ExxonMobil’s affairs are managed independently under the direction of our board of directors. All directors are required to stand for election each year at our annual meeting of shareholders. Independent directors also chair key board committees — audit, compensation, board affairs and public issues and contributions — that are comprised entirely of independent directors.
Board members select an independent director to serve as the presiding director, with the expectation that person will serve for a minimum of two years. The presiding director serves as a liaison of the chairman and president, and reviews in advance the schedule and agenda for all board meetings, in consultation with the chairman, as well as other materials distributed to the directors. At this time, the board believes the interests of shareholders are best served through a leadership model that combines the roles of chairman of the board and chief executive officer.
Performance and initiatives
At year-end 2016, 11 of 13 directors, including the presiding director and all members of the audit, compensation, public issues and contributions, and board affairs committees, were independent as defined by New York Stock Exchange guidelines. In 2016, the board met 12 times. Independent leadership is also supported by the presiding director, a non-employee director who, in consultation with the chairman, reviews board agendas and materials to be distributed to directors before board meetings, among other responsibilities.
Good corporate governance is an essential element of corporate social responsibility. Corporate citizenship topics typically fall under the purview of the public issues and contributions committee, the board affairs committee and the compensation committee, and are routinely reviewed at board meetings. While risk oversight is the responsibility of the entire board, committees help the board focus on risk aspects relevant to each committee. For example, the PICC is charged with reviewing the effectiveness of the company’s policies, programs and practices with respect to the environment, among other duties. The committee hears reports from operating units on environmental activities and also visits operating sites to observe and comment on current practices. The entire board receives briefings by internal experts on environmental stewardship and climate change.
Up Close: Board PICC trip to Baytown, Texas
Each year, members of the public issues and contributions committee (PICC) visit a company site to gain a deeper understanding of ExxonMobil operations and to view first-hand the execution of ExxonMobil standards, principles and capabilities. In 2016, the PICC visited our Baytown and Mont Belvieu facilities in Texas to view progress on the North American Growth Project. The project is part of a larger Gulf Coast investment program, called Growing the Gulf, that will create or support 45,000 construction and full-time jobs. Learn more in the case study on ExxonMobil’s Growing the Gulf investment program.
Founded in 1919, the Baytown refinery and petrochemical complex is located about 25 miles outside of Houston, along the Houston Ship Channel. The refinery consists of manufacturing sites, chemical plants and a global technology center. These sites employ more than 7,000 workers, and the refinery has a potential capacity of 584,000 barrels of crude oil per day. Within the Baytown area, our Mont Belvieu plant manufactures the film that bundles water bottles and heavy-duty sacks used to store food, and the Baytown olefins plant is one of the largest ethylene-producing plants in the world.
The trip included a reception and dinner at Lee College, a community college that is part of ExxonMobil’s Petrochemical Initiative, to engage with local community and civic leaders, including the Baytown mayor and the chair of the Houston Port Authority. Additionally, the PICC attended a lunch with employees from Mont Belvieu and the Baytown olefins plants.
Board selection process
We value the diversity of the board in regard to gender, race, geography, experience and fields of expertise. We believe maintaining this diversity is critical to our success in a globalized market. The board affairs committee recommends board of director candidates in accordance with the Guidelines for the Selection of Non-Employee Directors, which are published on our company website and reviewed regularly by the board, and diversity is a key consideration.
Supported by an independent executive search firm, the board affairs committee looks for highly qualified non-employee candidates with demonstrated leadership, competency and a commitment to represent the interests of all shareholders. Other desirable qualities include:
- Experience as the CEO or senior executive of a significant company or organization with responsibilities for global operations;
- Financial expertise;
- Experience on one or more boards of significant public organizations or nongovernmental organizations (NGOs); and
- Expertise resulting from significant professional or academically based scientific or research activities.
Performance and initiatives
In 2016, 45 percent of the board’s independent directors were female, African-American or from outside the United States. Four of the seven most recent additions to the board demonstrate this cultural and intellectual diversity. Below we introduce our most recent board member additions: Angela Braly and Susan Avery.
Angela Braly was elected to the ExxonMobil board in 2016. Ms. Braly served as president and chief executive officer of WellPoint from 2007 to 2012, and chairman from 2010 to 2012. Her current company directorships include Brookfield Asset Management, Lowe’s and Procter & Gamble.
Susan Avery was elected to the board in early 2017. Dr. Avery, an atmospheric scientist, is the former president and director of the Woods Hole Oceanographic Institution. In 2013, she was named to the Scientific Advisory Board of the United Nations Secretary-General, which provides advice on science, technology and innovation for sustainable development.
With our most recent board additions, the ExxonMobil board stands at 13 directors, 12 of whom are non-employee directors. We describe current director qualifications in our proxy statement, and the guidelines that the board employs in selecting board candidates are published on our company website and regularly reviewed.
Executive compensation and strategic advantage
ExxonMobil’s business model is reflective of a capital-intensive industry, requiring long investment lead times and a significant focus on risk management. Our executives understand their compensation reflects how effectively they manage risk and contribute to operations integrity and sustainable growth in shareholder value.
Our most senior executives — including the CEO, named executive officers and more than 1,000 other executives in the United States — participate in a common compensation program. Compensation for executives is highly differentiated, based on a rigorous annual individual performance assessment that takes into account several key factors, including results in the areas of safety, security, health and environmental performance, corporate governance, diversity and other goals pertinent to the financial and operating performance of the company.
ExxonMobil’s performance share awards have vesting periods that far exceed typical three-year vesting, resulting in significant performance share holdings, i.e., for executive officers 50 percent vests in five years and the other 50 percent vests in 10 years or retirement, whichever is later. Unvested performance share awards are not accelerated upon retirement and remain at risk of forfeiture. These features of the compensation program provide executives with a strong incentive to maintain a sharp focus on operations integrity, which in turn protects the safety and security of our employees, the communities and environments in which we operate. Learn more about our executive compensation program in ExxonMobil’s 2017 proxy statement.
Performance and initiatives
ExxonMobil’s compensation committee carefully considers the feedback on executive compensation we receive from our shareholders, some of whom have held ExxonMobil stock for more than a decade. During the 2016 proxy season, the advisory vote on executive compensation received 89 percent of votes “For” the company’s program as outlined.
We value the dialogue we have with our shareholders on a variety of governance, social and environmental topics throughout the year. Our direct engagement with shareholders provides an effective forum to address issues, share relevant information and viewpoints, and align on the facts.
The board has established procedures for shareholders and other interested parties to communicate with them, which further underpins the importance that the board places on shareholder input.
Individuals can email our non-employee directors through the corporate governance page of our website or send written correspondence in care of the secretary of the corporation. ExxonMobil employees work with directors as appropriate in responding to these letters and emails. Directors will sometimes request that senior managers meet with shareholders to address particular topics. Learn more about corporate governance.
Performance and initiatives
In 2016, we held 51 shareholder engagements on environmental, social and governance issues with institutional investors, pension funds, and labor, religious and nongovernmental organizations, representing almost 40 percent of outstanding stock held by institutional investors. These engagements have frequently allowed us to reach common ground with our shareholders, in some cases avoiding the need for more formal shareholder proposals at the annual shareholders meeting.
At the corporation’s 2016 annual meeting, shareholders owning approximately 3.5 billion — or more than 85 percent — of outstanding shares were represented. In 2016, shareholders voted on directors, independent auditors, executive compensation and 11 shareholder proposals. The summary table below shows the 2016 proxy vote results.