UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant Filed by a Party other than the Registrant
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §.240.14a-12
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CHEVRON CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Fee paid previously with preliminary materials. | |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |
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2019 proxy statement
notice of 2019 annual meeting of stockholders to be held on may 29, 2019
2019 notice of the chevron corporation
annual meeting of stockholders
wednesday, may 29, 2019
8:00 a.m. PDT
Chevron Park Auditorium, 6001 Bollinger Canyon Road, San Ramon, CA 94583-2324
record date
Monday, April 1, 2019
agenda
| Elect 11 Directors named in this Proxy Statement; |
| Vote on a Board proposal to ratify the appointment of PwC as our independent registered public accounting firm for 2019; |
| Vote on a Board proposal to approve, on an advisory basis, Named Executive Officer compensation; |
| Vote on five stockholder proposals, each if properly presented at the meeting; and |
| Transact any other business that is properly presented at the Annual Meeting by or at the direction of the Board. |
admission
Stockholders or their legal proxy holders may attend the Annual Meeting. Due to space constraints and other security considerations, we are not able to admit the guests of either stockholders or their legal proxy holders.
important notice regarding admission to the 2019 annual meeting
Stockholders or their legal proxy holders who wish to attend the Annual Meeting must preregister with and obtain an admission letter from Chevrons Corporate Governance Department. Admission letters will be distributed on a first-come, first-served basis. Requests for admission letters must be received by Chevron no later than 5:00 p.m. PDT on Thursday, May 23, 2019. For complete instructions for preregistering and obtaining an admission letter, see page 89 of this Proxy Statement.
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voting
Stockholders owning Chevron common stock at the close of business on Monday, April 1, 2019, or their legal proxy holders, are entitled to vote at the Annual Meeting. Please refer to pages 84 through 85 of this Proxy Statement for information about voting at the Annual Meeting.
distribution of proxy materials
On Monday, April 15, 2019, we will commence distributing to our stockholders (1) a copy of this Proxy Statement, a proxy card or voting instruction form, and our Annual Report (the Proxy Materials), (2) a Notice Regarding the Availability of Proxy Materials, with instructions to access our Proxy Materials and vote on the Internet, or (3) for stockholders who receive materials electronically, an email with instructions to access our Proxy Materials and vote on the Internet.
By Order of the Board of Directors,
Mary A. Francis
Corporate Secretary and Chief Governance Officer
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Chevron Corporation
6001 Bollinger Canyon Road
San Ramon, CA 94583-2324
Your Board of Directors is providing you with these Proxy Materials in connection with its solicitation of proxies to be voted at Chevron Corporations 2019 Annual Meeting of Stockholders to be held on Wednesday, May 29, 2019, at 8:00 a.m. PDT at Chevron Park Auditorium, 6001 Bollinger Canyon Road, San Ramon, California, and at any postponement or adjournment of the Annual Meeting.
In this Proxy Statement, Chevron and its subsidiaries may also be referred to as we, our, the Company, the Corporation, or Chevron.
Your Board is asking you to take the following actions at the Annual Meeting:
Item(s) |
Your Boards recommendation |
Vote required |
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Item 1: Elect 11 Directors named in this Proxy Statement |
Vote FOR |
Each Director nominee who receives a majority of the votes cast (i.e., the number of shares voted FOR a Director nominee must exceed the number of shares voted AGAINST that Director nominee, excluding abstentions) will be elected a Director in an uncontested election.
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Item 2: Vote to ratify the appointment of
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Vote FOR | These items are approved if the number of shares voted FOR exceeds the number of shares voted AGAINST. |
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Item 3: Vote to approve, on an advisory
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Vote FOR | |||||
Items 48: Vote on five stockholder
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Vote AGAINST |
If you are a street name stockholder (i.e., you own your shares through a bank, broker, or other holder of record) and do not vote your shares, your bank, broker, or other holder of record can vote your shares at its discretion ONLY on Item 2. If you do not give your bank, broker, or other holder of record instructions on how to vote your shares on Item 1 or Items 3 through 8, your shares will not be voted on those matters. If you have shares in an employee stock or retirement benefit plan and do not vote those shares, the plan trustee or fiduciary may or may not vote your shares, in accordance with the terms of the plan. Any shares not voted on Item 1 or Items 3 through 8 (whether by abstention, broker nonvote, or otherwise) will have no impact on that particular item.
We are not aware of any matters that are expected to be presented for a vote at the Annual Meeting other than those described above. If any other matter is properly be brought before the Annual Meeting by or at the direction of the Board, the proxy holders identified in the Voting and Additional InformationAppointment of Proxy Holders section of this Proxy Statement intend to vote the proxies in accordance with their best judgment. When conducting the Annual Meeting, the Chairman or his designee may refuse to allow a vote on any matter not made in compliance with our By-Laws and the procedures described in the Voting and Additional InformationSubmission of Stockholder Proposals for 2019 Annual Meeting section of the 2018 Proxy Statement.
Chevron Corporation2019 Proxy Statement | 1 |
The Board Nominating and Governance Committee (the BN&GC) recommended, and the Board set, a current Board size of 11 Directors. On
December 4, 2018, the Board elected Debra Reed-Klages as a member of the Board. All of the 11 nominees are current Directors. Each nominee, other than Ms. Reed-Klages, was previously elected at Chevrons 2018 Annual Meeting of
Stockholders.
Directors are elected annually and serve for a one-year term or until their successors are elected. If any nominee is unable to serve as a Directora circumstance we do not anticipatethe Board by resolution may reduce the number of Directors or choose a substitute. Your Board has determined that each non-employee Director is independent in accordance with the New York Stock Exchange (NYSE) Corporate Governance Standards and has no material relationship with Chevron other than as a Director.
director election requirements
director qualifications and nomination processes
2 | Chevron Corporation2019 Proxy Statement |
election of directors
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These skills, experiences, and expertise are critical to the Boards ability to provide effective oversight of the Company and are directly relevant to Chevrons business, strategy, and operations.
CEO / Senior Executive / Leader of Significant Operations |
Chevron employs more than 45,000 employees in business units throughout the world. Chevrons operations involve complex organizations and processes, strategic planning, and risk management.
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Science / Technology / Engineering / Research / Academia |
Technology and engineering are at the core of Chevrons business and are key to finding, developing, producing, processing, and refining oil and natural gas. Our business processes are complex and highly technical.
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Government / Regulatory / Legal / Public Policy |
Chevrons operations require compliance with a variety of regulatory requirements in numerous countries and involve relationships with various governmental entities and nongovernmental organizations throughout the world.
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Finance / Financial Disclosure / Financial Accounting
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Chevrons business is multifaceted and requires complex financial management, capital allocation, and financial reporting processes.
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Global Business / International Affairs |
Chevron conducts business around the globe. Our business success is derived from an understanding of diverse business environments, economic conditions, and cultures and a broad perspective on global business opportunities.
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Environmental |
We place the highest priority on the health and safety of our workforce and protection of our assets, communities, and the environment. We are committed to continuously improving our environmental performance and reducing the potential impacts of our operations.
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The Board seeks to achieve diversity of age, gender, and ethnicity and recognizes the importance of Board refreshment to ensure that it benefits from fresh ideas and perspectives. The following charts demonstrate the Boards commitment to diversity of backgrounds and Board refreshment. Since the last Annual Meeting, the Board elected Ms. Reed-Klages to the Board, who was recommended by a third party search firm.
strong board diversity | strong board refreshment |
Chevron Corporation2019 Proxy Statement | 3 |
election of directors
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The following matrix displays the most significant skills and qualifications that each Director possesses. The BN&GC reviews this matrix periodically to ensure that the Board maintains a balance of knowledge and experience.
CEO / Senior Executive / Leader of Significant Business Operations Science / Technology / Engineering / Research / Academia Government / Regulatory / Legal /Public Policy Finance / Financial Disclosure / Financial Accounting Global Business / International Affairs Environmental Director Wanda M. Austin John B. Frank Enrique Hernandez, Jr. Charles W. Moorman IV Ronald D. Sugar Inge G. Thulin D. James Umpleby III Michael K. Wirth Totals Alice P. Gast Dambisa F. Moyo 8 8 8 10 9 7
The BN&GC considers Director candidates suggested for nomination to the Board from stockholders, Directors, and other sources. Directors periodically suggest possible candidates, and from time to time, the BN&GC may engage a third-party consultant to assist in identifying potential candidates. The BN&GC has retained director search firms to assist with identifying potential candidates.
4 | Chevron Corporation2019 Proxy Statement |
election of directors
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The Board Nominating and Governance Committee recommended, and the Board set, a current Board size of 11 Directors. Each of the Director nominees is a current Director.
Your Board recommends that you vote FOR each of these Director nominees.
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Wanda M. Austin Retired President and Chief Executive
Age: 64 Director Since: December 2016 Independent: Yes |
Chevron Committees:
Board Nominating and Governance Public Policy (Chair)
Current Public Company Directorships:
Amgen Inc. |
Prior Public Company Directorships (within last five years):
None
Other Directorships and Memberships:
Horatio Alger Association National Academy of Engineering University of Southern California |
Dr. Austin has been Interim President of the University of Southern California since August 2018, and will hold that position until July 1, 2019. She has held an adjunct Research Professor appointment at the University of Southern Californias Viterbi Schools Department of Industrial and Systems Engineering since 2007. She has been Co-founder and Chief Executive Officer of MakingSpace, Inc., a leadership and STEM (science, technology, engineering, and math) consulting firm, since December 2017. She served as President and Chief Executive Officer of The Aerospace Corporation, a leading architect for the United States national security space programs, from 2008 until her retirement in 2016. From 2004 to 2007, she was Senior Vice President, National Systems Group, at Aerospace. Dr. Austin joined Aerospace in 1979.
skills and qualifications
Business Leadership / Operations: Eight years as CEO of The Aerospace Corporation. Thirty-seven-year career with The Aerospace Corporation included numerous senior management and executive positions. CEO of MakingSpace, Inc. since December 2017.
Finance: More than a decade of financial responsibility and experience at The Aerospace Corporation. Audit Committee member at Amgen Inc.
Global Business / International Affairs: Internationally recognized for her work in satellite and payload system acquisition, systems engineering, and system simulation. Former CEO of a company that provides space systems expertise to international organizations. Director of companies with international operations.
Government / Regulatory / Public Policy: Served on Presidents Council of Advisors on Science and Technology and Presidents Review of U.S. Human Space Flight Plans Committee. Appointed to the Defense Policy Board, the Defense Science Board, and the NASA Advisory Council.
Research / Academia: Interim President at the University of Southern California. Adjunct Research Professor at the University of Southern Californias Viterbi School of Engineering.
Science / Technology / Engineering: Ph.D. in Industrial and Systems Engineering from the University of Southern California, Master of Science in both Systems Engineering and Mathematics from the University of Pittsburgh. Thirty-seven-year career in national security space programs. Director at Amgen Inc., a biotechnology company. Fellow of the American Institute of Aeronautics and Astronautics. Member of the National Academy of Engineering.
Chevron Corporation2019 Proxy Statement | 5 |
election of directors
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John B. Frank Vice Chairman, Oaktree Capital Group, LLC
Age: 62 Director Since: November 2017 Independent: Yes |
Chevron Committees:
Audit audit committee financial expert
Current Public Company Directorships:
Oaktree Capital Group, LLC Oaktree Specialty Lending Corporation Oaktree Strategic Income Corporation |
Prior Public Company Directorships (within last five years):
None
Other Directorships and Memberships:
Good Samaritan Hospital of Los Angeles The James Irvine Foundation Wesleyan University XPRIZE Foundation |
Mr. Frank has been Vice Chairman since 2014, and Director since 2007, of Oaktree Capital Group, LLC, a leader among global investment managers specializing in alternative investments. He was Oaktrees Managing Principal from 2005 until 2014, having joined Oaktree in 2001 as General Counsel. Prior to that, he served as a Partner of the Los Angeles law firm of Munger, Tolles & Olson LLP.
skills and qualifications
Business Leadership / Operations: Eighteen years of service as senior executive of Oaktree Capital Group, LLC, a global investment management company, including service as principal executive officer, Vice Chairman, Director, Managing Principal, and General Counsel.
Finance: More than 20 years of financial responsibility and experience as a senior executive at Oaktree Capital Group, LLC and as the partner responsible for financial affairs at the law firm of Munger, Tolles and Olson LLP.
Global Business / International Affairs: Senior executive of Oaktree Capital Group, LLC, which conducts business worldwide from 18 offices around the globe. Regular travel around the world to meet with Oaktrees institutional clients and speak at international investment forums.
Government / Regulatory / Public Policy: Two decades of experience working with government officials regarding regulatory and public policy issues, including testimony before the U.S. Senate Finance Committee, as a senior executive of Oaktree Capital Group, LLC. Served as a Legislative Assistant to the Honorable Robert F. Drinan, Member of Congress, and as a law clerk to the Honorable Frank M. Coffin of the U.S. Court of Appeals for the First Circuit.
Legal: Served as General Counsel of Oaktree. Former Partner of Munger, Tolles & Olson LLP. Extensive experience with mergers and acquisitions and strategic, financial, and corporate governance issues. Law degree from the University of Michigan.
6 | Chevron Corporation2019 Proxy Statement |
election of directors
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Alice P. Gast President, Imperial College London
Age: 60 Director Since: December 2012 Independent: Yes |
Chevron Committees:
Board Nominating and Governance Public Policy
Current Public Company Directorships:
None |
Prior Public Company Directorships (within last five years):
None
Other Directorships and Memberships:
King Abdullah University of Science and Technology in Thuwal, Saudi Arabia National Academy of Engineering U.K. Research and Innovation Board |
Dr. Gast has been President of Imperial College London, a public research university specializing in science, engineering, medicine, and business, since 2014. She was President of Lehigh University, a private research university, from 2006 until 2014 and Vice President for Research, Associate Provost, and Robert T. Haslam Chair in Chemical Engineering at Massachusetts Institute of Technology from 2001 until 2006. Dr. Gast was professor of chemical engineering at Stanford and the Stanford Synchrotron Radiation Laboratory from 1985 until 2001.
skills and qualifications
Environmental Affairs: At Imperial College London, oversees environmental institutes and centers and leads the university crisis management group. At Lehigh University, presided over environmental centers, advisory groups, and crisis management. Expertise in chemical and biological terrorism issues gained through service on several governmental committees.
Finance: Thirteen years of service as president of leading educational institutions, with ultimate responsibility for finance, fundraising, and endowment management.
Global Business / International Affairs: Served as a U.S. Science Envoy for the U.S. Department of State to advise on ways to foster and deepen relationships with the Caucasus and Central Asia. Serves on the Singapore Ministry of Educations Academic Research Council and on the Board of Trustees for the King Abdullah University of Science and Technology in Saudi Arabia. Serves on the Global Federation of Competitiveness Councils.
Government / Regulatory / Public Policy: Served on the Homeland Security Science and Technology Advisory Committee. Chaired the scientific review committee empaneled by the National Research Council at the request of the FBI to conduct an independent review of the investigatory methods used by the FBI in the criminal case involving the mailing of anthrax spores. Serves on the Board of UKRI, the UK Research and Innovation funding and policy body.
Research / Academia: More than three decades of service in academia and research at leading educational institutions.
Science / Technology / Engineering: M.A. and Ph.D. in chemical engineering from Princeton University. Former Vice President for Research, Associate Provost, and Robert T. Haslam Chair in Chemical Engineering at Massachusetts Institute of Technology and professor of chemical engineering at Stanford University and the Stanford Synchrotron Radiation Laboratory. Member of the National Academy of Engineering.
Chevron Corporation2019 Proxy Statement | 7 |
election of directors
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Enrique Hernandez, Jr. Chairman and Chief Executive Officer, Inter-Con Security Systems, Inc.
Age: 63 Director Since: December 2008 Independent: Yes |
Chevron Committees:
Management Compensation (Chair) Public Policy
Current Public Company Directorships:
McDonalds Corporation |
Prior Public Company Directorships (within last five years):
Nordstrom, Inc. Wells Fargo & Company
Other Directorships and Memberships:
Harvard College Visiting Committee Harvard University Resources Committee John Randolph Haynes and Dora Haynes Foundation
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Mr. Hernandez has been Chairman and Chief Executive Officer of Inter-Con Security Systems, Inc., a global provider of security and facility support services to governments, utilities, and industrial customers, since 1986. He was President of Inter-Con from 1986 until 2018, and was previously Executive Vice President and Assistant General Counsel from 1984 until 1986. He was an associate of the law firm of Brobeck, Phleger & Harrison from 1980 until 1984.
skills and qualifications
Business Leadership / Operations: Served more than three decades as CEO of Inter-Con Security Systems, Inc. Co-founder of Interspan Communications, a television broadcasting company. Chairman of the Board of McDonalds Corporation.
Finance: More than three decades of financial responsibility and experience at Inter-Con Security Systems, Inc. Chaired the Audit Committee at McDonalds Corporation. Former Chair of the Finance Committee and the Risk Committee at Wells Fargo & Company. Former Audit Committee member at Great Western Financial Corporation, Nordstrom, Inc., Washington Mutual, Inc., and Wells Fargo & Company.
Global Business / International Affairs: CEO of a company that conducts business worldwide. Director of a company with international operations, and former director of companies with international operations.
Government / Regulatory / Public Policy: Trustee of the John Randolph Haynes Foundation, which has funded hundreds of important urban studies in education, transportation, local government elections, public safety, and other public issues. Former appointee and Commissioner and President of the Los Angeles Police Commission. Served on the U.S. National Infrastructure Advisory Committee.
Legal: Served as Executive Vice President and Assistant General Counsel of Inter-Con Security Systems. Former litigation associate of the law firm of Brobeck, Phleger & Harrison. Law degree from Harvard Law School.
8 | Chevron Corporation2019 Proxy Statement |
election of directors
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Charles W. Moorman IV Retired Chairman and Chief Executive Officer, Norfolk Southern Corporation
Age: 67 Director Since: May 2012 Independent: Yes |
Chevron Committees:
Audit (Chair) audit committee financial expert
Current Public Company Directorships:
Duke Energy Corporation Oracle Corporation |
Prior Public Company Directorships (within last five years):
Norfolk Southern Corporation
Other Directorships and Memberships:
Focused Ultrasound Foundation Georgia Tech Foundation Inc. National Academy of Engineering Nature Conservancy of Virginia |
Mr. Moorman served as coChief Executive Officer of Amtrak, a passenger rail service provider, from July 2017 until his retirement in December 2017, having served as President and Chief Executive Officer from September 2016 until July 2017. He was previously Chairman from 2006, and Chief Executive Officer from 2004, of Norfolk Southern Corporation, a freight and transportation company, until his retirement in 2015. He served as President of Norfolk Southern from 2004 until 2013. Prior to that, Mr. Moorman was Senior Vice President of Corporate Planning and Services from 2003 until 2004 and Senior Vice President of Corporate Services in 2003. Mr. Moorman joined Norfolk Southern in 1975.
skills and qualifications
Business Leadership / Operations: Served more than a decade as CEO of Norfolk Southern Corporation. Forty-year career with Norfolk Southern included numerous senior management and executive positions, with emphasis on operations.
Environmental Affairs: At Norfolk Southern Corporation, gained experience with environmental issues related to transportation of coal, automotive, and industrial products. Former Virginia chapter chair and current Virginia chapter director of The Nature Conservancy, a global conservation organization. Served as a trustee of the Chesapeake Bay Foundation, whose mission is to protect the environmental integrity of the bay.
Finance: Former Chairman and CEO of Fortune 500 company. More than three decades of financial responsibility and experience at Norfolk Southern Corporation.
Government / Regulatory / Public Policy: More than four decades of experience in the highly regulated freight and transportation industry.
Science / Technology / Engineering: Forty-year career with Norfolk Southern included numerous senior management and executive positions requiring expertise in engineering and technology. Norfolk Southern builds and maintains track and bridges, operates trains and equipment, and designs and manages complex information technology systems. Member of the National Academy of Engineering.
Chevron Corporation2019 Proxy Statement | 9 |
election of directors
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Dambisa F. Moyo Chief Executive Officer, Mildstorm LLC
Age: 50 Director Since: October 2016 Independent: Yes |
Chevron Committees:
Audit audit committee financial expert
Current Public Company Directorships:
3M Company Barclays plc (retiring May 2, 2019) |
Prior Public Company Directorships (within last five years):
Barrick Gold Corporation SABMiller plc Seagate Technology
Other Directorships and Memberships:
None |
Dr. Moyo has been Chief Executive Officer of Mildstorm LLC, a financial and economics firm, since she founded it in 2015. She is a global economist and commentator analyzing the macroeconomy and international affairs. Since 2008, Dr. Moyo has been engaged in researching, speaking, and writing about international macroeconomics. From 2001 to 2008, she worked at Goldman Sachs, a multinational investment bank and financial services company, in various roles, including as an economist. Prior to that she worked at the World Bank, an international financial institution in Washington, D.C., from 1993 until 1995.
skills and qualifications
Environmental Affairs: As director at Barrick Gold Corporation, served on the committee that considered and provided oversight on environmental matters.
Finance: Ten years of experience at Goldman Sachs and the World Bank. Ph.D. in economics from the University of Oxford and MBA in finance from the American University. Audit Committee member at 3M Company. Former Audit Committee and Risk Committee member at Barrick Gold Corporation.
Global Business / International Affairs: Traveled to more than 80 countries, with a particular focus on the interplay of international business and the global economy, while highlighting key opportunities for investment. Director of companies with international operations.
Government / Regulatory / Public Policy: Ten years of experience in the highly regulated banking and financial services industry. MPA in Public Administration from John F. Kennedy School of Government, Harvard.
Research / Academia: Author of four New York Times bestsellers. Dr. Moyos writing regularly appears in economic and finance-related publications.
10 | Chevron Corporation2019 Proxy Statement |
election of directors
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Debra Reed-Klages Retired Chairman, Chief Executive Officer and President, Sempra Energy
Age: 62 Director Since: December 2018 Independent: Yes |
Chevron Committees:
Management Compensation Public Policy
Current Public Company Directorships:
Caterpillar Inc. |
Prior Public Company Directorships (within last five years):
Halliburton Company Oncor Electric Delivery Company LLC Sempra Energy
Other Directorships and Memberships:
California Horse Racing Board The Trusteeship, International Womens Forum Rady Childrens Hospital and Health Center Rady Childrens Hospital San Diego, CA State Farm Mutual Board of Directors University of Southern California Viterbi School of Engineering, Board of Councilors
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Ms. Reed-Klages served as Chairman from 2012, Chief Executive Officer from 2011, and President from 2017 until her retirement in 2018 of Sempra Energy, an energy services holding company whose operating units invest in, develop, and operate energy infrastructure, and provide electric and gas services to customers in North and South America. Prior to that, she was Executive Vice President of Sempra Energy from 2010 to 2011. From 2006 to 2010, she served as President and Chief Executive Officer of San Diego Gas and Electric and Southern California Gas Co. (SoCalGas), Sempras regulated California utilities. She joined SoCalGas in 1978 as an energy systems engineer.
skills and qualifications
Business Leadership / Operations: Served seven years as CEO of Sempra Energy. Over three decades of experience in senior management and executive positions at Sempra, including responsibility for utility and infrastructure operations.
Environmental Affairs: As Chairman and CEO of Sempra Energy, oversaw all aspects of Sempras environmental and sustainability policies and strategies, which include initiatives to address challenges like limiting water use, improving the quality and efficiency of operations, infrastructure development and access to energy, human health, and environmental safety.
Finance: Former Chairman and CEO of Fortune 500 company. More than a decade of financial responsibility and experience at Sempra Energy. Former CFO of San Diego Gas & Electric and SoCalGas.
Global Business / International Affairs: Former Chairman and CEO of Fortune 500 company that conducts business in Mexico and South America. Director of a company with international operations, and former director of companies with international operations.
Government / Regulatory / Public Policy: At Sempra Energy, worked with and adhered to the rules established by the California Public Utilities Commission, the principal regulator of Sempras California utilities. Served four years on the National Petroleum Council, a federally chartered advisory committee to the U.S. Secretary of Energy.
Science / Technology / Engineering: Bachelor of Science in civil engineering from the University of Southern California. Served in a variety of senior management and executive positions at Sempra Energy, requiring expertise in engineering and technology.
Chevron Corporation2019 Proxy Statement | 11 |
election of directors
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Ronald D. Sugar Retired Chairman and Chief Executive Officer, Northrop Grumman Corporation
Lead Director Since: 2015
Age: 70 Director Since: April 2005 Independent: Yes |
Chevron Committees:
Board Nominating and Governance (Chair) Management Compensation
Current Public Company Directorships:
Air Lease Corporation Amgen Inc. Apple Inc. |
Prior Public Company Directorships (within last five years):
None
Other Directorships and Memberships:
Alliance College-Ready Public Schools Los Angeles Philharmonic Association National Academy of Engineering Uber Technologies, Inc. (Chair) UCLA Anderson School of Management Board of Visitors University of Southern California
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Dr. Sugar is a senior advisor to various businesses and organizations, including Ares Management LLC, a leading private investment firm; Bain & Company, a global consulting firm; Temasek Americas Advisory Panel, a private investment company based in Singapore; and the G100 Network and the World 50, peer-to-peer exchanges for current and former senior executives and directors from some of the worlds largest companies. He is also an advisor to Northrop Grumman Corporation, a global security and defense company, and was previously Northrops Chairman and Chief Executive Officer from 2003, until his retirement in 2010, and President and Chief Operating Officer, from 2001 until 2003. He joined Northrop Grumman in 2001, having previously served as President and Chief Operating Officer of Litton Industries, Inc., a developer of military products, and earlier as an executive of TRW Inc., a developer of missile systems and spacecraft.
skills and qualifications
Business Leadership / Operations: Served seven years as CEO of Northrop Grumman Corporation. Held senior management and executive positions, including service as COO, at Northrop Grumman, Litton Industries, Inc., and TRW Inc.
Environmental Affairs: As Chairman, CEO, and President of Northrop Grumman Corporation, oversaw environmental assessments and remediations at shipyards and aircraft and electronics factories.
Finance: Former CFO of Fortune 500 company. More than three decades of financial responsibility and experience at Northrop Grumman, Litton Industries, Inc., and TRW Inc. Current Audit Committee Chair at Apple Inc. and former Audit Committee Chair at Chevron.
Global Business / International Affairs: Former CEO of Fortune 500 company with extensive international operations. Current and former director of companies with international operations.
Government / Regulatory / Public Policy: At Northrop Grumman Corporation, a key government contractor, oversaw development of weapons and other technologies. Appointed by President of the United States to the National Security Telecommunications Advisory Committee. Former director of the World Affairs Council of Los Angeles.
Science / Technology / Engineering: Ph.D. in electrical engineering from the University of California at Los Angeles. Served in a variety of senior management and executive positions at Northrop Grumman, Litton Industries, Inc., and TRW Inc., requiring expertise in engineering and technology. Director at Amgen Inc., a biotechnology company; Apple Inc., a designer, manufacturer and marketer of, among other things, personal computers, mobile communication, and media devices; and former director at BeyondTrust, a global cybersecurity company. Member of National Academy of Engineering.
12 | Chevron Corporation2019 Proxy Statement |
election of directors
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Inge G. Thulin Executive Chairman, 3M Company (retiring June 1, 2019)
Age: 65 Director Since: January 2015 Independent: Yes |
Chevron Committees:
Audit audit committee financial expert
Current Public Company Directorships:
3M Company Merck & Co., Inc. |
Prior Public Company Directorships (within last five years):
None
Other Directorships and Memberships:
The Business Council Business Roundtable Council on Foreign Relations World Economic Forum |
Mr. Thulin has been Executive Chairman of 3M Company, a diversified global manufacturer, technology innovator, and marketer of a variety of products and services, since July 2018. Effective June 1, 2019, he will be retiring as Executive Chairman. He served as 3Ms Chairman, President and Chief Executive Officer from 2012 until June 2018. He was Executive Vice President and Chief Operating Officer of 3M from 2011 until 2012, with responsibility for all of 3Ms business segments and international operations. From 2004 until 2011, Mr. Thulin was 3Ms Executive Vice President of International Operations. He joined 3M Sweden in 1979, working in sales and marketing, and has held numerous leadership positions in Asia-Pacific, Europe, and the Middle East and across multiple businesses.
skills and qualifications
Business Leadership / Operations: Six years of service as CEO of 3M Company. More than three decades of experience in senior management and executive positions at 3M Company, including responsibility for international operations.
Environmental Affairs: As Executive Chairman, and former CEO and President of 3M Company, oversees all aspects of 3Ms environmental and sustainability policies and strategies, which include initiatives to address challenges like energy availability and security, raw material scarcity, human health, and environmental safety, education, and development.
Finance: CEO of Fortune 100 company. More than three decades of financial responsibility and experience at 3M Company.
Global Business / International Affairs: Executive Chairman and former CEO and President of Fortune 500 company with extensive international operations. At 3M Company, served as Executive Vice President for International Operations and as Managing Director of 3M Russia. Member of the International Business Council of the World Economic Forum. Served on the Presidents Advisory Committee for Trade Policy and Negotiations. Director of companies with international operations.
Science / Technology / Engineering: Has served in a variety of senior management and executive positions at 3M Company, requiring expertise in engineering and technology. 3M is a diversified technology company. Director at Merck & Co., Inc., a biopharmaceutical company.
Chevron Corporation2019 Proxy Statement | 13 |
election of directors
|
|
D. James Umpleby III Chairman and Chief Executive Officer, Caterpillar Inc.
Age: 61 Director Since: March 2018 Independent: Yes |
Chevron Committees:
Board Nominating and Governance Management Compensation
Current Public Company Directorships:
Caterpillar Inc. |
Prior Public Company Directorships (within last five years):
None
Other Directorships and Memberships:
Business Roundtable Latin America Conservation Council National Petroleum Council Peterson Institute for International Economics Rose-Hulman Institute of Technology U.S.-China Business Council U.S.-India CEO Forum U.S.-India Strategic Partnership Forum
|
Mr. Umpleby has been Chairman since 2018, and Chief Executive Officer since 2017, of Caterpillar Inc., a leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel electric locomotives. He was Group President of Caterpillar from 2013 until 2016, with responsibility for Caterpillars energy and transportation business segment, and Vice President from 2010 to 2013. He joined Solar Turbines Incorporated in 1980 as an associate engineer. Solar Turbines became a wholly owned Caterpillar subsidiary in 1981.
skills and qualifications
Business Leadership / Operations: Chairman and CEO of Caterpillar, a Fortune 100 company. More than three decades of experience in senior management and executive positions at Caterpillar Inc., including responsibility for engineering, manufacturing, marketing, sales, and services.
Environmental Affairs: As Chairman and CEO of Caterpillar Inc., oversees all aspects of Caterpillars environmental and sustainability policies and strategies, which include initiatives to address challenges like preventing waste, improving the quality and efficiency of operations, developing infrastructure and ensuring access to energy, human health, and environmental safety. Serves as a member of the Latin America Conservation Council, in partnership with The Nature Conservancy, a global conservation organization. Former director of the World Resources Institute, an international research nonprofit organization working to secure a sustainable future.
Finance: Chairman and CEO of Fortune 100 company. More than a decade of financial responsibility and experience at Caterpillar Inc.
Global Business / International Affairs: Chairman and CEO of Fortune 100 company with extensive international operations. Served in assignments at Caterpillar in Singapore and Kuala Lumpur from 1984 to 1990. Director of the Peterson Institute for International Economics, the U.S.-China Business Council, the U.S.-India Business Strategic Partnership Forum, and a member of the U.S.-India CEO Forum.
Science / Technology / Engineering: Bachelor of Science in Mechanical Engineering from the Rose-Hulman Institute of Technology. Has served in a variety of senior management and executive positions at Caterpillar Inc., requiring expertise in engineering and technology.
14 | Chevron Corporation2019 Proxy Statement |
election of directors
|
|
Michael K. Wirth Chairman and Chief Executive Officer, Chevron Corporation
Age: 58 Director Since: February 2017 Independent: No |
Chevron Committees:
None
Current Public Company Directorships:
None |
Prior Public Company Directorships (within last five years):
None
Other Directorships and Memberships:
American Petroleum Institute American Society of Corporate Executives The Business Council Business Roundtable Catalyst International Business Council of the World Economic Forum National Petroleum Council
|
Mr. Wirth has been Chairman and Chief Executive Officer of Chevron since February 2018. He was Vice Chairman in 2017 and Executive Vice President of Midstream & Development from 2016 until 2018, where he was responsible for supply and trading, shipping, pipeline, and power operating units; corporate strategy; business development; and policy, government and public affairs. He served as Executive Vice President of Downstream & Chemicals from 2006 to 2015. From 2003 until 2006, Mr. Wirth was President of Global Supply & Trading. Mr. Wirth joined Chevron in 1982.
skills and qualifications
Business Leadership / Operations: Chairman and CEO of Chevron. Twelve years as Executive Vice President of Chevron. More than three decades of experience in senior management and executive positions at Chevron.
Environmental Affairs: As Chairman and CEO of Chevron, oversees all aspects of Chevrons environmental policies and strategies. Oversaw environmental policies and strategies of Chevrons Downstream & Chemicals and shipping and pipeline operations.
Finance: CEO of Fortune 100 company. More than a decade of financial responsibility and experience at Chevron.
Global Business / International Affairs: Chairman and CEO of Fortune 100 company with extensive international operations. Served as President of Marketing for Chevrons Asia/Middle East/Africa marketing business based in Singapore and served as director of Caltex Australia Ltd. and GS Caltex in South Korea.
Government / Regulatory / Public Policy: More than three decades of experience in highly regulated industry. As Chairman and CEO of Chevron, oversees all aspects of Chevrons government, regulatory, and public policy affairs.
Science / Technology / Engineering: Bachelors degree in Chemical Engineering from the University of Colorado. More than three decades of experience at Chevron. Joined as a design engineer and advanced through a number of engineering, construction, marketing, and operations roles.
Each Director nominee who receives a majority of the votes cast (i.e., the number of shares voted FOR a Director nominee must exceed the number of shares voted AGAINST that Director nominee, excluding abstentions) will be elected a Director in an uncontested election. Any shares not voted (whether by abstention or otherwise) will have no impact on the elections. If you are a street name stockholder and do not vote your shares, your bank, broker, or other holder of record cannot vote your shares at its discretion in these elections.
If the number of Director nominees exceeds the number of Directors to be electeda circumstance we do not anticipatethe Directors shall be elected by a plurality of the shares present in person or by proxy at the Annual Meeting, or any adjournment or postponement thereof, and entitled to vote on the election of Directors.
Your Board recommends that you vote FOR the 11 Director nominees named in this Proxy Statement.
Chevron Corporation2019 Proxy Statement | 15 |
non-employee director compensation
In 2018, each non-employee Director received annual compensation of $375,000, with 40 percent paid in cash (or stock options at the Directors election) and 60 percent paid in restricted stock units. An additional cash retainer, in the amounts below, is paid to the Lead Director and each Committee Chair. Directors do not receive fees for attending Board or Board Committee meetings, nor do they receive fees for meeting with stockholders.
Position
|
Cash Retainers(1)
|
Restricted Stock
| ||||||||
Non-Employee Director |
$ |
150,000 |
$ |
225,000 |
||||||
Lead Director |
$ |
30,000 |
|
|
||||||
Audit Committee Chair |
$ |
30,000 |
|
|
||||||
Management Compensation Committee Chair |
$ |
25,000 |
|
|
||||||
Board Nominating and Governance Committee Chair |
$ |
20,000 |
|
|
||||||
Public Policy Committee Chair |
$ |
20,000 |
|
|
(1) | Each cash retainer is paid in monthly installments beginning with the date the Director is elected to the Board. Under the Chevron Corporation Non-Employee Directors Equity Compensation and Deferral Plan (the NED Plan), Directors can elect to receive nonstatutory/nonqualified stock options instead of any portion of their cash compensation. Directors can also elect to defer receipt of any portion of their cash compensation. 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. |
(2) | Restricted stock units (RSUs) are granted on the date of the Annual Meeting at which the Director is elected. If a Director is elected to the Board between annual meetings, a prorated grant is made. RSUs are paid out in shares of Chevron common stock unless the Director has elected to defer the payout until retirement. RSUs are subject to forfeiture (except when the Director dies, reaches mandatory retirement age of 74, becomes disabled, changes primary occupation, or enters government service) until the earlier of 12 months or the day preceding the first Annual Meeting following the date of the grant. |
expenses and charitable matching gift program
16 | Chevron Corporation2019 Proxy Statement |
director compensation
|
compensation during the fiscal year ended december 31, 2018
The following table sets forth the compensation of our non-employee Directors for the fiscal year ended December 31, 2018.
Name
|
Fees earned or ($)(1)
|
Stock ($)(2)
|
Option ($)(3)
|
All other ($)(4)
|
Total ($)
| ||||||||||||||||||||
Wanda M. Austin |
$ |
160,000 |
(5) |
$ |
225,000 |
|
|
$ |
31,011 |
$ |
416,011 |
||||||||||||||
Linnet F. Deily(6) |
$ |
82,046 |
(5) |
|
|
|
|
$ |
22,483 |
$ |
104,529 |
||||||||||||||
Robert E. Denham(6) |
|
|
|
|
|
|
$ |
23,354 |
$ |
23,354 |
|||||||||||||||
John B. Frank |
$ |
112,500 |
(7) |
$ |
225,000 |
$ |
75,000 |
$ |
30,436 |
$ |
442,936 |
||||||||||||||
Alice P. Gast |
$ |
150,000 |
(7) |
$ |
225,000 |
|
|
$ |
43,651 |
$ |
418,651 |
||||||||||||||
Enrique Hernandez, Jr. |
|
|
$ |
225,000 |
$ |
175,000 |
(5) |
$ |
12,349 |
$ |
412,349 |
||||||||||||||
Charles W. Moorman IV |
$ |
87,019 |
(5)(7) |
$ |
225,000 |
$ |
180,000 |
(5) |
$ |
11,180 |
$ |
503,199 |
|||||||||||||
Dambisa F. Moyo |
$ |
150,000 |
$ |
225,000 |
|
|
$ |
27,567 |
$ |
402,567 |
|||||||||||||||
Debra Reed-Klages(8) |
|
|
$ |
108,791 |
|
|
$ |
381 |
$ |
109,172 |
|||||||||||||||
Ronald D. Sugar |
$ |
197,500 |
(5)(7)(9) |
$ |
225,000 |
|
|
$ |
34,076 |
$ |
456,576 |
||||||||||||||
Inge G. Thulin |
|
|
$ |
225,000 |
$ |
150,000 |
$ |
1,180 |
$ |
376,180 |
|||||||||||||||
D. James Umpleby III(10) |
$ |
112,087 |
(7) |
$ |
280,632 |
|
|
$ |
11,881 |
$ |
404,600 |
(1) | Form of compensation selected by a Director, as described above, can result in differences in reportable compensation. |
(2) | Amounts reflect the grant date fair value for restricted stock units granted in 2018 under the NED Plan. We calculate the grant date fair value of these awards in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, CompensationStock Compensation (ASC Topic 718), for financial reporting purposes. The grant date fair value of these RSUs was $121.39 per unit, the closing price of Chevron common stock on May 29, 2018, except for the prorated award for Ms. Reed-Klages. For Ms. Reed-Klages, the grant date fair value was $117.24 per unit, the closing price of Chevron common stock on December 4, 2018, the day she joined the Board. Ms. Reed-Klages received a prorated grant of 927 RSUs for the compensation period covering December 4, 2018, through May 28, 2019. In addition to the annual grant received on May 30, 2018, Mr. Umpleby received a prorated grant of 496 RSUs for the compensation period covering March 1, 2018, through May 29, 2018. For this prorated grant, the grant date fair value was $112.04 per unit, the closing price of Chevron common stock on March 1, 2018, the day Mr. Umpleby joined the Board. RSUs accrue dividend equivalents, the value of which is factored into the grant date fair value. For purposes of this table only, estimates of forfeitures related to service-based vesting conditions have been disregarded. RSUs are payable in Chevron common stock. |
At December 31, 2018, the following Directors had the following number of shares subject to outstanding stock awards or deferrals:
Name
|
Restricted
|
Stock units(a)
|
Restricted
|
Stock units from
|
Total
| ||||||||||||||||||||
Wanda M. Austin |
| | 1,889 | | 1,889 | ||||||||||||||||||||
Linnet F. Deily |
| 3,790 | | | 3,790 | ||||||||||||||||||||
Robert E. Denham |
12,052 | 29,851 | 23,016 | 64,919 | |||||||||||||||||||||
John B. Frank |
| | 3,053 | | 3,053 | ||||||||||||||||||||
Alice P. Gast |
| | 11,360 | | 11,360 | ||||||||||||||||||||
Enrique Hernandez, Jr. |
| | 15,539 | 1,242 | 16,781 | ||||||||||||||||||||
Charles W. Moorman IV |
| | 15,920 | 9,670 | 25,590 | ||||||||||||||||||||
Dambisa F. Moyo |
| | 1,889 | | 1,889 | ||||||||||||||||||||
Debra Reed-Klages |
| | 927 | | 927 | ||||||||||||||||||||
Ronald D. Sugar |
2,550 | 7,805 | 31,741 | 16,067 | 58,163 | ||||||||||||||||||||
Inge G. Thulin |
| | 9,994 | 588 | 10,582 | ||||||||||||||||||||
D. James Umpleby III
|
|
|
|
|
|
|
|
1,889
|
|
|
|
|
|
1,889
|
|
(a) | Non-employee Directors received awards of restricted stock and stock units from 2004 through 2006 and awards of RSUs beginning in 2007. Awards of restricted stock are fully vested and are settled in shares of Chevron common stock upon retirement. Awards of stock units are settled in shares of Chevron common stock in one to 10 annual installments following the Directors retirement, resignation, or death. The terms of awards of RSUs are described above. |
(b) | 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. |
(3) | For Directors electing to receive stock options in lieu of all or a portion of the annual cash retainer, the stock options are granted on the date of the Annual Meeting that the Director is elected. The stock options are exercisable for that number of shares of Chevron common stock determined by dividing the amount of the cash retainer subject to the election by the Black-Scholes value of a stock option on the date of grant. Elections to receive stock options in lieu of any portion of cash compensation must be made by December 31 in the year preceding the year in which the stock options are granted. The stock options have an exercise price based on the closing price of Chevron common stock on the date of grant. |
Chevron Corporation2019 Proxy Statement | 17 |
director compensation
|
Amounts reported here reflect the grant date fair value for stock options granted on May 30, 2018, except for Mr. Moorman, whose stock options were granted on July 24, 2018. The grant date fair value was determined in accordance with ASC Topic 718 for financial reporting purposes. The grant date fair value of each option is calculated using the Black-Scholes model. Stock options granted on May 30, 2018 and July 24, 2018, using the measurement date of May 30, 2018, have an exercise price of $125.16 and a grant date fair value of $17.42. The assumptions used in the Black-Scholes model to calculate this grant date fair value were: an expected life of 6.5 years, a volatility rate of 20.3 percent, a risk-free interest rate of 2.74 percent, and a dividend yield of 3.86 percent. For purposes of this table only, estimates of forfeitures related to service-based vesting conditions have been disregarded. |
Messrs. Frank, Hernandez, Moorman and Thulin each elected to receive all or a part of their 2018 annual cash compensation in the form of stock options. The number of stock options granted in 2018 was 4,305 to Mr. Frank, 10,045 to Mr. Hernandez, 10,332 to Mr. Moorman and 8,610 to Mr. Thulin. One-half of the stock options vests on November 30, 2018, and the remaining half vests on the earlier of the last day of the Annual Compensation Cycle to which the grant relates or May 30, 2019. Stock options expire after 10 years. |
At December 31, 2018, Mr. Denham had 24,201, Mr. Frank had 4,305, Mr. Hernandez had 88,092, Mr. Moorman had 10,332 and Mr. Thulin had 44,429 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. |
(4) | All Other Compensation for 2018 includes the following items: |
Name
|
Insurance(a)
|
Perquisites(b)
|
Charitable(c)
| |||
Wanda M. Austin |
$ 862 |
$ 20,149 |
$ 10,000 | |||
Linnet F. Deily |
$ 323 |
$ 12,160 |
$ 10,000 | |||
Robert E. Denham |
$ 323 |
$ 13,031 |
$ 10,000 | |||
John B. Frank |
$ 862 |
$ 19,574 |
$ 10,000 | |||
Alice P. Gast |
$ 862 |
$ 32,789 |
$ 10,000 | |||
Enrique Hernandez, Jr. |
$ 862 |
|
$ 10,000 | |||
Charles W. Moorman IV |
$ 862 |
|
$ 10,000 | |||
Dambisa F. Moyo |
$ 862 |
$ 26,705 |
| |||
Debra Reed-Klages |
$ 63 |
|
| |||
Ronald D. Sugar |
$ 862 |
$ 23,214 |
$ 10,000 | |||
Inge G. Thulin |
$ 862 |
|
| |||
D. James Umpleby III |
$ 727 |
|
$ 10,000 |
(a) | Amounts reflect the annualized premium for accidental death and dismemberment insurance coverage paid by Chevron. |
(b) | Reflects perquisites and personal benefits received by a Director in 2018 to the extent that the total value of such perquisites and personal benefits was equal to or exceeded $10,000. |
Generally, every two years, the Board travels to an international Chevron location of operation to gain additional insight into Chevrons operations in such location and to meet with local and expatriate Chevron management and personnel, as well as local, state and national officials. Directors spouses or guests are invited to attend the international Board trip to learn about Chevrons operations, foster social interaction among the Directors and executives, attend receptions with local and expatriate Chevron employees and their families and with local government officials, tour Chevron facilities, and participate in community engagement and other goodwill activities on behalf of Chevron. |
Reflects the actual aggregate incremental cost incurred in connection with the attendance of each Directors spouse or guest at the Board of Directors September 2018 trip to Argentina, including for commercial air travel, lodging, meals, tours and other activities. In addition, the amounts reflect costs incurred for all participants for certain excursions and events on the Argentina Board trip, including travel on corporate and charter aircraft to a non-company location. Except for use of corporate aircraft, which incremental cost was calculated in the manner as described in the Summary Compensation Table under footnote (6) (e), the amounts presented reflect the actual aggregate incremental cost to Chevron. (Incremental cost was $32,471 and $26,386 for Drs. Gast and Moyo, respectively.) |
For each of Ms. Deily and Mr. Denham, amount includes the value of gifts presented upon their retirement. For each of Dr. Austin and Mr. Denham, amount reflects aggregate incremental actual cost incurred in connection with their spouses attendance at Company sponsored events associated with the retirement of Ms. Deily and Mr. Denham, including meals and transportation. A holiday gift was given to each Director. |
(c) | Amounts reflect payments made to charitable organizations under Chevron Humankind, our charitable matching gift and community involvement program, to match donations made by the Directors in 2018. |
(5) | Amount includes the additional retainer paid for serving as a Board Committee Chair during 2018. |
(6) | Ms. Deily and Mr. Denham retired from the Board on May 30, 2018. For Mr. Denham, he elected to receive his compensation in the form of stock options in lieu of cash, which were granted on May 31, 2017 for the compensation period covering May 31, 2017, through May 29, 2018. |
(7) | The Director has elected to defer part or all of the annual cash retainer under the NED Plan in 2018. None of the earnings under the NED Plan are above market or preferential. |
(8) | Ms. Reed-Klages joined the Board on December 4, 2018. Her cash retainer payment commenced in January 2019. |
(9) | Amount includes the additional retainer paid for serving as Lead Director during 2018. |
(10) | Mr. Umpleby joined the Board on March 1, 2018. |
18 | Chevron Corporation2019 Proxy Statement |
corporate governance
|
Board of Directors |
Monitors overall corporate performance, the integrity of financial and other controls, and the effectiveness of the Companys legal compliance and enterprise risk management programs, risk governance practices, and risk mitigation efforts, particularly with regard to those risks specified by the Company as Risk Factors in its Annual Report on Form 10-K
Oversees 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 and approval process
Receives reports from management on and considers risk matters in the context of the Companys strategic, business, and operational planning and decision making
Receives reports from management on and routinely considers critical risk topics, including: operational, financial, geopolitical/legislative, strategic, geological, security, commodity trading, skilled personnel/human capital, capital project execution, civil unrest, legal, and technology/cybersecurity risk
|
|||
Audit Committee |
Assists the Board in fulfilling its oversight of financial risk exposures, including but not limited to those related to cybersecurity, the effectiveness of internal controls over financial reporting, 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 certain members of Chevrons Compliance Policy Committee to receive information regarding compliance policies and procedures and internal controls
Meets with Chevrons Chief Information Officer to review cybersecurity implications and risk management on financial exposures
Meets with and reviews reports from Chevrons independent registered public accounting firm and internal auditors
Reports its discussions to the full Board for consideration and action when appropriate
|
Chevron Corporation2019 Proxy Statement | 21 |
corporate governance
|
Board Nominating and Governance Committee |
Assists the Board in fulfilling its oversight of risks that may arise in connection with Chevrons governance structures and processes
Conducts an annual evaluation of Chevrons governance practices with the help of the Corporate Governance Department
Discusses risk management in the context of general governance matters, including topics such as Board and management succession planning, delegations of authority and internal approval processes, stockholder proposals and activism, and Director and officer liability insurance
Reports its discussions to the full Board for consideration and action when appropriate
|
|||
Management Compensation Committee |
Assists the Board in fulfilling its oversight of risks that may arise in connection with 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 executive retention and diversity
Reports its discussions to the full Board for consideration and action when appropriate
|
|||
Public Policy Committee |
Assists the Board in fulfilling its oversight of risks that may arise in connection with the social, political, environmental, human rights, and public policy aspects of Chevrons business and the communities in which it operates
Discusses risk management in the context of, among other things, legislative and regulatory initiatives (including political activities such as political contributions and lobbying), safety and environmental stewardship, community relations, government and nongovernmental organization relations, and Chevrons reputation
Reports its discussions to the full Board for consideration and action when appropriate
|
board oversight of sustainability
22 | Chevron Corporation2019 Proxy Statement |
corporate governance
|
Committees and membership |
Committee functions |
|||
Audit Charles W. Moorman IV, Chair John B. Frank Dambisa F. Moyo Inge G. Thulin |
Selects the independent registered public accounting firm for endorsement by the Board and ratification by the stockholders
Reviews reports of the independent registered public accounting firm and internal auditors
Reviews and approves the scope and cost of all services (including nonaudit services) provided by the independent registered public accounting firm
Monitors the effectiveness of the audit process and financial reporting
Monitors the maintenance of an effective internal audit function
Reviews the adequacy of accounting, internal control, auditing, and financial reporting matters
Monitors implementation and effectiveness of Chevrons compliance policies and procedures
Assists the Board in fulfilling its oversight of enterprise risk management, particularly financial risks, including but not limited to cybersecurity risk as it relates to financial risk exposures
Evaluates the effectiveness of the Audit Committee
|
|||
Board Nominating and Governance Ronald D. Sugar, Chair Wanda M. Austin Alice P. Gast D. James Umpleby III |
Evaluates the effectiveness of the Board and its Committees and recommends changes to improve Board, Board Committee, and individual Director effectiveness
Assesses the size and composition of the Board
Recommends prospective Director nominees
Reviews and approves non-employee Director compensation
Reviews and recommends changes as appropriate in Chevrons Corporate Governance Guidelines, Restated Certificate of Incorporation, By-Laws, and other Board-adopted governance provisions
Reviews stockholder proposals and recommends Board responses to proposals
Assists the Board in fulfilling its oversight of enterprise risk management, particularly risks in connection with Chevrons corporate governance structures and processes
Evaluates the effectiveness of the Board Nominating and Governance Committee
|
|||
Management Compensation Enrique Hernandez, Jr., Chair Debra Reed-Klages Ronald D. Sugar D. James Umpleby III |
Conducts an annual review of the CEOs performance
Reviews and recommends to the independent Directors the salary and other compensation for the CEO
Reviews and approves salaries and other compensation for executive officers other than the CEO
Administers Chevrons executive incentive and equity-based compensation plans
Reviews Chevrons strategies and supporting processes for executive retention and diversity
Assists the Board in fulfilling its oversight of enterprise risk management, particularly risks in connection with Chevrons compensation programs
Evaluates the effectiveness of the Management Compensation Committee |
|||
Public Policy Wanda M. Austin, Chair Alice P. Gast Enrique Hernandez, Jr. Debra Reed-Klages |
Identifies, monitors, and evaluates domestic and international social, political, human rights, and environmental trends and issues that affect Chevrons activities and performance
Recommends to the Board policies, programs, and strategies concerning such issues
Recommends to the Board policies, programs, and practices concerning support of charitable, political, and educational organizations
Reviews annually the policies, procedures, and expenditures for Chevrons political activities, including political contributions and direct and indirect lobbying
Reviews stockholder proposals and recommends Board responses to proposals
Assists the Board in fulfilling its oversight of enterprise risk management, particularly risks in connection with the social, political, environmental, and public policy aspects of Chevrons business
Evaluates the effectiveness of the Public Policy Committee |
24 | Chevron Corporation2019 Proxy Statement |
corporate governance
|
board and committee meetings and attendance
board and committee evaluations
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/investors/corporate-governance. The guidelines address, among other topics:
Chevron Corporation2019 Proxy Statement | 25 |
corporate governance
|
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, which 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. Directors, officers, and employees certify annually that they will comply with the code.
environmental, social, and governance engagement
The Board Nominating and Governance Committee reviews interested-party communications, including stockholder inquiries directed to non-employee Directors. The Corporate Secretary and Chief Governance Officer compiles the communications, summarizes lengthy or repetitive communications, and regularly compiles the communications received, the responses sent, and further action, if any. All communications are available to the Directors.
Interested parties wishing to communicate their concerns or questions about Chevron to the independent Lead Director or any other non-employee Director may do so by mail addressed to the Lead Director or Non-Employee Directors, c/o Office of the Corporate Secretary and Chief Governance Officer, 6001 Bollinger Canyon Road, San Ramon, CA 94583-2324 or by email to corpgov@chevron.com.
|
|
26 | Chevron Corporation2019 Proxy Statement |
corporate governance
|
management compensation committee report
The Management Compensation Committee (the Committee) of Chevron has reviewed and discussed with management the Compensation Discussion and Analysis beginning on page 32 of this Proxy Statement. Based on such review and discussion, the Committee recommended to the Board of Directors of the Corporation that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Corporations Annual Report on Form 10-K.
Respectfully submitted on March 26, 2019, by members of the Management Compensation Committee of your Board:
Enrique Hernandez, Jr., Chair |
Debra Reed-Klages |
Ronald D. Sugar |
D. James Umpleby III |
Chevron Corporation2019 Proxy Statement | 29 |
board proposal to ratify PricewaterhouseCoopers LLP as the independent registered public accounting firm for 2019
|
PwC audited Chevrons consolidated financial statements and effectiveness of internal control over financial reporting during the years ended December 31, 2018 and 2017. During these periods, PwC provided both audit and nonaudit services. Aggregate fees for professional services rendered to Chevron by PwC for the years ended December 31, 2018 and 2017, were as follows (millions of dollars):
Services provided |
2018 |
2017 | ||||||||
Audit |
$ |
27.6 |
$ |
27.3 |
||||||
Audit Related |
$ |
1.8 |
$ |
2.5 |
||||||
Tax |
$ |
0.6 |
$ |
0.6 |
||||||
All Other |
$ |
0.8 |
$ |
0.4 |
||||||
Total |
$ |
30.8 |
$ |
30.8 |
audit committee preapproval policies and procedures
PwCs attendance at the annual meeting
Representatives of PwC will be present at the Annual Meeting. They will have an opportunity to make a statement if they desire and will be available to respond to appropriate questions.
This proposal is ratified if the number of shares voted FOR exceeds the number of shares voted AGAINST. Any shares not voted on this proposal (whether by abstention or otherwise) will have no impact on this proposal. If you are a street name stockholder and do not vote your shares, your bank, broker, or other holder of record can vote your shares at its discretion on this proposal.
Your Board recommends that you vote FOR the ratification of the appointment of PricewaterhouseCoopers LLP as Chevrons independent registered public accounting firm.
Chevron Corporation2019 Proxy Statement | 31 |
executive compensation
|
3-year TSR, Annualized (1) (1/1/2016-12/31/2018) 5-year TSR, Annualized (1) (1/1/2014 - 12/31/2018) 10-year TSR, Annualized (1) (1/1/2009 - 12/31/2018)
Note:
(1) | Figures rounded. |
Chevron Corporation2019 Proxy Statement | 33 |
executive compensation
|
pay philosophy and plan design
The material components of our executive compensation program are summarized in the following chart.
PAY ELEMENT METRICS / PURPOSE GOVERNANCE / TIMING base salary Fixed level of competitive base pay to attract and retain executive talent Annual Incentive Plan ("Chevron Incentive Plan", or "CIP") Recognize annual performance achievements in the following categories: Financials Capital Management Operating Performance Health, Environmental, and Safety Long-Term Incentive Plan (LTIP) Reward creation of long-term stockholder value using a balanced approach, with annual grants composed of three equity vehicles. each objectively measured and designed to focus recipients on different aspects of different stockholder value creation: Performance shares: incentivize performance relative to peers; modifier varies from 0 to 200% based on relative TSR vs. large-cap energy peers and S&P 500; three-year performance cycle Stock options: incentivize absolute performance and long-term value creation; three-year vesting; 10-year term Restricted stock units: incentivize absolute performance and retention through long holding periods; five-year cliff vesting; Benefits Competitive retirement and savings plan benefits to encourage retention and support long-term employment 4th quarter of preceding year MCC, supported by' independent compensation consultant. reviews competitive data; approves salary ranges, CIP and LTIP targets for executive officers except CEO January each year MCC and Board determine CIP and LTIP targets for CEO; approve salary and LTIP awards for all executive officers; approve CIP performance goals At the end of each year MCC and Board approve CIP. awards after performance results are evaluated against predetermined measures At the end of 3 years MCC approves performance share payout based on relative TSR performance over 3-year performance period At the end of 5 years Restricted stock units pay out based on absolute stock performance Over 10 years Stock options may be exercised at any time after vesting. Value is based on absolute stock performance from grant date to exercise date
34 | Chevron Corporation2019 Proxy Statement |
executive compensation
|
2018 CEO compensation mix |
2018 other NEOs compensation mix
| |
9% 13% 78% 91% at risk |
16% 19% 65% 84% at risk | |
base salary CIP LTIP* |
*Composed of the following equity vehicles: 50% Performance Shares, 25% Stock Options, 25% Restricted Stock Units
response to say-on-pay advisory vote and stockholder engagement
Chevron Corporation2019 Proxy Statement | 35 |
executive compensation
|
Total Capital and Exploratory Expenditures (1)($ Billions) ~$20 billion reduction (2014 2018) |
OPEX and SG&A(2) ($ Billions) ~$5 billion reduction (2014 2018) |
Notes:
(1) | Total capital and exploratory expenditures includes equity in affiliates. Figures rounded. |
(2) | Operating expenses, selling, general and administrative expenses and other components of net periodic benefit costs as reported in the consolidated statement of income (excludes affiliate spend). Figures rounded. |
36 | Chevron Corporation2019 Proxy Statement |
executive compensation
|
Chevron Corporation2019 Proxy Statement | 37 |
executive compensation
|
compensation discussion and analysis in detail
Chevrons Named Executive Officers, or NEOs |
Michael K. Wirth, Chairman and Chief Executive Officer* |
John S. Watson, Former Chairman and Chief Executive Officer* |
Patricia E. Yarrington, Vice President and Chief Financial Officer |
James W. Johnson, Executive Vice President, Upstream |
Joseph C. Geagea, Executive Vice President, Technology, Projects and Services |
Pierre R. Breber, Executive Vice President, Downstream & Chemicals |
* | Mr. Wirth assumed the positions of Chairman and Chief Executive Officer effective February 1, 2018, following Mr. Watsons retirement. |
We are always competing for the best talent with our direct industry peers and with the broader market. Accordingly, the MCC regularly reviews the market data, pay practices, and compensation ranges among both oil industry peers and non-oil industry peers to ensure that we continue to offer a reasonable and competitive executive pay program. Our core peer group is reviewed regularly by the MCC, with input from the MCCs independent compensation consultant, and updated as appropriate. Throughout this Compensation Discussion and Analysis, we refer to three distinct peer groups, as described below. We source peer company data from compensation consultant surveys and public disclosures.
Peer group |
Description |
|||
Oil industry peer group (13 companies) |
Companies with substantial U.S. or global operations that closely approximate the size, scope, and complexity of our business or segments of our business.
This is the primary peer group used to understand how each NEOs total compensation compares with the total compensation for reasonably similar industry-specific positions.
The MCC continues to monitor the group composition and considers adjustment when needed. Andeavor was acquired by Marathon Petroleum in October 2018 and will be removed from the benchmarks referenced for 2019 compensation actions.
|
|||
Nonoil industry peer group (21 companies) | Companies that are of significant financial and operational size and that have, among other features, global operations, significant assets and capital requirements, long-term project investment cycles, extensive technology portfolios, an emphasis on engineering and technical skills, and extensive distribution channels.
This is the secondary peer group used to periodically compare our overall compensation practices (and those of the oil and energy industry, generally) against a broader mix of non-oil companies that are similar to Chevron in size, complexity, and scope of operations.
In July 2018, the MCC approved an update to the non-oil peer group. Six companies were removed from the benchmarks referenced for 2019 compensation actions as they are no longer considered comparable to Chevron due to changes in their size or other criteria: Duke Energy, Northrop Grumman, Ford, American Electric Power, HP Inc., and International Paper.
|
|||
LTIP performance share peer group (four companies and one stock index) |
Companies used to compare our TSR for the purpose of determining performance share payout:
For LTIP grants issued prior to 2017: BP, ExxonMobil, Royal Dutch Shell, and Total
Effective with 2017 LTIP grant: BP, ExxonMobil, Royal Dutch Shell, Total, and S&P 500 Total Return Index
The inclusion of the S&P 500 Total Return Index broadens the performance benchmark beyond industry peers and requires Chevron to outperform both industry peers and a market-based index in order to receive maximum payout. The MCC believes this further aligns executive pay with long-term stockholder interests.
|
38 | Chevron Corporation2019 Proxy Statement |
executive compensation
|
2018 LTIP and Oil Industry Peer Group Market Capitalization 1 ($ Billions) 2018 Non-Oil Industry Peer Group Market Capitalization ($ Billions)
Note:
(1) | Andeavor was part of the Oil Industry Peer Group in 2018, but was acquired by Marathon Petroleum in October 2018. |
components of executive compensation
The material components of our executive compensation program and their purposes and key characteristics are as follows:
Base salary is a fixed, competitive component of pay based on responsibilities, skills, and experience. Base salaries are reviewed periodically in light of market practices and changes in responsibilities.
how base salaries are determined
Chevron Corporation2019 Proxy Statement | 39 |
executive compensation
|
adjustments in 2018 base salaries
Name | Position |
2017 |
2018 |
Adjustment for 2018 | |||||||||||||
Michael K. Wirth
|
Chairman and Chief Executive Officer
|
$
|
1,250,000
|
|
$
|
1,500,000
|
|
|
20.0
|
%
| |||||||
John S. Watson
|
Former Chairman and Chief Executive Officer
|
$
|
1,863,500
|
|
$
|
1,863,500
|
|
|
0.0
|
%
| |||||||
Patricia E. Yarrington
|
Vice President and Chief Financial Officer
|
$
|
1,120,000
|
|
$
|
1,139,000
|
|
|
1.7
|
%
| |||||||
James W. Johnson
|
Executive Vice President, Upstream
|
$
|
1,100,000
|
|
$
|
1,133,000
|
|
|
3.0
|
%
| |||||||
Joseph C. Geagea
|
Executive Vice President, Technology, Projects and Services
|
$
|
972,000
|
|
$
|
982,000
|
|
|
1.0
|
%
| |||||||
Pierre R. Breber
|
Executive Vice President, Downstream & Chemicals
|
$
|
917,000
|
|
$
|
962,000
|
|
|
4.9
|
%
|
* | Base salary refers to the approved annual salary rate as of the effective date. |
adjustments in 2019 base salaries
annual incentive plan (chevron incentive plan)
40 | Chevron Corporation2019 Proxy Statement |
executive compensation
|
The CIP award for the CEO and the other NEOs is calculated as follows:
Base Salary
|
x |
Award Target
|
x |
Corporate Performance Rating
|
x |
Individual Performance Factor
| ||||||
À | À | À | ||||||||||
Before the beginning of each performance year, the MCC establishes a CIP Award Target for the CEO and the other NEOs, which is expressed as a percentage of the NEOs base salary.
The MCC sets award targets with reference to target opportunities found across our Oil Industry Peer Group. All individuals in the same salary grade have the same target, which provides internal equity and consistency. |
At the beginning of each performance year, the MCC reviews and approves the annual performance measures, weightings, and goals established with the Business Plan. After the end of the performance year, the MCC reviews and assesses Company performance metrics and sets the Corporate Performance Rating based on a range of measures in four categories.
Performance is viewed across multiple parameters (i.e., absolute results; results vs. Business Plan; results vs. Oil Industry Peer Group and/or general industry; performance trends over time). The performance measures are also assessed taking into account the elements that may be market- driven or otherwise beyond the control of management. See pages 4243 for a discussion of 2018 performance.
The minimum Corporate Performance Rating is zero (i.e., no award), and the maximum is two (i.e., 200 percent of target). |
The MCC also takes into account individual performance. This is largely a personal leadership dimension, recognizing the individuals effort, initiative, and impact.
The CEO recommends to the MCC an Individual Performance Factor (IPF) for each NEO other than himself.
The MCC determines the final IPF for the CEO and the other NEOs. The independent Directors of the Board approve the IPF for the CEO and ratify the IPF for the other NEOs. |
Overall award capped at 200 percent of target |
2018 CIP corporate performance rating
Chevron Corporation2019 Proxy Statement | 41 |
executive compensation
|
Specific inputs to the MCCs evaluation are summarized below.
Category | Weight | Performance measures |
Year-end results vs. Plan highlights Plan refers to Board- approved Business Plan |
Results(1) | Raw score (0.00 - 2.00) |
Weighted score | ||||||||
Financials | 40% | Earnings per share (EPS, diluted)(2,3) |
$7.74 reported EPS, better than Plan; modest miss on normalized EPS. Five-year EPS performance versus peers improved; CVX now in middle of competitor band (vs. 5th place in 2017). |
1.15 - 1.25 | 0.46 - 0.50 | |||||||||
Net cash flow(4) |
$10.0 billion, above Plan. |
| ||||||||||||
Capital management |
30% |
Return on capital employed(3,5) (ROCE) |
8.2 percent, exceeded Plan. Performance was best among peers in 2018, but continues to be adversely impacted by higher levels of investment in trailing periods. |
1.10 - 1.30 |
0.33 - 0.39 | |||||||||
Capital and exploratory expenditures (C&E), including equity in affiliates |
$20.1 billion, above $18.3 billion budget, reflecting non budgeted, inorganic opportunities and some cost escalation. |
|||||||||||||
Major milestones | Gorgon & |
Exceeded cargo objective. Wheatstone Train 2 achieved first LNG in 2Q18. |
| |||||||||||
FGP / WPMP |
Met rack modules milestone. Modest delay in core substation mechanical completion. On track for first oil in 2022. | |||||||||||||
Permian |
Exceeded wells put on production target and met unit development cost objective. | |||||||||||||
Big Foot |
Achieved storm safe status; first oil achieved in 4Q18. | |||||||||||||
USGC Petrochemicals |
Achieved volume target. Startup of ethane cracker achieved in 1Q18, ahead of schedule. | |||||||||||||
Richmond Modernization |
Achieved mechanical completion in 3Q18 and Hydrogen Plant Train 1 startup in 4Q18. | |||||||||||||
Operating performance |
15% |
Net production, excluding impact of divestments |
Nearly 8 percent, above 4-7 percent guidance range. |
1.40 - 1.50 |
0.21 - 0.23 | |||||||||
Operating expense(6) |
$24.9 billion, above Plan. Unit costs in line with Plan and continued to decline. |
|||||||||||||
Refining utilization, including joint ventures and affiliates |
Better than Plan by 1.0 percent. | |||||||||||||
Health, environmental and safety |
15% | Personal safety(3) |
Industry-leading Fatal Accident Rate of zero and Days Away From Work Rate of 0.016. |
1.70 - 1.80 | 0.26 - 0.27 | |||||||||
Process safety and environmental |
Loss of Containment performance and spill volumes better than Plan. |
|||||||||||||
Corporate Performance Rating range | 1.3 - 1.4 | |||||||||||||
Final Corporate Performance Rating | 1.40 |
Notes:
(1) | Results refer to met / exceeded Plan (green), met Plan with some gaps (yellow), or did not meet Plan (red). |
(2) | Normalized earnings exclude market factors beyond the control of management, including price, foreign exchange, and uncontrollable tax impacts; comparison more accurately measures controllable performance. |
(3) | Relative peer comparisons based on externally disclosed results through the end of 3Q18. |
(4) | Cash flow including asset sales after dividends and stock repurchases = change in cash, cash equivalents and restricted cash less change in debt, marketable securities, and time deposits with maturities in excess of 90 days. |
(5) | See Definitions of Selected Financial Terms in Exhibit 99.1 of the Chevron Annual Report on Form 10-K for the year ended December 31, 2018. |
(6) | Operating expenses, selling, general and administrative expenses, and other components of net periodic benefit costs as reported in the consolidated statement of income (excludes affiliate spend). Figures rounded. |
42 | Chevron Corporation2019 Proxy Statement |
executive compensation
|
The LTIP program comprises the following three equity vehicles:
Component
|
2018
|
How it works
|
||||||||||||||||||||||||||||||
Performance shares |
50% |
Payout is dependent on Chevrons TSR over a three-year period, compared with our LTIP Performance Share Peer Group TSR. For the 2018 grant, the peer group is comprises: ExxonMobil, BP, Shell, Total, and the S&P 500 Total Return Index.
|
|
|||||||||||||||||||||||||||||
Relative TSR ranking |
|
1 |
|
|
2 |
|
|
3 |
|
|
4 |
|
|
5 |
|
|
6 |
|
||||||||||||||
2018 grant payout as a % of target |
|
200 |
% |
|
160 |
% |
|
120 |
% |
|
80 |
% |
|
40 |
% |
|
0 |
% |
||||||||||||||
Performance shares accrue dividend equivalents that are reinvested as additional shares, to be paid at the end of the performance period and are subject to the same three year cliff vesting schedule and performance modifier.
The MCC can exercise negative discretion to reduce payout.
Actual number of shares granted is determined by dividing the proportionate value of the NEOs LTIP award by Chevrons closing common stock price on the grant date.
Payment is made in cash. Refer to footnote 2 on pages 58 and 59 for calculation details.
|
|
|||||||||||||||||||||||||||||||
Stock options | 25% | Strike price is equal to the closing common stock price on the grant date.
Options vest and become exercisable at a rate of one-third per year for the first three years, based on continued service, and expire 10 years after the grant date.
Gain realized depends on the common stock price at the exercise date compared with the strike price.
Actual number of stock options granted is determined by dividing the proportionate value of the NEOs LTIP award by the Black-Scholes option value on the grant date in accordance with Grant Date Fair Value calculation as defined by the U.S. Securities and Exchange Commission.
|
|
|||||||||||||||||||||||||||||
Restricted stock units (RSUs) | 25% | Actual number of RSUs granted is determined by dividing the proportionate value of the NEOs LTIP award by Chevrons closing common stock price on the grant date.
Five-year cliff vesting lengthens equity holding time, which enhances retention and alignment with stockholders.
RSUs accrue dividend equivalents that are reinvested as additional units, to be paid at the time of vesting.
Payment is made in cash based on closing common stock price on the vesting date.
|
|
Chevron Corporation2019 Proxy Statement | 45 |
executive compensation
|
LTIP mix and timing: why a mix of performance shares, RSUs, and options
20162018 performance share payout
In January 2018, the independent Board of Directors, upon recommendation of the MCC, approved the LTIP award to the CEO and ratified the following LTIP awards to the other NEOs. Mr. Watson did not receive a 2018 grant due to his retirement on February 1, 2018. None of the NEOs received a 2018 supplemental RSU grant.
Name
|
2018 LTIP target value
|
Stock
|
Performance
|
Standard RSUs*
| ||||||||||||||||
Michael K. Wirth
|
$
|
13,250,000
|
|
|
182,100
|
|
|
52,850
|
|
|
26,430
|
| ||||||||
John S. Watson
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Patricia E. Yarrington
|
$
|
3,849,440
|
|
|
52,900
|
|
|
15,350
|
|
|
7,680
|
| ||||||||
James W. Johnson
|
$
|
4,999,500
|
|
|
68,700
|
|
|
19,940
|
|
|
9,970
|
| ||||||||
Joseph C. Geagea
|
$
|
3,849,440
|
|
|
52,900
|
|
|
15,350
|
|
|
7,680
|
| ||||||||
Pierre R. Breber
|
$
|
3,849,440
|
|
|
52,900
|
|
|
15,350
|
|
|
7,680
|
|
* | Number of awarded stock options, performance shares, and RSUs was determined based on the Companys common stock price on January 31, 2018, the grant date Black-Scholes value for stock options, and a performance share factor of 100 percent reflecting expected performance at target. As these inputs may vary from those used for financial reporting, the target value shown above may not match the values presented in the Summary Compensation Table or the Grants of Plan-Based Awards in Fiscal Year 2018 table in this Proxy Statement on pages 52 and 55, respectively. |
46 | Chevron Corporation2019 Proxy Statement |
executive compensation
|
In January 2019, the independent Board of Directors, upon recommendation of the MCC, approved the LTIP award to the CEO and ratified the following LTIP awards to the other NEOs.
Name | 2019 LTIP target value |
Stock options* |
Performance shares* |
Standard RSUs* | ||||||||||||||||
Michael K. Wirth |
|
$15,000,000 |
|
236,900 |
|
66,370 |
|
33,180 |
||||||||||||
Patricia E. Yarrington |
|
$ 3,963,120 |
|
62,600 |
|
17,530 |
|
8,770 |
||||||||||||
James W. Johnson |
|
$ 5,148,000 |
|
81,300 |
|
22,780 |
|
11,390 |
||||||||||||
Joseph C. Geagea |
|
$ 3,963,120 |
|
62,600 |
|
17,530 |
|
8,770 |
||||||||||||
Pierre R. Breber |
|
$ 3,963,120 |
|
62,600 |
|
17,530 |
|
8,770 |
* | Number of awarded stock options, performance shares, and RSUs was determined based on the Companys common stock price on January 30, 2019, the grant date Black-Scholes value for stock options, and a performance share factor of 100 percent reflecting expected performance at target. As these inputs may vary from those used for financial reporting, the target value shown above may not match the values to be presented in the 2020 Proxy Statements Summary Compensation Table or the Grants of Plan-Based Awards in Fiscal Year 2019 table. |
Chevron Corporation2019 Proxy Statement | 47 |
executive compensation
|
retirement programs and other benefits
NEOs, like all other employees, have retirement programs and other benefits as part of their overall compensation package at Chevron. We believe that these programs and benefits:
| Support our long-term investment cycle; and |
| Encourage retention and long-term employment. |
All of our employees, including our NEOs, have access to retirement programs that are designed to enable them to accumulate retirement income. The defined benefit (pension) and defined contribution (401(k) savings) plans allow highly compensated employees to receive the same benefits they would have earned without the IRS limitations on qualified retirement plans under the Employee Retirement Income and Security Act. The deferred compensation plan allows eligible employees to defer salary, CIP awards, and LTIP payouts.
Plan name | Plan type | How it works | 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 the Pension Benefits Table in this Proxy Statement, we report the change in pension value in 2018 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) |
Nonqualified Defined Benefit |
Provides participants with retirement income that cannot be paid from the CRP due to IRS limits on compensation and benefits.(1)
|
In the Pension Benefits Table and accompanying narrative in this Proxy Statement, we describe how the RRP works and present the current value of each 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) |
Nonqualified Defined |
Provides participants with an additional Company matching contribution that cannot be paid into the ESIP due to IRS limits on compensation and benefits.(3) |
In the footnotes to the Nonqualified Deferred Compensation Table in this Proxy Statement, we describe how the ESIP-RP works. In the Summary Compensation Table and the Nonqualified Deferred Compensation Table, we present Chevrons contributions to each NEOs ESIP-RP account.
| |||
Deferred Compensation Plan (DCP) |
Nonqualified Defined Contribution |
Participants can defer up to:
90 percent of CIP awards and LTIP performance share payouts; and
40 percent of base salary above the IRS limit (IRS §401(a)(17)) for payment after retirement or separation from service.
|
In the Nonqualified Deferred Compensation Table in this Proxy Statement, we report the aggregate NEO deferrals and earnings in 2018. |
(1) | Employees whose compensation exceeds the limits established by the IRS for covered compensation and benefit levels. IRS annual compensation limit was $275,000 in 2018. |
(2) | Participants who contribute at least 2 percent of their annual compensation to the ESIP receive a Company matching contribution of 8 percent (or 4 percent if they contribute 1 percent). The 2018 annual limit for both employer and employee contributions to a qualified defined contribution plan was $18,500 for employees under age 50 and $24,000 for employees age 50 and above in 2018. |
(3) | Participants who contribute at least 2 percent of their base salary to the DCP receive a Company matching contribution of 8 percent of their base salary that exceeds the IRS annual compensation limit. |
The same health and welfare programs, including post-retirement health care, that are broadly available to employees on our U.S. payroll also apply to NEOs, with no other special programs except executive physicals (as described below under Perquisites).
Perquisites for NEOs 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 practices and disclosures with respect to perquisites. In the Summary Compensation Table in this Proxy Statement, we report the value of each NEOs perquisites for 2018.
48 | Chevron Corporation2019 Proxy Statement |
executive compensation
|
best practice in compensation governance
To ensure independent oversight, stockholder alignment and long-term sustainability, our executive compensation program has the following governance elements in place.
What we do | What we do not do | |||||||
✓
|
Robust stockholder engagement plan to ensure alignment with stockholder interests
|
û
|
No excessive perquisites; all have a specific business rationale
| |||||
✓
|
Stock ownership guidelines for the Chief Executive Officer, six times base salary; for the Executive Vice Presidents and Chief Financial Officer, four times base salary
|
û
|
No individual supplemental executive retirement plans
| |||||
✓
|
Deferred accounts inaccessible until a minimum of one year following termination
|
û
|
No stock option repricing, reloads or exchanges without stockholder approval
| |||||
✓
|
Clawback provisions included in the CIP, LTIP, DCP, RRP, and ESIP-RP for misconduct
|
û
|
No loans or purchases of Chevron equity securities on margin
| |||||
✓
|
Significant CEO pay at risk (91 percent)
|
û |
No transferability of stock options (except in the case of death or a qualifying court order)
| |||||
✓
|
Thorough assessment of Company and individual performance
|
û |
No stock options granted below fair market value | |||||
✓
|
Robust succession planning process with Board review twice a year
|
û
|
No hedging or pledging of Chevron equity securities
| |||||
✓
|
MCC composed entirely of independent Directors
|
û
|
No change-in-control agreements for NEOs
| |||||
✓
|
Independent compensation consultant, hired by and reports directly to the MCC
|
û
|
No tax gross-ups for NEOs
| |||||
✓
|
MCC has discretion to reduce performance share payouts
|
û
|
No golden parachutes or golden coffins for NEOs
| |||||
✓
|
Certain pre-2018 LTIP awards (i.e., performance-based compensation) intended to qualify for deduction under the grandfather rule in Section 162(m) of Internal Revenue Code
|
|||||||
✓
|
Annual assessment of incentive compensation risks
|
Chevron Corporation2019 Proxy Statement | 49 |
executive compensation
|
compensation governance: oversight and administration of the executive compensation program
role of the board of directors management compensation committee
independent compensation advice
We require our NEOs to hold prescribed levels of Chevron common stock, further linking their interests with those of our stockholders. Executives have five years to attain their stock ownership guideline. Further, NEOs who have not attained their stock ownership guidelines are required to hold shares acquired under the LTIP program until such ownership requirements are met.
Position |
2018 ownership guidelines | |
CEO |
Six times base salary | |
Executive Vice Presidents and Chief Financial Officer |
Four times base salary | |
All Other Executive Officers |
Two times base salary |
Based upon our 250-day trailing average stock price ending December 31, 2018 ($120.20), Mr. Wirth had a stock ownership base salary multiple of 8.4. All other NEOs had an average stock ownership base salary multiple of 8.2. The MCC believes these ownership levels provide adequate focus on our long-term business model.
employment, severance, and change-in-control agreements
In general, we do not maintain employment, severance, or change-in-control agreements with our NEOs. Upon retirement or separation from service for other reasons, NEOs are entitled to certain accrued benefits and payments generally available to other employees. We describe these benefits and payments in the Pension Benefits Table, the Nonqualified Deferred Compensation Table, and the Potential Payments Upon Termination or Change-in-Control table in this Proxy Statement.
50 | Chevron Corporation2019 Proxy Statement |
executive compensation
|
compensation recovery policies
The Chevron Incentive Plan, Long-Term Incentive Plan, Deferred Compensation Plan for Management Employees, Retirement Restoration Plan, and Employee Savings Investment PlanRestoration Plan include provisions permitting us to claw back certain amounts of cash and equity awarded to an NEO at any time if the NEO engages in certain acts of misconduct, including, among other things: embezzlement; fraud or theft; disclosure of confidential information or other acts that harm our business, reputation or employees; misconduct resulting in Chevron having to prepare an accounting restatement; and failure to abide by post-termination agreements respecting confidentiality, noncompetition, or nonsolicitation.
We do not pay tax gross-ups to our NEOs. We do provide standard expatriate packages, which include tax equalization payments, to all employees of the Company who serve on overseas assignments, including executive officers.
tax deductibility of NEO compensation
For years prior to 2018, Section 162(m) of the Internal Revenue Code (as implemented by IRS guidance) limited companies deduction for compensation paid to the CEO and the other three most highly paid executives (excluding the CEO and CFO) to $1 million, but allowed for the deduction for performance-based compensation costs/expenses for amounts even in excess of the $1 million limit. As such, we structured our CIP and certain LTIP awards with the intention of meeting the requirements for performance-based compensation under Section 162(m). Effective January 1, 2018, the Tax Cut and Jobs Act (TCJA) repealed this exclusion for performance-based compensation, and expanded the class of affected executives, which means that all compensation paid to persons who in 2017, or any year following, were the CEO, CFO (in 2018 or later) or one of the other three most highly paid executives (excluding our CEO and CFO) will be subject to the cap of $1 million. For LTIP awards made on or prior to November 2, 2017, but not yet vested and/or paid out (other than time-based RSUs, which are not qualified under Section 162(m) and therefore are not deductible), we expect that the Company will still be able to deduct those amounts, provided that the Company meets the requirements in the TCJA.
Chevron Corporation2019 Proxy Statement | 51 |
executive compensation
|
The following table sets forth the compensation of our NEOs for the fiscal year ended December 31, 2018, and for the fiscal years ended December 31, 2017, and December 31, 2016, if they were NEOs in those years. The primary components of each NEOs compensation are also described in our Compensation Discussion and Analysis in this Proxy Statement.
Name and principal position |
Year |
Salary ($)(1) |
Stock ($)(2) |
Option ($)(3) |
Non-Equity ($)(4) |
Change in ($)(5) |
All
other ($)(6) |
Total ($) | ||||||||||||||||||||||||||||||||
M.K. Wirth, Chairman and CEO(7) |
|
2018 |
$ |
1,468,750 |
$ |
10,102,641 |
$ |
3,312,399 |
$ |
3,600,000 |
$ |
1,229,552 |
$ |
927,281 |
$ |
20,640,623 |
||||||||||||||||||||||||
|
2017 |
$ |
1,231,050 |
$ |
3,923,035 |
$ |
1,237,856 |
$ |
2,000,000 |
$ |
2,672,028 |
$ |
605,712 |
$ |
11,669,681 |
|||||||||||||||||||||||||
|
2016 |
$ |
1,094,492 |
$ |
2,866,329 |
$ |
2,286,247 |
$ |
906,200 |
$ |
1,845,887 |
$ |
130,490 |
$ |
9,129,645 |
|||||||||||||||||||||||||
J.S. Watson, Former Chairman and CEO(7) |
|
2018 |
$ |
251,197 |
|
|
|
|
|
|
$ |
850,222 |
$ |
140,080 |
$ |
1,241,499 |
||||||||||||||||||||||||
|
2017 |
$ |
1,863,500 |
$ |
12,140,826 |
$ |
3,830,000 |
$ |
3,750,000 |
$ |
2,982,424 |
$ |
214,818 |
$ |
24,781,568 |
|||||||||||||||||||||||||
|
2016 |
$ |
1,863,500 |
$ |
5,397,824 |
$ |
9,194,544 |
$ |
2,096,400 |
$ |
5,894,429 |
$ |
210,794 |
$ |
24,657,491 |
|||||||||||||||||||||||||
P.E. Yarrington, Vice President and Chief Financial Officer |
|
2018 |
$ |
1,133,458 |
$ |
2,934,703 |
$ |
962,251 |
$ |
2,017,200 |
|
|
|
$ |
111,467 |
$ |
7,159,079 |
|||||||||||||||||||||||
|
2017 |
$ |
1,108,013 |
$ |
3,018,827 |
$ |
952,904 |
$ |
1,700,200 |
$ |
1,283,468 |
$ |
88,641 |
$ |
8,152,053 |
|||||||||||||||||||||||||
|
2016 |
$ |
1,073,242 |
$ |
1,342,122 |
$ |
2,286,247 |
$ |
890,100 |
$ |
863,855 |
$ |
85,859 |
$ |
6,541,425 |
|||||||||||||||||||||||||
J.W. Johnson, Executive Vice President, Upstream |
|
2018 |
$ |
1,123,375 |
$ |
3,811,432 |
$ |
1,249,653 |
$ |
2,284,100 |
$ |
2,263,287 |
$ |
194,135 |
$ |
10,925,982 |
||||||||||||||||||||||||
|
2017 |
$ |
1,080,750 |
$ |
3,923,035 |
$ |
1,237,856 |
$ |
1,710,700 |
$ |
2,948,042 |
$ |
124,132 |
$ |
11,024,515 |
|||||||||||||||||||||||||
|
2016 |
$ |
1,012,417 |
$ |
1,745,492 |
$ |
2,970,501 |
$ |
930,600 |
$ |
2,640,381 |
$ |
116,929 |
$ |
9,416,320 |
|||||||||||||||||||||||||
J.C. Geagea, Executive Vice President, Technology, Projects and Services |
|
2018 |
$ |
979,083 |
$ |
2,934,703 |
$ |
962,251 |
$ |
1,663,500 |
$ |
1,210,881 |
$ |
98,993 |
$ |
7,849,411 |
||||||||||||||||||||||||
|
2017 |
$ |
957,825 |
$ |
3,018,827 |
$ |
952,904 |
$ |
1,347,200 |
$ |
2,614,776 |
$ |
112,790 |
$ |
9,004,322 |
|||||||||||||||||||||||||
|
2016 |
$ |
906,367 |
$ |
1,342,122 |
$ |
2,286,247 |
$ |
761,800 |
$ |
2,551,179 |
$ |
97,479 |
$ |
7,945,194 |
|||||||||||||||||||||||||
P.R. Breber, Executive Vice President, Downstream & Chemicals |
|
2018 |
$ |
948,875 |
$ |
2,934,703 |
$ |
962,251 |
$ |
1,629,600 |
$ |
1,445,807 |
$ |
108,808 |
$ |
8,030,044 |
||||||||||||||||||||||||
|
|
(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. Mr. Wirth received a salary increase in February 2018 upon his appointment to Chairman and CEO. The following table reflects the annual salary rate and effective date for the years in which each person was an NEO and the amounts deferred under the Deferred Compensation Plan for Management Employees II (DCP). Salary for Mr. Watson is as of his February 1, 2018 retirement date and also includes a final payout of his accrued but unused vacation balance, in the amount of $18,260, which is required to be paid under California law upon termination of employment. |
Name | Salary effective date | Salary | Total salary deferred under the DCP | ||||||||||||
M.K. Wirth |
February 2018 |
$ 1,500,000 |
$ 23,875 | ||||||||||||
February 2017 |
$ 1,250,000 |
$ 19,221 | |||||||||||||
April 2016 |
$ 1,098,400 |
$ 16,590 | |||||||||||||
J.S. Watson |
February 2018 |
$ 1,863,500 |
$ 23,294 | ||||||||||||
April 2017 |
$ 1,863,500 |
$ 186,350 | |||||||||||||
April 2016 |
$ 1,863,500 |
$ 186,350 | |||||||||||||
P.E. Yarrington |
April 2018 |
$ 1,139,000 |
$ 17,169 | ||||||||||||
April 2017 |
$ 1,120,000 |
$ 16,760 | |||||||||||||
April 2016 |
$ 1,078,900 |
$ 16,165 | |||||||||||||
J.W. Johnson |
April 2018 |
$ 1,133,000 |
$ 16,968 | ||||||||||||
April 2017 |
$ 1,100,000 |
$ 16,215 | |||||||||||||
April 2016 |
$ 1,034,000 |
$ 14,948 | |||||||||||||
J.C. Geagea |
April 2018 |
$ 982,000 |
$ 14,082 | ||||||||||||
April 2017 |
$ 972,000 |
$ 13,757 | |||||||||||||
April 2016 |
$ 923,400 |
$ 12,827 | |||||||||||||
P.R. Breber |
April 2018 |
$ 962,000 |
$ 13,478 |
We explain the amount of salary and non-equity incentive plan compensation in proportion to total compensation in our Compensation Discussion and AnalysisPay Philosophy and Plan Design. |
52 | Chevron Corporation2019 Proxy Statement |
executive compensation
|
(2) | Amounts for each fiscal year reflect the aggregate grant date fair value of performance shares and RSUs granted under the LTIP on January 31, 2018. 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 21, 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, 2018. These RSUs and performance shares accrue dividend equivalents. For purposes of this table only, estimates of forfeitures related to service-based vesting conditions for awards have been disregarded. |
For performance shares granted on January 31, 2018, the per-share grant date fair value was $128.47. 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 TSR for the Company and the LTIP peer group (BP, ExxonMobil, Royal Dutch Shell, Total, and the S&P 500 Total Return Index) using market data for a period equal to the term of the performance period, correlates the simulated returns within the peer group to estimate a probable payout value, and discounts the probable payout value using a risk-free rate for Treasury bonds having a term equal to the performance period. Performance shares are paid in cash, and the cash payout, if any, is based on market conditions at the end of the performance period (January 2018 through December 2020). Payout is calculated in the manner described in Footnote 2 to the Option Exercises and Stock Vested in Fiscal Year 2018 table in this Proxy Statement, except that the modifier for the 2018 grant depends on Chevrons TSR, for the three-year performance period relative to the S&P 500 Total Return Index and the TSR for our peer group of major oil competitorswhich consists of BP, ExxonMobil, Royal Dutch Shell, and Total. As such, the modifiers for the 2018 grant range from 0 to 200 percent in increments of 40 percent. If the maximum level of performance were to be achieved for the performance shares granted in 2018, the grant date value would be $250.70 per share (200 percent of the grant date stock price), or $13,249,495 for Mr. Wirth; $3,848,245 for Ms. Yarrington and Messrs. Geagea and Breber; and $4,998,958 for Mr. Johnson. |
The per-unit grant date fair value of the restricted stock units was $125.35, the closing price of Chevron common stock on the grant date. These RSUs earn dividend equivalents and are paid in cash upon vesting on January 31 following the fifth anniversary of the grant. Total payout will be based on the Chevron common stock closing price on the vesting date. |
The material terms of performance shares and RSUs granted in 2018 are described in the Grants of Plan-Based Awards in Fiscal Year 2018 and Outstanding Equity Awards at 2018 Fiscal Year-End tables in this Proxy Statement. |
(3) | Amounts for each fiscal year reflect the aggregate grant date fair value of nonstatutory/nonqualified stock options granted under the LTIP on January 31, 2018. The per-option grant date fair value was $18.19. We calculate the grant date fair value of these stock options in accordance with ASC Topic 718, as described in Note 21, 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, 2018. Stock options do not accrue dividends or dividend equivalents. For purposes of this table only, estimates of forfeitures related to service-based vesting conditions for awards have been disregarded. The material terms of stock options granted in 2018 are described in the Grants of Plan-Based Awards in Fiscal Year 2018 and Outstanding Equity Awards at 2018 Fiscal Year-End tables in this Proxy Statement. |
(4) | 2018 amounts reflect CIP awards for the 2018 performance year that were paid in March 2019. Ms. Yarrington elected to defer 1 percent of her award to the DCP, or $20,172. See Compensation Discussion and AnalysisComponents of Executive CompensationAnnual Incentive Plan (Chevron Incentive Plan) for a detailed description of CIP awards. |
(5) | 2018 amounts represent the aggregate change in the actuarial present value of the NEOs pension value for the CRP and the RRP from January 1, 2018, through December 31, 2018, 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-RP do not pay above-market or preferential earnings and are not represented in this table. For purposes of this disclosure, we have used the same amounts required to be disclosed in the Pension Benefits Table in this Proxy Statement. Mr. Watson retired effective February 1, 2018, and his actual CRP value at retirement was $2,213,441, and the value of his RRP on December 31, 2018, before reduction for taxes, was $47,014,948, a total change of $850,222 from the CRP and RRP values reported in the 2018 Proxy Statement. Ms. Yarringtons pension benefits are not reflected above as estimated theoretical pension benefits resulted in a negative value in 2018, generally because she was not subject to early retirement reduction and higher interest rates were used to calculate the present value of her benefit for her age. |
2018 changes in the actuarial present value of an NEOs pension value are attributable to five factors: |
Increases in highest average earnings (HAE) |
HAE is the highest consecutive 36-month average base salary and CIP awards. A significant portion of the changes in Messrs. Wirth, Johnson, Geagea and Brebers pension values were due to salary and CIP target increases tied to promotions in recent years, in addition to CIP awards as a result of individual and Company performance. |
Interest rate impact |
Generally, a higher interest rate produces a lower pension value, and a lower interest rate produces a higher pension value. The lump sum interest rates for determining the actuarial present values of the pension benefit are based on the Pension Protection Act of 2006 lump sum interest rates, and such rates are higher in 2018 than those used in 2017. In addition, 2018s discount rate, 4.2 percent, is higher than 2017s discount rate, 3.5 percent. |
An additional year of age |
The Chevron Retirement Plan and Retirement Restoration Plan provide an unreduced benefit at age 60 for eligible participants. Generally, being a year older results in an increase in pension value due to a shorter discount period from the current age to the assumed retirement age of 60. Once an NEO reaches age 60, the discount rate no longer applies. Furthermore, the pension value can be negatively impacted when the assumed duration of future payments is shorter based on age and actuarial assumptions. |
An additional year of benefit service earned in 2018 |
All of the NEOs except Mr. Watson worked for a full year in 2018, and their pension benefits increased because they earned an additional year of benefit service. |
Mortality projections |
When mortality tables project longer life spans, pension benefits increase. |
The following table provides a breakdown of the percent of change in the NEOs pension, including the return credited to Mr. Watsons Retirement Restoration Plan after his retirement: |
Name | Factors | |||||||||||||||||||||||||||||
Total percent change in pension value, Jan.-Dec. 2018(a) |
Higher HAE | Interest rate impact |
One year older | One additional year of service |
Mortality | |||||||||||||||||||||||||
M.K. Wirth |
|
7.4 |
% |
|
7.8 |
% |
|
(7.2 |
%) |
|
3.9 |
% |
|
2.9 |
% |
|
0.0 |
% | ||||||||||||
J.S. Watson |
|
1.8 |
% |
|
0.0 |
% |
|
1.6 |
% |
|
0.0 |
% |
|
0.2 |
% |
|
0.0 |
% | ||||||||||||
P.E. Yarrington |
|
(7.8 |
%) |
|
0.0 |
% |
|
(7.8 |
%) |
|
(2.4 |
%) |
|
2.8 |
% |
|
(0.4 |
%) | ||||||||||||
J.W. Johnson |
|
14.0 |
% |
|
13.8 |
% |
|
(6.5 |
%) |
|
3.8 |
% |
|
2.9 |
% |
|
0.0 |
% | ||||||||||||
J.C. Geagea |
|
9.1 |
% |
|
9.3 |
% |
|
(7.0 |
%) |
|
4.0 |
% |
|
2.8 |
% |
|
0.0 |
% | ||||||||||||
P.R. Breber |
|
19.0 |
% |
|
21.0 |
% |
|
(9.3 |
%) |
|
4.0 |
% |
|
3.3 |
% |
|
0.0 |
% |
(a) | Calculated as follows: (actuarial present value of accumulated benefit at December 31, 2018 (reported in the Pension Benefits Table in this Proxy Statement) actuarial present value of accumulated benefit at December 31, 2017 (reported in the Pension Benefits Table in last years Proxy Statement)) / actuarial present value of accumulated benefit at December 31, 2017 (reported in the Pension Benefits Table in last years Proxy Statement). |
Chevron Corporation2019 Proxy Statement | 53 |
executive compensation
|
For Mr. Watson, who retired effective February 1, 2018, the actuarial present value at December 31, 2018 was replaced with his actual Chevron Retirement Plan value at retirement and his Retirement Restoration Plan value at December 31, 2018. Mr. Watsons percent change in pension value includes the return of 2.79 percent credited to his Retirement Restoration Plan after his retirement. |
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 2018 includes the following items, but excludes other arrangements that are generally available to our salaried employees on the U.S. payroll and do not discriminate in scope, terms, or operation in favor of our NEOs, such as our medical, dental, disability, group life insurance and vacation programs. |
M.K. Wirth |
J.S. Watson |
P.E. Yarrington |
J.W. Johnson |
J.C. Geagea |
P.R. Breber |
|||||||||||||||||||
ESIP Company Contributions(a) |
$ |
22,000 |
|
$ |
16,772 |
|
$ |
22,000 |
|
$ |
22,000 |
|
$ |
22,000 |
|
$ |
22,000 |
| ||||||
ESIP-RP Company Contributions(a) |
$ |
95,500 |
|
$ |
1,864 |
|
$ |
68,677 |
|
$ |
67,870 |
|
$ |
56,327 |
|
$ |
53,910 |
| ||||||
Perquisites(b) |
||||||||||||||||||||||||
Financial Counseling(c) |
$ |
19,045 |
|
$ |
2,413 |
|
|
|
|
$ |
17,658 |
|
$ |
15,370 |
|
$ |
8,538 |
| ||||||
Motor Vehicles(d) |
$ |
20,741 |
|
$ |
1,162 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Corporate Aircraft(e) |
$ |
288,629 |
|
$ |
39,080 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Residential Security(f) |
$ |
453,593 |
|
$ |
7,185 |
|
|
|
|
$ |
61,937 |
|
|
|
|