DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.)

 

 

Filed by the Registrant  

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))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material under §240.14a-12

 

LOGO

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 all boxes that apply):

 

No fee required

 

Fee paid previously with preliminary materials

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

 

 

 


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LOGO

2022 proxy statement

Notice of 2022 annual meeting of stockholders to be held on May 25, 2022


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2022 notice of the Chevron Corporation

Annual meeting of stockholders

Wednesday, May 25, 2022

8:00 a.m. PDT

Online by live audio webcast (www.virtualshareholdermeeting.com/CVX2022)

Record date

Monday, March 28, 2022

Agenda

 

 

Elect 12 Directors named in this Proxy Statement;

 

 

Vote on a Board proposal to ratify the appointment of PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for 2022;

 

 

Vote on a Board proposal to approve, on an advisory basis, Named Executive Officer (“NEO”) compensation;

 

 

Vote on a Board proposal to approve the 2022 Long-Term Incentive Plan of Chevron Corporation;

 

 

Vote on six stockholder proposals, each if properly presented at the meeting; and

 

 

Transact any other business that is properly presented at the meeting by or at the direction of the Board.

Admission

Stockholders or their legal proxy holders may attend the 2022 Annual Meeting of Stockholders.

 

 

Important notice regarding admission to the 2022 annual meeting

 

Virtual Annual Meeting

 

We are pleased to announce that the Company will conduct its 2022 Annual Meeting of Stockholders (“Annual Meeting”) on the above date and time solely by live audio webcast in lieu of an in-person meeting. Your Board believes this format will enhance and facilitate attendance by providing convenient access for all of our stockholders with access to the internet. In addition, this meeting format should eliminate public health concerns around the COVID-19 pandemic and the significant costs associated with holding an in-person meeting. We have planned and designed the meeting to encourage stockholder participation, protect stockholder rights, and promote transparency.

 

We encourage participation

 

Stockholders of record owning Chevron common stock at the close of business on Monday, March 28, 2022, are entitled to participate in and vote at the Annual Meeting. To participate in the Annual Meeting, including to vote, ask questions, and view the list of registered stockholders as of the record date during the meeting, stockholders should go to the meeting website at www.virtualshareholdermeeting.com/CVX2022, enter the 16-digit control number found on your proxy card, voting instruction form, or Notice Regarding the Availability of Proxy Materials, and follow the instructions on the website. If your voting instruction form or Notice Regarding the Availability of Proxy Materials does not indicate that you may vote those shares through the www.proxyvote.com website and it does not include a 16-digit control number, you should contact your bank, broker, or other nominee (preferably at least five days before the annual meeting) and obtain a “legal proxy” in order to be able to attend, participate in, or vote at the Annual Meeting. The Annual Meeting will be opened for access beginning at 7:45 a.m. PDT on May 25, 2022. Proponents of the stockholder proposals included in this Proxy Statement will be given the option to prerecord or call in live through a dedicated line to ensure their ability to present their proposals.

 

We welcome questions from stockholders

 

Questions may be submitted in advance of the meeting at www.proxyvote.com or live during the meeting at www.virtualshareholdermeeting.com/CVX2022. If we are not able to get to every question submitted, we will post a summary of the remaining questions and answers on www.chevron.com/investors/stockholder-services.

 

Technical difficulties and additional questions

 

If you have difficulty accessing the Annual Meeting, please call 844-976-0738 (toll free) or 303-562-9301 (international). Technicians will be available to assist you. Please submit any additional questions, comments, or suggestions by email at corpgov@chevron.com or by telephone by calling 1-877-259-1501.

 

In the event of a technical malfunction or other situation that the meeting Chair determines may affect the ability of the meeting to satisfy the requirements for a stockholder meeting to be held by means of remote communication under the Delaware General Corporation Law, or that otherwise makes it advisable to adjourn the meeting, the Chair will convene the Annual Meeting at 8:30 a.m. PDT on the date specified above at the Company’s headquarters in San Ramon, California, solely for the purpose of adjourning the meeting to reconvene at a date, time, and physical or virtual location announced by the meeting Chair. Under either of the foregoing circumstances, we will post information regarding the announcement on the investor relations page of the Company’s website at www.chevron.com/investors/stockholder-services.

 

 

 


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Voting

Stockholders owning Chevron common stock at the close of business on Monday, March 28, 2022, or their legal proxy holders, are entitled to vote at the Annual Meeting. Please refer to pages 102 and 103 of this Proxy Statement for information about voting at the Annual Meeting.

Distribution of proxy materials

On Thursday, April 7, 2022, we will commence distributing to our stockholders (1) a copy of this Proxy Statement, a proxy card or voting instruction form, and our Annual Report (the “Proxy Materials”), (2) a Notice Regarding the Availability of Proxy Materials, with instructions to access the Proxy Materials and vote on the internet, or (3) for stockholders who receive materials electronically, an email with instructions to access the Proxy Materials and vote on the internet.

By Order of the Board of Directors,

 

LOGO

Mary A. Francis

Corporate Secretary and Chief Governance Officer


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LOGO

April 7, 2022

Dear Stockholder,

As we write this, a war rages in Ukraine. Our hearts are with the people, families and communities directly impacted by this tragedy, and we hope that peace is restored as quickly as possible.

The pandemic and recent geopolitical events remind us of the critical role that energy has in supporting and advancing society, including in supporting economic stability, essential supply chains, and national security. As a company, we are ever mindful of the vital role we play in society and the responsibility we have to our stakeholders as we pursue our purpose of delivering the affordable, reliable, ever-cleaner energy that enables human progress.

In 2021, we delivered strong financial performance, with our highest free cash flow ever, including times when prices were much higher. At the same time we made progress toward a lower carbon future. We’re a much better company than we were just a few years ago.

Our strategy is clear: Leverage our strengths to deliver lower carbon energy to a growing world. Chevron’s capabilities, assets and customers are distinct advantages. We’re building on these strengths as we aim to lead in lower carbon intensity oil, products and natural gas and advance new products and solutions that reduce the carbon emissions of major industries. The formation last year of Chevron New Energies highlights our ambition to grow lower carbon businesses in hydrogen; carbon capture, utilization and storage; offsets; and other emerging energies.

Chevron is executing a straightforward plan, grounded in capital and cost discipline. We aim to grow cash flow and return more of it to stockholders. Our financial priorities remain steadfast: sustain and grow the dividend, reinvest to grow future cash flows, maintain a strong balance sheet, and return excess cash to you.

We seek to demonstrate our leadership through increased transparency. We support efforts to enhance the comparability and consistency of climate-related information in public disclosures. We have voluntarily reported our greenhouse gas emissions for nearly two decades. In October, we released our latest Climate Change Resilience Report, detailing insights about the new targets we’ve set and the concrete steps we’re taking to help deliver lower carbon energy.

As the world rapidly evolves, we remain optimistic. It’s an optimism that comes naturally to a company of problem solvers. We believe profound challenges can be overcome with human ingenuity, and we intend to demonstrate this with Chevron’s performance in 2022 and beyond.

Sincerely,

 

LOGO

 

Michael K. Wirth

Chairman and CEO

    

LOGO

 

Ronald D. Sugar

Lead Director

 

 

 

Chevron Corporation

6001 Bollinger Canyon Road, San Ramon, CA 94583


Table of Contents

 

Table of contents

 

 

Proxy statement      1  

virtual annual meeting

     1  

items of business

     1  
Election of directors (item 1 on the proxy card)      2  

director election requirements

     2  

director qualifications and nomination processes

     2  

nominees for director

     5  

vote required

     17  

your board’s recommendation

     17  
Director compensation      18  

2021 non-employee director compensation

     19  
Corporate governance      22  

overview

     22  

role of the board of directors

     22  

corporate governance guidelines

     22  

business conduct and ethics code

     22  

board leadership structure

     22  

independent lead director

     23  

board oversight of risk

     24  

board oversight of strategy

     25  

human capital management

     25  

board oversight of environmental, social, and governance matters

     26  

board oversight of environmental issues

     27  

chevron’s approach to the energy transition

     27  

director independence

     29  

board committees

     30  

board and committee meetings and attendance

     30  

board and committee evaluations

     30  

director orientation and education

     32  

hedging, pledging, and other transactions

     32  

related person transactions

     32  

year-round environmental, social, and governance engagement

     33  

our response to stockholders

     34  

board nominating and governance committee report

     38  

management compensation committee report

     39  

audit committee report

     39  

communicating with the board

     39  
Executive compensation      40  

compensation discussion and analysis

     40  

summary compensation table

     62  

grants of plan-based awards in fiscal year 2021

     65  

outstanding equity awards at 2021 fiscal year-end

     66  

option exercises and stock vested in fiscal year 2021

     68  

pension benefits table

     70  

nonqualified deferred compensation table

     71  

potential payments upon termination or change-in-control

     74  
Equity compensation plan information      76  
CEO pay ratio      77  
Stock ownership information      78  

security ownership of certain beneficial owners and management

     78  
Board proposal to ratify PricewaterhouseCoopers LLP as the independent registered public accounting firm for 2022 (item 2 on the proxy card)      79  

auditor review and engagement

     79  

PwC’s fees and services

     80  

audit committee preapproval policies and procedures

     80  

PwC’s attendance at the annual meeting

     80  

vote required

     80  

your board’s recommendation

     80  
Board proposal to approve, on an advisory basis, named executive officer compensation (item 3 on the proxy card)      81  

vote required

     81  

your board’s recommendation

     81  
Board proposal to approve 2022 Long-Term Incentive Plan of Chevron Corporation (item 4 on the proxy card)      82  

key terms of the 2022 LTIP

     84  

key features of the 2022 LTIP

     84  

vote required

     88  

your board’s recommendation

     88  

Rule 14a-8 stockholder proposals

     89  

vote required

     89  

your board’s recommendation

     89  

Voting and additional information

     102  

vote results

     102  

appointment of proxy holders

     102  

record date; who can vote

     102  

quorum

     102  

how to vote

     103  

revoking your proxy or voting instructions

     103  

confidential voting

     104  

notice and access

     104  

method and cost of soliciting and tabulating votes

     104  

householding information

     105  

email delivery of future proxy materials

     105  

stockholder of record account maintenance

     105  

submission of stockholder proposals for 2023 annual meeting

     106  

rules for admission for the virtual annual meeting

     107  

attending the virtual annual meeting

     107  
Appendix A: 2022 Long-term Incentive Plan of Chevron Corporation      A-1  
 

 


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Cautionary statements relevant to forward-looking information for the purpose of “safe harbor” provisions of the private securities litigation reform act of 1995

The statements in this Proxy Statement, including without limitation those relating to the action areas of Chevron’s energy transition strategy in the “Chevron’s Approach to the Energy Transition” section, are forward-looking statements based on management’s current expectations, estimates and projections and, accordingly, involve risks and uncertainties that could cause actual outcomes and results to differ materially from those expressed or forecasted herein. Words or phrases such as “anticipates,” “expects,” “intends,” “plans,” “targets,” “advances,” “commits,” “drives,” “aims,” “forecasts,” “projects,” “believes,” “approaches,” “seeks,” “schedules,” “estimates,” “positions,” “pursues,” “may,” “can,” “could,” “should,” “will,” “budgets,” “outlook,” “trends,” “guidance,” “focus,” “on track,” “goals,” “objectives,” “strategies,” “opportunities,” “poised,” “potential,” “ambitions,” “aspires” and similar expressions are intended to identify such forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by the statements in this Proxy Statement can be found in our most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission and in the Quarterly Reports on Form 10-Q that we will subsequently file under the headings “Risk Factors” and “Cautionary Statements Relevant to Forward-Looking Information for the Purpose of ‘Safe Harbor’ Provisions of the Private Securities Litigation Reform Act of 1995.” The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.


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Proxy statement

Chevron Corporation

6001 Bollinger Canyon Road

San Ramon, CA 94583-2324

Your Board of Directors is providing you with these Proxy Materials in connection with its solicitation of proxies to be voted at Chevron Corporation’s 2022 Annual Meeting of Stockholders to be held by live audio webcast (www.virtualshareholdermeeting.com/CVX2022) on Wednesday, May 25, 2022, at 8:00 a.m. PDT, and at any postponement or adjournment of the Annual Meeting.

In this Proxy Statement, Chevron and its subsidiaries may also be referred to as “we,” “our,” “the Company,” “the Corporation,” or “Chevron.”1

Virtual annual meeting

We are pleased to announce that the Company will conduct its Annual Meeting on the above date and time solely by live audio webcast in lieu of an in-person meeting. Your Board believes this meeting format will enhance and facilitate attendance by providing convenient access for all of our stockholders. In addition, this meeting format will help eliminate public health concerns around the COVID-19 pandemic and the significant costs associated with holding an in-person meeting. We have planned and designed the meeting to encourage stockholder participation, protect stockholder rights, and promote transparency.

Items of business

Your Board is asking you to take the following actions at the Annual Meeting:

 

Item(s)

 

Your Board’s recommendation

  

Vote required

    
Item 1: Elect 12 Directors named in this Proxy Statement  

Vote for

(each

Director

nominee)

  

Each Director nominee who receives a majority of the votes cast (i.e., the number of shares voted FOR a Director nominee must exceed the number of shares voted AGAINST that Director nominee, excluding abstentions) will be elected a Director in an uncontested election.

 

   

 

Item 2: Vote to ratify the appointment of the independent registered public accounting firm

 

  Vote for   

These items are approved if the number of shares voted FOR exceeds the number of shares voted AGAINST.

   

 

Item 3: Vote to approve, on an advisory basis, Named Executive Officer compensation

 

  Vote for    

 

Item 4: Vote to approve the 2022 Long-Term Incentive Plan of Chevron Corporation

 

  Vote for    

Items 5–10: Vote on six stockholder proposals, if properly presented

 

 

 

Vote against items

 

5, 6, and 8-10

 

and for item 7

 

 

   

If you are a street name stockholder (i.e., you own your shares through a bank, broker, or other holder of record) and do not vote your shares, your bank, broker, or other holder of record may, but is not required to, vote your shares at its discretion ONLY on Item 2. If you do not give your bank, broker, or other holder of record instructions on how to vote your shares on Item 1 or Items 3 through 10, your shares will not be voted on those matters. If you have shares in an employee stock or retirement benefit plan and do not vote those shares, the plan trustee or fiduciary may or may not vote your shares, in accordance with the terms of the plan. Any shares not voted on Items 1 through 10 (whether by abstention, broker nonvote, or otherwise) will have no impact on that particular item. We urge you to promptly provide voting instructions to your broker to ensure that your shares are voted on all of the items, even if you plan to attend the Annual Meeting.

We are not aware of any matters that are expected to be presented for a vote at the Annual Meeting other than those described above. If any other matter is properly brought before the Annual Meeting by or at the direction of the Board, the proxy holders identified in the “Voting and Additional Information–Appointment of Proxy Holders” section of this Proxy Statement intend to vote the proxies in accordance with their best judgment. When conducting the Annual Meeting, the Chair or his designee may refuse to allow a vote on any matter not made in compliance with our By-Laws and the procedures described in the “Voting and Additional Information–Submission of Stockholder Proposals for 2022 Annual Meeting” section of the 2021 Proxy Statement.

 

1 

As used in this Proxy Statement, the term “Chevron” and such terms as “the Company,” “the Corporation,” “our,” “we,” “us” and “its” may refer to Chevron Corporation, one or more of its consolidated subsidiaries, or all of them taken as a whole, but unless stated otherwise they do not include “affiliates” of Chevron — i.e., those companies accounted for by the equity method (generally owned 50% or less) or non-equity method investments. All of these terms are used for convenience only and are not intended as a precise description of any of the separate companies, each of which manages its own affairs.

 

Chevron Corporation – 2022 Proxy Statement

 

1


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Election of directors

(Item 1 on the proxy card)

The Board Nominating and Governance Committee (the “Governance Committee”) recommended, and the Board set, a current Board size of 12 Directors. Each of the nominees is a current Director and was previously elected at Chevron’s 2021 Annual Meeting of Stockholders. Directors are elected annually and serve for a one-year term or until their successors are elected. If any nominee is unable to serve as a Director–a circumstance we do not anticipate–the Board by resolution may reduce the number of Directors or choose a substitute. Your Board has determined that each non-employee Director is independent in accordance with the New York Stock Exchange (“NYSE”) Corporate Governance Standards and has no material relationship with Chevron other than as a Director.

Director election requirements

 

Each Director nominee who receives a majority of the votes cast (i.e., the number of shares voted FOR a Director nominee must exceed the number of shares voted AGAINST that Director nominee, excluding abstentions) will be elected a Director in an uncontested election.

Under Chevron’s By-Laws, in an uncontested election, any Director nominated for re-election who receives more AGAINST votes than FOR votes must submit an offer of

resignation to the Board. The Governance Committee must then consider all relevant facts and circumstances, including the Director’s qualifications, past and expected future contributions, the overall composition of the Board, and whether Chevron would meet regulatory or similar requirements without the Director, and make a recommendation to the Board on the action to take with respect to the offer of resignation.

 

 

Director qualifications and nomination processes

 

The Governance Committee is responsible for recommending to the Board the qualifications for Board membership and for identifying, assessing, and recommending qualified Director candidates for the Board’s consideration. The Board membership qualifications and nomination procedures are set forth in Chevron’s Corporate Governance Guidelines, which are available on our website at www.chevron.com/investors/corporate-governance.

All Directors should have the following attributes:

 

    The highest professional and personal ethics and values, consistent with The Chevron Way and our Business Conduct and Ethics Code, both of which are available on Chevron’s website at www.chevron.com;  

 

    A commitment to building stockholder value;  

 

    Business acumen and broad experience and expertise at the policy-making level in one or more of the skills, qualifications, and experiences delineated below;  

 

    The ability to provide insights and practical wisdom based on the individual’s experience or expertise;  

 

    Sufficient time to effectively carry out duties as a Director; and  

 

    Independence (at least a majority of the Board must consist of independent Directors, as defined by the NYSE Corporate Governance Standards).  

When conducting its review of the appropriate skills and qualifications desired of Directors, the Governance Committee particularly considers:

 

    Leadership experience in business as a chief executive officer, senior executive, or leader of significant business operations;  

 

    Expertise in science, technology, engineering, research, or academia;  

 

    Extensive knowledge of governmental, regulatory, legal, or public policy issues;  

 

    Expertise in finance, financial disclosure, or financial accounting;  
    Experience in global business or international affairs;  

 

    Experience in environmental affairs (including with respect to climate change issues);  

 

    Experience in leading business transformation;  

 

    Service as a public company director;  

 

    Diversity of age, gender, and ethnicity; and  

 

    Such other factors as the Governance Committee deems appropriate, given the current and anticipated needs of the Board and the Company, to maintain a balance of knowledge, experience, background, and capability.  

In addition, Directors should limit their other board memberships to a number that permits them, given their individual circumstances, to perform all of their Director duties:

 

    A Director should not serve on the board of more than five publicly traded companies;

 

    A Director who serves as a board Chair or Lead Director of a publicly traded company should not serve on the boards of more than four publicly traded companies (including the board of the company for which the Director is board Chair or Lead Director); and

 

    A Director who serves as a Chief Executive Officer of a publicly traded company should not serve on the boards of more than three publicly traded companies (including the company for which the Director is CEO).

The Governance Committee regularly reviews the foregoing attributes, skills and qualifications required of Directors in the context of the current operating requirements of the Company and the long-term interests of stockholders. When recommending nominees for the Board, the Governance Committee discusses each nominee in the context of the foregoing attributes, skills, qualifications, and time commitments, including the foregoing limits on public company directorships, to ensure that the nominees and Board as a whole meet the requirements and needs of the company.

 

 

Chevron Corporation – 2022 Proxy Statement

 

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Election of directors  

 

 

These skills, experiences, and expertise are critical to the Board’s ability to provide effective oversight of the Company and are directly relevant to Chevron’s business, strategy, and operations.

 

 

 

CEO/Senior Executive/Leader of Significant Operations

 

 

 

Chevron employs approximately 43,0001 people in business units throughout the world. Chevron’s operations involve complex organizations and processes, strategic planning, and risk management.

 

 

 

Science/Technology/Engineering/Research/Academia

 

 

 

Technology and engineering are at the core of Chevron’s business and are key to finding, developing, producing, processing, and refining oil and natural gas, as well as assessing new energy sources. Our business processes are complex and highly technical.

 

 

 

Government/Regulatory/Legal/Public Policy

 

 

 

Chevron’s operations require compliance with a variety of regulatory requirements in numerous countries and involve relationships with various governmental entities and nongovernmental organizations throughout the world.

 

 

 

Finance/Financial Disclosure/Financial Accounting

 

 

 

Chevron’s business is multifaceted and requires complex financial management, capital allocation, and financial reporting processes.

 

 

 

Global Business/International Affairs

 

 

 

Chevron conducts business around the globe. Our business success is derived from an understanding of diverse business environments, economic conditions, and cultures and a broad perspective on global business opportunities.

 

 

 

Environmental

 

 

 

We place the highest priority on the health and safety of our workforce and the protection of our assets, the communities where we operate, and the environment. We are committed to continuously improving our environmental performance and reducing the potential impacts of our operations.

 

 

 

Leading Business Transformation

 

 

 

Chevron’s strategy is to leverage our strengths to deliver lower carbon energy to a growing world.

 

 

1 

Data as of December 31, 2021.

The following matrix displays the most significant skills and qualifications that each Director possesses. The Governance Committee reviews the composition of the Board as a whole periodically to ensure that the Board maintains a balance of knowledge and experience and to assess the skills and characteristics that the Board may find valuable in the future in light of current and anticipated strategic plans and operating requirements and the long-term interest of stockholders.

 

 

LOGO

 

Chevron Corporation – 2022 Proxy Statement

 

3


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Election of directors  

 

 

 

The Board seeks to achieve diversity of age, gender, and race/ethnicity and recognizes the importance of Board refreshment to ensure that it benefits from fresh ideas and perspectives. The following charts illustrate the Board’s continued commitment to diversity of backgrounds and Board refreshment.

 

 

LOGO

 

 

LOGO

Strong board diversity   Strong board refreshment
Four new directors since 2017*

 

     Date of Change   Director   Primary Reason for Nomination/Departure

 

+

 

 

January
2021

 

 

Marillyn A.
Hewson

 

 

Brings valuable global business experience as well as decades of perspective on international commerce and geopolitics

 

 

+

 

 

September
2020

 

 

Jon M.
Huntsman Jr.*

 

 

Strong international and public policy experience, knowledge of Chevron’s business, and leadership experience

 

 

-

 

 

January
2020

 

 

Inge G.
Thulin

 

 

Time and logistics conflict

 

 

+

 

 

December
2018

 

 

Debra
Reed-Klages

 

 

Depth of business leadership and experience with regulated utilities in California

 

 

-

 

 

May
2018

 

 

Linnet F.
Deily

 

 

Mandatory Director Retirement Policy

 

 

-

 

 

May
2018

 

 

Robert E.
Denham

 

 

Mandatory Director Retirement Policy

 

 

+

 

 

March
2018

 

 

D. James
Umpleby III

 

 

Strong background in international/environmental policy, heavy equipment engineering, and global workforce development

 

 

-

 

 

February
2018

 

 

John S.
Watson

 

 

Retirement from Chevron

 

 

   *

Jon M. Huntsman Jr. previously served on Chevron’s Board but resigned to serve as U.S. Ambassador to Russia. For purposes of calculating tenure going forward, we include only his current term.

The Governance Committee considers Director candidates suggested for nomination to the Board from stockholders, Directors, and other sources. Directors periodically suggest possible candidates, and the Governance Committee has retained director search firms to assist with identifying potential candidates.

 

 

Stockholders may recommend potential nominees by writing to the Corporate Secretary at 6001 Bollinger Canyon Road, San Ramon, CA 94583-2324, stating the candidate’s name and qualifications for Board membership.

 

 

 

When considering potential nominees recommended by stockholders, the Governance Committee follows the same Board membership qualifications evaluation and nomination procedures discussed in this section.

 

In addition, a qualifying stockholder (or stockholders) may nominate director nominees by satisfying the requirements specified in our By-Laws, which are described in the “Voting and Additional Information–Submission of Stockholder Proposals for 2023 Annual Meeting” section of this Proxy Statement.

 

Chevron Corporation – 2022 Proxy Statement

 

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Election of directors  

 

 

Nominees for director

The Governance Committee recommended, and the Board set, a current Board size of 12 Directors. Each of the Director nominees is a current Director.

Director Summary

 

                                   Committee Composition(1)     
Director   Gender  

Director

Age(1)

  Race/
Ethnicity
 

Director

Since

 

Principal

Occupation

  IND(2)   AC(3)   BN&GC(4)   MCC(5)   PP&SC(6)  

Other Current

Public Company
Directorships

Wanda M.
Austin
  F   67   Black/
African-American
  2016   Retired President and CEO, The Aerospace Corporation       C   M    

• Amgen Inc.

• Virgin Galactic Holdings, Inc.

John B.
Frank
  M   65   White/
Caucasian
  2017  

Vice Chairman,

Oaktree Capital Group, LLC

   

M

 

       

• Daily Journal Corporation

• Oaktree Capital Group, LLC

¡  Oaktree Acquisition Corporation II

¡ Oaktree Specialty Lending Corporation

Alice P.
Gast
  F   63   White/
Caucasian
  2012  

President,

Imperial College London

 

    M     M  

• None

Enrique 
Hernandez, Jr.
  M   66   Hispanic/
Latino
  2008  

Executive Chairman,

Inter-Con Security Systems, Inc.

 

      M   C  

• McDonald’s Corporation

Marillyn A.
Hewson
  F   68   White/
Caucasian
  2021   Retired Chairman, CEO, and President of Lockheed Martin Corporation  

  M        

• Johnson & Johnson

Jon M. 
Huntsman Jr.(7)
  M   62   White/
Caucasian
  2020   Vice Chair Policy, Ford Motor Company  

      M   M  

• Ford Motor Company

Charles W. 
Moorman
  M   70   White/
Caucasian
  2012  

Senior Advisor to Amtrak

Retired Chairman and CEO, Norfolk Southern Corporation

 

    M   C    

• Oracle Corporation

Dambisa F.
Moyo
  F   53   Black/
African
  2016   Co-principal, Versaca Investments  

  M        

• 3M Company

Debra
Reed-Klages
  F   65   White/
Caucasian
  2018   Retired Chairman, CEO, and President, Sempra Energy  

  C        

• Caterpillar Inc.

• Lockheed Martin Corporation

Ronald D.
Sugar
  M   73   White/
Caucasian
  2005   Retired Chairman and CEO, Northrop Grumman Corporation   L     M   M    

• Amgen Inc.

• Apple Inc.

• Uber Technologies, Inc.

D. James
Umpleby III
  M   64   White/
Caucasian
  2018  

Chairman and CEO,

Caterpillar Inc.

 

    M     M  

• Caterpillar Inc.

Michael K.
Wirth
  M   61   White/
Caucasian
  2017  

Chairman and CEO,

Chevron Corporation

   

 

                 

• None

 

(1)

As of April 7, 2022.

 

(2)

Independent in accordance with the NYSE Corporate Governance Standards. No material relationship exists with Chevron other than as a Director.

 

(3)

Audit Committee

 

(4)

Board Nominating and Governance Committee

 

(5)

Management Compensation Committee

 

(6)

Public Policy and Sustainability Committee

 

(7)

Previously served as a Director of the Company from January 15, 2014 to September 28, 2017.

L

   Lead Director (independent)

C

   Committee Chair

M

  

Committee Member

 

 

Your Board recommends that you vote for each of these Director nominees.

 

Chevron Corporation – 2022 Proxy Statement

 

5


Table of Contents

 

Election of directors  

 

 

 

 

LOGO

  

Wanda M. Austin

 

Retired President and Chief Executive
Officer, The Aerospace Corporation

 

Age:  67

Director Since: December 2016

Independent: Yes

 

Chevron Committees:

• Board Nominating and Governance (Chair)

• Management Compensation

 

Current Public Company Directorships:

• Amgen Inc.

• Virgin Galactic Holdings, Inc.

 

 

 

Prior Public Company Directorships

(within last five years):

• None

 

Other Directorships and Memberships:

• Horatio Alger Association

• National Academy of Engineering

• University of Southern California (Life Trustee)

 

Dr. Austin has held an adjunct Research Professor appointment at the University of Southern California’s Viterbi School’s Department of Industrial and Systems Engineering since 2007. She has been Co-founder and Chief Executive Officer of MakingSpace, Inc., a leadership and STEM (science, technology, engineering, and math) consulting firm, since December 2017. She is a World 50 executive advisor, fostering peer-to-peer discussions among senior executives from some of the world’s largest companies. She served as Interim President of the University of Southern California from August 2018 until July 2019. She served as President and Chief Executive Officer of The Aerospace Corporation (“Aerospace”), a leading architect for the United States’ national security space programs, from 2008 until her retirement in 2016. From 2004 to 2007, she was Senior Vice President, National Systems Group, at Aerospace. Dr. Austin joined Aerospace in 1979.

Skills and qualifications

Business Leadership/Operations: Eight years as CEO of Aerospace. Thirty-seven-year career with Aerospace included numerous senior management and executive positions. CEO of MakingSpace, Inc. since December 2017.

Finance: More than a decade of financial responsibility and experience at Aerospace. Audit Committee member at Amgen Inc.

Global Business/International Affairs: Internationally recognized for her work in satellite and payload system acquisition, systems engineering, and system simulation. Former CEO of a company that provides space systems expertise to international organizations. Director of companies with international operations.

Government/Regulatory/Public Policy: Served on the President’s Council of Advisors on Science and Technology and the President’s Review of U.S. Human Space Flight Plans Committee. Appointed to the Defense Policy Board, the Defense Science Board, and the NASA Advisory Council.

Leading Business Transformation: As President and CEO of The Aerospace Corporation, led the technical evaluation and certification of the launch enterprise transition to a commercial business model for national security space missions. Numerous awards for leadership and impact. As Interim President of the University of Southern California, implemented transformational governance measures to raise the bar at a time of great challenge – e.g. systemic lapses involving college athletics program, student admissions.

Research/Academia: Trustee and Adjunct Research Professor at the University of Southern California’s Viterbi School of Engineering. Former Interim President of the University of Southern California.

Science/Technology/Engineering: Ph.D. in Industrial and Systems Engineering from the University of Southern California, Master of Science in both Systems Engineering and Mathematics from the University of Pittsburgh. Thirty-seven-year career in national security space programs. Director at Amgen Inc., a biotechnology company, and Virgin Galactic Holdings, Inc., the world’s first commercial space line and vertically integrated aerospace company. Honorary fellow of the American Institute of Aeronautics and Astronautics. A member of the National Academy of Engineering.

 

Chevron Corporation – 2022 Proxy Statement

 

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Election of directors  

 

 

LOGO

  

John B. Frank

 

Vice Chairman, Oaktree Capital Group, LLC

 

Age:  65

Director Since: November 2017

Independent: Yes

 

Chevron Committees:

• Audit – audit committee financial expert

 

Current Public Company Directorships:

• Daily Journal Corporation

• Oaktree Capital Group, LLC

¡  Oaktree Acquisition Corporation II

¡ Oaktree Specialty Lending Corporation

 

 

Prior Public Company Directorships

(within last five years):

• Oaktree Acquisition Corporation

• Oaktree Strategic Income Corporation

 

Other Directorships and Memberships:

• The James Irvine Foundation

• Wesleyan University

• XPRIZE Foundation

 

Mr. Frank has been Vice Chairman since 2014, and Director since 2007, of Oaktree Capital Group, LLC (“Oaktree Capital”), a global investment management company with expertise in credit strategies. He is one of four members of Oaktree Capital’s Executive Committee and was previously the firm’s principal executive officer. Mr. Frank was Oaktree Capital’s Managing Principal from 2005 until 2014, having joined Oaktree Capital in 2001 as General Counsel. Prior to that, he served as a Partner of the Los Angeles law firm of Munger, Tolles & Olson LLP, where his practice focused on mergers and acquisitions and general corporate counseling.

Skills and qualifications

Business Leadership/Operations: Over 20 years of service as senior executive of Oaktree Capital, a global investment management company, including service as principal executive officer, Vice Chairman, Director, Managing Principal, and General Counsel.

Finance: More than 22 years of financial responsibility and experience as a senior executive at Oaktree Capital, and as the partner responsible for financial affairs at the law firm of Munger, Tolles & Olson LLP.

Global Business/International Affairs: Senior executive of Oaktree Capital, which conducts business worldwide from 18 offices around the globe. Travels around the world to meet with Oaktree Capital’s institutional clients and speak at international investment forums. Director of companies with international operations.

Government/Regulatory/Public Policy: Two decades of experience working with government officials regarding regulatory and public policy issues, including testimony before the U.S. Senate Finance Committee and as a senior executive of Oaktree Capital. Served as a Legislative Assistant to the Honorable Robert F. Drinan, Member of Congress, and as a law clerk to the Honorable Frank M. Coffin of the U.S. Court of Appeals for the First Circuit.

Legal: Served as General Counsel of Oaktree Capital. Former Partner of Munger, Tolles & Olson LLP. Extensive experience with mergers and acquisitions and strategic, financial, and corporate governance issues. Law degree from the University of Michigan.

 

Chevron Corporation – 2022 Proxy Statement

 

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Table of Contents

 

Election of directors  

 

 

 

LOGO

  

Alice P. Gast

 

President, Imperial College London

 

Age:  63

Director Since: December 2012

Independent: Yes

 

Chevron Committees:

• Board Nominating and Governance

• Public Policy and Sustainability

 

Current Public Company Directorships:

• None

 

 

Prior Public Company Directorships

(within last five years):

• None

 

Other Directorships and Memberships:

• National Academy of Engineering

• Royal Academy of Engineering

• Academie des Technologies (France)

 

Dr. Gast has been President of Imperial College London, a public research university specializing in science, engineering, medicine, and business, since 2014. She was President of Lehigh University, a private research university, from 2006 until 2014 and Vice President for Research, Associate Provost, and Robert T. Haslam Chair in Chemical Engineering at Massachusetts Institute of Technology from 2001 until 2006. Dr. Gast was professor of chemical engineering at Stanford and the Stanford Synchrotron Radiation Laboratory from 1985 until 2001.

Skills and qualifications

Environmental Affairs: At Imperial College London, oversees environmental institutes and centers and leads the university crisis management group. At Lehigh University, presided over environmental centers, advisory groups, and crisis management. Expertise in chemical and biological terrorism issues gained through service on several governmental committees.

Finance: Sixteen years of service as president of leading educational institutions, with ultimate responsibility for finance, fundraising, and endowment management.

Global Business/International Affairs: Served as a U.S. Science Envoy for the U.S. Department of State to advise on ways to foster and deepen relationships with the Caucasus and Central Asia. Serves on the Singapore Ministry of Education’s Academic Research Council and on the Global Federation of Competitiveness Councils. Served on the Board of Trustees for the King Abdullah University of Science and Technology in Saudi Arabia.

Government/Regulatory/Public Policy: Served on the Homeland Security Science and Technology Advisory Committee. Chaired the scientific review committee empaneled by the National Research Council at the request of the FBI to conduct an independent review of the investigatory methods used by the FBI in the criminal case involving the mailing of anthrax spores. Served on the Board of UKRI, the UK Research and Innovation funding and policy body.

Research/Academia: More than three decades of service in academia and research at leading educational institutions.

Science/Technology/Engineering: M.A. and Ph.D. in chemical engineering from Princeton University. Former Vice President for Research, Associate Provost, and Robert T. Haslam Chair in Chemical Engineering at Massachusetts Institute of Technology and professor of chemical engineering at Stanford University and the Stanford Synchrotron Radiation Laboratory. Member of the National Academy of Engineering, the Royal Academy of Engineering, and the Academie des Technologies (France).

 

Chevron Corporation – 2022 Proxy Statement

 

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Election of directors  

 

 

LOGO

  

Enrique Hernandez, Jr.

 

Executive Chairman,
Inter-Con Security Systems, Inc.

 

Age:  66

Director Since: December 2008

Independent: Yes

 

Chevron Committees:

• Management Compensation

• Public Policy and Sustainability (Chair)

 

Current Public Company Directorships:

• McDonald’s Corporation

 

 

Prior Public Company Directorships

(within last five years):

• Wells Fargo & Company

 

Other Directorships and Memberships:

• Catalyst

• Harvard College Visiting Committee

• Harvard University Resources Committee

• John Randolph Haynes and Dora Haynes Foundation

• Ronald McDonald House Charities

 

Mr. Hernandez has been Executive Chairman of Inter-Con Security Systems, Inc. (“Inter-Con”), a global provider of security and facility support services to governments, utilities, and industrial customers, since 2021. He previously served as Inter-Con’s Chairman and CEO from 1986 until 2021 and President from 1986 until 2018. He was previously Executive Vice President and Assistant General Counsel from 1984 until 1986. Mr. Hernandez was an associate of the law firm of Brobeck, Phleger & Harrison LLP from 1980 until 1984.

Skills and qualifications

Business Leadership/Operations: More than three decades as Chairman and CEO of Inter-Con. Co-founder of Interspan Communications, a television broadcasting company. Chairman of the Board of McDonald’s Corporation.

Finance: More than three decades of financial responsibility and experience at Inter-Con. Chaired the Audit Committee at McDonald’s Corporation. Former Chair of the Finance Committee and the Risk Committee at Wells Fargo & Company. Former Audit Committee member at Great Western Financial Corporation, Nordstrom, Inc., Washington Mutual, Inc., and Wells Fargo & Company.

Global Business/International Affairs: Former CEO of a company that conducts business worldwide. Current and former director of companies with international operations.

Government/Regulatory/Public Policy: Trustee of the John Randolph Haynes Foundation, which has funded hundreds of important urban studies in education, transportation, local government elections, public safety, and other public issues. Former appointee and Commissioner and President of the Los Angeles Police Commission. Served on the U.S. National Infrastructure Advisory Committee.

Leading Business Transformation: Extensive leadership experience transitioning in both media and security industries, having been a founder of Inter-Span Communications, a pioneer in Spanish language broadcast television in the U.S., and at Inter-Con where he evolved traditional physical security practices into a multinational industry leader, creating and utilizing proprietary technology platforms and techniques.

Legal: Served as Executive Vice President and Assistant General Counsel of Inter-Con. Former litigation associate of the law firm of Brobeck, Phleger & Harrison LLP. Law degree from Harvard Law School.

 

Chevron Corporation – 2022 Proxy Statement

 

9


Table of Contents

 

Election of directors  

 

 

 

LOGO

  

Marillyn A. Hewson

 

Retired Chairman, President, and

Chief Executive Officer,
Lockheed Martin Corporation

 

Age:  68

Director Since: January 2021

Independent: Yes

 

Chevron Committees:

• Audit – audit committee financial expert

 

Current Public Company Directorships:

• Johnson & Johnson

 

 

 

Prior Public Company Directorships

(within last five years):

• DuPont, DowDuPont Inc.

• Lockheed Martin Corporation

 

Other Directorships and Memberships:

• Trilateral Commission

• Culverhouse College of Commerce & Business Administration, University of Alabama Board of Visitors

• Nexii Building Solutions, Inc. (Privately held)

• University of Alabama’s President’s Cabinet

• Business Council

• Council of Chief Executives

 

Ms. Hewson served as Chairman of Lockheed Martin Corporation (“Lockheed Martin”), a security and aerospace company principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products, and services, from January 2014 to March 2021. Serving as Executive Chairman from June 2020 to March 2021 and President and Chief Executive Officer from January 2013 to June 2020. Ms. Hewson joined Lockheed Martin in 1983 as an industrial engineer and has held leadership positions across Lockheed Martin, including President and Chief Operating Officer and Executive Vice President of Lockheed Martin’s Electronic Systems business area.

Skills and qualifications

Business Leadership/Operations: Served six years as Chairman, President, and CEO of Fortune 100 company. Thirty-nine-year career with Lockheed Martin included numerous senior management and executive positions, including over seven years as President and CEO.

Environmental Affairs: As Chairman, CEO, and President of Lockheed Martin, oversaw initiatives for energy and environmental stewardship, including Go Green, carbon and energy reduction, and water use reduction, and partnered with the United States Department of Energy’s Better Plants Program, and the Environmental Protection Agency’s ENERGY STAR Program and Green Power Partnerships.

Finance: Former Chairman, President, and CEO of Fortune 100 company. More than three decades of financial responsibility and experience at Lockheed Martin.

Global Business/International Affairs: Former Chairman, President and CEO of Fortune 100 company with extensive international operations. Served on the Board of Trustees for the King Abdullah University Science and Technology in Saudi Arabia and Khalifa University in the United Arab Emirates. Served on the Atlantic Council International Advisory Board from 2014- June 2021. Served on the US-India CEO Forum in 2020, and as co-vice chair of the US UAE Business Council until 2020. Current and former director of companies with international operations.

Government/Regulatory/Public Policy: At Lockheed Martin, a government contractor, oversaw development and production of military and rotary-wing aircraft for all five branches of the U.S. armed forces along with military services and commercial operations. Serves on the American Workforce Policy Advisory Board. Appointed by the President of the United States to the President’s Export Council.

Leading Business Transformation: As Chairman and CEO of Lockheed Martin, led large complex global organization that is in continuing transformation and adaptation, with customers facing technology and geopolitical disruption every day. Led large-scale portfolio rebalancing to shift away from commodity IT support and enter rotary wing business with acquisition of Sikorsky. Led digital transformation in product and internal operations. Honored with Edison Achievement Award for leadership in technology innovation (2013) and Eisenhower Award for Innovation by Business Council for International Understanding (2015).

Science/Technology/Engineering: Served in a variety of senior management and executive positions at Lockheed Martin, a leading aerospace and advanced technology company, which positions required expertise in engineering and technology. Former director of DowDuPont, a global chemical company, and Chair of Sandia National Laboratories, one of three National Nuclear Security Administration research and development laboratories in the United States. Former Chair of the Aerospace Industries Association, Fellow of the Royal Aeronautical Society, and Fellow of the American Institute of Aeronautics and Astronautics.

 

Chevron Corporation – 2022 Proxy Statement

 

10


Table of Contents
 

 

Election of directors  

 

 

LOGO

  

Jon M. Huntsman Jr.

 

Vice Chair Policy, Ford Motor Company

 

Age:  62

Director Since: September 2020

Independent: Yes

 

Chevron Committees:

• Management Compensation

• Public Policy and Sustainability

 

Current Public Company Directorships:

• Ford Motor Company

 

 

Prior Public Company Directorships

(within last five years):

• Caterpillar Inc.

• Hilton Worldwide Holdings Inc.

 

Governor Huntsman is an American businessman, diplomat, politician, and Vice Chair of Policy, at Ford Motor Company since 2021. He served as U.S. Ambassador to Russia from 2017 to 2019 and as Chairman of the Atlantic Council, a nonprofit that promotes leadership and engagement in international affairs, from 2014 until 2017. He has served in the administrations of five Presidents and was a candidate for the Republican nomination for president of the United States in 2011. He was Chairman of the Huntsman Cancer Foundation, a nonprofit organization that financially supports research, education and patient care initiatives at Huntsman Cancer Institute at the University of Utah from 2012 until 2017. Governor Huntsman served as U.S. Ambassador to China from 2009 until 2011 and two consecutive terms as Governor of Utah from 2005 until 2009. Prior to his service as Governor, he served as U.S. Ambassador to Singapore, Deputy U.S. Trade Representative, and Deputy Assistant Secretary of Commerce for Asia.

Skills and qualifications

Business Leadership/Operations: Served eight years as Vice Chairman of Huntsman Corporation and Chairman and CEO of Huntsman Holdings Corporation.

Environmental Affairs: As Governor of Utah, oversaw environmental policy, including signing the Western Climate Initiative, by which Utah joined with other U.S. state governments to pursue targets for reduced greenhouse gas emissions. Significant experience overseeing environmental practices and related matters as Vice Chairman of Huntsman Corporation and Chairman and CEO of Huntsman Holdings Corporation. Sustainability and Innovation Committee member at Ford Motor Company.

Finance: Former executive officer of Huntsman Corporation and Huntsman Holdings Corporation.

Global Business/International Affairs: Member of the Defense Policy Board at the U.S. Department of Defense. Former U.S. Ambassador to Russia. Former Chairman of the Atlantic Council. Former Trustee of the National Committee on US-China Relations and of the Carnegie Endowment for International Peace. Former U.S. Ambassador to China. Former U.S. Ambassador to Singapore, Deputy U.S. Trade Representative, and Deputy Assistant Secretary of Commerce for Asia. Founding director of the Pacific Council on International Policy. Current and former director of companies with international operations.

Government/Regulatory/Public Policy: Member of the Defense Policy Board at the U.S. Department of Defense. Former two-term Governor of Utah. Former Deputy U.S. Trade Representative and Deputy Assistant Secretary of Commerce for Asia. Former Co-Chair of No-Labels, a nonprofit organization that works across political party lines to reduce gridlock and create policy solutions. Advisor to Ford Motor Company’s President and CEO, and Vice Chair on policy choices.

 

Chevron Corporation – 2022 Proxy Statement

 

11


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Election of directors  

 

 

 

LOGO

  

Charles W. Moorman

 

Senior advisor to Amtrak and Retired Chairman and Chief Executive Officer, Norfolk Southern Corporation

 

Age:  70

Director Since: May 2012

Independent: Yes

 

Chevron Committees:

• Board Nominating and Governance

• Management Compensation (Chair)

 

Current Public Company Directorships:

• Oracle Corporation

 

 

 

Prior Public Company Directorships

(within last five years):

• Duke Energy Corporation

 

Other Directorships and Memberships:

• Focused Ultrasound Foundation

• Georgia Tech Foundation Inc.

• National Academy of Engineering

• Nature Conservancy of Virginia

• Smithsonian National Board

 

Mr. Moorman has been senior advisor to Amtrak, a passenger rail provider, since 2018. He previously served as Amtrak’s co–Chief Executive Officer from July 2017 until his retirement in December 2017, and as President and Chief Executive Officer from September 2016 until July 2017. He was Chairman from 2006, and Chief Executive Officer from 2004, of Norfolk Southern Corporation (“Norfolk Southern”), a freight and transportation company, until his retirement in 2015. He served as President of Norfolk Southern from 2004 until 2013. Prior to that, Mr. Moorman was Senior Vice President of Corporate Planning and Services from 2003 until 2004 and Senior Vice President of Corporate Services in 2003. Mr. Moorman joined Norfolk Southern in 1975.

Skills and qualifications

Business Leadership/Operations: Served more than a decade as CEO of Norfolk Southern. Forty-year career with Norfolk Southern included numerous senior management and executive positions, with emphasis on operations. Senior advisor and former CEO of Amtrak.

Environmental Affairs: At Norfolk Southern, gained experience with environmental issues related to transportation of coal, automotive, and industrial products. Former Virginia chapter chair and current Virginia chapter director of The Nature Conservancy, a global conservation organization. Served as a trustee of the Chesapeake Bay Foundation, whose mission is to protect the environmental integrity of the bay.

Finance: Former Chairman and CEO of Fortune 500 company. More than three decades of financial responsibility and experience at Norfolk Southern.

Government/Regulatory/Public Policy: More than four decades of experience in the highly regulated freight and transportation industry.

Leading Business Transformation: As Chairman and CEO of Norfolk Southern, led strategic transformation to adapt to critical developments in intermodal transportation, namely advent of new providers of package delivery services, and shift to East Coast as hub for seaborn deliveries (as result of widening the Panama Canal). As Chief Executive of Amtrak, charged with transforming leadership and service model to support long-term sustainability and success of company.

Science/Technology/Engineering: Forty-year career with Norfolk Southern included numerous senior management and executive positions requiring expertise in engineering and technology. Norfolk Southern builds and maintains track and bridges, operates trains and equipment, and designs and manages complex information technology systems. Member of the National Academy of Engineering.

 

Chevron Corporation – 2022 Proxy Statement

 

12


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Election of directors  

 

 

LOGO

  

Dambisa F. Moyo

 

Co-principal, Versaca Investments

 

Age: 53

Director Since: October 2016

Independent: Yes

 

Chevron Committees:

 

• Audit – audit committee financial expert

 

Current Public Company Directorships:

 

• 3M Company

 

 

Prior Public Company Directorships

(within last five years):

 

• Barclays plc

• Barrick Gold Corporation

• Seagate Technology

 

Other Directorships and Memberships:

 

• Condé Nast

• Department for International Trade

Dr. Moyo has been Co-principal of Versaca Investments, a family office focused on growth investing globally, since she co-founded it in 2021. She is a global economist and commentator analyzing the macroeconomy and international affairs. Since 2008, Dr. Moyo has been engaged in researching, speaking, and writing about international macroeconomics. She was Chief Executive Officer of Mildstorm LLC, a financial and economics firm, from 2015 to 2021. From 2001 to 2008, she worked at Goldman Sachs, a multinational investment bank and financial services company, in various roles, including as an economist. Prior to that she worked at the World Bank, an international financial institution in Washington, D.C., from 1993 until 1995.

Skills and qualifications

Environmental Affairs: As director at Barrick Gold Corporation, served on the committee that considered and provided oversight on environmental matters.

Finance: Ten years of experience at Goldman Sachs and the World Bank. Ph.D. in economics from the University of Oxford and MBA in finance from the American University. Audit Committee member at 3M Company. Former Audit Committee and Risk Committee member at Barrick Gold Corporation.

Global Business/International Affairs: Traveled to more than 80 countries, with a particular focus on the interplay of international business and the global economy, while highlighting key opportunities for investment. Current and former director of companies with international operations.

Government/Regulatory/Public Policy: Ten years of experience in the highly regulated banking and financial services industry. MPA in Public Administration from John F. Kennedy School of Government, Harvard University.

Research/Academia: Author of four New York Times bestsellers. Dr. Moyo’s writing regularly appears in economics and finance-related publications.

 

Chevron Corporation – 2022 Proxy Statement

 

13


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Election of directors  

 

 

 

LOGO

  

Debra Reed-Klages

 

Retired Chairman, Chief Executive Officer and President, Sempra Energy

 

Age: 65

Director Since: December 2018

Independent: Yes

 

Chevron Committees:

 

• Audit (Chair)

 

Current Public Company Directorships:

 

• Caterpillar Inc.

• Lockheed Martin Corporation

 

 

Prior Public Company Directorships

(within last five years):

 

• Halliburton Company

• Oncor Electric Delivery Company LLC

• Sempra Energy

 

Other Directorships and Memberships:

 

• The Trusteeship, International Women’s Forum

• Rady Children’s Hospital and Health Center

• Rady Children’s Hospital – San Diego, CA

• State Farm Mutual Board of Directors

• University of Southern California Viterbi School of Engineering, Board of Councilors

Ms. Reed-Klages served as Chairman from 2012, Chief Executive Officer from 2011, and President from 2017 until her retirement in 2018 from Sempra Energy (“Sempra”), an energy services holding company whose operating units invest in, develop, and operate energy infrastructure and provide electric and gas services to customers in North and South America. Prior to that, she was Executive Vice President of Sempra from 2010 to 2011. From 2006 to 2010, she served as President and Chief Executive Officer of San Diego Gas and Electric and Southern California Gas Co. (“SoCalGas”), Sempra’s regulated California utilities. She joined SoCalGas in 1978 as an energy systems engineer.

Skills and qualifications

Business Leadership/Operations: Served seven years as CEO of Sempra. Over three decades of experience in senior management and executive positions at Sempra, including responsibility for utility and infrastructure operations.

Environmental Affairs: As Chairman and CEO of Sempra, oversaw all aspects of Sempra’s environmental and sustainability policies and strategies, which include initiatives to address challenges like limiting water use, improving the quality and efficiency of operations, infrastructure development and access to energy, human health, and environmental safety.

Finance: Former Chairman and CEO of Fortune 500 company. More than a decade of financial responsibility and experience at Sempra. Former CFO of San Diego Gas & Electric and SoCalGas. Audit Committee member at Lockheed Martin Corporation.

Global Business/International Affairs: Former Chairman and CEO of Fortune 500 company that conducts business in Mexico and South America. Current and former director of companies with international operations.

Government/Regulatory/Public Policy: At Sempra, worked with and adhered to the rules established by the California Public Utilities Commission, the principal regulator of Sempra’s California utilities. Served four years on the National Petroleum Council, a federally chartered advisory committee to the U.S. Secretary of Energy.

Leading Business Transformation: As Chairman and CEO of Sempra, led transformation of San Diego Gas & Electric from all fossil fuel generation to become one of the utilities with the highest percentage of renewables in its portfolio. Also led creation of the second largest energy company in Mexico to facilitate Mexico’s transition to renewable energy, including development of infrastructure in Mexico to support that transition.

Science/Technology/Engineering: B.S. in civil engineering from the University of Southern California. Served in a variety of senior management and executive positions at Sempra, requiring expertise in engineering and technology. Director at Caterpillar, a manufacturer of construction and mining equipment, and Lockheed Martin, a global security and aerospace company.

 

Chevron Corporation – 2022 Proxy Statement

 

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Election of directors  

 

 

LOGO

  

Ronald D. Sugar

 

Retired Chairman and Chief Executive Officer, Northrop Grumman Corporation

 

Lead Director Since: 2015

 

Age: 73

Director Since: April 2005

Independent: Yes

 

Chevron Committees:

 

• Board Nominating and Governance

• Management Compensation

 

Current Public Company Directorships:

 

• Amgen Inc.

• Apple Inc.

• Uber Technologies, Inc.

 

 

 

Prior Public Company Directorships

(within last five years):

 

• Air Lease Corporation

 

Other Directorships and Memberships:

 

• Los Angeles Philharmonic Association

• National Academy of Engineering

• Nexii Building Solutions, Inc. (Privately held)

• UCLA (Business School and Engineering School Boards of Advisors)

• University of Southern California (Trustee)

Dr. Sugar is a senior advisor to various businesses and organizations, including Ares Management LLC, a private investment firm; Bain & Company, a global consulting firm; Temasek Americas Advisory Panel, a private investment company based in Singapore; and the G100 and World 50 peer-to-peer exchanges for current and former senior executives and directors from some of the world’s largest companies. He was previously Northrop Grumman Corporation’s Chairman and Chief Executive Officer, from 2003 until his retirement in 2010, and President and Chief Operating Officer, from 2001 until 2003. He joined Northrop Grumman in 2001, having previously served as President and Chief Operating Officer of Litton Industries, Inc., a developer of military products, and earlier as an executive of TRW Inc., a developer of missile systems and spacecraft.

Skills and qualifications

Business Leadership/Operations: Served seven years as CEO of Northrop Grumman. Held senior management and executive positions, including service as COO, at Northrop Grumman, Litton Industries, Inc., and TRW Inc.

Environmental Affairs: As Chairman, CEO, and President of Northrop Grumman, oversaw environmental assessments and remediations at shipyards and aircraft and electronics factories.

Finance: Former CFO of Fortune 500 company. More than three decades of financial responsibility and experience at Northrop Grumman, Litton Industries, Inc., and TRW Inc. Current Audit Committee Chair at Apple Inc. and former Audit Committee Chair at Chevron.

Global Business/International Affairs: Former CEO of Fortune 500 company with extensive international operations. Current and former director of companies with international operations.

Government/Regulatory/Public Policy: At Northrop Grumman, a key government contractor, oversaw development of weapons and other technologies. Appointed by the President of the United States to the National Security Telecommunications Advisory Committee. Former director of the World Affairs Council of Los Angeles.

Leading Business Transformation: As Chairman, President & CEO of Northrop Grumman, led the business and cultural integration of 27 acquisitions into one Northrop Grumman. Led strategic repositioning of company from a traditional Cold War combat aircraft manufacturer into a diversified defense electronics, information, aeronautics, space and shipbuilding enterprise. Brought in as independent board chairman of Uber to oversee strategic, cultural, and corporate governance transformation in advance of IPO and subsequent large-cap publicly traded company.

Science/Technology/Engineering: B.S., M.S., and Ph.D. in engineering from the University of California at Los Angeles. Served in a variety of senior management and executive positions at Northrop Grumman, Litton Industries, Inc., and TRW Inc., requiring expertise in engineering and technology. Director at Amgen Inc., a biotechnology company; Apple Inc., a designer, manufacturer, and marketer of, among other things, personal computers and mobile communication and media devices; Chairman of the Board at Uber Technologies, Inc. (“Uber”), a technology company; and former director at BeyondTrust, a global cybersecurity company. Member of National Academy of Engineering.

 

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Election of directors  

 

 

 

LOGO

  

D. James Umpleby III

 

Chairman and Chief Executive Officer, Caterpillar Inc.

 

Age: 64

Director Since: March 2018

Independent: Yes

 

Chevron Committees:

 

• Board Nominating and Governance

• Public Policy and Sustainability

 

Current Public Company Directorships:

 

• Caterpillar Inc.

 

 

Prior Public Company Directorships

(within last five years):

 

• None

 

Other Directorships and Memberships:

 

• Business Roundtable

• The Business Council

• National Petroleum Council

• Peterson Institute for International Economics

• Rose-Hulman Institute of Technology

• U.S.-China Business Council

• U.S.-India Strategic Partnership Forum

 

Mr. Umpleby has been Chairman since 2018, and Chief Executive Officer since 2017, of Caterpillar Inc. (“Caterpillar”), a leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. He was Group President of Caterpillar from 2013 until 2016, with responsibility for Caterpillar’s energy and transportation business segment, and Vice President from 2010 to 2013. He joined Solar Turbines Incorporated, now a Caterpillar subsidiary, in 1980 as an associate engineer.

Skills and qualifications

Business Leadership/Operations: Chairman and CEO of Fortune 100 company. More than three decades of experience in senior management and executive positions at Caterpillar, including responsibility for engineering, manufacturing, marketing, sales, and services.

Environmental Affairs: As Chairman and CEO of Caterpillar, oversees all aspects of Caterpillar’s environmental and sustainability policies and strategies, which include initiatives to address challenges like preventing waste, improving the quality and efficiency of operations, developing infrastructure, and ensuring access to energy, human health, and environmental safety. Served as a member of the Latin America Conservation Council, in partnership with The Nature Conservancy, a global conservation organization. Former director of the World Resources Institute, an international research nonprofit organization working to secure a sustainable future.

Finance: Chairman and CEO of Fortune 100 company. More than a decade of financial responsibility and experience at Caterpillar.

Global Business/International Affairs: Chairman and CEO of Fortune 100 company with extensive international operations. Served in assignments at Caterpillar in Singapore and Kuala Lumpur from 1984 to 1990. Director of the Peterson Institute for International Economics, the U.S.-China Business Council, and the U.S.-India Business Strategic Partnership Forum and a former member of the U.S.-India CEO Forum.

Leading Business Transformation: As Chairman and CEO of Caterpillar, led global team to develop new enterprise strategy for long-term profitable growth focused on operational excellence, expanded offerings, sustainability and services, including accelerating expansion of commercial offerings to satisfy customer needs, growing services sales by more than 30% since 2016. In alignment with strategy, drove enterprise-wide improvement of operational performance with deployment of Caterpillar Operating & Execution Model across the company to prioritize resource allocation for future profitable growth. Improvements have resulted in 2021 adjusted profit per share that more than tripled compared to adjusted profit per share in 2016, while sales and revenues for the same period increased approximately 30 percent.

Science/Technology/Engineering: B.S. in Mechanical Engineering from the Rose-Hulman Institute of Technology. Has served in a variety of senior management and executive positions at Caterpillar, requiring expertise in engineering and technology.

 

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Election of directors  

 

 

LOGO

 

Michael K. Wirth

 

Chairman and Chief Executive Officer,

Chevron Corporation

 

Age: 61

Director Since: February 2017

Independent: No

Chevron Committees:

 

•  None

 

Current Public Company Directorships:

 

•  None

 

 

Prior Public Company Directorships

(within last five years):

 

•  None

 

Other Directorships and Memberships:

 

•  American Heart Association CEO Roundtable

•  American Petroleum Institute

•  American Society of Corporate Executives

•  The Business Council

•  Business Roundtable

•  Catalyst

•  International Business Council of the World Economic Forum

•  National Petroleum Council

 

Mr. Wirth has been Chairman and Chief Executive Officer of Chevron since February 2018. He was Vice Chairman in 2017 and Executive Vice President of Midstream & Development from 2016 until 2018, where he was responsible for supply and trading, shipping, pipeline, and power operating units; corporate strategy; business development; and policy, government, and public affairs. He served as Executive Vice President of Downstream & Chemicals from 2006 to 2015. From 2003 until 2006, Mr. Wirth was President of Global Supply & Trading. Mr. Wirth joined Chevron in 1982.

Skills and qualifications

Business Leadership/Operations: Chairman and CEO of Chevron. Twelve years as Executive Vice President of Chevron. More than three decades of experience in senior management and executive positions at Chevron.

Environmental Affairs: As Chairman and CEO of Chevron, oversees all aspects of Chevron’s environmental policies and strategies. Oversaw environmental policies and strategies of Chevron’s Downstream & Chemicals and shipping and pipeline operations.

Finance: CEO of Fortune 100 company. More than a decade of financial responsibility and experience at Chevron.

Global Business/International Affairs: Chairman and CEO of Fortune 100 company with extensive international operations. Served as President of Marketing for Chevron’s Asia/Middle East/Africa marketing business based in Singapore and served as director of Caltex Australia Ltd. and GS Caltex in South Korea.

Government/Regulatory/Public Policy: More than three decades of experience in highly regulated industry. As Chairman and CEO of Chevron, oversees all aspects of Chevron’s government, regulatory, and public policy affairs.

Leading Business Transformation: In 2010-2012 led major turnaround of Chevron’s global Downstream & Chemicals business, including significant portfolio rationalization, new supply chain processes, manufacturing improvements and comprehensive organizational restructuring. Cost savings, margin growth and execution improvement drove significant shift in relative competitive performance on safety, reliability and profitability. In 2019-2020 led transformation of Chevron Corporation, including the largest corporate restructuring in more than two decades. Approach was comprehensive and addressed strategy, portfolio business model, culture and efficiency. Completed a major acquisition at same time.

Science/Technology/Engineering: B.S. in Chemical Engineering from the University of Colorado. More than three decades of experience at Chevron. Joined as a design engineer and advanced through a number of engineering, construction, marketing, and operations roles.

Vote required

Each Director nominee who receives a majority of the votes cast (i.e., the number of shares voted FOR a Director nominee must exceed the number of shares voted AGAINST that Director nominee, excluding abstentions) will be elected a Director in an uncontested election. Any shares not voted (whether by abstention or otherwise) will have no impact on the elections. If you are a street name stockholder and do not vote your shares, your bank, broker, or other holder of record cannot vote your shares at its discretion in these elections.

If the number of Director nominees exceeds the number of Directors to be elected – a circumstance we do not anticipate – the Directors shall be elected by a plurality of the shares present in person or by proxy at the Annual Meeting, or any adjournment or postponement thereof, and entitled to vote on the election of Directors.

Your board’s recommendation

Your Board recommends that you vote for each of the 12 Director nominees named in this Proxy Statement.

 

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Director compensation

 

Objectives

Compensation for our non-employee Directors is designed to be competitive with compensation for directors of other large, global energy companies and other large, capital-intensive, international companies; to link rewards to business results and stockholder returns; and to align stockholder and Director interests through Director ownership of Chevron common stock.

Overview

Under the Chevron Corporation Non-Employee Directors’ Equity Compensation and Deferral Plan, as amended, and Plan Rules, as amended (together, the “NED Plan”), Chevron’s Annual Compensation Cycle for its non-employee Directors is the period commencing on the day of the Annual Meeting at which the non-employee Director is elected through the day immediately preceding the next Annual Meeting.

Our non-employee Director compensation program consists primarily of a cash component and an equity component. Non-employee Directors do not receive fees for attending Board or Board Committee meetings, nor do they receive fees for meeting with stockholders. We do not provide non-equity incentive awards, nor do we provide a retirement plan for non-employee Directors.

Our Chief Executive Officer is not paid additional compensation for service as a Director.

Cash retainer

No changes were made to non-employee Director compensation in 2021. In 2021, each non-employee Director received annual compensation of $375,000, with 40%, or $150,000, paid in cash (or stock options, at the non-employee Director’s election) and 60%, or $225,000, paid in restricted stock units (“RSUs”). In line with historical practice, an additional cash retainer was paid to the independent Lead Director and each Committee Chair.

Each cash retainer is paid in monthly installments beginning with the date the non-employee Director is elected to the Board. Under the NED Plan, non-employee Directors can elect to defer receipt of any portion of their cash compensation. Deferral elections must be made by December 31 in the year preceding the year in which the cash to be deferred is earned. Deferrals are credited, at the non-employee Director’s election, into accounts tracked with reference to the same investment fund options available to participants in the Chevron Deferred Compensation Plan II, including a Chevron Common Stock Fund. None of the earnings under the NED Plan are above market or preferential. Distribution of deferred amounts is in cash except for amounts valued with reference to the Chevron Common Stock Fund, which are distributed in shares of Chevron common stock.

Equity compensation

RSUs are granted on the date of the Annual Meeting at which the non-employee Director is elected. If a non-employee Director is elected to the Board between annual meetings, a prorated grant is made. RSUs are paid out in shares of Chevron common stock unless the non-employee Director has elected to defer the payout until retirement. RSUs are subject to forfeiture (except when the non-employee Director dies, reaches mandatory retirement age of 74, becomes disabled, changes primary occupation, or enters government service) until the earlier of 12 months or the day preceding the first Annual Meeting following the date of the grant, at which time they vest.

Expenses and charitable matching gift program

Non-employee Directors are reimbursed for out-of-pocket expenses incurred in connection with the business and affairs of Chevron. Non-employee Directors are eligible to participate in Chevron Humankind, our charitable matching gift and community involvement program, which is available to any employee, retiree, or Director. For active employees and non-employee Directors, we match contributions to eligible entities and grants for volunteer time, up to a maximum of $10,000 per year.

Governance

The Governance Committee evaluates and recommends to the Board the compensation for non-employee Directors, and the Board approves the compensation. Our executive officers have no role in determining the amount or form of non-employee Director compensation.

Independent compensation consultant

In 2021, the Governance Committee retained the services of an independent compensation consultant, Pearl Meyer & Partners, LLC (“Pearl Meyer”), to assist the Governance Committee with its periodic review of our non-employee Director compensation program relative to Chevron’s 2021 Oil Industry Peer Group and 2021 Non-Oil Industry Peer Group (excluding Marathon Oil for the 2021 Oil Industry Peer Group), as identified in “use of peer groups” in the “Compensation Discussion and Analysis” section of this Proxy Statement.

Pearl Meyer and its lead consultant report directly to the Governance Committee under the terms of its engagement, but they may work cooperatively with management to develop analyses and proposals when requested to do so by the Governance Committee. Pearl Meyer does not provide any services to the Company other than as described herein.

 

 

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Director compensation  

 

 

Looking ahead

Based on Pearl Meyer’s review, as described above, the Governance Committee recommended, and the non-employee Directors of the Board agreed, that effective as of the 2022 Annual Meeting, the cash retainer for the independent Lead Director will be increased by $20,000, to a total of $50,000 annually payable in cash, in recognition of the Lead Director’s increasing duties and time commitment, as discussed in the “Independent Lead Director” section of this Proxy Statement. The non-employee Directors’ annual compensation and the additional annual cash retainer for each Board Committee Chair, in the amounts described below, will remain unchanged.

Prior to December 31, 2021, non-employee Directors could elect to receive nonstatutory/nonqualified stock options in lieu of any portion of their cash compensation. The Governance Committee approved the cessation of the ability for non-employee Directors to elect to receive stock options in lieu of all or any portion of the annual cash retainer, effective December 31, 2021. Any outstanding stock options previously granted remain outstanding under the terms of the original grant until the options are exercised or expire. The

non-employee Directors may continue to elect the deferral of all or a portion of their annual cash retainer.

Also, effective December 31, 2021, the Governance Committee terminated the non-employee Directors’ accidental death and dismemberment insurance, which coverage will not be replaced.

Director stock ownership guidelines

Under the Corporate Governance Guidelines, each non-employee Director is expected, within five years of when the individual first becomes subject to the guidelines, to own shares of Chevron common stock that have a value equal to seven times their annual cash retainer, or 15,000 shares, for serving as a Director. Shares may be owned directly by the individual, owned jointly with, or separately by, the individual’s spouse, or held in trust for the benefit of the individual, the individual’s spouse, or the individual’s children. All non-employee Directors with more than five years of service have met our stock ownership guidelines, and all non-employee Directors with less than five years of service have met or are on target to meet our stock ownership guidelines within the expected time.

 

 

2021 non-employee director compensation

The 2021 amounts for our non-employee Directors’ annual compensation, and the additional annual cash retainer for each Board Committee Chair, are described below.

 

Position

 

 

Cash Retainer

 

 

RSUs

 

   

Non-Employee Director

    $ 150,000   $225,000
   

Independent Lead Director

    $ 30,000  
   

Audit Committee Chair

    $ 30,000  
   

Board Nominating and Governance Committee Chair

    $ 20,000  
   

Management Compensation Committee Chair

    $ 25,000  
   

Public Policy and Sustainability Committee Chair

    $ 20,000  

 

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Director compensation  

 

 

 

Compensation during the fiscal year ended December 31, 2021

The following table sets forth the compensation of our non-employee Directors for the fiscal year ended December 31, 2021.

 

Name

 

 

Fees earned or

paid in cash

($)(1)

 

 

Stock

awards

($)(2)

 

 

Option

awards

($)(3)

 

 

All other

compensation

($)(4)

 

 

Total

($)

 

   

Wanda M. Austin

    $ 85,000 (5)(7)(8)      $ 225,000       —           $     10,492     $     320,492
   

John B. Frank

    $     112,500 (6)(7)      $     225,000     $  37,500     $ 10,492     $ 385,492
   

Alice P. Gast

    $ 150,000 (6)      $ 225,000       —           $ 4,492     $ 379,492
   

Enrique Hernandez, Jr.

    $ 172,500 (5)      $ 225,000       —           $ 10,492     $ 407,992
   

Marillyn A. Hewson

    $ 134,753 (6)(9)      $ 314,629       —           $ 492     $ 449,874
   

Jon M. Huntsman Jr.

    $ 150,000     $ 225,000       —           $ 492     $ 375,492
   

Charles W. Moorman

    $ 132,500 (5)(6)(7)      $ 225,000       —           $ 10,492     $ 367,992
   

Dambisa F. Moyo

    $ 150,000     $ 225,000       —           $ 492     $ 375,492
   

Debra Reed-Klages

    $ 165,000 (5)      $ 225,000       —           $ 492     $ 390,492
   

Ronald D. Sugar

    $ 190,000 (5)(6)(10)      $ 225,000       —           $ 10,492     $ 425,492
   

D. James Umpleby III

    $ 150,000 (6)      $ 225,000       —           $ 10,492     $ 385,492

 

(1)

Form of compensation elected by a non-employee Director, as described above, can result in differences in reportable compensation.

 

(2)

Amounts reflect the aggregate grant date fair value for RSUs granted in 2021 under the NED Plan. We calculate the grant date fair value of these awards in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation–Stock Compensation (“ASC Topic 718”), for financial reporting purposes. The grant date fair value of these RSUs was $103.87 per unit, the closing price of Chevron common stock on May 25, 2021, except for the prorated award for Ms. Hewson. Ms. Hewson received a prorated grant of 1,061 RSUs for the compensation period covering January 1, 2021, the day she joined the Board, through May 25, 2021. For Ms. Hewson, the grant date fair value of these RSUs was $84.45 per unit, the closing price of Chevron common stock on December 31, 2020, the last trading day prior to her Board appointment effective date of January 1, 2021. RSUs accrue dividend equivalents, the value of which is factored into the grant date fair value, and vest on the earlier of 12 months or the day preceding the first Annual Meeting following the date of the grant. For purposes of this table only, estimates of forfeitures related to service-based vesting conditions have been disregarded. RSUs are payable in Chevron common stock.

 

  

At December 31, 2021, the following non-employee Directors had the following number of shares subject to outstanding stock awards or deferrals:

 

Name

 

 

Restricted

stock(a)

 

 

Stock units(a)

 

 

RSUs(a)

 

 

Stock units from

Director’s

deferral of cash

retainer(b)

 

 

Total

 

   

Wanda M. Austin

                  2,221             2,221
   

John B. Frank

                  10,524             10,524
   

Alice P. Gast

                  20,139             20,139
   

Enrique Hernandez, Jr.

                  22,789       1,437       24,226
   

Marillyn A. Hewson

                  3,335       1,180       4,515
   

Jon M. Huntsman Jr.

                  2,221             2,221
   

Charles W. Moorman

                  25,417       12,859       38,276
   

Dambisa F. Moyo

                  2,221             2,221
   

Debra Reed-Klages

                  8,064       1,154       9,218
   

Ronald D. Sugar

      2,952       9,035       43,729       18,598       74,314
   

D. James Umpleby III

                  2,221             2,221

 

  (a)

Represents awards of restricted stock and dividends and stock units and dividend equivalents from 2005 through 2006, and awards of RSUs and dividend equivalents beginning in 2007, rounded to whole units. Awards of restricted stock are fully vested and are settled in shares of Chevron common stock upon retirement. Awards of stock units and deferred RSUs are settled in shares of Chevron common stock in either one or 10 annual installments following the Director’s retirement, resignation, or death. RSUs not deferred are settled in shares upon vesting on the earlier of 12 months or the day preceding the first Annual Meeting following the date of the grant. The terms of awards of RSUs are described above.

 

  (b)

Represents deferred compensation and dividend equivalents, rounded to whole units. Distribution will be made in either one or 10 annual installments. Any deferred amounts unpaid at the time of a Director’s death are distributed to the Director’s beneficiary.

 

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(3)

The stock options are exercisable for that number of shares of Chevron common stock determined by dividing the amount of the cash retainer subject to the election by the Black-Scholes value of a stock option on the date of grant. Elections to receive stock options in lieu of any portion of cash compensation were made by December 31 in the year preceding the year in which the stock options were granted. The stock options have an exercise price based on the closing price of Chevron common stock on the date of grant. Under the NED Plan, non-employee Directors who retire in accordance with Chevron’s Director Retirement Policy have until 10 years from the date of grant to exercise any outstanding options. As noted above, effective December 31, 2021, Directors are no longer able to elect options in lieu of their cash compensation.

 

  

Amounts reported here reflect the aggregate grant date fair value for stock options granted on May 26, 2021. The grant date fair value was determined in accordance with ASC Topic 718 for financial reporting purposes. The grant date fair value of each option is calculated using the Black-Scholes model. Stock options granted on May 26, 2021, have an exercise price of $104.12 and a grant date fair value of $15.56. The assumptions used in the Black-Scholes model to calculate this grant date fair value were: an expected life of 6.8 years, a volatility rate of 31.5%, a risk-free interest rate of 1.24%, and a dividend yield of 5.91%. For purposes of this table only, estimates of forfeitures related to service-based vesting conditions have been disregarded. The aggregate grant date fair value is being reported as compensation in 2021, the year of grant, notwithstanding the Annual Compensation Cycle covering the period from May 26, 2021 through May 24, 2022.

 

  

Mr. Frank elected to receive a portion of his 2021 annual cash compensation in the form of stock options. The number of stock options granted at the 2021 Annual Meeting was 2,410. One-half of the stock options vested on November 26, 2021, and the remaining half vests on May 24, 2022. Stock options expire after 10 years. At December 31, 2021, Mr. Frank had 14,413 vested and unvested stock options.

 

(4)

All Other Compensation for 2021 includes the following items:

 

 

Name

 

 

 

Insurance(a)

 

 

 

Perquisites(b)

 

 

 

Charitable(c)

 

Wanda M. Austin

 

$    492

 

 

$    10,000

John B. Frank

 

$    492

 

 

$    10,000

Alice P. Gast

 

$    492

 

 

$       4,000

   

Enrique Hernandez, Jr.

  $    492     $    10,000
   

Marillyn A. Hewson

  $    492             –
   

Jon M. Huntsman Jr.

  $    492             –
   

Charles W. Moorman

  $    492     $    10,000
   

Dambisa F. Moyo

  $    492             –
   

Debra Reed-Klages

  $    492             –
   

Ronald D. Sugar

  $    492     $    10,000
   

D. James Umpleby III

  $    492     $    10,000

 

  (a)

Amounts reflect the annualized premium for accidental death and dismemberment insurance coverage paid by Chevron. Effective December 31, 2021, the accidental death and dismemberment insurance coverage for the non-employee Directors terminated. Coverage wil not be replaced.

 

  (b)

Perquisites and personal benefits did not equal or exceed $10,000 for any non-employee Director in 2021.

 

  (c)

Amounts reflect payments made to charitable organizations under Chevron Humankind, our charitable matching gift and community involvement program, to match donations made by the non-employee Directors in 2021.

 

(5)

Amount includes the additional retainer paid for serving as a Board Committee Chair during 2021.

 

(6)

Director has elected to defer all or a portion of the cash retainer under the NED Plan in 2021.

 

(7)

Dr. Austin and Messrs. Frank and Moorman each elected to receive a portion of their 2021 cash retainer, covering the period from January 1, 2021 through May 25, 2021, for the 2020 Annual Compensation Cycle in stock options in lieu of cash. Accordingly, all or a portion of the cash retainer was reported as compensation in 2020.

 

(8)

Reflects Dr. Austin’s cash retainer covering the period from May 26, 2021 through December 31, 2021.

 

(9)

Includes Ms. Hewson’s prorated cash retainer of $59,753 when she joined the Board during the 2020 Annual Compensation Cycle.

 

(10)

Amount includes the additional cash retainer paid for serving as Lead Director during 2021.

 

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Corporate governance

Overview

 

Chevron is governed by a Board of Directors and Board Committees that meet throughout the year. Directors discharge their responsibilities at Board and Committee meetings and through other communications with

management. Your Board is committed to strong corporate governance structures and practices that help Chevron compete more effectively, sustain its success, and build long-term stockholder value.

 

 

Role of the board of directors

 

The Board oversees and provides guidance for Chevron’s business and affairs. The Board oversees management’s development and implementation of Chevron’s strategy and business planning process. The Board monitors corporate performance, the integrity of Chevron’s financial controls, and the effectiveness of its legal compliance and enterprise risk

management programs. This is generally a year-round process, culminating in Board reviews of Chevron’s strategic plan, its business plan, the next year’s capital expenditures budget, and key financial and operational indicators. The Board also oversees management and the succession of key executives.

 

 

Corporate governance guidelines

Your Board has adopted Corporate Governance Guidelines to provide a transparent framework for the effective governance of Chevron. The Corporate Governance Guidelines are reviewed regularly and updated as appropriate. The full text of the Corporate Governance Guidelines can be found on our website at www.chevron.com/investors/corporate-governance. The guidelines address, among other topics:

 

  The role of the Board

 

  Board succession planning and membership criteria

 

  Director independence

 

  Board size

 

  Director terms of office

 

  The election of Directors

 

  Other Board memberships

 

  Director retirement policy

 

  Number and composition of Board Committees

 

  Board leadership and Lead Director

 

  Executive sessions
  Business Conduct and Ethics Code

 

  Confidentiality

 

  Succession planning

 

  Board compensation

 

  Board access to management and other employees

 

  Director orientation and education

 

  Evaluation of Board performance

 

  Chief Executive Officer performance review

 

  Director and officer stock ownership guidelines

 

  Access to outside advisors

 

  Board agenda and meetings
 

 

Business conduct and ethics code

 

We have adopted a code of business conduct and ethics for Directors, officers (including the Company’s Chief Executive Officer, Chief Financial Officer, and Controller), and employees, known as the Business Conduct and Ethics Code,

which is available on our website at www.chevron.com and is available in print upon request. We will post any amendments to the code on our website. Directors, officers, and employees certify biennially that they will comply with the code.

 

 

Board leadership structure

 

Under Chevron’s By-Laws, the positions of Chairman of the Board and Chief Executive Officer are separate positions that may be occupied by the same person at the discretion of the Board. Chevron’s independent Directors select the Chairman of the Board annually. Thus, the Board has great flexibility to choose its optimal leadership structure depending upon Chevron’s particular needs and circumstances and to organize its functions and conduct its business in the most effective manner.

Annually, the Governance Committee conducts an assessment of Chevron’s corporate governance structures and processes, which includes a review of Chevron’s Board

leadership structure and whether combining or separating the roles of Chairman and CEO is in the best interests of Chevron’s stockholders. At present, Chevron’s Board believes that it is in the stockholders’ best interests for the CEO, Michael K. Wirth, to also serve as Chairman of the Board. The Board believes that having Mr. Wirth serve as Chairman fosters an important unity of leadership between the Board and management that is subject to effective oversight by the independent Lead Director and the other independent Directors. The Board believes that it benefits from the significant knowledge, insight, and perspective of Chevron and the energy industry that Mr. Wirth has gained throughout

 

 

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Corporate governance  

 

 

his 39 years with Chevron. Our business is highly complex, and our projects often have long lead times, with many of our major capital projects taking more than 10 years from the exploration phase to first production. The Board believes that

Mr. Wirth’s in-depth knowledge of the Company, coupled with his extensive industry expertise, makes him particularly qualified to lead discussions of the Board. Having Mr. Wirth serve as Chairman also promotes better alignment of Chevron’s long-term strategic development with its operational execution. Also, as a global energy company that negotiates concessions and leases with host-country governments around the world, it is advantageous to the Company for the CEO to represent the Chevron Board in such dialogues as its Chairman.

Significantly, the Board does not believe that combining the roles creates ambiguity about reporting relationships. Given the role of the independent Lead Director discussed below

and the fact that the independent Directors, pursuant to their powers under the By-Laws, have affirmatively selected Mr. Wirth for the positions of Chairman and CEO, annually set his compensation, and regularly evaluate his performance, the Board believes it is clear that Mr. Wirth reports and is accountable to the independent Directors. Moreover, the Board does not believe that having the CEO also serve as Chairman inhibits the flow of information and interactions between the Board, management, and other Company personnel. To the contrary, the Board has unfettered access to management and other Company employees, and the Board believes that having Mr. Wirth in the roles of both Chairman and CEO facilitates the flow of information and communications between the Board and management, which enhances the Board’s ability to obtain information and to monitor management.

 

 

Independent lead director

 

Your Board recognizes the importance of independent Board oversight of the CEO and management and has developed policies and procedures designed to ensure independent oversight. In addition to conducting an annual review of the CEO’s performance, the independent Directors meet in executive session at each regular Board meeting and discuss management’s performance and routinely formulate guidance and feedback, which the independent Lead Director provides to the CEO and other members of management.

Further, when the Board selects the CEO to also serve as Chairman, the independent Directors annually select an independent Lead Director, currently Dr. Sugar. The Board routinely reviews the Lead Director’s responsibilities to ensure that these responsibilities enhance its independent oversight of the CEO and management and the flow of information and interactions between the Board, management, and other Company personnel. Annually the Lead Director leads the independent Directors’ review of candidates for all senior management positions. This succession planning process includes consideration of both ordinary course succession, in the event of planned promotions and retirements, and planning for situations where the CEO or another member of senior management unexpectedly becomes unable to perform the duties of their positions.

The Lead Director and Chairman collaborate closely on Board meeting schedules and agendas and information provided to the Board. These consultations and agendas and the information provided to the Board frequently reflect input and suggestions from other members of the Board and management. You can read more about these particular processes in the “Board Agenda and Meetings” section of Chevron’s Corporate Governance Guidelines.

Any stockholder can communicate with the Lead Director or any of the other Directors in the manner described in the “Communicating with the Board” section of this Proxy Statement.

Also, as discussed in more detail in the “Year-Round Environmental, Social, and Governance Engagement” section of this Proxy Statement, the Board encourages a robust investor engagement program. During these engagements, Board leadership is a frequent topic of

discussion. In general, investors, including those who are philosophically opposed to combining the positions of Chairman and CEO, have overwhelmingly communicated to Chevron that they have minimal, if any, concerns about your Board or individual Directors or about Chevron’s policies and leadership structure. More specifically, these investors have voiced confidence in the strong counterbalancing structure of the robust independent Lead Director role.

 

 

 

As described in the “Board Leadership and Lead Director” section of Chevron’s Corporate Governance Guidelines, the Lead Director’s responsibilities are to:

 

•  Chair all meetings of the Board in the Chairman’s absence;

 

•  Chair the executive sessions;

 

•  Lead non-employee Directors in an annual discussion of the performance evaluation of the CEO as well as communicate that evaluation to the CEO;

 

•  Oversee the process for CEO succession planning;

 

•  Lead the Board’s review of the Governance Committee’s assessment and recommendations from the Board self-evaluation process;

 

•  Lead the individual Director evaluation process;

 

•  Serve as liaison between the Chairman and the independent Directors;

 

•  Consult with the Chairman on and approve agendas and schedules for Board meetings and other matters pertinent to the Corporation and the Board;

 

•  Be available to advise the Committee Chairs of the Board in fulfilling their designated roles and responsibilities;

 

•  Participate in the interview process for prospective directors with the Governance Committee;

 

•  Call meetings of the independent Directors and special meetings of the Board; and

 

•  Be available as appropriate for consultation and direct communication with major stockholders.

 

 
 

 

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Board oversight of risk

The Board of Directors and the Board Committees oversee Chevron’s risk management policies, processes, and practices for the risk management systems throughout the Company. Chevron faces a broad array of risks, including without limitation market, operational, strategic, legal, regulatory, political, financial, cybersecurity, sustainability, and climate change risks. The Board exercises its role of risk oversight in a variety of ways, including the following:

 

 

Board of directors

     

 

•   Monitors overall corporate performance, the integrity of financial and other controls, and the effectiveness of Chevron’s legal compliance and enterprise risk management programs, risk governance practices, and risk mitigation efforts, particularly with regard to those risks specified by Chevron as “Risk Factors” in its Annual Report on Form 10-K

 

•   Oversees management’s implementation and utilization of appropriate risk management systems at all levels of Chevron, including operating companies, business units, corporate departments, and service companies

 

•   Reviews specific facilities and operational risks as part of visits to Chevron operations

 

•   Reviews portfolio, capital allocation, and geopolitical risks in the context of the Board’s annual strategy session and the annual business plan and capital budget review and approval process

 

•   Receives reports from management on and considers risk matters in the context of Chevron’s strategic, business, and operational planning and decision making

 

•   Receives reports from management on, and routinely considers, critical risk topics such as operational, financial, geopolitical/legislative, strategic, geological, security, commodity trading, skilled personnel/human capital, capital project execution, civil unrest, legal, technology/cybersecurity risk, and climate change risks

 

 

   

 

Audit committee

   

 

•   Assists the Board in fulfilling its oversight of accounting and financial reporting processes, including the audits and integrity of Chevron’s financial statements, financial risk exposures as part of Chevron’s broad enterprise management program, Chevron’s Operational Excellence audit and assurance process, the qualifications, performance and independence of the independent auditor, the effectiveness of internal controls over financial reporting, and the implementation and effectiveness of Chevron’s compliance programs and Internal Audit function

 

•   Meets with and reviews reports from Chevron’s independent registered public accounting firm and internal auditors

 

•   Discusses Chevron’s policies with respect to financial risk assessment and financial risk management including, but not limited to, cybersecurity and sustainability and climate change risks

 

•   Meets with Chevron’s Chief Compliance Officer and certain members of Chevron’s Compliance Policy Committee to receive information regarding compliance policies and procedures and internal controls

 

•   Meets with Chevron’s Chief Information Officer at least twice a year to review cybersecurity implications and risk management on financial exposures

 

•   Meets with Chevron’s General Manager, Operational Excellence (“OE”) Audit and Assurance, at least once a year to review findings of OE audits and corrective actions being taken to address priority findings

 

•   Reports its discussions to the full Board for consideration and action when appropriate

 

 

   

 

Board nominating

and

governance committee

   

 

•   Assists the Board in fulfilling its oversight of risks that may arise in connection with Chevron’s governance practices and processes

 

•   Conducts an annual evaluation of Chevron’s governance practices with the help of the Corporate Governance Department

 

•   Discusses risk management in the context of general governance matters, including topics such as Board succession planning to ensure desired skills and attributes are represented, including but not limited to diversity, business leadership, finance, policy, and environmental and climate change experience; Board and individual Director assessment; delegations of authority and internal approval processes; stockholder proposals and activism; and Director and officer liability insurance

 

•   In conjunction with the Public Policy and Sustainability Committee, oversees Chevron’s stockholder engagement program and makes recommendations regarding stockholder engagement

 

•   Reports its discussions to the full Board for consideration and action when appropriate

 

 

   

 

Management compensation committee

     

 

•   Assists the Board in fulfilling its oversight of risks that may arise in connection with Chevron’s compensation programs and practices

 

•   Reviews the design and goals of Chevron’s compensation programs and practices in the context of possible risks to Chevron’s financial and reputational well-being, and alignment with stockholders’ interests, including those related to sustainability and climate change risks and opportunities

 

•   Reviews Chevron’s strategies and supporting processes for executive retention and diversity

 

•   Reports its discussions to the full Board for consideration and action when appropriate

 

 

   

 

Public policy and sustainability committee

     

 

•   Assists the Board in fulfilling its oversight of risks that may arise in connection with the social, political, environmental, human rights, and public policy aspects of Chevron’s business and the communities in which it operates

 

•   Provides oversight and guidance on and receives reports regarding environmental matters, including those related to sustainability and climate change, in connection with Chevron’s projects and operations

 

•   Discusses risk management in the context of, among other things, legislative and regulatory initiatives (including political activities such as political contributions and lobbying), safety and environmental stewardship, community relations, government and nongovernmental organization relations, and Chevron’s global reputation

 

•   In conjunction with the Governance Committee, oversees Chevron’s stockholder engagement program and makes recommendations regarding stockholder engagement

 

•   Reports its discussions to the full Board for consideration and action when appropriate

 

 

   

 

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Board oversight of strategy

 

The Board of Directors and the Board Committees provide guidance to and oversight of management with respect to Chevron’s business strategy throughout the year. The Board dedicates at least one meeting each year to focus on Chevron’s strategic planning. In three of the past four years, the Board participated in expanded offsite strategy sessions that included presentations by a third-party expert to discuss energy transition issues. In addition, various elements of strategy are discussed at every Board meeting, as well as at many meetings of the Board’s Committees. The Board also dedicates one meeting each year to review Chevron’s five-year business plan and to endorse the business plan, performance objectives, and capital and exploratory budget for the coming year. Our strategic plan sets direction, aligns our organization, and differentiates us from the competition. It guides our actions to successfully manage risk and deliver

stockholder value. The Board of Directors and the Board Committees oversee fundamental components of our strategic plan, and management is charged with executing the business strategy. In order to assess performance against our strategic plans, the Board receives regular updates on progress and execution and provides guidance and direction throughout the year. In addition, the vice president of Chevron Strategy & Sustainability chairs the Global Issues Committee, an executive-level committee that oversees the development of Chevron’s policies and positions related to global issues that may have significant impact on Chevron’s business interests and reputation. The vice president of Chevron Strategy & Sustainability also serves as secretary to the Public Policy and Sustainability Committee, helping to connect the Global Issue Committee’s work to the Public Policy and Sustainability Committee.

 

 

Human capital management

 

We invest in our people and culture, with the objective of developing the full potential of our workforce to deliver energy solutions and drive human progress. The Chevron Way explains our beliefs, vision, purpose and values. It guides how our employees work and establishes a common understanding of culture and aspirations. We hire, develop, and strive to retain a diverse workforce of high-performing talent, and foster a culture that values diversity, inclusion, and employee engagement. Our leadership is accountable for our investment in people and culture. This includes reviews of measures addressing critical function hiring, leadership development, retention, diversity and inclusion, and employee engagement.

As we strive to empower our team, we are proud of the external recognition we have received, including, among other accolades, an EDGE certification for being among the top certified companies for gender equality and a rating of 100% on the Human Rights Campaign Equality Index. Additional information about our efforts to put our people at the center of everything we do can be found on the “Social” and “Diversity and Inclusion” pages on our website.

Hiring, development, and retention

Our approach to attracting, developing and retaining a diverse workforce of high-performing talent is anchored in a long-term employment model that fosters an environment of personal growth and engagement. Our philosophy is to offer compelling career opportunities and a competitive total compensation and benefits package linked to individual and enterprise performance. We recruit new employees in part through partnerships with universities and diversity associations. In addition, we recruit experienced hires to provide specialized skills.

Our learning and development programs are designed to help employees achieve their full potential by building technical, operating, and leadership capabilities at all levels to

produce energy safely, reliably, and efficiently. Our management regularly reviews measures on employee training and development programs, which are continually changing to meet the needs of our evolving business. For example, we deliver learning experiences digitally to empower our employees, in any location, to develop, maintain and enhance critical skills. In addition, to ensure business continuity, management regularly reviews the talent pipeline, identifies and develops succession candidates, and builds succession plans for key positions.

The Board is actively involved in reviewing and approving executive compensation, personnel selections, and succession plans to ensure we have leadership in place with the requisite skills and experience. In addition to the annual review of the CEO led by the Lead Director, the CEO periodically provides the Board with an assessment of senior executives and their potential as successors for the CEO position, as well as perspectives on potential candidates for other senior management positions. Members of the Board also meet directly with potential candidates for senior management positions. Our development programs and succession planning practices prepare us to continue providing the energy that enables human progress around the world.

Management routinely reviews the retention of its professional population, which includes executives, all levels of management, and the majority of its regular employee population; the annual voluntary attrition for this population was 4.5% in 2021, which is in line with rates over a five-year comparison period. The voluntary attrition rate generally excludes employee departures under enterprise-wide restructuring programs. We believe our low voluntary attrition rate is in part a result of the Company’s commitment to employee development, its long-term employment model, and competitive pay and benefits, and our culture.

 

 

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Diversity and inclusion

 

We believe innovative solutions to the most complex challenges emerge when diverse people, ideas, and experiences come together in an inclusive environment. We reinforce the values of diversity and inclusion through recruitment and talent development, equitable selection processes, community partnerships and supplier diversity. Examples of initiatives to further advance diversity and inclusion include our MARC (Men Advocating Real Change) program launched in 2017 in partnership with the non-profit organization Catalyst to facilitate discussions on gender equity in the workplace, and selection processes that

reinforce the importance of diverse selection teams and candidate slates. In addition, we have 12 employee networks (voluntary groups of employees that come together based on shared identity or interests) and a Chairman’s Inclusion Council, which provides the employee network presidents with a direct line of communication to the Chairman and Chief Executive Officer, the Chief Human Resources Officer, the Chief Diversity and Inclusion Officer, and the enterprise leadership team to collaborate and discuss how employee networks can reinforce our values of diversity and inclusion.

 

 

LOGO

Employee engagement

 

Employee engagement is an indicator of employee well-being and commitment to the Company’s values, purpose and strategies. We regularly conduct employee surveys to assess the health of the Company’s culture, and recent surveys indicate high employee engagement. In 2021, we increased survey frequency to better understand employee sentiment throughout the year, including focused efforts to gain insights into employee well-being. Our most recent employee survey found a total engagement score of 90% – among the best in the oil and gas industry. We are proud that 94% of employees surveyed reported that they “believe strongly in the goals and objectives of Chevron” and 93% reported being “proud to be a part of Chevron.” Chevron prioritizes the health, safety and well-being of our employees. Our safety culture empowers every member of its workforce to exercise stop-work authority without repercussion to address any potentially unsafe work conditions. We

developed new safeguards and operating standards and updated existing protocols to adjust for the ever-changing conditions of the pandemic, including a return to the workplace strategy that incorporated paced, condition-based stages. We announced a hybrid work model based on employee feedback and learnings from the pandemic, which will allow certain employees the flexibility to combine in-office and remote work. Additionally, we offer long-standing employee support programs such as Ombuds, an independent resource designed to equip employees with options to address and resolve workplace issues; a company hotline, where employees can report concerns to the Corporate Compliance department; and an Employee Assistance Program, a confidential consulting service that can help employees resolve a broad range of personal, family and work-related concerns.

 

 

Board oversight of environmental, social, and governance matters

 

Chevron’s sustainability efforts and environmental, social, and governance (“ESG”) priorities are focused on protecting the environment, empowering people, and getting results the right way. The Board oversees Chevron’s performance and management of various ESG issues, including climate change, ESG reporting, lobbying practices, human capital management, cybersecurity, and human rights. The Board

also offers guidance on Chevron’s Corporate Sustainability Report and on climate change reports aligned with the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (“TCFD”). The Board’s four standing Committees provide oversight and guidance over different aspects of ESG issues. For example, the Public Policy and Sustainability Committee assesses and advises on risks that

 

 

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may arise in connection with social, political, environmental, and public policy aspects of Chevron’s business and helps management evaluate trends and potential implications. The Public Policy and Sustainability Committee is briefed on the work of the Chevron Global Issues Committee, an executive-level committee that is regularly updated on various sustainability issues as well as ESG engagements with stockholders and other stakeholders. The Audit Committee discusses potential financial risk exposures related to sustainability. The Governance Committee discusses

maintaining appropriate Board composition to oversee various sustainability and ESG issues and reviews stockholder proposals, many of which are ESG focused. The Management Compensation Committee (“MCC”) discusses how to align incentive program design with Chevron’s sustainability strategy. In addition to providing oversight, the Board is committed to fostering long-term and institution-wide relationships with stockholders and listening to their input on sustainability and ESG issues.

 

 

Board oversight of environmental issues

 

In 2004, we launched our Operational Excellence Management System (“OEMS”), a comprehensive system that helped build our Operational Excellence (“OE”) culture and improve our health, environment and safety performance. OEMS is a risk-based and systematic approach to identify, assess, prioritize and manage OE risks. Environment is one of the six critical OE focus areas. The OEMS Environmental Focus Area is the framework we use to manage significant environmental risks. Under the OEMS Focus Area of Environment, Chevron operates using four environmental principles that define how we develop energy in an environmentally responsible manner. These are: include environmental impact in decision making, reduce our environmental footprint, operate responsibly, and steward our sites. A description of these principles can be found on Chevron’s website. Under OEMS, we also have an environmental risk management strategy aimed at driving improvements in environmental performance across the enterprise and an environmental risk management process to identify and manage potential environmental risks across the asset life cycle.

The Board of Directors, the Audit Committee, and the Public Policy and Sustainability Committee provide oversight and

guidance on environmental matters in connection with Chevron’s projects and operations and are regularly briefed by professionals whose focus is on environmental protection and stewardship. Members of the Board visit Chevron operations across the globe and discuss environmental matters specific and relevant to these locations. Significant environmental and process safety issues are reviewed by the Board to ensure compliance with the Company’s rigorous processes. The Audit Committee meets with Chevron’s General Manager, Operational Excellence Audit and Assurance, at least once a year to review findings of OE audits and corrective Actions being taken to address priority findings. The Public Policy and Sustainability Committee assists the Board in identifying, evaluating, and monitoring public policy trends and environmental issues that could impact the Company’s business activities and performance. It also reviews and makes recommendations for Chevron’s strategies related to corporate responsibility and reputation management. The Board of Directors and the Public Policy and Sustainability Committee regularly receive reports of stockholder engagements related to environmental issues and incorporate these into the direction they provide to management.

 

Chevron’s approach to the energy transition

At Chevron, we believe the future of energy is lower carbon, and we support the global net zero ambitions of the Paris Agreement. Affordable, reliable, ever-cleaner energy is essential to achieving a more prosperous world. Our Board has been heavily engaged in support of our energy transition strategy on our stockholders’ behalf. Our strategy is clear: Leverage our strengths to deliver lower carbon energy to a growing world. Our assets, capabilities and customers are distinct advantages. We’re building on these strengths as we aim to lead in lower carbon intensity oil, products and natural gas and to advance new products and solutions that reduce the carbon emissions of major industries – driving energy progress essential to a dynamic world.

 

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To deliver on our strategy, our primary objective is to deliver higher returns, lower carbon by lowering the carbon intensity of our assets cost efficiently and growing lower carbon businesses. In total, Chevron is planning $10 billion in lower carbon capital investments between 2021 and 2028 to reduce the carbon intensity of our oil, products and gas business and to build new lower carbon energy businesses.

 

LOGO

Lower carbon intensity of our operations: In 2021, we built upon our previously disclosed metrics and targets and updated GHG emissions intensity targets through 2028, introduced a net zero aspiration by 2050 for Upstream Scope 1 and 2 emissions, introduced the Portfolio Carbon Intensity (“PCI”) methodology to facilitate carbon-intensity accounting, and established a PCI target covering Scope 1, Scope 2, and certain Scope 3 emissions from use of products. The PCI metric encompasses the company’s Upstream and Downstream business and includes Scope 1 (direct emissions), Scope 2 (indirect emissions from imported electricity and steam), and certain Scope 3 (primarily emissions from use of sold products) emissions. Our additional GHG emissions intensity metrics are equity- and commodity- based, which means that they represent Chevron’s ownership interest in our operated and non-operated assets and consider the different uses of oil and gas (i.e., transportation and power).

In our most recent Task Force for Climate Change-related Financial Disclosure (TCFD)-aligned report issued in October 2021, we described our GHG intensity targets for oil, gas, flaring, and methane for 2028. In alignment with the Paris Agreement requirement that governments report their performance in five-year stocktakes, we have set metrics for 2023 (which were achieved in 2020) and 2028 and intend to set targets every five years thereafter. We have set 2016 as our baseline to align with the year the Paris Agreement came into force. The table below summarizes Chevron’s principal GHG emissions intensity reduction targets:

 

    

 

Chevron’s Portfolio Carbon Intensity (Scope 1,2, and 3) reduction target for 2028

    

PCI

 

71

 

g CO2e/MJ

 

> 5% reduction from 2016

    

 

Aspiration: Net-Zero Upstream business by 2050 (Scope 1 and 2)

     Chevron’s Upstream Carbon Intensity (scope 1 and 2) reduction targets for 2028     
 

 

 

Upstream Carbon Intensity Targets

   

 

Oil

 

24

 

kg CO2e/boe for oil (global industry averages 46)

 

40% reduction from 2016

Gas

 

24

 

kg CO2e/boe for gas (global industry averages 71)

 

26% reduction from 2016

Methane

 

2

 

kg CO2e/boe for methane and a global methane detection campaign

 

53% reduction from 2016

   

Flaring

  3

0

 

kg CO2e/boe for overall flaring

routine flaring by 2030

  66% reduction from 2016
*

CO2e = carbon dioxide equivalents    MJ = megajoules    boe = barrels of oil-equivalent    kg = kilogram    g = gram

Grow lower carbon businesses: Our lower carbon strategy is focused on growing new businesses targeting harder-to-abate sectors, such as manufacturing, aviation, and heavy-duty transportation. To accelerate progress, we formed Chevron New Energies (“CNE”), an organization focused on areas where we believe we can build competitive advantages and that target these hard-to-abate sectors. Carbon Capture, Utilization, and Storage (“CCUS”), offsets, and hydrogen are at the core of this strategy, and we believe they are an important part of addressing climate change.

We see CCUS opportunities in two areas: reducing the carbon intensity of our existing assets and growing our carbon capture business, primarily through hubs with third-party emitters as partners and customers. In addition, Chevron’s experience in developing and using offsets dates back nearly two decades and is an important part of our operations in areas like Australia,

 

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Canada, Colombia, and California. We have a global carbon trading organization and actively participate in multiple registries and exchanges. We expect to be a portfolio supplier of offsets by providing more customers with offset-paired products. Chevron’s approach to hydrogen envisions the use of green, blue, and gray hydrogen. We believe the use of blue and green hydrogen as a fuel source can help reduce the amount of GHG emissions entering the atmosphere. While gray hydrogen is viewed as not directly supporting decarbonization of the energy sector, we believe that early-use cases of gray hydrogen can provide key opportunities to de-risk technology, enable development of supporting infrastructure, including fueling stations, and contribute to learnings. Renewable fuels also play a critical role in growing our lower carbon businesses and are linked to existing assets, infrastructure, and markets. CNE will support our Downstream business unit as it seeks to leverage our refining systems and customer relationships to profitably grow our renewable fuels businesses.

For 2020, the MCC added “GHG management” to the “Health, environmental, and safety” performance category for the 2020 CIP scorecard. For the 2021 CIP scorecard, the MCC replaced “GHG management” with a new performance category: “Energy Transition” (see page 51 for the 2021 CIP scorecard). This important addition responds to stockholder input and reinforces Chevron’s focus on advancing a lower carbon future. This new category has a 10% weighting and measures Chevron’s progress in the area of GHG management, renewable energy and carbon offsets, and low carbon technologies. The scorecard performance outcomes impact CIP payout for all eligible employees.

Reaching the ambitions of the Paris Agreement will require breakthroughs in technology and innovation, more ambitious government policy, and the ability to attract and forge new partnerships. No one country, no one industry, no one company acting alone can meet the world’s energy and climate goals. That’s why we intend to be the partner of choice for those with complementary strengths and shared aspirations.

Director independence

 

 

Your Board has determined that each non-employee Director who served in 2021 and non-employee Director nominee is independent in accordance with the NYSE Corporate Governance Standards and that no material relationship exists with Chevron other than as a Director.

 

For a Director to be considered independent, the Board must determine that the Director does not have any material relationship with Chevron, other than as a Director. In making its determinations, the Board adheres to the specific tests for independence included in the NYSE Corporate Governance Standards. In addition, the Board has determined that the following relationships of Chevron Directors occurring within the last fiscal year are categorically immaterial to a determination of independence if the relevant transaction was conducted in the ordinary course of business:

 

  A director of another entity if business transactions between Chevron and that entity do not exceed $5 million or 5% of the receiving entity’s consolidated gross revenues, whichever is greater;

 

  An employee of another entity if business transactions in the most recent fiscal year between Chevron and that entity do not exceed $250,000 or 0.5% of the receiving entity’s consolidated gross revenues for that year, whichever is greater;

 

  A director of another entity if Chevron’s discretionary charitable contributions to that entity do not exceed $1 million or 2% of that entity’s gross revenues, whichever is greater, and if the charitable contributions are consistent with Chevron’s philanthropic practices; and

 

  A relationship arising solely from a Director’s ownership of an equity or limited partnership interest in a party that
   

engages in a transaction with Chevron as long as the Director’s ownership interest does not exceed 2% of the total equity or partnership interest in that other party.

These categorical standards are contained in our Corporate Governance Guidelines, which are available on our website at www.chevron.com/investors/corporate-governance and are available in print upon request.

Drs. Moyo and Sugar, Mses. Hewson and Reed-Klages, and Messrs. Hernandez, Huntsman, Moorman, and Umpleby served as directors of for-profit entities with which Chevron conducts business in the ordinary course. Other than Dr. Moyo, they and Drs. Austin and Gast, and Mr. Frank served as directors or trustees of, or similar advisors to, not-for-profit entities to which Chevron makes contributions. The Board has determined that all of these transactions and contributions were below the thresholds set forth in the first and second categorical standards described above (except as noted below) and are, therefore, categorically immaterial to the particular Director’s independence.

The Board reviewed the following relationships and transactions that existed or occurred in 2021 that are not covered by the categorical standards described above:

 

  For Mr. Hernandez, the Board considered that, in 2021, Chevron purchased services from two subsidiaries of Inter-Con Security Systems, Inc., in the ordinary course of business, amounting to less than 1% of Inter-Con’s most recent annual consolidated gross revenues. Mr. Hernandez is Chairman and a significant stockholder of Inter-Con, a privately held business. Three of Mr. Hernandez’s adult sons are executives of Inter-Con. The Board concluded that these transactions would not impair Mr. Hernandez’s independence.
 

 

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Board committees

 

Chevron’s Board of Directors has four standing Committees: Audit; Board Nominating and Governance; Management Compensation; and Public Policy and Sustainability. The Audit, Board Nominating and Governance, and Management Compensation Committees are each constituted and operated according to the independence and other requirements of the Securities Exchange Act of 1934, as amended (“Exchange Act”) and the NYSE Corporate Governance Standards. Each independent Director, including each member of the MCC, is an “outside” Director for purposes of ensuring that certain pre-2019 grants meet the grandfather rule in Section 162(m) of the Internal Revenue Code of 1986, as amended. In addition, each member of the Audit Committee is financially literate and an “audit committee financial expert,” as such terms are defined under the Exchange Act and related rules and the NYSE Corporate Governance Standards.

Each Committee is chaired by an independent Director who determines the agenda, the frequency, and the length of the meetings and who has unlimited access to management, information, and outside advisors, as necessary. Each non-employee Director generally serves on one or two Committees. Committee members serve staggered terms, enabling Directors to rotate periodically to different Committees. Four- to six-year terms for Committee Chairs facilitate rotation of Committee Chairs while preserving experienced leadership.

Each Committee operates under a written charter that sets forth the purposes and responsibilities of the Committee as well as qualifications for Committee membership. Each Committee assesses the adequacy of its charter periodically and recommends changes to the Governance Committee. All Committees report regularly to the full Board of Directors with respect to their activities. Committee charters can be viewed on Chevron’s website at www.chevron.com/investors/corporate-governance.

 

Board and committee meetings and attendance

 

In 2021, your Board held six regular Board meetings and one special Board meeting, with each regular meeting including an executive session of independent Directors led by our independent Lead Director. In addition, 25 Board Committee meetings were held in 2021, which included nine Audit Committee, five Governance Committee, four MCC, five Public Policy and Sustainability Committee and two joint meetings of the Governance and the Public Policy and Sustainability Committees. All Directors attended 100% of

their Board and Committee meetings during 2021. Chevron’s policy regarding Directors’ attendance at the Annual Meeting, as described in the “Board Agenda and Meetings” section of Chevron’s Corporate Governance Guidelines (available at www.chevron.com/investors/corporate-governance), is that all Directors are expected to attend the Annual Meeting, absent extenuating circumstances. All Directors attended the 2021 Annual Meeting.

 

 

Board and committee evaluations

 

Each year, your Board and its Committees perform a rigorous self-evaluation. As required by Chevron’s Corporate Governance Guidelines, the Governance Committee oversees this process. The performance evaluations solicit anonymous input from Directors regarding the performance and effectiveness of the Board, the Board Committees, and individual Directors and provide an opportunity for Directors to identify areas for improvement. In addition, the independent Lead Director has individual conversations with each member of the Board, providing further opportunity for dialogue and improvement. In 2018, the Governance Committee augmented the individual Director evaluation by adding an individual Director performance evaluation questionnaire to more rigorously evaluate individual Director performance. Under this part of the process, each Director sends a confidential individual Director performance evaluation for each independent Director to outside counsel

retained by the Company at the Governance Committee’s request. Outside counsel compiles the results of the evaluations into reports, which are sent to the Lead Director for consideration and used by the Lead Director during individual conversations with each independent Director (the Chair of the Audit Committee receives the report on the Lead Director and meets with the Lead Director regarding that report). The Governance Committee reviews the results and feedback from the evaluation process and makes recommendations for improvements as appropriate. The independent Lead Director leads a discussion of the evaluation results during an executive session of the Board and communicates relevant feedback to the CEO. Your Board has successfully used this process to evaluate Board, Committee, and individual Director effectiveness, and identify opportunities to strengthen the Board.

 

 

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Committees and membership

 

Committee functions

    

 

Audit

Debra Reed-Klages, Chair

John B. Frank

Marillyn A. Hewson

Dambisa F. Moyo

 

 

•   Selects the independent registered public accounting firm for endorsement by the Board and ratification by the stockholders

 

•   Reviews reports of the independent registered public accounting firm and internal auditors

 

•   Reviews and approves the scope and cost of all services (including non-audit services) provided by the independent registered public accounting firm

 

•   Monitors the effectiveness of the audit process and financial reporting

 

•   Monitors the maintenance of an effective internal audit function

 

•   Reviews the adequacy of accounting, internal control, auditing, and financial reporting matters

 

•   Monitors implementation and effectiveness of Chevron’s compliance policies and procedures

 

•   Assists the Board in fulfilling its oversight of enterprise risk management, particularly financial risks, including, but not limited to, cybersecurity and sustainability and climate change risks as they relate to financial risk exposures, and Chevron’s Operational Excellence audit and assurance process

 

•   Evaluates the effectiveness of the Audit Committee

 

   

 

Board nominating

and governance

Wanda M. Austin, Chair

Alice P. Gast

Charles W. Moorman

Ronald D. Sugar

D. James Umpleby III

 

 

•   Evaluates the effectiveness of the Board and its Committees and recommends changes to improve Board, Board Committee, and individual Director effectiveness

 

•   Assesses the size and composition of the Board to evaluate the skills and experience that are currently represented, as well as the skills and characteristics that the Board may find valuable in the future, including but not limited to diversity, business leadership, finance, policy, and environmental and climate change experience

 

•   Engages in succession planning for the Board and key leadership roles on the Board and its Committees

 

•   Recommends prospective Director nominees

 

•   Oversees the orientation process for new Directors and ongoing education for Directors

 

•   Reviews and approves non-employee Director compensation

 

•   Evaluates and recommends changes as appropriate in Chevron’s Corporate Governance Guidelines, Restated Certificate of Incorporation, By-Laws, and other Board-adopted governance provisions

 

•   Assesses stock ownership guidelines for Directors and the Directors’ ownership relative to the guidelines

 

•   Reviews stockholder proposals and recommends (in conjunction with the Public Policy and Sustainability Committee) Board responses to proposals

 

•   Assists the Board in fulfilling its oversight of enterprise risk management, particularly risks in connection with Chevron’s corporate governance practices and processes

 

•   Evaluates the effectiveness of the Governance Committee

 

   

 

Management

compensation

Charles W. Moorman, Chair

Wanda M. Austin

Enrique Hernandez, Jr.

Jon M. Huntsman Jr.

Ronald D. Sugar

 

 

•   Conducts an annual review of the CEO’s performance

 

•   Reviews and recommends to the independent Directors salary and the short-term and long-term incentive compensation for the CEO

 

•   Reviews and approves salaries and short-term and long-term incentive compensation for executive officers other than the CEO

 

•   Reviews the annual Compensation Discussion and Analysis (“CD&A”) and recommends to the independent Directors to include in the Proxy Statement.

 

•   Administers Chevron’s executive incentive and equity-based compensation plans

 

•   Reviews Chevron’s strategies and supporting processes for executive retention and diversity

 

•   Reviews and approves an executive compensation philosophy that aligns with Chevron’s strategy and stockholder interests, including those related to sustainability and climate change risks and opportunities

 

•   Reviews and approves peer group(s) used to benchmark executive compensation levels, program design and practices, and relative performance

 

•   Assists the Board in fulfilling its oversight of enterprise risk management, particularly risks in connection with Chevron’s compensation programs

 

•   Evaluates the effectiveness of the MCC

 

   

 

Public policy and

sustainability

Enrique Hernandez, Jr., Chair

Alice P. Gast

Jon M. Huntsman Jr.

D. James Umpleby III

 

 

•   Identifies, monitors, and evaluates domestic and international environmental, social, human rights, political, and public policy matters, including those related to sustainability and climate change, that are relevant to Chevron’s activities and performance

 

•   Assists the Board in devoting appropriate attention and effective response to stockholder concerns regarding such issues

 

•   Recommends to the Board policies, programs, and practices concerning support of charitable, political, and educational organizations

 

•   Reviews annually the policies, procedures, expenditures, and public disclosure practices related to Chevron’s political activities, including political contributions and direct and indirect lobbying

 

•   Reviews stockholder proposals and recommends (in conjunction with the Governance Committee) Board responses to proposals

 

•   Assists the Board in fulfilling its oversight of enterprise risk management, particularly risks in connection with the environmental, social, human rights, political, and public policy aspects of Chevron’s activities, and in doing so directs that the Company consider a broad range of perspectives

 

•   Evaluates the effectiveness of the Public Policy and Sustainability Committee

   

 

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Director orientation and education

 

Chevron’s Board maintains a new Director orientation program that is preferably completed during a new Director’s first year of Board service. The orientation program has three main components: (1) written materials detailing information about Chevron, such as Chevron’s governing documents, recent U.S. Securities and Exchange Commission (“SEC”) filings, and press releases; (2) a series of meetings with Chevron’s senior executives; and (3) Chevron facility/site visits to experience Chevron’s operations in person (visits include a downstream facility, typically a refinery, and an upstream operation). Beyond orientation, Directors regularly visit different Chevron work locations to meet with

employees and learn about particular operations. In addition, Directors are provided with a list of continuing director education opportunities, and all Directors are encouraged to periodically attend director continuing education programs offered by various organizations. Directors also benefit from access to various governance and directorship organizations and publications to which Chevron subscribes. Directors also receive a weekly digest of news articles related to Chevron. Directors also receive ongoing education through Board briefings and presentations at Board and Committee meetings, which regularly include outside speakers on various topics.

 

 

Hedging, pledging, and other transactions

Members of the Board and members of Chevron’s Global Leadership Forum are prohibited from:

 

  Engaging in hedging transactions or speculative transactions involving Chevron securities, including, but not limited to, short sales and trading in options, puts, calls, straddles, swaps, or other derivative securities;

 

  Purchasing Chevron securities on margin;
  Engaging in monetization transactions, such as forward sale contracts involving Chevron securities; and

 

  Pledging Chevron securities as collateral for a loan or any other purpose.
 

 

Employees other than those listed above, are generally permitted to engage in transactions involving Chevron securities that are designed to hedge or offset market  risk.

Related person transactions

 

Review and approval of related person transactions

It is our policy that all employees and Directors must avoid any activity that is in conflict with, or has the appearance of conflicting with, Chevron’s business interests. This policy is included in our Business Conduct and Ethics Code. Directors and executive officers must inform the Chairman and the Corporate Secretary and Chief Governance Officer when confronted with any situation that may be perceived as a conflict of interest. In addition, at least annually, each Director and executive officer completes a detailed questionnaire specifying any business relationship that may give rise to a conflict of interest.

Your Board has charged the Governance Committee with reviewing related person transactions as defined by SEC rules. The Governance Committee has adopted written guidelines to assist it with this review. Under these guidelines, all executive officers, Directors, and Director nominees must promptly advise the Corporate Secretary and Chief Governance Officer of any proposed or actual business and financial affiliations involving themselves or their immediate family members that, to the best of their knowledge after reasonable inquiry, could reasonably be expected to give rise to a reportable related person transaction. The Corporate Secretary and Chief Governance Officer will prepare a report summarizing any potentially reportable transactions, and the Governance Committee will review these reports and determine whether to

approve the identified transaction. The Governance Committee has identified the following categories of transactions that are deemed to be preapproved by the Governance Committee, even if the aggregate amount involved exceeds the $120,000 reporting threshold identified in the SEC rules:

 

  Compensation paid to an executive officer if that executive officer’s compensation is otherwise reported in our Proxy Statement and if the executive officer is not an immediate family member of another Chevron executive officer or Director;

 

  Compensation paid to a Director for service as a Director if that compensation is otherwise reportable in our Proxy Statement;

 

  Transactions in which the related person’s interest arises solely as a stockholder and all stockholders receive the same benefit on a pro-rata basis;

 

  Transactions involving competitive bids (unless the bid is awarded to a related person who was not the lowest bidder or unless the bidding process did not involve the use of formal procedures normally associated with our competitive bidding procedures);

 

  Transactions involving services as a common or contract carrier or public utility in which rates or charges are fixed by law;
 

 

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  Transactions involving certain banking-related services under terms comparable with similarly situated transactions;

 

  Transactions conducted in the ordinary course of business in which our Director’s interest arises solely because he or she is a director of another entity and the transaction does not exceed $5 million or 5% (whichever is greater) of the receiving entity’s consolidated gross revenues for that year;

 

  Transactions conducted in the ordinary course of business in which our Director’s interest arises solely because he or she is an employee of another entity and the transaction does not exceed $250,000 or 0.5% (whichever is greater) of the receiving entity’s consolidated gross revenues for that year;

 

  Charitable contributions by Chevron to an entity in which our Director’s interest arises solely because he or she is a director, trustee, or similar advisor to the entity and the contributions do not exceed, in the aggregate, $1 million or 2% (whichever is greater) of that entity’s gross revenues for that year; and

 

  Transactions conducted in the ordinary course of business where our Director’s interest arises solely because he or she owns an equity or limited partnership interest in the entity and the transaction does not exceed 2% of the total equity or partnership interests of the entity.

The Governance Committee reviews all relevant information, including the amount of all business transactions involving Chevron and the entity with which the Director or executive officer is associated, and determines whether to approve or ratify the transaction. A Director will abstain from decisions regarding transactions involving that Director or their family members.

Related person transactions

John T. Geagea, a brother of Mr. Joseph C. Geagea, Executive Vice President and senior advisor to the Chairman and CEO, is employed as a contractor by International Inspection Centre Co. W.L.L (“Intrex”), a contractor firm of Chevron and works solely on Chevron matters. In 2021, Chevron paid Intrex $3,868,833 and is expected to pay Intrex approximately the same amount in 2022. In 2021, Intrex paid John Geagea compensation in the amount of approximately $197,781, including salary and customary employee benefits, and is expected to pay him the same amount in 2022. These amounts reflect compensation that is consistent with the total compensation provided to other contractors of the same level with similar responsibilities. Dollar amounts for Intrex and John Geagea are based on the exchange rate at December 31, 2021.

 

 

Year-round environmental, social, and governance engagement

 

 

 

 

Fostering long-term and institution-wide relationships with stockholders and other stakeholders is a core Chevron objective. Chevron conducts extensive engagements with external stakeholders including stockholders as an essential part of addressing sustainability-related issues. These engagements routinely cover climate change, energy transition, workplace culture, human rights, human capital management, lobbying, governance and other issues.

 

In addition, we engage in extensive investor relations, in which members of management regularly meet with stockholders to review Company strategies, financial and operating performance, capital allocation priorities, and other topics of interest. We use all of these sessions to ensure that the Board and management understand the issues that are important to our stockholders.

 

 

  

Stockholder engagement following the 2021 Annual Meeting was robust, as Chevron’s Board and management sought feedback on key areas of stockholder interest, including about Chevron’s potential response to stockholder proposals received at our 2021 Annual Meeting. Described below in greater detail, Chevron’s actions were directly informed by this dialogue with our stockholders. More than 100 one-on-one ESG-focused meetings with stockholders occurred, representing 39% of outstanding common stock. Our CEO and/or Directors participated in ESG-focused meetings with stockholders representing 30% of outstanding common stock.

To continuously improve Chevron’s governance processes and communications, Chevron follows the Annual Engagement Plan and Process outlined below.

 

Spring

The Annual Report and Proxy Statement are developed with Board oversight. The ESG Engagement Team coordinates meetings with every proxy proposal proponent to discuss their concerns. Meetings are also set with our largest stockholders and key stakeholders to review matters to be considered at the Annual Meeting of Stockholders and obtain feedback about potential responses and positions.

Summer

The Board and Management review the Annual Meeting outcomes and post-vote feedback. This discussion helps set the agenda for Fall/Winter engagement.

Fall/Winter

With Board oversight, Management determines what actions to take in response to the Annual Meeting. The ESG Engagement Team continues its outreach to stockholders and stakeholders to understand the evolving landscape. Management and/or Board members have ESG-focused meetings with our largest stockholders and other stakeholders.

 

 

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Through this program, we seek to address environmental, social, and governance topics raised by our stockholders. This process also informs our corporate policies and reporting. The Governance Committee and the Public Policy and Sustainability Committee oversee the stockholder engagement program. Feedback received by the Company during these engagements is shared with our full Board, its relevant Committees, and relevant members of senior management.

Since Chevron’s last Annual Meeting, an engagement team consisting of senior executives; subject matter experts on governance, compensation, and environmental and social issues (“ESG Engagement Team”); and, when appropriate, our independent Lead Director and the Chairs of our Audit, Governance, and Public Policy and Sustainability Committees, have continued to engage with stockholders.

In addition, the team reached out to every stockholder or their representative who submitted proposals for inclusion in our Proxy Statement and met with each to discuss their perspective.

During our engagements, Chevron gained valuable feedback on key topics, including:

 

  Our energy transition strategy, including our net zero Upstream 2050 aspiration and greenhouse gas (“GHG”) intensity targets;
  The role of oil and gas in the energy transition;

 

  The future of Chevron New Energies, our new business focused on lower carbon opportunities such as hydrogen and carbon capture;

 

  Our work to support more standardized GHG reporting and promote value chain accounting, including on our GHG emissions disclosure framework;

 

  Methane management, including Chevron’s 2028 methane target, and increasing expectations for reductions and the potential for direct measurements;

 

  Our Board’s composition, including Director tenure, skills, and capacity;

 

  Our approach to lobbying and disclosure, as well as continued scrutiny of alignment with trade associations; and

 

  The importance of a diverse and inclusive workplace at all levels of the Company.

For more information about these engagements, see the “Independent Lead Director,” and “Compensation Discussion and Analysis” sections of this Proxy Statement.

 

 

Our response to stockholders

As noted above, Chevron engages regularly with key stockholders and stakeholders. We had over 100 one-on-one ESG-focused meetings with 71 institutions, representing 39% of outstanding common stock. Our CEO and Directors participated in ESG-focused meetings with stockholders representing 30% of outstanding common stock. These engagements included meetings with Climate Action 100+ and most of our top 25 stockholders and informed the actions we took following the 2021 Annual Meeting, as summarized below.

 

Key stockholder issues and 2021

proxy proposals

  

What we heard from

stockholders

  

Our board’s perspective &

what we did

   
Climate Change    GHG disclosure and performance are priority issues for our stockholders. Our stockholders support the Paris Agreement, but they have varied views on the pace of future progress toward that goal.   

Our October 2021 TCFD-aligned Climate Report included information responsive to the two climate-related proposals discussed below. In addition, the October 2021 Climate Report provided further information on the Company’s capital allocation plans and strategies to deliver long-term value to stockholders in a lower carbon future.

 

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Key stockholder issues and 2021

proxy proposals

  

What we heard from

stockholders

  

Our board’s perspective &

what we did

   

2021 Proposal to Reduce Scope 3 Emissions: Requested Chevron to “substantially reduce the greenhouse gas (GHG) emissions of their energy products (Scope 3) in the medium- and long-term.” 61% of the votes cast supported.

 

The Proposal’s resolution also stated:

“[N]othing in this resolution shall serve to micromanage the Company by seeking to impose methods for implementing complex policies in place of the ongoing judgement of management as overseen by its board of directors.”

 

The Proposal’s supporting statement said: “Nothing in this resolution shall limit the Company’s powers to set and vary their strategy or take any action which they believe in good faith would best contribute to reducing GHG emissions.”

  

While there was general agreement about the importance of addressing Scope 3, there was not a consensus among stockholders about the appropriateness of absolute Scope 3 reductions.

 

Some stockholders, including those that supported the proposal, shared that they recognized that absolute reductions of GHG emissions, and specifically Scope 3 emissions, may not be appropriate for Chevron because that would require significantly changing our business strategy.

 

Most stockholders generally did not favor shrinking Chevron’s traditional oil and gas business or shifting the core business to renewables as ways to reduce Scope 3 emissions.

 

Stockholders appreciated Chevron’s transparent reporting of Scopes 1, 2, and 3 emissions and generally expressed support for Chevron’s approach to reducing GHG emissions on an equity and intensity basis and including Scope 3 as part of Chevron’s Portfolio Carbon Intensity metric.

 

The flexibility allowed in the proposal for the Company to determine the best path forward was also an important element to many stockholders that supported the proposal.

 

  

In addition to setting various GHG emissions intensity targets through 2028 and introducing a net zero aspiration by 2050 for Upstream Scope 1 and 2 emissions, Chevron developed a Portfolio Carbon Intensity (“PCI”) methodology that covers Scope 1, 2, and Scope 3 emissions from use of products, and set a PCI Reduction target for 2028 that includes Scope 1, Scope 2, and certain Scope 3 emissions: 71 g CO2e/MJ by 2028, a > 5% reduction from 2016. Chevron has also set 2030 low-carbon business targets on renewable fuels (100 thousand barrels a day), hydrogen (150 million tonnes per annum), and CCUS (25 thousand tonnes per annum) in order to help reduce GHG emissions in hard-to-abate sectors.

 

We believe that an absolute Scope 3 target is incompatible with our strategy that includes increasing our oil and gas production while lowering carbon intensity and providing lower carbon solutions for hard-to-abate sectors.

   

2021 Proposal for a Report on Impacts of Net Zero 2050 Scenario:

Requested an audited report on whether and how a reduction in fossil fuel demand under the International Energy Agency’s (“IEA”) Net Zero by 2050 scenario (“NZE 2050”) would affect Chevron’s financial position and underlying assumptions. 48% of votes cast supported.

   Stockholders generally provided positive feedback about the level of detail regarding the NZE scenario provided in our October 2021 TCFD-aligned Climate Report. During engagements, stockholders did not generally focus on the issue of auditing the NZE scenario and recognized that auditing the analysis of IEA scenarios was not an established practice.    Our October 2021 TCFD-aligned Climate Report included a detailed scenario analysis of NZE 2050 against Chevron’s forecasted portfolio. The NZE scenario analysis describes how our portfolio would fare from a financial viability perspective and also the changes we would need to make if such a scenario were to actually occur. Chevron’s Corporate Audit department conducted a non-rated assurance review of the analysis. Because we do not rely on the NZE 2050 scenario for business planning, we do not think an audited report is warranted under established U.S. GAAP standards and would not be a responsible use of resources.

 

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Key stockholder issues and 2021

proxy proposals

  

What we heard from

stockholders

  

Our board’s perspective &

what we did

   

2021 Proposal for a Report on Lobbying: Proposal requested an annual report about: (1) Company policy and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications; (2) Payments by Chevron used for (a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment and the recipient; (3) Chevron’s membership in and payments to any tax-exempt organization that writes and endorses model legislation; and (4) Description of management’s and the Board’s decision making process and oversight for making payments described in sections 2 and 3 above. 48% of votes cast supported.

  

Stockholders generally acknowledged that the proposal requested four specific and different actions from the Company.

 

Some stockholders emphasized more transparency into how the Board oversees lobbying activity.

 

Some stockholders emphasized disclosure of all trade associations to which we contribute that participate in lobbying (not just those where our contributions exceed a particular dollar threshold).

 

Stockholders appreciated the increased transparency on lobbying and indicated that disclosure of specific payments to individual trade associations was not necessary for their decision making.

  

Chevron extensively updated its lobbying and trade association website. Chevron now includes on its website:

 

•  a detailed description of our policies and procedures governing lobbying activities and how our Management and Board manage reputational risk associated with lobbying;

 

•  a list of all trade associations to which we contribute that lobby; the range of lobbying expenditures (federal, state, and grassroots) made through these trade associations; the percentage of dues attributed to direct and indirect lobbying through trade associations; and information about membership dues paid to organizations that write model legislation.

 

•  Beginning in 2022, we plan two updates per year regarding the Company’s corporate political contributions, trade association memberships where a portion of dues are attributed to lobbying, and Chevron employee political action committee contributions.

 

During our engagements, we explained our approach to potential misalignments with trade associations, which is to focus on the overall value a trade association provides Chevron and to address any misalignment on a specific topic through engagement with the trade association. Through this approach, we believe we are better able to work toward effective solutions. Our updated lobbying reports cite examples where Chevron has worked with other member companies to move trade association positions toward our position, such as support for carbon pricing.

   
Diversity and Inclusion    Stockholders continue to express interest in Chevron’s approach to diversity and inclusion, and the steps Chevron is taking to enhance diversity and inclusion to protect Chevron’s reputation and to leverage the full value of our workforce.   

In 2021, as part of our continued efforts to foster diversity and inclusion at all levels of the Company, Chevron updated its talent development strategy and launched new development programs for underrepresented talent. These programs include the Chevron Latinx Leadership Program and the Asian American Leadership Development Program.

 

Chevron has continued to publish our most recent EEOC Report on our website and in our corporate sustainability report.

 

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Key stockholder issues and 2021

proxy proposals

  

What we heard from

stockholders

  

Our board’s perspective &

what we did

   
Board Composition and Skills   

Stockholders are increasingly interested in understanding how the skills of our Board can help Chevron navigate in the energy transition.

 

Stockholders want assurance that our Directors have the time and capacity to support the Company in challenging times.

  

We have expanded our skills matrix to show where our Directors have experience in leading business transformation. The Board recognizes that this capability is critical to the Board’s ability to provide effective oversight of the Company and its strategy.

 

 

The Board has provided greater disclosure about how the Governance Committee assesses the composition of the Board and evaluates the effectiveness of: the Board as a whole, each Board Committee, and individual Directors, including how the Governance Committee assesses Director time commitments and limits on public company directorships, to ensure that the nominees and Board as a whole meet the requirements and needs of the Company.

 

   
Chevron Incentive Plan Scorecard    Stockholders expressed interest in learning how the Company incentivizes progress on Chevron’s energy transition strategy.    To ensure accountability for our efforts to advance a lower carbon future, we modified the 2021 Chevron Incentive Plan (“CIP”) scorecard to include an “Energy Transition” category. Performance will be measured on progress in achieving our GHG metrics, growing renewable energy and carbon offsets, and investing in low-carbon technologies. The scorecard performance outcomes impact CIP payout for our eligible employees – approximately 37,000 at year-end 2021.

 

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Board nominating and governance committee report

 

The Board Nominating and Governance Committee (“Committee”) is responsible for recommending to the Board the qualifications for Board membership, identifying, assessing, and recommending qualified Director candidates for the Board’s consideration, assisting the Board in organizing itself to discharge its duties and responsibilities, and providing oversight of Chevron’s corporate governance practices and policies, including an effective process for stockholders to communicate with the Board. The Committee is composed entirely of independent Directors as defined by the New York Stock Exchange Corporate Governance Standards and operates under a written charter. The Committee’s charter is available on Chevron’s website at www.chevron.com/investors/corporate-governance/board-nominating-governance and is available in print upon request.

The Committee’s role in and process for identifying and evaluating prospective Director nominees, including nominees recommended by stockholders, is described in the “Election of Directors” section of this Proxy Statement. In addition, the Committee makes recommendations to the Board concerning Director independence, Board Committee assignments, Committee Chairs, Audit Committee “financial experts,” and the financial literacy of Audit Committee members. The Committee also reviews the process and the results of the annual performance evaluations of the Board, Board Committees, and individual Directors.

The Committee regularly reviews trends and recommends best practices, initiates improvements, and plays a leadership role in maintaining Chevron’s strong corporate governance structures and practices. Among the practices the Committee believes demonstrate the Company’s commitment to strong corporate governance are the following:

 

  Annual election of all Directors;

 

  Supermajority of independent Directors;

 

  Majority vote standard for the election of Directors in uncontested elections, coupled with a Director resignation policy;

 

  Annual election of the Chairman of the Board by independent Directors;

 

  Annual election of an independent Lead Director by independent Directors when the Chief Executive Officer is elected as Chairman;
  Annual performance assessment of the Board, Board Committees, and individual Directors;

 

  Director retirement policy;

 

  Director and executive officer succession planning;

 

  Confidential stockholder voting policy;

 

  Robust business conduct and ethics code for all Directors and employees;

 

  Director orientation program for new Directors and ongoing education for Directors;

 

  Minimum stock ownership guidelines for Directors and executive officers;

 

  Review and approval or ratification of “related person transactions” as defined by SEC rules;

 

  Policy to obtain stockholder approval of any stockholder rights plan;

 

  Proxy access;

 

  One vote for each common stock;

 

  Right of stockholders to call for a special meeting; and

 

  No supermajority voting provisions in the Restated Certificate of Incorporation or By-Laws.

Stockholders can find additional information concerning Chevron’s corporate governance structures and practices in Chevron’s Corporate Governance Guidelines, By-Laws, and Restated Certificate of Incorporation, copies of which are available on Chevron’s website at www.chevron.com/investors/corporate-governance and are available in print upon request.

Respectfully submitted on March 29, 2022, by members of the Board Nominating and Governance Committee of your Board:

Wanda M. Austin, Chair

Alice P. Gast

Charles W. Moorman

Ronald D. Sugar

D. James Umpleby III

 

 

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Management compensation committee report

The Management Compensation Committee (the “Committee”) of Chevron has reviewed and discussed with management the Compensation Discussion and Analysis beginning on page 40 of this Proxy Statement. Based on such review and discussion, the Committee recommended to the Board of Directors of the Corporation that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Corporation’s Annual Report on Form 10-K.

Respectfully submitted on March 29, 2022, by members of the Management Compensation Committee of your Board:

 

Charles W. Moorman, Chair

Wanda M. Austin

Enrique Hernandez, Jr.

Jon M. Huntsman Jr.

Ronald D. Sugar

Audit committee report

 

Roles and responsibilities. The Audit Committee (the “Committee”) assists your Board in fulfilling its responsibility to provide independent, objective oversight of Chevron’s financial reporting and internal control processes. The Committee’s charter can be viewed on Chevron’s website at www.chevron.com under the tabs “Investors” and “Corporate Governance.”

Management is responsible for preparing Chevron’s financial statements in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and for developing, maintaining, and evaluating disclosure controls and procedures and internal control over financial reporting.

The Company’s independent registered public accounting firm – PricewaterhouseCoopers LLP (“PwC”) – is responsible for expressing an opinion on the conformity of Chevron’s financial statements with U.S. GAAP and on the effectiveness of Chevron’s internal control over financial reporting.

Required disclosures and discussions. In discharging its oversight role, the Committee reviewed and discussed with management and PwC the audited financial statements for the year ended December 31, 2021, as contained in the 2021 Annual Report on Form 10-K, and management’s and PwC’s evaluation of Chevron’s internal control over financial reporting. The Committee routinely met privately with PwC

and discussed issues deemed significant by PwC and/or the Committee. The Committee has discussed with PwC the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the U.S. Securities and Exchange Commission.

In addition, the Committee discussed with PwC its independence from Chevron and Chevron’s management; received the written disclosures required by the PCAOB regarding PwC’s independence; and considered whether the provision of non-audit services was compatible with maintaining PwC’s independence.

Committee recommendation. In reliance on the reviews and discussions outlined above, the Committee recommended to your Board that the audited financial statements be included in Chevron’s Annual Report on Form 10-K for the year ended December 31, 2021, for filing with the U.S. Securities and Exchange Commission.

Respectfully submitted on February 23, 2022, by the members of the Audit Committee of your Board:

Debra Reed-Klages, Chair

John B. Frank

Marillyn A. Hewson

Dambisa F. Moyo

 

 

Communicating with the board

 

The Governance Committee reviews interested-party communications, including stockholder inquiries directed to non-employee Directors. The Corporate Secretary and Chief Governance Officer compiles the communications, summarizes lengthy or repetitive communications and the responses sent, and takes further action, as appropriate. All communications are available to the Directors.

 

 

Interested parties wishing to communicate their concerns or questions about Chevron to the independent Lead Director or any other non-employee Director may do so by mail addressed to the Lead Director or Non-Employee Directors, c/o Office of the Corporate Secretary and Chief Governance Officer, 6001 Bollinger Canyon Road, San Ramon, CA 94583-2324 or by email to corpgov@chevron.com.

 

 

  

 

 

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Executive compensation

Compensation discussion and analysis

Executive summary

Business description and context

 

Chevron is a fully integrated company involved in many facets of the energy industry. We believe affordable, reliable, and ever-cleaner energy is essential to achieving a more prosperous and sustainable world. We explore for, produce, and transport crude oil, natural gas, and natural gas liquids; process and transport liquefied natural gas; refine, market, and distribute transportation fuels and lubricants; manufacture and sell petrochemicals and additives; have a small, but growing, presence in the manufacture and sale of renewable natural gas, renewable diesel, and renewable base-oil; generate power; and develop and deploy technologies that enhance business value in multiple aspects of the Company’s operations. We are focused on lowering the carbon intensity of our operations and seeking to grow lower carbon businesses along with our traditional business lines. Our business is capital-intensive and has long investment horizons – most of our resource and manufacturing investments span decades. Most of our

product sales are commodities, whose prices can be volatile, leading to fluctuating earnings and cash flow through price cycles. In 2019, Brent oil prices averaged $64 per barrel, down 10% versus the prior year, primarily due to demand concerns about a slowing global economy. By late March 2020, the Brent oil price was under $20 per barrel, mainly due to the significant decline in demand as a result of the COVID-19 pandemic and the breakdown in the OPEC+ talks about production levels. In late 2020, the Brent price had recovered to $50 per barrel, largely based on optimism that the availability of COVID-19 vaccines would lead to greater oil demand and that OPEC+ producers’ supply cuts would be only gradually reduced. By the end of 2021, oil and gas demand had returned to near pre-pandemic levels, even with jet demand lagging recovery, and the Brent price averaged $71 for the full year. Looking forward, oil price futures indicate Brent prices may remain elevated above $90 per barrel in 2022.

 

 

 

 

LOGO

 

Note:

(1)

Brent futures prices are as of March 29, 2022.

 

Chevron made significant progress in a year full of ongoing challenges from the pandemic by:

 

  Acting consistently with our financial priorities to protect the dividend, maintain capital discipline, and strengthen the balance sheet – while reinstating stock repurchases;

 

  Executing a lower-risk, flexible, and disciplined capital program;

 

  Operating efficiently and effectively as rebounding economies drove increased demand for energy;

 

  Successfully integrating Noble Energy’s people and assets while doubling expected synergy capture;

 

  Setting a net zero aspiration for Upstream Scope 1 and 2 Greenhouse Gas (GHG) emissions by 20502 and creating Chevron New Energies, an organization dedicated to growing lower carbon business lines;
  Delivering record free cash flow3 and achieving production guidance; and

 

  Delivering competitive total stockholder return (“TSR”) performance, albeit lagging the S&P 500 Total Return Index over 5 and 10 year periods.

More information on Chevron’s 2021 performance available on page 45.

Notes:

2

Accomplishing this aspiration depends on continuing progress on commercially viable technology; government policy; successful negotiations for CCUS and nature-based projects; availability of cost-effective, verifiable offsets in the global market; and granting of necessary permits by governing authorities.

 

3

Free cash flow is defined as net cash provided by operating activities less cash capital expenditures.

 

 

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Total shareholder return

 

Over the past 15 years, the Company’s dividend growth rate of 6.7% per year (CAGR1) was over six times greater than the peer group2 average and was also higher than that of the S&P 500 Total Return Index. Our dividend yield3 was over three times higher than the S&P 500 Total Return Index at year-end. In April 2021, we raised our quarterly dividend per share by 4%, extending an annual dividend payment per share increase to 34 consecutive years. In 2020, two peers cut their quarterly dividend per share, ranging from 50% to 66%. These dividend cuts have not been fully reinstated.

Chevron continued to deliver competitive TSR performance among large-cap integrated energy companies1 over the one-, three-, five- and 10-year periods through the end of 2021.

The large-cap integrated energy companies outperformed the S&P 500 Total Return Index in TSR over the one-year period but underperformed over the five- and 10-year periods in part due to the significant drop in commodity prices since 2014 and the impacts of COVID-19 on demand.

 

 

LOGO

Outlook

 

Looking forward, we believe the Company is well positioned to deliver on our objectives of higher returns, lower carbon, and superior stockholder value in any business environment by:

 

  Increasing return on capital employed (“ROCE”) through more capital efficient investments, continued cost reductions and margin improvement efforts;

 

  Growing profitable, lower carbon, new energy businesses that leverage our strengths; and

 

  Generating surplus cash flow in upside oil-price environments and maintaining the dividend in downside ones.

We are focused on creating value for stockholders through a disciplined capital program, prioritizing high-return, low-execution-risk investments. We have an advantaged Upstream portfolio composed of long-duration, low-production decline assets (such as those in Australia and Kazakhstan), flexible, shorter cycle investments (such as in the Permian Basin and other shale and tight assets, infill drilling, and tiebacks), and an attractive queue of deepwater opportunities (such as in the Gulf of Mexico, Brazil, and West Africa). We also have an efficient, returns-focused Downstream & Chemicals business.

We believe the future of energy will be lower carbon and we intend to be a leader in that future. We plan to lower the carbon intensity of our oil and gas operations and invest in new lower carbon energy solutions where we believe we can build competitive advantages and we plan to target major industries that cannot be easily electrified.

We believe our strategy positions Chevron to return cash to stockholders, today and into the future. We expect our financial strength and capital discipline to sustain our dividend in any reasonable price scenario while our portfolio is well positioned to generate excess cash in a strong commodity price environment. Finally, we have a proven management team, a talented organization, and a results-oriented culture, which we believe enable us to adapt to dynamic markets and deliver higher returns and lower carbon. As a company of problem solvers, we look to the future of energy with optimism, believing it to be essential to human progress.

Notes:

1

CAGR = Compound Annual Growth Rate

 

2

Peer group: BP, ExxonMobil, Shell, and TotalEnergies; dividends include both cash and scrip share distributions for European peers.

 

3

Dividend yield at year-end reflects Chevron’s fourth quarter 2021 dividend per share annualized, divided by Chevron’s closing stock price on December 31, 2021.

 

 

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LOGO

 

Note:

(4)

Figures rounded.

2021 compensation outcomes and program design changes

The Chevron Board Management Compensation Committee (“MCC”) maintained a disciplined and consistent approach through a year of ongoing pandemic challenges and economic recovery. The 2021 key compensation outcomes and program design changes include the following:

 

 

 

•  No change in any NEO’s 2021 salary and target compensation level.

 

•  Added Energy Transition as one of the four annual bonus performance categories – further linking a portion of employees’ annual bonuses to advancing a lower carbon future.

 

•  Added a second LTIP performance share metric, Relative ROCE Improvement – linking LTIP performance share payouts to our focus on delivering higher returns.

 

•  Achieved a 1.50 corporate performance rating for the annual bonus plan as a result of strong financial and operating performance; CEO bonus payout at $4,500,000.

 

•  Certified the 2019-2021 performance share modifier at 160%, reflective of No. 2 ranking in relative TSR comparison, which includes industry peers and the S&P 500 Total Return Index.

 

 

 

Pay philosophy

 

The overall objective of our executive compensation program is to attract and retain management who will deliver long-term stockholder value in any business environment. Our compensation programs are designed with several important values and objectives in mind:

 

  Pay competitively across all salary grades and all geographies; our target compensation is determined by benchmarking comparable positions at other companies of equivalent size, scale, complexity, capital intensity, and geographic footprint. We reference both oil industry peers
 

and non-oil industry peers in this analysis. Refer to pages 47 and 48 for additional details;

 

  Balance short-term and long-term decision making in support of a long-cycle-time business with a long-term employment model;

 

  Pay for absolute and competitive performance, in alignment with stockholder returns; and

 

  Apply compensation program rules in a manner that is internally consistent.
 

 

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Pay element

The material components of our executive compensation program are summarized in the following chart.

 

 

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Pay mix

The MCC believes a large majority of each NEO’s target compensation should be at risk based on Company performance (approximately 92% for the CEO and 84% for the other NEOs), and the majority of this at-risk compensation should be tied to Chevron’s stock price. The amount NEOs eventually earn from their at-risk compensation will align strongly with what stockholders earn over that same period from their investment in Chevron.

 

2021 CEO                 

compensation mix                 

  

2021 other NEOs                    

compensation mix                    

 

LOGO

 

  

 

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LOGO

*Comprised of the following equity vehicles: 50% Performance Shares, 25% RSUs, 25% Stock Options

 

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2021 named executive officers

 

 Chevron’s Named Executive Officers, or NEOs

 Michael K. Wirth, Chairman and Chief Executive Officer

 Pierre R. Breber, Vice President and Chief Financial Officer

 James W. Johnson, Executive Vice President, Upstream

 Joseph C. Geagea, Executive Vice President and Senior Advisor to Chevron’s Chairman and CEO

 Mark A. Nelson, Executive Vice President, Downstream & Chemicals

Note: Mr. Geagea served as Executive Vice President of Technology, Projects, and Services from June 2015 to August 2021. In August 2021, he transitioned to Executive Vice President and Senior Advisor to Chevron’s Chairman and CEO, a position he will hold until his retirement in 2022.

2021 NEO target compensation

The table below summarizes the 2021 target compensation opportunities the Board and the MCC approved for the NEOs, which were the same as 2020.

 

Name

 

Base salary

 

Target CIP

 

LTIP target value

 

 

Target total  

compensation  

Michael K. Wirth

 

$1,650,000

 

$2,640,000 (160%)

 

$15,500,000

 

$19,790,000

Pierre R. Breber

 

$1,020,000

 

$1,122,000 (110%)

 

$  4,002,320

 

$  6,144,320

James W. Johnson

 

$1,210,000

 

$1,452,000 (120%)

 

$  5,197,500

 

$  7,859,500

Joseph C. Geagea

 

$1,020,000

 

$1,122,000 (110%)

 

$  4,002,320

 

$  6,144,320

Mark A. Nelson

 

$   950,000

 

$1,045,000 (110%)

 

$  4,002,320

 

$  5,997,320

These amounts may differ from those shown in the Summary Compensation Table, based on actual salary received during the calendar year, the actual CIP award resulting from 2021 performance, and differences between the MCC’s target LTIP valuation approach and the grant date fair value calculations as presented in the Summary Compensation Table.

Response to say-on-pay advisory vote and stockholder engagement

 

Chevron follows a robust process to systematically engage with its key stockholders and proactively address issues of importance. Among the issues routinely discussed in these engagements are Chevron’s executive compensation practices.

In 2021, the Company continued its dialogue with stockholders. We had substantive engagements with stockholders, representing more than 39% of Chevron’s outstanding common stock, regarding environmental, social, and governance issues. These discussions covered a range of topics, including executive compensation. Mr. Michael Wirth (CEO), Dr. Ronald Sugar (independent Lead Director), Dr. Wanda Austin (Chair of the Board Nominating and Governance Committee), Mr. Enrique Hernandez, Jr. (Chair of the Public Policy and Sustainability Committee) and Ms. Debra Reed-Klages (Chair of the Audit Committee) participated in these meetings. Through these engagements, we received positive feedback for the following 2021 program design changes:

 

  Energy transition performance measures in the 2021 CIP scorecard. We modified the 2021 CIP scorecard to include an “Energy Transition” performance category, which incorporates the prior greenhouse gas management performance measure and adds performance measures for renewable energy, carbon offsets, and low-carbon technologies. Performance will be measured by the
   

Company’s progress in each of these areas. The scorecard performance outcomes impact CIP payout for our eligible employees – approximately 37,400 at year-end 2021.

 

  Relative ROCE Improvement in the 2021 performance share grant. We added “Relative ROCE Improvement” as a second performance metric to the 2021 performance share grant. Performance shares will continue to represent 50% of the LTIP grant value, with payout weighted 70% based on relative TSR measured against the LTIP Performance Share Peer Group and 30% based on Relative ROCE Improvement measured against large-cap integrated energy companies (BP, ExxonMobil, Shell, and TotalEnergies).

Chevron’s 2021 Say-on-Pay vote received 94% support, which demonstrates stockholders’ strong support of our executive compensation practices and pay for performance alignment.

Our stockholders’ views on executive compensation are important to us, and the MCC regularly considers the Say-on-Pay vote outcome and stockholder insights in assessing our executive compensation program. We remain committed to continuing the dialogue with stockholders on compensation issues as part of our ongoing engagement.

 

 

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2021 performance

 

Chevron’s 2021 financial results, including Earnings, ROCE and Cash Flow from Operating Activities were strong, driven by recovering global economic conditions, which positively impacted commodity prices, and improved capital and cost efficiency. We continued to make progress toward our objective of higher returns and lower carbon, generating record free cash flow and taking actions focused on lowering the carbon intensity of our operations and growing lower carbon businesses.

We remained committed to consistent financial priorities, including maintaining the dividend, pursuing a disciplined capital program, protecting the balance sheet, and returning excess cash to stockholders.

 

  We delivered a record 3.099 million barrels of oil-equivalent per day in net production, excluding divestments, with growth within our 0% to 3% guidance range versus 2020.

 

  We made substantial progress on major capital projects. Tengizchevroil FGP/WPMP achieved its major milestones with all modules set on foundations and substation energization complete. Permian unit development costs were below our objective. GS Caltex reached 100% of design capacity of its mixed-feed cracker, ahead of schedule and under budget.

 

  Compared to 2020, Earnings increased by $21.2 billion and Cash Flow from Operating Activities increased by $ 18.6 billion in 2021. ROCE of 9.4% in 2021 improved significantly from (2.8)% in 2020.1

 

  Total capital and exploratory2 (“C&E”) spending of $11.7 billion was 16% below the Company’s original 2021 budget of $13.9 billion.
  We resumed our stock repurchase program, buying back $1.4 billion and making this the 14th out of the past 18 years that we have repurchased shares.

 

  Operating expense3 was $25.4 billion, slightly higher than Plan. Reductions in Downstream were offset by higher Employee Benefit costs. Since 2014, operating expenses have declined 15%.

 

  We paid down debt, ending the year with a 18.4% debt ratio and 15.6% net debt ratio.4

 

  We made progress on all of our energy transition milestones. With greenhouse gas management, we identified, funded, and executed GHG reduction projects. In Renewable Energy and Carbon Offsets, we achieved milestones for renewable feedstocks, renewable natural gas, and renewable power projects. For Low-Carbon Technologies, we advanced memorandums of understanding and venture investments.

 

  We grew our quarterly dividend by 4% to $1.34 per share, resulting in the 34th consecutive year of higher annual dividend payout per share. At year-end, Chevron’s dividend yield was more than three times higher than the dividend yield of the S&P 500 Total Return Index. In 2021, we returned $10.2 billion in dividends to our stockholders.

Note:

1

A definition and calculation of ROCE is included on page 47 of our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”).

2

Total capital and exploratory expenditures include equity in affiliates. Figures rounded.

3

Operating expenses, selling, general and administrative expenses and other components of net periodic benefit costs as reported in the consolidated statement of income (excludes affiliate spend). Figures rounded.

4

Definitions and calculations of debt ratio and net debt ratio are included on pages 46 and 47 of the 2021 Form 10-K.

 

 

LOGO   LOGO

 

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Executive compensation  

 

 

 

CEO realizable pay

The MCC establishes Mr. Wirth’s target compensation based on several factors, including an external comparison of compensation opportunities for CEOs at companies of comparable size, scope, complexity, and utilization of a consistent application of Chevron’s internal compensation policies and structure.

The MCC believes that the CEO’s realizable compensation should align with stockholder value creation and relative TSR performance. The following charts compare Mr. Wirth’s target and realizable compensation as of December 31, 2021, for compensation opportunities awarded to him in 2019, 2020, and 2021. The 2020 and 2021 realizable pay is higher, primarily due to higher valuation of unvested performance shares at year-end 2021. The ultimate realized values will match or exceed targets only if Chevron delivers sustained competitive stock performance.

 

 

LOGO

Notes:

(1)

Target Value reflects: (i) base salary rate each year, (ii) target CIP award, and (iii) intended grant date value of LTIP awards (50% performance shares, 25% restricted stock units, and 25% stock options).

 

(2)

Realizable Value at 12/31/2021 reflects: (i) the actual paid base salary during the calendar year; (ii) the actual CIP award earned for that year, and (iii) the actual prevailing LTIP value at 12/31/2021. For (i) 2021 performance shares: reflects 12/31/2021 performance modifier based on 70% weighted 12/31/2021 TSR rank versus the LTIP Performance Share Peer Group (at 160%) and 30% weighted 12/31/2021 Relative ROCE Improvement rank versus the integrated energy companies (at 150%), multiplied by Chevron’s stock price at 12/31/2021 ($117.35), including dividend accruals; (ii) 2020 performance shares: reflects 12/31/2021 TSR rank versus the LTIP Performance Share Peer Group and associated performance modifier (at 140%) multiplied by Chevron’s stock price at 12/31/2021 ($117.35), including dividend accruals; and (iii) 2019 performance shares: reflects the actual amount earned and paid for the 3-year performance period at 160% multiplied by the 20-day average trailing price of Chevron common stock at 12/31/2021 ($116.66), including dividend accruals. For restricted stock units, reflects Chevron’s stock price at 12/31/2021 ($117.35), including dividend accruals. For stock options: reflects in-the-money value for 2019, 2020 and 2021 grants, with exercise prices of $113.01 (2019), $110.37 (2020) and $88.20 (2021) relative to Chevron’s common stock price at 12/31/2021 of $117.35.

 

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Compensation discussion and analysis in detail

Compensation planning and governance

The graphic below illustrates the timing and key governance elements of the executive compensation planning cycle:

 

LOGO

Use of peer groups

We are always competing for the best talent with our direct industry peers and with the broader market. Accordingly, the MCC regularly reviews the market data, pay practices, and compensation ranges among both oil industry peers and non-oil industry peers to ensure that we continue to offer a reasonable and competitive executive pay program. Our core peer group is reviewed regularly by the MCC, with input from the MCC’s independent compensation consultant, and updated as appropriate. Throughout this Compensation Discussion and Analysis, we refer to three distinct peer groups, as described below. We source peer company data from compensation consultant surveys and public disclosures.

 

     

Peer group

  

Description

    

 

Oil industry peer group (10 companies)

  

 

Companies with substantial U.S. or global operations that closely approximate the size, scope, and complexity of our business or segments of our business. This is the primary peer group used to understand how each NEO’s total compensation compares with the total compensation for reasonably similar industry-specific positions.

 

Devon was removed from the oil industry peer group for 2021 due to its withdrawal from survey participation.

 

   
Non–oil industry peer group (13 companies)   

Companies of significant financial and operational size that have, among other features, global operations, significant assets and capital requirements, long-term project investment cycles, extensive technology portfolios, an emphasis on engineering and technical skills, and extensive distribution channels. This is the secondary peer group used to periodically compare our overall compensation practices against a broader mix of non-oil companies that are similar to Chevron in size, complexity, and scope of operations.

 

Dupont de Nemours was removed from the non-oil industry peer group for 2021 due to its size.

 

   

LTIP performance share peer group

(four companies and one stock index)

  

Companies used to compare our TSR and ROCE Improvement for the purpose of determining performance share payout: BP, ExxonMobil, Shell, TotalEnergies, and the S&P 500 Total Return Index (for TSR comparison only).

 

The inclusion of the S&P 500 Total Return Index broadens the performance benchmark beyond industry peers for TSR comparison. The MCC believes its inclusion aligns executive pay with long-term stockholder interests.

 

Effective with the 2021 grant, the addition of Relative ROCE Improvement as a performance measure further strengthens the Company’s alignment with stockholder interests and reinforces our focus on delivering higher returns.

 

   

 

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The energy companies most similar to Chevron in size, complexity, geographic reach, business lines, and location of operations are BP, ExxonMobil, Shell, and TotalEnergies. These companies are key competitors for stockholder investments within the larger global energy sector. We also compete for stockholder investment and employee talent with smaller U.S. companies, including the larger independent

exploration and production companies and the larger independent refining and marketing companies. The Non-Oil Industry Peer Group includes capital-intensive, global, large-scale and high-complexity companies. The median market cap (as of 12/31/2021) of the Non-Oil Industry Peer Group was $176 billion (vs. $226 billion for Chevron), and the median sales for 2021 were $67 billion (vs. $156 billion for Chevron).

 

 

 

LOGO

Note:

(1)

TotalEnergies is part of the LTIP Performance Share Group but not part of the Oil Industry Peer Group due to its limited U.S. operations.

Base salary

 

Base salaries are determined through market surveys of positions of comparable level, scope, complexity, and responsibility. There is no predetermined target or range within the Oil Industry Peer Group or the Non–Oil Industry Peer Group as an objective for Mr. Wirth’s base salary. Instead, the MCC takes into account the data provided by the MCC’s independent consultant, the relative size, scope, and complexity of our business, Mr. Wirth’s performance and tenure, and the aggregate amount of Mr. Wirth’s compensation package. For the other NEOs, each executive officer is assigned a base salary grade based on competitive

data and relative internal parity of the role. The MCC annually reviews the base salary grade ranges and may approve changes in the ranges based on business conditions and comparative peer group data provided by the MCC’s independent consultant. Within each salary grade range, the MCC makes base salary determinations for each NEO taking into account qualitative considerations, such as individual performance, experience, skills, retention objectives, and leadership impact. The independent Directors of the Board approve the compensation of the CEO and ratify the compensation of the other NEOs.

 

 

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Adjustments in 2021 base salaries

 

In January 2021, the independent Directors of the Board, upon the recommendation of the MCC, made no change to Mr. Wirth’s salary based on survey data and market condition. In addition, the MCC made no changes to any of the other

NEOs’ base salaries for the 2021 compensation cycle. See the Summary Compensation Table on page 62 for more information on base salary changes over time.

 

 

Name Position

 

2020
Base salary*

 

2021
Base salary*

 

Adjustment

for 2021

 

Michael K. Wirth

 

Chairman and Chief Executive Officer

 

 

 

$1,650,000

 

 

 

 

 

$1,650,000

 

 

 

 

 

0.0%

 

 

 

Pierre R. Breber

 

Vice President and Chief Financial Officer

 

 

 

$1,020,000

 

 

 

 

 

$1,020,000

 

 

 

 

 

0.0%

 

 

 

James W. Johnson

 

Executive Vice President, Upstream

 

 

 

$1,210,000

 

 

 

 

 

$1,210,000

 

 

 

 

 

0.0%

 

 

 

Joseph C. Geagea

 

Executive Vice President and Senior Advisor to Chairman and CEO

  $1,020,000     $1,020,000     0.0%  

 

Mark A. Nelson

 

 

Executive Vice President, Downstream & Chemicals

 

 

 

 

 

$   950,000

 

 

 

 

 

 

 

 

$   950,000

 

 

 

 

 

 

0.0%

 

 

 

 

*

Base salary refers to the approved annual salary rate as of the effective date.

Adjustments in 2022 base salaries

 

In January 2022, the independent Directors of the Board, upon the recommendation of the MCC, increased Mr. Wirth’s base salary to $1,700,000, taking into account his 2021 performance and the desired compensation level relative to CEOs of both oil and non-oil industry peer companies. The MCC increased the NEO salary grade ranges by 2% for the 2022 compensation cycle based on improved market

conditions and survey data. As to individual salary changes, the MCC adjusted the other NEOs’ base salaries in 2022 (ranging from 2.9% to 10.5%) reflective of their 2021 performance, experience, and competitive benchmarks. All salary increases are effective March 1, 2022. See the Summary Compensation Table on page 62 for more information on base salary changes over time.

 

 

Annual incentive plan (chevron incentive plan)

 

The Chevron Incentive Plan is designed to recognize annual performance achievements based on the MCC’s assessment of Company performance across four performance categories that are Company priorities and are in large part reflected in the Company’s Business Plan:

 

    financial results (weighted 35%)

 

    capital management (weighted 30%)

 

    operating and safety performance (weighted 25%)

 

    energy transition (weighted 10%)

Each category contains multiple performance measures, reflecting outcomes of both short-term and long-term measures on absolute and relative performance, as well as the performance trend over time.

The award is delivered as an annual cash payment based on an individual bonus component reflecting executive leadership and performance, multiplied by the Corporate Performance Rating. The CIP award determination process is consistent across approximately 37,400 CIP-eligible Chevron employees, with the award target varying by pay grade. See page 44 for the target CIP value for each NEO.

In early 2021, the MCC approved the addition of an “Energy Transition” performance category to the 2021 CIP scorecard. This important addition responds to investor input and reinforces Chevron’s focus on advancing a lower carbon future. This new category will have a 10% weighting, and will measure Chevron’s progress in the areas of GHG management, renewable energy and carbon offsets, and low-carbon technologies. The scorecard performance outcomes impact CIP payout for all eligible employees.

 

 

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Executive compensation  

 

 

 

The CIP award for the CEO and the other NEOs is calculated as follows:

 

     

Corporate Performance Rating   

 

X

  Individual Bonus Component

      (base salary x bonus percentage)

 

À À

 

At the beginning of each performance year, the MCC reviews and approves the annual performance measures, weightings, and goals established with the Business Plan. After the end of the performance year, the MCC reviews and assesses Company performance metrics and sets the Corporate Performance Rating based on a range of measures in four categories.

 

Performance is viewed across multiple parameters (i.e., absolute results; results vs. Business Plan; results vs. Oil Industry Peer Group and/or general industry; performance trends over time). The MCC also evaluates achievement of the performance measures by taking into account elements that may be market-driven or otherwise beyond the control of management. See pages 50 to 53 for a discussion of 2021 performance.

 

The minimum Corporate Performance Rating is zero (i.e., no award), and the maximum is two (i.e., 200%).

 

 

The Individual Bonus Component (IBC) is determined by the MCC taking into account competitive bonus targets among oil peers and individual performance.

 

Before the beginning of each performance year, the MCC establishes a target as a percentage of the NEO’s base salary, which is set with reference to target opportunities found across Chevron’s Oil Industry Peer Group. The MCC then establishes a bonus range, which is 75% to 125% of the target for the 2021 performance cycle. All CIP participants in the same salary grade have the same target and bonus range, which provides for internal equity and consistency.

 

At the end of the performance year, the MCC determines the IBC for each NEO by selecting a percentage point within the bonus range based on an assessment of individual performance, taking into account personal effort and initiative, business unit performance, and the individual’s leadership impact on the enterprise. Under extraordinary circumstances, the IBC may be adjusted upward or downward, including to zero, for any employee at the sole discretion of the MCC.

 

The CEO recommends to the MCC an IBC for each NEO other than himself.

 

The MCC recommends the IBC for the CEO and approves the IBC for the other NEOs. The independent Directors of the Board approve the IBCs for the CEO and ratify the IBCs for the other NEOs.

 

 

Overall award capped at 200% of target

 

Chevron goes through a rigorous goal-setting and performance review process to determine the CIP Corporate Performance Rating. Annually, Business Plan objectives are determined after thorough reviews and approvals by the Enterprise Leadership Team (“ELT”), a subcommittee of the Executive Committee, and the Board. The ELT is responsible for setting objectives that challenge the Company to optimize strategies and portfolio composition and to improve

operational performance to create stockholder value. Robust annual performance measures, weightings, and goals are established with the Business Plan, subject to review and approval by the MCC. Mid-year and end-of-year reviews by the Board and the MCC systematically assess progress against these measures. The MCC has discretion in determining CIP awards, which includes discretion to set the award to zero if conditions warrant it.

 

 

2021 CIP corporate performance rating

 

In January 2022, the MCC evaluated Chevron’s 2021 performance across the four performance categories: financial results, capital management, operating and safety performance, and energy transition. A raw score range was assigned based on the Company’s actual performance with respect to the particular performance measures comprising each category as measured against the Company’s Plan. This raw score can span from zero (reflecting very poor performance) to two (reflecting outstanding performance) for each category.

Category weights are then applied to the raw score ranges to determine an overall range. When determining the Corporate Performance Rating, the MCC may apply discretion when assessing the Company’s performance.

For the 2021 performance year, the MCC assigned an overall CIP Corporate Performance Rating of 1.50, based on the Company’s strong financial and operating results and in recognition of the extraordinary workforce achievements during a year of ongoing pandemic challenges.

 

 

Chevron Corporation – 2022 Proxy Statement

 

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Executive compensation  

 

 

Specific inputs to the MCC’s evaluation are summarized below, followed by a detailed description of the basis for the compensation results. We have included specific measures from our Plan for the first time to provide more transparency into the MCC’s decision making. Commodity price fluctuations are a significant and uncontrollable factor in our industry. Plans for any year are dependent on commodity price assumptions and financial results vary significantly based on differences between assumed and actual commodity prices. 2021 Plan assumptions were forecast in the second half of 2020 during significant global economic and commodity uncertainty when Brent oil prices averaged around $44 per barrel.

 

Category   Weight     Performance measures   2021 Plan(1)  

 

Year-end results vs. Plan

highlights

    Results(2)     Raw score  

  (0.00 - 2.00)   

    Weighted    

score  

             

Financial

Results

  35%  

Earnings

 

$(0.5)B

 

$15.6 B, significantly above Plan primarily due to recovering global economic conditions. Normalized(3) earnings above Plan. 5-yr EPS performance ranked 1st among LTIP peers.

 

 

LOGO

  1.75 - 1.90   0.61 -  0.67
 

 

CFFO (4)

 

Cash flow before distributions (5)

 

 

$12.3B

 

$4.0B

 

 

$29.2 B cash flow from operations and $24.6 B cash flow before distributions significantly above Plan. Normalized(3) for price / market effects, above Plan.

 

 

LOGO

 

Operating expenses, excluding fuel and transportation (6)

 

 

$19.6B

 

 

$20.1 B, slightly above Plan with reductions in Downstream offset by higher unanticipated Employee Benefits.

 

 

LOGO

             

Capital    

Management    

  30%  

Return on capital employed (7)(8)

 

0.3%

 

 

9.4%, significantly above Plan. 1-year improvement ranked 2nd amongst LTIP peers.

 

 

LOGO

  1.45 - 1.60   0.44 -  0.48
 

Organic Capital and exploratory expenditures, including equity in affiliates

 

$13.9B

 

 

$11.6 B, significantly better than Plan.

 

 

LOGO

  Major milestones  

$8.50/BOE

 

 

Permian - Company-operated average unit development cost below Plan.

 

 

LOGO

 

Modules 1Q

 

Substation 3Q

 

 

FGP/ WPMP - All modules on foundations in April 2021 and substation energization in December 2021, despite COVID impacts.

 

Start-Up 3Q

 

 

GSC - Completed Cracker start-up in 2Q21, ahead of schedule and under budget.

             

Operating & Safety    

Performance

  25%  

Net production, excluding impact of divestments

 

3,083 - 3,175
MBOED

 

 

At lower end of 0-3% guidance range.

 

 

LOGO

  0.90 - 1.00    0.23 - 0.25 
 

Refining reliability, including joint ventures and affiliates

 

96.6%

 

Operational availability in-line with Plan.

 

 

LOGO

 

 

Personal safety (9)

 

 

Eliminate
fatalities and
prevent
serious
injuries (10)

 

 

Serious Injury count slightly better than Plan. Two fatal injuries.

 

 

LOGO

 

 

Process safety and environmental (9)

 

Zero severe
tier 1 loss of
containment
(LOC) (11)

 

One Severe Tier 1 event

 

 

LOGO

 

 

Tier 1+2 LOCs
59

 

 

101 Tier 1 + Tier 2 LOCs

 

 

Spill volume
(to land &
water) 1.0
Mbbl

 

 

Spill volume 2.1 Mbbl.

             
Energy  Transition       10%  

Greenhouse gas management

  See “Energy
Transition”
milestones on
page 53
 

 

Progress with identifying, funding, and executing projects.

 

 

LOGO

  0.95 - 1.05   0.10 - 0.11
 

Renewable energy & carbon offsets

 

Achieved milestones for renewable feedstocks, renewable natural gas, and renewable power projects.

 

 

LOGO

 

Low-Carbon technologies

 

 

In line with Plan for MOUs and venture investments.

 

 

LOGO

   
        Corporate Performance Rating Range     1.4 - 1.5 
   
        Final Corporate Performance Rating     1.50

 

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Notes:

(1)

Plan refers to Board-approved Business Plan and externally disclosed guidance for organic capital and exploratory expenditures and net production.

 

(2)

Results refer to overall evaluation: green – met or exceeded, yellow – some gaps, red – did not meet. Earnings and cash flow are evaluated based on comparisons to Plan, normalized objectives, and peers, but weighted most heavily to comparisons to Plan.

 

(3)

Normalized earnings and cash flow exclude market factors beyond the control of management, including commodity prices.

 

(4)

Cash Flow From Operating Activities as reported in the 2021 Consolidated Statement of Cash Flows; normalized cash from operating activities excludes the impact of commodity price and Downstream market and price effects.

 

(5)

Cash flow before distributions reconciliation (non-GAAP measure) from Net Change in Cash as reported on the 2021 Consolidated Statement of Cash Flows and Note 3. Information Relating to the Consolidated Statement of Cash Flows. Distributions include cash dividends, share repurchases, net borrowing/repayment of short-term obligations, and repayments of long-term debt obligations.

 

 

 
 

 

 
 

($ Billions, figures rounded)

Net Change in Cash

 

 

 
 

 

 
  (0.1)  
   

(-) Net borrowings (repayment) of short-term debt obligations

        (5.6
   

(-) Repayments of long-term debt and other financing obligations

        (7.4
   

(-) Cash dividends – common stock

        (10.2
   

(-) Shares purchased under share repurchase and deferred compensation plans

        (1.4
   

Cash flow before distributions

        24.

 

(6)

Operating expenses, selling, general, and administrative expenses, and other components of net periodic benefit costs as reported in the 2021 Consolidated Statement of Income (excludes affiliate spending), excluding fuel and transportation expenses. Figures rounded. Evaluated as “green” when within 3% of Plan.

 

(7)

Relative peer comparisons based on externally disclosed results through the end of 3Q21.

 

(8)

See ROCE calculation on page 47 and “Definitions of Selected Financial Terms” in Exhibit 99.1 of Chevron’s Annual Report on Form 10-K for the year ended December 31, 2021.

 

(9)

Plan with respect to personal safety and process safety and environmental measures refer to the maximum number of incidents we aim to stay below for the year.

 

(10)

A serious injury is an injury that results in significant disfigurement or typically results in permanent or long-term impairment of an internal organ, body function or body part.

 

(11)

Severe Tier 1 LOCs are differentiated from other Tier 1 LOCs due to their more serious consequences (e.g. fatality or significant offsite environmental impact).

Financial results – 35%

 

  Earnings – 2021 reported earnings of $15.6 billion were significantly above Plan, mainly due to recovering global economic conditions resulting in higher Upstream realizations and Downstream margins, in addition to higher CPChem results. Normalized earnings were also above Plan. The Company’s five-year indexed Earnings, excluding special items, per share performance ranked first relative to peers.

 

  Cash flow – Chevron delivered operating cash flow of $29.2 billion and cash flow before distributions of $24.6 billion in 2021, significantly above Plan. Normalized for oil price and Downstream market/price effects, cash flow was in-line with Plan.

 

  Operating expense, excluding fuel and transportation – $20.1 billion, slightly above Plan with reductions in Downstream and achievement of Noble run-rate synergies offset by higher employee benefits. Since 2014, costs have declined 15%.

 

  Based on the preceding, the raw score range assigned to this category for the 2021 performance year was 1.75-1.90 out of a maximum of 2.0.

Capital management – 30%

 

  Return on capital employed – Reported ROCE for 2021 of 9.4% was significantly above Plan, in-line with above Plan earnings. The Company’s one-year ROCE, excluding special items, performance improvement was ranked second relative to peers.

 

  Capital and exploratory expenditures – 2021 organic C&E totaled $11.6 billion, significantly better than Plan on COVID-
 

related project spend deferrals and continued capital efficiencies.

 

  Major milestones per Plan:

 

    Tengizchevroil FGP/WPMP – Despite COVID-impacted timelines, all modules set on foundations and substation energization complete.

 

    Permian – Unit development cost better than Plan.

 

    GS Caltex – Reached 100% of design capacity of its mixed-feed cracker, ahead of schedule and under budget.

 

  Based on the preceding, the raw score range assigned to this category for the 2021 performance year was 1.45-1.60 out of a maximum of 2.0.

Operating & safety performance – 25%

 

  Net production – 3.099 million barrels of oil-equivalent per day in 2021, excluding divestments. Annual growth rate at the lower-end of our 0-3% external guidance range (vs. 2020).

 

  Refinery reliability – Operational availability in-line with Plan.

 

  Personal safety – Serious Injury count for the Company in 2021 slightly better than Plan (favorable). Opportunity for improvement remains in preventing fatal incidents.

 

  Process safety and environmental – Gaps in preventing high-severity incidents; combined number of Tier 1 + Tier 2 Loss of Containment exceeded Plan (unfavorable). Spill volume exceeded target.

 

  Based on the preceding, the raw score range assigned to this category for the 2021 performance year was 0.90-1.00 out of a maximum of 2.0.
 

 

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Energy transition – 10%

 

Progress on performance measures that are intended to lead to achieving our GHG intensity metrics:

 

  Greenhouse gas management – Progress with identifying, funding, and executing GHG reduction projects via our marginal abatement cost curve process, which has identified more than 200 GHG-abatement projects. Launched global methane detection plan. Completed strategy for achieving Zero Routine Flaring by 2030.

 

  Renewable energy and carbon offsets – Achieved milestones for renewable feedstocks, including beginning coprocessing at El Segundo; renewable natural gas, including achieving first renewable natural gas from Brightmark LLC partnership; and renewable power projects, including achieving final investment decision for renewable power projects in the Permian Basin under co- development with Algonquin.
  Low-Carbon technologies – In line with Plan for memorandums of understanding, including with Cummins Inc. and Toyota Motor North America to explore strategic alliances for commercial viable business opportunities in hydrogen, and venture investments, including among others in Starfire, a startup developing a modular, distributed ammonia cracking system, Hydrogenious LOHC Technologies, whose technology has potential as a bulk hydrogen storage and transportation medium, and Ocergy Inc., a developer of floating offshore wind foundation technology.

 

  Based on the preceding, the raw score range assigned to this category for the 2021 performance year was 0.95-1.05 out of a maximum of 2.0.
 

 

2021 NEO CIP awards

 

There was no change to CIP targets for the CEO and the other NEOs in 2021.

In determining the Individual Bonus Component (IBC) for the 2021 CIP awards to the CEO and the other NEOs, the MCC and the independent Directors of the Board considered a wide range of factors, including individual and business unit achievements in alignment with the four CIP categories, strategic impact in positioning Chevron for the future, the executive’s collaboration with other members of the leadership team, and how executives role model The Chevron Way as stewards of the business.

Specifically, the MCC recognized and considered these accomplishments and performance gaps for each NEO when determining the IBC:

 

  Michael K. Wirth – Mr. Wirth exhibited strong leadership in meeting Chevron’s key financial and operational objectives– notably, highest earnings since 2014 and record free cash flow, continued capital discipline with the Company’s highest ROCE since 2014, resuming stock repurchases and delivering significant progress on major milestones. In addition, Mr. Wirth led Chevron’s efforts to advance its lower carbon future by forming the Chevron New Energies organization, introducing a 2050 net zero aspiration for Upstream Scope 1 and Scope 2 emissions, and more than tripling planned lower carbon investments through 2028.
  Pierre R. Breber – Mr. Breber continued to be highly effective in managing costs and efficiencies, retaining strong internal controls, maintaining the balance sheet, and strengthening relationships and engagements with the investment community.

 

  James W. Johnson – Mr. Johnson led the Upstream organization to deliver strong operational results in another year of ongoing pandemic challenges and made substantial progress on the Tengizchevroil FGP/WPMP major milestones, with some performance gaps with respect to fatality prevention and process safety.

 

  Joseph C. Geagea – Mr. Geagea successfully drove the completion of Noble integration, which more than doubled the Company’s initial synergy estimates. He was also instrumental in ensuring a smooth leadership transition while delivering on key safety and operational metrics and exceeding the cost reduction targets for his organization.

 

  Mark A. Nelson – Mr. Nelson delivered strong operational, safety and financial results despite challenging Downstream market conditions for most of the year. He also demonstrated strong leadership and was a key contributor on the execution of the Company’s lower carbon strategy, particularly in the early ventures of renewable fuels.
 

As a result of the performance evaluation, the MCC and the Independent Directors of the Board determined the 2021 CIP awards to be paid to Mr. Wirth and the other NEOs as follows. Refer to page 44 for CIP target percentage for each NEO.

 

Name   Corporate
Performance Rating
   

 

 
   

Individual Bonus Component

(base salary x bonus percentage)

        

 

 
     2021 CIP award  

Michael K. Wirth

  1.50          x     $  3,000,000     ( $  1,650,000       x       182 % )         =      $   4,500,000  

Pierre R. Breber

  1.50          x     $ 1,200,000     ( $ 1,020,000       x       118 % )         =      $ 1,800,000  

James W. Johnson

  1.50          x     $ 1,500,000     ( $ 1,210,000       x       124 % )         =      $ 2,250,000  

Joseph C. Geagea

  1.50          x     $ 1,200,000     ( $ 1,020,000       x       118 % )         =      $ 1,800,000  

Mark A. Nelson

  1.50          x     $ 1,200,000     ( $ 950,000       x       126 % )         =      $ 1,800,000  

 

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Executive compensation  

 

 

 

Long-term incentive plan

 

The key objective of our Long-Term Incentive Plan is to encourage performance that drives stockholder value over the long term. The target value of an NEO’s LTIP award at the time of grant is determined by the MCC, with input from its independent compensation consultant and referencing external benchmark comparisons. The objective is to ensure that Chevron is competitive against its industry peer companies on the overall target compensation (cash plus equity), after allowing for appropriate differentiation based on size, scale, scope and job responsibilities.

Each year in January, the MCC determines a target value for LTIP awards for the CEO and the other NEOs based on industry competitive data. These awards provide incentive compensation opportunities tied to Chevron’s future long-term performance.

In recommending the LTIP target value for the CEO, the MCC relies on input from its independent compensation consultant and benchmark research, focusing on the form and amount of similar compensation opportunities in the Oil Industry Peer Group. The MCC also considers the CEO’s

demonstrated performance and the Company’s size, scope, and complexity relative to the comparison companies. For the other NEOs, the MCC sets an annual LTIP target value for each salary grade as a multiple of salary, referencing median incentive opportunities for executives in similar positions at companies in the Oil Industry Peer Group. All NEOs in the same salary grade receive the same LTIP award, comprised of the three equity vehicles listed in the table. In addition, in line with the Company’s grant practice for all LTIP-eligible employees, the MCC may grant additional RSUs to differentiate and recognize exceptional individual performance. These RSUs are typically awarded up to 15% of the LTIP-eligible participants each year, accrue dividend equivalents and vest at the end of the three years. The MCC may also make a downward adjustment to LTIP awards based on an NEO’s performance assessment.

The LTIP award represents a pay opportunity. The ultimate realized value of equity-based awards is determined by absolute and relative stock price performance over a three- to 10-year period.

 

 

Chevron Corporation – 2022 Proxy Statement

 

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Executive compensation  

 

 

The LTIP program comprises the following three equity vehicles:

 

Component

 

2021

Proportion

 

 

How it works

 

 

Performance
shares

 

 

50%

 

 

•   Payout weighted 70% based on Relative TSR as measured against the LTIP Performance Share Peer Group (ExxonMobil, BP, Shell, TotalEnergies, and the S&P 500 Total Return Index) and 30% based on Relative ROCE Improvement (ROCE-I) as measured against large-cap integrated energy companies (BP, ExxonMobil, Shell, and TotalEnergies).

 

   
     

Relative ranking

 

1

 

2

 

3

 

4

 

5

 

6

       
     

TSR (70% weight, ranking includes S&P 500)

 

200%

 

160%

 

120%

 

80%

 

40%

 

0%

   
     

ROCE-I (30% weight, ranking excludes S&P 500)

 

200%

 

150%

 

100%

 

50%

 

0%

 

n/a

   
   
     

We believe the addition of Relative ROCE Improvement as a performance measure (effective 2021) further strengthens the Company’s alignment with stockholder interests and reinforces our focus on delivering higher returns.

 

•   Performance shares accrue dividend equivalents that are reinvested as additional shares, to be paid at the end of the performance period and subject to the same three-year cliff vesting schedule and performance modifier.

 

•   The MCC can exercise negative discretion to reduce the payout.

 

•   Actual number of shares granted is determined by dividing the proportionate target value of the NEO’s LTIP award by Chevron’s closing common stock price on the grant date.

 

•   Payment is made in cash. Refer to footnote 2 on pages 68 and 69 for calculation details.

 

   
   
RSUs   25%  

•   Actual number of RSUs granted is determined by dividing the proportionate target value of the NEO’s LTIP award by Chevron’s closing common stock price on the grant date.

 

•   Five-year cliff vesting lengthens equity holding time, which enhances retention and alignment with stockholders.

 

•   RSUs accrue dividend equivalents that are reinvested as additional RSUs, to be paid at the time of vesting.

 

•   Payment is made in cash based on the closing common stock price on the vesting date.

 

 

   
   
Stock options   25%  

•   Strike price is equal to Chevron’s closing common stock price on the grant date.

 

•   Options vest and become exercisable at a rate of one-third per year for the first three years and expire 10 years after the grant date.

 

•   Gains realized depend on the Chevron common stock price at the time of exercise compared with the strike price.

 

•   Actual number of stock options granted is determined by dividing the proportionate target value of the NEO’s LTIP award by the Black-Scholes option value on the grant date, consistent with the grant date fair value calculation as presented in the Summary Compensation Table.

 

       

 

 

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LTIP metrics

The MCC continues to believe TSR should be the primary pay-for-performance measure to align our CEO’s and other NEOs’ performance with stockholder interests. It is objectively determined and allows for meaningful comparisons of our performance relative to other companies within the same industry and to our stockholders’ other investment alternatives within the S&P 500 Total Return Index. Like TSR, ROCE is a standard performance measure by which stockholders measure a company’s performance, and it allows for meaningful comparisons relative to peers within our industry. The MCC believes that the addition of Relative ROCE Improvement as a performance measure in our performance shares further strengthens the Company’s alignment with stockholder interests and reinforces our focus on delivering higher returns.

The majority of the LTIP award derives value directly from TSR (relative and absolute). For the CEO and the other NEOs to earn their originally targeted compensation, Chevron must show competitive TSR performance.

2019–2021 performance share payout

 

The three-year performance period for performance shares granted in January 2019 ended on December 31, 2021. For this three-year period, Chevron ranked second in TSR when compared with the LTIP Performance Share Peer Group, which includes the S&P 500 Total Return Index, resulting in a payout modifier of 160%.

The inclusion of the S&P 500 Total Return Index was implemented in 2017 and has led to lower payout modifiers in the 2017-2019, 2018-2020 and 2019-2021 performance periods.

Refer to “Option Exercises and Stock Vested in Fiscal Year 2021” tables on pages 68 and 69 for details on the performance payout calculation.

LOGO

Note

   (1)

Per program rules, annualized returns based on average closing stock price for the 20 trading days prior to the beginning of the performance period (January 1, 2019) and the last 20 trading days of the performance period (ending December 31, 2021). Figures rounded.

 

 

2021 LTIP grants

In January 2021, the independent Directors, upon recommendation of the MCC, approved the LTIP award to the CEO and ratified the following LTIP awards to the other NEOs. In addition, the MCC awarded Mr. Geagea additional RSUs of 18,150 shares in recognition of his extraordinary leadership in managing Chevron’s global COVID-19 pandemic response, serving as integration executive for the acquisition of Noble Energy, Inc., and leading the enterprise-wide business restructuring, in addition to his regular responsibilities. This is the first additional RSU award to a NEO since 2016. The MCC will continue to limit the grant of additional RSUs to NEOs, except in extraordinary circumstances.

 

Name

 

2021

LTIP target value*

   

Performance
shares

   

RSUs

   

Stock
options

 

Michael K. Wirth

 

$

  15,500,000

 

 

 

87,870

 

 

 

43,930

 

 

 

317,100

 

Pierre R. Breber

 

$

 4,002,300

 

 

 

22,690

 

 

 

11,340

 

 

 

81,900

 

James W. Johnson

 

$

 5,197,500

 

 

 

29,460

 

 

 

14,730

 

 

 

106,300

 

Joseph C. Geagea

 

$

5,603,200

 

 

 

22,690

 

 

 

29,490

 

 

 

81,900

 

Mark A. Nelson

 

$

 4,002,300

 

 

 

22,690

 

 

 

11,340

 

 

 

81,900

 

 

*

The number of awarded performance shares, RSUs, and stock options was determined based on the Company’s common stock price on January 27, 2021, the grant date Black-Scholes value for stock options, and a performance share factor of 100% reflecting expected performance at target. As these inputs may vary from those used for financial reporting, the target value shown above may not match the values presented in the “Summary Compensation Table” or the “Grants of Plan-Based Awards in Fiscal Year 2021” table in this Proxy Statement on pages 62 and 65, respectively. Mr. Geagea’s LTIP target value and awarded RSU shares include additional RSUs as described above.

 

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2022 LTIP grants

In January 2022, the independent Directors, upon the recommendation of the MCC, approved the LTIP award to the CEO and ratified the following LTIP awards to the other NEOs. The MCC and the independent Directors increased the CEO’s 2022 LTIP target value by 3.2%, and the other NEOs’ 2022 LTIP target values by 1.4% to 2.0%. No change was made to the share calculation methodology. Mr. Geagea did not receive a 2022 LTIP grant due to his upcoming retirement.

 

Name

 

2022

LTIP target value*

   

Performance
shares

   

RSUs

   

Stock
options

 

Michael K. Wirth

 

$

  16,000,000

 

 

 

60,290

 

 

 

30,150

 

 

 

169,800

 

Pierre R. Breber

 

$

 4,059,900

 

 

 

15,300

 

 

 

7,650

 

 

 

43,100

 

James W. Johnson

 

$

 5,301,000

 

 

 

19,980

 

 

 

9,990

 

 

 

56,300

 

Joseph C. Geagea

 

$

—      

 

 

 

—    

 

 

 

—   

 

 

 

—    

 

Mark A. Nelson

 

$

 4,059,900

 

 

 

15,300

 

 

 

7,650

 

 

 

43,100

 

 

*

The number of awarded performance shares, RSUs, and stock options was determined based on the Company’s common stock price on January 26, 2022, the grant date Black-Scholes value for stock options, and a performance share factor of 100% reflecting expected performance at target. As these inputs may vary from those used for financial reporting, the target value shown above may not match the values presented in the 2023 Proxy Statement’s “Summary Compensation Table” or the “Grants of Plan-Based Awards in Fiscal Year 2022” table.

Retirement programs and other benefits

NEOs, like all other employees, have retirement programs and other benefits as part of their overall compensation package at Chevron. We believe these programs and benefits support our long-term investment cycle and encourage retention and long-term employment.

Retirement programs

All of our employees, including our NEOs, have access to retirement programs that are designed to enable them to accumulate retirement income. The defined benefit and defined contribution restoration plans allow highly compensated employees to receive the same benefits they would have earned without the IRS limitations on qualified retirement plans under the Employee Retirement Income and Security Act. The deferred compensation plan allows eligible employees to defer salary, CIP awards, and LTIP payouts.

 

       

Plan name

 

Plan type

 

How it works

 

What’s disclosed

   
Chevron Retirement Plan (“CRP”)  

Qualified
Defined

Benefit
(IRS §401(a))

  Participants are eligible for a pension benefit when they leave the Company as long as they meet age, service, and other provisions under the plan.   In the “Summary Compensation Table” and the “Pension Benefits Table” in this Proxy Statement, we report the change in pension value in 2021 and the present value of each NEO’s accumulated benefit under the CRP.
   

 

Chevron Retirement Restoration Plan (“RRP”)

 

 

Nonqualified
Defined
Benefit

 

 

Provides participants with retirement income that cannot be paid from the CRP due to IRS limits on compensation and benefits.(1)

 

 

In the “Pension Benefits Table” and accompanying narrative in this Proxy Statement, we describe how the RRP works and present the current value of each NEO’s accumulated benefit under the RRP.

   

 

Employee Savings Investment Plan (“ESIP”)

 

 

Qualified
Defined
Contribution
(IRS §401(k))

 

 

Participants who contribute a percentage of their annual compensation (i.e., base salary and CIP award) are eligible for a Company matching contribution, up to annual IRS limits.(2)

 

 

In the footnotes to the “Summary Compensation Table” in this Proxy Statement, we describe Chevron’s contributions to each NEO’s ESIP account.

   

 

Employee Savings Investment Plan– Restoration Plan (“ESIP-RP”)

 

 

Nonqualified

Defined
Contribution

 

 

Provides participants with an additional Company matching contribution that cannot be paid into the ESIP due to IRS limits on compensation and benefits.(3)

 

 

In the footnotes to the “Nonqualified Deferred Compensation Table” in this Proxy Statement, we describe how the ESIP-RP works. In the “Summary Compensation Table” and the “Nonqualified Deferred Compensation Table,” we present Chevron’s contributions to each NEO’s ESIP-RP account.

 

   

 

Deferred Compensation Plan (“DCP”)

 

 

Nonqualified Defined
Contribution

 

 

Participants can defer up to:

 

• 90% of CIP awards and LTIP performance share payouts; and

 

• 40% of base salary above the IRS limit (IRS §401(a)(17)) for payment after retirement or separation from service.

 

 

 

In the “Nonqualified Deferred Compensation Table” in this Proxy Statement, we report the aggregate NEO deferrals and earnings in 2021.

 

(1)

IRS annual compensation limit was $290,000 in 2021.

 

(2)

Participants who contribute at least 2% of their annual compensation to the ESIP receive a Company matching contribution of 8% (or 4% if they contribute 1%).

 

(3)

Participants who contribute at least 2% of their base salary to the DCP receive an ESIP-RP Company matching contribution of 8% of their base salary that exceeds the IRS annual compensation limit.

 

Chevron Corporation – 2022 Proxy Statement

 

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Executive compensation  

 

 

 

Benefit programs

The same health and welfare programs, including post-retirement health care, that are broadly available to employees on our U.S. payroll also apply to NEOs, with no other special programs except executive physicals (as described below under Perquisites). In addition, NEOs are eligible for HR policies and programs applicable to all U.S. payroll exempt employees, such as our relocation program. In 2021, Mr. Johnson and Mr. Geagea received relocation benefits associated with moving their positions from Chevron’s headquarters in the San Francisco Bay Area to our Houston, Texas offices. These standard benefits include home sale assistance and benefits to primarily cover closing costs and commissions (or receipt of a home retention allowance in lieu of such benefits if the NEO chooses to retain their current residence at the time of relocation), shipment of household goods, home purchase assistance, temporary lodging and travel, and other miscellaneous relocation benefits. No home loss buyout benefits or tax gross-up on any relocation benefits were provided to Mr. Johnson or Mr. Geagea. These benefits are reported as perquisites in footnote 6 to the “Summary Compensation Table” of this Proxy Statement on page 64.

Perquisites

We provide certain perquisites to eligible members of senior management, including the NEOs, as discussed below and with respect to certain “Benefit programs” described above.

Ensuring the safety and security of our Chairman and CEO, Mr. Wirth, and the other NEOs is of critical importance to Chevron. Accordingly, perquisites include business-related security measures; in particular, these security measures include residential and personal security and the aggregate incremental costs to Chevron for personal use of Chevron automobiles and corporate aircraft to ensure secure travel and protection. For security reasons, the Board has mandated that Mr. Wirth fly on the corporate aircraft for all business and personal travel whenever it is feasible, and Mr. Wirth is also provided with access to Chevron’s cars, drivers, and security personnel for both business and personal use. Effective 2021, the MCC also endorsed the provision of optional cybersecurity consulting services to Chevron’s executives, including the NEOs, given the increasing cybersecurity threat to these high-profile executives.

Further, consistent with peer practice and as part of our standard employee benefit package, we provide financial counseling services pursuant to Chevron’s Financial Counseling Program to approximately 300 eligible members of senior management, including the NEOs, to assist them in obtaining professional advice on personal financial matters. We also provide executive physicals to approximately 50 eligible members of senior management, including the NEOs, to promote overall health and wellness.

The MCC periodically reviews our practices and disclosures with respect to perquisites. In footnote 6 to the “Summary Compensation Table” of this Proxy Statement on page 64, we report the value of each NEO’s perquisites for 2021, as well as additional details regarding these perquisites.

 

Chevron Corporation – 2022 Proxy Statement

 

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Executive compensation  

 

 

Best practice in compensation governance

To ensure independent oversight, stockholder alignment, and long-term sustainability, our executive compensation program has the following governance elements in place.

 

 

What we do

 

      

What we do not do

 

 

 

Robust stockholder engagement plan to ensure alignment with stockholder interests

 

 

     

 

No excessive perquisites; all have a specific business rationale

 

 

 

Stock ownership guidelines for the Chief Executive Officer, six times base salary; for the Executive Vice Presidents and Chief Financial Officer, four times base salary

 

     

 

No individual supplemental executive retirement plans

 

 

 

Deferred accounts inaccessible until a minimum of one year following termination

 

 

     

 

No stock option repricing, reloads or exchanges without stockholder approval

 

 

 

Clawback provisions included in the CIP, LTIP, DCP, RRP, and ESIP-RP for misconduct

 

 

     

 

No loans or purchases of Chevron equity securities on margin

 

 

 

 

Significant CEO pay at risk (92%)

 

     

 

No transferability of stock options (except in the case of death or a qualifying court order)

 

 

 

 

Thorough assessment of Company and individual performance

 

 

     

No stock options granted below fair market value

 

 

 

MCC composed entirely of independent Directors

 

     

No hedging or pledging of Chevron equity securities

 

 

Independent compensation consultant, hired by and reports directly to the MCC

 

     

No change-in-control agreements for NEOs

 

 

MCC has discretion to reduce performance share payouts

 

 

     

No tax gross-ups for NEOs

 

 

 

Annual assessment of incentive compensation risks

 

 

     

 

No “golden parachutes” or “golden coffins” for NEOs

 

 

 

Chevron Corporation – 2022 Proxy Statement

 

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Executive compensation  

 

 

 

Compensation governance: oversight and administration of the executive compensation program

Role of the board of directors management compensation committee

 

The MCC oversees the executive compensation program. The MCC is supported by the independent compensation consultant, Meridian Compensation Partners, LLC (“Meridian”), and management to review pay and performance relative to the Business Plan approved by the Board and to industry peers. The MCC solicits input from the CEO concerning the performance and compensation of other

NEOs. The CEO does not participate in discussion about his own pay; and proposed changes to the compensation of the CEO is recommended by the MCC and approved by the independent Directors of the Board. A complete description of the MCC’s authority and responsibility is provided in its charter, which is available on our website at www.chevron.com and in print upon request.

 

 

Independent compensation advice

 

The MCC retains Meridian as an independent compensation consultant to assist with its duties. The MCC first engaged Meridian in 2014, following a comprehensive request-for-proposal process and subsequent screening and selection. The MCC has the exclusive right to select, retain, and terminate Meridian, as well as to approve any fees, terms, and other conditions of its service. Meridian and its lead consultant report directly to the MCC, but when directed to do so by the MCC, they work cooperatively with Chevron’s management to develop analyses and proposals for the MCC. Meridian provides the following services to the MCC:

 

  Education on executive compensation trends within and across industries;
  Recommendation regarding compensation philosophy and compensation levels;

 

  Selection of compensation comparator groups; and

 

  Identification and resolution of technical issues associated with executive compensation plans, including tax, accounting, and securities regulations.

Meridian does not provide any services to the Company. The MCC is not aware of any work performed by Meridian that raised any conflicts of interest.

 

 

Compensation risk management

 

The MCC annually undertakes a risk assessment of Chevron’s compensation programs to determine whether these programs are appropriately designed and to ensure that they do not motivate individuals or groups to take risks that are reasonably likely to have a material adverse effect on the

Company. Following its most recent comprehensive review of the design, administration, and controls of these programs, the MCC was satisfied that Chevron’s programs are well structured with strong governance and oversight mechanisms in place to minimize and mitigate potential risk.

 

 

Stock ownership guidelines

We require our NEOs to hold prescribed levels of Chevron common stock, further linking their interests with those of our stockholders. Executives have five years to attain their stock ownership guideline. Further, NEOs who have not attained their stock ownership guidelines are required to hold shares acquired under the LTIP program until such ownership requirements are met.

 

     

Position

  

2021 ownership guidelines        

    

CEO

  

Six times base salary

    

Executive Vice Presidents and CFO

  

Four times base salary

    

All Other Executive Officers

  

Two times base salary

    

Based upon our 250-day trailing average stock price ending December 31, 2021 ($104.35), Mr. Wirth had a stock ownership base salary multiple of 13.9. All other NEOs met their respective ownership requirement and had an average stock ownership base salary multiple of 10.7. The MCC believes these ownership levels provide adequate focus on our long-term business model.

Employment, severance, and change-in-control agreements

In general, we do not maintain employment, severance, or change-in-control agreements with our NEOs. Upon retirement or separation from service for other reasons, NEOs are entitled to certain accrued benefits and payments generally available to other employees. We describe the benefits and payments in the “Pension Benefits Table,” the “Nonqualified Deferred Compensation Table,” and the “Potential Payments Upon Termination or Change-in-Control” table in this Proxy Statement.

 

Chevron Corporation – 2022 Proxy Statement

 

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Executive compensation  

 

 

Compensation recovery policies

The Chevron Incentive Plan, Long-Term Incentive Plan, Deferred Compensation Plan, Retirement Restoration Plan, and Employee Savings Investment Plan–Restoration Plan include provisions permitting us to “claw back” certain amounts of cash and equity awarded to an NEO at any time if the NEO engages in certain acts of misconduct, including, among other things: embezzlement; fraud or theft; disclosure of confidential information or other acts that harm our business, reputation or employees; misconduct resulting in Chevron having to prepare an accounting restatement; and failure to abide by post-termination agreements respecting confidentiality, non-competition or non-solicitation.

Hedging and pledging

Under our insider trading policy, our NEOs are prohibited from hedging and pledging Chevron securities, as described in more detail on page 32.

Tax gross-ups

We do not pay tax gross-ups to our NEOs. We do provide standard expatriate packages, which include tax equalization payments, to all employees of the Company who serve on overseas assignments, including executive officers.

Tax deductibility of NEO compensation

For years prior to 2018, Section 162(m) of the Internal Revenue Code (“Code”) limited companies’ deduction for compensation paid to the CEO and the other three most highly paid executives (excluding the CEO and CFO) to $1 million, but allowed for the deduction for performance-based compensation costs/expenses for amounts even in excess of the $1 million limit. Effective January 1, 2018, the Tax Cut and Jobs Act (“TCJA”) repealed this exclusion for performance-based compensation and expanded the class of affected executives, which means that all compensation paid to persons who in 2017, or any year following, were the CEO, CFO (in 2018 or later) or one of the other three most highly paid executives (excluding our CEO and CFO) will be subject to the cap of $1 million. For LTIP awards made on or prior to November 2, 2017, but not yet vested and/or paid out (other than time-based RSUs, which are not qualified under Section 162(m) and therefore are not deductible unless paid after the executive terminates), we expect that the Company will still be able to deduct those amounts, provided that the Company meets the requirements in the TCJA. In January 2021, the Board amended and restated the CIP to remove outdated terms that were designed to allow awards under the CIP to satisfy conditions in Section 162(m) of the Code that were repealed in 2017 by the TCJA.

 

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Executive compensation  

 

 

 

Summary compensation table

The following table sets forth the compensation of our NEOs for the fiscal year ended December 31, 2021, and for the fiscal years ended December 31, 2020, and December 31, 2019, if they were NEOs in those years. The primary components of each NEO’s compensation are also described in our “Compensation Discussion and Analysis” in this Proxy Statement.

 

                 

Name and

principal position

  Year  

Salary

($)(1)

 

Stock
awards

($)(2)

 

Option
awards

($)(3)

 

Non-equity
incentive plan
compensation

($)(4)

 

Change in
pension

value and
nonqualified
deferred
compensation
earnings

($)(5)

 

All other
compensation

($)(6)

 

Total

($)

   

M.K. Wirth,

Chairman and CEO

   

 

 

2021

 

 

   

$

 

1,650,000

 

 

   

$

 

12,233,699

 

 

   

$

 

3,874,962

 

 

   

 

 

$ 4,500,000

 

 

   

 

 

 

 

   

 

 

$ 351,624

 

 

   

$

 

22,610,285

 

 

     

 

2020

 

 

    $

 

 1,635,417

 

 

    $

 

11,248,191

 

 

    $

 

3,875,300

 

 

     

 

 

 

     

 

$ 11,414,991

 

 

     

 

$ 843,132

 

(7)

 

 
    $

 

29,017,031

 

 

      2019     $  1,570,833     $  11,663,631     $  3,750,127       $ 2,280,000       $ 13,383,378       $ 422,693     $  33,070,662
   

P.R. Breber,

Vice President and

Chief Financial Officer

   

 

 

2021

 

 

   

$

 

1,020,000

 

 

   

$

 

3,158,688

 

 

   

$

 

1,000,818

 

 

   

 

 

$ 1,800,000

 

 

   

 

 

$   1,007,726

 

 

   

 

 

$ 118,302

 

 

   

$

 

8,105,534

 

 

     

 

2020

 

 

    $

 

1,014,167

 

 

    $

 

2,904,706

 

 

    $

 

1,001,000

 

 

     

 

 

 

     

 

$   3,327,613

 

 

     

 

$ 105,728

 

 

    $

 

8,353,214

 

 

     

 

2019

 

 

    $

 

988,917

 

 

    $

 

 3,081,375

 

 

    $

 

990,958

 

 

     

 

$ 1,045,000

 

 

     

 

$   5,222,222

 

 

     

 

$   91,948

 

 

    $

 

 11,420,420

 

 

   

J.W. Johnson,

Executive Vice President,

Upstream

   

 

 

2021

 

 

   

$

 

1,210,000

 

 

   

$

 

4,101,716

 

 

   

$

 

1,298,986

 

 

   

 

 

$ 2,250,000