Exxon Mobil Corporation · NYSE:XOM
Exxon Mobil — Shareholder Meeting (May 2015)
59 slides from Exxon Mobil's shareholder meeting presentation, May 14, 2015
Slide 1: Exxon Mobil Corporation Schedule 14A
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 May 14, 2015
Audio Webcast May 14, 2015 9:30 a.m. CT Beforeyou castyour vote on ManagementResolutionItem 3 – Advisory Voteto ApproveExecutiveCompensation,pleasereview the Executive Compensation Overview, as well as the more detailed information included in the Compensation Discussion and Analysis, compensation t
Slide 3: Welcome to webinar on executive compensation program
*** • Good morning 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 opportun
Slide 4: Cautionary Statement and Definitions
Cautionary Statement and Definitions ReportedPayis Total Compensationreportedin the SummaryCompensationTable, exceptfor years2006to 2008,wherethe grant date valueof restrictedstockas provided under current SEC rules is used to put all years of compensation on the same basis. RealizedPayis compensati
Slide 5: Definitions of compensation-related terms
*** • I would particularly call your attention to the definitions of certain compensation-related terms on Slide 2, 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 r
Slide 6: Agenda
Agenda 9:30am ShareholderEngagement.............................JeffWoodbury, Vice President, Investor Relations and Secretary Key Focus Areas Basis for Compensation Decisions Financial and Operating Performance Strategic Business Results Long-Term Business Performance CEOCompensation...............
Slide 7: Review of engagement and business performance
*** • We will begin our review with a quick recap of our shareholder engagement in 2014 and the business performance for this period which formed the basis of compensation decisions made by the board Compensation Committee. *** • The balance of the review will focus on how the compensation program i
Slide 8: 2014 Shareholder Engagement
2014 Shareholder Engagement Say-On-Pay Results: 89.8 percent “For” Multiple conference calls with institutional shareholders preceding shareholder meeting Webcast on May 14, 2014, available to all shareholders Executive Compensation Overview brochure issued to all shareholders 4
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 ens
Slide 10: Key Focus Areas
Key Focus Areas Level of StockAwards:New illustration of how the Compensation Committee determined the CEO’s stock-based award level StockHoldingRequirement:Vesting periods of up to 10 years or longer require that executives hold their equity compensation through commodity price cycles AnnualBonus:F
Slide 11: Headlines of compensation program before voting
Before you cast your vote on Management Resolution Item 3 – Advisory Vote to Approve Executive Compensation for 2015, here are some of the headlines of our compensation program to consider. These focus areas were based on shareholder’s feedback and requests for additional information. We will be rev
Slide 12: Basis for Compensation Decisions
Basis for Compensation Decisions
Slide 13: Basis of Compensation Committee's assessment of CEO
*** • We often get asked about the basis of the Compensation Committee’s 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 pe
Slide 14: Financial and Operating Performance
Financial and Operating Performance Earnings of $32.5 billion in 2014 compared with $32.6 billion in 2013. Five-year annual average of $36.3 billion in earnings Distributed $23.6 billion to shareholders in dividends and share purchases in 2014, for a distribution yield of 5.4 percent. Distributed $3
Slide 15: Short-term incentive linked to financial and operating performance
*** • The Compensation Committee links the short-term incentive compensation to key short-term financial and operating performance: *** The 2014 results reflect our focus on the fundamentals and the strength of our integrated businesses amid global economic challenges, uncertainties, and price volat
Slide 16: Strategic Business Results
Strategic Business Results Upstream Downstream Increased proved reserves by 1.5 billion oil- Commissioned the Clean Fuels Project at our joint equivalent barrels venture refinery in Saudi Arabia Completed eight major projects with working Completed a lube basestock expansion in interest production c
Slide 17: Long-term strategic priorities and compensation decisions
*** • Another key performance criterion underlying the compensation decisions made by our Compensation Committee in 2014 was the progress achieved on several long-term strategic priorities. These accomplishments, outlined on Slide 8, are expected to have a positive impact on *** Company performance
Slide 18: Long-Term Business Performance
Long-Term Business Performance Safety is a core value for ExxonMobil, and nothing ExxonMobil’sproven businessmodel delivers industry- receives more attention from management. leading ROCE. • Best-ever performance in 2014. • Disciplined investments through the business cycle • Safety results are a le
Slide 19: Workforce safety and ROCE performance
*** • In 2014, our workforce safety performance for both employees and contractors continued to improve and remained strong in the industry. *** • ExxonMobil's return on average capital employed continued to lead our competitors. In 2014, ExxonMobil’s ROCE of 16.2 percent was more than 5 percentage
Slide 20: Long-Term Business Performance
Long-Term Business Performance ExxonMobil’ssuperiorcash flow preserves capacityfor ExxonMobilmaintains industry-leadingshareholder investmentsand shareholderdistributions. distributionsthroughthe businesscycle. • Generated $117 billion of free cash flow since beginning of 2010. • Dividends per share
Slide 21: Free cash flow and shareholder distributions
*** • Another measure of the value created by the business through strong financial and operating performance is the free cash flow available after fully funding attractive investment opportunities. *** • Free cash flow grew significantly, reflecting strong business performance as well as slightly l
Slide 22: Long-Term Business Performance
Long-Term Business Performance ExxonMobilleads the industryin total shareholderreturn ExxonMobilgenerated superiorreturnsthrougha (TSR) in all performanceperiods. range of economicenvironmentsand businesscycles. • The most relevant TSR comparison is across companies in the same industry of comparabl
Slide 23: TSR comparison across industry peers
*** • The most relevant Total Shareholder Return or TSR comparison is across companies in the same industry of comparable size and scale. ExxonMobil leads the industry in TSR in all performance periods shown, ranging from one to 30 years. *** • Chart 6 shows that ExxonMobil generated superior return
Slide 24: CEO Compensation
CEO Compensation
Slide 25: Handover to Randy on CEO compensation
*** I will now turn it over to Randy who will take you through the highlights of the CEO compensation. *** 12
Slide 26: Reported Pay
Reported Pay Pay granted to ExxonMobil CEO in 2014 increased less than 1 percent versus 2013 and 4 percent versus 2012, while the stock grant price increased about 1 percent and 9 percent respectively. • Primary cause of fluctuating pension accrual is change in the applicable interest rates. • Actua
Slide 27: Summary Compensation Table reported pay 2012 to 2014
*** Thank you, Jeff. *** • Chart 7 shows the Summary Compensation Table (SCT) reported pay for 2012 to 2014. • As shown in the Chart, almost all of the 2014 increase in reported pay is due to a valuation change in pension for accrual purposes. The CEO’s pension will be realized only at retirement, w
Slide 28: Realized Pay vs. Reported Pay
Realized Pay vs. Reported Pay ExxonMobilCEO’s realized pay averaged 46 percent of reportedpay over his tenure. *Exercised last stock options granted in 2001 that would have expired in 2011. No stock options granted since 2001. ExxonMobilCEO’s realized pay ranked 8th among the compensationbenchmark c
Slide 29: Definition of realized pay
*** • “Realized pay” is compensation actually received by the CEO during the year. It includes 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 Co
Slide 30: Realized Pay and Unrealized Pay
Realized Pay and Unrealized Pay ExxonMobilCEO’s realized pay is belowthe median of the compensation benchmark companiesfor most of his tenure. ExxonMobilCEO’s combined realized and unrealized pay * 39 percent of ExxonMobil CEO’s realized pay in 2011 was from the exercise of stock options that were g
Slide 31: Realized pay versus benchmark companies
• The Charts on this slide have also been updated with data through 2014 and included in the April 21, 2015 supplemental disclosure. • Chart 10 compares ExxonMobil CEO’s realized pay versus our compensation benchmark companies during the nine years in which he has been in the role. ExxonMobil CEO’s
Slide 32: Scale and Scope of ExxonMobil
Scale and Scope of ExxonMobil The Compensation Committee places the most emphasis on individual performance and business results in determining compensation levels. • Size and complexity of ExxonMobil are considered among several factors (4) Financial data estimated based on public information. Mark
Slide 33: Scale and scope versus benchmark companies
*** • The CEO compensation charts are not adjusted for the substantial differences in scale and scope between ExxonMobil and the compensation benchmark companies. *** • Chart 12 puts in perspective the scale and scope of ExxonMobil versus our compensation benchmark companies. • In determining compen
Slide 34: ExxonMobil Incentive Program
ExxonMobil Incentive Program
Slide 35: Design of incentive program
*** • We now turn to the design of our incentive program. *** 17
Slide 36: Annual Bonus Program
Annual Bonus Program Bonus Program Formula Performance Factors that Determine Annual Bonus The bonus program is determined by annual earnings. The bonus program differentiates for individual performance; similar to how equity awards are differentiated. Half of the annual bonus is delayed until cumul
Slide 37: Annual bonus program formula since 2002
*** • Since 2002, the annual bonus program for more than 1,700 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) performance is tempered (two-thirds x earnings perce
Slide 38: ExxonMobil Equity Program
ExxonMobil Equity Program Performance Assessment Process The performance of each executive is The Committee grants a top category assessed annually through a well-defined award to the CEO only if the Company process. leads on key metrics over periods of time – Applies to the CEO and over 1,700 other
Slide 39: Detail on determining individual stock-based awards
*** • During the 2014 proxy season, several shareholders requested more detail on how the level of individual stock-based awards is determined. *** • We added a new section titled “Determination of Equity Award Levels” in our disclosure that more clearly delineates the seven performance metrics util
Slide 40: Determination of Equity Award Levels
Determination of Equity Award Levels (1) Competitor data estimated on a consistent basis with ExxonMobil and based on public information. For more information concerning ROCE, see pages 44 and 45 of the Summary Annual Report included with the 2015 Proxy Statement. (2) BP, Chevron, Royal Dutch Shell,
Slide 41: Performance metrics and award level differentiation
*** • Chart 14 illustrates the performance metrics considered and how stock-based award levels are differentiated. Each performance quintile corresponds to an award level. *** The award levels are widely differentiated by performance and range from zero to the maximum level depending on how the Comp
Slide 42: Determination of Equity Award Levels
Determination of Equity Award Levels Highest Performance Standards for 21 Executive Officers, Including the CEO Expected to perform at the highest level or they are replaced Performance must be high in all key performance areas to receive an overall superior evaluation Outstanding performance in one
Slide 43: Executive officers expected to perform at highest level
*** • All 21 executive officers are expected to perform at the highest level or they are replaced. If it is determined that another executive would make a stronger contribution than one of the current officers, a succession plan is implemented and the incumbent is reassigned or separated from the **
Slide 44: Stock Holding Requirement
Stock Holding Requirement Vesting Periods that Far Exceed Most Industries ExxonMobil’sextended vesting periodsbetter reflect and align with the time frames over whichbusiness decisions affect long-termshareholder value in our industry. Sixty-five percent of the CEO’s 2014 reported compensation is in
Slide 45: Long vesting periods align with investment lead times
*** • ExxonMobil’s equity incentive program aligns with long investment lead times by granting restricted stock units with long vesting periods. In 2014, 65 percent of the CEO’s reported compensation is in restricted stock units with vesting periods far longer than most companies across all *** indu
Slide 46: ExxonMobil Equity Program
ExxonMobil Equity Program Potential Misalignment of Formula-Based Pay with Long-Term Shareholder Experience Potential unintended consequences of an alternate formula-based program: Compensation that is misaligned with the gains or losses incurred by long-term shareholders through the use of steep pa
Slide 47: Formula-based TSR methodology and unintended consequences
*** • As mentioned earlier, some shareholders have suggested that ExxonMobil consider a formula-based methodology based on three-year TSR versus the industry. Chart 17 shows a typical approach to this formula-based methodology. *** • The Compensation Committee reviewed and assessed this approach and
Slide 48: ExxonMobil Equity Program
ExxonMobil Equity Program Potential Misalignment of Formula-Based Pay with ExxonMobil’s Business Model 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 approximatel
Slide 49: Compensation program supports ExxonMobil business model
*** • The ExxonMobil compensation program supports the ExxonMobil business model. To illustrate that, let’s take a look at Chart 18. *** 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
Slide 50: ExxonMobil Equity Program
ExxonMobil Equity Program 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
Slide 51: Committee rationale for current equity program
*** Thanks Randy. *** • The Compensation Committee on multiple occasions has carefully analyzed alternative methods of granting stock-based awards and recognizing business performance and, for the reasons Randy mentioned, believes that a formula-based plan would not deliver the desired results for E
Slide 52: 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 53: Conclusion on compensation program
*** • 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.
Slide 54: Shareholder Proposals
Shareholder Proposals The Board recommends you vote AGAINST the following proposals: Item 4 – Independent Chairman Item 5 – Proxy Access Bylaw Item 6 – Climate Expert on Board Item 7 – Board Quota for Women Item 8 – Report on Compensation for Women Item 9 – Report on Lobbying Item 10 – Greenhouse Ga
Slide 55: Comments on shareholder proposals
As we conclude our prepared remarks, I would like to take a moment to briefly 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 the proposal being ultimately withdrawn. Furt
Slide 56: Item 11 Report on Hydraulic Fracturing
• Skipping down to Item 11, Report on Hydraulic Fracturing, I’d like to highlight that after we received a similar resolution from the same proponent last year, the Company prepared a white paper called Unconventional Resources Development, Managing the Risks, which details the inherent risks and mi
Slide 57: Questions?
Questions?
Slide 58: Concluding remarks and questions
*** That concludes our prepared remarks. We would now be happy to take your questions. *** 28
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