Exxon Mobil Corporation · NYSE:XOM
Exxon Mobil — Shareholder Meeting (May 2017)
69 slides from Exxon Mobil's shareholder meeting presentation, May 11, 2017
Slide 1: 2017 Shareholder Webcast
2017 Shareholder Webcast May 11, 2017 ExxonMobil Energy lives here TM
Slide 2: Agenda
Agenda 10:00 Welcome 10:05 Executive Compensation Overview 10:25 Energy & Carbon Summary 10:50 Shareholder Proposals 11:00 Meeting Concludes
Slide 3: Opening Remarks & Agenda
No Spacing;2 Opening Remarks & Agenda Slide 2 Ladies and gentlemen, good morning and welcome to today’s shareholder webcast. Over the next hour, Randy Powers and I will cover key highlights of ExxonMobil’s executive compensation program, review our new Energy & Carbon Summary, and then briefly touch
Slide 4: Shareholder Engagement
Shareholder Engagement Ongoing engagement is essential Keeps shareholders informed on relevant business matters Variety of venues: Shareholder meetings, including Annual Shareholder Meeting Publications and website Webcasts Established procedures for direct communications with Directors Value shareh
Slide 5: Shareholder Engagement
3 Shareholder Engagement Slide 3 First, a few comments on shareholder engagement. We believe ongoing engagement with our shareholders is essential and keeping our shareholders informed on relevant business matters is a priority. The Company connects with shareholders through a variety of venues. We
Slide 6: Executive Summary
Executive Summary How did we perform? How do we link performance and pay? How did we pay? How do we manage risk? Chairman and CEO retirement ExxonMobil 2017 Executive Compensation Overview
Slide 7: Executive Compensation Overview
Executive Compensation Overview Slide 4 Thank you Jeff. 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 de
Slide 8: Executive Compensation Executive Summary
Executive Compensation Executive Summary How did we perform? > Best-ever safety performance Industry-leading ROCE over the business cycle 2016 results Earnings of $7.8 billion Distributed $12.5 billion to shareholders Strongest balance sheet among industry peers How do we link performance and pay? >
Slide 9: Executive Summary
Executive Summary Slide 5 The slide in front of you contains the key messages across 4 questions; let me highlight just a few: First, how did we perform With best ever safety performance, industry-leading ROCE, earnings of $7.8 billion and $12.5 billion in shareholder distributions in 2016, our Comp
Slide 10: How did we perform?
How did we perform? Industry-leading results in 7 pre-established performance areas and metrics 1. Safety and Operations Integrity 2. Return on Average Capital Employed (ROCE)(3) 3. Free Cash Flow(3) 4. Shareholder Distributions(3, 4) 6
Slide 11: How did we perform?
from 2007 to 2016. How did we perform? Slide 6 Looking now specifically at how we performed: As mentioned, industry-leading results in 7 pre-established performance areas and metrics over the investment lead times of the business, across companies within the oil and gas industry of similar scale and
Slide 12: How did we perform? Total Shareholder Return
How did we perform? 5. Total Shareholder Return(5) Cumulative Shareholder Returns: ExxonMobil Industry Group Average(6) (percent) 60 40 20 0 -20 Brent Price(7) (dollars per barrel) 120 80 40 0 2007 08 09 10 11 12 13 14 15 2016 Total Shareholder Return: ExxonMobil Industry Group Average(6) (percent)
Slide 13: How did we perform?
How did we perform? Slide 7 Specific to total shareholder return, ExxonMobil has generated superior relative returns through a range of economic environments and business cycles. Finally, this brings us to our strategic business results and project execution highlights. For our Upstream business seg
Slide 14: How do we link performance and pay?
How do we link performance and pay? Highest performance standards 8. Performance Criteria and Award Matrix Industry-Leading Performance in All 7 Key Areas: Safety and Operations Integrity Return on Average Capital Employed (ROCE) Free Cash Flow Shareholder Distributions Total Shareholder Return (TSR
Slide 15: How do we link performance and pay?
How do we link performance and pay? Slide 8 We have a strong link between performance and pay; let me take a moment and explain how we achieve this. We seek to reward outstanding performance, promote retention, and encourage long-term business decisions. Ultimately, for our executive officers to rec
Slide 16: Scale and Complexity
9 Brent $/Barrel How do we link performance and pay Scale and Complexity 9. Scale of ExxonMobil vs. Benchmark Companies(1) • Scale of ExxonMobil and each business segment on the basis of 2016 revenue • All 3 ExxonMobil business segments on a stand-alone basis rank among other large companies based o
Slide 17: How did we link performance and pay?
How did we link performance and pay? Slide 9 I would like to finish this section by highlighting this chart which illustrates the scale of ExxonMobil and each business segment on the basis of 2016 revenue. All 3 business segments on a stand-alone basis would rank among other large companies based on
Slide 18: How did we pay? Bonus Program
How did we pay? Bonus Program Three factors determine the annual bonus and 10. Percent Change in Earnings(1) vs. focus executives on sustainable growth in Percent Change in Bonus Program shareholder value: Brent 1. Size of annual bonus pool determined by a formula, aligned with change in annual earn
Slide 19: How did we pay?
How did we pay? Slide 10 Let me now turn to “how did we pay”. Before we focus on the level of CEO compensation, I will share highlights of our bonus and performance share programs, both of which have been applied consistently for the past 15 years to all of our executives worldwide, including the CE
Slide 20: How did we pay? Performance Share Program
How did we pay? Performance Share Program(3) The following design principles result in a performance and risk profile aligned with the experience of long-term shareholders: 1. Performance award matrix determined by annual benchmarking 2. Number of performance shares at grant determined by 7 pre-esta
Slide 21: How did we pay?
How did we pay? Slide 11 This brings me to the performance share program which is underpinned by 4 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 is determined
Slide 22: How did we pay? CEO Compensation
How did we pay? CEO Compensation 13. Realized Pay vs. Benchmark Companies ExxonMobil Compensation Benchmark Company: Median Highest (dollars in millions) 80 60 40 20 0 2006 07 08 09 10 11(2) 12 13 14 15 2016 14. Realized and Unrealized Pay ExxonMobil 2006 to 2016 Percentile Position Realized Pay 26%
Slide 23: How did we pay?
How did we pay? Slide 12 Let me now shift to CEO compensation. In 2016, CEO reported pay was consistent with 2015 ($27 million) and down from 2014 ($33 million) reflecting the second consecutive decrease in the annual bonus program and an increase in share price in 2016. Looking at reported pay in i
Slide 24: How do we manage risk? Long Vesting Periods
13 • At peak of crude price, 19 percent of awards vested • Under Alternate Program 84 percent of awards would have vested How do we manage risk? Long Vesting Periods 15. Integration of Industry Environment and Compensation Program Design Long vesting periods align the interests of CEO with those of
Slide 25: How do we manage risk?
How do we manage risk? Slide 13 The current industry environment provides an illustration of the value of sustainable risk management so it is important to highlight how ExxonMobil manages risk within the framework of our executive compensation program. Our long vesting periods far exceed competitor
Slide 26: How do we manage risk? Sound Governance Practices
How do we manage risk? Sound Governance Practices How our program discourages inappropriate risk taking: Extensive performance share holding requirement Risk of forfeiture for resignation or detrimental activity No accelerated payout at retirement Bonus clawback policy No employment contracts, sever
Slide 27: How do we manage risk?
How do we manage risk? Slide 14 In addition to the long vesting periods, 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 inappr
Slide 28: Chairman and Chief Executive Officer
Chairman and Chief Executive Officer Rex W. Tillerson, Chairman and CEO, retired at year-end 2016 Subsequent to his retirement, ExxonMobil reached an agreement with Mr. Tillerson to comply with conflict-of-interest requirements associated with his appointment as U.S. Secretary of State Severed all f
Slide 29: Chairman and Chief Executive Officer
Chairman and Chief Executive Officer Slide 15 Finally, I would like to address the agreement we reached with Mr. Tillerson subsequent to his retirement to comply with the conflict-of-interest requirements associated with his appointment as U.S. Secretary of State on February 1, 2017. The key message
Slide 30: Vote FOR Say-on-Pay
Vote “FOR” Say-on-Pay Item 3: Advisory Vote to Approve Executive Compensation Strong business performance over the commodity cycle relative to industry peers Compensation is based on significant performance differentiation Contributes to a culture of performance, integrity, reliability, and continuo
Slide 31: Why Vote For Say-on-Pay
Why Vote “For” Say-on-Pay Slide 16 In closing my comments on our executive compensation program, I would like to say, 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 app
Slide 32: Our Position on Climate Change
“Society continues to face the dual challenge of meeting energy demand to support the economic growth needed for improved living standards, while simultaneously addressing the risks posed by rising greenhouse gas emissions and climate change.” Our Position on Climate Change Discussion on Energy & Ca
Slide 33: Energy & Carbon Summary Intro
Energy & Carbon Summary Intro Slide 17 Thanks Randy. Next, I’d like to take some time to review our Energy & Carbon Summary As indicated, this new disclosure was a result of our ongoing engagements with shareholders and their interest in a concise explanation of energy supply and demand, the potenti
Slide 34: Our position on climate change
Our position on climate change The risks of climate change are serious and warrant thoughtful action ExxonMobil is part of the solution Reducing greenhouse gas emissions (GHG) in our operations Helping consumers reduce emissions Supporting research that leads to technology breakthroughs Participatin
Slide 35: Our position on climate change
Our position on climate change Slide 18 Next we state ExxonMobil’s position on climate change, which you can find on our website. We acknowledge that the risks of climate change are serious and warrant thoughtful action. We believe that ExxonMobil is part of the solution we do this by: Pursing oppor
Slide 36: Energy and Living Standards
Energy and Living Standards Global Population Increase Access to affordable energy improves standards of living 10 9.1 Billion Non-OECD(1) nations will lead gains in GDP 9 Middle class more than doubles to almost 5 billion 8 7.3 Billion By 2040, global energy demand likely to increase by 7 25% even
Slide 37: Energy and Living Standards
Energy and Living Standards Slide 19 The next slide highlights the interdependence of energy and living standards. World GDP is forecasted to double from 2015 to 2040, with non-OECD nations leading the GDP gains. The middle class expands on a global basis, more than doubling by 2030 to reach almost
Slide 38: ExxonMobil Annual Outlook for Energy
ExxonMobil Annual Outlook for Energy Global Energy Demand Quadrillion BTUs 750 0.9% 2040 Average Growth/Year 2015 to 2040 2015 500 1.4% 250 -0.1% 0 Total Non-OECD OECD Source: ExxonMobil 2017 The Outlook for Energy: A View to 2040. * Includes hydro, geothermal, bio-energies. 250 0.7% 2040 200 2015 1
Slide 39: ExxonMobil Annual Outlook for Energy
ExxonMobil Annual Outlook for Energy Slide 20 The next slide is a summary of energy demand from ExxonMobil’s annual Outlook for Energy. A more detailed summary is available on our website. A few key messages: The Outlook for Energy forms the foundation for ExxonMobil’s strategic decisions, business
Slide 40: International Energy Agency Supply Outlook
International Energy Agency Supply Outlook Liquids Supply, Moebd 120 100 30+ Moebd IEA New Policies Scenario 80 60 Existing Supplies 57+ Moebd IEA 450 Scenario 40 Natural decline in absence of further investment 20 0 Existing Supplies 2015 2040 2040 Additional Supplies Needed Source: Based on IEA so
Slide 41: IEA Supply Outlook
IEA Supply Outlook Slide 21 The next slide demonstrates an important point. Developed from IEA data, it slide shows the need to continue investing in order to meet global energy demand. Shown on the left is the current liquids supply and the reduction in the current supply in the absence of reinvest
Slide 42: Reserves and Resources
Reserves and Resources Rigorous process with reporting integrity 20 BOEB Proved Reserves* 91 BOEB Resource Base Reported annually in accordance Aligned with Petroleum Resources with SEC rules Management System guidelines Reasonable certainty criteria Diverse global portfolio Prescribed pricing / eco
Slide 43: Reserves and Resources
Reserves and Resources Slide 22 So let me know comment on our reserves and resources, which I just referenced and which are governed by a rigorous process Through year-end 2016, ExxonMobil maintains approximately 20 billion oil-equivalent barrels of proved reserves. These proved resources are report
Slide 44: Dynamic Resource Development Planning
Dynamic Resource Development Planning Value Maximization Monetize Resource Discovery Development Planning Development Decision Develop Exit Acreage Examples of key variables: Resource definition Development concept and costs Fiscal terms Regulatory requirements Re-optimize Environmental impact analy
Slide 45: Dynamic Resource Development Planning
Dynamic Resource Development Planning Slide 23 Upon the discovery of a potential resource, we evaluate and optimize development plans, often through an iterative process, with the objective to maximize resource value. The ultimate development decision is based on many key variables, which are optimi
Slide 46: Investment Planning
Investment Planning Stress testing is a robust approach to evaluate a range of economic outcomes Tests investments across key economic variables Defines economic resiliency and key economic drivers Captures insights to mitigate risk Examples of Economic Variables* Fiscals Cost & schedule Commodity p
Slide 47: Investment Planning
Investment Planning Slide 24 We employ a robust process to assess economic resiliency. Our stress testing ensures a wide range of market environments and economic factors are considered in our investment planning process, and provides value insights that help mitigate risk. In short, a proven proces
Slide 48: Minimizing the Impact of our Operations
Minimizing the Impact of our Operations Key Environmental Metrics % Change 2015 vs 2006 GHG -12% Flaring -35% NOx, SO2 and VOC emissions -46% Cogeneration +28% GHG Emissions Avoided from XOM Actions Net Equity CO2 - equivalent emissions Millions of metric tons, cumulative 0 -2 -4 -6 -8 -10 ‘11 ‘12 ‘
Slide 49: Minimizing the Impact of our Operations
Minimizing the Impact of our Operations Slide 25 Let me know briefly comment on the 4 focus areas to mitigate climate impacts I mentioned at the outset. Changing gears a bit, ExxonMobil has a robust set of processes to improve efficiency and reduce emissions in our own operations. Tailored objective
Slide 50: Supplying Products that Lower GHG Emissions
Supplying Products that Lower GHG Emissions Expanding supply of natural gas Advanced automotive materials Light-weight packaging Lower emission higher efficiency fuels and lubricants Raw materials required for renewable energy 26
Slide 51: Supplying Products that Lower GHG Emissions
Supplying Products that Lower GHG Emissions Slide 26 Second, supplying products to our customers that lower GHG emissions. This slide highlights some of our products that have a direct impact on reducing emissions, such as: Expanding the supply of natural gas, a key driver to lowering US CO2 emissio
Slide 52: Supporting Long-Range Research & Technology
Supporting Long-Range Research & Technology Natural gas to products Internal combustion engine efficiency Carbon capture and storage Advanced biofuels Climate science, economics, and policy 27
Slide 53: Support Long-Range Research and Technology
Support Long-Range Research and Technology Slide 27 As mentioned we continue to pursue significant research and development efforts. Areas of focus include: Converting natural gas to products; Increasing the efficiency of the internal combustion engine; Developing breakthrough carbon capture and sto
Slide 54: Engaging on Climate Change
Engaging on Climate Change 30+ years of engagement in climate science Government and regulator discussions IPIECA International Petroleum Industry Environmental Conservation Association active member UN UN Intergovernmental Panel on Climate Change participation Academic institution partnerships Proa
Slide 55: Engaging on Climate Change
Engaging on Climate Change Slide 28 ExxonMobil has been active in climate science for over 30 years. We proactively engage though multiple avenues, including: Governments and regulatory agencies across the globe; Very active in the International Petroleum Industry Environmental Conservation Associat
Slide 56: Attributes of Sound Policy
Attributes of Sound Policy Public and Shareholders Promote global participation Academic Policy Let market prices drive the selection of solutions Institutions Makers Ensure a uniform and predictable cost of greenhouse Sound gas emissions across the economy Policy Minimize complexity and administrat
Slide 57: Attributes of Sound Policy
Attributes of Sound Policy Slide 29 We believe sound policy should consider the attributes show on this slide One option being consider by policymakers, that we believe is generally consistent with these principles, is a revenue-neutral carbon tax. Adopting of such a policy by government in place of
Slide 58: Managing Impact of Policies to Reduce Carbon
Managing Impact of Policies to Reduce Carbon Engage stakeholders Address Consider economic impacts* Develop cost-reduction solutions Mitigate Optimize project development scope Research & Development Innovate Technological innovation *Where appropriate, investment evaluations consider estimated cost
Slide 59: Managing Impact of Policies to Reduce Carbon
Managing Impact of Policies to Reduce Carbon Slide 30 So, how do we manage the impacts of policies to reduce carbon? ExxonMobil is committed to addressing climate policies through engagement of stakeholders and incorporating potential impacts in our investment analysis. We will mitigate policy impac
Slide 60: Key Messages
Key Messages Affordable energy solutions are essential to advance global prosperity Energy Outlook reflects increasingly stringent GHG policy with diverse energy supplies to meet demand growth Proved reserves reported annually in accordance with SEC rules Dynamic resource planning designed to minimi
Slide 61: Key Messages
Key Messages Slide 31 Let me emphasize that we are well positioned to created long-term shareholder value and being an active partner in addressing climate change. I’ll summarize by reiterating several key messages: Its clear affordable energy solutions are essential to advance global prosperity; Ou
Slide 62: Shareholder Proposals
32 Shareholder Proposals • Appreciate engagement of shareholders • Some proposals satisfactorily addressed and excluded from proxy • Remaining proxy proposals –generally agree on objectives, differ on approach • Important to maintain constructive dialogue Board recommends you vote Against: Item 5 In
Slide 63: Shareholder Proposals
Shareholder Proposals Slide 32 We appreciate the opportunities to engage with many of our shareholders. As I said, your input is valued Each year, the Corporation receives a number of suggestions from shareholders, some of which are in the form of proposals to be presented at the annual meeting. We
Slide 64: Questions
Questions
Slide 65: Questions
Questions Slide 33 This concludes our presentation. We appreciate all of you who have joined in to review these important topics. Your vote is important to us and we look forward to continuing our shareholder engagements throughout the year. We would now be happy to take a few questions. 33
Slide 66: Cautionary Statements
Cautionary Statements Executive Compensation Overview 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 o
Slide 67: Footnotes
Footnotes Executive Compensation Overview 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; 2016 industry data not available at time of publication
Slide 68: Frequently Used Terms
Frequently Used Terms Executive Compensation Overview Please also read the footnotes contained throughout this presentation for additional definitions of terms we use and other important information. Reported Pay is Total Compensation reported in the Summary Compensation Table, except for years 2006
Slide 69: Disclosures and References
Disclosures and References Energy and Carbon Summary Corporate Citizenship Report (http://corporate.exxonmobil.com/en/community/corporate-citizenship-report) Climate Policy material (http://corporate.exxonmobil.com/en/current-issues/climate-policy) Current issues relating to energy and climate (http