Washington, D.C. 20549


Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. )


þ    Filed by the Registrant    ¨    Filed by a Party other than the Registrant



  Check the appropriate box:






Preliminary Proxy Statement






Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))






Definitive Proxy Statement






Definitive Additional Materials






Soliciting Material Pursuant to §.240.14a-12




(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)



  Payment of Filing Fee (Check the appropriate box):



No fee required.



Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.



(1) Title of each class of securities to which transaction applies:



(2) Aggregate number of securities to which transaction applies:



(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):



(4) Proposed maximum aggregate value of transaction:



(5) Total fee paid:



Fee paid previously with preliminary materials.



Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.



(1) Amount Previously Paid:



(2) Form, Schedule or Registration Statement No.:



(3) Filing Party:



(4) Date Filed:





stockholder engagement: executive compensation program

This document supplements our proxy statement filed on April 7, 2016. With a challenging 2015 performance year, the Management Compensation Committee believes the additional disclosure will further clarify the link between management’s and stockholders’ interests.

We ask stockholders to vote FOR Item 3 on this year’s proxy, approving on an advisory basis our named executive officer compensation.

© 2016 Chevron Corporation



Chevron business overview and performance update

Chevron’s long-term business:

—Heavily influenced by the competitive and volatile oil & gas industry

—Characterized by a need to replenish resources, often through investment in capital intensive and long development cycle projects with

decades-long asset lives

—Requires career employment model; ability to attract and retain employees is critical

2015 Business Overview:

—Sharp decline in commodity prices

—Higher weighting than peers to both the Upstream business segment (versus Downstream) and to liquids production (versus natural gas)

—Upstream earnings hit hard by low crude oil and natural gas prices at a time when several major capital projects were under construction;

significant volume growth expected once these projects are fully online (2017-2018)

—Downstream reported record earnings and achieved strong utilization rates across the refineries

2015 performance in context:

Days Away from Work

Net Production Crude Prices and Cash from Operations Rate*

MBOED $ billions $/bbl $ billions


3,000 30 120 50 0.20

40 0.15

2,000 20 80 30


1,000 10 40 20

10 0.05 1



1 1 1

— 0 0—0.00

2010 2011 2012201320142015 2010 2011 2012201320142015 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015

Earnings Brent Price Competitor Range CVX



Per 200,000 hours worked. LTIP Performance Share Peer Group used for

comparison. Reported earnings normalized to reflect inventory accounting

differences for IFRS based reporting.

© 2016 Chevron Corporation 2



Compensation program aligns incentives with stockholder interests

Pay decisions and outcomes demonstrate strong link to performance

2015 Compensation Outcomes

Board and Management Compensation Committee

(MCC) decreased 2015 CEO compensation to parallel

stockholder experience

Intended compensation down year-over-year

—Chevron Incentive Plan payout down year-

over-year, reflecting rigorous MCC target-

setting process

—Intended equity grant level year-over-year

(accounting value increased due to valuation


Realizable pay down versus target pay over last 3


—Option grants from last 5 years all underwater

© 2016 Chevron Corporation

TSR Performance Compared to Peers1

Performance Chevron Peer Group Chevron CEO

Period TSR TSR 2 Pay Alignment

Short-term incentive



year (16.0%) (14.7%) down 21% from prior

(2015) year



years 3-year performance

(2013-2015) (2.3%) (2.8%) share payout down

19% from target value



years 5 years of option grants

3.3% 0.6%

(2011-2015) are underwater



As of December 31, 2015



Peer Group TSR refers to average TSR of LTIP Performance Share Peer Group (BP, ExxonMobil, Royal

Dutch Shell and Total)





Significant CEO and NEO compensation ‘at risk’

Substantial portion of pay directly aligned to stockholder value creation

Reward element Form Purpose CEO compensation mix 2

Provide a fixed level of

Fixed competitive base pay to help us 10%

Base salary Cash attract and retain strong executive 12%

talent through a full career 90%

78% at risk

Chevron Cash Reward NEOs for annual

Incentive Plan company, business unit and

(CIP) individual performance

At risk Other NEO compensation mix 2

Long-Term Stock options Reward creation of long-term

Incentive Plan Performance shares stockholder value

(LTIP) Restricted stock units 1 15%

15% 85%

Retirement Lump sum or annuity Provide retirement benefits

Benefits plans/savings savings plan designed to achieve a base 70% at risk

plans level of replacement pay

upon retirement



RSU grants were made in 2015 to 3 non-CEO NEOs; see slide 9 for details



Pie charts exclude benefits Base Salary CIP LTIP

© 2016 Chevron Corporation 4



Realizable pay demonstrates compensation aligns with performance

CEO’s cumulative realizable pay over the past three years is 55 percent less than its original

intended target value

Target and realizable values



$20 Same realizable $9.9MM realizable $10.2MM

value as of value as of realizable value as

$19.5 5/9/2016 stock $19.9 5/9/2016 stock $20.0 of 5/9/2016 stock

$15 price $100 price $100 price $100


$9.2 $9.4 $8.3



Target1 2013 Realizable2 Target1 2014 Realizable2 Target1 2015 Realizable2

Base Salary Bonus Stock Options Performance Shares

(1) Target Value at Award Date reflects: (i) base salary at year end, (ii) target CIP award, and (iii) intended grant date value of LTIP awards (60 percent stock options and 40 percent performance shares).

(2) Realizable Value at 12/31/15 reflects: (i) paid base salary during the calendar year; (ii) the actual CIP award earned for that year, and (iii) the actual prevailing LTIP value at 12/31/15. For stock options: reflects that none of the past three

awards is currently “in the money”, with exercise prices of $116.45 (2013); $116.00 (2014) and $103.71 (2015) relative to Chevron’s common stock price at 12/31/15 of $89.96. For (i) 2014 and 2015 performance shares: reflect 12/31/15 TSR

rank versus the LTIP Performance Share Peer Group and associated performance modifier multiplied by Chevron’s common stock price at 12/31/15 ($89.96) and (ii) for the 2013 performance shares: the amount earned and paid at 100

percent (median Peer Group ranking) using the 20-day average trailing price of Chevron common stock at 12/31/15 ($89.93).

© 2016 Chevron Corporation 5



Board decreased CEO compensation in 2015

Accounting value differences show increase in compensation

Compensation elements approved by Board

Short-term Long-term Incentive

Year Salary Total

Incentive (target value)1

2015 $1,855,479 $ 2,450,000 $15,322,000 $19,627,479

2014 $1,825,500 $ 3,100,000 $15,322,000 $20,247,500

Difference $29,979 $ (650,000)—($620,021)

% Change 1.6% (21.0%) no change (3.1%)

1Target value is disclosed in the Compensation Discussion & Analysis (CD&A) section of the proxy statement

Summary Compensation Table disclosure2

Non-Equity Option Awards

Year Salary Incentive + Total

Compensation Stock Awards

2015 $1,855,479 $ 2,450,000 $14,679,660 $18,985,139

2014 $1,825,500 $ 3,100,000 $13,402,740 $18,328,240

Difference $29,979 $ (650,000) $1,276,920 $656,899

% Change 1.6% (21.0%) 9.5% 3.6%

2Including other compensation and change in pension and non-qualified deferred compensation, total CEO compensation decreased by 15 percent from 2014

© 2016 Chevron Corporation

Basis for Board decisions

Salary: modest increase in recognition of strong 2014


Short-term incentive: reduced to recognize mixed 2015


Long-term incentive: remained same based on the independent

consultant’s input and competitive data primarily from the Oil

Industry Peer Group adjusted for Company’s size, scope and

complexity; also considered CEO’s demonstrated performance

Why is the disclosed equity value different?

Accounting Standards Codification Topic 718 (ASC 718) requires

Grant Date Fair Value reporting of equity grants using Monte Carlo

simulation for TSR-based performance shares and Black Scholes

option valuation—see footnote (2) and (3) to the Summary

Compensation Table (page 52 of the 2016 proxy statement)

Approved target value will always differ from disclosed accounting






Executive compensation governance is driven by strong metrics-based oversight

Board of Directors Compensation Oversight Process

Management Compensation Committee (MCC)

Composed of

Independent Directors Oversight responsibility for compensation program

Independent (Retained by Compensation Management


Consultant Committee)

Advise on CEO compensation package, based on market-data Assist with peer group selection Review and provide data on executive compensation levels, practices and market trends

© 2016 Chevron Corporation

Evaluation of

corporate and



Metrics-based corporate

performance measures:


Health, environment

and safety




and commercial

Individual leadership


Total Shareholder Return

relative to peer group


Set compensation levels

Base salary Chevron Incentive Plan (CIP) awards Long-Term Incentive Plan (LTIP) awards

Rigorous Goal Setting & Performance Review

Beginning of year




presented to


Board sets annual

business plan at




weighting and

goals are



business plan

Mid-year performance review on metrics

Board/MCC reviews progress update on CIP measures Quantitative and qualitative updates delivered

Comprehensive year-end performance assessment



reviews and

assesses company




parameters analyzed


– Absolute results to

current year plan

– Relative results to

Oil Industry Peer


– Performance trend

over time

– Individual






Chevron Incentive Plan is tied to value delivered to shareholders

CIP is designed to recognize annual performance achievements across

more than 55,000 CIP-eligible Chevron employees

The Management Compensation Committee determined a Corporate

Performance Rating of 80% for 2015 performance year, with a possible range

of 0%-200%

Significant non-financial achievements also include:

– Industry leading safety results

– Historic downstream facility utilization and reliability

– Advanced many major capital projects and realized significant value from


CIP Payout Calculator

Corporate Individual Base Award Performance Performance salary Target Rating Factor

Award Target & Benchmarking

Prior to each performance year, MCC sets the CIP Award Target as a multiple of base salary with reference to the median awards of Oil Industry Peer Group pay

Chevron Incentive

Plan (“CIP”) Oil Industry Peer Group: Exxon Mobil, Royal Dutch Shell, BP, ConocoPhillips, Occidental Petroleum, Philips 66, Valero Energy, Marathon Petroleum, Anadarko Petroleum, Hess, Devon Energy, Tesoro, Marathon Oil

© 2016 Chevron Corporation

Corporate Performance Rating Components & Metrics

Financial 40%


Environment, and 20% Safety




Milestones and




Return on Capital Employed

Total Shareholder Return (1, 3 and 5 year) Process Safety Personal Safety Environmental Performance Operating Expenses Segment Earnings per Barrel Production Reserves Asset Utilization Rates

Major Capital Projects Commercial Transactions

Performance is assessed against key performance measures on historical, absolute and relative performance to the Oil Industry Peer Group

Performance Assessment

Performance highlights include:

Significant actions in response to low

commodity prices

28th consecutive dividend increase

One of the best years in overall

Operational Excellence performance





Long-term incentive plan (LTIP) aligns with stockholder interests

Targets vs. pay outcomes demonstrate strong link to performance

Term of LTIP awards

Grant Year: Perf. shares

2015 Stock options

Perf. shares

2014 Stock options

Perf. shares

2013 Stock options

2013 2015 2017 2019 2021 2023 2025

CEO 2013 PSU Target vs. Payout Value

(2013-2015 performance period)



Target Value at Grant Actual Payout

Payout = modifier 100% x 20-day trailing average price $89.93 x vested shares 47,000

© 2016 Chevron Corporation

Performance Shares (40% of target grant value)

Realized value is significantly lower than the target due to lower payout price

($89.93) despite 2013 performance share grant paid out at 100% modifier

Stock Options (60% of target grant value)



years of option grants underwater as of 12/31/2015 (closing price of $89.96)

Stock options and performance shares as key compensation elements ensure

CEO and NEOs are:

Fully aligned with the economic interests of our stockholders, on medium and

long term horizon;

Significantly leveraged, from an ultimate compensation standpoint, to

Chevron’s common stock price performance; and

Rewarded based on a balance between relative (performance shares) and

absolute (stock options) pay-for-performance.

Restricted Stock Units

Granted on rare occasions to recognize performance or incentivize retention. The

following NEOs received RSU grants in 2015 in recognition of their strong

performance in 2014:

James W. Johnson: Increased responsibility and seamless leadership transition in

Upstream operations

Michael K. Wirth: Industry-leading Downstream performance

R. Hewitt Pate: Exceptional progress on major litigation matters