FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________to________
Commission File Number 1-2256
EXXON CORPORATION
_______________________________________________________
(Exact name of registrant as specified in its charter)
NEW JERSEY 13-5409005
______________________________ __________________
(State or other jurisdiction of (I.R.S. Employer
(incorporation or organization) (Identification Number)
5959 Las Colinas Boulevard, Irving, Texas 75039-2298
_________________________________________________________________
(Address of principal executive offices) (Zip Code)
(972) 444-1000
_________________________________________________________
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No .
___ __
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding as of June 30, 1997
_______________________________ _______________________________
Common stock, without par value 2,474,366,358
<PAGE>
EXXON CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
TABLE OF CONTENTS
Page
Number
______
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statement of Income 3
Three and six months ended June 30, 1997 and 1996
Condensed Consolidated Balance Sheet 4
As of June 30, 1997 and December 31, 1996
Condensed Consolidated Statement of Cash Flows 5
Six months ended June 30, 1997 and 1996
Notes to Condensed Consolidated Financial Statements 6 - 8
Item 2. Management's Discussion and Analysis of Financial 9 -13
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 2. Changes in Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14-15
Item 6. Exhibits and Reports on Form 8-K 15
Signature 16
Index to Exhibits 17
-2-
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EXXON CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(millions of dollars)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
__________________ ________________
<S> <C> <C> <C> <C>
REVENUE 1997 1996 1997 1996
_______ _______ _______ _______
Sales and other operating revenue,
including excise taxes $32,314 $31,625 $65,419 $62,099
Earnings from equity interests and other
revenue 533 586 1,018 1,317
______ ______ ______ ______
Total revenue 32,847 32,211 66,437 63,416
______ ______ ______ ______
COSTS AND OTHER DEDUCTIONS
Crude oil and product purchases 13,708 13,325 28,217 25,922
Operating expenses 3,202 3,270 6,443 6,558
Selling, general and administrative expenses 2,012 2,020 3,891 3,956
Depreciation and depletion 1,342 1,306 2,707 2,678
Exploration expenses, including dry holes 141 149 306 289
Interest expense 104 136 176 212
Excise taxes 3,631 3,650 7,180 6,960
Other taxes and duties 5,449 5,623 10,642 11,129
Income applicable to minority and
preferred interests 98 80 197 219
______ ______ ______ ______
Total costs and other deductions 29,687 29,559 59,759 57,923
______ ______ ______ ______
INCOME BEFORE INCOME TAXES 3,160 2,652 6,678 5,493
Income taxes 1,195 1,082 2,538 2,038
______ ______ ______ ______
NET INCOME $ 1,965 $ 1,570 $ 4,140 $ 3,455
====== ====== ====== ======
Net income per common share* $ 0.79 $ 0.63 $ 1.66 $ 1.39
Dividends per common share* $ 0.410 $ 0.395 $ 0.805 $ 0.770
Average number common shares
outstanding (millions)* 2,478.5 2,484.1 2,480.9 2,484.0
</TABLE>
Net income per share computed as income less dividends on preferred stock
divided by the weighted average number of common shares outstanding.
* Prior year amounts restated to reflect two-for-one stock split effective
March 14, 1997.
-3-
<PAGE>
EXXON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(millions of dollars)
<TABLE>
<CAPTION> June 30, Dec. 31,
1997 1996
______ ______
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 4,720 $ 2,951
Other marketable securities 22 18
Notes and accounts receivable - net 9,814 10,499
Inventories
Crude oil, products and merchandise 4,384 4,501
Materials and supplies 752 784
Prepaid taxes and expenses 1,102 1,157
______ ______
Total current assets 20,794 19,910
Property, plant and equipment - net 65,520 66,607
Investments and other assets 8,606 9,010
______ ______
TOTAL ASSETS $94,920 $95,527
====== ======
LIABILITIES
Current liabilities
Notes and loans payable $ 2,643 $ 2,510
Accounts payable and accrued liabilities 13,691 14,510
Income taxes payable 2,398 2,485
______ ______
Total current liabilities 18,732 19,505
Long-term debt 7,041 7,236
Annuity reserves, deferred credits and
other liabilities 25,332 25,244
______ ______
TOTAL LIABILITIES 51,105 51,985
______ ______
SHAREHOLDERS' EQUITY
Preferred stock, without par value:
Authorized: 200 million shares
Outstanding: 4 million shares at June 30, 1997 221
5 million shares at Dec. 31, 1996 303
Guaranteed LESOP obligation (225) (345)
Common stock, without par value:
Authorized: 3,000 million shares
Issued: 2,984 million shares at June 30, 1997 2,322
See Note 3 for shares at Dec. 31, 1996 2,822
Earnings reinvested 49,923 57,156
Cumulative foreign exchange translation adjustment 57 1,126
Common stock held in treasury:
510 million shares at June 30, 1997 (8,483)
1,142 million shares at Dec. 31, 1996 (17,520)
______ ______
TOTAL SHAREHOLDERS' EQUITY 43,815 43,542
______ ______
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $94,920 $95,527
====== ======
</TABLE>
The number of shares of common stock issued and outstanding at June 30, 1997
and December 31, 1996 (restated to reflect two-for-one stock split effective
March 14, 1997) were 2,474,366,358 and 2,483,492,968, respectively.
-4-
<PAGE>
EXXON CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(millions of dollars)
<TABLE>
<CAPTION> Six Months Ended
June 30,
_________________
1997 1996
<S> <C> <C>
_____ _____
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $4,140 $3,455
Depreciation and depletion 2,707 2,678
Changes in operational working capital, excluding
cash and debt (244) 163
All other items - net 1,324 764
_____ _____
Net Cash Provided By Operating Activities 7,927 7,060
_____ _____
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions and additions to property,
plant and equipment (3,331) (3,259)
Sales of subsidiaries and property, plant and equipment 165 170
Other investing activities - net 104 35
_____ _____
Net Cash Used In Investing Activities (3,062) (3,054)
_____ _____
NET CASH GENERATION BEFORE FINANCING ACTIVITIES 4,865 4,006
_____ _____
CASH FLOWS FROM FINANCING ACTIVITIES
Additions to long-term debt 330 364
Reductions in long-term debt (220) (261)
Additions/(reductions) in short-term debt - net (81) (14)
Cash dividends to Exxon shareholders (2,007) (1,928)
Cash dividends to minority interests (155) (169)
Additions/(reductions) to minority interests and
sales/(redemptions) of affiliate preferred stock (73) (29)
Acquisitions of Exxon shares - net (914) (243)
_____ _____
Net Cash Used In Financing Activities (3,120) (2,280)
_____ _____
Effects Of Exchange Rate Changes On Cash 24 (12)
_____ _____
Increase/(Decrease) In Cash And Cash Equivalents 1,769 1,714
Cash And Cash Equivalents At Beginning Of Period 2,951 1,508
_____ _____
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$4,720 $3,222
===== =====
SUPPLEMENTAL DISCLOSURES
Income taxes paid $2,052 $1,213
Cash interest paid $ 316 $ 371
</TABLE>
-5-
<PAGE>
EXXON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis Of Financial Statement Preparation
These unaudited condensed consolidated financial statements should be read
in the context of the consolidated financial statements and notes thereto
filed with the S.E.C. in the corporation's 1996 Annual Report on Form 10-K.
In the opinion of the corporation, the information furnished herein
reflects all known accruals and adjustments necessary for a fair statement
of the results for the periods reported herein. All such adjustments are
of a normal recurring nature. The corporation's exploration and production
activities are accounted for under the "successful efforts" method.
2. Recently Issued Statements of Financial Accounting Standards
In February 1997, the Financial Accounting Standards Board released
Statement No. 128, "Earnings per Share" which must be adopted for both
interim and annual periods ending after December 15, 1997, with earlier
application not permitted. Based on preliminary estimates, basic earnings
per share defined by the statement is consistent with current reporting of
net income per common share. The difference between basic and diluted
earnings per share is expected to be insignificant.
In June 1997, the Financial Accounting Standards Board released Statement
No. 130, "Reporting Comprehensive Income" and Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information."
Both statements become effective for fiscal years beginning after
December 15, 1997 with early adoption permitted. These statements require
disclosure of certain components of changes in equity and certain
information about operating segments and geographic areas of operation.
No decision has been made as to when the company will adopt the statements.
These statements will not have any effect on the results of operations or
financial position.
3. Capital
On February 26, 1997, the company's Board of Directors approved a
two-for-one stock split to Common Stock shareholders of record on
March 14, 1997 and canceled 321,000,000 shares (pre-split basis) of
Common Stock without par value held by the corporation as treasury
shares. These canceled shares were returned to the status of authorized
but unissued shares. The treasury stock account was credited for $9,869
million, the Common Stock account charged for $500 million and the
retained earnings account charged for $9,369 million to cancel these
treasury shares.
On March 14, 1997, the authorized Common Stock was increased from two
billion shares without par value to three billion shares without par value
and the issued shares were split on a two-for-one basis.
Since canceled treasury shares were returned to the status of authorized but
unissued shares and used to partially accomplish the two-for-one stock
split, the restated number of Common Stock shares issued (on a post-split
basis) at December 31, 1996 is not meaningful.
-6-
<PAGE>
EXXON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The number of shares of Common Stock issued and outstanding as of
December 31, 1996 and 1995, restated to reflect the two-for-one stock split,
were 2,483,492,968 and 2,483,543,658, respectively. Earnings per share for
the years ended December 31, 1996, 1995 and 1994, restated for the effect of
the two-for-one stock split, are $3.01, $2.59, and $2.04, respectively.
4. Litigation and Other Contingencies
A number of lawsuits, including class actions, were brought in various
courts against Exxon Corporation and certain of its subsidiaries relating to
the accidental release of crude oil from the tanker Exxon Valdez in 1989.
Essentially all of these lawsuits have now been resolved or are subject to
appeal.
On September 24, 1996, the United States District Court for the District of
Alaska entered a judgment in the amount of $5.058 billion in the Exxon
Valdez civil trial that began in May 1994. The District Court awarded
approximately $19.6 million in compensatory damages to fisher plaintiffs,
$38 million in prejudgment interest on the compensatory damages and
$5 billion in punitive damages to a class composed of all persons and
entities who asserted claims for punitive damages from the corporation as a
result of the Exxon Valdez grounding. The District Court also ordered that
these awards shall bear interest from and after entry of the judgment. The
District Court stayed execution on the judgment pending appeal based on a
$6.75 billion letter of credit posted by the corporation. Exxon has
appealed the judgment. The corporation continues to believe that the
punitive damages in this case are unwarranted and that the judgment should
be set aside or substantially reduced by the appellate courts.
The ultimate cost to the corporation from the lawsuits arising from the
Exxon Valdez grounding is not possible to predict and may not be resolved
for a number of years.
German and Dutch affiliated companies are the concessionaires of a natural
gas field subject to a treaty between the governments of Germany and the
Netherlands under which the gas reserves in an undefined border or common
area are to be shared equally. Entitlement to the reserves is determined by
calculating the amount of gas which can be recovered from this area. Based
on the final reserve determination, the German affiliate has received more
gas than its entitlement. Arbitration proceedings, as provided in the
agreements, have been underway to determine the manner of resolving the
issues between the German and Dutch affiliated companies.
On July 8, 1996, an interim ruling was issued establishing a provisional
compensation payment for the excess gas received. Additional compensation,
if any, remains subject to further arbitration proceedings or negotiation.
Other substantive matters remain outstanding, including recovery of
royalties paid on such excess gas and the taxes payable on the final
compensation amount. The net financial impact on the corporation is not
possible to predict at this time given these outstanding issues. However,
the ultimate outcome is not expected to have a materially adverse effect
upon the corporation's consolidated financial condition or operations.
-7-
<PAGE>
EXXON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The U.S. Tax Court has decided the issue with respect to the pricing of
crude oil purchased from Saudi Arabia for the years 1979-1981 in favor of
the corporation. This decision is subject to appeal. Certain other issues
for the years 1979-1982 remain pending before the Tax Court. The ultimate
resolution of these issues is not expected to have a materially adverse
effect upon the corporation's operations or financial condition.
Claims for substantial amounts have been made against Exxon and certain of
its consolidated subsidiaries in other pending lawsuits, the outcome of
which is not expected to have a materially adverse effect upon the
corporation's financial condition or operations.
The corporation and certain of its consolidated subsidiaries are directly
and indirectly contingently liable for amounts similar to those at the prior
year-end relating to guarantees for notes, loans and performance under
contracts, including guarantees of non-U.S. excise taxes and customs duties
of other companies, entered into as a normal business practice, under
reciprocal arrangements.
Additionally, the corporation and its affiliates have numerous long-term
sales and purchase commitments in their various business activities, all of
which are expected to be fulfilled with no adverse consequences material to
the corporation's operations or financial condition.
The operations and earnings of the corporation and its affiliates throughout
the world have been, and may in the future be, affected from time to time in
varying degree by political developments and laws and regulations, such as
forced divestiture of assets; restrictions on production, imports and
exports; price controls; tax increases and retroactive tax claims;
expropriation of property; cancellation of contract rights and environmental
regulations. Both the likelihood of such occurrences and their overall
effect upon the corporation vary greatly from country to country and are not
predictable.
-8-
<PAGE>
EXXON CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
FUNCTIONAL EARNINGS SUMMARY
Second Quarter First Six Months
_________________ ________________
1997 1996 1997 1996
______ ______ ______ ______
(millions of dollars)
<S> <C> <C> <C> <C>
Petroleum and natural gas
Exploration and production
United States $ 335 $ 423 $ 889 $ 842
Non-U.S. 620 615 1,510 1,619
Refining and marketing
United States 162 98 219 82
Non-U.S. 382 134 679 324
_____ _____ _____ _____
Total petroleum and natural gas 1,499 1,270 3,297 2,867
Chemicals
United States 246 166 438 319
Non-U.S. 147 138 265 272
Other operations 127 100 255 217
Corporate and financing (54) (104) (115) (220)
_____ _____ _____ _____
NET INCOME $1,965 $1,570 $4,140 $3,455
===== ===== ===== =====
</TABLE>
SECOND QUARTER 1997 COMPARED WITH SECOND QUARTER 1996
Exxon Corporation estimated second quarter 1997 net income of $1,965 million,
an increase of $395 million or 25 percent from $1,570 million in second quarter
1996. On a per share basis, net income rose to $0.79 in the second quarter of
1997 compared to $0.63 in the prior year's quarter.
Exxon's net income of $1.97 billion was up $395 million or 25 percent over last
year's second quarter and represented the highest second quarter earnings in
Exxon's history. Earnings benefited from generally stronger downstream margins
and higher petroleum product sales. Chemicals volumes and margins also
improved over the prior year's quarter. Crude oil prices were volatile during
the quarter and on average were lower than the prior year. Liquids production
and natural gas sales were similar to second quarter 1996 levels. Petroleum
product sales for the second quarter were at the highest level achieved in over
20 years, with increases in all major geographic areas. Downstream margins
improved overall with U.S. and European industry refining margins recovering
modestly from last year's depressed levels. Chemicals earnings were up
29 percent over last year. Sales volumes continued strong, establishing a
quarterly record. Commodity chemical product prices and margins were also
higher. Earnings from other operations increased from second quarter 1996 on
higher copper realizations and record coal production.
-9-
<PAGE>
EXXON CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OTHER COMMENTS ON SECOND QUARTER COMPARISON
Exploration and production earnings were negatively impacted by lower crude
prices which averaged about $1.50 per barrel less than the prior year.
European gas prices improved, while U.S. gas prices were lower on average than
last year, although strengthening over the course of the quarter.
Liquids production was 1,588 kbd (thousand barrels per day) compared to
1,595 kbd in the second quarter of 1996. Production increased from
developments in Canadian heavy oil operations, the North Sea and Australia.
These gains were offset by planned maintenance, a revised production sharing
agreement in Malaysia, and field decline. Gas production was 5,640 mcfd
(million cubic feet per day) compared to 5,674 mcfd in the prior year.
Earnings from U.S. exploration and production were $335 million, compared with
$423 million in the second quarter last year. Outside the U.S., earnings from
exploration and production were $620 million, as compared to $615 million in
the second quarter 1996.
Petroleum product sales of 5,348 kbd rose 6 percent from last year's second
quarter. Sales volumes increased in all major geographic areas. Refinery
throughput increased 121 kbd to 3,875 kbd reflecting lower scheduled
maintenance. Downstream industry margins improved somewhat from the depressed
levels of second quarter 1996. Refining margins strengthened in the U.S. gulf
coast and Europe but were weaker in Asia-Pacific. The industry environment
improved in the U.K., although marketing margins remained weak.
In the U.S., second quarter refining and marketing earnings were $162 million,
up $64 million from the prior year. Earnings from refining and marketing
operations outside the U.S. were $382 million, an increase of $248 million from
last year.
Chemical earnings were $393 million, up $89 million from second quarter 1996.
Record prime product sales of 4,277 kt (thousand metric tons) were up 8 percent
from the prior year. Margins improved on the strengthening of commodity
chemicals prices and lower feedstock costs.
Earnings from other operations, including coal, minerals and power, totaled
$127 million, an increase from $100 million in the second quarter 1996.
Copper realizations were higher, and coal production from continuing operations
was at a record level. Corporate and financing expenses of $54 million
compared with $104 million in the second quarter of last year, reflecting lower
tax-related charges.
Revenue for the second quarter of 1997 totaled $32,847 million, an increase
from $32,211 million in the second quarter 1996. Capital and exploration
expenditures were $2,215 million in the second quarter of 1997 compared with
$2,301 million in last year's second quarter.
During the second quarter of 1997, Exxon purchased 14.9 million shares of its
common stock for the treasury at a cost of $863 million, reducing shares
outstanding from 2,483.0 million at the end of first quarter 1997 to 2,474.4
million at the end of the second quarter. Purchases are made in open market
and negotiated transactions and may be discontinued at any time.
-10-
<PAGE>
EXXON CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FIRST SIX MONTHS 1997 COMPARED WITH FIRST SIX MONTHS 1996
Net income was $4,140 million in the first half 1997, an increase of 20 percent
from the $3,455 million earned in 1996. Net income for first half 1996
included $125 million in non-recurring credits. Excluding these credits, the
increase was $810 million or 24 percent. On a per share basis, net income was
$1.66 in the first half of 1997 compared to $1.39 last year.
Exploration and production earnings benefited from higher crude oil and natural
gas prices. Liquids production was 1,608 kbd compared to 1,639 kbd last year.
Increased production from Canada and new developments was offset by a revised
production sharing agreement in Malaysia, field decline and the sale of several
producing properties. Natural gas production of 6,587 mcfd was down 415 mcfd
from the first half of 1996 reflecting warmer weather in Europe.
Earnings from U.S. exploration and production operations for the first six
months were $889 million, an increase of $47 million from 1996. Outside the
U.S., earnings from exploration and production operations were $1,510 million,
up $16 million, after excluding non-recurring credits of $125 million in the
first quarter of 1996.
Petroleum product sales of 5,318 kbd increased 210 kbd over last year, with
volume growth in all major geographic areas. Earnings from U.S. refining and
marketing operations were $219 million, up from $82 million in 1996, as
industry refining margins improved from last year's low levels. Outside the
U.S., first half 1997 refining and marketing earnings increased $355 million to
$679 million, reflecting higher refining margins in Europe and an improved but
still weak industry environment in the U.K.
Chemical earnings totaled $703 million in the first half of 1997, up
$112 million from last year. Prime product sales grew 6 percent over 1996 to
8,361 kt. Industry commodity prices and margins improved from last year's
levels.
Earnings from other operations totaled $255 million, an increase of $38 million
from the first half of 1996, reflecting increased coal production and higher
copper realizations. Corporate and financing expenses declined $105 million to
$115 million, reflecting lower tax-related charges.
-11-
<PAGE>
EXXON CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FIRST SIX MONTHS 1997 COMPARED WITH FIRST SIX MONTHS 1996
Net cash generation before financing activities was $4,865 million in the first
half of 1997 versus $4,006 million in the same period last year. Operating
activities provided net cash of $7,927 million, an increase of $867 million
from 1996's first half, influenced by higher net income and an insurance
related settlement. Investing activities used net cash of $3,062 million,
about the same level as the prior year period.
Net cash used in financing activities was $3,120 million in the first half of
1997 versus $2,280 million for the year-ago period. The increase of
$840 million reflects the purchase of additional shares of Exxon common stock.
During the first half of 1997, a total of 20.2 million shares of Exxon common
stock were acquired for the treasury at a cost of $1,142 million. Purchases
are made in both the open market and through negotiated transactions.
Purchases may be discontinued at any time.
Capital and exploration expenditures in this year's first half were $4,005
million versus $4,292 million a year ago. Total capital and exploration
activity in 1997 should be at similar levels to 1996, as attractive investment
opportunities continue to be developed in each of the major business segments.
Total debt of $9.7 billion at June 30, 1997 was essentially unchanged from
year-end 1996. The corporation's debt to capital ratio was 17.5 percent at the
end of the first six months of 1997, down from 17.7 percent at year-end 1996.
Over the twelve months ended June 30, 1997, return on average shareholders'
equity was 19.2 percent. Return on average capital employed, which includes
debt, was 15.8 percent over the same time period.
Although the corporation issues long-term debt from time to time and maintains
a revolving commercial paper program, internally generated funds cover the
majority of its financial requirements.
Litigation and other contingencies are discussed in note 4 to the unaudited
condensed consolidated financial statements. There are no events or
uncertainties known to management beyond those already included in reported
financial information that would indicate a material change in future operating
results or future financial condition.
The corporation, as part of its ongoing asset management program, continues to
evaluate its mix of assets for potential upgrade. Because of the ongoing
nature of this program, dispositions will continue to be made from time to time
which will result in either gains or losses.
-12-
<PAGE>
EXXON CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
SPECIAL ITEMS
_____________
Second Quarter First Six Months
__________________ ________________
1997 1996 1997 1996
______ ______ ______ ______
(millions of dollars)
EXPLORATION & PRODUCTION
________________________
Non-U. S.
Tax related - - - $125
______ ______ ______ ______
TOTAL - - - $125
====== ====== ====== ======
-13-
<PAGE>
PART II. OTHER INFORMATION
EXXON CORPORATION
FOR THE QUARTER ENDED JUNE 30, 1997
Item 2. Changes in Securities
______ _____________________
In accordance with the registrant's 1997 Nonemployee Director
Restricted Stock Plan, a newly elected nonemployee director was
granted 4,000 shares of restricted Common Stock on
June 24, 1997. This grant is exempt from registration under
bonus stock interpretations such as the "no-action" letter to
Pacific Telesis Group (June 30, 1992).
_____________________
Item 4. Submission of Matters to a Vote of Security Holders
______ ___________________________________________________
At the annual meeting of shareholders on April 30, 1997, the
following proposals were voted upon:
Concerning Election of Directors
Votes Votes
Nominees for Director Cast for Withheld
_____________________ _____________ _________
Michael J. Boskin 1,052,332,293 7,972,120
D. Wayne Calloway 1,052,140,178 8,164,235
Jess Hay 1,051,938,768 8,365,645
James R. Houghton 1,052,179,148 8,125,265
William R. Howell 1,051,918,940 8,385,473
Philip E. Lippincott 1,052,093,961 8,210,452
Harry J. Longwell 1,052,458,749 7,845,664
Marilyn Carlson Nelson 1,052,519,403 7,785,010
Lee R. Raymond 1,051,951,660 8,352,753
Robert E. Wilhelm 1,052,619,241 7,685,172
Concerning Amendment of 1993 Incentive Program
Votes Cast For: 1,010,576,435
Votes Cast Against: 33,448,471
Abstentions: 14,810,927
Broker Non-Votes: 1,468,580
Concerning Performance-Based Incentive Awards
Votes Cast For: 1,013,386,268
Votes Cast Against: 31,048,747
Abstentions: 14,400,818
Broker Non-Votes: 1,468,580
-14-
<PAGE>
PART II. OTHER INFORMATION
EXXON CORPORATION
FOR THE QUARTER ENDED JUNE 30, 1997
Concerning Ratification of the Appointment of Independent Public
Accountants
Votes Cast For: 1,050,572,448
Votes Cast Against: 3,548,056
Abstentions: 4,718,334
Broker Non-Votes: 1,465,575
Concerning Additional Reporting of Political Contributions
Votes Cast For: 63,434,778
Votes Cast Against: 827,530,808
Abstentions: 25,038,625
Broker Non-Votes: 144,300,202
Concerning Additional Executive Compensation Reporting
Votes Cast For: 83,938,122
Votes Cast Against: 793,750,959
Abstentions: 38,315,130
Broker Non-Votes: 144,300,202
See also pages 4 through 8 and pages 17 through 22 of the registrant's
definitive proxy statement dated March 19, 1997. These voting results are
presented on a pre-split basis for votes from shareholders of record at the
close of business on March 3, 1997.
Item 6. Exhibits and Reports on Form 8-K
______ ________________________________
a) Exhibits
Exhibit 10(iii)(a) - Registrant's 1993 Incentive Program, as amended
May 28, 1997.
Exhibit 10(iii)(e) - Registrant's Short Term Incentive Program, as
amended May 28, 1997.
Exhibit 27 - Financial Data Schedule (included only in the
electronic filing of this document).
b) Reports on Form 8-K
The registrant has not filed any reports on Form 8-K during the
quarter.
-15-
<PAGE>
EXXON CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1997
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
EXXON CORPORATION
Date: August 12, 1997 /s/ Donald D.Humphreys
_______________________________________________
Donald D. Humphreys, Vice President, Controller
and Principal Accounting Officer
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<PAGE>
EXXON CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1997
INDEX TO EXHIBITS
10(iii)(a). Registrant's 1993 Incentive Program, as amended May 28, 1997.
10(iii)(e). Registrant's Short Term Incentive Program, as amended
May 28, 1997.
-17-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM EXXON'S
CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 30, 1997 AND EXXON'S CONDENSED
CONSOLIDATED STATEMENT OF INCOME FOR THE SECOND QUARTER 1997, THAT ARE CONTAINED
IN EXXON'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997. THE SCHEDULE
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 4,720
<SECURITIES> 22
<RECEIVABLES> 7,134
<ALLOWANCES> 92
<INVENTORY> 5,136
<CURRENT-ASSETS> 20,794
<PP&E> 125,695
<DEPRECIATION> 60,175
<TOTAL-ASSETS> 94,920
<CURRENT-LIABILITIES> 18,732
<BONDS> 7,041
0
221
<COMMON> 2,322
<OTHER-SE> 41,272
<TOTAL-LIABILITY-AND-EQUITY> 94,920
<SALES> 65,419
<TOTAL-REVENUES> 66,437
<CGS> 28,217
<TOTAL-COSTS> 28,217
<OTHER-EXPENSES> 9,456
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 176
<INCOME-PRETAX> 6,678
<INCOME-TAX> 2,538
<INCOME-CONTINUING> 4,140
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,140
<EPS-PRIMARY> 1.660<F1>
<EPS-DILUTED> 0
<FN>
<F1>Prior period primary earnings per share amounts have been restated for the
two-for-one stock split effective March 14, 1997.
</FN>
</TABLE>
Exhibit 10(iii)(a)
EXXON CORPORATION
1993 INCENTIVE PROGRAM
Adopted by shareholders April 28, 1993
(as last amended May 28, 1997)
General Provisions
I. Purpose.
The 1993 Incentive Program is intended to help maintain and develop strong
management through ownership of shares of the Corporation by key employees of
the Corporation and certain of its affiliates and through incentive awards for
recognition of efforts and accomplishments which contribute materially to the
success of the Corporation's business interests.
II. Definitions.
In this Program, except where the context otherwise indicates, the
following definitions apply:
(1) 'Administrative authority' means one of the following, as
appropriate in accordance with Section III: the Board; any committee to
which the Board delegates authority to administer this Program; or, in
individual cases, the Chairman of the Board or persons acting under his
direction.
(2) 'Affiliate' means (a) any subsidiary and (b) any other
corporation, partnership, joint venture, or other entity in which the
corporation, directly or indirectly, owns an equity interest and which
the administrative authority deems to be an affiliate for purposes of
this Program (including, without limitation, for purposes of determining
whether a change of employment constitutes a termination).
(3) 'Award' means a stock option, stock appreciation right ('SAR'),
restricted stock, performance award, incentive share, dividend equivalent
right ('DER'), or other award under this Program.
(4) 'Board' means the Board of Directors of the Corporation.
(5) 'Board Compensation Committee,' hereinafter sometimes called the
'BCC,' means the committee of the Board so designated in accordance with
Section IV.
(6) 'By the grant' means by the action of the granting authority at
the time of the grant of an award hereunder, or at the time of an
amendment of the grant, as the case may be.
<PAGE>
(7) 'Code' means the Internal Revenue Code, as in effect from time
to time.
(8) 'Corporation' means Exxon Corporation, a New Jersey corporation.
(9) 'Designated beneficiary' means the person designated by the
grantee of an award hereunder to be entitled, on the death of the
grantee, to any remaining rights arising out of such award. Such
designation must be made in writing and in accordance with such
regulations as the administrative authority may establish.
(10) 'Detrimental activity' means activity that is determined in
individual cases by the administrative authority to be detrimental to the
interests of the Corporation or any affiliate.
(11) 'Dividend equivalent right,' herein sometimes called a 'DER,'
means the right of the holder thereof to receive, pursuant to the terms
of the DER, credits based on the cash dividends that would be paid on the
shares specified in the DER if such shares were held by the grantee, as
more particularly set forth in Section XIV(1).
(12) 'Effectively granted' means, for purposes of determining the
number of shares subject to an outstanding award under this Program, the
number of shares subject to such award or the number of shares with
respect to which the value of such award is measured, as applicable. An
option that includes an SAR shall be considered a single award for this
purpose.
(13) 'Effectively issued' means the gross number of shares
purchased, issued, delivered, or paid free of restrictions upon the
exercise, settlement, or payment of an award, or lapse of restrictions
thereon, as the case may be.
(14) 'Eligible employee' means an employee of the Corporation or a
subsidiary who is a director or officer, or in a managerial,
professional, or other key position as determined by the granting
authority.
(15) 'Employee' means an employee of the Corporation or an
affiliate.
(16) 'Exchange Act' means the Securities Exchange Act of 1934, as
amended from time to time.
(17) 'Fair market value' in relation to a share as of any specific
time shall mean such value as reported for stock exchange transactions
determined in accordance with any applicable regulations of the
administrative authority in effect at the relevant time.
(18) 'Grantee' means a recipient of an award under this Program.
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<PAGE>
(19) 'Granting authority' means the Board or any appropriate
committee authorized to grant and amend awards under this Program in
accordance with Section V and to exercise other powers of the granting
authority hereunder.
(20) 'Incentive shares' means an award of shares granted pursuant to
Section XIII.
(21) 'Incentive Stock Option,' herein sometimes called an 'ISO,'
means a stock option meeting the requirements of Section 422 of the Code
or any successor provision.
(22) 'Performance award' means an award of shares, or of units or
rights based on, payable in, or otherwise related to shares, granted
pursuant to Section XII.
(23) 'Performance period' means any period specified by the grant of
a performance award during which specified performance criteria are to be
measured.
(24) 'Reporting person' means a person subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to equity
securities of the Corporation.
(25) 'Restricted stock' means any share issued with the restriction
that the holder may not sell, transfer, pledge, or assign such share and
such other restrictions (which may include, but are not limited to,
restrictions on the right to vote or receive dividends) which may expire
separately or in combination, at one time or in installments, all as
specified by the grant.
(26) 'Rule 16b-3' means Rule 16b-3 (or any successor thereto) under
the Exchange Act that exempts transactions under employee benefit plans,
as in effect from time to time.
(27) 'Share' means a share of Common Stock of the Corporation issued
and reacquired by the Corporation or previously authorized but unissued.
(28) 'Shareholder-approved plan' means any of the plans constituting
parts of any of the Incentive Programs previously approved by
shareholders of the Corporation.
(29) 'Stock appreciation right,' herein sometimes called an 'SAR,'
means the right of the holder thereof to receive, pursuant to the terms
of the SAR, a number of shares or cash or a combination of shares and
cash, based on the increase in the value of the number of shares
specified in the SAR, as more particularly set forth in Section X.
(30) 'Subsidiary' means a corporation, partnership, joint venture,
or other entity in which the Corporation, directly or indirectly, owns a
50% or greater equity interest.
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<PAGE>
(31) 'Terminate' means cease to be an employee, except by death, but
a change of employment from the Corporation or one affiliate to another
affiliate or to the Corporation shall not be considered a termination.
For purposes of this Program, the administrative authority may determine
that the time or date of termination is the day an employee resigns,
accepts employment with another employer or otherwise indicates an intent
to resign, which time or date need not necessarily be the last day on the
payroll.
(32) 'Terminate normally' for purposes of this Program means
terminate
(a) at normal retirement time for that employee, or
(b) with written approval of the administrative authority
given in the context of recognition that all or a specified portion
of the outstanding awards to that employee will not expire or be
forfeited or annulled because of such termination
and, in each such case, without being terminated for cause.
(33) 'Year' means calendar year.
III. Administration.
(1) The Board is the ultimate administrative authority for this Program,
with the power to conclusively interpret its provisions and decide all
questions of fact arising in its application. The Board may delegate its
authority pursuant to any provision of this Program to a committee which,
except in the case of the BCC, need not be a committee of the Board. Subject
to the authority of the Board or an authorized committee and excluding cases
involving the Chairman as grantee, the Chairman of the Board and persons acting
under his direction may serve as the administrative authority under this
Program for purposes of making determinations and interpretations in individual
cases.
(2) The Board and any committee acting as the administrative authority
under this Program can act by regulation, by making individual determinations,
or by both. The Chairman of the Board and persons designated by him can act as
the administrative authority under this Program only by making individual
determinations.
(3) All determinations and interpretations pursuant to the provisions of
this Program shall be binding and conclusive upon the individuals involved and
all persons claiming under them.
(4) With respect to reporting persons, transactions under this Program are
intended to comply with all applicable conditions of Rule 16b-3. To the extent
any provision of this Program or any action by an authority under this Program
fails to so comply, such provision or action shall, without further action by
any person, be deemed to be automatically amended to the extent necessary to
effect compliance with Rule 16b-3, provided that if such provision or action
cannot be amended to effect such compliance, such provision or action shall be
deemed null and void, to the extent
-4-
<PAGE>
permitted by law and deemed advisable by the appropriate authority. Each award
to a reporting person under this Program shall be deemed issued subject to the
foregoing qualification.
(5) An award under this Program is not transferable except, as provided in
the award, by will or the laws of descent and distribution, and is not subject
to attachment, execution, or levy of any kind. The designation by a grantee of
a designated beneficiary shall not constitute a transfer.
(6) Any rights with respect to an award granted under this Program
existing after the grantee dies are exercisable by the grantee's designated
beneficiary or, if there is no designated beneficiary, by the grantee's
personal representative.
(7) Except as otherwise provided herein, a particular form of award may be
granted to an eligible employee either alone or in addition to other awards
hereunder. The provisions of particular forms of award need not be the same
with respect to each recipient.
(8) If the administrative authority believes that a grantee (a) may have
engaged in detrimental activity or (b) may have accepted employment with
another employer or otherwise indicated an intent to resign, the authority may
suspend the exercise, vesting or settlement of all or any specified portion of
such grantee's outstanding awards pending an investigation of the matter.
(9) This Program and all action taken under it shall be governed by the
laws of the State of New York.
(10) Any award which was granted under a shareholder-approved plan and is
still outstanding shall be interpreted and administered in accordance with the
definitions and administrative provisions of this Program, including, without
limitation, Sections II through V hereof.
IV. Board Compensation Committee (BCC).
The Board shall appoint a BCC. The BCC shall consist of two or more
members of the Board, each of whom is a 'nonemployee director' within the
meaning of Rule 16b-3. No award may be granted to a member of the BCC.
V. Right to Grant Awards; Reserved Powers.
The Board is the ultimate granting authority for this Program, with the
power to select eligible employees for participation in this Program and to
make all decisions concerning the grant or amendment of awards. The Board may
delegate such authority in whole or in part (1) in the case of reporting
persons, to the BCC and (2) in the case of eligible employees who are not
reporting persons, to any committee.
VI. Term.
The term of this Program begins on the date shareholder approval of this
Program is obtained and ends on the tenth anniversary of that date.
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<PAGE>
VII. Awards Grantable.
(1) Subject to the provisions of this Program, an award is grantable if,
should it be granted, the total number of shares effectively granted during the
year of the grant would not exceed seven tenths of one percent (0.7%) of the
total number of shares of Common Stock of the Corporation outstanding
(excluding shares held by the Corporation) on December 31 of the preceding
year.
(2) If the total number of shares effectively issued with respect to an
award is less than, or exceeds, the number of shares deemed effectively granted
with respect to such award, the balance of such shares shall be, respectively,
added to, or subtracted from, the maximum number of shares that may be
effectively granted as awards thereafter.
(3) If the total number of shares effectively granted as awards in any
year is less than the maximum number of shares that could have been so granted
pursuant to the provisions of this Program, the balance of such unused shares
shall be added to the maximum number of shares that may be effectively granted
as awards in the following year.
(4) In addition to the foregoing, shares surrendered to the Corporation in
payment of the exercise price or applicable taxes upon exercise or settlement
of an award may also be used thereafter for additional awards.
(5) Notwithstanding the foregoing provisions of this Section VII, the
total number of shares that may be effectively granted under stock options or
stock appreciation rights to any one grantee in any one calendar year may not
exceed two tenths of one percent (0.2%) of the total number of shares of Common
Stock of the Corporation outstanding (excluding shares held by the Corporation)
on December 31, 1996; provided, that such number of shares is doubled in
accordance with Section VIII to reflect a two-for-one split of the shares on
March 14, 1997.
VIII. Adjustments.
Whenever a stock split, stock dividend, or other relevant change in
capitalization which the administrative authority determines to be dilutive to
outstanding awards occurs,
(1) the number of shares that can thereafter be obtained under
outstanding awards and the purchase price per share, if any, under such
awards, and
(2) every number of shares used in determining whether a particular
award is grantable thereafter,
shall be appropriately adjusted.
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<PAGE>
IX. Stock Options.
One or more grantable stock options can be granted to any eligible
employee. Each stock option so granted shall be subject to such terms and
conditions as the granting authority shall impose, which shall include the
following:
(1) The exercise price per share shall be specified by the grant,
but shall in no instance be less than 100 percent of fair market value at
the time of grant. Payment of the exercise price shall be made in cash,
shares, or other consideration in accordance with the terms of this
Program and any applicable regulations of the administrative authority in
effect at the time and valued at fair market value on the date of
exercise of the stock option.
(2) If the grantee has not terminated, the stock option shall become
exercisable at the time or times specified by the grant. If the grantee
has terminated before a stock option or portion thereof becomes
exercisable, that stock option or portion thereof shall be forfeited and
shall never become exercisable. Except as otherwise specified by the
grant, a stock option shall become immediately exercisable in full upon
the death of the grantee.
(3) Any stock option or portion thereof that is exercisable is
exercisable for the full amount or for any part thereof, except as
otherwise provided by the grant.
(4) Each stock option ceases to be exercisable, as to any share,
when the stock option is exercised to purchase that share, or when a
related SAR is exercised either by the holder or automatically in
accordance with its terms, or when the stock option expires. To the
extent an SAR included in a stock option is exercised, such stock option
shall be deemed to have been exercised and shall not be deemed to have
expired.
(5) A stock option or portion thereof that is exercisable shall
expire in the following situations:
(a) unless clauses (b), (c) or (d) below apply, it shall
expire at the earlier of:
(i) ten years after it is granted, or
(ii) any earlier time specified by the grant;
(b) if the grantee terminates, but does not terminate
normally, it shall expire at the time of termination;
(c) if the grantee is determined to have engaged in
detrimental activity, it shall expire as of the date of such
determination; or
(d) if the grantee dies, it shall expire at the earlier
of:
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<PAGE>
(i) five years after the grantee's death, or
(ii) any earlier time specified by the grant;
but, in any case, no later than ten years after it is granted.
(6) If a grantee terminates other than normally, (a) the
administrative authority may refuse to deliver shares in settlement of
any pending stock option exercise and (b) the granting authority may
require the grantee to repay to the Corporation an amount equal to the
spread on any stock option exercised by the grantee during the six-month
period immediately preceding such termination. For purposes of the
foregoing subsection (6)(b), 'spread' means the difference between the
aggregate stock option exercise price and the fair market value of the
underlying shares on the date such option is exercised.
(7) All stock options granted hereunder are hereby designated as
ISOs except to the extent otherwise specified by the grant and except to
the extent otherwise specified in this Section IX(7). To the extent that
the aggregate fair market value of shares with respect to which stock
options designated as ISOs are exercisable for the first time by any
grantee during any year (under all plans of the Corporation and any
affiliate thereof) exceeds $100,000, such stock options shall be treated
as not being ISOs. The foregoing shall be applied by taking stock options
into account in the order in which they were granted. For the purposes of
the foregoing, the fair market value of any share shall be determined as
of the time the stock option with respect to such share is granted. In
the event the foregoing results in a portion of a stock option
designated as an ISO exceeding the above $100,000 limitation, only such
excess shall be treated as not being an ISO.
For each year in which this Program is in effect, the number of
shares that may be effectively granted as ISOs may not exceed seven
tenths of one percent (0.7%) of the total number of shares of Common
Stock of the Corporation outstanding (excluding shares held by the
Corporation) on the December 31 preceding the date on which shareholder
approval of this Program is obtained; provided, that beginning with the
year 1998, the annual number of shares determined as aforesaid shall be
doubled in accordance with Section VIII to reflect a two-for one split of
the shares on March 14, 1997. If the number of shares effectively
granted as ISOs in any year is less than the number of shares that could
have been so granted pursuant to this paragraph, the balance of such
unused shares may be added to the maximum number of shares that may be
effectively granted as ISOs the following year.
A stock option designated as an ISO, or portion thereof, that fails
or ceases to qualify as such under the Code shall otherwise remain valid
according to its terms as a non-ISO under this Program.
X. Stock Appreciation Rights.
(1) An SAR may be granted to an eligible employee as a separate award
hereunder. Any such SAR shall be subject to such terms and conditions as the
granting authority shall impose, which shall
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<PAGE>
include provisions that (a) such SAR shall entitle the holder thereof, upon
exercise thereof in accordance with such SAR and the regulations of the
administrative authority, to receive from the Corporation that number of shares
having an aggregate value equal to the excess of the fair market value, at the
time of exercise of such SAR, of one share over the exercise price per share
specified by the grant of such SAR (which shall in no instance be less than 100
percent of fair market value at the time of grant) times the number of shares
specified in such SAR, or portion thereof, which is so exercised; and (b) such
SAR shall be exercisable, or be forfeited or expire, upon the same conditions
set forth for freestanding options in Section IX, paragraphs (2), (3), (4),
(5), and (6).
(2) Any stock option granted under this Program may include an SAR, either
at the time of grant or by amendment. An SAR included in a stock option shall
be subject to such terms and conditions as the granting authority shall impose,
which shall include provisions that (a) such SAR shall be exercisable to the
extent, and only to the extent, the stock option is exercisable; and (b) such
SAR shall entitle the optionee to surrender to the Corporation unexercised the
stock option in which the SAR is included, or any portion thereof, and to
receive from the Corporation in exchange therefor that number of shares having
an aggregate value equal to the excess of the fair market value, at the time of
exercise of such SAR, of one share over the exercise price specified in such
stock option times the number of shares specified in such stock option, or
portion thereof, which is so surrendered.
(3) In lieu of the right to receive all or any specified portion of such
shares, an SAR may entitle the holder thereof to receive the cash equivalent
thereof as specified by the grant.
(4) An SAR may provide that such SAR shall be deemed to have been
exercised at the close of business on the business day preceding the expiration
of such SAR or the related stock option, if any, if at such time such SAR has
positive value and would have expired in accordance with the conditions set
forth in Section IX(5)(a).
Xl. Restricted Stock.
(1) An award of restricted stock may be granted hereunder to an eligible
employee, for no cash consideration, for such minimum consideration as may be
required by applicable law, or for such other consideration as may be specified
by the grant. The terms and conditions of restricted stock shall be specified
by the grant.
(2) Any restricted stock issued hereunder may be evidenced in such manner
as the administrative authority in its sole discretion shall deem appropriate,
including, without limitation, book-entry registration or issuance of a stock
certificate or certificates. In the event any stock certificate is issued in
respect of shares of restricted stock awarded hereunder, such certificate shall
bear an appropriate legend with respect to the restrictions applicable to such
award.
(3) Except as otherwise specified by the grant, if a holder of record of
restricted stock terminates, but does not terminate normally, all shares of
restricted stock (whether or not stock certificates have been issued) then held
by such holder and then subject to restriction shall be forfeited by such
holder and reacquired by the Corporation. Except as otherwise specified by the
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<PAGE>
grant, if a holder of record of restricted stock terminates normally or dies,
any and all remaining restrictions with respect to such restricted stock shall
expire. Notwithstanding the foregoing, if a holder of record of restricted
stock is determined to have engaged in detrimental activity, all shares of
restricted stock (whether or not stock certificates have been issued) then held
by such holder and then subject to restriction shall be forfeited by such
holder as of the date of such determination and shall be reacquired by the
Corporation.
XII. Performance Awards.
(1) Performance awards may be granted hereunder to an eligible employee,
for no cash consideration, for such minimum consideration as may be required by
applicable law, or for such other consideration as may be specified by the
grant. The terms and conditions of performance awards, which may include
provisions establishing performance periods, performance criteria to be
achieved during a performance period, and maximum or minimum settlement values,
shall be specified by the grant.
(2) Performance awards may be valued by reference to the value of Common
Stock of the Corporation or according to any other formula or method.
Performance awards may be paid in cash, shares, or other consideration, or any
combination thereof. The extent to which any applicable performance criteria
have been achieved shall be conclusively determined by the administrative
authority. Performance awards may be payable in a single payment or in
installments and may be payable at a specified date or dates or upon attaining
performance criteria.
(3) Except as otherwise specified by the grant, if the grantee terminates,
but does not terminate normally, any performance award or installment thereof
not payable prior to the grantee's termination shall be annulled as of the date
of termination. If the grantee is determined to have engaged in detrimental
activity, any performance award or installment thereof not payable prior to the
date of such determination shall be annulled as of such date.
XIII. Incentive Shares.
(1) An incentive award may be granted hereunder in the form of shares.
Incentive shares may be granted to an eligible employee for no cash
consideration, for such minimum consideration as may be required by applicable
law, or for such other consideration as may be specified by the grant. The
terms and conditions of incentive shares shall be specified by the grant.
(2) Incentive shares may be paid to the grantee in a single installment or
in installments and may be paid at the time of grant or deferred to a later
date or dates. Each grant shall specify the time and method of payment as
determined by the granting authority, provided that no such determination shall
authorize delivery of shares to be made later than the tenth anniversary of the
grantee's date of termination. The granting authority, by amendment of the
grant prior to delivery, can modify the method of payment for any incentive
shares, provided that the delivery of any incentive shares shall be completed
not later than the tenth anniversary of the grantee's date of termination.
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<PAGE>
(3) If any incentive shares are payable after the grantee dies, such
shares shall be payable (a) to the grantee's designated beneficiary or, if
there is no designated beneficiary, to the grantee's personal representative,
and (b) either in the form specified by the grant or otherwise, as may be
determined by the administrative authority.
(4) Any grant of incentive shares is provisional, as to any share, until
delivery of the certificate representing such share. If, while the grant is
provisional,
(a) the grantee terminates, but does not terminate normally, or
(b) the grantee is determined to have engaged in detrimental
activity,
the grant shall be annulled as of the date of termination, or the date of such
determination, as the case may be.
XIV. Dividend Equivalent Rights; Interest Equivalents.
(1) A DER may be granted hereunder to an eligible employee, as a component
of another award or as a separate award. The terms and conditions of DERs shall
be specified by the grant. Dividend equivalents credited to the holder of a DER
may be paid currently or may be deemed to be reinvested in additional shares
(which may thereafter accrue additional dividend equivalents). Any such
reinvestment shall be at fair market value at the time thereof. DERs may be
settled in cash or shares or a combination thereof, in a single installment or
installments. A DER granted as a component of another award may provide that
such DER shall be settled upon exercise, settlement, or payment of, or lapse of
restrictions on, such other award, and that such DER shall expire or be
forfeited or annulled under the same conditions as such other award. A DER
granted as a component of another award may also contain terms and conditions
different from such other award.
(2) Any award under this Program that is settled in whole or in part in
cash on a deferred basis may provide by the grant for interest equivalents to
be credited with respect to such cash payment. Interest equivalents may be
compounded and shall be paid upon such terms and conditions as may be specified
by the grant.
XV. Other Awards.
Other forms of award based on, payable in or otherwise related in whole or
in part to shares may be granted to an eligible employee under this Program if
the granting authority determines that such awards are consistent with the
purposes and restrictions of this Program. The terms and conditions of such
awards shall be specified by the grant. Such awards shall be granted for no
cash consideration, for such minimum consideration as may be required by
applicable law, or for such other consideration as may be specified by the
grant.
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<PAGE>
XVI. Amendments to This Program.
The Board can from time to time amend or terminate this Program, or any
provision hereof, except that approval of the shareholders of the Corporation
shall be required for any amendment (1) to increase the maximum number of
shares that may be effectively granted as awards hereunder; (2) to decrease the
minimum exercise price per share of a stock option or SAR; or (3) for which
such approval is otherwise necessary to comply with any applicable law,
regulation, or listing requirement, or to qualify for an exemption or
characterization that is deemed desirable by the Board.
XVII. Amendments to Awards.
Any award which was granted under a shareholder-approved plan and is still
outstanding may, subject to any requirements of applicable law or regulation,
be amended by action of the granting authority so as to incorporate in that
award any terms that might have been incorporated in an award under this
Program.
XVIII. Withholding Taxes.
The Corporation shall have the right to deduct from any cash payment made
under this Program any federal, state or local income or other taxes required
by law to be withheld with respect to such payment. It shall be a condition to
the obligation of the Corporation to deliver shares or securities of the
Corporation upon exercise of a stock option or SAR, upon settlement of a
performance award or DER, upon delivery of restricted stock or incentive
shares, or upon exercise, settlement, or payment of any other award under this
Program, that the grantee of such award pay to the Corporation such amount as
may be requested by the Corporation for the purpose of satisfying any liability
for such withholding taxes. Any award under this Program may provide by the
grant that the grantee of such award may elect, in accordance with any
applicable regulations of the administrative authority, to pay a portion or
all of the amount of such minimum required or additional permitted withholding
taxes in shares. The grantee shall authorize the Corporation to withhold, or
shall agree to surrender back to the Corporation, on or about the date such
withholding tax liability is determinable, shares previously owned by such
grantee or a portion of the shares that were or otherwise would be distributed
to such grantee pursuant to such award having a fair market value equal to the
amount of such required or permitted withholding taxes to be paid in shares.
XIX. Grant of Awards to Employees Who are Foreign Nationals.
Without amending this Program, but subject to the limitations specified in
Sections III(4) and XVI, the granting authority can grant or amend, and the
administrative authority can administer, annul, or terminate, awards to
eligible employees who are foreign nationals on such terms and conditions
different from those specified in this Program as may in its judgment be
necessary or desirable to foster and promote achievement of the purposes of
this Program.
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Exhibit 10(iii)(e)
EXXON CORPORATION
SHORT TERM INCENTIVE PROGRAM
(as amended May 28, 1997)
I. Purpose. The Short Term Incentive Program in intended to help
maintain and develop strong management through incentive awards to key
employees of the Corporation and certain of its affiliates for recognition of
efforts and accomplishments which contribute materially to the success of the
Corporation's business interests.
II. Definitions. In this Program, except where the context otherwise
indicates, the following definitions apply:
(1) 'Administrative authority' means one of the following, as
appropriate in accordance with Section III: the Board; any committee to which
the Board delegates authority to administer this Program; or, in individual
cases, the Chairman of the Board or persons acting under his direction.
(2) 'Affiliate' means (a) any subsidiary and (b) any other
corporation, partnership, joint venture, or other entity in which the
Corporation, directly or indirectly, owns an equity interest and which the
administrative authority deems to be an affiliate for purposes of this Program
(including, without limitation, for purposes of determining whether a change of
employment constitutes a termination).
(3) "Award" means a bonus, bonus unit, or other incentive award
under this Program.
(4) "Board" means the Board of Directors of the Corporation.
(5) "Board Compensation Committee," hereinafter sometimes called
the "BCC," means the committee of the Board so designated.
(6) "Bonus" means an award granted under this Program which may
be payable in cash or other consideration as specified by the grant.
(7) "Bonus unit" means an award granted under this Program to
receive from the Corporation an amount of cash or other consideration not
to exceed the maximum settlement value and based upon a measurement for
valuation as specified by the grant. The term bonus unit includes, but is
not limited to, earnings bonus units.
(8) "By the grant" means by the action of the granting authority
at the time of the grant of an award hereunder, or at the time of an
amendment of the grant, as the case may be.
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(9) "Corporation" means Exxon Corporation, a New Jersey
corporation.
(10) "Designated beneficiary" means the person designated by the
grantee of an award hereunder to be entitled, on the death of the grantee,
to any remaining rights arising out of such award. Such designation must
be made in writing and in accordance with such regulations as the
administrative authority may establish.
(11) "Detrimental activity" means activity that is determined in
individual cases by the administrative authority to be detrimental to the
interests of the Corporation or any affiliate.
(12) "Earnings bonus unit," hereinafter sometimes called an "EBU,"
means a bonus unit granting the right to receive from the Corporation at
the settlement date specified by the grant, or at a later payment date so
specified, an amount of cash equal to the Corporation's cumulative
consolidated earnings per common share as reflected in its quarterly
earnings statements as initially published commencing with earnings for the
first full quarter following the date of grant to and including the last
full quarter preceding the date of settlement, but the amount of such
settlement shall not exceed the maximum settlement value specified by the
grant.
(13) "Eligible employee" means an employee of the Corporation or a
subsidiary who is a director or officer, or in a managerial, professional,
or other key position as determined by the granting authority.
(14) "Employee" means an employee of the Corporation or an
affiliate.
(15) "Grantee" means a recipient of an award under this Program.
(16) "Granting authority" means the Board or any appropriate
committee authorized to grant and amend awards under this Program in
accordance with Section V and to exercise other powers of the granting
authority hereunder.
(17) "Reporting person" means a person subject to the reporting
requirements of Section 16 with respect to equity securities of the
Corporation.
(18) "Section 16" means Section 16 of the Securities Exchange Act
of 1934, together with the rules and interpretations thereunder, as in
effect from time to time.
(19) "Subsidiary" means a corporation, partnership, joint
venture, or other entity in which the Corporation, directly or indirectly,
owns a 50% or greater equity interest.
(20) "Terminate" means cease to be an employee, except by death,
but a change of employment from the Corporation or one affiliate to another
affiliate or to the Corporation shall not be considered a termination. For
purposes of this Program, the administrative authority may determine that
the time or date of termination is the day an
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employee resigns, accepts employment with another employer or otherwise
indicates an intent to resign, which time or date need not necessarily be
the last day on the payroll.
(21) "Terminate normally" for purposes of this Program means
terminate
(a) at normal retirement time for that employee, or
(b) with written approval of the administrative authority
given in the context of recognition that all or a specified
portion of the outstanding awards to that employee will not
expire or be forfeited or annulled because of such
termination
and, in each such case, without being terminated for cause.
(22) "Year" means calendar year.
III. Administration.
(1) The Board is the ultimate administrative authority for this
Program, with the power to conclusively interpret its provisions and decide
all questions of fact arising in its application. The Board may delegate its
authority pursuant to any provision of this Program to a committee which,
except in the case of the BCC, need not be a committee of the Board. Subject
to the authority of the Board or an authorized committee and excluding cases
involving the Chairman as grantee, the Chairman of the Board and persons
acting under his direction may serve as the administrative authority under
this Program for purposes of making determinations and interpretations in
individual cases.
(2) The Board and any committee acting as the administrative
authority under this Program can act by regulation, by making individual
determinations, or by both. The Chairman of the Board and persons
designated by him can act as the administrative authority under this
Program only by making individual determinations.
(3) All determinations and interpretations pursuant to the
provisions of this Program shall be binding and conclusive upon the
individual employees involved and all persons claiming under them.
(4) It is intended that this Program shall not be subject to the
provisions of Section 16 and that awards granted hereunder shall not be
considered equity securities of the Corporation within the meaning of
Section 16. Accordingly, no award under this Program shall be payable in
any equity security of the Corporation. In the event an award to a
reporting person under this Program should be deemed to be an equity
security of the Corporation within the meaning of Section 16, such award
may, to the extent permitted by law and deemed advisable by the granting
authority, be amended so as not to constitute such an equity security or be
annulled. Each award to a reporting person under this Program shall be
deemed issued subject to the foregoing qualification.
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(5) An award under this Program is not transferable prior to
payment or settlement except, as provided in the award, by will or the laws
of descent and distribution, and is not subject, in whole or in part, to
attachment, execution, or levy of any kind. The designation by a grantee
of a designated beneficiary shall not constitute a transfer.
(6) The grantee's designated beneficiary or, if there is no
designated beneficiary, the grantee's personal representative shall be
entitled to any remaining rights with respect to an award granted under this
Program existing after the grantee dies.
(7) Except as otherwise provided herein, a particular form of award
may be granted to an eligible employee either alone or in addition to other
awards hereunder. The provisions of particular forms of award need not be the
same with respect to each recipient.
(8) If the administrative authority believes that a grantee (a)
may have engaged in detrimental activity or (b) may have accepted employment
with another employer or otherwise indicated an intent to resign, the
authority may suspend the delivery, vesting or settlement of all or any
specified portion of such grantee's outstanding awards pending an
investigation of the matter.
(9) This Program and all action taken under it shall be governed
by the laws of the State of New York.
IV. Annual Ceiling. In respect to each year under the Program, the BCC
shall, pursuant to authority delegated by the Board, establish a ceiling on
the aggregate dollar amount that can be awarded hereunder. With respect to
bonuses granted in a particular year under the Program, the sum of:
(1) the aggregate amount of bonuses in cash, and
(2) the aggregate maximum settlement value of bonuses in any form
of bonus unit shall not exceed such ceiling.
The BCC may revise the ceiling as it deems appropriate.
V. Right to Grant Awards; Reserved Powers. The Board is the ultimate
granting authority for this Program, with the power to select eligible
employees for participation in this Program and to make all decisions
concerning the grant or amendment of awards. The Board may delegate such
authority in whole or in part to a committee which, except in the case of the
BCC, need not be a committee of the Board.
VI. Term. The term of this Program begins on November 1, 1993 and shall
continue until terminated by the Board.
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VII. Bonuses Grantable. A bonus is grantable in respect of any year
to any eligible employee during such year if, should it be granted, the
aggregate amount of the bonuses granted in respect of that year will not
exceed the ceiling established from time to time by the BCC. In this
connection, each bonus granted ceases to be effectively granted to the extent
that the grant is annulled. No award may be granted to a member of the BCC.
VIII. Form of Bonus. Subject to Section III(4), a grantable bonus can be
granted to any eligible employee in respect of any year either wholly in cash,
bonus units, or other consideration, or partly in two or more such forms.
IX. Settlement of Bonuses. Each grant shall specify the time and method
of settlement as determined by the granting authority, provided that no such
determination shall authorize settlement to be made later than the tenth
anniversary of the grantee's date of termination. Each grant, any portion of
which is granted in bonus units, shall specify as the regular method of
settlement for that portion a settlement date, which may be accelerated to an
earlier time as specified by the grant, provided, however, whether or not the
settlement date has been accelerated, payment of cash to the grantee to
complete such settlement may be postponed, by the grant, so long as such
payment is not postponed beyond the tenth anniversary of the grantee's date of
termination. The granting authority, by amendment of the grant prior to
payment or delivery, can modify any method of settlement for any bonus or
portion thereof, provided that the settlement of any bonus shall be completed
by the payment of any cash not later than the tenth anniversary of the
grantee's date of termination.
X. Installments Payable After Death. If any bonus or installment
thereof is payable after the grantee dies, it shall be payable
(1) to the grantee's designated beneficiary or, if there is no
designated beneficiary, to the grantee's personal representative, and
(2) either in the form specified by the grant or otherwise, as
may be determined in the individual case by the administrative
authority.
XI. Interest Equivalents. With respect to the relevant portion of a
bonus granted in cash for delivery more than six months after the date of
grant, there shall be credited to the grantee an amount equivalent to interest
(which may be compounded) as specified by the grant with respect to the period
beginning at the date of grant and ending on the date as specified by the
grant. The rate of interest, if any, credited to the grantee shall be
determined from time to time by the BCC.
With respect to the relevant portion of a bonus granted in bonus
units the payment of cash in settlement of which is postponed more than six
months after the settlement date, there shall be credited to the grantee an
amount equivalent to interest (which may be
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compounded) as specified by the grant. The rate of interest, if any, credited
to the grantee shall be determined from time to time by the BCC.
Such credits for interest equivalents shall not be included in any
computation made for purposes of any ceiling established by the BCC pursuant
to Section IV.
When a bonus in cash is paid, any interest equivalents so credited
on the cash shall be paid. When a bonus in units is paid, any interest
equivalents so credited on the units shall be paid.
XII. Annulment of Grant. The grant of any bonus or portion thereof is
provisional until cash or other consideration is paid in settlement thereof,
except to the extent the granting authority shall have declared the bonus to
be vested and nonforfeitable. If, while the grant is provisional,
(1) the grantee terminates but does not terminate normally, or
(2) the grantee is determined to have engaged in detrimental
activity, the grant shall be annulled as of the time of termination, or
the date such activity is determined to be detrimental, as the case may
be.
XIII. Amendments to this Program. The Board can from time to time amend
or terminate this Program, or any provision hereof.
XIV. Amendments to Awards. The granting authority may amend any
outstanding award under this Program to incorporate any terms that could then
be incorporated in a new award under this Program.
XV. Withholding Taxes. The Corporation shall have the right to deduct
from any cash payment made under this Program any federal, state or local
income or other taxes required by law to be withheld with respect to such
payment. In the case of a payment under this Program other than cash, the
grantee will pay to the Corporation such amount of cash as may be requested by
the Corporation for purpose of satisfying any liability for such withholding
taxes.
XVI. Grant of Awards to Employees Who Are Foreign Nationals. Without
amending this Program, but subject to the limitations specified in Section
III(4), the granting authority can grant or amend, and the administrative
authority can administer, annul, or terminate, awards to eligible employees
who are foreign nationals on such terms and conditions different from those
specified in this Program as may in its judgment be necessary or desirable to
foster and promote achievement of the purposes of this Program.
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