials, you can request to receive a single copy of these materials in the
future by calling Broadridge Financial Solutions, Inc., toll-free at 1-800-542-1061 or by writing to Broadridge
Financial Solutions, Inc., Attn: Householding Department, 51 Mercedes Way, Edgewood, NY 11717. If you or another stockholder of record with whom you share an address wish to receive a separate
Annual Report and Proxy Statement or Notice Regarding the Availability of Proxy Materials, we will promptly deliver it to you if you request it by contacting Broadridge Financial Solutions, Inc., in the same manner as described above.
Stockholders who participate in householding will continue to receive separate proxy cards. Householding will not affect your dividend check
mailings.
If you are a street name stockholder, you can request householding by contacting your bank, broker, or other holder of record
through which you hold your shares.
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Chevron Corporation2014 Proxy Statement
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Email Delivery of Future Proxy Materials
You can elect to receive future proxy materials by email, which will save us the cost of producing and mailing documents to you. If you choose to
receive future proxy materials by email, you will receive an email with instructions containing a link to the website where those materials are available as well as a link to the proxy voting website.
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Stockholders of Record
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Street Name Stockholders
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You may enroll in the email delivery service by going directly
to
www.icsdelivery.com/cvx
.
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Please check the information provided in the proxy materials mailed
to you by your bank, broker, or other holder of record concerning the availability of this service.
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You may revoke your email delivery election at this site at any time and request a paper copy of the proxy materials.
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Stockholder of Record Account Maintenance
Chevron engages a transfer agent, Computershare, to assist the Company in maintaining the accounts of
individuals and entities that hold Chevron common stock in their own name on the records of the Company, sometimes referred to as stockholders of record or registered stockholders. All communications concerning accounts of
stockholders of record, including name and address changes and inquiries about the requirements to transfer shares and similar matters, can be handled by calling Chevron Stockholder Services toll-free number, 1-800-368-8357, or by contacting
Computershare through its website at
www.computershare.com/investor
. You can also address correspondence to Computershare at P.O. Box 30170, College Station, TX 77842-3170, or, if by overnight delivery, 211 Quality Circle, Suite 210,
College Station, TX 77845.
When you access your account through the Computershare Investor Centre website, you can view your current
balance, access your account history, obtain current and historical common stock prices, and purchase and sell Chevron shares through the Computershare Investment Plan. For stockholders who do not have a Computershare Investor Centre account, you
may be able to create a unique user ID,
by answering a series of questions, including a first-time user authentication process and creating a custom site seal. If you already have an existing Investor Centre account, you will need your
user ID and password.
The Computershare Investment Plan allows interested investors to purchase and sell shares of Chevron common
stock and enroll in dividend reinvestment. Directions and deadlines for the purchase of shares, including payment via electronic funds transfer or check, can be found on the Stockholder Services section of our
website at
www.chevron.com/investors/stockholderservices/stockpurchasedividends
. Additional information can be found in the Computershare Plan Brochure available on Computershares website at
www.computershare.com/investor
.
If you are a street name stockholder, you may contact your bank, broker, or other holder
of record with questions concerning your account.
Submission of Stockholder Proposals for 2015 Annual Meeting
If a stockholder wishes to present a proposal for action at the 2015 Annual Meeting, the proponent
and the proposal must comply with the stockholder proposal submission rules of the U.S. Securities and Exchange Commission. Proposals must be received by the Corporate Secretary and Chief Governance Officer no later than December 11, 2014.
Proposals received after that date will not be included in the Proxy Statement or acted upon at the 2015 Annual Meeting. We urge stockholders to submit proposals by overnight mail addressed to Chevron Corporation, Attn: Corporate Secretary and Chief
Governance
Officer, 6001 Bollinger Canyon Road, San Ramon, CA 94583-2324 or by email to
corpgov@chevron.com
.
Article VII of Chevrons Restated Certificate of Incorporation precludes taking actions on any proposals or other items of business that have not been included in the Notice of 2015 Annual Meeting of
Stockholders and 2015 Proxy Statement delivered in advance of the 2015 Annual Meeting unless the Board decides to waive this restriction.
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Attending the Annual Meeting
Directions
The Annual Meeting will be held on Wednesday, May 28, 2014, at the Permian
Basin Petroleum Museum, 1500 Interstate 20 West, Midland, Texas 79701. The meeting will begin promptly at 8:00 a.m. CDT.
Rules for Admission
We will observe the following rules for admission to the Annual Meeting:
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Only stockholders or their legal proxy holders may attend the Annual Meeting.
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Due to space constraints and other security considerations, we are not able to admit the guests of either stockholders or their legal proxy holders.
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Seating is available on a first-come basis.
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All persons wishing to attend
must present a form of government-issued photo identification.
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If you are a stockholder of record
,
you must present one of the following items: (i) the admission ticket that is attached to your proxy
card delivered as part of your proxy materials, (ii) a copy of your Computershare account statement indicating your ownership of Chevron common stock, (iii) the Notice Regarding the Availability of Proxy Materials, if you received one, or
(iv) an admission ticket provided by Chevrons Corporate Governance Department (see below). If you arrive without any of these items, we will admit you only if we are able to verify that you are a stockholder.
|
|
|
|
If you are a street name stockholder
,
you must present one of the following items: (i) the voting instruction form provided by your
broker or other holder of record as part of your proxy materials, (ii) a copy of a recent bank or brokerage account statement indicating your ownership of Chevron common stock, (iii) the Notice Regarding the Availability of Proxy Materials, if
you received one, or (iv) an admission ticket provided by Chevrons Corporate Governance Department (see below).
|
|
|
|
If you are not a stockholder but attending as proxy for a stockholder
,
you must present (i) a valid legal proxy, or (ii) an admission
ticket provided by Chevrons Corporate Governance Department (see below). If you plan to attend as proxy for a stockholder of record, you must present a valid legal proxy from the stockholder of record to you. If you plan to attend as proxy for
a street name stockholder, you must present a valid legal proxy from the stockholder of record (i.e., the bank, broker, or other holder of record) to the street name stockholder that is assignable and a valid legal proxy from the street name
stockholder to you. Stockholders may appoint only one proxy holder to attend on their behalf.
|
|
To Expedite Your Admission You May
Obtain an Admission Ticket
From Chevrons Corporate Governance Department
If you would like to expedite your admission
to the Annual Meeting, you may obtain an admission ticket in advance of the meeting by emailing Chevrons Corporate Governance Department at
corpgov@chevron.com.
When submitting your request, please include proof of ownership of Chevron
common stock or a valid legal proxy in conformance with the rules of admission described above. Please remember that if you attend the Annual Meeting with an admission ticket, you must still present a form of government-issued photo identification
to be admitted.
If you do not have
access to email or have other questions about the admission process, you may call Christopher A. Butner, Assistant Secretary, at (925) 842-1000.
|
Prohibited Items
Cameras, recording equipment, electronic devices (including cell phones, tablets, laptops, etc.), purses, bags, briefcases, and packages will NOT be allowed into the Annual Meeting, other than for Company purposes.
A checkroom or station for such items will be provided. We also reserve the right to deny admission to any person carrying any item that may pose a threat to the physical safety of stockholders or other meeting participants. Attendees will be asked
to pass through a security screening device prior to entering the Annual Meeting. We regret any inconvenience this may cause you, and we appreciate your cooperation.
|
|
|
76
|
|
Chevron Corporation2014 Proxy Statement
|
More Information About Chevron
Chevron strives to be transparent and comprehensive in disclosing information about all of its operations. Your Board encourages you to reference
www.chevron.com
as your primary source of information about the Company and its operations.
|
|
|
About Chevron
|
Corporate Website
|
|
www.chevron.com
|
Chevron Way
|
|
www.chevron.com/about/chevronway
|
Operational Excellence
|
|
www.chevron.com/about/operationalexcellence
|
Business Conduct & Ethics
|
|
www.chevron.com/investors/corporategovernance/businessconductethics
|
Our Businesses
|
|
www.chevron.com/about/ourbusiness
|
Products & Services
|
|
www.chevron.com/productsservices
|
Energy Sources
|
|
www.chevron.com/deliveringenergy
|
Senior Management
|
|
www.chevron.com/about/leadership/corporateofficers
|
News
|
|
www.chevron.com/news
|
Board of Directors and Governance Documents
|
Board of Directors
|
|
www.chevron.com/about/leadership/boardofdirectors
|
Board Committee Structure
|
|
www.chevron.com/investors/corporategovernance/committeemembers
|
Committee Charters
|
|
www.chevron.com/investors/corporategovernance/committeecharters
|
Contact the Board
|
|
www.chevron.com/investors/corporategovernance/contactboard
|
Corporate Governance Guidelines
|
|
www.chevron.com/investors/corporategovernance/governanceguidelines
|
By-Laws
|
|
www.chevron.com/documents/pdf/chevronbylaws.pdf
|
Certificate of Incorporation
|
|
www.chevron.com/documents/pdf/certificateofincorporation.pdf
|
Political and Environmental Disclosures
|
Corporate Responsibility
|
|
www.chevron.com/corporateresponsibility
|
Global Operations, One Approach
|
|
www.chevron.com/documents/pdf/GlobalOperationsApproach.pdf
|
Global Issues
|
|
www.chevron.com/globalissues
|
Climate Change
|
|
|
Human Rights
|
|
|
Energy Efficiency
|
|
|
Environment
|
|
|
Renewable Energy & Emerging Technology
|
|
|
Political Contributions and Lobbying
|
|
www.chevron.com/investors/corporategovernance/businessconductethics/politicalcontributions
|
Financial Reporting
|
Investor Relations
|
|
http://investor.chevron.com
|
Annual Report
|
|
www.chevron.com/annualreport/2013
|
Stockholder Services
|
|
www.chevron.com/investors/stockholderservices
|
Financial Information
|
|
www.chevron.com/investors/financialinformation
|
Other Updates
|
Ecuador Lawsuit
|
|
www.chevron.com/ecuador
|
Gorgon and Wheatsone
|
|
www.chevron.com/countries/australia/businessportfolio/projectprogress
|
|
|
|
Chevron Corporation2014 Proxy Statement
|
|
77
|
Appendix A
|
|
Reconciliation of Non-GAAP Financial Measures Referenced in The Compensation Discussion
and Analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Chevrons Adjusted Earnings
|
|
Total Chevron Corporation
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
Adjusted Earnings
1
($ Million)
|
|
$
|
21,523
|
|
|
$
|
23,779
|
|
|
$
|
26,395
|
|
|
$
|
18,799
|
|
|
$
|
9,643
|
|
|
$
|
23,381
|
|
Adjustment Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Impairments and Revaluations
|
|
|
(100
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(100
|
)
|
|
|
(400
|
)
|
Asset Dispositions
2
|
|
|
|
|
|
|
2,400
|
|
|
|
500
|
|
|
|
400
|
|
|
|
940
|
|
|
|
950
|
|
Tax Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Environmental Remediation Provisions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructurings and Reorganizations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(175
|
)
|
|
|
|
|
|
|
|
|
Litigation Provisions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Special Items
|
|
|
(100
|
)
|
|
|
2,400
|
|
|
|
500
|
|
|
|
225
|
|
|
|
840
|
|
|
|
550
|
|
Cumulative Effect of Changes in Accounting Principles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Earnings ($ Million)
|
|
$
|
21,423
|
|
|
$
|
26,179
|
|
|
$
|
26,895
|
|
|
$
|
19,024
|
|
|
$
|
10,483
|
|
|
$
|
23,931
|
|
Average Capital Employed
3
($ Million)
|
|
$
|
160,450
|
|
|
$
|
141,179
|
|
|
$
|
124,810
|
|
|
$
|
110,181
|
|
|
$
|
99,547
|
|
|
$
|
90,271
|
|
(1)
|
Adjusted Earnings = Reported Earnings less adjustments for certain nonrecurring items noted above. Earnings of competitors are adjusted on a consistent basis as Chevron to
exclude certain nonrecurring items based on publicly available information.
|
(2)
|
Does not include dispositions immaterial to our business.
|
(3)
|
Capital Employed is the sum of Chevron Corporation stockholders equity, total debt and noncontrolling interests. Average capital employed is computed by averaging the sum
of capital employed at the beginning and end of the year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Chevrons Adjusted Earnings
|
|
Total Upstream
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
Adjusted Earnings
1
($ Million)
|
|
$
|
20,809
|
|
|
$
|
21,788
|
|
|
$
|
24,786
|
|
|
$
|
17,677
|
|
|
$
|
10,632
|
|
|
$
|
21,619
|
|
Adjustment Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Impairments and Revaluations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(100
|
)
|
|
|
(400
|
)
|
Asset Dispositions
2
|
|
|
|
|
|
|
2,000
|
|
|
|
|
|
|
|
|
|
|
|
400
|
|
|
|
950
|
|
Tax Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Environmental Remediation Provisions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructurings and Reorganizations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Litigation Provisions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Special Items
|
|
|
|
|
|
|
2,000
|
|
|
|
|
|
|
|
|
|
|
|
300
|
|
|
|
550
|
|
Cumulative Effect of Changes in Accounting Principles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Earnings ($ Million)
|
|
$
|
20,809
|
|
|
$
|
23,788
|
|
|
$
|
24,786
|
|
|
$
|
17,677
|
|
|
$
|
10,932
|
|
|
$
|
22,169
|
|
Net Production Volume
3
(MBOED)
4
|
|
|
2,510
|
|
|
|
2,512
|
|
|
|
2,576
|
|
|
|
2,674
|
|
|
|
2,617
|
|
|
|
2,443
|
|
Reported Earnings per BOE
5
|
|
$
|
22.72
|
|
|
$
|
25.87
|
|
|
$
|
26.36
|
|
|
$
|
18.11
|
|
|
$
|
11.44
|
|
|
$
|
24.79
|
|
Adjusted Earnings per BOE
5
|
|
$
|
22.72
|
|
|
$
|
23.70
|
|
|
$
|
26.36
|
|
|
$
|
18.11
|
|
|
$
|
11.13
|
|
|
$
|
24.18
|
|
(1)
|
Adjusted Earnings = Reported Earnings less adjustments for certain nonrecurring items noted above. Earnings of competitors are adjusted on a consistent basis as Chevron to
exclude certain nonrecurring items based on publicly available information.
|
(2)
|
Does not include dispositions immaterial to our business.
|
(3)
|
Excludes own-use fuel (natural gas consumed in operations).
|
(4)
|
Thousands of Barrels of Oil Equivalent Per Day.
|
(5)
|
Barrels of Oil Equivalent.
|
|
|
|
Chevron Corporation2014
Proxy Statement
|
|
A-1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Chevrons Adjusted Earnings
|
|
Total Downstream, Including Chemicals
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
Adjusted Earnings
1
($ Million)
|
|
$
|
2,237
|
|
|
$
|
3,899
|
|
|
$
|
3,091
|
|
|
$
|
2,228
|
|
|
$
|
(67
|
)
|
|
$
|
3,152
|
|
Adjustment Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Impairments and Revaluations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Dispositions
2
|
|
|
|
|
|
|
400
|
|
|
|
500
|
|
|
|
400
|
|
|
|
540
|
|
|
|
|
|
Tax Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Environmental Remediation Provisions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructurings and Reorganizations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(150
|
)
|
|
|
|
|
|
|
|
|
Litigation Provisions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Special Items
|
|
|
|
|
|
|
400
|
|
|
|
500
|
|
|
|
250
|
|
|
|
540
|
|
|
|
|
|
Cumulative Effect of Changes in Accounting Principles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Earnings ($
Million)
|
|
$
|
2,237
|
|
|
$
|
4,299
|
|
|
$
|
3,591
|
|
|
$
|
2,478
|
|
|
$
|
473
|
|
|
$
|
3,152
|
|
(1)
|
Adjusted Earnings = Reported Earnings less adjustments for certain nonrecurring items noted above. Earnings of competitors are adjusted on a consistent basis as Chevron to
exclude certain nonrecurring items based on publicly available information.
|
(2)
|
Does not include dispositions immaterial to our business.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Chevrons Adjusted Earnings
|
|
Total Downstream, Excluding Chemicals
|
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
Adjusted Earnings
1
($ Million)
|
|
$
|
1,234
|
|
|
$
|
3,047
|
|
|
$
|
2,383
|
|
|
$
|
1,737
|
|
|
$
|
(314
|
)
|
|
$
|
3,026
|
|
Adjustment Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Impairments and Revaluations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Dispositions
2
|
|
|
|
|
|
|
400
|
|
|
|
500
|
|
|
|
400
|
|
|
|
540
|
|
|
|
|
|
Tax Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Environmental Remediation Provisions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructurings and Reorganizations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(150
|
)
|
|
|
|
|
|
|
|
|
Litigation Provisions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Special Items
|
|
|
|
|
|
|
400
|
|
|
|
500
|
|
|
|
250
|
|
|
|
540
|
|
|
|
|
|
Cumulative Effect of Changes in Accounting Principles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported Earnings ($ Million)
|
|
$
|
1,234
|
|
|
$
|
3,447
|
|
|
$
|
2,883
|
|
|
$
|
1,987
|
|
|
$
|
226
|
|
|
$
|
3,026
|
|
Volumes
(MBD)
3
|
|
|
2,711
|
|
|
|
2,765
|
|
|
|
2,949
|
|
|
|
3,113
|
|
|
|
3,254
|
|
|
|
3,429
|
|
Reported Earnings per Barrel
|
|
$
|
1.25
|
|
|
$
|
3.41
|
|
|
$
|
2.68
|
|
|
$
|
1.75
|
|
|
$
|
0.19
|
|
|
$
|
2.41
|
|
Adjusted Earnings per Barrel
|
|
$
|
1.25
|
|
|
$
|
3.01
|
|
|
$
|
2.21
|
|
|
$
|
1.53
|
|
|
$
|
(0.26
|
)
|
|
$
|
2.41
|
|
(1)
|
Adjusted Earnings = Reported Earnings less adjustments for certain nonrecurring items noted above. Earnings of competitors are adjusted on a consistent basis as Chevron to
exclude certain nonrecurring items based on publicly available information.
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(2)
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Does not include dispositions immaterial to our business.
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(3)
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Thousands of Barrels Per Day.
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A-2
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Chevron Corporation2014 Proxy Statement
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About Chevron
Who We Are
Chevron is one of the worlds leading integrated energy companies. Our success is
driven by our people and their commitment to get results the right wayby operating responsibly, executing with excellence, applying innovative technologies and capturing new opportunities for profitable growth. We are 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 petrochemical products; generate power and produce
geothermal energy; provide renewable energy and energy efficiency solutions; and develop the energy resources of the future, including conducting advanced biofuels research.
At Chevron, we are relentlessly focused on producing safe, reliable energy now and for the future. How are we doing it? By applying the energy we have most in abundance: Human Energy.
The Chevron Way
The Chevron Way explains who we
are, what we do, what we believe and what we plan to accomplish. It establishes a common understanding not only for those of us who work here, but for all who interact with us. At the heart of The Chevron Way is our vision
to be
the
global energy company most admired for its people, partnership and performance.
Using your smartphone, scan the QR codes below to learn more about
Human Energy and The Chevron Way:
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CHEVRON CORPORATION
6001 BOLLINGER CANYON ROAD
SAN RAMON, CA 94583-2324
ATTN: CORPORATE GOVERNANCE DEPARTMENT
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VOTE BY TELEPHONE OR INTERNET OR MAIL
24 Hours a Day, 7 Days a Week
VOTE BY INTERNET - www.proxyvote.com or, from a smartphone, scan the QR Barcode above.
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the
meeting date or on the applicable Voting Plan cutoff date. Have your proxy card in hand when you access the website and then follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the meeting date or on the applicable
Voting Plan cutoff date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign, and date your proxy
card and return it in the postage-paid envelope we have provided or return it to Chevron Corporation, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS
If you
would like to reduce the costs incurred by Chevron Corporation in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards, and annual reports electronically via e-mail or the Internet. To sign up for electronic
delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access stockholder communications electronically in future years.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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M67108-P47886-Z62457
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KEEP THIS PORTION FOR YOUR RECORDS
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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DETACH AND RETURN THIS PORTION ONLY
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CHEVRON CORPORATION
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If you wish to vote in accordance with the Board of
Directors recommendations, you need only sign, date, and return this proxy card.
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Your Board recommends you vote FOR the election of
the following Board Nominees for Director 1a through 1l:
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For
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Against
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Abstain
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1a.
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L. F. Deily
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¨
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¨
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¨
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1b.
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R. E. Denham
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¨
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¨
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¨
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Your Board recommends you vote AGAINST stockholder proposals 4, 5, 6, 7, 8, 9 and 10:
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For
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Against
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Abstain
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1c.
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A. P. Gast
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¨
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¨
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¨
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4.
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Charitable Contributions Disclosure
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¨
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¨
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¨
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1d.
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E. Hernandez, Jr.
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¨
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¨
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¨
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5.
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Lobbying Disclosure
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¨
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¨
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¨
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1e.
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J. M. Huntsman, Jr.
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¨
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¨
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6.
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Shale Energy Operations
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¨
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¨
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1f.
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G. L. Kirkland
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7.
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Independent Chairman
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¨
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1g.
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C. W. Moorman
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¨
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8.
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Special Meetings
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¨
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¨
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¨
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1h.
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K. W. Sharer
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¨
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9.
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Independent Director with Environmental Expertise
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¨
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¨
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1i.
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J. G. Stumpf
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10.
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Country Selection Guidelines
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¨
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1j.
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R. D. Sugar
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¨
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1k.
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C. Ware
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¨
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¨
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¨
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1l.
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J. S. Watson
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¨
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¨
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¨
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Your Board recommends you vote FOR Board proposals 2 and 3:
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For
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Against
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Abstain
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2.
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Ratification of Appointment of Independent Registered Public Accounting Firm
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¨
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¨
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¨
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Yes
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No
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3.
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Advisory Vote to Approve Named Executive Officer Compensation
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¨
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¨
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Please indicate if you plan to attend this meeting.
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¨
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¨
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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Dear Stockholder:
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The lower portion of this form is your proxy for
Chevron Corporations 2014 Annual Meeting of Stockholders. It is important that you vote. You may vote by telephone, Internet, or mail. If you wish to vote by telephone or Internet, instructions are printed on the reverse side of this form. If
you wish to vote by mail, please mark, sign, date, and return the proxy card (the reverse portion of this form) using the enclosed postage-paid envelope or return it to Chevron Corporation, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
You
must sign, date, and return the proxy card for your vote to be counted.
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The upper portion of this form is your meeting
admission ticket.
I invite you to attend the meeting at the Permian Basin Petroleum Museum, 1500 Interstate 20 West, Midland, Texas 79701. Only stockholders or their legal proxy holders may attend the 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. Seating is available on a first-come basis. To be admitted, please bring this ticket and a government-issued photo identification with
you to the meeting.
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Sincerely,
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Lydia I. Beebe
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Corporate Secretary and Chief Governance Officer
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Annual Meeting of Stockholders
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Meeting Date:
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Wednesday, May 28, 2014
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Meeting Time:
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8:00 a.m., CDT (doors open at 7:30 a.m.)
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Meeting Location:
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Permian Basin Petroleum Museum
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1500 Interstate 20 West
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Midland, Texas 79701
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Directions to the Annual Meeting location are provided in the 2014
Proxy Statement.
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Note: Cameras, recording equipment, electronic
devices (including cell phones, tablets, laptops, etc.), purses, bags, briefcases, or packages will NOT be allowed into the Annual Meeting, other than for Company purposes. A checkroom or station for such items will be provided. We also reserve the
right to deny admission to any person carrying any item that may pose a threat to the physical safety of stockholders or other meeting participants. Attendees will be asked to pass through a security screening device prior to entering the Annual
Meeting. We regret any inconvenience this may cause you, and we appreciate your cooperation.
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Important Notice Regarding the Availability of Proxy Materials for
the Stockholder Meeting to Be Held on Wednesday, May 28, 2014: The Notice of the 2014 Annual Meeting, 2014 Proxy Statement, and 2013 Annual Report are available at www.proxyvote.com.
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M67109-P47886-Z62457