8-KLeadership ChangesExhibits & Filings

CHEVRON CORP 8-K Report, Executive Changes (Feb 1, 2011)

Filed February 1, 2011For Securities:CVX

Summary

This 8-K filing from Chevron Corporation, filed on February 1, 2011, primarily details the compensation arrangements for its key executives, specifically the Chairman and CEO, J.S. Watson, the Vice President and CFO, P.E. Yarrington, and the Vice Chairman and Executive Vice President, G.L. Kirkland. The report outlines the grant of stock options and performance shares approved by the independent Directors and ratified by the Management Compensation Committee under the Long Term Incentive Plan (LTIP). These grants are designed to align executive compensation with long-term company performance. The stock options have a ten-year term with tiered vesting, and the exercise price is based on the closing stock price on the grant date. The performance shares are tied to Chevron's Total Stockholder Return (TSR) relative to a peer group over a three-year period, with potential payouts influenced by a performance modifier. The filing also details specific vesting acceleration provisions for these awards upon separation from service, based on executive age and service years.

Key Highlights

  • 1Grant of 340,000 stock options and 53,000 performance shares to CEO J.S. Watson.
  • 2Grant of 132,000 stock options and 21,000 performance shares to CFO P.E. Yarrington.
  • 3Grant of 190,000 stock options and 30,000 performance shares to Vice Chairman G.L. Kirkland.
  • 4Stock options have a 10-year term with one-third vesting annually.
  • 5Stock option exercise price set at $94.64, based on the January 26, 2011 closing price.
  • 6Performance shares are tied to Chevron's 3-year Total Stockholder Return (TSR) compared to a peer group, with payouts determined by a performance modifier.
  • 7Vesting acceleration provisions are in place for these awards upon separation from service, with terms varying based on executive tenure and age under the LTIP.

Frequently Asked Questions

The main purpose of this 8-K filing is to disclose the approved grants of stock options and performance shares to key executive officers, including the CEO, CFO, and Vice Chairman, under Chevron's Long Term Incentive Plan (LTIP). It details the terms of these awards and their linkage to company performance.

The performance shares may result in a cash payout at the end of a three-year performance period (January 1, 2011, through December 31, 2013). The payout amount depends on Chevron's Total Stockholder Return (TSR) compared to its peer group. A performance modifier, ranging from zero to 200 percent, is applied based on Chevron's TSR ranking within the peer group, and the final cash payout is calculated using this modifier and the average stock price at the end of the performance period.

Yes, the filing outlines special vesting conditions. For G.L. Kirkland (Vice Chairman), unvested options and performance shares vest upon separation from service (if not for cause) after being held for at least one year from the grant date, provided he has over 90 points (age + years of service). For P.E. Yarrington (CFO) and J.S. Watson (CEO), unvested awards vest on a pro-rata basis under similar separation conditions (if not for cause and held for at least one year), if they have over 75 points (age + years of service).

According to the filing, Chevron does not have employment agreements with J.S. Watson (Chairman and CEO), P.E. Yarrington (Vice President and CFO), or G.L. Kirkland (Vice Chairman and Executive Vice President).