Summary
This 8-K filing by Chevron Corporation (CVX), dated February 4, 2019, primarily details adjustments to executive compensation. On January 30, 2019, the independent Directors approved annual base salary increases for key executive officers, including the CEO, CFO, and other senior VPs, effective April 1, 2019. These adjustments reflect annual reviews and aim to align compensation with executive roles and responsibilities. In addition to salary adjustments, the filing outlines significant equity grants awarded to these executives under the Long-Term Incentive Plan (LTIP). These grants include performance shares, stock options, and restricted stock units, all designed to incentivize long-term performance and shareholder value creation. The performance shares are tied to Chevron's Total Stockholder Return (TSR) relative to a peer group over a three-year period, with payout modifiers based on relative TSR ranking. The stock options and restricted stock units also have specific vesting schedules and terms, with provisions for early vesting upon separation from service under certain conditions after January 31, 2020.
Key Highlights
- 1Chevron's independent directors approved annual base salary increases for key executives, including CEO Michael K. Wirth ($1,600,000), CFO Patricia E. Yarrington ($1,170,000), EVP James W. Johnson ($1,200,000), and EVP Joseph C. Geagea ($1,000,000), effective April 1, 2019.
- 2Significant equity awards were granted to executives under the Long-Term Incentive Plan (LTIP), including performance shares, stock options, and restricted stock units.
- 3Performance shares are linked to Chevron's Total Stockholder Return (TSR) over a three-year period (Jan 1, 2019 - Dec 31, 2021) compared to a peer group (BP, Exxon Mobil, Royal Dutch Shell, Total S.A., S&P 500 TR Index).
- 4Stock options granted have a ten-year term, with one-third vesting annually on January 31st of 2020, 2021, and 2022. The exercise price was set at $113.01 per share.
- 5Restricted stock units vest on January 31, 2024, and will pay out in cash based on the closing stock price at vesting.
- 6Special provisions exist for executive separation from service: stock options and performance shares may forfeit if separation occurs before Jan 31, 2020. However, unvested options and performance shares will vest upon separation after Jan 31, 2020 (unless for misconduct), and restricted stock units will continue to vest after Jan 31, 2020, with payouts occurring no earlier than Jan 31, 2024.
- 7New forms of award agreements for performance shares and restricted stock units under the LTIP were approved for future grants.