SCHEDULE 14A INFORMATION
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/ / Soliciting Material Pursuant to Section240.14a-12
EXXON MOBIL CORPORATION
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[LOGO]
Notice of 2001 Annual Meeting
and Proxy Statement
including
Financial Statements
YOUR VOTE IS IMPORTANT
PLEASE VOTE YOUR SHARES PROMPTLY
NOTICE OF ANNUAL MEETING
MAY 30, 2001
AND PROXY STATEMENT
[LOGO]
Dear Shareholder:
We invite you to attend the annual meeting of shareholders on Wednesday,
May 30, 2001, in Dallas, Texas. The meeting will begin promptly at 9:30 a.m. At
the meeting, you will hear a report on our business and have a chance to meet
your directors and executives.
This booklet includes the formal notice of the meeting, the proxy statement and
financial statements. The proxy statement tells you more about the agenda,
procedures and rules of conduct for the meeting. It also describes how the board
operates and gives personal information about our director candidates.
This year, for the first time, financial statements are included with this proxy
statement as Appendix B rather than with the annual report. The summary annual
report includes summary financial statements.
Even if you only own a few shares, we want your shares to be represented at the
meeting. You can vote your shares by Internet, toll-free telephone call, or
proxy card. If you vote this year's proxy via the Internet, you can elect to
access future proxy statements and summary annual reports on our Web site. If
you are a registered shareholder, you can choose to discontinue receiving more
than one annual report.
To attend the meeting in person, please follow the instructions on page 2. If
you are not able to attend, you may listen to a live audiocast of the meeting on
the Internet. Instructions for listening to this audiocast will be available at
our Web site, www.exxonmobil.com, approximately one week prior to the event. A
report on the meeting will be included in the June issue of EXXONMOBIL
PERSPECTIVES, which will also be available on our Web site.
Sincerely yours,
/s/ Lee R. Raymond
Lee R. Raymond
Chairman of the Board
April 18, 2001
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF EXXON MOBIL CORPORATION
TIME:
Doors open: 8:00 a.m., central time
Meeting begins: 9:30 A.M., central time
DATE:
Wednesday, May 30, 2001
PLACE:
Morton H. Meyerson Symphony Center
2301 Flora Street
Dallas, Texas 75201
PURPOSE:
- Elect directors
- Ratify appointment of independent auditors
- Vote on eight shareholder proposals
- Conduct other business if properly raised
Only shareholders of record on April 6, 2001, may vote at the
meeting. Only shareholders or their proxy holders and ExxonMobil
guests may attend the meeting.
YOUR VOTE IS IMPORTANT. PLEASE VOTE YOUR SHARES PROMPTLY. TO
VOTE YOUR SHARES, CALL THE TOLL-FREE TELEPHONE NUMBER OR USE THE
INTERNET AS DESCRIBED IN THE INSTRUCTIONS ON YOUR PROXY CARD, OR
COMPLETE, SIGN, DATE, AND RETURN YOUR PROXY CARD.
[/S/ T. P. TOWNSEND]
T. P. Townsend
Secretary
April 18, 2001
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
TABLE OF CONTENTS PAGE
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General Information........................................ 1
ELECTION OF DIRECTORS...................................... 3
Director Compensation...................................... 10
Board Committees........................................... 10
Director and Executive Officer Stock Ownership............. 13
BCC Report on Executive Compensation....................... 14
Executive Compensation Tables.............................. 18
Stock Performance Graphs................................... 24
Board Audit Committee Report............................... 25
BOARD OF DIRECTORS PROPOSAL:
Ratification of Independent Auditors..................... 26
SHAREHOLDER PROPOSALS...................................... 26
Additional Information..................................... 43
Appendix A: Board Audit Committee Charter.................. A1
Appendix B: Financial Section.............................. B1
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
GENERAL INFORMATION
WHO MAY VOTE
Shareholders of ExxonMobil, as recorded in our stock register on April 6, 2001,
may vote at the meeting.
HOW TO VOTE
You may vote in person at the meeting or by proxy. We recommend you vote by
proxy even if you plan to attend the meeting. You can always change your vote at
the meeting.
HOW PROXIES WORK
ExxonMobil's Board of Directors is asking for your proxy. Giving us your proxy
means you authorize us to vote your shares at the meeting in the manner you
direct. You may vote for all, some, or none of our director candidates. You may
also vote for or against the other proposals or abstain from voting.
If your shares are held in your name, you can vote by proxy in three convenient
ways:
- BY TELEPHONE: Call toll-free 1-877-779-8683 and follow the instructions.
You will need to give the 14-digit Control Number contained on your proxy
card.
- VIA INTERNET: Go to www.eproxyvote.com/xom and follow the instructions.
You will need to give the 14-digit Control Number contained on your proxy
card. At this Web site, you can elect to access future proxy statements
and annual reports via the Internet.
- IN WRITING: Complete, sign, date, and return your proxy card in the
enclosed envelope.
Your proxy covers all shares registered in your name and shares held in your
Shareholder Investment Program (SIP) account.
If you give us your proxy, but do not specify how to vote, we will vote your
shares in favor of our director candidates; in favor of the management proposal
to ratify the appointment of independent auditors; and against the shareholder
proposals.
If you hold shares through someone else, such as a stockbroker, you may get
material from that firm asking how you want to vote. Check the voting form used
by that firm to see if it offers telephone or Internet voting.
VOTING SHARES IN THE EXXONMOBIL SAVINGS PLAN
If you own shares in the ExxonMobil Savings Plan, you will receive a separate
voting instruction card for those shares. The Savings Plan trustee will vote
plan shares as participants direct. To the extent participants do not give
instructions, the trustee, or other plan fiduciary, will vote shares as it
thinks best.
1
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
REVOKING A PROXY
You may revoke your proxy before it is voted by:
- submitting a new proxy with a later date, including a proxy given by
telephone or via the Internet;
- notifying ExxonMobil's Secretary in writing before the meeting; or
- voting in person at the meeting.
CONFIDENTIAL VOTING
Independent inspectors count the votes. Your individual vote is kept
confidential from us unless special circumstances exist. For example, a copy of
your proxy card will be sent to us if you write comments on the card.
QUORUM
In order to carry on the business of the meeting, we must have a quorum. This
means at least a majority of the outstanding shares eligible to vote must be
represented at the meeting, either by proxy or in person. Treasury shares, which
are shares owned by ExxonMobil itself, are not voted and do not count for this
purpose.
VOTES NEEDED
The director candidates who receive the most votes will be elected to fill the
seats on the board. Approval of the other proposals requires the favorable vote
of a majority of the votes cast. Only votes for or against a proposal count.
Abstentions and broker non-votes count for quorum purposes but not for voting
purposes. Broker non-votes occur when a broker returns a proxy but does not have
authority to vote on a particular proposal.
ATTENDING IN PERSON
Only shareholders, their proxy holders, and ExxonMobil's guests may attend the
meeting. For safety and security reasons, cameras will not be allowed in the
meeting and will need to be checked at the admissions desk.
For registered shareholders, an admission ticket is attached to your proxy card.
Please bring the admission ticket with you to the meeting.
If your shares are held in the name of your broker, bank, or other nominee, you
must bring to the meeting an account statement or letter from the nominee
indicating that you are the beneficial owner of the shares on April 6, 2001, the
record date for voting. You may receive an admission ticket in advance by
sending a written request with proof of ownership to the address listed under
"Contact information" on page 44.
Shareholders who do not present admission tickets at the meeting will be
admitted only upon verification of ownership at the admissions counter.
2
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
ELECTION OF DIRECTORS
(ITEM 1 ON THE PROXY CARD)
The board has nominated the director candidates named below. Personal
information on each of our nominees is also given below. All of our nominees
currently serve as ExxonMobil directors.
The Board of Directors performs a number of services for ExxonMobil and its
shareholders, including:
- overseeing the management of the company on your behalf;
- reviewing ExxonMobil's long-term strategic plans;
- exercising direct decision-making authority in key areas, such as
declaring dividends;
- choosing the CEO, setting the scope of his authority to manage the
company's business day to day, and evaluating his performance; and
- reviewing development and succession plans for ExxonMobil's top
executives.
Most ExxonMobil directors--including 11 of our 15 nominees--are not ExxonMobil
employees. Only nonemployee directors serve on ExxonMobil's Board Audit, Board
Compensation, Public Issues, Board Affairs, and Board Advisory on Contributions
committees.
All ExxonMobil directors are elected for one-year terms. Nonemployee directors
cannot stand for election after they have reached age 70. Thus, Jess Hay and J.
Richard Munro, who were elected last year, are not standing for reelection at
the forthcoming 2001 annual meeting. Mr. Lucio A. Noto elected to retire as Vice
Chairman and director, effective January 31, 2001, so he is also not standing
for reelection.
The board met nine times in 2000. All of ExxonMobil's directors, on average,
attended approximately 96% of board and committee meetings during the year 2000.
If a director nominee becomes unavailable before the election, your proxy
authorizes the people named as proxies to vote for a replacement nominee if the
board names one.
THE BOARD RECOMMENDS YOU VOTE FOR EACH OF THE FOLLOWING CANDIDATES:
3
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
BIOGRAPHIES OF OUR BOARD NOMINEES
- ----------------------------------------------------------------------------------------------------------
MICHAEL J. BOSKIN T. M. Friedman Professor of Economics, and Senior Fellow,
Hoover Institution, Stanford University. Holds bachelor's,
[PHOTO] master's, and Ph.D. degrees in economics. Joined Stanford
University in 1970. Adjunct Scholar, American Enterprise
AGE 55 Institute; Research Associate, National Bureau of Economic
Director since 1996 Research. Director, First Health Group Corporation; Oracle
Corporation; Vodafone Group PLC; Western Multiplex
Corporation. Chairman, Congressional Advisory Commission on
the Consumer Price Index 1995-96; Council of Economic
Advisors, 1989-93. Member, Advisory Committee of the Joint
Committee on Taxation of the U.S. Congress; Panel of
Advisors to the Congressional Budget Office. Dr. Boskin is
the recipient of numerous professional awards.
- ----------------------------------------------------------------------------------------------------------
RENE DAHAN Senior Vice President. Principal responsibilities include
the corporation's worldwide chemicals and coal and minerals
[PHOTO] activities; ExxonMobil Global Services Company; facility
services; controller's; corporate planning; public affairs;
and safety, health and environment. Since joining the Exxon
AGE 59 organization in 1963, Mr. Dahan has held a variety of
Director since 1998 management positions in domestic and foreign operations,
including President and Chief Executive Officer of our
Benelux affiliate; President, Exxon Company, International.
Elected Senior Vice President of the corporation in 1995 and
Director in 1998. Member, International Advisory Board of
Instituto de Empresa; Board of Directors, Junior Achievement
International.
- ----------------------------------------------------------------------------------------------------------
WILLIAM T. ESREY Chairman and Chief Executive Officer, Sprint Corporation.
Holds bachelor's degree in economics and master of business
[PHOTO] administration degree. Joined Sprint, a global
communications company integrating long distance, local, and
AGE 61 wireless communications services and one of the world's
Director since 1998 largest carriers of Internet traffic, in 1980. Held a
variety of management positions. Elected Chief Executive
Officer in 1985 and Chairman in 1990. Prior to joining
Sprint, Mr. Esrey held management positions with Dillon,
Read and Company; AT&T; New York Telephone Company; and
Empire City Subway Co., Ltd. Director, Duke Energy
Corporation; General Mills, Inc. Member, The Business
Council; The Business Roundtable.
4
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
- ----------------------------------------------------------------------------------------------------------
DONALD V. FITES Former Chairman and Chief Executive Officer, Caterpillar
Inc. Holds bachelor's degree in civil engineering and
[PHOTO] master's degree in management. Joined Caterpillar, a
manufacturer of heavy machinery, in 1956. Held a variety of
AGE 67 management positions. Became Vice President in 1981,
Director since 1999 Executive Vice President in 1985, Director in 1986, Presi-
dent and Chief Operating Officer in 1989, and Chairman and
Chief Executive Officer in 1990. Retired in 1999. Director
of Mobil from 1990 to 1999. Director, AK Steel Corporation;
AT&T Corporation; Georgia-Pacific Corporation; Oshkosh Truck
Corporation; Wolverine World Wide, Inc.; Valparaiso
University. Member, The Business Council. Chairman, The
Salvation Army National Advisory Board; the World Methodist
Council Financial Development Committee. Trustee, Knox
College. Mr. Fites is the recipient of numerous awards,
including two honorary doctorate of law degrees.
- ----------------------------------------------------------------------------------------------------------
CHARLES A. HEIMBOLD, JR. Chairman of the Board and Chief Executive Officer, Bristol-
Myers Squibb Company. Holds bachelor of arts and law
[PHOTO] degrees. Joined Bristol-Myers, a manufacturer of consumer
products and pharmaceuticals, in 1963. Elected Executive
AGE 67 Vice President and Director in 1989, President in 1992,
Director since 1999 Chief Executive Officer in 1994, and Chairman in 1995.
Director of Mobil from 1995 to 1999. Director, Pharma-
ceutical Research and Manufacturers of America. Chairman of
the Board of Directors, Phoenix House. Deputy Chairman of
the Board of Directors, Federal Reserve Bank of New York.
Chairman, Board of Overseers of the Law School and Trustee,
University of Pennsylvania. Trustee, American Museum of
Natural History. Member, The Business Council; The Business
Roundtable; Council on Foreign Relations.
5
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
- ----------------------------------------------------------------------------------------------------------
JAMES R. HOUGHTON Chairman of the Board Emeritus, Corning Incorporated. Holds
bachelor of arts and master of business administration
[PHOTO] degrees. Joined Corning, a communications, advanced
materials, and display products company, in 1962. Held a
AGE 65 variety of management positions. Elected Chairman of the
Director since 1994 Board and Chief Executive Officer of Corning in 1983.
Retired in 1996. Director, Corning Incorporated; Metropol-
itan Life Insurance Company. Trustee, Corning Museum of
Glass; The Metropolitan Museum of Art; The Pierpont Morgan
Library. Member, The Business Council; Council on Foreign
Relations; Harvard Corporation.
- ----------------------------------------------------------------------------------------------------------
WILLIAM R. HOWELL Chairman Emeritus, J.C. Penney Company, Inc. Holds bachelor
of business administration degree. Joined J.C. Penney, a
[PHOTO] department store and catalog chain, in 1958. Held a variety
of management positions. Elected Chairman of the Board and
AGE 65 Chief Executive Officer in 1983. Retired as Chairman of the
Director since 1982 Board in 1997. Director, Bankers Trust New York Corporation
and Bankers Trust Company; American Electric Power;
Halliburton Co.; Pfizer, Inc.; Williams.
- ----------------------------------------------------------------------------------------------------------
HELENE L. KAPLAN Of Counsel to Skadden, Arps, Slate, Meagher & Flom LLP, a
law firm that performed services for Mobil. Holds bachelor
[PHOTO] of arts degree and juris doctor. Director of Mobil 1989
through 1999. Director, J.P. Morgan Chase & Co.; May
AGE 67 Department Stores Company; Metropolitan Life Insurance
Director since 1999 Company; Verizon Communications. Trustee and Vice Chair,
American Museum of Natural History; Carnegie Corporation of
New York; Commonwealth Fund; J. Paul Getty Trust; Institute
for Advanced Study. Chairman, Mount Sinai School of
Medicine. Trustee, Mount Sinai/ NYU Health. Member, American
Academy of Arts and Sciences; Council on Foreign Relations.
Fellow, American Philosophical Society. Mrs. Kaplan is the
recipient of numerous awards, including an honorary
doctorate of law.
6
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
- ----------------------------------------------------------------------------------------------------------
REATHA CLARK KING President and Executive Director, General Mills Founda-
tion; Vice President, General Mills, Inc., a manufacturer
[PHOTO] and marketer of consumer food products. Holds bachelor of
science degree in chemistry and mathematics, master of
AGE 63 science degree in chemistry, master of business administra-
Director since 1997 tion degree in finance management, and Ph.D. degree in
thermochemistry. Prior to joining the General Mills Foun-
dation in 1988, Dr. King held a variety of scientific and
educational positions, including Research Chemist, National
Bureau of Standards; Chemistry Professor, Associate Dean for
Division of Natural Science & Mathematics, and Associate
Dean for Academic Affairs, York College, City University of
New York; President, Metropolitan State University.
Director, H.B. Fuller Company; Minnesota Mutual Compa-
nies, Inc.; Wells Fargo and Company. Trustee, Clark Atlanta
University; H.B. Fuller Foundation. Life Trustee, University
of Chicago. Dr. King is the recipient of numerous awards,
including 13 honorary doctorate degrees.
- ----------------------------------------------------------------------------------------------------------
PHILIP E. LIPPINCOTT Chairman of the Board, Campbell Soup Company, a global
manufacturer and marketer of high quality, branded conve-
[PHOTO] nience food products, since 1999. Retired Chairman and Chief
Executive Officer, Scott Paper Company. Holds bachelor of
AGE 65 arts and master of business administration degrees in food
Director since 1986 distribution. Joined Scott Paper, a company involved in
sanitary paper, printing and publishing papers, and forestry
operations, in 1959. Held a variety of management positions.
Elected Chief Executive Officer in 1982 and Chairman in
1983. Retired in 1994. Director, Campbell Soup Company.
Chairman of the Board and Director, Fox Chase Cancer Center.
Trustee, The Penn Mutual Life Insurance Company. Member, The
Business Council.
7
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
- ----------------------------------------------------------------------------------------------------------
HARRY J. LONGWELL Senior Vice President. Holds bachelor's degree in petroleum
engineering. Principal responsibilities include the corpora-
[PHOTO] tion's worldwide upstream oil and gas activities;
ExxonMobil Upstream Research Company; Imperial Oil Limited;
AGE 59 aviation; and human resources. Since joining the Exxon
Director since 1995 organization in 1963, Mr. Longwell has held a variety of
management positions in domestic and foreign operations,
including Vice President-Production and President, Exxon
Company, U.S.A.; Vice President, Esso Europe Inc.; Senior
Vice President-Upstream and Executive Vice President, Exxon
Company, International. Elected Senior Vice President and
Director of Exxon in 1995. Director, U.S.-China Business
Council; National Action Council for Minorities in
Engineering; United Way of Dallas. Member, Board of
Visitors, University of Texas, M.D. Anderson Cancer Center;
Advisory Board, Dallas Area Habitat for Humanity.
- ----------------------------------------------------------------------------------------------------------
MARILYN CARLSON NELSON Chairman and Chief Executive Officer, Carlson Compa-
nies, Inc. Co-Chair, Carlson Holdings, Inc. Co-Chair, Carl-
[PHOTO] son Wagonlit Travel, Inc. Holds bachelor's degree in inter-
national economics. Since joining Carlson Companies, a
AGE 61 travel, hotel, restaurant, and marketing services company,
Director since 1991 in 1989, Mrs. Nelson has held a number of management
positions, including Director, Senior Vice President, and
Vice Chair. Board of Directors, Carlson Companies, Inc;
Qwest Communications, Inc. Member, Council of the World
Economic Forum; World Travel and Tourism Council. Chair,
Travel Industry Association of America. Advisory Board
Member, Curtis L. Carlson School of Management, University
of Minnesota. Mrs. Nelson is the recipient of numerous
awards, including three honorary doctorate degrees.
8
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
- ----------------------------------------------------------------------------------------------------------
LEE R. RAYMOND Chairman of the Board and Chief Executive Officer. Holds
bachelor's and Ph.D. degrees in chemical engineering. Since
[PHOTO] joining the Exxon organization in 1963, Mr. Raymond held a
variety of management positions in domestic and foreign
AGE 62 operations, including Exxon Company, U.S.A.; Creole Petro-
Director since 1984 leum Corporation; Exxon Company, International; Exxon
Enterprises; Esso Inter-America, Inc. Elected Senior Vice
President and Director of Exxon in 1984, President in 1987,
Chairman and Chief Executive Officer in 1993, and added
title of President in 1996. Director, J.P. Morgan Chase &
Co.; American Petroleum Institute; United Negro College
Fund. Trustee, Wisconsin Alumni Research Foundation. Member,
The Business Council; The Business Roundtable; Council on
Foreign Relations; Emergency Committee for American Trade;
National Petroleum Council; Singapore-U.S. Business Council;
Trilateral Commission; University of Wisconsin Foundation.
- ----------------------------------------------------------------------------------------------------------
EUGENE A. RENNA Senior Vice President. Holds bachelor's and master's degrees
in business administration. Principal responsibilities
[PHOTO] include fuels marketing; lubricants and petroleum special-
ties; refining and supply activities; ExxonMobil Research
AGE 56 and Engineering Company. Prior to the merger of Exxon and
Director since 1999 Mobil, Mr. Renna held a variety of management positions in
Mobil and was named President and Chief Operating Officer in
1998. Director of Mobil from 1986 to 1999. Director, Fortune
Brands, Inc. Member, American Petroleum Institute; Advisory
Council of Samuel Curtis Johnson Graduate School of
Management, Cornell University.
- ----------------------------------------------------------------------------------------------------------
WALTER V. SHIPLEY Retired Chairman of the Board, The Chase Manhattan Cor-
poration and The Chase Manhattan Bank, a banking and finance
[PHOTO] company. Holds bachelor of science degree. Joined Chase Bank
in 1956. Held a variety of management positions. Director,
AGE 65 Verizon Communications; Lincoln Center for the Performing
Director since 1998 Arts, Inc.; American Home Products Corporation; Chairman and
Director, Goodwill Industries of Greater New York, Inc.
Member, The Business Council. Board of Trustees, American
Museum of Natural History.
9
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
DIRECTOR COMPENSATION
ExxonMobil employees receive no extra pay for serving as directors. Effective
October 1, 2000, we restructured the compensation we pay to nonemployee
directors. We eliminated the $1,500 per meeting fee for each board and committee
meeting attended and increased the annual membership fee. We now pay a base fee
to all nonemployee directors of $75,000 a year. We also pay members of the Audit
and Compensation Committees a fee of $15,000 per year, and an additional fee of
$10,000 per year to the chairs of those committees. For other committees,
nonemployee directors receive $8,000 per year for each committee on which they
serve, and the chairs receive an additional fee of $7,000 per year. No fees are
paid to members of the Executive Committee. Nonemployee directors are reimbursed
for actual expenses to attend meetings.
Nonemployee directors may elect to defer all or part of these fees either into
ExxonMobil stock equivalents with dividends or into a deferred account that
earns interest at prime rate. Deferred fees are payable after the director
leaves the board in one to five annual installments.
We also pay a portion of director compensation in stock. Each nonemployee
director receives 4,000 shares of restricted stock when first elected to the
board and, if the director remains in office, an additional 1,200 restricted
shares (increased from 600 shares effective October 1, 2000) each following
year. At the time they joined the ExxonMobil Board, the four former nonemployee
Mobil-nominated directors received a restricted stock grant of 4,000 shares. The
former Exxon nonemployee directors received a similar restricted stock grant of
4,000 shares on October 1, 2000. While on the board, each nonemployee director
receives the same cash dividends on restricted shares as a holder of regular
common stock, but the director is not allowed to sell the shares. The restricted
shares can be forfeited if the director leaves the board early.
BOARD COMMITTEES
The board appoints committees to help carry out its duties. In particular, board
committees work on key issues in greater detail than would be possible at full
board meetings. Each committee reviews the results of its meetings with the full
board.
BOARD AUDIT COMMITTEE
Mr. Houghton (Chairman)
Mr. Esrey
Mr. Howell
Mrs. Kaplan
Dr. King
Mr. Munro
Mrs. Nelson
The Board Audit Committee met four times during 2000. The committee oversees
accounting and internal control matters. The committee also recommends to the
board the independent auditors to audit ExxonMobil's financial statements,
subject to shareholder approval. The responsibilities of the Board Audit
Committee are included in its charter which is provided in
10
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
Appendix A. The committee's report on its activities for the fiscal year 2000 is
on page 25. Fees paid to the independent auditors are provided on page 26.
BOARD ADVISORY COMMITTEE ON CONTRIBUTIONS
Mr. Hay (Chairman)
Mr. Esrey
Mrs. Kaplan
Dr. King
Mr. Lippincott
Mr. Munro
Mrs. Nelson
The Board Advisory Committee on Contributions met two times during 2000. The
committee reviews the level of ExxonMobil's support for education and other
public service programs, including the company's contributions to the ExxonMobil
Foundation. The foundation works to improve the quality of education in America
at all levels, with special emphasis on math and science. The foundation also
supports the company's other cultural and public service giving.
BOARD AFFAIRS COMMITTEE
Mrs. Nelson (Chairman)
Mr. Fites
Mr. Hay
Mr. Howell
Mrs. Kaplan
Mr. Lippincott
Mr. Shipley
The Board Affairs Committee met two times during 2000. The committee recommends
director candidates; reviews nonemployee director compensation; and reviews
other corporate governance practices. The committee will consider your
suggestions for possible director candidates if you submit the name and
biographical information in writing to ExxonMobil's Secretary at the address
under "Contact information" on page 44. On request, the Secretary will also
provide a description of the qualifications we look for in director candidates.
BOARD COMPENSATION COMMITTEE
Mr. Howell (Chairman)
Dr. Boskin
Mr. Fites
Mr. Hay
Mr. Heimbold
Mr. Shipley
The Board Compensation Committee, which we also call the BCC, met seven times
and acted by written consent three times during 2000. The committee oversees
compensation for ExxonMobil's senior executives, including salary, bonus, and
incentive awards. The committee
11
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
also reviews succession plans for key executive positions. The committee's
report on executive compensation starts on page 14.
FINANCE COMMITTEE
Mr. Raymond (Chairman)
Dr. Boskin
Mr. Esrey
Mr. Fites
Mr. Heimbold
Mr. Houghton
Mr. Shipley
The Finance Committee met three times and acted by written consent one time
during 2000. The committee reviews ExxonMobil's financial policies and
strategies, including our capital structure, and authorizes corporate debt
within limits set by the board.
PUBLIC ISSUES COMMITTEE
Mr. Lippincott (Chairman)
Dr. Boskin
Mr. Heimbold
Mr. Houghton
Dr. King
Mr. Munro
The Public Issues Committee met two times during 2000. The committee reviews
ExxonMobil's policies and practices on relevant public issues, including their
effects on safety, health and the environment. The committee hears reports from
operating units on safety and environmental activities. The committee also
visits operating sites to observe and comment on current practices, including
spill and hazard prevention.
EXECUTIVE COMMITTEE
Mr. Raymond (Chairman)
Mr. Hay
Mr. Howell
Mr. Lippincott
Mrs. Nelson
Other directors serve as alternate members on a rotational basis.
The Executive Committee met once during 2000. The committee has broad power to
act on behalf of the board. In practice, the committee meets only when it is
impractical to call a meeting of the full board.
12
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
DIRECTOR AND EXECUTIVE OFFICER STOCK OWNERSHIP
These tables show how much ExxonMobil common stock each executive named in the
Summary Compensation Table on page 18 and each nonemployee director and nominee
owned on February 28, 2001. In these tables, ownership means the right to direct
the voting or the sale of shares, even if those rights are shared with someone
else. None of these individuals owns more than 0.12 percent of the outstanding
shares.
Shares
Covered
by
Shares Exercisable
Named Executive Officer Owned Options*
--------------------------------------------------------------------------------------
Lee R. Raymond.............................................. 665,227(1) 3,288,428
Lou A. Noto................................................. 217,432(2) 1,766,876
Rene Dahan.................................................. 123,427(3) 992,335
Harry J. Longwell........................................... 191,187(4) 1,380,000
Eugene A. Renna............................................. 183,467 712,868
----------
(1) Includes 150 shares owned by spouse.
(2) Includes 4,146 shares owned by spouse; 5,565 shares held jointly with
spouse; and 680 shares owned by dependent.
(3) Includes 55,013 shares held jointly with spouse.
(4) Includes 50 shares owned by spouse and 19,046 shares held jointly with
spouse.
*Includes options that will become exercisable within 60 days.
Shares
Nonemployee Director/Nominee Owned*
------------------------------------------------------------------------
Michael J. Boskin........................................... 11,750
William T. Esrey............................................ 11,070(1)
Donald V. Fites............................................. 11,185
Jess Hay.................................................... 20,150
Charles A. Heimbold, Jr..................................... 8,590
James R. Houghton........................................... 16,050(2)
William R. Howell........................................... 14,950(3)
Helene L. Kaplan............................................ 18,811
Reatha Clark King........................................... 11,802
Philip E. Lippincott........................................ 16,550
J. Richard Munro............................................ 8,590
Marilyn Carlson Nelson...................................... 26,470(4)
Walter V. Shipley........................................... 11,870
----------
(1) Includes 520 shares held jointly with spouse.
(2) Includes 2,500 shares owned by spouse.
(3) Includes 2,700 restricted shares held as constructive trustee for former
spouse.
(4) Includes 12,720 shares held as co-trustee of family trusts.
*The nonemployee directors are not granted ExxonMobil stock options.
On February 28, 2001, ExxonMobil's directors and executive officers (32 people)
together owned 2,751,491 shares of ExxonMobil stock and 13,122,498 shares
covered by exercisable options, representing about 0.46 percent of the
outstanding shares.
13
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
BCC REPORT ON EXECUTIVE COMPENSATION
OVERVIEW
ExxonMobil's success depends on developing, motivating and retaining executives
who have the skills and expertise required to lead a global organization. To
that end, our executive compensation program is designed to motivate, reward and
retain the management talent our company needs to achieve its business goals and
maintain its leadership. We do this with:
- competitive base salaries in keeping with a philosophy of career
continuity;
- rewards for exceptional performance and accomplishments; and
- incentives to meet short-term and long-term objectives.
The nature of the petroleum business requires long-term, capital-intensive
investments. These investments often take years to generate a return to
shareholders. Accordingly, we grant incentive awards with a view toward
long-term corporate performance. These awards may not fluctuate as much as
year-to-year financial results. Under our program, a substantial portion of
senior executives' potential compensation depends on increases in shareholder
value.
ExxonMobil pays for performance based on an individual's level of
responsibility. For this purpose, performance means both individual and
corporate performance. Individual performance includes the ability to put
ExxonMobil's business plans into effect and to react to unanticipated events. We
base compensation decisions for all executives, including the Chief Executive
Officer (CEO) and the other executives named in the Summary Compensation Table
on page 18 on these criteria.
The three major components of ExxonMobil's compensation program are base salary,
short term incentive awards, and long term incentive awards.
BASE SALARY
In keeping with the long-term and highly technical nature of ExxonMobil's
business, we take a long-term approach to management development. This
career-oriented philosophy requires a competitive base salary. Each year, we
adjust ExxonMobil's salary structure based on competitive positioning (comparing
ExxonMobil's salary structure with salaries paid by other companies),
ExxonMobil's own business performance, and general economic factors. Specific
weights are not given to these factors, but competitive positioning is the most
important factor.
We use a number of surveys to determine ExxonMobil's competitive salary
position. We compare our salary structure with the U.S.-based oil companies in
the industry group used for comparing stock performance on page 24. We do not
consider salary data from the foreign-based oil companies in that group. Their
executive compensation structures are not considered comparable.
14
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
ExxonMobil's business, and the competition for executives, extend beyond the oil
industry. Therefore, we also compare our salary structure with other major
U.S.-based corporations. ExxonMobil is significantly larger and more diverse
than the other surveyed companies. Therefore, ExxonMobil targets its salary
ranges between the median and high end of the survey data. Within these ranges,
we determine individual executive salaries based on individual performance,
level of responsibility, and experience. The BCC recommends the CEO's and Vice
Chairman's salaries to the Board of Directors, sets the salaries for
ExxonMobil's other elected officers, and reviews the salaries of other senior
executives.
SHORT TERM INCENTIVE AWARDS
Short term incentive awards consist of cash bonuses and Earnings Bonus Units
(EBUs). See page 21 for a description of the terms of EBUs. We grant short term
awards to executives to reward their contributions to the business during the
past year. We also grant EBUs as incentives for strong, mid-term corporate
performance. EBUs help stress that decisions and contributions in any one year
affect future years. In 2000, approximately one half of executive bonuses were
in the form of EBUs. The cumulative earnings required for maximum payout of each
EBU granted this year was increased from those granted in 1999.
Each year, the BCC establishes a ceiling for cash bonuses and EBUs. The ceiling
for 2000 was $144 million. Almost all of that amount was granted in awards to
approximately 1,800 employees. The ceiling is based on ExxonMobil's business
performance, progress towards long-term goals, and competitive position. No
particular formula is used. Some of the measures of performance considered by
the BCC include net income, earnings per share, return on capital employed,
return on equity, dividends, and operational excellence. The BCC does not give
specific weights to these measures. The 2000 ceiling was increased from the 1999
ceiling in recognition of ExxonMobil's record earnings, the significant progress
made in realizing synergies resulting from the merger, and the increased size of
the company and number of executives resulting from the merger.
The bonus an executive receives depends on the executive's individual
performance and level of responsibility. Each year, we assess relative
performance based on factors including initiative, business judgment, technical
expertise, and management skills.
LONG TERM INCENTIVE AWARDS
Long term incentive awards are intended to develop and retain strong management
through share ownership and incentive awards that recognize future performance.
Stock options were the primary long term incentive granted to executive officers
and over 5,700 other key employees in 2000. The BCC believes that a significant
portion of senior executives' compensation should depend on value created for
the shareholders. Options are an excellent way to accomplish this because they
tie the executives' interests directly to the shareholders' interests. See page
19 for a description of the terms of options.
The number of options granted to executive officers is based on individual
performance and level of responsibility. For this purpose, the committee
measures performance the same way as
15
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
described above for short term awards. Option grants must be sufficient in size
to provide a strong incentive for executives to work for long-term business
interests and become significant owners of the business. The number of options
held by an executive is not a factor in determining subsequent grants. Granting
options on that basis could create an incentive for executives to exercise
options and sell their shares.
The company does not have required levels for equity holdings by senior
management, but long term awards are designed to encourage share ownership. The
five officers named in the Summary Compensation Table on page 18 have, on
average, equity holdings of approximately 16 times salary as of year-end 2000.
In addition, other elected officers have holdings that exceed typical ownership
guidelines used by some companies in industry.
Last year, the BCC granted Career Shares to a limited number of senior
executives. Career Shares are shares of ExxonMobil common stock that normally
may not be sold until after an executive reaches normal retirement age. The
shares may be forfeited if an executive leaves before that time. Given the size,
complexity, and global scope of ExxonMobil's business, it is essential to retain
an experienced senior management team. Career Shares help ExxonMobil retain key
strategic and operating executives for the long term. These awards also provide
an additional incentive for superior long-term corporate performance and align
their total compensation with senior executives in the group of industry and
other major U.S. corporations used in our compensation survey. The number of
Career Shares granted to senior executives also reflects the increased
responsibility and complexity of senior positions.
The committee bases individual Career Share grants on the executive's personal
contribution and level of responsibility. The number of shares held by an
executive is not a factor in determining individual grants since Career Shares
are primarily designed to promote long-term retention.
U.S. INCOME TAX LIMITS ON DEDUCTIBILITY
U.S. income tax law limits the amount ExxonMobil can deduct for compensation
paid to the CEO and the other four most highly paid executives.
Performance-based compensation that meets IRS requirements is not subject to
this limit. The short term awards and stock option grants described above are
designed to meet these requirements so that ExxonMobil can continue to deduct
the related expenses. Specifically, the shareholders have approved broad
performance measures for short term awards to the top executives. The
shareholders also set limits on short term awards to these executives (0.2% of
operating net income) and on individual option grants (0.2% of outstanding
shares at year-end 1996, adjusted for stock splits). These are not targets, only
maximums established for deductibility purposes. Actual award levels have been
significantly less based on the factors and judgments described in the preceding
sections of this report.
CEO COMPENSATION
Within the framework described above, the BCC determines the CEO's compensation
by judging his individual contributions to ExxonMobil's business, level of
responsibility, and career
16
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
experience. The BCC does not think narrow quantitative measures or formulas are
sufficient for determining Mr. Raymond's compensation. The committee does not
give specific weights to the factors considered, but the primary factor is the
CEO's individual contributions to the business.
The combination of Mr. Raymond's base salary, short term incentive awards, and
Career Share award recognizes his outstanding contributions to ExxonMobil's
business performance, continued strengthening of the corporation's worldwide
competitive position, and its progress toward long range strategic goals. The
BCC believes this compensation will retain his leadership, and is appropriate
compared to CEOs of ExxonMobil's competitors and other large, complex, global
organizations. Mr. Raymond's long term equity based incentive awards recognize
the long-term nature of ExxonMobil's business and the desirability of linking a
significant portion of his potential compensation to shareholder value creation.
In determining Mr. Raymond's total compensation, the BCC considered
Mr. Raymond's level of responsibility, his leadership, and his overall
contribution as CEO. The BCC believes his package is appropriately positioned
relative to the CEOs of U.S.-based oil companies and other major U.S.-based
corporations.
SUMMARY
The BCC is made up of nonemployee directors who do not participate in any of the
compensation plans they administer. The BCC approves or endorses all the
programs that involve compensation paid or awarded to senior executives.
The BCC is responsible for ensuring that ExxonMobil's compensation program
serves the best interest of its shareholders. To help meet this responsibility,
the BCC is guided by an independent analysis prepared by an outside consultant.
This analysis, based on a survey of comparable positions at 17 other major
corporations both within and outside the oil industry, focuses on the
competitiveness of total compensation for the CEO and other senior executives.
The BCC also considers the results of the salary surveys described above.
In the opinion of the committee, ExxonMobil has an appropriate and competitive
compensation program. The combination of sound base salary, competitive short
term bonuses, and emphasis on long term incentives provides a balanced and
stable foundation for effective executive leadership.
William R. Howell, Chairman Donald V. Fites Jess Hay
Michael J. Boskin Charles A. Heimbold, Jr. Walter V. Shipley
17
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
EXECUTIVE COMPENSATION TABLES
The following tables show the compensation of ExxonMobil's Chairman, Vice
Chairman, and the three other most highly paid executives. See the Board
Compensation Committee (BCC) report beginning on page 14 for an explanation of
our compensation philosophy.
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
-------------------------------------------------------------------------
Awards
-------------------- Payouts
Other Restricted --------- All
Annual Stock LTIP Other
Name and Salary Bonus Compensation Award(s)($) Options Payouts Compensation
Principal Position Year ($) ($)(b) ($) (f) (#) ($)(h) ($)(i)
- ----------------------------------------------------------------------------------------------------------------------
L. R. Raymond 2000 2,500,000 2,700,000 91,643(c) 9,043,750 525,000 2,817,630 227,925
CHAIRMAN AND CEO 1999 2,100,417 13,900,000 222,571 8,356,250 425,000 0 128,547
1998 1,900,000 1,400,000 55,849 7,162,500 425,000 1,275,000 114,000
......................................................................................................................
L. A. Noto (a) 2000 1,500,000 1,075,000 178,344(d) 0 375,000 1,603,872 180,366
VICE CHAIRMAN 1999 1,048,334 8,598,300 0 2,089,063 564,029(g) 2,111,007 137,833
(RETIRED 1/31/01) 1998 955,000 1,537,700 0 0 264,029 2,985,052 102,016
......................................................................................................................
R. Dahan 2000 1,100,000 863,000 5,485 904,375 250,000 893,520 99,689
SENIOR VICE PRESIDENT 1999 953,333 2,640,000 5,484 835,625 200,000 0 75,136
AND DIRECTOR 1998 860,000 440,000 244,935 716,250 200,000 382,500 65,686
......................................................................................................................
H. J. Longwell 2000 1,100,000 863,000 5,485 904,375 250,000 893,520 99,689
SENIOR VICE PRESIDENT 1999 953,333 2,640,000 5,484 835,625 200,000 0 75,136
AND DIRECTOR 1998 860,000 440,000 5,660 716,250 200,000 382,500 65,686
......................................................................................................................
E. A. Renna (a) 2000 1,100,000 863,000 458,101(e) 904,375 250,000 878,111 105,420
SENIOR VICE PRESIDENT 1999 828,750 2,880,500 0 835,625 351,816(g) 1,172,501 102,095
AND DIRECTOR 1998 754,167 874,500 0 0 151,816 1,657,785 80,396
(a) Mr. Noto and Mr. Renna became executives of ExxonMobil when the merger
closed in November 1999. In order to provide more complete and
comparable information, we have included in this table compensation
paid by Mobil before the merger.
(b) 1999 bonus includes regular annual bonus (Mr. Raymond: $1,400,000;
Mr. Noto $1,098,300; Mr. Dahan: $440,000; Mr. Longwell: $440,000;
Mr. Renna $680,500) plus special merger bonus. One-half of the merger
bonus was paid in cash in 1999 and the other half was paid in cash in
2000.
(c) Represents certain perquisites, including membership fees of $41,824,
and tax assistance of $36,069.
(d) Represents certain perquisites, including relocation expenses of
$88,398, and tax assistance of $62,994.
(e) Represents certain perquisites, including relocation expenses of
$248,660, and tax assistance of $162,499.
(f) The value shown is the number of restricted shares times the market
price of ExxonMobil stock on the day of grant. As of December 31, 2000,
the total number and value of restricted shares held by these
executives was: Mr. Raymond: 480,000 shares ($41,730,000); Mr. Noto:
25,000 ($2,173,438); Mr. Dahan: 66,000 ($5,737,875); Mr. Longwell:
66,000 ($5,737,875); and Mr. Renna: 20,000 ($1,738,750). The values
given do not reflect the fact that the shares are restricted. The
executives receive the same cash dividends on restricted shares as
holders of regular common stock, but cannot sell the shares during the
restricted period. See page 16 for more details on these shares, which
we call Career Shares.
(g) Includes 1999 ExxonMobil grant plus Mobil grants of 264,029 shares to
Mr. Noto and 151,816 shares to Mr. Renna.
(h) Settlements of Earnings Bonus Units. See page 21 for more details.
(i) 2000 values represent company credits and other allocations under
defined contribution plans (Mr. Raymond: $148,725; Mr. Noto: $136,025;
Mr. Dahan: $66,425; Mr. Longwell: $66,425; and Mr. Renna: $101,675); and
costs of executive life insurance (Mr. Raymond: $79,200; Mr. Noto:
$44,341; Mr. Dahan: $33,264; Mr. Longwell: $33,264; and Mr. Renna:
$3,745).
18
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
OPTION GRANTS IN LAST FISCAL YEAR
- --------------------------------------------------------------------------------
Individual Grants (a) Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
for Option Term (b)
--------------------------------------------------------------------------
% of
Total
Number Options
of Granted
Securities to Exercise
Underlying Employees or If Stock If Stock
Options in Base At $147.31 At $234.57
Granted Fiscal Price Expiration 5% 10%
Name (#) Year ($/Sh) Date ($) ($)
- ---------------------------------------------------------------------------------------------------
All Shareholders' N/A N/A N/A N/A 196.6 billion 498.2 billion
Stock Appreciation
...................................................................................................
L. R. Raymond 525,000 2.9% 90.44 11/29/10 29,859,720 75,670,394
...................................................................................................
L. A. Noto 375,000 2.1% 90.44 11/29/10 21,328,372 54,050,281
...................................................................................................
R. Dahan 250,000 1.4% 90.44 11/29/10 14,218,914 36,033,521
...................................................................................................
H. J. Longwell 250,000 1.4% 90.44 11/29/10 14,218,914 36,033,521
...................................................................................................
E. A. Renna 250,000 1.4% 90.44 11/29/10 14,218,914 36,033,521
(a) The exercise price is the market price of ExxonMobil stock on the grant
date. Options granted to senior executives become exercisable after one
year or on death. The maximum option term is 10 years after grant or
five years after death, if earlier. Options may be forfeited in cases
of detrimental activity or early termination of employment. We did not
grant any stock appreciation rights to senior executives.
(b) These columns show the gains option holders and all shareholders could
realize if ExxonMobil stock appreciates at a 5% or 10% rate. These
growth rates are arbitrary assumptions specified by the SEC, not
ExxonMobil's predictions.
19
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
- ----------------------------------------------------------------------------------------------
Number Number of Securities
of Underlying Value of Unexercised,
Shares Unexercised In-the-Money
Underlying Options/SARs at Options/SARs
Options/SARs Value FY-End (#) at FY-End ($)*
Exercised Realized -------------------- ------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------
L. R. Raymond 410,552 24,315,334 3,288,428 525,000 120,496,931 0
..............................................................................................
L. A. Noto 81,271 5,035,983 1,241,841 903,058 45,724,806 13,639,960
..............................................................................................
R. Dahan 118,235 6,037,889 992,335 250,000 25,775,074 0
..............................................................................................
H. J. Longwell 83,980 5,032,513 1,380,000 250,000 47,449,063 0
..............................................................................................
E. A. Renna 41,307 2,471,682 563,346 553,632 18,252,562 7,723,700
* The difference between the option exercise price and the market price of
ExxonMobil stock at year-end. The actual gain, if any, an executive realizes
will depend on the market price of ExxonMobil stock at the time of exercise.
"In-the-money" means the market price of the stock is greater than the
exercise price of the option on the date specified.
20
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
LONG TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
- --------------------------------------------------------------
Estimated Future
Number of Performance or Payouts Under
Shares, Other Period Non-Stock
Units or Until Price-Based Plans
Other Maturation or -----------------
Name Rights Payout Maximum ($)
- --------------------------------------------------------------
L. R. Raymond 490,910 5 years maximum 2,700,005
..............................................................
L. A. Noto 195,460 5 years maximum 1,075,030
..............................................................
R. Dahan 156,730 5 years maximum 862,015
..............................................................
H. J.
Longwell 156,730 5 years maximum 862,015
..............................................................
E. A. Renna 156,730 5 years maximum 862,015
The awards shown above are Earnings Bonus Units or EBUs. Each EBU entitles the
executive to receive an amount equal to ExxonMobil's cumulative net income per
common share as announced each quarter beginning after the grant. Payout
occurs on the fifth anniversary of the grant or when the maximum settlement
value of $5.50 per unit is reached, if earlier. SEC rules classify EBUs as
long term incentives, but because of the nature of ExxonMobil's business we
view EBUs as short term awards. See page 15 for more details.
21
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
PENSION PLAN TABLE
- --------------------------------------------------------------------------------
Years of Accredited Service
---------------------------------------------
Remuneration* 30 35 40 45
- --------------------------------------------------------------------
2,500,000 1,200,000 1,400,000 1,600,000 1,800,000
....................................................................
3,000,000 1,440,000 1,680,000 1,920,000 2,160,000
....................................................................
3,500,000 1,680,000 1,960,000 2,240,000 2,520,000
....................................................................
4,000,000 1,920,000 2,240,000 2,560,000 2,880,000
....................................................................
4,500,000 2,160,000 2,520,000 2,880,000 3,240,000
....................................................................
5,000,000 2,400,000 2,800,000 3,200,000 3,600,000
....................................................................
5,500,000 2,640,000 3,080,000 3,520,000 3,960,000
....................................................................
6,000,000 2,880,000 3,360,000 3,840,000 4,320,000
....................................................................
6,500,000 3,120,000 3,640,000 4,160,000 4,680,000
....................................................................
7,000,000 3,360,000 3,920,000 4,480,000 5,040,000
....................................................................
7,500,000 3,600,000 4,200,000 4,800,000 5,400,000
....................................................................
* For plan purposes, this means: (1) average annual salary over the highest
paid 36-month period during the employee's last 10 years of employment;
plus, (2) the average of the three highest cash bonus and EBU awards during
the employee's last five years of employment.
Employees who meet the age, service, and other requirements of ExxonMobil's
pension plans are eligible for a pension after retirement. The table shows the
approximate yearly benefit that would be paid to an ExxonMobil employee in the
top compensation and period of service categories. The table reflects a
five-year certain and life annuity form of payment. Retiring employees may also
elect to receive an equivalent lump-sum payment instead of an annuity. The
actual benefit would be reduced by a portion of the employee's Social Security
benefits.
Under the ExxonMobil plans, covered compensation for the named executive
officers includes the amount shown in the "Salary" column of the Summary
Compensation Table; the regular bonus shown in the "Bonus" column of that table;
and the EBU award shown in the Long Term Incentive Plans table. At February 28,
2001, the covered compensation and years of service were $5,928,801 (38 years)
for Mr. Raymond; $2,178,961 (39 years) for Mr. Dahan; $2,178,961 (38 years) for
Mr. Longwell; and $2,019,870 (32 years) for Mr. Renna. At his retirement on
January 31, 2001, Mr. Noto's annual pension entitlement was $1,817,897. The
22
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
benefit payable to Messrs. Noto and Renna under the ExxonMobil formula is
calculated on the basis of combined compensation and years of service with Mobil
and ExxonMobil.
MOBIL EMPLOYEE SEVERANCE PLAN; NONCOMPETE AGREEMENT
Mobil adopted an employee severance plan in September 1998. The plan provides
for cash severance benefits to Mobil employees in case of a qualifying
termination of employment during the two years after a change in control of
Mobil. For former Mobil executives, the severance benefit is based on a multiple
of the sum of the employee's salary at the time of severance plus bonus and
company savings plan contributions before the change in control.
The merger was a change in control for purposes of the Mobil plan. Until
November 30, 2001, the second anniversary of the merger closing, a Mobil
employee who accepted a job with ExxonMobil can claim the severance benefit if
the employee is terminated other than for "cause" as defined in the plan. This
severance benefit would be $6,610,625 for Mr. Renna.
Effective upon his retirement on January 31, 2001, Mr. Noto entered into a
noncompete agreement with ExxonMobil. Under that agreement, Mr. Noto agreed,
among other things, that for at least two years he would not become associated
with any other major energy company or engage in other specified activities that
might be competitive with ExxonMobil. Mr. Noto also agreed to waive any
potential benefit under the Mobil severance plan, which prior to his retirement
would have been approximately $10 million. In exchange, Mr. Noto will receive
$8 million, payable in installments over approximately the next 11 years
together with interest at 6.73%.
Both the severance plan and Mr. Noto's noncompete agreement provide for
additional payments to offset special excise taxes, but we estimate that these
additional payments will not be required.
RETIREMENT LIFE INSURANCE
In connection with Mobil's former executive life insurance plan, Mr. Noto is
entitled to cash payments after retirement. The payments begin at age 65 and
continue for 15 years. The payments equal the amount necessary to pay for a life
insurance policy with a death benefit equal to twice the sum of Mr. Noto's final
base salary and regular bonus. The payments can be used to buy a policy or taken
in cash.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires that our
executive officers and directors file reports of their ownership and changes in
ownership of ExxonMobil stock on Forms 3, 4, and 5 with the Securities and
Exchange Commission and New York Stock Exchange. S.D. Pryor, an ExxonMobil Vice
President, inadvertently underreported the number of ExxonMobil shares he
acquired in exchange for Mobil shares on closing of the merger in 1999.
Mr. Pryor also reported shares as directly held that should have been reported
in his wife's account. Both errors were corrected in his Form 5 for 2000. Also,
D.S. Sanders, an ExxonMobil Vice President, was late in reporting a purchase of
four shares by his spouse as a gift.
23
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
STOCK PERFORMANCE GRAPHS
Annual total returns to ExxonMobil shareholders were 10% in 2000, 13% in 1999,
and 22% in 1998 and have averaged 20% over the past five years. Total returns
mean share price increase plus dividends paid, with dividends reinvested. The
graphs below show the relative investment performance of ExxonMobil common
stock, the S&P 500, and an industry peer group over the last five- and 10-year
periods. The peer group consists of five other international integrated oil
companies: BP, Chevron, Royal Dutch, Shell Transport and Trading, and Texaco.
FIVE-YEAR CUMULATIVE TOTAL RETURNS
VALUE OF $100 INVESTED AT YEAR-END 1995
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Dollars
1995 1996 1997 1998 1999 2000
ExxonMobil 100 126 162 198 223 246
S&P 100 123 164 211 255 232
Industry Group 100 131 164 164 210 201
Fiscal Years Ended December 31
TEN-YEAR CUMULATIVE TOTAL RETURNS
VALUE OF $100 INVESTED AT YEAR-END 1990
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Dollars
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
ExxonMobil 100 123 130 140 141 195 246 316 386 435 479
S&P 100 130 140 155 157 215 265 353 454 550 500
Industry Group 100 105 100 133 146 193 254 317 317 406 388
Fiscal Years Ended December 31
24
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
BOARD AUDIT COMMITTEE REPORT
The primary function of our committee is oversight of the corporation's
financial reporting process, public financial reports, internal accounting and
financial controls, and the independent audit of the annual consolidated
financial statements. The Board, in its business judgment, has determined that
our members are "independent", as required by the New York Stock Exchange. Our
committee acts under a charter attached to this proxy statement. Our members are
not professionally engaged in the practice of accounting or auditing and are not
experts in either of those fields or in auditor independence.
In carrying out our responsibilities, we look to management and the independent
auditors. Management is responsible for the preparation, presentation and
integrity of the corporation's financial statements, the financial reporting
process and internal controls. The independent auditors are responsible for
auditing the corporation's annual financial statements in accordance with
generally accepted auditing standards and expressing an opinion as to the
statements' conformity with generally accepted accounting principles.
In performance of our oversight function, we have reviewed and discussed the
consolidated financial statements with management and PricewaterhouseCoopers LLP
(PwC), the independent auditors. Management and PwC told us that the
corporation's consolidated financial statements were fairly stated in accordance
with generally accepted accounting principles. We discussed with PwC matters
covered by Statement on Auditing Standards No. 61 (Communication with Audit
Committees).
We have also discussed with PwC their independence from the corporation and
management, including the matters in Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees) and the letter and
disclosures from PwC to us pursuant to Standard No. 1. We considered whether the
information technology consulting services relating to financial information
systems design and implementation and other non-audit services provided by PwC
to the corporation are compatible with maintaining the auditors' independence.
We discussed with the corporation's internal auditors and PwC the overall scope
and plans for their respective audits. We met with the internal auditors and
PwC, with and without management present, to discuss the results of their
examinations, their evaluations of the corporation's internal controls, and the
overall quality of the corporation's financial reporting.
Based on the reviews and discussions referred to above, in reliance on
management and PwC, and subject to the limitations of our role, we recommended
to the Board, and the Board has approved, the inclusion of the audited financial
statements in the corporation's Annual Report on Form 10-K for the year ended
December 31, 2000, for filing with the Securities and Exchange Commission.
We have also recommended to the Board, and the Board has appointed, PwC to audit
the corporation's financial statements for 2001, subject to shareholder
ratification of that appointment.
James R. Houghton, Chairman
William T. Esrey William R. Howell Helene L. Kaplan
Reatha Clark King J. Richard Munro Marilyn Carlson Nelson
25
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
BOARD OF DIRECTORS PROPOSAL: RATIFICATION OF INDEPENDENT AUDITORS
(ITEM 2 ON THE PROXY CARD)
Based on the recommendations of the Board Audit Committee, the board has
appointed PricewaterhouseCoopers LLP (PwC) to audit our financial statements for
2001. We are asking you to ratify that appointment.
AUDIT FEES
The aggregate fees paid to PwC for professional services rendered for the audit
of our annual financial statements for the fiscal year ended December 31, 2000,
and for the reviews of the financial statements included in our quarterly
reports on Form 10-Q for that fiscal year, are estimated to be $18.3 million.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The aggregate fees billed by PwC for professional services rendered for
financial information systems design and implementation for the fiscal year
ended December 31, 2000 were $46.8 million.
ALL OTHER FEES
The aggregate fees billed by PwC for services rendered to us, other than the
services described above under "Audit Fees" and "Financial Information Systems
Design and Implementation Fees," for the fiscal year ended December 31, 2000
were $18.5 million.
PwC has been ExxonMobil's independent auditing firm for many years, and we
believe they are well qualified for the job. A PwC representative will be at the
annual meeting to answer appropriate questions and to make a statement if he
desires.
THE BOARD RECOMMENDS YOU VOTE FOR THIS PROPOSAL.
SHAREHOLDER PROPOSALS
(ITEMS 3 THROUGH 10 ON THE PROXY CARD)
We expect the following proposals to be presented by shareholders at the annual
meeting. Following SEC rules, other than minor formatting changes, we are
reprinting the proposals and supporting statements as they were submitted to us.
We take no responsibility for them. On request to the Secretary at the address
given under "Contact information" on page 44, we will provide the names of
co-sponsors and information about the sponsors' shareholdings.
THE BOARD RECOMMENDS YOU VOTE AGAINST THESE PROPOSALS FOR THE REASONS WE GIVE
AFTER EACH ONE.
26
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
SHAREHOLDER PROPOSAL: GOVERNMENT SERVICE
(ITEM 3 ON THE PROXY CARD)
This proposal was submitted by Mrs. Evelyn Y. Davis, Watergate Office Building,
2600 Virginia Avenue, N.W., Suite 215, Washington, DC 20037.
"RESOLVED: That the stockholders of Exxon Mobil Corporation assembled in Annual
Meeting in person and by proxy hereby request the Board of Directors to have the
Company furnish the stockholders each year with a list of people employed by the
Corporation with the rank of Vice President or above, or as a consultant, or as
a lobbyist, or as legal counsel or investment banker or director, who, in the
previous five years have served in any governmental capacity, whether Federal,
City or State, or as a staff member of any CONGRESSIONAL COMMITTEE or regulatory
agency, and to disclose to the stockholders whether such person was engaged in
any matter which had a bearing on the business of the Corporation and/or its
subsidiaries, provided that information directly affecting the competitive
position of the Corporation may be omitted.
REASONS: Full disclosure on these matters is essential at Exxon Mobil
Corporation because of its many dealings with Federal and State agencies, and
because of pending issues forthcoming in Congress and/or State and Regulatory
Agencies.
If you AGREE, please mark your proxy FOR this resolution."
THE BOARD RECOMMENDS YOU VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
The proponent submitted a similar proposal for the Exxon annual meeting in 1976
and more than 98% of the votes cast by shareholders were AGAINST.
As in 1976, this proposal would serve no useful purpose and would entail
significant burdens in trying to interpret and then implement its vague
requirements.
The board interprets this resolution as implying that individuals now associated
with ExxonMobil who were once affiliated with federal, state or municipal
governments might use their past associations in an inappropriate manner. While
there may be very rare occasions when ExxonMobil's employment requirements are
met by someone who also happens to have had prior government experience, to list
such persons solely because of past government associations seems to imply that
this is the reason for employment and that he or she might behave in an
unethical manner. We believe such inference is incorrect in practice and assumes
behavior that is inconsistent with the corporation's long standing STANDARDS OF
BUSINESS CONDUCT. Qualified employees who volunteer to serve in the public
interest do so openly and no useful purpose would be served by publishing a list
as proposed in this resolution.
Further, the listing of outside consultants, investment bankers and legal
counsel with previous government service, as required by this resolution, would
present the practical problem of trying to ascertain information about past
activities of all individuals in those outside firms who could fall under the
vaguely defined requirements of this proposal. As a result, this proposal might
make it difficult for the corporation to obtain the most qualified outside
advisors.
27
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
SHAREHOLDER PROPOSAL: TWO DIRECTOR NOMINEES
(ITEM 4 ON THE PROXY CARD)
This proposal was submitted by Mr. Bart Naylor, 1255 N. Buchanan, Arlington,
Virginia 22205.
"RESOLVED: The shareholders urge our board of directors to take the necessary
steps to nominate at least two candidates for each open board position, and that
the names, biographical sketches, SEC-required declarations and photographs of
such candidates shall appear in the company's proxy materials (or other required
disclosures) to the same extent that such information is required by law and is
our company's current practice with the single candidates it now proposes for
each position."
SUPPORTING STATEMENT
"Although our company's board appreciates the importance of qualified people
overseeing management, we believe that the process for electing directors can be
improved.
Our company currently nominates for election only one candidate for each board
seat, thus leaving shareholders no practical choice in most director elections.
Shareholders who oppose a candidate have no easy way to do so unless they are
willing to undertake the considerable expense of running an independent
candidate for the board. The only other way to register dissent about a given
candidate is to withhold support for that nominee, but that process rarely
affects the outcome of director elections. The current system thus provides no
readily effective way for shareholders to oppose a candidate that has failed to
attend board meetings; or serves on so many boards as to be unable to supervise
our company management diligently; or who serves as a consultant to the company
that could compromise independence; or poses other problems. As a result, while
directors legally serve as the shareholder agent in overseeing management, the
election of directors at the annual meeting is largely perfunctory. Even
directors of near bankrupt companies enjoy re-election with 90%+ pluralities.
The 'real' selection comes through the nominating committee, a process too often
influenced, if not controlled, by the very management the board is expected to
scrutinize critically.
Our company should offer a rational choice when shareholders elect directors.
Such a process could abate the problem of a chair 'choosing' his own board, that
is, selecting those directors he expects will reflexively support his
initiatives, and shedding those who may sometimes dissent. Such a process could
create healthy and more rigorous shareholder evaluation about which specific
nominees are best qualified.
Would such a process lead to board discontinuity? Perhaps, but only with
shareholder approval. Presumably an incumbent would be defeated only because
shareholders considered the alternative a superior choice. Would such a
procedure discourage some candidates? Surely our board should not be made of
those intolerant of competition. Would such a procedure be 'awkward' for
management when it recruits candidates? Hopefully so. (Management could print a
nominee's name advanced by an independent shareholder to limit such
embarrassment.) The point is to remove the 'final' decision on who serves as a
board director from the hands of management, and place it firmly in those of
shareholders.
We urge you to vote FOR this proposal."
28
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
THE BOARD RECOMMENDS YOU VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
The board believes our current process for selecting nominees for election as
directors serves shareholders well.
The proposal in our view would not improve the process and could very well
deprive the corporation of the services of highly qualified director nominees.
Under current procedures, the Board Affairs Committee, which consists solely of
non-employee directors, is responsible for annually identifying the best
candidates for election to the board. These duties include evaluating the
performance of the current Board of Directors as well as identifying potential
new members. In selecting a slate of candidates each year, the committee and the
board carefully consider the performance and qualifications not just of each
individual but of the group as a whole, and nominates the persons whom they
believe both individually and as a group will together best serve the
shareholders.
The board believes that if it followed the procedure set forth in the proposal
and nominated twice as many candidates to the board as there are seats, it would
fail in its duty to ExxonMobil's shareholders to identify and recommend the best
candidates. Since the board is responsible for advising shareholders in making
voting decisions, it has an obligation to inform shareholders which candidates
it favors. Further, the proposal could well deprive the corporation and its
shareholders of the services of a number of highly qualified individuals as
nominees for election to the board. These individuals typically have numerous
opportunities to serve on other boards and the corporation could be at a
competitive disadvantage in attracting new directors if this proposal were
adopted.
The proposal implies that shareholders currently have no way in which to voice
their concerns about directors under our present voting procedures. In fact,
shareholders, if they are so inclined, may withhold their votes for all or
specific individual director nominees. Yet, typically every year each ExxonMobil
director nominee receives over 98% of the votes cast by shareholders.
Shareholders also have the alternative, if they are dissatisfied with our
individual director nominees, to conduct a proxy contest to challenge the
board's proposed nominees.
The board notes that the proponent describes a number of situations where the
proposed procedure might be of benefit, such as a circumstance involving a
candidate who has failed to attend board meetings, or who serves on so many
boards as to be unable to supervise our company management diligently, or who
poses other problems. Those situations have not arisen in connection with
ExxonMobil in the past and there is no reason to believe that they will do so in
the future.
The Board Affairs Committee will continue to consider the recommendation of any
shareholder of a candidate for the board, if the name and biographical
information are submitted in writing to ExxonMobil's Secretary at the address
provided under "Contact information" on page 44. On request, the Secretary will
also provide a description of the qualifications the committee looks for in
director candidates.
29
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
SHAREHOLDER PROPOSAL: POLICY ON BOARD DIVERSITY
(ITEM 5 ON THE PROXY CARD)
This proposal was submitted by Mr. Tom Gniewek, 123 Norwood Circle, Camden,
Tennessee 38320.
"WHEREAS shareholders believe that our board of directors needs to be more
representative of shareholders and reflect a diverse workforce and population so
our company can remain competitive and,
Recently the Investor Responsibility Research Center reported inclusiveness at
senior management and board levels was only 9% within Fortune 500 companies.
If we are to successfully compete in the increasingly diverse global marketplace
of the future, we must select the best people regardless of race, gender,
religion, or physical challenge.
We believe a more diverse board with its wider range of perspectives would
improve the quality of corporate decision-making. We request our corporation to
enlarge its search for qualified board members including minorities and women.
The recent proxy of W. R. Grace states their Board... 'recognizes that its
composition should reflect the global nature of the company's operation and the
diversity of its workforce. The Board also recognizes that it is in a unique
position to 'set the tone at the top' and to demonstrate its belief that
diversity makes good business sense.'
Though ExxonMobil has three women, one of whom is African American on its board,
we do believe this is inadequate to provide the necessary diversity for
ExxonMobil to effectively compete in the future.
We request that the Board promptly take steps to include additional minorities
and women candidates for nominations to the Board starting in 2001 and
thereafter.
THEREFORE, BE IT RESOLVED that the shareholders request:
The Board issue a policy publicly committing the company to a more diverse
board, a program of steps, and the timeline to move further in that
direction.
The Board make available an annual report starting in 2001 summarizing
efforts to encourage and increase the diversification of:
- our Board of Directors
- our Board search firms
- all Board of Directors committees.
NOTES: Last year 92.1% of votes were cast against this proxy and 7.9% in favor.
This is indicative of stockholder support which this proxy commands. Please
vote."
30
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
THE BOARD RECOMMENDS YOU VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
The proponent submitted an essentially identical proposal for the ExxonMobil
annual meeting in 2000 and more than 92% of the votes cast by shareholders were
AGAINST. In the past, the proponent did not support his own proposal. At the
2000 meeting, and again in a letter to the Chairman, the proponent stated he had
voted AGAINST his own proposal. Further, in 1999, the proponent submitted a
proposal directly contrary to his 2000 and 2001 proposals.
The proposal essentially asks the board to do what it is already doing. The
board has reviewed and approved "Guidelines for Selection of Nonemployee
Directors," which states that the corporation "seeks candidates with diverse
backgrounds who possess knowledge and skills in areas of importance to the
corporation, such as management, finance, marketing, technology, law,
international business, or public service." The guidelines also state that the
corporation "recognizes the strength and effectiveness of the board reflects the
balance, experience, and diversity of the individual directors..." The Board
Affairs Committee and the full board periodically review these guidelines.
Clearly, the board is always searching for the most qualified candidates,
regardless of race, sex, ethnicity, religion, or any other classification, with
the background, experience, knowledge, and skills to oversee the operations of a
corporation as large and complex as ExxonMobil. The Board Affairs Committee,
which consists entirely of nonemployee directors, reviews the qualifications of,
and recommends to the board, candidates to fill board vacancies.
The board believes, in view of its stated and obvious commitment to the
diversity of its membership, that developing and issuing another policy
addressing board diversity and preparation of a related annual report would
replicate current policy and practice and create an unnecessary expense.
SHAREHOLDER PROPOSAL: AMENDMENT OF EEO POLICY
(ITEM 6 ON THE PROXY CARD)
This proposal was submitted by the New York City Employees' Retirement System, 1
Centre Street, New York, New York, 10007 and eight co-proponents.
"WHEREAS: ExxonMobil claims to bar all forms of employment discrimination but
its post-merger written policies do not explicitly prohibit discrimination based
on sexual orientation;
Prior to the merger Mobil explicitly prohibited discrimination based on sexual
orientation in its equal employment opportunity policy;
Our competitors Chevron, Sunoco, Atlantic Richfield, BP Amoco and Texaco
explicitly prohibit discrimination based on sexual orientation;
31
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
The hundreds of corporations with non-discrimination policies relating to sexual
orientation have a competitive advantage to recruit and retain employees from
the widest talent pool;
Employment discrimination on the basis of sexual orientation diminishes employee
morale and productivity;
Our company has an interest in preventing discrimination and resolving
complaints internally so as to avoid costly litigation and damage to its
reputation as an equal opportunity employer;
San Francisco, Atlanta, Seattle and Los Angeles have adopted legislation
restricting business with companies that do not guarantee equal treatment for
lesbian and gay employees and similar legislation is pending in other
jurisdictions;
Our company has operations in and makes sales to institutions in states and
cities which prohibit discrimination on the basis of sexual orientation;
A recent National Gay and Lesbian Task Force study has found that 16%-44% of gay
men and lesbians in twenty cities nationwide experienced workplace harassment or
discrimination based on their sexual orientation;
National public opinion polls consistently find more than three-quarters of the
American people support equal rights in the workplace for gay men, lesbians and
bisexuals;
RESOLVED: The Shareholders request the Board of Directors to amend ExxonMobil's
written equal employment opportunity policy to explicitly prohibit
discrimination based on sexual orientation and to substantially implement that
policy.
STATEMENT: By implementing a written policy prohibiting discrimination based on
sexual orientation, our Company will ensure a respectful and supportive
atmosphere for all employees and enhance its competitive edge by joining the
growing ranks of companies guaranteeing equal opportunity for all employees."
THE BOARD RECOMMENDS YOU VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
Similar proposals were submitted for the Exxon annual meeting in 1999 and the
ExxonMobil annual meeting in 2000 and more than 91% of the votes cast by
shareholders were AGAINST on both occasions.
The board believes that current policies and practices achieve the objectives of
this proposal and it is unnecessary and undesirable to make changes to the
written EEO policy.
The board shares the proponent's interest in preventing discrimination and
harassment in the workplace. We agree that employment discrimination and
harassment diminish employee morale and productivity. Therefore, we are
committed to keeping our workplaces free of all forms of discrimination and
harassment. Our business success depends on creating a positive, supportive work
environment where all employees are treated with dignity and respect.
32
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
ExxonMobil has written policies, communication and training programs, as well as
investigative and stewardship procedures to ensure that ANY AND ALL FORMS of
discrimination or harassment, including that based on sexual orientation, are
prohibited in any of our workplaces in the nearly 200 countries in which we
operate around the world.
ExxonMobil prefers an all-inclusive global policy, so that there can be no doubt
among employees, supervisors, or contractors worldwide that discrimination and
harassment for ANY reason is prohibited. The corporation maintains one
consistent global policy, which makes management's expectations clear. However,
laws in some countries, such as the United States, obligate us to supplement the
global policy for application in that country. In the United States, for
example, we are required to specifically reference nondiscrimination based on
"RACE, COLOR, SEX, RELIGION, NATIONAL ORIGIN, CITIZENSHIP STATUS, AGE, PHYSICAL
OR MENTAL DISABILITY, VETERAN OR OTHER LEGALLY PROTECTED STATUS." These
additions do not change our overall global policy.
Not only have ExxonMobil's written policies been in place for a number of years,
but communication, training and monitoring programs are continuously upgraded.
For example, in 2000, extensive training sessions were held for all employees
worldwide to reemphasize our expected business practices, including a discussion
using specific case examples on nondiscrimination based on sexual orientation.
All employees were required to attend this training and to provide written
acknowledgement that they understood the policies and are in compliance with
these expected practices. Thorough investigative and stewardship procedures have
been established throughout our worldwide organization to ensure continued
compliance.
ExxonMobil's global policies prohibit ANY form of discrimination or harassment
in ANY company workplace, ANYWHERE in the world. Period. In our opinion, adding
additional special categories to the U.S. policy would only erode the policy and
divert attention from the basic objective of providing for nondiscrimination and
a harassment-free work environment. Therefore, the board believes there is no
need to amend the EEO policy.
SHAREHOLDER PROPOSAL: EXECUTIVE PAY AND DOWNSIZING
(ITEM 7 ON THE PROXY CARD)
This proposal was submitted by Mr. John R. Weber, Sr., 4910 Valley Crest Drive,
St. Louis, Missouri 63128 and two co-proponents.
"WHEREAS despite record profitability in the last decade, U.S. corporations,
including ExxonMobil, have also laid off record numbers of workers, arguing that
cost-cutting is one key to long-term competitiveness and increased
profitability;
WHEREAS a 1992 study by the Haas School of Business at the University of
California at Berkeley found that firms with the widest pay gaps experienced
lower quality products and services. A study published in the JOURNAL OF
ORGANIZATIONAL BEHAVIOR found that high levels of executive compensation
generated cynicism among white collar employees;
33
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
WHEREAS firms with large pay gaps between CEOs and other executives experience
executive turnover at twice the rate of firms with a more equal distribution of
pay among executives according to a 2000 study by Notre Dame University (Source:
WALL STREET JOURNAL, April 6, 2000);
WHEREAS in the week before Christmas 1999, ExxonMobil's CEO Lee Raymond
announced the elimination of 16,000 jobs, representing 15% of the company's
workforce.
WHEREAS Mr. Raymond's total compensation, exceeded the combined compensation of
the CEOs of Amerada Hess, Chevron, Conoco, Sunoco and Texaco by 55% in 1999;
WHEREAS we believe that asking employees to sacrifice, while at the same time
rewarding executives, sends a mixed message to employees, suppliers and
shareholders. We believe that business success over the long term is enhanced
when business is viewed as a shared enterprise in which both the rewards and
sacrifices are fairly shared among all employees;
RESOLVED: Shareholders request that the Board adopt an executive compensation
policy that freezes the pay of corporate officers during periods of significant
downsizing (layoffs involving the lesser of 5% of the company's workforce or
2,000 workers). This pay freeze shall continue for a period of one year
following the layoffs."
THE BOARD RECOMMENDS YOU VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
The Board Compensation Committee (BCC) and the board believe the executive
compensation constraints suggested by this proposal and in Item 8
below--Executive Compensation Factors--would be detrimental to the interests of
the shareholders. The executive compensation program should continue to reflect
overall business performance and the competitive dynamics of the marketplace.
The board believes that freezing or using formulas to determine executive
compensation would severely restrict our ability to maintain the overall
competitiveness of the corporation and its compensation structure.
Responsibility for determining the executive compensation structure and
compensation for senior executives (including salary, bonus, and incentive
awards) belongs to the BCC. The BCC is made up of nonemployee directors who do
not participate in any of the compensation plans they administer. The basic
tenet of the executive compensation program is to develop, motivate and retain
executives with the skills and expertise to manage the operations of a
corporation as large and complex as ExxonMobil and guide the corporation to
achieving its goals and maintaining its leadership position. The compensation
structure is based primarily on competitive positioning with significant
consideration given to business performance and general economic factors.
The BCC and the board believe that the executive compensation program is
appropriately designed with its focus on competitive salaries and incentives.
Executive compensation should not be fixed by arbitrary or pre-determined
formulas and constraints.
34
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
SHAREHOLDER PROPOSAL: EXECUTIVE COMPENSATION FACTORS
(ITEM 8 ON THE PROXY CARD)
This proposal was submitted by Sisters of St. Dominic of Caldwell, New Jersey,
52 Old Swartswood Station Road, Newton, New Jersey 07860 and two co-proponents.
"WHEREAS:
- We believe that executive compensation should reflect not only the
financial performance of a company, but also the total performance,
including social and environmental criteria;
- During the period 1990-1999, corporate profits rose 117.4%, the S&P 500
rose 297%, and CEO pay rose 535%. During the same period, average worker
pay rose 32%;
- The average large company CEO made 475 times more than the average
production worker in 1999 (BUSINESS WEEK). If the pay of the average
manufacturing worker had increased as fast as CEO pay between 1990-1999,
it would be $114,035/year, not $23,753/year. If minimum wage rose as fast
as CEO pay it would be $24.13/hour, not $5.15/hour;
- Business leaders and thinkers ranging from J.P. Morgan to Peter Drucker
have argued against wide pay gaps and call for limits on executive pay;
- ExxonMobil's CEO was awarded $24,717,785 in overall compensation in 1999
(2000 proxy statement);
- A Price Waterhouse survey of securities' issuers in 1992 found that as
many as 62% of responding companies had known of environmental liability
exposures that were not yet recorded in financial statements;
- ExxonMobil has been sued for up to $4.7 million for nearly 200 violations
of the Clean Air Act and has been sued with a partner company for
$4.8 million for toxic discharges into San Francisco Bay (THE HERALD,
Glasgow). Federal and State agencies have initiated numerous actions
against the company. Our liabilities for the Valdez spill have yet to be
settled.
RESOLVED: Shareholders request that the Board Compensation Committee should
consider non-financial factors, including social and environmental concerns, in
determining compensation for top executives. We recommend the Committee consider
setting executive performance goals that take into account disparities between
increases in top executives' compensation and that of the lowest paid workers,
as well as to environmental liability and progress."
35
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
STATEMENT OF SUPPORT
We believe that ExxonMobil has misinformed shareholders about global warming
with inaccurate statements and unreliable information. In addition, we believe
CEO Lee Raymond made inaccurate statements and used unreliable information when
discussing global warming at the May 2000 Annual Meeting.
Links between executive compensation and environmental performance do not impose
arbitrary limits. Instead, they address issues of
- The lost profitability represented by waste by-products released into the
environment instead of being utilized in production processes.
- The increasing detrimental and unstable environmental impacts of operating
waste and output.
By joining executive compensation with social and environmental liability and
progress, our company can establish social and environmental accountability as
an integral business goal that positively impacts the bottom line and helps to
reverse global trends of waste and degradation."
THE BOARD RECOMMENDS YOU VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
The proponent submitted essentially the same proposal for the ExxonMobil annual
meeting in 2000 and more than 92% of the votes cast by shareholders were
AGAINST.
For the reasons explained in response to Item 7--Executive Pay and
Downsizing--as well as those reasons discussed here, the directors believe the
approach to determining executive compensation suggested by this proposal also
would negatively impact the company's competitiveness and its ability to retain
senior executives and would not be in the best interests of the shareholders.
The proponent appears to be seeking support for this proposal by implying that
the company and the Chairman have made misleading and inaccurate statements
concerning global climate change. We categorically reject these allegations. We
believe the proponent is referring to two temperature charts shown at the 2000
annual meeting. With the first chart, the Chairman referenced temperature data
relating to a 3000 year period and the Sargasso Sea that was culled from
published peer-reviewed scientific articles to highlight the unsettled nature of
the scientific data on trends in temperature levels. In reviewing a second chart
illustrating global average temperature change over the past twenty years as
measured from satellites, the Chairman stated: "If you eyeball this, you could
make a case statistically that, in fact, the temperature is going down. I'm not
asserting that. Similarly, I reject the assertion that the temperature is going
up. We need to understand what is going on and then take steps to deal with what
we find."
The corporation believes the issue of global climate change is important. That
is why ExxonMobil continues to be one of the leading corporate supporters of
public research in this area. And although the issues around climate science are
not settled, we are not standing idle. We believe that it is possible to take
responsible actions now, even under the existing
36
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
uncertainty. However, these actions should be market-based, scientifically and
economically justified, global, and they should capitalize on advances in
technology. The Chairman stated this view in the foreword to the corporation's
publication, GLOBAL CLIMATE CHANGE:
A BETTER PATH FORWARD
"...The company is committed to a course of action on this issue [global
climate change] consistent with sound science, solid economics and high
ethical standards. ...We agree that the potential for climate change caused
by increases in atmospheric gases, carbon dioxide and other greenhouse gases
may pose a legitimate long-term risk. ...This does not mean we favor doing
nothing. ...We believe that there is a better path forward--one that will
allow us both to protect our environment and to sustain economic prosperity.
...Climate change is an important issue. We have an obligation to ourselves
and to future generations to make sure it's handled properly."
This publication and others are available to all shareholders in hard copy and
on ExxonMobil's Web site at www.exxonmobil.com.
SHAREHOLDER PROPOSAL: ADDITIONAL REPORT ON ANWR DRILLING
(ITEM 9 ON THE PROXY CARD)
This proposal was submitted by Trillium Asset Management Corporation, 711
Atlantic Avenue, Boston, Massachusetts 02111 and three co-proponents.
"WHEREAS the Arctic National Wildlife Refuge is the only conservation area in
the nation that provides a complete range of Arctic and sub-Arctic ecosystems
balanced with a wide variety of wildlife, including large populations of
caribou, muskoxen, polar bears, snow geese and 180 species of other migratory
birds;
Interior Secretary Bruce Babbitt has likened drilling in the Refuge to damming
up the Grand Canyon;
the Refuge coastal plain, is the only section of Alaska's entire North Slope not
open for oil and gas leasing, exploration and production; and
RESOLVED: The Shareholders request that Board of Directors prepare a report, at
reasonable cost and omitting proprietary information, on the potential
environmental damage that would result from the company drilling for oil and gas
in the coastal plain of the Arctic National Wildlife Refuge. The report should
also cover the financial costs of the plan and the expected return."
SUPPORTING STATEMENT
"Ninety-five percent of Alaska's most promising oil-bearing lands are already
open for development, but it is imperative that we continue to protect the
wildlife, fish and wilderness
37
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
that make up the rest of this invaluable part of our American
heritage."--President Jimmy Carter (1995)
Once part of the largest intact wilderness area in the United States, the North
Slope now hosts one of the world's largest industrial complexes. In fact, oil
companies already have access to 95 percent of Alaska's North Slope. More than
1500 miles of roads and pipelines and thousands of acres of industrial
facilities sprawl over some 400 square miles of once pristine arctic tundra. Oil
operations on the North Slope annually emit roughly 43,000 tons of oxides of
nitrogen, which contribute to smog and acid rain.
The coastal plain is the biological heart of the Refuge, to which the vast
Porcupine River caribou herd migrates each spring to give birth. The Department
of Interior has concluded that development in the coastal plain would result in
major adverse impacts on the caribou population. According to biologists from
the Alaska Department of Fish and Game caribou inhabiting the oil fields do not
thrive as well as members of the same herd that seldom encounter oil-related
facilities.
The coastal plain is also the most important onshore denning area for the entire
South Beaufort Sea polar bear population, and serves as crucial habitat for
muskoxen and for at least 180 bird species that gather there for breeding,
nesting and migratory activities.
Balanced against these priceless resources is the small potential for
economically recoverable oil in the coastal plain. In fact, the most recent
federal estimate predicted that only 3.4 billion barrels would be economically
recoverable in the coastal plain--less than 6 months worth of oil for the United
States.
Vote YES for this proposal, which will improve our Company's reputation as a
leader in environmentally responsible energy recovery."
THE BOARD RECOMMENDS YOU VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
The proponents are requesting a report to shareholders on potential
environmental damage that would result from the company drilling for oil and gas
in the Coastal Plain of the Arctic National Wildlife Refuge (ANWR) and
speculating on likely costs and returns of such activities. This proposal is
essentially identical to a proposal submitted for the ExxonMobil annual meeting
in 2000 and more than 94% of the votes cast by shareholders were AGAINST. Little
has changed in the intervening year, and the board again recommends voting
against this proposal. Provided the existing regulatory landscape remains
essentially unchanged, the board also expressly designates this response to be
its report on the topic should proponents seek an additional report in the
future.
ANWR is an area of approximately 19 million acres in Alaska. The Coastal Plain
(also known as Area 1002 of ANWR) is an area of about 1.5 million acres within
ANWR in which oil and gas exploration and development are generally prohibited
by federal government regulation. The corporation has absolutely no property
interests, or rights to acquire any property interest, or drilling rights in the
Coastal Plain. Given the many uncertainties about the possible timing
38
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
of changes, if any, in the restrictions on exploration in ANWR and the
conditions that could prevail when such exploration might be undertaken, the
preparation of a report beyond that offered here would provide little useful
information for shareholders and would be an inappropriate use of corporate
resources.
In the supporting statement, the proponent speculates about the possible adverse
impacts of Coastal Plain development on wildlife. Alaska Governor Tony Knowles
has commented that,
"... not withstanding oil and gas development on the North Slope, air quality is
good, drilling wastes have been well managed, and wildlife and their habitat
have been minimally impacted. Most notably, the Central Arctic Caribou Herd,
which occupies the Prudhoe Bay area throughout the year, has grown steadily from
a population of 6,000 in 1978, the year after North Slope oil production began,
to over 22,000 by 1994." An environmental impact report issued by the U.S.
Department of Interior (DOI) in 1987 on the Coastal Plain area concluded that
potential impacts from exploration and drilling activities would be minor or
negligible on the wildlife resources, and that production activities would
affect less than one percent of the Coastal Plain area. Governor Knowles further
stated,
"... the Eskimos who reside on the North Slope and who are dependent on the
resources of the region are among the strongest supporters for the development
of ANWR." In addition, over 70% of Alaskans polled in April of 2000 supported
exploration in ANWR.
The proponent also mentions the small potential for economically recoverable oil
in the Coastal Plain. The (DOI) estimates the Coastal Plain could contain
between 9 to 16 billion barrels of recoverable oil. In fact, discovery of
3.4 billion barrels of recoverable oil would represent a giant oil field,
development of which would significantly contribute to domestic oil production
and to a reduction of U.S. dependence on foreign oil for many years.
The board supports environmentally responsible development within the Coastal
Plain of ANWR. More than 30 years of oil and gas industry experience on Alaska's
North Slope provides strong evidence that development would pose little threat
to the ecology of the Coastal Plain. That experience, along with technological
advancements, means that the amount of land needed for oil field facilities
would be vastly reduced, as would the potential for spills or other
environmental hazards.
SHAREHOLDER PROPOSAL: RENEWABLE ENERGY SOURCES
(ITEM 10 ON THE PROXY CARD)
This proposal was submitted by the Province of St. Joseph of the Capuchin Order,
1015 North Ninth Street, Milwaukee, Wisconsin 53233 and thirty-four
co-proponents.
"WHEREAS increasing evidence points to global warming caused, in part, by fossil
fuel burning. At the same time, an increasing number of voices are calling for
the development of
39
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
alternative energy sources to reduce our nation's over-dependence on fossil
fuels for its energy supply;
- An Executive Order was made (August, 1999) encouraging the development of
renewable energy sources. On May 29, 2000 energy ministers of the European
Union committed themselves to double the average share of renewables for
the EU's total energy consumption by 2010.
- Committed to combat pollution from fossil fuels, two of our main
international competitors, Royal Dutch/Shell Group and BP, have increased
significantly development of renewables. The Royal Dutch/Shell Group has
launched a 5-year $500 million renewal energy investment program with
worldwide projects which are targeted to attain internal profitability
goals. In July, BP announced its goal of being 'a new company able to
offer global energy solutions' through gasoline and diesel producing lower
emissions and becoming 'the world's leading producer of solar power.'
- Meanwhile we believe ExxonMobil continues to resist efforts urging
management to wean itself from pollution-causing fuels and begin similar
demonstrable efforts to expand 'beyond petroleum.' In its January 20,
2000, filing of legal arguments to disallow this resolution, management
stated: 'Renewable energy sources currently compose only an extremely
insignificant percentage of the company's business.'
- Dr. Robert Dorsch, Director of Biotechnology Development at Dupont, a
potential beneficiary of expanded renewable energy sources stated
(August 13, 1999): 'Essentially all of society in the last 100 years has
been built on petroleum as the energy and raw material. We need to go from
black gold to green gold.' Indeed, BP has agreed by indicating its name
connotes 'Beyond Petroleum.'
- ExxonMobil has made some efforts to develop renewable sources of energy;
however, by its concentration on cheap fossil fuels, it has been left 'out
of the loop' in the renewable energy business segment. At the same time,
we believe its ongoing denial of climatic effects from fossil fuel burning
is increasingly isolating it from the innovative policies and strategies
of our main international competitors (such as Shell and BP).
RESOLVED: That shareholders request the Board to adopt a company policy to
promote renewable energy sources consistent with the Cabinet-level council
newly-created to enhance renewable energy sources and to develop strategic plans
to help bring bioenergy and other renewable energy sources into ExxonMobil's
energy mix. Shareholders request they be kept advised regularly as to the ways
our Company is moving from its self-stated 'insignificant percentage of the
company's business' in renewable energy resources to the promotion and marketing
of renewables."
SUPPORTING STATEMENT
"Support for this resolution will indicate shareholder desire to de-emphasize
the production of fossil fuels and the development of more non-polluting,
environmentally-friendly approaches to renewable energy sources. Please vote
'yes' for this resolution."
40
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
THE BOARD RECOMMENDS YOU VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING REASONS:
Proponents request the company pursue renewable energy sources without offering
convincing economic, scientific, technical or environmental data on which to
evaluate such action. The proponent submitted a similar proposal for the
ExxonMobil annual meeting in 2000 and over 93% of the votes cast by shareholders
were AGAINST.
ExxonMobil has substantial experience in renewable energy. The corporation has
participated in past commercial ventures with renewable energy, particularly
solar energy, involving expenditures in excess of $500 million on research and
commercial activities. However, after evaluating all relevant considerations,
the business decision was made many years ago not to continue to actively pursue
these energy alternatives, but to concentrate on our core energy and
petrochemical businesses.
The timing and advisability of entering into any new business, such as
renewables, including associated research and marketing decisions, require the
judgment of experienced management and scientists. The corporation continues to
follow technical and commercial developments in renewable energy, though, at
this time, we do not believe that they offer a substantive business opportunity
for ExxonMobil. Today, energy sources such as wind and solar comprise less than
0.5% of total global energy supply. Renewables are not currently competitive
with abundant, affordable fossil fuels, nor are they expected to become
competitive in the near term. Typically, renewables occupy only specialized
niche markets because they are more costly and less reliable than conventional
energy. For example, in a recent public webcast, one competitor cited by
proponents stated that "one of the problems with solar is that the profitability
is questionable, if it is there at all. This is true for all the players."
We feel that proponents are mistaken in several respects in their belief that
the corporation should "wean itself from pollution causing fossil fuels" in
favor of "more non-polluting, environmentally friendly approaches to energy
sources." First, customers continue to demand products from petroleum. Second,
research, development and investment in fossil fuels have resulted in processes
and products with fewer environmental impacts. Finally, renewable energy sources
produce environmental impacts.
The corporation shapes its business to respond to consumers' actual and
projected needs for products. Customers want and need increasingly sophisticated
and technologically demanding products. ExxonMobil is committed to meeting our
customers' demand for abundant, affordable, environmentally acceptable products.
We provide them through continuous research, technology development and
investment. The board continues to be confident that traditional energy sources
will continue to play a critical role in the increasing demand for energy for
many years to come.
As demonstrated in respected projections from private, national, and
international agencies, global demand for fossil fuels far outstrips projected
demand for renewable energy. In supplying these demands, ExxonMobil actively
works to promote the development of new and improved products with reduced
environmental impacts. We are proud that the oil and auto industries
41
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
have succeeded in reducing tailpipe emissions from new cars by 95% since the
1970s. Further enhancements to fuels and engines are planned that will provide
additional reductions. ExxonMobil is actively engaged in forefront research with
General Motors and Toyota to develop sophisticated, advanced vehicles based on
fuel cells that offer the prospect of dramatically lower emissions in the
future.
However, it is also important to recognize that all energy sources impact the
environment; none are truly "non-polluting." Though citing environmental
concerns as the basis for their proposal, proponents fail to acknowledge the
environmental challenges inherent in renewable energy sources, particularly if
they are deployed on a scale necessary to make an appreciable contribution to
global energy demands. Solar panels must be manufactured, installed and
maintained. Wind turbines face increasing pressures because of their impacts on
wildlife and noise. Bioenergy creates land-use issues especially impacting on
biodiversity and, moreover, uses considerable amounts of energy in the planting,
cultivation, and harvesting of crops. To characterize renewable energy sources
as non-polluting is inaccurate and misleading. Such considerations play an
important role in deciding whether renewable energy sources provide sufficient
commercial opportunity or true benefit to the environment.
While proponents cite climate change as the basis for their proposal, they offer
renewable energy sources as though they were the best and only way to respond to
concerns about climate change. They fail to demonstrate in what way public or
private efforts to advance renewables would make a meaningful contribution to
reducing projected greenhouse gas emissions in the future.
Society needs options to respond to long-term environmental, economic, and
social concerns, such as climate change. We believe that the development of
advanced technology offers several promising options that could provide
solutions over the long time periods available to address these concerns. At
ExxonMobil, we participate in research and development on a range of
technologies related to our business that address these long-term issues. When,
in our judgement, business opportunities occur that provide value to our
shareholders, we will pursue them. This approach, based on the role of R&D and
markets as an appropriate response to climate change, is widely shared by others
in industry, academia, government and the public.
In conclusion, the board believes that the proponents' recommendation that the
corporation should pursue a business activity in renewables is unwarranted by
consumer demand, technical and environmental concerns, and by economic factors.
Such business activity at this time is not in the best interests of
shareholders. ExxonMobil remains committed and engaged in research, innovation,
technology development and investment to meet consumers' demands for new,
affordable, environmentally acceptable products.
42
PROXY STATEMENT 2001 - EXXON MOBIL CORPORATION
ADDITIONAL INFORMATION
CONDUCT OF MEETING
We are currently not aware of any other business to be acted on at the meeting.
Under the laws of New Jersey, where ExxonMobil is incorporated, no business
other than procedural matters may be raised at the meeting unless proper notice
has been given to the shareholders. If other business is properly raised, your
proxies have authority to vote as they think best, including to adjourn the
meeting.
The Chairman has broad authority to conduct the annual meeting so that the
business of the meeting is carried out in an orderly and timely manner. In doing
so, he has broad discretion to establish reasonable rules for discussion,
comments and questions during the meeting. Rules of conduct are stated in the
ANNUAL MEETING PROGRAM available at the meeting. The Chairman also is entitled
to rely upon applicable law regarding disruptions or disorderly conduct to
ensure that the meeting is conducted in a manner that is fair to all
participants.
PEOPLE WITH DISABILITIES
We can provide reasonable assistance to help you participate in the meeting if
you tell us about your disability and your plan to attend. Please call or write
the Secretary at least two weeks before the meeting at the number or address
listed under "Contact information" on page 44.
OUTSTANDING SHARES
On February 28, 2001, 3,456,242,044 shares of common stock were outstanding.
Each common share has one vote.
HOW WE SOLICIT PROXIES
In addition to this mailing, ExxonMobil employees may solicit proxies
personally, electronically, or by telephone. ExxonMobil pays the costs of
soliciting this proxy. We are paying D.F. King & Co. a fee of $25,000 plus
expenses to help with the solicitation. We also reimburse brokers and other
nominees for their expenses in sending these materials to you and getting your
voting instructions.
SHAREHOLDER PROPOSALS FOR NEXT YEAR
Any shareholder proposal for the annual meeting in 2002 must be sent to the
Secretary at the address of ExxonMobil's principal executive office listed under
"Contact information" on page 44. The deadline for receipt of a proposal to be
considered for inclusion in the proxy statement is December 19, 2001. The
deadline for notice of a proposal for which a shareholder will conduct his or
her own solicitation is March 4, 2002. On request, the Secretary will provide
instructions for submitting proposals.
43
EXXON MOBIL CORPORATION - PROXY STATEMENT 2001
DUPLICATE ANNUAL REPORTS
Registered shareholders with multiple accounts may authorize ExxonMobil to
discontinue mailing extra summary annual reports by marking the "discontinue
duplicate summary annual report" box on the proxy card. If you vote by telephone
or via the Internet, you will also have the opportunity to indicate that you
wish to discontinue receiving extra summary annual reports. At least one account
must continue to receive a summary annual report. Eliminating these duplicate
mailings will not affect receipt of future proxy statements and proxy cards.
Also, you may write or call ExxonMobil Shareholder Services at the toll-free 800
number listed below at any time during the year to discontinue duplicate
mailings.
CONTACT INFORMATION
If you have questions or need more information about the annual meeting, write
to:
Secretary
Exxon Mobil Corporation
5959 Las Colinas Boulevard
Irving, TX 75039-2298
or call us at (972) 444-1157.
For information about your record holdings or Shareholder Investment Program
account, call ExxonMobil Shareholder Services at 1-800-252-1800 or access your
account via the Internet at www.equiserve.com. We also invite you to visit
ExxonMobil's Web site at www.exxonmobil.com. Web site materials are not part of
this proxy solicitation.
FINANCIAL STATEMENTS
The year 2000 consolidated financial statements and auditor's report,
management's discussion and analysis of financial condition and results of
operations, information concerning the quarterly financial data for the past two
fiscal years and other information are provided in Appendix B.
SEC FORM 10-K
Shareholders may obtain a copy of the company's annual report to the Securities
and Exchange Commission on Form 10-K without charge by writing to the Secretary
at the address listed above or by visiting ExxonMobil's Web site at
www.exxonmobil.com.
44
APPENDIX A
BOARD AUDIT COMMITTEE CHARTER
I. PURPOSE
The primary function of the Board Audit Committee (the "Committee") is
oversight. The Committee shall assist the Board of Directors (the "Board") in
fulfilling its responsibility to oversee management's conduct of the
Corporation's financial reporting process, the financial reports and other
financial information provided by the Corporation to the Securities and Exchange
Commission and the public, the Corporation's system of internal accounting and
financial controls, and the annual independent audit of the Corporation's
financial statements.
The Committee, subject to any action that may be taken by the full Board, shall
have the ultimate authority and responsibility to select (subject to shareholder
ratification), evaluate and, where appropriate, replace the independent auditor.
The Corporation's management is responsible for preparing the Corporation's
financial statements. The independent auditors are responsible for auditing
those financial statements. Management, including the internal audit function,
and the independent auditors have more time, knowledge and detailed information
about the Corporation than do Committee members. Consequently, in carrying out
its oversight responsibilities, the Committee is not providing any professional
certification as to the independent auditors' work or any expert or special
assurance as to the Corporation's financial statements, including with respect
to auditor independence. Each member of the Committee shall be entitled to rely
on the integrity of people and organizations from whom the Committee receives
information and the accuracy of such information, including representations by
management and the independent auditors regarding information technology and
other non-audit services provided by the independent auditor.
In discharging its oversight role, the Committee is empowered to investigate any
matter brought to its attention with full access to all books, records,
facilities and personnel of the Corporation and the authority to retain outside
counsel, auditors or other experts for this purpose.
II. MEMBERSHIP
The Committee's composition shall meet the requirements of the Audit Committee
Policy of the New York Stock Exchange.
Accordingly, each member of the Committee shall:
have no relationship to the Corporation that may interfere with the exercise
of his or her independence from management and the Corporation; and
be financially literate or become financially literate within a reasonable
period of time after appointment to the Committee.
In addition, at least one member of the Committee shall have accounting or
related financial management expertise.
A1
III. ACTIVITIES
The following shall be the common recurring activities of the Committee in
carrying out its oversight function. These activities are set forth as a guide
with the understanding that the Committee may diverge from this guide as
appropriate given the circumstances.
1. The Committee shall make a recommendation to the Board prior to the end
of each year with respect to the appointment of independent auditors to
audit the consolidated financial statements of the Corporation and its
subsidiaries for the coming year.
2. The Committee shall review from time to time, at least annually,
(a) the results of the audits by the Corporation's independent auditors
of the Corporation's consolidated financial statements, (b) the costs of
such audits including the fees paid to the independent auditors,
(c) any significant deficiency in the design or the operation of
internal accounting controls identified by the independent auditors and
any resulting recommendations, and (d) the arrangements for and the
scope of the independent auditors' audits of the Corporation's
consolidated financial statements. The Committee shall report the
foregoing to the Board with such recommendations as it may deem
appropriate.
3. The Committee shall confer with the Controller, the General Auditor,
management and the independent auditors as requested by any of them or
by the Committee, at least annually, and review their reports with
respect to the functioning, quality and adequacy of programs for
compliance with the Corporation's policies and procedures regarding
business ethics, financial controls and internal auditing, including
information regarding violations or probable violations of such
policies. The Committee shall report the foregoing to the Board with
such recommendations as it may deem appropriate.
4. The Committee shall review with the Controller and the General Auditor,
at least annually, the activities, budget, staffing and structure of the
internal auditing function of the Corporation and its subsidiaries,
including their evaluations of the performance of that function and any
recommendations with respect to improving the performance of or
strengthening that function. As appropriate, the Committee shall review
the reports of any internal auditor on a financial safeguard problem
which has not resulted in corrective action or has not otherwise been
resolved to the auditor's satisfaction at any intermediate level of
audit management.
5. The Committee, along with the other members of the Board, shall review
with management and the independent auditors the audited financial
statements to be included in the Corporation's Annual Report on
Form 10-K. The Committee shall review and consider with the independent
auditors the matters required to be discussed by Statement of Auditing
Standards No. 61 ("SAS No. 61"), including deficiencies in internal
controls, fraud, illegal acts, management judgments and estimates, audit
adjustments, audit difficulties, and the independent auditors' judgments
about the quality of the Corporation's accounting practices.
A2
6. As a whole, or through the Committee Chairman, the Committee shall
review with the independent auditors and management the Corporation's
interim financial results to be included in each quarterly report on
Form 10-Q. Each such review shall include any matters required to be
discussed by SAS No. 61 and shall occur prior to the Corporation's
filing of the related Form 10-Q, with the Securities and Exchange
Commission.
7. The Committee shall: (a) request annually from the independent auditors
a formal written statement delineating all relationships between the
independent auditors and the Corporation consistent with Independence
Standards Board Standard Number 1; (b) consider, with a view to auditor
independence, the fees payable to the independent auditor for audit
services, information technology services, and all other services, for
such periods, in such categories and on such bases as the Committee may
request; (c) discuss with the independent auditors any such disclosed
relationships and their impact on the independent auditors'
independence; and (d) recommend that the Board take appropriate action
in response to the independent auditors' report to satisfy itself of the
auditors' independence.
8. The Committee shall deliver any report or other disclosure by the
Committee required to be included in any proxy statement for the
election of the Corporation's directors under the rules of the
Securities and Exchange Commission.
9. The Committee shall review the adequacy of this Charter on an annual
basis.
10. The Committee shall review major changes to the Corporation's auditing
and accounting principles and practices based on advice of the
independent auditor, the Controller, the General Auditor or management.
11. The Committee shall evaluate, along with the other members of the Board,
the performance of the independent auditor.
12. The Committee shall review the expenses of officers of the Corporation
who are also members of the Board and such other officers as it may deem
appropriate.
13. The Committee shall take such other actions and do such other things as
may be referred to it from time to time by the Board.
A3
APPENDIX B
FINANCIAL SECTION
TABLE OF CONTENTS
Business Profile ........................................................................ B2
Financial Summary ....................................................................... B3
Management's Discussion and Analysis of Financial Condition and Results of Operations ... B4-B10
Report of Independent Accountants ....................................................... B11
Consolidated Financial Statements
Statement of Income ............................................................ B12
Balance Sheet .................................................................. B13
Statement of Shareholders' Equity .............................................. B14
Statement of Cash Flows ........................................................ B15
Notes to Consolidated Financial Statements
1. Summary of Accounting Policies .............................................. B16
2. Extraordinary Item and Accounting Change .................................... B17
3. Merger of Exxon Corporation and Mobil Corporation ........................... B17
4. Reorganization Costs ........................................................ B17
5. Miscellaneous Financial Information ......................................... B18
6. Cash Flow Information ....................................................... B18
7. Additional Working Capital Data ............................................. B18
8. Equity Company Information .................................................. B19
9. Investments and Advances .................................................... B19
10. Investment in Property, Plant and Equipment ................................. B20
11. Leased Facilities ........................................................... B20
12. Capital ..................................................................... B20
13. Employee Stock Ownership Plans .............................................. B22
14. Financial Instruments ....................................................... B22
15. Long-Term Debt .............................................................. B23
16. Incentive Program ........................................................... B24
17. Litigation and Other Contingencies .......................................... B25
18. Annuity Benefits and Other Postretirement Benefits .......................... B26
19. Income, Excise and Other Taxes .............................................. B28
20. Disclosures about Segments and Related Information .......................... B29
Supplemental Information on Oil and Gas Exploration and Production Activities ........... B30-B34
Quarterly Information ................................................................... B35
Operating Summary ....................................................................... B36
B1
BUSINESS PROFILE
Return on Capital and
Earnings After Average Capital Average Capital Exploration
Income Taxes Employed Employed Expenditures
-----------------------------------------------------------------------
Financial 2000 1999 2000 1999 2000 1999 2000 1999
- ---------------------------------------------------------------------------------------------------------------
(millions of dollars) (percent) (millions of dollars)
Petroleum and natural gas
Upstream
United States $ 4,545 $ 1,842 $ 12,804 $ 12,660 35.5 14.5 $ 1,859 $ 1,729
Non-U.S 7,824 4,044 26,235 26,203 29.8 15.4 5,040 6,661
---------------------------------------- ------------------
Total $ 12,369 $ 5,886 $ 39,039 $ 38,863 31.7 15.1 $ 6,899 $ 8,390
---------------------------------------- ------------------
Downstream
United States $ 1,561 $ 577 $ 7,976 $ 8,354 19.6 6.9 $ 1,077 $ 905
Non-U.S 1,857 650 19,756 19,679 9.4 3.3 1,541 1,496
---------------------------------------- ------------------
Total $ 3,418 $ 1,227 $ 27,732 $ 28,033 12.3 4.4 $ 2,618 $ 2,401
---------------------------------------- ------------------
Total petroleum and natural gas $ 15,787 $ 7,113 $ 66,771 $ 66,896 23.6 10.6 $ 9,517 $ 10,791
---------------------------------------- ------------------
Chemicals
United States $ 644 $ 738 $ 5,644 $ 5,471 11.4 13.5 $ 351 $ 663
Non-U.S. 517 616 8,170 6,991 6.3 8.8 1,117 1,580
---------------------------------------- ------------------
Total $ 1,161 $ 1,354 $ 13,814 $ 12,462 8.4 10.9 $ 1,468 $ 2,243
Other operations 551 426 3,992 4,242 13.8 10.0 163 249
Corporate and financing (589) (514) 2,886 236 - - 20 24
Merger expenses (920) (469) - - - - - -
Gain from required asset divestitures 1,730 - - - - - - -
---------------------------------------- ------------------
Net income $ 17,720 $ 7,910 $ 87,463 $ 83,836 20.6 10.3 $ 11,168 $ 13,307
======================================== ==================
Operating 2000 1999 2000 1999
- ---------------------------------------------------------------------------------------------------------------
(thousands of barrels daily) (thousands of barrels daily)
Net liquids production Refinery throughput
United States 733 729 United States 1,862 1,930
Non-U.S 1,820 1,788 Non-U.S 3,780 4,047
---------------- ---------------
Total 2,553 2,517 Total 5,642 5,977
(millions of cubic feet daily) (thousands of metric tons)
Natural gas production available for sale
United States 2,856 2,871 Chemical prime product sales 25,637 25,283
Non-U.S 7,487 7,437
---------------- (millions of metric tons)
Total 10,343 10,308 Coal production
United States 2 3
(thousands of barrels daily) Non-U.S. 15 14
Petroleum product sales ---------------
United States 2,669 2,918 Total 17 17
Non-U.S 5,324 5,969
---------------- (thousands of metric tons)
Total 7,993 8,887 Copper production 254 248
B2
FINANCIAL SUMMARY
2000 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
(millions of dollars, except per share amounts)
Sales and other operating revenue
Petroleum and natural gas $ 210,006 $ 167,802 $ 151,109 $ 179,137
Chemicals 17,501 13,777 13,589 16,190
Other 932 950 929 2,408
-------------------------------------------------------
Sales and other operating revenue, including excise taxes $ 228,439 $ 182,529 $ 165,627 $ 197,735
Earnings from equity interests and other revenue 4,309 2,998 4,015 4,011
-------------------------------------------------------
Total revenue $ 232,748 $ 185,527 $ 169,642 $ 201,746
=======================================================
Earnings
Petroleum and natural gas
Upstream $ 12,369 $ 5,886 $ 3,352 $ 6,905
Downstream 3,418 1,227 3,474 3,088
-------------------------------------------------------
Total petroleum and natural gas $ 15,787 $ 7,113 $ 6,826 $ 9,993
Chemicals 1,161 1,354 1,394 1,771
Other operations 551 426 384 434
Corporate and financing (589) (514) (460) (466)
Merger expenses (920) (469) - -
Gain from required asset divestitures 1,730 - - -
Accounting change - - (70) -
-------------------------------------------------------
Net income $ 17,720 $ 7,910 $ 8,074 $ 11,732
=======================================================
Net income per common share $ 5.10 $ 2.28 $ 2.31 $ 3.32
Net income per common share - assuming dilution $ 5.04 $ 2.25 $ 2.28 $ 3.28
Cash dividends per common share $ 1.760 $ 1.687 $ 1.666 $ 1.619
Net income to average shareholders' equity (percent) 26.4 12.6 12.9 18.7
Net income to total revenue (percent) 7.6 4.3 4.8 5.8
Working capital $ 2,208 $ (7,592) $ (5,187) $ (377)
Ratio of current assets to current liabilities 1.06 0.80 0.85 0.99
Total additions to property, plant and equipment $ 8,446 $ 10,849 $ 12,730 $ 11,652
Property, plant and equipment, less allowances $ 89,829 $ 94,043 $ 92,583 $ 93,527
Total assets $ 149,000 $ 144,521 $ 139,335 $ 143,751
Exploration expenses, including dry holes $ 936 $ 1,246 $ 1,506 $ 1,252
Research and development costs $ 564 $ 630 $ 753 $ 763
Long-term debt $ 7,280 $ 8,402 $ 8,532 $ 10,868
Total debt $ 13,441 $ 18,972 $ 17,016 $ 17,182
Fixed charge coverage ratio 15.7 6.6 6.9 9.9
Debt to capital (percent) 15.4 22.0 20.6 20.3
Shareholders' equity at year-end $ 70,757 $ 63,466 $ 62,120 $ 63,121
Shareholders' equity per common share $ 20.42 $ 18.25 $ 17.96 $ 18.08
Average number of common shares outstanding (millions) 3,477 3,453 3,468 3,511
Number of regular employees at year-end (thousands) 99.6 106.9 111.6 114.5
B3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FUNCTIONAL EARNINGS 2000 1999 1998
- ------------------------------------------------------------------------------------------------
(millions of dollars)
EARNINGS INCLUDING MERGER EFFECTS AND SPECIAL ITEMS
Upstream
United States $ 4,545 $ 1,842 $ 850
Non-U.S 7,824 4,044 2,502
Downstream
United States 1,561 577 1,199
Non-U.S 1,857 650 2,275
Chemicals
United States 644 738 792
Non-U.S 517 616 602
Other operations 551 426 384
Corporate and financing (589) (514) (460)
Merger expenses (920) (469) -
Gain from required asset divestitures 1,730 - -
Accounting change - - (70)
----------------------------------
Net income $ 17,720 $ 7,910 $ 8,074
==================================
Net income per common share (dollars) $ 5.10 $ 2.28 $ 2.31
Net income per common share - assuming dilution (dollars) $ 5.04 $ 2.25 $ 2.28
- -----------------------------------------------------------------------------------------------
MERGER EFFECTS AND SPECIAL ITEMS
Upstream
United States $ - $ - $ (185)
Non-U.S - 119 (176)
Downstream
United States - - 8
Non-U.S - (120) (412)
Chemicals
United States - - (8)
Non-U.S - - (1)
Corporate and financing - - 112
Merger expenses (920) (469) -
Gain from required asset divestitures 1,730 - -
Accounting change - - (70)
----------------------------------
Total $ 810 $ (470) $ (732)
==================================
- -----------------------------------------------------------------------------------------------
EARNINGS EXCLUDING MERGER EFFECTS AND SPECIAL ITEMS
Upstream
United States $ 4,545 $ 1,842 $ 1,035
Non-U.S 7,824 3,925 2,678
Downstream
United States 1,561 577 1,191
Non-U.S 1,857 770 2,687
Chemicals
United States 644 738 800
Non-U.S 517 616 603
Other operations 551 426 384
Corporate and financing (589) (514) (572)
----------------------------------
Total $ 16,910 $ 8,380 $ 8,806
==================================
Earnings per common share (dollars) $ 4.87 $ 2.41 $ 2.52
Earnings per common share - assuming dilution (dollars) $ 4.81 $ 2.38 $ 2.49
- -----------------------------------------------------------------------------------------------
B4
REVIEW OF 2000 RESULTS
Earnings excluding merger effects and special items were $16,910 million, an
increase of $8,530 million from 1999. Net income in 2000 of $17,720 million,
including net favorable merger effects of $810 million, increased $9,810
million from 1999. Upstream (Exploration and Production) earnings benefited
from higher crude oil and natural gas realizations, which on average were up
about 60 percent and 45 percent, respectively, versus 1999. Excluding the
effects of lower entitlements caused by higher crude prices, liquids
production was 3 percent higher than 1999. Downstream (Refining and Marketing)
earnings improved from the very depressed results in 1999, driven by stronger
worldwide refining margins and better refining operations. However, downstream
profitability was restrained by difficulties in recovering the significant
increases in raw material costs that occurred over much of the year. Merger
implementation activities in 2000 added a net $810 million to net income,
reflecting $1,730 million of gains from asset divestitures that were a
condition of regulatory approval of the merger. These gains more than offset
merger implementation expenses of $920 million. Results in 1999 included $470
million of net charges for special items, primarily merger expenses with other
special items essentially offsetting. Revenue for 2000 totaled $233 billion,
up 25 percent from 1999, and the cost of crude oil and product purchases
increased by 41 percent, both influenced by higher prices.
Excluding merger expenses, the combined total of operating costs
(including operating, selling, general, administrative, exploration,
depreciation and depletion expenses from the consolidated statement of income
and ExxonMobil's share of similar costs for equity companies) in 2000 were
$43.6 billion, down about $700 million from 1999. The impact of efficiency
initiatives, including the capture of merger synergies, reduced operating
costs by $1.6 billion. Interest expense in 2000 was $589 million compared to
$695 million in 1999 as the effect of lower debt levels was partly offset by
higher interest rates.
UPSTREAM
Upstream earnings of $12,369 million increased due to higher crude oil and
natural gas realizations, up about 60 percent and 45 percent, respectively.
Liquids production of 2,553 kbd (thousands of barrels daily) increased from
2,517 kbd in 1999. Excluding the effects of lower entitlements caused by
higher crude prices, liquids production was 3 percent higher than 1999, mainly
reflecting new production from fields in the North Sea and Venezuela and
increased production from eastern Canada and Alaska. These increases more than
offset the effects of natural field declines. Natural gas production of 10,343
mcfd (millions of cubic feet daily) was about the same as 1999 reflecting
higher production in eastern Canada, Europe and Qatar, offset by lower
production in Indonesia. Excluding entitlement impacts, natural gas production
increased about 1 percent. Lower exploration expenses also benefited 2000
upstream earnings. Earnings from U.S. upstream operations were $4,545 million,
an increase of $2,703 million from 1999. Earnings outside the U.S. were $7,824
million, $3,899 million higher than last year, excluding a $141 million
deferred tax benefit and a $22 million property write-off in 1999.
DOWNSTREAM
Downstream earnings of $3,418 million improved over $2 billion from the very
depressed results in 1999, driven by stronger worldwide refining margins and
better refining operations. Earnings also benefited from a planned reduction
in inventories as a result of merging Exxon and Mobil operations around the
world. Petroleum product sales of 7,993 kbd compared with 8,887 kbd in 1999.
The decrease reflected the effects of the required divestiture of Mobil's
European fuels joint venture and of U.S. marketing and refining assets, as
well as lower supply sales in Asia-Pacific resulting from the low margin
environment. Refinery throughput was 5,642 kbd compared with 5,977 kbd in
1999. Excluding the effects of the divestments, refinery throughput in 2000
was at the same level as 1999 and petroleum product sales were down about 4
percent. Earnings from U.S. downstream operations were $1,561 million, up $984
million from the depressed results of 1999, reflecting stronger refining
margins and improved operations, partly offset by weaker marketing margins.
Earnings outside the U.S. of $1,857 million were $1,087 million higher than
1999 after excluding special charges in 1999 in Japan of $80 million for
non-merger related restructuring of downstream operations and a $40 million
write-off associated with the cancellation of a power project. The improvement
was driven by stronger European and to a much lesser extent Southeast Asian
refining margins and improved refining operations, partly offset by weaker
marketing margins.
CHEMICALS
Chemicals earnings totaled $1,161 million compared with $1,354 million in
1999. Record prime product sales volumes of 25,637 kt (thousands of metric
tons) were up 354 kt. The decline in earnings was driven by higher feedstock
and energy costs and unfavorable foreign exchange effects.
OTHER OPERATIONS
Earnings from other operating segments totaled $551 million, an increase of
$125 million from 1999, reflecting record copper, coal and electricity sales,
higher copper prices, lower operating expenses and favorable foreign exchange
effects, partly offset by lower coal prices.
CORPORATE AND FINANCING
Corporate and financing expenses of $589 million compared with $514 million in
1999. The increase resulted from unfavorable foreign
B5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
exchange effects and lower tax-related benefits. Partly offsetting was a
reduction in administrative expenses as a result of combining Exxon and Mobil
headquarters operations. The effect of lower debt levels was partly offset by
higher interest rates during the year.
REVIEW OF 1999 RESULTS
Earnings excluding merger expenses and special items were $8,380 million, down
$426 million or 5 percent from 1998. Net income was $7,910 million, down from
$8,074 million in 1998. The decline was primarily in the downstream where
steeply rising crude oil costs could not be recovered in the marketplace.
Crude oil prices rose about $14 per barrel from January to December 1999,
depressing downstream margins in all geographic areas. Weaker chemicals
margins and lower coal prices also adversely affected earnings. However,
upstream results benefited from the increase in crude oil prices and partly
offset the weakness in downstream business conditions. Record chemicals, coal
and copper volumes and reduced expenses in every operating segment also
benefited earnings. Results in 1999 included $470 million of net charges for
special items -- $469 million of merger expenses with other special items
essentially offsetting. Results in 1998 included $732 million of net special
charges. Revenue for 1999 totaled $186 billion, up 9 percent from 1998, and
the cost of crude oil and product purchases increased 24 percent.
Excluding merger expenses, the combined total of operating costs
(including operating, selling, general, administrative, exploration,
depreciation and depletion expenses from the consolidated statement of income
and ExxonMobil's share of similar costs for equity companies) in 1999 was
$44.3 billion, down about $400 million from 1998. The impact of efficiency
initiatives, including the capture of early merger synergies, reduced
operating costs by $1.2 billion. Interest expense in 1999 was $695 million,
$127 million higher than 1998, mainly due to a higher debt level and
unfavorable foreign exchange effects.
UPSTREAM
Upstream earnings of $5,886 million increased significantly from 1998
reflecting higher average crude oil prices, up over $5 per barrel from 1998.
Average U.S. natural gas prices were 9 percent higher than the prior year,
while European gas prices, which are tied to petroleum product prices on a
lagged basis, were about 17 percent lower. Liquids production of 2,517 kbd was
up 1 percent from 2,502 kbd in 1998 as production from new developments in the
North Sea, the Gulf of Mexico, West Africa and the Caspian offset natural
field declines in North America and lower liftings in Indonesia and Malaysia.
Natural gas production of 10,308 mcfd compared with 10,617 mcfd in 1998.
Upstream expenses were reduced from 1998 levels. Earnings from the U.S.
upstream were $1,842 million, up $807 million after excluding $185 million of
special charges related mainly to property write-downs in 1998. Outside the
U.S. upstream earnings were $3,925 million, up $1,247 million after excluding
a $141 million deferred tax benefit and a $22 million property write-off in
1999 and $176 million of other net special charges in 1998.
DOWNSTREAM
Downstream earnings of $1,227 million declined from 1998's strong results
primarily reflecting escalating crude oil costs and weaker downstream margins
in all geographic areas. Unfavorable foreign exchange and inventory effects
also reduced earnings. Higher volumes, mainly in the U.S., and lower operating
expenses provided a partial offset. Petroleum product sales were 8,887 kbd
compared with 8,873 kbd in 1998. Refinery throughput was 5,977 kbd compared
with 6,093 kbd in 1998. In the U.S., downstream earnings were $577 million,
down $614 million from 1998 after excluding $8 million of special credits
related to inventory adjustments in 1998. Downstream operations outside of the
U.S. earned $770 million, down $1,917 million from 1998 after excluding
special charges from both years. Results in 1999 included $80 million of
charges for non-merger related restructuring of Japanese downstream operations
and a $40 million write-off associated with the cancellation of a power
project in Japan, while 1998 results included $412 million of special charges
largely related to the impact of lower prices on inventories and Mobil-British
Petroleum (BP) alliance implementation costs.
CHEMICALS
Earnings from chemicals operations totaled $1,354 million, down $40 million or
3 percent from 1998. Industry margins declined due to lower product prices and
higher feedstock costs. Prime product sales volumes of 25,283 kt were a
record. Earnings also benefited from lower operating expenses. Chemicals'
results included $9 million of special charges related to the impact of lower
prices on inventories in 1998.
OTHER OPERATIONS
Earnings from other operating segments totaled $426 million, an increase of
$42 million from 1998. The increase reflects record copper and coal
production, lower operating expenses and favorable foreign exchange effects,
partly offset by depressed coal prices.
CORPORATE AND FINANCING
Corporate and financing expenses were $514 million, $54 million higher than
1998 which included a net special credit of $112 million related to settlement
of prior years' tax disputes. Excluding special items, expenses were $58
million lower reflecting lower tax-related charges.
MERGER OF EXXON CORPORATION AND MOBIL CORPORATION
On November 30, 1999, a wholly-owned subsidiary of Exxon Corporation (Exxon)
merged with Mobil Corporation (Mobil) so that Mobil became a wholly-owned
subsidiary of Exxon (the "Merger"). At the same time, Exxon changed its name
to Exxon Mobil Corporation (ExxonMobil). Under the terms of the agreement,
approximately 1.0 billion shares of ExxonMobil common stock were issued in
exchange for all the outstanding shares of Mobil common stock based upon an
exchange ratio of 1.32015. Following the exchange, former shareholders of
Exxon owned approximately 70 percent of the corporation, while former Mobil
shareholders owned approximately 30 percent of the corporation. Each
outstanding share of Mobil preferred stock was converted into one share of a
new class of ExxonMobil preferred stock.
As a result of the Merger, the accounts of certain downstream and
chemicals operations jointly controlled by the combining companies have been
included in the consolidated financial statements. These operations were
previously accounted for by Exxon and Mobil as separate companies using the
equity method of accounting.
B6
The Merger was accounted for as a pooling of interests. Accordingly,
the consolidated financial statements give retroactive effect to the merger,
with all periods presented as if Exxon and Mobil had always been combined.
As a condition of the approval of the Merger, the U.S. Federal Trade
Commission and the European Commission required that certain property
- -- primarily downstream, pipeline and natural gas distribution assets -- be
divested. These assets, with a carrying value of approximately $3 billion,
were sold in the year 2000. Before-tax proceeds for these assets were
approximately $5 billion. The net after-tax gain of $1,730 million was
reported as an extraordinary item consistent with pooling of interests
accounting requirements. The properties have historically earned approximately
$200 million per year.
REORGANIZATION COSTS
In association with the merger between Exxon and Mobil, $1,406 million pre-tax
($920 million after-tax) and $625 million pre-tax ($469 million after-tax) of
costs were recorded as merger related expenses in 2000 and 1999, respectively.
Cumulative charges included separation expenses related to workforce
reductions (approximately 6,000 employees at year-end 2000) and merger closing
and implementation costs. The separation reserve balance at year-end 2000 of
approximately $320 million is expected to be expended in 2001. Merger related
expenses are expected to grow to approximately $2.5 billion pre-tax on a
cumulative basis by 2002. Pre-tax operating synergies associated with the
Merger, which are on track with expectations, including cost savings,
efficiency gains, and revenue enhancements, are expected to reach $4.6 billion
per year by 2002.
In the first quarter of 1999 the corporation recorded a $120 million
after-tax charge for the reorganization of Japanese downstream operations in
its wholly-owned Esso Sekiyu K.K. and 50.1 percent owned General Sekiyu K.K.
affiliates. The reorganization resulted in the reduction of approximately 700
administrative, financial, logistics and marketing service employee positions.
The Japanese affiliates recorded a combined charge of $216 million
(before-tax) to selling, general and administrative expenses for the employee
related costs. Substantially all cash expenditures anticipated in the
restructuring provision have been paid as of the end of 1999. General Sekiyu
also recorded a $211 million (before-tax) charge to depreciation and depletion
for the write-off of costs associated with the cancellation of a power plant
project at the Kawasaki terminal. Manpower reduction savings associated with
this reorganization are approximately $50 million per year after-tax in 2000.
As indicated in note 4, during 1998 Mobil implemented reorganization
programs in Australia, New Zealand and Latin America to integrate regional
fuels and lubes operations. In 1997, Mobil and BP announced that their
European downstream alliance would implement a major reorganization of its
lubricant base oil refining business. Also in 1997, Mobil commenced two major
cost savings initiatives in Asia-Pacific: one in Japan in response to the
deregulated business environment and the other in Australia. After-tax costs
for programs initiated in 1998 were $41 million and for the 1997 programs were
$189 million. Benefits associated with these undertakings are estimated at
$140 million per year after-tax.
The following table summarizes the activity in the reorganization
reserves. The 1998 opening balance represents accruals for provisions taken in
prior years.
Opening Balance at
Balance Additions Deductions Year End
- ------------------------------------------------------------
(millions of dollars)
1998 $300 $ 50 $181 $169
1999 169 563 351 381
2000 381 738 780 339
CAPITAL AND EXPLORATION EXPENDITURES
Capital and exploration expenditures in 2000 were $11.2 billion, down from
$13.3 billion in 1999, primarily reflecting timing of completion of major
project expenditures.
Upstream spending was down 18 percent to $6.9 billion in 2000, from
$8.4 billion in 1999, as a result of the completion of major projects in the
North Sea, Canada and South America, and lower exploration expenses. Capital
investments in the downstream totaled $2.6 billion in 2000, up $0.2 billion
from 1999, primarily reflecting increased investments in China and higher
spending at U.S. refineries. The increase was largely offset by lower spending
in the European Fuels Joint Venture with BP which was divested in 2000 as a
condition of regulatory approval of the merger, and lower spending in the
retail businesses. Chemicals capital expenditures were $1.5 billion in 2000,
down from $2.2 billion in 1999, due to the completion of major projects in the
United States, Singapore, Saudi Arabia, and Thailand.
Capital and exploration expenditures in the U.S. totaled $3.3 billion
in 2000, a decrease of $0.1 billion from 1999, reflecting higher spending in
both the upstream and downstream, offset by lower spending in chemicals.
Spending outside the U.S. of $7.9 billion in 2000 compared with $9.9 billion
in 1999, reflecting lower expenditures in the upstream and chemicals.
Firm commitments related to capital projects totaled approximately
$4.6 billion at the end of 2000, the same as at year-end 1999. The largest
single commitment in 2000 was $2.3 billion associated with the development of
crude oil and natural gas resources in Malaysia. The corporation expects to
fund the majority of these commitments through internally generated funds.
MARKET RISKS, INFLATION AND OTHER UNCERTAINTIES
In the past, crude, product and chemical prices have fluctuated widely in
response to changing market forces. The impacts of these price fluctuations on
earnings from upstream operations, downstream operations and chemical
operations have been varied, tending at times to be offsetting.
The markets for crude oil and natural gas have a history of
significant price volatility. Although prices will occasionally drop
precipitously, industry prices over the long term will continue to be driven
by market supply and demand fundamentals. Accordingly, the corporation tests
the viability of its oil and gas operations based on long-term price
projections. The corporation's assessment is that its operations will
B7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
continue to be successful in a variety of market conditions. This is the
outcome of disciplined investment and asset management programs.
Investment opportunities are tested against a variety of market
conditions, including low price scenarios. As a result, investments that would
succeed only in highly favorable price environments are screened out of the
investment plan. In addition, the corporation has had an aggressive asset
management program in which under-performing assets are either improved to
acceptable levels or considered for divestment. The asset management program
involves a disciplined, regular review to ensure that all assets are
contributing to the corporation's strategic and financial objectives. The
result has been the creation of a very efficient capital base.
RISK MANAGEMENT
The corporation's size, geographic diversity and the complementary nature of
the upstream, downstream and chemicals businesses mitigate the corporation's
risk from changes in interest rates, currency rates and commodity prices. As a
result, the corporation makes limited use of derivatives to offset exposures
arising from existing transactions.
Interest rate, foreign exchange rate and commodity price exposures
from the contracts undertaken in accordance with the corporation's policies
have not been significant. Derivative instruments are not held for trading
purposes nor do they have leveraged features.
DEBT-RELATED INSTRUMENTS
The corporation is exposed to changes in interest rates, primarily as a result
of its short-term and long-term debt with both fixed and floating interest
rates. The corporation makes limited use of interest rate swap agreements to
adjust the ratio of fixed and floating rates in the debt portfolio. The impact
of a 100 basis point change in interest rates affecting the corporation's debt
would not be material to earnings, cash flow or fair value.
FOREIGN CURRENCY EXCHANGE RATE INSTRUMENTS
The corporation conducts business in many foreign currencies and is subject to
foreign currency exchange rate risk on cash flows related to sales, expenses,
financing and investment transactions. The impacts of fluctuations in foreign
currency exchange rates on ExxonMobil's geographically diverse operations are
varied and often offsetting in amount. The corporation makes limited use of
currency exchange contracts to reduce the risk of adverse foreign currency
movements related to certain foreign currency debt obligations. Exposure from
market rate fluctuations related to these contracts is not material. Aggregate
foreign exchange transaction gains and losses included in net income are
discussed in note 5 to the consolidated financial statements.
COMMODITY INSTRUMENTS
The corporation makes limited use of commodity forwards, swaps and futures
contracts of short duration to mitigate the risk of unfavorable price
movements on certain crude, natural gas and petroleum product purchases and
sales. Commodity price exposure related to these contracts is not material.
INFLATION AND OTHER UNCERTAINTIES
The general rate of inflation in most major countries of operation has been
relatively low in recent years, and the associated impact on operating costs
has been countered by cost reductions from efficiency and productivity
improvements.
The operations and earnings of the corporation and its affiliates
throughout the world have been, and may in the future be, affected from time
to time in varying degree by political developments and laws and regulations,
such as forced divestiture of assets; restrictions on production, imports and
exports; price controls; tax increases and retroactive tax claims;
expropriation of property; cancellation of contract rights and environmental
regulations. Both the likelihood of such occurrences and their overall effect
upon the corporation vary greatly from country to country and are not
predictable.
RECENTLY ISSUED STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board released Statement No.
133, "Accounting for Derivative Instruments and Hedging Activities." Statement
No. 133, as amended by Statements No. 137 and 138, must be adopted by the
corporation no later than January 1, 2001. The statement establishes
accounting and reporting standards for derivative instruments. It requires
that all derivatives be recognized as either assets or liabilities in the
financial statements and measured at fair value. It establishes the accounting
for changes in the fair value of the derivatives depending on their intended
use. Since the corporation makes very limited use of derivatives, the effect
of adoption on the corporation's operations or financial condition will be
negligible.
SITE RESTORATION AND OTHER ENVIRONMENTAL COSTS
Over the years the corporation has accrued provisions for estimated site
restoration costs to be incurred at the end of the operating life of certain
of its facilities and properties. In addition, the corporation accrues
provisions for environmental liabilities in the many countries in which it
does business when it is probable that obligations have been incurred and the
amounts can be reasonably estimated. This policy applies to assets or
businesses currently owned or previously disposed.
The corporation has accrued provisions for probable environmental
remediation obligations at various sites, including multi-party sites where
ExxonMobil has been identified as one of the potentially responsible parties
by the U.S. Environmental Protection Agency. The involvement of other
financially responsible companies at these multi-party sites mitigates
ExxonMobil's actual joint and several liability exposure. At present, no
individual site is expected to have losses material to ExxonMobil's
operations, financial condition or liquidity.
Charges made against income for site restoration and environmental
liabilities were $311 million in 2000, $219 million in 1999 and $240 million
in 1998. At the end of 2000, accumulated site restoration and environmental
provisions, after reduction for amounts paid, amounted to $3.7 billion.
ExxonMobil believes that any cost in excess of the amounts already provided
for in the financial statements would not have a materially adverse effect
upon the corporation's operations, financial condition or liquidity.
B8
In 2000, the corporation spent $1,529 million (of which $393 million
were capital expenditures) on environmental projects and expenses worldwide,
mostly dealing with air and water conservation. Total expenditures for such
activities are expected to be about $1.8 billion in both 2001 and 2002 (with
capital expenditures representing about 25 percent of the total).
TAXES
Income, excise and all other taxes and duties totaled $68.4 billion in 2000,
an increase of $6.9 billion or 11 percent from 1999. Income tax expense, both
current and deferred, was $11.1 billion compared to $3.2 billion in 1999,
reflecting higher pre-tax income in 2000. The effective tax rate increased
from 31.8 percent in 1999 to 42.4 percent in 2000 as a result of a larger
share of total earnings coming from the more highly taxed non-U.S. upstream
segment and lower benefits from resolution of tax-related issues. Excise and
all other taxes and duties decreased $1.0 billion to $57.3 billion.
Income, excise and all other taxes and duties totaled $61.5 billion
in 1999, an increase of $1.6 billion or 3 percent from 1998. Income tax
expense, both current and deferred, was $3.2 billion compared to $3.9 billion
in 1998, reflecting lower pre-tax income in 1999, the impact of lower foreign
tax rates and favorable resolution of tax-related issues. The effective tax
rate was 31.8 percent in 1999 versus 35.2 percent in 1998. Excise and all
other taxes and duties increased $2.3 billion to $58.3 billion, reflecting
higher prices.
LIQUIDITY AND CAPITAL RESOURCES
In 2000, cash provided by operating activities totaled $22.9 billion, up $7.9
billion from 1999. Major sources of funds were net income of $17.7 billion and
non-cash provisions of $8.1 billion for depreciation and depletion.
Cash used in investing activities totaled $3.3 billion, down $7.7
billion from 1999 due to higher proceeds from sales of subsidiaries,
investments and property, plant and equipment resulting from asset
divestitures that were required as a condition of the regulatory approval of
the merger, and due to lower additions to property, plant and equipment.
Cash used in financing activities was $14.2 billion, up $9.4 billion,
driven by debt reductions in the current year versus debt increases in 1999,
along with higher purchases of common shares. Dividend payments on common
shares increased from $1.687 per share to $1.760 per share and totaled $6.1
billion, a payout of 35 percent. Total consolidated debt declined by $5.6
billion to $13.4 billion.
Shareholders' equity increased by $7.3 billion to $70.8 billion. The
ratio of debt to capital decreased to 15 percent, reflecting lower debt levels
and the higher shareholders' equity balance.
Prior to the merger, the corporation purchased shares of its common
stock for the treasury. Consistent with pooling accounting requirements, this
repurchase program was terminated effective with the close of the ExxonMobil
merger on November 30, 1999. On August 1, 2000, the corporation announced its
intention to purchase shares of its common stock. During 2000, Exxon Mobil
Corporation purchased 27.0 million shares of its common stock for the treasury
at a gross cost of $2,352 million. These purchases were to offset shares
issued in conjunction with company benefit plans and programs and to reduce
the number of shares outstanding. Shares outstanding were reduced from 3,477
million at the end of 1999 to 3,465 million at the end of 2000. Purchases were
made in both the open market and through negotiated transactions, and may be
discontinued at any time.
In 1999, cash provided by operating activities totaled $15.0 billion,
down $1.4 billion from 1998. Major sources of funds were net income of $7.9
billion and non-cash provisions of $8.3 billion for depreciation and depletion.
Cash used in investing activities totaled $11.0 billion, down $1.0
billion from 1998 primarily as a result of lower additions to property, plant
and equipment, partly offset by lower sales of subsidiaries and property,
plant and equipment.
Cash used in financing activities was $4.8 billion, down $2.4
billion, primarily due to fewer common share purchases. Dividend payments on
common shares increased from $1.666 per share to $1.687 per share and totaled
$5.8 billion, a payout of 74 percent. Total consolidated debt increased by
$2.0 billion to $19.0 billion.
Shareholders' equity increased by $1.3 billion to $63.5 billion. The
ratio of debt to capital increased to 22 percent, reflecting higher debt
levels. During 1999, Exxon purchased 8.3 million shares of its common stock
for the treasury at a cost of $648 million. These purchases were used to
offset shares issued in conjunction with the company's benefit plans and
programs. Purchases were made both in the open market and through negotiated
transactions. Consistent with pooling of interest accounting requirements,
these repurchases were terminated effective with the close of the ExxonMobil
merger on November 30, 1999. Previously, as a consequence of the then proposed
merger of Exxon and Mobil announced on December 1, 1998, both companies'
repurchase programs to reduce the number of shares outstanding were
discontinued.
Although the corporation issues long-term debt from time to time and
maintains a revolving commercial paper program, internally generated funds
cover the majority of its financial requirements.
As discussed in note 14 to the consolidated financial statements, the
corporation's financial derivative activities are limited to simple risk
management strategies. The corporation does not trade in financial derivatives
nor does it use financial derivatives with leveraged features. The corporation
maintains a system of controls that includes a policy covering the
authorization, reporting, and monitoring of derivative activity. The
corporation's derivative activities pose no material credit or market risks to
ExxonMobil's operations, financial condition or liquidity.
LITIGATION AND OTHER CONTINGENCIES
As discussed in note 17 to the consolidated financial statements, a
number of lawsuits, including class actions, were brought in various courts
against Exxon Mobil Corporation and certain of its subsidiaries relating to
the accidental release of crude oil from the tanker Exxon Valdez in 1989.
Essentially all of these lawsuits have now been resolved or are subject to
appeal.
B9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
On September 24, 1996, the United States District Court for the
District of Alaska entered a judgment in the amount of $5.058 billion in the
Exxon Valdez civil trial that began in May 1994. The District Court awarded
approximately $19.6 million in compensatory damages to fisher plaintiffs, $38
million in prejudgment interest on the compensatory damages and $5 billion in
punitive damages to a class composed of all persons and entities who asserted
claims for punitive damages from the corporation as a result of the Exxon
Valdez grounding. The District Court also ordered that these awards shall
bear interest from and after entry of the judgment. The District Court stayed
execution on the judgment pending appeal based on a $6.75 billion letter of
credit posted by the corporation. ExxonMobil has appealed the judgment. The
United States Court of Appeals for the Ninth Circuit heard oral arguments on
the appeal on May 3, 1999. The corporation continues to believe that the
punitive damages in this case are unwarranted and that the judgment should be
set aside or substantially reduced by the appellate courts. The ultimate cost
to the corporation from the lawsuits arising from the Exxon Valdez grounding
is not possible to predict and may not be resolved for a number of years.
On December 19, 2000, a jury in Montgomery County, Alabama, returned
a verdict against the corporation in a contract dispute over royalties in the
amount of $87.69 million in compensatory damages and $3.42 billion in
punitive damages in the case of Exxon Corporation v. State of Alabama, et al.
ExxonMobil will challenge the verdict and believes that the verdict is
unwarranted and that the judgment should be set aside or substantially
reduced. The ultimate outcome is not expected to have a materially adverse
effect upon the corporation's operations or financial condition.
The U.S. Tax Court has decided the issue with respect to the pricing
of crude oil purchased from Saudi Arabia for the years 1979-1981 in favor of
the corporation. This decision is subject to appeal. Certain other issues for
the years 1979-1993 remain pending before the Tax Court. Ultimate resolution
of these issues and several other tax and legal issues, notably final
resolution of royalty recovery and tax issues related to the gas lifting
imbalance in the Common Area (along the German/Dutch border), is not expected
to have a materially adverse effect upon the corporation's operations,
financial condition or liquidity.
There are no events or uncertainties known to management beyond
those already included in reported financial information that would indicate
a material change in future operating results or financial condition.
THE EURO
On January 1, 1999, eleven European countries established fixed conversion
rates between their existing sovereign currencies ("legacy currencies") and
adopted the euro as their common legal currency. The euro and the legacy
currencies are each legal tender for transactions now. Beginning January 1,
2002, the participating countries will issue euro-denominated bills and
coins. By July 1, 2002 each country will withdraw its sovereign currency and
transactions thereafter will be conducted solely in euros. Based on work to
date, the conversion to the euro is not expected to have a material effect on
the corporation's operations, financial condition or liquidity.
FORWARD-LOOKING STATEMENTS
Statements in this discussion regarding expectations, plans and future events
or conditions are forward-looking statements. Actual future results,
including merger related expenses; synergy benefits from the merger
(including cost savings, efficiency gains and revenue enhancements);
financing sources; the resolution of contingencies; the effect of changes in
prices, interest rates and other market conditions; and environmental and
capital expenditures could differ materially depending on a number of
factors. These factors include management's ability to implement merger plans
successfully and on schedule; the outcome of commercial negotiations; changes
in the supply of and demand for crude oil, natural gas, and petroleum and
petrochemical products; and other factors discussed above and under the
caption "Factors Affecting Future Results" in Item 1 of ExxonMobil's 2000
Form 10-K.
B10
REPORT OF INDEPENDENT ACCOUNTANTS
[PRICEWATERHOUSECOOPERS LOGO]
Dallas, Texas
February 28, 2001
To the Shareholders of Exxon Mobil Corporation
In our opinion, based on our audits and the report of other auditors, the
consolidated financial statements appearing on pages B12 through B29 present
fairly, in all material respects, the financial position of Exxon Mobil
Corporation and its subsidiary companies at December 31, 2000 and 1999, and
the results of their operations and their cash flows for each of the three
years in the period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States of America. These
financial statements are the responsibility of the corporation's management;
our responsibility is to express an opinion on these financial statements
based on our audits. The consolidated financial statements give retroactive
effect to the merger of Mobil Corporation on November 30, 1999 in a
transaction accounted for as a pooling of interests, as described in note 3
to the consolidated financial statements. We did not audit the financial
statements of Mobil Corporation, which statements reflect total revenues of
$53,531 million for the year ended December 31, 1998. Those statements were
audited by other auditors whose report thereon has been furnished to us, and
our opinion expressed herein, insofar as it relates to the amounts included
for Mobil Corporation, is based solely on the report of the other auditors.
We conducted our audits of these statements in accordance with auditing
standards generally accepted in the United States of America, which require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits and the report
of the other auditors provide a reasonable basis for our opinion.
As discussed in note 2 to the consolidated financial statements, the
corporation changed its method of accounting for the cost of start-up
activities in 1998.
/s/ PricewaterhouseCoopers LLP
B11
CONSOLIDATED STATEMENT OF INCOME
2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Revenue
Sales and other operating revenue, including excise taxes $ 228,439 $ 182,529 $ 165,627
Earnings from equity interests and other revenue 4,309 2,998 4,015
--------------------------------------
Total revenue $ 232,748 $ 185,527 $ 169,642
--------------------------------------
Costs and other deductions
Crude oil and product purchases $ 108,951 $ 77,011 $ 62,145
Operating expenses 18,135 16,806 17,666
Selling, general and administrative expenses 12,044 13,134 12,925
Depreciation and depletion 8,130 8,304 8,355
Exploration expenses, including dry holes 936 1,246 1,506
Merger related expenses 1,406 625 -
Interest expense 589 695 568
Excise taxes 22,356 21,646 20,926
Other taxes and duties 32,708 34,765 33,203
Income applicable to minority and preferred interests 412 145 265
--------------------------------------
Total costs and other deductions $ 205,667 $ 174,377 $ 157,559
--------------------------------------
Income before income taxes $ 27,081 $ 11,150 $ 12,083
Income taxes 11,091 3,240 3,939
--------------------------------------
Income before extraordinary item and cumulative effect of accounting change $ 15,990 $ 7,910 $ 8,144
Extraordinary gain from required asset divestitures, net of income tax 1,730 - -
Cumulative effect of accounting change - - (70)
--------------------------------------
Net income $ 17,720 $ 7,910 $ 8,074
======================================
Net income per common share (dollars)
Before extraordinary item and cumulative effect of accounting change $ 4.60 $ 2.28 $ 2.33
Extraordinary gain, net of income tax 0.50 - -
Cumulative effect of accounting change - - (0.02)
--------------------------------------
Net income $ 5.10 $ 2.28 $ 2.31
--------------------------------------
Net income per common share - assuming dilution (dollars)
Before extraordinary item and cumulative effect of accounting change $ 4.55 $ 2.25 $ 2.30
Extraordinary gain, net of income tax 0.49 - -
Cumulative effect of accounting change - - (0.02)
--------------------------------------
Net income $ 5.04 $ 2.25 $ 2.28
--------------------------------------
The information on pages B16 through B29 is an integral part of
these statements.
B12
CONSOLIDATED BALANCE SHEET
Dec. 31 Dec. 31
2000 1999
- -------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Assets
Current assets
Cash and cash equivalents $ 7,080 $ 1,688
Other marketable securities 1 73
Notes and accounts receivable, less estimated doubtful amounts 22,996 19,155
Inventories
Crude oil, products and merchandise 7,244 7,370
Materials and supplies 1,060 1,122
Prepaid taxes and expenses 2,018 1,733
-------------------------
Total current assets $ 40,399 $ 31,141
Investments and advances 12,618 14,544
Property, plant and equipment, at cost, less accumulated depreciation and depletion 89,829 94,043
Other assets, including intangibles, net 6,154 4,793
-------------------------
Total assets $ 149,000 $ 144,521
=========================
Liabilities
Current liabilities
Notes and loans payable $ 6,161 $ 10,570
Accounts payable and accrued liabilities 26,755 25,492
Income taxes payable 5,275 2,671
-------------------------
Total current liabilities $ 38,191 $ 38,733
Long-term debt 7,280 8,402
Annuity reserves and accrued liabilities 11,934 12,902
Deferred income tax liabilities 16,442 16,251
Deferred credits 1,166 1,079
Equity of minority and preferred shareholders in affiliated companies 3,230 3,688
-------------------------
Total liabilities $ 78,243 $ 81,055
-------------------------
Shareholders' equity
Benefit plan related balances $ (235) $ (298)
Common stock without par value (4,500 million shares authorized) 3,661 3,403
Earnings reinvested 86,652 75,055
Accumulated other nonowner changes in equity
Cumulative foreign exchange translation adjustment (4,862) (2,300)
Minimum pension liability adjustment (310) (299)
Unrealized gains/(losses) on stock investments (17) 31
Common stock held in treasury (545 million shares in 2000 and 533 million shares in 1999) (14,132) (12,126)
-------------------------
Total shareholders' equity $ 70,757 $ 63,466
-------------------------
Total liabilities and shareholders' equity $ 149,000 $ 144,521
=========================
The information on pages B16 through B29 is an integral part of these statements.
B13
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
2000 1999 1998
----------------------------------------------------------------------------
Nonowner Nonowner Nonowner
Shareholders' Changes in Shareholders' Changes in Shareholders' Changes in
Equity Equity Equity Equity Equity Equity
----------------------------------------------------------------------------
(millions of dollars)
Class A preferred stock outstanding at end of year $ - $ - $ 105
Class B preferred stock outstanding at end of year - - 641
Benefit plan related balances (235) (298) (793)
Common stock (see note 12)
At beginning of year 3,403 4,870 4,766
Issued - 92 104
Other 258 303 -
Cancellation of common stock held in treasury - (1,862) -
-------- -------- --------
At end of year $ 3,661 $ 3,403 $ 4,870
-------- -------- --------
Earnings reinvested
At beginning of year 75,055 75,109 72,875
Net income for the year 17,720 $ 17,720 7,910 $ 7,910 8,074 $ 8,074
Dividends - common and preferred shares (6,123) (5,872) (5,840)
Cancellation of common stock held in treasury - (2,092) -
-------- -------- --------
At end of year $ 86,652 $ 75,055 $ 75,109
-------- -------- --------
Accumulated other nonowner changes in equity
At beginning of year (2,568) (1,981) (1,940)
Foreign exchange translation adjustment (2,562) (2,562) (727) (727) 367 367
Minimum pension liability adjustment (11) (11) 109 109 (408) (408)
Unrealized gains/(losses) on stock investments (48) (48) 31 31 - -
-------- -------- --------
At end of year $ (5,189) $ (2,568) $ (1,981)
-------- -------- -------- -------- -------- --------
Total $ 15,099 $ 7,323 $ 8,033
======== ======== ========
Common stock held in treasury
At beginning of year (12,126) (15,831) (12,881)
Acquisitions, at cost (2,352) (976) (3,523)
Dispositions 346 727 573
Cancellation, returned to unissued - 3,954 -
-------- -------- --------
At end of year $(14,132) $(12,126) $(15,831)
-------- -------- --------
Shareholders' equity at end of year $ 70,757 $ 63,466 $ 62,120
======== ======== ========
Share Activity
----------------------------------------------------------
2000 1999 1998
----------------------------------------------------------
(millions of shares)
Class A preferred stock - - 2
Class B preferred stock - - 0.2
Common stock
Issued (see note 12)
At beginning of year 4,010 4,169 4,164
Issued - 4 5
Cancelled - (163) -
------- ------- -------
At end of year 4,010 4,010 4,169
------- ------- -------
Held in treasury (see note 12)
At beginning of year (533) (711) (674)
Acquisitions, at cost (27) (17) (53)
Dispositions 15 32 16
Cancellation, returned to unissued - 163 -
------- ------- -------
At end of year (545) (533) (711)
------- ------- -------
Common shares outstanding at end of year 3,465 3,477 3,458
======= ======= =======
The information on pages B16 through B29 is an integral part of these statements.
B14
CONSOLIDATED STATEMENT OF CASH FLOWS
2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Cash flows from operating activities
Net income
Accruing to ExxonMobil shareholders $ 17,720 $ 7,910 $ 8,074
Accruing to minority and preferred interests 412 145 265
Adjustments for non-cash transactions
Depreciation and depletion 8,130 8,304 8,355
Deferred income tax charges/(credits) 10 (1,439) 318
Annuity and accrued liability provisions (662) 412 (251)
Dividends received greater than/(less than) equity in current earnings of equity companies (387) 146 328
Extraordinary gain from required asset divestitures, before income tax (2,038) - -
Changes in operational working capital, excluding cash and debt
Reduction/(increase) - Notes and accounts receivable (4,832) (3,478) 2,170
- Inventories (297) 50 438
- Prepaid taxes and expenses (204) 177 8
Increase/(reduction) - Accounts and other payables 5,411 3,046 (3,010)
All other items - net (326) (260) (259)
---------------------------------
Net cash provided by operating activities $ 22,937 $ 15,013 $ 16,436
---------------------------------
Cash flows from investing activities
Additions to property, plant and equipment $ (8,446) $(10,849) $(12,730)
Sales of subsidiaries, investments and property, plant and equipment 5,770 972 1,884
Additional investments and advances (1,648) (1,476) (1,469)
Collection of advances 985 387 336
Additions to other marketable securities (41) (61) (61)
Sales of other marketable securities 82 42 58
---------------------------------
Net cash used in investing activities $ (3,298) $(10,985) $(11,982)
---------------------------------
Net cash generation before financing activities $ 19,639 $ 4,028 $ 4,454
---------------------------------
Cash flows from financing activities
Additions to long-term debt $ 238 $ 454 $ 1,384
Reductions in long-term debt (901) (341) (305)
Additions to short-term debt 500 1,870 930
Reductions in short-term debt (2,413) (2,359) (2,175)
Additions/(reductions) in debt with less than 90 day maturity (3,129) 2,210 2,384
Cash dividends to ExxonMobil shareholders (6,123) (5,872) (5,843)
Cash dividends to minority interests (251) (219) (387)
Changes in minority interests and sales/(purchases) of affiliate stock (227) (200) (84)
Common stock acquired (2,352) (670) (3,547)
Common stock sold 493 348 507
---------------------------------
Net cash used in financing activities $(14,165) $ (4,779) $ (7,136)
---------------------------------
Effects of exchange rate changes on cash $ (82) $ 53 $ 23
---------------------------------
Increase/(decrease) in cash and cash equivalents $ 5,392 $ (698) $ (2,659)
Cash and cash equivalents at beginning of year 1,688 2,386 5,045
---------------------------------
Cash and cash equivalents at end of year $ 7,080 $ 1,688 $ 2,386
=================================
The information on pages B16 through B29 is an integral part of these statements.
B15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The corporation's principal business is energy, involving the worldwide
exploration, production, transportation and sale of crude oil and natural gas
(upstream) and the manufacture, transportation and sale of petroleum products
(downstream). The corporation is also a major worldwide manufacturer and
marketer of petrochemicals and participates in coal and minerals mining and
electric power generation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates that
affect the reported amounts of assets, liabilities, revenues and expenses and
the disclosure of contingent assets and liabilities. Actual results could
differ from these estimates.
The accompanying consolidated financial statements and the supporting
and supplemental material are the responsibility of the management of Exxon
Mobil Corporation.
1. SUMMARY OF ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the
accounts of those significant subsidiaries owned directly or indirectly with
more than 50 percent of the voting rights held by the corporation, and for
which other shareholders do not possess the right to participate in
significant management decisions. Amounts representing the corporation's
percentage interest in the underlying net assets of other significant
subsidiaries and less than majority owned companies in which a significant
equity ownership interest is held, are included in "Investments and advances";
the corporation's share of the net income of these companies is included in
the consolidated statement of income caption "Earnings from equity interests
and other revenue."
Investments in other companies, none of which is significant, are
generally included in "Investments and advances" at cost or less. Dividends
from these companies are included in income as received.
REVENUE RECOGNITION. Revenues associated with sales of crude oil, natural gas,
petroleum and chemical products and all other items are recorded when title
passes to the customer.
Revenues from the production of natural gas properties in which the
corporation has an interest with the other producers are recognized on the
basis of the company's net working interest. Differences between actual
production and net working interest volumes are not significant.
DERIVATIVE INSTRUMENTS. As discussed in footnote 14, the corporation makes
limited use of derivative instruments to hedge its exposures associated with
interest rates, foreign currency exchange rates and hydrocarbon prices. Gains
and losses on hedging contracts are recognized concurrent with the recognition
of the economic impact of the underlying exposures using either the accrual or
deferral method of accounting. In order to qualify for hedge accounting, the
derivative instrument must be designated and effective as a hedge.
The accrual method is used for interest rate swaps, cross-currency
interest rate swaps and commodity swaps. Under the accrual method,
differentials in the swapped amounts are recorded as adjustments of the
underlying periodic cash flows that are being hedged. If these swaps are
terminated, the gains and losses are amortized over the original lives of such
contracts. The deferral method is used for futures exchange contracts, forward
contracts and commodity swaps. Gains and losses resulting from changes in
value of derivative instruments are deferred and recognized in the same period
as the gains and losses of the items being hedged.
Cash flow from derivative instruments that qualify for hedge
accounting is included in the same category for cash flow purposes as the item
being hedged.
INVENTORIES. Crude oil, products and merchandise inventories are carried at
the lower of current market value or cost (generally determined under the
last-in, first-out method-LIFO). Costs include applicable purchase costs and
operating expenses but not general and administrative expenses or research and
development costs. Inventories of materials and supplies are valued at cost or
less.
PROPERTY, PLANT AND EQUIPMENT. Depreciation, depletion and amortization, based
on cost less estimated salvage value of the asset, are primarily determined
under either the unit-of-production method or the straight-line method.
Unit-of-production rates are based on oil, gas and other mineral reserves
estimated to be recoverable from existing facilities. The straight-line method
of depreciation is based on estimated asset service life taking obsolescence
into consideration.
Maintenance and repairs are expensed as incurred. Major renewals and
improvements are capitalized and the assets replaced are retired.
The corporation's upstream activities are accounted for under the
"successful efforts" method. Under this method, costs of productive wells and
development dry holes, both tangible and intangible, as well as productive
acreage are capitalized and amortized on the unit-of-production method. Costs
of that portion of undeveloped acreage likely to be unproductive, based
largely on historical experience, are amortized over the period of
exploration. Other exploratory expenditures, including geophysical costs,
other dry hole costs and annual lease rentals, are expensed as incurred.
Exploratory wells that find oil and gas in an area requiring a major capital
expenditure before production could begin are evaluated annually to assure
that commercial quantities of reserves have been found or that additional
exploration work is underway or planned. Exploratory well costs not meeting
either of these tests are charged to expense.
Oil, gas and other properties held and used by the corporation are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amounts may not be recoverable. The corporation estimates
the future undiscounted cash flows of the affected properties to judge the
recoverability of carrying amounts. In general, analyses are based on proved
reserves, except in circumstances where it is probable that additional
resources will be developed and contribute to cash flows in the future.
ENVIRONMENTAL CONSERVATION AND SITE RESTORATION COSTS. Liabilities for
environmental conservation are recorded when it is probable that obligations
have been incurred and the amounts can be reasonably estimated. These
liabilities are not reduced by possible recoveries from third parties, and
projected cash expenditures are not discounted.
Site restoration costs that may be incurred by the corporation at the
end of the operating life of certain of its facilities and properties are
reserved ratably over the asset's productive life.
B16
FOREIGN CURRENCY TRANSLATION. The "functional currency" for translating the
accounts of the majority of downstream and chemical operations outside the
U.S. is the local currency. Local currency is also used for upstream
operations that are relatively self-contained and integrated within a
particular country, such as in Canada, the United Kingdom, Norway and
Continental Europe. The U.S. dollar is used for operations in highly
inflationary economies, in Singapore which is predominantly export oriented
and for some upstream operations, primarily in Malaysia, Indonesia, Nigeria,
Equatorial Guinea and the Middle East. For all operations, gains or losses on
remeasuring foreign currency transactions into functional currency are
included in income.
2. EXTRAORDINARY ITEM AND ACCOUNTING CHANGE
Net income for 2000 included a net after-tax gain of $1,730 million (net of
$308 million of income taxes), or $0.49 per common share - assuming dilution,
from asset divestments that were required as a condition of the regulatory
approval of the Merger. The net after-tax gain on required divestments was
reported as an extraordinary item according to accounting requirements for
business combinations accounted for as a pooling of interests.
Effective as of January 1, 1998, the corporation adopted the American
Institute of Certified Public Accountants' Statement of Position 98-5,
"Reporting on the Costs of Start-up Activities." This statement requires that
costs of start-up activities and organizational costs be expensed as incurred.
The cumulative effect of this accounting change on years prior to 1998 was a
charge of $70 million (net of $70 million income tax effect), or $0.02 per
common share.
3. MERGER OF EXXON CORPORATION AND MOBIL CORPORATION
On November 30, 1999, a wholly-owned subsidiary of Exxon Corporation (Exxon)
merged with Mobil Corporation (Mobil) so that Mobil became a wholly-owned
subsidiary of Exxon (the "Merger"). At the same time, Exxon changed its name
to Exxon Mobil Corporation (ExxonMobil). Under the terms of the agreement,
approximately 1.0 billion shares of ExxonMobil common stock were issued in
exchange for all the outstanding shares of Mobil common stock based upon an
exchange ratio of 1.32015. Following the exchange, former shareholders of
Exxon owned approximately 70 percent of the corporation, while former Mobil
shareholders owned approximately 30 percent of the corporation. Each
outstanding share of Mobil preferred stock was converted into one share of a
new class of ExxonMobil preferred stock.
As a result of the Merger, the accounts of certain downstream and
chemicals operations jointly controlled by the combining companies have been
included in the consolidated financial statements. These operations were
previously accounted for by Exxon and Mobil as separate companies using the
equity method of accounting.
The Merger was accounted for as a pooling of interests. Accordingly,
the consolidated financial statements give retroactive effect to the Merger,
with all periods presented as if Exxon and Mobil had always been combined.
Certain reclassifications have been made to conform the presentation of Exxon
and Mobil.
The following table sets forth summary data for the separate companies and the
combined amounts for periods prior to the Merger.
Nine Months Year
Ended Ended
Sept. 30 Dec. 31
1999 1998
- ------------------------------------------------
(millions of dollars)
Revenues
Exxon $ 89,378 $ 117,772
Mobil 42,782 53,531
Adjustments (1) 6,033 7,987
Eliminations (7,248) (9,648)
-------------------------
ExxonMobil $ 130,945 $ 169,642
=========================
Net Income
Exxon $ 3,725 $ 6,370
Mobil 1,901 1,704
------------------------
ExxonMobil $ 5,626 $ 8,074
========================
(1) Consolidation of activities previously accounted for using the equity
method of accounting.
As a condition of the approval of the Merger, the U.S. Federal Trade
Commission and the European Commission required that certain property --
primarily downstream, pipeline and natural gas distribution assets -- be
divested. These assets, with a carrying value of approximately $3 billion,
were sold in the year 2000. The net after-tax gain of $1,730 million was
reported as an extraordinary item. The properties have historically earned
approximately $200 million per year.
4. REORGANIZATION COSTS
In association with the Merger, $1,406 million pre-tax ($920 million
after-tax) and $625 million pre-tax ($469 million after-tax) of costs were
recorded as merger related expenses in 2000 and 1999, respectively. Cumulative
charges included separation expenses of approximately $1,125 million related
to workforce reductions (approximately 6,000 employees at year-end 2000), plus
implementation and merger closing costs. The separation reserve balance at
year end 2000 of approximately $320 million, is expected to be expended in
2001.
In the first quarter of 1999, the corporation recorded a $120 million
after-tax charge for the non-merger related reorganization of Japanese
downstream operations in its wholly-owned Esso Sekiyu K.K. and 50.1 percent
owned General Sekiyu K.K. affiliates. The reorganization resulted in the
reduction of approximately 700 administrative, financial, logistics and
marketing service employee positions. The Japanese affiliates recorded a
combined charge of $216 million (before-tax) to selling, general and
administrative expenses for the employee related costs. Substantially all cash
expenditures anticipated in the restructuring provision have been paid as of
the end of 1999. General Sekiyu also recorded a $211 million (before-tax)
charge to
B17
depreciation and depletion for the write-off of costs associated with the
cancellation of a power plant project at the Kawasaki terminal.
In 1998, Mobil implemented new reorganization programs in Australia
and New Zealand and in Latin America to integrate regional fuels and lubes
operations. These programs resulted in the elimination of approximately 500
positions as well as asset write-downs in Australia and New Zealand. A
provision of $50 million ($41 million after-tax) was recorded in selling,
general and administrative expenses and depreciation and depletion for these
programs. In 1998 and 1999, a combination of cash for employee separation
benefits and exit costs and noncash costs for the closure of facilities
essentially depleted the reserve.
In 1997, Mobil and BP announced that their alliance would implement a
major restructuring of its lubricant base oil refining business. This program
resulted in the elimination of approximately 460 positions and in write-downs
and closure of certain facilities and was completed by the end of 1999.
Reserves were recorded in 1997 of about $86 million ($82 million after-tax)
mainly for employee severance costs associated with workforce reductions and
for write-downs and closure of certain facilities. These costs were recorded
in earnings from equity interests and selling, general and administrative
expenses. Cash outlays have been approximately $70 million and non-cash costs
about $20 million. There was no amount remaining in this reserve at December
31, 2000, for this program.
Also in 1997, Mobil commenced two major cost savings initiatives in
Asia-Pacific -- one in Japan in response to the deregulated business
environment and the other in Australia. These programs resulted in the
elimination of approximately 400 positions and the impairment of certain
assets. In 1997, reserves were recorded in the amount of $172 million ($107
million after-tax) primarily for separation costs related to workforce
reductions and for closure of certain facilities. The provisions were recorded
in selling, general and administrative expenses; operating expenses; earnings
from equity interests and other revenue and depreciation and depletion. At the
end of 2000 the reserve was essentially depleted.
The following table summarizes the activity in the reorganization
reserves. The 1998 opening balance represents accruals for provisions taken in
prior years.
Opening Balance at
Balance Additions Deductions Year End
- ----------------------------------------------------------------
(millions of dollars)
1998 $300 $ 50 $181 $169
1999 169 563 351 381
2000 381 738 780 339
5. MISCELLANEOUS FINANCIAL INFORMATION
Research and development costs totaled $564 million in 2000, $630 million in
1999 and $753 million in 1998.
Net income included aggregate foreign exchange transaction losses of
$236 million in 2000 and $5 million in 1999, and gains of $20 million in 1998.
In 2000, 1999, and 1998, net income included gains of $175 million,
and losses of $7 million and $8 million, respectively, attributable to the
combined effects of LIFO inventory accumulations and draw-downs. The aggregate
replacement cost of inventories was estimated to exceed their LIFO carrying
values by $6,706 million and $5,898 million at December 31, 2000 and 1999,
respectively.
In 1998, Mobil recorded a charge of $325 million before-tax ($270
million after-tax) to adjust certain inventories to their market value. Also
in 1998, a charge of $491 million before-tax ($387 million after-tax) was
recorded by Mobil to write down certain oil and gas properties to fair value.
6. CASH FLOW INFORMATION
The consolidated statement of cash flows provides information about changes in
cash and cash equivalents. Highly liquid investments with maturities of three
months or less when acquired are classified as cash equivalents.
Cash payments for interest were: 2000 - $729 million, 1999 - $882
million and 1998 - $1,066 million. Cash payments for income taxes were: 2000
- -$8,671 million, 1999 - $3,805 million and 1998 - $4,629 million.
7. ADDITIONAL WORKING CAPITAL DATA
Dec. 31 Dec. 31
2000 1999
- -------------------------------------------------------------------
(millions of dollars)
Notes and accounts receivable
Trade, less reserves of $258 million
and $231 million $ 17,568 $ 14,605
Other, less reserves of $48 million
and $10 million 5,428 4,550
---------------------
$ 22,996 $ 19,155
=====================
Notes and loans payable
Bank loans $ 1,244 $ 2,223
Commercial paper 3,761 7,231
Long-term debt due within one year 650 407
Other 506 709
---------------------
$ 6,161 $ 10,570
=====================
Accounts payable and accrued liabilities
Trade payables $ 15,357 $ 13,524
Obligations to equity companies 586 608
Accrued taxes other than income taxes 5,423 6,005
Other 5,389 5,355
---------------------
$ 26,755 $ 25,492
=====================
On December 31, 2000, unused credit lines for short-term financing totaled
approximately $6.7 billion. Of this total, $3.3 billion support commercial
paper programs under terms negotiated when drawn. The weighted average
interest rate on short-term borrowings outstanding at December 31, 2000 and
1999 was 6.4 percent and 5.6 percent, respectively.
B18
8. EQUITY COMPANY INFORMATION
The summarized financial information below includes amounts related to
certain less than majority owned companies and majority owned subsidiaries
where minority shareholders possess the right to participate in significant
management decisions (see note 1). These companies are primarily engaged in
crude production, natural gas marketing and refining operations in North
America; natural gas production, natural gas distribution, and downstream
operations in Europe and crude production in Kazakhstan and the Middle East.
Also included are several power generation, petrochemical/lubes manufacturing
and chemical ventures; 1998 and 1999 included amounts related to Mobil's
European Fuels joint venture which was divested as a condition of the Merger
approval.
2000 1999 1998
---------------------------------------------------------------
ExxonMobil ExxonMobil ExxonMobil
Equity Company Financial Summary Total Share Total Share Total Share
- ----------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Total revenues
Percent of revenues from companies included in the ExxonMobil
consolidation was 7% in 1998, 8% in 1999 and 11% in 2000 $ 81,371 $ 32,452 $ 94,534 $ 32,124 $ 76,552 $ 24,740
---------------------------------------------------------------
Income before income taxes $ 7,632 $ 3,092 $ 4,100 $ 2,095 $ 4,104 $ 2,002
Less: Related income taxes (1,382) (658) (734) (449) (1,071) (492)
---------------------------------------------------------------
Net income $ 6,250 $ 2,434 $ 3,366 $ 1,646 $ 3,033 $ 1,510
===============================================================
Current assets $ 28,784 $ 11,479 $ 21,518 $ 7,739 $ 19,037 $ 6,645
Property, plant and equipment, less accumulated depreciation 36,553 13,733 44,213 15,509 40,268 15,221
Other long-term assets 6,656 2,979 4,806 2,106 3,529 1,449
---------------------------------------------------------------
Total assets $ 71,993 $ 28,191 $ 70,537 $ 25,354 $ 62,834 $ 23,315
---------------------------------------------------------------
Short-term debt $ 2,636 $ 1,093 $ 2,856 $ 1,129 $ 2,628 $ 1,048
Other current liabilities 25,377 10,357 18,129 6,324 16,367 5,574
Long-term debt 11,116 4,094 13,486 3,978 11,316 3,488
Other long-term liabilities 7,054 3,273 5,372 2,598 4,974 2,362
Advances from shareholders 8,485 2,510 3,636 1,919 3,734 2,017
---------------------------------------------------------------
Net assets $ 17,325 $ 6,864 $ 27,058 $ 9,406 $ 23,815 $ 8,826
===============================================================
9. INVESTMENTS AND ADVANCES
Dec. 31 Dec. 31
2000 1999
- ----------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
Companies carried at equity in underlying assets
Investments $ 6,864 $ 9,406
Advances 2,510 1,919
-------------------
$ 9,374 $ 11,325
Companies carried at cost or less and stock investments carried at fair value 1,230 964
-------------------
$ 10,604 $ 12,289
Long-term receivables and miscellaneous investments at cost or less 2,014 2,255
-------------------
Total $ 12,618 $ 14,544
===================
B19
10. INVESTMENT IN PROPERTY, PLANT AND EQUIPMENT
Dec. 31, 2000 Dec. 31, 1999
-----------------------------------------
Cost Net Cost Net
- ------------------------------------------------------------------------------------
(millions of dollars)
Petroleum and natural gas
Upstream $106,287 $ 45,731 $106,067 $ 48,100
Downstream 51,862 26,730 54,772 28,974
-----------------------------------------
Total petroleum and natural gas $158,149 $ 72,461 $160,839 $ 77,074
Chemicals 17,860 9,935 17,564 9,969
Other 11,737 7,433 10,809 7,000
-----------------------------------------
Total $187,746 $ 89,829 $189,212 $ 94,043
=========================================
Accumulated depreciation and depletion totaled $97,917 million at the end of
2000 and $95,169 million at the end of 1999. Interest capitalized in 2000, 1999
and 1998 was $641 million, $595 million and $545 million, respectively.
- --------------------------------------------------------------------------------
11. LEASED FACILITIES
At December 31, 2000, the corporation and its consolidated subsidiaries held
non-cancelable operating charters and leases covering drilling equipment,
tankers, service stations and other properties with minimum lease commitments
as indicated in the table.
Net rental expenditures for 2000, 1999 and 1998 totaled $1,935
million, $2,172 million and $2,760 million, respectively, after being reduced
by related rental income of $195 million, $317 million and $331 million,
respectively. Minimum rental expenditures totaled $1,992 million in 2000,
$2,311 million in 1999 and $2,910 million in 1998.
Minimum Related
commitment rental income
- -----------------------------------------------------
(millions of dollars)
2001 $ 1,219 $ 76
2002 814 65
2003 604 44
2004 462 29
2005 347 22
2006 and beyond 1,959 104
- --------------------------------------------------------------------------------
12. CAPITAL
At the effective time of the merger of Exxon and Mobil, the authorized common
stock of ExxonMobil was increased from three billion shares to 4.5 billion
shares. Under the terms of the merger agreement, approximately 1.0 billion
shares of ExxonMobil common stock were issued in exchange for all of the
outstanding shares of Mobil's common stock based upon an exchange ratio of
1.32015 ExxonMobil shares for each Mobil share. Mobil's common stock
accounted for as treasury stock was cancelled at the effective time of the
merger.
In 1989, Mobil sold 206 thousand shares of a new issue of Series B
Convertible Preferred Stock to its employee stock ownership plan (Mobil ESOP)
trust for $3,887.50 per share. Each preferred share was convertible into 100
shares of Mobil common stock. The proceeds of the issuance were used by Mobil
for general corporate purposes. Dividends were cumulative and payable in an
amount per share equal to $300 per annum. In connection with the merger, each
outstanding share of Mobil's Series B Convertible Preferred Stock was
converted into one share of ExxonMobil Class B Preferred Stock with similar
terms. Each share of ExxonMobil Class B Preferred Stock was convertible into
132.015 shares of ExxonMobil common stock. In 1999 and 1998, Mobil Series B
Convertible Preferred Stock totaling 6 thousand shares in each year were
redeemed. In 1999, after the merger, 159 thousand shares of ExxonMobil Class
B Preferred Stock totaling $618 million were converted to ExxonMobil common
stock. No shares of Class B Preferred Stock remain outstanding.
B20
In 1989, Exxon sold 16.3 million shares of a new issue of convertible Class A
Preferred Stock to its leveraged employee stock ownership plan (Exxon LESOP)
trust for $61.50 per share. The proceeds of the issuance were used by Exxon
for general corporate purposes. If the common share price exceeded $30.75,
one share of Exxon Class A Preferred Stock was convertible into two shares of
common stock. If the price was $30.75 or less, one share of preferred stock
was convertible into common shares having a value of $61.50. Dividends were
cumulative and payable in an amount per share equal to $4.680 per annum. In
1999 and 1998, 1.7 million and 1.4 million shares of Exxon Class A Preferred
Stock totaling $105 million and $85 million, respectively, were converted to
common stock. At year-end 1999, no shares of Class A Preferred Stock remained
outstanding.
In 1989, $1,800 million of benefit plan related balances were
recorded as debt and as a reduction to shareholders' equity, representing
Exxon and Mobil guaranteed borrowings by the Mobil ESOP and Exxon LESOP
trusts to purchase preferred stock. As the debt is repaid and common shares
are earned by employees, the benefit plan related balances are being
extinguished. Preferred dividends of $36 million and $60 million were paid
during 1999 and 1998, respectively.
The table below summarizes the earnings per share calculations.
2000 1999 1998
------------------------------
NET INCOME PER COMMON SHARE
Income before extraordinary item and cumulative effect of accounting change (millions of dollars) $ 15,990 $ 7,910 $ 8,144
Less: Preferred stock dividends - (36) (60)
------------------------------
Income available to common shares $ 15,990 $ 7,874 $ 8,084
==============================
Weighted average number of common shares outstanding (millions of shares) 3,477 3,453 3,468
Net income per common share
Before extraordinary item and cumulative effect of accounting change $ 4.60 $ 2.28 $ 2.33
Extraordinary gain, net of income tax 0.50 - -
Cumulative effect of accounting change - - (0.02)
------------------------------
Net income $ 5.10 $ 2.28 $ 2.31
==============================
NET INCOME PER COMMON SHARE - ASSUMING DILUTION
Income before extraordinary item and cumulative effect of accounting change (millions of dollars) $ 15,990 $ 7,910 $ 8,144
Adjustment for assumed dilution (8) 1 (7)
------------------------------
Income available to common shares $ 15,982 $ 7,911 $ 8,137
==============================
Weighted average number of common shares outstanding (millions of shares) 3,477 3,453 3,468
Plus: Issued on assumed exercise of stock options 40 44 39
Plus: Assumed conversion of preferred stock - 21 26
------------------------------
Weighted average number of common shares outstanding 3,517 3,518 3,533
==============================
Net income per common share
Before extraordinary item and cumulative effect of accounting change $ 4.55 $ 2.25 $ 2.30
Extraordinary gain, net of income tax 0.49 - -
Cumulative effect of accounting change - - (0.02)
------------------------------
Net income $ 5.04 $ 2.25 $ 2.28
==============================
Dividends paid per common share $ 1.760 $ 1.687 $ 1.666
B21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. EMPLOYEE STOCK OWNERSHIP PLANS
In 1989, the Exxon leveraged employee stock ownership plan (Exxon LESOP)
trust borrowed $1,000 million under the terms of notes guaranteed by Exxon
maturing between 1990 and 1999. As further described in note 12, the Exxon
LESOP trust used the proceeds of the borrowing to purchase shares of Exxon's
convertible Class A Preferred Stock. The final Exxon LESOP note matured in
1999 with the final principal payment of the outstanding debt. All remaining
shares of Exxon Class A Preferred Stock were converted to ExxonMobil common
shares.
In 1989, the Mobil Oil Corporation employee stock ownership plan
(Mobil ESOP) trust borrowed $800 million under the terms of notes and
debentures guaranteed by Mobil. As further described in note 12, the trust
used the proceeds of the borrowing to purchase shares of Mobil's Series B
Convertible Preferred Stock which upon the Merger were converted into shares
of ExxonMobil Class B Preferred Stock with similar terms. By year-end 1999,
all outstanding shares of Class B Preferred Stock were converted to
ExxonMobil common shares.
The Exxon LESOP and Mobil ESOP were merged in late 1999 to create
the ExxonMobil ESOP. Employees eligible to participate in ExxonMobil's
Savings Plan may elect to participate in the ExxonMobil ESOP. Corporate
contributions to the plan and dividends are used to make principal and
interest payments on the notes and debentures. As contributions and dividends
are credited, common shares are allocated to participants' accounts. When
debt service exceeded dividends, ExxonMobil funded the excess. The excess for
the ExxonMobil ESOP was $15 million, $19 million, and $15 million in 2000,
1999, and 1998, respectively.
Accounting for the plans has followed the principles which were in
effect for the respective plans when they were established. The amount of
compensation expense related to the plans and recorded by the corporation
during the periods was not significant. The ExxonMobil ESOP trust held 59.9
million shares of ExxonMobil common stock at the end of 1999 and 54.6 million
shares at the end of 2000.
14. FINANCIAL INSTRUMENTS
The fair value of financial instruments is determined by reference to various
market data and other valuation techniques as appropriate. Long-term debt is
the only category of financial instruments whose fair value differs
materially from the recorded book value. The estimated fair value of total
long-term debt, including capitalized lease obligations, at December 31, 2000
and 1999, was $8.0 billion and $8.9 billion, respectively, as compared to
recorded book values of $7.3 billion and $8.4 billion.
The corporation's size, geographic diversity and the complementary
nature of the upstream, downstream and chemicals businesses mitigate the
corporation's risk from changes in interest rate, foreign currency rate and
commodity prices. As a result, the corporation makes limited use of
derivatives to offset exposures arising from existing transactions.
Derivative instruments are not held for trading purposes nor do they have
leveraged features. In addition, they are either purchased or sold over
authorized exchanges or with counterparties of high credit standing. As a
result of the above factors, the corporation's exposure to credit risks and
market risks from derivative activities is negligible.
The notional principal amounts of derivative financial instruments at
December 31, are as follows:
AT DECEMBER 31: 2000 1999
---- ----
(millions of dollars)
Debt-related instruments $ 970 $2,111
Nondebt-related foreign currency
exchange rate instruments 63 4,245
Commodity financial instruments
requiring cash settlement 1,367 1,988
------------------
Total $2,400 $8,344
==================
B22
15. LONG-TERM DEBT
At December 31, 2000, long-term debt consisted of $6,630 million due in U.S.
dollars and $650 million representing the U.S. dollar equivalent at year-end
exchange rates of amounts payable in foreign currencies. These amounts
exclude that portion of long-term debt, totaling $650 million, which matures
within one year and is included in current liabilities. The amounts of
long-term debt maturing, together with sinking fund payments required, in
each of the four years after December 31, 2001, in millions of dollars, are:
2002 - $368, 2003 - $832, 2004 - $2,245 and 2005 - $359. Certain of the
borrowings described may from time to time be assigned to other ExxonMobil
affiliates. At December 31, 2000, the corporation's unused long-term credit
lines were not material.
The total outstanding balance of defeased debt at year-end 2000 was
$480 million. Summarized long-term borrowings at year-end 2000 and 1999 were
as follows:
2000 1999
- --------------------------------------------------------------------
(millions of dollars)
Exxon Mobil Corporation
7.45% Guaranteed notes due 2001 $ - $ 246
Guaranteed zero coupon notes due 2004
- Face value ($1,146) net of
unamortized discount 749 671
Exxon Capital Corporation
6.0% Guaranteed notes due 2005 106 246
6.125% Guaranteed notes due 2008 175 250
SeaRiver Maritime Financial Holdings, Inc.
Guaranteed debt securities due 2002-2011(1) 115 122
Guaranteed deferred interest
debentures due 2012
- Face value ($771) net of unamortized
discount plus accrued interest 811 728
Imperial Oil Limited
8.3% notes due 2001 - 200
Variable rate notes due 2004(2) 600 600
Mobil Oil Canada, Ltd.
3.0% Swiss franc debentures due 2003(3) 331 331
5.0% U.S. dollar Eurobonds due 2004(4) 274 300
Mobil Producing Nigeria Unlimited
8.625% notes due 2002-2006 188 229
Mobil Corporation
8.625% debentures due 2021 247 247
7.625% debentures due 2033 203 213
Industrial revenue bonds due 2003-2033(5) 1,469 1,429
ESOP Trust notes due 2002-2003 100 351
Other U.S. dollar obligations(6) 1,062 1,045
Other foreign currency obligations 598 924
Capitalized lease obligations(7) 252 270
---------------
Total long-term debt $7,280 $8,402
===============
1. Average effective interest rate of 6.4% in 2000 and 5.3% in 1999.
2. Average effective interest rate of 6.6% in 2000 and 5.3% in 1999.
3. Swapped into floating rate U.S.$ debt.
4. Swapped principally into floating rate debt.
5. Average effective interest rate of 4.5% in 2000 and 4.0% in 1999.
6. Average effective interest rate of 7.8% in 2000 and 7.6% in 1999.
7. Average imputed interest rate of 7.2% in 2000 and 7.2% in 1999.
B23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. INCENTIVE PROGRAM
The 1993 Incentive Program provides for grants of stock options, stock
appreciation rights (SARs), restricted stock and other forms of award. Awards
may be granted over a 10-year period to eligible employees of the corporation
and those affiliates at least 50 percent owned. The number of shares of stock
which may be awarded each year under the 1993 Incentive Program may not
exceed seven tenths of one percent (0.7%), of the total number of shares of
common stock of the corporation outstanding (excluding shares held by the
corporation) on December 31 of the preceding year. If the total number of
shares effectively granted in any year is less than the maximum number of
shares allowable, the balance may be carried over thereafter. Outstanding
awards are subject to certain forfeiture provisions contained in the program
or award instrument.
Options and SARs may be granted at prices not less than 100 percent
of market value on the date of grant and have a maximum life of 10 years.
Most of the options and SARs normally first become exercisable one year
following the date of grant.
On the closing of the merger on November 30, 1999, outstanding
options and SARs granted by Mobil under its 1995 Incentive Compensation and
Stock Ownership Plan and prior plans were assumed by ExxonMobil and converted
into rights to acquire ExxonMobil common stock with adjustments to reflect
the exchange ratio. No further awards may be granted under the former Mobil
plans.
Shares available for granting under the 1993 Incentive Program were
59,536 thousand at the beginning of 2000 and 42,303 thousand at the end of
2000. At December 31, 1999 and 2000, respectively, 1,077 thousand and 1,219
thousand shares of restricted common stock were outstanding.
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," was implemented in January 1996. As permitted by
the Standard, ExxonMobil retained its prior method of accounting for stock
compensation. If the provisions of Statement No. 123 had been adopted, net
income and earnings per share (on both a basic and diluted basis) would have
been reduced by $296 million, or $0.08 per share in 2000; $149 million, or
$0.04 per share in 1999 and $134 million, or $0.04 per share in 1998. For the
ExxonMobil plan, the average fair value of each option granted during 2000,
1999, and 1998 was $20.36, $19.70 and $12.80, respectively. The fair value
was estimated at the grant date using an option-pricing model with the
following weighted average assumptions for 2000, 1999 and 1998, respectively:
risk-free interest rates of 5.5 percent, 6.2 percent and 4.8 percent;
expected life of 6 years for all years; volatility of 16 percent, 15 percent
and 13 percent and a dividend yield of 2.0 percent, 2.1 percent and 2.3
percent. For the Mobil plans, the average fair value of each Mobil option
granted during 1999 and 1998 was $17.02 and $13.05, respectively. The fair
value was estimated at the grant date using an option-pricing model with the
following weighted average assumptions for 1999 and 1998, respectively:
risk-free interest rates of 5.2 percent and 5.7 percent; expected life of 5
years for both years; volatility of 20 percent and 18 percent and a dividend
yield of 2.7 percent and 3.2 percent.
Changes that occurred in options outstanding in 2000, 1999 and 1998
(including the former Mobil plans) are summarized below (shares in thousands):
2000 1999 1998
------------------------------------------------------------
Avg. Avg. Avg.
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------------------------------------------------------------
Outstanding at beginning of year 121,116 $49.62 110,609 $42.03 112,341 $36.42
Granted 18,112 90.37 22,099 78.00 16,646 65.89
Exercised (14,357) 32.70 (11,250) 30.31 (17,907) 28.65
Expired/Canceled (531) 74.25 (342) 66.18 (471) 55.41
------- ------- -------
Outstanding at end of year 124,340 57.40 121,116 49.62 110,609 42.03
Exercisable at end of year 97,572 51.89 87,472 42.16 83,258 36.76
The following table summarizes information about stock options outstanding,
including those from former Mobil plans, at December 31, 2000 (shares in
thousands):
Options Outstanding Options Exercisable
- ---------------------------------------------------------- -------------------
Avg. Avg. Avg.
Exercise Price Remaining Exercise Exercise
Range Shares Contractual Life Price Shares Price
- ---------------------------------------------------------- ----------------
$23.27-33.07 30,800 3.2 years $29.77 30,800 $29.77
38.12-55.42 33,329 6.2 years 45.80 29,819 44.84
58.36-90.44 60,211 8.7 years 77.96 36,953 76.02
------- ------
Total 124,340 6.7 years 57.40 97,572 51.89
B24
17. LITIGATION AND OTHER CONTINGENCIES
A number of lawsuits, including class actions, were brought in various courts
against Exxon Mobil Corporation and certain of its subsidiaries relating to
the accidental release of crude oil from the tanker Exxon Valdez in 1989.
Essentially all of these lawsuits have now been resolved or are subject to
appeal.
On September 24, 1996, the United States District Court for the
District of Alaska entered a judgment in the amount of $5.058 billion in the
Exxon Valdez civil trial that began in May 1994. The District Court awarded
approximately $19.6 million in compensatory damages to fisher plaintiffs, $38
million in prejudgment interest on the compensatory damages and $5 billion in
punitive damages to a class composed of all persons and entities who asserted
claims for punitive damages from the corporation as a result of the Exxon
Valdez grounding. The District Court also ordered that these awards shall
bear interest from and after entry of the judgment. The District Court stayed
execution on the judgment pending appeal based on a $6.75 billion letter of
credit posted by the corporation. ExxonMobil has appealed the judgment. The
United States Court of Appeals for the Ninth Circuit heard oral arguments on
the appeal on May 3, 1999. The corporation continues to believe that the
punitive damages in this case are unwarranted and that the judgment should be
set aside or substantially reduced by the appellate courts.
On January 29, 1997, a settlement agreement was concluded resolving
all remaining matters between the corporation and various insurers arising
from the Valdez accident. Under terms of this settlement, ExxonMobil received
$480 million. Final income statement recognition of this settlement continues
to be deferred in view of uncertainty regarding the ultimate cost to the
corporation of the Valdez accident.
The ultimate cost to ExxonMobil from the lawsuits arising from the
Exxon Valdez grounding is not possible to predict and may not be resolved for
a number of years.
Under the October 8, 1991, civil agreement and consent decrees with
the U.S. and Alaska governments, the corporation will make a final payment of
$70 million in 2001. This payment, along with prior payments will be charged
against the provision that was previously established to cover the costs of
the settlement.
German and Dutch affiliated companies are the concessionaires of a
natural gas field subject to a treaty between the governments of Germany and
the Netherlands under which the gas reserves in an undefined border or common
area are to be shared equally. Entitlement to the reserves is determined by
calculating the amount of gas which can be recovered from this area. Based on
the final reserve determination, the German affiliate has received more gas
than its entitlement. Arbitration proceedings, as provided in the agreements,
were conducted to resolve issues concerning the compensation for the
overlifted gas.
By final award dated July 2, 1999, preceded by an interim award in
1996, an arbitral tribunal established the full amount of the compensation
for the excess gas. This amount has now been paid and a petition to set the
award aside has now been dismissed, rendering the award final in all
respects. Other substantive matters remain outstanding, including recovery of
royalties paid on such excess gas and the taxes payable on the final
compensation amount. The net financial impact on the corporation is not
possible to predict at this time. However, the ultimate outcome is not
expected to have a materially adverse effect upon the corporation's
operations or financial condition.
On December 19, 2000, a jury in Montgomery County, Alabama, returned
a verdict against the corporation in a contract dispute over royalties in the
amount of $87.69 million in compensatory damages and $3.42 billion in
punitive damages in the case of Exxon Corporation v. State of Alabama, et al.
ExxonMobil will challenge the verdict and believes that the verdict is
unwarranted and that the judgement should be set aside or substantially
reduced. The ultimate outcome is not expected to have a materially adverse
effect upon the corporation's operations or financial condition.
The U.S. Tax Court has decided the issue with respect to the pricing
of crude oil purchased from Saudi Arabia for the years 1979-1981 in favor of
the corporation. This decision is subject to appeal. Certain other issues for
the years 1979-1993 remain pending before the Tax Court. The ultimate
resolution of these issues is not expected to have a materially adverse
effect upon the corporation's operations or financial condition.
Claims for substantial amounts have been made against ExxonMobil and
certain of its consolidated subsidiaries in other pending lawsuits, the
outcome of which is not expected to have a materially adverse effect upon the
corporation's operations or financial condition.
The corporation and certain of its consolidated subsidiaries were
contingently liable at December 31, 2000, for $2,184 million, primarily
relating to guarantees for notes, loans and performance under contracts. This
includes $770 million representing guarantees of non-U.S. excise taxes and
customs duties of other companies, entered into as a normal business
practice, under reciprocal arrangements. Not included in this figure are
guarantees by consolidated affiliates of $1,715 million, representing
ExxonMobil's share of obligations of certain equity companies.
Additionally, the corporation and its affiliates have numerous
long-term sales and purchase commitments in their various business
activities, all of which are expected to be fulfilled with no adverse
consequences material to the corporation's operations or financial condition.
The operations and earnings of the corporation and its affiliates
throughout the world have been, and may in the future be, affected from time
to time in varying degree by political developments and laws and regulations,
such as forced divestiture of assets; restrictions on production, imports and
exports; price controls; tax increases and retroactive tax claims;
expropriation of property; cancellation of contract rights and environmental
regulations. Both the likelihood of such occurrences and their overall effect
upon the corporation vary greatly from country to country and are not
predictable.
B25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
18. ANNUITY BENEFITS AND OTHER POSTRETIREMENT BENEFITS
Annuity Benefits
-------------------------------------------------- Other Postretirement
U.S. Non-U.S. Benefits
-----------------------------------------------------------------------------
2000 1999 1998 2000 1999 1998 2000 1999 1998
-----------------------------------------------------------------------------
(millions of dollars)
Components of net benefit cost
Service cost $ 214 $ 249 $ 229 $ 245 $ 312 $ 297 $ 24 $ 36 $ 34
Interest cost 592 555 549 603 608 625 201 190 191
Expected return on plan assets (726) (601) (622) (641) (599) (564) (51) (48) (41)
Amortization of actuarial loss/(gain)
and prior service cost (168) (36) (24) 55 167 111 - 14 12
Net pension enhancement and
curtailment/settlement expense (175) 1 1 77 50 (1) (5) - -
-----------------------------------------------------------------------------
Net benefit cost $(263) $ 168 $ 133 $ 339 $ 538 $ 468 $ 169 $ 192 $ 196
=============================================================================
Costs for defined contribution plans were $67 million, $69 million and
$121 million in 2000, 1999 and 1998, respectively.
Annuity Benefits
------------------------------------------- Other Postretirement
U.S. Non-U.S. Benefits
-------------------- -------------------- --------------------
2000 1999 2000 1999 2000 1999
--------------------------------------------------------------------
(millions of dollars)
Change in benefit obligation
Benefit obligation at January 1 $ 8,032 $ 8,708 $ 11,628 $ 12,572 $ 2,620 $ 2,932
Service cost 214 249 245 312 24 36
Interest cost 592 555 603 608 201 190
Actuarial loss/(gain) 179 (746) 429 (948) 144 (333)
Benefits paid (1,534) (859) (815) (814) (233) (259)
Foreign exchange rate changes - - (811) (171) (8) 14
Other 168 125 (216) 69 194 40
--------------------------------------------------------------------
Benefit obligation at December 31 $ 7,651 $ 8,032 $ 11,063 $ 11,628 $ 2,942 $ 2,620
====================================================================
Change in plan assets
Fair value at January 1 $ 7,965 $ 6,604 $ 8,689 $ 7,577 $ 568 $ 512
Actual return on plan assets 208 2,083 (12) 1,467 (30) 104
Foreign exchange rate changes - - (612) 14 - -
Payments directly to participants 156 138 311 305 166 172
Company contribution - - 232 167 38 42
Benefits paid (1,534) (859) (815) (814) (233) (259)
Other - (1) (13) (27) (63) (3)
--------------------------------------------------------------------
Fair value at December 31 $ 6,795 $ 7,965 $ 7,780 $ 8,689 $ 446 $ 568
====================================================================
Assets in excess of/(less than) benefit obligation
Balance at December 31 $ (856) $ (67) $ (3,283) $ (2,939) $ (2,496) $ (2,052)
Unrecognized net transition liability/(asset) (31) (102) 49 42 - -
Unrecognized net actuarial loss/(gain) (788) (1,960) 507 (368) 35 (217)
Unrecognized prior service cost 281 338 297 310 180 5
Intangible asset (12) (33) (82) (81) - -
Equity of minority shareholders - - (36) (23) - -
Minimum pension liability adjustment (163) (103) (422) (444) - -
--------------------------------------------------------------------
Prepaid/(accrued) benefit cost $ (1,569) $ (1,927) $ (2,970) $ (3,503) $ (2,281) $ (2,264)
====================================================================
Annuity assets and reserves in excess of accumulated
benefit obligation $ 1,422 $ 2,833 $ 710 $ 1,760 - -
Assumptions as of December 31 (percent)
--------------------------------------------------------------------
Discount rate 7.5 7.75 3.0-7.0 3.0-7.3 7.5 7.75
Long-term rate of compensation increase 3.5 3.5 3.0-5.0 3.0-4.0 3.5 3.5
Long-term rate of return on funded assets 9.5 9.5 6.5-10.0 5.5-10.0 9.5 9.5
B26
The data shown on the previous page are reported as required by current
accounting standards which specify use of a discount rate at which
postretirement liabilities could be effectively settled. The discount rate
stipulated for use in calculating year-end postretirement liabilities is
based on the year-end rate of interest on high quality bonds. For determining
the funding requirements of U.S. annuity plans in accordance with applicable
federal government regulations, ExxonMobil uses the expected long-term rate
of return of the annuity fund's actual portfolio as the discount rate. This
rate has historically been higher than bonds as the majority of pension
assets are invested in equities. In fact, the actual rate earned over the
past decade has been 15 percent. On this basis, all funded U.S. plans meet
the full funding requirements of the Department of Labor and the Internal
Revenue Service as detailed in the table below. Certain smaller U.S. plans
and a number of non-U.S. plans are not funded because of local tax
conventions and regulatory practices which do not encourage funding of these
plans. Book reserves have been established for these plans to provide for
future benefit payments.
Status of U.S. annuity plans subject to federal government funding requirements 2000 1999
- -------------------------------------------------------------------------------------------------------
(millions of dollars)
Funded assets at market value less total projected benefit obligation $ (856) $ (67)
Differences between accounting and funding basis:
Certain smaller plans unfunded due to lack of tax and regulatory incentives 884 874
Use of long-term rate of return on fund assets as the discount rate 981 1,061
Use of government required assumptions and other actuarial adjustments 364 (1,086)
------------------
Funded assets in excess of obligations under government regulations $ 1,373 $ 782
------------------
B27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
19. INCOME, EXCISE AND OTHER TAXES
2000 1999 1998
- --------------------------------------------------------------------------------------------------------------------------------
United Non- United Non- United Non-
States U.S. Total States U.S. Total States U.S. Total
---------------------------------------------------------------------------------------------
(millions of dollars)
Income taxes
Federal or non-U.S
Current $ 2,635 $ 7,972 $ 10,607 $ 369 $ 3,973 $ 4,342 $ 801 $ 2,753 $ 3,554
Deferred - net 433 (322) 111 214 (1,489) (1,275) 196 5 201
U.S. tax on non-U.S. operations 64 - 64 25 - 25 43 - 43
---------------------------------------------------------------------------------------------
$ 3,132 $ 7,650 $ 10,782 $ 608 $ 2,484 $ 3,092 $ 1,040 $ 2,758 $ 3,798
State 309 - 309 148 - 148 141 - 141
---------------------------------------------------------------------------------------------
Total income taxes $ 3,441 $ 7,650 $ 11,091 $ 756 $ 2,484 $ 3,240 $ 1,181 $ 2,758 $ 3,939
Excise taxes 6,997 15,359 22,356 7,795 13,851 21,646 7,459 13,467 20,926
All other taxes and duties 1,253 33,685 34,938 1,021 35,616 36,637 967 34,084 35,051
---------------------------------------------------------------------------------------------
Total $ 11,691 $ 56,694 $ 68,385 $ 9,572 $ 51,951 $ 61,523 $ 9,607 $ 50,309 $ 59,916
=============================================================================================
All other taxes and duties include taxes reported in operating and selling,
general and administrative expenses. The above provisions for deferred income
taxes include net credits for the effect of changes in tax laws and rates of $84
million in 2000, $205 million in 1999 and $153 million in 1998. Income taxes
(charged)/credited directly to shareholders' equity were:
2000 1999 1998
- ----------------------------------------------------------------------------
(millions of dollars)
Cumulative foreign exchange translation adjustment $ 221 $ (84) $ (21)
Minimum pension liability adjustment 27 (127) 375
Unrealized gains and losses on stock investments 57 (45) -
Other components of shareholders' equity 111 50 88
The reconciliation between income tax expense and a theoretical U.S.
tax computed by applying a rate of 35 percent for 2000, 1999 and 1998, is as
follows:
2000 1999 1998
- --------------------------------------------------------------------------------------
(millions of dollars)
Earnings before Federal and non-U.S. income taxes
United States $ 9,016 $ 3,187 $ 3,451
Non-U.S 17,756 7,815 8,491
-----------------------------------
Total $ 26,772 $ 11,002 $ 11,942
-----------------------------------
Theoretical tax $ 9,370 $ 3,851 $ 4,180
Effect of equity method accounting (852) (576) (529)
Non-U.S. taxes in excess of theoretical U.S. tax 1,986 201 256
U.S. tax on non-U.S. operations 64 25 43
Other U.S. 214 (409) (152)
-----------------------------------
Federal and non-U.S. income tax expense $ 10,782 $ 3,092 $ 3,798
===================================
Total effective tax rate 42.4% 31.8% 35.2%
The effective income tax rate includes state income taxes and the
corporation's share of income taxes of equity companies. Equity company taxes
totaled $658 million in 2000, $449 million in 1999 and $492 million in 1998,
primarily all outside the U.S.
Deferred income taxes reflect the impact of temporary differences
between the amount of assets and liabilities recognized for financial reporting
purposes and such amounts recognized for tax purposes.
Deferred tax liabilities/(assets) are comprised of the following at
December 31:
Tax effects of temporary differences for: 2000 1999
- -----------------------------------------------------------------
(millions of dollars)
Depreciation $ 13,358 $ 14,118
Intangible development costs 3,282 3,371
Capitalized interest 1,891 1,500
Other liabilities 2,935 2,028
--------------------
Total deferred tax liabilities $ 21,466 $ 21,017
--------------------
Pension and other postretirement benefits $ (1,923) $ (2,070)
Tax loss carryforwards (1,763) (1,701)
Other assets (3,465) (2,195)
--------------------
Total deferred tax assets $ (7,151) $ (5,966)
--------------------
Asset valuation allowances 380 651
--------------------
Net deferred tax liabilities $ 14,695 $ 15,702
====================
The corporation had $14 billion of indefinitely reinvested,
undistributed earnings from subsidiary companies outside the U.S. Unrecognized
deferred taxes on remittance of these funds are not expected to be material.
B28
20. DISCLOSURES ABOUT SEGMENTS AND RELATED INFORMATION
The functional segmentation of operations reflected below is consistent with
ExxonMobil's internal reporting. Earnings are before the cumulative effect of
accounting changes and include special items. Transfers are at estimated market
prices. The interest revenue amount relates to interest earned on cash deposits
and marketable securities. Interest expense includes non-debt related interest
expense of $142 million, $123 million and $81 million in 2000, 1999 and 1998,
respectively. All Other includes smaller operating segments, corporate and
financing activities, merger expenses, and extraordinary gains from required
asset divestitures of $1,730 million.
Upstream Downstream Chemicals
-------------------- ----------------- ------------------ All Corporate
U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. Other Total
----------------------------------------------------------------------------------------
(millions of dollars)
As of December 31, 2000
Earnings after income tax $ 4,545 $ 7,824 $ 1,561 $ 1,857 $ 644 $ 517 $ 772 $ 17,720
Earnings of equity companies included above 753 1,400 71 74 35 139 (38) 2,434
Sales and other operating revenue 5,669 15,774 56,080 132,483 8,198 9,303 932 228,439
Intersegment revenue 6,557 15,654 8,631 11,684 2,905 2,398 181 -
Depreciation and depletion expense 1,417 3,469 594 1,489 397 281 483 8,130
Interest revenue - - - - - - 258 258
Interest expense - - - - - - 589 589
Income taxes 2,489 7,137 889 850 344 210 (828) 11,091
Additions to property, plant and equipment 1,513 3,501 966 926 288 458 794 8,446
Investments in equity companies 1,261 1,971 264 1,456 492 1,395 25 6,864
Total assets 18,825 39,626 13,516 42,422 8,047 10,234 16,330 149,000
========================================================================================
As of December 31, 1999
Earnings after income tax $ 1,842 $ 4,044 $ 577 $ 650 $ 738 $ 616 $ (557) $ 7,910
Earnings of equity companies included above 299 881 8 148 49 83 178 1,646
Sales and other operating revenue 3,104 11,353 43,376 109,969 6,554 7,223 950 182,529
Intersegment revenue 3,925 9,093 2,867 5,387 1,624 1,317 796 -
Depreciation and depletion expense 1,330 3,497 697 1,670 402 274 434 8,304
Interest revenue - - - - - - 153 153
Interest expense - - - - - - 695 695
Income taxes 1,008 2,703 343 (22) 338 63 (1,193) 3,240
Additions to property, plant and equipment 1,440 5,025 830 1,201 600 1,093 660 10,849
Investments in equity companies 1,171 2,647 280 3,304 429 1,537 38 9,406
Total assets 18,211 40,906 13,699 43,718 7,605 9,831 10,551 144,521
========================================================================================
As of December 31, 1998
Earnings after income tax $ 850 $ 2,502 $ 1,199 $ 2,275 $ 792 $ 602 $ (76) $ 8,144
Earnings of equity companies included above 92 955 69 126 7 67 194 1,510
Sales and other operating revenue 3,017 10,493 36,642 100,957 5,940 7,649 929 165,627
Intersegment revenue 2,957 6,313 2,124 4,828 2,101 1,250 798 -
Depreciation and depletion expense 1,682 3,330 706 1,516 402 338 381 8,355
Interest revenue - - - - - - 185 185
Interest expense - - - - - - 568 568
Income taxes 476 1,490 666 1,204 329 132 (358) 3,939
Additions to property, plant and equipment 1,836 5,646 1,035 1,718 622 1,121 752 12,730
Investments in equity companies 1,161 2,523 313 3,345 365 1,058 61 8,826
Total assets 18,130 39,094 12,585 42,790 7,224 8,898 10,614 139,335
========================================================================================
Geographic
Sales and other operating revenue 2000 1999 1998
- --------------------------------------------------------------------------------
(millions of dollars)
United States $ 70,036 $ 53,214 $ 45,783
Non-U.S 158,403 129,315 119,844
------------------------------
Total $228,439 $182,529 $165,627
Significant non-U.S. revenue sources include:
Japan $ 24,520 $ 19,727 $ 22,982
United Kingdom 19,904 16,305 16,012
Canada 16,059 11,576 9,995
Long-lived assets 2000 1999 1998
- --------------------------------------------------------------------------------
(millions of dollars)
United States $ 33,087 $ 33,913 $ 33,597
Non-U.S 56,742 60,130 58,986
------------------------------
Total $ 89,829 $ 94,043 $ 92,583
Significant non-U.S. long-lived assets include:
United Kingdom $ 9,024 $ 10,293 $ 11,112
Canada 7,922 8,404 7,526
Japan 5,532 6,545 6,055
B29
SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES
Consolidated Subsidiaries
-------------------------------------------------------------------
Non-
Consoli-
United dated Total
Results of Operations States Canada Europe Asia-Pacific Africa Other Total Interests Worldwide
- ------------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
2000 - Revenue
Sales to third parties $ 4,060 $ 2,423 $ 4,387 $ 2,167 $ 20 $ 366 $ 13,423 $ 3,055 $ 16,478
Transfers 5,420 771 5,491 2,130 3,212 324 17,348 1,532 18,880
------------------------------------------------------------------------------------------
$ 9,480 $ 3,194 $ 9,878 $ 4,297 $ 3,232 $ 690 $ 30,771 $ 4,587 $ 35,358
Production costs excluding taxes 1,231 595 1,627 543 400 181 4,577 621 5,198
Exploration expenses 145 81 135 164 196 211 932 22 954
Depreciation and depletion 1,373 586 1,906 556 340 141 4,902 399 5,301
Taxes other than income 637 33 358 506 446 4 1,984 997 2,981
Related income tax 2,419 736 3,274 1,005 1,093 97 8,624 975 9,599
------------------------------------------------------------------------------------------
Results of producing activities $ 3,675 $ 1,163 $ 2,578 $ 1,523 $ 757 $ 56 $ 9,752 $ 1,573 $ 11,325
Other earnings* 117 (36) 521 144 31 (31) 746 298 1,044
------------------------------------------------------------------------------------------
Total earnings $ 3,792 $ 1,127 $ 3,099 $ 1,667 $ 788 $ 25 $ 10,498 $ 1,871 $ 12,369
==========================================================================================
1999 - Revenue
Sales to third parties $ 2,419 $ 925 $ 3,287 $ 2,160 $ 13 $ 178 $ 8,982 $ 2,123 $ 11,105
Transfers 3,237 848 2,965 1,250 1,986 204 10,490 867 11,357
------------------------------------------------------------------------------------------
$ 5,656 $ 1,773 $ 6,252 $ 3,410 $ 1,999 $ 382 $ 19,472 $ 2,990 $ 22,462
Production costs excluding taxes 1,347 504 1,499 566 394 157 4,467 617 5,084
Exploration expenses 232 93 280 144 236 261 1,246 29 1,275
Depreciation and depletion 1,260 486 1,932 678 318 173 4,847 443 5,290
Taxes other than income 425 31 246 288 309 2 1,301 591 1,892
Related income tax 893 252 929 521 534 (5) 3,124 546 3,670
------------------------------------------------------------------------------------------
Results of producing activities $ 1,499 $ 407 $ 1,366 $ 1,213 $ 208 $(206) $ 4,487 $ 764 $ 5,251
Other earnings* 42 32 391 6 17 (36) 452 183 635
------------------------------------------------------------------------------------------
Total earnings $ 1,541 $ 439 $ 1,757 $ 1,219 $ 225 $(242) $ 4,939 $ 947 $ 5,886
==========================================================================================
1998 - Revenue
Sales to third parties $ 2,297 $ 603 $ 3,427 $ 1,893 $ (8) $ 40 $ 8,252 $ 2,385 $ 10,637
Transfers 2,343 526 1,956 928 1,362 182 7,297 537 7,834
------------------------------------------------------------------------------------------
$ 4,640 $ 1,129 $ 5,383 $ 2,821 $ 1,354 $ 222 $ 15,549 $ 2,922 $ 18,471
Production costs excluding taxes 1,505 501 1,731 514 284 241 4,776 542 5,318
Exploration expenses 317 74 299 210 248 352 1,500 69 1,569
Depreciation and depletion 1,649 423 1,726 813 254 197 5,062 388 5,450
Taxes other than income 343 40 195 164 225 6 973 595 1,568
Related income tax 313 (49) 499 509 196 30 1,498 513 2,011
------------------------------------------------------------------------------------------
Results of producing activities $ 513 $ 140 $ 933 $ 611 $ 147 $(604) $ 1,740 $ 815 $ 2,555
Other earnings* 269 51 556 5 (19) 17 879 (82) 797
------------------------------------------------------------------------------------------
Total earnings $ 782 $ 191 $ 1,489 $ 616 $ 128 $(587) $ 2,619 $ 733 $ 3,352
==========================================================================================
Average sales prices and production costs per unit of production
- ------------------------------------------------------------------------------------------------------------------------------------
During 2000
Average sales prices
Crude oil and NGL, per barrel $23.94 $21.60 $26.96 $28.74 $28.17 $24.57 $25.77 $24.17 $25.59
Natural gas, per thousand cubic feet 3.85 3.58 2.69 2.59 - 1.29 3.12 3.11 3.12
Average production costs, per barrel** 3.08 4.04 3.72 2.72 3.39 5.50 3.43 2.90 3.35
During 1999
Average sales prices
Crude oil and NGL, per barrel $14.96 $14.47 $16.59 $17.96 $16.81 $18.57 $16.16 $14.52 $15.97
Natural gas, per thousand cubic feet 2.21 1.61 2.25 1.88 - 1.21 2.08 2.47 2.15
Average production costs, per barrel** 3.42 3.69 3.64 2.40 3.31 6.20 3.38 3.02 3.33
During 1998
Average sales prices
Crude oil and NGL, per barrel $ 9.87 $ 8.29 $12.59 $13.10 $12.42 $10.90 $11.29 $10.72 $11.23
Natural gas, per thousand cubic feet 2.01 1.27 2.62 1.50 - 1.24 1.99 3.03 2.16
Average production costs, per barrel** 3.55 3.60 4.48 1.97 2.61 10.67 3.56 2.73 3.45
* Includes earnings from transportation operations, tar sands operations, LNG
operations, technical services agreements, other non-operating activities and
adjustments for minority interests.
**Production costs exclude depreciation and depletion and all taxes. Natural
gas included by conversion to crude oil equivalent.
B30
OIL AND GAS EXPLORATION AND PRODUCTION COSTS
The amounts shown for net capitalized costs of consolidated subsidiaries are
$4,852 million less at year-end 2000 and $4,593 million less at year-end 1999
than the amounts reported as investments in property, plant and equipment for
the upstream in note 10. This is due to the exclusion from capitalized costs
of certain transportation and research assets and assets relating to the tar
sands and LNG operations, and to the inclusion of accumulated provisions for
site restoration costs, all as required in Statement of Financial Accounting
Standards No. 19.
The amounts reported as costs incurred include both capitalized
costs and costs charged to expense during the year. Total worldwide costs
incurred in 2000 were $6,063 million, down $1,696 million from 1999, due
primarily to lower development costs. 1999 costs were $7,759 million, down
$1,616 million from 1998, due primarily to lower development costs.
Consolidated Subsidiaries
-------------------------------------------------------------------
Non-
Consoli-
United dated Total
Capitalized costs States Canada Europe Asia-Pacific Africa Other Total Interests Worldwide
- ------------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
As of December 31, 2000
Property (acreage) costs - Proved $ 4,686 $ 2,784 $ 161 $ 729 $ 54 $ 1,187 $ 9,601 $ 11 $ 9,612
- Unproved 700 236 50 1,044 641 314 2,985 3 2,988
----------------------------------------------------------------------------------------
Total property costs $ 5,386 $ 3,020 $ 211 $ 1,773 $ 695 $ 1,501 $ 12,586 $ 14 $ 12,600
Producing assets 31,843 5,958 27,794 11,359 3,920 1,592 82,466 5,528 87,994
Support facilities 860 105 447 950 41 119 2,522 260 2,782
Incomplete construction 877 682 1,050 678 1,001 497 4,785 430 5,215
----------------------------------------------------------------------------------------
Total capitalized costs $ 38,966 $ 9,765 $ 29,502 $ 14,760 $ 5,657 $ 3,709 $102,359 $ 6,232 $108,591
Accumulated depreciation and depletion 25,129 4,607 18,666 9,486 1,946 1,646 61,480 2,858 64,338
----------------------------------------------------------------------------------------
Net capitalized costs $ 13,837 $ 5,158 $ 10,836 $ 5,274 $ 3,711 $ 2,063 $ 40,879 $ 3,374 $ 44,253
========================================================================================
As of December 31, 1999
Property (acreage) costs - Proved $ 4,606 $ 2,952 $ 207 $ 931 $ 105 $ 1,246 $ 10,047 $ 14 $ 10,061
- Unproved 664 214 59 926 662 254 2,779 3 2,782
----------------------------------------------------------------------------------------
Total property costs $ 5,270 $ 3,166 $ 266 $ 1,857 $ 767 $ 1,500 $ 12,826 $ 17 $ 12,843
Producing assets 30,708 4,499 28,669 11,526 3,161 1,281 79,844 5,294 85,138
Support facilities 795 115 580 1,007 767 399 3,663 145 3,808
Incomplete construction 1,093 2,226 1,828 651 582 182 6,562 695 7,257
----------------------------------------------------------------------------------------
Total capitalized costs $ 37,866 $ 10,006 $ 31,343 $ 15,041 $ 5,277 $ 3,362 $102,895 $ 6,151 $109,046
Accumulated depreciation and depletion 23,953 4,401 18,680 9,248 1,575 1,531 59,388 2,872 62,260
----------------------------------------------------------------------------------------
Net capitalized costs $ 13,913 $ 5,605 $ 12,663 $ 5,793 $ 3,702 $ 1,831 $ 43,507 $ 3,279 $ 46,786
========================================================================================
Costs incurred in property acquisitions, exploration and development activities
- ------------------------------------------------------------------------------------------------------------------------------------
During 2000
Property acquisition costs - Proved $ 1 $ 1 $ - $ 1 $ - $ - $ 3 $ - $ 3
- Unproved 72 15 4 96 2 49 238 - 238
Exploration costs 219 145 187 145 272 297 1,265 23 1,288
Development costs 1,236 525 1,262 502 402 224 4,151 383 4,534
-----------------------------------------------------------------------------------------
Total $ 1,528 $ 686 $ 1,453 $ 744 $ 676 $ 570 $ 5,657 $ 406 $ 6,063
=========================================================================================
During 1999
Property acquisition costs - Proved $ - $ - $ 1 $ 18 $ - $ - $ 19 $ - $ 19
- Unproved 8 5 8 - 459 70 550 - 550
Exploration costs 263 106 248 152 304 267 1,340 38 1,378
Development costs 1,263 787 1,822 576 547 408 5,403 409 5,812
-----------------------------------------------------------------------------------------
Total $ 1,534 $ 898 $ 2,079 $ 746 $ 1,310 $ 745 $ 7,312 $ 447 $ 7,759
=========================================================================================
During 1998
Property acquisition costs - Proved $ 21 $ 2 $ - $ 1 $ - $ - $ 24 $ - $ 24
- Unproved 100 9 13 4 87 78 291 - 291
Exploration costs 409 79 392 258 329 380 1,847 127 1,974
Development costs 1,469 731 2,596 757 584 286 6,423 663 7,086
-----------------------------------------------------------------------------------------
Total $ 1,999 $ 821 $ 3,001 $ 1,020 $ 1,000 $ 744 $ 8,585 $ 790 $ 9,375
=========================================================================================
B31
SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES
OIL AND GAS RESERVES
The following information describes changes during the years and balances of
proved oil and gas reserves at year-end 1998, 1999 and 2000.
The definitions used are in accordance with applicable Securities
and Exchange Commission regulations.
Proved oil and gas reserves are the estimated quantities of crude
oil, natural gas and natural gas liquids which geological and engineering
data demonstrate with reasonable certainty to be recoverable in future years
from known reservoirs under existing economic and operating conditions, i.e.,
prices and costs as of the date the estimate is made. Prices include
consideration of changes in existing prices provided only by contractual
arrangements, but not on escalations based upon future conditions. In some
cases, substantial new investments in additional wells and related facilities
will be required to recover these proved reserves.
Proved reserves include 100 percent of each majority owned
affiliate's participation in proved reserves and ExxonMobil's ownership
percentage of the proved reserves of equity companies, but exclude royalties
and quantities due others. Gas reserves exclude the gaseous equivalent of
liquids expected to be removed from the gas on leases, at field facilities
and at gas processing plants. These liquids are included in net proved
reserves of crude oil and natural gas liquids.
Consolidated Subsidiaries
---------------------------------------------------------------
Non-
Consoli-
United dated Total
Crude Oil and Natural Gas Liquids States Canada Europe Asia-Pacific Africa Other Total Interests Worldwide
- ------------------------------------------------------------------------------------------------------------------------------------
(millions of barrels)
Net proved developed and undeveloped reserves
January 1, 1998 2,916 1,228 1,875 838 1,341 241 8,439 1,840 10,279
Revisions 73 (23) 13 41 230 11 345 117 462
Purchases - - - - - - - - -
Sales (5) (5) - - - - (10) (3) (13)
Improved recovery 17 9 21 - 1 - 48 85 133
Extensions and discoveries 37 43 27 24 358 474 963 23 986
Production (234) (98) (228) (117) (109) (16) (802) (92) (894)
-----------------------------------------------------------------------------------
December 31, 1998 2,804 1,154 1,708 786 1,821 710 8,983 1,970 10,953
Revisions 96 19 96 23 128 6 368 25 393
Purchases - - - - - - - - -
Sales (3) - - - - - (3) (9) (12)
Improved recovery 7 1 15 - 3 - 26 72 98
Extensions and discoveries 58 277 174 18 191 2 720 - 720
Production (213) (96) (232) (112) (119) (18) (790) (102) (892)
-----------------------------------------------------------------------------------
December 31, 1999 2,749 1,355 1,761 715 2,024 700 9,304 1,956 11,260
Revisions 410 9 25 29 50 24 547 33 580
Purchases - - - - - - - - -
Sales (1) (5) - - - - (6) - (6)
Improved recovery 40 34 20 - 3 - 97 26 123
Extensions and discoveries 8 33 5 39 425 4 514 3 517
Production (220) (96) (253) (93) (118) (26) (806) (107) (913)
-----------------------------------------------------------------------------------
December 31, 2000 2,986 1,330 1,558 690 2,384 702 9,650 1,911 11,561
Developed reserves, included above
At December 31, 1998 2,470 594 884 673 1,032 57 5,710 1,383 7,093
At December 31, 1999 2,383 608 1,086 615 1,048 186 5,926 1,333 7,259
At December 31, 2000 2,661 630 978 504 989 245 6,007 1,331 7,338
B32
Net proved developed reserves are those volumes which are expected
to be recovered through existing wells with existing equipment and operating
methods. Undeveloped reserves are those volumes which are expected to be
recovered as a result of future investments to drill new wells, to recomplete
existing wells and/or to install facilities to collect and deliver the
production from existing and future wells.
Reserves attributable to certain oil and gas discoveries were not
considered proved as of year-end 2000 due to geological, technological or
economic uncertainties and therefore are not included in the tabulation.
Crude oil and natural gas liquids and natural gas production
quantities shown are the net volumes withdrawn from ExxonMobil's oil and gas
reserves. The natural gas quantities differ from the quantities of gas
delivered for sale by the producing function as reported on page B36 due to
volumes consumed or flared and inventory changes. Such quantities amounted to
approximately 242 billion cubic feet in 1998, 391 billion cubic feet in 1999
and 392 billion cubic feet in 2000.
Consolidated Subsidiaries
--------------------------------------------------------------
Non-
Consoli-
United idated Total
Natural Gas States Canada Europe Asia-Pacific Africa Other Total Interests Worldwide
- ----------------------------------------------------------------------------------------------------------------------------------
(billions of cubic feet)
Net proved developed and undeveloped reserves
January 1, 1998 13,481 3,352 11,747 10,311 2 504 39,397 19,688 59,085
Revisions 643 (87) 456 245 - 99 1,356 184 1,540
Purchases - 10 - - - - 10 - 10
Sales (52) (47) (10) (4) - - (113) (34) (147)
Improved recovery 3 57 20 - - - 80 34 114
Extensions and discoveries 195 503 191 362 111 60 1,422 99 1,521
Production (1,213) (299) (1,003) (916) - (48) (3,479) (638) (4,117)
----------------------------------------------------------------------------------
December 31, 1998 13,057 3,489 11,401 9,998 113 615 38,673 19,333 58,006
Revisions 781 31 680 131 - 42 1,665 142 1,807
Purchases - - - - - - - - -
Sales (18) (1) - - - - (19) - (19)
Improved recovery 2 14 105 - - - 121 161 282
Extensions and discoveries 305 207 192 44 58 6 812 61 873
Production (1,126) (353) (1,150) (815) - (55) (3,499) (654) (4,153)
----------------------------------------------------------------------------------
December 31, 1999 13,001 3,387 11,228 9,358 171 608 37,753 19,043 56,796
Revisions 987 69 970 (113) 147 62 2,122 85 2,207
Purchases - 10 - - - - 10 - 10
Sales (3) (5) - - - - (8) - (8)
Improved recovery 22 24 46 - - 24 116 50 166
Extensions and discoveries 195 430 96 11 70 26 828 45 873
Production (1,157) (399) (1,170) (710) (13) (53) (3,502) (676) (4,178)
----------------------------------------------------------------------------------
December 31, 2000 13,045 3,516 11,170 8,546 375 667 37,319 18,547 55,866
Developed reserves, included above
At December 31, 1998 10,690 2,254 7,939 6,871 2 389 28,145 7,967 36,112
At December 31, 1999 10,820 2,475 7,764 6,471 2 426 27,958 8,643 36,601
At December 31, 2000 10,956 2,850 8,222 6,300 125 477 28,930 9,087 38,017
================================================================================
INFORMATION ON CANADIAN TAR SANDS PROVEN RESERVES NOT INCLUDED ABOVE
In addition to conventional liquids and natural gas proved reserves,
ExxonMobil has significant interests in proven tar sands reserves in Canada
associated with the Syncrude project. For internal management purposes,
ExxonMobil views these reserves and their development as an integral part of
total Upstream operations. However, U.S. Securities and Exchange Commission
regulations define these reserves as mining related and not a part of
conventional oil and gas reserves.
The tar sands reserves are not considered in the standardized
measure of discounted future cash flows for conventional oil and gas
reserves, which is found on page B34.
Tar Sands Reserves Canada
- ---------------------------------------------
(millions of barrels)
At December 31, 1998 597
At December 31, 1999 577
At December 31, 2000 610
B33
SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES
STANDARDIZED MEASURE OF DISCOUNTED FUTURE CASH FLOWS
As required by the Financial Accounting Standards Board, the standardized
measure of discounted future net cash flows is computed by applying year-end
prices, costs and legislated tax rates and a discount factor of 10 percent to
net proved reserves. The corporation believes the standardized measure is not
meaningful and may be misleading.
Consolidated Subsidiaries
--------------------------------------------------------------------
Non-
United Consolidated Total
States Canada Europe Asia-Pacific Africa Other Total Interests Worldwide
- --------------------------------------------------------------------------------------------------------------------------------
(millions of dollars)
As of December 31, 1998
Future cash inflows from sales of
oil and gas $ 45,618 $ 13,255 $ 42,408 $ 21,640 $ 16,889 $ 6,539 $146,349 $ 62,642 $208,991
Future production costs 18,946 4,567 14,926 8,679 6,298 2,530 55,946 28,343 84,289
Future development costs 4,066 2,012 5,668 3,490 4,141 975 20,352 3,393 23,745
Future income tax expenses 7,359 2,411 8,290 2,725 2,585 667 24,037 11,734 35,771
-----------------------------------------------------------------------------------------
Future net cash flows $ 15,247 $ 4,265 $ 13,524 $ 6,746 $ 3,865 $ 2,367 $ 46,014 $ 19,172 $ 65,186
Effect of discounting net cash
flows at 10% 7,395 2,011 4,951 3,060 2,058 1,541 21,016 12,207 33,223
-----------------------------------------------------------------------------------------
Discounted future net cash flows $ 7,852 $ 2,254 $ 8,573 $ 3,686 $ 1,807 $ 826 $ 24,998 $ 6,965 $ 31,963
=========================================================================================
As of December 31, 1999
Future cash inflows from sales of
oil and gas $ 82,674 $ 29,360 $ 64,192 $ 34,771 $ 49,247 $ 13,780 $274,024 $ 94,767 $368,791
Future production costs 21,219 6,618 13,660 9,754 11,784 2,548 65,583 33,006 98,589
Future development costs 4,131 2,116 4,904 3,516 4,779 605 20,051 3,104 23,155
Future income tax expenses 20,103 8,096 23,396 7,680 20,405 2,493 82,173 26,573 108,746
-----------------------------------------------------------------------------------------
Future net cash flows $ 37,221 $ 12,530 $ 22,232 $ 13,821 $ 12,279 $ 8,134 $106,217 $ 32,084 $138,301
Effect of discounting net cash
flows at 10% 20,139 5,884 7,351 5,918 6,275 4,694 50,261 19,473 69,734
-----------------------------------------------------------------------------------------
Discounted future net cash flows $ 17,082 $ 6,646 $ 14,881 $ 7,903 $ 6,004 $ 3,440 $ 55,956 $ 12,611 $ 68,567
=========================================================================================
As of December 31, 2000
Future cash inflows from sales of
oil and gas $177,178 $ 41,275 $ 70,208 $ 34,658 $ 52,651 $ 10,317 $386,287 $ 93,597 $479,884
Future production costs 26,417 7,857 15,979 9,977 10,953 3,467 74,650 38,011 112,661
Future development costs 3,977 2,806 5,552 3,405 7,516 798 24,054 3,901 27,955
Future income tax expenses 55,192 12,731 26,078 7,382 18,949 1,830 122,162 21,333 143,495
-----------------------------------------------------------------------------------------
Future net cash flows $ 91,592 $ 17,881 $ 22,599 $ 13,894 $ 15,233 $ 4,222 $165,421 $ 30,352 $195,773
Effect of discounting net cash
flows at 10% 48,876 6,795 7,779 5,638 8,158 2,450 79,696 18,825 98,521
-----------------------------------------------------------------------------------------
Discounted future net cash flows $ 42,716 $ 11,086 $ 14,820 $ 8,256 $ 7,075 $ 1,772 $ 85,725 $ 11,527 $ 97,252
=========================================================================================
CHANGE IN STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING
TO PROVED OIL AND GAS RESERVES
Consolidated Subsidiaries 2000 1999 1998
- -----------------------------------------------------------------------------------------
(millions of dollars)
Value of reserves added during the year due to
extensions, discoveries, improved recovery
and net purchases less related costs $ 6,029 $ 4,245 $ 1,329
Changes in value of previous-year reserves due to:
Sales and transfers of oil and gas produced during
the year, net of production (lifting) costs (24,498) (13,395) (10,300)
Development costs incurred during the year 4,194 5,313 6,104
Net change in prices, lifting and development costs 44,702 59,466 (34,611)
Revisions of previous reserves estimates 12,537 3,106 1,281
Accretion of discount 7,694 3,056 5,865
Net change in income taxes (20,889) (30,833) 15,989
------------------------------
Total change in the standardized measure
during the year $ 29,769 $ 30,958 $(14,343)
==============================
B34
QUARTERLY INFORMATION
2000 1999
-----------------------------------------------------------------------------------------
First Second Third Fourth First Second Third Fourth
Quarter Quarter Quarter Quarter Year Quarter Quarter Quarter Quarter Year
- ----------------------------------------------------------------------------------------------------------------------------
Volumes
Production of crude oil (thousands of barrels daily)
and natural gas liquids 2,602 2,514 2,497 2,600 2,553 2,540 2,473 2,477 2,579 2,517
Refinery throughput 5,528 5,572 5,736 5,732 5,642 6,068 5,950 5,899 5,991 5,977
Petroleum product sales 7,796 8,035 8,069 8,068 7,993 8,974 8,842 8,879 8,857 8,887
Natural gas production (millions of cubic feet daily)
available for sale 12,146 9,247 8,735 11,252 10,343 11,516 9,178 8,700 11,851 10,308
(thousands of metric tons)
Chemical prime product sales 6,519 6,596 6,038 6,484 25,637 6,076 6,262 6,288 6,657 25,283
Summarized financial data
Sales and other operating (millions of dollars)
revenue $53,273 54,936 57,497 62,733 228,439 $37,982 42,458 48,415 53,674 182,529
Gross profit* $21,896 22,201 23,620 25,506 93,223 $17,850 19,229 20,379 22,950 80,408
Net income before
extraordinary item $ 3,025 4,000 4,060 4,905 15,990 $ 1,484 1,954 2,188 2,284 7,910
Extraordinary gain from
required asset divestitures $ 455 530 430 315 1,730 - - - - -
Net income $ 3,480 4,530 4,490 5,220 17,720 $ 1,484 1,954 2,188 2,284 7,910
Per share data
Net income per common share (dollars per share)
before extraordinary item $ 0.87 1.15 1.17 1.41 4.60 $ 0.42 0.57 0.63 0.66 2.28
Extraordinary gain from
required asset divestitures $ 0.13 0.15 0.12 0.10 0.50 $ - - - - -
Net income per common share $ 1.00 1.30 1.29 1.51 5.10 $ 0.42 0.57 0.63 0.66 2.28
Net income per common share
- assuming dilution $ 0.99 1.28 1.28 1.49 5.04 $ 0.42 0.56 0.62 0.65 2.25
Dividends per common share $0.4400 0.4400 0.4400 0.4400 1.7600 $0.4165 0.4165 0.4165 0.4375 1.6870
Common stock prices
High $86.313 84.750 90.750 95.438 95.438 $76.375 87.250 83.000 86.563 87.250
Low $69.875 75.000 75.125 84.063 69.875 $64.313 69.438 72.125 70.063 64.313
* Gross profit equals sales and other operating revenue less estimated costs associated with products sold.
The price range of ExxonMobil Common Stock is as reported on the composite tape
of the several U.S. exchanges where ExxonMobil Common Stock is traded. The
principal market where ExxonMobil Common Stock (XOM) is traded is the New York
Stock Exchange, although the stock is traded on other exchanges in and outside
the United States. Through December 1, 1999, the Common Stock traded under the
name of Exxon Corporation (XON).
There were 718,881 registered shareholders of ExxonMobil common stock
at December 31, 2000. At January 31, 2001, the registered shareholders of
ExxonMobil common stock numbered 715,020.
On January 31, 2001, the corporation declared a $0.44 dividend per
common share, payable March 9, 2001.
B35
OPERATING SUMMARY
2000 1999 1998 1997
- --------------------------------------------------------------------------------------------
(thousands of barrels daily)
Production of crude oil and natural gas liquids
Net production
United States 733 729 745 803
Canada 304 315 322 287
Europe 704 650 635 641
Asia-Pacific 253 307 322 347
Africa 323 326 301 294
Other Non-U.S 236 190 177 155
---------------------------------------
Worldwide 2,553 2,517 2,502 2,527
=======================================
(millions of cubic feet daily)
Natural gas production available for sale
Net production
United States 2,856 2,871 3,140 3,223
Canada 844 683 667 600
Europe 4,463 4,438 4,245 4,283
Asia-Pacific 1,755 2,027 2,352 2,632
Other Non-U.S 425 289 213 156
---------------------------------------
Worldwide 10,343 10,308 10,617 10,894
=======================================
(thousands of barrels daily)
Refinery throughput
United States 1,862 1,930 1,919 2,026
Canada 451 441 445 448
Europe 1,578 1,782 1,888 1,899
Asia-Pacific 1,462 1,537 1,554 1,559
Other Non-U.S 289 287 287 302
---------------------------------------
Worldwide 5,642 5,977 6,093 6,234
=======================================
Petroleum product sales
United States 2,669 2,918 2,804 2,777
Canada 577 587 579 574
Europe 2,129 2,597 2,646 2,609
Asia-Pacific and other Eastern Hemisphere 2,090 2,223 2,266 2,249
Latin America 528 562 578 564
---------------------------------------
Worldwide 7,993 8,887 8,873 8,773
=======================================
Gasoline, naphthas 3,122 3,428 3,417 3,317
Heating oils, kerosene, diesel oils 2,373 2,658 2,689 2,725
Aviation fuels 749 813 774 753
Heavy fuels 694 706 765 744
Specialty petroleum products 1,055 1,282 1,228 1,234
---------------------------------------
Worldwide 7,993 8,887 8,873 8,773
=======================================
(thousands of metric tons)
Chemical prime product sales 25,637 25,283 23,628 23,838
=======================================
(millions of metric tons)
Coal production 17 17 15 15
=======================================
(thousands of metric tons)
Copper production 254 248 216 205
=======================================
Operating statistics include 100 percent of operations of majority owned subsidiaries; for
other companies, crude production, gas, petroleum product and chemical prime product sales
include ExxonMobil's ownership percentage, and refining throughput includes quantities
processed for ExxonMobil. Net production excludes royalties and quantities due others when
produced, whether payment is made in kind or cash.
B36
[LOGO] PRINTED ON RECYCLED PAPER 3300-ps-0401
EXXONMOBIL 2001 ANNUAL MEETING
ADMISSION TICKET
c/o EquiServe This ticket will admit shareholder and one guest.
P.O. Box 9398
Boston, MA 02205-9398
ANNUAL MEETING OF SHAREHOLDERS
TIME: Wednesday, May 30, 2001, 9:30 A.M. (PLEASE NOTE EARLIER START TIME)
PLACE: Morton H. Meyerson Symphony Center
Dallas, Texas (MAP ON BACK)
AUDIOCAST: Live on the Internet at www.exxonmobil.com. Instructions
on the Web site one week prior to the event.
- ------------------------------------------------------------------------------------------------------------------------------------
---------------------------------
VOTE BY TELEPHONE OR INTERNET
QUICK EASY
---------------------------------
VOTE BY PHONE Call toll-free on a touch-tone phone 1-877-779-8683 anytime.
VOTE BY INTERNET: The Web address is WWW.EPROXYVOTE.COM/XOM
IF YOU VOTE BY PHONE OR INTERNET, YOU WILL BE ASKED TO ENTER YOUR 14-DIGIT CONTROL
NUMBER LOCATED ABOVE YOUR NAME ON THE PROXY CARD.
VOTE BY CARD: Complete, sign, date, and return your proxy card in the enclosed envelope.
Check the box below to discontinue duplicate summary annual report mailings.
To access the Summary Annual Report and Proxy Statement on the Internet, visit our Web site at
WWW.EXXONMOBIL.COM
IF YOU VOTE BY PHONE OR INTERNET -- DO NOT MAIL THE PROXY CARD
DETACH CARD BEFORE MAILING
- ------------------------------------------------------------------------------------------------------------------------------------
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR ITEMS 1 AND 2. THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEMS 3 THROUGH 10.
- ------------------------------------------------------------------------------------------------------------------------------------
FOR ALL WITHHELD FROM ALL FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1. ELECTION OF 3. GOVERNMENT [ ] [ ] [ ] 7. EXECUTIVE PAY AND [ ] [ ] [ ]
DIRECTORS (PAGE 3). [ ] [ ] SERVICE DOWNSIZING (PAGE 33).
(PAGE 27).
8. EXECUTIVE COMPENSATION [ ] [ ] [ ]
4. TWO DIRECTOR FACTORS (PAGE 35).
NOMINEES
(PAGE 28). [ ] [ ] [ ] 9. ADDITIONAL REPORT ON
ANWR DRILLING (PAGE 37).[ ] [ ] [ ]
For all nominees except as noted above 5. POLICY ON
- ------------------------------------------------ BOARD 10. RENEWABLE ENERGY
DIVERSITY SOURCES (PAGE 39). [ ] [ ] [ ]
2. RATIFICATION (PAGE 30). [ ] [ ] [ ]
OF INDEPENDENT FOR AGAINST ABSTAIN
AUDITORS (PAGE 26). [ ] [ ] [ ] 6. AMENDMENT
OF EEO
POLICY
(PAGE 31). [ ] [ ] [ ]
- ------------------------------------------------------------------------------------------------------------------------------------
I HAVE MADE COMMENTS ON THIS CARD OR AN
ATTACHMENT. THIS BOX MUST BE MARKED FOR
COMMENTS TO BE READ. [ ]
DISCONTINUE DUPLICATE SUMMARY ANNUAL
REPORT [ ]
-------------------------------------------------
THIS CARD COVERS REGISTERED SHARED INCLUDING
ANY SHAREHOLDER INVESTMENT PROGRAM SHARES.
Signature:_____________________________ Date:_____________ 2001 Signature:_____________________________ Date:_____________ 2001
NOTE: Please sign exactly as name appears hereon. When signing as attorney, executor, administrator, trustee, or guardian,
please give full name as such.
EXXONMOBIL 2001 ANNUAL MEETING
MORTON H. MEYERSON SYMPHONY CENTER
2301 FLORA STREET
DALLAS, TEXAS 75201
[MAP]
Free parking is available in the Arts District Garage. Have your parking ticket validated at the
annual meeting. Traffic in the area may cause a delay; please allow extra time for parking.
- ------------------------------------------------------------------------------------------------------------------------------------
PROXY
EXXONMOBIL SOLICITED BY BOARD OF DIRECTORS
c/o Proxy Services ANNUAL MEETING, MAY 30, 2001
P.O. Box 9157 DALLAS, TEXAS
Boston, MA 02205-9157
The undersigned hereby appoints J.R. Houghton, W.R. Howell, P.E. Lippincott, M.C. Nelson, and L.R. Raymond, or each or any of
them, with power of substitution, proxies for the undersigned to act and vote shares of common stock of the undersigned at the
2001 annual meeting of shareholders of Exxon Mobil Corporation and at any adjournments thereof, as indicated, upon all matters
referred to on the reverse side and described in the proxy statement for the meeting and, at their discretion, upon any other
matters that may properly come before the meeting.
Election of Directors(1)
NOMINEES:
(01) M.J. Boskin (05) C.A. Heimbold, Jr. (09) R.C. King (13) L.R. Raymond
(02) R. Dahan (06) J.R. Houghton (10) P.E. Lippincott (14) E.A. Renna
(03) W.T. Esrey (07) W.R. Howell (11) H.J. Longwell (15) W.V. Shipley
(04) D.V. Fites (08) H.L. Kaplan (12) M.C. Nelson
This proxy covers shares of common stock registered in the name of the undersigned and shares held in the name of the undersigned
in the ExxonMobil Shareholder Investment Program.
IF NO OTHER INDICATION IS MADE, THE PROXIES SHALL VOTE (a) FOR THE ELECTION OF THE DIRECTOR NOMINEES AND (b) IN ACCORDANCE WITH
THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS ON THE OTHER MATTERS REFERRED TO ON THE REVERSE SIDE.
(1) See item 1 on reverse side. The numbers in front of the nominees' names are provided to assist in telephone and Internet
voting. (OVER)
- ------------------------------------------------------------------------------------------------------------------------------------
