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 x
Filed by a Party other than the Registrant ¨
Check the appropriate box:
¨ Preliminary Proxy Statement | ¨ Confidential, for Use of the Commission Only(as permitted by Rule 14a-6(e)(2)) | |
x Definitive Proxy Statement |
||
¨ Definitive Additional Materials | ||
¨ Soliciting Material Pursuant to §240.14a-12 |
EXXON MOBIL CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x | No fee required. |
¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
(1) | Title of each class of securities to which transaction applies: |
(2) | Aggregate number of securities to which transaction applies: |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
(4) | Proposed maximum aggregate value of transaction: |
(5) | Total fee paid: |
¨ | Fee paid previously with preliminary materials. |
¨ | 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. |
(1) | Amount Previously Paid: |
(2) | Form, Schedule or Registration Statement No.: |
(3) | Filing Party: |
(4) | Date Filed: |
NOTICE OF 2014 | ||||
ANNUAL MEETING | ||||
AND PROXY STATEMENT | ||||
April 11, 2014 |
Dear Shareholder:
We invite you to attend the annual meeting of shareholders on Wednesday, May 28, 2014, at the Morton H. Meyerson Symphony Center, 2301 Flora Street, Dallas, Texas 75201. The meeting will begin promptly at 9:30 a.m., Central Time. At the meeting, you will hear a report on our business and vote on the following items:
| Election of directors; |
| Ratification of PricewaterhouseCoopers LLP as independent auditors; |
| Advisory vote to approve executive compensation as required by law; |
| Five shareholder proposals contained in this proxy statement; and |
| Other matters if properly raised. |
Only shareholders of record on April 4, 2014, or their proxy holders may vote at the meeting. Attendance at the meeting is limited to shareholders or their proxy holders and ExxonMobil guests. Only shareholders or their valid proxy holders may address the meeting.
This booklet includes the formal notice of the meeting and proxy statement. The proxy statement tells you about the agenda, procedures, and rules of conduct for the meeting. It also describes how the Board operates, gives information about our director candidates, and provides information about the other items of business to be conducted at the meeting.
Financial information is provided separately in the booklet, 2013 Financial Statements and Supplemental Information, enclosed with proxy materials available to all shareholders.
Even if you own only a few shares, we want your shares to be represented at the meeting. You can vote your shares by Internet, toll-free telephone call, or proxy card.
To attend the meeting in person, please follow the instructions on page 3. An audio webcast with slide presentation and a report on the meeting will be available on our website at exxonmobil.com.
Sincerely,
David S. Rosenthal | Rex W. Tillerson | |||
Secretary | Chairman of the Board |
Page | ||||
1 | ||||
4 | ||||
4 | ||||
17 | ||||
20 | ||||
22 | ||||
22 | ||||
23 | ||||
24 | ||||
48 | ||||
59 | ||||
60 | ||||
60 | ||||
63 | ||||
63 | ||||
64 | ||||
64 | ||||
66 | ||||
67 | ||||
69 | ||||
Who May Vote
Shareholders of ExxonMobil, as recorded in our stock register on April 4, 2014, may vote at the meeting.
How to Vote
You may vote in person at the meeting or by proxy. We recommend you vote by proxy even if you plan to attend the meeting. You can always change your vote at the meeting.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be held on May 28, 2014
| The 2014 Proxy Statement, 2013 Summary Annual Report, and 2013 Financial Statements are available at www.edocumentview.com/xom. |
Electronic Delivery of Proxy Statement and Annual Report Documents
Instead of receiving future copies of these documents by mail, shareholders can elect to receive an e-mail that will provide electronic links to the proxy materials. Opting to receive your proxy materials online will save the Company the cost of producing and mailing documents to your home or business, and will also give you an electronic link to the proxy voting site.
| Shareholders of Record: If you vote on the Internet at www.investorvote.com/exxonmobil, simply follow the prompts for enrolling in the electronic proxy delivery service. You may enroll in the electronic proxy delivery service at any time in the future by going directly to www.computershare.com/exxonmobil. You may also revoke an electronic delivery election at this site at any time. |
| Beneficial Shareholders: If you hold your shares in a brokerage account, you may also have the opportunity to receive copies of the proxy materials electronically. Please check the information provided in the proxy materials mailed to you by your bank or broker regarding the availability of this service. |
How Proxies Work
ExxonMobils Board of Directors is asking for your proxy. Giving us your proxy means you authorize us to vote your shares at the meeting in the manner you direct.
If your shares are held in your name, you can vote by proxy in one of three convenient ways:
| Via Internet: Go to www.investorvote.com/exxonmobil and follow the instructions. You will need to have your proxy card or electronic notice in hand. At this website, you can elect to access future proxy statements and annual reports via the Internet. |
| By Telephone: Call toll-free 1-800-652-8683 or 1-781-575-2300 (outside the United States, Canada, and Puerto Rico), and follow the instructions. You will need to have your proxy card in hand. |
| In Writing: Complete, sign, date, and return your proxy card in the enclosed envelope. |
Your proxy card covers all shares registered in your name and shares held in your Computershare Investment Plan account. If you own shares in the ExxonMobil Savings Plan for employees and retirees, your proxy card also covers those shares.
If you give us your signed proxy but do not specify how to vote, we will vote your shares as follows:
| FOR the election of our director candidates; |
| FOR ratification of the appointment of independent auditors; |
| FOR approval of the compensation of the Named Executive Officers; and |
| AGAINST the shareholder proposals. |
1
If you hold shares through someone else, such as a stockbroker, you will receive material from that firm asking how you want to vote. Check the voting form used by that firm to see if it offers Internet or telephone voting.
Voting Shares in the ExxonMobil Savings Plan
The Trustee of the ExxonMobil Savings Plan will vote Plan shares as participants direct. To the extent participants do not give instructions, the Trustee will vote shares as it thinks best. The proxy card serves to give voting instructions to the Trustee.
Revoking a Proxy
You may revoke your proxy before it is voted at the meeting by:
| Submitting a new proxy with a later date via a proxy card, the Internet, or by telephone; |
| Notifying ExxonMobils Secretary in writing before the meeting; or |
| Voting in person at the meeting. |
Confidential Voting
Independent inspectors count the votes. Your individual vote is kept confidential from us unless special circumstances exist. For example, a copy of your proxy card will be sent to us if you write comments on the card.
Quorum
In order to carry on the business of the meeting, we must have a quorum. This means at least a majority of the outstanding shares eligible to vote must be represented at the meeting, either by proxy or in person. Treasury shares, which are shares owned by ExxonMobil itself, are not voted and do not count for this purpose.
Votes Required
| Election of Directors Proposal: A plurality of the votes cast is required for the election of directors. This means that the director nominee with the most votes for a particular seat is elected for that seat. Only votes FOR or WITHHELD count. Abstentions and broker non-votes are not counted for purposes of the election of directors. A broker non-vote occurs when a bank, broker, or other holder of record that is holding shares for a beneficial owner does not vote on a particular proposal because the record holder does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. If you own shares through a broker, you must give the broker instructions to vote your shares in the election of directors. Otherwise, your shares will not be voted. |
Our Corporate Governance Guidelines, which can be found in the Corporate Governance section of our website at exxonmobil.com/guidelines, state that all directors will stand for election at the annual meeting of shareholders. In any non-contested election of directors, any director nominee who receives a greater number of votes WITHHELD from his or her election than votes FOR such election shall tender his or her resignation. Within 90 days after certification of the election results, the Board of Directors will decide, through a process managed by the Board Affairs Committee and excluding the nominee in question, whether to accept the resignation. Absent a compelling reason for the director to remain on the Board, the Board shall accept the resignation. The Board will promptly disclose its decision and, if applicable, the reasons for rejecting the tendered resignation on Form 8-K filed with the Securities and Exchange Commission (SEC).
| Other Proposals: Approval of the ratification of the appointment of independent auditors, the advisory vote to approve executive compensation, and the shareholder proposals requires the favorable vote of a majority of votes cast. Only votes FOR or AGAINST these proposals count. |
Abstentions count for quorum purposes, but not for voting. Broker non-votes count as votes FOR the ratification of the appointment of independent auditors but do not count for voting on any of the other proposals.
2
Annual Meeting Admission
Only shareholders or their proxy holders and ExxonMobil guests may attend the meeting. For safety and security reasons, cameras, smartphones, recording equipment, electronic devices, computers, large bags, briefcases, or packages will not be permitted in the building. In addition, each shareholder and ExxonMobil guest will be asked to present a valid government-issued picture identification, such as a drivers license, before being admitted to the meeting.
For registered shareholders, an admission ticket is attached to your proxy card. Please detach and bring the admission ticket with you to the meeting.
If your shares are held in the name of your broker, bank, or other nominee, you must bring to the meeting an account statement or letter from the nominee indicating that you beneficially owned the shares on April 4, 2014, the record date for voting. You may receive an admission ticket in advance by sending a written request with proof of ownership to the address listed below under Contact Information.
Shareholders who do not present admission tickets at the meeting will be admitted only upon verification of ownership at the admission counter.
Audio Webcast of the Annual Meeting
You are invited to visit our website at exxonmobil.com to hear the audio webcast with slide presentation at 9:30 a.m., Central Time, on Wednesday, May 28, 2014. An archived copy of this audio webcast will be available on our website for one year.
Conduct of the Meeting
The Chairman has broad responsibility and legal authority to conduct the annual meeting in an orderly and timely manner. This authority includes establishing rules for shareholders who wish to address the meeting. Only shareholders or their valid proxy holders may address the meeting. Copies of these rules will be available at the meeting. The Chairman may also exercise broad discretion in recognizing shareholders who wish to speak and in determining the extent of discussion on each item of business. In light of the number of business items on this years agenda and the need to conclude the meeting within a reasonable period of time, we cannot ensure that every shareholder who wishes to speak on an item of business will be able to do so.
Dialogue can usually be better accomplished with interested parties outside the meeting and, for this purpose, we have provided a method on our website at exxonmobil.com/directors for raising issues and contacting the non-employee directors either in writing or electronically. The Chairman may also rely on applicable law regarding disruptions or disorderly conduct to ensure that the meeting is conducted in a manner that is fair to all shareholders. Shareholders making comments during the meeting must do so in English so that the majority of shareholders present can understand what is being said.
Contact Information
If you have questions or need more information about the annual meeting, write to Mr. David S. Rosenthal, Secretary, Exxon Mobil Corporation, 5959 Las Colinas Boulevard, Irving, TX 75039-2298. Or call us at 1-972-444-1157 or send a fax to 1-972-444-1505.
For information about shares registered in your name or your Computershare Investment Plan account, call ExxonMobil Shareholder Services at 1-800-252-1800 or 1-781-575-2058 (outside the United States, Canada, and Puerto Rico), or access your account via the website at www.computershare.com/exxonmobil. We also invite you to visit ExxonMobils website at exxonmobil.com. Investor information can be found at exxonmobil.com/investor. Website materials are not part of this proxy solicitation.
3
Overview
The Board of Directors and its committees perform a number of functions for ExxonMobil and its shareholders, including:
| Overseeing the management of the Company on your behalf, including oversight of risk management; |
| Reviewing ExxonMobils long-term strategic plans; |
| Exercising direct decision-making authority in key areas, such as declaring dividends; |
| Selecting the CEO and evaluating the CEOs performance; and |
| Reviewing development and succession plans for ExxonMobils top executives. |
The Board has adopted Corporate Governance Guidelines that govern the structure and functioning of the Board and set out the Boards position on a number of governance issues. A copy of our current Corporate Governance Guidelines is posted on our website at exxonmobil.com/guidelines.
All ExxonMobil directors stand for election at the annual meeting. Non-employee directors cannot stand for election after they have reached age 72, unless the Board makes an exception on a case-by-case basis. Employee directors resign from the Board when they are no longer employed by ExxonMobil.
Risk Oversight
Risk oversight is the responsibility of the full Board of Directors. The Board throughout the year participates in reviews with management on the Companys business, including identified risk factors. As a whole, the Board reviews include litigation and other legal matters; political contributions, budget, and policy; developments in climate science and policy; the Energy Outlook, which projects world supply and demand to 2040; stewardship of business performance; and long-term strategic plans.
The Board and/or the Public Issues and Contributions Committee visit an ExxonMobil operation each year. These visits allow the directors to better understand local issues and to discuss safety, environmental performance, technology, products, industry and corporate standards, and community involvement associated with the Companys business.
In addition, existing committees help the Board carry out its responsibility for risk oversight by focusing on specific key areas of risk:
| The Audit Committee oversees risks associated with financial and accounting matters, including compliance with legal and regulatory requirements, and the Companys financial reporting and internal control systems; |
| The Board Affairs Committee oversees risks associated with corporate governance, including board structure and succession planning; |
| The Compensation Committee helps ensure that the Companys compensation policies and practices encourage long-term focus, support the retention and development of executive talent, and discourages excessive risk taking; |
| The Public Issues and Contributions Committee oversees operational risks such as those relating to employee and community safety, health, environmental, and security matters; and |
| The Finance Committee oversees risk associated with financial instruments, financial policies and strategies, and capital structure. |
The Board receives regular updates from the committees, and believes this structure is best for overseeing risk.
4
Board Leadership Structure
The Board believes that the decision as to who should serve as Chairman and/or CEO is the proper responsibility of the Board. The Board retains authority to amend the By-Laws to separate the positions of Chairman and CEO at any time and will carefully consider the pros and cons of such separation or combination. At the present time, the Board believes the interests of all shareholders are best served through a leadership model with a combined Chairman/CEO position and an independent Presiding Director.
The current CEO possesses an in-depth knowledge of the Company; its integrated, multinational operations; the evolving energy industry supply and demand; and the array of challenges to be faced. This knowledge was gained through more than 38 years of successful experience in progressively more senior positions, including domestic and international responsibilities.
The Board believes that these experiences and other insights put the CEO in the best position to provide broad leadership for the Board as it considers strategy and as it exercises its fiduciary responsibilities to shareholders.
Further, the Board has demonstrated its commitment and ability to provide independent oversight of management.
The Board is comprised entirely of independent directors except the CEO, and 100 percent of the Audit, Compensation, Board Affairs, and Public Issues and Contributions Committee members are independent. Each independent director has access to the CEO and other Company executives on request; may call meetings of the independent directors; and may request agenda topics to be added or dealt with in more detail at meetings of the full Board or an appropriate Board committee.
In addition, after considering evolving governance practices and shareholder input regarding Board independence, the Board established the role of Presiding Director. The Board believes the Presiding Director can provide effective independent Board leadership. J.S. Fishman succeeded S.J. Palmisano in 2013 as Presiding Director and is expected to remain in the position at least through the annual meeting of shareholders. In accordance with the specific duties prescribed in the Corporate Governance Guidelines, the Presiding Director chairs executive sessions of the independent directors, which are held several times per year, normally coincident with meetings of the Board and without the CEO or other management present; chairs meetings of the Board in the absence of the Chairman; and works closely with the Chairman in developing Board agendas, topics, schedules, and in reviewing materials provided to the directors.
Director Qualifications
The Board has adopted guidelines outlining the qualifications sought when considering non-employee director candidates. These guidelines are published on our website at exxonmobil.com/directorguidelines.
In part, the guidelines describe the necessary experiences and skills expected of director candidates as follows:
Candidates for non-employee director of Exxon Mobil Corporation should be individuals who have achieved prominence in their fields, with experience and demonstrated expertise in managing large, relatively complex organizations, and/or, in a professional or scientific capacity, be accustomed to dealing with complex situations preferably those with worldwide scope.
The key qualifications the Board seeks across its membership to achieve a balance of diversity and experiences important to the Corporation include: financial expertise; experience as the CEO of a significant company or organization or as a next-level executive with responsibilities for global operations; experience managing large, complex organizations; or experience on one or more boards of significant public or non-profit organizations; and expertise resulting from significant academic, scientific, or research activities. The Board also seeks diversity of life experiences and backgrounds, as well as gender and ethnic diversity.
5
The table below describes the particular experience, qualifications, attributes, and skills of each director nominee that led the Board to conclude that such person should serve as a director of the Company.
M.J. Boskin | | Public finance, tax, budget, and macroeconomic policy experience as Senior Fellow at the Hoover Institution and the T.M. Friedman Professor of Economics at Stanford University | ||
| Financial expertise | |||
| Government/research experience as Chairman of the Presidents Council of Economic Advisors and an Associate at the National Bureau of Economic Research | |||
| Experience advising the federal government, heads of state, finance ministries, and central banks around the world | |||
| Board experience as a Director of Oracle, and a former Director of Shinsei Bank and Vodafone Group (prior to 2009) | |||
P. Brabeck-Letmathe | | Global leadership position as Chairman of Nestlé | ||
| Board experience at Nestlé, and as a Director of Credit Suisse Group and LOréal, and a former Director of Alcon (prior to 2009) and Roche Holding | |||
| Experience with worldwide leadership of strategic business groups | |||
| Financial expertise | |||
| Affiliation with leading business associations (Hong Kong/Europe Business Council and Foundation Board of the World Economic Forum) | |||
| Recipient of awards, including La Orden Mexicana del Aguila Azteca, the Schumpeter Prize for outstanding contribution in economics, and the Austrian Cross of Honour for service to the Republic of Austria | |||
U.M. Burns | | Global leadership position as Chairman and Chief Executive Officer of Xerox Corporation | ||
| Board experience at Xerox, American Express, and as former Director of Boston Scientific | |||
| Financial expertise | |||
| Leadership positions as Vice Chair of the Presidents Export Council and as founding Board Director of Change the Equation to improve education in the United States in science, technology, engineering and math | |||
| Affiliation with numerous community, educational, and non-profit organizations including FIRST (For Inspiration and Recognition of Science and Technology), National Academy Foundation, MIT, and the U.S. Olympic Committee | |||
L.R. Faulkner | | Leadership experience as President Emeritus of The University of Texas at Austin and former President of Houston Endowment | ||
| Financial expertise | |||
| Academic/administration experience at major universities including the University of Illinois and Harvard University | |||
| Expertise in chemistry, electrochemistry, and materials | |||
| Board experience as a former Director of Guaranty Financial Group and Temple-Inland | |||
| Recognition by the American Academy of Arts and Sciences and leadership of the National Mathematics Advisory Panel |
6
J.S. Fishman | | Global leadership position as Chairman and Chief Executive Officer of The Travelers Companies | ||
| Board experience at The Travelers Companies and The Carlyle Group, and as a former Director of Nuveen Investments and Platinum Underwriters Holdings Ltd. (both prior to 2009) | |||
| Affiliation with a leading academic institution as a member of the Board of Trustees of the University of Pennsylvania, the Board of Overseers of the University of Pennsylvania School of Veterinary Medicine, and the Industry Advisory Board of the Wharton Financial Institutions Center | |||
| Affiliation with leading business associations (the Business Council and the American Insurance Association) | |||
H.H. Fore | | Global leadership position as Chairman and Chief Executive Officer of Holsman International | ||
| Government service (former Administrator of the U.S. Agency for International Development and Director of U.S. Foreign Assistance; former Under Secretary of State for Management, the Chief Operating Officer for the Department of State; and former Director of the U.S. Mint) | |||
| Board experience at Theravance, and as a former Director of Dexter Corporation and HSB Group (both prior to 2009) | |||
| Leadership positions as Co-Chair of Asia Society and global Co-Chair of Women Corporate Directors, and as Trustee of the Aspen Institute and the Center for Strategic and International Studies | |||
| Affiliation as a Director with leading humanitarian associations (the Committee Encouraging Corporate Philanthropy and the Center for Global Development) | |||
K.C. Frazier | | Global leadership position as Chairman, President, and Chief Executive Officer of Merck | ||
| Board experience at Merck and at non-profit organizations | |||
| Affiliation with leading legal, business, and public policy associations (the Presidents Export Council, the American Law Institute, the Business Council, and Pharmaceutical Research and Manufacturers of America) | |||
| Recipient of award for extraordinary achievement in pro bono and public service | |||
W.W. George | | Global business experience as former Chairman, President, and Chief Executive Officer at Medtronic | ||
| Leadership position as Professor of Management Practice at Harvard University | |||
| Financial expertise | |||
| Academic experience at Harvard Business School and at Yale School of Management | |||
| Board experience as a Director of Goldman Sachs and as a former Director of Novartis, and Medtronic and Target (both prior to 2009) | |||
| Affiliation with a leading medical institution as Trustee of the Mayo Clinic | |||
| Authorship of books and articles on leadership and corporate governance | |||
S.J. Palmisano | | Global business experience as former Chairman, President, and Chief Executive Officer of IBM | ||
| Board experience as a Director of American Express and former Director of IBM | |||
| Affiliation with leading business and public policy associations (the Business Roundtable and the Executive Committee of the Council on Competitiveness) | |||
| Awarded honorary fellowship from the London Business School |
7
S.S Reinemund | | Global business experience as former Chairman, President, and Chief Executive Officer of PepsiCo | ||
| Leadership position as Dean of Business at Wake Forest University | |||
| Academic experience as Professor of Leadership and Strategy at Wake Forest University | |||
| Board experience as a Director of American Express, Marriott, and Walmart, and as a former Director of Johnson & Johnson and PepsiCo (both prior to 2009) | |||
| Affiliation with leading charitable and business associations (United States Naval Academy Foundation, National Minority Supplier Development Council, and National Advisory Board of the Salvation Army) | |||
R.W. Tillerson | | Global business position as Chairman and Chief Executive Officer of ExxonMobil since January 2006 with demonstrated leadership skills resulting from a career of more than 38 years involving positions of increasing responsibility with the Companys domestic and international business operations | ||
| Affiliation with leading business and public policy associations (the Executive Committee of the American Petroleum Institute, the Center for Strategic and International Studies, the National Petroleum Council, the Business Council, the Business Roundtable, the Business Council for International Understanding, and the Emergency Committee for American Trade) | |||
| Leadership as the Immediate Past President of the Boy Scouts of America, Vice Chairman of the Fords Theatre Society, and a former Director of the United Negro College Fund | |||
W.C. Weldon | | Global business experience as former Chairman and CEO of Johnson & Johnson | ||
| Board experience as a Director of JPMorgan Chase, Chubb, CVS Caremark, and former Chairman of Johnson & Johnson | |||
| Leadership positions as Director of USChina Business Council and Trustee of Quinnipiac University | |||
| Affiliation with leading business associations (past Vice Chairman of the Business Council, the Business Roundtable, past Chairman of the CEO Roundtable on Cancer, Healthcare Leadership Council, and past Chairman of Pharmaceutical Research and Manufacturers of America) |
Director Independence
Our Corporate Governance Guidelines require that a substantial majority of the Board consist of independent directors. In general, the Guidelines require that an independent director must have no material relationship with ExxonMobil, directly or indirectly, except as a director. The Board determines independence on the basis of the standards specified by the New York Stock Exchange (NYSE), the additional standards referenced in our Corporate Governance Guidelines, and other facts and circumstances the Board considers relevant.
Under ExxonMobils Corporate Governance Guidelines, a director will not be independent if a reportable related person transaction exists with respect to that director or a member of the directors family for the current or most recently completed fiscal year. See the Guidelines for Review of Related Person Transactions posted on the Corporate Governance section of our website and described in more detail under Related Person Transactions and Procedures on pages 15 to 16.
The Board has reviewed relevant relationships between ExxonMobil and each non-employee director and director nominee to determine compliance with the NYSE standards and ExxonMobils additional standards. The Board has also evaluated whether there are any other facts or circumstances that might impair a directors independence. Based on that review, the Board has determined that all ExxonMobil non-employee directors and nominees are independent. The Board has also determined that each member of the Audit, Board Affairs, Compensation, and Public Issues and Contributions Committees (see membership table on page 9) is independent.
8
In recommending that each director and nominee be found independent, the Board Affairs Committee reviewed the following transactions, relationships, or arrangements. All matters described below fall within the NYSE and ExxonMobil independence standards.
Name | Matters Considered | |
P. Brabeck-Letmathe | Ordinary course business with Nestlé (purchases of food and nutrition products; purchases of Nestlé commercial paper; sales of fuels and plastic film) | |
U.M. Burns | Ordinary course business with Xerox (purchases of business process, IT; and document and benefit plan services) | |
J.S. Fishman | Ordinary course business with Travelers (purchases of insurance products; sales of ExxonMobil commercial paper) | |
K.C. Frazier | Ordinary course business with Merck (purchases of pharmaceuticals; sales of chemicals and oils) |
Board Meetings and Committees; Annual Meeting Attendance
The Board met 11 times in 2013. ExxonMobils incumbent directors, on average, attended approximately 95 percent of Board and committee meetings during 2013. No director attended less than 75 percent of such meetings except for Mr. Weldon, who first joined the Board in May 2013. ExxonMobils non-employee directors held four executive sessions in 2013.
As specified in our Corporate Governance Guidelines, it is ExxonMobils policy that directors should make every effort to attend the annual meeting of shareholders. All incumbent directors attended last years meeting except Mr. George, who was unable to attend due to a family commitment.
The Board appoints committees to help carry out its duties. Board committees work on key issues in greater detail than would be possible at full Board meetings. Only non-employee directors may serve on the Audit, Compensation, Board Affairs, and Public Issues and Contributions Committees. Each committee has a written charter. The charters are posted on the Corporate Governance section of our website at exxonmobil.com/governance.
The table below shows the current membership of each Board committee and the number of meetings each committee held in 2013.
Director | Audit | Compensation |
Board Affairs |
Finance | Public Issues and Contributions |
Executive(1) | ||||||
M.J. Boskin |
C | | | |||||||||
P. Brabeck-Letmathe |
| | ||||||||||
U.M. Burns |
| | ||||||||||
L.R. Faulkner |
| | ||||||||||
J.S. Fishman |
| | ||||||||||
H.H. Fore |
| | ||||||||||
K.C. Frazier |
C | | ||||||||||
W.W. George |
| | | |||||||||
S.J. Palmisano |
C | | | |||||||||
S.S Reinemund |
| | | |||||||||
R.W. Tillerson |
C | C | ||||||||||
W.C. Weldon |
| | ||||||||||
E.E. Whitacre, Jr. |
| C | ||||||||||
2013 Meetings |
11 | 7 | 7 | 2 | 4 | 0 |
C = Chair = Member (1) Other directors serve as alternate members on a rotational basis.
9
Below is additional information about each Board committee.
Board Affairs Committee
The Board Affairs Committee serves as ExxonMobils nominating and corporate governance committee. The Committee recommends director candidates, reviews non-employee director compensation, and reviews other corporate governance practices, including the Corporate Governance Guidelines. The Committee also reviews any issue involving an executive officer or director under ExxonMobils Code of Ethics and Business Conduct and administers ExxonMobils Related Person Transaction Guidelines.
The Committee has adopted Guidelines for the Selection of Non-Employee Directors that describe the qualifications the Committee looks for in director candidates. These Selection Guidelines, as well as the Committees charter, are posted on the Corporate Governance section of our website, and are described in more detail below and in the section titled Director Qualifications on pages 5 to 8.
A substantial majority of the Board must meet the independence standards described in the Corporate Governance Guidelines, and all candidates must be free from any relationship with management or the Corporation that would interfere with the exercise of independent judgment. Candidates should be committed to representing the interests of all shareholders and not any particular constituency. The Board must include members with the particular experience required for service on key Board committees, as described in the committee charters.
The Guidelines for the Selection of Non-Employee Directors state:
ExxonMobil recognizes the strength and effectiveness of the Board reflects the balance, experience, and diversity of the individual directors; their commitment; and importantly, the ability of directors to work effectively as a group in carrying out their responsibilities. ExxonMobil seeks candidates with diverse backgrounds who possess knowledge and skills in areas of importance to the Corporation.
In addition to seeking a diverse set of business or academic experiences, the Committee seeks a mix of nominees whose perspectives reflect diverse life experiences and backgrounds, as well as gender and ethnic diversity. The Committee does not use quotas but considers diversity along with the other requirements of the Selection Guidelines when evaluating potential new directors. The Committee has also instructed its executive search firm to include diversity as part of the candidate search criteria.
The Committee identifies director candidates primarily through recommendations made by the non-employee directors. These recommendations are developed based on the directors own knowledge and experience in a variety of fields, and research conducted by ExxonMobil staff at the Committees direction. The Committee has also engaged an executive search firm to help the Committee identify new director candidates. The firm identifies potential director candidates for the Committee to consider and helps research candidates identified by the Committee. Additionally, the Committee considers recommendations made by employee directors, shareholders, and others. All recommendations, regardless of the source, are evaluated on the same basis against the criteria contained in the Selection Guidelines.
Shareholders may send recommendations for director candidates to the Secretary at the address given under Contact Information on page 3. A submission recommending a candidate should include:
| Sufficient biographical information to allow the Committee to evaluate the candidate in light of the Selection Guidelines; |
| Information concerning any relationship between the candidate and the shareholder recommending the candidate; and |
| Material indicating the willingness of the candidate to serve if nominated and elected. |
10
The procedures by which shareholders may recommend nominees have not changed materially since last years proxy statement.
The Committee also administers provisions of the Corporate Governance Guidelines that require a director to tender a resignation when there is a substantial change in the directors circumstances. The Committee reviews the relevant facts to determine whether the directors continued service would be appropriate and makes a recommendation to the Board.
Another responsibility of the Committee is to review and make recommendations to the Board regarding the compensation of the non-employee directors. The Committee uses an independent consultant, Pearl Meyer & Partners, to provide information on current developments and practices in director compensation. Pearl Meyer & Partners is the same consultant retained by the Compensation Committee to advise on executive compensation, but performs no other work for ExxonMobil.
Audit Committee
The Audit Committee oversees accounting and internal control matters. Its responsibilities include oversight of:
| Managements conduct of the Corporations financial reporting process; |
| The integrity of the financial statements and other financial information provided by the Corporation to the SEC and the public; |
| The Corporations system of internal accounting and financial controls; |
| The Corporations compliance with legal and regulatory requirements; |
| The performance of the Corporations internal audit function; |
| The independent auditors qualifications, performance, and independence; and |
| The annual independent audit of the Corporations financial statements. |
The Committee has direct authority and responsibility to appoint (subject to shareholder ratification), compensate, retain, and oversee the independent auditors.
The Committee also prepares the report that SEC rules require be included in the Corporations annual proxy statement. This report is on page 59.
The Audit Committee has adopted specific policies and procedures for pre-approving fees paid to the independent auditors. Under the Audit Committees approach, an annual program of work is approved each October for the following categories of services: Audit, Audit-Related, and Tax. Additional engagements may be brought forward from time to time for pre-approval by the Audit Committee. Pre-approvals apply to engagements within a category of service, and cannot be transferred between categories. If fees might otherwise exceed pre-approved amounts for any category of permissible services, the incremental amounts must be reviewed and pre-approved prior to commitment. The complete text of the Audit Committees pre-approval policies and procedures is posted on the Corporate Governance section of ExxonMobils website.
The Board has determined that all members of the Committee are financially literate within the meaning of the NYSE standards, and that Dr. Boskin, Mr. Brabeck-Letmathe, Ms. Burns, Dr. Faulkner, and Mr. George are audit committee financial experts as defined in the SEC rules.
Compensation Committee
The Compensation Committee oversees compensation for ExxonMobils senior executives, including salary, bonus, and incentive awards. They also oversee succession planning for key executive positions. The Committees charter is available on the Corporate Governance section of our website.
During 2013, the Committee established the ceiling for the 2013 short term and long term incentive award programs, approved the salary program for 2014, reviewed the individual performance and contributions of each senior executive including the CEO, granted individual incentive awards and set salaries for the senior executives, and reviewed progress on executive development and succession planning for senior positions.
11
The Compensation Committees report is on page 23.
The Committee does not delegate its responsibilities with respect to ExxonMobils executive officers and other senior executives (currently 25 positions). For other employees, the Committee delegates authority to determine individual salaries and incentive awards to a committee consisting of the Chairman and the Senior Vice Presidents of the Corporation. That committees actions are subject to a salary budget and aggregate annual ceilings on cash and equity incentive awards established by the Compensation Committee.
The Committee utilizes the expertise of an external independent consultant, Pearl Meyer & Partners. The Committee is solely and directly responsible for the appointment, compensation and oversight of the consultant. The Committee considers factors that could affect Pearl Meyer & Partners independence, including that the consultant provides no other services for ExxonMobil other than its engagement by the Committee and the Board Affairs Committee as described below. Based on this review, the Committee has determined the consultants work for the Committee to be free from conflicts of interest.
At the direction of the Committee, the consultant provides the following services:
| Attends Compensation Committee meetings; |
| Informs the Compensation Committee regarding general trends in executive compensation across industries, particularly trends that reflect a change in compensation practices, and prepares the analysis of comparator company compensation used by the Compensation Committee; and |
| Participates in the Committees deliberations regarding compensation for Named Executive Officers that include items such as: |
| Whether changes in trends in compensation practices are relevant to ExxonMobils compensation programs, as well as a perspective on the structure and competitive standing of ExxonMobils compensation program for senior executives; |
| Whether the ExxonMobil compensation strategy continues to support the business model, including how the Committee should emphasize or weigh one compensation element versus another to address the long-term nature of the business and long investment lead times of the Companys capital program; |
| How the compensation strategy impacts executive succession planning; |
| The interpretation of issues involving executive compensation raised by shareholders and the appropriate responses from management; |
| How to determine the appropriate level of compensation and each compensation element for the Named Executive Officers considering similar positions across industries, their career experience, and length of experience in their positions, as well as general performance of the Company within the industry; and |
| Input on the pace at which compensation levels should be adjusted over future years and how to weigh or consider the impact of a compensation change today on future retirement income. |
The independent consultants input is given serious consideration as part of the Committees decision-making process but is not assigned a weight versus the other matters considered by the Committee as described in the Compensation Discussion and Analysis beginning on page 24.
In addition, at the direction of the Chair of the Board Affairs Committee, Pearl Meyer & Partners provides an annual survey of non-employee director compensation for use by that Committee.
The Compensation Committee meets with ExxonMobils CEO and other senior executives during the year to review the Corporations business results and progress on strategic plans. The Committee uses this input to help determine the aggregate annual ceilings to be set for the Corporations cash and stock-based incentive award programs. The CEO also provides input to the Committee regarding performance assessments for ExxonMobils other senior executives and makes recommendations to the Committee with respect to salary and incentive awards for these executives and succession planning for senior positions. The CEO does not, however, participate in or provide input on decisions regarding his own compensation.
12
The Committee uses tally sheets to assess total compensation for the Corporations senior executives. The tally sheets value all elements of cash compensation; incentive awards, including stock-based grants; the annual change in pension value; and other benefits and perquisites. The tally sheets also display the value of outstanding stock-based awards and lump sum pension estimates.
Additional information on tally sheets and other analytical tools used by the Committee to facilitate compensation decisions is on page 41.
The Compensation Committee determines whether ExxonMobils compensation program could result in inappropriate risk taking. The assessment process includes examining each element of the Companys compensation policies and practices to determine whether they encourage or reward excessive risk taking. Based on its assessment, the Committee does not believe that ExxonMobils compensation policies and practices create any material adverse risks for the Company.
The key design features of our compensation program that discourage inappropriate risk taking are summarized below. These elements are also described in more detail in the Compensation Discussion and Analysis section of this proxy statement.
| Allocation of Compensation Elements |
The objective of the Compensation Committee is to grant more than 50 percent of compensation in the form of equity awards and 10 to 20 percent as an annual bonus. Salary comprises 10 percent or less of the total compensation. The allocation of these compensation elements for the Named Executive Officers for 2013 is shown on page 44. In the judgment of the Committee, this mix of short and long term incentives strikes an appropriate balance in aligning the interests of senior executives with the business priorities of the Company and sustainable growth in long-term shareholder value.
| Equity Awards |
Long Holding Periods. As noted above, senior executives are granted a substantial portion of annual compensation in the form of restricted stock or restricted stock units. These equity awards are restricted from sale for extended periods of time. Specifically, half of the annual equity award is restricted for 10 years from grant date or until retirement, whichever is later. The other half is restricted for five years.
Risk of Forfeiture. During these long holding periods, the equity award is at risk of forfeiture for resignation or detrimental activity. The long vesting periods on equity awards and the risk of forfeiture together support an appropriate risk/reward profile that reinforces the long-term orientation expected of senior executives.
| Annual Bonus |
Delayed Payout. Payout of half of the annual bonus is delayed. This is a unique feature of our compensation program relative to many comparator companies and further discourages inappropriate risk taking; the timing of the delayed payout is determined by earnings performance.
Risk of Forfeiture. Similar to equity awards, the delayed portion of the bonus is subject to risk of forfeiture for resignation or detrimental activity.
Recoupment. The entire annual bonus is subject to recoupment (claw-back) in the event of material negative restatement of the Corporations reported financial or operating results. The recoupment provision reinforces the importance of the Companys financial controls and compliance programs.
| No Contracts |
The CEO and the other Named Executive Officers do not have employment contracts, severance agreements, or change-in-control arrangements with the Company. The Committee believes that inappropriate risk taking is discouraged by the fact that senior executives are at-will employees of the Company.
| Common Programs |
All of ExxonMobils U.S. executives (more than 1,000), including the Named Executive Officers, are eligible for the same salary, incentive, and retirement programs, which are reviewed by the Compensation Committee. We do not have special programs specifically for the CEO or other Named Executive Officers. Inappropriate
13
risk taking is discouraged at all levels of the Company through similar compensation design features and allocation of awards.
For more information on the Committees approach to executive compensation and the decisions made by the Committee for 2013, refer to the Compensation Discussion and Analysis beginning on page 24.
Finance Committee
The Finance Committee reviews ExxonMobils financial policies and strategies, including our capital structure, dividends, and share purchase program. The Committee authorizes the issuance of corporate debt subject to limits set by the Board. The Committees charter is available on the Corporate Governance section of our website.
Public Issues and Contributions Committee
The Public Issues and Contributions Committee reviews the effectiveness of the Corporations policies, programs, and practices with respect to safety, security, health, the environment, and social issues. The Committee hears reports from operating units on safety and environmental activities, and also visits operating sites to observe and comment on current operating practices. In addition, the Committee reviews the level of ExxonMobils support for education and other public service programs, including the Companys contributions to the ExxonMobil Foundation. The Foundation works to improve the quality of education in the United States at all levels, with special emphasis on math and science. The Foundation also supports the Companys other cultural and public service giving. The Committees charter is available on the Corporate Governance section of our website.
Executive Committee
The Executive Committee has broad power to act on behalf of the Board. In practice, the Committee meets only when it is impractical to call a meeting of the full Board.
Shareholder Communications
The Board Affairs Committee has approved and implemented procedures for shareholders and other interested persons to send written or electronic communications to individual directors, including the Presiding Director, Board committees, or the non-employee directors as a group.
| Written Communications: Written correspondence should be addressed to the director or directors in care of the Secretary at the address given under Contact Information on page 3. |
| Electronic Communications: You may send e-mail to individual non-employee directors, Board committees, or the non-employee directors as a group by using the form provided for that purpose on our website at exxonmobil.com/directors. |
Additional instructions and procedures for communicating with the directors are posted on the Corporate Governance section of our website at exxonmobil.com/proceduresdircom.
Code of Ethics and Business Conduct
The Board maintains policies and procedures (which we refer to in this proxy statement as the Code) that represent both the code of ethics for the principal executive officer, principal financial officer, and principal accounting officer under SEC rules, and the code of business conduct and ethics for directors, officers, and employees under NYSE listing standards. The Code applies to all directors, officers, and employees. The Code includes a Conflicts of Interest Policy under which directors, officers, and employees are expected to avoid any actual or apparent conflict between their own personal interests and the interests of the Corporation.
The Code is posted on the ExxonMobil website at exxonmobil.com/code. The Code is also included as an exhibit to our Annual Report on Form 10-K. Any amendment of the Code will be posted promptly on our website.
14
The Corporation maintains procedures for administering and reviewing potential issues under the Code, including procedures that allow employees to make complaints without identifying themselves. The Corporation also conducts periodic mandatory business practice training sessions, and requires regular employees and non-employee directors to make annual compliance certifications.
The Board Affairs Committee will initially review any suspected violation of the Code involving an executive officer or director and will report its findings to the Board. The Board does not envision that any waiver of the Code will be granted. Should such a waiver occur, it will be promptly disclosed on our website.
Related Person Transactions and Procedures
In accordance with SEC rules, ExxonMobil maintains Guidelines for Review of Related Person Transactions. These Guidelines are available on the Corporate Governance section of our website.
In accordance with the Related Person Transaction Guidelines, all executive officers, directors, and director nominees are required to identify, to the best of their knowledge after reasonable inquiry, business and financial affiliations involving themselves or their immediate family members that could reasonably be expected to give rise to a reportable related person transaction. Covered persons must also advise the Secretary of the Corporation promptly of any change in the information provided, and will be asked periodically to review and reaffirm their information.
For the above purposes, immediate family member includes a persons spouse, parents, siblings, children, in-laws, and step-relatives.
Based on this information, we review the Companys own records and make follow-up inquiries as may be necessary to identify potentially reportable transactions. A report summarizing such transactions and including a reasonable level of detail is then provided to the Board Affairs Committee. The Committee oversees the Related Person Transaction Guidelines generally and reviews specific items to assess materiality.
In assessing materiality for this purpose, information will be considered material if, in light of all circumstances, there is a substantial likelihood a reasonable investor would consider the information important in deciding whether to buy or sell ExxonMobil stock or in deciding how to vote shares of ExxonMobil stock. A director will abstain from the decision on any transactions involving that director or his or her immediate family members.
Under SEC rules, certain transactions are deemed not to involve a material interest (including transactions in which the amount involved in any 12-month period is less than $120,000 and transactions with entities where a related persons interest is limited to service as a non-employee director). In addition, based on a consideration of ExxonMobils facts and circumstances, the Committee will presume that the following transactions do not involve a material interest for purposes of reporting under SEC rules:
| Transactions in the ordinary course of business with an entity for which a related person serves as an executive officer, provided: (1) the affected director or executive officer did not participate in the decision on the part of ExxonMobil to enter into such transactions; and (2) the amount involved in any related category of transactions in a 12-month period is less than 1 percent of the entitys gross revenues. |
| Grants or membership payments in the ordinary course of business to non-profit organizations, provided: (1) the affected director or executive officer did not participate in the decision on the part of ExxonMobil to make such payments; and (2) the amount of general purpose grants in a 12-month period is less than 1 percent of the recipients gross revenues. |
| Payments under ExxonMobil plans and arrangements that are available generally to U.S. salaried employees (including contributions under the ExxonMobil Foundations Educational and Cultural Matching Gift Programs and payments to providers under ExxonMobil health care plans). |
| Employment by ExxonMobil of a family member of an executive officer, provided the executive officer does not participate in decisions regarding the hiring, performance evaluation, or compensation of the family member. |
15
Transactions or relationships not covered by the above standards will be assessed by the Committee on the basis of the specific facts and circumstances.
The following disclosures are made as of February 26, 2014, the date of the most recent Board Affairs Committee review of potential related person transactions.
ExxonMobil and its affiliates have about 75,000 regular employees around the world and employees related by birth or marriage may be found at all levels of the organization. ExxonMobil employees do not receive preferential treatment by reason of being related to an executive officer, and executive officers do not participate in hiring, performance evaluation, or compensation decisions for family members. ExxonMobils employment guidelines state, Relatives of Company employees may be employed on a non-preferential basis. However, an employee should not be employed by or assigned to work under the direct supervision of a relative, or to report to a supervisor who in turn reports to a relative of the employee.
M.W. Albers (Senior Vice President) has a daughter employed by ExxonMobil Development Company, and R.N. Schleckser (Vice President and Treasurer) has a brother employed by ExxonMobil Refining & Supply Company. In each case, the total value of the family members annual compensation (including benefits) exceeds the SEC threshold for disclosure. However, consistent with ExxonMobils Related Person Transaction Guidelines, we do not consider either of the relationships noted above to be material within the meaning of the related person transaction disclosure rules.
The Board Affairs Committee also reviewed ExxonMobils ordinary course business with companies for which non-employee directors or their immediate family members serve as executive officers. The Committee determined that, in accordance with the categorical standards described above, none of those matters represent reportable related person transactions. See Director Independence on page 8.
The Committee also determined that no related person transactions occurred during the year involving any of the investors who have reported ownership of 5 percent or more of ExxonMobils outstanding common stock. See Certain Beneficial Owners on page 22.
We are not aware of any related person transactions required to be reported under applicable SEC rules since the beginning of the last fiscal year where our policies and procedures did not require review, or where such policies and procedures were not followed.
The Corporations Related Person Transaction Guidelines are intended to assist the Corporation in complying with its disclosure obligations under SEC rules. These procedures are in addition to, not in lieu of, the Corporations Code of Ethics and Business Conduct.
16
ITEM 1 ELECTION OF DIRECTORS
The Board of Directors has nominated the director candidates named on the following pages. Personal information on each of our nominees, including public company directorships during the past five years, is provided. All of our nominees currently serve as ExxonMobil directors.
All director nominees have stated they are willing to serve if elected. If a nominee becomes unavailable before the election, your proxy authorizes the people named as proxies to vote for a replacement nominee if the Board names one. Alternatively, the Board may reduce its size to equal the number of remaining nominees.
The Board recommends you vote FOR each of the following candidates:
| ||
Michael J. Boskin
Age 68 Director since 1996 |
Principal Occupation: T.M. Friedman Professor of Economics and Senior Fellow, Hoover Institution, Stanford University
Business Experience: Dr. Boskin is also a Research Associate, National Bureau of Economic Research. He is Chief Executive Officer and President of Boskin & Co., an economic consulting company.
Current Public Company Directorships: Oracle (April 1994Present)
Past Public Company Directorships: Shinsei Bank (March 2000June 2009) | |
| ||
Peter Brabeck-Letmathe
Age 69 Director since 2010 |
Principal Occupation: Chairman of the Board, Nestlé
Business Experience: Mr. Brabeck-Letmathe was elected Chairman of Nestlé in 2005, and Chief Executive Officer in 1997, and relinquished the role of CEO in 2008. He also served as Vice Chairman, Executive Vice President, and Senior Vice President of Nestlé.
Current Public Company Directorships: Nestlé (June 1997Present); Credit Suisse Group (May 1997Present); LOréal (June 1997Present)
Past Public Company Directorships: Roche Holding (April 2000March 2010) | |
| ||
Ursula M. Burns
Age 55 Director since 2012 |
Principal Occupation: Chairman of the Board and Chief Executive Officer, Xerox Corporation
Business Experience: Ms. Burns was elected Chairman of Xerox in 2010, Chief Executive Officer in 2009, and President in 2007. She also served as Senior Vice President, Corporate Strategic Services; and Senior Vice President and President, Document Systems and Solutions Group, and Business Group Operations, at Xerox.
Current Public Company Directorships: Xerox (April 2007Present); American Express (January 2004Present)
Past Public Company Directorships: Boston Scientific (May 2002May 2009) | |
|
17
| ||
Larry R. Faulkner
Age 69 Director since 2008 |
Principal Occupation: President Emeritus, The University of Texas at Austin
Business Experience: Dr. Faulkner served as President of Houston Endowment from 2006 to 2012 and as President of The University of Texas at Austin from 1998 to 2006. He served on the chemistry faculties of The University of Texas, the University of Illinois, and Harvard University. At the University of Illinois, he also held a number of positions in academic administration including Provost and Vice Chancellor for Academic Affairs.
Current Public Company Directorships: None
Past Public Company Directorships: Guaranty Financial Group (December 2007August 2009); Temple-Inland (August 2005February 2012) | |
| ||
Jay S. Fishman
Age 61 Director since 2010 Presiding Director since 2013 |
Principal Occupation: Chairman of the Board and Chief Executive Officer, The Travelers Companies
Business Experience: Mr. Fishman was elected Chairman of The Travelers Companies in 2005, and Chief Executive Officer in 2004 upon the merger of The St. Paul Companies and Travelers Property Casualty Corporation. From 2001 to 2004, he was Chairman, Chief Executive Officer, and President of The St. Paul Companies.
Current Public Company Directorships: Travelers (October 2001Present); The Carlyle Group (May 2012Present)
Past Public Company Directorships: None | |
| ||
Henrietta H. Fore
Age 65 Director since 2012 |
Principal Occupation: Chairman of the Board and Chief Executive Officer, Holsman International
Business Experience: Ms. Fore has served as Chairman and Chief Executive Officer of Holsman International since 2009. She served as the Administrator of the U.S. Agency for International Development and Director of U.S. Foreign Assistance from 2007 to 2009. She also served as Under Secretary of State for Management, the Chief Operating Officer for the Department of State, from 2005 to 2007.
Current Public Company Directorships: Theravance (October 2010Present)
Past Public Company Directorships: None | |
|
18
| ||
Kenneth C. Frazier
Age 59 Director since 2009 |
Principal Occupation: Chairman of the Board, President, and Chief Executive Officer, Merck & Co.
Business Experience: Mr. Frazier was elected Chairman and Chief Executive Officer of Merck in 2011, and President in 2010. He was elected Executive Vice President and President, Global Human Health, at Merck in 2007; and Executive Vice President and General Counsel in 2006. He served as Senior Vice President and General Counsel at Merck from 1999 to 2006.
Current Public Company Directorships: Merck (January 2011Present)
Past Public Company Directorships: None | |
| ||
William W. George
Age 71 Director since 2005 |
Principal Occupation: Professor of Management Practice, Harvard University
Business Experience: Mr. George was elected Chairman of Medtronic in 1996, and retired in 2002; Chief Executive Officer in 1991; and President and Chief Operating Officer in 1989.
Current Public Company Directorships: Goldman Sachs (December 2002Present)
Past Public Company Directorships: Novartis (May 1999February 2009) | |
| ||
Samuel J. Palmisano
Age 62 Director since 2006 |
Principal Occupation: Former Chairman of the Board, IBM
Business Experience: Mr. Palmisano was elected Chairman, President, and Chief Executive Officer of IBM in 2003; and relinquished the roles of President and CEO in January 2012 and Chairman in September 2012. Mr. Palmisano also served as President, Senior Vice President, and Group Executive for IBMs Enterprise Systems Group, IBM Global Services, and IBMs Personal Systems Group.
Current Public Company Directorships: American Express (March 2013Present)
Past Public Company Directorships: IBM (July 2000September 2012) | |
|
19
| ||
Steven S Reinemund
Age 66 Director since 2007 |
Principal Occupation: Dean of Business, Wake Forest University
Business Experience: Mr. Reinemund served as Executive Chairman of the Board of PepsiCo from 2006 to 2007, and retired in 2007; was elected Chief Executive Officer and Chairman of the Board in 2001; President and Chief Operating Officer in 1999; and Director in 1996. He was also elected President and CEO of Frito-Lay in 1992 and Pizza Hut in 1986.
Current Public Company Directorships: American Express (April 2007Present); Marriott (April 2007Present); Walmart (June 2010Present)
Past Public Company Directorships: None | |
| ||
Rex W. Tillerson
Age 62 Chairman and CEO since 2006 Director since 2004 |
Principal Occupation: Chairman of the Board and Chief Executive Officer, Exxon Mobil Corporation
Business Experience: Mr. Tillerson was elected Chairman and Chief Executive Officer of ExxonMobil in 2006; President and Director in 2004; and Senior Vice President in 2001. Mr. Tillerson has held a variety of management positions in domestic and foreign operations since joining the Exxon organization in 1975, including President, Exxon Yemen Inc. and Esso Exploration and Production Khorat Inc.; Vice President, Exxon Ventures (CIS) Inc.; President, Exxon Neftegas Limited; and Executive Vice President, ExxonMobil Development Company.
Current Public Company Directorships: None
Past Public Company Directorships: None | |
| ||
William C. Weldon
Age 65 Director since 2013 |
Principal Occupation: Former Chairman of the Board, Johnson & Johnson
Business Experience: Mr. Weldon was elected Chairman and Chief Executive Officer of Johnson & Johnson in 2002; and relinquished the roles of CEO in April 2012 and Chairman in December 2012. He also served as Vice Chairman from 2001 to 2002 and as Worldwide Chairman, Pharmaceuticals Group, from 1998 to 2001.
Current Public Company Directorships: Chubb (May 2013Present); CVS Caremark (March 2013Present); JPMorgan Chase (March 2005Present)
Past Public Company Directorships: Johnson & Johnson (February 2001December 2012) | |
|
Director compensation elements are designed to:
| Ensure alignment with long-term shareholder interests; |
| Ensure the Company can attract and retain outstanding director candidates who meet the selection criteria outlined in the Guidelines for Selection of Non-Employee Directors, which can be found on the Corporate Governance section of our website; |
20
| Recognize the substantial time commitments necessary to oversee the affairs of the Corporation; and |
| Support the independence of thought and action expected of directors. |
Non-employee director compensation levels are reviewed by the Board Affairs Committee each year, and resulting recommendations are presented to the full Board for approval. The Committee uses an independent consultant, Pearl Meyer & Partners, to provide information on current developments and practices in director compensation. Pearl Meyer & Partners is the same consultant retained by the Compensation Committee to advise on executive compensation, but performs no other work for ExxonMobil.
ExxonMobil employees receive no additional pay for serving as directors.
Non-employee directors receive compensation consisting of cash and equity in the form of restricted stock. Non-employee directors are also reimbursed for reasonable expenses incurred to attend Board meetings or other functions relating to their responsibilities as a director of Exxon Mobil Corporation.
The annual cash retainer for non-employee directors in 2013 was $110,000 per year. Chairs of the Audit and Compensation Committees and the Presiding Director receive an additional $10,000 per year.
A significant portion of director compensation is paid in restricted stock to align director compensation with the long-term interests of shareholders. The annual restricted stock award grant for incumbent non-employee directors is 2,500 shares. A new non-employee director receives a one-time grant of 8,000 shares of restricted stock upon first being elected to the Board.
While on the Board, the non-employee director receives the same cash dividends on restricted shares as a holder of regular common stock, but the non-employee director is not allowed to sell the shares. The restricted shares may be forfeited if the non-employee director leaves the Board early, i.e., before the retirement age of 72, as specified for non-employee directors.
Current and former non-employee directors of Exxon Mobil Corporation are eligible to participate in the ExxonMobil Foundations Educational and Cultural Matching Gift Programs under the same terms as the Corporations U.S. employees.
Director Compensation for 2013
Name |
Fees or Paid ($) |
Stock Awards ($)(a) |
Option ($) |
Non-Equity ($) |
Change in Nonqualified ($) |
Other Compensation ($)(b) |
Total ($) |
|||||||||||||||||||||
M.J. Boskin |
120,000 | 219,938 | 0 | 0 | 0 | 380 | 340,318 | |||||||||||||||||||||
P. Brabeck-Letmathe |
110,000 | 219,938 | 0 | 0 | 0 | 380 | 330,318 | |||||||||||||||||||||
U.M. Burns |
110,000 | 219,938 | 0 | 0 | 0 | 380 | 330,318 | |||||||||||||||||||||
L.R. Faulkner |
110,000 | 219,938 | 0 | 0 | 0 | 380 | 330,318 | |||||||||||||||||||||
J.S. Fishman |
115,879 | 219,938 | 0 | 0 | 0 | 380 | 336,197 | |||||||||||||||||||||
H.H. Fore |
110,000 | 219,938 | 0 | 0 | 0 | 380 | 330,318 | |||||||||||||||||||||
K.C. Frazier |
110,000 | 219,938 | 0 | 0 | 0 | 380 | 330,318 | |||||||||||||||||||||
W.W. George |
114,121 | 219,938 | 0 | 0 | 0 | 380 | 334,439 | |||||||||||||||||||||
S.J. Palmisano |
120,000 | 219,938 | 0 | 0 | 0 | 380 | 340,318 | |||||||||||||||||||||
S.S Reinemund |
110,000 | 219,938 | 0 | 0 | 0 | 380 | 330,318 | |||||||||||||||||||||
W.C. Weldon |
64,973 | 736,040 | 0 | 0 | 0 | 252 | 801,265 | |||||||||||||||||||||
E.E. Whitacre, Jr. |
110,000 | 219,938 | 0 | 0 | 0 | 380 | 330,318 |
21
(a) | In accordance with SEC rules, the valuation of stock awards in this table represents fair value on the date of grant. Dividends on stock awards are not shown in the table because those amounts are factored into the grant date fair value. |
Each director (other than Mr. Weldon, who joined the Board in May 2013) received an annual grant of 2,500 restricted shares in January 2013. The valuation of these awards is based on a market price of $87.975 on the date of grant.
Mr. Weldon received a one-time grant of 8,000 restricted shares upon being first elected to the Board in May 2013. The valuation of this award is based on the market price of $92.005 on the date of the grant.
At year-end 2013, the aggregate number of restricted shares held by each director was as follows:
Name |
Restricted Shares (#) |
|||
M.J. Boskin |
59,300 | |||
P. Brabeck-Letmathe |
15,500 | |||
U.M. Burns |
10,500 | |||
L.R. Faulkner |
20,500 | |||
J.S. Fishman |
15,500 | |||
H.H. Fore |
10,500 | |||
K.C. Frazier |
18,000 | |||
W.W. George |
31,000 | |||
S.J. Palmisano |
27,000 | |||
S.S Reinemund |
23,000 | |||
W.C. Weldon |
8,000 | |||
E.E. Whitacre, Jr. |
20,500 |
(b) | The amount shown for each director is the cost of travel accident insurance covering death, dismemberment, or loss of sight, speech, or hearing under a policy purchased by the Corporation with a maximum benefit of $500,000 per individual. |
The non-employee directors are not entitled to any additional payments or benefits as a result of leaving the Board or death except as described above. The non-employee directors are not entitled to any payments or benefits resulting from a change in control of the Corporation.
Based on our review of ownership reports filed with the SEC, the firms listed below are the only beneficial owners of more than 5 percent of ExxonMobils outstanding common stock as of December 31, 2013.
Name and Address of Beneficial Owner |
Shares Owned |
Percent of Class |
||||||
BlackRock Inc. 40 East 52nd Street New York, NY 10022 |
234,790,167 | 5.4 | % | |||||
The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 |
228,548,880 | 5.2 | % |
DIRECTOR AND EXECUTIVE OFFICER STOCK OWNERSHIP
These tables show the number of ExxonMobil common shares each executive named in the Summary Compensation Table on page 48 and each non-employee director or director nominee owned on February 28, 2014. In these tables, ownership means the right to direct the voting or the sale of shares, even if those rights are shared with someone else. None of these individuals owns more than 0.05 percent of the outstanding shares.
22
Named Executive Officer | Shares Owned(1) | Shares Covered by Exercisable Options |
||||||
R.W. Tillerson |
1,902,580 | 0 | ||||||
M.W. Albers |
509,340 | (2) | 0 | |||||
M.J. Dolan |
593,658 | (3) | 0 | |||||
A.P. Swiger |
527,958 | 0 | ||||||
S.D. Pryor |
1,077,932 | (4) | 0 |
(1) | Does not include unvested restricted stock units, which do not carry voting rights prior to the issuance of shares on settlement of the awards. |
(2) | Includes 15 shares owned by dependent child and 166 shares owned by spouse in family trust. |
(3) | Includes 95,746 shares jointly owned with spouse. |
(4) | Includes ownership by spouse of 23,022 shares and 114,000 shares held in family limited partnership. |
Non-Employee Director/Nominee | Shares Owned | |||
M.J. Boskin |
61,800 | |||
P. Brabeck-Letmathe |
18,000 | |||
U.M. Burns |
13,206 | |||
L.R. Faulkner |
23,000 | |||
J.S. Fishman |
18,000 | |||
H.H. Fore |
37,500 | |||
K.C. Frazier |
20,500 | |||
W.W. George |
43,500 | (1) | ||
S.J. Palmisano |
29,500 | |||
S.S Reinemund |
36,725 | (2) | ||
W.C. Weldon |
11,513 | |||
E.E. Whitacre, Jr. |
33,000 |
(1) | Includes 10,000 shares held as co-trustee of family foundation. |
(2) | Includes 1,100 shares held in family trust of which spouse is a trustee. |
On February 28, 2014, ExxonMobils incumbent directors and executive officers (31 people) together owned 7,595,588 shares of ExxonMobil stock and zero shares covered by exercisable options, representing about 0.18 percent of the outstanding shares.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities and Exchange Act of 1934 requires our executive officers and directors to file reports of their ownership and changes in ownership of ExxonMobil stock on Forms 3, 4, and 5 with the SEC. We are not aware of any unfiled or late reports for the last year except for two reports for D.W. Woods, Vice President. Due to a good-faith but incorrect interpretation of the Section 16 reporting requirements by Company staff, the Form 3 as initially filed for Mr. Woods omitted two cash-only stock unit awards, and the partial settlement of one such award was not reported timely on Form 4. The omissions were corrected after the errors were discovered.
The Compensation Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis for 2013 with management of the Corporation. Based on that review and discussion, we recommended to the Board that the Compensation Discussion and Analysis be included in the Corporations proxy statement for the 2014 annual meeting of shareholders, and also incorporated by reference in the Corporations Annual Report on Form 10-K for the year ended December 31, 2013.
Samuel J. Palmisano, Chair |
Jay S. Fishman | |
William C. Weldon |
Edward E. Whitacre, Jr. |
23
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Discussion and Analysis (CD&A) and Executive Compensation Tables are organized as follows:
24
Overview
| Reported Compensation: 30-percent reduction in CEO reported compensation (Chart 7, page 30): |
| Reduction in annual bonus |
| Lower pension value |
| Realized Compensation: Ranked 11th in realized compensation among compensation benchmark companies in 2012 and below the compensation benchmark companies median for most of CEOs tenure (Charts 10 and 12, page 31). Realized compensation averaged 44 percent of reported pay over the eight years of CEO tenure (Chart 9, page 30). |
| Stock Holding Requirement: Vesting periods for stock-based compensation far longer than most companies. |
| Holding periods extend beyond retirement date and align with long lead times of business model (Chart 15, page 33); for example, 50 percent of ExxonMobil CEOs 2013 grant does not vest until 2023. |
| Delayed Bonus Payout: Half of the annual bonus is delayed to strengthen alignment with sustainable growth in shareholder value and allow for forfeiture in the event of executive resignation or detrimental activity. |
| No Contracts: No employment agreements, severance arrangements, or change-in-control arrangements. |
| Common Programs: All U.S. executives (more than 1,000, including the CEO), participate in common programs (the same salary, incentive, and retirement programs). |
Preceding the 2013 advisory vote to approve executive compensation, ExxonMobil management held a series of meetings with institutional shareholders and conducted a webcast available to all shareholders to explain the Companys executive compensation programs and answer questions. These questions typically took the form of requests for additional information or clarification. The following summarizes shareholder feedback and describes steps taken in this Overview to address these requests.
Positive shareholder feedback was received on the following:
| Long-Term Orientation: The unique long-term orientation of the overall ExxonMobil compensation program. |
| Alignment with Business Model: Chart that illustrated how the equity program aligns with ExxonMobil capital investment lead times and cash flows (Chart 17, page 34). |
| Forfeiture Risk: Risk of forfeiture and cancellation provisions in equity grants. |
In response to the same question from several shareholders, the Company confirmed that the forfeiture and cancellation provisions of the equity program have been exercised since the program was implemented in 2002.
| Bonus Formula: Expanded disclosure that provided more detail on the formula that connects the size of the annual bonus program to corporate earnings performance. |
In particular, shareholders appreciated the consistent application of this formula over the past 11 years (Chart 14, page 32).
25
| Compensation History Disclosure: Disclosure of seven years of realized pay history, compared to reported pay for the same time period. |
Several shareholders commented that neither realized nor reported pay in isolation provides a complete, accurate picture of the potential payout values of a compensation program, but contrasting both in the same table provided a more informed perspective on the range of potential present values (Chart 9, page 30).
| Continuity of Leadership: Linkage of the compensation programs to a strong program of executive retention, development, and succession planning. |
There was general agreement among shareholders that the long-term orientation of the compensation programs reinforced retention and development objectives, which allows ExxonMobil to achieve continuity of leadership and competitive advantage.
Shareholders requested additional information on the following:
| Equity Program: Further explanation on the Compensation Committees determination that time-vested restricted stock or restricted stock units with long vesting periods are the most effective method for aligning with the fundamentals of the business model and the experience of long-term shareholders. |
In this Overview, we dedicate a section on this subject to provide shareholders a more in-depth understanding of the design of the current stock-based award program and the alternative evaluated by the Committee (pages 33 to 35).
| Realized Pay Benchmark: Disclosure of realized pay for our compensation benchmark companies compared to ExxonMobils CEO. |
In response, we have provided a one-year and a multiyear comparison of realized pay of our compensation benchmark companies versus ExxonMobil; total shareholder return (TSR) over the same period is also included (Charts 10, 11, and 12, page 31).
| Vesting Methodology: Further explanation of the ExxonMobil vesting terms given that half of the stock-based grants require 10 years or longer to vest. |
Chart 15 on page 33 is included for this purpose.
Financial and Operating Performance
The financial and operating results outlined below provide additional perspective on ExxonMobils performance:
| Earnings of $32.6 billion in 2013, a 27-percent decrease versus 2012. Five-year annual average of $33.7 billion in earnings. |
| Distributed $25.9 billion to shareholders in dividends and share purchases in 2013, for a distribution yield of 6.6 percent. Distributed $318 billion in dividends and share purchases since the beginning of 2000. Dividends per share increased for the 31st consecutive year. |
| Industry-leading return on average capital employed (ROCE) of 17.2 percent, with a five-year average of 21 percent (Chart 2, page 28). |
| Strong safety and operations performance supported by effective risk management. |
26
UPSTREAM
Major Projects
| Started up six major projects with gross facility capacity of more than 930 thousand oil-equivalent barrels per day, highlighted by the Kearl Initial Development in Canada. |
| Progressed construction and began commissioning activities at the Papua New Guinea Liquefied Natural Gas project, which is on target to start up in 2014. |
| Advanced the Kearl Expansion project, which remains on schedule to start up in 2015. |
Exploration Results
| Added 6.6 billion oil-equivalent barrels of new resources, increasing the overall resource base to more than 90 billion oil-equivalent barrels. |
| Exploration discoveries totaling 1.5 billion oil-equivalent barrels in several countries including Australia, Canada, Tanzania, and the United States. |
| Captured new exploration acreage in countries such as Brazil, Gabon, Liberia, Russia, and South Africa. |
Rosneft Agreement
| Progressed and expanded the Strategic Cooperation Agreement with Rosneft. In 2013, we expanded the agreement to add seven new blocks covering more than 150 million acres in the Russian Arctic. The 180 million acres we are now working with Rosneft in the Arctic cover some of the most promising and least explored acreage in the world. |
| Preparing to drill our first well in the Kara Sea in 2014. |
| Progressing the pilot program to develop tight oil in West Siberia. |
DOWNSTREAM
| Commissioned a new diesel hydrotreater in Singapore to increase ultra-low sulfur diesel production capacity to meet growing demand for this product in the region. |
| Completed multiyear conversion to a branded wholesaler business model in the United States. |
CHEMICAL
| Started up the Singapore Chemical Expansion project, more than doubling steam-cracking capacity at the site and significantly increasing premium and specialty capacity. |
| Progressed construction of a 400-thousand-tonnes-per-year specialty elastomers project in Saudi Arabia with our joint venture partner Saudi Basic Industries Corporation. |
| Advanced plans for a major expansion at our Texas facilities, which includes a new world-scale ethane cracker. |
27
Long-Term Business Performance and Basis for Compensation Decisions
The following charts illustrate the effectiveness of ExxonMobils compensation program in delivering superior results for shareholders over the long term. These results, in addition to individual performance, experience, and level of responsibility, helped form the basis of compensation decisions made by the Compensation Committee in 2013.
Safety is a core value for ExxonMobil, and nothing receives more attention from management. Safety performance is a leading indicator of business performance. |
ExxonMobils proven business model continues to deliver ROCE leadership in the industry. Disciplined investments through the business cycle position the Company for long-term performance. Strength of integrated portfolio, project management, and technology application.
|
ExxonMobils superior cash flow provides financial flexibility. Generated $104 billion of free cash flow since beginning of 2009. Industry-leading cash flows enable ExxonMobil to fund attractive investment opportunities and unmatched shareholder distributions. |
ExxonMobil leads the industry in shareholder distributions. Distributed 50 cents of every dollar of operating cash flow generated from 2009 to 2013. |
28
ExxonMobil leads the industry in total shareholder return (TSR) in almost all performance periods. TSR of companies in the same industry with similar size and scale is the most relevant metric for comparing shareholder returns. |
ExxonMobil generated superior returns through a range of economic environments and cycles. Maintained strong relative performance through the financial crisis. |
(1) Employee and contractor safety data from participating American Petroleum Institute companies (2013 industry data not available at time of publication). (2) XTO Energy Inc. data included beginning 2011. (3) Competitor data estimated on a consistent basis with ExxonMobil and based on public information. For more information concerning ROCE, see page 44 of the Summary Annual Report included with the 2014 Proxy Statement. (4) Competitor data estimated on a consistent basis with ExxonMobil and based on public information; excludes impact of Gulf of Mexico spill and TNK-BP divestment for BP. For more information on Free Cash Flow, see page 45 of the Summary Annual Report included with the 2014 Proxy Statement. (5) Shareholder distributions consist of cash dividends and share buybacks. See page 45 of the Summary Annual Report included with the 2014 Proxy Statement for additional information. (6) Annualized returns assuming dividends are reinvested when paid. (7) Royal Dutch Shell, BP, Chevron, and Total weighted by market capitalization. (8) AT&T, Boeing, Caterpillar, Chevron, Ford, General Electric, IBM, Johnson & Johnson, Pfizer, Procter & Gamble, United Technologies, and Verizon.
29
A substantial portion of the compensation granted by the Compensation Committee to the CEO and reported in the Summary Compensation Table represents an incentive for future performance, not current cash compensation. This long-term incentive pay will not actually be received by the CEO for many years in the future and remains at risk of forfeiture.
2013 REPORTED PAY
2012 | 2013 | 2013 vs. 2012 |
30-percent reduction in reported pay primarily due to 20-percent reduction in bonus and change in pension value. 46-percent reduction in reported pay if full impact of pension valuation considered. Pension value impacted by interest rate change. | |||||||||||||
Total Reported Pay |
|
$40,266,501 | $28,138,329 | * | 30% | |||||||||||
Negative Pension Adjustment(1) |
|
|
$ |
|
$ 6,240,556 | | ||||||||||
Total Adjusted Pay |
|
$40,266,501 | $21,897,773 | 46% | ||||||||||||
* No change in number of equity awards granted. |
|
|||||||||||||||
The relationship between change in ExxonMobil CEOs reported pay and ExxonMobils total shareholder return (TSR) throughout the CEOs tenure is as shown. | ||||||||||||||||
REALIZED PAY VS. REPORTED PAY
|
||||||||||||||||
Year of Compensation |
Realized Pay | Reported Pay | |
Realized Pay vs. Reported Pay |
|
Realized Pay as a Percentage of Reported Pay |
ExxonMobil CEOs realized compensation averaged 44 percent of reported pay over the CEOs tenure. | |||||||||
2013 |
$15,768,829 | $28,138,329 | $12,369,500 | 56% | ||||||||||||
2012 |
$15,561,163 | $40,266,501 | $24,705,338 | 39% | ||||||||||||
2011 |
$24,637,196 | $34,920,506 | $10,283,310 | 71%* | ||||||||||||
2010 |
$14,229,609 | $28,952,558 | $14,722,949 | 49% | ||||||||||||
2009 |
$ 8,530,165 | $27,168,317 | $18,638,152 | 31% | ||||||||||||
2008 |
$10,212,091 | $32,211,079 | $21,998,988 | 32% | ||||||||||||
2007 |
$12,884,308 | $27,172,280 | $14,287,972 | 47% | ||||||||||||
2006 |
$ 6,712,435 | $22,440,807 | $15,728,372 | 30% | ||||||||||||
Average | 44% | |||||||||||||||
* Exercised last stock options granted in 2001 that would have expired in 2011. No stock options granted since 2001. |
For definitions of the terms reported pay and realized pay as used in this Overview, as well as a list of our compensation benchmark companies, see Frequently Used Terms on page 35. (1) In 2013, the change in pension value was negative ($6.24 million), but under SEC reporting rules, a negative change in pension value must be shown in the Summary Compensation Table as zero. This shows the impact the full negative pension valuation would have if applied to total compensation. (2) TSR represents annualized returns assuming dividends are reinvested when paid. (3) Reported pay values shown correspond to the companies with the highest, median, and lowest realized pay values. (4) Financial data estimated based on publicly available information. Market capitalization is as of December 31, 2013. (5) Trailing twelve months (TTM); excludes excise taxes and other sales-based taxes, if applicable. (6) Excludes General Electric due to lack of comparability resulting from how assets are quantified and reported for its financial business. (7) Trailing twelve months (TTM).
30
Realized Pay as a Percentage of |
||||||||||||||
(dollars in thousands) | Realized Pay | Reported Pay(3) | Reported Pay | |||||||||||
Comparator Companies |
ExxonMobil CEOs realized pay ranked 11th among the compensation benchmark companies. The benchmark companies median is almost $24 million and the high is just over $68 million. | |||||||||||||
Highest |
$68,443 | $20,956 | 327 | % | ||||||||||
Median |
$23,989 | $19,280 | 124 | % | ||||||||||
Lowest |
$ 6,008 | $10,977 | 55 | % | ||||||||||
ExxonMobil |
$15,561 | $40,267 | * | 39 | % | |||||||||
ExxonMobil Position |
11 of 13 | 1 of 13 | ||||||||||||
* $28 million in 2013; 2013 comparator company data not available at time of publication.
COMPENSATION AND GROWTH IN SHAREHOLDER VALUE
|
|
|||||||||||||
Period: CEOs Tenure (2006 to 2012) | Cumulative TSR | Realized Pay (dollars in millions) |
ExxonMobils cumulative | |||||||||||
Comparator Companies |
||||||||||||||
Median |
74 | % | $144 | |||||||||||
ExxonMobil |
80 | % | $ 93 | |||||||||||
ExxonMobil Multiple of Median |
1.1 | x | 0.6x | |||||||||||
* 39 percent of ExxonMobil CEOs realized pay in 2011 was from the exercise of stock options that were granted in 2001 and expired in 2011. No stock options have been granted since 2001. |
ExxonMobil CEOs realized pay is below the compensation benchmark companies median for most of his tenure. |
|
(dollars in billions) | Revenue(5) | Market Capitalization |
Assets(6) | Net Income(7) |
Capital Expenditures(7) |
|||||||||||||||||
Comparator Companies |
|
In determining compensation levels, the Compensation Committee places the most emphasis on individual performance and business results. Size and complexity of ExxonMobil are considered among several factors. | ||||||||||||||||||||
Median |
$ 93 | $190 | $143 | $13.4 | $ 4.3 | |||||||||||||||||
90th Percentile |
$147 | $256 | $274 | $21.9 | $20.5 | |||||||||||||||||
ExxonMobil |
$390 | $439 | $347 | $32.6 | $42.5 | |||||||||||||||||
ExxonMobil Rank (Percentile) |
100 | 100 | 100 | 100 | 100 | |||||||||||||||||
ExxonMobil Multiple of Median |
4.2x | 2.3x | 2.4x | 2.4x | 9.9x | |||||||||||||||||
31
The annual bonus for the CEO decreased 20 percent in 2013 corresponding to a 27-percent decrease in corporate earnings to $32.6 billion. The bonus is intentionally a small portion of the CEOs total compensation (13 percent in 2013) to reflect the Committees continuing emphasis on long-term compensation.
Since 2002, the annual bonus program for more than 1,600 executives worldwide, including the CEO, has been determined based on the annual percentage change in projected net income according to the following formula:
* | The purpose of the two-thirds adjustment is to mitigate the impact of commodity price swings on short-term earnings performance. |
The bonus program is benchmarked along with the rest of total compensation to ensure alignment with the market.
The bonus program formula has been consistently applied in each of the last 12 years, including years in which earnings declined. |
PERFORMANCE FACTORS THAT DETERMINE ANNUAL BONUS
1. | The bonus program is determined by annual earnings as described above. |
2. | The bonus program differentiates for individual performance. The program provides for different awards based on pay grade and individual performance assessment. |
3. | Half of the annual bonus is delayed until cumulative earnings per share (EPS) reach a specified level, further aligning the interests of executives with sustainable long-term growth in shareholder value. The EPS threshold has been raised over the years, from $3.00 per unit in 2001 to $6.25 in 2012/2013. |
The annual bonus is subject to recoupment in the case of a material negative restatement of ExxonMobils financial or operating results.
32
In 2013, 75 percent of the CEOs reported compensation is in restricted stock units with vesting periods far longer than most companies across all industries. Specifically, half of the annual equity award is restricted for 10 years from grant date or until retirement, whichever is later, and the other half is restricted for five years. The 10 years or retirement, whichever is later feature results in senior executives holding equity grants for well over 10 years as illustrated in Chart 15.
Grant Years | Vest Years | Length of Vesting | ||
20022007(1) |
2017 (assuming retirement) | 1015 years(2) | ||
20082013 |
20182023 | 10 years | ||
The basis for the size of individual grants includes a rigorous annual performance assessment of individual executives. The 2013 equity grant to the CEO was based on the performance assessment of the CEO by the Committee on the operating and financial performance and strategic business results outlined on pages 26 to 29.
EXXONMOBIL PROGRAM VS. FORMULA-BASED PAY
Some shareholders have suggested that ExxonMobil consider a formula-based methodology based on three-year TSR versus the industry. While this approach may be appropriate for the business model of other companies, the Compensation Committee has the following concerns with respect to the application by ExxonMobil.
Potential Misalignment of Formula-Based Pay with Long-Term Shareholder Experience
The ExxonMobil method of granting equity or stock-based awards will result in ExxonMobil executives seeing a one-for-one change in compensation through stock price that coincides with the experience of the long-term shareholder.
By contrast, formula-based methods can generate payouts for executives that are misaligned with the gains or losses incurred by long-term shareholders through the use of steep payout factors (Chart 16).
A typical approach to formula- |
The Committee concluded that the leverage inherent in formula-based methods, such as this example, could drive a focus on short-term results at the expense of long-term sustainable growth in shareholder value. Furthermore, this steep leverage does not reinforce the critical importance of sustainable risk management strategies; the current ExxonMobil program does so with much longer payout periods.
Another concern is that a formula-based plan by design necessitates a shorter payout period due to the practical inability to forecast events much beyond the typical three-year vesting period. This shorter payout period, combined with the leverage described, creates the following issue.
(1) Includes shares granted to the CEO between 2002 and 2005 before his appointment to CEO. (2) Assuming retirement at age 65 in 2017, 50 percent of shares granted in 2002 will vest at retirement resulting in a 15-year vesting period. The vesting period for 50 percent of shares granted in 2003 is 14 years; 2004 is 13 years; 2005 is 12 years; 2006 is 11 years; and 2007 is 10 years.
33
Potential Misalignment of Formula-Based Pay with ExxonMobils Business Model
Chart 17 illustrates how the ExxonMobil design of granting and vesting stock-based awards better aligns with the long-term investment lead times and risks of our business. By contrast, the high degree of variability and earlier payout of the alternate formula-based program (blue line) is misaligned with the investment profile of a typical ExxonMobil project.
As shown, there is potential for the alternate formula-based program to result in unintended consequences including:
| Rewarding short-term performance that bears little correlation to long-term sustainable growth in shareholder value; |
| Increased risk taking and diminished focus on long-term operations integrity; |
| Encouraging underinvestment in the business to achieve short-term TSR results; and |
| Undermining the executive retention strategy. |
Sustainable growth in shareholder value relies on strong alignment between the design of compensation and the ExxonMobil investment profile.
|
Approximately 70 percent of cumulative stock-based awards granted over the illustrated time period for the ExxonMobil program will remain unvested and at risk during employment, versus approximately 30 percent for the alternate program. After retirement, the ExxonMobil senior executive will continue to have grants unvested and at risk of forfeiture for 10 years. |
Annual investment required and cash flow generated by a typical ExxonMobil project. |
ExxonMobil equity program: 50 percent of an annual grant of restricted stock or restricted stock units vests in 10 years or retirement, whichever is later, and the other 50 percent vests in five years. |
Hypothetical alternate program: Percent of target shares that pay out are shown in Chart 16 and depend on ExxonMobils relative three-year TSR rank versus our primary competitors: Royal Dutch Shell, BP, Chevron, and Total. TSR ranking has been determined by a Monte Carlo simulation that applies equal probability to each rank position. The Monte Carlo simulation method is consistent with U.S. GAAP accounting principles for valuing performance stock awards. |
34
EXXONMOBIL PROGRAM VS. FORMULA-BASED PAY
Summary
The Compensation Committee on multiple occasions has carefully analyzed alternative methods of granting stock-based awards and recognizing business performance and, for the reasons mentioned above, believes that a formula-based plan would not deliver the desired results for ExxonMobil or its shareholders.
The Committee believes that the current ExxonMobil stock-based program achieves the following:
| Accountability: Holds senior executives accountable for many years, extending well beyond retirement date, with long vesting periods (Chart 15, page 33); |
| Alignment: Links financial gains or losses of each executive to the experience of the long-term shareholder and aligns strongly with ExxonMobil business model (Chart 17, page 34); |
| Performance and Results: Keeps executives focused on delivering industry-leading results (Charts 1 to 6, pages 28 and 29); and |
| Retention: Supports continuity of leadership by encouraging a career orientation. |
Prior Say-on-Pay Vote and Shareholder Engagement
The Compensation Committee has carefully considered the results of the 2013 advisory vote on executive compensation, in which more than 70 percent of votes cast were FOR the compensation of the Named Executive Officers, as described in the 2013 Proxy Statement. The Committee also discussed ExxonMobils executive compensation program with its independent consultant, as described in more detail in the 2014 Proxy Statement.
The Committee considered shareholder feedback on executive compensation received through a wide-ranging dialogue between management and numerous shareholders, including the Companys largest shareholders, many of whom have held our stock for over a decade. This provided an excellent opportunity to discuss the alignment between pay and performance, including the Companys long-standing philosophy that executive compensation should be based on long-term performance.
The Committee respects all shareholder votes, both FOR and AGAINST our compensation program. The Committee is committed to continued engagement between shareholders and the Company to fully understand diverse viewpoints and discuss the important connections between ExxonMobils compensation program, business strategy, and long-term financial and operating performance.
FREQUENTLY USED TERMS
Reported Pay is Total Compensation reported in the Summary Compensation Table, except for years 2006 to 2008, where the grant date value of restricted stock as provided under current SEC rules is used to put all years of compensation on the same basis.
Realized Pay is compensation actually received by the CEO during the year, including salary, current bonus, payouts of previously granted Earnings Bonus Units (EBU), net spread on stock option exercises, market value at vesting of previously granted stock-based awards, and All Other Compensation amounts realized during the year. It excludes unvested grants, change in pension value, and other amounts that will not actually be received until a future date. Amounts for other companies include salary, bonus, payouts of non-equity incentive plan compensation, and All Other Compensation as reported in the Summary Compensation Table, plus value realized on option exercise or stock vesting as reported in the Option Exercises and Stock Vested table. It excludes unvested grants, change in pension value, and other amounts that will not actually be received until a future date, as well as any retirement-related payouts from pension or nonqualified compensation plans.
Compensation Benchmark Companies consist of: AT&T, Boeing, Caterpillar, Chevron, Ford, General Electric, IBM, Johnson & Johnson, Pfizer, Procter & Gamble, United Technologies, and Verizon. For consistency, CEO compensation is based on compensation as disclosed in the Summary Compensation Table of the proxy statements as of August 31, 2013.
35
Key Elements of the Compensation Program
| It takes a long period of time and significant investment to develop the experienced executive talent necessary to effectively lead a company with the scale and technical complexity of ExxonMobil. Senior executives must have experience with all phases of the business cycle to be effective leaders. For this reason, it is our objective to attract and retain for a career the best talent available. |
| Career orientation among a dedicated and highly skilled workforce, combined with the highest performance standards, contribute to the Companys leadership and generate competitive advantage. |
| Career orientation requires compensation programs that promote retention by delaying and placing at risk of forfeiture the majority of annual compensation. |
| This principle of career orientation is coupled with a strong belief that executive talent should be developed and promoted from within. Development of talent from within avoids the need for employment contracts, severance agreements, or change-in-control arrangements typically needed to recruit executives from other companies. |
| The long Company service of high-performing executive officers reflects this strategy at all levels of the organization. |
| The Named Executive Officers have career service ranging from 33 to more than 42 years. |
| The other executive officers of the Corporation have on average more than 30 years of career service. |
| Each of the executive officers has been carefully evaluated and selected through rigorous performance assessment and succession planning processes over a long career. In their current assignments, they remain subject to a challenging annual performance assessment in which they must continue to meet the highest standards or be reassigned or separated from the Company. |
| Salaries provide executives with a base level of income. |
| The level of annual salary is based on the executives individual performance, experience, and level of responsibility. |
| Salary decisions directly affect the level of retirement benefits since salary is included in retirement benefit formulas. Annual performance assessments and benchmarking determine the percentage change in salary in any given year. Thus, the level of retirement benefits is influenced by individual performance. |
| The Compensation Committee established a ceiling for the 2013 bonus program of $205 million versus $266 million in 2012. The size of the bonus program compared to 2013 corporate earnings of $32.6 billion is 0.6 percent of earnings. The annual bonus awards reflect the combined value at grant of cash and Earnings Bonus Units. |
| The annual bonus program is determined based on the annual percentage change in projected net income (earnings) of the Company as described on page 32. |
| The annual bonus program is highly variable depending on annual earnings. |
| The size of individual bonus awards is differentiated among eligible executives based on pay grades and individual performance, a method that applies to more than a thousand executives. |
36
| After the size of individual bonus awards is determined, the award is generally delivered as shown below. |
| Fifty percent of the annual bonus is delayed and tied to future cumulative earnings per share. Earnings Bonus Units are cash awards that pay out when a specified level of cumulative earnings per share is achieved or within three years at a reduced level. This delayed payout feature represents an additional performance factor, as described on page 32, and further aligns the interests of senior executives with sustainable long-term growth in shareholder value. |
| For bonus awards granted in 2013, the cumulative earnings per share, or trigger, required for payout of the delayed portion was $6.25 per unit. This earnings-per-share trigger has been raised over the years from $3.00 per unit in 2001 to $6.25 in 2012/2013. |
| If cumulative earnings per share do not reach the level required for payout within three years, the delayed portion of the bonus is reduced to an amount equal to the number of units times the actual cumulative earnings per share over the three-year period. |
| The intent of the earnings-per-share trigger is to tie the timing of the bonus payment to the rate of the Corporations future earnings. Thus, the trigger is set intentionally at a level that is expected to be achieved within the three-year period; however, the amount of the payment is reduced if the specified cumulative earnings per share is not achieved in that timeframe. |
| The delayed portion of the bonus is at risk of forfeiture if the executive leaves the Company before the standard retirement age or engages in activity that is detrimental to the Company. Payment of the delayed portion is not accelerated upon retirement. |
| In addition, the Cash and Earnings Bonus Unit payments are subject to recoupment in the event of material negative restatement of the Corporations reported financial or operating results. Even though a restatement is unlikely given ExxonMobils high ethical standards and strict compliance with accounting and other regulations applicable to public companies, a recoupment policy was approved by the Board of Directors to reinforce the well-understood philosophy that incentive awards are at risk of forfeiture and that how we achieve results is as important as the actual results. |
| Stock-based compensation accounts for a substantial portion of annual total compensation to align the personal financial interests of executives with the long-term interests of shareholders and encourage a long-term perspective. |
| The objective is to grant more than 50 percent of a senior executives annual total compensation in the form of restricted stock or restricted stock units settled in shares (RSUs) as measured by grant date fair market value and described beginning on page 44. (Total compensation for this purpose excludes the value of annual pension accrual.) |
| The size of individual equity awards is differentiated among eligible executives based on pay grades and individual performance, a method that applies to more than a thousand executives. |
| The Compensation Committee sets the size of the equity program and makes grant decisions on a share-denominated basis rather than a price basis. The Committee does not support a practice of offsetting the loss or gain of prior equity grants by the value of current year grants. This practice would minimize the risk/reward profile of stock-based awards and undermine the long-term view that executives are expected to adopt. |
| The Corporation also compares the total value of equity awards against the combined value of all forms of long-term awards by comparator companies through an annual benchmarking process (see pages 41 to 42). |
37
Vesting and Restriction Periods
| It is ExxonMobils policy that executives hold significant amounts of restricted stock or RSUs granted under our incentive program for multiple years after retirement. To implement this policy, the following vesting provisions are in place for the most-senior executives: |
| 50 percent of each grant is unvested for five years; and |
| The balance is unvested for 10 years or until retirement, whichever is later. |
| As a result of these vesting provisions for the most-senior executives, more than half of the total amount of stock-based compensation may not be sold or transferred until after the executive retires and the awards have reached the 10-year holding requirement. |
| For example, 50 percent of the last equity grant received by a senior executive in the year preceding retirement will not vest for 10 years following the grant even though the executive is retired throughout most of that 10-year period. |
| The restricted period for equity awards is not subject to acceleration, except in the case of death. |
Rationale
| Given the long-term orientation of ExxonMobils business, granting equity in the form of restricted stock or RSUs with long vesting provisions keeps executives focused on the fundamental premise that decisions made currently affect the performance of the Corporation and its stock for many years into the future. |
| The long equity vesting periods support a long-term risk/reward profile that aligns with underlying business fundamentals and discourages inappropriate risk taking. These long vesting periods hold executives accountable for many years into the future, even into retirement, for investment and operating decisions that are made today. |
| The long restriction periods reinforce the Companys focus on growing shareholder value over the long term by subjecting a large percentage of executive compensation and net worth in shareholdings to the long-term return on ExxonMobil stock realized by shareholders. |
| Restricted stock and RSUs remove employee discretion on the sale of Company-granted stock holdings and reinforce the retention objectives of the compensation program. |
Forfeiture Risk and Hedging Policy
| Unvested equity awards are subject to forfeiture if an executive: |
| Leaves the Company before standard retirement time (defined as age 65 for U.S. employees). In the event of early retirement prior to the age of 65 (i.e., age 55 to 64), the Compensation Committee must approve the retention of awards by an executive officer. |
| Engages in activity that is detrimental to the Company, even if such activity occurs or is discovered after retirement. |
| Company policy prohibits all active employees, including executives, from entering into put or call options on ExxonMobil common stock or futures contracts on oil or gas. |
Share Utilization
| The Compensation Committee establishes a ceiling each year for annual stock-based awards. The overall number of shares underlying awards granted in 2013 represents dilution of 0.2 percent, which is well below the average of the other large U.S.-based companies benchmarked for compensation and incentive program purposes based on historical grant patterns. |
| The Company has a long-established practice of purchasing shares in the marketplace to eliminate the dilutive effect of stock-based incentive awards. |
38
Prior Stock Programs
| All stock-based awards granted since 2003 are granted under the Corporations 2003 Incentive Program. All stock-based awards granted prior to 2003 that remain outstanding were granted under the Corporations 1993 Incentive Program. No further grants can be made under the 1993 Incentive Program. |
| Prior to 2002, ExxonMobil granted Career Shares to the Companys most-senior executives. |
| Career Shares vest the year following an executives retirement and are subject to forfeiture on substantially the same terms as current equity grants. The long vesting period further aligns the personal financial interests of executives with the long-term interests of shareholders and helps ExxonMobil retain senior executives for the duration of their careers. |
| The Corporation ceased granting Career Shares in 2002 when the Corporation began granting restricted stock and RSUs to the broader executive population in lieu of stock options. |
| Restricted stock and RSUs with long holding requirements achieve the same objectives as Career Shares but also achieve even longer-term holding periods following retirement. Therefore, it is unnecessary to grant both Career Shares and the current form of equity awards. |
| Career Shares could be granted again in the future under the Corporations 2003 Incentive Program, but there are no current plans to make such grants. |
| Before the merger with Exxon, Mobil Corporation granted retention awards under the former Mobil Corporation Management Retention Plan. Retention awards are stock units that settle in cash in a single lump sum payment as soon as practicable after retirement (taking into account the required six-month delay in payment required under the American Jobs Creation Act of 2004). Mr. Pryor has outstanding retention awards. |
Stock Ownership
| The table below shows stock ownership, including shares underlying RSUs, as a multiple of salary and the percentage of shares that are still subject to restrictions for the Named Executive Officers as of year-end 2013. The average for all current U.S.-dollar-paid executive officers as of year-end 2013 is also provided. Valuation for this purpose is based on the Companys year-end 2013 stock price. These levels of stock ownership ensure executive officers have a significant stake in the sustainable long-term success of the Corporation. |
Name |
Dollar Value of Stock Ownership as a Multiple of Salary |
Percent of Shares/Units Restricted |
||||||
R.W. Tillerson |
79 | 79 | ||||||
A.P. Swiger |
59 | 72 | ||||||
M.W. Albers |
56 | 90 | ||||||
M.J. Dolan |
60 | 85 | ||||||
S.D. Pryor |
114 | 58 | ||||||
All Other U.S.-Dollar-Paid Executive Officers (average) |
38 | 78 |
The Corporation maintains retirement and other employee benefit plans to attract and retain the best talent. The retirement plans include defined contribution plans, which are attractive to new hires, since they can immediately begin building an account balance; and defined benefit plans, which are particularly valuable in retaining mid- and late-career employees.
Common Programs
| Senior executives participate in the same tax-qualified pension and savings plans as other U.S. employees. Senior executives also participate in the same nonqualified defined benefit and defined contribution plans as other U.S. executives. |
39
| A key principle on which the pension and savings programs are based is commonality of design for all employees, except where the American Jobs Creation Act of 2004 requires delayed timing of nonqualified plan distributions for higher-level executives. The same principle of commonality applies to the Company health care benefits (see page 58). |
Pension Plans
| Pension plans provide a strong incentive for employees to stay until retirement age, consistent with the long-term nature of the Companys business and its objective of promoting long-term career employment. |
| Because pension benefits use final average pay applied to all years of service, the increase in pension values is greatest late in an employees career when compensation tends to be highest. This enhances the retention feature of the plans with respect to high performers whose compensation increases as their job responsibilities expand. |
| The value of the pension plans is combined with other key elements of compensation salary, bonus, and long-term equity awards to achieve total compensation that is competitive with other companies of similar scope and complexity. Pay for the purpose of pension calculations includes base salary and bonus but does not include stock-based compensation. |
| The tax-qualified and nonqualified pension plans, described in more detail beginning on page 54, provide an annual benefit of 1.6 percent of final average pay per year of service, with an offset for Social Security benefits. |
| Bonus includes the amounts that are paid at grant and the amounts delayed by the Company, as described beginning on page 36. |
| The portion of annual bonus subject to delayed payment is expected to pay out (subject to forfeiture provisions) and, therefore, is properly included for pension purposes as being earned in the year of grant rather than the year of payment, as described on page 55. |
| Pension benefits are paid upon retirement as follows: |
| Qualified pension plan benefits are payable, at the election of the employee, in a lump sum or in one of various forms of annuity payments. |
| Nonqualified pension plan benefits are paid in the form of an equivalent lump sum six months after retirement. |
Qualified Savings Plan
| The qualified savings plan described on page 50 permits employees to make pre- or post-tax contributions and receive a Company-matching contribution of 7 percent of eligible salary, subject to Internal Revenue Code limits on the amount of pay taken into account and the total amount of contributions. |
| To receive the Company-matching contribution, employees must contribute a minimum of 6 percent of salary. |
| Qualified benefits are payable in a single lump sum or in partial withdrawals at any time after retirement. |
| The Internal Revenue Code generally requires distributions to commence after a retired employee has attained age 70-1/2. |
Nonqualified Savings Plan
| The nonqualified savings plan described on pages 50 and 57 does not permit employee contributions but provides 7 percent of eligible pay to restore matching contributions that could not be made to the qualified plan due to Internal Revenue Code limits. |
| The nonqualified savings plan balance is paid in a single lump sum six months after retirement. |
40
Compensation Committee Decisions
The Committee sets the compensation for the Named Executive Officers and certain other senior executives. The following describes the basis on which the Committee made decisions in 2013.
Tally Sheets
| A tally sheet is a matrix used by the Compensation Committee that shows the individual elements of compensation and benefits, including retirement, for each Named Executive Officer. The total of all compensation and benefit plan elements is included to reflect the full employment costs for each Named Executive Officer. |
| Tally sheets were used for the following principal purposes: |
| To understand how decisions on each individual element of compensation affect total compensation for each senior executive; |
| To gauge total compensation for each senior executive against publicly available data for similar positions at comparator companies; and |
| To confirm that stock-based compensation represents a substantial portion of each senior executives total compensation. |
Pension Modeling
| A pension-modeling tool was used to determine how current compensation decisions would affect pension values of the CEO upon retirement. |
Benchmarking
| Compensation is benchmarked annually. The primary benchmark for the Named Executive Officers is a select group of large companies across industries. |
| Comparator Companies |
| The following criteria are used to select comparator companies: |
| U.S. companies; |
| International operations; |
| Large scope and complexity; |
| Capital intensive; and |
| Proven sustainability/permanence. |
| The 12 companies benchmarked are listed below and are the same companies noted in the 2013 Proxy Statement, except that Hewlett-Packard was replaced by Caterpillar since it no longer met the selection criteria. The benchmark companies align with ExxonMobils current business circumstances and the above |
41
selection criteria. However, even with this comparator group, differences in size, scope, and complexity versus ExxonMobil can be significant as illustrated in the Overview. |
AT&T Boeing Caterpillar |
Chevron Ford Motor Company General Electric |
IBM Johnson & Johnson Pfizer |
Procter & Gamble United Technologies Verizon |
| In the United States, only Chevron has the size, complexity, and geographic scope in the oil and gas business to provide a reasonable comparison. Other smaller oil companies in the United States do not have the international scale or functional integration to allow meaningful comparisons. |
| Benchmarking Principles |
| Consistent with the Compensation Committees practice of using well-informed judgment to determine overall executive compensation, the Committee does not target any particular percentile among comparator companies at which to align compensation. |
| When the Compensation Committee cross-checks compensation levels against comparator companies, the focus is on a broader and more flexible orientation, generally a range around the median of comparator company compensation, which provides the ability to: |
| Differentiate compensation based on experience and performance levels among executives; |
| Minimize the potential for automatic ratcheting-up of compensation that could occur with an inflexible and narrow target among benchmarked companies; |
| Manage salaries based on a career orientation; and |
| Respond to changing business conditions. |
| These benchmarking principles apply to salaries and the annual incentive program that includes bonus and equity awards. |
| The Compensation Committee takes into consideration the size, scope, and complexity of ExxonMobil among several factors in determining compensation levels. For the purpose of its analysis, the Compensation Committee does not adjust for differences in the types or nature of businesses among the comparator companies and does not determine compensation levels based on a formula. |
| The Compensation Committee uses an independent consultant to assist in this analysis as discussed in the Corporate Governance section beginning on page 11. |
In determining compensation levels, the Compensation Committee places the most emphasis on individual performance and business results. Individual experience and level of responsibility are also considered.
The basis for the salary and incentive award decisions made by the Compensation Committee in 2013 include the safety, financial, and operating performance measurements and strategic business results discussed in the Overview beginning on page 26, as well as the Companys continued maintenance of sound business controls and a strong corporate governance environment. The Compensation Committee considered the results in aggregate and over multiple years in recognition of the long-term nature of our business.
Individual Performance Assessment
| The Compensation Committee annually assesses the CEOs performance and documents the basis on which compensation decisions are made. |
| Similarly for all other officers, the CEO reviews the performance of all officers in achieving results in line with the long-term business performance as described on pages 26 to 29 during the annual executive development review with the Board of Directors in October of each year. The same long-term business results are key elements in the assessment of the CEOs performance by the Compensation Committee. |
42
| The performance of all officers is also assessed by the Board of Directors throughout the year. This occurs during specific business reviews and Board Committee meetings that provide reports on strategy development; operating and financial results; safety, security, health, and environmental results; business controls; and other areas pertinent to the general performance of the Company. |
| The Compensation Committee does not assign weights to the factors considered and does not use quantitative targets or formulas to assess executive performance. Due to leverage or steep payout factors, formula-based compensation can generate payouts that are misaligned with the gains or losses incurred by long-term shareholders. Also, formula-based performance assessments typically require emphasis on two or three business metrics. For the Company to be an industry leader and effectively manage the technical complexity and global scope of ExxonMobil, the most-senior executives must advance multiple strategies and objectives in parallel, versus emphasizing one or two at the expense of others that require equal attention. |
| An executives performance must be high in all key performance areas for the executive to receive an overall superior evaluation. Outstanding performance in one area will not cancel out poor performance in another. For example: |
| A problem in safety, security, health, or environmental performance in a business unit for which the executive is responsible could result in an executives incentive award being reduced even though the executives performance against financial and other criteria was superior. |
| A violation of the Companys code of business conduct could result in elimination of an executives incentive award for the year, as well as termination of employment and/or cancellation of all previously granted awards that have not yet vested or been paid. |
| The Management Committee and all other executive officers are expected to perform at the highest level or they are replaced. If it is determined that another executive is ready and would make a stronger contribution than one of the current executive officers, a succession plan is implemented and the incumbent is reassigned or separated from the Company. |
| The fact that executives, including the CEO, do not have employment contracts, severance agreements, or change-in-control arrangements eliminates any real or perceived safety net with respect to job security. This increases the risk and consequences to the individual of performance that does not meet the highest standards. |
Individual Experience and Responsibility
Experience and assigned responsibilities are factors in assessing the contribution of individual executives. The current responsibilities, tenure in the current job, and recent past experience of each Named Executive Officer are described below.
| Mr. Tillerson was a Senior Vice President before becoming President and a member of the Board in 2004 and Chairman of the Board and CEO in 2006. More information regarding his career history is on page 20. |
| Mr. Swiger was President of ExxonMobil Gas & Power Marketing Company before becoming Senior Vice President in 2009. Mr. Swiger became ExxonMobils Principal Financial Officer effective January 1, 2013. |
| Mr. Albers was President of ExxonMobil Development Company before becoming Senior Vice President in 2007. |
| Mr. Dolan was President of ExxonMobil Chemical Company before becoming Senior Vice President in 2008. |
| Mr. Pryor was President of ExxonMobil Refining & Supply Company before becoming President of ExxonMobil Chemical Company in 2008. |
As discussed on page 36, the career service for Named Executive Officers ranges from 33 to more than 42 years.
Pay Awarded to Named Executive Officers
| Within the context of the compensation program structure and performance assessment processes described above, the Compensation Committee aligned the value of 2013 incentive awards and 2014 salary adjustments with: |
| Performance of the Company, including the business results outlined beginning on page 26; |
43
| Individual performance; and |
| Annual compensation of comparator companies. |
| The Committees decisions reflect its judgment taking all factors into consideration. The Committee approved the individual elements of compensation and the total compensation as shown in the tables beginning on page 48. |
| In exercising its judgment to determine the specific amount of bonus and equity awards granted to each Named Executive Officer, the Committee considered all of the performance factors discussed under Performance Measurements beginning on page 42. |
CEO
| The higher level of compensation for Mr. Tillerson as CEO versus the other Named Executive Officers reflects his greater level of responsibility, including the ultimate responsibility for the performance of the Corporation and oversight of the other senior executives. |
| The significant achievements regarding the long-term strategic results outlined on pages 26 to 29 were a major factor in the compensation approved by the Compensation Committee for Mr. Tillerson. |
Compensation Allocation
| To achieve alignment with the interests of shareholders, the objective is that over 50 percent of annual total compensation be in the form of equity awards with long holding periods as described beginning on page 37. For the CEO, stock-based pay represents 75 percent of total compensation in 2013. |
| To further tie compensation to the performance of the business, the objective is to have 10 to 20 percent of annual total compensation in the form of variable annual bonus awards, which are described beginning on page 36. |
| Salary represents 10 percent or less of annual total compensation, with pension accruals and other forms of compensation comprising the remainder. |
| Whether an executives total compensation is near, substantially below, or substantially above the comparator group median is a qualitative factor the Compensation Committee considers along with experience, level of responsibility, and performance (see page 42). |
| The allocation of compensation in 2013 for the CEO and the average for the other Named Executive Officers is illustrated in the chart below. |
Salary
| The changes in salary for the Named Executive Officers from the prior year, as shown in the Summary Compensation Table, primarily reflect alignment with the market for the base salary program for all U.S. executives, taking into account increased individual experience and level of responsibility. |
44
Bonus
| Annual bonuses (consisting of cash plus the full value of Earnings Bonus Units awards) were reduced by 20 percent for Messrs. Tillerson, Albers, and Pryor and approximately 14 percent for Messrs. Dolan and Swiger. |
| While the Committee considered all the factors referenced in this CD&A in determining specific bonus awards, the 27-percent decrease in Company earnings in 2013 was the primary factor resulting in the decrease of award amounts from 2012. The formula for determining the annual bonus program is described on pages 32 and 36. |
| The relatively lower decreases in the bonuses for Messrs. Dolan and Swiger compared to the other Named Executive Officers reflect their transition to higher pay grades, which takes into consideration the competitive orientation and internal alignment of their overall compensation levels. Promotions can include movement to a higher pay grade within the same position consistent with our strategy to advance high-performing employees over a career and ensure competitive alignment. |
Equity Awards
| Equity awards to the Named Executive Officers in 2013 were made in the form of share-settled RSUs. The number of RSUs granted in 2013 was the same as the number of restricted shares granted in 2012 for Messrs. Tillerson, Albers, and Pryor. The grant level was increased for Messrs. Dolan and Swiger. |
| While the Committee considered all the factors referenced in this CD&A in determining stock awards, the increase in the number of shares granted to Messrs. Dolan and Swiger from 2012 primarily reflects their transition to higher pay grades and internal alignment as previously noted. |
| The grant date fair value of each underlying share was 8 percent higher in 2013, in line with the higher stock price on the 2013 grant date compared to 2012. |
Pension
| This category comprises the change in pension value as shown in the Summary Compensation Table. In 2013, the change in pension value for Messrs. Tillerson, Albers, and Pryor was negative, but under SEC reporting rules, a negative change in pension value must be shown in the Summary Compensation Table as zero. |
| The higher lump sum interest rate for 2013 (3.5 percent) versus 2012 (2.5 percent) is a primary factor contributing to lower or negative pension accruals for the Named Executive Officers. These values are estimates. The actual value of the pension will be determined at the time each individual retires from the Company. |
| A breakdown of the factors that determined the negative change in the actual value of Mr. Tillersons pension in 2013 is in the narrative to the Summary Compensation Table on page 48. |
All Other Compensation
| This category comprises all other compensation as shown in the Summary Compensation Table. |
| The Compensation Committee grants incentive awards to the Companys senior executives at its regular November meeting, which is held either the day of or the day before the regularly scheduled November Board of Directors meeting. |
| The Board of Directors meeting is scheduled more than a year in advance and is held on the last Wednesday of the month (or on Tuesday if the last Wednesday immediately precedes Thanksgiving). |
| This firm timing of award grants is reinforced through a decision-making process in which the Corporation does not grant awards by written consent. |
45
| A committee comprising ExxonMobils Chairman and Senior Vice Presidents grants incentive awards to other eligible managerial, professional, and technical employees, within the parameters of the bonus and equity award ceilings approved by the Compensation Committee. This includes employees below the level of Business Line Presidents and Staff Function Vice Presidents. The schedule of the November meeting of the Compensation Committee as described above determines when this committee meets to approve the annual incentive grants for employees under its purview. |
| The Company has not granted stock options since 2001. |
| U.S. income tax law limits the amount ExxonMobil can deduct for compensation paid to the CEO and the other three most highly paid executives other than the Principal Financial Officer (PFO). Performance-based compensation that meets Internal Revenue Code requirements is not subject to this limit. |
| The bonus and equity awards described above are intended to meet these requirements so that ExxonMobil can deduct the related expenses. Under the material terms of performance goals previously approved by shareholders, the Corporation must achieve positive net income (earnings) in order to make any incentive awards to the covered executives. If positive earnings are achieved, individual awards to these executives are subject to a maximum cap of 0.2 percent of earnings in the case of bonus awards, and 0.5 percent of earnings in the case of equity awards. Equity awards to the covered executives for purposes of Section 162(m) of the Internal Revenue Code are made only under the performance stock provisions of the 2003 Incentive Program, which include the shareholder-approved goal and cap. The Compensation Committee has no authority to amend or change the shareholder-approved goals. |
| These terms have been established to meet tax regulations and do not represent the actual operational goals we expect our senior executives to achieve. Actual award levels are determined based on a subjective consideration of all the factors previously discussed in this report and are below the shareholder-approved caps. |
| Salaries for senior executives may be set at levels that exceed the U.S. income tax law limitation on deductibility. The primary drivers for determining the amount and form of executive compensation are the retention and motivation of superior executive talent rather than the Internal Revenue Code. |
| In 2005, the Compensation Committee eliminated the ability of executives to defer payment of incentive awards. Executives may not defer any element of compensation prior to retirement. |
| Tax assistance is not provided by the Company for either the bonus or equity awards discussed above. |
| The Company has designed all nonqualified pension and other benefits in a manner intended to avoid tax penalties that potentially could be imposed on the recipients of such amounts by Section 409A of the Internal Revenue Code. This is achieved by setting the form and timing of distributions to eliminate executive and Company discretion. |
| The above discussion of tax consequences is based on the Companys interpretation of current tax laws. |
Relative Total Shareholder Return (TSR) Analysis
| Some compensation models advocate the use of short-term TSR as a basis to measure business performance. However, short-term TSR is generally not a good indicator of future changes in shareholder value over the long term. |
| The table below illustrates the effectiveness of one- and three-year TSR as indicators for long-term TSR over the last 46 years (1968 to 2013). Specifically, for the last 46-year period, we evaluated the relationship between the relative one- and three-year TSRs respectively with the relative TSRs of the subsequent 10-year periods, comparing ExxonMobils performance versus the S&P 500 index. We completed a similar analysis of ExxonMobil relative to our industry group over a 32-year period. |
46
| As indicated in the table below, the relative TSR performance of ExxonMobil versus the S&P 500 over the previous one- and three-year periods predicts less than 5 percent and less than 14 percent, respectively, of the following 10-year relative TSRs. In the same analysis using our industry group, the corresponding outcomes were less than 1 percent and less than 19 percent, respectively. |
Ability of One- and Three-Year TSR to Predict Relative 10-Year TSR in Subsequent Years | ||||
ExxonMobil vs. S&P 500 | ExxonMobil vs. Industry Group(1) | |||
1-year TSR |
less than 5% | less than 1% | ||
3-year TSR |
less than 14% | less than 19% |
(1) | Royal Dutch Shell, BP, Chevron, and Total. |
| These analyses show that short-term relative TSR is not a good indicator of long-term relative TSR. This underscores the importance of ExxonMobil maintaining a compensation program that supports the long-term orientation of the business model. We believe ExxonMobils compensation design, with its strong performance basis and long-term orientation, will produce superior results for shareholders over time. |
47
Summary Compensation Table for 2013
Name and Principal Position |
Year | Salary ($) |
Bonus ($) |
Stock Awards ($) |
Option Awards ($) |
Non- Equity sation ($) |
Change in Pension Value and Nonqualified Deferred Compen- sation Earnings ($) |
All Other Compen- sation ($) |
Total ($) |
|||||||||||||||||||||||||
R.W. Tillerson Chairman and CEO |
|
2013 2012 2011 |
|
|
2,717,000 2,567,000 2,387,000 |
|
3,670,000 4,587,000 4,368,000 |
|
21,254,625 19,627,875 17,890,875 |
|
|
0 0 0 |
|
|
0 0 0 |
|
|
0 13,037,201 9,755,401 |
|
|
496,704 447,425 519,230 |
|
|
28,138,329 40,266,501 34,920,506 |
| |||||||||
A.P. Swiger Senior Vice President; PFO |
|
2013 2012 |
|
|
1,052,500 962,500 |
|
1,876,000 2,174,000 |
|
8,577,422 7,327,740 |
|
|
0 0 |
|
|
0 0 |
|
|
640,703 7,281,545 |
|
|
112,596 102,616 |
|
|
12,259,221 17,848,401 |
| |||||||||
M.W. Albers Senior Vice President |
|
2013 2012 2011 |
|
|
1,092,500 1,020,000 942,500 |
|
1,876,000 2,345,000 2,070,000 |
|
8,577,422 7,920,938 6,679,260 |
|
|
0 0 0 |
|
|
0 0 0 |
|
|
0 6,975,372 3,837,964 |
|
|
111,791 123,905 106,937 |
|
|
11,657,713 18,385,215 13,636,661 |
| |||||||||
M.J. Dolan Senior Vice President |
|
2013 2012 2011 |
|
|
1,175,000 1,077,500 991,250 |
|
2,168,000 2,527,000 2,232,000 |
|
10,051,076 8,601,371 7,219,962 |
|
|
0 0 0 |
|
|
0 0 0 |
|
|
395,472 7,738,975 4,657,416 |
|
|
126,600 118,041 106,369 |
|
|
13,916,148 20,062,887 15,206,997 |
| |||||||||
S.D. Pryor Vice President; President, ExxonMobil Chemical Company |
|
2013 2012 2011 |
|
|
1,040,000 1,006,000 972,000 |
|
1,601,000 2,001,000 1,905,000 |
|
7,273,805 6,717,095 6,122,655 |
|
|
0 0 0 |
|
|
0 0 0 |
|
|
0 4,314,699 1,833,877 |
|
|
115,226 111,261 110,698 |
|
|
10,030,031 14,150,055 10,944,230 |
|
Compensation Adjusted for Negative Change in Pension
The actual annual change in pension value was negative in 2013 for Messrs. Tillerson, Albers, and Pryor. However, SEC regulations do not allow for inclusion of negative pension amounts in the Summary Compensation Table. The following pro forma table reflects the impact of the full negative pension value on 2013 compensation:
Name | Reported Pay ($) | 2013 Negative Pension Adjustment ($) |
2013 Total Adjusted Pay ($) |
2013 Total Adjusted Pay vs. 2012 Reported Pay | |||||||||||||||||||||
2012 | 2013 | ||||||||||||||||||||||||
R.W. Tillerson |
40,266,501 | 28,138,329 | 6,240,556 | 21,897,773 | 46 | % | |||||||||||||||||||
M.W. Albers |
18,385,215 | 11,657,713 | 207,562 | 11,450,151 | 38 | % | |||||||||||||||||||
S.D. Pryor |
14,150,055 | 10,030,031 | 3,098,916 | 6,931,115 | 51 | % |
The change in pension value in 2013 is described in more detail on page 49.
Employment Arrangements
ExxonMobils Compensation Committee believes senior executives should be at-will employees of the Corporation. Accordingly, the CEO and other executive officers, including the other officers named in these tables, do not have employment contracts, severance agreements, or change-in-control arrangements with the Company.
Salary
| Effective January 1, 2014, the annual salary of the Named Executive Officers increased as follows: Mr. Tillersons to $2,867,000; and Mr. Pryors to $1,085,000. Effective April 1, 2014, the annual salary was increased for Mr. Swiger to $1,165,000; Mr. Albers to $1,180,000; and Mr. Dolan to $1,270,000. |
| The 2013 and 2014 salary increases reflect adjustments to the competitive position of the base salary program for U.S. executives, taking into account individual experience and level of responsibility. |
| Salary (together with other compensation related to fringe benefits or perquisites) is not deductible by the Corporation to the extent that it exceeds $1 million for any Named Executive Officer (other than the PFO). |
48
Bonus
| As described in more detail in the CD&A, the 2013 bonus shown was paid one-half in cash at the time of grant. The Company delays payment of the balance until cumulative earnings reach $6.25 per share. |
| Delayed bonus amounts do not earn interest. |
| The bonus and the stock awards described below are intended to meet the requirements of Section 162(m) of the Internal Revenue Code. See Tax Matters on page 46. |
Stock Awards
| In accordance with disclosure regulations, the valuation of Stock Awards in this table represents the grant date fair value, which is equal to the number of RSUs awarded times the grant price. Grant price is deemed to be the average of the high and low sale prices on the NYSE on the grant date ($94.47 on November 26, 2013; $87.24 on November 28, 2012; and $79.52 on November 30, 2011). |
| See the narrative accompanying the Grants of Plan-Based Awards table for information regarding the terms of RSUs. |
| Dividends or dividend equivalents paid on restricted stock or RSU awards are reflected in the grant date fair value and, therefore, are not shown in the table. |
Change in Pension Value and Nonqualified Deferred Compensation Earnings
The amounts shown in this column in the Summary Compensation Table represent the positive change in pension value. Earnings on nonqualified deferred compensation (supplemental savings plan) are no longer required to be included because, as of January 1, 2008, interest is limited to 120 percent of the long-term Applicable Federal Rate.
Pension Value
| The change in pension value shown in the table for 2013 is the increase between year-end 2012 and year-end 2013 in the present value of each executives pension benefits under the plans described in more detail beginning on page 54. A negative change in value is reported as zero in the Summary Compensation Table due to SEC regulations. |
| For each year end, the data reflect an annuity beginning at age 60 (or current age if over 60) equal to 1.6 percent of the participants covered compensation multiplied by years of service at year end. These values are converted to lump sums using the plans applicable factors and then discounted. For employees under age 60, this discount is calculated to present values based on the time difference between the individuals age at year-end 2013 and age 60 (and at year-end 2012 and age 60) using the interest rates for financial reporting of pension obligations as of each year end. The difference between the two year-end amounts represents the annual increase in the value of the pension shown in the Summary Compensation Table. |
| The lump sum interest rate applied for an employee who worked through the end of 2012 was 2.5 percent. The lump sum interest rate applied for an employee who worked through the end of 2013 was 3.5 percent. |
| The discount rate for determining the present value of benefits was 4 percent as of year-end 2012 and 5 percent as of year-end 2013. |
| The increase in the lump sum interest rate is the primary contributing factor to the decrease in the present value of age 60 benefits shown. This rate could be higher or lower at the time of actual retirement. A decrease in interest rates would increase the lump sum value of pension benefits. |
| For Mr. Tillerson, the change in the pension value for 2013 represents a 9-percent decrease in the present value of his pension benefits as shown in the Pension Benefits table on page 54. The following table provides a breakdown of the factors that determine the 9-percent decrease in the pension value for Mr. Tillerson. |
49
Factors | Change in Pension Value (Percent) |
Change in Present Value ($) |
||||
Higher Lump Sum Interest Rate |
10 | 6,764,092 | ||||
Change in Final Average Bonus |
2 | 1,118,340 | ||||
Change in Final Average Salary |
3 | 1,728,334 | ||||
Age and Service |
0 | 86,458 | ||||
Total |
9 | 6,240,556 |
All Other Compensation
The following table breaks down the amounts included in the All Other Compensation column of the Summary Compensation Table in 2013.
Name | Life Insurance ($) |
Savings Plan ($) |
Personal ($) |
Personal Use of Company |
Financial ($) |
Total ($) |
||||||||||||||||||||||
Aircraft ($) |
Properties/Car ($) |
|||||||||||||||||||||||||||
R.W. Tillerson |
85,679 | 190,190 | 177,140 | 33,434 | 0 | 10,261 | 496,704 | |||||||||||||||||||||
A.P. Swiger |
21,569 | 73,675 | 5,114 | 0 | 1,977 | 10,261 | 112,596 | |||||||||||||||||||||
M.W. Albers |
22,429 | 76,475 | 1,124 | 0 | 1,502 | 10,261 | 111,791 | |||||||||||||||||||||
M.J. Dolan |
30,704 | 82,250 | 2,776 | 0 | 609 | 10,261 | 126,600 | |||||||||||||||||||||
S.D. Pryor |
32,858 | 72,800 | 1,127 | 0 | 41 | 8,400 | 115,226 |
Life Insurance
| The Company offers senior executives term life insurance or a Company-paid death benefit. |
| Coverage under either option equals 4 times base salary until age 65, and a declining multiple thereafter until age 75, at which point the multiple remains at 2.5 times salary. |
| For executives with life insurance coverage, the premium cost in any year depends on overall financial and mortality experience under the group policy. |
| For executives electing the death benefit, there is no cash cost until the executive dies, as benefits are paid directly by the Company. |
| The amount shown is based on Internal Revenue Code tables used to value the term cost of such coverage. This valuation is applied since the actual life insurance premium is a single payment for a large group of executives that does not represent the cost of insuring one specific individual; and because one of the Named Executive Officers has elected the death benefit, the long-term cost of which is comparable to the insurance. |
| The Company eliminated the executive term life insurance and Company-paid death benefit for all newly eligible executives as of October 1, 2007, but retained it for all current participants, including the Named Executive Officers. |
Savings Plan
| The amount shown is the value of Company-matching contributions under ExxonMobils tax-qualified defined contribution (401(k)) plan and Company credits under the related nonqualified supplemental plan. The Company credit is 7 percent, which is consistent with the matching contribution for all employees participating in the savings plan. |
| The nonqualified supplemental plan provides all affected employees with the 7-percent Company credit to which they would otherwise be entitled as a matching contribution under the qualified plan if not for limitations under the Internal Revenue Code. All affected employees participate in the nonqualified supplemental plan on the same basis. |
| The value of the credits to the nonqualified supplemental plan is also disclosed in the Nonqualified Deferred Compensation table on page 57. |
50
Personal Security
| The Company provides security for its employees as appropriate based on an assessment of risk. The assessment includes consideration of the employees position and work location. |
| The Company does not consider any such security costs to be personal benefits since these costs arise from the nature of the employees employment by the Company; however, the disclosure regulations require certain security costs to be reported as personal benefits. |
| The amounts shown in the table include the following types of security-related costs: security systems at executive residences; security services and personnel (at residences and/or during personal travel); car and personal security driver; and communications equipment. Costs of security relating to travel for business purposes are not included. |
| The car provided for security reasons and used primarily for commuting is valued based on the annualized cost of the car plus maintenance and fuel. Reported costs for rental cars utilized due to security concerns during personal travel are the actual incremental costs. |
| For security personnel employed by the Company, the cost is the actual incremental cost of expenses incurred by the security personnel. Total salary, wages, and benefits for security personnel are not allocated because the Company already incurs these costs for business purposes. |
| For security contractors, the cost is the actual incremental cost of such contractors associated with the executives personal time. |
| For Mr. Tillerson, the amount shown includes $130,922 for residential security and $38,297 for the cost of his car provided for security reasons as described above. The remainder is for security costs relating to personal travel and communications equipment for conducting business in a secure manner. |
Aircraft
| Incremental cost for personal use of the aircraft is based on direct operating costs (fuel, airport fees, incremental pilot costs, etc.) and does not include capital costs of the aircraft since the Company already incurs these capital costs for business purposes. |
| For security reasons, the Board requires the Chairman and CEO to use Company aircraft for both business and personal travel. |
| The Committee considers these costs to be necessary, security-related business expenses rather than perquisites, but per the disclosure regulations, we report the incremental cost of aircraft usage for personal travel. |
Properties/Car
| The Company owns or leases various venues for the purpose of business entertainment, including boxes and season tickets to sporting events and recreation and conference retreat properties. When these venues are not otherwise in use for business entertainment, the tickets and properties may be available for use by Company executives and other personnel. |
| The table shows the incremental cost incurred for any personal use of these venues by the Named Executive Officers. Cost for this purpose is based solely on incremental operating costs (catering, transportation, incremental employee or contractor costs, etc.) and does not include annual or capital costs of these venues since the Company already incurs these costs for business purposes. |
| The amount shown also includes the incremental cost for personal use of a Company car, which is based on an assumed cost of $0.57 per mile. Driver personnel costs are not allocated because the Company already incurs these costs for business purposes. |
Financial Planning
| The Company provides financial planning services to senior executives, which includes tax preparation. This benefit is valued based on the actual charge for the services. |
51
Grants of Plan-Based Awards for 2013
Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards |
Estimated Future Payouts Under Equity Incentive Plan Awards |
All Stock Awards: Number of of Stock or Units (#) |
All Other Option Awards: Number Securities Under- lying Options (#) |
Exercise Base of Awards ($/Sh) |
Grant Date Fair Value of Stock and Option Awards ($) |
|||||||||||||||||||||||||||||||||||||
Thresh ($) |
Tar- get ($) |
Maxi- mum ($) |
Thresh -old (#) |
Tar- get (#) |
Maxi- mum (#) |
|||||||||||||||||||||||||||||||||||||||
R.W. Tillerson |
11/26/2013 | 0 | 0 | 0 | 0 | 0 | 0 | 225,000 | 0 | 0 | 21,254,625 | |||||||||||||||||||||||||||||||||
A.P. Swiger |
11/26/2013 | 0 | 0 | 0 | 0 | 0 | 0 | 90,800 | 0 | 0 | 8,577,422 | |||||||||||||||||||||||||||||||||
M.W. Albers |
11/26/2013 | 0 | 0 | 0 | 0 | 0 | 0 | 90,800 | 0 | 0 | 8,577,422 | |||||||||||||||||||||||||||||||||
M.J. Dolan |
11/26/2013 | 0 | 0 | 0 | 0 | 0 | 0 | 106,400 | 0 | 0 | 10,051,076 | |||||||||||||||||||||||||||||||||
S.D. Pryor |
11/26/2013 | 0 | 0 | 0 | 0 | 0 | 0 | 77,000 | 0 | 0 | 7,273,805 |
In 2013, equity grants were made in the form of restricted stock units (RSUs). Each RSU represents one share of ExxonMobil common stock. RSUs granted to the Named Executive Officers may only be settled in shares. During the restricted period for RSUs, the executive receives a cash payment on each RSU corresponding to the cash dividends paid on an outstanding share of ExxonMobil stock. Unlike shares of restricted stock, RSUs do not carry voting rights prior to settlement.
Restrictions and Forfeiture Risk
| These awards are restricted: (1) for one-half of the RSUs, until five years after the grant date; and (2) for the balance, until 10 years after the grant date or retirement, whichever occurs later. These restricted periods are not subject to acceleration, except upon death, and thus, RSUs may remain subject to restriction for many years after an executives retirement. |
| During the restricted period, the executive may not sell or transfer RSUs or use them as collateral. |
| The awards also remain subject to forfeiture during the restricted period in case of an unapproved early termination of employment or in case the executive is found to have engaged in activity that is detrimental to the Company. Detrimental activity may include conduct that violates the Companys Ethics or Conflicts of Interest policies. |
Grant Date
| The grant date is the same as the date on which the Compensation Committee of the Board met to approve the awards, as described on page 45. |
| Grant date fair value is equal to the number of RSUs awarded times the grant price, which is deemed to be the average of the high and low sale prices on the NYSE on the grant date ($94.47 on November 26, 2013). |
52
Outstanding Equity Awards at Fiscal Year-End for 2013
Name | Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||
Number of Securities Underlying Unexercised Options (#) Exercisable |
Number of Securities Underlying Unexercised Options (#) Unexercisable |
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |
Option Exercise Price |
Option Date |
Number of Shares or Units of Stock That Have Not Vested (#) |
Market Value of |
Equity Awards: Rights That |
Equity Incentive Awards: Market or Rights That Vested ($) |
||||||||||||||||||||||||||||
R.W. Tillerson |
0 | 0 | 0 | 0 | | 1,688,500 | 170,876,200 | 0 | 0 | |||||||||||||||||||||||||||
A.P. Swiger |
0 | 0 | 0 | 0 | | 442,800 | 44,811,360 | 0 | 0 | |||||||||||||||||||||||||||
M.W. Albers |
0 | 0 | 0 | 0 | | 540,950 | 54,744,140 | 0 | 0 | |||||||||||||||||||||||||||
M.J. Dolan |
0 | 0 | 0 | 0 | | 594,500 | 60,163,400 | 0 | 0 | |||||||||||||||||||||||||||
S.D. Pryor |
0 | 0 | 0 | 0 | | 683,641 | 69,184,445 | 0 | 0 |
Stock Awards (Restricted Stock and RSUs)
| Stock awards shown in the table above include both restricted stock and RSUs. Restricted stock awards have substantially the same terms as RSUs, including the same restricted period and forfeiture provisions, except that restricted stock awards include voting rights. See the narrative accompanying the Grants of Plan-Based Awards table for more information regarding the terms of RSUs. |
| The table below shows the dates on which the respective restricted periods for the stock awards shown in the previous table expire, assuming the awards are not forfeited and the executive is living when the restrictions lapse. |
Name | Date Restrictions Lapse and Number of Shares/Units | |||||||||||||||||||||||||||
11/24/2014 | 11/23/2015 | 11/30/2016 | 11/28/2017 | 11/26/2018 | 10 Years or Retirement, Whichever Occurs Later |
Retirement(1) | ||||||||||||||||||||||
R.W. Tillerson |
112,500 | 112,500 | 112,500 | 112,500 | 112,500 | 1,108,000 | 18,000 | |||||||||||||||||||||
A.P. Swiger |
30,000 | 34,250 | 38,500 | 42,000 | 45,400 | 252,650 | 0 | |||||||||||||||||||||
M.W. Albers |
38,500 | 38,500 | 42,000 | 45,400 | 45,400 | 331,150 | 0 | |||||||||||||||||||||
M.J. Dolan |
38,500 | 42,000 | 45,400 | 49,300 | 53,200 | 366,100 | 0 | |||||||||||||||||||||
S.D. Pryor |
38,500 | 38,500 | 38,500 | 38,500 | 38,500 | 452,900 | 38,241 |
(1) | Restrictions lapse on Career Shares on the first day of the calendar year following retirement with the exception of the restricted stock units granted to Mr. Pryor by Mobil Corporation under the Management Retention Plan, which are converted to a cash value at retirement and then paid in a single lump sum (18,241 units for Mr. Pryor). See page 39 for more information regarding Career Shares and the former Mobil Corporation Management Retention Plan. |
53
Option Exercises and Stock Vested for 2013
Name | Option Awards | Stock Awards | ||||||||||||||
Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise ($) |
Number of Shares (#) |
Value Realized on Vesting ($) |
|||||||||||||
R.W. Tillerson |
0 | 0 | 112,500 | 10,720,125 | ||||||||||||
A.P. Swiger |
0 | 0 | 23,400 | 2,229,786 | ||||||||||||
M.W. Albers |
0 | 0 | 35,350 | 3,368,502 | ||||||||||||
M.J. Dolan |
0 | 0 | 35,350 | 3,368,502 | ||||||||||||
S.D. Pryor |
0 | 0 | 38,500 | 3,668,665 |
Stock Awards/Restriction Lapse in 2013
| In 2013, restrictions lapsed on 50 percent of stock awards that were granted in 2008. |
| The number of shares acquired on vesting is the gross number of shares to which the award relates. |
| The value realized is the gross number of shares times the market price, which is the average of the high and low sale prices on the NYSE on the date that restrictions lapse. |
| The net number of shares acquired (gross number of shares less shares withheld for taxes): 65,306 for Mr. Tillerson; 14,037 for Mr. Swiger; 20,645 for Mr. Albers; 20,568 for Mr. Dolan; and 22,349 for Mr. Pryor. |
| Refer to the Equity Awards section beginning on page 37 for additional information on equity awards. |
Name | Plan Name |
Number of (#) |
Present Value of ($) |
Payments ($) |
||||||||||
R.W. Tillerson |
ExxonMobil Pension Plan ExxonMobil Supplemental Pension Plan ExxonMobil Additional Payments Plan |
|
38.58 38.58 38.58 |
|
|
2,124,008 21,141,743 38,565,818 |
|
|
0 0 0 |
| ||||
A.P. Swiger |
ExxonMobil Pension Plan ExxonMobil Supplemental Pension Plan ExxonMobil Additional Payments Plan |
|
35.33 35.33 35.33 |
|
|
1,796,672 5,505,911 15,348,083 |
|
|
0 0 0 |
| ||||
M.W. Albers |
ExxonMobil Pension Plan ExxonMobil Supplemental Pension Plan ExxonMobil Additional Payments Plan |
|
34.42 34.42 34.42 |
|
|
1,704,432 5,647,225 15,412,786 |
|
|
0 0 0 |
| ||||
M.J. Dolan |
ExxonMobil Pension Plan ExxonMobil Supplemental Pension Plan ExxonMobil Additional Payments Plan |
|
33.42 33.42 33.42 |
|
|
1,891,651 6,814,810 18,929,657 |
|
|
0 0 0 |
| ||||
S.D. Pryor |
ExxonMobil Pension Plan ExxonMobil Supplemental Pension Plan ExxonMobil Additional Payments Plan |
|
42.17 42.17 42.17 |
|
|
2,174,915 7,143,674 17,345,679 |
|
|
0 0 0 |
|
Pension Plan
| The tax-qualified pension plan provides a benefit calculated as an annual annuity beginning at the Plans normal retirement age equal to 1.6 percent of the participants final average salary multiplied by years of credited service, minus an offset for Social Security benefits. |
54
| Final average salary is the average of the highest 36 consecutive months in the 10 years of service prior to retirement. |
| Final average salary included and benefits paid are subject to the limits on compensation ($255,000 for 2013) and benefits prescribed under the Internal Revenue Code. |
| The annuity amount may be further reduced by the Internal Revenue Code limit on the annuity value of benefits from qualified plans. |
| The benefit is available as a lump sum or in various annuity forms. |
| The defined benefit pension arrangements (qualified and nonqualified) help to attract and retain employees at all levels of the Corporation. |
| The defined benefit pension plan provides a strong incentive for employees to stay until retirement age. |
| The plan uses final average pay applied to all years of service; thus, the increase in pension values is greatest late in career when compensation tends to be highest. This retention feature is strong for high performers, whose compensation increases as their job responsibilities continue to expand throughout their career, making their level of retirement income performance-based. |
Supplemental Pension Plan
| The nonqualified Supplemental Pension Plan provides a benefit calculated as the annuity amount that exceeds Internal Revenue Code limits referred to above. |
| It is calculated as an annual annuity beginning at normal retirement age but is converted to a lump sum benefit using the same factors that apply for the qualified plan. |
| To help meet the retention and performance objectives described for U.S. salaried employees, the Supplemental Pension Plan provides pension benefits to the extent annual salary exceeds the amount that can be considered in determining qualified pension benefits ($255,000 for 2013, adjusted each year based on inflation) and to the extent other limits may apply to qualified benefits. |
| Without the Supplemental Pension Plan, the retention power of the overall pension plan would be greatly reduced for employees earning more than that amount, since the increase in their pension values in mid- to late career would be, in effect, based on relatively flat final average pay. |
Additional Payments Plan
| The nonqualified Additional Payments Plan provides a benefit calculated as an annual annuity beginning at normal retirement age equal to 1.6 percent of the participants average annual bonus multiplied by years of credited service but is converted to a lump sum using the same factors that apply for the qualified plan. |
| The plan uses the average of the annual bonus for the three highest grants of the last five prior to retirement (including the portion of the annual bonus that is paid at time of grant and the portion that is paid on a delayed basis as described on page 37). |
| Benefits under the Additional Payments Plan are forfeited if an employee resigns prior to completion of 15 years of service and attainment of age 55. All of the Named Executive Officers have satisfied these conditions. |
| The objective of the Additional Payments Plan is to support retention and performance objectives in light of the Compensation Committees practice of putting higher percentages of annual cash compensation at risk at higher executive levels. |
| The Compensation Committee believes that even though a large percentage of annual cash compensation is discretionary and based on Corporate business performance, it should not be excluded from the pension calculation. Inclusion of discretionary bonuses in the pension formula strengthens the performance basis of such bonuses. |
| By limiting bonuses to those granted in the five years prior to retirement, there is a strong motivation for executives to continue to perform at a high level. |
55
| The Additional Payments Plan is designed to be a powerful retention tool since benefits are forfeited if the employee resigns prior to completion of 15 years of service and attainment of age 55. The plan applies on the same terms to all U.S. salaried employees who receive a bonus. |
Present Value Pension Calculations
| The present value of accumulated benefits shown in the Pension Benefits table is determined by converting the annuity values earned as of year end to lump sum values payable at age 60 (or at the employees actual age, if older) using the mortality tables and interest rate (3.5 percent) that would apply to a participant who worked through the end of 2013 and retired in the first quarter of 2014. |
| The actual lump sum conversion factors that will apply when each executive retires may be different. For executives who were not yet age 60, the present value as of year-end 2013 of each executives age-60 lump sum is determined using a discount rate of 5 percent, the rate used for valuing pension obligations for purposes of the Corporations financial statements for year-end 2013. |
Effect of Early Termination or Death
| All three pension plans require attainment of age 55 and completion of 15 years of service to be eligible for early retirement. All Named Executive Officers have satisfied this requirement. |
| The Named Executive Officers have not received any additional service credit. Actual service is reflected in the above table. |
| The early retirement benefit consists of an annuity that is undiscounted for retirement ages of 60 years or over, with a discount of 5 percent for each year under age 60. |
| In addition, the Social Security offset is waived for annuity payments scheduled to be paid prior to age 62. |
| Early retirement benefits are in some cases more valuable than the present value of the executives earned age 60 benefits. This is because the increase in lump sum value due to receiving benefits earlier and using a longer life expectancy is not fully offset, in the current interest rate environment, by the plans discount factor (5 percent per year) for early retirement annuities. |
| Messrs. Albers and Swiger were eligible for early retirement prior to age 60 under the plans as of year-end 2013. |
| The table below shows the lump sum early retirement benefits under the plans for Messrs. Albers and Swiger as of year-end 2013. The lump sum early retirement benefits for Messrs. Tillerson, Dolan, and Pryor as of year-end 2013 are the amounts shown in the Pension Benefits table. |
Name | Plan Name | Lump Sum Early Retirement Benefit ($) |
||||
A.P. Swiger |
ExxonMobil Pension Plan | 1,900,533 | ||||
ExxonMobil Supplemental Pension Plan | 5,758,769 | |||||
ExxonMobil Additional Payments Plan | 16,052,941 | |||||
M.W. Albers |
ExxonMobil Pension Plan | 1,817,613 | ||||
ExxonMobil Supplemental Pension Plan | 5,941,001 | |||||
ExxonMobil Additional Payments Plan | 16,214,582 |
| Voluntary or involuntary termination would be treated the same as early retirement for pension benefit purposes. In the event of termination prior to early retirement eligibility, there is no benefit payable under the Additional Payments Plan, and other pension benefits are actuarially discounted. |
| In the event of death after early retirement eligibility, the retirement benefit is payable to the participants beneficiary. Prior to early retirement eligibility, if a participant has at least 15 years of service, the actuarially determined present value of the benefit accrued prior to death is payable to the participants beneficiary. Under the qualified Pension Plan, if a participant has less than 15 years of service, the survivor benefit, |
56
payable to the participants surviving spouse, is 50 percent of the actuarially discounted vested termination benefit payable under the qualified joint and survivor annuity option. |
| Change in control is not a triggering event under any ExxonMobil benefit plans, including the pension plans. |
Nonqualified Deferred Compensation for 2013
Name |
Executive ($) |
Registrant ($) |
Aggregate Earnings in Last FY ($) |
Aggregate ($) |
Aggregate Balance at Last FYE ($) |
|||||||||||||||
R.W. Tillerson |
0 | 172,340 | 49,736 | 0 | 1,564,527 | |||||||||||||||
A.P. Swiger |
0 | 55,825 | 18,400 | 0 | 578,842 | |||||||||||||||
M.W. Albers |
0 | 58,625 | 13,570 | 0 | 437,667 | |||||||||||||||
M.J. Dolan |
0 | 64,400 | 20,466 | 0 | 644,514 | |||||||||||||||
S.D. Pryor |
0 | 54,950 | 50,022 | 0 | 1,511,556 |
| The table above shows the value of the Company credits under ExxonMobils nonqualified supplemental savings plan. The Company credits for 2013 are also included in the Summary Compensation Table under the column labeled All Other Compensation. |
| The amounts in the Summary Compensation Table include both Company contributions to the tax-qualified plan and Company credits to the nonqualified plan, whereas the registrant contributions in the table above represent only the Company credits to the nonqualified plan. |
| The amount of Company contributions to the tax-qualified savings plan was limited to the Internal Revenue Code contribution and salary maximums. For this reason, $17,850 was the maximum Company match to the qualified savings plan in 2013. |
| The aggregate balance at the last fiscal year end shown above includes amounts reported as Company contributions in the Summary Compensation Table of the current proxy statement and proxy statements from prior years as follows: $1,201,900 for Mr. Tillerson; $105,700 for Mr. Swiger; $161,350 for Mr. Albers; $263,813 for Mr. Dolan; and $304,360 for Mr. Pryor. |
| The nonqualified savings plan provides employees with the 7-percent Company-matching contribution to which they would otherwise be entitled under the qualified plan if not for limitations on covered compensation and total contributions under the Internal Revenue Code. |
| All eligible employees participate in the nonqualified plan on the same basis. |
| The rate at which the nonqualified savings plan account bears interest during the term of a participants employment is 120 percent of the long-term Applicable Federal Rate. |
| The tax-qualified and nonqualified savings plans are designed to help attract and retain employees. The matching design is intended to encourage employees to contribute their own funds to the plan to receive the tax benefits available under the Internal Revenue Code. The supplemental savings plan serves similar purposes for salary or contributions in excess of the Internal Revenue Code limits referenced above. |
Administrative Services for Retired Employee Directors
| The Company provides certain administrative support to retired employee directors. |
| The support provided generally involves, but is not limited to, assistance with correspondence and travel arrangements relating to activities the retired directors are involved with that continue from their employment, such as board positions with nonprofit organizations. Given the nature of the support provided, a retired directors spouse may also benefit from the support provided. |
| The Company also allows retired employee directors to use otherwise vacant office space at the Companys headquarters. |
57
| It is not possible to estimate the future cost that may be incurred by the Company for providing these services to Mr. Tillerson, who is currently the only employee director. |
| The aggregate incremental cost of providing these services for all currently covered persons is approximately $115,000 per year. |
| This amount represents the compensation and benefit cost for support personnel allocated based on their estimated time dedicated to providing this service, as well as other miscellaneous office support costs. |
| ExxonMobil does not provide any special executive health care benefits. |
| Executives and their families are eligible to participate in the Companys health care programs, including medical, dental, prescription drug, and vision care, on the same basis as all other U.S. salaried employees. |
| The terms and conditions of the programs for both current employees and retirees do not discriminate in scope, terms, or operation in favor of executive officers. |
| All U.S. salaried employees are entitled to payment of salary for any accumulated but unused vacation days at retirement or other termination of employment. |
| Payment for unused vacation is included in final payments of earned salary. |
Termination and Change in Control
| ExxonMobil executive officers are not entitled to any additional payments or benefits relating to termination of employment other than the retirement benefits previously described in the preceding compensation tables and narrative. |
| Executives are at-will employees of the Company. They do not have employment contracts, a severance program, or any benefits or payments triggered by a change in control. |
| As discussed in greater detail above, unvested equity awards and any unpaid portion of an annual bonus are subject to forfeiture at the discretion of the Compensation Committee if an executive: |
| Engages in detrimental activity; or |
| Terminates employment prior to standard retirement age (currently age 65 for U.S. executives), whether such termination is voluntary or involuntary. |
| The Board has a policy to recoup compensation in the event of a material negative restatement of the Corporations reported financial or operating results as described on page 37. |
Payments in the Event of Death
The only event that results in acceleration of the normal payment or vesting schedule of any benefit is death. In that event, the vesting period of outstanding equity awards would be accelerated. Also in the event of death, the executives estate or beneficiaries would be entitled to payment of the life insurance or death benefit as described on page 50. At year-end 2013, the amount of that life insurance benefit for each Named Executive Officer is as follows:
Name | Life Insurance Benefit ($) | |||
R.W. Tillerson |
10,868,016 | |||
A.P. Swiger |
4,300,032 | |||
M.W. Albers |
4,440,048 | |||
M.J. Dolan |
4,800,048 | |||
S.D. Pryor |
4,160,016 |
58
The primary function of our Committee is oversight of the Corporations financial reporting process, public financial reports, internal accounting and financial controls, and the independent audit of the annual consolidated financial statements. Our Committee acts under a charter, which can be found on the ExxonMobil website at exxonmobil.com/auditcharter. We review the adequacy of the charter at least annually. All of our members are independent directors, and all are audit committee financial experts under SEC rules. We held 11 meetings in 2013 at which, as discussed in more detail below, we had extensive reports and discussions with the independent auditors, internal auditors, and members of management.
In performing our oversight function, we reviewed and discussed the consolidated financial statements with management and PricewaterhouseCoopers LLP (PwC), the independent auditors. Management and PwC indicated that the Corporations consolidated financial statements were fairly stated in accordance with generally accepted accounting principles. We discussed significant accounting policies applied by the Corporation in its financial statements, as well as alternative treatments. We discussed with PwC matters covered by Public Company Accounting Oversight Board (PCAOB) standards, including PCAOB AS 16 Communication with Audit Committees. In addition, we reviewed and discussed managements report on internal control over financial reporting and the related audits performed by PwC, which confirmed the effectiveness of the Corporations internal control over financial reporting.
We also discussed with PwC its independence from the Corporation and management, including the communications PwC is required to provide us under applicable PCAOB rules. We considered the non-audit services provided by PwC to the Corporation, and concluded that the auditors independence has been maintained.
We discussed with the Corporations internal auditors and PwC the overall scope and plans for their respective audits. We met with the internal auditors and PwC at each meeting, both with and without management present. Discussions included the results of their examinations, their evaluations of the Corporations internal controls, and the overall quality of the Corporations financial reporting.
We discussed with the Corporations management the comprehensive, long-standing risk management and compliance processes of the Corporation, and reviewed several topics of interest.
Based on the reviews and discussions referred to above, in reliance on management and PwC, and subject to the limitations of our role described below, we recommended to the Board, and the Board approved, the inclusion of the audited financial statements in the Corporations Annual Report on Form 10-K for the year ended December 31, 2013, for filing with the SEC.
We have also appointed PwC to audit the Corporations financial statements for 2014, subject to shareholder ratification of that appointment.
In carrying out our responsibilities, we look to management and the independent auditors. Management is responsible for the preparation and fair presentation of the Corporations financial statements and for maintaining effective internal control. Management is also responsible for assessing and maintaining the effectiveness of internal control over the financial reporting process in compliance with Sarbanes-Oxley Section 404 requirements. The independent auditors are responsible for auditing the Corporations annual financial statements, and expressing an opinion as to whether the statements are fairly stated in conformity with generally accepted accounting principles. In addition, the independent auditors are responsible for auditing the Corporations internal control over financial reporting and for expressing an opinion on the effectiveness of internal control over financial reporting. The independent auditors perform their responsibilities in accordance with the standards of the PCAOB. Our members are not professionally engaged in the practice of accounting or auditing, and are not experts under the Securities Act of 1933 in either of those fields or in auditor independence.
Michael J. Boskin, Chair |
Peter Brabeck-Letmathe | Ursula M. Burns | ||
Larry R. Faulkner |
William W. George |
59
ITEM 2 RATIFICATION OF INDEPENDENT AUDITORS
The Audit Committee has appointed PricewaterhouseCoopers LLP (PwC) to audit ExxonMobils financial statements for 2014. We are asking you to ratify that appointment.
Total Fees
The total fees for PwC professional services rendered to ExxonMobil for the year ended December 31, 2013, were $33.9 million, a decrease of $0.6 million from 2012. The Audit Committee reviewed and pre-approved all services in accordance with the service pre-approval policies and procedures, which can be found on the ExxonMobil website at exxonmobil.com/pre-approval. The Audit Committee did not use the de minimis exception to pre-approval that is available under SEC rules. The following table summarizes the fees, which are described in more detail below.
2013 | 2012 | |||||||
(millions of dollars) | ||||||||
Audit Fees |
28.0 | 27.9 | ||||||
Audit-Related Fees |
5.1 | 5.7 | ||||||
Tax Fees |
0.8 | 0.9 | ||||||
All Other Fees |
| | ||||||
|
|
|
|
|||||
Total |
33.9 | 34.5 |
Audit Fees
The aggregate fees for PwC professional services rendered for the annual audits of ExxonMobils financial statements for the year ended December 31, 2013, and for the reviews of the financial statements included in our quarterly reports on Form 10-Q for that year were $28.0 million (versus $27.9 million for 2012).
Audit-Related Fees
The aggregate fees for PwC Audit-Related services rendered to ExxonMobil for the year ended December 31, 2013, were $5.1 million (versus $5.7 million in 2012). These services were mainly related to asset dispositions, benefit plan audits, and attestation procedures related to cost certifications.
Tax Fees
The aggregate fees for PwC Tax services rendered to ExxonMobil for the year ended December 31, 2013, were $0.8 million (versus $0.9 million for 2012). These services are mainly related to assisting various ExxonMobil affiliates with the preparation of local tax filings and related services.
All Other Fees
The aggregate fees for PwC services rendered to ExxonMobil, other than the services described above under Audit Fees, Audit-Related Fees, and Tax Fees, for the year ended December 31, 2013, were zero (also zero in 2012).
We believe PwC is well qualified to perform this work. A PwC representative will be at the annual meeting to answer appropriate questions and to make a statement if desired.
The Audit Committee recommends you vote FOR this proposal.
ITEM 3 ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
At the meeting, shareholders will be asked to vote on a non-binding resolution to approve the compensation of the executive officers named in the Summary Compensation Table.
The compensation program for the Companys Named Executive Officers (NEOs), as described in the Compensation Discussion and Analysis (CD&A) section of this proxy statement, is carefully structured to support
60
shareholder value given the capital-intensive nature of our business, the long investment lead times, and the critical importance of managing risk.
The compensation program is developed and approved by the Compensation Committee of the Board, which is comprised exclusively of non-employee directors.
Alignment with Shareholder Interests
To support the key business strategies of the Company and align with shareholder interests, the compensation program is designed to ensure that executives place a high priority on taking a long-term view when managing the assets of the business, making investments, and managing risks.
The design of the compensation program helps reinforce these priorities by paying a substantial portion of an NEOs annual compensation in the form of restricted stock or stock units and restricting the sale of these equity awards for periods of time far greater than the restrictions required by most other companies across all industries.
| Half of the equity award may not be sold for 10 years from date of grant or until retirement, whichever is later. The other half is restricted from sale for five years. |
| During these long holding periods, the equity award is at risk of forfeiture for resignation or detrimental activity. |
This approach to executive pay ensures that the majority of compensation granted over multiple years and the shareholding net worth of senior executives are linked to the performance of ExxonMobil stock and resulting shareholder value. The ExxonMobil method of granting stock-based awards will result in ExxonMobil executives seeing a one-for-one change in compensation through stock price that coincides with the experience of the long-term shareholder.
The annual bonus also aligns the interests of senior executives with the priority of sustainable growth in shareholder value. First, the level of the annual bonus program is determined by earnings performance using the formula described on page 32. Second, 50 percent of the payout of the annual bonus award is delayed based on the pace of earnings performance, as described on pages 32 and 37, and the entire annual bonus is subject to recoupment (claw-back).
The compensation program for senior executives excludes pay practices that the Board believes are contrary to high performance standards and the interests of shareholders:
| No employment contracts (i.e., executives may be terminated for poor performance without triggering any special payments); |
| No payments or benefits triggered by a change in control (e.g., a merger); |
| No severance programs; |
| No repricing of equity incentive awards; and |
| No tax gross-ups (other than for relocation, which is a benefit available to all professional and managerial employees). |
Prior Say-on-Pay Vote and Shareholder Engagement
The Compensation Committee has carefully considered the results of the 2013 advisory vote on executive compensation, in which more than 70 percent of votes cast were FOR the compensation of the Named Executive Officers as described in the 2013 proxy statement. The Committee also discussed the Companys executive compensation program with its independent consultant, as described in more detail beginning on page 11 of the proxy statement.
The Committee considered shareholder feedback on executive compensation received through a wide-ranging dialogue between management and numerous shareholders, including the Companys largest shareholders, many of whom have held ExxonMobil stock for over a decade. This dialogue took place both before and after the 2013
61
advisory vote on 2012 compensation and included one-on-one calls with the Companys largest shareholders as well as a webcast available to all shareholders. This provided an excellent opportunity to discuss the alignment between pay and performance, including the Companys long-standing philosophy that executive compensation should be based on long-term performance.
We concluded from this dialogue with shareholders and the analysis outlined on pages 33 to 35 of the CD&A of this proxy statement that a formula-based approach that relies heavily on one- or three-year total shareholder returns could encourage inappropriate risk taking; have a lasting and negative impact on ExxonMobils business by encouraging a focus on more immediate results at the expense of our long-term underlying business model; and through the use of steep payout factors, generate payouts for executives that are misaligned with the gains or losses incurred by long-term shareholders.
In contrast, the Committee believes that the current compensation program described herein achieves the following:
| Accountability: Holds senior executives accountable for many years, extending well beyond retirement date, with long vesting periods; |
| Alignment: Links financial gains or losses of each executive to the experience of the long-term shareholder and aligns strongly with ExxonMobil business model; |
| Performance and Results: Keeps executives focused on delivering industry-leading results (operating and financials results, as well as progress on key strategic priorities, are outlined beginning on page 26 of the CD&A); and |
| Retention: Supports continuity of leadership by encouraging a career orientation. |
This ensures that executives maintain an unwavering focus on the long-term performance of the business that we expect will continue to generate strong operating and financial results for the benefit of our long-term shareholders.
The Committee respects all shareholder votes, both FOR and AGAINST our compensation program. The Committee is committed to continued engagement between shareholders and the Company to fully understand diverse viewpoints and discuss the important connections between ExxonMobils compensation program, business strategy, and long-term financial and operating performance.
Summary
| ExxonMobils compensation program supports a business model that has weathered volatile commodity prices and industry business cycles for many years (Chart 6 on page 29 of the CD&A). |
| The program sets ExxonMobil apart and has established a culture of performance, integrity, reliability, and consistency. |
| Through this business model and the underlying compensation program and management practices that support it, the Company has become the partner of choice for many national oil companies and major investors in the oil, gas, and petrochemical industry. |
| The Company has taken additional steps to address questions raised by shareholders, including, on multiple occasions, careful consideration of alternative methods of granting stock-based awards (summary on pages 33 to 35 of the CD&A). |
| We believe ExxonMobils business model and supporting compensation program will continue to serve shareholders well in the future. |
For the reasons summarized above and discussed in more detail in this proxy statement, the Board recommends an advisory vote FOR the following resolution:
RESOLVED: That shareholders approve the compensation of the Named Executive Officers as disclosed pursuant to Item 402 of SEC Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and narrative discussion on pages 24 to 58 of this proxy statement.
62
We expect Items 4 through 8 to be presented by shareholders at the annual meeting. Following SEC rules, other than minor formatting changes, we are reprinting the proposals and supporting statements as they were submitted to us. We take no responsibility for them. Upon oral or written request to the Secretary at the address listed under Contact Information on page 3, we will provide information about the sponsors shareholdings, as well as the names, addresses, and shareholdings of any co-sponsors.
The Board recommends you vote AGAINST Items 4 through 8 for the reasons we give after each one.
ITEM 4 MAJORITY VOTE FOR DIRECTORS
This proposal was submitted by the United Brotherhood of Carpenters Pension Fund, 101 Constitution Avenue NW, Washington, D.C. 20001, the beneficial owner of 55,630 shares.
RESOLVED: That the shareholders of Exxon Mobil Corporation (Company) hereby request that the Board of Directors initiate the appropriate process to amend the Companys bylaws to provide that director nominees shall be elected by the affirmative vote of the majority of votes cast at an annual meeting of shareholders, with a plurality vote standard retained for contested director elections, that is, when the number of director nominees exceeds the number of board seats.
Supporting Statement: Exxon Mobil Corporations Board of Directors should establish a majority vote standard in director elections in order to provide shareholders a meaningful role in these important elections. The proposed majority vote standard requires that a director nominee receive a majority of the votes cast in an election in order to be formally elected. The Companys current plurality standard is not well-suited for the typical director election that involves only a management slate of nominees running unopposed. Under these election circumstances, a board nominee is elected with as little as a single affirmative vote, even if a substantial majority of the withhold votes are cast against the nominee. So-called withhold votes simply have no legal consequence in uncontested director elections. We believe that a majority vote standard in board elections establishes a challenging vote standard for board nominees, enhances board accountability, and improves the performance of boards and individual directors.
Over the past eight years, nearly 87% of the companies in the S&P 500 Index have adopted a majority vote standard in company bylaws, articles of incorporation, or charter. These companies have also adopted a director resignation policy that establishes a board-centered post-election process to determine the status of any director nominee that is not elected. This dramatic move to a majority vote standard is in direct response to strong shareholder demand for a meaningful role in director elections. However, ExxonMobil has responded only partially to the call for change, simply adopting a post-election director resignation policy that sets procedures for addressing the status of director nominees that receive more withhold votes than for votes. The plurality vote standard remains in place.
Exxon Mobil Corporations Board of Directors has not acted to establish a majority vote standard, despite the fact that all of its self-identified peer companies including Chevron, ConocoPhillips, Boeing, General Electric, Johnson & Johnson, United Technologies, Pfizer and AT&T have adopted majority voting. The Board should adopt a majority vote standard in its governance documents and then refashion its director resignation policy to address the status of unelected directors. A majority vote standard combined with a post-election director resignation policy would establish meaningful voting rights for shareholders in director elections at ExxonMobil, while reserving for the Board an important post-election role in determining the continued status of an unelected director. We urge the Board to join the mainstream of major U.S. companies and establish a majority vote standard.
The Board recommends you vote AGAINST this proposal for the following reason:
Corporate Governance Guidelines currently require a director to tender his or her resignation if the director does not receive a majority of votes cast in favor of election. In the absence of a compelling reason, the resignation will be accepted.
63
The Board believes that this step adequately addresses the proponents concerns, and that amendment of the By-Laws is not needed at this time.
This proposal was submitted by Mr. Kenneth Steiner, 14 Stoner Ave., 2M, Great Neck, NY 11021, the beneficial owner of 500 shares.
Proposal 5 Curb Excessive Directorships
RESOLVED: Shareholders recommend that our Board take the steps necessary to adopt a bylaw to limit our directors to a maximum of 3 board memberships in companies with sales in excess of $500 million annually. The bylaw should also specify how to address a situation where a director may have a brief temporary situation above these limits. (Applies only to nominees for directors at meetings subsequent to the upcoming 2014 annual meeting.)
Adoption of this proposal could help deter our directors from accepting further director assignments that would rob them of the adequate time to deal with the complex and troubling problems of our company. Adoption could also deter our board committees from getting new directors who would not have adequate time for effective oversight. For instance, Peter Brabeck-Letmathe was on our demanding audit committee and yet was potentially over-burdened with director duties at 6 companies. Steven Reinemund, also on our audit committee, was potentially over-burdened with director duties at 4 companies. William Weldon also had director duties at 4 companies.
This proposal should also be more favorably evaluated due to our concerns about our executive pay $40 million for Rex Tillerson. Plus only 43% of Exxon shares outstanding approved Exxons pay for top executives.
Please vote to protect shareholder value.
Curb Excessive Directorships Proposal 5
The Board recommends you vote AGAINST this proposal for the following reasons:
The Board Affairs Committee reviews requests by directors to accept a seat on any additional public company board and refers the matter to the Board with the Committees recommendation whether such request should be approved.
In addition, the Board Affairs Committee reviews, at least annually, the service of all directors on the boards of other public companies with consideration to the substantial time commitment required of directors and makes such recommendations to the Board as it may deem advisable. It should be noted that Mr. Brabeck-Letmathe serves on only four boards of public companies including ExxonMobil. Also, last year Directors received on average more than 96 percent of votes cast in favor of election.
The proponent also refers to the 2013 shareholder advisory vote on executive compensation on the basis of shares outstanding. This is not a meaningful approach since New Jersey law requires voting on this type of shareholder proposal to be based on shares cast FOR and AGAINST. Tallied on this basis, the Companys 2013 Say-on-Pay vote was nearly 71 percent in favor.
The Board recommends a slate of director candidates to the shareholders for election each year, and so, believes that it is in the best position to determine the balance between the appropriate number of other board memberships and commitment to ExxonMobils Board. Therefore, the arbitrary limits proposed by the proponent are not necessary.
ITEM 6 AMENDMENT OF EEO POLICY
This proposal was submitted by the New York State Common Retirement Fund, 633 Third Avenue 31st Floor, New York, NY 10017, the beneficial owner of 12,987,035 shares and lead proponent of a filing group.
Whereas: Exxon Mobil Corporation does not explicitly prohibit discrimination based on sexual orientation and gender identity in its written employment policy;
64
Over 90% of the Fortune 500 companies have adopted written nondiscrimination policies prohibiting harassment and discrimination on the basis of sexual orientation, as have more than 95% of Fortune 100 companies, according to the Human Rights Campaign. Over 70% of the Fortune 100 and 57% of the Fortune 500 now prohibit discrimination based on gender identity or expression;
We believe that corporations that prohibit discrimination on the basis of sexual orientation and gender identity have a competitive advantage in recruiting and retaining employees from the widest talent pool;
According to an October, 2009 survey by Harris Interactive and Witeck-Combs, 44% of gay and lesbian workers in the United States reported an experience with some form of job discrimination related to sexual orientation; an earlier survey found that almost one out of every 10 gay or lesbian adults also stated that they had been fired or dismissed unfairly from a previous job, or pressured to quit a job because of their sexual orientation;
Twenty-one states, the District of Columbia and more than 160 cities and counties, have laws prohibiting employment discrimination based on sexual orientation; 16 states and the District of Columbia have laws prohibiting employment discrimination based on sexual orientation and gender identity;
Minneapolis, San Francisco, Seattle and Los Angeles have adopted legislation restricting business with companies that do not guarantee equal treatment for gay and lesbian employees;
Our company has operations in, and makes sales to institutions in states and cities that prohibit discrimination on the basis of sexual orientation;
National public opinion polls consistently find more than three quarters of the American people support equal rights in the workplace for gay men, lesbians and bisexuals; for example, in a Gallup poll conducted in May 2009, 89% of respondents favored equal opportunity in employment for gays and lesbians;
Resolved: The Shareholders request that ExxonMobil amend its written equal employment opportunity policy to explicitly prohibit discrimination based on sexual orientation and gender identity and to substantially implement the policy.
Supporting Statement: Employment discrimination on the basis of sexual orientation and gender identity can diminish employee morale and productivity. Because state and local laws are inconsistent with respect to employment discrimination, our company would benefit from a consistent, corporate wide policy to enhance efforts to prevent discrimination, resolve complaints internally, and ensure a respectful and supportive atmosphere for all employees. ExxonMobil will enhance its competitive edge by joining the growing ranks of companies guaranteeing equal opportunity for all employees.
The Board recommends you vote AGAINST this proposal for the following reasons:
ExxonMobil is committed to having a workplace that facilitates the maximum contribution from all of our employees. While there are many factors that are important to creating this type of environment, one of the most significant is having a workplace that is free from any form of harassment or discrimination.
The Board has reviewed in detail ExxonMobils existing global policies that prohibit all forms of discrimination, including those based on sexual orientation and gender identity, in any Company workplace, anywhere in the world. In fact, ExxonMobils policies go beyond the law and prohibit any form of discrimination. Based on these existing all-inclusive, zero-tolerance policies, the Board believes the proposal is unnecessary.
The Companys Equal Employment Opportunity (EEO) and Harassment in the Workplace policies, which are included in the Standards of Business Conduct (Standards), constitute only one component of our employment nondiscrimination policies. Other communication initiatives, training programs, and investigative and stewardship processes explicitly state that any form of discrimination or harassment in the workplace based on sexual orientation will not be tolerated; and more broadly, that no form of discrimination or harassment in the workplace will be tolerated. It is these elements, as a totality, that constitute ExxonMobils policies.
As stated in the EEO portion of the Standards, the Company administers its personnel policies, programs, and practices in a nondiscriminatory manner in all aspects of the employment relationship, including recruitment, hiring, work assignment, promotion, transfer, termination, wage and salary administration, and selection for training. ExxonMobil is a meritocracy, with programs and policies designed to employ the best people, recognize and
65
reward superior job performance, and to create an environment in which employees can maximize their contributions and reach their full potential. A discrimination-free environment is essential to meet these objectives. For countries in which the national laws require specific language regarding nondiscrimination based on sexual orientation or gender identity be explicitly included in policies, we have amended our policies as appropriate.
A written statement by our Chairman regarding ExxonMobils commitment to nondiscrimination, including that based on sexual orientation, is widely accessible to all employees on the Company intranet, and we provide training programs for new employees and refresher courses for existing employees. The harassment training material included in our Working Together booklet includes examples and references specifically based on sexual orientation. As a part of our ongoing policy stewardship, ExxonMobil also has annual reporting and compliance procedures, which include a letter to all senior managers emphasizing their responsibilities regarding maintaining work environments free from any form of harassment and discrimination.
This proposal was submitted by the United Steelworkers, Five Gateway Center, Pittsburgh, PA 15222, the beneficial holder of 116 shares.
Whereas, corporate lobbying exposes our company to risks that could affect the companys stated goals, objectives, and ultimately shareholder value, and
Whereas, we rely on the information provided by our company to evaluate goals and objectives, and we, therefore, have a strong interest in full disclosure of our companys lobbying to assess whether our companys lobbying is consistent with its expressed goals and in the best interests of shareholders and long-term value.
Resolved, the shareholders of Exxon Mobil Corporation (ExxonMobil) request the Board authorize the preparation of a report, updated annually, disclosing:
1. | Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications. |
2. | Payments by ExxonMobil used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient. |
3. | ExxonMobils membership in and payments to any tax-exempt organization that writes and endorses model legislation. |
4. | Description of the decision making process and oversight by management and the Board for making payments described in sections 2 and 3 above. |
For purposes of this proposal, a grassroots lobbying communication is a communication directed to the general public that (a) refers to specific legislation or regulation, (b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with respect to the legislation or regulation. Indirect lobbying is lobbying engaged in by a trade association or other organization of which ExxonMobil is a member.
Both direct and indirect lobbying and grassroots lobbying communications include efforts at the local, state and federal levels.
The report shall be presented to the Audit Committee or other relevant oversight committees of the Board and posted on the companys website.
Supporting Statement
As shareholders, we encourage transparency and accountability in the use of staff time and corporate funds to influence legislation and regulation both directly and indirectly. Absent a system of accountability, company assets could be used for objectives contrary to ExxonMobils long-term interests.
ExxonMobil spent approximately $30 million in 2011 and 2012 on direct federal lobbying activities (Senate reports). These figures do not include lobbying expenditures to influence legislation in states. ExxonMobil lobbied at
66
the state level with at least 286 lobbyists in 35 states between 2003 and 2011 (National Institute on Money in State Politics). ExxonMobil is listed as a member of the American Petroleum Institute (API), and Rex Tillerson is a member of the Business Roundtable (BRT). In 2011 and 2012, BRT spent more than $31 million on lobbying. ExxonMobil does not disclose its memberships in, or payments to, trade associations, or the portions of such amounts used for lobbying.
We encourage our Board to require comprehensive disclosure related to direct, indirect and grassroots lobbying.
The Board recommends you vote AGAINST this proposal for the following reasons:
ExxonMobil complies fully with all state and federal requirements concerning lobbying activity and related disclosures. Pursuant to the federal Lobby Disclosure Act, ExxonMobil publicly reports on a quarterly basis to Congress its lobbying expenses, including the portion of trade association dues used for lobbying purposes, and the specific issues lobbied, which are accessible to the general public on the U.S. Senates website at senate.gov.
The Board believes the rigor of these requirements provides ample transparency and accountability of our lobbying activities to the general public, including shareholders. The U.S. Congress and Executive Branch are the appropriate recipients of the proponents specific positions on our nations disclosure laws, and any proposed reforms sought.
While the proponent claims that, corporate lobbying exposes our company to risks, the Company believes that the failure to engage in critical public policy developments, including communications with elected officials, would represent a far greater risk to shareholders interests. In our pluralistic, democratic society, public policies are optimized when multiple voices are heard in our national political discourse.
ExxonMobil, like many U.S. companies, labor unions, and other entities, engages in lobbying in the United States at both the federal and state levels to effectively explain or advocate the Companys position when necessary. The Companys engagement on important public policy issues ranges from support of improved educational quality in science, technology, engineering, and mathematics (STEM), to expanded energy development and security.
The Company has an established practice to determine which public policy issues are important to ExxonMobil, which includes gaining input from affected business lines and functional departments such as Law and Public and Government Affairs. Key issues and lobbying activities and expenses are reviewed at least annually by senior management and the Board of Directors. Detailed disclosures concerning internal deliberations on public policy issues could be competitively harmful, and would be of questionable utility to shareholders.
ITEM 8 GREENHOUSE GAS EMISSIONS GOALS
This proposal was submitted by the Sisters of St. Dominic of Caldwell New Jersey, 40 South Fullerton Avenue, Montclair, NJ 07042, the beneficial owner of 200 shares and lead proponent of a filing group.
WHEREAS:
Mounting scientific, social, and financial evidence demonstrates the urgency to establish and meet specific, measurable, and sustainable goals to reduce greenhouse gas (GHG) emissions.
On May 9, 2013, NOAA reported atmospheric levels of carbon dioxide (CO2) at 400 parts per million (ppm), well above the 350 ppm level to which scientists believe we must return. This tipping point is reflected in severe weather events including typhoons, heat waves, and hurricanes, creating a profound obligation for all GHG producers especially those within the oil and gas industry to reduce emissions in their operations and products.
To mitigate the worst impacts of climate change and achieve the international goal of limiting global warming to below 2°C, the Intergovernmental Panel on Climate Change estimates that a 50 percent reduction in GHG emissions globally is needed by 2050.
According to the International Energy Agency, meeting the 2°C limit will require that 2/3 of total proven global fossil fuel reserves, which comprises nearly 50% of oil and gas reserves, be left in the ground. Yet existing ExxonMobil assets, like Kearl oil sands, will be active for decades, while the company spends nearly $37 billion annually in exploration and development of additional reserves.
67
In order to seriously reduce CO2 emissions, ExxonMobil must address the emissions associated with its products, which far outweigh its operational emissions as the major source of its climate-related risk.
President Obamas Climate Action Plan to reduce emissions 17% by 2020, and EPA Fuel Efficiency Standards requiring autos to average 54.5 MPG by 2025, demand the development of a new generation of fuels that will be economically and environmentally sustainable.
Citigroup, and others, report that global oil demand could peak by 2020, with potentially significant implications for oil price and shareholder profits.
Sixty percent of Fortune 100 and Global 100 companies have set GHG reduction goals. Reduction goals enable companies to reduce costs, build resilient supply chains, manage operational and reputational risk, and create new products and services. CDP reports High emitting companies that set absolute emissions reduction targets achieved reductions double the rate of those without targets with 10% higher firm-wide profitability.
ExxonMobils response to the severity of the climate crisis, as well as to investors seven-year request for GHG reduction goals in operations and products, has been wholly inadequate. ExxonMobil investors request quantifiable and actionable goals to reduce GHG emissions that are integrated into our overall business strategy. Investors expect ExxonMobil to take leadership in developing solutions to this global challenge as the company plays such a critical role in energy markets.
RESOLVED: Shareholders request that the Board of Directors adopt quantitative goals, based on current technologies, for reducing total greenhouse gas emissions from the Companys products and operations; and that the Company report to shareholders by November 30, 2014, on its plans to achieve these goals. Such a report will omit proprietary information and be prepared at reasonable cost.
The Board recommends you vote AGAINST this proposal for the following reasons:
ExxonMobil provides extensive public disclosure on its approach to managing the risks of climate change, including corporate governance, operations and product initiatives, risks and opportunities, and emissions performance in its Carbon Disclosure Project (CDP) submission posted on our external website at exxonmobil.com/climate. These CDP submissions have included business-specific goals such as improvements in refining and chemical manufacturing, energy efficiency, and reductions in upstream flaring.
ExxonMobils scientists, engineers, and management continually seek opportunities to improve efficiency and reduce emissions from our operations and from customers use of our products. Expanded use of energy-efficient technologies and less carbon-intensive energy sources is a key reason why energy demand is projected to grow at only 28 percent of gross domestic product (GDP) growth from 2010 to 2040, with GHG emissions growth at about 53 percent that of energy demand. The cost of energy provides significant incentive to reduce energy use and develop energy efficient products, as evidenced by a long history of significant improvements in energy use per unit of GDP around the world.
The Board does not believe that setting absolute goals is the most effective way to manage climate risks. Rather, we feel it is essential to apply ExxonMobils technical and management capabilities to meet growing global demand for energy efficiently and to pursue technical solutions to address greenhouse gas (GHG) emissions and the risks of climate change.
Even after accounting for significant improvements in energy efficiency, projections for global energy needs (e.g., International Energy Agency, ExxonMobils Outlook for Energy) indicate that absolute demand for energy from petroleum and natural gas will continue to increase for decades, supporting improved living standards for people around the world.
In general, it requires energy to produce and process oil and gas, so increases in production volumes that are needed to meet the worlds rising need for energy will lead to increases in emissions from our operations and from end use by customers. To be accurate, goals for absolute GHG emissions would need to reflect the coincident impact of largely unforeseeable factors that influence year-to-year changes in market demand, including macroeconomic issues, weather, and responses by national oil companies. Goals that reflect so many variables would be impractical for guiding business performance.
68
As ExxonMobil seeks to increase production of oil and gas to meet growing global energy demand and to maintain leadership in return to shareholders, the Company will continue taking steps to improve efficiency, reduce emissions, and contribute to effective long-term solutions to manage climate risks.
Other Business
We are not currently aware of any other business to be acted on at the meeting. Under the laws of New Jersey, where ExxonMobil is incorporated, no business other than procedural matters may be raised at the meeting unless proper notice has been given to the shareholders. If other business is properly raised, your proxies have authority to vote as they think best, including to adjourn the meeting.
People with Disabilities
We can provide reasonable assistance to help you participate in the meeting if you tell us about your disability and your plans to attend. Please call or write the Secretary at least two weeks before the meeting at the telephone number, address, or fax number listed under Contact Information on page 3.
Outstanding Shares
On February 28, 2014, there were 4,310,332,037 shares of common stock outstanding. Each common share has one vote.
How We Solicit Proxies
In addition to this mailing, ExxonMobil officers and employees may solicit proxies personally, electronically, by telephone, or with additional mailings. ExxonMobil pays the costs of soliciting this proxy. We are paying D.F. King & Co. a fee of $30,000 plus expenses to help with the solicitation. We also reimburse brokers and other nominees for their expenses in sending these materials to you and getting your voting instructions.
Shareholder Proposals for Next Year
Any shareholder proposal for the annual meeting in 2015 must be sent to the Secretary at the address or fax number of ExxonMobils principal executive office listed under Contact Information on page 3. The deadline for receipt of a proposal to be considered for inclusion in the 2015 proxy statement is 5:00 p.m., Central Time, on December 12, 2014. The deadline for notice of a proposal for which a shareholder will conduct his or her own solicitation is February 25, 2015. Upon request, the Secretary will provide instructions for submitting proposals.
Duplicate Annual Reports
Registered shareholders with multiple accounts may authorize ExxonMobil to discontinue mailing extra annual reports by marking the discontinue annual report mailing for this account box on the proxy card. If you vote via the Internet or by telephone, you will also have the opportunity to indicate that you wish to discontinue receiving extra annual reports. At least one account must continue to receive an annual report. Eliminating these duplicate mailings will not affect receipt of future proxy statements and proxy cards.
You may discontinue duplicate mailings by calling ExxonMobil Shareholder Services at the toll-free telephone number listed on page 3 at any time during the year. Beneficial holders should contact their banks, brokers, or other holders of record to discontinue duplicate mailings.
Shareholders with the Same Address
If you share an address with one or more ExxonMobil shareholders, you may elect to household your proxy mailing. This means you will receive only one set of proxy materials at that address unless one or more shareholders at that address specifically elect to receive separate mailings. Shareholders who participate in householding will continue to receive separate proxy cards. Householding will not affect dividend check mailings. We will promptly send separate proxy materials to a shareholder at a shared address on request. Shareholders with a shared address may also request us to send separate proxy materials in the future, or to send a single copy in the future, if we are currently sending multiple copies to the same address.
69
Requests related to householding should be made by calling ExxonMobil Shareholder Services at the telephone number listed on page 3. Beneficial shareholders should request information about householding from their banks, brokers, or other holders of record.
SEC Form 10-K
Shareholders may obtain a copy of the Corporations Annual Report on Form 10-K to the Securities and Exchange Commission without charge by writing to the Secretary at the address listed under Contact Information on page 3, or by visiting ExxonMobils website at exxonmobil.com/secfilings.
Statements regarding future events or conditions are forward-looking statements. Actual future results, including project plans, schedules, and results, as well as the impact of compensation incentives, could differ materially due to changes in oil and gas prices and other factors affecting our industry, technical or operating conditions, and other factors described under the heading Factors Affecting Future Results in our most recent Form 10-K. References to oil-equivalent barrels and other quantities of oil and gas herein include amounts not yet classified as proved reserves under SEC rules, but which we believe will ultimately be moved into the proved category and produced.
The term project can refer to a variety of different activities and does not necessarily have the same meaning as in any government payment transparency reports.
70
ExxonMobil 2014 Annual Meeting
Wednesday, May 28, 2014
9:30 a.m., Central Time
Morton H. Meyerson Symphony Center
2301 Flora Street
Dallas, Texas 75201
| Free parking is available at the Hall Arts Center Parking Garage. Traffic and construction in the area may cause a delay; please allow extra time for parking. |
| From I-45/Hwy. 75 Take I-35E exit (Woodall Rodgers Frwy.) to Pearl Street exit or St. Paul exit (follow frontage road east to Pearl Street); turn south and continue to Ross Avenue; turn left to the Hall Arts Center Parking Garage. |
| From I-35E Take I-45/Hwy. 75 exit (Woodall Rodgers Frwy.) to Pearl Street exit; continue to Ross Avenue; turn left to the Hall Arts Center Parking Garage. |
| From DFW Airport Take South exit to Hwy. 183 East (merges with I-35E); follow directions from I-35E (above). |
| From Love Field Exit airport on Mockingbird Lane west to I-35E South; follow directions from I-35E (above). |
Printed entirely on recycled paper | 002CSN33FD |
|
Electronic Voting Instructions
You may vote by Internet or telephone 24 hours a day, 7 days a week. Login details are located in the shaded bar below.
Please vote immediately. Your vote is important. | |||||||
Vote by Internet | ||||||||
Go to www.investorvote.com/exxonmobil or scan the QR code with your smartphone
Follow the steps outlined on the secure website | ||||||||
Vote by Telephone Call toll free at 1-800-652-VOTE (8683) Outside the U.S., Canada, and Puerto Rico, call 1-781-575-2300 through an operator and we will accept the charge |
Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. |
x |
q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q |
A | VOTING ITEMS |
The Directors recommend a vote FOR items 1 through 3.
1. Election of Directors (page 17): |
The Directors recommend a vote AGAINST shareholder proposal items 4 through 8. | + | ||||||||||||||||||||||
For | Against | Abstain | ||||||||||||||||||||||
For | Withhold | For | Withhold | 4. Majority Vote for Directors (page 63) |
¨ | ¨ | ¨ | |||||||||||||||||
01 - M.J. Boskin | ¨ | ¨ | 07 - K.C. Frazier | ¨ | ¨ | 5. Limit Directorships (page 64) |
¨ | ¨ | ¨ | |||||||||||||||
02 - P. Brabeck-Letmathe | ¨ | ¨ | 08 - W.W. George | ¨ | ¨ | 6. Amendment of EEO Policy (page 64) |
¨ | ¨ | ¨ | |||||||||||||||
03 - U.M. Burns | ¨ | ¨ | 09 - S.J. Palmisano | ¨ | ¨ | 7. Report on Lobbying (page 66) |
¨ | ¨ | ¨ | |||||||||||||||
04 - L.R. Faulkner | ¨ | ¨ | 10 - S.S Reinemund | ¨ | ¨ | 8. Greenhouse Gas Emissions Goals (page 67) |
¨ | ¨ | ¨ | |||||||||||||||
05 - J.S. Fishman | ¨ | ¨ | 11 - R.W. Tillerson | ¨ | ¨ | |||||||||||||||||||
06 - H.H. Fore | ¨ | ¨ | 12 - W.C. Weldon | ¨ | ¨ | |||||||||||||||||||
For |
Against | Abstain | ||||||||||||||||||||||
2. Ratification of Independent Auditors (page 60) |
¨ | ¨ | ¨ | |||||||||||||||||||||
3. Advisory Vote to Approve Executive Compensation (page 60) |
¨ | ¨ | ¨ |
Please sign on the reverse side if voting by mail.
c/o Computershare Investor Services
P.O. Box 43105
Providence, RI 02940-5076
2014 Annual Meeting of Shareholders Admission Ticket
|
||||
TIME: | Wednesday, May 28, 2014 9:30 a.m., Central Time |
|||
PLACE: |
Morton H. Meyerson Symphony Center 2301 Flora Street Dallas, Texas 75201 |
|||
AUDIO WEBCAST: |
A slide presentation with audio will be available on the Internet at exxonmobil.com. Instructions will appear on the website prior to the event. |
|||
ADMISSION: |
This ticket will admit shareholder. Ticket for one guest can be requested at Admissions desk at the annual meeting. Valid admission ticket and government-issued picture identification are required for shareholder and guest. |
q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PROXY/VOTING INSTRUCTIONS
Solicited by the Board of Directors |
+ |
The undersigned hereby appoints, and instructs the appropriate account trustee(s), if any, to appoint, M.J. Boskin, W.W. George, S.J. Palmisano, S.S Reinemund, and R.W. Tillerson, or each or any of them, with power of substitution, proxies to act and vote shares of common stock of the undersigned at the 2014 annual meeting of shareholders of Exxon Mobil Corporation and at any adjournments thereof, as indicated, upon all matters referred to on the reverse side and described in the proxy statement for the meeting and, at their discretion, upon any other matters that may properly come before the meeting.
This proxy covers shares of ExxonMobil common stock registered in the name of the undersigned (whether certificated or book entry) and shares held in the name of the undersigned in the Computershare Investment Plan. This card also provides voting instructions to the applicable trustees for any shares held in the name of the undersigned in the ExxonMobil Savings Plan and/or a Computershare Investment Plan IRA.
If no other indication is made on the reverse side of this form, the proxies/trustees shall vote: (a) for the election of the director nominees; and (b) in accordance with the recommendations of the Board of Directors on the other matters referred to on the reverse side.
B | NON-VOTING ITEMS |
Annual Report Mailing | Change of Address Please print your new address below. | Comments Please print your comments below. | ||||||||||
¨ |
Mark box with an X to discontinue annual report mailing for this account. | |||||||||||
` |
C | AUTHORIZED SIGNATURES This section must be completed for your vote to be counted. Date and sign | |
below. |
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. |
Date (mm/dd/yyyy) Please print date below. |
Signature 1 Please keep signature within the box. |
Signature 2 Please keep signature within the box. | ||||||
/ / |
|
|
+ | ||||
002CSP0054