<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Chevron Corporation
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] 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:
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(2) Aggregate number of securities to which transaction applies:
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(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
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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<PAGE> 2
[CHEVRON LOGO]
CHEVRON CORPORATION
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS AND
PROXY STATEMENT
APRIL 29, 1998
THE ORPHEUM THEATER
129 UNIVERSITY PLACE
NEW ORLEANS, LOUISIANA
<PAGE> 3
[CHEVRON LOGO]
San Francisco, California
March 30, 1998
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS -- APRIL 29, 1998
To Our Stockholders:
The Annual Meeting of Stockholders of Chevron Corporation will be held on
Wednesday, April 29, 1998 at 9:30 a.m., local time, in The Orpheum Theater, 129
University Place, New Orleans, Louisiana to consider and take action on the
following:
- ITEM 1 -- to elect thirteen Directors;
- ITEM 2 -- to ratify the appointment of independent public accountants;
- ITEM 3 -- to take action on the stockholder proposal;
and to transact any other business that may properly be brought before the
Annual Meeting.
Stockholders of record at the close of business on March 10, 1998 are entitled
to vote at the Annual Meeting. The number of outstanding voting securities of
Chevron Corporation on February 20, 1998 was 653,354,113 shares of Common Stock,
$1.50 par value. Each share is entitled to one vote.
A list of stockholders entitled to vote at the Annual Meeting will be available
at The Orpheum Theater on April 29, 1998. It will be available for ten days
prior to the Annual Meeting at the offices of the Chevron U.S.A. Production
Company, 935 Gravier Street, New Orleans, Louisiana between the hours of 8:00
a.m. and 4:00 p.m.
Please read the attached proxy statement. It contains information on the matters
to be considered and acted upon at the Annual Meeting. Your vote is important.
Your shares cannot be voted unless you sign and return a proxy or vote by ballot
at the Annual Meeting.
We hope that you will attend the Annual Meeting. Information about attending the
meeting is located on pages 16-17 of the proxy statement. If you cannot attend
the Annual Meeting, it is very important that you vote. Please mark, sign and
return the enclosed proxy card to indicate your vote.
By Order of the Board of Directors,
/s/ Lydia I. Beebe
- - -----------------------
Lydia I. Beebe
Corporate Secretary
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information for Stockholders........................ 1
Voting Procedures........................................... 1
Confidential Voting......................................... 1
Method and Cost of Soliciting Proxies....................... 2
ITEM 1 Election of Directors................................ 2
Nominees for Directors................................. 2
Stock Ownership of Directors and Executive Officers.... 5
Board Committees and Meeting Attendance................ 6
Non-Employee Directors' Compensation................... 6
Executive Compensation................................. 7
Management Compensation Committee Report on Executive
Compensation........................................ 7
Summary Compensation Table........................... 11
Option Grants in Last Fiscal Year.................... 11
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values....................... 12
Long-Term Incentive Plan -- 1997 Performance Unit
Awards Table........................................ 12
Pension Plan Table................................... 12
Performance Graph.................................... 13
ITEM 2 Approval of the Appointment of Independent Public
Accountants............................................... 14
Submission of Stockholder Proposals......................... 14
ITEM 3 Stockholder Proposal to Provide Information About
Toxic Chemicals Released by Chevron's Facilities.......... 15
Compliance with Section 16 of The Exchange Act.............. 16
Information About Attending the Annual Meeting.............. 16
Other Matters............................................... 17
</TABLE>
<PAGE> 5
CHEVRON CORPORATION
575 Market Street
San Francisco, California 94105
March 30, 1998
PROXY STATEMENT
The Board of Directors is sending you this proxy statement. It explains the
matters to be considered and acted upon at the Annual Meeting and how to vote
your shares at the April 29, 1998 Annual Meeting of Stockholders. The
accompanying proxy card allows you to vote your shares of Chevron Common Stock
without being present at the Annual Meeting.
GENERAL INFORMATION FOR STOCKHOLDERS
VOTING PROCEDURES
As a stockholder of Chevron, you can be represented at the Annual Meeting and
have your shares voted as you direct by means of the enclosed proxy card. When
you sign the proxy card, you name K. T. Derr, C. A. Hills, and G. H.
Weyerhaeuser as your proxy holders. They will vote your shares (and all of the
shares of Chevron Stock represented by every properly signed and returned proxy
card) at the Annual Meeting as directed on the proxy card.
You specify your voting choices by marking the appropriate boxes on the proxy
card. If you do not specify your voting choices, your proxy holders will vote
your shares as recommended by the Board of Directors.
The proxy card also authorizes the proxy holders to vote your shares on any
matters not known at the time the proxy statement was printed that may be
properly presented for action at the Annual Meeting.
YOU MUST RETURN A PROPERLY SIGNED PROXY CARD TO AUTHORIZE THE PROXY HOLDERS TO
VOTE YOUR SHARES.
The Board of Directors encourages you to complete and return the proxy card even
if you expect to attend the Annual Meeting. You may revoke your proxy at any
time before it is voted at the Annual Meeting. If you attend the Annual Meeting
and wish to vote, your completed ballot at the Annual Meeting will cancel any
proxy that you previously sent.
Each outstanding share of Chevron Stock is entitled to cast one vote for as many
separate nominees as there are Directors to be elected and for or against all
other matters presented. The nominees who receive the most votes for the number
of positions to be filled are elected Directors. Proposals are approved if the
number of votes cast in favor exceeds the number of votes cast against.
Abstentions and broker non-votes do not affect the voting calculations.
CONFIDENTIAL VOTING
Chevron has a corporate policy that protects stockholder voting privacy.
Proxies, ballots and voting tabulations that identify individual stockholders
are confidential. Only the proxy solicitor, proxy tabulator, the Inspector of
Election and the few other persons who inspect and vote the ballots and proxies
have access to them. None of these persons is a Director or officer of Chevron.
Every such person who inspects and processes proxies and ballots signs a pledge
to treat in confidence all information from proxies and ballots. Information
concerning the ballots and proxies may be disclosed only in the event of a proxy
contest or as otherwise required by law.
<PAGE> 6
METHOD AND COST OF SOLICITING PROXIES
Chevron has retained Georgeson & Company Inc. to assist in the distribution of
proxy materials and solicitation of votes at an estimated cost of $25,000 plus
their reasonable out-of-pocket expenses. Additionally, Chevron has hired
Corporate Election Services, Inc. to tabulate proxies at an estimated cost of
$27,000.
Chevron will reimburse brokerage houses and other custodians, nominees and
fiduciaries for their reasonable out-of pocket expenses for forwarding proxy and
solicitation material to Chevron stockholders. Employees of Chevron and its
subsidiaries may also solicit proxies personally and by telephone. The expense
for this would be nominal.
ITEM 1 ON THE PROXY CARD
ELECTION OF DIRECTORS
Your shares will be voted, unless such authority is withheld on the proxy card,
for the election of the thirteen Director nominees named in the following
section. Each nominee is presently a Director of Chevron. The Directors will be
elected to serve for the ensuing year and until their successors are elected.
If any Director nominee is unable to serve as a Director, which is not
anticipated, the Board may, by resolution, provided for a lesser number of
Directors or designate a substitute Director to fill the vacancy.
NOMINEES FOR DIRECTORS
<TABLE>
<S> <C>
SAMUEL H. ARMACOST, 58, is a Managing Director of Weiss,
[PHOTO] Peck & Greer L.L.C., an investment firm. Mr. Armacost was
President, Director and Chief Executive Officer of
BankAmerica Corporation from 1981 to 1986. From 1987-1990,
he was a Managing Director of Merrill Lynch Capital Markets.
He assumed his current position in 1990. He has been a
Director of Chevron since 1982. He is a Director of SRI
International, The James Irvine Foundation, Exponent, Inc.
and Scios, Inc., and a member of The Business Council and
the Advisory Council of the California Academy of Sciences.
[PHOTO] KENNETH T. DERR, 61, is Chairman of the Board and Chief
Executive Officer of Chevron. He joined Chevron in 1960.
After a succession of assignments in the Comptroller's and
Manufacturing Departments, he became Assistant to the
President in 1969. He was elected a Vice-President in 1972,
a Vice-Chairman in 1985 and assumed his present position in
1989. He served as President and Chief Executive Officer of
Chevron U.S.A. Inc. from 1979 to 1984. He has been a
Director of Chevron since 1981. He is a Director of AT&T
Corp., Citicorp, Potlatch Corporation, The Bay Area Council,
The American Productivity and Quality Center and the
American Petroleum Institute; a Trustee Emeritus of Cornell
University and a member of the National Petroleum Council,
the California Business Roundtable, The Business Council and
The Business Roundtable.
</TABLE>
2
<PAGE> 7
<TABLE>
<S> <C>
[PHOTO] SAM GINN, 60, has been Chairman of the Board and Chief
Executive Officer of AirTouch Communications, Inc., formerly
PacTel Corporation, a worldwide wireless telecommuni-
cations company, since December 1993. From 1988 until April
1, 1994, Mr. Ginn served as Chairman of the Board, President
and Chief Executive Officer of Pacific Telesis Group. He was
Chairman of the Board of Pacific Bell from 1988 until April
1, 1994. He has been a Director of Chevron since 1989. He is
also a Director of Transamerica Corporation, Safeway Inc.
and Hewlett-Packard Company. He is a member of The
California Business Roundtable, The Business Roundtable, The
Business Council, The Institute for International Studies at
Stanford, and the California Council on Competitiveness.
[PHOTO] AMBASSADOR CARLA ANDERSON HILLS, 64, is Chairman and Chief
Executive Officer of Hills & Company International
Consultants, a company giving advice on investment, trade
and risk issues abroad. From 1989 to 1993, she served as
United States Trade Representative. She is a Director of
American International Group, Inc., Lucent Technologies Inc,
Time Warner Inc., and Trust Company of the West. Mrs. Hills
was a Director of Chevron from 1977 through 1988 prior to
serving as U.S. Trade Representative, and rejoined the Board
of Directors in 1993.
[PHOTO] SENATOR J. BENNETT JOHNSTON, 65, is Chief Executive Officer
of Johnston & Associates, a governmental and business
consulting firm. He served as U.S. Senator from Louisiana
from 1972 through 1996. He was a member of the Senate
Committee on Energy and Natural Resources (Chairman from
1986 to 1994 and ranking Democrat from 1994 through 1996).
He was a member of the Appropriations Committee and Chairman
of the Subcommittee on Energy & Water Development from 1986
to 1994. Other committees he served on were the Select
Committee on Intelligence; the Budget Committee; and the
Special Committee on Aging. Prior to serving in the Senate,
he served in the Louisiana State Legislature for eight
years. He has been a Director of Chevron since 1997. He is a
Director of Columbia Energy Group, Freeport-McMoran Copper &
Gold Inc., and URS Corporation.
[PHOTO] RICHARD H. MATZKE, 61, is a Vice-President of Chevron and
President of Chevron Overseas Petroleum Inc. He joined
Chevron in 1961 as a geologist and advanced through various
positions in Chevron's exploration, economics, research and
corporate planning departments, becoming Assistant to the
President in 1976. Between 1979 and 1989 when he assumed his
present position, he served as Vice-President of Chevron
Chemical Company, manager of Chevron's foreign operations
staff, Director of Caltex Pacific Indonesia, and President
of Chevron Canada Resources Limited. He joined the Chevron
Board of Directors in 1997. He is a Trustee of the African
American Institute and of St. Mary's College of California,
and Chairman of the Board of Directors of the United
States -- Kazakhstan Council. He is also a member of the
American Association of Petroleum Geologists, and the World
Affairs Council of Northern California.
</TABLE>
3
<PAGE> 8
<TABLE>
<S> <C>
[PHOTO] CHARLES M. PIGOTT, 68, is Chairman Emeritus and a Director
of PACCAR Inc, a manufacturer of transportation equipment.
He was elected President of PACCAR Inc in 1965, became its
Chief Executive Officer in 1967 and Chairman of the Board in
1986. He has been a Director of Chevron since 1973. He is a
Director of The Boeing Company and Seattle Times Company,
and a member of The Business Council.
[PHOTO] CONDOLEEZZA RICE, 43, is Provost and Vice-President of
Stanford University. She was named Provost in September
1993. Ms. Rice joined the Stanford University faculty in
1981. From 1989 until April 1991, she served on the Bush
Administration's National Security Council as Special
Assistant to President Bush for National Security Affairs
and Senior Director for Soviet Affairs. She has been a
Director of Chevron since 1991. She is a Director of
Transamerica Corporation, and a member of the Council on
Foreign Relations and the J.P. Morgan International Advisory
Council.
[PHOTO] FRANK A. SHRONTZ, 66, is Chairman Emeritus of The Boeing
Company. He was Chief Executive Officer from 1986 until 1996
and was President of The Boeing Company from 1985 until
1988. He served as Assistant Secretary of the Air Force and
as Assistant Secretary of Defense from 1973 until 1976. He
has been a Director of Chevron since 1996. He is also a
Director of Boise Cascade Corporation, Citicorp, and the
Minnesota Mining and Manufacturing Company, and a member of
The Business Council and a citizen regent of The Smithsonian
Institution.
[PHOTO] JAMES N. SULLIVAN, 60, is Vice-Chairman of the Board of
Chevron. He joined Chevron in 1961 as a Process Engineer and
held a succession of manufacturing assignments. He was
elected a Vice-President of Chevron in 1983. He assumed his
present position in 1989. He has been a Director of Chevron
since 1988. He is a Director of Weyerhaeuser Company, the
American Petroleum Institute and the United Way of the Bay
Area. He is a member of the Board of Trustees of the
University of San Francisco and the Committee for Economic
Development.
[PHOTO] CHANG-LIN TIEN, 62, is NEC Distinguished Professor of
Engineering at the University of California, Berkeley. He
was Chancellor from 1990 until 1997. Mr. Tien has been a
Director of Chevron since 1997. He is also a Director of
AirTouch Communications, Inc., Wells Fargo & Company and
Raychem Corporation and is currently serving on the board of
trustees of the Asia Foundation. He is also an elected
Fellow of the American Academy of Arts and Sciences and is a
member of the National Academy of Engineering, the Pacific
Council on International Policy, the U.S. Committee for
Economic Development and the Council on Foreign Relations.
</TABLE>
4
<PAGE> 9
<TABLE>
<S> <C>
[PHOTO] GEORGE H. WEYERHAEUSER, 71, has been Chairman of the Board
of Weyerhaeuser Company, a forest products company since
1988. He joined Weyerhaeuser Company in 1949, became its
President in 1966 and was its Chief Executive Officer from
1966 to 1991. He has been a Director of Chevron since 1977.
He is a Director of The Boeing Company and SAFECO
Corporation, and a member of The Business Council.
[PHOTO] JOHN A. YOUNG, 65, retired as President, Director and Chief
Executive Officer of Hewlett-Packard Company, a manufacturer
of electronic equipment, in 1992. He joined Hewlett-Packard
in 1958, became its President in 1977 and its Chief
Executive Officer in 1978. He has been a Director of Chevron
since 1985. He is Vice-Chairman of the Board of Novell, Inc.
He is a Director of Affymetrix, Inc., Lucent Technologies
Inc., Shaman Pharmaceuticals, Inc., SmithKline Beecham PLC
and Wells Fargo & Company. He is a member of The Business
Council and the Executive Committee of the Council on
Competitiveness. He is Chairman of the Board of Smart Valley
Inc., a non-profit corporation aimed at creating an
electronic community in Silicon Valley.
</TABLE>
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table shows information about economic and beneficial ownership of
Chevron Stock for each Director nominee, for each executive officer named in the
Summary Compensation Table on page 11, and for all Directors and executive
officers of Chevron as a group. All amounts shown in the table are as of January
28, 1998 and represent less than 1% of the outstanding shares of Chevron Stock.
<TABLE>
<CAPTION>
Shares Restricted
Currently Exercisable Stock
Name Owned(1) Options(2) Units(3)
---- ---------- ----------- -----------
<S> <C> <C> <C>
Samuel H. Armacost 5,745 0 0
Kenneth T. Derr 132,965 547,900 0
Sam Ginn 2,409 0 2,607
Carla A. Hills 2,472 0 0
J. Bennett Johnston 409 0 707
Martin R. Klitten 24,365 181,900 0
Richard H. Matzke 48,829 159,500 26,153
David J. O'Reilly 24,919 103,700 0
Charles M. Pigott 69,313 0 3,236
Condoleezza Rice 2,065 0 0
Frank A. Shrontz 1,659 0 1,026
James N. Sullivan 58,205 369,200 0
Chang-Lin Tien 400 0 0
George H. Weyerhaeuser 13,209 0 3,379
John A. Young 4,645 0 0
Directors and executive officers as a group (18
persons) 421,374 1,615,350 85,500
</TABLE>
- - ---------------
(1) Includes, for non-employee Directors, shares of restricted Chevron Stock
awarded under the Chevron Restricted Stock Plan for Non-Employee Directors,
and for executive officers, shares held in trust under various profit
sharing plans and in dividend reinvestment accounts.
(2) Securities and Exchange Commission rules deem a person to be the beneficial
owner of shares of Chevron Stock if he or she has a right to vote or sell
the shares or can exercise an option to acquire the shares presently or at
some time within the next 60 days. These are all currently exercisable stock
options awarded under the Long-Term Incentive Plan.
5
<PAGE> 10
(3) Restricted stock units do not carry voting rights and may not be sold. But
they represent economic ownership of Chevron Stock since their value depends
on the performance of Chevron Stock and they may ultimately be paid in
shares. For non-employee Directors, these are stock units awarded under the
Chevron Restricted Stock Plan for Non-Employee Directors and retainers and
fees deferred under the Chevron Corporation Deferred Compensation Plan, and
for executive officers, these are stock units deferred under the Management
Incentive Plan and the Long-Term Incentive Plan.
BOARD COMMITTEES AND MEETING ATTENDANCE
The Board of Directors has Audit, Board Nominating and Governance, Management
Compensation and Public Policy Committees. The membership of each of these
committees is reviewed from time to time by the Board.
AUDIT COMMITTEE -- The members of the Audit Committee are John A. Young, its
Chairman, Sam Ginn, J. Bennett Johnston, Frank A. Shrontz, and Chang-Lin Tien.
The committee met three times in 1997. It selects a firm of independent
certified public accountants to audit the books and accounts of Chevron and its
subsidiaries for the fiscal year for which they are appointed. In addition, the
committee reviews and approves the scope and cost of all services (including
nonaudit services) provided by the firm selected to conduct the audit. The
committee also monitors the effectiveness of the audit effort and financial
reporting, and inquires into the adequacy of financial and operating controls.
BOARD NOMINATING AND GOVERNANCE COMMITTEE -- The members of the Board Nominating
and Governance Committee are Charles M. Pigott, its Chairman, Samuel H.
Armacost, Sam Ginn, Frank A. Shrontz, and Chang-Lin Tien. The committee met four
times in 1997. It makes recommendations to the Board regarding corporate
governance matters and practices including the effectiveness of the Board, its
committees and individual directors. It also assesses the size and composition
of the Board, and recommends prospective Directors, without regard to race,
religion or sex, to assist in creating a balance of knowledge, experience, and
capability on the Board. The committee will consider nominees recommended by
stockholders. If a stockholder wishes to recommend a nominee for the Board of
Directors, the stockholder should write to the Corporate Secretary of Chevron
specifying the name of the nominee and the qualifications of such nominee for
membership on the Board of Directors. All such recommendations will be brought
to the attention of the Board Nominating and Governance Committee.
MANAGEMENT COMPENSATION COMMITTEE -- The members of the Management Compensation
Committee are Samuel H. Armacost, its Chairman, Carla A. Hills, Charles M.
Pigott, Condoleezza Rice, and George H. Weyerhaeuser. The committee met four
times in 1997. It reviews and approves salaries and other matters relating to
compensation of the principal officers and all other executives of Chevron and
its subsidiaries above a specified salary grade. The committee also administers
the Excess Benefit, Management Incentive, Long-Term Incentive, and Salary
Deferral Plans for management employees of Chevron.
PUBLIC POLICY COMMITTEE -- The members of the Public Policy Committee are Carla
A. Hills, its Chairman, Kenneth T. Derr, J. Bennett Johnston, Condoleezza Rice,
George H. Weyerhaeuser, and John A. Young. The committee met twice in 1997. It
identifies, monitors and evaluates domestic and foreign social, political and
environmental trends, issues and concerns which affect or could affect Chevron
or to which Chevron could make a unique contribution. The committee reviews and
develops recommendations to the Board to assist it in formulating and adopting
policies and strategies concerning public policy issues.
The Board of Directors met ten times during 1997. The total number of meetings
of the Board and its committees in 1997 was twenty-three. The members of the
Board attended on average over 95 percent of the meetings.
NON-EMPLOYEE DIRECTORS' COMPENSATION
Chevron believes that non-employee Directors' compensation should provide total
compensation that is competitive, links rewards to business results and
stockholder returns and facilitates increased ownership of
6
<PAGE> 11
Chevron Stock by Directors. Chevron's non-employee Directors' compensation
program consists of two elements: cash and equity.
Non-employee Directors receive an annual retainer of $35,000 and an attendance
fee of $1,500 for each meeting of the Board or a committee of the Board
attended. Committee Chairmen are paid an additional fee of $1,500 for each
meeting chaired. Any non-employee Director may elect to defer receipt of all or
any portion of the annual retainer and meeting fees. Deferred amounts are
credited each quarter with interest at a variable rate, or alternatively, at the
election of the Director are converted into stock units representing the value
of an equal number of shares of Chevron Stock. In such event, unpaid stock units
are credited each quarter with dividend equivalents in the same amounts as the
dividends paid on Chevron Stock. The amount ultimately distributed to the
Director will reflect changes in the market value of Chevron Stock during the
deferral period. Distribution may ultimately be made in shares of Chevron Stock.
Any deferred amounts remaining unpaid at the time of a Director's death are
distributed to the Director's beneficiary.
Non-employee Directors receive an annual grant of 400 shares of restricted
Chevron Stock under the Chevron Restricted Stock Plan for Non-Employee Directors
(RSP). At the election of the Director, dividends paid on the shares of
restricted Chevron Stock can be used to purchase additional shares of restricted
Chevron Stock, additional shares of unrestricted Chevron Stock or may be paid in
cash. Annual awards under the RSP are subject to forfeiture if any non-employee
Director does not serve as a Director of Chevron for a minimum of five years
after the award is granted. However, such forfeiture does not apply if a
Director dies, reaches mandatory retirement age, becomes disabled, changes
primary occupation or enters government service.
Non-employee Directors are reimbursed for expenses that may be incurred by them
in connection with the business and affairs of Chevron.
EXECUTIVE COMPENSATION
The compensation of K. T. Derr, Chevron's Chief Executive Officer, and the four
other most highly paid executive officers during 1997 is discussed in the report
from the Management Compensation Committee of the Board of Directors below and
is shown on the following pages in five tables.
MANAGEMENT COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report is provided by the Management Compensation Committee of the Board of
Directors (the Committee) to assist stockholders in understanding the
Committee's objectives and procedures in establishing the compensation of
Chevron's Chief Executive Officer and other senior Chevron executives.
The Committee, which consists of five of the ten non-employee Directors, is
responsible for establishing and administering Chevron's executive compensation
program. All members of the Committee qualify as "outside directors" under
section 162(m) of the IRS Code. The Committee met four times during 1997,
including a meeting with the Committee's external consultant in which there were
neither Chevron officers nor employees present.
In structuring Chevron's incentive programs, the Committee is advised on plan
design by external compensation consultants and by Chevron's compensation staff.
The outside consultant provides the Committee with competitive pay and
performance information. Chevron's compensation staff provides additional data
and analysis as requested by the Committee.
7
<PAGE> 12
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Committee believes that compensation of Chevron's key executives should:
- link rewards to business results and stockholder returns;
- encourage creation of stockholder value and achievement of strategic
objectives;
- provide total compensation opportunity that is competitive with major oil
and non-oil companies, taking into account relative company size and
performance as well as individual experience, responsibility and
performance;
- maintain an appropriate balance between base salary and short- and
long-term incentive opportunity, with more compensation at risk at the
higher salary grades; and
- attract and retain high caliber personnel on a long-term basis.
Chevron uses six major oil companies as its competition when determining
competitive compensation practice (Amoco, Arco, Exxon, Mobil, Shell U.S. and
Texaco). These six companies are the primary competition in the marketplaces
where Chevron operates and are strong competitors for human resources talent.
Five of these six competitors (Amoco, Arco, Exxon, Mobil and Texaco) also
comprise the competitor peer group for determining relative total stockholder
return (TSR), which is stock price appreciation plus dividends on a reinvested
basis. Shell U.S. is excluded from the competitor peer group because it is a
subsidiary of Royal Dutch Shell and does not issue publicly traded stock, making
it difficult to determine a return to stockholders.
KEY ELEMENTS OF EXECUTIVE COMPENSATION
Chevron's existing executive compensation program consists of three elements:
Base Pay, Short-Term Incentives and Long-Term Incentives. For senior executives,
the Committee believes short- and long-term incentive pay, linked to Chevron's
financial performance, should represent half or more of their total compensation
opportunity. Payout of the short-term incentives depends on assessments of
corporate performance measured against both annual business plan objectives and
annual performance relative to the five peer group competitors (Amoco, Arco,
Exxon, Mobil and Texaco). Payout of the long-term incentives depends on
performance of Chevron Stock and on TSR performance relative to the peer group
competitors.
The Omnibus Budget Reconciliation Act of 1993 (OBRA) included a provision that
eliminates a company's tax deduction for any compensation over one million
dollars paid to any one of the five executives who appear in the Summary
Compensation Table, subject to several statutory exceptions. Both the Management
Incentive Plan and the Long-Term Incentive Plan, as amended and approved by the
stockholders, qualify for these statutory exceptions.
BASE PAY
- Salary structures target average pay levels of the six major oil
competitors. The Committee also reviews pay information of companies
outside the oil industry, provided by outside consultants, when
establishing salary structure to ensure compensation opportunity is
appropriate on a broad industry basis.
- Salaries within these structures vary by individual. They are based on
sustained performance toward achievement of Chevron's goals, objectives
and strategic intents. The Committee also considers experience, time
since last increase, and current salary compared to market rates when
considering salary actions.
- Executive salaries and proposed changes are reviewed and approved
annually by the Committee. Pay increases under the executive salary
program are administered throughout the salary program year.
8
<PAGE> 13
SHORT-TERM INCENTIVE (MANAGEMENT INCENTIVE PLAN)
- The Management Incentive Plan (MIP) is an annual cash incentive plan
which links awards to performance results of the prior year. Individual
target awards vary by salary grade and are based on competitive practice
of the six major oil competitors. Actual individual awards typically vary
from 150% of target to zero. Awards are based on the Committee's
assessments of performance vs. objectives on three components: corporate
results, business unit results and individual performance, each weighted
about one-third of the target award. Performance assessments within each
of the three components are aggregate judgments; there is no specific
weighting formula for each factor within a component.
- Corporate and business unit financial and strategic objectives are set at
the beginning of each year. Financial objectives are developed for:
earnings, return on capital employed (ROCE), cash flow and operating
expense. Results are measured against these objectives and against major
oil competitor results.
- An individual's key job responsibilities and objectives are also
established at the beginning of each year. Individual objectives include
achievement of business unit financial goals as well as targets related
to business operations (e.g., refinery throughput, production volumes,
product quality, safety, environmental performance, etc.). Performance
assessments are also made on other factors including diversity
leadership, teamwork, communication, planning and organizing, creativity
and innovation, and quality improvement.
- The corporate performance assessment is the same for all MIP
participants. Individuals will have differing business unit and
individual performance assessments.
LONG-TERM INCENTIVE (LONG-TERM INCENTIVE PLAN)
- The Long-Term Incentive Plan (LTIP) is designed specifically to link a
substantial portion of executive pay to increases in stockholder value.
Individual grants vary by salary grade, and are based on valuations of
grants made by the six major oil competitors which are provided by an
outside consultant. Grants are typically in the form of non-qualified
stock options and performance units.
- Non-Qualified Stock Options (NQSOs) are awarded at market price on the
day of grant, vest after one year, and have a ten-year term. Their
ultimate value depends entirely on appreciation of Chevron Stock. The
Committee does not grant discounted options.
- Performance Units -- The ultimate value of Performance Units (denominated
in shares of Chevron Stock) is tied to Chevron's TSR as compared to the
TSRs of the five peer group competitors (Amoco, Arco, Exxon, Mobil and
Texaco). Performance units have a three-year vesting period, with a
performance modifier based on relative TSR ranking that can vary from 0%
to 150%. If Chevron's TSR is the lowest of the peer group competitors,
the modifier is 0%; if fifth, 30%; if fourth, 60%; if third, 90%; if
second, 120%; if first, 150%. Moreover, if the difference between one or
more competitor's TSR and Chevron's TSR is less than one percentage
point, the TSR ranking modifiers are averaged. Payout is in cash and is
equal to the number of units multiplied by the performance modifier
multiplied by the 20-day trailing average price of Chevron Stock at the
end of the performance period.
EXECUTIVE STOCK OWNERSHIP
Chevron does not have formal stock ownership guidelines. Executives participate
in Chevron's Profit Sharing/Savings Plan (a broad-based employee stock ownership
and savings plan) and also have the option to defer MIP awards and LTIP
performance unit payouts into Chevron Stock fund accounts. As a result of these
opportunities, the average value of Chevron Stock holdings of executives as a
group is more than four times their annual salaries.
9
<PAGE> 14
1997 CEO COMPENSATION
BASE PAY
Mr. Derr's last salary increase was on April 1, 1996, when the Committee
increased his base salary to $1,200,000 following a 27-month period with no
increase. Mr. Derr's salary reflects his excellent performance throughout his
nine-year tenure as CEO. Through the end of 1996, during Mr. Derr's tenure,
Chevron's annualized 18.9% TSR ranked first among the peer group competitors and
ahead of the 16.4% achieved by the S&P 500.
During 1996, Chevron's net income was a record high $2,607 million, its TSR was
28.5% (ranked second amongst the peer group competitors), its net proved OEG
reserves replacement ratio was 112% and its operational earnings of $2,651
million were the highest of any year since 1985, the first year that measure was
used. In view of this excellent performance, and considering the fact that Mr.
Derr is already deferring part of his salary because of the OBRA tax limitations
on Chevron, the Committee granted him a NQSO in lieu of a salary increase for
1997. This option for 15,000 shares was granted at the March 26, 1997 meeting.
ANNUAL BONUS (MIP)
1997 was a record earnings year for Chevron. Net income of $3,256 million was
the highest in Chevron's history. Operational earnings of $3,180 million were
also the highest ever recorded. Chevron's 1997 TSR was 22.1%, third highest of
the major oil peer group. Operational ROCE was 14.7%, the highest in a decade,
and cash flow from operations was 103% of target. Operating results continued
the upward trend begun in 1995. Operating costs were reduced by $0.42 per barrel
from 1996. Net worldwide liquids production during 1997 reached 1.07 MMBD. 1997
also marked the eighth consecutive year of international liquids production
increases. Strong exploration and development efforts also continued, with a
1997 net proved OEG reserves replacement ratio of 115%.
Based on Chevron's 1997 performance, the Committee granted Mr. Derr a MIP award
of $1,595,000, which is 133% of his target award. The MIP awards granted to Mr.
Derr and to the other four highest-paid officers for the past three performance
years are presented in the summary compensation table which follows this report.
LONG-TERM INCENTIVES (LTIP)
Chevron's LTIP grants are made under the same determination rules for all LTIP
participants. During 1997, Mr. Derr's grant under LTIP was a NQSO for 110,000
shares of Chevron Stock and 24,000 Performance Units. The Performance Unit
period began on January 1, 1998 and will end on December 31, 2000. Based on data
provided by an outside consultant, the Committee believes this grant is
reasonable and well within competitive practice for his level of
responsibilities.
Mr. Derr was granted Performance Units in 1994 for the Performance Unit period
January 1, 1995 through December 31, 1997. Chevron's TSR of 24.7% for this
three-year period resulted in a Performance Unit payout of $1,666,594 to Mr.
Derr.
The Committee also notes that Mr. Derr was allocated $12,542 from his
participation in Chevron's Profit Sharing/Savings Plan, a broad-based employee
stock ownership plan. The allocation to this Plan was based on Chevron's 1997
income.
January 28, 1998
MANAGEMENT COMPENSATION COMMITTEE
<TABLE>
<S> <C> <C>
S. H. ARMACOST, Chairman
C. A. HILLS C. M. PIGOTT
C. RICE G. H. WEYERHAEUSER
</TABLE>
10
<PAGE> 15
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------------------------
Annual Compensation Awards Payouts
--------------------------------- ---------- -------------------------
Securities Vested
Underlying Performance Non-Stock All Other
Salary Bonus($) Options Units Award Compensation(4)
Name and Principal Position Year ($) (Year Earned) (#) ($) ($) ($)
- - --------------------------- ---- --------- -------------- ---------- ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
K. T. Derr 1997 1,200,000 1,595,000 125,000(1) 1,666,594 0 118,563
Chairman 1996 1,154,000 1,200,000 135,400(2) 869,361 290,000(3) 105,243
1995 1,000,000 721,000 105,800 1,958,454 0 69,819
J. N. Sullivan 1997 701,250 775,000 60,000 913,753 0 67,603
Vice-Chairman 1996 650,000 575,000 74,400(2) 476,840 159,000(3) 59,318
1995 575,000 359,000 58,200 1,072,192 0 40,147
M. R. Klitten 1997 461,250 405,000 35,000 534,459 0 36,404
Vice-President 1996 426,250 290,000 43,500(2) 279,126 94,000(3) 38,509
1995 400,000 229,000 34,000 638,357 0 27,427
R. H. Matzke 1997 450,000 415,000 35,000 382,167 0 41,434
Vice-President 1996 410,000 400,000 43,500(2) 197,714 66,000(3) 36,611
1995 365,000 225,000 23,400 440,032 0 25,485
D. J. O'Reilly 1997 420,000 470,000 35,000 270,103 0 34,700
Vice-President 1996 381,250 215,000 36,000(2) 285,091 66,000(3) 34,491
1995 338,333 122,000 23,400 153,914 0 23,634
</TABLE>
- - ---------------
(1) Includes a non-qualified stock option (NQSO) for 15,000 shares granted in
March in lieu of a salary increase.
(2) Includes a NQSO and a one-time performance stock option grant.
(3) Special award made by Management Compensation Committee in January 1997
under the Long-Term Incentive Plan for performance during 1994, 1995 and
1996.
(4) Includes Chevron's contributions to the Profit Sharing/Savings Plan and
allocations under the Excess Benefit Plan for the Profit Sharing/Savings
Plan. For 1997, contibutions under the Profit Sharing/Savings Plan for the
five named individuals were as follows: K. T. Derr, $12,542, J. N. Sullivan,
$12,542, M. R. Klitten, $13,625, R. H. Matzke, $14,136 and D. J. O'Reilly,
$13,859; and contributions under the Excess Benefit Plan for the five named
individuals were as follows: K. T. Derr, $106,021, J. N. Sullivan, $55,061,
M. R. Klitten, $22,779, R. H. Matzke, $27,298 and D. J. O'Reilly, $20,841.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------
Percentage
Number of of Total Potential Realizable Value After 10 Years
Securities Options Exercise based on Assumed Compounded
Underlying Granted to or Base Annual Rates of Stock Price Appreciation($)
Options Employees Price($) Expiration ----------------------------------------------
Name Granted(1) in 1997 (per share) Date 0% per Year 5% per Year 10% per Year
---- ----------- ----------- ----------- ---------- ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
K. T. Derr 110,000 6.1% 80.938 10/29/07 0 5,599,127.47 14,189,288.34
15,000(2) 0.8% 72.125 03/26/07 0 680,385.00 1,724,235.00
J. N. Sullivan 60,000 3.3% 80.938 10/29/07 0 3,054,069.53 7,739,611.82
M. R. Klitten 35,000 1.9% 80.938 10/29/07 0 1,781,540.56 4,514,773.56
R. H. Matzke 35,000 1.9% 80.938 10/29/07 0 1,781,540.56 4,514,773.56
D. J. O'Reilly 35,000 1.9% 80.938 10/29/07 0 1,781,540.56 4,514,773.56
NQSO Stock Price/Share($) 80.938 80.938 131.839 209.931
All Optionees for NQSOs 1,800,300 91,525,651 232,016,331
All Stockholders(3) 655,931,833 33,387,690,429 84,610,962,817
Optionee Gain as % of All
Stockholders' Gain 0% 0.3% 0.3%
</TABLE>
- - ---------------
(1) NQSOs have a 10 year term and are 100% vested one year after date of grant.
The exercise price is the fair market value on the date of grant.
(2) NQSO granted in lieu of salary increase.
(3) Represents the potential aggregate increase in market capitalization of
Chevron based upon the outstanding shares of Chevron Stock as of December
31, 1997.
11
<PAGE> 16
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying In-the-Money
Unexercised Options at Options at
Shares December 31, 1997 December 31, 1997($)
Acquired Value --------------------------- ---------------------------
Name on Exercise Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
K. T. Derr 148,000 5,799,217 547,900 125,000 18,208,575 73,125
J. N. Sullivan 15,000 498,750 369,200 60,000 12,371,488 0
M. R. Klitten 38,000 1,118,994 181,900 35,000 5,911,438 0
R. H. Matzke 0 0 159,500 35,000 5,002,338 0
D. J. O'Reilly 15,000 416,688 103,700 35,000 3,149,463 0
</TABLE>
LONG-TERM INCENTIVE PLAN -- 1997 PERFORMANCE UNIT AWARDS TABLE
<TABLE>
<CAPTION>
Number of Number at Payout Performance
Performance ------------------------------ Period Until
Name Units Granted Maximum Target Threshold Payout
---- ------------- ------- ------ --------- ------------
<S> <C> <C> <C> <C> <C>
K. T. Derr 24,000 36,000 24,000 7,200 3 Years
J. N. Sullivan 13,000 19,500 13,000 3,900 3 Years
M. R. Klitten 8,000 12,000 8,000 2,400 3 Years
R. H. Matzke 8,000 12,000 8,000 2,400 3 Years
D. J. O'Reilly 8,000 12,000 8,000 2,400 3 Years
</TABLE>
The payout can vary depending on Chevron's TSR vs. its five peer group
competitors. A performance modifier provides the incentive to maximize TSR
relative to the five peer group competitors by modifying the payout value (e.g.,
the modifier is 150 percent for the highest relative TSR and 0 percent for the
lowest relative TSR). Payout (in dollars) is equal to the number of units times
a performance modifier based on relative TSR times the 20-day trailing average
price of Chevron Stock at the end of the performance period.
PENSION PLAN TABLE
The following table illustrates the approximate annual pension that the named
executive officers in the Summary Compensation Table would receive under the
Chevron Retirement Plan and the Retirement Plan portion of the Excess Benefit
Plan if the plans remained in effect and the named executive officers retired at
age 65 and elected an individual life pension. However, because of changes in
the tax laws or future adjustments to benefit plan provisions, actual pension
benefits could differ significantly from the amounts set forth in the table.
<TABLE>
<CAPTION>
Estimated Annual Pension($)
Average Annual Salary Plus ---------------------------------------------------------
Management Incentive Plan Years of Credited Service
Awards During the Highest ---------------------------------------------------------
3 Consecutive Years($) 25 30 35 40 45
-------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
750,000 287,500 338,100 389,400 476,900 529,400
1,000,000 383,400 450,900 519,200 635,900 705,900
1,250,000 479,200 563,600 649,000 794,900 882,400
1,500,000 575,000 676,300 778,800 953,900 1,058,900
1,750,000 670,900 789,000 908,600 1,112,900 1,235,400
2,000,000 766,700 901,700 1,038,400 1,271,900 1,411,900
2,250,000 862,600 1,014,400 1,168,200 1,430,900 1,588,400
2,500,000 958,400 1,127,200 1,298,000 1,589,900 1,764,900
2,750,000 1,054,200 1,239,900 1,427,800 1,748,900 1,941,400
3,000,000 1,150,100 1,352,600 1,557,600 1,907,900 2,117,900
</TABLE>
If they remain employees until they reach age 65, the years of credited service
will be as follows: K. T. Derr, 40 years; J. N. Sullivan, 40 years; M. R.
Klitten, 39 years; R. H. Matzke, 40 years; and D. J. O'Reilly, 40 years. The
amounts set forth in the table above do not include modest reductions to reflect
the offset for federal social security benefits required by the Retirement Plan.
12
<PAGE> 17
The Retirement Plan is a defined benefit pension plan. Eligible employees of
Chevron and consolidated subsidiaries automatically participate in the Plan and
start accruing benefits from their first day of employment. Eligible employees
become fully vested in their pension benefits after completing five years of
service.
Pension benefits are calculated on a "final average pay formula" based on the
length of credited service and the annual average of the highest thirty-six
consecutive months of earnings. For executive officers, earnings include MIP
awards and generally correspond with the combined amounts set forth in the
"Salary" and "Bonus" columns in the Summary Compensation Table on page 11. The
same thirty-six consecutive month period is used to determine the highest
average earnings for both salary and MIP awards.
The total pension benefit is equal to the sum of 1.4 percent of average earnings
(less $600) multiplied by years of credited service prior to July 1, 1971; plus
1.35 percent of average earnings multiplied by years of credited service after
June 30, 1971 and prior to July 1, 1986; plus 1.6 percent of average earnings
multiplied by years of credited service after June 30, 1986. The basic pension
is reduced by a portion of the federal social security benefit. Employees of
acquired companies might receive benefits calculated under different formulas
for their service under plans merged into the Retirement Plan. Benefits under
the Retirement Plan are ordinarily payable monthly in the form of an individual
life pension upon retirement at age 65, although reduced benefits are available
to eligible employees who terminate employment before attaining age 65. Instead
of an individual life pension, eligible employees may elect to receive a 50
percent or 100 percent joint-and-survivor pension, or a lump sum payment. Other
forms of distribution are available under the Excess Benefit Plan.
PERFORMANCE GRAPH
The following graph was prepared by Standard & Poor's Compustat group. It shows
how an initial investment of $100 in Chevron Stock would have compared to an
equal investment in the S&P 500 Index or in an index of peer group companies
over a five-year period beginning December 31, 1992 and ending December 31, 1997
weighted by market capitalization as of the beginning of each year. The graph
reflects the reinvestment of all dividends that an investor would be entitled to
receive, with the reinvestment made on the ex dividend trading date. The interim
measurement points show the value of $100 invested on December 31, 1992 as of
the end of each year between 1992 and 1997.
The Competitor Peer Group index is made up of Amoco, Arco, Exxon, Mobil and
Texaco. Chevron competes directly against these companies, and for a number of
years has measured its performance against them for purposes of its Management
Incentive Plan and Long-Term Incentive Plan.
<TABLE>
<CAPTION>
Measurement Period CHEVRON
(Fiscal Year Covered) CORP S&P 500 INDEX PEER GROUP
<S> <C> <C> <C>
1992 100.00 100.00 100.00
1993 130.55 110.08 111.59
1994 139.55 111.53 117.02
1995 170.37 153.45 156.33
1996 218.84 188.68 191.28
1997 267.48 251.63 234.32
</TABLE>
13
<PAGE> 18
ITEM 2 ON THE PROXY CARD
APPROVAL OF THE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board, which is composed entirely of non-employee
Directors, has selected Price Waterhouse LLP ("Price Waterhouse") as independent
public accountants to audit the books, records and accounts of Chevron and its
subsidiaries for the year 1998. The Board has endorsed this appointment and it
is being presented to the stockholders for approval.
Price Waterhouse has audited the consolidated financial statements of Chevron
for many years and during the year ended December 31, 1997, provided both audit
and nonaudit services. Audit services included: (1) regular examination of the
consolidated financial statements, including work relating to quarterly reviews,
SEC filings, and consultation on accounting and financial reporting matters; (2)
audit of the financial statements of certain subsidiary companies to meet
statutory or local regulatory requirements; (3) audit of specific financial and
statistical information in connection with sales contracts and other agreements;
and (4) examination of the financial statements of various Chevron employee
benefit plans. Nonaudit services provided by Price Waterhouse included income
tax consulting, employee benefit advisory services and systems consulting
projects. All audit and nonaudit services provided by Price Waterhouse are
approved by the Audit Committee which gives due consideration to the potential
impact of nonaudit services on auditor independence.
Representatives of Price Waterhouse will be present at the Annual Meeting, will
have an opportunity to make statements if they desire, and will be available to
respond to appropriate questions.
If the stockholders do not approve the appointment of Price Waterhouse, the
Audit Committee will select another firm of auditors for the ensuing year.
YOUR DIRECTORS RECOMMEND THAT STOCKHOLDERS VOTE FOR THE APPOINTMENT OF PRICE
WATERHOUSE AS INDEPENDENT PUBLIC ACCOUNTANTS.
SUBMISSION OF STOCKHOLDER PROPOSALS
You may be asked to vote on proposals that are submitted by stockholders who are
not members of management or the Board of Directors. The proposals are included
as action items in the Notice of Meeting and are set forth and discussed in the
proxy statement because they are proper subjects for action by stockholders and
for inclusion in the proxy statement, have been submitted to Chevron on a timely
basis, and otherwise comply with the rules of the Securities Exchange Act of
1934, as amended, the laws of the State of Delaware and applicable provisions of
Chevron's Restated Certificate of Incorporation. These proposals are printed in
the proxy statement as submitted.
When submitted, each proposal includes the name and address of the stockholder
making the proposal, the number of shares owned by the stockholder and the dates
upon which the shares were acquired. Each proposal also includes a statement
that the stockholder has held the shares for more than one year at the time of
submission and intends to hold the shares through the date of the Annual
Meeting. Persons who claim beneficial ownership of stock held of record by
others are permitted to submit proposals if they submit appropriate
documentation of their claim of beneficial ownership. The names and addresses of
the stockholders submitting the proposals, as well as the number of shares held,
will be furnished by Chevron, either orally or in writing as requested, promptly
upon the receipt of any oral or written request therefor.
Stockholders submitting a proposal must appear personally or by separate proxy
at the Annual Meeting to move the proposal for consideration. A proposal will be
approved if it is introduced and voted on at the Annual Meeting and it is
supported by a majority of the shares that are voted.
For a stockholder proposal to be considered for inclusion in the proxy materials
for the 1999 Annual Meeting of Stockholders, it must be received by the
Corporate Secretary at the corporate headquarters address by
14
<PAGE> 19
November 29, 1998. It is suggested that a proponent submit any proposal by
Certified Mail--Return Receipt Requested.
ITEM 3 ON THE PROXY CARD
STOCKHOLDER PROPOSAL TO PROVIDE INFORMATION ABOUT TOXIC CHEMICALS RELEASED BY
CHEVRON'S FACILITIES.
WHEREAS:
Although Federal law requires the company to publicize the quantities of certain
toxic chemicals which are released by each facility, not all toxic chemicals are
covered by the law and among those not covered is dioxin;
Dioxin is an unintentional by-product with no industrial use which may cause
cancer, birth defects, developmental toxicity, neurotoxicity, immunotoxicity,
reproductive toxicity and altered sex hormones; and which has, in some places,
been concentrated in the environment and in the general human population at or
near levels that cause slow learning in children;
Dioxin pollution causes environmental injustice because children are highly
exposed to dioxin in mother's milk and in the womb;
At least two refining processes in the Chevron refinery in Richmond, California,
test positive for dioxin, and dioxin has been measured in air emissions, storm
water runoff, and waste water discharges to San Francisco Bay from this
refinery; and
We believe that shareholder value and the Company's image are enhanced by open
communication, respect for public rights, and research to develop methods which
can cost-effectively eliminate environmental liabilities from by-products of
manufacturing which have no commercial use. We are also concerned about possible
future liabilities which could arise from discharge of dioxin and other toxic
chemicals in all of Chevron's operations.
Therefore, be it resolved that the shareholders request that:
Chevron adopt and implement a corporate policy which gives the public
accurate information about each of its facilities, specifying the amounts
of all toxic chemical compounds, including dioxin compounds released from
its refineries, the sources of these compounds in the refineries, and
alternatives which may prevent the formation and release of such compounds
at these sources.
Supporting statement
There is a potential for serious harm to public health from additional dioxin
exposure, and clear evidence that the Company's Richmond Refinery contributes to
additional dioxin exposure. In addition, this threat raises issues of
environmental injustice for children who are known to be more highly exposed to
dioxin than adults, low income people who rely on fishing in San Francisco Bay
for food, and refinery neighbors who are people of color.
Given these considerations, the public has a legitimate right to know about
dioxin and other toxics released by all of Chevron's refineries and what
alternatives are available to eliminate this unwanted by-product. Providing this
information will enhance the Company's image regarding a high-profile issue.
RECOMMENDATION OF THE BOARD AGAINST THIS PROPOSAL
Your Board of Directors believes that Chevron's existing Policy 530, Protecting
People and the Environment, and associated operating and communications
practices address the concerns raised in the proposal. Chevron's commitment to
protecting people and the environment is longstanding. Over the years we have
continually anticipated and responded to society's heightened expectations in
the areas of health, safety and the environment. We are proud of our efforts and
continue to work hard to ensure that our policies in this area are unsurpassed.
15
<PAGE> 20
In 1992 we established Policy 530 to ensure consistent and comprehensive
implementation of our company's health, safety and environment policy worldwide.
The policy includes 10 categories of performance supported by 102 management
practices that are integrated into the daily activities of all of our
businesses.
Implementation of Policy 530's pollution prevention elements requires that
Chevron facilities have operational practices in place which minimize toxic
chemical emissions and prevent pollution. In addition, our facilities routinely
communicate information about toxic chemical emissions to government agencies in
compliance with local, state and federal regulations. Such information is
publicly available from these responsible government agencies.
Assertions concerning the contribution and impact of dioxin compound releases
from our Richmond, California refinery are not supported by regulatory agency
testing. Agency analyses found that our operations are not a significant
contributor to dioxin compound releases to the environment relative to other
sources. Dioxin compound emissions from the refinery have been thoroughly
monitored by government agency and Chevron testing, which has shown dioxin
compound emissions to be in compliance with regulatory limits.
Implementation of Policy 530's community awareness and outreach elements
requires our facilities to engage in specific practices to foster understanding
and dialog with the community. These include processes that enable our
facilities to acquire, assess and respond to community concerns about health,
safety or the environment and processes to familiarize interested people with
the facility, its operations and products and its efforts to protect safety,
health and the environment.
We are proud of our commitment to and record of protecting people and the
environment through Policy 530, which was recently deemed by the Council on
Economic Priorities to be one of the best environmental management systems of
all major petroleum refiners.
We believe that our Policy 530 and our current operational and communications
practices substantially satisfy the concerns raised in the stockholder proposal.
YOUR DIRECTORS RECOMMEND THAT STOCKHOLDERS VOTE AGAINST THIS PROPOSAL.
COMPLIANCE WITH SECTION 16 OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act requires Directors, executive
officers and persons who own more than 10% of a registered class of Chevron's
equity securities to file with the SEC and the New York Stock Exchange reports
of ownership and reports of changes in ownership of equity securities of
Chevron. Such persons are required by SEC regulation to furnish Chevron with
copies of all Section 16(a) forms they file.
Based solely on a review of the copies of reports furnished to Chevron, Chevron
believes that all of its Directors, executive officers and 10% stockholders
complied with the SEC requirements for reporting ownership and changes in
ownership of equity securities of Chevron during 1997.
INFORMATION ABOUT ATTENDING THE ANNUAL MEETING
The Annual Meeting will be held in The Orpheum Theater at 129 University Place,
New Orleans, Louisiana. Each stockholder must have a ticket of admission. Your
Annual Meeting Ticket is the lower third of your proxy card. Please detach it
and bring it with you to the Annual Meeting.
If your shares are held in the name of a broker or other nominee, please bring
proof of ownership (e.g., your broker's statement) with you and ask an assistant
in the registration area to help you. Or your broker or agent can ask the
Corporate Secretary of Chevron at 575 Market Street, San Francisco, CA 94105 to
send you a ticket. It takes about one week to process ticket requests.
Chevron has arranged with the Parking Company of America to provide
complimentary parking for stockholders who attend the Annual Meeting. The
parking lot is located at 125 University Place. Capacity is limited. Please show
your Annual Meeting Ticket to the parking attendant as you enter the lot.
16
<PAGE> 21
Headsets will be available at the Annual Meeting for stockholders with impaired
hearing. Please ask an assistant in the registration area to get you a headset.
If you require special accommodation at the Annual Meeting due to a disability,
please write to the Office of the Corporate Secretary at 575 Market Street, San
Francisco, CA 94105 by April 17, 1998 identifying your specific needs.
OTHER MATTERS
The only business that the Board knows will be acted upon at the Annual Meeting
is set forth and discussed in this Notice of Annual Meeting and proxy statement.
Except as the Board may otherwise permit, it is the only business that may be
acted on at the Annual Meeting. If any other business does properly come before
the Annual Meeting or any adjournment thereof, the proxy holders will vote your
shares on those items according to their discretion if your proxy is not limited
to the contrary.
By Order of the Board of Directors,
LOGO
/s/ LYDIA I. BEEBE
- - ------------------------
Lydia I. Beebe
Corporate Secretary
PLEASE SIGN, DATE, AND RETURN YOUR PROXY CARD AS SOON AS POSSIBLE.
17
<PAGE> 22
PROXY [CHEVRON LOGO]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
K.T. Derr, C.A. Hills and G.H. Weyerhaeuser and each of them, each with the
power of substitution, are hereby authorized to represent and to vote the stock
of the undersigned in CHEVRON CORPORATION at the Annual Meeting of its
stockholders to be held on April 29, 1998 and any adjournments thereof.
MANAGEMENT RECOMMENDS AND WILL VOTE FOR THE ELECTION OF THE FOLLOWING AS
DIRECTORS (UNLESS OTHERWISE DIRECTED):
1. S.H. Armacost, K.T. Derr, S. Ginn, C.A. Hills, J.B. Johnston, R.H. Matzke,
C.M. Pigott, C. Rice, F.A. Shrontz, J.N. Sullivan, C. Tien, G.H. Weyerhaeuser
and J.A. Young
To vote for all nominees, check this box. [ ]
To withhold authority to vote for all nominees, check this box. [ ]
To withhold authority to vote for any
individual nominee while voting for the
remainder, write this nominee's name in
the space following: ----------------------------------------
MANAGEMENT RECOMMENDS AND WILL VOTE FOR THE FOLLOWING (UNLESS OTHERWISE
DIRECTED):
2. Appointment of Price Waterhouse LLP as Independent Public Accountants.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
MANAGEMENT DOES NOT RECOMMEND AND WILL VOTE AGAINST THE FOLLOWING STOCKHOLDER
PROPOSAL (UNLESS OTHERWISE DIRECTED):
3. Provide information about toxic chemicals.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(OVER)
- - -------------------------------------------------------------------------------
<PAGE> 23
Dear Stockholders: [CHEVRON LOGO]
Attached is your 1998 Chevron Corporation Proxy Card. Please read both sides of
the Proxy Card and mark, sign, and date it. Then detach and return it promptly
to Corporate Election Services using the enclosed reply envelope. If you
properly sign and return your Proxy Card, but do not specify your choices, your
shares will be voted as recommended by the Board of Directors. We urge you to
vote your shares.
We are pleased to invite you to attend the 1998 Annual Meeting of Stockholders
of Chevron Corporation to be held at 9:30 a.m. local time on Wednesday, April
29, in The Orpheum Theater in New Orleans, Louisiana.
Sincerely,
/s/ Lydia I. Beebe
- - -------------------
Lydia I. Beebe
Corporate Secretary
PLEASE USE THE ATTACHED TICKET TO ATTEND THE ANNUAL MEETING.
YOU MAY ALSO REGISTER AT THE MEETING.
- - --------------------------------------------------------------------------------
<PAGE> 24
1998 ANNUAL MEETING TICKET [CHEVRON LOGO]
FOR THE ANNUAL MEETING OF STOCKHOLDERS AT
9:30 A.M., APRIL 29, 1998
TO BE HELD IN THE ORPHEUM THEATER, 129 UNIVERSITY PLACE, NEW ORLEANS.
(DOORS OPEN AT 8:30 A.M. YOU MAY BYPASS THE REGISTRATION AREA
AND PRESENT THIS TICKET AT THE ENTRANCE TO THE MEETING.)
Chevron has arranged with the Parking Company of America garage to provide
complimentary parking for stockholders who attend the Annual Meeting. The
garage is located at 125 University Place. Capacity is limited. Please show your
Annual Meeting Ticket to the parking attendant as you enter the garage.
Note: Cameras, tape recorders, etc., will not be allowed in the theater during
the meeting, other than for Company purposes. A check room will be provided.
For your protection, all briefcases, purses, packages, etc., will be subject to
an inspection as you enter the meeting. We regret any inconvenience this may
cause you (see reverse side for additional information.)
<PAGE> 25
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NOT OTHERWISE DIRECTED, FOR THE
NOMINEES, FOR PROPOSAL 2 AND AGAINST PROPOSAL 3. This proxy will also be voted
on such other matters as may properly come before the meeting (unless this
sentence is stricken.)
Please sign as name appears hereon, date, and return this Proxy Card promptly
using the enclosed envelope.
- - -------------------------------------------------------------------------------
Signature/Date Signature/Date
- - -------------------------------------------------------------------------------
Please detach here and return this proxy to Corporate
Election Services in the enclosed reply envelope.
PLEASE VOTE YOUR SHARES
Headsets will be available at the meeting for stockholders with impaired
hearing.
