Strategic Business Results

UPSTREAM

Major Projects

•   Started up six major projects with gross facility capacity of more than 930 thousand oil-equivalent barrels per day, highlighted by the Kearl Initial Development in Canada.

•   Progressed construction and began commissioning activities at the Papua New Guinea Liquefied Natural Gas project, which is on target to start up in 2014.

•   Advanced the Kearl Expansion project, which remains on schedule to start up in 2015.

Exploration Results

•   Added 6.6 billion oil-equivalent barrels of new resources, increasing the overall resource base to more than 90 billion oil-equivalent barrels.

•   Exploration discoveries totaling 1.5 billion oil-equivalent barrels in several countries including Australia, Canada, Tanzania, and the United States.

•   Captured new exploration acreage in countries such as Brazil, Gabon, Liberia, Russia, and South Africa.

Rosneft Agreement

•   Progressed and expanded the Strategic Cooperation Agreement with Rosneft. In 2013, we expanded the agreement to add seven new blocks covering more than 150 million acres in the Russian Arctic. The 180 million acres we are now working with Rosneft in the Arctic cover some of the most promising and least explored acreage in the world.

•   Preparing to drill our first well in the Kara Sea in 2014.

•   Progressing the pilot program to develop tight oil in West Siberia.

DOWNSTREAM

•   Commissioned a new diesel hydrotreater in Singapore to increase ultra-low sulfur diesel production capacity to meet growing demand for this product in the region.

•   Completed multiyear conversion to a branded wholesaler business model in the United States.

CHEMICAL

•   Started up the Singapore Chemical Expansion project, more than doubling steam-cracking capacity at the site and significantly increasing premium and specialty capacity.

•   Progressed construction of a 400-thousand-tonnes-per-year specialty elastomers project in Saudi Arabia with our joint venture partner Saudi Basic Industries Corporation.

•   Advanced plans for a major expansion at our Texas facilities, which includes a new world-scale ethane cracker.

Long-Term Business Performance and Basis for Compensation Decisions

The following charts illustrate the effectiveness of ExxonMobil’s compensation program in delivering superior results for shareholders over the long term. These results, in addition to individual performance, experience, and level of responsibility, helped form the basis of compensation decisions made by the Compensation Committee in 2013.

Safety Performance

Lost-Time Injuries and Illnesses Rate

Safety is a core value for ExxonMobil, and nothing receives more attention from management.

•    Safety performance is a leading indicator of business performance.

Return on Average Capital Employed (ROCE)⁽³⁾

Industry Group

ExxonMobil’s proven business model continues to deliver ROCE leadership in the industry.

•    Disciplined investments through the business cycle position the Company for long-term performance.

•    Strength of integrated portfolio, project management, and technology application.

Total Free Cash Flow⁽⁴⁾

Industry Group

Total Shareholder Returns⁽⁶⁾

Industry Group

ExxonMobil’s superior cash flow provides financial flexibility.

•    Generated $104 billion of free cash flow since beginning of 2009.

•    Industry-leading cash flows enable ExxonMobil to fund attractive investment opportunities and unmatched shareholder distributions.

ExxonMobil leads the industry in total shareholder return (TSR) in almost all performance periods.

•    TSR of companies in the same industry with similar size and scale is the most relevant metric for comparing shareholder returns.

Shareholder Distributions

Shareholder Distributions as Percent of Cash Flow from Operations and Asset Sales⁽⁵⁾

10-Year Cumulative Returns⁽⁶⁾

Industry Group and Compensation Benchmark Companies

ExxonMobil leads the industry in shareholder distributions.

•    Distributed 50 cents of every dollar of operating cash flow generated from 2009 to 2013.

ExxonMobil generated superior returns through a range of economic environments and cycles.

•    Maintained strong relative performance through the financial crisis.

2013

vs. 2012

 Total Reported Pay

30-percent reduction in reported pay primarily due to 20-percent reduction in bonus and change in pension value.

•   46-percent reduction in reported pay if full impact of pension valuation considered.

•   Pension value impacted by interest rate change.

Negative Pension Adjustment⁽¹⁾

 Total Adjusted Pay

*No change in number of equity awards granted.

CEO Reported Pay vs. TSR – 2006 to 2013

REALIZED PAY VS. REPORTED PAY

CEO Realized and Reported Pay – 2006 to 2013

Year of

Compensation

Realized Pay vs.

Reported Pay

Realized Pay as

a Percentage of

Reported Pay

2013

2012

2011

2010

2009

2008

2007

2006

a Percentage of

Reported Pay

 Comparator Companies

ExxonMobil CEO’s realized pay ranked 11th among the compensation benchmark companies.

•   The benchmark companies’ median is almost $24 million and the high is just over $68 million.

Highest

Median

Lowest

 ExxonMobil

 ExxonMobil – Position

 Comparator Companies

Median

 ExxonMobil – Multiple of Median

*39 percent of ExxonMobil CEO’s realized pay in 2011 was from the exercise of stock options that were granted in 2001 and expired in 2011. No stock options have been granted since 2001.

Market

Capitalization

Capital

Expenditures⁽⁷⁾

 Comparator Companies

In determining compensation levels, the Compensation Committee places the most emphasis on individual performance and business results.

•   Size and complexity of ExxonMobil are considered among several factors.

Median

90th Percentile

 ExxonMobil

 ExxonMobil Rank (Percentile)

 ExxonMobil – Multiple of Median

Annual Bonus Program

The annual bonus for the CEO decreased 20 percent in 2013 corresponding to a 27-percent decrease in corporate earnings to $32.6 billion. The bonus is intentionally a small portion of the CEO’s total compensation (13 percent in 2013) to reflect the Committee’s continuing emphasis on long-term compensation.

Since 2002, the annual bonus program for more than 1,600 executives worldwide, including the CEO, has been determined based on the annual percentage change in projected net income according to the following formula:

Equity Incentive Program

In 2013, 75 percent of the CEO’s reported compensation is in restricted stock units with vesting periods far longer than most companies across all industries. Specifically, half of the annual equity award is restricted for 10 years from grant date or until retirement, whichever is later, and the other half is restricted for five years. The “10 years or retirement, whichever is later” feature results in senior executives holding equity grants for well over 10 years as illustrated in Chart 15.

CEO Equity Grant Vesting

2002–2007⁽¹⁾

2008–2013

*The purpose of the two-thirds adjustment is to mitigate the impact of commodity price swings on short-term earnings performance.

The bonus program is benchmarked along with the rest of total compensation to ensure alignment with the market.

 Percent Change in Earnings vs. Percent Change in Bonus Award Program

The bonus program formula has been consistently applied in each of the last 12 years, including years in which earnings declined.

PERFORMANCE FACTORS THAT

DETERMINE ANNUAL BONUS

1.  The bonus program is determined by annual earnings as described above.

2.  The bonus program differentiates for individual performance. The program provides for different awards based on pay grade and individual performance assessment.

3.  Half of the annual bonus is delayed until cumulative earnings per share (EPS) reach a specified level, further aligning the interests of executives with sustainable long-term growth in shareholder value. The EPS threshold has been raised over the years, from $3.00 per unit in 2001 to $6.25 in 2012/2013.

The annual bonus is subject to recoupment in the case of a material negative restatement of ExxonMobil’s financial or operating results.

The basis for the size of individual grants includes a rigorous annual performance assessment of individual executives. The 2013 equity grant to the CEO was based on the performance assessment of the CEO by the Committee on the operating and financial performance and strategic business results outlined on pages 3 to 5.

EXXONMOBIL PROGRAM VS.

FORMULA-BASED PAY

Some shareholders have suggested that ExxonMobil consider a formula-based methodology based on three-year TSR versus the industry. While this approach may be appropriate for the business model of other companies, the Compensation Committee has the following concerns with respect to the application by ExxonMobil.

Potential Misalignment of Formula-Based Pay with Long-Term Shareholder Experience

The ExxonMobil method of granting equity or stock-based awards will result in ExxonMobil executives seeing a one-for-one change in compensation through stock price that coincides with the experience of the long-term shareholder.

By contrast, formula-based methods can generate payouts for executives that are misaligned with the gains or losses incurred by long-term shareholders through the use of steep payout factors (Chart 16, page 9).

The Committee concluded that the leverage inherent in formula-based methods, such as this example, could drive a focus on short-term results at the expense of long-term sustainable growth in shareholder value. Furthermore, this steep leverage does not reinforce the critical importance of sustainable risk management strategies; the current ExxonMobil program does so with much longer payout periods.

Another concern is that a formula-based plan by design necessitates a shorter payout period due to the practical inability to forecast events much beyond the typical three-year vesting period. This shorter payout period, combined with the leverage described, creates the following issue.

Potential Misalignment of Formula-Based Pay with ExxonMobil’s  Business Model            

Chart 17 illustrates how the ExxonMobil design of granting and vesting stock-
based awards better aligns with the long-term investment lead times and risks of
our business. By contrast, the high degree of variability and earlier payout of
the alternate formula-based program (blue line) is misaligned with the investment
profile of a typical ExxonMobil project.

As shown, there is potential for the alternate formula-based program to result in
unintended consequences including:

•   Rewarding short-term performance that bears little correlation to long-term sustainable growth in shareholder value;

•   Increased risk taking and diminished focus on long-term operations integrity;

•   Encouraging underinvestment in the business to achieve short-term TSR results; and                

•   Undermining the executive retention strategy.

Sustainable growth in shareholder value relies on strong alignment between the design of compensation and the ExxonMobil investment profile.

Integration of Project Net Cash Flow and Compensation Program Design            

Payout Profiles for Annual Grants of 100 Shares

A typical approach to formula-based compensation can generate payouts that misalign with the experience of the shareholders through the use of steep payout factors.

Approximately 70 percent of cumulative stock-based awards granted over the illustrated time period for the ExxonMobil program will remain unvested and at risk during employment, versus approximately 30 percent for the alternate program.

•   After retirement, the ExxonMobil senior executive will continue to have grants unvested and at risk of forfeiture for 10 years.