Exxon Mobil Corporation · NYSE:XOM
Exxon Mobil — Shareholder Meeting (May 2018)
45 slides from Exxon Mobil's shareholder meeting presentation, May 10, 2018
Slide 1: 2018 Shareholder Webcast
2018 Shareholder Webcast May 10, 2018
Slide 2: Agenda
Agenda 10:00 Welcome 10:05 Executive Compensation Overview 10:30 Shareholder Proposals 10:45 Q&A 2
Slide 3: Opening Remarks & Agenda
Opening Remarks & Agenda - Slide 2 Good morning and welcome to today’s shareholder webcast. Over the next hour, Randy Powers, Manager, Compensation, Benefit Plans and Policies will cover key highlights of ExxonMobil’s executive compensation program and I will briefly touch on the four shareholder pr
Slide 4: Cautionary Statement
Cautionary Statement 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 oi
Slide 5: Cautionary Statement Slide
Cautionary Statement Slide 3 Please note the cautionary statement on this slide; compensation related terms and footnotes are included at the end of this presentation.
Slide 6: 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 7: Shareholder Engagement – Slide
Shareholder Engagement – Slide 4 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 sharehol
Slide 8: Key Messages
Key Messages Linking Performance to Pay Tying Pay to Shareholder Experience Responding to Shareholder Feedback CEO Pay Governance Practices 5
Slide 9: Executive Compensation Overview – Slide
Executive Compensation Overview – Slide 5 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
Slide 10: Key Messages – Why Vote FOR Say on Pay?
Key Messages – Why Vote “FOR” Say on Pay? Compensation program links Company performance to executive pay Reduced 2017 performance share awards for CEO and other Named Executive Officers due to 10 year Total Shareholder Return (TSR) performance that is not leading average of industry peers Industry
Slide 11: Key Messages – Why Vote FOR Say on Pay? – Slide
Key Messages – Why Vote “FOR” Say on Pay? – Slide 6 This slide contains 3 key messages. First, our compensation program links executive pay to Company performance: In 2017, the performance share awards for our CEO and other NEOs were reduced because our 10 year Total Shareholder Return (TSR) perform
Slide 12: Linking Performance to Pay: Performance Share Program
Linking Performance to Pay Performance Share Program Industry leading performance on pre established performance metrics over investment lead times of the business (10 years) is required to maximize performance share award Outstanding performance in one metric will not cancel out poor performance in
Slide 13: Linking Performance to Pay – Slide
Linking Performance to Pay – Slide 7 Performance against 5 pre established metrics over investment lead times of the business (10 years) forms the basis for determining awards in the performance share program. As indicated, the confirmation in our disclosure of 10 years as the time period the Compen
Slide 14: Linking Performance to Pay: Performance Share Program, continued
Linking Performance to Pay Performance Share Program, continued Annual Process to Set Performance Share Grants Based on Business Performance and Market Orientation 1 Compensation Committee (CC) sets preliminary award levels, based on external benchmarking 2 CC assesses Company performance relative t
Slide 15: Linking Performance to Pay, continued – Slide
Linking Performance to Pay, continued – Slide 8 On this slide, which is also in response to shareholder feedback, we are providing more granularity and clarity on how the Compensation Committee determines the size of annual performance share awards, which currently make up over 60 percent of CEO pay
Slide 16: Tying Pay to Shareholder Experience
Tying Pay to Shareholder Experience Example The Commodity Price Cycle ExxonMobil’s longer restriction periods ensure that executives are required to hold shares through the commodity price cycle An alternate, formula-based program with short-term target setting and three-year vesting would enable ex
Slide 17: Tying Pay to Shareholder Experience – Slide
Tying Pay to Shareholder Experience – Slide 9 Finishing up our discussion of the performance share program, it is important not to underestimate the impact of long restriction periods on the number of performance shares that our executives are required to hold. Given the long term nature of the oil
Slide 18: Linking Performance to Pay: Bonus Program
Linking Performance to Pay Bonus Program 1 Size of annual bonus determined by a formula, aligned with change in annual earnings (3) % change in annual earnings 2/3 % change in bonus program 2 Individual grant levels determined by the above formula and changes in pay grade; Compensation Committee can
Slide 19: Linking Performance to Pay – Slide
Linking Performance to Pay – Slide 10 As we move to the annual bonus program, I’d like to reemphasize that we have now decoupled performance metrics for this program from the long-term performance share program. This change to the program is in response to shareholder feedback. Our annual bonus prog
Slide 20: Benchmarking and Scale/Complexity
Benchmarking and Scale/Complexity Scale of ExxonMobil vs. Benchmark Companies (4)(5) (2017 Revenue, dollars in billions) 250 200 150 100 50 0 ExxonMobil AT&T Ford Genera; Motors Chevron General Electric Boeing IBM Johnson & Johnson Procter & Gamble United Technologies Pfizer ExxonMobil Downstream Ex
Slide 21: Benchmarking and Scale/Complexity – Slide
Benchmarking and Scale/Complexity – Slide 11 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 2017 revenue. All 3 business segments on a stand alone basis would rank among other large companies based on
Slide 22: CEO Pay
CEO Pay Reported Pay Salary Bonus Performance I All Other I Change in Share Award Compensation Pension Value (dollars in millions, rounded) $3.0 $0.5 $18.3 $2.4 $3.0 2015 $2.2 $0.6 $19.7 $1.7 $3.2 $3.3 $0.3 $10.8 $1.8 $1.2 2017 Total Reported Pay: $27.3 $27.4 $17.5 36% Reported Pay to CEO position i
Slide 23: CEO Pay Slide
CEO Pay Slide 12 Let me now shift to CEO compensation. The design objectives and features that we have been discussing translated into a 36-percent decline in reported pay to our CEO position from 2016 to 2017, from $27.4 million to $17.5 million, respectively. Some of that difference is the result
Slide 24: CEO Pay 2008 to 2017: Reported Pay vs. Realized Pay
CEO Pay 2008 to 2017 Reported Pay vs. Realized Pay Over 10 Year Period Reported Pay Realized Pay (dollars in millions) 40 35 30 25 20 15 10 5 0 2008 09 10 11 (6) 12 13 14 15 16 2017 Realized Pay as a Percentage of Reported Pay: 32% 31% 49% 71% 39% 56% 55% 57% 53% 29% Realized and Unrealized Pay(1) v
Slide 25: CEO Pay Slide
CEO Pay Slide 13 Looking at reported pay in isolation is not the most complete way to assess compensation. For this reason, we have also disclosed CEO realized and unrealized pay and have received positive feedback from our shareholders on the additional perspective it provides. In fact, on average,
Slide 26: Sound Governance Practices
Sound Governance Practices Long restriction periods on performance shares result in required ownership that far exceeds typical stock ownership guidelines among compensation benchmark companies At retirement, ExxonMobil senior executives continue to have performance shares unvested and at risk of fo
Slide 27: Sound Governance Practices Slide
Sound Governance Practices Slide 14 Our program is underpinned by sound governance practices, based on a desire to discourage inappropriate risk taking. Our long restriction periods on performance shares far exceed typical three year vesting that is common across most industries and are strongly int
Slide 28: Why Vote FOR Say-on-Pay
Why Vote “FOR” Say-on-Pay Item 3: Advisory Vote to Approve Executive Compensation Compensation program links executive pay to Company performance Executive pay tied to shareholder experience Shareholder feedback continues to result in program and disclosure improvements
Slide 29: Why Vote For Say-on-Pay – Slide
Why Vote “For” Say-on-Pay – Slide 15 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 a
Slide 30: 2018 Energy and Carbon Summary (2nd edition)
2018 Energy and Carbon Summary (2nd edition) Substantial engagement with shareholders Addresses feedback, including 2017 proposal –Report on Impacts of Climate Change Policies Demand sensitivities Impacts from 2°C Scenarios Positioning for a lower-carbon energy future Technology Conducted session at
Slide 31: Energy & Carbon Summary Slide
Energy & Carbon Summary Slide 16 Thanks Randy. Next, I’d like to highlight our 2018 Energy & Carbon Summary, which was included in the proxy materials. We have had substantial engagement with our shareholders on this important topic. The second edition of the Energy & Carbon Summary addresses feedba
Slide 32: Shareholder Proposals
Shareholder Proposals Appreciate engagement of shareholders Some proposals satisfactorily addressed and excluded from proxy 16 Remaining proxy proposals generally agree on objectives, differ on approach Important to maintain constructive dialogue 17
Slide 33: Shareholder Proposals Slide
Shareholder Proposals Slide 17 We appreciate the opportunities to engage with shareholders. Over the past year and a half (1/1/17 5/10/18), we have held over 100 such engagements in person or by teleconference. Each year, the Corporation receives a number of suggestions from shareholders, some of wh
Slide 34: Item 4: Independent Chairman
Item 4: Independent Chairman Board recommends you vote Against: Agree with importance of a strong, independent Board All directors, including Presiding Director, are independent, other than CEO Retain flexibility to select the best leadership structure 18
Slide 35: Item 4: Independent Chairman Slide
Item 4: Independent Chairman Slide 18 A moment ago, I mentioned that many times ExxonMobil and its shareholders are able to agree on objectives, but occasionally cannot align on the approach to reach those objectives. The shareholder proposals covered on the next four slides are good examples. The B
Slide 36: Item 5: Special Shareholder Meetings
Item 5: Special Shareholder Meetings Board recommends you vote Against: Shareholders holding ³ 10% of shares already have right to call special meetings Showing of good cause demonstrates legitimate purpose and informs shareholders 19
Slide 37: Item 5: Special Shareholder Meetings Slide
Item 5: Special Shareholder Meetings Slide 19 Next, on the proposal regarding special shareholder meetings, ExxonMobil shareholders currently have the right to call special shareholder meetings. This requires at least 10 percent of outstanding shares and a showing of good cause to disclose purpose a
Slide 38: Item 6: Board Diversity Matrix
Item 6: Board Diversity Matrix Board recommends you vote Against: Diversity is a key attribute of Board composition and competency Detailed in proxy with Board member biographies and collective attributes Continued emphasis; gender/ethnic diversity exceeds S&P average 20
Slide 39: Item 6: Board Diversity Matrix – Slide
Item 6: Board Diversity Matrix – Slide 20 We agree that diversity of experience, background, gender and ethnicity are critical to the composition and competence of our Board, and that shareholders should know that our Board benefits from the varying perspectives that diversity brings. However, we do
Slide 40: Item 7: Report on Lobbying
Item 7: Report on Lobbying Board recommends you vote Against: Support accountability and appropriate transparency Fully comply with federal and state lobbying disclosure requirements Company policy positions and lobbying details available online 21
Slide 41: Item 7: Report on Lobbying Slide
Item 7: Report on Lobbying Slide 21 On the fourth and final shareholder proposal requesting a report on lobbying, we agree with appropriate transparency and disclosure of lobbying policy, activities and expenditures, and fully comply with both the spirit and letter of all federal and state laws on l
Slide 42: Questions
Questions
Slide 43: Questions Slide
Questions Slide 22 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.
Slide 44: Footnotes
Footnotes Executive Compensation Overview 1) Pay means the sum of Realized Pay and Unrealized Pay as described in the related Frequently Used Terms. 2) In the Example, for both the ExxonMobil and Alternate programs, 100 shares are granted each year from 2008 to 2017. For ExxonMobil performance share
Slide 45: Frequently Used Terms
Frequently Used Terms Executive Compensation Overview Performance Share Program is the terminology used to describe our equity program to better reflect the strong connection between performance and pay. Compensation Benchmark Companies consist of AT&T, Boeing, Chevron, Ford, General Electric, Gener