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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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EXXON MOBIL CORPORATION
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 Executive Compensation
Overview Executive Compensation Overview
Audio Webcast
May 16, 2012
2:00 p.m. CT |
 •
Welcome/introductions
•
Shareholder outreach at direction of Compensation Committee of the Board of Directors
1 |
 2
Cautionary Statement
Cautionary Statement
Information concerning future events or conditions in this presentation
or subsequent Q&A period are forward-looking statements. Actual future results,
including capital expenditures; business and project plans, timing, costs, and capacities; and
financial and operating results or returns may differ materially due to a number of
factors. These factors include: changes in oil or gas prices and other market
factors affecting the oil and gas industry; the outcome of exploration and development programs;
the occurrence and duration of economic recessions; changes in law or government regulation;
the outcome of commercial negotiations; actions of competitors; the development of new
technology; and other factors discussed in Item 1A of ExxonMobil’s most recent Form
10-K and under the heading “Factors Affecting Future Results” on the Investors page of our
website at exxonmobil.com. Forward-looking statements are based on management’s
knowledge and reasonable expectations as of the date hereof, and we assume no duty to update
such statements as of any future date.
For definitions of, and additional information (including the information
required by SEC Regulation G) concerning “capital employed,” “return on average capital
employed,” and other terms used in this presentation, see the “Frequently Used
Terms” on the Investors page of our website at exxonmobil.com. Forward-looking Statements. Frequently Used Terms. |
 •
Please bear Cautionary Statement in mind during today’s discussion.
2 |
 Agenda
Agenda
•
ExxonMobil’s Business Environment and Key Business Strategies
•
Pay
for
Long-Term
Performance
•
Long-Term Business Performance and Basis for Compensation Decisions
–
Financial and Operating Performance
–
Strategic Business Results
•
CEO Compensation
•
Scale and Scope of ExxonMobil
•
Development and Retention of Executive Talent
•
Prior Say on Pay Vote and Shareholder Engagement
•
Questions and Answers
3 |
 •
Review agenda and procedure to submit questions
3 |
 4
ExxonMobil’s Business Environment
ExxonMobil’s Business Environment
•
Long investment horizons
–
Typically requires 10+ years for capital investments to generate
returns
•
Large capital investments
–
More than $36 billion in 2011
–
Approximately $185 billion expected over next 5 years
•
Worldwide diverse resources and markets
•
Significant operating risk
•
Commodity-based, cyclical product prices |
 4
•
Due to the nature of our industry and size of ExxonMobil, our senior executives are
responsible for making very large capital investments that generate attractive returns
on capital employed for many years into the future.
•
These capital investments, including more than $36 billion in 2011, can take 10+ years to
generate revenues and shareholder value. We expect to invest approximately $185
billion over the next 5 years to continue to exploit our diverse worldwide resource
base and markets.
•
This capital commitment requires a disciplined and selective strategy of investment. It
also requires strong project execution and risk management. The compensation
program reinforces these priorities.
•
This rate of annual investment is in addition to a current level of capital employed that
exceeds $175 billion.
•
This level of investment far exceeds the investments by most other companies across all
industries.
•
The business environment entails worldwide diverse resources and markets, and significant
operating risk. How well we manage this risk is our highest priority and is our
“license to operate.”
•
Additionally, we operate in a commodity business with cyclical product prices; in this
business environment, maintaining a long-term focus is key.
|
 ExxonMobil’s Key Business Strategies
ExxonMobil’s Key Business Strategies
•
Long-term growth in shareholder value
•
Disciplined, selective, and long-term focus in making investments
•
Operational excellence and risk management
•
Industry-leading returns on capital and superior cash flow
5 |
 5
•
Given this business environment, our overriding strategy is to generate long-term growth
in shareholder value.
•
We accomplish this through a disciplined, selective, and long-term focus in making the
large investments we just discussed.
•
Given the nature of our business, operational excellence is critical. For this reason,
ExxonMobil places a high premium on effective risk management, including safety,
security, health, environmental, and reputational risks.
•
Design features of the compensation program recognize these operating and
investment risks inherent in our business.
•
This focus on sustainable operations and results is a critical success factor
given the scale, operations risk, and long investment lead times of the
business.
•
Industry-leading returns on capital and superior cash flow are critical in
generating long-term shareholder value.
|
 Pay for
Long-Term Performance Pay for Long-Term Performance
•
Linkage to the Business Model
–
ExxonMobil’s compensation program is unique in how it effectively links
executive pay to the business model and the interests of long-term
shareholders
•
Long-Term Program Design
–
This
linkage
achieved
by
granting
more
than
half
of
annual
compensation
in the form of restricted stock
–
50 percent not vesting until 10 years after grant or retirement,
whichever
is later
–
Remaining 50 percent of the shares not vesting until five years after grant
•
Hold Through
Retirement
–
Substantial portion of compensation held in the form of ExxonMobil stock
for many years after the executive retires
6 |
 6
Linkage to the Business Model:
•
ExxonMobil’s business model is characterized by significant capital intensity, operations
risk, and very long investment leadtimes which can span decades. These three
elements of our business model determine the design of the compensation program.
Long-Term Program Design:
•
The compensation program grants more
than
half
of
annual
compensation
in
the
form
of
stock, subject to vesting periods that
are substantially longer than the holding requirements of stock grants among any other
company; 50 percent in 10 years or retirement, whichever is later, and 50 percent in 5
years. This represents 51 percent of total compensation (or 71 percent when
pension accrual is excluded). Hold Through
Retirement:
•
This
design
results
in
a
hold
through
retirement
feature;
this
is
unique
relative
to
most
other
company
compensation
strategies,
particularly for such a large percentage of total compensation.
•
This means that a substantial portion of an executive’s compensation will continue to be
held in the form of ExxonMobil stock for many years after the executive retires.
• |
 Pay for
Long-Term Performance, cont’d Pay for Long-Term Performance,
cont’d •
Risk of Forfeiture
–
In the oil and gas industry, management decisions on large, capital-
intensive projects affect financial and operating results for decades into
the future
–
Thus, to motivate executives to achieve the best long-term results the
holding periods and the risk of forfeiture of these stock-based awards
extend beyond retirement
•
Alignment with Long-Term Shareholders
–
Executive’s compensation at risk in a way that is similar to the risk
assumed by long-term shareholders
–
Our
compensation
program
is
intended
to
drive
business
decisions
by
executives that are consistent with the priorities of long-term
shareholders 7 |
 •
Risk of Forfeiture:
•
In the oil and gas industry, management decisions on large, capital-intensive projects
affect financial and operating results for decades into the future.
•
The performance feature of the stock grant is substantially reinforced by the risk of
forfeiture
provision that is in place for the entire period of the vesting
term, which is
beyond retirement.
•
Alignment with Long-Term Shareholders:
•
The underlying premise of this design feature is to encourage a “mind set”
among senior
executives that aligns with the interests of long-term shareholders.
•
This compensation strategy puts the value of an executive’s compensation at risk in a
way that is similar to the risk assumed by long-term shareholders, and
•
It ensures that business decisions made by executives are consistent with the priorities of
long-term shareholders.
7 |
 Pay for
Long-Term Performance, cont’d Pay for Long-Term Performance,
cont’d •
Holding Periods Exceed
Comparators
–
Long-term orientation of
ExxonMobil’s compensation
program far exceeds the
holding periods of our
comparator companies
–
Holding periods for
ExxonMobil are 2.5 times the
median of our comparator
companies
8
(1)
This chart shows the dollar-weighted average time from grant to actual realization of the
CEO’s annual pay (salary, bonus, incentive awards, and equity). For this purpose, it
is assumed that annual salary and bonus are paid in one year; performance-based awards are paid at target levels at the end of the performance period;
and that options and other equity awards are paid or exercised at grant-date value on each vesting
date. Annual pension accrual and all other compensation are excluded. Comparator
companies consist of: AT&T, Boeing, Chevron, ConocoPhillips, GE, H-P, IBM, J&J, Pfizer, Procter & Gamble, United Technologies, and
Verizon. These comparator companies have been selected based on their alignment with
ExxonMobil’s current business circumstances, as described in more detail on page 40 of the
CD&A. For consistency, all data based on our analysis of proxies filed on or before February 1, 2012.
(1)
Holding Periods of Annually Granted Compensation
|
 8
Holding Periods Exceed Comparators:
•
The long-term design of our compensation program is illustrated by the bar graph.
•
We measured the holding periods of the elements of the compensation program that are granted
annually by the Compensation Committee, and compared the results with benchmark
companies [review footnote as needed].
•
The holding periods for ExxonMobil are 2.5 times the median of our comparator
companies.
|
 Long-Term Business Performance and
Long-Term Business Performance and
Basis for Compensation Decisions
Basis for Compensation Decisions
9
Lost-Time Injuries and Illnesses
(1) Royal Dutch Shell, BP, and Chevron values are on a consistent
basis with ExxonMobil, based on our analysis of public information.
For definitions and additional information concerning the
calculation of ROCE, see page F-5 of the 2011 Financial
Statements and Supplemental Information included with the 2012
Proxy Statement.
(1) Employee safety data from participating American Petroleum
Institute companies (2011 industry data not available at time of
publication).
(2) Includes XTO Energy Inc. data.
Return on Average Capital Employed (ROCE)
|
 9
Long-Term Business Performance and Basis for Compensation Decisions
•
These charts illustrate “how we are doing”
in terms of (1) managing operating risk, (2) achieving returns on invested
capital, and (3) achieving shareholder returns.
•
These results helped form the basis for compensation decisions by the Compensation
Committee. •
LTI: we continue to substantially outperform the industry benchmark with respect to
safety. •
ROCE: this is a key metric in our industry; return on average capital employed
continues to far exceed the average of our competitors. |
 Long-Term Business Performance and
Long-Term Business Performance and
Basis for Compensation Decisions, cont’d
Basis for Compensation Decisions, cont’d
10
Ten-Year Cumulative Total Returns
(1)
Twenty-Year Cumulative Total Returns
(1)
(1) The value of $100 invested in common stock of the company on
January 1, 2001, assuming dividends are reinvested when paid.
(2) Royal Dutch Shell, BP, and Chevron.
(1) The value of $100 invested in common stock of the company on
January 1, 1991, assuming dividends are reinvested when paid.
(2) Royal Dutch Shell, BP, and Chevron. |
 •
10-year TSR: Our 10-year total returns exceed that of our industry group and the
market in general ($100 invested 10 years ago: ExxonMobil: $269; industry
group: $221; and S&P 500: $133).
•
20-year TSR: On the chart to the right, you can see similar outperformance over a
20-year period (XOM: $968; industry group: $778; and S&P
500: $450). •
Our compensation strategies are designed to support long-term TSR performance as
reflected in these graphs. Some compensation models advocate the use of
short-term TSR as a basis to measure business performance; however, we do not
believe short-term TSR is a good predictor of sustainable growth in shareholder
value in the long term. •
Page 46 of the CD&A describes an analysis that we recently conducted to validate our view
that short-term TSR is not a good predictor of future long-term TSR.
•
Specifically, we measured the correlation between historical short-term TSRs
(1- and 3-year) and
prospective long-term (10-year) TSRs for the following:
•
ExxonMobil relative to the S&P 500
•
ExxonMobil relative to our industry group
•
This underscores the importance of ExxonMobil’s compensation program maintaining a
strong emphasis on the long-term orientation of the business. The
compensation program discourages executives from taking short-term actions at the
expense of long-term sustainable growth in shareholder returns.
10
•
Our analysis shows that there is very low correlation between short-term relative TSR and
long-term stock performance when ExxonMobil is measured against the industry or
S&P 500. |
 Comparator
Companies Total Shareholder Return Comparator Companies Total Shareholder
Return ExxonMobil
Rank
Percentile
18.7%
4 of 13
74
4.6%
12 of 13
8
4.3%
5 of 13
67
10.4%
4 of 13
81
12.0%
4 of 13
77
15.3%
1 of 11
100
(1) AT&T, Boeing, Chevron, ConocoPhillips, GE, Hewlett-Packard, IBM,
Johnson & Johnson, Pfizer, Procter & Gamble, United Technologies, Verizon.
ExxonMobil
Comparator Company Average
(1)
(percent)
20
15
10
5
0
1 Year
3 Year
5 Year
10 Year
20 Year
30 Year
11 |
 11
Note: 30-year period excludes AT&T and GE; public data not available for this time
period. •
We typically compare our shareholder returns to the industry group presented in the previous
slides. •
We were asked by shareholders to compare our shareholder returns
to the 12 comparator companies
we use to
benchmark compensation for the Named Executive Officers.
•
This graph shows that ExxonMobil’s total shareholder return exceeds the average TSR of
the comparator companies
for 1-year and 5-year time periods, as well as the long-
term trend for 10-, 20-, and 30-year time
periods. |
 Financial
and Operating Performance Financial and Operating Performance
•
Financial and operating results outlined below provide additional perspective
on Company performance:
–
Earnings of $41 billion in 2011, increased by 35 percent versus 2010.
Five-year annual average of $35 billion
–
Total shareholder return was 18.7 percent in 2011, versus S&P 500 of 2.1
percent. Ten-year annual average of 10.4 percent, versus S&P
500 of 2.9 percent
–
Distributed $29 billion to shareholders as dividends and share purchases
in 2011, for a cash distribution yield of 8.0 percent. $262 billion
in dividends plus share purchases since the beginning of 2000.
Dividend payments per share increased for the 29th consecutive year
–
Solid safety and operations performance supported by effective risk
management
–
Industry-leading return on average capital employed of 24.2 percent,
with a five-year average of 25.6 percent
12 |
 12
Financial and Operating Performance
•
The financial and operating results outlined [on this slide] provide additional perspective on
Company performance:
•
Earnings of $41 billion in 2011, increased by 35 percent versus 2010. Five-year
annual average of $35 billion.
•
Total shareholder return was 18.7 percent in 2011, versus S&P 500 of 2.1 percent.
Ten-year annual average of 10.4 percent, versus S&P 500 of 2.9 percent.
•
Distributed $29 billion to shareholders as dividends and share purchases in 2011, for a cash
distribution yield of 8.0 percent. $262 billion in dividends plus share
purchases since the beginning of 2000. Dividend payments per share increased for
the 29th consecutive year.
•
Solid safety and operations performance supported by effective risk management.
•
Industry-leading return on average capital employed of 24.2 percent, with a five-year
average of 25.6 percent.
|
 Strategic
Business Results Strategic Business Results
•
Expansion of opportunities in U.S. Gulf of Mexico and a major oil discovery
with the Hadrian-5 exploration well
•
Strategic Cooperation Agreement with Rosneft to jointly participate in
exploration and development activities in Russia, the United States, and other
parts of the world
•
Strong progress on the following major projects:
–
Initial development of Kearl oil sands project in Canada
–
Liquefied natural gas project in Papua New Guinea
–
Expansion of opportunities in Iraq and other parts of the world
–
Next phase of the Sakhalin-1 project in Russia
–
Singapore Parallel Train/major Chemical expansion in Asia Pacific
13 |
 13
Strategic Business Results •
Another key factor underlying the compensation decisions made by the Compensation
Committee in 2011 was the progress achieved on strategic priorities.
•
The accomplishments outlined [on this slide] are expected to have a positive impact on Company
performance for decades.
•
Expansion of opportunities in U.S. Gulf of Mexico and a major oil discovery
with the Hadrian-5 exploration well.
•
Strategic Cooperation Agreement with Rosneft to jointly participate in
exploration and development activities in Russia, the United States, and other parts
of the world.
•
Strong progress on the following major projects:
•
Initial development of Kearl oil sands project in Canada;
•
Liquefied natural gas project in Papua New Guinea;
•
Expansion of opportunities in Iraq and other parts of the world;
•
Next phase of the Sakhalin-1 project in Russia; and,
•
Singapore Parallel Train/major Chemical expansion in Asia Pacific.
|
 Strategic
Business Results, cont’d Strategic Business Results, cont’d
•
Additional unconventional resource acquisitions enabled by XTO
–
Continued leverage of XTO expertise to expand unconventional resource
base in the United States and evaluate potential global unconventional
opportunities in Argentina, Canada, Indonesia, and Poland
•
Completion of new facilities at refineries in Fawley, United Kingdom; and
Sriracha, Thailand, increasing ultra-low sulfur diesel production capacity by
more than 70 thousand barrels per day
•
Began construction of new world-class synthetic lubricant base stock plant in
the United States
•
Restructuring of Lubes and Fuels Marketing business lines to further improve
efficiencies and optimize returns
14 |
 •
Additional unconventional resource acquisitions enabled by XTO.
•
Continued leverage of XTO expertise to expand unconventional resource base in the United
States and evaluate potential global unconventional opportunities in Argentina,
Canada, Indonesia, and Poland.
•
Completion of new facilities at refineries in Fawley, United Kingdom; and Sriracha, Thailand,
increasing ultra-low sulfur diesel production capacity by more than 70 thousand
barrels per day. •
Began construction of new world-class synthetic lubricant base stock plant in the United
States. •
Restructuring of Lubes and Fuels Marketing business lines to further improve efficiencies and
optimize returns.
14 |
 CEO
Compensation CEO Compensation
15
•
Difference between “Reported Pay”
and “Realized Pay”
reinforces the concept
that a significant portion of the CEO’s compensation is deferred, at risk of
forfeiture, and dependent on future performance of the Company
CEO Reported Pay vs. Realized Pay |
 15
•
A substantial portion of the CEO’s compensation granted by the Compensation Committee and
reported in the CD&A represents an incentive for future performance, not current
cash compensation.
•
This long-term incentive pay will not actually be received by the CEO for many years in
the future, and the value of this pay when realized may differ significantly from the
amounts shown in the Summary Compensation Table, depending on how ExxonMobil actually
performs.
•
Table shows the amount of “reported pay” and “realized pay” for the CEO
over his 6-year tenure as CEO.
•
The difference between “reported pay” and “realized pay” reinforces the
concept that a significant portion of the CEO’s compensation is deferred and
dependent on future performance of the Company.
•
For 2011 the “realized pay” column includes the value realized from the exercise of
stock options that were granted in 2001 which would have expired if they had not been
exercised in 2011 (39 percent of 2011 “realized pay” includes the exercise
of the last options granted to Mr. Tillerson).
•
ExxonMobil has not granted any stock options to Mr. Tillerson or any other employee since
2001.
•
To achieve alignment of the organization around the Company’s principles and values, all
U.S. executives (more than 1000), including the CEO, participate in common programs
(the same salary, incentive, and retirement programs).
|
 CEO
Compensation, cont’d CEO Compensation, cont’d
CEO Reported Pay –
2011
•
2011
restricted
stock
grant
was
awarded
at
the
same
share
level
as
the
last
three
years
•
2011
corporate
earnings
increased
35
percent
to
over
$41
billion,
but
the
annual
bonus
increase
was
limited
to
30
percent
–
Annual Bonus as a Percentage of Total Pay:
Small portion (13 percent in 2011) of
total compensation to reflect the Committee’s continuing emphasis on the long
term. Long-term, stock-based compensation represents 51
percent of total compensation –
Delayed Bonus Feature:
50 percent of annual bonus is delayed until ExxonMobil’s
cumulative EPS reach a specified level ($6.00). EPS threshold has been
raised steadily over the years (e.g., $3.00 in 2001). This delayed
bonus feature further aligns the interests of senior executives with
sustainable longer-term growth in shareholder value –
Recoupment:
Annual bonus is subject to recoupment in the case of a material negative
restatement of the Corporation’s financial or operating results
16
Restricted Stock Grant:
Annual Bonus: |
 CEO Reported Pay
– 2011
Restricted Stock Grant:
The 2011 restricted stock grant was awarded at the same share level as the last
three years (225,000 shares of restricted stock) with the vesting periods we described
earlier. Annual Bonus and Delayed Bonus Feature:
2011 bonus of $4.4M, half of which was paid at grant date and
the other half will not pay out until cumulative earnings per share reach $6.00. The
bonus in total is up 30 percent from last year based on a 35 percent increase in
earnings. •
The earnings-per-share threshold has been raised steadily over the years. For
example, it was $3.00 in 2001. This delayed bonus feature further aligns the
interests of senior executives with sustainable longer-term growth in shareholder
value. •
The bonus is designed to reflect a small percentage of total compensation (13 percent) to
help keep the emphasis on the long-term orientation of the business.
Recoupment:
The annual bonus is also subject to recoupment in the case of a material negative restatement
of the Corporation’s financial or operating results.
16 |
 CEO
Compensation, cont’d CEO Compensation, cont’d
CEO Pay Alignment
•
17
The following chart illustrates how the percent change in “Reported Pay”
has tracked changes in TSR during the current CEO’s tenure
|
 17
Pay Alignment
•
This chart illustrates how the percent change in “Reported Pay” has tracked changes
in total shareholder returns (TSR) during the current CEO’s tenure.
•
Very strong correlation between CEO pay and ExxonMobil stock performance.
|
 Scale and
Scope of ExxonMobil Scale and Scope of ExxonMobil
18
Scale
of
ExxonMobil
vs.
Comparator
Companies
(1)
(1) Comparator companies consist of: AT&T, Boeing, Chevron,
ConocoPhillips, General Electric, Hewlett-Packard, IBM, Johnson & Johnson, Pfizer, Procter &
Gamble, United Technologies, and Verizon. These comparator companies have been
selected based on their alignment with ExxonMobil’s current business
circumstances, as described in more detail on page 40 of the CD&A.
Financial data reflect our analysis of most recently available data disclosed by each
company as of February 24, 2012 (including 8-K filings with preliminary fiscal
year-end results for companies with calendar fiscal years). Market capitalization
is as of December 31, 2011.
(2) Trailing twelve months (TTM); excludes excise and other sales-based taxes,
if applicable. (3) Excludes General Electric due to lack of comparability
resulting from how assets are quantified and reported for its financial business.
(4) Trailing twelve months (TTM). |
 18
•
The Compensation Committee believes that performance should be the primary basis on which
compensation decisions are made, particularly annual changes in compensation.
•
At the same time, the Committee believes that the compensation program should recognize that
our senior executives are responsible for managing a larger investment on behalf of
shareholders relative to that of most other large, publicly traded companies.
•
The geographic scope involves conducting business in over 120 countries and territories.
•
This table puts into perspective the scale, scope, and complexity of ExxonMobil versus our
comparator companies.
|
 Scale and
Scope of ExxonMobil, cont’d Scale and Scope of ExxonMobil, cont’d
19
•
To put the size and scale challenge in perspective, the charts below illustrate
the financial values managed (from the table on the previous slide) for each
dollar of compensation paid to the CEO of ExxonMobil relative to
the CEOs of
our comparator companies
ExxonMobil Financial Values Managed Per Dollar of CEO Compensation vs. Comparator
Companies (1) |
 •
This chart expands on the prior table and helps answer the question “What is the
shareholder getting for the compensation paid relative to the other benchmark
companies?” •
This
analysis
shows
the
financial
values
managed
for
each
dollar
of
compensation
paid
to
the
CEO
[ExxonMobil as multiple of the median for each category]:
•
Revenue: 3.0x
•
Market capitalization: 2.2x
•
Assets: 1.4x
•
Net income: 3.1x
•
The Compensation Committee does not suggest that there should be
direct proportionality of
compensation to the relative size of the company. Rather, the Committee places the most
emphasis on individual performance and business results. At the same time, the
Committee takes into consideration the size of the Company as one of several
factors in determining compensation.
19 |
 Development
and Retention of Executive Talent Development and Retention of Executive
Talent •
Technical Depth and Experience:
Retaining high-quality executives for a
career and developing technical and leadership skills provide the Company with
a strong competitive advantage
•
Executive Development is an Investment:
Aggressive investment in the
development of managers makes retention a high priority
•
High Value of Experience, Knowledge, and Skills
•
Rigorous Performance Assessments Coupled With Long Experience
•
Succession Planning:
To support this strict meritocracy, we maintain a roster
of highly qualified internal candidates for each key position
•
No Employment Contracts:
All senior executives are employed “at will,”
with
no employment contracts or severance programs; this reinforces for each
executive the critical importance of continuing to achieve superior
performance 20 |
 •
Technical
Depth
and
Experience:
In
this
business,
superior
business
results
require
experienced
executives
with strong technical depth that is honed over decades. Thus, retention is
critical. •
Executive
Development:
We
invest
aggressively
in
the
development
of
each
executive
over
their
career,
which
makes retention of these managers a priority.
•
Experience
and
Skills:
As
you
can
imagine,
an
executive
at
ExxonMobil
who
has
been
carefully
developed
over
a 30+ year career could command a large compensation package among our competitors.
•
Rigorous
Performance
Assessments:
All
NEOs
have
been
thoroughly
tested
through
this
decades-long
development process by a performance assessment process that is rigorous and highly
competitive, thus increasing the likelihood that we have the most qualified leaders at
the top of our Company. •
Succession
Planning:
Well-prepared
replacements
allow
us
to
move
out
executives
who
are
not
performing
at
the highest levels and ensure continuity of leadership.
•
No
Employment
Contracts:
Senior
executives
are
employed
“at-will”
with
no
employment
contracts
and
no
change-in-control or severance agreements. The management development and
succession planning process
also helps us avoid the need for employment contracts, CIC agreements, and severance
programs, thus reinforcing the mindset among executives to maintain the emphasis on
high performance standards or be replaced.
20 |
 Prior Say
on Pay Vote Prior Say on Pay Vote
and Shareholder Engagement
and Shareholder Engagement
•
In 2011, over 67 percent of votes cast were in favor of the say on pay
resolution •
The Compensation Committee has carefully considered this result as well as
shareholder feedback on executive compensation through a wide-ranging
dialogue
between
management
and
numerous
shareholders,
including
the
Company's largest shareholders
•
There was no consensus recommendation for any specific change to
the design
of our compensation program
•
Dialogue included discussion on whether the Company should consider the use
of formula-based pay tied to shorter-term metrics, such as 1-
and 3-year TSR
•
We believe that applying a short-term, formula-based approach to
ExxonMobil’s compensation program would undermine the uniquely
long-term requirements of our proven business strategy, which are
characterized by investment lead times that can span decades
21 |
 •
The Compensation Committee of the Board believes that our program should not be designed in
isolation. This also means the Committee is committed to engagement between
shareholders and the Company to fully understand diverse viewpoints on the topic of
executive compensation. •
The Committee has carefully considered the results of the 2011 advisory vote in which over 67
percent of votes cast supported the say-on-pay resolution.
•
The CD&A and brochure describe our exchange with shareholders in
2011 both before and after the vote on
executive compensation.
•
We concluded from this dialogue, including those we learned voted “against”
the proposal, that there was no
consensus for any specific change.
•
This dialogue also included discussion on whether the Company should consider the use of
formula-based pay tied to short-term metrics, such as 1-
and 3-year TSR.
•
Compensation does not have to be formula-based to be performance-based. The
Committee believes that applying a short-term, formula-based approach to
ExxonMobil’s compensation program would undermine the uniquely long- term
requirements of our proven business strategy as discussed on this call and as described in more detail in the
CD&A and brochure.
21 |
 Vote
‘FOR’ Vote ‘FOR’
Item 3: Advisory Vote to Approve
Item 3: Advisory Vote to Approve
Executive Compensation
Executive Compensation
•
ExxonMobil’s compensation program supports a business model that has
weathered
volatile
commodity
prices
and
industry
business
cycles
for
many
years
•
Our compensation program has demonstrated critical alignment between
executive compensation and shareholder value creation and fostered a culture
of
pay
for
performance
combined
with
integrity,
reliability,
and
consistency
•
Through this business model and the underlying compensation program and
management
practices
that
support
it,
the
Company
has
become
the
partner
of
choice for many national oil companies and major investors in the oil, gas, and
petrochemical industry
•
We believe this business model and supporting compensation program will
continue to serve shareholders well in the future
YOUR VOTE IS IMPORTANT: PLEASE VOTE ‘FOR’
ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
22 |
 ExxonMobil’s
compensation program supports a business model that has weathered volatile commodity
prices and industry business cycles for many years. It sets ExxonMobil apart and
has established a culture of performance, integrity, reliability, and
consistency.
Through this business model and the underlying compensation program and management practices
that support it, the Company has become the partner of choice for many national oil
companies and major investors in the oil, gas, and petrochemical industry.
We believe this business model and supporting compensation program will continue to
serve shareholders well in the future.
22
•
•
•
•
Conclusion: |
 Questions and Answers
Questions and Answers
23 |
 •
Begin question and answer session.
23 |