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Chevron Executive Compensation 2011

RESOLVED: That the shareholders of Chevron Corporation (“Chevron” or “Company”) request the Board’s Compensation Committee, when setting senior executive compensation, include sustainability as one of the performance measures for senior executives under the Company’s annual and/or long-term incentive plans. Sustainability is defined as how environmental, social and financial considerations are integrated into corporate strategy over the long term.
We believe that the long-term interests of shareholders, as well as other important constituents, is best served by companies that operate their businesses in a sustainable manner focused on long-term value creation. As the recent financial crisis demonstrates, those boards of directors and management that operate their companies with integrity and a focus on the long term are much more likely to prosper than ones that are dominated by a short-term focus. The best means of demonstrating a company’s commitment to the concept of sustainability is through incorporating it as a performance measure in the Company’s annual and/or long-term incentive plans.
We note that the Company has affirmed its commitment to the concept of sustainability. Chevron’s 2009 Corporate Responsibility Report, entitled “The Value of Partnership,” contains an extensive discussion of various social and environmental initiatives and the concept of sustainability. The preface to the report states:
Corporate responsibility at Chevron means demonstrating the vision and values of The Chevron Way throughout our corporation, throughout our operations, and throughout our partnerships. In this document—our eighth annual Corporate Responsibility Report—we are proud to share how our environmental, social and governance systems, processes and actions support our vision to be the global energy company most admired for its people, partnership and performance. This report discusses our seven pillars of corporate responsibility: the environment, health and safety; human rights; stakeholder engagement; community engagement; workforce; supply chain; and ethics.
While these words are laudable, incorporating them into the Company’s senior executive compensation program would give them real impact. Yet, the Compensation Discussion and Analysis section of Chevron’s 2010 Proxy Statement contains no discussion of sustainability. Nor does the Compensation Discussion and Analysis disclose any specific performance measures related to sustainability in the Company’s annual incentive plan or its long-term incentive plan. We believe that this represents a serious shortcoming.
Other companies have added sustainability to the metrics that they use when determining executive compensation. British utility company National Grid announced last year it would partly base executive compensation on meeting targets for reducing carbon emissions. In addition, Xcel Energy in its 2009 proxy statement discloses that certain annual incentive payments are dependent on green house gas emission reductions alongside the weight given to meeting earnings per share targets. Also Intel Corporation calculates every employees annual bonus based on the firms performance on measures that include energy efficiency, completion of renewable energy and clean energy projects, and the company’s reputation for environmental leadership.