8-KLeadership ChangesExhibits & Filings

CHEVRON CORP 8-K Report, Executive Changes (Feb 3, 2020)

Filed February 3, 2020For Securities:CVX

Summary

This 8-K filing from Chevron Corporation (CVX), filed on February 3, 2020, details adjustments to executive compensation and equity awards approved on January 29, 2020. The independent Directors of the Board reviewed and approved changes to the base salaries of key executive officers, including the CEO, CFO, and other senior vice presidents. These salary adjustments, effective April 1, 2020, represent modest increases and are a routine part of annual compensation reviews. Furthermore, the filing outlines significant equity awards granted under the Long-Term Incentive Plan (LTIP) for 2020 to these executives, comprising performance shares, stock options, and restricted stock units. The performance shares are tied to Total Stockholder Return (TSR) over a three-year period relative to a peer group, with payouts influenced by a performance modifier. Vesting and payout terms for these awards, including provisions for early termination of employment, are detailed, indicating a strong alignment of executive compensation with long-term company performance and shareholder value.

Key Highlights

  • 1Executive base salaries were adjusted effective April 1, 2020, with modest increases for the CEO, CFO, and other senior executives.
  • 2Michael K. Wirth (CEO) received a $50,000 base salary increase to $1,650,000.
  • 3Significant equity awards, including performance shares, stock options, and restricted stock units, were granted to key executives under the Long-Term Incentive Plan (LTIP).
  • 4Performance share payouts are contingent on Chevron's Total Stockholder Return (TSR) relative to a peer group over a three-year period (January 1, 2020 - December 31, 2022).
  • 5Stock options granted have a ten-year term, with one-third vesting annually on January 31st of 2021, 2022, and 2023.
  • 6Detailed provisions are outlined for accelerated vesting and payout upon termination of employment under specific conditions, particularly for executives meeting certain age and service point thresholds.
  • 7The Chevron Incentive Plan (CIP) rules were amended, affecting how annual performance bonuses are calculated, with awards capped at 200% of target.

Frequently Asked Questions

This 8-K filing primarily reports on the annual review and adjustment of executive base salaries and the approval of significant equity awards granted under Chevron's Long-Term Incentive Plan (LTIP) to its key executive officers.

The performance shares are tied to Chevron's Total Stockholder Return (TSR) over a three-year period (January 1, 2020, through December 31, 2022) relative to a defined peer group and the S&P 500 Total Return Index. The payout is determined by a performance modifier based on Chevron's TSR ranking within this group.

Stock options have a ten-year term and vest in thirds on January 31st of 2021, 2022, and 2023. Performance shares vest on December 31, 2022, subject to the payout modifier. Restricted stock units vest on January 31, 2025. Special provisions exist for accelerated vesting in cases of termination of employment after meeting certain tenure and age criteria.

The CIP rules were amended to define the calculation of annual performance bonuses as 'Corporate Performance Rating' multiplied by an 'Individual Bonus Component' (salary x bonus percentage). The overall CIP award is capped at 200% of target for each pay grade, and the bonus percentage for individual executives is determined by the Committee based on individual performance, leadership, and business unit results.