Annual Report — Form 10-K — Sect. 13 / 15(d) – SEA’34 Filing Table of Contents
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31: EX-99.1 Miscellaneous Exhibit HTML 19K
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The purpose of the Chevron Incentive Plan is to obtain, develop, retain and reward high
caliber employees, stimulate constructive and imaginative thinking, and contribute to the growth
and profits of the Corporation.
SECTION II. EFFECTIVE DATE.
The Plan, formerly known as the Management Incentive Plan of Chevron Corporation, was adopted
effective January 1, 1966 and approved by the Corporation’s stockholders at the Annual Meeting on
May 5, 1966. Prior to this amendment and restatement, the Plan was last amended and restated
effective January 1, 2005; further amended December 7, 2005 and December 6, 2006; and last approved
by the Corporation’s stockholders at the Annual Meeting on May 15, 2002. This Restatement shall
apply to all Plan distributions made after December 31, 2008. This Plan, effective, January 1,2008, is also the successor to the Chevron Success Sharing Program.
SECTION III. DEFINITIONS.
For
purposes of the Plan, the following terms have the meanings set forth below:
(a) “Annual Income” means the Corporation’s reported earnings before special items and
account changes for the Performance Year.
(b) “Award” means a cash payment approved by the Committee under Section V. of the
Plan.
(c) “Benefit Protection Period” means the period commencing on the date six months
prior to the public announcement of a proposed transaction which, when effected, is a Change in
Control and ending on the date which is two years after the date of a Change in Control.
(d) “Board” means the Board of Directors of the Corporation.
(e) “Business in Competition” means any person, organization or enterprise which is
engaged in or is about to be engaged in any line of business engaged in by the Corporation at such
time.
(f) “Change in Control” means a “change in control” of the Corporation as defined in
Article VI. of the By-Laws of the Corporation, as such By-Laws may be amended from time to time.
(g) “Code” means the Internal Revenue Code of 1986, as amended.
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(h) “Committee” means the committee of the Board that it appoints to administer the
Plan. In the absence of specific action by the Board, the Board shall be deemed to have appointed
the Board’s Management Compensation Committee.
(i) “Corporation” means Chevron Corporation, a Delaware corporation, or any Successors
or Assigns. Where the context shall permit, “Corporation” shall include the Subsidiaries of Chevron
Corporation.
(1) Information embodied in inventions, discoveries and improvements, whether patentable or
unpatentable, including trade secrets;
(2) Geological and geophysical data and analyses thereof, well information, discoveries,
development initiatives, reserves, offshore bidding strategies, potential value of unleased
offshore acreage, exploration and other business strategies and investment plans, business methods,
current and planned technology, processes and practices relating to the existence of, exploration
for, or the development of oil, gas, or other potentially valuable raw material, product, mineral
or natural resource of any kind;
(3) Confidential personnel or Human Resources data;
(4) Customer lists, pricing, supplier lists, and Corporation processes;
(5) Any other information having present or potential commercial value; and
(6) Confidential information of any kind in possession of the Corporation, whether developed
for or by the Corporation (including information developed by the Participant), received from a
third party in confidence, or belonging to others and licensed or disclosed to the Corporation in
confidence for use in any aspect of its business and without regard to whether it is designated or
marked as such through use of such words as “classified,”“confidential” or “restricted”;
Provided, however, that Corporation Confidential Information shall not include any information
that is or becomes generally known through no wrongful act or omission of the Participant.
However, information shall not fail to be Corporation Confidential Information solely because it is
embraced by more general information available on a non-confidential basis.
(k) “Covered Employee” means the Corporation’s principal executive officer, principal
financial officer and three other most highly compensated executive officers (as defined in Item
402 of Regulation S-K) who were serving as such at the end of the last completed Performance Year.
(l) “Director” means a member of the Board.
(m) “Document” means any devices, records, data, notes, reports, abstracts, proposals,
lists, correspondence (including e-mails), specifications, drawings, blueprints,
sketches, materials, equipment, reproductions of any kind made from or about such documents or
information contained therein, recordings, or similar items.
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(n) “Eligible Employee” means any individual who is an employee on the Payroll.
(o) “Executive Committee” means the Executive Committee of the Corporation.
(p) “Independent Director” means a member of the Board that is independent of the
Corporation within the meaning of the rules of the New York Stock Exchange and the Corporation’s
Corporate Governance Guidelines.
(q) “Misconduct” of a Participant means:
(1) The Corporation has been required to prepare an accounting restatement due to material
noncompliance, as a result of misconduct, with any financial reporting requirement under the
securities laws, and the Committee has determined in its sole discretion that the Participant:
(A) Had knowledge of the material noncompliance or circumstances giving rise to such
noncompliance and willfully failed to take reasonable steps to bring it to the attention of
appropriate individuals within the Corporation; or
(B) Knowingly engaged in practices which materially contributed to the circumstances that
enabled such material noncompliance to occur;
(2) A Participant commits an act of embezzlement, fraud or theft with respect to the property
of the Corporation, materially violates the Corporation’s conflict of interest policy, or breaches
his or her fiduciary duty to the Corporation;
(3) A Participant, while still employed by the Corporation:
(A) Willfully misappropriates or discloses to any person, firm or corporation any Corporation
Confidential Information, unless the Participant is expressly authorized by the Corporation’s
management to disclose such Corporation Confidential Information, pursuant to a written
non-disclosure agreement that sufficiently protects it;
(B) Directly or indirectly engages in, commences employment with, or materially renders
services, advice or assistance to any Business in Competition with the Corporation other than on
behalf of the Corporation;
(C) Induces or attempts to induce, directly or indirectly, any of the Corporation’s customers,
employees, representatives or consultants to terminate, discontinue or cease working with or for
the Corporation, or to breach any contract with the Corporation, in order to work with or for, or
enter into a contract with, the Participant or any third party other than when such action is taken
on behalf of the Corporation;
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(4) A Participant willfully fails to promptly return all Documents and other tangible items
belonging to the Corporation that are in his or her possession or control upon termination of
employment, whether pursuant to retirement or otherwise;
(5) A Participant willfully commits an act which, under applicable law, constitutes the
misappropriation of a Corporation trade secret or otherwise violates the law of unfair competition
with respect to the Corporation; including, but not limited to, unlawfully:
(A) Using or disclosing Corporation Confidential Information; or
(B) Soliciting (or contributing to the soliciting of) the Corporation’s customers, employees,
representatives, or consultants to:
(i) Terminate, discontinue or cease working with or for the Corporation; or
(ii) To breach any contract with the Corporation, in order to work with or for, or enter into
a contract with, the Participant or any third party;
(6) A Participant willfully fails to inform any new employer of the Participant’s continuing
obligation to maintain the confidentiality of the trade secrets and other Corporation Confidential
Information obtained by the Participant during the term of his or her employment with the
Corporation;
The Committee shall determine in its sole discretion whether the Participant has engaged in
any of the acts set forth in subsections (1) through (6) above, and its determination shall be
conclusive and binding on all interested persons.
(r) “Outside Director” means an outside director of the Board within the meaning of
Section 162(m) of the Code.
(s) “Participant” means an Eligible Employee who receives an Award under the Plan.
(t) “Payroll” means the system used by the Corporation to pay those individuals it
regards as Corporation employees for their services and to withhold employment taxes from the
compensation it pays to such employees. “Payroll” does not include any system the Corporation
uses to pay individuals whom it does not regard as Corporation employees and for whom it does not
actually withhold employment taxes (including, but not limited to, individuals it regards as
independent contractors) for their services.
(u) “Performance Year” means the Corporation’s fiscal year with respect to which the
Committee makes Awards to Eligible Employees under the Plan.
(v) “Plan” means the Chevron Incentive Plan, as amended from time to time.
Previously, the Chevron Incentive Plan was known as the Management Incentive Plan of Chevron
Corporation.
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(w) “Rules” mean the rules promulgated by the Committee within its sole discretion to
administer the Plan.
(x) “Subsidiary” means any corporation or entity with respect to which the
Corporation, one or more Subsidiaries, or the Corporation together with one or more Subsidiaries,
owns not less than eighty percent (80%) of the total combined voting power of all classes of stock
entitled to vote, or not less than eighty percent (80%) of the total value of all shares of all
classes of stock.
(y) “Successors or Assigns” means a corporation or other entity acquiring all or
substantially all the assets and business of the Corporation (including the Plan) whether by
operation of law or otherwise, including any corporation or other entity effectuating a Change in
Control of the Corporation.
(z) “Termination”, “Terminated”, or “Terminates” means that an
Eligible Employee’s formal employment relationship with the Corporation has ended, including by
reason of death. A formal employment relationship with the Corporation cannot exist unless an
individual is on the Payroll.
SECTION IV. ADMINISTRATION.
The Plan shall be administered by the Committee.
(a) Composition of the Committee.
(1) The Committee shall consist of not less than a sufficient number of Outside Directors so
as to qualify the Committee to administer the Plan as contemplated by Section 162(m) of the Code
and each of whom is also an Independent Director.
(2) The Board shall appoint one (1) of the members of the Committee as chair.
(3) If any member of the Committee does not qualify as an Outside Director, Awards under the
Plan with respect to a Covered Employee shall be administered by a subcommittee consisting of all
Committee members who qualify as Outside Directors. Such subcommittee must consist of at least two
(2) members of the Committee.
(4) The Board may from, time to time, remove members from, add members to, or fill vacancies
on the Committee. If fewer than two (2) Committee members qualify as an Outside Director, the Board
shall appoint one or more new members who so qualify.
(5) In the event that the Committee will not satisfy the requirements of paragraph (a)(1)
above, the Board shall appoint another committee that shall satisfy such requirements.
(b) Actions by the Committee. The Committee shall hold meetings at such times and
places as it may determine. Acts approved by a majority of the members of the Committee
present at a meeting at which a quorum is present, or acts reduced to or approved in writing
by a majority of the members of the Committee, shall be the valid acts of the Committee.
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(c) Powers of the Committee.
(1) The Committee shall have the authority to administer the Plan in its sole discretion. The
Committee’s authority includes the rights to:
(A) Construe and interpret the Plan;
(B) Promulgate, amend, interpret, and rescind Rules relating to the implementation of the
Plan;
(C) Select which Eligible Employees to whom to make an Award and under what conditions;
(D) Determine the Award amount;
(E) Determine other terms and conditions of Awards;
(F) Adopt procedures for the disposition of Awards in the event of a Participant’s divorce or
dissolution of marriage; and
(G) Make all other determinations necessary or advisable for the administration of the Plan.
(2) Notwithstanding Section IV.(c)(1) of the Plan:
(A) No provision in the Plan referencing the Committee’s discretion shall be construed as
granting the Committee the authority to exercise discretion in a manner that is inconsistent with
the Plan; and
(B) Adoption of Rules by the Committee is an exercise of the Committee’s discretion. Once
adopted, the Committee may not exercise additional discretion that is inconsistent with the Rules
without amending the Rules.
(3) Subject to the requirements of applicable law, the Committee may designate the
Corporation’s Executive Committee to carry out its responsibilities and may prescribe such
conditions and limitations as it may deem appropriate in its sole discretion; provided, however,
the Committee may not delegate its authority with regard to the selection for participation of or
the grant of Awards to persons in salary classification PSG 41 or above (or at a level determined
by the Committee in its sole discretion to be the equivalent under a successor salary
classification system). The Executive Committee may further delegate this function as it deems
appropriate. The Committee may also designate the Corporation’s Vice President, Human Resources,
to perform the day-to-day administrative tasks as may be necessary for the Committee’s
administration of the Plans. Any determination, decision or action of the Committee in connection
with the construction, interpretation, administration, or application of
the Plan shall be final, conclusive and binding upon all persons participating in the Plan and
any person validly claiming under or through persons participating in the Plan.
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(d) Liability of Committee Members. No member of the Board or the Committee shall be
liable for any action or determination made in good faith by the Board or the Committee with
respect to the Plan or any Award under it.
(e) Administration of the Plan Following a Change in Control. Within thirty (30) days
after the occurrence of a Change in Control, the Committee shall appoint an independent
organization which shall thereafter administer the Plan and have all of the powers and duties
formerly held and exercised by the Committee with respect to the Plan as provided in Section
IV.(c). Upon such appointment, the Committee shall cease to have any responsibility with respect
to the administration of the Plan.
SECTION V. AWARDS UNDER THE PLAN.
(a) Discretion to Grant Awards. Subject to Section V.(b); the Committee, in its
discretion, may approve an Award under the Plan to any Eligible Employee for the Performance Year
in any amount.
(b) Limitation for Covered Employees. The amount of any Award granted to Covered
Employees shall be subject to the following limitations:
(1) 0.5% of the Corporation’s Annual Income shall be set aside for Awards to the Covered
Employees.
(2) The maximum Award amount for the Covered Employees shall equal the indicated percentage of
the aggregate fund set forth in Section V.(b)(1), determined pursuant to the following schedule:
Officer
Percentage
CEO
40
%
Other Covered Employees
15
% each
Total
100
%
(3) The Committee in its sole discretion may reduce the Award otherwise payable to any Covered
Employee as determined above, but in no event shall any such reduction result in an increase of the
Award payable to any other Participant, including but not limited to any other Covered Employee.
(c) Awards Payable After Change in Control. Notwithstanding Section V.(a) and (b),
the following shall apply with respect to Awards for the Performance Year in which a Change in
Control occurs (and for the prior Performance Year to the extent such Awards have not been granted
prior to the Change in Control):
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(1) Eligible Employees below PSG 44 shall be entitled to receive an Award for such Performance
Year(s) in an amount that is not less than that Eligible Employee’s target Award, as may be
established from time-to-time by the Committee; provided that such Eligible Employee:
(A) Received an Award for the Performance Year for which the Award had been paid prior to the
Change in Control;
(B) Would have received such an Award but for his or her performance; and
(C) Is an otherwise similarly situated Eligible Employee, who shall be determined by the
independent organization appointed by the Committee pursuant to this Section V.(c) on the basis of
the Committee’s practices in the Performance Year for which the Committee last determined Awards.
Such Awards shall be prorated for the portion of the year the employee is an Eligible Employee
during the Performance Year.
Eligible Employees above PSG 43 shall be entitled to receive an Award, if any, for such
Performance Year(s) as determined by the independent organization appointed by the Committee
pursuant to Section IV.(e).
(2) All such Awards shall be vested upon grant.
(d) Effect of Mandatory Wage Controls. Notwithstanding anything in this Section V. to
the contrary, the Committee may cancel the payment of all or any part of an Award under the Plan if
the Committee determines that the payment of such Award or part thereof would violate any mandatory
wage controls in effect at the time payment would otherwise be made.
SECTION VI. PAYMENT OF AWARDS.
(a) Non-Deferred Awards. Non-deferred Awards shall be paid in the form of a cash lump
sum in the Payroll for which payment is scheduled by the Corporation, which in no event shall be
later than two and one-half (2 1/2) months following the end of the calendar year in which the
Committee makes the Award.
(b) Deferral of Awards. Deferral of Awards shall be determined under the terms of the
Chevron Corporation Deferred Compensation Plan for Chevron Employees II (or any successor plan),
its Rules, and in compliance with the requirements of Section 409A of the Code.
SECTION VII. ASSIGNABILITY.
Except as otherwise determined by the Committee, or a domestic relations order enforceable
under applicable law, a Participant’s Award or the interest, if any, of a Participant’s beneficiary
may not be assigned, either by voluntary or involuntary assignment or by operation of law,
including, but without limitation, garnishment, attachment or other creditor’s process and any act
in violation hereof shall be void.
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SECTION VIII. FORFEITURE FOR MISCONDUCT.
Notwithstanding any other provision of the Plan to the contrary, if a Participant engages in
Misconduct, the Committee (or its delegate) may determine that:
(a) The Participant shall not receive any future Awards pursuant to the Plan; and
(b) The Corporation may demand repayment of any Award received after June 29, 2005 with
respect to a period after the date of the Participant’s Misconduct; provided that, following a
Change in Control, this Section VIII. shall apply only in the event of Misconduct as defined in
Section II.(q)(1) and (2) of the Plan.
(c) Any provision of this Section VIII. which is determined by a court of competent
jurisdiction to be invalid or unenforceable should be construed or limited in a manner that is
valid and enforceable and that comes closest to the business objectives intended by such invalid or
unenforceable provision, without invalidating or rendering unenforceable the remaining provisions
of this Section VIII;
SECTION IX. AMENDMENT OF THE PLAN OR AWARDS.
The Board may, at any time, alter, amend or terminate the Plan, provided:
(a) Subject to Sections V.(b)(3) and (d), no amendment, suspension or termination of the Plan
nor any amendment, cancellation or modification of any Award outstanding under it that would
adversely affect the right of any Participant in an Award or grant previously made under the Plan
shall be effective without the written consent of the affected Participant except to the extent
necessary to comply with applicable law (including compliance with any provision of law concerning
favorable taxation); and
(b) No amendment, revision, suspension or discontinuation of the Plan (including any amendment
to this Section IX.) approved by the Board during the Benefit Protection Period under Change in
Control shall be valid or effective if such amendment, revision, suspension or discontinuation
would alter the provisions of this Section IX. or adversely affect an Award outstanding under the
Plan; provided, however, any amendment, revision, suspension or discontinuation may be effected,
even if so approved after the public announcement of the proposed transaction which effected, would
have constituted a Change in Control, if:
(1) The alteration, amendment or termination is approved after any plans have been abandoned
to effect the transaction which, if effected, would have constituted a Change in Control and the
event which would have constituted the Change in Control has not occurred; and
(2) Within a period of six months after such approval, no other event constituting a Change in
Control shall have occurred, and no public announcement of a proposed event which would constitute
a Change in Control shall have been made, unless thereafter any plans to effect the Change in
Control have been abandoned and the event which would have constituted the Change in Control has
not occurred.
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(3) Any alteration, amendment or termination of the Plan which is approved by the Board prior
to a Change in Control at the request of a third party who effectuates a Change in Control shall be
deemed to be an alteration, amendment or termination approved during the Benefit Protection Period.
SECTION X. GENERAL PROVISIONS.
(a) Participant’s Rights Unsecured. A Participant shall have no rights other than
those of a general creditor of the Corporation. Awards shall represent unfunded and unsecured
obligations against the general assets of the Corporation.
(b) Authority to Establish a Grantor Trust. The Committee is authorized in its sole
discretion to establish a grantor trust for the purpose of providing security for the payment of
Awards under the Plan; provided, however, that no Participant shall be considered to have a
beneficial ownership interest (or any other sort of interest) in any specific asset of the
Corporation or of its subsidiaries or affiliates as a result of the creation of such trust or the
transfer of funds or other property to such trust.
(c) Awards in Foreign Countries. The Committee shall have the authority to adopt such
modifications, procedures and sub-plans as may be necessary or desirable to comply with provisions
of the laws of foreign countries in which the Corporation may operate to assure the viability of
the benefits of Awards made to Participants employed in such countries and to meet the intent of
the Plan.
(d) Costs of the Plan. The costs and expenses of administering the Plan shall be
borne by the Corporation.
(e) Binding Effect of Plan. The Plan shall be binding upon and shall inure to the
benefit of the Corporation, its Successors or Assigns and the Corporation shall require any
Successor or Assign to expressly assume and agree to perform the Plan in the same manner and to the
same extent that the Corporation would be required to perform it if no such Succession or
Assignment had taken place.
(f) No Waiver of Breach. No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any condition or provision of the Plan to be
performed by such other party shall be deemed a waiver of similar or dissimilar provisions of
conditions at the same or at any prior or subsequent time.
(g) No Right to Employment. Neither the Plan, its Rules, nor any Award granted under
the Plan shall be deemed to give any individual a right to remain employed by the Corporation. The
Corporation reserves the right to Terminate any Eligible Employee at any time and for any reason,
which right is hereby reserved.
(h) Choice of Law. The Plan shall be administered, construed and governed in
accordance with the Code, and the laws of the State of California, but without regard to its
conflict of law rules. Notwithstanding the foregoing, domestic relations orders and the Section
III.(q) definition of Misconduct shall be subject to the jurisdiction’s law that would otherwise be
applicable, but without regard to that particular jurisdiction’s conflict of laws rules.
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(i) Severability. The provisions of the Plan shall be deemed severable and the
validity or unenforceability of any provision shall not affect the validity or enforceability of
the other provisions hereof.
SECTION XI. EXECUTION.
Approved by the Board at a meeting held on December 10, 2008 and effective
January 1, 2008 and executed pursuant to the Board’s delegation.
