shareholder proposals and proxy statements

As part of our shareholder engagement process, the Corporation receives shareholder suggestions each year. Some of these are in the form of shareholder proposals to be presented in our proxy statement for consideration at the Annual Meeting of Shareholders. Significant suggestions are carefully considered by management and/or the Board of Directors. Typically, we seek a dialogue with the proposal sponsor prior to the distribution of our proxy statement to more fully discuss each other’s position. This dialogue often produces a satisfactory solution, and the proposal is withdrawn by the sponsor. However, when agreement is not reached — for example, such as on adopting a bylaw to recoup unearned incentive pay — the proposal and the Board of Directors’ response and recommendation are published in our proxy statement. Shareholders vote on each proposal at the Annual Meeting of Shareholders. The Board further evaluates the proposals receiving significant support from shareholders and takes action as appropriate.

Example:
Proposal on adopting a bylaw to recoup unearned incentive pay.

Shareholder request:
The Board of Directors should adopt a bylaw to recoup unearned incentive bonuses or other incentive payments to senior executives if it is later reasonably determined that their performance targets were not achieved or resulted from overstated financial or operating results.

Board response:
The Board agrees that senior executives should not profit on the basis of overstated financial or operating results. However, the Board believes this proposal is unnecessary since the company has long had programs and practices in place to address these concerns and has taken steps to further clarify this intent.

The Board’s new Statement on Incentive Compensation in Case of Restatement supports this view. Consistent with the Statement, the Board also amended the Short-Term Incentive Program — under which incentive bonuses and other payments are granted and paid to our executives — to give the Board the right to require repayment from executive officers in case of a material negative restatement of financial or operating results.

With the addition of the new Statement and amendment to the Short-Term Incentive Program, we believe that ExxonMobil has taken the necessary action to enable the company to recoup compensation from executive officers as contemplated by the proposal. In fact, we believe the company’s action is more effective for this purpose than a bylaw action would be and, therefore, substantially implements the proposal.

ExxonMobil’s incentive programs are carefully structured so that at any given time, and in most cases for many years after retirement, a substantial portion of an executive’s personal net worth in the form of outstanding incentive awards will be subject to cancellation or forfeiture if the executive is found to have engaged in detrimental activity.