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Before you cast your vote on Management Resolution Item 3
Advisory Vote to Approve Executive Compensation for 2015, here are some of the
headlines of our compensation program to consider.
These focus areas were based on shareholders feedback and requests for
additional information. We will be reviewing specific charts and data to
elaborate on these key points during this webinar.
We have added a new section to illustrate how the Compensation Committee determined
the level of the CEOs stock-based award. Titled
Determination of Equity Award Levels, this section illustrates that
award levels range from zero to the maximum level depending on how the
company and the executive perform with respect to the performance measures.
ExxonMobil Vesting Methodology: Half of the stock-based grants require
10 years or longer to vest and that results in vesting periods that are more
than three times longer than those of industry group and compensation benchmark
companies. In fact, you will see that the CEO has awards with a
vesting period of 15 years. These uniquely long vesting periods sharply raise the risk profile of the stock awards, including the risk of forfeiture
until awards vest, relative to more traditional formula-based programs that pay
out in three years. This inability to monetize equity compensation
early results in executives experiencing the impact of commodity price cycles much
like the experience of long-term shareholders. The annual
bonus program formula is linked to annual earnings and has been consistently applied for 13 years. Half of the annual bonus is
delayed to strengthen alignment with sustainable growth in shareholder value and
allow for forfeiture in the event of executive resignation or detrimental
activity. Individual awards are determined and differentiated using a method similar to individual stock-based awards.
In the last few years, the media and others have reported that ExxonMobils
CEO is at the 100th percentile versus comparator companies based on reported
pay. However, we believe a more accurate description is illustrated in this years disclosure. We have conducted a detailed compensation
analysis using combined realized and unrealized pay that shows a market orientation
at the 39th percentile in 2014 (was 41st percentile in 2013). Also,
our senior executives do not have employment contracts, severance agreements, or change-in-control arrangements; and,
All U.S. executives, more than 1,000 including the CEO, participate in common
programs (the same salary, incentive, and retirement programs). |