Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
(e)
2020 Base Salaries
On January 29, 2020, the independent Directors of the Board of Directors
(the "Board") of Chevron Corporation ("Chevron") conducted an annual review of
the base salaries of Chevron's executive officers. Following such review, the
independent Directors of the Board approved an annual base salary of $1,650,000
for Michael K. Wirth, Chairman and Chief Executive Officer, an increase of
$50,000, and ratified the decision of the Management Compensation Committee of
the Board (the "Committee") to increase the annual base salaries of the
principal financial officer and the other named executive officers of Chevron
identified in Chevron's 2019 proxy statement (the "Named Executive Officers"),
as follows: (i) Pierre R. Breber, Vice President and Chief Financial Officer, by
$20,000, resulting in an annual base salary of $1,020,000; (ii) James W.
Johnson, Executive Vice President, Upstream, by $10,000, resulting in an annual
base salary of $1,210,000; and (iii) Joseph C. Geagea, Executive Vice President,
Technology, Projects and Services, by $20,000, resulting in an annual base
salary of $1,020,000. These base salary increases will be effective April 1,
2020.
2020 Equity Awards
On January 29, 2020, the independent Directors of the Board also approved the
grant of 70,220 performance shares, 298,100 stock options, and 35,110 restricted
stock units to Mr. Wirth and ratified the following grants by the Committee
under the Long-Term Incentive Plan ("LTIP"): (i) Mr. Breber, 18,130 performance
shares, 77,000 stock options, and 9,070 restricted stock units;
(ii) Mr. Johnson, 23,550 performance shares, 100,000 stock options, and 11,770
restricted stock units; and (iii) Mr. Geagea, 18,130 performance shares, 77,000
stock options, and 9,070 restricted stock units.
The stock options have a ten-year term, and one-third of the options granted
vest on each of January 31, 2021, January 31, 2022 and January 31, 2023, except
as described further herein. The exercise price for the stock options is
$110.37 per share, the closing price of Chevron's common stock on January 29,
2020, the date of grant. The number of stock options granted was determined
based on grant date inputs, including stock price and Black-Scholes valuation.
The performance shares may result in a cash payout at the end of the three-year
performance period (January 1, 2020 through December 31, 2022) depending upon
Chevron's Total Stockholder Return ("TSR") for the performance period as
compared to the TSR of the following Chevron LTIP Performance Share Peer Group:
BP p.l.c., Exxon Mobil Corporation, Royal Dutch Shell p.l.c., Total S.A., and
the S&P 500 Total Return Index. The cash payout, if any, will occur in an amount
equal to the number of performance shares granted multiplied by the 20-day
trailing average price of Chevron common stock at the end of the performance
period multiplied by a performance modifier. The performance modifier is based
on Chevron's TSR ranking for the three-year performance period compared to the
TSR of each competitor in the LTIP Performance Share Peer Group as follows (from
best TSR to lowest TSR): 200 percent, 160 percent, 120 percent, 80 percent, 40
percent or zero percent. If the difference between Chevron's TSR and the TSR of
any higher or lower competitor of the LTIP Performance Share Peer Group is less
than one percentage point (rounded to one decimal point), the results will be
considered a tie, and the performance modifier will be the average of all of the
performance modifiers for Chevron and for such other competitors of the LTIP
Performance Share Peer Group that fall less than one percentage point (rounded
to one decimal point) higher or lower than Chevron. The performance shares will
accrue dividend equivalents that will be reinvested as additional performance
shares and will vest on December 31, 2022, subject to the payout modifier,
except as described further herein. The Committee may, in its discretion, adjust
the cash payout of performance shares downward if it determines that business or
economic considerations warrant such an adjustment.
The restricted stock units were awarded under the form of standard restricted
stock unit agreement approved by the Committee. The award vests on January 31,
2025, will pay out in cash based on the closing price of Chevron common stock on
the date of vesting (or, if not a trading day, on the last preceding trading
day), and will accrue dividend equivalents that will be reinvested as additional
restricted stock units, except as described further herein.
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Under the LTIP, if these individuals' employment terminates for any reason prior
to January 31, 2021, the above-described stock option, performance share, and
restricted stock unit awards will be forfeited. Since Messrs. Wirth, Johnson and
Geagea each have reached 90 points (the sum of years of age and years of
service) under the LTIP, on January 31, 2021, 100 percent of the unvested
portion of the above-described stock options will vest upon the termination of
their employment on or after that date for any reason other than for misconduct
(as defined under the LTIP rules), and such options will be exercisable through
the remainder of the original 10-year term. In addition, 100 percent of the
unvested portion of the above-described performance share awards will continue
to vest upon the termination of their employment on or after January 31, 2021,
for any reason other than for misconduct (as defined in the LTIP rules), but
will not be fully vested and will not be paid out prior to December 31, 2022.
Further, 100 percent of the unvested portion of the above-described restricted
stock unit awards will continue to vest upon the termination of their employment
on or after January 31, 2021, for any reason other than for misconduct (as
defined under the LTIP rules), but will not be fully vested and will not be paid
out prior to January 31, 2025.
Since Mr. Breber has more than 75 points but less than 90 points (the sum of
years of age and years of service) under the LTIP, on January 31, 2021, a
portion of the unvested portion of the above-described stock option will vest
upon the termination of his employment on or after that date for any reason
other than for misconduct (as defined under the LTIP rules) and remain
exercisable for five years from the date of termination or the remaining term of
the award, if less. A portion of the unvested portion of Mr. Breber's
above-described performance share awards will continue to vest upon the
termination of his employment on or after January 31, 2021, for any reason other
than for misconduct (as defined in the LTIP rules), but will not be vested and
will not be paid out prior to December 31, 2022. Further, a portion of the
unvested portion of the above-described restricted stock unit awards will
continue to vest upon the termination of his employment on or after January 31,
2021, for any reason other than for misconduct (as defined under the LTIP
rules), but will not be vested and will not be paid out prior to January 31,
2025. The portion of Mr. Breber's unvested stock options that will vest will be
determined by multiplying the number of stock options granted, as applicable, by
the number of completed months from the grant date to the date of termination,
up to a maximum of 36 months, divided by 36 months, and the rest will be
forfeited. The portion of Mr. Breber's unvested performance shares that will
vest will be determined by multiplying the number of performance shares granted,
as applicable, by the number of completed months from the performance period
start date to the date of termination, up to a maximum of 36 months, divided by
36 months, and the rest will be forfeited. The portion of Mr. Breber's unvested
restricted stock units that will vest will be determined by multiplying the
number of restricted stock units granted by the number of completed months from
the grant date to the date of termination, up to a maximum of 60 months, divided
by 60 months, and the rest will be forfeited.
Effective January 28, 2020, the Committee approved new forms of award agreements
to be used for the award of performance shares, stock options, and restricted
stock units under the LTIP on a going-forward basis to executive officers and
other eligible employees of Chevron, including the awards to the Named Executive
Officers described above. These new forms of agreement provide that European
Union countries shall be as defined in the LTIP rules as of the date of an
employee's termination. Copies of such forms of award agreements are filed as
exhibits hereto and are hereby incorporated by reference herein.
Chevron Incentive Plan
On January 28, 2020, the Committee amended the rules governing awards under the
Chevron Incentive Plan ("CIP"), with effect as of January 1, 2020. The CIP is
designed to recognize annual performance achievement. Under the amended CIP plan
rules, the CIP award for years beginning January 1, 2020, will be calculated as
follows:
Corporate Performance X Individual Bonus Component
Rating (salary x bonus percentage)
The Committee has capped the CIP award at 200 percent of target for each pay
grade.
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Corporate Performance Rating: After the end of the performance year, the
Committee sets the Corporate Performance Rating. This rating reflects the
Committee's overall assessment of Chevron's performance for that year, based on
a range of measures used to evaluate performance against business plan ("Plan")
in four broad categories, which are weighted: financials; capital management;
operating performance; and health, environmental and safety. When determining
the Corporate Performance Rating, the Committee may apply discretion when
assessing Chevron's absolute performance against Plan and Chevron's performance
relative to competitors. The minimum Corporate Performance Rating is zero and
the maximum is 200 percent.
Individual Bonus Component: The Individual Bonus Component is determined by
multiplying a Named Executive Officer's ("NEO") base salary by a bonus
percentage, as determined by the Committee and described further below:
• Before the beginning of each performance year, for each NEO, the Committee
establishes a target as a percentage of the NEO's base salary, which is
set with reference to target opportunities found across Chevron's Oil
Industry Peer Group. The Committee then establishes an individual
opportunity range ("Individual Opportunity Range"), which for the 2020
performance year, the Committee set as 75 to 125 percent of the target.
All CIP participants in the same salary grade have the same target and
Individual Opportunity Range, which provides for internal equity and
consistency.
• At the end of the performance year, the Committee determines the
Individual Bonus Component for each NEO by selecting a percentage within
such NEO's Individual Opportunity Range based on an assessment of
individual performance. In making this assessment, the Committee uses its
judgment in analyzing the individual performance of each NEO, his or her
enterprise and business unit leadership, and how the business units
reporting to the NEO performed. Under extraordinary circumstances, the
bonus percentage may be adjusted upward or downward, including to
zero percent, for a particular performance year for any CIP participant at
the sole discretion of the Committee.
On January 29, 2020, the independent Directors of the Board approved a target of
160 percent for Michael K. Wirth, Chairman and Chief Executive Officer, an
increase from 150 percent for 2019, and ratified the decision of the Committee
to set the targets for the other NEOs, which did not change from 2019, as
follows: (i) Mr. Breber at 110 percent; (ii) Mr. Johnson at 120 percent, and
(iii) Mr. Geagea at 110 percent.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number Description
10.1 Form of Performance Share Award Agreement under the Long-Term
Incentive Plan of Chevron Corporation
10.2 Form of Non-Qualified Stock Options Agreement under the
Long-Term Incentive Plan of Chevron Corporation
10.3 Form of Standard Restricted Stock Unit Award Agreement under
the Long-Term Incentive Plan of Chevron Corporation
104 Cover Page Interactive Data File, formatted in Inline XBRL
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