Slide 1: Executive Compensation Overview
Executive Compensation Overview ExxonMobil Energy lies here™ 2016 Audio Webcast May 12, 2016 10:00 a.m. CT Jeffrey J. Woodbury Vice President, Investor Relations and Secretary Randy Powers Compensation, Benefit Plans & Policies Manager Before you cast your vote on Management Resolution Item 3 - Advi
Slide 2: Agenda
Agenda Introduction Shareholder Engagement Key Highlights of the Executive Compensation Program Shareholder Proposals Q&A Definitions of Frequently Used Terms and all footnotes included in this presentation are contained at the back of this presentation.
Slide 3: Welcome and webinar introduction
• Good morning and welcome to today’s webinar during which Randy Powers and I will cover key highlights of ExxonMobil’s executive compensation program and shareholder proposals. • As in prior years, this webinar is part of a broad shareholder outreach effort at the direction of the Compensation Comm
Slide 4: Shareholder Engagement
Shareholder Engagement ¡ Ongoing engagement is important -Keeps shareholders informed on relevant business matters ¡ Variety of venues: -Shareholder meetings, including Annual Shareholders Meeting -Website and publications -Webcasts ¡ Established procedures for direct communication with Directors ¡
Slide 5: Ongoing shareholder engagement
• We believe ongoing engagement with our shareholders is vitally important, and keeping shareholders informed on relevant business matters is a key priority for us. • The Company connects with shareholders through a variety of venues. We engage directly with key shareholders throughout the year to m
Slide 6: Key Messages and Why Vote For Say-On-Pay
Key Messages and Why Vote “For” Say-On-Pay? Shareholder Engagement and Prior Say-On-Pay Vote 2015 Say-On-Pay Executive Summary How did we perform? How do we link performance and pay? How did we pay? How do we manage risk? Key Messages How did we perform? >How do we link performance and pay? >How did
Slide 7: Strategic design choices in compensation program
• I would like to start today’s overview by reflecting on the strategic design choices in our executive compensation program that underpin our goal of achieving sustainable growth in shareholder value. Specifically, our compensation program is designed to reward outperformance, drive sustainability,
Slide 8: 2015 Say-On-Pay results
Executive Summary How did we perform? How do we link performance and pay? How did we pay? How do we manage risk? Key Messages and Why Vote “For” Say-On-Pay? | Shareholder Engagement and Prior Say-On-Pay Vote | 2015 Say-On-Pay 2015 Say-On-Pay • Say-On-Pay Results: 90.1 percent “For” We heard positive
Slide 9: Shareholder engagement and 2015 vote feedback
• As Jeff mentioned in his opening remarks, ongoing shareholder engagement is a high priority for ExxonMobil and the Compensation Committee of the Board of Directors. We are committed to engagement between shareholders and the Company to fully understand the diverse viewpoints on the topic of execut
Slide 10: Safety and ROCE performance
Executive How do we link Summary performance and pay? How did we pay? How do we manage risk? Safety and ROCE Shareholder Returns Free Cash Flow and Shareholder Distributions Strategic Business Results Industry-leading performance across companies within the oil and gas industry of similar scale and
Slide 11: Safety and ROCE commentary
• Thank you, Randy • As you mentioned, the Compensation Committee evaluates 7 key metrics including safety and operations integrity, return on average capital employed (ROCE), total shareholder return (TSR), free cash flow, shareholder distributions, strategic business results, and project execution
Slide 12: Shareholder returns and TSR
Executive How do we link Summary performance and pay? How did we pay? How do we manage risk? Safety and ROCE Shareholder Returns Free Cash Flow and Shareholder Distributions Strategic Business Results Industry-leading performance across companies within the oil and gas industry of similar scale and
Slide 13: Cumulative returns commentary
• Charts 3 and 4 depict shareholder returns. • Specific to 10-year cumulative returns, ExxonMobil has generated superior returns through a range of economic environments and cycles, including strong relative performance through the industry downturn. – The addition of Brent price over this same 10-y
Slide 14: Free Cash Flow and Shareholder Distributions
Executive How did How do we link How did How do we Summary we perform? performance and pay? we pay? manage risk? Safety and ROCE Shareholder Returns Free Cash Flow and Shareholder Distributions Strategic Business Results Industry-leading performance across companies within the oil and gas industry o
Slide 15: Free cash flow and distributions commentary
• Another measure of the value created by ExxonMobil through strong financial and operating performance is the amount of free cash that provides capacity for investments and shareholder distribution. • ExxonMobil generated about $6 billion of free cash flow in 2015, reflective of our disciplined cap
Slide 16: Strategic Business Results and Project Execution
Executive How did we How do we link How did How do we Summary perform? performance and pay? we pay? manage risk? Safety and ROCE Shareholder Returns Free Cash Flow and Shareholder Distributions Strategic Business Results Industry-leading performance across companies within the oil and gas industry o
Slide 17: Business results commentary
• This brings us to our strategic business results and project execution highlights. • For our Upstream business segment, focus is on capital-efficient resource developments. As an example, we have started up 22 major projects since 2012, which in combination will add almost 1 MOEBD of working inter
Slide 18: Design Objectives
Executive Summary How did we perform? How do we link performance and pay? How did we pay? How do we manage risk? Design Objectives | Compensation Committee Decisions | Highest Performance Standards | Scale and Complexity Design Objectives Compensation program that rewards outstanding performance, pr
Slide 19: Linking performance and pay
Thank you, Jeff. Let me start by drawing the connection between performance and pay. From a compensation program design perspective, we seek to reward outstanding performance, promote retention, and encourage long-term business decisions. Each executive’s total compensation is highly differentiated
Slide 20: Compensation Committee Decisions
Executive Summary How did we perform? How do we link performance and pay? How did we pay? How do we manage risk? Design Objectives Compensation Committee Decisions Highest Performance Standards Scale and Complexity Compensation Committee Decisions • Industry-leading performance over investment lead
Slide 21: Committee benchmarking commentary
As you highlighted, Jeff, the Compensation Committee considered the Company’s performance across 7 key metrics. While not explicitly mentioned, the results in the areas of corporate governance, diversity, and other goals pertinent to sustainable growth in shareholder value are also considered in the
Slide 22: Highest Performance Standards
Executive Summary How did we perform? How do we link performance and pay? How did we pay? How do we manage risk? Design Objectives Compensation Committee Decisions Highest Performance Standards Scale and Complexity Highest Performance Standards Performance must be high in all 7 key areas for executi
Slide 23: Performance standards commentary
The link between performance and pay is most apparent in the way in which we establish the highest performance standards. Ultimately, for our executive officers to receive an overall superior evaluation, performance must be high in all 7 key areas. This also means that outstanding performance in one
Slide 24: Scale and Complexity
Executive Summary How did we perform? How do we link performance and pay? How did we pay? How do we manage risk? Design Objectives Compensation Committee Decisions Highest Performance Standards Scale and Complexity Scale and Complexity (2015 Revenue, dollars in billions) 300 250 200 150 100 50 0 Exx
Slide 25: Scale and scope commentary
I would like to finish this section by highlighting chart 9 which puts in perspective the scale and scope of ExxonMobil and its 3 business segments versus our compensation benchmark companies. The primary factor in determining compensation levels by the Compensation Committee is business and individ
Slide 26: Bonus Program
Executive Summary How did we perform? How do we link performance and pay? How did we pay? How do we manage risk? Bonus Program Equity Program CEO Compensation CEO Pay vs. Benchmark Companies Programs applied consistently for the past 14 years to all executives worldwide, including the CEO Bonus Prog
Slide 27: Bonus program commentary
Let me now turn to the “how did we pay” section. Before we focus on the level of CEO compensation, I will share highlights of our bonus and equity programs, both of which have been applied consistently for the past 14 years to all of our executives worldwide, including the CEO. The annual bonus is d
Slide 28: Equity Program
Executive Summary How did we perform? How do we link performance and pay? How did we pay? How do we manage risk? Bonus Program Equity Program CEO Compensation CEO Pay vs. Benchmark Companies Programs applied consistently for the past 14 years to all executives worldwide, including the CEO Equity Pro
Slide 29: Equity program commentary
This brings me to the equity program which is underpinned by 3 design principles that in combination result in performance and risk profiles aligned with the returns of long-term shareholders: We previously covered the performance award matrix which determines the number of shares at grant on the ba
Slide 30: CEO Compensation
Executive Summary How did we perform? How do we link performance and pay? How did we pay? How do we manage risk? Bonus Program Equity Program CEO Compensation CEO Pay vs. Benchmark Companies CEO Compensation 11. Reported Pay Pay granted to CEO in 2015 is down 18 percent versus 2014 Change reflective
Slide 31: CEO compensation commentary
• With this in mind, let me now shift to CEO compensation. • Chart 11 depicts reported pay as covered in the Summary Compensation Table (SCT), for 2013, 2014, and 2015. • In 2015, CEO reported pay was down 18 percent, reflective of the industry downturn and resulting primarily from a decrease in the
Slide 32: CEO Pay vs. Benchmark Companies
Executive Summary How did we perform? How do we link performance and pay? How did we pay? How do we manage risk? Bonus Program Equity Program CEO Compensation CEO Pay vs. Benchmark Companies CEO Compensation 13. Realized Pay vs. Benchmark Companies(4) CEO’s realized pay is below the median of benchm
Slide 33: Long Vesting Through The Cycle
Executive Summary How did we perform? How do we link performance and pay? How did we pay? How do we manage risk? Long Vesting Through The Cycle Long Vesting and Investment Lead Times Periodic Assessment of Program Design Sound Governance Practices Long Vesting Periods ExxonMobil’s vesting periods fa
Slide 34: Long vesting commentary
Our long vesting periods far exceed competitor practice and are strongly integrated with our business model and the interests of our long-term shareholders, particularly in an industry with significant exposure to volatile commodity prices. Chart 15 illustrates cumulative vested shares year over yea
Slide 35: Long Vesting and Investment Lead Times
Executive Summary How did we perform? How do we link performance and pay? How did we pay? How do we manage risk? Long Vesting Through The Cycle Long Vesting and Investment Lead Times Periodic Assessment of Program Design Sound Governance Practices Long Vesting Periods ExxonMobil’s vesting periods fa
Slide 36: Investment lead times commentary
Chart 16 depicts the same programs as chart 15 but illustrates the frequency and pace of vested shares each year, as compared to the typical net cash flow of a major ExxonMobil project. In this example, the alternate, formula-based program provides a high degree of variability and earlier payout, wh
Slide 37: Periodic Assessment of Program Design
Executive How did How do we link How did How do we Summary we perform? performance and pay? we pay? manage risk? Long Vesting Long Vesting and Periodic Assessment Sound Through The Cycle Investment Lead Times of Program Design Governance Practices Periodic Assessment of Program Design The Compensati
Slide 38: Program assessment commentary
A key step in ensuring that our compensation program addresses the requirement of sustainable risk management includes a periodic assessment of our program. The Compensation Committee periodically evaluates alternative program designs. The last two charts clearly demonstrate that programs with short
Slide 39: program. The Compensation Ci
program. The Compensation Ci model nor the interests of our long-term shareholders. More specifically, periods. ‘sustainable growth in shareholder value. shareholder. die sai bbe used as collateral for any purpose. 10 years, and cannot the c
Slide 40: Sound Governance Practices
Executive Summary How did we perform? How do we link performance and pay? How did we pay? How do we manage risk? Long Vesting Through The Cycle Long Vesting and Investment Lead Times Periodic Assessment of Program Design Sound Governance Practices Sound Governance Practices How our program encourage
Slide 41: Governance practices and closing summary
• And finally, I would like to highlight that our program is underpinned by sound governance practices. • Most of these we have covered in detail throughout this presentation and are based on a desire to encourage significant performance differentiation and discourage inappropriate risk taking. • In
Slide 42: Vote FOR Item 3: Advisory Vote to Approve Executive Compensation
Vote ‘FOR’ Item 3: Advisory Vote to Approve Executive Compensation ExxonMobil’s compensation program supports a business model that has weathered volatile commodity prices and industry business cycles for many years. Our compensation program has contributed to a culture of performance, integrity, re
Slide 43: Board recommendation to vote FOR
Thanks Randy On behalf of your Board of Directors, we recognize your vote is important and encourage you to carefully consider the information provided today and vote FOR the advisory vote to approve executive compensation. ExxonMobil’s compensation program supports a business model that has weather
Slide 44: Shareholder Proposals
Shareholder Proposals The Board recommends you vote AGAINST the following proposals: Item 4 Independent Chairman Item 5 Climate Expert on Board Item 6 Hire an Investment Bank Item 7 Proxy Access Bylaw Item 8 Report on Compensation for Women Item 9 Report on Lobbying Item 10 Increase Capital Distribu
Slide 45: Shareholder proposals introduction
SHAREHOLDER PROPOSALS • I would now like to take a few moments to comment on the shareholder proposals in our proxy statement. We have had robust dialogue with the proponents for each of the proposals submitted, some of which have resulted in proposals ultimately being withdrawn. Further, we have ca
Slide 46: Shareholder Proposals - Governance: Independent Chairman
Shareholder Proposals - Governance INDEPENDENT CHAIRMAN (Item 4) - AGAINST Reasons: = Board retains flexibility to determine appropriate governance structure 85% of Board is independent Presiding Director provides independent Board leadership - Authority to call, chair and set agenda in executive se
Slide 47: Independent Chairman (Item 4)
INDEPENDENT CHAIRMAN (ITEM 4) The first few shareholder proposals touch on governance matters. First among them is a proposal requesting a policy and an amendment to our bylaws that require the Chairman to be an independent member of the Board. • The Board doesn’t support this proposal because it re
Slide 48: Climate Expert on Board (Item 5)
Shareholder Proposals - Governance CLIMATE EXPERT ON BOARD (Item 5) - AGAINST Reasons: Director candidates required to have breadth of experience / demonstrated expertise in managing large, global, complex organizations (See Guidelines) Directors must possess capabilities to address full range of bu
Slide 49: Climate Expert on Board commentary
CLIMATE EXPERT ON BOARD (ITEM 5) The second shareholder proposal asks the Company to add a climate expert on the Board. • The Board’s published Guidelines for the Selection of Non-Employee Directors requires candidates to have the breadth of experience and demonstrated expertise in managing large, g
Slide 50: Hire an Investment Bank (Item 6)
Shareholder Proposals - Governance HIRE AN INVESTMENT BANK (Item 6) - AGAINST Reasons: = Business strategies maximize long-term shareholder value - Includes asset divestments when highest value option * Returned $357 billion to shareholders over last 15 years through distributions
Slide 51: Hire an Investment Bank commentary
HIRE AN INVESTMENT BANK (ITEM 6) Next is a shareholder proposal to hire an investment bank to explore the sale of the Company. - The Company pursues business strategies that maximize long-term shareholder value; its asset management discipline includes considering asset divestments when they are the
Slide 52: Proxy Access Bylaw (Item 7)
Shareholder Proposals - Governance PROXY ACCESS BYLAW (Item 7) - AGAINST Reasons: Support objectives of maintaining high quality / independent board, with broad access to potential candidates Existing process robust: - Ensures required skills, backgrounds and competencies - Shareholders have ability
Slide 53: Proxy Access Bylaw commentary
PROXY ACCESS BYLAW (ITEM 7) Item #7 is a shareholder proposal to adopt a proxy access bylaw. • The Board agrees with the underlying objective of maintaining a high quality and independent board, with broad access to potential candidates. • The existing director nomination process is robust, as it en
Slide 54: Report on Compensation for Women (Item 8)
Shareholder Proposals - Compensation REPORT ON COMPENSATION FOR WOMEN (Item 8) - AGAINST Reasons: • Diversity valued, underpinned by processes to advance women • Promote opportunities through all aspects of employment relationship • Extensive management oversight and review • Compensation based on i
Slide 55: Report on Compensation for Women commentary
REPORT ON COMPENSATION FOR WOMEN (ITEM 8) The next shareholder proposal is a report on compensation for women. • First, let me note that ExxonMobil values diversity and has well-established processes to advance women on a global basis. Leadership opportunities for women are promoted through all aspe
Slide 56: Report on Lobbying (Item 9)
Shareholder Proposals - Public Issues REPORT ON LOBBYING (Item 9) - AGAINST Reasons: Lobbying necessary to explain / advocate corporation’s position (incl. climate change) Policy, procedures and oversight posted in Accountability section of company website Key policy issues reviewed by Management Co
Slide 57: Report on Lobbying commentary
REPORT ON LOBBYING (ITEM 9) The next shareholder proposal is a Report on Lobbying. • As you know, lobbying is an important process to explain or advocate the corporation’s position at both the federal and state levels, much like many other U.S. companies, labor unions, and NGOs. • Our policy and pro
Slide 58: Increase Capital Distributions (Item 10)
Shareholder Proposals - Climate INCREASE CAPITAL DISTRIBUTIONS (Item 10) - AGAINST Reasons: Published Energy and Carbon - Managing the Risks to address questions raised on energy demand, climate change policy and carbon asset risk Annual Outlook for Energy incorporates key variables including expect
Slide 59: Increase Capital Distributions commentary
INCREASE CAPITAL DISTRIBUTIONS (ITEM 10) First among several climate-related proposals is one that seeks to increase capital distributions, meaning dividends and share purchases, in light of climate change related risks. To address questions raised on the topics of global energy demand and supply, c
Slide 60: Policy to Limit Global Warming to 2°C (Item 11)
Shareholder Proposals - Climate POLICY TO LIMIT GLOBAL WARMING TO 2°C (Item 11) - AGAINST Reasons: Company takes the risk of Climate Change seriously, requiring thoughtful action - Reduce risks at minimal societal cost - While providing reliable and affordable energy to improve living standards Focu
Slide 61: Global warming policy commentary
POLICY TO LIMIT GLOBAL WARMING TO 2°C (ITEM 11) Another proponent asks us to establish a policy to limit global warming to 2°C. Let me touch on a few points on how we have proactively addressed this global challenge. First, you should know that the Company takes the risk of Climate Change seriously,
Slide 62: Report on Impacts of Climate Change Policies (Item 12)
Shareholder Proposals - Climate REPORT ON IMPACTS OF CLIMATE CHANGE POLICIES (Item 12) - AGAINST Reasons: Issue framed in Energy and Carbon - Managing the Risks Current processes sufficiently test portfolio to ensure long-term shareholder value - Stress testing in annual Outlook for Energy and inves
Slide 63: Report on Impacts of Climate Change Policies
REPORT ON IMPACTS OF CLIMATE CHANGE POLICIES (ITEM 12) The next climate proposal is a Report on Impacts of Climate Change Policies. 31
Slide 64: All Scenarios Require Ongoing Development
Shareholder Proposals - Climate All Scenarios Require Ongoing Development Liquids Supply/Demand MBDOE 120 100 80 60 40 20 0 Demand: IEA New Policies Scenario Demand: IEA 450 Scenario Liquids Production in the Absence of Further Investment Development Required 2010 – 2035 2010 2015 2020 2025 2030 203
Slide 65: Climate change policies impacts commentary
REPORT ON IMPACTS OF CLIMATE CHANGE POLICIES (ITEM 12) • I mentioned earlier that the Company previously published the report Energy and Carbon – Managing the Risks; this report demonstrates the Board’s focus on the importance of assessing the resiliency of the Company’s resource portfolio. As shown
Slide 66: Report on Impacts of Climate Change Policies (Item 12)
Shareholder Proposals - Climate REPORT ON IMPACTS OF CLIMATE CHANGE POLICIES (Item 12) - AGAINST Reasons: Issue framed in Energy and Carbon - Managing the Risks Current processes sufficiently test portfolio to ensure long-term shareholder value - Stress testing in annual Outlook for Energy and inves
Slide 67: Climate policies stress testing commentary
REPORT ON IMPACTS OF CLIMATE CHANGE POLICIES (ITEM 12) The Board believes that the Company’s current processes sufficiently test its portfolio to ensure long-term shareholder value. Framed by the report mentioned earlier and assessed annually through stress testing in our Outlook for Energy and in i
Slide 68: Report Reserve Replacements in BTUs (Item 13)
Shareholder Proposals - Climate REPORT RESERVE REPLACEMENTS IN BTUs (Item 13) - AGAINST Reasons: Reserves reporting on oil-equivalents basis is industry standard and governed by SEC rules Redundant reporting on BTU basis will not better inform investment community nor influence investment choices Ou
Slide 69: Reserve replacements in BTUs commentary
REPORT RESERVE REPLACEMENTS IN BTUs (ITEM 13) The next shareholder proposal relates to reporting reserve replacements in British Thermal Units, or BTUs. As you know, reserves reporting on an oil-equivalent basis is the industry standard and governed by SEC rules. Redundant reporting on a BTU basis,
Slide 70: Report on Hydraulic Fracturing (Item 14)
Shareholder Proposals - Climate REPORT ON HYDRAULIC FRACTURING (Item 14) - AGAINST Reasons: Published Unconventional Resource Development - Managing the Risks to detail risks and management processes Continued operational enhancements and regulatory development Annual Corporate Citizenship Report de
Slide 71: Hydraulic fracturing commentary
REPORT ON HYDRAULIC FRACTURING (ITEM 14) The last shareholder proposal requests a report on hydraulic fracturing, specifically a subset of data by ‘resource play’ or field level. • In addition to the report I mentioned earlier, the Company has published another significant report entitled Unconventi
Slide 72: Questions
QUESTIONS
Slide 73: Prepared remarks conclusion
This concludes our prepared remarks. We would now be happy to take your questions. 36
Slide 74: Footnotes
Footnotes How did we perform? Charts 1-4: (1) Employees and contractors; includes XTO Energy Inc. data beginning in 2011. (2) Workforce safety data from participating American Petroleum Institute (API) companies; 2015 industry data not available at time of publication. (3) Competitor data estimated
Slide 75: Frequently Used Terms and Cautionary Statements
Frequently Used Terms and Cautionary Statements Frequently Used Terms Please also read the footnotes contained throughout this Overview for additional definitions of terms we use and other important information. Reported Pay is Total Compensation reported in the Summary Compensation Table, except fo