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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
CHEVRON CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
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(LOGO)
CHEVRON CORPORATION
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS AND
PROXY STATEMENT
MAY 7, 1996
NOB HILL MASONIC CENTER
1111 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA
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(LOGO)
San Francisco, California
March 22, 1996
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS--MAY 7, 1996
To Our Stockholders:
The Annual Meeting of Stockholders of Chevron Corporation will be held at 9:30
a.m., local time, on Tuesday, May 7, 1996, in the Auditorium of the Nob Hill
Masonic Center, 1111 California Street, San Francisco, California (the
"Meeting").
The Meeting will be held for the following purposes as set forth in the attached
proxy statement:
- ITEM 1--to elect 10 Directors;
- ITEM 2--to ratify the appointment of independent public accountants;
- ITEMS 3 THROUGH 6--to take action on stockholder proposals;
and to act upon such other matters as may properly be brought before the
Meeting.
Stockholders of record at the close of business on March 11, 1996 are entitled
to vote at the Meeting. The number of outstanding voting securities of Chevron
Corporation on February 15, 1996 was 652,586,311 shares of Common Stock, $1.50
par value. Each share is entitled to one vote.
In accordance with Delaware law, a list of stockholders entitled to vote at the
Meeting will be available at the Nob Hill Masonic Center on May 7, 1996 and for
10 days prior to the Meeting, between the hours of 8:00 a.m. and 4:00 p.m. at
the office of the Transfer Agent, Chevron Corporation, 225 Bush Street, San
Francisco, California.
Please carefully read the attached proxy statement for information on the
matters to be considered and acted upon at the Meeting. We hope that you will
attend the Meeting. Information about attending the Meeting is located on page
21 of the proxy statement. If you cannot attend, please vote on the listed items
by marking, signing, and returning the enclosed proxy card. Your shares cannot
be voted unless you sign and return a proxy or vote by ballot at the Meeting.
By Order of the Board of Directors
/s/ Lydia I. Beebe
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Lydia I. Beebe
Secretary
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TABLE OF CONTENTS
Page
----
General Information for Stockholders.................................................. 1
Voting Procedures................................................................... 1
Confidential Voting................................................................. 1
Expenses of Solicitation............................................................ 1
ITEM 1 Election of Directors.......................................................... 2
Nominees for Directors........................................................... 2
Stock Ownership of Directors and Executive Officers.............................. 5
Board Committees and Meeting Attendance.......................................... 5
Non-employee Directors' Compensation............................................. 6
Executive Compensation........................................................... 7
Management Compensation Committee Report on Executive Compensation............. 7
Summary Compensation Table..................................................... 10
Option Grants in 1995 Table.................................................... 11
Aggregated Option Exercises and 1995 Year-End Option Value Table............... 11
Long-Term Incentive Plan-1995 Performance Unit Awards Table.................... 12
Pension Plan Table............................................................. 12
Performance Graph.............................................................. 13
ITEM 2 Approval of the Appointment of Independent Public Accountants.................. 14
Stockholder Proposals................................................................. 14
ITEM 3 Stockholder Proposal to Limit Annual and Cumulative Retirement Pay............. 15
ITEM 4 Stockholder Proposal to Pay Directors Exclusively in Common Stock.............. 16
Board Discussion of Nigerian Operations............................................... 17
ITEM 5 Stockholder Proposal to Develop Country Investment Guidelines.................. 18
ITEM 6 Stockholder Proposal to Prepare an Investment Risk Report on Nigeria........... 20
Compliance with Section 16 of the Exchange Act........................................ 20
Information About Attending the Meeting............................................... 21
Other Matters......................................................................... 21
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CHEVRON CORPORATION
575 Market Street
San Francisco, California 94105
March 22, 1996
PROXY STATEMENT
This proxy statement is furnished by the Board of Directors of Chevron
Corporation ("Chevron") to help you exercise your voting rights at the May 7,
1996 Annual Meeting of Stockholders (the "Meeting"). The accompanying proxy card
enables you to vote your shares of Chevron Corporation Common Stock, $1.50 par
value ("Chevron Stock") without being present at the Meeting.
GENERAL INFORMATION FOR STOCKHOLDERS
VOTING PROCEDURES
If you are a stockholder of Chevron, you can be represented at the Meeting and
have your shares voted as you direct by means of the enclosed proxy card. The
proxy holders, K. T. Derr, C. M. Pigott and G. H. Weyerhaeuser, will vote all
shares of Chevron Stock represented by the proxy cards that are properly signed
and returned by stockholders. Your shares will be voted by the proxy holders as
you have directed. You may specify your voting choices by marking the
appropriate boxes on the proxy card. If you properly sign and return your proxy
card, but do not specify your choices, your shares will be voted as recommended
by the Board of Directors. The proxy card also authorizes the proxy holders to
vote the shares represented on any matters not known at the time this proxy
statement was printed that may be properly presented for action at the Meeting.
YOU MUST RETURN A SIGNED PROXY CARD TO PERMIT THE PROXY HOLDERS TO VOTE YOUR
SHARES.
The Board of Directors encourages you to complete and return the proxy card even
if you expect to attend the Meeting. You may revoke your proxy at any time
before it is voted at the Meeting. If you attend the Meeting and wish to vote,
your ballot at the Meeting will cancel any proxy that you have previously given.
Under Chevron's Restated Certificate of Incorporation and By-Laws, each
outstanding share of Chevron Stock is entitled to cast one vote for as many
separate nominees as there are Directors to be elected and for or against all
other matters presented.
The nominees receiving the most support for the number of positions to be filled
are elected Directors. Proposals are approved if the number of shares voted in
favor exceed the number voted against. Abstentions and broker non-votes do not
affect the calculation.
CONFIDENTIAL VOTING
Corporation policy is to handle proxies and ballots from all stockholders in a
manner that protects stockholder voting privacy. Only the proxy solicitor, the
Judges of Election and the few other persons necessary to inspect and process
the ballots and proxies have access to them. None of these persons is a Director
or officer of Chevron. Every such person pledges to treat in confidence all
information from proxies and ballots. Information concerning the ballots and
proxies may be disclosed only in the event of a proxy contest or as otherwise
required by law. Your Directors believe these procedures are in the best
interests of Chevron and protect stockholder voting privacy.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by Chevron. Chevron has retained
Georgeson & Company Inc. to solicit proxies at an estimated cost of $25,000.
Employees of Chevron and its subsidiaries may also solicit proxies personally
and by telephone, for which the expense would be nominal.
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ITEM 1 ON THE PROXY CARD
ELECTION OF DIRECTORS
It is intended that the shares represented by the enclosed proxy card will be
voted, unless such authority is withheld, for the election of the ten Director
nominees named in the following section. Each nominee is presently a Director of
Chevron. The Directors will be elected to serve for the ensuing year and until
their successors have been elected. In the event that any Director nominee
should become unavailable to serve as a Director, which is not anticipated, the
proxy will be voted for a nominee who shall be designated by the present Board
to fill such vacancy or the Board of Directors may provide by resolution for a
lesser number of Directors.
NOMINEES FOR DIRECTORS
SAMUEL H. ARMACOST, 56, is a Principal of Weiss, Peck & Greer L.L.C., an
(PHOTO) investment firm. Mr. Armacost was President, Director and Chief Executive
Officer of BankAmerica Corporation from 1981 to 1986. From 1987-1990, he
was a Managing Director of Merrill Lynch Capital Markets. He assumed his
current position in 1990. He has been a Director of Chevron since 1982. He
is a Director of SRI International, the Irvine Foundation, The Failure
Group, Inc. and Scios-Nova Inc., and a member of The Business Council and
the Advisory Council of the California Academy of Sciences.
KENNETH T. DERR, 59, is Chairman of the Board of Chevron. He joined Chevron
(PHOTO) in 1960. After a succession of assignments in the Comptroller's and
Manufacturing Departments, he became Assistant to the President in 1969. He
was elected a Vice-President in 1972, a Vice-Chairman in 1985 and assumed
his present position in 1989. He served as President and Chief Executive
Officer of Chevron U.S.A. Inc. from 1979 to 1984. He has been a Director of
Chevron since 1981. He is a Director of AT&T Corp., Citicorp, Potlatch
Corporation, The Bay Area Council, Invest-in-America, The American
Productivity and Quality Center and the American Petroleum Institute; a
Trustee Emeritus of Cornell University and a member of the National
Petroleum Council, the California Business Roundtable, The Business
Council, The Business Roundtable, and the President's Council for
Sustainable Development.
RAYMOND E. GALVIN, 64, is a Vice-President of Chevron and President of
(PHOTO) Chevron U.S.A. Production Company. He joined Gulf Oil Corporation in 1953
as an engineer and moved up to become Vice-President for Gulf 's U.S.
production in 1979. After Chevron acquired Gulf in 1984, he was elected
Senior Vice-President of Chevron U.S.A. Inc. In 1992, he assumed his
current position. He was elected a Director of Chevron in 1995. Mr. Galvin
is Chairman of the Natural Gas Council and the Natural Gas Supply
Association, a board member of the National Ocean Industries Association,
the Gas Research Institute, the Greater Houston Partnership, the National
Council for Minorities in Engineering, and the Houston Advisory Board of
the Nature Conservancy of Texas. He is also a member of the American
Petroleum Institute and the Society of Petroleum Engineers.
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SAM GINN, 58, has been Chairman of the Board and Chief Executive Officer of
(PHOTO) AirTouch Communications, Inc., formerly PacTel Corporation, a worldwide
wireless telecommunications company, since December 1993. From 1988 until
April 1, 1994, Mr. Ginn served as Chairman of the Board, President and
Chief Executive Officer of Pacific Telesis Group. He was Chairman of the
Board of Pacific Bell from 1988 until April 1, 1994. He has been a Director
of Chevron since 1989. He is also a Director of Transamerica Corporation
and Safeway Inc. He is Chairman of The California Business Roundtable and a
member of The Business Roundtable, The Business Council, The Institute for
International Studies at Stanford, and the California Council on
Competitiveness.
CARLA ANDERSON HILLS, 62, is Chairman and Chief Executive Officer of Hills
(PHOTO) & Company International Consultants, a company giving advice on investment,
trade and risk issues abroad. From 1989 to 1993, she served as United
States Trade Representative. Prior to her government service, she was a
co-managing partner in the law firm of Weil, Gotshal & Manges. She is a
Director of American International Group, Inc., AT&T Corp., Bechtel
Enterprises, Inc., Bechtel Group, Inc., Time Warner Inc., and Trust Company
of the West. Mrs. Hills was a Director of Chevron from 1977 through 1988
prior to serving as U.S. Trade Representative, and rejoined the Board of
Directors in 1993.
CHARLES M. PIGOTT, 66, is Chairman of the Board and Chief Executive Officer
(PHOTO) of PACCAR Inc, a manufacturer of transportation equipment. He was elected
President of PACCAR Inc in 1965, became its Chief Executive Officer in 1967
and Chairman of the Board in 1986. He has been a Director of Chevron since
1973. He is a Director of The Boeing Company and Seattle Times Company, and
a member of The Business Council.
CONDOLEEZZA RICE, 41, is Provost and Vice President of Stanford University.
(PHOTO) She was named Provost in September 1993. Ms. Rice joined the Stanford
University faculty in 1981. From 1986 to 1987, she served on a fellowship
with the Joint Chiefs of Staff acting as Special Assistant to the Director
of the Joint Staff for strategic nuclear policy. From 1989 until April
1991, she served on the Bush Administration's National Security Council, as
Director for Soviet and East European Affairs and also as Senior Director
for Soviet Affairs. She also served as Special Assistant to President Bush
for National Security Affairs. She has been a Director of Chevron since
1991. She is a Director of Transamerica Corporation and the Rand
Corporation, and a member of the Council on Foreign Relations and the J. P.
Morgan International Advisory Council.
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JAMES N. SULLIVAN, 58, is Vice-Chairman of the Board of Chevron. He joined
(PHOTO) Chevron in 1961 as a Process Engineer and held a succession of
manufacturing assignments. He was elected a Vice-President of Chevron in
1983. He assumed his present position in 1989. He has been a Director of
Chevron since 1988. He is a member of the Board of Trustees of the
University of San Francisco, the California Academy of Sciences, and the
Committee for Economic Development. He is a Director of the American
Petroleum Institute and the United Way of the Bay Area.
GEORGE H. WEYERHAEUSER, 69, has been Chairman of the Board of Weyerhaeuser
(PHOTO) Company, a forest products company since 1988. He joined Weyerhaeuser
Company in 1949, became its President in 1966 and was its Chief Executive
Officer from 1966 to 1991. He has been a Director of Chevron since 1977. He
is a Director of The Boeing Company and SAFECO Corporation, and a member of
The Business Council.
JOHN A. YOUNG, 63, retired as President, Director and Chief Executive
(PHOTO) Officer of Hewlett-Packard Company, a manufacturer of electronic equipment,
in 1992. He joined Hewlett-Packard in 1958, became its President in 1977
and its Chief Executive Officer in 1978. He has been a Director of Chevron
since 1985. He is a Director of Affymetrix, Inc., Ciphergen, Inc., General
Magic Inc., Novell, Inc., Shaman Pharmaceuticals, Inc., SmithKline Beecham
PLC and Wells Fargo & Company. He is a member of The Business Council and
the Executive Committee of the Council on Competitiveness. He is Chairman
of the Board of Smart Valley Inc., a non-profit corporation aimed at
creating an electronic community in Silicon Valley.
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STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
Under applicable rules of the Securities and Exchange Commission (the "SEC"), a
person is deemed to be the beneficial owner of Chevron Stock if he or she
directly or indirectly has or shares voting power and/or investment power with
respect to a security. A person is also considered to own shares which he or she
does not own currently but has the right to acquire presently or at some time
within the next 60 days. Restricted stock units awarded under Chevron
compensation plans do not carry voting rights and may not be sold. Nonetheless,
they may ultimately be paid in shares of Chevron Stock and represent economic
ownership.
The following table sets forth information about economic and beneficial
ownership of Chevron Stock as of January 31, 1996, for each Director, for each
executive officer named in the Summary Compensation Table on page 10, and for
all Directors and executive officers of Chevron as a group. All amounts shown in
the table represent less than 1% of the outstanding shares of Chevron Stock.
Shares
Restricted Stock Currently Exercisable
Units(1) Owned(2) Options(3)
---------------- -------- -----------
Samuel H. Armacost..................... 2,862 2,100 -0-
J. Dennis Bonney....................... 47,158 80,473 309,800
Kenneth T. Derr........................ -0- 130,221 454,700
Raymond E. Galvin...................... 950 20,674 101,700
Sam Ginn............................... 2,272 2,000 -0-
Carla A. Hills......................... 1,200 600 -0-
Martin R. Klitten...................... -0- 23,425 142,400
Charles M. Pigott...................... 2,862 68,904 -0-
Condoleezza Rice....................... 1,381 -0- -0-
James N. Sullivan...................... -0- 56,622 251,600
George H. Weyerhaeuser................. 2,862 12,800 -0-
John A. Young.......................... 2,862 1,000 -0-
Directors and executive officers as a
group
(16 persons)......................... 110,790 482,510 1,547,700
- ---------------
(1) Includes, for non-employee Directors, stock units awarded under the Chevron
Restricted Stock Plan for Non-Employee Directors, and for executive
officers, stock units deferred under the Management Incentive Plan and stock
units awarded under the Long-Term Incentive Plan. The stock units awarded
under the Long-Term Incentive Plan remain subject to possible forfeiture
under applicable provisions of the plan.
(2) Includes, for executive officers, restricted shares and shares held in trust
under various profit sharing or incentive plans, some of which may remain
subject to forfeiture under applicable provisions of such plans.
(3) Represents all currently exercisable stock options awarded under the
Long-Term Incentive Plan.
BOARD COMMITTEES AND MEETING ATTENDANCE
The Board of Directors has established permanent Audit, Board Nominating,
Management Compensation and Public Policy committees. The membership of each of
these committees is determined from time to time by the Board.
The Audit Committee, which consists of John A. Young, Chairman, Samuel H.
Armacost, Sam Ginn, Carla A. Hills and George H. Weyerhaeuser, held three
meetings during 1995. The committee selects a firm of independent certified
public accountants to audit the books and accounts of Chevron and its
subsidiaries for the fiscal year for which they are appointed. In addition, the
committee reviews and approves the scope and cost of all services (including
nonaudit services) provided by the firm selected to conduct the audit. The
committee also monitors the effectiveness of the audit effort and financial
reporting, and inquires into the adequacy of financial and operating controls.
The Board Nominating Committee, which consists of Samuel H. Armacost, Chairman,
Charles M. Pigott, Condoleezza Rice and George H. Weyerhaeuser, held one meeting
during 1995. The committee assesses the
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size and composition of the Board and recommends prospective Directors, without
regard to race, religion or sex, to assist in creating a balance of knowledge,
experience, and capability on the Board. The committee will consider nominees
recommended by stockholders. If a stockholder wishes to recommend a nominee for
the Board of Directors, the stockholder should write to the Corporate Secretary
of Chevron specifying the name of the nominee and the qualifications of such
nominee for membership on the Board of Directors. All such recommendations will
be brought to the attention of the Board Nominating Committee.
The Management Compensation Committee, which consists of Charles M. Pigott,
Chairman, Samuel H. Armacost, Sam Ginn, Carla A. Hills, Condoleezza Rice, George
H. Weyerhaeuser and John A. Young, held five meetings during 1995. The committee
reviews and approves salaries and other matters relating to compensation of the
principal officers and all executives of Chevron and its subsidiaries above a
specified salary grade. The committee also administers the Excess Benefit,
Management Incentive, and Long-Term Incentive Plans of Chevron.
The Public Policy Committee, which consists of Carla A. Hills, Chairman, Kenneth
T. Derr, Sam Ginn, Charles M. Pigott, Condoleezza Rice and John A. Young, held
three meetings during 1995. The committee identifies, monitors and evaluates
domestic and foreign social, political and environmental trends, issues and
concerns which affect or could affect Chevron or to which Chevron could make a
unique contribution. The committee reviews and develops recommendations to the
Board to assist it in formulating and adopting policies and strategies
concerning public policy issues.
Chevron's Board of Directors met ten times during 1995. There were a total of 22
meetings of the Board and its committees. Attendance by all Directors at these
meetings averaged over 96 percent.
NON-EMPLOYEE DIRECTORS' COMPENSATION
Non-employee Directors receive an annual retainer of $35,000 and an attendance
fee of $1,250 for each meeting of the Board or a Committee of the Board
attended. Committee Chairmen are paid an additional fee of $1,250 for each
meeting chaired. Any non-employee Director may elect to defer receipt of all or
any portion of the annual retainer and meeting fees. Deferred amounts are
credited each quarter with interest at a variable rate, or alternatively, at the
election of the Director are converted into stock units representing the value
of an equal number of shares of Chevron Stock. In such event, unpaid stock units
are credited each quarter with dividend equivalents in the same amounts as the
dividends paid on Chevron Stock. The amount ultimately distributed to the
Director will reflect changes in the market value of Chevron Stock during the
deferral period. Any deferred amounts remaining unpaid at the time of a
Director's death are distributed to the Director's beneficiary.
In addition, non-employee Directors receive deferred compensation to supplement
their cash retainers and attendance fees under the Chevron Restricted Stock Plan
for Non-Employee Directors (the "Restricted Stock Plan"). Benefits under the
Restricted Stock Plan accrue in the form of stock units and are payable in an
equal number of shares of Chevron Stock after any non-employee Director
terminates service as a Director of Chevron and attains the age of 65. Pursuant
to the Restricted Stock Plan, the stock unit accounts of non-employee Directors
are credited annually with stock units representing $10,000 worth of Chevron
Stock and quarterly with stock units representing converted dividend equivalents
earned on the stock units in the non-employee Directors' accounts. Annual awards
under the Restricted Stock Plan are subject to forfeiture if any non-employee
Director fails to serve as a Director of Chevron for five years. However, such
forfeiture does not apply if a Director reaches age 72 while serving.
Non-employee Directors are reimbursed for expenses which may by incurred by them
in connection with the business and affairs of Chevron.
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EXECUTIVE COMPENSATION
The compensation of K. T. Derr, Chevron's Chief Executive Officer, and the four
other most highly paid executive officers during 1995 is discussed in the report
from the Management Compensation Committee of the Board of Directors below and
is shown on the following pages in five tables.
MANAGEMENT COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report is provided by the Management Compensation Committee of the Board of
Directors (the "Committee") to assist stockholders in understanding the
Committee's objectives and procedures in establishing the compensation of
Chevron's Chief Executive Officer and other senior Chevron executives.
The Committee, consisting of all seven of the non-employee Directors, is
responsible for establishing and administering Chevron's executive compensation
program. The Committee met five times during 1995.
In structuring Chevron's incentive programs, the Committee has been advised on
plan design by external compensation consultants, as well as Chevron's
compensation staff. The Committee has been provided with competitive pay and
performance information by an outside consultant. Chevron's compensation staff
provided additional data and analysis that was requested by the Committee.
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Committee believes that compensation of Chevron's key executives should:
- link rewards to business results and stockholder returns,
- encourage creation of stockholder value and achievement of strategic
objectives,
- provide total compensation opportunity that is competitive with major oil
and non-oil companies, taking into account relative company size and
performance as well as individual experience, responsibility and
performance,
- maintain an appropriate balance between base salary and short- and
long-term incentive opportunity, with more compensation at risk at the
higher salary grades, and
- attract and retain high caliber personnel on a long-term basis.
Chevron uses seven major oil companies as its competition when determining
competitive compensation practice: Amoco, Arco, Exxon, Mobil, Shell, Texaco, and
Unocal. These seven are the primary competition in the marketplaces in which
Chevron operates and are strong competitors for human resources talent.
Five of these competitors (Amoco, Arco, Exxon, Mobil, and Texaco) are also used
as the competitor peer group when determining relative total stockholder return
("TSR"), which is stock price appreciation plus dividends on a reinvested basis.
Shell is excluded because it is a subsidiary of Royal Dutch Shell and does not
issue stock, making it difficult to determine a return to stockholders. Unocal
is excluded from the peer group because its assets and scope of operations are
significantly smaller than the other members of the peer group.
KEY ELEMENTS OF EXECUTIVE COMPENSATION
Chevron's existing executive compensation program consists of three elements:
Base Pay, Short-Term Incentives and Long-Term Incentives. For senior executives,
the Committee believes short- and long-term incentive pay, linked to Chevron's
financial performance, should represent half or more of their total compensation
opportunity. Payout of the short-term incentives depends on assessments of
corporate performance measured against both annual business plan objectives and
performance relative to the five peer group competitors (Amoco, Arco, Exxon,
Mobil and Texaco). Payout of the long-term incentives depends on performance of
Chevron Stock and on TSR performance relative to the same five competitors.
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BASE PAY
- Salary structures are targeted to average pay levels of the seven major
oil competitors noted previously. The Committee also reviews pay
information of companies outside the oil industry, supplied by outside
consultants, when establishing salary structures to ensure compensation
opportunity is appropriate on a broad industry basis.
- Salaries within these structures vary by individual and are based on
sustained performance toward achievement of Chevron's goals, objectives
and strategic intents. The Committee also considers experience, time
since last increase, and current salary compared to market rates when
considering salary actions.
- Executive salaries and proposed changes are reviewed and approved
annually by the Committee. Pay increases under the executive salary
program are administered throughout the salary program year.
SHORT-TERM INCENTIVE (MANAGEMENT INCENTIVE PLAN)
- The Management Incentive Plan ("MIP") is an annual cash incentive plan
which links awards to performance results of the prior year. Individual
target awards vary by salary grade, and are based on competitive practice
of the seven oils (Amoco, Arco, Exxon, Mobil, Shell, Texaco and Unocal).
Actual individual awards typically vary from 150% of target to zero
percent. Awards are based on the Committee's assessments of performance
vs. objectives on three components: corporate results, business unit
results and individual performance, each weighted about one-third of the
target award. Performance assessments within each of the three components
are aggregate judgments; there is no specific weighting formula for each
factor within a component.
- Corporate and business unit financial and strategic objectives are set at
the beginning of each year. Financial objectives are developed for:
earnings, return on capital employed ("ROCE"), cash flow and operating
expense. Results are measured against these objectives and against major
oil competitor results.
- An individual's key job responsibilities and objectives are also
established at the beginning of each year. Individual objectives include
achievement of business unit financial objectives as well as objectives
related to business operations (e.g., refinery throughput, production
volumes, product quality, safety, environmental performance, etc.).
Performance assessments are also made on other factors including
leadership, teamwork, communication, planning and organizing, creativity
and innovation, and quality improvement.
- The corporate performance assessment is the same for all MIP
participants. Individuals will have differing business unit and
individual performance assessments.
LONG-TERM INCENTIVE (LONG-TERM INCENTIVE PLAN)
- The Long-Term Incentive Plan ("LTIP") is designed specifically to link a
substantial portion of executive pay to increases in stockholder value.
Individual grants vary by salary grade, and are based on valuations of
grants made by the seven oils (Amoco, Arco, Exxon, Mobil, Shell, Texaco
and Unocal) which are provided by an outside consultant. Grants are
typically in the form of non-qualified stock options and performance
units.
- Stock options are awarded at market price on the day of grant, vest after
one year, and have a ten-year term. Their ultimate value depends entirely
on appreciation of Chevron Stock. The Committee does not grant discounted
options.
- The ultimate value of performance units (denominated in shares of Chevron
Stock) is tied to TSR as compared to TSRs for Amoco, Arco, Exxon, Mobil
and Texaco. Performance units have a three-year vesting period, with a
performance modifier based on relative TSR ranking that can vary from
zero percent to 150%. If Chevron's TSR is the lowest of the group, the
modifier is zero percent; if fifth, 30%; if fourth, 60%; if third, 90%;
if second, 120%; if first, 150%. Moreover, if one or more competitor's
TSR
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is within one percentage point of Chevron's TSR, the TSR ranking modifiers
are averaged. Payout (in cash) is equal to the number of units multiplied
by the performance modifier multiplied by the Chevron Stock price at the
end of the performance period.
EXECUTIVE STOCK OWNERSHIP
Chevron has no formal stock ownership guidelines. Executives participate in
Chevron's Profit Sharing/Savings Plan (a broad-based employee stock ownership
and savings plan) in addition to having the option to defer MIP awards and LTIP
performance unit payouts into Chevron Stock accounts. As a result of these
opportunities, the average value of Chevron Stock holdings of executives as a
group is more than four times their annual salaries.
1993 OBRA--EXECUTIVE COMPENSATION TAX DEDUCTIBILITY
The Omnibus Budget Reconciliation Act of 1993 ("OBRA") included a provision
which eliminates a company's tax deduction for any compensation over one million
dollars paid to any one of the five executives who appear in the Summary
Compensation Table, subject to several statutory exceptions. Final regulations
for this section of OBRA were issued in December 1995 and are being reviewed by
Chevron's compensation staff and legal counsel. Based on preliminary review, the
Committee believes both the MIP and the LTIP currently qualify for statutory
exceptions and does not anticipate additional tax exposure from grants or awards
made under these plans.
1995 CEO COMPENSATION
BASE PAY
Mr. Derr did not receive a base salary increase in 1995. His base pay of
$1,000,000 reflects excellent performance throughout his seven-year tenure as
CEO, during which time Chevron's annualized 17.6% TSR ranks second in the
competitive peer group and ahead of the 15.5% achieved by S&P 500 companies.
ANNUAL BONUS (MIP)
Chevron's 1995 earnings were slightly below objective for the year. Reported
earnings decreased 6% before application of a $659 million writeoff for FAS 121.
However, overall financial performance improved significantly, as indicated by
an operational earnings increase of 17% from 1994 to 1995. (Operational earnings
for this purpose represent reported earnings before special items and accounting
changes. Competitor operational earnings are similarly adjusted, based on
publicly available data.) Cash flow from operations was up 41% from 1994.
Operational ROCE increased to 9.8% from 8.6% in 1994, while reported ROCE
declined from 8.7% to 8.2% (also before application of the FAS 121 writeoff).
Chevron's 1995 TSR was 22% compared with 6.8% TSR in 1994.
Operating results also improved in 1995. Chevron had its most successful year of
oil discoveries in 15 years. Worldwide net proved reserves replacement ratio
improved to 138% from 114% in 1994 and international upstream oil and gas
production rose by 4%. Operating expense decreased $287 million from 1994, and
remains significantly below the 1991 and 1992 levels.
Staffing levels were reduced by 7%, continuing the downward trend begun in 1991.
Chevron also announced several significant restructurings designed to improve
operating focus and efficiency.
Considering these factors, the Committee granted Mr. Derr an MIP award of
$721,000, which was 96.1% of his target award.
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LONG TERM INCENTIVES
Chevron's LTIP grants are made under the same determination rules for all LTIP
participants. Mr. Derr's 1995 LTIP grant was 105,800 stock options and 23,100
performance units. Based on data provided by an outside consultant, the
Committee believes this grant is reasonable and well within competitive practice
for his level of responsibilities. The value of the stock options granted will
depend on the price of Chevron Stock at the time they are exercised. The
performance unit period began on January 1, 1996 and will end on December 31,
1998; payout will be based on Chevron's TSR ranking relative to the five
competitor companies (Amoco, Arco, Exxon, Mobil and Texaco).
Mr. Derr was granted performance units in 1992 for the performance period
January 1, 1993 through December 31, 1995. Chevron's TSR of 19.0% for this
three-year period was the second highest of the competitor group, which resulted
in a $1,958,454 performance unit payout to Mr. Derr.
The Committee also notes that Mr. Derr was allocated $7,536 from his
participation in Chevron's Profit Sharing/Savings Plan, a broad-based employee
stock ownership and savings plan. The 1995 allocation to this plan was based on
Chevron's income.
January 31, 1996 MANAGEMENT COMPENSATION COMMITTEE
C. M. PIGOTT,
Chairman SAM GINN
S. H. ARMACOST C. RICE
C. A. HILLS J. A. YOUNG
G. H. WEYERHAEUSER
SUMMARY COMPENSATION TABLE
Long-Term Compensation
---------------------------------------
Awards Payouts
Annual Compensation ----------------------- -----------
Name ------------------------------- Restricted Securities Vested All Other
and Bonus($) Stock Underlying Performance Compen-
Principal Salary (Year Award(1) Options Units sation(2)
Position Year ($) Earned) ($) (#) ($) ($)
- -------------- ---- --------- -------- -------- ---------- ----------- ---------
K. T. Derr 1995 1,000,000 721,000 -0- 105,800 1,958,454 69,819
Chairman 1994 1,000,000 700,000 -0- 125,300 1,402,981 50,095
1993 900,000 914,000 -0- 93,600 909,437 58,073
J. D. Bonney 1995 657,500 419,000 -0- 58,200 1,072,192 45,899
Vice-Chairman 1994 620,000 375,000 -0- 68,800 787,327 34,252
1993 550,000 469,000 -0- 51,400 509,284 35,490
J. N. Sullivan 1995 575,000 359,000 -0- 58,200 1,072,192 40,147
Vice-Chairman 1994 575,000 348,000 -0- 68,800 787,327 27,935
1993 500,000 427,000 -0- 51,400 509,284 32,263
M. R. Klitten 1995 400,000 229,000 -0- 34,000 638,357 27,927
Vice-President 1994 381,250 208,000 -0- 40,200 473,580 19,438
1993 356,250 248,000 -0- 30,000 227,359 23,007
R. E. Galvin 1995 405,000 197,000 -0- 24,300 440,032 28,278
Vice-President 1994 380,000 184,000 -0- 28,700 301,907 18,402
1993 354,167 240,000 -0- 21,400 200,076 22,867
- ---------------
(1) Aggregate number of shares of restricted stock and/or restricted stock units
and their value at fiscal year-end ($52.375 per share) is as follows: K. T.
Derr--4,500 shares, $235,688; J. D. Bonney--2,550 stock units, $133,556; J.
N. Sullivan--2,550 shares, $133,556; M. R. Klitten--1,550 shares, $81,181
and R. E. Galvin--950 stock units, $49,756. Holders of restricted
stock/restricted stock units receive dividends/dividend equivalents paid on
their holdings.
(2) Includes Chevron's contribution to the Profit Sharing/Savings Plan, the
Savings Plus Plan and allocations under the Excess Benefit Plan for these
plans. For 1995, contributions under the Profit
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Sharing/Savings Plan for the five named individuals were as follows: K. T.
Derr, $7,536, J. D. Bonney, $7,536, J. N. Sullivan, $7,468, M. R. Klitten,
$6,990 and R. E. Galvin, $7,004; contributions under the Savings Plus Plan
for the five name individuals were as follows: K. T. Derr, $3,029, J. D.
Bonney, $3,030, J. N. Sullivan, $3,030, M. R. Klitten, $3,032 and R. E.
Galvin, $3,032; and contributions under the Excess Benefit Plan for the five
named individuals were as follows: K. T. Derr, $59,254, J. D. Bonney,
$35,333, J. N. Sullivan, $29,649, M. R. Klitten, $17,905 and R. E. Galvin,
$18,242.
OPTION GRANTS IN 1995 TABLE
Individual Grants
-----------------------------------
Percentage Potential Realizable Value on 6/28/05
Number of of Total based on Assumed Compounded
Securities Options Exercise Annual Rates of Stock Price
Underlying Granted to or Base Appreciation
Options Employees Price Expiration --------------------------------------
Name Granted(1) in 1995 (per Share) Date 0% per Year 5% per Year 10% per Year
- ------------------- ---------- ---------- ----------- -------- ----------- ----------- ------------
K. T. Derr......... 105,800 5.9% $48.375 06/28/05 $ -0- $ 3,218,753 $ 8,156,863
J. D. Bonney....... 58,200 3.2 48.375 06/28/05 -0- 1,770,619 4,487,045
J. N. Sullivan..... 58,200 3.2 48.375 06/28/05 -0- 1,770,619 4,487,045
M. R. Klitten...... 34,000 1.9 48.375 06/28/05 -0- 1,034,382 2,621,298
R. E. Galvin....... 24,300 1.4 48.375 06/28/05 -0- 739,279 1,873,457
Stock Price per
Share............ $48.375 $ 78.798 $ 125.472
All Optionees...... -0- $55 Million $139 Million
All
Stockholders(2).. -0- $20 Billion $ 50 Billion
Optionee Gain as %
of All
Stockholders'
Gain............. -0- 0.3% 0.3 %
- ---------------
(1) Non-qualified stock options are granted to Chevron's senior managers and
executives (about 1% of Chevron's employees). The options have a 10 year
term and are 100% vested one year after date of grant. The exercise price is
the fair market value on the date of grant.
(2) Represents aggregate increases in market capitalization of Chevron based
upon the outstanding shares (652,327,011) of Chevron Stock as of December
29, 1995.
AGGREGATED OPTION EXERCISES AND 1995 YEAR-END OPTION VALUE TABLE
Number of Securities Value of Unexercised
Underlying In-the-Money
Unexercised Options at Options at
December 31, 1995 December 31, 1995
--------------------------- ---------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------- ----------- ------------- ----------- -------------
K. T. Derr.................................. 454,700 105,800 $6,214,363 $423,200
J. D. Bonney................................ 309,800 -0- 3,678,613 -0-
J. N. Sullivan.............................. 251,600 58,200 3,445,813 232,800
M. R. Klitten............................... 142,400 34,000 1,933,213 136,000
R. E. Galvin................................ 101,700 24,300 1,380,825 97,200
No stock options were exercised by the above named executive officers during
1995.
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LONG-TERM INCENTIVE PLAN--1995 PERFORMANCE UNIT AWARDS TABLE
Performance
Number of Number at Payout Period
Performance ---------------------------- Until
Name Units Maximum Target Threshold Payout
- ------------------------------------------ ----------- ------- ------ --------- -----------
K. T. Derr................................ 23,100 34,650 23,100 6,930 3 Years
J. D. Bonney.............................. 12,700 19,050 12,700 3,810 3 Years
J. N. Sullivan............................ 12,700 19,050 12,700 3,810 3 Years
M. R. Klitten............................. 7,400 11,100 7,400 2,220 3 Years
R. E. Galvin.............................. 5,300 7,950 5,300 1,590 3 Years
The payout can vary depending on Chevron's TSR vs. its peer group (Amoco, Arco,
Exxon, Mobil and Texaco). A performance modifier provides the incentive to
maximize TSR relative to the peer group by modifying the payout value (e.g., the
modifier is 150% for the highest relative TSR and zero percent for the lowest
relative TSR). Payout (in dollars) is equal to the number of units times a
performance modifier based on relative TSR times the 20-day trailing average
price of Chevron Stock at the end of the performance period.
PENSION PLAN TABLE
The following table illustrates the approximate annual pension that the named
executive officers in the Summary Compensation Table would receive under the
Chevron Retirement Plan and the Retirement Plan portion of the Excess Benefit
Plan if the plans remained in effect and the named executive officers retired at
age 65 and elected an individual life pension. However, because of changes in
the tax laws or future adjustments to benefit plan provisions, actual pension
benefits could differ significantly from the amounts set forth in the table.
Estimated Annual Pension
----------------------------------------------------------
Average Annual Earnings Years of Credited Service
During Highest 3 ----------------------------------------------------------
Consecutive Years 25 30 35 40 45
------------------------ -------- -------- ---------- ---------- ----------
$ 500,000............... $187,400 $221,200 $ 256,100 $ 291,100 $ 326,000
$ 750,000............... $281,100 $331,700 $ 384,200 $ 436,600 $ 489,100
$1,000,000.............. $374,800 $442,300 $ 512,300 $ 582,200 $ 652,200
$1,250,000.............. $468,500 $552,900 $ 640,300 $ 727,800 $ 815,300
$1,500,000.............. $562,100 $663,500 $ 768,400 $ 873,400 $ 978,300
$1,750,000.............. $655,800 $774,000 $ 896,500 $1,019,000 $1,141,400
$2,000,000.............. $749,500 $884,600 $1,024,600 $1,164,500 $1,304,500
$2,250,000.............. $843,200 $995,200 $1,152,700 $1,310,100 $1,467,600
If they remain employees until they reach age 65, the years of credited service
will be as follows: K. T. Derr, 40 years; J. N. Sullivan, 40 years; M. R.
Klitten, 39 years and R. E. Galvin, 44 years. J. D. Bonney retired on December
31, 1995 with 35 years of credited service. The amounts set forth in the table
above do not include modest reductions to reflect the offset for federal Social
Security benefits required by the Retirement Plan. As a former executive of Gulf
Oil Corporation, Mr. R. E. Galvin is also entitled to receive a single lump-sum
payment upon retirement of $180,000.
The Retirement Plan is a defined benefit pension plan. Employees of Chevron and
certain consolidated subsidiaries automatically participate in the Plan and
start accruing benefits from their first day of employment. Eligible employees
become fully vested in their benefits after completing five years of service.
Benefits under the Plan are calculated on a "final average pay formula" based on
length of credited service and the average of the highest three consecutive
years of annual earnings. For executive officers, annual earnings include
unrestricted incentive awards and generally correspond with the combined amounts
set forth in the "Salary" and "Bonus" columns in the Summary Compensation Table
on page 10. The same 36-month period is used to determine the highest average
earnings for both salary and unrestricted incentive awards.
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The total pension benefit is equal to the sum of 1.4% of average earnings (less
$600) multiplied by years of credited service prior to July 1, 1971; plus 1.35%
of average earnings multiplied by years of credited service after June 30, 1971
and prior to July 1, 1986; plus 1.6% of average earnings multiplied by years of
credited service after June 30, 1986. The basic pension is reduced by a portion
of the federal Social Security benefit. Employees of acquired companies might
receive benefits calculated under different formulas for their service under
plans merged into the Retirement Plan. Benefits are ordinarily payable monthly
in the form of an individual life pension upon retirement at age 65, although
reduced benefits are available to eligible employees who terminate employment
before attaining age 65. Instead of an individual life pension, eligible
employees may elect to receive a 50% or 100% joint-and-survivor pension, or a
lump sum payment.
PERFORMANCE GRAPH
The following graph, prepared by Standard & Poor's Compustat group, shows how an
initial investment of $100 in Chevron Stock would have compared to an equal
investment in the S&P 500 Index or in an index of peer group companies over a
five-year period beginning December 31, 1990 and ending December 31, 1995
weighted by market capitalization as of the beginning of each year. The graph
reflects the reinvestment of all dividends that an investor would be entitled to
receive, with the reinvestment made on the ex dividend trading date. The interim
measurement points show the value of $100 invested on December 31, 1990 as of
the end of each year between 1990 and 1995.
The Peer Group Index is made up of Amoco, Arco, Exxon, Mobil and Texaco. Chevron
competes directly against the companies in the Peer Group Index, and for a
number of years has measured its performance against these companies for
purposes of its Management Incentive Plan and Long-Term Incentive Plan.
Measurement Period S&P 500 IN-
(Fiscal Year Covered) CHEVRON CORP DEX PEER GROUP
1990 100 100 100
1991 99.34 130.47 112.64
1992 104.97 140.41 117.49
1993 137.03 154.56 131.12
1994 146.48 156.60 137.49
1995 178.83 215.45 183.67
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ITEM 2 ON THE PROXY CARD
APPROVAL OF THE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board, which is composed entirely of non-employee
Directors, has selected Price Waterhouse LLP ("Price Waterhouse") as independent
public accountants to audit the books, records and accounts of Chevron and its
subsidiaries for the year 1996. The Board has endorsed this appointment and it
is being presented to the stockholders for approval.
Price Waterhouse has audited the consolidated financial statements of Chevron
for many years and during the year ended December 31, 1995, provided both audit
and nonaudit services. Audit services included: (1) regular examination of the
consolidated financial statements, including work relating to quarterly reviews,
SEC filings, and consultation on accounting and financial reporting matters; (2)
audit of the financial statements of certain subsidiary companies to meet
statutory or local regulatory requirements; (3) audit of specific financial and
statistical information in connection with sales contracts and other agreements;
and (4) examination of the financial statements of various Chevron employee
benefit plans. Nonaudit services provided by Price Waterhouse included income
tax consulting, employee benefit advisory services and systems consulting
projects.
All audit and nonaudit services provided by Price Waterhouse are approved by the
Audit Committee which will give due consideration to the potential impact of
nonaudit services on auditor independence.
Representatives of Price Waterhouse will be present at the Meeting, will have an
opportunity to make statements if they desire, and will be available to respond
to appropriate questions.
If the stockholders do not approve the appointment of Price Waterhouse, the
Audit Committee will select another firm of auditors for the ensuing year.
YOUR DIRECTORS RECOMMEND THAT STOCKHOLDERS VOTE FOR THE APPOINTMENT OF PRICE
WATERHOUSE AS INDEPENDENT PUBLIC ACCOUNTANTS.
STOCKHOLDER PROPOSALS
You may be asked to vote on proposals which were submitted by stockholders who
are not members of management or the Board of Directors. The proposals are
included as action items in the Notice of Meeting and are set forth and
discussed in this proxy statement because they are proper subjects for action by
stockholders and for inclusion in the proxy statement, have been submitted to
Chevron on a timely basis and otherwise comply with the rules of the Securities
Exchange Act of 1934, as amended, (the "Exchange Act") the laws of the State of
Delaware and applicable provisions of Chevron's Restated Certificate of
Incorporation. These proposals have been printed in this proxy statement as
submitted.
When submitted, each proposal included the name and address of the stockholder
making the proposal, the number of shares owned by the stockholder and the dates
upon which the shares were acquired. Each proposal also included a statement
that the stockholder had held the shares for more than one year at the time of
the submission and intended to hold the shares through the date of the Meeting.
Persons who claimed beneficial ownership of stock held of record by others were
permitted to submit proposals if they submitted appropriate documentation of
their claim of beneficial ownership. The names and addresses of the stockholders
submitting the proposals, as well as the number of shares held, will be
furnished by Chevron, either orally or in writing as requested, promptly upon
the receipt of any oral or written request therefor.
Stockholders submitting a proposal must appear personally or by proxy at the
Meeting to move the proposal for consideration. A proposal will be approved if
it is introduced and voted on at the Meeting and it is supported by a majority
of the shares that are voted.
For a stockholder proposal to be considered for inclusion in the proxy materials
for the 1997 Annual Meeting of Stockholders, it must be received by the
Corporate Secretary at the corporate headquarters address before
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November 22, 1996. It is suggested that a proponent submit any proposal by
Certified Mail--Return Receipt Requested.
ITEM 3 ON THE PROXY CARD
STOCKHOLDER PROPOSAL TO LIMIT ANNUAL AND CUMULATIVE RETIREMENT PAY
SUPPORTING STATEMENTS:
The wages on this planet range from $1 per day to perhaps $1,000,000 per day.
This is absurd!
Capitalism requires open competition with wages and capital earnings equable to
productivity. Leaders in all organizations and government must espouse fair
wages and prices as values again or the volatility of monetary value and the
effects of greed by the powerful will cause the revolt of the poor because there
will be no middle class.
Capitalism, which is our modus operandi, is couched upon a dynamic balance of
wages dependent upon productivity of product, service, or other capital or
wealth. The stability of wages and prices is expected.
Introducing "automatic" annuity increases into SSA and other pensions was
logical IF one assumes that there will always be price inflation--this keeps the
"basic dignified survival" payments constant in buying power.
Unfortunately, this concept was applied beyond pensioners thereby increasing
cyclical inflation of wages and prices. Further, the calculation is not sane:
the equation compounds the payment basis--rather than using a constant basis.
The effects of escalating payment bases are primarily: exponential increase of
the difference between minimum wage and maximum wage, escalating dollar
deflation, concentration of wealth, and the exponential growth of federal
expenditures, debt projections, and actual debt.
There is an effort made to measure the average price of a 'constant basket of
goods and services' to produce the CPI-W index. The value of the dollar
fluctuates. This CPI index is INVALID since it assumes that it is 'measuring
with a constant ruler'.
The practice of compounding basis payment increase should be made explicitly
illegal because it is cheating the lower income recipients and subsidizing those
with high incomes.
Since the federal government overpays all its employees, including the military,
and all retirees, survivors, SSA & SSI recipients, et cetera, it must increase
the revenues, exponentially or have increasing deficits and debt. The better
option is to cease compounding bases.
The future Cost Of Living Adjustments and ALL wage and salary increases should
be made using a legitimate, logical constant-basis for each wage or annuity.
(Since I do not expect total fiscal reform, I make the proposal very specific to
limit the most highly compensated (who are wealthy at retirement) to ten million
dollars more. They do not need any pension.)
proposal:
Resolved that the stockholders request the Board of Directors to adopt a limit
of one million dollars total annual compensation for any and all Chevron
retirees and a limit of ten million dollars cumulative retirement pay to any
retirees. Both of these limits should be made effective on the date the proposal
is voted upon or as soon thereafter as existing contract rights of retirees will
permit.
RECOMMENDATION OF THE BOARD AGAINST THIS PROPOSAL
Your Board of Directors believes that the establishment of an arbitrary ceiling
on compensation payable to Chevron retirees would not be in the company's best
interest. Any such ceiling could, in our opinion, have adverse consequences on
Chevron's competitive compensation package.
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Chevron's retirement program portion of its total compensation package includes
the Retirement Plan, the Profit Sharing/Savings Plan and the Excess Benefit
Plan. The retirement program is competitive with other oil companies' programs
and is designed to provide long-service employees with retirement income that
will enable them to maintain their pre-retirement standard of living.
Retirement Plan benefits are calculated on a formula based on length of service
and annual earnings. This formula applies to all plan participants, and we
believe appropriately rewards the contributions and sustained performance of
career employees.
The Profit Sharing/Savings Plan is a broad-based plan which through company
contributions encourages employees to save for the future and to invest in
Chevron equity. As a result of this plan, many thousands of Chevron employees
are committed stakeholders in Chevron's success. A great portion of an
employee's Profit Sharing/Savings Plan benefit arises from the employee's own
contributions and earnings rather than directly from Chevron's contributions.
The Excess Benefit Plan is designed to provide retirement income lost under the
Retirement Plan and the Profit Sharing/Savings Plan because of regulatory
limitations on tax subsidized plans and because awards under the cash incentive
compensation plan are not included in the average earnings used to calculate the
Retirement Plan benefits.
The Board of Directors believes that Chevron's retirement program is an
essential element of a total compensation package which rewards long-term
service and sustained performance, and is competitive within the oil industry.
The Board believes that retirement pay to retirees under the Retirement Plan,
the Profit Sharing/Savings Plan and the Excess Benefit Plan should not be
arbitrarily limited.
ACCORDINGLY, YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
ITEM 4 ON THE PROXY CARD
STOCKHOLDER PROPOSAL TO PAY DIRECTORS EXCLUSIVELY IN COMMON STOCK
THE SHAREHOLDERS of Chevron Corporation request the Board of Directors take the
necessary steps to amend the company's governing instruments to adopt the
following: Beginning on [sic] the 1997 Chevron Corporation fiscal year all
members of the Board of Director's total compensation will be solely in shares
of Chevron Corporation common stock each year. No other compensation of any kind
will be paid.
SUPPORTING STATEMENT
For many years the Rossi family have been submitting for shareholder vote, at
this corporation as well as other corporations, proposals aimed at putting
management on the same playing field as the shareholders. This proposal would do
just that.
A few corporations have seen the wisdom in paying directors solely in stock.
Most notably, Scott Paper and Travelers. Ownership in the company is the
American way. We feel that this method of compensation should be welcomed by
anyone who feels they have the ability to direct a major corporation's fortunes.
The directors would receive shares each year. If the corporation does well, the
directors will make more money in the value of the stock they receive and the
dividend that usually rise with more profits. If things go bad, they will be
much more inclined to correct things, because it will be coming directly out of
their pockets. Instead of the way it is done now, where directors receive the
same compensation for good or bad performance.
RECOMMENDATION OF THE BOARD AGAINST THIS PROPOSAL
Chevron believes it must offer a fair and competitive total compensation package
in order to attract and retain exceptional individuals to serve as non-employee
Directors. (Employee Directors are not compensated for services as Directors).
Chevron believes that the Directors' current compensation package consisting of
cash retainers and attendance fees and the Chevron Restricted Stock Plan for
Non-Employee Directors (the
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"Restricted Stock Plan") is competitive with industry standards, allowing
Chevron to attract highly valued individuals to serve on its Board. The
Directors' compensation package is described on page 6 under the heading
"Non-employee Directors' Compensation".
Chevron believes that the cash portion of the current compensation package is
fair and appropriate in light of the obligations and responsibilities of
corporate directors. The cash portion of the compensation provides flexibility
to non-employee Directors to use such cash as their particular needs may
require, including the payment of income taxes which are the sole responsibility
of the non-employee Directors.
Chevron believes that its Restricted Stock Plan provides Directors with an
interest parallel to stockholders. Additionally, it maintains that interest over
the entire term the Director is serving on the Board, whereas unrestricted stock
could be sold at any time. The Restricted Stock Plan provides to Directors
deferred compensation in the form of stock units, which are payable in an equal
number of shares of Chevron Stock after any non-employee Director terminates
service as a Director of Chevron and attains the age of 65. Annual awards under
the Restricted Stock Plan are subject to forfeiture if any non-employee Director
fails to serve as a Director of Chevron for five years.
Chevron also provides Directors the opportunity to defer cash compensation. Any
non-employee Director may elect to defer and convert to stock units all or any
portion of the annual retainers and meeting fees. The amount ultimately
distributed to the Director will reflect changes in the market price of Chevron
Stock during the deferral period. Each of these forms of compensation gives the
Directors an ownership interest in Chevron and further aligns their interests
with the interests of stockholders.
Requiring that all Directors' compensation be paid in the form of Chevron Stock
would not guarantee long-term stock ownership. Directors could choose to sell
their shares. In the alternative, payment in stock could result in hardship or
in qualified people resigning from or declining election to the Board.
Implementation of this proposal would decrease the competitiveness of the
compensation package from non-employee Directors and thereby decrease the
ability of Chevron to attract and retain outstanding individuals to serve on its
Board.
YOUR DIRECTORS RECOMMEND THAT STOCKHOLDERS VOTE AGAINST THIS PROPOSAL.
ITEMS 5 AND 6 ON THE PROXY CARD
BOARD DISCUSSION OF NIGERIAN OPERATIONS
Chevron has received two stockholder proposals relating to the operations of its
subsidiaries or its affiliates in Nigeria and other developing countries. One
proposal calls for Chevron to report on operating risks in Nigeria and also to
press the Nigerian Government to cease persecution of Nigerian political
activists. The other provides a description of political turmoil in Nigeria and
requests Chevron to develop and report to the stockholders general guidelines
for company investment in all countries experiencing political unrest and human
rights violations. In view of Chevron's long standing international investment
philosophy, as described below, your Directors recommend a vote AGAINST both
proposals.
Chevron's overall international investment philosophy is to refrain from
partisan involvement in the internal politics of the approximately 95 host
countries in which we operate. This philosophy is based on these important
considerations: involvement in a host country's politics is not an appropriate
role for a private foreign commercial enterprise and the most effective way for
Chevron to positively influence a host country is to provide economic
opportunities for its people.
Chevron believes that the concerns raised by the proposals are properly
addressed at the governmental level and through international organizations,
rather than by a private commercial enterprise. Chevron's international
investments and operations are most often long term and, during that time, a
succession of changes in government may take place. While maintaining a
nonpartisan approach, Chevron will remain well-informed on the political,
economic and commercial affairs of the host country in order to protect its
stockholders' business investments.
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Although remaining nonpartisan, Chevron did express deep sadness at the time of
the recent executions in Nigeria and conveyed sympathy to the families of the
men involved and to all the citizens of Nigeria.
Chevron also remained nonpartisan during the 1994 oil workers strike, contrary
to the inaccurate assertions contained in one of the proposals. Chevron did not
work directly with the Nigerian Government, nor did we, as claimed, use
expatriates or indigenous employees to break the strike or employ Nigerian
security forces to prevent protests. During the strike, in order to protect our
operations, we did increase the number of security personnel to protect
employees, contractors, and facilities -- not to prevent protests.
In our opinion, if Chevron were to voluntarily withdraw from Nigeria, the
Nigerian Government would not be adversely affected because another company
would take its place. Only Chevron's investment interest would be damaged or
lost.
Chevron has long believed in the value to a host country of providing economic
opportunities for its people. As an international firm, we recognize this
responsibility to assist the socio-economic development, particularly in the
local areas where we operate so that they may realize a direct economic benefit
from our activities.
We believe that Chevron's presence in Nigeria or other countries mentioned in
the two stockholder proposals represents a very positive development opportunity
for the people of those countries. Our business activities result in the
creation of jobs, the transfer of new technology, advanced technical and
managerial expertise and training, payment of fair compensation, implementation
of high environmental protection and operational safety standards. And we
conduct our business at all time with full respect for individual citizens.
Chevron maintains an active community relations program in our Nigerian
operating areas which results in improved health care, schools, scholarships,
roads, telecommunications and jobs for local people. Over the past four years
(1992-95), the Chevron joint venture with the Nigerian National Petroleum
Company has invested a total of $23.3 million dollars in contributions and
community development (Chevron's share = $9.3 million). In 1996, the joint
venture plans to invest about $11 million (Chevron's share = $4.4 million) in
this effort. Chevron believes that improving the standard of living in local
communities is an integral part of responsible international business practice
in the developing world.
Finally, as we do throughout our operations, Chevron has demonstrated a strong
commitment to environmental protection in Nigeria. For example, Chevron helps
sponsor Clean Nigeria, an oil-spill cooperative with fast response boats and
inflatable booms. Chevron's oil recovery swamp skimmer was one of the first of
its type in the country. In 1993, the Nigeria Environmental Society bestowed on
Chevron Nigeria Limited its Environmental Excellence Award for reduced gas
flaring, improved water-treatment systems on production facilities and
spill-control capabilities. The Society also commended Chevron for its
commitment to environmental safety, and to training and support for compliance
audits.
During 35 years of operations in Nigeria, and in other countries where Chevron
has had a long-term presence, we have experienced a number of changes in
governments and been privileged to continue operations during this time.
Chevron's business success and operating longevity can be attributed in large
part to our ability to establish and maintain a nonpartisan position concerning
the host country's internal affairs, to the economic benefits our operations
bring, to our firm commitment to employ high ethical business standards, and to
our compliance with the laws and regulations of the host country and of the
United States.
ITEM 5 ON THE PROXY CARD
STOCKHOLDER PROPOSAL TO DEVELOP COUNTRY INVESTMENT GUIDELINES
WHEREAS
Chevron is the US-based company with the largest oil operations in Nigeria (and
second internationally only to Shell);
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The illegitimate military regime of General Sani Abacha, which currently rules
Nigeria, has refused to recognize the results of the 1993 Nigerian elections and
has, according to Amnesty International, a long history of systematic human
rights violations;
The recent international outrage triggered by the execution of nine political
prisoners including the Ogoni leader, Ken Saro Wiwa, has focused attention on
the major oil companies in Nigeria, including Chevron, Mobil and Shell, which
are increasingly viewed by the public as supporting the Nigerian military
regime;
Chevron has made payments, including royalties, fees and taxes, to the military
government and the wholly state-owned Nigerian National Petroleum Company;
The Nigerian Civil Liberties Organization and the oil workers' unions NUPENG and
PENGASSAN charge that U.S. oil companies, including Mobil and Chevron, used
expatriate strike breakers to maintain and increase oil production during the
July 1994 strike for democracy, and called in Nigerian security forces to
prevent protests against the strikebreaking;
The International Labor Organization has found Nigeria in violation of
internationally accepted labor standards and has demanded the release of oil
workers union leaders Frank Kokori, F. A. Addo, Wariebi K. Agamene and others
held incommunicado without charge or trial;
South African President Nelson Mandela has called for a regional summit to
discuss measures to be taken against the Nigerian military junta;
TransAfrica, the Washington-based human rights organization, has called for
economic and political sanctions on Nigeria, similar to those that were
previously imposed on the apartheid regime in South Africa;
The growing international press and public opposition to doing business in
Nigeria may translate into consumer and investment pressure, which may, in the
medium and long term, have significant material effects on our company;
Chevron, on its own or through its joint venture Caltex, also does business in
other countries with controversial human rights records, including Angola,
Bolivia, Burma, China, Columbia and Zaire;
Levi Strauss & Co., in its "Guidelines For Country Selection," has set criteria
for deciding whether to do business in certain countries. These guidelines bar
Levi Strauss & Co. from doing business in countries where the company's
involvement would hurt its brand image or expose its employees to unreasonable
risks. The guidelines also state that Levi Strauss & Co. "shall not initiate or
renew contractual relationships in countries where there are pervasive
violations of human rights."
RESOLVED:
the Shareholders request the Board of Directors to review and develop guidelines
for country selection and report these guidelines to shareholders and employees
by September 1996. In its review, the Board shall develop guidelines on
maintaining investments in or withdrawing from countries where:
- - there is a pattern of ongoing and systematic violation of human rights,
- - a government is illegitimate,
- - there is a call by human rights advocates, pro-democracy organizations or
legitimately elected representatives for economic sanctions,
- - Chevron's long-term financial performance may be potentially threatened by
international criticism and economic sanctions.
YOUR DIRECTORS RECOMMEND THAT STOCKHOLDERS VOTE AGAINST THIS PROPOSAL FOR THE
REASONS DISCUSSED ON PAGES 17 AND 18.
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ITEM 6 ON THE PROXY CARD
STOCKHOLDER PROPOSAL TO PREPARE AN INVESTMENT RISK REPORT ON NIGERIA
RESOLVED: That the Shareholders of Chevron Corp. urge that the board: a) prepare
a report analyzing costs and risks of continued operations in Nigeria; and b)
take appropriate and ethical steps to press the Nigerian military regime to
cease persecution of labor, political and environmental leaders.
SUPPORTING STATEMENT:
Our company derives substantial revenue from joint venture operations with the
Nigerian government, which serves as Chevron's largest source of crude oil
outside North America.
Recent political turmoil in Nigeria, however, threatens to compromise this
important source of oil reserves. Importantly, Chevron's own actions are at the
center of the turmoil itself.
First, environmental problems associated with oil production led to protests by
such notable Nigerians as poet Ken Saro-Wiwa. When Saro-Wiwa's group began to
demonstrate for an end to oil spillages, Nigerian troops responded by "mounting
a kind of scorched-earth campaign against the Ogoni, burning villages and
committing murders and rapes," according to the New York Times.
Second, the military government of Sani Abacha seized control of Nigeria from a
popularly elected government. This military government is sustained by oil
payments, which account for some 95% of the country's exports. Noted one
magazine, the military regime's "corruption and incompetence escalated so far
that by 1994, the country owed foreign oil corporations nearly $1 billion in
operating fees." It is possible that some of these monies are owed to Chevron.
Pro-democracy and environmental leaders called for a strike in the oil producing
regions. While some corporations sympathized with the strikers and let their
pumps go idle, Chevron flew in strikebreakers to keep oil flowing. The
government subsequently arrested protesters and sentenced many to death.
In November, 1995, the Abacha government dismissed worldwide pleas for clemency
and executed Ken Saro-Wiwa and eight of his fellow minority-rights activists.
The Journal of Commerce noted: "The world should repay in kind by hitting its
military ruler, General Sani Abacha, where it would hurt most: oil."
Not only are there concerns that Chevron's relationship with the Abacha military
government may be costing it payments should international pressure succeed in
replacing Abacha, Chevron may suffer repercussions from any succeeding
democratically elected government. In sum, Chevron's Nigeria posture appears
short-sighted.
Civil strife and its repercussions are not new in Nigeria. In the 1960s
upheaval, the war virtually halted Nigerian oil production--in addition to
costing the lives of thousands.
Chevron has noted that it is concerned about "supply disruptions due to local
disturbances in Nigeria" but failed to detail for shareholders the nature and
extent of risks involved. We think a report detailing these risks would better
inform shareholders about the merits of Chevron's current policy.
Further, we think Chevron should undertake all appropriate and ethical steps to
press for reforms in Nigeria, just as our company actively promotes a
legislative agenda in Washington, D.C and in the states.
YOUR DIRECTORS RECOMMEND THAT STOCKHOLDERS VOTE AGAINST THIS PROPOSAL FOR THE
REASONS DISCUSSED ON PAGES 17 AND 18.
COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires Chevron Directors and executive
officers, and persons who own more than 10% of a registered class of Chevron's
equity securities, if any, to file with the SEC and the New York Stock Exchange
initial reports of ownership and reports of changes in ownership of equity
securities of
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Chevron. Such persons are required by SEC regulation to furnish Chevron with
copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such reports furnished to Chevron by
its Directors and executive officers and their written representations that such
reports accurately reflect all reportable transactions and holdings, Chevron
believes that during 1995 all filing requirements were complied with except that
two reports covering one transaction of the estate of his mother were
inadvertently filed late by Donald G. Henderson, Vice-President and Comptroller.
INFORMATION ABOUT ATTENDING THE MEETING
The Meeting will be held in the Auditorium of the Nob Hill Masonic Center at
1111 California Street, San Francisco, California. Each stockholder must have a
ticket of admission. The Annual Meeting Ticket is the lower third of your proxy
card. Please detach it and bring it with you to the Meeting.
If your shares are held in a street name account, you must bring proof of
ownership (e.g., your broker's statement) to the registration area located
outside of the auditorium. Or your may have your broker or agent write to the
Office of the Corporate Secretary at 575 Market Street, San Francisco, CA 94105
to request a ticket before April 23, 1996.
Chevron has reserved all available space at the Memorial Temple Garage at 1101
California Street (adjacent to the Nob Hill Masonic Center) to provide
complimentary parking for our stockholders. Capacity is limited. Please show
your Annual Meeting Ticket which is the lower third of your proxy card to the
garage attendant as you enter the garage.
Real-time captioning services and headsets will be available at the Meeting for
stockholders with impaired hearing. Please contact an usher at the Meeting if
you wish to be seated in the real-time captioning section or to use a headset.
If you require special accommodation at the Meeting due to a disability, please
write to the Office of the Corporate Secretary at 575 Market Street, San
Francisco, CA 94105 by April 23, 1996 identifying your specific need.
OTHER MATTERS
The Board of Directors does not know of any other business which will be
presented for consideration at the Meeting. Except as the Board of Directors may
otherwise permit, only the business set forth and discussed in this Notice of
Meeting and proxy statement may be acted on at the Meeting. If any other
business does properly come before the Meeting or any adjournment thereof, the
proxy holders will vote in regard thereto according to their discretion insofar
as such proxies are not limited to the contrary.
By Order of the Board of Directors
/s/ Lydia I. Beebe
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Lydia I. Beebe
Secretary
PLEASE SIGN, DATE, AND RETURN YOUR PROXY CARD AS SOON AS POSSIBLE.
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(RECYCLE LOGO)
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PROXY [CHEVRON LOGO]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
K. T. Derr, C. M. Pigott and G. H. Weyerhaeuser and each of them, each with the
power of substitution, are hereby authorized to represent and to vote the stock
of the undersigned in CHEVRON CORPORATION at the annual meeting of its
stockholders to be held on May 7, 1996 and any adjournment thereof.
MANAGEMENT RECOMMENDS AND WILL VOTE FOR THE ELECTION OF THE FOLLOWING AS
DIRECTORS (UNLESS OTHERWISE DIRECTED):
1. S. H. Armacost, K. T. Derr, R. E. Galvin, S. Ginn, C. A. Hills, C. M.
Pigott, C. Rice, J. N. Sullivan, G. H. Weyerhaeuser and J. A. Young.
To vote for all nominees, check this box. / /
To withhold authority to vote for all nominees, check this box. / /
To withhold authority to vote for any individual nominee while voting
for the remainder, write this nominee's name in the space following:
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MANAGEMENT RECOMMENDS AND WILL VOTE FOR THE FOLLOWING (UNLESS OTHERWISE
DIRECTED):
2. Appointment of Price Waterhouse LLP as Independent Public Accountants
FOR / / AGAINST / / ABSTAIN / /
MANAGEMENT DOES NOT RECOMMEND AND WILL VOTE AGAINST THE FOLLOWING STOCKHOLDER
PROPOSALS (UNLESS OTHERWISE DIRECTED):
3. Proposal to Limit Annual and Cumulative Retirement Pay.
FOR / / AGAINST / / ABSTAIN / /
4. Proposal to Pay Directors Exclusively in Common Stock.
FOR / / AGAINST / / ABSTAIN / /
5. Proposal to Develop Country Investment Guidelines.
FOR / / AGAINST / / ABSTAIN / /
6. Proposal to Prepare an Investment Risk Report on Nigeria.
FOR / / AGAINST / / ABSTAIN / /
(OVER) TRANS-180-L(2-96)
Dear Stockholders: [CHEVRON LOGO]
Attached is your 1996 Chevron Corporation Proxy Card. Please read both sides of
the Proxy Card and mark, sign, and date it. Then detach and return it promptly
using the enclosed reply envelope. If you properly sign and return your Proxy
Card, but do not specify your choices, your shares will be voted as recommended
by the Board of Directors. We urge you to vote your shares.
We are pleased to invite you to attend the 1996 Annual Meeting of Stockholders
of Chevron Corporation to be held at 9:30 a.m. local time on Tuesday, May 7, in
the Auditorium of the Nob Hill Masonic Center in San Francisco, California.
Sincerely,
Lydia I. Beebe
Secretary
PLEASE USE THE ATTACHED TICKET TO ATTEND THE ANNUAL MEETING.
YOU ALSO MAY REGISTER AT THE MEETING.
1996 ANNUAL MEETING TICKET [CHEVRON LOGO]
FOR THE ANNUAL MEETING OF STOCKHOLDERS AT
9:30 A.M., ON MAY 7, 1996
TO BE HELD IN THE AUDITORIUM OF THE NOB HILL MASONIC CENTER,
1111 CALIFORNIA STREET, SAN FRANCISCO.
(DOORS OPEN AT 8:00 A.M. YOU MAY BYPASS THE REGISTRATION AREA
AND PRESENT THIS TICKET AT THE ENTRANCE TO THE AUDITORIUM.)
Note: Cameras, tape recorders, etc., will not be allowed in the auditorium
during the meeting, other than for Company purposes. A check room will be
provided. For your protection, all briefcases, purses, packages, etc. will be
subject to an inspection as you enter the meeting. We regret any inconvenience
this may cause you. (See reverse side for additional information.)
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THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NOT OTHERWISE DIRECTED, FOR THE
NOMINEES, FOR PROPOSAL 2 AND AGAINST THE STOCKHOLDER PROPOSALS 3,4,5 AND 6.
This Proxy will also be voted on such other matters as may properly come before
the meeting (unless this sentence is stricken).
Please sign as name appears hereon, date, and return this Proxy Card promptly
using the enclosed envelope.
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Signature/Date Signature/Date
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- DETACH HERE -
PLEASE VOTE YOUR SHARES
Chevron has reserved all available space at the Memorial Temple Garage at 1101
California Street (adjacent to the Masonic Auditorium) to provide complimentary
parking for our stockholders. However, capacity is limited. Please show your
annual meeting ticket to the garage attendant as you enter the garage.
Real-time captioning services and headsets will be available at the meeting for
stockholders with impaired hearing. Please contact an usher at the meeting if
you wish to be seated in the real-time captioning section or to use a headset.
