2018 Guide to Effective Proxies

6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 486 EXECUTIVECOMPENSATION Response to Say-on-Pay Advisory Vote and Stockholder Engagement Chevronfollowsarobustprocesstosystematicallyengagewith its key stakeholders and proactively address issues of importance. Among the issues routinely discussed in these engagementsareChevron’sexecutivecompensationpractices. In 2017, Chevron’s Say-on-Pay vote received over 93 percent support from our stockholders. A contributing factor to this positive outcome was a series of changes the MCC and the independent Directors of the Board made to the executive compensationprogram,informedbyfeedbackobtaineddirectly throughstockholderengagements: • ModifiedthecompositionofLTIPawardsto: • 50percentperformanceshares • 25percentstockoptions • 25percentrestrictedstockunits Previouslyannualequitygrantswerecomposedof60percent stock options and 40 percent performance shares. These changes were made to tiea greater percentageof long-term compensationtotheCompany’srelativeperformance,dampen volatility associated with potential option values, and ensure longerequityholdingperiods; • AddedtheS&P500TotalReturnIndexasafifthcompetitorin therelativeTSRcompetitorgrouptoensureabroader,market- basedhurdletoperformancesharespayout,beginningwiththe 2017-2019performanceperiod; • Increased the weighting and visibility of return on capital employed (“ROCE”) and project execution in the annual CIP measure, to further strengthen accountability for project performanceandcapitalmanagement; • Increasedthespecificityanddetailprovidedinthediscussionof annual incentive measures and results that support the CIP awards; • CappedCIPbonusawardsat200percentoftarget; • IncreasedtheCEOequityholdingrequirementfromfivetimes tosixtimesbasesalary;and • Committedtolimiteduseofsupplementalrestrictedstockunit grants to executive officers, except for extraordinary circumstances. In 2017, the Company continued its dialogue with stockholders. We reached out to stockholders accounting for approximately 42 percent of Chevron’s outstanding stock. We conducted in-depth discussions with stockholders comprising more than 36 percent of Chevron’s outstanding stock. These discussions covered a range of issues, including executive compensation. Throughtheseengagements,wereceivedpositivefeedbackfor theexecutivecompensationprogram,aswellasforourenhanced transparencyinCIPperformancedisclosure. Our stockholders’ views on executive compensation are importanttous,andtheMCCregularlyconsiderstheSay-on-Pay voteoutcomeandstockholderinsightsinassessingourexecutive compensationprogram.Weremaincommittedtocontinuingthe dialoguewithstockholdersoncompensationissuesaspartofour ongoingengagement. 2017 Performance Chevrondeliveredsolidfinancialandoperationalperformancefor theyear,resultinginreportedearningsof$9.2billion.Theactions we took to be cash balanced in a lower commodity price environmenthavepositionedtheCompanytosustainandgrow production,earnings,andcashflowgoingforward: • Wemadesubstantialprogressincompletingandrampingup productionofmajoroilandgasdevelopmentcapitalprojects, notablyourAustralianliquefiednaturalgas(“LNG”)projects.At year-end, Gorgon’s Trains 1-3 and Wheatstone’s Train 1 were on-line. Wheatstone’s second train was nearing completion. Our unconventional production growth in the Permian exceeded expectations, driven by innovations in design and technologytoimprovewelltargets,unitdevelopmentcost,and performance.ChevronhasoneofthelargestPermianpositions intheindustry. • We recorded an annual reserve replacement ratio of 155 percent,anindicatorofoursustainabilityatlowerprices. • We reduced capital and exploratory (“C&E”) spending to $18.8billion,$3.6billionbelow2016levelsand$1billionbelow budget.Theannouncedplanned$18.3billionC&Eprogramfor 2018isthefourthconsecutiveyeartheCompanyhasreduced its C&E budget, reflecting project completions, improved efficiencies,andinvestmenthigh-grading. • We reduced operating expenses and selling, general and administrative expenses to $23.9 billion despite growing volumes, $1.1 billion below 2016 levels and below our 2017 objective.Additionalreductionsinunitcostsareexpectedfor 2018. • Our asset sale proceeds totaled $5.2 billion in 2017 as we continued to high-grade the portfolio. Total asset sales for 2016-2017 were $8 billion, within our $5 billion to $10 billion guidancerange.Ourdivestiturecriteriaremainedunchangedin 2017, focusing on strategic fit, ability to compete for capital withinourportfolio,andreceivinggoodvalue. • Wehaveasolidbalancesheet,endingtheyearwithaprudent 21percentdebtratio.Atthesametime,theCompany’sannual dividend rose by $0.03 per share to $4.32, representing the 30thconsecutiveannualpaymentincrease. The Company is well positioned to continue investing in its advantaged,balancedportfolioofopportunitiesoverbothnear- term and long-term investment horizons. It has a sustainable investment,production,reserves,andcashflowprofileevenina low commodity price environment. At the same time, the Companyiswellpositionedandhighlyleveragedtobenefitfrom anyfuturecommoditypriceincreases. 34 ChevronCorporation—2018ProxyStatement Total of 02 pages in section CorporateGovernanceMatters WebelievethatourshareholderengagementprogramallowsExecutiveManagementandtheBoardtogatherinformation aboutinvestorviewsandprioritiesandmakeeducatedanddeliberatedecisionsthatarebalancedandappropriateforour diverseshareholderbaseandthatareinthebestinterestsofBB&T. Inboththespringandfallof2017,wecontacted48ofour50largestshareholdersrepresentingapproximately47%ofour outstandingshares.Duringourspringengagement,representativesofBB&T,includingtheChairofourCompensation Committee,soughtshareholderreactiontothesignificantchangesmadetoourexecutivecompensationprogramin2016and 2017,andtotheshareholdersponsoredproposaltoeliminatesupermajorityvotingprovisionsinourgoverningdocuments. Shareholderspositivelysupportedtheexecutivecompensationimprovementswemade,suchastheadditionofPSUsand eliminationofstockoptions,andthereafter,atthe2017annualmeeting,shareholdersstronglyapprovedoursay-on-payvote with94%support. Duringourfallengagement,representativesofBB&T,includingtheChairofourNominatingandCorporateGovernance Committee,discussedwithourshareholderscorporategovernanceandexecutivecompensationissuesofinteresttothem. Specifically,wesoughtfeedbackontheBoard’sproposaltoeliminatethesupermajorityvoterequirementinthebylaws,andto retainthesupermajorityvoterequirementsinthearticlesofincorporation.Shareholderssupportedthisapproachassetforthin Proposal4.Inaddition,wesolicitedourshareholders’feedbackontherighttocallaspecialmeeting,includingtheappropriate shareownershipthresholdforexerciseofthatright.Shareholderssupportedthisspecialmeetingrightandingeneralpreferred aminimumownershipthresholdlevelofgreaterthan10%,basedoneachissuer’suniquecircumstances.Finally,shareholders contactedduringourengagementeffortsuniversallysupportedourexecutivecompensationprogram. G OVERNANCE AND C OMPENSATION P ROGRAM E NHANCEMENTS Ourcontinuedengagementhasledtoseveralchangestoourgovernanceandcompensationpracticesoverthepast severalyears.Inparticular,inresponsetofeedbackfromsomeofourshareholders,we: • amendedourbylawstoprovideforproxyaccess; • publishedaCorporateSocialResponsibilityreportonourwebsiteinresponsetoshareholderrequestsforinsightinto oureffortsinthisarea; • increasedourCEOstockownershiprequirementfrom5xto6xbasesalary;and • amendedourbylawstoprovideshareholdersowning20%ormoreofouroutstandingcommonstocktherighttocalla specialmeetingofshareholders. Inaddition,asfurtherdescribedintheCompensationDiscussionandAnalysissection,ourengagementeffortshave promptedseveralenhancementstoourexecutivecompensationprogramin2017,including: • theuseofPSUs; • theeliminationofstockoptions;and • theuseofaTSRmodifierforourLTIPawards. BB&T’s Culture WeareveryproudofourcultureatBB&T,whichhasbeendeliberatelydevelopedandconsistentlyarticulatedformore than40years.Inarapidlychangingandunpredictableworld,webelieveindividualsandorganizationsneedaclearsetof fundamentalprinciplestoguidetheiractions.AtBB&T,weknowourbusinesswill,andshould,experienceconstantchange. Changeisnecessaryforprogress.Inanycontext,ourvision,missionandvalues,areunchangingbecausetheseprinciples arebasedonbasictruths. Weareamission-drivenorganizationwithaclearlydefinedsetofvalues.Weencourageouremployees,whowe commonlyrefertoasassociates,tohaveastrongsenseofpurpose,ahighlevelofself-esteemandthecapacitytothink clearlyandlogically.Webelieveacompetitiveadvantageislargelyinthemindsofourassociatesandtheircapacitytoturn rationalideasintoactionshelpusaccomplishofourmission: Tomaketheworldabetterplacetolive, by: • Helpingourclientsachieveeconomicsuccessandfinancialsecurity; • Creatingaplacewhereourassociatescanlearn,growandbefulfilledintheirwork; BB&TCorporation | 2018ProxyStatement 19 Total of 02 pages in section BB&T CORPORATION CHEVRON CORPORATION CorporateGovernanceMatters Risk Committee William J. Reuter Chair CommitteeMembers: JenniferS.Banner,K.DavidBoyer,Jr.,KellyS.King,NidoR.Qubein,ThomasE.Skains • Reviewsprocessesforidentifying,assessing,monitoringandmanagingcompliance, credit,liquidity,market,operational(includinginformationtechnologyandclient informationrisks),reputationalandstrategicrisks. • AssessestheadequacyofBB&T’sriskmanagementpoliciesandprocedure . • Receivesperiodicreportsonourrisks,approvesBB&T’sriskmanagement frameworkandperiodicallyreviewsandevaluatestheadequacyand ffectiveness oftheriskmanagementframework. • Discusseswithmanagement,includingtheChiefRiskOfficer,ourmajorrisk exposuresandreviewsthestepsmanagementhastakentoidentify,monitorand controlsuchexposures. • ApprovesstatementsdefiningBB&T’sriskappetite,monitorsourriskprofileand providesinputtomanagementregardingourriskappetiteandriskprofile. • Overseesmanagement’simplementationandmanagementof,andconformance with,BB&T’ssignificantriskmanagementpolicies,procedures,limitsandtolerances. Shareholder Engagement Program Forthepastseveralyears,BB&T’sshareholderengagementprogramhasdevelopedintoarobust,year-roundprocess includingoutreachtoshareholders,analysisofresultsoftheannualmeetingofshareholders,boarddeliberationsa d response,andre-engagementwithshareholders.Welistencloselytoourshareholderssoastounderstandtheirviewsand addresstheirconcernsabout,andsupportfor,ourexecutivecompensationandcorporategovernanceprograms.Our shareholderengagementprogramencompassesavarietyofinitiativesandissummarizedbelow: Report toBoard andExecutiveManagement: - Review shareholder input andpotential issues and concerns - Evaluateand determineappropriate responses and enhancements topolicies and practices, if needed - Provide reports to theBoard and appropriate committees AfterAnnualMeeting: - Analyze voting results - Identify potential developmentsor enhancements in governance, executive compensation and othermatters Engagementwith shareholders: - DirectorsandExecutiveManagement meetwith shareholders to provide insight into current policiesand solicit viewson governance,executive compensation and othermatters Respondback to shareholders: - Continue dialoguewith shareholders to discussactions taken, includingany enhancements to policiesand practices Thegoalsofourshareholderengagementprograminclude,butarenotlimitedto: • Obtainingshareholderinsightintoourcorporategovernance,executivecompensation,andotherpoliciesandpracti es, includingshareholderperspectivesandpriorities; • CommunicatingBoardandmanagementactionsinresponsetoshareholderfeedback; • Discussingcurrenttrendsincorporategovernanceandexecutivecompensationmatters;and • Providinginsightintoourcurrentpracticesandenhancingcommunicationwithourlargestshareholders. 18 BB&TCorporation | 2018ProxyStatement CORPORATEGOVERNANCE Engagement Your Board believes that fostering long-term and institution- widerelationshipswithstockholdersandmaintainingtheirtrust and goodwill is a core Chevron objective. Chevron conducts extensive engagements with key stockholders. These engagements routinely cover governance, compensation, social, safety, environmental, human rights, and other current andemergingissues.Inaddition,wehaveanextensiveinvestor relations outreach effort, in which members of senior management routinely meet with major investors to review Company strategies, financial and operating performance, capitalallocationpriorities,andnear-termoutlook.Weuseallof these sessions to ensure that the Board and management understand and address the issues that are important to our stockholders. In order to continuously improve Chevron’s governance processes and communications, Chevron follows an Annual Engagement Plan and Process. Through this program, we are able to identify and address topics that are raised by our stockholders. Since Chevron’s last Annual Meeting, an engagement team consisting of senior executives, subject matter experts on governance,compensation,andenvironmentalandsocialissues, and, when appropriate, our independent Lead Director have continuedtoleadourrobuststockholderoutreachprogram. • We contacted stockholders accounting for approximately 42percentofChevron’soutstandingcommonstocktooffera meeting. • We conducted in-depth discussions with stockholders representing more than 36 percent of Chevron’s utstanding commonstock. • Of those meetings, our Chairman met with stockhold rs representing24percentofouroutstandingstock. • 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 agreementanddisagreement. During these engagements, Chevron gained valuable feedback onseveraltopics,including: • BoardcompositionandDirectorskills/expertise • Executivecompensationandalignmentwithperforman • Environmentalriskmanagement • Governancetrends This feedback was shared with the Board and its relevant Committees. For more information about these engagements, see the “Board Leadership Structure,” “Independent Lead Director,” and “Compensation Discussion and Analysis” s ctions oftheProxyStatement. Communicating With the Board TheBoardNominatingandGovernanceCommitteereviewsinterested-partycommunications,includingstockholderinquiriesdirected tonon-employeeDirectors.TheCorporateSecretaryandChiefGovernanceOfficercompilesthecommunications,summarizeslengthy or repetitive communications, and regularly compiles the communications received, theresponses sent, and furtheraction, ifany. All communicationsareavailabletotheDirectors. Interested parties wishing tocommunicatetheirconcerns orquestions aboutChevrontotheindependentLead Directororanyothernon-employeeDirectorsmaydosobymailaddressedtotheLeadDirectororNon-employee Directors,c/oOfficeoftheCorporateSecretaryandChiefGovernanceOfficer,6001BollingerCanyonRoad,San Ramon,CA94583-2324orbyemailto corpgov@chevron.com . Related Person Transactions ReviewandApprovalofRelatedPersonTransactions It is our policy that all employees and Directors must avoid any activity that is in conflict with, or has the appearance of conflicting with, Chevron’s business interests. This policy is includedinourBusinessConductandEthicsCode.Directorsand executive officers must inform the Chairman and the Corporate Secretary and Chief Governance Officer when confronted with any situation that may be perceived as a conflict of interest. In addition, at least annually, each Director and executive officer completes a detailed questionnaire specifying any business relationshipthatmaygiverisetoaconflictofinterest. YourBoardhaschargedtheBoardNominatingandGovernance Committeewithreviewingrelatedpersontransactionsasdeined by U.S. Securities and Exchange Commission (“SEC”) rules. Th Committee has adopted guidelines to assist it with this review. Under these guidelines, all executive officers, Directors, and DirectornomineesmustpromptlyadvisetheCorporateSecretary andChiefGovernanceOfficerofanyproposedoractualbusiness and financial affiliations involving themselves or their immediate family members that, to the best of their knowledge after reasonableinquiry,couldreasonablybeexpectedtogiverisetoa reportable related person transaction. The Corporate Secretary andChiefGovernanceOfficerwillprepareareportsummarizing any potentially reportable transactions, and the Committee will ChevronCorporation—2018ProxyStatement 25