board of directors, governance and ethics
Chevron holds its workforce to the highest standards of honesty and integrity and encourages employees to report questionable conduct. We believe in being transparent with and responsive to our stakeholders at all times and we strive to comply with the letter and the spirit of all applicable laws when conducting company business. Chevron’s Board of Directors, which oversees all of the company’s business and affairs, is committed to strong corporate governance structures and practices that help the company continue to achieve business results the right way.
what we’re doing
board of directors
Chevron is governed by a Board of Directors and committees of the Board that meet throughout the year. Our Board of Directors oversees and guides Chevron’s business and affairs. The Board has four standing committees, each composed solely of independent Directors: Audit; Board Nominating and Governance; Management Compensation; and Public Policy. Directors discharge their responsibilities through Board and committee meetings and also through other communications with management. The Board monitors corporate performance, the integrity of Chevron’s financial controls, and the effectiveness of its legal, risk management, and political compliance and public policy and social programs, and it oversees the management and the succession of key executives and Chevron’s strategic and business planning process.
Chevron faces a broad array of risks, including market, operational, strategic, legal, political and financial. To determine if appropriate risk management systems are employed throughout the company, the Board and its committees oversee Chevron’s risk management policies and practices. For example, the Public Policy Committee assists the Board in fulfilling its oversight of risks that may arise in connection with the social, political, environmental, human rights and public policy aspects of Chevron’s business and the communities where it operates. The committee discusses risk management in the context of, among other things, legislative and regulatory initiatives, safety and environmental stewardship, community relations, government and nongovernmental organization relations, and Chevron’s reputation. The committee reports its discussions to the full Board for consideration and action when appropriate.
To learn more about the role of Chevron’s Board and Board committees, please see our 2017 Proxy Statement.
For Chevron, good corporate governance means having structures and processes in place to make sure that the company’s decisions and actions are in the best interests of our stockholders. We understand that effective corporate governance, including an independent Board in which all Directors stand for election every year, is critical to our long-term success. Ten of our 12 Directors are nonemployees and independent, as defined by the New York Stock Exchange Corporate Governance Standards. The independent Directors annually elect a Chairman and, when the CEO is also Chairman, they elect an independent Lead Director. Chevron’s Certificate of Incorporation and By-Laws do not contain any supermajority vote provisions, and stockholders have the right to call for special meetings and recommend Director candidates to the Board. In addition, we have a policy to obtain stockholder approval of any stockholder rights plan. More information can be found at Chevron Corporate Governance.
engagement with stockholders
Chevron believes in being responsive to our stockholders. Fostering long-term and institution-wide relationships with stockholders and maintaining their trust and goodwill is a core Chevron objective.
In an effort to continuously improve our governance processes and communications, Chevron has developed and follows an Annual Engagement Plan and Process to systematically identify and plan engagements and to proactively address important issues. The Annual Engagement Plan and Process is supervised by an Engagement Steering Committee (ESC), which is composed of senior executive officers.
Chevron conducts extensive engagements with key stockholders through our Corporate Governance department. These engagements routinely cover governance, compensation, social, safety, environmental, human rights, and other current and emerging issues. We also have an extensive outreach effort through our Investor Relations department, in which members of senior management routinely meet with major investors to review Company strategies, financial and operating performance, capital allocation priorities, and near-term outlook. These engagements help our Board and management understand and address the issues that are important to our stockholders.
Since Chevron’s 2016 Annual Meeting, an engagement team consisting of senior executives, subject matter experts on governance, compensation, and environmental and social issues, and, when appropriate, our independent Lead Director and the Chair of our Management Compensation Committee, conducted more than 45 in-depth discussions with stockholders representing more than 36 percent of Chevron’s outstanding common stock. Of those meetings, our Lead Director and Chairman of our Management Compensation Committee met with stockholders comprising 29 percent of our outstanding stock. In addition, our engagement team met with many of the stockholders who submitted proposals for inclusion in our Proxy Statement to discuss their concerns and areas of agreement and disagreement. Chevron values engagements with proponents and the stockholder proposal process and shares feedback from engagements with the Board and its relevant committees.
Chevron takes the conduct of its employees seriously and requires questionable conduct to be reported. This may include, for example, violations of company policy or of the Chevron Business Conduct and Ethics Code. One reporting method available to the entire workforce is the Chevron Hotline, which is operated offsite by Global Compliance Services (AlertLine®), an independent agent. In addition, our Global Office of Ombuds provides a safe, confidential environment outside formal reporting channels to resolve workplace concerns. Employees may contact an Ombudsman at any time, regardless of the stage of the concern or severity of the issue.
Our Chevron Business Conduct and Ethics Code has information about the avenues by which employees can report misconduct and a description of how we administer oversight of our compliance program.
Chevron has a right and a responsibility to its stockholders to advocate positions on proposed policies that will affect the company’s ability to meet the growing demand for energy. We lobby ethically, constructively and in a nonpartisan manner. Chevron’s lobbying activities include contacts with public officials and related support for such contacts. We also encourage our employees, retirees and others to communicate with officials as permitted by law. We comply with all registration and reporting regulations related to our lobbying activities.
Chevron engages with the administration of U.S. President Donald Trump and the U.S. Congress to provide perspectives on energy and other significant policy issues affecting the United States and the world. The goal is to contribute to economic prosperity through sound policy.
Chevron has strict policies and internal approval processes that comply with all applicable laws governing political contributions. Global corporate contributions in 2016 were approximately $11.8 million to support candidates and political organizations that foster economic development, free enterprise and good governance. Totals include contributions to support our views on local and state ballot measures. Chevron employees, through the Chevron Employees Political Action Committee (CEPAC), contributed $450,000 in 2016 to the election of candidates from both parties for U.S. federal office, as well as to local and state candidates in certain U.S. jurisdictions. By policy, CEPAC does not contribute to presidential candidates or national political parties.
participating in industry and trade associations
Energy – its production, development, deployment and consumption – is one of the most important public policy issues today, both domestically and internationally. Policy decisions on energy issues can significantly affect Chevron’s operations, strategies and stockholder value at home and abroad. When crafted appropriately, these decisions can support the interests of our stockholders and our ability to produce energy, to operate safely and to promote global economic growth.
Chevron engages at the corporate, regional and local level with business and trade organizations that support sound energy and environmental policies promoting the development of affordable and reliable energy. At the corporate level, our major trade association memberships include the American Petroleum Institute, American Fuel & Petrochemical Manufacturers, the National Association of Manufacturers, the U.S. Chamber of Commerce and the Western States Petroleum Association. These organizations represent approximately 90 percent of Chevron’s annual trade association membership expenditures. The annual membership fee paid to each of these organizations is typically $500,000 or more.
Associations have a diverse array of members, and their perspectives on business, legislative and technical issues can vary. Despite the potential to disagree with these organizations and their members on certain issues, Chevron believes it is important to remain engaged with them in continuous dialogue rather than withdraw from participation.
In all cases where Chevron is involved in dialogue on important issues at industry and trade associations, we speak and act in alignment with the vision, values and strategies outlined in The Chevron Way.
More than half of the world’s population lives in countries rich in crude oil, natural gas and minerals. These resource-rich countries have the ability to generate revenues to facilitate their own economic development and reduce poverty. Chevron believes that the transparent and accurate accounting of revenues received by governments and payments made by extractive-industry companies to governments contribute to stable, long-term investment climates, economic growth and the well-being of communities, and have the potential to reduce corruption.
Chevron respects and complies with all applicable laws and regulations wherever we operate, including the U.S. Foreign Corrupt Practices Act (FCPA) and all applicable antibribery laws. Chevron has established detailed compliance guidelines that require advance review and approval of certain sensitive transactions involving persons and entities who qualify as a “foreign or non-U.S. government official” under the FCPA. Each business unit is expected to establish compliance procedures that are consistent with these overarching corporate guidelines. Additional information about our compliance programs that monitor engagements with foreign officials can be found here.
We demonstrate our commitment to promoting revenue transparency through active participation in the Extractive Industries Transparency Initiative (EITI). Chevron is the longest continually serving member on the EITI international board, has played a leadership role in establishing EITI’s global standard for financial transparency, and has actively supported the launch of EITI in many countries, including the United States. Over 50 countries are now undertaking EITI’s external validation process to ensure they are implementing the program according to agreed-upon standards. Chevron currently operates or has nonoperated working interests in 15 EITI-implementing countries: Colombia, the Democratic Republic of the Congo, Ghana, Indonesia, Iraq, Kazakhstan, Liberia, Myanmar, Nigeria, Norway, the Philippines, Republic of Congo and the United Kingdom. Chevron representatives currently participate in local multistakeholder groups in Norway and the Republic of Congo.
In addition to our voluntary engagement with the EITI, transparency-related legislation has been enacted in the European Union, Norway, Canada and the United States. These regulations require companies in the extractive industries to publish information on the payments made to host governments for upstream exploration and production activities. In 2016, we disclosed required payments made to the government of the United Kingdom, which transposed the European Union Accounting Directive into national law. In 2017, we began disclosing payments made in accordance with the Canadian Extractive Sector Transparency Measures Act.
The EITI’s multistakeholder approach fosters ongoing and meaningful dialogue between governments, extractive-industry companies, civil society and the public about natural resource governance.
Chevron will continue to provide support to new and experienced EITI-implementing countries, and work constructively with stakeholders involved in revenue transparency initiatives that strive to provide citizens of resource-rich countries with information they can use to reduce corruption and improve governance.