Record performance in 2008 helped enable Chevron Corporation to reward its investors, fund a robust capital program and position the company to capitalize on the increase in demand for energy that will come with the global economic recovery, attendees were told May 27 at the company’s 2009 Annual Meeting of Stockholders.
“Chevron’s been in business for 130 years through 13 major recessions. It’s no accident we’re still in business today. We look past the downturns to keep our focus on long-term growth,” said Dave O’Reilly, chairman and CEO. “Eventually, world economies will grow. Experts say that by 2030 energy demand will increase as much as 30 to 40 percent. When the world starts growing, it will need all the energy it can get. Chevron will be there to supply it.”
John Watson, vice chairman of the board, discussed Chevron’s strong 2008 financial performance, which produced earnings of $23.9 billion and a return on capital employed of nearly 27 percent. The company acquired $8 billion of its common shares and increased the quarterly dividend by 12 percent, marking 21 consecutive years of annual dividend rate increases. Watson recognized that 2008 was a difficult year for all equities, but said Chevron’s total stockholder returns averaged nearly 15 percent over the five-year period ending Dec. 31, 2008, and bested the S&P 500 by 17 percentage points over the same period.
Watson highlighted that 2008 was the safest year in the company’s history and one of the best among the industry. He noted that Lloyds Register, an independent auditor, confirmed that Chevron’s environmental management systems meet all international standards. Chevron has met its greenhouse gas emission goals every year since 2004, and is ranked No. 1 among U.S.-based oil and gas companies and No. 2 worldwide in the 2008 Carbon Disclosure Leadership Index. The Index lists companies taking best-in-class actions to measure and report carbon emissions.
Watson stated that Chevron’s $22.8 billion capital and exploratory expenditure program for 2009 will fund large, multi-year projects with about 75 percent of program dollars marked for worldwide crude oil and natural gas exploration and production projects and 20 percent dedicated to the company’s downstream business.
George Kirkland, executive vice president, Global Upstream and Gas, noted that the company’s upstream position is strong with operations in nearly all of the world’s key hydrocarbon basins, and a portfolio that is deep and diverse with 11.2 billion barrels of proved reserves and 2.7 million barrels per day of production capacity. As of 2008, the company had the most competitive cost structure in the industry.
Kirkland noted that in 2008 Chevron added more than 1.7 billion barrels and, since 2002, more than 8.5 billion barrels of oil-equivalent resources to its portfolio through exploration efforts. Nine major capital projects started up in 2008, demonstrating Chevron’s ability to execute complex projects. The projects are expected to contribute 350,000 barrels per day in 2009.
Kirkland also spoke about Chevron’s full queue of 40 major capital projects, each of which represents a Chevron investment of more than $1 billion. Chevron’s full inventory includes 93 projects each representing an investment of over $200 million.
Mike Wirth, executive vice president, Global Downstream, said important achievements in 2008 included record safety performance, continued investment in the flexibility of the company’s refining system, and best-ever reliability – exceeding the company’s commitment to improve utilization of operated refineries by six percent versus 2005.
He also noted a continued commitment to improve returns, including exiting markets that do not align with strategy and selling less profitable assets. In 2008, the company exited more than 20 fuels markets and continued to rationalize its service station network. It also reduced its lubricant product line by over 40 percent versus 2005 – a move that has helped reduce complexity and costs and more than triple the profitability of this business.
Nine proposals were voted on by Chevron stockholders while one proposal was withdrawn by its proponents. The preliminary report of the Inspector of Election was as follows:
· Item 1: More than 1.5 billion shares, or 94 percent of the votes cast, were voted for the 14 nominees for election to the board of directors.
· Item 2: More than 1.6 billion shares, or 98 percent of the votes cast, were voted to ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm.
· Item 3: 93 percent of the votes cast were voted for the board’s proposal to approve the material terms of performance goals for the performance-based awards under the Chevron Incentive Plan.
· Item 4: 93 percent of the votes cast were voted for the board’s proposal to approve the material terms of performance goals for the performance-based awards under the Long-Term Incentive Plan of Chevron Corporation.
· Item 5: Less than 47 percent of the votes cast were voted for the stockholder proposal regarding special stockholder meetings.
· Item 6: Less than 42 percent of the votes cast were voted for the stockholder proposal regarding an advisory vote on the summary compensation table.
· Item 7: The stockholder proposal that appeared in the proxy statement regarding greenhouse gas emissions was withdrawn by its proponents due to Chevron’s significant progress in developing and deploying a rigorous greenhouse gas management system.
· Item 8: Less than 26 percent of the votes cast were voted for the stockholder proposal regarding a report on country selection guidelines.
· Item 9: Less than 28 percent of the votes cast were voted for the stockholder proposal regarding a human rights policy.
· Item 10: Less than 7 percent of the votes cast were voted for the stockholder proposal regarding a report on host country laws.
Final voting results will be reported in Chevron’s second quarter 2009 Form 10-Q, which will be filed with the Securities and Exchange Commission in early August and available at www.chevron.com. Specific information about the proposals before Chevron stockholders this year may be found in the Investor Relations section of the company’s Web site under Stockholder Services – “Annual Meeting Materials.”
Chevron Corporation is one of the world's leading integrated energy companies, with subsidiaries that conduct business worldwide. The company's success is driven by the ingenuity and commitment of approximately 62,000 employees who operate across the energy spectrum. Chevron explores for, produces and transports crude oil and natural gas; refines, markets and distributes transportation fuels and other energy products; manufactures and sells petrochemical products; generates power and produces geothermal energy; provides energy efficiency solutions; and develops the energy resources of the future, including biofuels and other renewables. Chevron is based in San Ramon, Calif.