Executive Compensation Overview 2014
ExecutiveCompensation Overview2014
2E X XO N M O B I L 2 0 14 E X E C U T I V E CO M P E N S AT I O N O V E R V I E W2013 Shareholder EngagementPreceding the 2013 advisory vote to approve executive compensation, ExxonMobil management held a seriesof meetings with institutional shareholders and conducted a webcast available to all shareholders to explain theCompany’s executive compensation programs and answer questions. These questions typically took the formof requests for additional information or clarification. The following summarizes shareholder feedback anddescribes steps taken in this Overview to address these requests.Positive shareholder feedback was received on the following:Long-Term Orientation: The unique long-term orientation of the overall ExxonMobil compensation program.Alignment with Business Model: Chart that illustrated how the equity program aligns with ExxonMobil capitalinvestment lead times and cash flows (Chart 17, page 9).Forfeiture Risk: Risk of forfeiture and cancellation provisions in equity grants. In response to the same question from several shareholders, the Company confirmed that the forfeiture andcancellation provisions of the equity program have been exercised since the program was implemented in 2002.Bonus Formula: Expanded disclosure that provided more detail on the formula that connects the size of theannual bonus program to corporate earnings performance. In particular, shareholders appreciated the consistent application of this formula over the past 11 years(Chart 14, page 8).Compensation History Disclosure: Disclosure of seven years of realized pay history, compared to reported payfor the same time period. Several shareholders commented that neither realized nor reported pay in isolation provides a complete, accuratepicture of the potential payout values of a compensation program, but contrasting both in the same table provideda more informed perspective on the range of potential present values (Chart 9, page 6).Continuity of Leadership: Linkage of the compensation programs to a strong program of executive retention,development, and succession planning. There was general agreement among shareholders that the long-term orientation of the compensation programsreinforced retention and development objectives, which allows ExxonMobil to achieve continuity of leadershipand competitive advantage.Shareholders requested additional information on the following:Equity Program: Further explanation on the Compensation Committee’s determination that time-vested restricted stockor restricted stock units with long vesting periods are the most effective method for aligning with the fundamentals of thebusiness model and the experience of long-term shareholders. In this Overview, we dedicate a section on this subject to provide shareholders a more in-depth understanding of thedesign of the current stock-based award program and the alternative evaluated by the Committee (pages 8 to 10).Realized Pay Benchmark: Disclosure of realized pay for our compensation benchmark companies compared toExxonMobil’s CEO. In response, we have provided a one-year and a multiyear comparison of realized pay of our compensationbenchmark companies versus ExxonMobil; total shareholder return (TSR) over the same period is also included(Charts 10, 11, and 12, page 7).Vesting Methodology: Further explanation of the ExxonMobil vesting terms given that half of the stock-basedgrants require 10 years or longer to vest.Chart 15 on page 8 is included for this purpose.
3Before you cast your vote on Management Resolution Item 3 – Advisory Vote to ApproveExecutive Compensation, please review this Overview, as well as the more detailedinformation included in the Compensation Discussion and Analysis, compensation tables,and narrative in ExxonMobil’s 2014 Proxy Statement.HeadlinesReported Compensation: 30-percent reduction in CEO reported compensation(Chart 7, page 6): Reduction in annual bonus Lower pension valueRealized Compensation: Ranked 11th in realized compensation among compensationbenchmark companies in 2012 and below the compensation benchmark companies’median for most of CEO’s tenure (Charts 10 and 12, page 7). Realized compensationaveraged 44 percent of reported pay over the eight years of CEO tenure (Chart 9, page 6).Stock Holding Requirement: Vesting periods for stock-based compensation far longerthan most companies. Holding periods extend beyond retirement date and align with long lead times ofbusiness model (Chart 15, page 8); for example, 50 percent of ExxonMobil CEO’s2013 grant does not vest until 2023.Delayed Bonus Payout: Half of the annual bonus is delayed to strengthen alignmentwith sustainable growth in shareholder value and allow for forfeiture in the event ofexecutive resignation or detrimental activity.No Contracts: No employment agreements, severance arrangements, orchange-in-control arrangements.Common Programs: All U.S. executives (more than 1,000, including the CEO),participate in common programs (the same salary, incentive, and retirement programs).Financial and Operating PerformanceThe financial and operating results outlined below provide additional perspectiveon ExxonMobil’s performance: Earnings of 32.6 billion in 2013, a 27-percent decrease versus 2012. Five-year annualaverage of 33.7 billion in earnings. Distributed 25.9 billion to shareholders in dividends and share purchases in 2013, for adistribution yield of 6.6 percent. Distributed 318 billion in dividends and share purchasessince the beginning of 2000. Dividends per share increased for the 31st consecutive year. Industry-leading return on average capital employed (ROCE) of 17.2 percent, with afive-year average of 21 percent (Chart 2, page 4). Strong safety and operations performance supported by effective risk management.
4E X XO N M O B I L 2 0 14 E X E C U T I V E CO M P E N S AT I O N O V E R V I E WStrategic Business ResultsLong-Term Business Performanceand Basis for Compensation DecisionsUPSTREAMThe following charts illustrate the effectiveness of ExxonMobil’scompensation program in delivering superior results for shareholdersover the long term. These results, in addition to individualperformance, experience, and level of responsibility, helped formthe basis of compensation decisions made by the CompensationCommittee in 2013.Major Projects Started up six major projects with gross facility capacity ofmore than 930 thousand oil-equivalent barrels per day,highlighted by the Kearl Initial Development in Canada. Progressed construction and began commissioning activitiesat the Papua New Guinea Liquefied Natural Gas project,which is on target to start up in 2014. Advanced the Kearl Expansion project, which remains onschedule to start up in 2015.Exploration Results Added 6.6 billion oil-equivalent barrels of new resources,increasing the overall resource base to more than 90 billionoil-equivalent barrels. Exploration discoveries totaling 1.5 billion oil-equivalentbarrels in several countries including Australia, Canada,Tanzania, and the United States. Captured new exploration acreage in countries such asBrazil, Gabon, Liberia, Russia, and South Africa.1 Safety PerformanceLost-Time Injuries and Illnesses RateExxonMobil EmployeesU.S. Petroleum Industry Benchmark Employees (1)ExxonMobil ContractorsU.S. Petroleum Industry Benchmark Contractors (1)(incidents per 200,000 work hours)0.50.40.30.20.10Rosneft Agreement200102030405060708091011(2)122013 Progressed and expanded the Strategic CooperationAgreement with Rosneft. In 2013, we expanded theagreement to add seven new blocks covering more than150 million acres in the Russian Arctic. The 180 million acreswe are now working with Rosneft in the Arctic cover some ofthe most promising and least explored acreage in the world.Safety is a core value for ExxonMobil, and nothing receivesmore attention from management. Safety performance is a leading indicator of business performance. Preparing to drill our first well in the Kara Sea in 2014.DATA as of 01/23/2014:2 Return on Average Capital Employed (ROCE) (3)"XOM LTIR""Contractors LTIR"Industry Group"01"0.0940.1252009–2013 average 440.062"05"0.0690.05420“06 ”0.050.052“07 ”0.0310.06515“08 ”0.0540.049“09 ”0.0430.0410“10 ”0.0480.031"11"0.0630.0865“12 ”0.0380.049“13 ”0.0440.04 Progressing the pilot program to develop tight oilin West Siberia.DOWNSTRE AM Commissioned a new diesel hydrotreater in Singaporeto increase ultra-low sulfur diesel production capacity to meetgrowing demand for this product in the region. Completed multiyear conversion to a branded wholesalerbusiness model in the United States.CHEMICAL Started up the Singapore Chemical Expansion project,more than doubling steam-cracking capacity at the siteand significantly increasing premium and specialty capacity. Progressed construction of a 400-thousand-tonnes-per-yearspecialty elastomers project in Saudi Arabia with ourjoint venture partner Saudi Basic Industries Corporation. Advanced plans for a major expansion at our Texas facilities,which includes a new world-scale ethane cracker.0ExxonMobilChevronShell"API Emp"0.30.340.30.290.240.19“API Cont 30.120.110.090.130.120.11TotalBPExxonMobil’s proven business model continues to deliver ROCEleadership in the industry. Disciplined0.5 investments through the business cycle position“API Cont”the Company for long-term performance.API Emp0.4of integrated portfolio, project management, and Strengthtechnology application.Contractors LTIR0.3DATA AS OF 02/15/20140.2"Exxon""2013"17.2XOM LTIR"2009-2013"21
55 Total Shareholder Returns (6)Industry Group3 Total Free Cash Flow(4)Industry Group2013Industry Group Average (7)ExxonMobil2009–2013 average(dollars in ShellTotal0BPExxonMobil’s superior cash flow provides financial flexibility. Generated 104 billion of free cash flow since beginning of 2009. Industry-leading cash flows enable ExxonMobil to fund attractiveinvestment opportunities and unmatched shareholder distributions.1 Year3 Years5 Years"2009-2013"4 Shareholder Distributions "2013""Exxon"10.64120.869Shareholder Distributions as Percent of Cash Flow"Chevron"-1.7368.157(5)from Operations and Asset Sales"Shell"0.5076.876ExxonMobilChevronShellBP" Total"0.485 Total4.793(percent)"BP"2.84511.544AS OF(percent)FILE INFO1502009-201320201310020.117.914.310.55 Year7.510.703 13XOMECO10 Year 11.9FreeCashFlow.ai20 Year8.812.610.730 Year XX14.713.7IN EXECUTIVE COMPENSATION REPORTON PAGE15LAST FILE CHANGE MADE BY50Carol0–10CHARTOWNER1051 Yearxxxx 3 YearAPPROVED BY20080DATA as of 01/23/2014:(8)Industry eFeb.Average17,(7)2014ExxonMobil252030 Years(6)6Industry Group and Compensation Benchmark Companies1004020 YearsEXECUTIVE10-Year CumulativeReturnsCOMPENSATIONDATA AS OF 02/15/20146010 YearsExxonMobil leads the industry in total shareholder return (TSR)in almost all performance periods. TSR of companies in the same industry with similar size and scaleis the most relevant metric for comparing shareholder returns.VERSION0–25EricBillNAMExxxxxIndustry AverageNOTE:060708091012201311XOMData listis used to drive the blackandPleasedoublecheckdata0white chart , which is then used as afor colors.thereturnscolor chart.throughBars andlinesExxonMobil leads the industry in shareholder distributions.ExxonMobil generatedsuperiora range of economicandtemplatechartShellandare cut and pasted from the black and20white template and are highly accurate. Distributedenvironments andChevroncycles.-5 50 cents of every dollar of operating cash flowchangeddramaticallyHowever, the color chart is NOT linked toExxonChevronShellTotalBPthe databaseand is NOT “driven”by the the financial crisis.generated from 2009 to 2013. Maintained n.data; it is a piece of artwork buiilt by aTherefore, the editor needs to15Justhuman.wanttomakesurethey’rethoroughly proof the final artwork, notJUST the data list .correct.Julio E. Tamacas Investor RelationsCarol(1) Employee and contractor safety data from participating American Petroleum Institute companies (2013 industrydataMobilnot availabletimeTXof publication).Corporation,atIrving,10 Exxon20092010201120122013200405EDITORATTENTION: OWNER0Office: 972.444.1135(2) XTO Energy Inc. data included beginning 2011. (3) Competitor data estimated on a consistent basis with ExxonMobiland based on public information. For moreCell: 972.249.8901information concerning ROCE, see page 44 of the Summary Annual Report included with the 2014 Proxy Statement.(4) Competitor data estimated on a consistentjulio.e.tamacas@exxonmobil.combasis with ExxonMobil and based on public information; excludes impact of Gulf of Mexico spill and TNK-BP divestmentfor BP. For more information on Free Cash Flow,Eric Whetstone Whetstone DesignDATA as of 01/23/2014:5 studio/cell:214-412-8000see page 45 of the Summary Annual Report included with the 2014 Proxy Statement. (5) Shareholder distributionsconsist ofcash dividends and share buybacks. Seefax: 817-583-6119page 45 of the Summary Annual Report included with the 2014 Proxy Statement for additional information.(6) Annualizedreturnsassumingreinvested"XOM""Ind GrpAvg" dividends are"CompBenchmrk"ericwhetstone@gmail.comAS OFwhen paid. (7) Royal Dutch Shell, BP, Chevron, and Total weighted by market capitalization. (8) AT&T, Boeing, Caterpillar,Chevron, Ford,General Electric, IBM,Carol Zuber-MallisonZM Graphics, Inc."2004" 27.921.111.1Feb. 214-906-416219, 2014Johnson & Johnson,Procter& Gamble, United Technologies, and Verizon.0 studio/cell: fax: 817-924-7784DATAPfizer,AS OF02/15/20141 Year 383 Year5 Year107.7Year 20 Year 30 “ SATIONAPPROVED BY98.9 Usage: Exclusive rights63.8within ExxonMobilxxxx147.297.728.642
6E X XO N M O B I L 2 0 14 E X E C U T I V E CO M P E N S AT I O N O V E R V I E WCEO CompensationA substantial portion of the compensation granted by the Compensation Committee to the CEO and reported in the SummaryCompensation Table represents an incentive for future performance, not current cash compensation. This long-term incentive paywill not actually be received by the CEO for many years in the future and remains at risk of forfeiture.2 0 13 R E P O R T E D PAY7 CEO Reported and Adjusted Pay – 2013 vs. 2012201320122013vs. 2012Total Reported PayNegative Pension 40,266,501Adjustment (1)Total Adjusted Pay -30% 28,138,329*—- 6,240,556— 40,266,501 21,897,773-46%30-percent reduction in reported payprimarily due to 20-percent reductionin bonus and change in pension value. 46-percent reduction in reportedpay if full impact of pension valuationconsidered. Pension value impacted by interestrate change.*No change in number of equity awards granted.8 CEO Reported Pay vs. TSR – 2006 to 2013CEO Reported PayTotal Shareholder Return (2)(percent)The relationship between change inExxonMobil CEO’s reported pay andExxonMobil’s total shareholder return(TSR) throughout the CEO’s tenureis as 013EXECUTIVECOMPENSATIONR E A L I Z E D PAY V S . R E P O R T E D PAYYear ofCompensationRealized PayReported PayRealized Pay vs.Reported Pay2013 15,768,829 28,138,329- 12,369,5002012 15,561,163 40,266,501- 24,705,3382011 24,637,196 34,920,506- 10,283,310DATA as of 01/23/2014:2010 14,229,609 28,952,558- 14,722,9492009 8,530,165 "Reported 27,168,317- 18,638,152Pay"TSR Change2008 10,212,091 32,211,079- 21,998,988“2006”24.7239.22007 12,884,308 27,172,280- 14,287,972"2007"21.082006 6,712,435 22,440,807- 24.315,728,372"2008"18.54-13.2AverageVERSION9 CEO Realized and Reported Pay – 2006 to 2013Realized Pay asa Percentage ofReported Pay56%39%71%*49%31%32%47%30%44%*Exercised last stock options grantedin 2001 that would haveexpired in 2011. No -12.6stock options granted since 2001."2009"-15.66"2010"6.5710.1AS OFFeb. 06, 2014EXECUTIVExxxxExxonMobilCEO’s realized compensationCOMPENSATIONaveraged 44 percent of reported pay overVERSIONFILE INFO2006APPROVED BYCEO’s tenure.07the13XOMECOFeb.15,2014CEOPay.aiAS OFAPPROVEDBY COMPENSATION REPORTINEXECUTIVEON PAGExxx07LAST FILE CHANGE MADE BYEricBill08Carol13XOMECONAMECEOPayVsTSR.aiFILE INFOCHARTOWNER–30IN xxxxxEXECUTIVE COMPENSATION REPORTON PAGEXXN: OWNERATTENTION:CHART OWNEREDITOROWNERData list is used to drive the black andFor definitions of the terms “reported pay” and “realized pay” as used in this Overview, as well as a list of our compensationcompanies,see FrequentlyLAST chart,FILEbenchmarkCHANGEMADEBY as awhitewhich is thenused20.61value was negative18.7templatefor theBarsUsed Terms on page 10. (1) In"2011"2013, the change in pension(- 6.24 million), but under SEC reportingrules,a colornegativein pension valueCarolEric chart. changeBill and linesare cut and pasted from the black andmust be shown in the Summary Compensation Table as zero. This shows the impact the full negative pension valuationwould have if applied to total compensation.white template and are highly accurate."2012"15.34.7NOT linked towith the highest,(2) TSR represents annualized returns assuming dividends are reinvested when paid. (3) Reported pay values shownHowever,correspondtochartthe iscompaniesNAME the colordatabase and is NOT “driven” by themedian, and lowest realized payvalues. (4) Financial-30.12data estimated based onpublicly available information. Marketthecapitalizationis as of December 31, 2013.“2013”20.1xxxdata;it is a piece of artwork buiilt by ahuman.Therefore,to(5) Trailing twelve months (TTM); excludes excise taxes and other sales-based taxes, if applicable. (6) Excludes GeneralElectricduethetoeditorlackneedsof comparabilityresultingthoroughly proof the final artwork, notfrom how assets are quantified and reported for its financial business. (7) Trailing twelve months (TTM).JUST the data list.Data list is used to drive the black andwhite chart, which is then used as aJulio E. Tamacas Investor Relationstemplate for the color chart. Bars and linesExxon Mobil Corporation, Irving, TXare cut and pasted from the black andOffice: 972.444.1135white template and are highly accurate.Cell: 972.249.8901However, the color chart is NOT linked to
7CEO Realized Pay vs. Compensation Benchmark Companies – 201210Realized Pay asa Percentage ofReported Pay(dollars in thousands)Realized PayReported Pay (3)Comparator CompaniesHighestMedianLowestExxonMobilExxonMobil – Position 68,443 23,989 6,008 15,56111 of 13 20,956 19,280 10,977 40,267*1 of 13ExxonMobil CEO’s realized pay ranked11th among the compensation benchmarkcompanies. The benchmark companies’ median isalmost 24 million and the high isjust over 68 million.327%124%55%39%* 28 million in 2013; 2013 comparator company data not available at time of publication.C O M P E N S AT I O N A N D G R O W T H I N S H A R E H O L D E R VA L U E11 CEO Realized Pay vs. Compensation Benchmark Companies – CumulativePeriod: CEO’s Tenure (2006 to 2012)Cumulative TSRComparator CompaniesMedianExxonMobilExxonMobil – Multiple of MedianRealized Pay(dollars in millions)74%80%1.1xExxonMobil’s cumulative TSR for theCEO’s tenure is 1.1 times thecompensation benchmark companies’median versus 0.6 times for cumulativerealized pay. 144 930.6xEXECUTIVECOMPENSATIONExxonMobilComparator Company MedianVERSION12 CEO Realized Pay vs. Compensation Benchmark Companies – AnnualComparator Company Maximum(dollars in thousands)AS OFFEB 15, 2014APPROVED BYExxonMobilCEO’s realized pay isxxxxbelow the compensation benchmark10companies’13XOMECOmedian for most ofhistenure.CEOPayVsBenchmrk.aiFILE INFO80,00060,000IN EXECUTIVE COMPENSATION REPORTON PAGE40,00010LAST FILE CHANGE MADE OMPENSATIO
Executive Compensation, please review this Overview, as well as the more detailed information included in the Compensation Discussion and Analysis, compensation tables, and narrative in ExxonMobil’s 2014 Proxy Statement. Reported Compensation:
Fellow Shareholders, Before you cast your vote on Management Resolution Item 3 – Advisory Vote to Approve Executive Compensation, the members of the Board’s independent Compensation Committee encourage you to review the content of this Executive Compensation Overview, as well as the additional detail provided in the Compensation Discussion and Analysis, compensation tables, and
Compensation Provided to the Company’s Named Executive Officers for 2019 28 Executive Compensation 29 Compensation Discussion and Analysis 29 Compensation Committee Report 39 Executive Compensation Tables 40 Equity Compensation Plan Information 53 Security Ownership of Principal Stockholders and Management 54
2. Proposed Instructions to Compensation Discussion and Analysis 3. “Filed” Status of Compensation Discussion and Analysis 4. Proposed Elimination of the Performance Graph and the Compensation Committee Report B. Compensation Tables 1. Compensation to Named Executive Officers in the Last Three
TABLE OF CONTENTS UNIT LESSON TITLE PAGE NO. I 1.1 Compensation 3 1.2 Compensation Responsibilities 17 1.3 Compensation System Design Issues 23 1.4 Compensation Philosophies 29 1.5 Compensation Approaches 34 II 2.1 Fringe Benefits 41 2.2 Strategic Compensation
Clinic compensation (Total Compensation -Academic Compensation) 170,000 Dr. Smith earned 5 points in 3 different categories in calendar year 2018. Dr. Smith has therefore met the expectations for 100% the benchmark. Dr. Smith's compensation in FY20 is 200,000 30,000 (Academic Compensation) 170,000 (Clinical Compensation)
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