<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
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
[X] Definitive Proxy Statement RULE 14A-6(E)(2))
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
MOBIL CORPORATION
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
G. G. Garney
Senior Assistant Secretary
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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):
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[_] 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:
Notes:
<PAGE>
[LOGO OF MOBIL CORPORATION APPEARS HERE]
NOTICE OF
1995
ANNUAL MEETING
AND
PROXY STATEMENT
------------------------------------------------
YOUR VOTE IS IMPORTANT!
PLEASE PROMPTLY MARK, SIGN, DATE AND RETURN YOUR
PROXY CARD IN THE ENCLOSED ENVELOPE.
------------------------------------------------
MOBIL CORPORATION
3225 GALLOWS ROAD
FAIRFAX, VIRGINIA 22037-0001
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Chairman's Letter......................................................... 1
Notice of Annual Meeting.................................................. 2
Proxy Statement........................................................... 3
General Information...................................................... 3
Item 1--Election of Directors........................................... 3
Directors' Meetings and Compensation................................ 7
Committees of the Board............................................. 8
Item 2--Approval and Ratification of Appointment of Independent Audi-
tors................................................................... 9
Item 3--Approve 1995 Mobil Incentive Compensation and Stock Ownership
Plan................................................................... 10
Stockholder Proposals--General........................................... 13
Item 4--Limit Authority to Issue Preferred Stock........................ 14
Item 5--Limitations on Composition of the Board......................... 15
Executive Compensation................................................... 17
Ownership of Mobil Corporation Stock..................................... 27
Proxies and Voting at the Meeting........................................ 28
Quorum and Vote Required for Approval.................................... 28
Attendance at Annual Meeting............................................. 29
Proxy Solicitation....................................................... 29
1995 Mobil Incentive Compensation and Stock Ownership Plan........... Appendix
</TABLE>
<PAGE>
[LOGO OF MOBIL CORPORATION APPEARS HERE]
3225 GALLOWS ROAD
FAIRFAX, VIRGINIA
22037-0001
LUCIO A. NOTO
CHAIRMAN OF THE BOARD
CHIEF EXECUTIVE OFFICER
March 20, 1995
Dear Mobil Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders to be
held in the Grand Ballroom, Hyatt Regency Reston, Reston Town Center, 1800
Presidents Street, Reston, Virginia, on May 11, 1995.
In addition to the formal items of business to be brought before the meeting,
there will be a report on our Company's operations during 1994, followed by a
question and answer period.
Your participation in Mobil's business is important, regardless of the number
of shares you hold. To ensure your representation, please sign, date and return
the enclosed proxy card promptly.
I wish to call your attention to the retirements of three directors. Mr.
William J. Kennedy III, who has been a director since 1979 and is Chairman of
the Committee on Directors and Board Affairs, will be retiring this April. Mr.
Robert G. Weeks, who had been a director since 1987 and served as Senior Vice
President and Chief Financial Officer, retired in November 1994. Mr. Allen E.
Murray, who had been a director since 1977 and had served as Chairman of the
Board and Chief Executive Officer since 1986, retired in February 1994, after
more than 40 years of service to Mobil. We are very grateful to Messrs.
Kennedy, Weeks and Murray for their many contributions to Mobil over the years.
We look forward to seeing you on May 11th.
Sincerely,
/s/ Lucio A. Noto
Lucio A. Noto
Chairman of the Board and
Chief Executive Officer
1
<PAGE>
NOTICE OF ANNUAL MEETING
MAY 11, 1995
- - --------------------------------------------------------------------------------
The Annual Meeting of Stockholders of Mobil Corporation will be held in the
Grand Ballroom at the Hyatt Regency Reston, Reston Town Center, 1800 Presidents
Street, Reston, Virginia 22090, on Thursday, May 11, 1995, at 10:00 A.M., for
the following purposes:
1. To elect four directors;
2. To approve and ratify the appointment of Ernst & Young LLP as independent
auditors;
3. To approve the 1995 Mobil Incentive Compensation and Stock Ownership Plan;
4. To act upon stockholder proposals;
and to transact such other business as properly may come before the meeting.
Stockholders of record at the close of business on March 13, 1995 are
entitled to receive notice of, and to vote at, the meeting. A list of
stockholders entitled to vote will be kept at the Mobil Land Development
Corporation, 11911 Freedom Drive, Suite 400, Reston, Virginia 22090-5606, for a
period of ten days prior to the meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Caroline M. Devine
CAROLINE M. DEVINE
SECRETARY
MOBIL CORPORATION
3225 Gallows Road
Fairfax, Virginia 22037-0001
March 20, 1995
2
<PAGE>
MOBIL CORPORATION
3225 GALLOWS ROAD
FAIRFAX, VIRGINIA 22037-0001
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Mobil Corporation ("Mobil", the "Corporation" or the
"Company") of proxies to be voted at the Annual Meeting of Mobil stockholders
on May 11, 1995. This Proxy Statement, the accompanying proxy card, and Annual
Report are being mailed to stockholders on or about March 20, 1995. Business at
the Annual Meeting is conducted in accordance with the procedures determined by
the presiding officer and is generally limited to matters properly brought
before the meeting by or at the suggestion of the Board of Directors or by a
stockholder pursuant to provisions requiring advance notice and disclosure of
relevant information.
The number of voting securities of Mobil outstanding on March 13, 1995, the
record date for the meeting, was (i) 395,929,890 shares of common stock, $2.00
par value per share, each share being entitled to one vote, and (ii) 95,248.58
shares of Series B ESOP Convertible Preferred Stock, $1.00 par value per share,
each share being entitled to 100 votes, for a total of 405,454,748 votes.
ITEM 1-ELECTION OF DIRECTORS
Mobil's Certificate of Incorporation classifies the Board of Directors into
three classes, as nearly equal in number as possible, the members of which
serve for three years. The terms of office of the members of one class of
directors expire each year in rotation so that the members of one class are
elected at each Annual Meeting for full three-year terms. The terms of office
of four of the present directors will expire at this Annual Meeting.
Four directors have been nominated for election for three-year terms expiring
at the Annual Meeting in 1998 or until their successors are elected and
qualified. The terms of the other directors, except for that of William J.
Kennedy III, will continue as indicated below. Mr. Kennedy has indicated that
he will retire as a Director effective April 30, 1995, in accordance with the
retirement policies of the Corporation for non-employee directors. The number
of directors constituting the Board will thereupon become thirteen.
The ages of directors are as of March 1, 1995.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES LISTED
BELOW.
3
<PAGE>
NOMINEES FOR TERMS EXPIRING IN 1998
- - --------------------------------------------------------------------------------
LEWIS M. BRANSCOMB
(PHOTO OF LEWIS M. BRANSCOMB
APPEARS HERE)
Lewis M. Branscomb, age 68, has
been a director since 1978. He is
Director, Science, Technology and
Public Policy, John F. Kennedy
School of Government, Harvard
University. Dr. Branscomb is the
former chief scientist and vice
president of International Business
Machines Corporation (information
systems). He is also a director of
the Lord Corporation, Mitre
Corporation and C. S. Draper
Laboratory, Inc. Dr. Branscomb is
chairman of the Audit Committee and
a member of the Committee on
Directors and Board Affairs.
PAUL J. HOENMANS
(PHOTO OF PAUL J. HOENMANS
APPEARS HERE)
Paul J. Hoenmans, age 62, joined
Mobil in 1954. He has been a
director since 1985 and a director
of Mobil Oil Corporation since 1983.
He is an executive vice president
of Mobil Oil Corporation and since
1986 he has been president of the
Exploration and Producing Division.
Mr. Hoenmans is a member of the
Executive Committee of Mobil
Corporation.
ALLEN F. JACOBSON
(PHOTO OF ALLEN F. JACOBSON
APPEARS HERE)
Allen F. Jacobson, age 68, has
been a director since 1988. He is
the former chairman of the board
and chief executive officer of
Minnesota Mining and Manufacturing
Company (manufacturer of
diversified products) and remains
on the 3M board. He is also a
director of Abbott Laboratories,
Northern States Power Company, U.S.
WEST, Inc., Valmont Industries,
Inc., Potlatch Corporation, Sara
Lee Corporation, Silicon Graphics,
Inc., Deluxe Corporation and
Prudential Insurance Company of
America. Mr. Jacobson is a member
of both the Audit and the
Management Compensation and
Organization Committees.
J. RICHARD MUNRO
(PHOTO OF J. RICHARD MUNRO
APPEARS HERE)
J. Richard Munro, age 64, has
been a director since 1989. He is
chairman of the Executive Committee
of the Board of Directors of Time
Warner Inc. (publishing and
communications) and former
co-chairman of the board and co-chief
executive officer of that company.
He is also a director of Genentech,
Inc., Kmart Corporation and The
Kellogg Company. Mr. Munro is a
member of both the Audit and the
Management Compensation and
Organization Committees.
4
<PAGE>
DIRECTORS WHOSE TERMS EXPIRE IN 1996
- - --------------------------------------------------------------------------------
SAMUEL C. JOHNSON
(PHOTO OF SAMUEL C. JOHNSON
APPEARS HERE)
Samuel C. Johnson, age 66, has
been a director since 1981. He is
chairman of the board of S. C.
Johnson & Son, Inc. (chemical
specialty products). He is also a
director of Deere and Company, H.
J. Heinz Company, a director and
chairman of Johnson International
Inc., and a director and chairman
of Johnson Worldwide Associates,
Inc. Mr. Johnson is chairman of the
Public Issues Committee and a
member of the Management
Compensation and Organization
Committee.
HELENE L. KAPLAN
(PHOTO OF HELENE L. KAPLAN
APPEARS HERE)
Helene L. Kaplan, age 61, has
been a director since 1989. She
is Of Counsel to Skadden, Arps,
Slate, Meagher & Flom. Mrs. Kaplan
is also a director of Chemical
Banking Corporation, Chemical Bank,
the May Department Stores Company,
Metropolitan Life Insurance Company
and NYNEX. Mrs. Kaplan is a member
of the Audit Committee and the
Committee on Directors and Board
Affairs.
LUCIO A. NOTO
(PHOTO OF LUCIO A. NOTO
APPEARS HERE)
Lucio A. Noto, age 56, joined
Mobil in 1962. He has been a
director since 1988, chairman and
chief executive officer since 1994,
and president and chief operating
officer since 1993. He was
previously chief financial officer
beginning in 1989. He has been a
director of Mobil Oil Corporation
since 1986 and chairman of the
board and chief executive officer
of Mobil Oil Corporation since
1994. He is also a director of
International Business Machines
Corporation. Mr. Noto is chairman
of the Executive Committee of Mobil
Corporation and a member of the
Public Issues Committee.
AULANA L. PETERS
(PHOTO OF AULANA L. PETERS
APPEARS HERE)
Aulana L. Peters, age 53, has
been a director since 1992. She is
a partner in Gibson, Dunn &
Crutcher, a law firm which Mobil
retained during 1994 and may retain
in 1995. She is also a director of
the Minnesota Mining and
Manufacturing Company, Merrill
Lynch & Co., the New York Stock
Exchange, Inc. and Northrop Grumman
Corporation. Mrs. Peters is a
member of the Committee on
Directors and Board Affairs and the
Public Issues Committee.
5
<PAGE>
DIRECTOR WHOSE TERM EXPIRES IN 1996
- - --------------------------------------------------------------------------------
EUGENE A. RENNA
(PHOTO OF EUGENE A. RENNA
APPEARS HERE)
Eugene A. Renna, age 50, joined
Mobil in 1968. He has been a
director since 1986 and a director
of Mobil Oil Corporation since
1985. Since 1986, he has been an
executive vice president of Mobil
Oil Corporation and president of
the Marketing and Refining
Division. Mr. Renna is a member of
the Executive Committee of Mobil
Corporation.
DIRECTOR WHOSE TERM EXPIRES IN 1997
- - --------------------------------------------------------------------------------
DONALD V. FITES
(PHOTO OF DONALD V. FITES
APPEARS HERE)
Donald V. Fites, age 61, has
been a director since 1990. He
is chairman and chief executive
officer of Caterpillar Inc.
(heavy machinery). He is also a
director of First Chicago
Corporation and Georgia-Pacific
Corporation. Mr. Fites is a member
of both the Audit and the Public
Issues Committees.
DIRECTORS WHOSE TERMS EXPIRE IN 1997
- - --------------------------------------------------------------------------------
CHARLES S. SANFORD, JR.
(PHOTO OF CHARLES S. SANFORD, JR.
APPEARS HERE)
Charles S. Sanford, Jr., age 58,
has been a director since 1990. He
is chairman of Bankers Trust New
York Corporation and its principal
subsidiary, Bankers Trust Company,
investment banking affiliates of
which performed services for Mobil
in 1994 and may do so in 1995. He
is also a director of J. C. Penney
Company, Inc. Mr. Sanford is a
member of the Management
Compensation and Organization
Committee and the Committee on
Directors and Board Affairs.
ROBERT G. SCHWARTZ
(PHOTO OF ROBERT G. SCHWARTZ
APPEARS HERE)
Robert G. Schwartz, age 66, has
been a director since 1987. He is
the former chairman of the board,
president and chief executive
officer of Metropolitan Life
Insurance Company. He is a director
of Metropolitan Life Insurance
Company, CS First Boston, Inc.,
COMSAT Corporation, Lone Star
Industries, Inc., Lowe's Companies,
Inc., Potlatch Corporation, The
Reader's Digest Association Inc.
and is a member of the board of
trustees of Consolidated Edison
Company of New York. Mr. Schwartz
is Chairman of the Management
Compensation and Organization
Committee and a member of the Audit
Committee.
6
<PAGE>
DIRECTOR WHOSE TERM EXPIRES IN 1997
- - --------------------------------------------------------------------------------
ROBERT O. SWANSON
(PHOTO OF ROBERT O. SWANSON
APPEARS HERE)
Robert O. Swanson, age 58, joined
Mobil in 1958. He has been a director
since 1991 and a director of Mobil
Oil Corporation since 1990. Since
1993, Mr. Swanson has been a senior
vice president with responsibility
for Mobil Chemical Company; Mobil
Mining and Minerals Company; Mobil
Land Development Corporation;
and Mobil's Research, Engineering
and Environmental Affairs unit. He
was previously executive vice
president-international of the
Marketing and Refining Division
beginning in 1985. Mr. Swanson is
a member of the Executive Committee
of Mobil Corporation.
- - --------------------------------------------------------------------------------
DIRECTORS' MEETINGS AND COMPENSATION
During 1994, the Board of Directors met nine times and all current directors
attended more than 75 percent of the Board meetings and their respective Board
committee meetings.
Employee directors receive no additional compensation for service on the
Board of Directors or its committees. Each non-employee director receives an
annual retainer of $36,000 and a fee of $1,250 for each Board meeting and
committee meeting attended, plus travel allowances where appropriate. Directors
who chair committees receive additional annual fees: $8,000 for the Audit and
the Management Compensation and Organization Committees; and $4,000 for the
Committee on Directors and Board Affairs and the Public Issues Committee.
Under the Deferred Fee Plan, non-employee directors may defer, until a
specified later date or retirement, receipt of all or a portion of their annual
retainers and fees. Deferred amounts may either be credited with notional
interest or be represented by stock equivalents which earn notional dividends
equal to dividends declared on Mobil common stock. Notional interest on
deferred cash accounts is credited at the average rate for 10-year U.S.
Treasury bonds over a six-month period, plus 1%, currently 8.47% per year.
Non-employee directors may not participate in Mobil's incentive compensation
or other employee benefit programs. However, Mobil provides $100,000 of non-
contributory group life insurance and $500,000 of accidental death insurance
for accidents occurring while on Mobil business. Mobil also provides a
retirement income plan of 10% of the annual retainer fee for each year of
service, up to 100%, for non-employee directors who have served at least five
years and are age 60 or older. The mandatory retirement age for non-employee
directors is age 72. The retirement benefits are payable for the life of the
director and, after his or her death, up to eight additional annual payments to
the surviving spouse or a dependent.
7
<PAGE>
COMMITTEES OF THE BOARD
In 1994, the Board reviewed its corporate governance roles and
responsibilities and at the December Board meeting approved new charters for
its committees. The new charters incorporated suggestions recommended by
shareholders and take into consideration new concepts in the field of corporate
governance.
The responsibilities of the committees are described below. Each met
regularly during the year and promptly following each meeting advised the full
Board of its actions and recommendations.
The AUDIT COMMITTEE, established in 1969, met three times during 1994. In
accordance with its charter, the Committee reviews with the independent
auditors and Mobil's General Auditor the general scope of their respective
audit coverages. Such reviews include consideration of Mobil's accounting
practices, procedures and system of internal accounting controls and any
significant problems encountered. The Committee also recommends to the Board
the appointment of Mobil's principal independent auditors.
At least annually, the Audit Committee reviews the services performed and the
fees charged by the independent auditors engaged by Mobil and determines that
the non-audit services rendered by the independent auditors do not compromise
their independence.
The independent auditors and Mobil's General Auditor have direct access to
the Committee and may discuss with it any matters which may arise in connection
with audits, the maintenance of internal accounting controls or any other
matters relating to Mobil's financial affairs. Furthermore, the Committee may
authorize the independent auditors to investigate any matters which the
Committee deems appropriate and may present its recommendations and conclusions
to the Board.
The Audit Committee is composed entirely of non-employee directors. Members
of the committee are: Lewis M. Branscomb (Chairman), Donald V. Fites, Allen F.
Jacobson, Helene L. Kaplan, J. Richard Munro and Robert G. Schwartz.
The COMMITTEE ON DIRECTORS AND BOARD AFFAIRS, which replaced the Nominating
Committee established in 1977, met twice during 1994. The responsibilities of
the Committee were significantly increased in December 1994 by the addition of
responsibilities for evaluating the effectiveness of the Board, its committees
and individual Board members and for assessing overall corporate governance.
The Committee will also now review and make recommendations to the Board
regarding compensation and meeting fees for non-employee directors.
The Committee will continue to propose to the Board a slate of directors for
election by the shareholders at the annual meeting and to identify and propose
to the Board candidates to fill Board vacancies. The Committee considers
suggestions from many sources, including shareholders, regarding possible
candidates for director.
The Committee will consider candidates proposed by stockholders in accordance
with the following procedure:
Nominations should be sent to the Secretary of the Committee on Directors
and Board Affairs, Mobil Corporation, 3225 Gallows Road, Fairfax, Virginia
22037-0001. Nominations should describe the qualifications of the candidate
and should be accompanied by a written statement that the candidate is
willing to serve and is committed to representing the interests of all the
stockholders. Candidates must be endorsed by a member of the Committee on
Directors and Board Affairs or be supported by the holders of not less than
200 shares of common stock. This number is subject to periodic review by
the Committee on Directors and Board Affairs.
Nominations by stockholders may also be made at an annual stockholders'
meeting in the manner provided in the Corporation's By-Laws. The By-Laws
require, among other things, that written notice must be given to the
Corporation of such nominations, at least 90 days prior to the anniversary date
of the preceding annual meeting. For a description of the full procedure
governing such nominations, reference is made to the By-Laws,
8
<PAGE>
a copy of which is available from the Secretary of the Corporation. At any
meeting of stockholders, the presiding officer may refuse to acknowledge the
nomination of any person not made in compliance with the procedure specified in
the By-Laws.
In 1994, the Board removed all employee directors from this Committee so that
it is now composed entirely of non-employee directors. Members of the Committee
are: William J. Kennedy III (Chairman), Lewis M. Branscomb, Helene L. Kaplan,
Aulana L. Peters and Charles S. Sanford, Jr.
The MANAGEMENT COMPENSATION AND ORGANIZATION COMMITTEE, which replaced the
Compensation and Management Incentive Committee established in 1960, met four
times during 1994. The Committee reviews, approves and recommends to the Board:
(1) the Corporation's employee and management compensation and benefit
policies; (2) management incentive compensation plans, including stock option
plans; and (3) the amount and form of compensation of employee directors and
senior managers of the Corporation. The Committee also administers the Mobil
incentive compensation and stock option plans. In December 1994, the
Committee's responsibilities were increased by the addition of the
responsibility to review and endorse all senior management appointments and any
significant structural changes in the management and organization of the
Corporation.
The Management Compensation and Organization Committee is composed entirely
of non-employee directors. Members of the committee are: Robert G. Schwartz
(Chairman), Allen F. Jacobson, Samuel C. Johnson, William J. Kennedy III, J.
Richard Munro and Charles S. Sanford, Jr.
The report of the Committee on Executive Compensation is set forth beginning
on page 17.
The PUBLIC ISSUES COMMITTEE, established in 1973, met four times during 1994.
The Committee reviews and makes recommendations regarding: (1) Mobil's domestic
and international policies, programs, position and strategies involving
political, social and environmental trends and issues; (2) shareholder
proposals; (3) support of business, charitable and educational organizations;
and (4) an area of responsibility added in December 1994, the Corporation's
employment and workplace policies and practices, including those relating to
equal employment opportunity, non-discrimination and diversity in the
workplace.
The Public Issues Committee is composed of non-employee directors and the
Chairman of the Board. Members of the committee are: Samuel C. Johnson
(Chairman), Donald V. Fites, William J. Kennedy III, Lucio A. Noto and Aulana
L. Peters.
ITEM 2--APPROVAL AND RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors desires, in accordance with its established policy, to
obtain from the stockholders an indication of their approval or disapproval of
the Board's action in appointing Ernst & Young LLP, Fairfax Square-Tower II,
8075 Leesburg Pike, Vienna, Virginia 22182-2709, as independent auditors of
Mobil and its subsidiaries for the year 1995.
Ernst & Young has been serving Mobil and its subsidiaries for many years. It
has no direct financial interest or any material indirect financial interest in
Mobil or any of its subsidiaries and during the past three years has had no
connection therewith in the capacity of promoter, underwriter, voting trustee,
director, officer, or employee. During 1994, Ernst & Young rendered audit
services amounting to $12.6 million.
The Audit Committee recommended and the Board approved the appointment of
Ernst & Young as independent auditors. The Audit Committee, in arriving at its
recommendation to the Board, reviewed the performance of Ernst & Young in prior
years as well as the firm's reputation for integrity and competence in the
fields of accounting and auditing, and the status of litigation involving the
firm. The Audit Committee has expressed its satisfaction with Ernst & Young in
these respects.
Representatives of Ernst & Young will be present at the stockholders' meeting
and will have the opportunity to make such statements as they may desire. They
will also be available to respond to appropriate questions from stockholders
attending the meeting.
9
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING RESOLUTION WHICH
WILL BE PRESENTED AT THE MEETING:
"RESOLVED, that the appointment, by the Board of Directors of the
Corporation, of Ernst & Young LLP as independent auditors of the
Corporation and its subsidiary companies, for the year 1995, be and hereby
is approved and ratified."
In the event the resolution is defeated, the adverse vote will be considered
a direction to the Board of Directors to select other auditors for the
following year. However, because of the difficulty and expense in making any
substitution of auditors so long after the beginning of the current year, it is
contemplated that the appointment for the year 1995 will be permitted to stand
unless the Board finds other good reasons for making a change.
ITEM 3--APPROVE 1995 MOBIL INCENTIVE COMPENSATION AND STOCK OWNERSHIP PLAN
Mobil's 1995 Incentive Compensation and Stock Ownership Plan (the "1995
Plan"), the text of which is set forth in the Appendix to this Proxy Statement,
is being submitted for shareholder approval at the meeting and, if approved,
will supersede the 1991 Mobil Incentive Compensation and Stock Option Plan (the
"1991 Plan"). The 1995 Plan contains provisions intended to permit the
Corporation to qualify for a Federal tax deduction for awards thereunder. The
following is a summary of certain of the provisions of the 1995 Plan; the
summary is not, however, intended to be complete, and is qualified by reference
to the Appendix.
PURPOSE AND ADMINISTRATION
The purpose of the 1995 Plan is to promote the creation of shareholder value
by encouraging, recognizing and rewarding sustained outstanding corporate,
division, business unit and individual performance by key employees who are
largely responsible for the management, growth and protection of the business.
The components of the Plan include the Short-Term Incentive Program, the Long-
Term Incentive Program and the Stock Ownership Program.
Under the Short-Term Incentive Program, a portion of key employees' total
annual compensation is based upon the past year's business performance, with
the intention that key employees receive total compensation that is above the
average for comparable positions paid by the seven other major oil companies
included in the Performance Graph on page 21 (the "peer companies") when the
Corporation's performance is above average compared to those companies; total
compensation that is equal to the average for comparable positions paid by the
peer companies when the Corporation's comparative performance is average; and
total compensation that is below the average for comparable positions paid by
those companies when the Corporation's comparative performance is below
average.
The purpose of the Long-Term Incentive Program is to provide rewards, based
on the performance of the Corporation over a longer term, to those key
employees who have the potential to contribute significantly to the long-term
growth and success of the Corporation. These awards are in the form of stock
equivalents (i.e., hypothetical shares of Mobil stock) or restricted stock,
which serves to align the interests of these key employees with the interests
of the shareholders.
The Stock Ownership Program provides long-term incentives designed to
encourage stock ownership by participants in the 1995 Plan, thereby directly
linking their financial interests to those of the shareholders. Under the
Program, key employees receive stock options, which provide them an opportunity
to increase their ownership of Mobil common stock. The Committee is expected to
develop stock ownership guidelines, based on the cumulative number of options
an employee has received, to encourage key employees to take advantage of the
Program and invest in and hold Mobil stock.
The Plan is administered by the Board Management Compensation and
Organization Committee (the "Committee").
SHORT-TERM INCENTIVE PROGRAM
The Committee may make annual short-term incentive awards in the form of
cash, stock or any combination thereof. To permit the Corporation to qualify
for a Federal tax deduction for such awards to each person who is a "named
executive officer" covered by Section 162(m) of the Internal Revenue of 1986
(the "Code") (i.e., the
10
<PAGE>
Chief Executive Officer and the other four most highly compensated executive
officers), the maximum awards to such persons must be determinable by reference
to objective, predefined performance measures. Accordingly, the 1995 Plan
provides that the maximum annual short-term incentive award to the Chief
Executive Officer is 0.1%, and the maximum such award to each of the other
named executive officers is 0.0375%, of the Corporation's net income, adjusted
to exclude the effects of extraordinary items, gains or losses on the
disposition of discontinued operations of a segment of the business, the
cumulative effect of changes in accounting principles and "Special Items".
Special Items are charges or credits in excess of $10 million for certain types
of events or circumstances specified in the 1995 Plan that are included in the
Corporation's net income. The Committee has discretion to reduce these maximum
awards and intends to administer the Short-Term Incentive Program for named
executive officers under guidelines similar to those that it may establish from
time to time that apply to other senior executives.
Under current Committee guidelines, which are subject to change, the
Committee may make annual short-term incentive awards to eligible employees
(currently, approximately 1,300) based on the level of achievement of financial
and other performance criteria. These guidelines place strong emphasis on
corporate, division and business unit performance as well as on individual
performance. A short-term incentive award target will be established for each
eligible employee. This target will be the difference between the estimated
total cash compensation (base salary plus short-term incentive award) for
comparable positions at the peer companies and the midpoint of the salary range
for the employee's salary grade. Under current guidelines, this target will
then be multiplied by a performance factor which, in the case of the named
executive officers, will range from 0 to 1.5 depending equally on the
Corporation's return on capital employed and its earnings per share growth
during the preceding year, in each case relative to that of the peer companies
during the same year. In the case of executives other than the named executive
officers, the target multiplier will depend also on individual and applicable
division and business unit performance.
In administering the 1995 Plan, the Committee intends to lower the salary
grade threshold for eligibility for short-term incentive awards to reflect the
extensive elimination of layers of management and the associated delegation to
lower level employees of significant authority.
Short-term incentive awards may be paid currently in cash or stock or
deferred in whole or in part, in the Committee's discretion. While the 1995
Plan permits deferred awards to be denominated in such units as the Committee
shall prescribe, the Committee presently intends to permit deferral only in the
form of stock equivalents, which would appreciate or depreciate in value just
as real shares of Mobil stock and on which dividend equivalents (i.e.,
hypothetical dividends) would be credited.
LONG-TERM INCENTIVE PROGRAM
Long-term incentive awards may be granted by the Committee either in the form
of annual grants in respect of four-year performance cycles or one-time grants
of restricted stock. To permit the Corporation to qualify for a federal tax
deduction for performance cycle-related long-term awards to named executive
officers, the 1995 Plan provides that the maximum long-term award payable to
each named executive officer is 0.2% of the average of the Corporation's net
income for the four years of the performance cycle adjusted as above, except
that there is no adjustment to exclude the effects of Special Items. As in the
case of short-term incentive awards, the Committee has the discretion to reduce
these maximum awards, and it intends to administer the Long-Term Incentive
Program for named executive officers under guidelines similar to those
applicable to the other senior employees who are eligible for such awards.
As under the 1991 Plan, performance cycle-related awards are based on the
performance of Mobil stock and other corporate performance measures. The 1995
Plan provides that each year, each employee eligible for a long-term award in
respect of the four-year performance cycle beginning with that year (currently
49) will receive an allotment of a number of stock equivalents based on the
employee's level. Over the four-year performance cycle period, dividend
equivalents will be credited with respect to these allotments and will be
immediately converted to additional stock equivalents. (This represents a
change from the 1991 Plan, which provided for dividend equivalent amounts to be
paid currently to the executives.) The amount of the long-term incentive award
payable after the close of the four-year period is the end-of-period value of
real shares equal in number to the accumulated stock equivalents multiplied by
a performance factor. Under current Committee
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guidelines, this factor will be between 0 and 1.5, depending on the
Corporation's return to shareholders (capital appreciation plus dividends)
(weighted 50%), earnings per share growth (weighted 25%) and return on capital
employed (weighted 25%) over the four-year period, in each case relative to
results achieved by the peer companies over the same period. Long-term
incentive awards may be paid currently in cash, stock or restricted stock, or
deferred, under current guidelines, in stock equivalents.
The Chairman has set three challenging performance goals for the Corporation
to achieve by the end of 1998: annual net income of $3.0 billion, annual
return on capital employed of 12%, and a stock price of $125. As a special
incentive under the Long-Term Incentive Program, for the first performance
cycle only, the Committee intends to increase the awards otherwise payable by
5%, 15% or 30% if one, two or three of these goals are achieved by the end of
1998.
Like the 1991 Plan, the 1995 Plan authorizes the Committee to make grants of
restricted stock as an additional type of long-term incentive award. The
Committee presently intends to use such authority to make such grants on an
extremely selective basis to recognize employees who have demonstrated
potential to make a significant contribution to the long-term performance of
the Corporation and to provide a retention incentive for such employees by
making vesting of the restricted stock conditional on continued service for up
to ten years. The Committee intends to use such grants in place of any further
conditional deferred awards under Mobil's Management Retention Plan, described
on page 26. Under the 1995 Plan, the maximum number of shares of restricted
stock that can be the subject of any grant is 10,000 (as adjusted in the case
of a stock split or other change in the Corporation's capital structure), and
no employee holding a prior grant of restricted stock that has not vested will
be eligible to receive another grant. The Committee presently does not intend
to grant restricted stock to any named executive officer or any other person
who is an officer or director of the Corporation.
STOCK OWNERSHIP PROGRAM
Under the 1995 Plan, as under the 1991 Plan, the Committee may award to
eligible employees options to purchase the Corporation's common stock. For
U.S. employees, these options provide certain Federal income tax advantages,
as described below, particularly in the case of "Incentive Stock Options" as
defined in the Code ("ISOs"). The Committee intends to lower the salary grade
threshold for option grant eligibility under the 1995 Plan, for both U.S. and
non-U.S. employees, to reflect the extensive elimination of layers of
management over the last few years and the associated delegation to lower
level employees of significant authority. As a result, about 1,650 employees
(compared to 700 in the past) will now be eligible to receive options. The
Committee believes that executives who receive stock options should be
investing a portion of their own money in the Corporation on a long term
basis, and will establish stock ownership guidelines based on the cumulative
number of options received.
The term of any option granted under the 1995 Plan cannot exceed 10 years
from the date of grant, and the option exercise price must be no less than the
fair market value of the shares covered by the option at the time of the grant
(but not less than par value). The market value of a share of the
Corporation's common stock as of March 1, 1995 was $87.1875. No employee can
receive options covering more than 150,000 shares (as adjusted in the case of
a stock split or other change in the Corporation's capital structure) in any
year. As in the past, stock option awards are not transferrable other than by
will or the laws of descent and distribution and may be exercised in the
grantee's lifetime only by the grantee. However, the Committee is authorized
to grant transferrable options if changes in the law should favor such
options.
The 1991 Plan contained a provision which gave the Committee discretion to
accept the surrender of options in return for a payment in cash and/or stock
in the amount of the difference between the market price of stock on the date
of the exercise of the option and the option exercise price. This provision is
not included in the 1995 Plan, since changes in the U.S. securities laws
subsequent to the adoption of the 1991 Plan have eliminated the need for it.
After satisfying any minimum waiting period established by the Committee
(currently three years), a grantee can exercise an option by tendering the
full purchase price, plus any required withholding taxes, in cash, certified
check or shares of the Corporation's common stock. The shares to be delivered
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upon exercise of an option shall be made available, at the discretion of the
Board, from authorized but unissued shares or shares held by the Corporation as
treasury shares, including shares purchased in the open market.
Options granted under the 1995 Plan, as in the case of the 1991 Plan, may be
ISOs or non-qualified options. The value (determined at the time of grant) of
the shares covered by an ISO granted to an employee that become exercisable in
any single calendar year cannot exceed $100,000 under current tax law. There
are no tax consequences to the Corporation or the optionee upon the grant of
ISOs or non-qualified options. The gain upon exercise of non-qualified options
(i.e., the bargain element reflected in the exercise price) is currently
taxable to the optionee, and the Corporation is entitled to a current deduction
in an equivalent amount for income tax purposes. The Corporation would
generally not be permitted a deduction for income tax purposes of the bargain
element realized by the optionee upon exercise of ISOs, unless the optionee
disposes of the shares acquired within one year (or within two years of the
date the option was granted). The optionee is generally not liable for tax on
the bargain element realized upon exercise of ISOs until the shares so acquired
are sold or otherwise disposed of. If the one-year and two-year holding periods
referred to above are satisfied, such gain is taxed at capital gains rates.
LIMITS ON AWARDS
The 1991 Plan limited annual incentive awards to a dollar figure comprised of
an amount determined by a formula based on the Corporation's net income and
capital investment and a carry forward amount from prior years in which less
than the maximum amount was awarded. Actual awards under the 1991 Plan never
approached this incentive award limit, and the 1995 Plan does not provide for
any formula-based limit. However, under the 1995 Plan, individual short-term
and long-term incentive awards are subject to the performance-based limits
described on page 11. In addition, the 1995 Plan contains the 1991 Plan's
prohibition against the making of any incentive awards in any year in which
common stock dividends are not paid. Further, the 1995 Plan limits the number
of shares subject to options granted, and the number of shares of restricted
stock awarded, to any individual in any year to 150,000 and 10,000,
respectively, as described on page 12. Finally, on an aggregate basis, the 1995
Plan limits to 0.9% of shares outstanding at the end of the prior year the
total of the option shares, shares of restricted stock and stock equivalents in
respect of long-term allotments (including dividend equivalents credited on
such allotments) that may be awarded (and credited) in any year. Under the 1991
Plan, the number of shares available for stock option grants in any year was
limited to 0.6% of shares outstanding at the end of the prior year, while
restricted stock awards and stock equivalents in respect of long-term
allotments counted against the incentive award dollar limit referred to above.
The new share limit is higher than that under the 1991 Plan in part to reflect
the increased number of employees eligible for option grants and in part
because shares of restricted stock and stock equivalents in respect of long-
term allotments are now counted toward that limit. Having a single pool of
shares allows the Committee flexibility to choose among these various forms of
long-term incentive. To the extent the authorized pool is not fully utilized in
any year, the excess is carried over to future years. To the extent that
options are cancelled prior to being exercised, the number of shares covered by
such options will be restored to the authorized pool.
The Board of Directors believes that the various programs embodied in the
1995 Plan will contribute to Mobil's ability to achieve the purpose set out
above. If approved, approximately 1,660 regular employees will be eligible to
participate, of whom 12 are currently directors or officers of the Corporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING RESOLUTION WHICH
WILL BE PRESENTED AT THE MEETING:
"RESOLVED, that the 1995 Mobil Incentive Compensation and Stock Ownership
Plan, the text of which is set forth in the Appendix to the Proxy Statement
for this meeting, be and the same hereby is approved."
STOCKHOLDER PROPOSALS--GENERAL
In addition to the matters to be presented by Mobil as set forth in the
Notice of Annual Meeting, stockholders are asked to consider two proposals
submitted by stockholders. Mobil knows of no other matters which properly may
be presented at the meeting. Proposals and suggestions received from
stockholders are given careful consideration. The Corporation has adopted a
number of such proposals and suggestions when they were in the best interests
of the Corporation and its stockholders.
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Stockholder proposals are eligible for consideration for inclusion in the
proxy statement for the 1996 Annual Meeting if they are received by Mobil
before the close of business on November 21, 1995. Any proposal should be
directed to the attention of the Secretary, Mobil Corporation, 3225 Gallows
Road, Fairfax, Virginia 22037-0001.
ITEM 4--LIMIT AUTHORITY TO ISSUE PREFERRED STOCK
Management has been advised that the College Retirement Equities Fund, 730
Third Avenue, New York, New York 10017, the holder of 3,538,899 Mobil shares,
intends to submit the following proposal at the meeting:
WHEREAS, the Company's Board of Directors has authority under the Company's
charter to issue one or more classes of so-called "blank check" preferred
stock, having such voting and other rights as the Board, in its sole
discretion, may determine;
WHEREAS, the Board may be able to deter unsolicited acquisition offers by
placing blank check preferred in friendly hands without seeking shareholder
approval;
WHEREAS, Delaware's anti-takeover statute enhances the Board's ability to
deter unsolicited takeover bids by placing a block of blank check preferred
in friendly hands;
WHEREAS, such use of blank check preferred by the Board could deprive
shareholders of the opportunity to consider valuable offers for their
stock;
RESOLVED that the shareholders request that the Board:
Adopt a policy of seeking shareholder approval prior to placing
preferred stock with any person or group except for the purpose of
raising capital in the ordinary course of business or making
acquisitions and without a view to effecting a change in voting power.
I. The Board can limit shifts in control of the Company by placing a block
of preferred stock in friendly hands without shareholder approval.
Blank check preferred can be issued by the Board for capital raising,
acquisitions or as an anti-takeover device, without shareholder approval.
The Board can use blank check preferred as an anti-takeover device to deter
unsolicited tender offers favorable to shareholders. For example, the Board
could issue blank check preferred to dilute the stock ownership of, or
create voting impediments for, an unsolicited acquiror. Since such uses of
blank check preferred could potentially diminish the value of the
shareholders' investment and decrease the market price of the Company's
shares, shareholder approval should be obtained before the Board uses blank
check preferred as an anti-takeover device.
II. Delaware's anti-takeover statute enhances the Board's ability to deter
takeovers by undertaking blocking transactions.
Delaware's anti-takeover statute enhances the Board's ability to deter a
takeover by placing blank check preferred in friendly hands. The statute
provides generally that unless an unsolicited acquiror obtains 85 percent
of the Company's voting stock in the transaction by which it obtains 15
percent, it is barred for three years from consummating a business
combination with the Company. The Board can thus effectively deter
unsolicited bids by placing a significant block of blank check preferred in
friendly hands, making it much harder (if not impossible) for an
unsolicited bidder to attain the 85 percent ownership it needs to be
exempted from the Delaware statute.
III. Blank Check preferred should not be used by the Board to disadvantage
shareholders without their consent.
The Board's discretionary authority to issue blank check preferred should
only be exercised for corporate purposes demonstrably in the best interests
of shareholders. Good corporate governance requires that holders of a
majority of voting stock approve the use of blank check preferred as a
deterrent to unsolicited tender offers--a use that is not necessarily in
the best interests of shareholders.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF ITEM 4.
This proposal was presented at last year's annual meeting, and over 64% of
the votes cast were voted against it. Your Board continues to believe, for the
same reasons we articulated last year, that its adoption would be unwise and
adverse to the shareholders' interests.
First, and most importantly, the proposal would deprive the Board of one of
the means it now has to protect the shareholders' interests by deterring or
repulsing coercive, two-tier and bargain-price offers for the Company. The
capacity to issue preferred stock, together with other protective measures now
available, does not prevent tender offers, but serves to enhance the Board's
bargaining position on behalf of the shareholders if and when they might be
made. Your Board feels strongly that the elimination of any of those protective
measures would adversely affect that bargaining position, and thus the
interests of the shareholders. Any future issuance of preferred stock would, of
course, have to comply with the Board's fiduciary duty to act in the best
interests of the Corporation and its shareholders, subject to the heightened
level of scrutiny applied by the Delaware courts in takeover situations. The
proponent does not suggest that the Board has in the past abused its authority
to issue preferred stock and cites no reason as to why it would not fully
perform its fiduciary obligations in the future. In fact, the Board has in the
past always fulfilled these obligations in full measure, and it would do so
similarly in the future.
Second, the proposal could curtail the Corporation's ability to issue
preferred stock for financings, acquisitions and additional equity capital.
While it purports to permit the Board to issue preferred stock for these
purposes, it effectively negates this permission by requiring shareholder
approval if the issue effects a change in voting power. Since it is literally
impossible to issue any preferred stock which does not effect some change in
voting power from what it was immediately before, this requirement would be an
undesirable limitation on the Board's discretion in negotiating the issuance of
shares with underwriters in connection with capital raising or with purchasers
in a merger-acquisition situation, where voting rights, like the dividend rate
and other basic terms, are a matter of negotiation. Your Board believes
strongly that the imposition of any limitation on the Corporation's ability to
issue preferred stock for these purposes would not be in the best interests of
the Corporation and its shareholders.
FOR THE FOREGOING REASONS, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE PROPOSAL.
ITEM 5--LIMITATIONS ON COMPOSITION OF THE BOARD
Management has been advised that Dr. Thomas R. Sifferman, 3051 Camino De Las
Piedras, El Cajon, California, 92019, the beneficial owner of 126 shares of
Mobil common stock and 135 units of interest in shares of Series B ESOP
Convertible Preferred Stock (equivalent to 1.35 such shares), intends to submit
the following proposal at the meeting:
WHEREAS,
Mobil currently has a Board of Directors that has 14 directors with 4
who are Mobil employees (INSIDE DIRECTORS) and 10 who are non-Mobil
employees (OUTSIDE DIRECTORS),
INSIDE DIRECTORS can have vested interest in voting for THEIR BEST
INTEREST rather than the shareholders' interest, and
Some of the OUTSIDE DIRECTORS provide major services to Mobil that then
provides a POTENTIAL CONFLICT OF INTEREST.
BE IT RESOLVED THAT THE STOCKHOLDERS REQUEST MOBIL TO IMPLEMENT THE
PROPOSAL BELOW:
Change the composition of and membership requirements for the Board of
Directors to have a larger number of INDEPENDENT OUTSIDE DIRECTORS by
only allowing a maximum of 2 INSIDE DIRECTORS and no AFFILIATED
DIRECTORS (OUTSIDE DIRECTORS, who are officers of companies that provide
services worth more than $1 million to Mobil) on the Board of Directors.
This proposal would only be effective for nominees for director at
meetings subsequent to the 1995 Annual Meeting and would, therefore, not
affect the unexpired terms of the existing directors.
If you agree with this proposal, please mark your proxy FOR.
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SUPPORTING STATEMENT
This proposal would allow the Board of Directors to be more responsive to
stockholders. Having all INDEPENDENT OUTSIDE DIRECTORS (who do not provide
any services to Mobil) should reduce possible CONFLICTS OF INTEREST and
make it easier for the Board of Directors to discharge their fiduciary
responsibilities. Even the National Association of Corporate Directors
"discourages members from serving on the boards of companies that are their
clients."/1/
Senior officers do not need to be on the Board of Directors for them to
provide their knowledge and understanding to the Board. The OUTSIDE
DIRECTORS of General Motors Corp. wrote a 28 point document that states
Board members "have complete access to GM's management."/2/, /3/ GM's Board
of Directors has access to GM's management--without them being on the board
as voting members. Similarly, providers of major services should be willing
to attend board meetings to discuss their contracts with Mobil.
Although Mobil has their Board of Directors sign statements that they have
no CONFLICTS OF INTEREST, there have been COMPENSATION committee interlocks
as noted on page 23 of last year's proxy statement between Mobil Director
Mr. Schwartz and Mobil CEO Mr. Murray.
Phillip Norton predicted "that one in four companies will face board-
related litigation this year, much of which will include CONFLICT-OF-
INTEREST issues." In fact, "roughly 300 U.S. companies last year were hit
with 713 (lawsuit) claims against directors and officers."/1/
For these reasons, I strongly encourage you to vote for this proposal and
mark FOR on your ballot. Thanks.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF ITEM 5.
Last year, over 88% of the votes cast by Mobil's shareholders on a proposal
very similar to this proposal were voted against it. Your Board believes, for
the same reasons presented last year, that the proposal does not warrant
stockholder support.
The proposal would limit the number of employee directors to two, because,
the proponent states, employee directors "can have a vested interest in voting
for their best interest rather than the shareholders' interest." However,
Delaware law requires that directors act in the interest of the Corporation
and its shareholders and each Mobil director has always been and is dedicated
to performing his or her fiduciary duty in accordance with that standard.
Moreover, Mobil's non-employee directors all agree that Board membership of
the Corporation's senior executives is important and valuable. Their
participation as members gives the non-employee directors direct access to
critical information about the Company's operations and strategies and permits
such directors to evaluate knowledgeably top management's contributions and
personal qualities.
The proposal would also prohibit outside directors who are officers of
companies that provide $1 million or more of services to Mobil. This would
arbitrarily exclude from Board membership many highly qualified individuals
simply because they are officers of companies that provide some service to
Mobil. It would also foreclose Mobil from obtaining services from another
company simply because one of its officers is a current Mobil director.
The proponent states the prohibition would "reduce possible conflicts of
interest." However, there can be no serious concern in this regard. Mobil's
Board has had a strict conflict-of-interest policy for more than 30 years, and
it has been diligently implemented. All directors sign statements confirming
they have no conflicts of interest, and there have been no violations of any
director's duty to avoid conflicts.
FOR THE FOREGOING REASONS, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE PROPOSAL.
- - -------
/1/ Linda Himelstein, "Boardrooms: The Ties that BLIND?" Business Week, May
2, 1994, 112-114.
/2/ Judith H. Dobrzynski, "At GM, a MAGNA CARTA FOR DIRECTORS," Business
Week, April 4, 1994, 37.
/3/ Robert L. Simison, "GM Board Adopts Formal Guidelines on STRONGER
CONTROL OVER MANAGEMENT," Wall Street Journal, March 28, 1994, A4.
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EXECUTIVE COMPENSATION
MANAGEMENT COMPENSATION AND ORGANIZATION COMMITTEE REPORT
The Management Compensation and Organization Committee of Mobil's Board of
Directors consists of six directors who are neither employees nor officers of
the Company. The Committee regularly reviews the Corporation's executive
compensation policies and programs and determines the compensation of the
senior executive officers. The Committee's decisions on compensation of the
Chief Executive Officer and other employee directors are reviewed with and
approved by all of the non-employee directors, who constitute a majority of the
Board.
The Committee's overall policy regarding compensation of Mobil's executive
officers is to provide competitive salaries and incentives that 1) attract,
retain and motivate individuals of outstanding ability in these key positions;
2) reward individual performance and the performance of the Corporation; 3)
support both the short-term and long-term goals of the Corporation; and 4)
reinforce the importance of increasing shareholder value.
The executive compensation program includes four elements which, in the
Committee's view, constitute a flexible and balanced method of establishing
total compensation for senior management. The four compensation elements,
further discussed below, are: base salary, short-term incentive, long-term
incentive, and stock options.
BASE SALARIES
The Committee annually reviews salary ranges for senior positions and
approves adjustments necessary to align these ranges with the competitive rates
of pay reported by seven major petroleum companies for similar positions. These
companies constitute Mobil's petroleum comparator group, as named in the
Performance Graph on page 21, except that the salary data for the U.S.
subsidiaries of British Petroleum Company p.l.c. and Royal Dutch Petroleum
Company/"Shell" Transport and Trading Company p.l.c. are used because parent
company data are not available. These seven companies have been chosen as
comparators because they are the major companies in direct competition with
Mobil in most of its areas of business.
The Committee annually adopts guidelines for executive salary increases which
are consistent with guidelines for all Mobil salaried employees. These
guidelines are based generally on the average salary increase budget within the
comparator group. Actual salaries within the established salary range are
determined based on the individual executive's performance and experience
level.
In accordance with the above procedures, effective March 1, 1994, the Board
increased Mr. Noto's base salary to $800,000 coincident with his promotion to
the position of Chairman of the Board and Chief Executive Officer. Because he
was new to this position, Mr. Noto's base salary was then, and continues to be,
substantially below both the average and median base salary paid for such
position by the companies in the petroleum comparator group.
Former Chairman and Chief Executive Officer, A. E. Murray, retired effective
February 28, 1994, after serving over eight years in that position and over 40
years with Mobil. Mr. Murray did not receive a salary increase in 1994.
SHORT-TERM INCENTIVE PROGRAM
The goal of the short-term incentive program is to place a portion of
executives' annual cash compensation at risk to encourage and reward sustained
high performance each year. An incentive compensation fund is provided by the
shareholder-approved 1991 Mobil Incentive Compensation and Stock Option Plan.
Within this fund, the Committee establishes the total amount to be allocated
for short-term incentive awards. This amount is based on the Committee's
judgement of the Corporation's annual financial and operating performance
relative to its past performance, the current performance of the petroleum
comparator companies, and its business plan objectives. No short-term awards
are payable based on income for any year in which Mobil does not pay a dividend
to its shareholders. The Committee's award guidelines for each executive
position reflect the competitive practice within the petroleum comparator
group. Awards are limited or eliminated altogether as a result of below average
performance, and above average awards are paid for above average performance.
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In determining the total amount to be allocated for the 1994 short-term
incentive awards, the Committee considered several factors including net
income, earnings growth, return on capital employed, return to shareholders,
increase or decrease in shareholders' equity and various strategic and
operational objectives. While all of these factors were considered, they were
not specifically weighted and no formula was used in determining the total
amount for short-term awards. Operating earnings were basically the same in
1994 as in 1993, despite adverse industry fundamentals such as lower crude and
natural gas prices and lower industry refinery margins, the effects of which
the organization was able to offset through business initiatives, cost
controls, increased productivity and effective management of the asset base.
The Committee determined, however, that the 1994 short-term incentive awards
should be slightly lower than the 1993 short-term awards because shareholders'
equity, one of the factors influencing the total funds for short-term incentive
awards, declined slightly from year-end 1993. The total funds allocated for the
1994 short-term incentive awards were about 10% less than in 1993, reflecting a
decrease in award levels of about 5% for the above cited reason and an equal
reduction to reflect a decrease in the number of eligible employees.
Mr. Noto was promoted to Chairman and Chief Executive Officer in March of
1994 and in the judgement of the Committee has commenced long-term strategic
and cost reduction initiatives that will enhance the future of the Company.
Based on Mr. Noto's overall contributions and his increased level of
responsibility as Chairman and Chief Executive Officer, the Committee felt an
increase over last year's short-term incentive award, which he received as
President, would have been appropriate. However, Mr. Noto requested that his
1994 short-term incentive award be reduced by 5% from his award last year to
correspond with the overall 5% average reduction in 1994 short-term incentive
awards for other directors. As indicated in the Summary Compensation Table, Mr.
Noto's short-term incentive award for 1994 was $525,000.
Mr. Murray did not receive a short-term incentive award for 1994 due to his
retirement.
LONG-TERM INCENTIVE PROGRAM
The long-term incentive program links executive rewards to growth in long-
term shareholder value. The program focuses executives' attention on the
Corporation's performance over a period longer than one year. In the opinion of
the Committee, this program is a key tool in building value for Mobil
shareholders, because it rewards the strategic decisions on capital investments
which are necessary for success in the petroleum industry. It is structured in
four-year performance cycles during which achievement of longer term financial,
strategic, and operational objectives is measured. Contingent stock equivalents
(also known as performance shares) are allotted annually at the beginning of
each four-year performance period. The number of performance shares allotted to
each executive is calculated by multiplying base salary by a percentage which
varies with the position level, and then converting these amounts into
performance shares at the average market price over the 30 trading days
immediately preceding the date of allotment. Amounts equal to dividends paid on
Mobil common stock are paid during the four-year cycle for the performance
shares allotted. At the end of the four-year performance period, the Committee
determines what percent of the performance share allotments should be converted
into actual awards. The policy for determining actual awards is based on
Mobil's performance relative to its petroleum comparator group using five
criteria: earnings per share growth, return on capital employed, total
shareholder return, other defined operating and financial factors relative to
competition, and the degree to which Mobil's internal corporate objectives are
achieved. In assessing performance for the cycle, the Committee assigns equal
weight, or 20%, to each of the five criteria. If the Committee approves any
actual awards based on Mobil's relative performance, its policy is to approve
awards within a range of 40% to 120% of the performance shares allotted,
according to the discretion of the Committee. The normal award level is 100% of
the value of the performance shares allotted, assuming satisfactory Mobil
performance.
Mobil's performance for the 1991-1994 period was compared in detail with the
performance of the seven companies in its petroleum comparator group, using the
criteria defined above. Relative to the comparator group, Mobil's annual total
return to shareholders ranked first, at 14.9% over the four-year cycle. Mobil's
relative ranking in earnings per share growth and return on capital employed
remained essentially the same as in the last cycle, slightly above the middle
of the comparator group. Mobil successfully achieved, or made very good
progress towards achieving, all of its stated internal objectives. Taking all
of these factors into account, the Committee judged Mobil's overall performance
satisfactory during the performance cycle, and approved actual awards for the
1991-1994 period at 95% of the performance shares allotted.
18
<PAGE>
These contingent allotments were made in January 1991 when the market value
of Mobil common stock was $57.156 per share. Actual awards at the end of this
cycle thus include appreciation in the market value of Mobil common stock of
$29.17 per share between January 1991 and January 1995. As a result, Mr. Noto
received an actual award of $609,713 based on the 1991 contingent allotment
related to his previous position, and Mr. Murray received an actual award of
$1,266,388 reflecting a proration in proportion to the number of months of the
performance cycle he served as Chairman and Chief Executive Officer. The actual
awards for the 1991-1994 cycle were higher than the actual awards for the 1990-
1993 cycle; both cycles were paid at 95% of the original allotments but the
1991-1994 cycle included stock appreciation of $29.17 per share while the 1990-
1993 cycle included stock appreciation of $18.24 per share.
STOCK OPTIONS
Stock options are granted to emphasize the importance of increasing
shareholder value over the long term, and to encourage and facilitate the
executives' personal ownership of Mobil stock. The Committee's policy is to
grant options annually, at fair market value, to sustain executives' long-term
perspective. The Committee has established stock option guidelines which allow
grants sufficient in size to provide a strong incentive for executives to
strive for long-term results and to become significant Mobil shareholders.
Grant size is related to the level of responsibility and individual performance
of executives and is intended, in conjunction with the Long-Term Incentive
Program, to provide executives with the opportunity for total average long-term
incentive compensation equivalent to that afforded for comparable positions by
the petroleum comparator companies over time. In view of this focus on the
opportunity for total average long-term incentive compensation, the grant size
is not targeted to the number of options granted by the comparator companies.
In 1994, the Board awarded Mr. Noto 70,000 stock options. This is the same
number granted to the preceding Chairman and Chief Executive Officer and the
Committee believes it is competitively justified as described above. Due to his
retirement Mr. Murray did not receive any stock options in 1994. The actual
financial gains to be realized by executives as a result of these stock option
grants depends solely on the future performance of Mobil stock.
OTHER COMPENSATION
Under the Management Retention Plan, conditional deferred awards, the
principal amount of which cannot exceed $1 million for any one person during
his or her working lifetime, are made to selected executives whose continued
success is considered key to the long-term success of Mobil. Payments,
including either notional interest on the awards or the cash value of dividend
equivalents if awards are converted to share equivalents, are made only after
normal retirement, approved early retirement, death or long-term disability. As
disclosed in the notes to the Summary Compensation Table on page 22, Mr.
Murray, who retired effective February 28, 1994 as Chairman and Chief Executive
Officer, received $2 million from the Management Retention Plan upon his
retirement. He had received conditional deferred awards between October 1978
and March 1985 totalling $1 million, and pursuant to the terms of the Plan,
this principal amount plus interest was payable at the time of his retirement.
SUMMARY
The Committee believes that the compensation program described above
effectively links executive and shareholder interests and provides incentives
that are consistent with the long-term strategies required for success in the
petroleum industry. Generally, a majority share of senior executives' total
compensation is structured in the form of incentives which reward the executive
depending on corporate and individual performance. With the program's mix of
performance-based incentives, an executive has an opportunity to earn above
average total compensation for above average corporate and individual
performance.
Each year, the Committee reviews the compensation program, giving particular
attention to the program's linkage to increasing shareholder value while
maintaining competitive total compensation within the petroleum comparator
group. Since the competitive market for executive talent extends beyond the
petroleum industry, cross-checks are also made each year against a broader
comparator group. As in the prior year, in 1994 an independent consultant
reviewed for the Committee the total compensation of the Chairman and Chief
Executive Officer and other senior executives, based on a survey of comparable
positions at twenty-two other major corporations of similar size, complexity
and quality from both the oil and other industries. The aggregate
19
<PAGE>
compensation for Mobil's senior executives is in the range of the 75th
percentile among the twenty-two companies. In a year-to-year analysis, the
aggregate compensation trend is directionally consistent with Mobil's relative
earnings performance within this group of major companies.
EXECUTIVE COMPENSATION TAX DEDUCTIBILITY
Section 162(m) of the Internal Revenue Code of 1986 (the "Code") limits the
Company's Federal income tax deduction for certain executive compensation in
excess of $1 million. This limitation applies to the chief executive officer
and the four other executive officers identified in the Summary Compensation
Table on page 22 who are employed by the Company at year-end. The $1 million
deduction limit does not apply to "performance-based compensation," as that
term is defined in Section 162(m) of the Code. The Internal Revenue Service
issued proposed regulations on December 20, 1993, interpreting Section 162(m)
of the Code and adding a number of transitional rules (the "proposed
regulations").
The Committee was advised in early 1994 that compensation attributable to
stock option grants would qualify for deductibility under a transition rule in
the proposed regulations. However, the Committee was further advised that
payments under the 1994 Short-Term Incentive Program and the 1994-1997 Long-
Term Incentive Program might not be fully deductible unless substantial changes
were made in the design and administration of these programs or the proposed
regulations were modified. Any change in the design or administration of these
programs had to be made by April 1, 1994 in order to comply with the proposed
regulations.
The Committee determined that these required changes, which were based on
proposed regulations that were subject to change, raised significant concerns
about the design and administration of Mobil's long-standing compensation
policies. Since the Committee was advised that the tax cost attributable to
nondeductible 1994 awards would be nominal, it determined that the April 1,
1994 deadline did not provide adequate time for a deliberate evaluation of the
Plan modifications necessary to qualify 1994 awards for deductibility under
Section 162(m) of the Code and the proposed regulations.
At the direction of the Committee, and with the assistance of the Committee's
consultant on executive compensation matters, a major study of Mobil's
incentive compensation programs was conducted in 1994, resulting in the 1995
Incentive Compensation and Stock Ownership Plan (the "1995 Plan") that
shareholders are being asked to approve at the meeting. A detailed description
of the 1995 Plan is set forth on pages 10 to 13 of this Proxy Statement, and
the text of the Plan is set forth in the Appendix. The 1995 Plan is subject to
shareholder approval and all awards thereunder to covered employees are
intended to qualify, to the extent permitted under the proposed regulations, as
fully deductible performance-based compensation described in Section
162(m)(4)(C) of the Code.
Management Compensation and Organization Committee
Robert G. Schwartz, Chairman William J. Kennedy III
Allen F. Jacobson J. Richard Munro
Samuel C. Johnson Charles S. Sanford, Jr.
20
<PAGE>
PERFORMANCE GRAPH
The following graph compares the five-year cumulative total shareholder
return, including reinvested dividends, on Mobil common stock, with two other
indexes:
COMPARISON OF FIVE YEAR TOTAL RETURN (1)
MOBIL, S&P 500, SEVEN MAJOR PETROLEUM COMPANIES (2)
[GRAPH APPEARS HERE]
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG MOBIL, S&P 500 INDEX AND SEVEN MAJOR PETROLEUM COMPANIES
<CAPTION>
Seven
Measurement period S&P 500 Petroleum
(Fiscal Year Covered) Mobil Index Companies
- - --------------------- ------ ------- ---------
<S> <C> <C> <C>
Measurement PT -
12/31/89 $ 100 $ 100 $ 100
FYE 12/31/90 $ 97 $ 97 $ 111
FYE 12/31/91 $ 119 $ 126 $ 119
FYE 12/31/92 $ 116 $ 136 $ 119
FYE 12/31/93 $ 152 $ 150 $ 142
FYE 12/31/94 $ 169 $ 153 $ 152
</TABLE>
Assumes $100 invested on December 31, 1989, in Mobil common stock, S&P 500
Index, and a composite index, weighted by market capitalization each year, of
the following seven major petroleum companies: Exxon Corporation, Chevron
Corporation, Amoco Corporation, Royal Dutch Petroleum Company/"Shell" Transport
and Trading Company p.l.c., Atlantic Richfield Company, British Petroleum
Company p.l.c., and Texaco Inc.
- - -------
(1) Total return assumes reinvestment of dividends.
(2) Fiscal year ending December 31.
21
<PAGE>
The following table presents information for the past three years for the
Chief Executive Officer, the other four most highly compensated executive
officers of Mobil, and the former Chief Executive Officer and the former Chief
Financial Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
--------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------ ---------- ---------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION COMPEN- OPTIONS/ LTIP COMPEN-
AS OF DECEMBER 31, 1994 YEAR SALARY BONUS SATION (1) SARS(2) PAYOUTS SATION(3)
- - --------------------------- ---- --------- --------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Lucio A. Noto............. 1994 $ 770,833 $ 525,000 $112,533 70,000 $ 609,713 $ 53,958
chairman of the board 1993 608,333 550,000 94,682 50,000 463,784 42,583
and chief executive 1992 520,833 245,000 88,707 35,000 349,295 36,458
officer, Mobil
Corporation
Paul J. Hoenmans.......... 1994 725,000 380,000 130,234 35,000 789,011 50,750
director, Mobil 1993 678,332 400,000 121,846 35,000 618,431 47,483
Corporation; executive 1992 637,083 245,000 117,482 35,000 489,013 44,596
vice president, Mobil
Oil Corporation
Eugene A. Renna........... 1994 636,667 380,000 113,512 35,000 717,274 44,567
director, Mobil 1993 595,833 400,000 107,923 35,000 556,557 41,708
Corporation; executive 1992 550,000 245,000 105,962 35,000 435,290 38,500
vice president, Mobil
Oil Corporation
Robert O. Swanson......... 1994 547,500 335,000 91,848 35,000 553,602 38,325
director and senior vice 1993 501,667 345,000 84,328 30,000 404,740 35,117
president, Mobil 1992 442,500 200,000 78,810 28,000 301,951 30,975
Corporation
Thomas C. DeLoach, Jr..... 1994 421,250 250,000 53,550 25,000 290,397 29,488
senior vice president 1993 385,000 260,000 49,143 25,000 227,214 26,950
and chief financial 1992 350,000 155,000 44,957 22,000 177,306 24,500
officer, Mobil
Corporation
Allen E. Murray........... 1994 220,834 0 146,659 0 1,266,388 2,015,458
retired chairman of the 1993 1,325,000 1,100,000 246,344 70,000 1,255,496 92,750
board and chief 1992 1,225,000 650,000 238,349 70,000 994,162 85,750
executive officer, Mobil
Corporation
Robert G. Weeks........... 1994 557,917 300,000 107,137 35,000 632,072 1,232,748
retired director, senior 1993 575,000 380,000 100,233 35,000 500,893 40,250
vice president and chief 1992 504,167 235,000 95,642 35,000 392,261 35,291
financial officer, Mobil
Corporation
</TABLE>
- - -------
(1) Dividend equivalent payments in respect of allotments of contingent share
equivalents under the long-term incentive program.
(2) Number of shares covered by grants in 1992 and 1993 may be exercised as
stock options or Stock Appreciation Rights (SARs); number of shares covered
by grants in 1994 may be exercised as stock options only.
(3) Company allocations to Mobil's Supplemental Employees Savings Plan and in
1994, a $2,000,000 Management Retention Plan payment to Mr. Murray and a
$1,193,694 Management Retention Plan payment to Mr. Weeks.
22
<PAGE>
THE FOLLOWING TWO TABLES PRESENT FURTHER DETAILS ON STOCK OPTIONS.
OPTION/SAR GRANTS IN 1994
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK PRICE GRANT DATE
SECURITIES OPTIONS APPRECIATION FOR PRESENT
UNDERLYING GRANTED TO EXERCISE OPTION TERM(2) VALUE(3)
OPTIONS EMPLOYEES OR BASE EXPIRATION ------------------------------------ -----------
NAME GRANTED(1) IN 1994 PRICE DATE 0% 5% 10%
---- ---------- ---------- -------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$80.6875(4) $131.43(4) $209.28(4)
Lucio A. Noto........... 70,000 2.1% $80.6875 1/27/2004 $0 $3,552,073 $9,001,657 $984,900
Paul J. Hoenmans........ 35,000 1.1% 80.6875 1/27/2004 0 1,776,037 4,500,829 492,450
Eugene A. Renna......... 35,000 1.1% 80.6875 1/27/2004 0 1,776,037 4,500,829 492,450
Robert O. Swanson....... 35,000 1.1% 80.6875 1/27/2004 0 1,776,037 4,500,829 492,450
Thomas C. DeLoach, Jr... 25,000 0.8% 80.6875 1/27/2004 0 1,268,598 3,214,878 351,750
Allen E. Murray......... 0 0.0% N/A N/A 0 0 0 0
Robert G. Weeks......... 35,000 1.1% 80.6875 1/27/2004 0 1,776,037 4,500,829 492,450
</TABLE>
- - -------
(1) Number of shares covered by grants which may be exercised as stock options.
Options may be granted to employees as Incentive Stock Options as defined
in the Internal Revenue Code ("qualified options") or options which are not
so qualified ("non-qualified options"). All options are granted at an
option price equal to the fair market value of a share of Mobil common
stock on the date of grant (but not less than the par value) for up to ten
years after grant as determined by the Management Compensation and
Organization Committee. Qualified options are 100% exercisable after one
year; non-qualified options are 50% exercisable after one year and 100%
exercisable after two years. Options are not transferable by the employee.
If the employee dies before exercising an option, it may be exercised on
behalf of his or her estate or distributed to an heir or legatee.
(2) The figures shown are potential future undiscounted values and are
unrelated to the Grant Date Present Values shown in the next column.
(3) Value based on modified Black-Scholes option pricing model which includes
assumptions for variables such as interest rates, stock price volatility
and future dividend yield. The Company's use of this model should not be
construed as an endorsement of its accuracy. Whether the model assumptions
used will prove to be accurate cannot be known at the date of grant. The
Black-Scholes model produces a value based on freely tradable securities.
Mobil employee stock options are not transferable so the "present value"
shown cannot be realized by the holder. Recognizing the limitations of the
model as described, the following assumptions were used to estimate the
Grant Date Present Value: dividend yield of 4.21%, continuously compounded
semi-annual risk-free interest rate of 5.56%, and estimated volatility of
17%. Mobil stock options are issued at the fair market value of its stock
on the date of grant, and terminate if unexercised after ten years. The
holder can derive a benefit only to the extent the market value of Mobil
common stock is higher than the exercise price at the date of the actual
exercise.
(4) If the assumed annual rate of stock price appreciation of 0%, 5% or 10% per
year should occur, the market value per share of Mobil common stock at the
end of the ten-year option term would be $80.69, $131.43, or $209.28, as
the case may be.
23
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN 1994
AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS(4)
FY-END AT FY-END
---------------- ----------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(1) REALIZED(2) UNEXERCISABLE(3) UNEXERCISABLE(3)
---- --------------- ----------- ---------------- ----------------
<S> <C> <C> <C> <C>
Lucio A. Noto........... 37,877 $ 850,075 92,608 $2,031,305
94,209 818,158
Paul J. Hoenmans........ 27,737 1,089,707 160,554 4,095,949
51,709 508,939
Eugene A. Renna......... 21,924 496,984 58,491 1,267,155
51,709 508,939
Robert O. Swanson....... 39,814 943,855 15,791 342,467
49,209 454,720
Thomas C. DeLoach, Jr... 2,627 47,685 70,040 1,562,694
36,709 358,626
Allen E. Murray......... 57,967 1,953,464 270,000 6,001,250
0 0
Robert G. Weeks......... 68,399 1,464,684 68,418 871,315
0 0
</TABLE>
- - -------
(1) Represents number of shares covered by stock options or SARs exercised.
(2) Difference between exercise price and market value on date of exercise.
(3) Qualified options 100% exercisable after one year; non-qualified options
50% exercisable after one year; 100% exercisable after two years.
(4) Value of unexercised in-the-money options is based on the December 30, 1994
stock price of $84.875.
---------------
LONG-TERM INCENTIVE PROGRAM
CONTINGENT ALLOTMENTS IN 1994
<TABLE>
<CAPTION>
ESTIMATED FUTURE
NUMBER OF PERFORMANCE OR OTHER PAYOUTS
CONTINGENT STOCK PERIOD UNTIL -----------------------------
NAME EQUIVALENTS MATURATION OR PAYOUT THRESHOLD TARGET MAXIMUM
---- ---------------- -------------------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Lucio A. Noto........... 10,175 1994-1997 $345,441 $863,603 $1,036,323
Paul J. Hoenmans........ 9,094 1994-1997 308,741 771,853 926,223
Eugene A. Renna......... 7,631 1994-1997 259,072 647,681 777,217
Robert O. Swanson....... 6,486 1994-1997 220,199 550,499 660,599
Thomas C. DeLoach, Jr... 3,672 1994-1997 124,664 311,661 373,993
Allen E. Murray......... 16,853 1994-1997 23,832 59,582 71,498
Robert G. Weeks......... 7,377 1994-1997 57,375 143,439 172,126
</TABLE>
Under this program, allotments of contingent stock equivalents (also know as
performance shares) are determined for participants annually, at the start of a
four-year performance period. These allotments are based on dollar amounts,
determined by reference to participants' base salaries and level within the
Company at the beginning of each period, which are then converted into
performance shares at the average market price for Mobil common stock over the
30 trading days immediately preceding the allotment. Amounts equal to dividends
paid on Mobil common stock are paid on the performance shares during the four-
year cycle. At the end of the period, the Management Compensation and
Organization Committee of the Board of Directors determines the extent to which
the contingent allotments should be converted into actual awards. The
Committee's policy in granting actual awards is based on Mobil's performance
relative to its petroleum comparator group using five criteria: earnings per
share growth, return on capital employed, total shareholder return, other
defined operating and financial factors relative to competition, and the degree
to which Mobil's internal corporate objectives are being achieved. Payouts
under the program are based in part on the price of Mobil's common stock. The
price used for the estimates provided is $84.875 per share, the mean of the
high and low sales prices
24
<PAGE>
of Mobil common stock on the New York Stock Exchange on December 30, 1994.
Actual payouts, if any, will be based on the mean of the high and low sales
prices of Mobil common stock on such Exchange for a period of thirty trading
days at the end of the four-year performance period. Estimated future payouts
for Mr. Murray and Mr. Weeks reflect proration in proportion to completed
months of service during the performance cycle.
PENSION TABLE
Mobil's Retirement Plan is qualified under the Internal Revenue Code of 1986,
as amended, and is non-contributory. Employees who retire or terminate as
vested participants are entitled to receive retirement benefits computed under
a final average pay formula and may select either a life annuity or one of
several forms of settlement having an equivalent actuarial value at retirement.
The approximate annual annuity payable to employees in the higher salary
classifications is shown in the following table. To the extent these amounts
cannot be provided under the Retirement Plan due to the limitations imposed by
Sections 415 and 401(a)(17) of the Code, they will be provided for Messrs.
Noto, Hoenmans, Renna, Swanson and DeLoach under a supplemental benefit plan
which is not qualified under the Code.
ESTIMATED ANNUAL BENEFITS UNDER FINAL AVERAGE PAY FORMULA
<TABLE>
<CAPTION>
EARNINGS CREDITED YEARS OF SERVICE AT RETIREMENT
FOR RETIREMENT ------------------------------------------------------------------------
PLAN BENEFITS* 15 20 25 30 35 40 45
- - ----------------- -------- -------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 600,000 $144,000 $192,000 $ 240,000 $ 288,000 $ 336,000 $ 384,000 $ 432,000
800,000 192,000 256,000 320,000 384,000 448,000 512,000 576,000
1,000,000 240,000 320,000 400,000 480,000 560,000 640,000 720,000
1,200,000 288,000 384,000 480,000 576,000 672,000 768,000 864,000
1,400,000 336,000 448,000 560,000 672,000 784,000 896,000 1,008,000
1,600,000 384,000 512,000 640,000 768,000 896,000 1,024,000 1,152,000
1,800,000 432,000 576,000 720,000 864,000 1,008,000 1,152,000 1,296,000
2,000,000 480,000 640,000 800,000 960,000 1,120,000 1,280,000 1,440,000
2,200,000 528,000 704,000 880,000 1,056,000 1,232,000 1,408,000 1,584,000
2,400,000 576,000 768,000 960,000 1,152,000 1,344,000 1,536,000 1,728,000
2,600,000 624,000 832,000 1,040,000 1,248,000 1,456,000 1,664,000 1,872,000
</TABLE>
- - -------
* All benefits shown are annual straight life annuities based on current
earnings credited for Retirement Plan benefits. Earnings credited for
Retirement Plan benefits represent one-third of the highest consecutive 36
months of base salary ("Salary" in the table on page 22) out of the last 120
months before retirement, plus one-third of 100% of the highest three
consecutive completed calendar years of short-term incentive compensation
("Bonus" in the table on page 22) awarded out of the last 10 completed
calendar years before retirement. Actual benefit payments would be slightly
lower than shown after integration with Social Security benefits, which would
vary with individual wage histories. Estimated credited years of service are
as follows for Mr. Noto, 34 years; Mr. Hoenmans, 40 years; Mr. Renna, 26
years; Mr. Swanson, 37 years; and Mr. DeLoach, 26 years.
SPECIAL ARRANGEMENTS RELATING TO POSSIBLE CHANGE OF CONTROL--The Board of
Directors has defined certain events, which are described below, the occurrence
of which might precede either a threat or a major challenge to control of the
Corporation. The Board has indicated that certain arrangements affecting
executive employees, including Messrs. Noto, Hoenmans, Renna, Swanson, and
DeLoach, might, in the discretion of the Management Compensation and
Organization Committee, be implemented upon the occurrence of such events. If
an event that might precede a threat to control should occur, these
arrangements are accelerated consideration and vesting of awards under the
short-term and long-term incentive compensation programs and the Mobil
Management Retention Plan and acceleration of the right to exercise any
outstanding stock options not currently exercisable. If an event that might
precede a major challenge to control should occur, these arrangements are
payment of vested awards under the short-term and long-term incentive
compensation programs and funding of currently unfunded employee benefits. In
addition, if the employment of such persons is terminated within two years of a
change of control, as defined below, they would receive payment of special
termination allowances and reimbursement of any fees and expenses of counsel in
connection with employee
25
<PAGE>
claims and costs of financial counseling and tax planning. The Board has also
determined that special termination allowances would be paid to all other
employees whose employment is terminated within designated periods following a
change of control. Awards which would currently be payable as of December 31,
1994, under Mobil's special termination allowance plan, upon involuntary
termination of employment after a change of control, are as follows: Mr. Noto,
$2,700,000; Mr. Hoenmans, $2,290,000; Mr. Renna, $2,080,000; Mr. Swanson,
$1,890,000; and Mr. DeLoach, $1,460,000.
Under Mobil's Management Retention Plan, conditional deferred awards, the
principal amount of which cannot exceed $1 million for any one person during
his or her working lifetime, have been made to selected executives whose
continued success is considered key to the long-term success of Mobil.
Payments, including either notional interest on the awards or the cash value of
dividend equivalents if awards are converted to share equivalents, are made
only after normal retirement, approved early retirement, death or long-term
disability. In the event of a change of control of the Corporation, deferred
awards plus either interest or the cash value of dividend equivalents would be
payable to participants whose employment has been or is to be terminated. The
amounts that would be payable as of December 31, 1994 in such an event are as
follows: Mr. Noto, $1,006,448; Mr. Hoenmans, $1,600,000; Mr. Renna, $914,273;
Mr. Swanson, $1,150,820, and Mr. DeLoach, $637,750.
The following are the events defined by the Board the occurrence of which
might precede a threat to control of the Corporation: (a) a stockholder or one
of a group of stockholders who or which is the beneficial owner of at least 5%
of Mobil's outstanding stock (an "interested stockholder") proposes removal of
a director or election of a director other than one nominated by the Board, (b)
any stockholder or group of stockholders acting in concert owns beneficially or
has acquired the right to vote shares representing more than 10% of Mobil's
outstanding stock, (c) an announcement is made of a serious tender offer for
some or all of Mobil's outstanding stock, or (d) an interested stockholder
proposes a "business combination". A business combination is (i) a merger
between Mobil and the interested stockholder, (ii) a sale or other disposition
by Mobil of assets worth at least $100 million in a transaction involving the
interested stockholder, (iii) the issuance of securities by Mobil to the
interested stockholder in exchange for cash or property (including stock or
securities) worth at least $100 million, (iv) the adoption of a plan to
liquidate or dissolve Mobil, or (v) any reclassification of Mobil's securities,
recapitalization of the Corporation, merger of Mobil with any of its
subsidiaries or any other transaction which would have the effect of increasing
the proportionate share of Mobil's outstanding stock owned by the interested
stockholder. The following are the events defined by the Board the occurrence
of which might precede a major challenge to control of the Corporation: (1) a
date is set for a meeting of stockholders to consider a business combination,
(2) an interested stockholder begins to solicit proxies to propose the election
of a director, removal of an incumbent director or a business combination, (3)
an announcement is made of a serious tender offer for some or all of Mobil's
shares, or (4) any stockholder or group of stockholders acting in concert owns
beneficially or has acquired the right to vote shares representing more than
25% of Mobil's outstanding stock. A change of control occurs when the incumbent
directors (which term includes subsequent directors who are approved by at
least a majority of the incumbent directors) cease to constitute a majority of
the Board, any stockholder or group of stockholders acting in concert owns
beneficially or has acquired the right to vote shares representing more than
25% of Mobil's outstanding stock, or Mobil's stockholders approve the
liquidation or dissolution of Mobil, the sale of all Mobil's assets, or a
reorganization or merger following which such stockholders own less than 50% of
the outstanding stock of the reorganized or merged company.
---------------
26
<PAGE>
OWNERSHIP OF MOBIL CORPORATION STOCK
The following table sets forth the beneficial ownership of Mobil's common
stock for each director and nominee for director, each current executive
officer named in the Summary Compensation Table on page 22 who is not a
director, all directors and current executive officers as a group, and each
former executive officer named in the Summary Compensation Table on page 22. It
also sets forth the deferred share equivalents credited to such persons.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
------------------------- DEFERRED
SHARES STOCK SHARE
DIRECTORS AND CURRENT EXECUTIVE OFFICERS OWNED OPTIONS TOTAL EQUIVALENTS
- - ---------------------------------------- ------- ------- --------- -----------
<S> <C> <C> <C> <C>
Lewis M. Branscomb....................... 1,000 0 1,000 0
Thomas C. DeLoach, Jr. .................. 45,858 93,312 139,170 0
Donald V. Fites.......................... 1,743 0 1,743 0
Paul J. Hoenmans......................... 51,631 195,382 247,013 7,305
Allen F. Jacobson........................ 1,158 0 1,158 5,450
Samuel C. Johnson........................ 1,100 0 1,100 0
Helene L. Kaplan......................... 4,000 0 4,000 2,044
William J. Kennedy III................... 400 0 400 0
J. Richard Munro......................... 500 0 500 0
Lucio A. Noto............................ 55,323 152,436 207,759 0
Aulana L. Peters......................... 100 0 100 1,546
Eugene A. Renna.......................... 53,658 93,319 146,977 0
Charles S. Sanford, Jr. ................. 2,001 0 2,001 368
Robert G. Schwartz....................... 1,000 0 1,000 2,975
Robert O. Swanson........................ 53,637 18,119 71,756 0
All directors and current executive
officers as a
group, including those named above...... 405,312 877,008 1,282,320 23,149
FORMER EXECUTIVE OFFICERS
- - -------------------------
Allen E. Murray.......................... 130,099 259,571 389,670 0
Robert G. Weeks.......................... 42,775 83,526 126,301 0
</TABLE>
The information in the table is as of March 1, 1995 except that it is as of
March 1, 1994 with respect to Messrs. Murray and Weeks, each of whom retired
during 1994. Shares listed as beneficially owned include shares held by family
members or family trusts or foundations of certain directors as to which such
persons disclaim beneficial ownership. Excluded from the shares listed as
beneficially owned are 7,823,689 shares held in accounts of Bankers Trust
Company, the principal subsidiary of Bankers Trust New York Corporation, for
which Mr. Sanford serves as Chairman of the Board. Sole discretion as to voting
and investment power exists as to all remaining shares which the directors and
officers presently hold. Stock options refer to the numbers of shares of common
stock that may be acquired within 60 days pursuant to employee stock options.
Deferred share equivalents are stock equivalents equal in value to common stock
which earn dividend equivalents equal to dividends declared on common stock.
Non-employee directors may elect to receive such equivalents under the Deferred
Fee Plan referred to on page 7, while incentive awards to employees may be
deferred and paid in such equivalents under the 1995 Incentive Compensation and
Stock Ownership Plan described on pages 10 to 13 and its predecessors.
Individuals credited with deferred share equivalents have neither investment
nor voting powers in respect of such equivalents.
No individual named above owns more than 1% of Mobil's outstanding common
stock, nor do all directors and executive officers as a group, including those
named above. As of March 1, 1995, the Trustee under the Employees Savings Plan
of Mobil Oil Corporation held 18,541,722 shares of the common stock of Mobil in
such Plan, which is approximately 4.68% of the total number of shares of common
stock outstanding at that date. As of the same date, the Trustee under the
Mobil Employee Stock Ownership Plan, which is incorporated in the Employees
Savings Plan, held all 95,304 outstanding shares of Series B ESOP Convertible
Preferred Stock. The shares of common stock and preferred stock so held by such
Trustees together represented 6.92% of the votes which may be cast by the
voting securities of Mobil outstanding as of March 1, 1995. All such shares of
common stock are beneficially owned by participants in the Employees Savings
Plan; all such shares of Series B ESOP Convertible Preferred Stock which have
been allocated to participants in the Employee Stock Ownership Plan, numbering
31,324, are beneficially owned by such participants, the balance being held for
such allocation over the life of the Plan.
27
<PAGE>
PROXIES AND VOTING AT THE MEETING
Since many Mobil stockholders are unable to attend the Corporation's Annual
Meeting, the Board of Directors solicits proxies to give each stockholder an
opportunity to vote on all matters scheduled to come before the meeting and set
forth in this Proxy Statement. Stockholders are urged to read carefully the
material in this Proxy Statement; specify their choice on each matter by
marking the appropriate boxes on the enclosed proxy card; and sign, date and
return the card in the enclosed envelope.
If no choice is specified and the card is properly signed and returned, the
shares will be voted by the Proxy Committee as recommended by Mobil. A
stockholder who signs a proxy may revoke or revise that proxy at any time
before the meeting or, by voting by ballot at the meeting, cancel any proxy
previously returned.
Stockholder proxies are returned to the Corporation's independent proxy
processing agent and the vote is certified by independent Inspectors of
Election. Proxies and ballots that identify the vote of individual stockholders
are kept confidential until the final vote has been tabulated at the Annual
Meeting, except as necessary to meet legal requirements or in a contested proxy
solicitation, and in cases where stockholders write comments on their proxy
cards.
Mobil's Proxy Committee comprises the Chairman, Lucio A. Noto; Chief
Financial Officer, Thomas C. DeLoach, Jr.; and Secretary of the Corporation,
Caroline M. Devine. Proxy cards, unless otherwise indicated by the stockholder,
also confer upon the Proxy Committee discretionary authority to vote all shares
of the stock represented by the proxies on any matter which properly may be
presented for action at the meeting even if not covered herein. If any of the
nominees for director named in Item 1 beginning on page 3 should be unavailable
for election, the proxies will be voted for the election of such other person
as may be recommended by Mobil in place of such nominee.
Stockholders of record at the close of business on March 13, 1995, are
entitled to receive notice of the meeting and to vote the shares held on that
date. If a stockholder is a participant in Mobil's Stock Purchase and Dividend
Reinvestment Plan, the proxy card represents the number of shares in the Plan
account, as well as shares registered in the participant's name.
A stockholder who is a participant in the Mobil Oil Corporation Employees
Savings Plan and the Mobil Oil Corporation Employee Stock Ownership Plan will
receive a single proxy card which covers shares credited to such stockholder's
Plan account plus shares of record registered in the same name. Accordingly,
proxies executed by such a participant will serve as a voting instruction to
the Trustee of those Plans. If a participant's Plan account is not carried in
the same name as his or her shares of record, such participant will receive
separate proxy cards for both individual and Plan holdings. If a participant in
the Employees Savings Plan does not vote the shares credited to such
participant's Plan account, such shares will be voted by the Plan's Trustee at
the direction of Mobil. If a participant in the Employee Stock Ownership Plan
does not vote the shares credited to the participant's Plan account, such
shares will be voted by the Plan's Trustee in the same proportion as the shares
that are voted by the other participants in the Plan.
QUORUM AND VOTE REQUIRED FOR APPROVAL
The holders of all outstanding shares of Mobil stock are entitled to vote in
person or by proxy on all matters which may come before the meeting. The
holders of shares entitled to cast not less than one-third of the votes must be
present in person or represented by proxy at the meeting in order to constitute
a quorum for the transaction of business; all shares present in person or
represented by proxy are counted for quorum purposes.
Directors are elected by a plurality of the votes of the shares present or
represented at the meeting and entitled to vote. Except as stated in Item 2 on
pages 9 and 10 in respect of the appointment of independent auditors, approval
of each other matter to be voted upon requires the affirmative vote of a
majority of the votes of shares present or represented at the meeting and
entitled to vote on such matter. Where a stockholder by marking a proxy form or
ballot withholds a vote on the election of any director or otherwise indicates
that no vote is to be cast on any specific matter to be voted upon (including a
non-vote by a broker pursuant to the rules of the New York Stock Exchange),
such votes are not counted as entitled to vote with respect to that election or
subject matter, as the case may be. Abstentions are counted as votes cast on
any matter to which they relate, except that they are not so counted for the
purpose of determining whether the percentage tests
28
<PAGE>
under the rules of the Securities and Exchange Commission for resubmission of
proxy statement proposals have been met. Abstentions have the same effect as
"no" votes since in both instances the vote is not part of the affirmative vote
required for approval of the matter voted upon.
ATTENDANCE AT ANNUAL MEETING
All individuals attending must register before entering the meeting hall.
Priority seating will be given to stockholders of record, beneficial owners of
Mobil stock having evidence of such ownership, or their authorized
representatives, and invited guests of management. In addition, a stockholder
may bring a guest. Those unable to attend may request from the Secretary a copy
of the report of the proceedings of the meeting.
PROXY SOLICITATION
The cost of soliciting proxies will be borne by Mobil. To assist in the proxy
solicitation, Mobil has engaged Morrow & Co., Inc. for a fee of $20,000 plus
out-of-pocket expenses. Mobil will reimburse brokerage houses, banks and other
custodians, nominees, and fiduciaries for reasonable expenses, in accordance
with the regulations of the Securities and Exchange Commission, the New York
Stock Exchange, Inc. and other exchanges, in sending proxy materials to
beneficial owners.
Dated: March 20, 1995
29
<PAGE>
Appendix
1995 MOBIL INCENTIVE COMPENSATION AND STOCK OWNERSHIP PLAN
ARTICLE I--PURPOSE OF THE PLAN
The purpose of the Mobil Incentive Compensation and Stock Ownership Plan is
to promote the creation of shareholder value by encouraging, recognizing and
rewarding sustained outstanding corporate, division, business unit and
individual performance by key Employees of Mobil Corporation and Affiliated
Corporations who are largely responsible for the management, growth and
protection of the business. The Plan in addition provides part of a competitive
total compensation package to attract and retain key Employees.
The components of the Plan include the Short-Term Incentive Program, the
Long-Term Incentive Program and the Stock Ownership Program. The purpose of the
Short-Term Incentive Program is to base a portion of key Employees' total
annual compensation on the performance of the Corporation compared to the
performance of other companies selected by the Committee, with the intention
that the key Employees will receive total compensation that is above the
average for comparable positions paid by such other companies when the
Corporation's comparative performance is above average; total compensation that
is equal to the average for comparable positions paid by these companies when
the Corporation's comparative performance is average; and total compensation
that is below the average for comparable positions when the Corporation's
comparative performance is below average. The Long-Term Incentive Program
provides rewards, based on the performance of the Corporation over a longer
term, to those key Employees who have the potential to contribute significantly
to the long-term growth and success of the Corporation. These awards are
denominated in hypothetical stock or in the form of Restricted Stock, which
serves to align the interests of these key Employees with the interests of
shareholders. The purpose of the Stock Ownership Program is to provide long-
term incentive, designed to encourage Stock ownership by key Employees, thereby
directly aligning their financial interests with those of shareholders. Key
Employees receive Stock Options, which provide them an opportunity to increase
their ownership of Stock, and the Committee is expected to develop guidelines
to encourage key Employees to take advantage of the program to acquire and hold
Stock.
ARTICLE II--DEFINITIONS
"Adjusted Net Income" with respect to any fiscal year of the Corporation
means the amount reported as net income in the Income Statement for such year,
adjusted to exclude any of the following items:
(a) extraordinary items (as described in Accounting Principles Board
Opinion No. 30);
(b) gains or losses on the disposition of discontinued operations of a
segment of the business; and
(c) the cumulative effect of changes in accounting principles.
"Affiliated Corporation" means any stock corporation of which a majority of
the voting common or capital stock is owned directly or indirectly by the
Corporation.
"Allotment" means a number of Stock Equivalents granted pursuant to Section
5.3(a).
"Allotment Supplement" means a number of Stock Equivalents credited with
respect to an Allotment pursuant to Section 5.3(b).
"Authorized Share Pool" for any calendar year during any part of which this
Plan is in effect means nine tenths of one percent (0.9%) of the total issued
and outstanding shares of Stock as of December 31 of the preceding year,
cumulative from the effective date of the Plan, subject to adjustment pursuant
to Article IX.
"Award" means a Short-Term Incentive Award or a Long-Term Incentive Award
granted under Article V or an Option granted under Article VI. Awards granted
that are to be paid upon full satisfaction of any applicable conditions are
provisional Awards and are forfeitable until such conditions are satisfied. An
Award is non-forfeitable if the only condition to its payment is passage of
time.
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"Award Date" means the date an Award is granted.
"Board" means the Board of Directors of the Corporation.
"Chief Executive Officer" means the Employee of the Corporation acting in
such capacity.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
Reference to a specific provision of the Code shall include such provision and
any regulation or ruling promulgated thereunder.
"Committee" means the Management Compensation and Organization Committee of
the Board or such other committee as may be designated by the Board to
administer the Plan.
"Corporation" means Mobil Corporation, a Delaware corporation, or its
successor.
"Dividend Equivalent" means, in respect of one Stock Equivalent, an amount
equal to the amount of the dividend that would be payable on any Dividend
Payment Date with respect to one share of Stock.
"Dividend Payment Date" means a date on which dividends are paid with respect
to Stock.
"Employee" means any person who is a regular full time employee of the
Corporation or an Affiliated Corporation, including such employees who are
officers or directors of the Corporation. In the discretion of the Committee,
the term may include persons who at the request of the Corporation or any
Affiliated Corporation accept employment with any company in which the
Corporation directly or indirectly has a substantial interest.
"Fair Market Value" of Stock is the mean between the highest and lowest
quoted selling price of Stock on the New York Stock Exchange or, in the
discretion of the Committee, as reported by a recognized central market
reporting system on the date an Award is granted or on any other date the value
of Stock is to be determined, provided that (i) if no sales of Stock shall have
been so made on such Exchange or so reported by such central market reporting
system on such date, or (ii) if in the opinion of the Committee insufficient
sales shall have been made on such date to constitute a representative market,
then Fair Market Value shall be determined by taking a weighted average of the
means between the highest and lowest sales prices on the nearest representative
trading dates before and after the valuation date. The average is to be
weighted inversely by the respective numbers of trading days between the
trading dates and the valuation date.
"Incentive Award" means a Short-Term Incentive Award or a Long-Term Incentive
Award.
"Income Statement" with respect to any fiscal year of the Corporation means
the consolidated statement of income and the accompanying notes to financial
statements for such year included in the Corporation's annual report to
shareholders.
"Long-Term Incentive Award" means an Award granted pursuant to Section 5.3.
"Named Executive Officer" means an Employee described in Section 162(m)(3) of
the Code for the year an Incentive Award is granted.
"Non-Qualified Option" means an Option granted under Article VI which is not
a Qualified Option.
"Option" means an Award granted under Article VI in the form of a right to
purchase Stock evidenced by an instrument containing such provisions as the
Committee may establish.
"Performance Cycle" means any period, beginning not earlier than January 1,
1995, of four successive calendar years.
"Performance Measure" means such measure or indicator of the performance of
the Corporation, an Affiliated Corporation, any division, department or
identifiable segment thereof, or of any individual recipient of an Award as may
be set forth herein or established from time to time by the Committee.
A-2
<PAGE>
"Plan" means this 1995 Mobil Incentive Compensation and Stock Ownership Plan.
"Prior Plan" means the 1991 Mobil Incentive Compensation and Stock Option
Plan.
"Qualified Option" means an option granted under Article VI which is
designated by the Committee as a Qualified Option and for which the Code
provides for either or both deferral of taxation on exercise or a lower
effective rate of tax on recognition of gain than would be available in respect
of a Non-Qualified Option.
"Restricted Stock" means Stock which bears such restrictive endorsements as
the Committee, in its discretion, shall deem appropriate and necessary to carry
out the purpose of this Plan.
"Short-Term Incentive Award" means an Award granted pursuant to Section 5.2.
"Special Item" with respect to any fiscal year of the Corporation means each
item in excess of $10 million after tax that is reflected in the Corporation's
Adjusted Net Income for such year and is recorded in accordance with generally
accepted accounting principles in one of the following categories:
(a) Gains or losses on asset sales or dispositions;
(b) Asset write downs;
(c) Litigation or claim judgments or settlements;
(d) Accruals for environmental obligations;
(e) Effect of changes in tax law or rate on deferred tax liabilities;
(f) Accruals for restructuring programs; and
(g) Catastrophic property losses.
"Stock" means the publicly traded common stock of the Corporation or any
successor, including any adjustments in the event of changes in capital
structure of the type described in Article IX.
"Stock Equivalent" means a hypothetical share of Stock credited to an
Employee having a value at any time equal to the Fair Market Value of an actual
share of Stock at that time. Stock Equivalents may be recorded in full shares
only or in full and fractional shares pursuant to such rules as the Committee
shall prescribe.
ARTICLE III--ADMINISTRATION OF THE PLAN
3.1 COMPOSITION OF COMMITTEE
This Plan shall be administered by the Committee which shall be composed of
not less than four members of the Board as may be designated by the Board;
provided that the Committee shall not include any individual who (a) is an
officer or employee of the Corporation or any Affiliated Corporation; (b) is a
former officer of the Corporation or any Affiliated Corporation; (c) is a
former employee of the Corporation or any Affiliated Corporation who receives
compensation for prior service (other than benefits under a tax-qualified
retirement plan) during the taxable year in which such individual serves on the
Committee; (d) is not an outside director as defined under Section 162(m) of
the Code; or (e) has been eligible to receive Awards under this Plan or the
Prior Plan at any time within the 12-month period immediately prior to service
as a member of the Committee; provided that the restrictions set out in clause
(d) shall not apply prior to the annual meeting of shareholders of the
Corporation in 1996 (or such later date as may be permitted under Section
162(m) of the Code). The Board may designate alternate members of the Committee
from eligible Board members to act in the place and stead of any absent member
of the Committee.
3.2 QUORUM
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by all of the members in the absence of a meeting,
shall be the acts of the Committee. Any one or more members of the Committee
may participate in a meeting by means of a conference telephone or similar
communications equipment by means of which all
A-3
<PAGE>
persons participating in the meeting can hear and speak to each other.
Participation by such means shall constitute presence in person at such
meeting.
3.3 POWERS
The Committee shall have full and final authority to operate, manage and
administer the Plan on behalf of the Corporation. This authority includes, but
is not limited to:
(a) The power to grant Awards conditionally or unconditionally, subject
to any applicable limitations in this Plan,
(b) The power to establish Performance Measures upon which Awards shall
be based; provided that any changes to the Performance Measures applicable
to Named Executive Officers set forth in Article V shall be subject to
approval by a separate vote of the shareholders of the Corporation,
(c) The power to make the certification referred to in Section 3.4(b),
(d) The power to reduce the amount of any Award (other than an Award that
has become non-forfeitable),
(e) The power to determine whether Incentive Awards shall be expressed in
United States currency, shares of Stock, Restricted Stock, or any
combination thereof,
(f) The power to prescribe the form or forms of the instruments
evidencing Awards granted under this Plan,
(g) The power to pay and to defer payment of Incentive Awards which have
become non-forfeitable,
(h) The power to direct the Corporation to make the conversions, accruals
and payments provided for by the Plan,
(i) The power to interpret the Plan and to make any determination of fact
incident to the operation of the Plan,
(j) The power to provide regulations for the operation of the various
features of the Plan, and otherwise to prescribe regulations for the
interpretation, management and administration of the Plan,
(k) The power to delegate responsibility for Plan operation, management
and administration on such terms, consistent with the Plan, as the
Committee may establish,
(l) The power to delegate to other persons the responsibility of
performing ministerial acts in furtherance of the Plan's purpose, and
(m) The power to engage the services of persons, companies, or
organizations, including but not limited to banks, insurance companies,
brokerage firms, and consultants, in furtherance of the Plan's purpose.
3.4 CERTIFICATION
No Short-Term Incentive Award or Long-Term Incentive Award will be paid to a
Named Executive Officer unless the Committee has certified in writing (which
writing may include approved minutes of a meeting of the Committee) that the
Adjusted Net Income and Special Items, or the average of the Adjusted Net
Income amounts for the years included in a Performance Cycle, as the case may
be, was equal to or in excess of the amount required for the granting of such
Award hereunder.
3.5 COMMUNICATION OF AWARDS
The Committee shall timely communicate in writing to each Employee to whom an
Award is granted in accordance with this Plan a description of such Award,
including the terms and any conditions of its payment.
3.6 ACCOUNTS
(a) For the purpose of accounting for provisional Awards and non-forfeitable
Awards deferred as to payment, the Corporation shall establish bookkeeping
accounts bearing the name of each Employee receiving such Awards. Except as
provided below, each account shall be unfunded, and shall not be a trust for
the benefit of the Employee; the existence of such accounts shall not give any
Employee any rights superior to those of unsecured general creditors of the
Corporation.
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<PAGE>
(b) With respect to non-forfeitable Awards, payment of which is deferred, the
Committee may, in its discretion, direct the Corporation:
(i) To pay an amount equal to such Award to a trustee or fiduciary in
trust for the benefit of one or more Employees, as the Committee may
designate, with instructions to provide for the investment thereof during
any period of deferment; or
(ii) To allocate an amount equal to such Award to an investment manager
(who may, but need not, be an Employee of the Corporation or an Affiliated
Corporation) with instructions to provide for the investment thereof during
the period of deferment either in the discretion of such manager or one or
more designated investment advisors.
ARTICLE IV--ELIGIBILITY
4.1 ELIGIBLE EMPLOYEES
Awards will be granted only to key Employees described in Article I, selected
or determined by (or pursuant to delegation of authority from) the Committee in
its sole discretion. An Incentive Award may be granted within a reasonable
period after an employee's termination of service and such Incentive Award
shall be deemed granted to an Employee. Neither the members of the Committee
nor any member of the Board who is not an Employee shall be eligible to receive
an Award. In lieu of determining individual Employees to whom Awards may be
granted and the amounts of such Awards, the Committee may in its discretion
from time to time authorize such determinations with respect to Employees other
than Named Executive Officers to be made by the Chief Executive Officer or by
senior management of the divisions, departments or other identifiable segments
of the Corporation or of Affiliated Corporations or their divisions,
departments or other identifiable segments, provided that such determinations
shall be made in accordance with such rules, regulations and guidance as the
Committee shall prescribe. Named Executive Officers, other Officers of the
Corporation, Directors who are Employees and other Employees to whom the
Committee delegates final authority to determine Awards under the Plan are
eligible only for Awards granted directly by the Committee.
4.2 RELEVANT FACTORS
In selecting individual Employees to whom Awards shall be granted at any
time, as well as in determining the amount, type, terms and conditions of any
Award, the Committee (or as authorized, its representative) shall weigh such
factors as are relevant to accomplish the purpose of the Plan as stated in
Article I. No Employee shall be eligible for the grant of any Option under the
Plan if at the time of grant the Employee, directly or indirectly, owns Stock
possessing more than 5% of the combined voting power of all classes of Stock of
the Corporation and its Affiliated Corporations. No Named Executive Officer
shall be eligible for the grant of any Award that would cause the applicable
amounts in Articles V or VI to be exceeded.
ARTICLE V--INCENTIVE AWARDS
5.1 PROVISIONAL AND NON-FORFEITABLE INCENTIVE AWARDS
The Committee may in its discretion grant Incentive Awards that are
provisional or non-forfeitable in accordance with such criteria, at such
intervals, in such form and upon such conditions as the Committee may
establish, subject to the limitations set forth in this Plan. Incentive Awards,
whether provisional or non-forfeitable, may be expressed in United States
currency, shares of Stock, shares of Restricted Stock or any combination
thereof, and upon satisfaction of the relevant conditions, if any, may be paid
or distributed currently, deferred for payment at a later date, or paid in part
currently and in part at a later date, all as the Committee in its discretion
shall determine.
5.2 SHORT-TERM INCENTIVE AWARDS
The Committee in its sole discretion may grant or approve Short-Term
Incentive Awards to Employees from time to time. The amounts of such Awards
shall be determined on the basis of such Performance Measures as the Committee
shall establish from time to time. In the case of Named Executive Officers, the
Performance Measure for Short-Term Incentive Awards shall be the Adjusted Net
Income for the year prior to the year in which any such Award is granted,
further adjusted to exclude the effects of any Special Items for such year.
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The amount of the Short-Term Incentive Award for any year to a Named Executive
Officer who is the Chief Executive Officer shall be 0.1% of such Performance
Measure, and the amount of the Short-Term Incentive Award for any year to any
other Named Executive Officer shall be 0.0375% of such Performance Measure, in
each case subject to reduction pursuant to Section 5.4.
5.3 LONG-TERM INCENTIVE AWARDS
(a) The Committee in its sole discretion may grant Allotments comprised of a
specified number of Stock Equivalents to Employees from time to time. Each
Allotment shall be granted during the first year of, and shall be in respect
of, a Performance Cycle and shall remain provisional until the Committee grants
or determines not to grant a Long-Term Incentive Award in respect of such
Allotment pursuant to Section 5.3(c). The maximum number of Stock Equivalents
that may comprise Allotments granted at any time during any calendar year
during any part of which this Plan is in effect shall be the number of shares
of Stock in the Authorized Share Pool for such calendar year reduced by:
(i) the number of shares of Stock upon which Options have theretofore
been granted pursuant to Section 6.2 during such calendar year;
(ii) the number of Stock Equivalents comprising Allotments that have
theretofore been granted pursuant to this Section 5.3(a) during such
calendar year;
(iii) the number of Stock Equivalents comprising Allotment Supplements
that have theretofore been credited pursuant to Section 5.3(b) during such
calendar year or are reasonably estimated to be so credited during the
remainder of such calendar year; and
(iv) the number of shares of Restricted Stock, if any, that have
theretofore been awarded pursuant to Section 5.3(d) during such calendar
year.
(b) On each Dividend Payment Date after the Award Date of any Allotment, an
Allotment Supplement shall be credited in respect of such Allotment and any
Allotment Supplements theretofore credited pursuant to this Section 5.3(b) in
respect of such Allotment. The number of Stock Equivalents that shall comprise
an Allotment Supplement shall be determined by dividing (i) the Dividend
Equivalents in respect of the number of Stock Equivalents that comprise such
Allotment and any Allotment Supplements theretofore credited pursuant to this
Section 5.3(b) in respect of such Allotment by (ii) the Fair Market Value of a
share of Stock on the Dividend Payment Date.
(c) After the end of each Performance Cycle, all Stock Equivalents that
comprise an Allotment in respect of such Performance Cycle and all Allotment
Supplements theretofore credited in respect of such Allotment shall be
converted to a Long-Term Incentive Award in an amount, if any, to be based on
Performance Measures established by the Committee from time to time. In the
case of each Named Executive Officer, the Performance Measure shall be Adjusted
Net Income, and the amount of the Long-Term Incentive Award granted to each
such Officer in respect of a Performance Cycle, irrespective of the number of
Stock Equivalents credited to the account of such Officer in respect of such
Performance Cycle, shall be 0.2% of the average of the Adjusted Net Income for
each of the four years of such Performance Cycle, subject to reduction pursuant
to Section 5.4.
(d) In addition to the Long-Term Incentive Awards described in Sections
5.3(a), (b) and (c), the Committee in its sole discretion may grant Long-Term
Incentive Awards in the form of Restricted Stock to such Employees as it shall
identify as having extraordinary potential to make a long-term contribution to
the success of the Corporation. The maximum number of shares of Restricted
Stock that can be the subject of any such grant shall be 10,000, subject to
adjustment in accordance with Article IX. No Award may be made pursuant to this
Section 5.3(d) to any person who at the time of the Award holds Restricted
Stock granted pursuant to this Section 5.3(d) as to which all restrictions
applicable to such Restricted Stock have not lapsed. The foregoing
determination as to whether restrictions have lapsed shall be made without
regard to any potential or actual modification of such restrictions after the
original grant date. The maximum number of shares of Restricted Stock that may
be granted at any time during any calendar year during any part of which this
Plan is in effect shall be the number of shares in the Authorized Share Pool
for such calendar year reduced by:
(i) the number of shares of Stock upon which Options have theretofore
been granted pursuant to Section 6.2 during such calendar year;
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(ii) the number of Stock Equivalents comprising Allotments that have
theretofore been granted pursuant to Section 5.3(a) during such calendar
year;
(iii) the number of Stock Equivalents comprising Allotment Supplements
that have theretofore been credited pursuant to Section 5.3(b) during such
calendar year or are reasonably expected to be so credited during the
remainder of such calendar year; and
(iv) the number of shares of Restricted Stock that have theretofore been
awarded pursuant to this Section 5.3(d) during such calendar year.
5.4 REDUCTION OF AWARDS
(a) The Committee in its sole discretion may, but shall not be required to,
reduce the amount of, or not grant, any Short-Term Incentive Award or any Long-
Term Incentive Award that could otherwise be granted, based on such Performance
Measures or other considerations as it deems appropriate.
(b) No Short-Term Incentive Award or Long-Term Incentive Award that could
otherwise be granted shall be granted if no dividend has been paid to holders
of Stock in the preceding 12 months. Allotments or Allotment Supplements with
respect to which Long-Term Incentive Awards are prohibited by the preceding
sentence shall be cancelled.
5.5 DEATH OF EMPLOYEE
Any provisional Incentive Award shall be cancelled upon death of the Employee
during the provisional period except as the Committee may otherwise provide. If
a provisional Incentive Award is cancelled by reason of the death of the
Employee, the Committee may authorize an alternative disposition in its
discretion.
5.6 DEFERRAL OF INCENTIVE AWARDS
The Committee may, in its sole discretion, permit or require deferral of
payment of any Incentive Award, subject to such terms, conditions, rules and
regulations as the Committee shall prescribe. Deferred Incentive Awards may be
denominated in Stock Equivalents or such other units as the Committee shall
prescribe. Where a deferred Incentive Award is denominated in Stock
Equivalents, each such Stock Equivalent shall be valued at an amount equal to
the Fair Market Value of a share of Stock on the date that payment would have
been due but for the deferral (or the Fair Market Value of a share of Stock
averaged over such dates as the Committee shall establish from time to time).
An account bearing the name of the Employee as provided in Section 3.6 shall be
credited with the number of Stock Equivalents determined on the basis of such
value. Each such account shall also be credited on each Dividend Payment Date
with an amount of Dividend Equivalents in respect of the Stock Equivalents in
the account. Dividend Equivalents may, in the discretion of the Committee, be
disbursed in cash to the Employee to whose account they have been credited or
accumulated in such account in the form of additional Stock Equivalents based
on the Fair Market Value of a share of Stock on the Dividend Payment Date.
Stock Equivalents resulting from deferral of Incentive Awards shall not be
charged against any Authorized Share Pool.
5.7 PAYMENT OF INCENTIVE AWARDS
Payment of Incentive Awards shall be made, in the sole discretion of the
Committee, in cash, Stock, Restricted Stock, or any combination of cash, Stock
and Restricted Stock; provided that the Committee may prescribe by regulation
circumstances in which amounts payable to any person who is or was a director
or officer subject to Section 16 of the Securities Exchange Act of 1934 shall
be paid solely in cash.
ARTICLE VI--STOCK OPTION AWARDS
6.1 NUMBER OF SHARES
The maximum number of shares of Stock upon which Options may be granted at
any time during any calendar year during any part of which this Plan is in
effect shall be the number of shares in the Authorized Share Pool for such
calendar year reduced by:
(a) the number of shares of Stock upon which Options have theretofore
been granted pursuant to Section 6.2 during such calendar year;
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(b) the number of Stock Equivalents comprising Allotments that have
theretofore been granted pursuant to Section 5.3(a) during such calendar
year;
(c) the number of Stock Equivalents comprising Allotment Supplements that
have theretofore been credited pursuant to Section 5.3(b) during such
calendar year or are reasonably estimated to be so credited during the
remainder of such calendar year; and
(d) the number of shares of Restricted Stock that have theretofore been
awarded pursuant to Section 5.3.(d) during such calendar year.
Of the shares of Stock upon which Options may be granted in any year pursuant
to the foregoing sentence, no more than 2,000,000 shares (subject to adjustment
pursuant to Article IX) per year, cumulative from the effective date of the
Plan, shall be available for the grant of Incentive Stock Options.
6.2 OPTION GRANTS
The Committee in its sole discretion may from time to time grant Options on
such terms and subject to such conditions as it shall deem appropriate, subject
to the applicable provisions of this Plan; provided that the maximum number of
shares of Stock upon which Options may be granted to any Employee in any
calendar year shall be 150,000, subject to adjustment as provided in Article
IX. As to each Option, the Committee shall have full and final authority in its
discretion: (a) to determine whether the same shall be a Qualified Option or a
Non-Qualified Option or both, (b) to determine the number of shares of Stock
subject to each Option, subject to the limit set forth in the immediately
preceding sentence, (c) to determine the purchase price of the shares of Stock
subject to each Option (the "Option Price"), which price shall be not less than
the minimum price specified in Section 6.4, and (d) to determine the time or
times when each Option shall become exercisable and the duration of the
exercise period, which period shall not exceed the maximum period specified in
Section 6.3.
6.3 TERM OF OPTIONS
The full term of each Option granted hereunder shall be for such period as
the Committee shall determine, but not for more than ten years from the date of
granting thereof. Each Option shall be subject to earlier termination as
provided in Sections 6.8 and 6.9.
6.4 OPTION PRICE
The Option Price shall be determined by the Committee at the time any Option
is granted and shall be not less than 100 percent of the Fair Market Value of
the shares covered thereby at the time the Option is granted (but in no event
less than par value).
6.5 NON-TRANSFERABILITY OF OPTIONS
No Option granted under this Plan shall be transferable by the grantee
otherwise than by will or the laws of descent and distribution, and such Option
may be exercised during the grantee's lifetime only by the grantee; provided
that the Committee may in its sole discretion provide in the instrument
evidencing any Non-Qualified Option any terms and conditions upon which such
Non-Qualified Option may be transferred if the Committee determines, based upon
such advice of counsel (which may be counsel to the Corporation) as it deems
appropriate, that a Registration Statement under the Securities Act of 1933 is
in effect, or an exemption from the requirements for such a Registration
Statement exists, for each of (a) the transfer of such Non-Qualified Option;
(b) the issuance of Stock to the transferee of the Non-Qualified Option upon
exercise of the Non-Qualified Option; and (c) any sale by the transferee of the
Option of Stock issued to such transferee upon exercise of the Non-Qualified
Option.
6.6 INCENTIVE STOCK OPTIONS
Any Option issued hereunder which is intended to qualify as an "incentive
stock option" as described in Section 422 of the Code (an "ISO") shall be
subject to the limitations or requirements as may be necessary for the purposes
of Section 422 of the Code to the extent and in such form as determined by the
Committee in its discretion.
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6.7 EXERCISE OF OPTIONS
Each Option granted under this Plan shall be exercisable on such date or
dates and during such period and for such number of shares as shall be
determined pursuant to the provisions of the instrument evidencing such Option.
A person electing to exercise an Option shall give written notice to the
Corporation or its agent of such election and of the number of shares he or she
has elected to purchase and shall at the time of exercise tender the full
purchase price of the shares he or she has elected to purchase plus any
required withholding taxes. Until a certificate or certificates for the shares
so purchased has been issued to, or for the benefit of, such person, or until
an entry in lieu of such a certificate is made on the stock books of the
Corporation, he or she shall possess no rights of a record holder with respect
to any of such shares. The purchase price may be paid in cash, by certified
check or in shares of Stock (excluding fractional shares) or any combination
thereof. Shares of Stock delivered in payment of the purchase price shall be
valued at the Fair Market Value of such shares on the date of exercise of the
Option. The shares to be delivered upon exercise of Options under this Plan
shall be made available, at the discretion of the Board, either from authorized
but unissued shares or from previously issued and reacquired shares of Stock
held by the Corporation as treasury shares, including shares purchased in the
open market.
6.8 OPTION UNAFFECTED BY CHANGE IN DUTIES
No Option shall be affected by any change of duties or position of the
optionee (including transfer to or from an Affiliated Corporation), so long as
he or she continues to be an Employee. If an optionee shall cease to be an
Employee for any reason other than death, such Option shall thereafter be
exercisable only to the extent of the purchase rights, if any, which have
accrued as of the date of such cessation; provided that (i) the Committee may
provide in the instrument evidencing any Option that the Committee may in its
absolute discretion, upon any such cessation of employment, determine (but be
under no obligation to determine) that such accrued purchase rights shall be
deemed to include additional shares covered by such Option and (ii) unless the
Committee shall otherwise provide in the instrument evidencing any Option, upon
any such cessation of employment, such remaining rights to purchase shall in
any event terminate upon the expiration of the original term of the Option
where such cessation of employment is on account of retirement under a
Corporation sponsored retirement plan on or after the Employee attains age
sixty, on account of long-term disability, or on account of any other reason
specified by the Committee, or its delegate, for the purpose of making this
clause applicable, and otherwise, upon the expiration of three months from such
date of termination, but in no event later than the expiration of the original
term of the Option.
6.9 DEATH OF OPTIONEE
Should an optionee die while in possession of the legal right to exercise an
Option or Options under this Plan, such person (the "personal representative")
as shall have acquired, by will or by the laws of descent and distribution, the
right to exercise any Option theretofore granted may exercise such Option (i)
at any time up to the expiration of the original term of the Option in the
following cases: (a) where the optionee was an Employee on the date of death
and (b) where the optionee was not an Employee on the date of death and his or
her employment ceased on account of retirement under a Corporation sponsored
plan on or after the Employee attained age sixty, on account of long term
disability, or on account of any other reason specifically approved by the
Committee or its delegate for the purpose of making this clause applicable; or
(ii) at any time prior to one year from the date of death where the optionee
was not an Employee on the date of death and his or her employment ceased on
account of a cause other than those specified in clause (i)(b) above, provided
that such Option shall expire in all events no later than the last day of the
original term of such Option, and provided further, that any such exercise
shall be limited to the purchase rights which have accrued as of the date when
the optionee ceased to be such an Employee, whether by death or otherwise,
provided further, however, that the Committee may provide in the instrument
evidencing any Option that all shares covered by such Option shall become
subject to purchase immediately upon the death of the optionee.
ARTICLE VII--BENEFITS PLANS
Incentive Awards, Awards of Restricted Stock and Awards of Options under the
Plan are discretionary and are additional to and not a part of regular salary.
Incentive Awards, Awards of Restricted Stock and Awards of Options may not be
used in determining the amount of compensation for any purpose under the
benefit plans of the Corporation, or an Affiliated Corporation, except (1) an
Incentive Award made to an
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Employee may be used in determining the amount of compensation for the purpose
of any retirement or life insurance plan of the Corporation and its Affiliated
Corporations to the extent provided from time to time in such plan, and (2) as
the Committee may otherwise from time to time expressly provide.
ARTICLE VIII--AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The Board may suspend the Plan or any part thereof at any time or may
terminate the Plan in its entirety. Awards shall not be granted under any part
of the Plan affected by a suspension, nor shall Awards be granted after Plan
termination.
The Board may also amend the Plan from time to time, except that amendments
which affect the following subjects must be approved by shareholders of the
Corporation:
(a) The qualifications for eligibility to become or remain a member of
the Committee;
(b) The Performance Measures and the amounts of the Short-Term Incentive
Awards and the Long-Term Incentive Awards for Named Executive Officers;
(c) Except as provided in Article IX relating to capital changes, the
number of shares in the Authorized Share Pool for any calendar year, the
maximum number of shares of Stock upon which Options may be granted to any
person in any calendar year and the maximum number of shares of Restricted
Stock that may be awarded to any person pursuant to Section 5.3(d);
(d) The maximum term of Options granted;
(e) The minimum Option Price;
(f) The term of the Plan;
(g) The requirements as to eligibility for participation in the Plan;
(h) The prohibition against granting Awards to a member of the Committee;
and
(i) The provision requiring that Employees to whom the Committee has
delegated final authority to determine Awards under the Plan are eligible
only for Awards granted directly by the Committee.
Awards granted prior to suspension or termination of the Plan may not be
cancelled solely because of such suspension or termination, except with the
consent of the grantee of the Award.
ARTICLE IX--CHANGES IN CAPITAL STRUCTURE
Stock, Stock Equivalents, Restricted Stock and the instruments evidencing
Options granted hereunder shall be subject to adjustments in the event of
changes in the outstanding stock of the Corporation by reason of Stock
dividends, Stock splits, recapitalizations, reorganizations, mergers,
consolidations, combinations, exchanges or other relevant changes in
capitalization occurring after the date of an Award to the same extent as would
affect an actual share of Stock issued and outstanding on the effective date of
such change. In the event of any such change, the aggregate number and classes
of shares comprising the Authorized Share Pool for the calendar year in which
such change occurs, the number of shares upon which Options may thereafter be
granted to any person pursuant to Section 6.2, and the number of shares of
Restricted Stock that may thereafter be awarded to any person pursuant to
Section 5.3(d) shall be appropriately adjusted as determined by the Board so as
to reflect such change.
ARTICLE X--EFFECTIVE DATE AND TERM OF THE PLAN
The Plan became effective January 1, 1995, subject to the affirmative vote of
the holders of shares entitled to cast a majority of the votes entitled to be
cast (in person or by proxy) for or against approval of the Plan at the Annual
Meeting of the shareholders of the Corporation in 1995. The Plan shall continue
until such time as it may be terminated by action of the Board; provided,
however, that the Plan, if not so terminated, shall be submitted to the
shareholders of the Corporation for their approval not later than December 31,
2000. No Options may be granted under this Plan subsequent to April 30, 2000.
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ARTICLE XI--TRANSITION--1991 INCENTIVE COMPENSATION AND STOCK OPTION PLAN
(a) This Plan supersedes the Prior Plan, and no new Incentive Awards or
Options, as defined in the Prior Plan, may be granted under the Prior Plan
after the effective date of this Plan, except that (i) short-term incentive
awards in respect of 1994 shall be payable pursuant to the Prior Plan in 1995
and (ii) options granted in 1995 to persons, other than Named Executive
Officers, that are subject to the laws of any foreign jurisdiction that
require, or condition favorable tax treatment on, approval of the plan pursuant
to which options are granted prior to the grant thereof shall be granted
pursuant to the Prior Plan but shall count against the Authorized Share Pool
for 1995; provided that nothing herein shall modify the terms of the Prior Plan
if this Plan is not approved by vote of the shareholders of the Corporation as
contemplated by Article X. Incentive Awards including conditional Incentive
Awards made and Options granted under the Prior Plan before the effective date
of this Plan shall remain outstanding and shall be administered under the terms
of the Prior Plan.
(b) Any Awards granted under this Plan prior to approval of this Plan by the
shareholders of the Corporation shall be conditional upon, and forfeited upon
the failure of, such approval at the Annual Meeting of Stockholders of Mobil
Corporation in 1995; provided that failing such approval any such Award to a
person other than a Named Executive Officer that could have been granted under
the terms of the Prior Plan may, in the discretion of the Committee, be deemed
to have been so granted.
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PRINTED RECYCLED
IN [LOGO OF RECYCLED PAPER APPEARS HERE] PAPER
U.S.A.
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MOBIL CORPORATION PROXY
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SOLICITED BY THE BOARD OF DIRECTORS for Annual Meeting of Stockholders
GRAND BALLROOM
HYATT REGENCY RESTON
RESTON TOWN CENTER
1800 PRESIDENTS STREET
RESTON, VIRGINIA 22090
THURSDAY, MAY 11, 1995 AT 10:00 A.M.
The undersigned hereby appoints Lucio A. Noto, Thomas C. DeLoach, Jr. and
Caroline M. Devine and any one of them, each with power of substitution, the
attorneys of the undersigned to vote all shares held of record on the record
date by the undersigned, as directed and, in their discretion, on all other
matters which may properly come before the 1995 Annual Meeting of Stockholders
of Mobil Corporation, and any adjournment thereof. The undersigned directs said
proxies to vote as specified upon the items shown on the reverse side, which are
referred to in the Notice of Annual Meeting and set forth in the Proxy
Statement.
This card also provides voting instructions for shares held in the Stock
Purchase and Dividend Reinvestment Plan. For participants in the Mobil Oil
Employees Savings Plan and the Mobil Employee Stock Ownership Plan, if you wish
to provide voting instructions for the trustees for shares of Mobil stock
credited to your accounts, please fill in and sign this card and mail it in time
to be received no later than noon on May 8, 1995.
Your vote for four directors may be indicated on the reverse side. Lewis M.
Branscomb, Paul J. Hoenmans, Allen F. Jacobson and J. Richard Munro have been
nominated to serve for a term of three years to expire at the Annual Meeting in
1998.
You are encouraged to specify your choices by marking the appropriate boxes, SEE
REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations.
(Continued, and to be signed, on the reverse side)
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FOLD AND DETACH HERE
Dear Mobil Stockholder:
Please sign and date the above proxy card and return it promptly using the
enclosed envelope. We encourage you to vote your proxy. Your voting instructions
will be confidential and will be seen only by authorized personnel of the
independent inspectors of election, except as otherwise provided in the proxy
statement.
Thank you in advance for voting on the important items shown on the reverse
side of the proxy.
Caroline M. Devine
Secretary
<PAGE>
The votes represented by this proxy will be voted as marked by you. However, if
you execute and return the proxy unmarked, such votes will be voted "FOR"
Proposals 1, 2 and 3 and "AGAINST" Proposals 4 and 5.
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The Board of Directors Recommends a Vote "FOR" Items 1,2 and 3.
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1. Election of Directors (duly nominated and listed on the reverse side of this
proxy)
Withheld
For for all
[_] [_]
Withheld for the following only (write the nominee's name(s) in the space below)
___________________________________
Nominee's Name(s)
2. Ratification of independent auditors
For Against Abstain
[_] [_] [_]
3. 1995 incentive compensation and stock ownership plan
For Against Abstain
[_] [_] [_]
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+++++
+
+
+
+
+++++
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The Board of Directors Recommends a Vote "AGAINST" Items 4 and 5.
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4. Limit authority to issue preferred stock
For Against Abstain
[_] [_] [_]
5. Limitations on composition of the board
For Against Abstain
[_] [_] [_]
Please date and sign as your name appears to the left and return in the enclosed
envelope . If acting as executor, administrator, trustee, guardian,
etc., you should so indicate when signing. If the signer is a corporation,
please sign the full corporate name, by a duly authorized officer. If shares
are held jointly, each stockholder named should sign.
Dated__________________________________, 1995
_____________________________________________
(Signature)
_____________________________________________
(Signature if held jointly)
[X] Please mark your vote with an X.
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FOLD AND DETACH HERE
