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Exchange Act of 1934
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CHEVRON CORPORATION
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(Name of Registrant as Specified In Its Charter)
CHEVRON CORPORATION
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LOGO
CHEVRON CORPORATION
Notice of Annual Meeting
of Stockholders and
Proxy Statement
May 3, 1994
Nob Hill Masonic Center
1111 California Street
San Francisco, California
LOGO
San Francisco, California
March 25, 1994
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS--MAY 3, 1994
To the Stockholders:
The Annual Meeting of Stockholders of Chevron Corporation will be held at 9:30
a.m., local time, on Tuesday, May 3, 1994, in the Auditorium of the Nob Hill
Masonic Center, 1111 California Street, San Francisco, California (the
"Meeting").
As set forth in the attached Proxy Statement, the Meeting will be held for the
following purposes:
. ITEM 1--to elect 12 Directors;
. ITEM 2--to vote upon the proposal to amend Chevron Corporation's Restated
Certificate of Incorporation to increase the number of authorized shares
of Common Stock;
. ITEM 3--to vote upon the proposal to split the Common Stock;
. ITEM 4--to ratify the appointment of independent public accountants;
. ITEMS 5 THROUGH 7--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, 1994 are entitled
to vote at the Meeting. The number of outstanding voting securities of Chevron
Corporation on February 10, 1994 was 325,823,685 shares of Common Stock, $3 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 3, 1994 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. If you cannot, please vote on the listed matters 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
M. J. McAULEY
Secretary
TABLE OF CONTENTS
Page
----
General Information for Stockholders...................................... 1
Voting Procedures....................................................... 1
Expenses of Solicitation................................................ 1
Stockholder Proposals................................................... 2
Ownership of Chevron Stock.............................................. 2
Directors and Executive Officers...................................... 3
ITEM 1 Election of Directors.............................................. 4
Nominees for Directors.................................................. 4
Committees of the Board................................................. 6
Non-Employee Directors' Compensation.................................... 7
ITEM 2 Approval of the Proposal to Amend Chevron's Restated
Certificate of Incorporation to Increase the Number of Authorized
Shares of Common Stock............................................... 8
ITEM 3 Approval of the Proposal to Split the Common Stock................. 8
ITEM 4 Approval of the Appointment of Independent Public Accountants...... 9
ITEM 5 Stockholder Proposal to Make Directors' Compensation in the Form of
Common Stock............................................................. 9
ITEM 6 Stockholder Proposal to Prepare a Report on the Impact of NAFTA.... 11
ITEM 7 Stockholder Proposal to Prepare a Report on Environmental and
Safety Hazards........................................................... 12
Executive Compensation.................................................... 15
Summary Compensation Table.............................................. 15
Stock Options Granted in 1993 Table..................................... 16
1993 Year-End Stock Option Value Table.................................. 16
Long-Term Incentive Plan--1993 Performance Unit Awards Table............ 16
Pension Plan Table...................................................... 17
Management Compensation Committee Report on Executive Compensation...... 18
Performance Graph....................................................... 21
Other Matters............................................................. 22
Appendix A--Proposed Amended Article IV to the Restated Certificate of In-
corporation.............................................................. A-1
CHEVRON CORPORATION
225 Bush Street
San Francisco, California
94104
March 25, 1994
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 3,
1994 Annual Meeting of Stockholders (the "Meeting"). The accompanying Proxy
Card represents your holdings of Chevron Corporation Common Stock, $3 par value
("Chevron Stock").
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 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 properly be 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.
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 contest or as
otherwise required by law. Your Directors believe these procedures are in the
best interests of Chevron and are adequate to protect stockholder voting
privacy.
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.
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.
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 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 name and address 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 1995 Annual Meeting of Stockholders, it must be received by
the Corporate Secretary at the corporate headquarters address before November
25, 1994. It is suggested that a proponent submit any proposal by Certified
Mail--Return Receipt Requested.
OWNERSHIP OF CHEVRON STOCK
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.
2
DIRECTORS AND EXECUTIVE OFFICERS
The following table contains information about economic and beneficial
ownership of Chevron Stock as of January 26, 1994, for each Director, for each
executive officer named in the Summary Compensation Table on page 15 and for
all Directors and executive officers of Chevron as a group. All amounts shown
in the table represent less than one percent of the outstanding shares of
Chevron Stock.
Restricted Stock Exercisable Shares Currently
Units(1) Options(2) Owned(3)
---------------- ----------- ----------------
Samuel H. Armacost......... 1,110 -- 1,050
J. Dennis Bonney........... 15,226 65,700 33,975
William E. Crain........... 3,875 39,600 21,458
Kenneth T. Derr............ -- 117,900 67,561
Sam Ginn................... 838 -- 1,000
Carla A. Hills............. 344 -- 300
Martin R. Klitten.......... -- 36,100 11,490
Charles M. Pigott.......... 1,110 -- 34,452
Condoleezza Rice........... 427 -- --
S. Bruce Smart, Jr......... 1,110 -- 1,000
James N. Sullivan.......... -- 65,700 29,166
George H. Weyerhaeuser..... 1,110 -- 6,400
John A. Young.............. 1,110 -- 500
Directors and executive of-
ficers as a group (18 per-
sons)..................... 48,299 402,800 256,151
- --------
(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 Management Contingent Incentive Plan and/or
the Long-Term Incentive Plan. Some of the stock units remain subject to
possible forfeiture under applicable provisions of such plans.
(2) Represents all currently exercisable stock options awarded under the Long-
Term Incentive Plan.
(3) 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
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 12
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, 54, is a General Partner of Weiss, Peck &
Greer, an investment firm. Mr. Armacost was President, Director
Photo of and Chief Executive Officer of BankAmerica Corporation from 1981
Samuel H. to 1986. From 1987-1990, he was a Managing Director of Merrill
Armacost Lynch Capital Markets. He assumed his current position in 1990.
appears He has been a Director of Chevron since 1982. He is a Director
here. of SRI International, the Irvine Foundation, The Failure Group,
Inc. and CoreLink Resources Inc.; and a member of The Business
Roundtable, The Business Council, The Conference Board, and the
Advisory Council of the California Academy of Science.
J. DENNIS BONNEY, 63, is a Vice-Chairman of the Board of
Chevron. He joined Chevron in 1960. After a succession of
assignments in its international operations, he advanced to
Photo of Assistant Manager of the Foreign Operations Staff in 1967 and
J. Dennis Manager in 1971. He was elected a Vice-President in 1972 and
Bonney assumed his present position in 1987. He has been a Director of
appears Chevron since 1986. He is a Director of the American Petroleum
here. Institute, the San Francisco Opera and San Francisco
Performances. He is a Trustee of the Asian Art Museum. He is a
member of the Board of Overseers of the Hoover Institution,
Vice-Chairman of the World Affairs Council of Northern
California, a member of the National Council of the World
Wildlife Fund and a member of the Council on Foreign Relations.
WILLIAM E. CRAIN, 64, is a Director and Vice-President,
Exploration and Production, of Chevron. He joined Chevron in
1957 as an Exploration Geologist and had a succession of
Photo of management positions in exploration. In 1985, he was elected
William E. Vice-President for Exploration for Chevron U.S.A. Inc., the
Crain domestic oil and gas subsidiary. He was elected a Vice-President
appears of Chevron and Senior Vice-President, Exploration, Land and
here. Production, of Chevron U.S.A. Inc., in 1986. He has been a
Director of Chevron since 1988. He is a Director of the American
Geological Institute Foundation and the San Francisco
Exploratorium; and a member of the American Association of
Petroleum Geologists, the Society of Exploration Geophysicists,
the Stanford University Earth Sciences Advisory Board and the
Engineering Foundation Advisory Council of the University of
Texas. Mr. Crain is scheduled to retire as an officer and
employee on September 1, 1994. At such time, in accordance with
corporation policy, he would resign from the Board of Directors.
4
KENNETH T. DERR, 57, is Chairman of the Board of Chevron. He
joined Chevron in 1960. After a succession of assignments in the
Comptroller's and Manufacturing Departments, he became Assistant
Photo of to the President in 1969. He was elected a Vice-President in
Kenneth T. 1972, a Vice-Chairman in 1985 and assumed his present position
Derr in 1989. He served as President and Chief Executive Officer of
appears Chevron U.S.A. Inc. from 1979 to 1984. He has been a Director of
here. Chevron since 1981. He is a Director of Citicorp, Potlatch
Corporation, The Bay Area Council, Invest-in-America and the
American Productivity and Quality Center; Chairman of the
American Petroleum Institute; a Trustee of Cornell University
and The Conference Board; and a member of the National Petroleum
Council, the California Business Roundtable, The Business
Council, The Business Roundtable, The Institute for
International Studies at Stanford University, the Business
Council for Sustainable Development and the President's Council
on Sustainable Development.
SAM GINN, 56, is Chairman of the Board and Chief Executive
Officer of Pacific Telesis Group, a diversified
telecommunications company. Prior to becoming Chairman in 1988,
Photo of he was President and Chief Operating Officer. He has been a
Sam Ginn Director of Chevron since 1989. He is a Director of Pacific
appears Telesis Group, Pacific Bell, Transamerica Corporation and
here. Safeway Inc. He is Chairman of the California Business
Roundtable, a member of The Business Council, The Business
Roundtable and The Institute for International Studies at
Stanford University. In December 1993, Mr. Ginn became Chairman
of the Board and Chief Executive Officer of PACTEL Corporation.
At the time of the spinoff of PACTEL Corporation by Pacific
Telesis, he will resign his positions with Pacific Telesis and
Pacific Bell.
CARLA ANDERSON HILLS, 60, is Chairman and Chief Executive
Officer of Hills & Company International Consultants, a company
giving advice on investment, trade and risk issues abroad. From
Photo of 1989 to 1993, she served as United States Trade Representative.
Carla Prior to her government service, she was a co-managing partner
Anderson in the law firm of Weil, Gotshal & Manges. She is a Director of
Hills American International Group, American Telephone and Telegraph
appears Company, Bechtel Enterprises, Inc., Bechtel Group, Inc., Time
here. Warner, Inc., Trust Company of the West and United Air Lines,
Inc. 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, 64, is Chairman of the Board and Chief
Photo of Executive Officer of PACCAR Inc, a manufacturer of
Charles transportation equipment. He was elected President of PACCAR Inc
M. Pigott in 1965, became its Chief Executive Officer in 1967 and Chairman
appears of the Board in 1986. He has been a Director of Chevron since
here. 1973. He is a Director of The Boeing Company and Seattle Times
Company; and a member of The Business Council.
CONDOLEEZZA RICE, 39, is Provost and Vice President of Stanford
University. She was named Provost in September 1993. Ms. Rice
Photo of joined the Stanford University faculty in 1981. From 1986 to
Condoleezza 1987, she served on a fellowship with the Joint Chiefs of Staff
Rice acting as Special Assistant to the Director of the Joint Staff
appears for strategic nuclear policy. From 1989 until April 1991, she
here. 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. She is a
member of the Council on Foreign Relations and the Aspen
Strategy Group.
5
S. BRUCE SMART, JR., 71, is Senior Fellow and a Director of the
World Resources Institute. He joined the predecessor to The
Photo of Continental Group in 1953 and was its Chairman and Chief
S. Bruce Executive Officer from 1981 to 1985. He served as Under
Smart, Jr. Secretary of Commerce for International Trade from 1985 to 1988.
appears He has been a Director of Chevron since 1988. He is a member of
here. The Business Council and the Council on Foreign Relations and he
is a Director of Inform, Inc.
JAMES N. SULLIVAN, 56, is a Vice-Chairman of the Board of
Chevron. He joined Chevron in 1961 as a Process Engineer and
Photo of held a succession of manufacturing assignments. He was elected a
James N. Vice-President of Chevron in 1983. He assumed his present
Sullivan position in 1989. He has been a Director of Chevron since 1989.
appears He is a member of the Board of Trustees of the University of San
here. Francisco and the Committee for Economic Development. He is a
Director of the U.S. Chamber of Commerce, the California Chamber
of Commerce, the National Association of Manufacturers and the
American Petroleum Institute.
GEORGE H. WEYERHAEUSER, 67, has been Chairman of the Board of
Weyerhaeuser Company, a forest products company, since 1988. He
Photo of joined Weyerhaeuser Company in 1949, became its President in
George H. 1966 and was its Chief Executive Officer from 1966 to 1991. He
Weyerhaeuser has been a Director of Chevron since 1977. He is a Director of
appears The Boeing Company, SAFECO Corporation and a member of The
here. Business Council.
JOHN A. YOUNG, 61, retired as President, Director and Chief
Executive Officer of Hewlett-Packard Company, a manufacturer of
Photo of electronic equipment, in 1992. He joined Hewlett-Packard in
John A. 1958, became its President in 1977 and its Chief Executive
Young Officer in 1978. He has been a Director of Chevron since 1985.
appears He is a Director of Affymetrix, Inc., Shaman Pharmaceuticals,
here. 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 a Director and Trustee of
the Foundation for the Malcolm Baldrige National Quality Award.
COMMITTEES OF THE BOARD
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 George H. Weyerhaeuser, Chairman, Samuel
H. Armacost, Sam Ginn, Carla A. Hills and John A. Young, held 3 meetings during
1993. 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.
6
The Board Nominating Committee, which consists of Samuel H. Armacost, Chairman,
Charles M. Pigott, Condoleezza Rice, S. Bruce Smart, Jr. and John A. Young,
held 1 meeting during 1993. The committee assesses the 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, S.
Bruce Smart, Jr., George H. Weyerhaeuser and John A. Young, held 9 meetings
during 1993. 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, Long-Term Incentive and
Management Contingent Incentive Plans of Chevron.
The Public Policy Committee, which consists of S. Bruce Smart, Jr., Chairman,
Kenneth T. Derr, Sam Ginn, Carla A. Hills, Charles M. Pigott and Condoleezza
Rice, held 2 meetings during 1993. 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 10 times during 1993. There were a total of 25
meetings of the Board and its committees. Attendance by all Directors at these
meetings averaged over 91 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.
7
ITEM 2 ON THE PROXY CARD
APPROVAL OF THE PROPOSAL TO AMEND CHEVRON'S RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
Your Directors are presenting, for approval by the stockholders, a proposal to
increase the authorized number of shares of Common Stock from 500,000,000 to
1,000,000,000.
The affirmative vote of the holders of a majority of Chevron's outstanding
Common Stock is required to approve this proposal. Adoption of the proposal is
also contingent on approval of the following proposal. See Item 3, "Approval of
the Proposal to Split the Common Stock," for a full discussion of the two
proposals.
YOUR DIRECTORS RECOMMEND THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF THE
PROPOSAL TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK.
ITEM 3 ON THE PROXY CARD
APPROVAL OF THE PROPOSAL TO SPLIT THE COMMON STOCK
Your Directors are presenting, for approval by the stockholders, a proposal to
split each issued share of Chevron Common Stock of $3.00 par value into two new
shares of $1.50 par value. Adoption of this proposal is also contingent on
approval of the preceding proposal to increase the number of authorized shares
of Common Stock. The full text of Article IV, as such Article is proposed to be
amended, is set forth in Appendix A hereto.
The Board of Directors believes that the proposed stock split is in the best
interests of the stockholders because it should broaden the market for
Chevron's shares and ultimately result in an increased number of stockholders
and greater interest in the welfare of Chevron.
No change in stockholders' equity will result from the proposed stock split.
The aggregate amount of capital represented by the outstanding shares of Common
Stock will not change as the number of outstanding shares of Common Stock will
be doubled while the par value per share will be halved from $3.00 to $1.50.
Shares issued pursuant to the stock split will have the same rights as the
shares of Common Stock currently outstanding. Although the number of authorized
but unissued shares of Common Stock after the proposed stock split will be
twice the number of authorized but unissued shares before such action, the
relative potential for dilution will not change as the number of outstanding
shares will be doubled as well. There are no current plans or understandings
for the issuance of the additional authorized shares contemplated by the
foregoing proposal.
Upon the effectiveness of the stock split, appropriate adjustments would be
made to outstanding stock options, restricted stock units and performance units
awarded under Chevron's Long-Term Incentive Plan, Management Incentive Plan,
Management Contingent Incentive Plan and Restricted Stock Plan for Non-Employee
Directors. The proposed stock split also will have the effect of adjusting the
current one-to-one relationship between issued shares of Common Stock and the
Stock Purchase Rights granted to holders of Common Stock under the terms of
Chevron's Stockholder Rights Agreement, adopted November 22, 1988 and amended
December 7, 1989. After the proposed stock split, each of the two new shares of
Common Stock will represent one-half of one Right. The value of a Right is
unaffected by the split and the aggregate number of Rights held by each
stockholder will not change. The Rights are not currently exercisable.
Based upon current tax law, the proposed action will result in no gain or loss
for federal income tax purposes. The tax basis of each share held before the
split will be allocated among the two shares held as a result of the
8
split, and the holding period of the new shares will include the holding period
of the share with respect to which they were issued. The laws of jurisdictions
other than the United States may impose income taxes on the issuance of the
additional shares, and stockholders subject to such laws are urged to consult
their tax advisors.
It should be noted that because of the increased number of shares, brokerage
charges and any stock transfer taxes on sales and purchases of the new Common
Stock which would result from the split may be somewhat higher than on pre-
split sales and purchases, assuming a transaction involving equivalent market
value.
The affirmative vote of the holders of a majority of Chevron's outstanding
Common Stock is required to approve this proposal.
YOUR DIRECTORS RECOMMEND THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF THE
PROPOSAL TO SPLIT THE COMMON STOCK.
ITEM 4 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 as independent public accountants to
audit the books, records and accounts of Chevron and its subsidiaries for the
year 1994. The Board has endorsed this appointment and it is being presented to
the stockholders for approval.
Price Waterhouse has audited the books, records and accounts of Chevron for
many years and during the year ended December 31, 1993, 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.
ITEM 5 ON THE PROXY CARD
STOCKHOLDER PROPOSAL TO MAKE DIRECTORS' COMPENSATION IN THE FORM OF 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 the 1995 Chevron Corporation's fiscal year all members of the
Board of Director's total compensation will be in the form of Chevron
Corporation common stock.
9
The price of the stock paid to the board members shall be the closing price on
the New York Stock Exchange of the preceding year.
In addition, each director must sign an agreement to hold onto a minimum of 80%
of the shares paid as compensation at least one year after his or her term
expires. Should any director fail to comply with this agreement, such director
shall have sixty (60) days from the date of non-compliance to again comply.
Failure to again comply shall result in disqualification and such director's
position shall be declared vacant.
SUPPORTING STATEMENT
In this proponent's opinion this is the most important issue before the
American public today, "Accountability'. In our government, our schools, our
law system and our corporations we've lost accountability. Everyone wants to be
under the umbrella of tenure, seniority, guaranteed contracts and Golden
Parachutes. These people want to be handsomely paid whether they do good or
bad, completely against the principals of our country. What created this great
nation and what gave us stockholders the standard of living we enjoy. That this
management would object to being paid solely in company stock shows just how
far it has gone.
Management in this country has created a monopoly. It doesn't matter if a
director knows whether we make widgets or digets, just as long as he has a
degree from a prestigious college and is one of the good old boy club. Next to
the Soviet politburo, management has created one of the largest pork barrels
ever known. After fifty years a great light shone in the west and the Russians
suddenly realized that, "We aint got nuttin" So now they reason ! Let's follow
those guys over there who got something while our great crop of M.B.A.s have
decided to emulate their failed system.
The Rossi family has investigated about 40 Fortune 500 companies. Which we
believe represents most industries and presents a good cross section of
corporate America. Our study found that all the members of the board of
directors all have advanced degrees from prestigious universities. They are
virtually all white and male. Even though women represent at least half of our
population, we found an occasional sole women, at best two women on these
boards. In addition, BLACKS, ASIANS and HISPANICS are seldom seen on these
boards.
We came to the conclusion that only ten percent of our population is currently
eligible to serve as a board member on an American corporation. To be included
in this exclusive ten percent, you must be male, educated (Ivy League or
equivalent) and well connected.
We feel that this is a national tragedy of Himalayan proportions. An enormous
waste of one of our most precious resources. People who have that innate
ability to be innovative, to lead this country's heartbeat--business. But
unfortunately, 90% of our population is excluded, regardless of their ability.
If this board has so little confidence in their ability to run this corporation
successfully, that they are not willing to take their pay as we the
shareholders do, I suggest they seek another type of employment. Perhaps
tennis. I urge stockholders to pass this proposal for the well being of this
corporation and America!
"A beginning to accountabilty ".
RECOMMENDATION OF THE BOARD AGAINST THIS PROPOSAL
Chevron believes it is in the best interests of the corporation and its
stockholders to attract and retain exceptional individuals to serve as non-
employee Directors on the Board of Directors. To successfully do this, Chevron
must offer a fair and competitive total compensation package to non-employee
Directors (employee Directors are not compensated for their services as
Directors). Chevron believes that the non-employee Directors' current
compensation package consisting of cash retainers and attendance fees and the
Restricted Stock Plan is competitive with industry standards, allowing Chevron
to attract highly valued individuals to serve on its Board.
10
As discussed on page 7 under "Non-Employee Directors' Compensation," the
Restricted Stock Plan supplements the non-employee Directors' cash compensation
with 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. In
addition, any non-employee Director may elect to defer receipt of all or any
portion of the annual retainers and meeting fees. At the election of the
Director, such deferred amounts may be converted into stock units representing
the value of an equal number of shares of Chevron Stock. 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
non-employee Directors an ownership interest in Chevron and further aligns
their interests with the interests of stockholders.
Chevron believes that 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. At the same time, the package aligns non-employee Directors'
interests with stockholders' interests through stock units issued under the
Restricted Stock Plan and through Directors' deferral elections. Implementation
of this proposal would decrease the competitiveness of the compensation package
for 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.
ITEM 6 ON THE PROXY CARD
STOCKHOLDER PROPOSAL TO PREPARE A REPORT ON THE IMPACT OF NAFTA
BE IT RESOLVED:
That the shareholders of Chevron Corporation request that the Board of
Directors prepare a written report detailing the anticipated impact of the
North American Free Trade Agreement ("NAFTA"), or any other trade agreement
of a similar nature with Mexico, on our Company's competitive strategies
and long-term shareholder value. The report shall review and describe:
(i) The specific impact of NAFTA on our Company's competitive
strategies and the policies and programs for their implementation;
(ii) The specific impact of NAFTA on our Company's workers, customers,
shareholders, suppliers and the communities in which we do business;
(iii) Any plans to relocate or outsource production to Mexico;
(iv) Our Company's workplace and environmental standards for its
current and future Mexican operations; and
(v) Our Company's activities promoting the passage of NAFTA and the
estimated cost of those activities.
The report shall exclude any proprietary information, be prepared at
reasonable cost, and be available to shareholders within three months after
the Company's 1994 annual meeting of shareholders.
SUPPORTING STATEMENT
Chevron Corporation has been a prominent supporter of NAFTA, a significant
public policy issue. While there is a range of opinion regarding the economic,
social and environmental impact of NAFTA, the behavior of specific companies
will ultimately determine who wins and loses under NAFTA. We believe it is the
11
responsibility of our Company to comprehensively analyze how NAFTA will affect
the Company's shareholders and other important corporate constituencies such as
workers, customers, suppliers and the communities in which we do business prior
to participating in the public debate. Failure to thoroughly conduct such an
analysis and report its findings to shareholders would be irresponsible.
Elimination of trade and investment barriers between the U.S., Canada and
Mexico will undoubtedly change the competitive position of our Company and
consequently require directors and managers to rethink our competitive
strategies. This reassessment should include an analysis of whether or not
relocating to Mexico, which means trading off lower wages for reduced quality
and productivity, is a sound business decision. Further, since Mexican
environmental and workplace standards are significantly inferior to those in
the U.S. and Canada, a failure to exceed those standards could not only put
workers and communities at risk, but also hurt business by tarnishing our
Company's public image and incurring preventable legal liabilities.
Relocation of any Company facilities to Mexico could have a substantial
impact on a range of our Company's constituencies including owners, workers,
customers, suppliers and the communities in which we do business. Good
relations with all corporate constituencies is vital to the long-term financial
success of our Company. Confusion about our Company's intentions could damage
relations with these key corporate constituencies. Therefore, we believe it is
in the mutual best interest of our Company's shareholders and other key
constituencies that directors and managers report on the issues raised in this
proposal.
RECOMMENDATION OF THE BOARD AGAINST THIS PROPOSAL
Your Directors recommend a vote AGAINST this proposal. Preparation of such a
report would be costly, have little practical value and have no impact on the
long-term viability and profitability of Chevron Corporation.
Chevron's support of NAFTA was based on management's fundamental belief that
the liberalization of trade will increase prosperity in the western hemisphere.
We believe there is a direct cause-and-effect link between free trade and
economic development--conditions that enhance our ability to compete and
increase long-term stockholder value.
The opening of markets through NAFTA should reinforce and expand Chevron's
economic relationship with Mexico. Chevron currently buys crude oil from and
sells petroleum products to PEMEX, the Mexican national petroleum company. We
also sell lube oil and gasoline additives to Mexico. The total trade of Chevron
companies with Mexico exceeded U.S. $1.0 billion in 1992. With the anticipated
improvement in Mexico's economy, we expect a growing market for U.S. goods and
services and for Chevron petroleum products and services, in particular. Also,
as U.S. exports increase, the U.S. economy will benefit, thereby improving
opportunities for Chevron in domestic markets, as well.
Overall, Chevron views NAFTA as an opportunity for the U.S., Canada and Mexico
to create more jobs, strengthen our economies, protect and clean up the
environment and forge new trading partnerships. In support of the agreement,
Chevron joined with the business community in a grassroots campaign to win
Congressional approval of the legislation implementing NAFTA.
YOUR DIRECTORS RECOMMEND THAT STOCKHOLDERS VOTE AGAINST THIS PROPOSAL.
ITEM 7 ON THE PROXY CARD
STOCKHOLDER PROPOSAL TO PREPARE A REPORT ON ENVIRONMENTAL AND SAFETY HAZARDS
WHEREAS:
159 deaths and 1,129 injuries have occurred in chemical industry accidents
during the past 5 years, according to an OSHA-commissioned study. The New York
Times has reported this as one of the deadliest periods for
12
the American petrochemical industry's history: "Alarm[ing] company executives,
the 12 worst explosions killed 79 people, injured 833, and caused roughly $2
billion in damage." The Congressional subcommitee chairman overseeing OSHA
believes that this accident increase is linked to the use of less trained
contract workers.
WHEREAS WE BELIEVE:
These problems are exemplified in the United States by explosions at facilities
of companies such as Union Carbide, Chevron, and others. The greatest
catastrophic potential for damage was demonstrated at Bhopal, India.
Many companies are doing extensive studies of their chemical risks, even though
not legally mandated, "worst-case' scenarios of potential accidents, hazard
assessments, and periodic safety audits of unresolved problems at major
hazardous facilities, with recommendations for improvement. Some of these
studies of plant safety and hazard prevention are also required by OSHA and
EPA, but are not disclosed to the local communities. Unless such studies are
shared with the communities potentially affected by the hazards, local citizens
are unable to avoid needless deaths and injuries.
Investors, citizens, environmental and labor groups across the country are
asking for: worst-case accident scenarios and consequence analysis; groundwater
contamination; hazardous waste disposal practices; safety audits; "self-audits"
for the CMA Responsible Care Program; and toxic use reduction plans. Residents
wish to inspect facilities and discuss such documents with the company in a
public forum.
Increasingly, companies are agreeing to provide this information under Good
Neighbor Agreements which in allow mutually agreeable experts to provide
technical assistance to the community. Given the Company's past record and
problems, we believe that it should meet community requests in this manner,
make information public, and show itself to be truly accountable.
RESOLVED: The shareholders request the Company to make publicly available a
report (prepared at reasonable cost, omitting proprietary information, and made
available by September 1994), sufficiently comprehensive to permit interested
persons to assess: (a) environmental and safety hazards to communities
surrounding its plants, such as risks and consequences of chemical accidents,
preventative measures, and plans to reduce the use of toxics; (b) communities'
rights to inspect facilities with regard to these hazards; (c) Company policy
and procedures in these areas.
SUPPORTING STATEMENT
We believe that company records of actual safety performance should be widely
available to local citizens and employees. Our Company needs to deal adequately
with public concerns about environmental health and safety, if it is to be
viewed as environmentally responsible. Shareholders concerned with our
Company's image, or with its treatment of local concerns about environmental
health and safety, should vote FOR this resolution, to indicate the degree of
investor concern for these issues. We believe that these issues are appropriate
for shareholder attention, given the financial as well as the human costs of
such accidents, including direct costs of damage and the repercussions of
negative publicity.
RECOMMENDATION OF THE BOARD AGAINST THIS PROPOSAL
Your Board of Directors believes that corporate policies and actions at Chevron
facilities satisfy or will satisfy the principal elements of the proposal:
POLICY
. One element of Chevron's published vision is for communities to welcome us.
To achieve this vision, Chevron facilities will give high priority to
environmental, public and governmental concerns.
13
. Chevron's Safety, Fire, Health and Environment Policy 530 encourages
employees and facility management to recognize and respond to community
concerns. Adopted in 1989, this policy was supported by a vote of 98.3% of
stockholders at the 1991 Annual Meeting of Stockholders.
. In 1992, Chevron issued guidance to assist Chevron facilities in implementing
Policy 530. This guidance calls on Chevron facilities to communicate with and
work to resolve community concerns.
. Chevron intends to publish by the end of 1994 an environmental, health and
safety performance report. Chevron plans to include in the report numeric
data covering such things as employee safety, toxic emissions and pollution
prevention and oil spills. Additional data may also be included. Data will be
on an aggregated, nationwide basis for all of Chevron's various operations.
The report will also contain general information on Chevron's policies and
actions to prevent pollution and accidents. It will be available to
stockholders and the public upon request.
SPECIFIC ACTIONS AT FACILITIES
. Chevron refineries and chemical plants will complete Risk Management Plans as
required by the Federal Clean Air Act. The goal of these plans is to protect
communities and the environment by preventing accidents. When completed in
1997-1998, they will be available to the public.
. Chevron refineries and chemical plants are covered by community emergency
response plans. These plans, required by the Federal Emergency Planning and
Community Right-to-Know Act of 1986, are available to the public.
. Chevron refineries and chemical plants are currently implementing the Federal
Occupational Safety and Health Administration's Process Safety Management
requirements to better protect employees from chemical accidents.
We believe that through Chevron's policies, communications efforts, current and
proposed federal notification requirements, and the planned report, much of the
information covered by the proposal can be obtained by stockholders and
communities near Chevron facilities and, therefore, the proposal is
unnecessary.
YOUR DIRECTORS RECOMMEND THAT STOCKHOLDERS VOTE AGAINST THIS PROPOSAL.
14
EXECUTIVE COMPENSATION
The compensation of K. T. Derr, Chevron's Chief Executive Officer, and the four
other most highly paid executive officers during 1993 is shown on the following
pages in five tables and discussed in a report from the Management Compensation
Committee of the Board of Directors.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
---------------------- -----------------------------------
Awards Payouts
----------------------- -----------
Name Restricted Shares Vested All Other
and Bonus ($) Stock Underlying Performance Compen-
Principal Salary (Year Awards(s)(1) Options Units sation(2)
Position Year ($) Earned) ($) (#) ($) ($)
---------- ---- ------- --------- ------------ ---------- ----------- ---------
K. T. Derr 1993 900,000 914,000 -0- 46,800 909,437 51,372
Chairman 1992 800,000 759,000 -0- 47,300 311,328 36,628
1991 800,000 575,000 157,781 37,200 -0- 50,330
J. D.
Bonney 1993 550,000 469,000 -0- 25,700 509,284 32,332
Vice-
Chairman 1992 512,500 421,000 -0- 26,000 174,344 23,668
1991 500,000 335,000 89,409 20,900 -0- 31,456
J. N. Sul-
livan 1993 500,000 427,000 -0- 25,700 509,284 29,612
Vice-
Chairman 1992 451,250 371,000 -0- 26,000 174,344 20,924
1991 435,000 275,000 89,409 20,900 -0- 27,366
W. E.
Crain 1993 390,000 276,000 -0- 15,000 309,208 23,620
Vice-Pres-
ident 1992 371,667 256,000 -0- 15,500 105,852 17,045
1991 353,333 165,000 54,347 12,600 -0- 21,982
M. R.
Klitten 1993 356,250 248,000 -0- 15,000 227,359 21,799
Vice-Pres-
ident 1992 323,750 215,000 -0- 15,500 77,832 14,965
1991 305,000 125,000 54,347 12,600 -0- 19,228
- --------
(1) Aggregate number of shares of restricted stock and/or restricted stock
units and their value at fiscal year-end ($87.125 per share) is as follows:
K. T. Derr--15,750 shares, $1,372,219; J. D. Bonney--9,775 stock units,
$851,647; J. N. Sullivan--7,775 shares, $677,397; W. E. Crain--3,875 stock
units, $337,609, M. R. Klitten--2,525 shares, $219,991. Holders of
restricted stock/restricted stock units receive the 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 1993, contributions under the Profit Sharing/Savings Plan for
the five named individuals were as follows: K. T. Derr, $16,947, J. D.
Bonney, $14,555, J. N. Sullivan, $14,214, W. E. Crain, $12,057, M. R.
Klitten, $11,096; contributions under the Savings Plus Plan for the five
named individuals were as follows: K. T. Derr, $4,737; J. D. Bonney,
$4,770, J. N. Sullivan, $4,775; W. E. Crain, $4,769, M. R. Klitten, $4,765;
and contributions under the Excess Benefit Plan for the five named
individuals were as follows: K. T. Derr, $29,688, J. D. Bonney, $13,007, J.
N. Sullivan, $10,624, W. E. Crain, $6,794, M. R. Klitten, $5,937.
15
STOCK OPTIONS GRANTED IN 1993 TABLE
Potential Realizable Value on
6/30/03 based on Assumed Compounded
Annual Rates of Stock Price
Individual Grants Appreciation
--------------------------------- -------------------------------------
Percentage
Number of of Total
Shares Options
Underlying Granted to Exercise or
Options Employees Base Price Expiration
Name Granted(1) in 1993 (per Share) Date 0% per Year 5% per Year 10% per Year
- ---- ---------- ---------- ----------- ---------- ----------- ----------- ------------
K. T. Derr.............. 46,800 6.7% $87.75 6/30/03 $ -0- $ 2,582,982 $ 6,544,980
J. D. Bonney............ 25,700 3.7% 87.75 6/30/03 -0- 1,418,383 3,594,145
J. N. Sullivan.......... 25,700 3.7% 87.75 6/30/03 -0- 1,418,383 3,594,145
W. E. Crain............. 15,000 2.1% 87.75 6/30/03 -0- 827,850 2,097,750
M. R. Klitten........... 15,000 2.1% 87.75 6/30/03 -0- 827,850 2,097,750
Stock Price per Share... $87.75 142.94 227.60
All Optionees........... -0- $39 Million $98 Million
All Stockholders(2)..... -0- $18 Billion $46 Billion
Optionee Gain as % of
All Stockholders' Gain. -- 0.2% 0.2%
- --------
(1) Non-qualified options are granted to Chevron's senior managers and
executives (one-half of one percent of Chevron's employees). The options
have a ten 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 (325,737,605) of Chevron Stock as of December
31, 1993.
1993 YEAR-END STOCK OPTION VALUE TABLE
Number of
Shares Value of
Underlying Unexercised
Unexercised In-the-Money
Options on Options on
December 31, December 31,
1993 1993
-------------- -------------
Exercisable/ Exercisable/
Unexercisable Unexercisable
-------------- -------------
K. T. Derr......................................... 117,900/46,800 $2,087,775/$0
J. D. Bonney....................................... 65,700/25,700 1,162,950/0
J. N. Sullivan..................................... 65,700/25,700 1,162,950/0
W. E. Crain........................................ 39,600/15,000 700,763/0
M. R. Klitten...................................... 36,100/15,000 639,950/0
No options were exercised by the above named executive officers during 1993.
LONG-TERM INCENTIVE PLAN-1993 PERFORMANCE UNIT AWARDS TABLE
Performance
Number of Period
Performance Until
Units Payout
----------- -----------
K. T. Derr.............................................. 14,950 3 Years
J. D. Bonney............................................ 8,200 3 Years
J. N. Sullivan.......................................... 8,200 3 Years
W. E. Crain............................................. 4,800 3 Years
M. R. Klitten........................................... 4,800 3 Years
The payout can vary between 0% and 150% of grant depending on Chevron's total
stockholder return (TSR) vs. its peer group. Payout (in dollars) is equal to
the number of units times the 20-day trailing average of the price of Chevron
Stock at the end of the performance period times a performance modifier based
on relative TSR.
16
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.
Average Annual Salary Estimated Annual Pension
Plus Unrestricted -----------------------------------------------
Incentive Awards During Years of Credited Service
the Highest -----------------------------------------------
3 Consecutive Years 25 30 35 40 45
------------------------- -------- -------- --------- --------- ---------
$ 500,000............... $186,800 $220,600 $ 255,600 $ 290,600 $ 325,500
750,000............... 280,100 331,000 383,400 435,900 488,300
1,000,000............... 373,500 441,300 511,300 581,200 651,200
1,250,000............... 466,900 551,600 639,100 726,500 814,000
1,500,000............... 560,300 662,000 766,900 871,900 976,800
1,750,000............... 653,600 772,300 894,700 1,017,200 1,139,700
2,000,000............... 747,000 882,600 1,022,600 1,162,500 1,302,500
If they remain employees until they reach age 65, the Years of Credited Service
for Messrs. J. D. Bonney, W. E. Crain, K. T. Derr, M. R. Klitten and J. N.
Sullivan, will be as follows: J. D. Bonney, 35 years; W. E. Crain, 37 years; K.
T. Derr, 40 years; M. R. Klitten, 39 years; J. N. Sullivan, 40 years. 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.
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 generally
correspond to the amount set forth in the "Salary" column of the table on page
15. Beginning in 1989, federal law prohibited the inclusion of earnings in
excess of $200,000 per year (adjusted annually for cost of living increases).
In 1993 this limit was $235,840. Beginning in 1994, federal law prohibits the
inclusion of earnings in excess of $150,000 per year (adjusted in increments of
$10,000) in the average earnings used to calculate benefits.
The basic 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 percent or 100 percent joint-and-survivor
pension, or a lump sum payment. All Retirement Plan benefits are paid out of a
trust maintained by Bankers Trust Company. Future contributions to the trust
will be made by Chevron; employee contributions are not permitted. In general,
federal law limits the maximum annual pension to $90,000 (adjusted annually for
cost of living increases) for each eligible employee. In 1993, this limit was
$115,641. This amount is subject to further limitation depending on the
eligible employee's participation in the Profit Sharing/Savings Plan and
Savings Plus Plan.
17
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 eight of the non-employee Directors, is
responsible for establishing and administering Chevron's executive compensation
program. The Committee met 9 times during 1993.
In structuring Chevron's incentive programs, the Committee has been advised on
plan design by external compensation consultants, as well as by 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 responsibilities 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, on a long-term basis, high caliber personnel.
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 business performance.
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 executive
officers, the Committee believes short- and long-term incentive pay, linked to
Chevron's financial performance, should represent more than half 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 total stockholder return (TSR) performance
relative to the same five competitors. TSR is stock price appreciation plus
dividends on a reinvested basis.
Base Pay
. Salary structures are targeted to average pay levels of the seven major oil
competitors noted previously. The Committee also reviews non-oil company pay
information supplied by outside consultants when establishing salary
structures to ensure compensation opportunity is competitive. Individual
salaries are based on sustained individual performance toward achieving
Chevron's goals and objectives.
. Executive salaries are reviewed and approved annually by the Committee. Pay
increases under the executive salary program are administered throughout the
salary program year.
18
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. Awards are based on
three components: corporate results, business unit results and individual
performance.
. Individual target awards vary by salary grade and are based on competitive
practice of the seven oils. Actual individual awards depend on assessments of
performance versus corporate, business unit and individual targets, and
typically vary from 150% of target award to zero.
. Corporate and business unit operating and financial targets are set at the
beginning of each year. Targets include: earnings, return on capital employed
(ROCE), cash flow, and operating expense. Results are measured against annual
business plan objectives and against major oil competitor results.
. An individual's key job responsibilities and stretch goals are established
annually during Chevron's Performance Management Process (an ongoing cycle of
performance planning, coaching and feedback). Performance dimensions include
leadership, teamwork, communication, planning and organizing, quality
improvement, creativity/innovation and managing performance. Assessment of
individual performance is an aggregate judgment; no specific weighting is
applied to the performance dimensions.
Long-Term Incentive (Long-Term Incentive Plan)
. The Long-Term Incentive Plan (LTIP), which was approved by the stockholders
in 1990, 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 seven oil company competitive valuations provided by
an outside consultant.
. Stock Options are awarded at market price on the day of grant, vest after one
year, and have a ten-year term. Their value ultimately depends entirely on
appreciation of Chevron Stock. (The Committee does not grant discounted
options).
. Performance Units have their value 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 rank that can vary
from 0% to 150% of grant. Payout (in cash) is equal to the number of units
multiplied by the 20-day trailing average of the Chevron Stock price at the
end of the performance period multiplied by the performance modifier.
1993 OBRA--EXECUTIVE COMPENSATION TAX DEDUCTIBILITY
The Omnibus Budget Reduction Act (OBRA) of 1993 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. The proposed
regulations for this section of OBRA, which specify the requirements for
exceptions, were not published until December 16, 1993. Written comments and
requests for a public hearing are not due until February 22, 1994. The
Committee is studying this issue and following developments. However, based on
the proposed regulations and transition rules, the Committee does not
anticipate additional tax exposure from Chevron's 1994 executive compensation
program.
1993 CEO COMPENSATION
In the five-year period since K.T. Derr became CEO (1989-1993), Chevron has
achieved a TSR of 18.9% per year, which ranks Chevron first among major oil
companies. During this same period the peer oil companies (Amoco, Arco, Exxon,
Mobil and Texaco) achieved returns for their stockholders ranging from 10.4% to
17.0%, and averaging 13.2%.
As noted in this report last year, 1992 salary increases for key executives
were deferred due to poor 1991 financial results. At the beginning of 1992, Mr.
Derr established several "strategic intents" to guide Chevron toward cutting
costs and improving profits to become a top competitor in the oil industry.
Significant progress had been made toward these goals by year-end.
. Mr. Derr established a goal to reduce operating costs by $.50 per barrel by
the third quarter of 1993. This goal was surpassed by the end of 1992, well
ahead of the target date. Operational costs were reduced from $7.45 per
barrel in 1991 to $6.91 per barrel in 1992 and overall 1992 operating
expenses (adjusted for special items and own use fuel credit) declined by
$535 million from 1991 levels.
19
. Chevron and other companies track ROCE to measure how efficiently they
manage their assets relative to their competition. Chevron's reported ROCE
improved from 7.5% in 1991 to 11.4% in 1992 before the cumulative effects of
accounting changes. This moved Chevron's ranking relative to the five oil
company peers from last place in 1991 to first place in 1992.
. Chevron's 1992 reported earnings ($2,210 million before accounting changes)
improved over 70% from 1991 ($1,293 million). This moved Chevron from fifth
place relative to its peers to second place, behind industry giant Exxon.
Adjusted earnings improved about 15%, (from $1,359 million to $1,559
million), moving relative rank from fourth to second, again behind Exxon.
(Adjusted earnings for this purpose represent reported earnings before
special items and accounting changes. Competitor reported earnings are
similarly adjusted, based on publicly available data.)
Based on these results, in January 1993 the Committee granted Mr. Derr a
$100,000 salary increase bringing his annual salary to $900,000. This was Mr.
Derr's first salary increase in 24 months and is equivalent to an annual salary
progress of 6.1%.
In 1993, Chevron's adjusted earnings were $2.1 billion, up 38% from 1992 and
19% over the 1993 objective of $1.8 billion. Cash flow from operations was $4.2
billion, up 8% from 1992. Chevron's 1993 adjusted ROCE of 11.0% compares to
8.4% in 1992. Several years of difficult negotiations culminated in the
formation of the Tengizchevroil joint venture in the Republic of Kazakhstan,
which began operations on April 6, 1993. Throughout 1993, Chevron continued its
aggressive restructuring activities by selling marginal and non-strategic
properties, which on a cumulative basis has helped raise Chevron's adjusted
ROCE to first among the peer group. Operating expenses were further reduced in
1993. As a result of these continuing efforts toward achieving long-term
sustainable cost savings, operating expenses adjusted for special items and own
use fuel credits since 1991 have been reduced by over $1.1 billion a year. For
the year 1993, Chevron's TSR was 30.6%, essentially tied with Mobil for first
place and well ahead of the competitors' average of 12.4% as well as the S&P
average of 10.0%. Based on these results, the Committee granted Mr. Derr an
annual bonus award of $914,000.
Management Contingent Incentive Plan (MCIP) Performance Unit awards granted in
1988 vested in 1993. The payout of these MCIP performance units, which was
based on ROCE during the period 1988-1992, was zero. Mr. Derr received a
$909,437 payout of LTIP performance units granted in 1990 which vested on
December 31, 1993. In the plan approved by stockholders in 1990, payout is
determined by formula. The formula payout for these vested performance units
was 105%, based on Chevron's TSR rank relative to that of the five oil company
peers.
During 1993, Mr. Derr was granted 46,800 Stock Options and 14,950 Performance
Units under LTIP. These grants were made under the same determination rules as
apply to all other employees eligible to participate in LTIP. The Committee's
outside compensation consultant advises that Mr. Derr's award is well within
competitive practice for his level of responsibilities. The value of the Stock
Options will depend on the price of Chevron Stock at the time they are
exercised. The Performance Units will vest on December 31, 1996, and payout
will be based on Chevron's TSR ranking relative to the five oil company peers.
The Committee also notes that Mr. Derr was allocated $16,947 from his
participation in the Chevron Corporation Profit Sharing/Savings Plan, a broad-
based employee stock ownership and savings plan. The allocation to this Plan
was based on Chevron's income.
January 26, 1994
MANAGEMENT COMPENSATION COMMITTEE
C. M. PIGOTT, CHAIRMAN C. RICE
S. H. ARMACOST S. B. SMART, JR.
SAM GINN G. H. WEYERHAEUSER
C. A. HILLS J. A. YOUNG
20
PERFORMANCE GRAPH
The following graph, prepared by Value Line, Inc., 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, 1988 and ending December 31, 1993 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 TSR as of the end of each year between 1988 and
1993.
The peer group index is made up of Amoco, Arco, Exxon, Mobil and Texaco.
Chevron competes directly against the companies in the peer group, 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.
COMPARATIVE FIVE-YEAR TOTAL RETURNS
Chevron Corporation, S&P 500, Peer Group
(Performance results beginning 12/31/88 through 12/31/93)
Performance Graph filed with the Securities and Exchange Commission under Form
SE appears here.
CHV [_] $100.00 $155.72 $174.05 $172.87 $182.66 $238.46
S&P 500 + $100.00 $131.49 $127.32 $166.21 $179.30 $197.23
Peer Group* $100.00 $133.91 $141.73 $159.59 $166.31 $185.59
21
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
M. J. McAuley Secretary
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD AS SOON AS POSSIBLE.
22
APPENDIX A
PROPOSED AMENDED ARTICLE IV TO THE
RESTATED CERTIFICATE OF INCORPORATION
1. The total number of shares of all classes of stock which the Corporation
shall have authority to issue is one billion one hundred million
(1,100,000,000), of which one hundred million (100,000,000) shares shall be
Preferred Stock of the par value of one dollar ($1.00) per share, and one
billion (1,000,000,000) shares shall be Common Stock of the par value of one
dollar and fifty cents ($1.50) per share.
At the time this amendment becomes effective, each share of Common Stock, par
value three dollars ($3.00), including treasury shares, issued at such time
shall be, and hereby is, changed and reclassified into two (2) fully paid and
non-assessable shares of Common Stock, par value one dollar fifty cents ($1.50)
each, as herein authorized. Each outstanding stock certificate of this
Corporation which, immediately prior to the time this amendment becomes
effective, represented one or more shares of Common Stock, $3.00 par value,
shall thereafter represent the same number of shares of Common Stock, $1.50 par
value, and this Corporation shall issue and deliver to each holder of Common
Stock of this Corporation of record immediately prior to the time this
amendment becomes effective certificates representing one additional share of
Common Stock, $1.50 par value, for each share of Common Stock held of record by
each such stockholder at such time.
The number of authorized shares of Common Stock and Preferred Stock may be
increased or decreased (but not below the number of shares thereof outstanding)
if the increase or decrease is approved by the holders of a majority of the
shares of Common Stock, without the vote of the holders of the shares of
Preferred Stock or any series thereof, unless any such Preferred Stockholders
are entitled to vote thereon pursuant to the provisions established by the
Board of Directors in the resolution or resolutions providing for the issue of
such Preferred Stock, and if such holders of such Preferred Stock are so
entitled to vote thereon, then, except as may otherwise be set forth in this
Restated Certificate of Incorporation, the only stockholder approval required
shall be that of a majority of the combined voting power of the Common and
Preferred Stock so entitled to vote.
2. The Board of Directors is expressly authorized to provide for the issue,
in one or more series, of all or any shares of the Preferred Stock and, in the
resolution or resolutions providing for such issue, to establish for each such
series:
(a) the number of its shares, which may thereafter (unless forbidden in
the resolution or resolu-
tions providing for such issue) be increased or decreased (but not below
the number of shares of the series then outstanding) pursuant to a
subsequent resolution of the Board of Directors,
(b) the voting powers, full or limited, of the shares of such series, or
that such shares shall have no voting powers, and
(c) the designations, preferences and relative, participating, optional
or other special rights of the shares of such series, and the
qualifications, limitations or restrictions thereof.
3. In furtherance of the foregoing authority and not in limitation of it, the
Board of Directors is expressly authorized, in the resolution or resolutions
providing for the issue of a series of Preferred Stock:
(a) to subject the shares of such series, without the consent of the
holders of such shares, to being converted into or exchanged for shares of
another class or classes of stock of the Corporation, or to being redeemed
for cash, property or rights, including securities, all on such conditions
and on such terms as may be stated in such resolution or resolutions, and
(b) to make any of the voting powers, designations, preferences, rights
and qualifications, limitations or restrictions of the shares of the series
dependent upon facts ascertainable outside this Restated Certificate of
Incorporation.
4. Whenever the Board of Directors shall have adopted a resolution or
resolutions to provide for:
(a) the issue of a series of Preferred Stock,
A-1
(b) a change in the number of authorized shares of a series of Preferred
Stock, or
(c) the elimination from this Restated Certificate of Incorporation of
all references to a previously authorized series of Preferred Stock by
stating that none of the authorized shares of a series of Preferred Stock
are outstanding and that none will be issued,
the officers of the Corporation shall cause a certificate, setting forth a copy
of such resolution or resolutions and, if applicable, the number of shares of
stock of such series, to be executed, acknowledged, filed and recorded, in
order that the certificate may become effective in accordance with the
provisions of the General Corporation Law of the State of Delaware, as from
time to time amended. When any such certificate becomes effective, it shall
have the effect of amending this Restated Certificate of Incorporation, and
wherever such term is used in these Articles, it shall be deemed to include the
effect of the provisions of any such certificate.
5. As used in this Article IV, the term "Board of Directors" shall include,
to the extent permitted by the General Corporation Law of the State of
Delaware, any duly authorized committee of the Board of Directors.
6. Holders of shares of Common Stock shall be entitled to receive such
dividends or distributions as are lawfully declared on the Common Stock; to
have notice of any authorized meeting of stockholders; to one vote for each
share of Common Stock on all matters which are properly submitted to a vote of
such stockholders; and, upon dissolution of the Corporation, to share ratably
in the assets thereof that may be available for distribution after satisfaction
of creditors and of the preferences, if any, of any shares of Preferred Stock.
A-2
This Proxy will be voted as directed, but if not otherwise directed, FOR the
nominees, FOR the Proposals numbered 2 through 4 and AGAINST the Stockholder
Proposals 5 through 7.
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.
- -----------------------------------------------
Signature / Date
- -----------------------------------------------
Signature / Date
Proxy
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 3, 1994, and any adjournment thereof.
Management recommends and will vote FOR the election of the following as
Directors (unless otherwise directed):
1. S. H. Armacost, J. D. Bonney, W. E. Crain, K. T. Derr, S. Ginn,
C. A. Hills, C. M. Pigott, C. Rice, S. B. Smart, Jr., 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:
-------------------------------------------------------------------------
Management recommends and will vote FOR the following (unless otherwise
directed):
2. Amend Restated Certificate of Incorporation to Increase Authorized
Common Stock. FOR ( ) AGAINST ( ) ABSTAIN ( )
3. Proposal to Split the Common Stock. FOR ( ) AGAINST ( ) ABSTAIN ( )
4. Appointment of Price Waterhouse as Independent Public Accountants.
FOR ( ) AGAINST ( ) ABSTAIN ( )
Management does not recommend and will vote AGAINST the following stockholder
proposals (unless otherwise directed):
5. Compensate Directors Solely in the Form of Common Stock.
FOR ( ) AGAINST ( ) ABSTAIN ( )
6. Prepare a Report on Impact of NAFTA. FOR ( ) AGAINST ( ) ABSTAIN ( )
7. Prepare a Report on Environment and Safety Hazards.
FOR ( ) AGAINST ( ) ABSTAIN ( )
(OVER)
...............................................................................
LOGO
CHEVRON CORPORATION
225 Bush Street
San Francisco CA 94104
Dear Stockholders:
Attached is your 1994 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 1994 Annual Meeting of Stockholders
of Chevron Corporation to be held at 9:30 a.m. local time on Tuesday, May 3, in
the Auditorium of the Nob Hill Masonic Center, 1111 California Street, San
Francisco, California.
Sincerely,
M.J. McAuley
Secretary
