board of directors, governance and ethics
Chevron holds it workforce to the highest standards of honesty and integrity and encourages employees to report questionable conduct. Chevron is committed to strong corporate governance structures and practices that help the company continue to achieve business results the right way.
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board of directors
Chevron is governed by a Board of Directors that meets throughout the year. Our Board oversees and guides Chevron’s business and affairs, including corporate strategy and performance, the integrity of Chevron’s financial reporting and internal controls, and the effectiveness of its risk management systems. The Board also oversees management and the succession of key executives.
Chevron faces a broad array of risks. The Board oversees Chevron’s policies and practices to ensure that appropriate risk management systems are employed throughout the company. The Board regularly considers critical risk topics as part of its deliberative decision-making process, and annually, as part of Chevron’s Enterprise Risk Management process, it reviews financial, operational, market, political, and other risks inherent in our business. The Board has four standing committees, each composed solely of independent Directors: Audit; Board Nominating and Governance; Management Compensation; and Public Policy. Each committee fulfills important responsibilities to help Chevron manage risks enterprisewide and compete more effectively to help build long-term stockholder value.
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, including climate change. The Committee discusses risk management in the context of, among other things, legislative and regulatory initiatives, political activities such as political contributions and lobbying, 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.
The Executive Committee is a committee of corporate officers chartered by the Board of Directors to carry out policies in managing the company’s business. To assist in discharging its duties, the Executive Committee has established five subcommittees that specialize in various matters important to the company. One such committee, the Global Issues Committee, oversees strategic corporate responsibility policy issues.
director nomination process
An experienced, talented and diverse board is critical to Chevron’s success. In identifying Director nominees, the Board Nominating and Governance Committee utilizes a skills and qualifications matrix to maintain a balance of knowledge and experience across key dimensions. The committee particularly considers leadership experience; expertise in science, technology, engineering, research or academia; extensive knowledge of governmental, regulatory, legal or public policy issues; expertise in finance, financial disclosure or financial accounting; experience in global business or international affairs; and environmental experience. The committee also considers other factors as appropriate to meet the current needs of the Board and the company. The Board seeks to achieve diversity of age, gender and ethnicity and recognizes the importance of Board refreshment as demonstrated by our current average Board tenure of 4.3 years.
For Chevron, good corporate governance means having structures and processes in place to ensure that 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. Eleven 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 with our stockholders to proactively address important issues. The Annual Engagement Plan and Process is supervised by a committee of senior executive officers.
Chevron conducts extensive engagements with key stockholders through our Corporate Governance department. These engagements cover environmental, executive compensation, governance, human rights, operational, safety, social, 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 2017 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, conducted discussions with stockholders representing more than 36 percent of Chevron’s outstanding common stock. Of those meetings, our Chairman met with stockholders representing 24 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 objectives. Chevron values engagements with proponents and the stockholder proposal process and shares feedback from engagements with the Board and its relevant committees.
Strong financial results and a solid safety record were hallmarks of our company performance in 2017. These successes were achieved through the demonstration of The Chevron Way behavior and a commitment to The Chevron Way values – diversity and inclusion, high performance, integrity and trust, partnership and protecting people and the environment. It is on these values that the foundation of our company is built. Below are two examples of how we apply our core values to business decisions and position ourselves for success. For more, visit Chevron Business Conduct and Ethics Code.
Bribery of any government official in any country is strictly against Chevron policy. Chevron requires that internal controls be in place and functioning and that accurate and complete transaction records be kept within the company.
suppliers and contractors
Suppliers and contractors play a vital role in our success, and we rely heavily on them to help us deliver leading business results. We expect our suppliers and contractors to conduct their business in a manner that protects people and the environment and that complies with Chevron policies as well as applicable laws and regulations. We expect our suppliers to treat their employees and to interact with communities in ways that respect human rights. Our standard language for procurement contracts includes a requirement for our suppliers and contractors to comply with applicable laws and keep accurate books and records. Where appropriate, our procurement contracts contain specific anti-bribery commitments. Through our Contractor Health, Environment and Safety Management process, we work with suppliers to increase accountability and improve performance.
resolving workplace concerns
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.
Chevron has a right and a responsibility to its stockholders to advocate positions on proposed policies that will affect the company’s ability to explore for and produce 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 laws and reporting regulations related to our lobbying activities.
Chevron engages with the U.S. administration and Congress to provide perspective on energy issues affecting the United States and the world. Our goal is to contribute to economic prosperity and safe and responsible energy development through sound policymaking.
Chevron has strict policies and internal approval processes that comply with all applicable laws governing political contributions. Global corporate contributions in 2017 were approximately $12.2 million to support candidates and political organizations who 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 $510,000 in 2017 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 today’s most important public policy issues, 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, the American Fuel & Petrochemical Manufacturers, the Consumer Energy Alliance, 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 ongoing 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 continuously serving member on the EITI international board, has played a leadership role in establishing the EITI’s global standard for financial transparency, and has actively supported the launch of EITI in many countries, including the United States. More than 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 13 EITI-implementing countries: Colombia, Ghana, Indonesia, Iraq, Kazakhstan, Liberia, Myanmar, Nigeria, Norway, the Philippines, the 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, we comply with transparency-related legislation that 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.