Exxon Mobil Corporation · NYSE:XOM
Exxon Mobil — Shareholder Meeting (May 2014)
45 slides from Exxon Mobil's shareholder meeting presentation, May 14, 2014
Slide 1: Schedule 14A Proxy Statement - Exxon Mobil Corporation
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
Slide 2: Audio Webcast
Audio Webcast May 14, 2014 1:00 p.m. CT Before you cast your vote on Management Resolution Item 3 – Advisory Vote to Approve Executive Compensation, pleasereviewthe Executive Compensation Overview, as well as the more detailed information included in the Compensation Discussion and Analysis, compens
Slide 3: Welcome to today's webinar on executive compensation
• Good afternoon and welcome to today’s webinar to discuss ExxonMobil’s executive compensation program. • This webinar is part of a broad shareholder outreach effort at the direction of the Compensation Committee of the Board of Directors. • Randy and I would like to thank you for the opportunity to
Slide 4: Cautionary Statement and Definitions
Cautionary Statement and Definitions Forward-LookingStatements Statementsregardingfutureeventsorconditionsareforward-looking statements.Actual future results,includingprojectplans,schedules,andresults,aswell asthe impact of compensation incentives, could differ materially due to changes in oil and g
Slide 5: Definitions of compensation-related terms
• I would particularly call your attention to the definitions included on Slide 2 of certain compensation-related terms, which differ in some respects from compensation totals reported in the proxy statement tables. We will be discussing these terms in more detail in today’s webinar. • You may also
Slide 6: Agenda
• SHAREHOLDERENGAGEMENT • HEADLINES • LONG-TERMBUSINESSPERFORMANCEAND BASIS FORCOMPENSATION DECISIONS Agenda • CEO COMPENSATION • ANNUAL BONUS PROGRAM • EQUITY INCENTIVE PROGRAM • EXXONMOBIL PROGRAM VS.FORMULA-BASEDPAY • QUESTIONS AND ANSWERS 3 EXXONMOBIL 2014 EXECUTIVE COMPENSATIONOVERVIEWWEBINAR
Slide 7: Review outline and structure
• We will begin our review with a quick recap of our shareholder engagement in 2013 and the business performance for this period. • The balance of the review will focus on how the compensation program is carefully designed to support our business and incentivize management to achieve long-term, sust
Slide 8: Shareholder Engagement: positive feedback
Positive shareholder feedback was received on the following: The unique long-term orientation of the overall ExxonMobil compensation program. Alignment with Business Model: Chart that illustrated how the SHAREHOLDER equity program aligns with ExxonMobil capital investment lead ENGAGEMENT times and c
Slide 9: Ongoing shareholder engagement is a high priority
• Ongoing shareholder engagement is a high priority for ExxonMobil and the Compensation Committee of the Board of Directors. This means we are committed to engagement between shareholders and the Company to fully understand diverse viewpoints on the topic of executive compensation and to ensure shar
Slide 10: Shareholder Engagement: additional information requested
Shareholders requested additional information on the following: EquityProgram:Further explanationon the Compensation Committee’s determination that time-vested restricted stock or restricted stock units with long vesting periods are the most SHAREHOLDER effective method for aligning with the fundame
Slide 11: Shareholder questions on equity, realized pay, vesting
• We also received several questions which typically took the form of requests for additional information or clarification in these three areas: Equity Program: Further explanation on the Compensation Committee’s determination that time-vested restricted stock or restricted stock units with long ves
Slide 12: Headlines
• 30-percent reduction in CEO reported compensation. • For the CEO’s tenure from 2006 to 2013: – Ranked 10 of 13 in cumulative realized compensation among compensation benchmark companies – Ranked8 of 13in combinedcumulativerealizedand unrealized compensation among compensation HEADLINES benchmark c
Slide 13: Headlines of the compensation program
Beforeyou castyourvote on ManagementResolutionItem3 – AdvisoryVoteto ApproveExecutiveCompensationfor 2014, here are some of the headlines of our compensation program to consider. We will be sharing specific charts and data that elaborate on these key points during this webinar. – ExxonMobil CEO repo
Slide 14: Short-Term Business Performance
Financial and Operating Performance • Earnings of $32.6 billion in 2013, a 27-percent decrease versus 2012. Five-year annual average of $33.7 billion in earnings. SHORT-TERM BUSINESS • Distributed $25.9 billion to shareholders in dividends PERFORMANCE and share purchases in 2013 and $318 billion sin
Slide 15: Basis of Compensation Committee CEO assessment
• We often get asked the basis of the Compensation Committee assessment of the CEO’s performance. In the next few slides, we will share the metrics and the business results that the Committee reviews. It is a rigorous assessment that looks at both the short- and long-term business performance. • The
Slide 16: Long-Term Business Performance: Strategic Business Results
Strategic Business Results Upstream Started up six major projects. Added 6.6 billion oil-equivalent barrels of new resources. Achieved exploration discoveries totaling 1.5 billion LONG-TERM oil-equivalent barrels. BUSINESS Captured new exploration acreage. PERFORMANCE Progressed and expanded the Str
Slide 17: Upstream, Downstream and Chemical accomplishments
• Another key performance criterion underlying the compensation decisions made by our Compensation Committee in 2013 was the progress achieved on several long-term strategic priorities. The accomplishments outlined on Slide 8 are expected to have a positive impact on Company performance for decades,
Slide 18: Long-Term Business Performance
Long-Term Business Performance (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 Exxon
Slide 19: Safety performance and ROCE
• In 2013, our safety performance continues to improve and remains strong in the industry. • In 2013, ExxonMobil’s ROCE was 17.2 percent, about 3.5 percentage points higher than our nearest competitor. Over the past five years, ROCE averaged 21 percent, about 5 percentage points higher than our near
Slide 20: Long-Term Business Performance
Long-Term Business Performance (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. (5) Shareholder distributions consist of cash dividends and share buybacks. 10 EXXONMOBIL 2014EXEC
Slide 21: Free cash flow and shareholder distributions
Another measure of the value created through strong financial and operating performance is the cash flow remaining after fully funding attractive investment opportunities. We added a new chart this year to illustrate this. Chart 3 shows that over the past five years, ExxonMobil generated $104 billio
Slide 22: Long-Term Business Performance
Long-Term Business Performance (6) Annualized returns assuming dividends are reinvested when paid. (7) RoyalDutch 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 T
Slide 23: Total shareholder return versus industry
TSR of companies in the same industry with similar size and scale is the most relevant metric for comparing shareholder returns. ExxonMobil leads the industry in TSR in almost all performance periods. Chart 6 shows that ExxonMobil generated superior returns through a range of economic environments a
Slide 24: CEO Compensation
CEO COMPENSATION (1) In 2013,the changein pension valuewas negative (-$6.24 million), but under SECreporting rules, a negative changein pension value must be shown in the Summary CompensationTable aszero. This shows the impact the full negative pension valuation would have if applied to total compen
Slide 25: CEO reported pay and TSR
Thank you, David. • Chart 7 shows the Summary Compensation Table (SCT) reported pay for 2013 versus 2012. – There is a 30-percent reduction in reported pay primarily due to 20-percent reduction in bonus and change in pension value (due to the interest rate change). – A negative number for change in
Slide 26: CEO Compensation
CEO COMPENSATION (3) Reported pay values shown correspond to the companies with the highest, median, and lowest realized pay values. 13 EXXONMOBIL 2014EXECUTIVE COMPENSATIONOVERVIEWWEBINAR
Slide 27: Realized pay explained
• Looking at reported pay in isolation is not the most complete way to view or compare compensation across a group of companies. For this reason, we started disclosing realized pay of the CEO in our proxy last year and received positive feedback from you, our shareholders, on the additional perspect
Slide 28: CEO Compensation: Realized and Unrealized Pay
CEO COMPENSATION REALIZED PAY AND UNREALIZED PAY (1) ExxonMobil CEO’s realized pay is below the compensation benchmark companies’ median for most of his tenure. ExxonMobil CEO’s realized pay and st ExxonMobil unrealizedpayisat the 41 percentileof CEO's Tenure 2006 to 2013 Rank Percentile Position th
Slide 29: Realized pay versus benchmark companies
• After our disclosure of CEO realized pay in last year’s proxy, we received shareholder feedback requesting a chart on how ExxonMobil CEO’s realized pay compares to our compensation benchmark companies over multiple years. We added Chart 12 for this purpose. – Chart12providednew information onCEOre
Slide 30: Annual Bonus Program
ANNUAL BONUS PROGRAM Bonus Program Formula Performance Factors that Determine Annual Bonus 1. Thebonusprogramisdeterminedby annual earnings. 2. Thebonusprogramdifferentiatesfor individual performance. 3. Half of the annualbonusis delayeduntil The bonus program formula has been consistently cumulativ
Slide 31: Bonus program design and formula
• We now turn to the design of our compensation program. • 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 formula shown. - The net income (earnings) p
Slide 32: Equity Incentive Program
EQUITY INCENTIVE PROGRAM Vesting / Restriction Period • 75 percent of the CEO’s reported compensation in 2013 is in restricted stock units with vesting periods far longer than most companies across all industries. • Half of the annual equity award is restricted for 10 years from grant date or until
Slide 33: Equity program aligned with long investment lead times
• ExxonMobil’s equity incentive program aligns with long investment lead times by granting restricted stock units with long vesting periods. • Shareholders have requested further explanation of the ExxonMobil vesting terms given that half of the stock-based grants require 10 yearsorlongerto vest. •
Slide 34: Scale and Scope of ExxonMobil
S CALE AND SCOPE OF EXXON M OBIL (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 co
Slide 35: Scale, scope and complexity versus comparators
• Chart 13 puts in perspective the scale, scope, and complexity of ExxonMobil versus our comparator companies. The geographic scope involves conducting business in over 120 countries and territories. • In determining compensation levels, the Compensation Committee places the most emphasis on individ
Slide 36: Potential Misalignment of Formula-Based Pay with Shareholder Experience
Potential Misalignment of Formula-Based Pay with Long-Term Shareholder Experience There is potential for an alternate formula-based program to result in unintended consequences including: • Compensation that is misaligned with the gains or losses incurred by long-term shareholders through the use of
Slide 37: Formula-based TSR methodology and unintended consequences
Thanks, Randy. As mentioned earlier, some shareholders have suggested that ExxonMobil consider a formula-based methodology based on three-year TSR versus the industry. Chart 16 shows a typical approach to this formula-based methodology. The Compensation Committee reviewed and assessed this approach
Slide 38: Potential Misalignment of Formula-Based Pay with Business Model
Potential Misalignment of Formula-Based Pay with ExxonMobil’s Business Model • Approximately 70percent 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 30percent for the alter
Slide 39: Compensation program supports the business model
• The ExxonMobil compensation program supports the ExxonMobil business model. To illustrate that, let’s take a look at Chart 17. - The purple line shows the project net cash flow of a typical ExxonMobil project, and the red and blue lines show the payout profiles of the ExxonMobil stock-based progra
Slide 40: Summary
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
Slide 41: Committee analysis of alternative stock-based awards
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 shareho
Slide 42: Vote 'FOR' Item 3: Advisory Vote to Approve Executive Compensation
Vote ‘FOR’Item 3: AdvisoryVote to ApproveExecutiveCompensation • 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: Conclusion
• In conclusion, ExxonMobil’s compensation program supports a business model that has weathered volatile commodity prices and industry business cycles for many years and consistently generated industry-leading financial and operating performance and shareholder returns over a very long time. • The c
Slide 44: Questions & Answers
QUESTIONS & ANSWERS 22 EXXONMOBIL 2014 EXECUTIVE COMPENSATIONOVERVIEWWEBINAR
Slide 45: That concludes our prepared remarks
That concludes our prepared remarks. We would now be happy to take your questions. 22