Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
(e)
2022 Executive Compensation Review and 2022 Base Salaries
On January 26, 2022, the independent Directors of the Board of Directors (the
"Board") of Chevron Corporation ("Chevron") conducted an annual review of the
compensation of Chevron's executive officers, including Michael K. Wirth,
Chairman and Chief Executive Officer ("CEO"); Pierre R. Breber, Vice President
and Chief Financial Officer; and the other named executive officers of Chevron
identified in Chevron's 2021 proxy statement, James W. Johnson, Executive Vice
President, Upstream; Joseph C. Geagea, Executive Vice President, Senior Advisor
to the Chairman and CEO; and Mark A. Nelson, Executive Vice President,
Downstream & Chemicals (collectively, the "Named Executive Officers"). Following
such review, the independent Directors of the Board approved an annual base
salary of $1,700,000 for Mr. Wirth, 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, as follows: (i) increase of $55,000 for Mr.
Breber, resulting in an annual base salary of $1,075,000; (ii) increase of
$40,000 for Mr. Johnson, resulting in an annual base salary of $1,250,000; (iii)
increase of $30,000 for Mr. Geagea, resulting in annual base salary of
$1,050,000; and (iv) increase of $100,000 for Mr. Nelson, resulting in an annual
base salary of $1,050,000. These base salary increases will be effective March
1, 2022.
Chevron Incentive Plan
On January 26, 2022, the independent Directors of the Board approved a target
bonus percentage of 165 percent under the Chevron Incentive Plan ("CIP") for
Michael K. Wirth, Chairman and Chief Executive Officer, an increase from 160
percent for 2021, and ratified the decision of the Committee to set the target
bonus percentages under the CIP for the other NEOs, which did not change from
2021, as follows: (i) Mr. Breber at 110 percent; (ii) Mr. Johnson at 120
percent; (iii) Mr. Geagea at 110 percent; and (iv) Mr. Nelson at 110 percent.
2022 Equity Awards to Named Executive Officers
On January 26, 2022, the independent Directors of the Board also approved the
grant of 60,290 performance shares, 169,800 stock options, and 30,150 standard
restricted stock units to Mr. Wirth and ratified the following grants by the
Committee under the Long-Term Incentive Plan of Chevron Corporation ("LTIP"):
(i) Mr. Breber, 15,300 performance shares, 43,100 stock options, and 7,650
standard restricted stock units; (ii) Mr. Johnson, 19,980 performance shares,
56,300 stock options, and 9,990 standard restricted stock units; and (iii) Mr.
Nelson, 15,300 performance shares, 43,100 stock options, and 7,650 standard
restricted stock units. Mr. Geagea did not receive a grant due to his upcoming
retirement.
The stock options were awarded under the form of non-qualified stock options
agreement previously approved by the Committee. These options have a ten-year
term, and one-third of the options granted vest on each of January 31, 2023,
January 31, 2024, and January 31, 2025, except as described further herein. The
exercise price for the stock options is $132.69 per share, the closing price of
Chevron's common stock on January 26, 2022, the date of grant. The number of
stock options granted was determined based on grant date inputs, including stock
price and Black-Scholes valuation.
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The restricted stock units were awarded under the forms of standard restricted
stock unit award agreement previously approved by the Committee. The standard
restricted stock units vest on January 31, 2027 and 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.
The performance shares were awarded under the form of performance share award
agreement previously approved by the Committee. The performance shares may
result in a cash payout at the end of the three-year performance period (January
1, 2022 through December 31, 2024) (the "Performance Period") depending upon
Chevron's relative performance, weighted 70 percent based on relative Total
Stockholder Return ("TSR") as measured against BP p.l.c., ExxonMobil
Corporation, Shell plc, TotalEnergies SE, and the S&P 500 Total Return Index
(collectively the "LTIP Performance Share Peer Group"), and 30 percent based on
relative Return on Capital Employed ("ROCE") Improvement as measured against the
large-cap integrated energy companies BP p.l.c., ExxonMobil Corporation, Shell
plc, and TotalEnergies SE (collectively, the "ROCE Competitor Group"), as
follows:
Relative ranking 1 2 3 4 5 6
TSR Modifier (1) 200% 160% 120% 80% 40% 0%
(70% weight, ranking includes S&P 500 Total Return Index)
ROCE Improvement Modifier (2)
200% 150% 100% 50% 0% n/a
(30% weight, ranking excludes S&P 500 Total Return Index)
1.Chevron's TSR for the Performance Period as compared to the TSR of the LTIP
Performance Share Peer Group. The TSR 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 (from best TSR to lowest TSR) as set forth
in the table. 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 TSR Modifier will be the average of all of the TSR 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.
2.Chevron's ROCE Improvement ("ROCE-I"), measured by percentage point change, as
compared with the ROCE-I for the ROCE Competitor Group. The ROCE-I Modifier is
based on Chevron's ROCE-I ranking for the three-year period commencing with the
quarter preceding the beginning of the Performance Period and ending one quarter
prior to the end of the Performance Period, compared to the ROCE-I of each
company in the ROCE Competitor Group (from best ROCE-I to lowest ROCE-I) as set
forth in the table. In the event Chevron's measured ROCE-I is less than one half
of a percentage point of the nearest member(s) of the ROCE Competitor Group, the
results will be considered a tie, and the ROCE-I Modifier will be determined by
dividing the sum of the ROCE-I Modifiers in the tied positions by the number of
members of the ROCE Competitor Group in the tie.
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The performance shares will accrue dividend equivalents that will be reinvested
as additional performance shares and will vest on December 31, 2024, subject to
the payout multiplier, except as described further herein. The cash payout, if
any, will occur in an amount equal to the number of performance shares granted,
including dividend equivalents, multiplied by the 20-day trailing average price
of Chevron common stock at the end of the Performance Period, multiplied by a
performance share multiplier, which is the weighted average of (a) the TSR
Modifier (70 percent weight) and (b) the ROCE-I Modifier (30 percent weight),
each of which is determined as described above. 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.
Under the LTIP award terms, if these individuals' employment terminates for any
reason prior to January 31, 2023, the above-described stock option, restricted
stock unit, and performance share awards will be forfeited. Since Messrs. Wirth,
Breber, Johnson, and Nelson each have reached or will have reached 90 points
(the sum of years of age and years of service) under the LTIP rules before
January 31, 2023, on January 31, 2023, 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 standard restricted stock unit awards will
continue to vest upon the termination of their employment on or after January
31, 2023, 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, 2027. Further, 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, 2023, 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, 2024.
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