8-KLeadership Changes

CHEVRON CORP 8-K Report, Executive Changes (Dec 12, 2011)

Filed December 12, 2011For Securities:CVX

Summary

Chevron Corporation (CVX) filed an 8-K report on December 12, 2011, detailing executive compensation actions taken on December 6, 2011. The Management Compensation Committee of the Board of Directors approved grants of restricted stock units (RSUs) under the Long Term Incentive Plan (LTIP) to three named executive officers: R. Hewitt Pate, Michael K. Wirth, and Patricia E. Yarrington. These RSU grants are designed as long-term incentives, with specific vesting schedules that extend over several years, ranging from two to seven years depending on the executive. Importantly, these RSUs accrue dividend equivalents in the form of additional RSUs, which will be paid out in cash upon vesting, based on the stock price at that time. The terms also include provisions for potential forfeiture in cases of "Misconduct" as defined by the plan, ensuring alignment of executive behavior with shareholder interests.

Key Highlights

  • 1Chevron's Management Compensation Committee approved restricted stock unit (RSU) grants to key executives on December 6, 2011.
  • 2Recipients include R. Hewitt Pate (22,500 RSUs), Michael K. Wirth (15,000 RSUs), and Patricia E. Yarrington (15,000 RSUs).
  • 3RSUs vest over multi-year periods, with schedules ranging from two to seven years from the date of grant.
  • 4Grants accrue dividend equivalents, paid as additional RSUs, which will be settled in cash upon vesting.
  • 5Vesting and payout are subject to forfeiture if the executive is terminated for "Misconduct" as defined by the LTIP.
  • 6This action reflects a continued use of long-term equity incentives to retain and motivate executive officers.

Frequently Asked Questions

Restricted Stock Units (RSUs) are a form of equity compensation that gives executives the right to receive shares of company stock after a vesting period. They are being granted to R. Hewitt Pate, Michael K. Wirth, and Patricia E. Yarrington as a long-term incentive to align their financial interests with those of shareholders and to encourage retention within the company.

The vesting schedules vary by executive. R. Hewitt Pate's RSUs vest over seven years with a tiered structure (30% at year 3, 30% at year 5, 40% at year 7). Michael K. Wirth and Patricia E. Yarrington have RSUs that vest over four years, with 50% vesting at the second anniversary and the remaining 50% at the fourth anniversary of the grant date.

The RSUs will accrue dividend equivalents in the form of additional RSUs. Upon vesting, these accumulated dividend RSUs will be paid out in cash, with the payout amount determined by the closing stock price on the date of vesting.

Yes, the RSUs can be canceled before payout if the grantee is terminated for "Misconduct," as defined in the Long Term Incentive Plan. Furthermore, Chevron may demand forfeiture of any payout that occurred after the date of such misconduct.