Edgar Filing: CHEVRON CORP

Definitive Proxy Statement

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. )

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Preliminary Proxy Statement

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material Pursuant to §.240.14a-12

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CHEVRON CORPORATION

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)


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2015 Proxy Statement

Notice of 2015 Annual Meeting of Stockholders

to be Held on May 27, 2015

Notice of the 2015

Annual Meeting of Stockholders

Wednesday, May 27, 2015

8:00 a.m. PDT

Chevron Park Auditorium, 6001 Bollinger Canyon Road, San Ramon, CA 94583-2324

Record Date

Wednesday, April 1, 2015

Agenda

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Elect 12 Directors named in this Proxy Statement;

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Vote on a Board proposal to ratify the appointment of the independent registered public accounting firm;

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Vote on a Board proposal to approve, on an advisory basis, named executive officer compensation;

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Vote on 10 stockholder proposals, if properly presented; and

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Transact any other business that may be properly brought before the Annual Meeting.

Admission

Stockholders or their legal proxy holders may attend the Annual Meeting. Due to space constraints and other security considerations, we are not able to admit the guests of either stockholders or their legal proxy holders.

Important Notice Regarding Admission to the 2015 Annual Meeting

We have changed our admission policy for the Annual Meeting. Stockholders or their legal proxy holders who wish to attend the Annual Meeting must preregister with and obtain an admission ticket from Chevron’s Corporate Governance Department. Tickets will be distributed on a first-come, first-served basis. Requests for admission tickets must be received by Chevron no later than 5:00 p.m. PDT on Thursday, May 21, 2015. For complete instructions for preregistering and obtaining an admission ticket, see page 84 of this Proxy Statement.

Voting

Stockholders owning Chevron common stock at the close of business on Wednesday, April 1, 2015, or their legal proxy holders, are entitled to vote at the Annual Meeting. Please refer to pages 1 through 2 of this Proxy Statement for information about voting at the Annual Meeting.

Distribution of Proxy Materials

On or about Thursday, April 9, 2015, we will commence distributing to our stockholders (1) a copy of this Proxy Statement, a proxy card or voting instruction form, and our Annual Report (the proxy materials), (2) a Notice Regarding the Availability of Proxy Materials, with instructions to access our proxy materials and vote on the Internet, or (3) for stockholders who receive materials electronically, an email with instructions to access our proxy materials and vote on the Internet.

By Order of the Board of Directors,

LOGO

Lydia I. Beebe

Corporate Secretary and Chief Governance Officer

Table of Contents



Voting Information			1
Items of Business			1
Vote Results			1
Appointment of Proxy Holders			1
Record Date; Who Can Vote			2
Quorum			2
How to Vote			2
Revoking Your Proxy or Voting Instructions			2
Confidential Voting			2

Election of Directors (Item 1 on the Proxy Card)			3
Director Election Requirements			3
Director Nomination Process			3
Nominees for Director			4
Vote Required			10
Your Board’s Recommendation			10

Director Compensation			11
Overview			11
Cash or Stock Options (at the Director’s Election)			11
Restricted Stock Units			11
Expenses and Charitable Matching Gift Program			11
Compensation During the Fiscal Year Ended December 31, 2014			12

Corporate Governance			14
Overview			14
Role of the Board of Directors			14
Director Independence			14
Board Leadership and Independent Lead Director			15
Board Committees			16
Board and Committee Meetings and Attendance			18
Board and Committee Oversight of Risk			18
Succession Planning and Leadership Development			19
Board and Committee Evaluations			19
Corporate Governance Guidelines			19
Business Conduct and Ethics Code			19
Engagement			20
Communicating With the Board			20
Related Person Transactions			20
Board Nominating and Governance Committee Report			21
Management Compensation Committee Report			22
Audit Committee Report			22


TABLE OF CONTENTS



Board Proposal to Ratify the Appointment of the Independent Registered Public Accounting Firm (Item 2 on the Proxy Card)			23
Principal Accountant Fees and Services			23
Audit Committee Preapproval Policies and Procedures			23
Vote Required			23
Your Board’s Recommendation			23

Executive Compensation			24
Compensation Discussion and Analysis			24
Summary Compensation Table			44
Grants of Plan-Based Awards in Fiscal Year 2014			46
Outstanding Equity Awards at 2014 Fiscal Year-End			47
Option Exercises and Stock Vested in Fiscal Year 2014			48
Pension Benefits Table			49
Nonqualified Deferred Compensation Table			51
Potential Payments Upon Termination or Change-in-Control			53

Equity Compensation Plan Information			58

Stock Ownership Information			59
Security Ownership of Certain Beneficial Owners and Management			59
Section 16(a) Beneficial Ownership Reporting Compliance			59

Board Proposal to Approve, on an Advisory Basis, Named Executive Officer Compensation (Item 3 on the Proxy Card)			60
Vote Required			60
Your Board’s Recommendation			60

Stockholder Proposals (Items 4 through 13 on the Proxy Card)			61
2015 Qualifying Stockholder Proposals			61
Vote Required			61
Your Board’s Recommendation			61
Stockholder Proposals			62

Additional Information			82
Notice and Access			82
Method and Cost of Soliciting and Tabulating Votes			82
Householding Information			82
Email Delivery of Future Proxy Materials			83
Stockholder of Record Account Maintenance			83
Submission of Stockholder Proposals for 2016 Annual Meeting			83
Preregistering for and Attending the Annual Meeting			84
More Information About Chevron			85

Appendix A Reconciliation of Non-GAAP Financial Measures Referenced in the Compensation Discussion and Analysis			A-1

Voting Information

Chevron Corporation

6001 Bollinger Canyon Road

San Ramon, CA 94583-2324

Your Board of Directors is providing you with these proxy materials in connection with its solicitation of proxies to be voted at Chevron Corporation’s 2015 Annual Meeting of Stockholders to be held on Wednesday, May 27, 2015, at 8:00 a.m. PDT at Chevron Park Auditorium, 6001 Bollinger Canyon Road, San Ramon, California, and at any postponement or adjournment of the Annual Meeting. In this Proxy Statement, Chevron and its subsidiaries may also be referred to as “we,” “our,” “the Company” or “the Corporation.”

Items of Business

Your Board is asking you to take the following actions at the Annual Meeting:


Item(s)	Your Board’s Recommendation	Vote Required
• Item 1: Elect 12 Directors named in this Proxy Statement	Vote FOR	Each Director nominee who receives a majority of the votes cast (i.e., the number of shares voted FOR a Director nominee must exceed the number of shares voted AGAINST that Director nominee, excluding abstentions) will be elected a Director, in an uncontested election.
• Item 2: Vote to ratify the appointment of the independent registered public accounting firm	Vote FOR	These items are approved if the number of shares voted FOR exceeds the number of shares voted AGAINST.
• Item 3: Vote to approve, on an advisory basis, named executive officer compensation	Vote FOR
• Items 4–13: Vote on 10 stockholder proposals, if properly presented	Vote AGAINST

If you are a street name stockholder (i.e., you own your shares through a bank, broker, or other holder of record) and do not vote your shares, your bank, broker, or other holder of record can vote your shares at its discretion ONLY on Item 2. If you do not give your bank, broker, or other holder of record instructions on how to vote your shares on Item 1 or Items 3 through 13, your shares will not be voted on those matters. If you have shares in an employee stock or retirement benefit plan and do not vote those shares, the plan trustee or fiduciary may or may not vote your shares, in accordance with the terms of the plan. Any shares not voted on Item 1 or Items 3 through 13 (whether by abstention, broker nonvote, or otherwise) will have no impact on that particular item.

Vote Results

At the Annual Meeting, we will announce preliminary vote results for those items of business properly presented. Within four business days of the Annual Meeting, we will disclose the preliminary results (or final results, if available) in a Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission.

Appointment of Proxy Holders

Your Board asks you to appoint John S. Watson, R. Hewitt Pate, and Mary A. Francis as your proxy holders, each with full power of substitution, to represent and to vote your shares at the Annual Meeting. You make this appointment by voting the proxy card provided to you using one of the voting methods described in “How to Vote” in this section.

If you sign and return a proxy card with voting instructions, the proxy holders will vote your shares as you direct on the matters

described in this Proxy Statement. If you sign and return a proxy card without voting instructions, they will vote your shares as recommended by your Board.

Unless you indicate otherwise on the proxy card, you also authorize the proxy holders to vote your shares on any matters that are not known by your Board as of the date of this Proxy Statement and that may be properly presented for action at the Annual Meeting.


Chevron Corporation—2015 Proxy Statement		1


VOTING INFORMATION

Record Date; Who Can Vote

Stockholders owning Chevron common stock at the close of business on Wednesday, April 1, 2015, the Record Date, or their legal proxy holders, are entitled to vote at the Annual Meeting. At the close of business on the Record Date, there were 1,880,477,711 shares of Chevron common stock outstanding. Each outstanding share of Chevron common stock is entitled to one vote.

Quorum

A quorum, which is a majority of the outstanding shares of Chevron common stock as of the Record Date, must be present to hold the Annual Meeting. A quorum is calculated based on the number of shares represented at the meeting, either by the stockholders attending in person or by the proxy holders. If you indicate an abstention as your voting preference in any matter, your shares will be counted toward a quorum, but will not be voted on any such matter.

How to Vote

Stockholders can vote by mail, telephone, Internet, or in person at the Annual Meeting.

Stockholders of Record

Street Name Stockholders

Employee Plan Participants

If you hold your shares in your own name as reflected in the records of Chevron’s transfer agent, Computershare Shareowner Services LLC, you can most conveniently vote by telephone, Internet, or mail. Please review the voting instructions on your proxy card.

If you vote by telephone or on the Internet, you do not need to return your proxy card. Telephone and Internet voting are available 24 hours a day and will close at 11:59 p.m. EDT on Tuesday, May 26, 2015.

You can vote in person at the Annual Meeting by completing, signing, dating, and returning your proxy card during the meeting.

If you own your shares through a bank, broker, or other holder of record, you can most conveniently vote by telephone, Internet, or mail. Please review the voting instructions on your voting instruction form.

If you vote by telephone or on the Internet, you do not need to return your voting instruction form. Telephone and Internet voting are available 24 hours a day and will close at 11:59 p.m. EDT on Tuesday, May 26, 2015.

You can vote in person at the Annual Meeting ONLY if you obtain and present a proxy, executed in your favor, from the bank, broker, or other holder of record of your shares.

If you own your shares through participation in a Chevron employee stock or retirement benefit plan, you can most conveniently vote by telephone, Internet, or mail. Please review the voting instructions contained in the email sent to your work address or in the materials you receive through the mail.

All votes must be received by the plan trustee or fiduciary by 11:59 p.m. EDT on Thursday, May 21, 2015, or other cutoff date as determined by the plan trustee or fiduciary.

You can vote in person at the Annual Meeting ONLY if you obtain and present a proxy, executed in your favor, from the trustee or fiduciary of the plan through which you hold your shares.

We encourage you to vote by telephone or on the Internet. Both are designed to record your vote immediately and enable you to confirm that your vote has been properly recorded.

Revoking Your Proxy or Voting Instructions

Stockholders can revoke their proxy or voting instructions as follows.


Stockholders of Record	Street Name Stockholders	Employee Plan Participants
• Send a written statement revoking your proxy to: Chevron Corporation, Attn: Corporate Secretary and Chief Governance Officer, 6001 Bollinger Canyon Road, San Ramon, CA 94583-2324;	Notify your bank, broker, or other holder of record in accordance with that entity’s procedures for revoking your voting instructions.	Notify the trustee or fiduciary of the plan through which you hold your shares in accordance with its procedures for revoking your voting instructions.
• Submit a proxy card with a later date and signed as your name appears on your account;
• Vote at a later time by telephone or the Internet; or
• Vote in person at the Annual Meeting.

Confidential Voting

Chevron has a confidential voting policy to protect the privacy of your votes. Under this policy, ballots, proxy cards, and voting instructions returned to banks, brokers, and other holders of record are kept confidential. Only the proxy solicitor, the proxy tabulator, and the Inspector of Election have access to the ballots, proxy cards, and voting instructions. Anyone who processes or

inspects the ballots, proxy cards, and voting instructions signs a pledge to treat them as confidential. None of these persons is a Chevron Director, officer, or employee. The proxy solicitor and the proxy tabulator will disclose information taken from the ballots, proxy cards, and voting instructions only in the event of a proxy contest or as otherwise required by law.


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Election of Directors

(Item 1 on the Proxy Card)

Your Board is nominating the 12 individuals identified below for election as Directors. Directors are elected annually and serve for a one-year term or until their successors are elected. If any nominee is unable to serve as a Director–a circumstance we do not anticipate–the Board by resolution may reduce the number of Directors or choose a substitute. Your Board has determined that each nonemployee Director is independent in accordance with the New York Stock Exchange (NYSE) Corporate Governance Standards and that no material relationship exists that would interfere with the exercise of independent judgment in carrying out the responsibilities of a Director.

Director Election Requirements

Under Chevron’s By-Laws, in an uncontested election any Director nominee who receives more AGAINST votes than FOR votes must submit an offer of resignation to the Board. The Board

Nominating and Governance Committee must then consider all relevant facts and circumstances, including the Director’s qualifications and past and expected future contributions, the overall composition of the Board, and whether Chevron would meet regulatory or similar requirements without the Director, and make a recommendation to the Board on the action to take with respect to the offer of resignation.

Director Nomination Process

The Board Nominating and Governance Committee (the Committee) is responsible for recommending to the Board the qualifications for Board membership and for identifying, assessing, and recommending qualified Director candidates for the Board’s consideration. The Board membership qualifications and nomination procedures are set forth in Chevron’s Corporate Governance Guidelines, which are available on Chevron’s website at www.chevron.com.

All Directors should have the following attributes:

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the highest professional and personal ethics and values, consistent with The Chevron Way and our Business Conduct and Ethics Code, both of which are available on Chevron’s website at www.chevron.com;

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a commitment to building stockholder value;

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business acumen and broad experience and expertise at the policy-making level in one or more of the areas of particular consideration indicated below;

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the ability to provide insights and practical wisdom based on the individual’s experience or expertise;

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sufficient time to effectively carry out duties as a Director (service on other boards of public companies should be limited to a reasonable number); and

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independence (at least a majority of the Board must consist of independent Directors, as defined by the NYSE Corporate Governance Standards).

The Committee uses a skills and qualifications matrix to ensure that the Board maintains a balance of knowledge and experience. The Committee regularly reviews the appropriate skills and characteristics required of Board members in the context of the current composition of the Board, the operating requirements of the Company, and the long-term interests of stockholders.

When conducting its review of the appropriate skills and qualifications desired of Directors, the Committee particularly considers:

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leadership experience in business as a chief executive officer, senior executive, or leader of significant business operations;

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expertise in science, technology, engineering, research, or academia;

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extensive knowledge of governmental, regulatory, legal, or public policy issues;

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expertise in finance, financial disclosure, or financial accounting;

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experience in global business or international affairs;

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experience in environmental affairs;

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service as a public company director;

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diversity of age, gender, and ethnicity; and

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such other factors as the Committee deems appropriate given the current needs of the Board and the Company, to maintain a balance of knowledge, experience, background, and capability.

The Committee considers Director candidates identified for consideration for nomination to the Board from stockholders, Board members, and other sources. Board members periodically suggest possible candidates, and from time to time, the Committee may engage a third-party consultant to assist in identifying potential candidates. The Committee has retained Russell Reynolds Associates to assist it with identifying potential candidates. Russell Reynolds has interviewed current Directors, evaluated the Board’s current and future makeup and needs, and worked with the Committee to develop a list of potential candidates.


Chevron Corporation—2015 Proxy Statement		3


ELECTION OF DIRECTORS

The Committee considers all candidates recommended by our stockholders.

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Stockholders may recommend candidates by writing to the Corporate Secretary and Chief Governance Officer at 6001 Bollinger Canyon Road, San Ramon, CA 94583-2324, stating the candidate’s name and qualifications for Board membership.

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When considering candidates recommended by stockholders, the Committee follows the same Board membership qualifications evaluation and nomination procedures discussed in this section.

After the 2014 Annual Meeting, at which 10 of the current nominees for Director were elected, the Committee recommended and the Board concurred with electing Alexander B. Cummings Jr. and Inge G. Thulin to the Board, effective December 10, 2014, and January 28, 2015, respectively. Both were identified by our current nonemployee Directors as part of the Committee’s regular process for identifying potential Directors. George L. Kirkland and Kevin W. Sharer will retire from the Board in 2015, effective as of the Annual Meeting. For the 2015 Annual Meeting, the Committee recommended and the Board concurred with a Board size of 12 Directors. Each of the Director nominees is a current Director.

Nominees for Director

Your Board unanimously recommends that you vote FOR each of these Director nominees.


Alexander B. Cummings Jr.		Mr. Cummings has been Executive Vice President and Chief Administrative Officer of The Coca-Cola Company, the world’s largest beverage manufacturer, since 2008. Prior Positions Held: Mr. Cummings was President and Chief Operating Officer of The Coca-Cola Company’s Africa Group from 2001 until 2008 and was President of the North & West Africa Division from 2000 to 2001. Mr. Cummings joined The Coca-Cola Company in 1997 as Region Manager, Nigeria. Prior to that, he held several positions with The Pillsbury Company, including Vice President of Finance for Pillsbury International. Prior Public Company Boards (within the last five years): Coca-Cola Hellenic Bottling Co. S.A. Other Boards and Memberships: African Leadership Foundation; CARE USA; Clark Atlanta University (Chair); S.C. Johnson & Son, Inc. *Specific qualifications and experience relevant to Chevron* Mr. Cummings has extensive board and senior executive–level experience in business, operations, technology, finance, and international affairs as a result of his 18-year career with The Coca-Cola Company and, prior to that, The Pillsbury Company. As a native of Liberia and as a result of his numerous assignments of increasing responsibility for Coca-Cola’s Africa business, he also brings to the Board an in-depth knowledge of one of Chevron’s key areas of operations. In addition, as Executive Vice President and Chief Administrative Officer of Coca-Cola, Mr. Cummings supervises a variety of functions, including legal, human resources, community engagement, strategic planning, information technology, sustainability, research and development, product integrity, innovation, and procurement.

Age: 58 Director since: 2014
Committees: Audit – audit committee financial expert
Other Public Company Boards: Coca-Cola Bottling Co. Consolidated


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								ELECTION OF DIRECTORS


Linnet F. Deily		Ms. Deily is a former Deputy U.S. Trade Representative and U.S. Ambassador to the World Trade Organization and retired financial services industry executive. Prior Positions Held: Ms. Deily served as Deputy U.S. Trade Representative and U.S. Ambassador to the World Trade Organization (WTO) from 2001 until 2005. She was Vice Chairman of Charles Schwab Corporation from 2000 until 2001, President of the Schwab Retail Group from 1998 until 2000 and President of Schwab Institutional Services for Investment Managers from 1996 until 1998. Prior to joining Schwab, Ms. Deily was Chairman, Chief Executive Officer and President from 1990 until 1996 and President and Chief Operating Officer from 1988 until 1990 of the First Interstate Bank of Texas. Prior Public Company Boards (within the last five years): None. Other Boards and Memberships: Episcopal Health Foundation (Chair); Houston Endowment, Inc.; Houston Museum of Fine Arts; Houston Zoo (Vice Chair); Jung Center of Houston; University of Texas MD Anderson Cancer Center Board of Visitors. *Specific qualifications and experience relevant to Chevron* Ms. Deily has significant government, policy-making, and international affairs experience, including experience with environmental issues, based in part on her work as a Deputy U.S. Trade Representative and U.S. Ambassador to the WTO. In the latter role, she oversaw the negotiation of various environmental issues before the WTO. In addition, Ms. Deily has extensive board and senior executive–level experience having served as Chairman, Chief Executive Officer and President of the First Interstate Bank of Texas, as Vice Chairman of Charles Schwab Corporation, and as a director of several large public companies in various industries. In these and predecessor roles, she also gained significant financial expertise.

Age: 69 Director since: 2006
Committees: Board Nominating and Governance; Public Policy (Chair)
Other Public Company Boards: Honeywell International Inc.


Robert E. Denham		Mr. Denham has been a Partner of Munger, Tolles & Olson LLP, a law firm, since 1998 and from 1973 until 1991. Prior Positions Held: Mr. Denham was Chairman and Chief Executive Officer of Salomon Inc. from 1992 until 1998. He joined Salomon in 1991, as General Counsel of Salomon and its subsidiary, Salomon Brothers. Prior Public Company Boards (within the last five years): UGL Limited; Wesco Financial Corporation. Other Boards and Memberships: Good Samaritan Hospital of Los Angeles (Vice Chair); James Irvine Foundation; MDRC; New Village Girls Academy; Professional Ethics Executive Committee of the American Institute of Certified Public Accountants (Public Member). *Specific qualifications and experience relevant to Chevron* Mr. Denham has extensive board and senior executive–level expertise in accounting, law, business, and finance as a result of his nearly 45-year career as a lawyer, senior executive, and director of several large public companies in various industries. From 2004 until 2009, he served as Chairman and President of the Financial Accounting Foundation. In addition, Mr. Denham has extensive experience with environmental issues: representing buyers and sellers in complex mergers and acquisitions; as CEO of Salomon Inc., then owner of refiner Basis Petroleum; as a former Trustee of the Natural Resources Defense Council; and as the former Chairman of the Board of the John D. and Catherine T. MacArthur Foundation, which funds environmental and sustainable development programs.

Age: 69 Director since: 2004 Lead Director since: 2011
Committees: Board Nominating and Governance (Chair); Management Compensation
Other Public Company Boards: Fomento Económico Mexicano, S.A. de C.V.; The New York Times Company; Oaktree Capital Group, LLC


Chevron Corporation—2015 Proxy Statement		5


ELECTION OF DIRECTORS


Alice P. Gast		Dr. Gast has been President of Imperial College London, a public research university specializing in science, engineering, medicine, and business, since 2014. Prior Positions Held: Dr. Gast was President of Lehigh University from 2006 until 2014 and Vice President for Research, Associate Provost, and Robert T. Haslam Chair in Chemical Engineering at Massachusetts Institute of Technology from 2001 until 2006. Prior to that, she was professor of chemical engineering at Stanford University and the Stanford Synchrotron Radiation Laboratory from 1985 until 2001. Prior Public Company Boards (within the last five years): None. Other Boards and Memberships: Science Envoy to the Caucasus and Central Asia appointed by the U.S. Department of State; King Abdullah University of Science and Technology in Thuwal, Saudi Arabia; Global Science and Innovation Advisory Council to the Prime Minister of Malaysia; The New York Academy of Sciences. *Specific qualifications and experience relevant to Chevron* Dr. Gast has an extensive research, engineering, and science background gained during the course of her education and 30-year career at leading educational institutions. In addition, she has policy-making and international affairs experience, having served on a number of international advisory committees and boards, as a science envoy to the Caucasus and Central Asia, and on the Academic Research Council for the Singapore Ministry of Education, and the Council on Competitiveness. Dr. Gast also has valuable experience in environmental matters. At Imperial College London, she participates in the oversight of environmental institutes and centers. At Lehigh University, she presided over the establishment of STEPS, an initiative on science, technology, environment, policy and society, and she oversaw the university’s Environmental Advisory Group and emergency and crisis management planning, which includes preparedness for environmental emergencies.

Age: 56 Director since: 2012
Committees: Audit
Other Public Company Boards: None


Enrique Hernandez Jr.		Mr. Hernandez has been Chairman, Chief Executive Officer and President of Inter-Con Security Systems, Inc., a global provider of physical and facility security services to local, state, federal, and foreign governments, utilities, and major corporations since 1986. Prior Positions Held: Mr. Hernandez was Executive Vice President and Assistant General Counsel of Inter-Con Security Systems from 1984 until 1986 and an associate in the law firm of Brobeck, Phleger & Harrison from 1980 until 1984. Prior Public Company Boards (within the last five years): None. Other Boards and Memberships: Catholic Community Foundation of Los Angeles; City of Hope National Medical Center; Harvard College Visiting Committee; Harvard University Resources Committee; John Randolph Haynes and Dora Haynes Foundation; University of Notre Dame. *Specific qualifications and experience relevant to Chevron* Mr. Hernandez has extensive board and senior executive–level experience in international business as a result of his 30-year career with Inter-Con Security Systems, Inc, and as a director of several large public companies in various industries. In addition, he also has significant financial expertise, gained as a current member of the boards and audit committees of McDonald’s and Wells Fargo and a former member of the boards and audit committees of Great Western Financial Corporation and Washington Mutual. Mr. Hernandez also provides expertise in international security from his role leading Inter-Con Security Systems, as well as expertise in communications and community affairs from his role as co-founder of Interspan Communications, a television broadcasting company serving Spanish-language audiences.

Age: 59 Director since: 2008
Committees: Management Compensation; Public Policy
Other Public Company Boards: McDonald’s Corporation; Nordstrom, Inc.; Wells Fargo & Company


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								ELECTION OF DIRECTORS


Jon M. Huntsman Jr.		Mr. Huntsman has been Chairman of the Board of the Atlantic Council, a nonprofit organization that promotes leadership and engagement in international affairs, since 2014 and Chairman of the Board of Huntsman Cancer Foundation, a nonprofit organization that financially supports research, education, and patient care initiatives at Huntsman Cancer Institute at the University of Utah, since 2012. Prior Positions Held: Mr. Huntsman was a candidate for the Republican nomination for President of the United States in 2011. He served as U.S. Ambassador to China from 2009 until 2011 and two consecutive terms as Governor of Utah from 2005 until 2009. Prior to his service as Governor, Mr. Huntsman served as U.S. Ambassador to Singapore, Deputy U.S. Trade Representative and Deputy Assistant Secretary of Commerce for Asia. Between these appointments, Mr. Huntsman was employed by Huntsman Corporation in various capacities, including Vice Chairman, and as Chairman and Chief Executive Officer of Huntsman Holdings Corporation, until his resignation in 2005. Prior Public Company Boards (within the last five years): None. Other Boards and Memberships: Brookings Institution; Carnegie Endowment for International Peace; National Committee on U.S.-China Relations; Pacific Council on International Policy; Ronald Reagan Presidential Foundation and Library; University of Pennsylvania; U.S. Naval Academy Foundation. *Specific qualifications and experience relevant to Chevron* Mr. Huntsman has extensive experience in public policy and international affairs as a result of his service as U.S. Ambassador to China, U.S. Ambassador to Singapore, Governor of Utah, and Deputy U.S. Trade Representative. As Deputy U.S. Trade Representative, he oversaw all trade policy and negotiations with Asia, South Asia, and Africa, including several free trade agreements and regional initiatives. As Governor of Utah, Mr. Huntsman oversaw environmental policy decisions and other matters. He also brings extensive board and senior executive–level experience, in particular, significant experience overseeing environmental practices and related matters as Vice Chairman of Huntsman Corporation and Chairman and Chief Executive Officer of Huntsman Holdings Corporation.

Age: 55 Director since: 2014
Committees: Board Nominating and Governance; Public Policy
Other Public Company Boards: Caterpillar, Inc.; Ford Motor Company; Huntsman Corporation


Charles W. Moorman IV		Mr. Moorman has been Chairman of the Board since 2006 and Chief Executive Officer since 2005 of Norfolk Southern Corporation, a freight transportation company. Prior Positions Held: Mr. Moorman served as President at Norfolk Southern from 2004 until 2013, Senior Vice President of Corporate Planning and Services from 2003 until 2004, and Senior Vice President of Corporate Services in 2003. From 1999 until 2004, he was President of Thoroughbred Technology and Telecommunications, Inc., a subsidiary of Norfolk Southern. Prior Public Company Boards (within the last five years): None. Other Boards and Memberships: American Society of Corporate Executives; Chesapeake Bay Foundation; Hampton Roads Community Foundation; Nature Conservancy of Virginia; University of Virginia Medical Center Operating Board; Virginia Business Council (Chair). *Specific qualifications and experience relevant to Chevron* Mr. Moorman has extensive board and senior executive–level experience in business, finance, logistics services, technology, strategy, safety, and environmental issues as a result of his 38-year career in the freight railroad and transportation industries. In addition, he serves as Chairman and Chief Executive Officer of a Fortune 500 public company, providing him insight into and experience with the operations, challenges, and complex issues facing large corporations. As current Chairman and Chief Executive Officer of Norfolk Southern, Mr. Moorman also brings firsthand knowledge of the business climate in key regions of the United States where Chevron operates. Mr. Moorman is also active in a number of associations and organizations focusing on business, public policy, and governance.

Age: 63 Director since: 2012
Committees: Audit – audit committee financial expert
Other Public Company Boards: Norfolk Southern Corporation


Chevron Corporation—2015 Proxy Statement		7


ELECTION OF DIRECTORS


John G. Stumpf		Mr. Stumpf has been Chairman of the Board since 2010, Chief Executive Officer since 2007, and President since 2005 of Wells Fargo & Company, a nationwide, diversified, community-based financial services company. Prior Positions Held: Mr. Stumpf served as Group Executive Vice President of Community Banking at Wells Fargo from 2002 to 2005. In 2000, he led the integration of Wells Fargo’s $23 billion acquisition of First Security Corporation. Beginning in 1982, Mr. Stumpf served in numerous executive capacities at Norwest Corporation until its merger with Wells Fargo in 1998, at which time he became head of Wells Fargo’s Southwestern Banking Group. Prior Public Company Boards (within the last five years): None. Other Boards and Memberships: The Clearing House; Financial Services Roundtable; San Francisco Museum of Modern Art. *Specific qualifications and experience relevant to Chevron* Mr. Stumpf has extensive board and senior executive–level expertise in business and finance. In particular, as a result of his 33-year career in the banking and financial services industries and his service on the boards of Visa USA, Visa International, and Inovant LLC, Mr. Stumpf has significant expertise in finance, strategy, operations, and marketing. In addition, he serves as Chairman, Chief Executive Officer, and President of a Fortune 500 public company, providing him insight into and experience with the operations, challenges, and complex issues facing large corporations. He is also active in a number of associations and organizations focusing on business and public policy.

Age: 61 Director since: 2010
Committees: Audit – audit committee financial expert
Other Public Company Boards: Target Corporation; Wells Fargo & Company


Ronald D. Sugar		Dr. Sugar is a senior advisor to various businesses and organizations, including Ares Management LLC, a leading private investment firm; Bain & Company, a global consulting firm; Temasek Americas Advisory Panel, Singapore’s sovereign wealth fund; and the G100 Network and the World 50, peer-to-peer exchanges for current and former senior executives from some of the world’s largest companies. Prior Positions Held: Dr. Sugar was Chairman of the Board and Chief Executive Officer of Northrop Grumman Corporation from 2003 until 2010 and President and Chief Operating Officer from 2001 until 2003. He joined Northrop Grumman in 2001, having previously served as President and Chief Operating Officer of Litton Industries, Inc., and earlier as an executive of TRW Inc. Prior Public Company Boards (within the last five years): Northrop Grumman Corporation. Other Boards and Memberships: Alliance College-Ready Public Schools; Boys & Girls Clubs of America; Los Angeles Philharmonic Association; National Academy of Engineering; UCLA Anderson School of Management Board of Visitors; University of Southern California. *Specific qualifications and experience relevant to Chevron* Dr. Sugar has extensive board and senior executive–level expertise in business and finance. In particular, as a result of his careers at Northrop Grumman, Litton Industries, and TRW Inc., Dr. Sugar has significant expertise in manufacturing, technology, finance, government affairs, international marketing, long investment cycles, and environmental issues. While at Northrop Grumman, he oversaw environmental assessments and remediations at shipyards and aircraft and electronics factories. In addition, Dr. Sugar served as Chairman and Chief Executive Officer of a Fortune 500 public company, providing him insight into and experience with the operations, challenges, and complex issues facing large, international corporations. Dr. Sugar’s career has included service as Chief Financial Officer of TRW Inc., providing additional financial expertise.

Age: 66 Director since: 2005
Committees: Audit (Chair) – audit committee financial expert
Other Public Company Boards: Air Lease Corporation; Amgen Inc.; Apple Inc.


8		Chevron Corporation—2015 Proxy Statement


								ELECTION OF DIRECTORS


Inge G. Thulin		Mr. Thulin has been Chairman of the Board, President and Chief Executive Officer since 2012 of 3M Company, a diversified technology company. Prior Positions Held: Mr. Thulin was Executive Vice President and Chief Operating Officer of 3M Company from 2011 to 2012, with responsibility for all of 3M Company’s business segments and international operations. From 2004 to 2011, he was Executive Vice President of International Operations. Mr. Thulin joined 3M Sweden in 1979, working in sales and marketing, and has held numerous leadership positions in Asia Pacific, Europe, and the Middle East, and across multiple businesses. Prior Public Company Boards (within the last five years): The Toro Company. Other Boards and Memberships: Business Roundtable; Council on Foreign Relations; Sällskapet; University of Minnesota, Carlson School of Management, International Programs Advisory Council. *Specific qualifications and experience relevant to Chevron* Mr. Thulin has extensive board and senior executive–level expertise in business, finance, strategy, manufacturing, and international affairs as a result of his 35-year career with 3M Company and service on the board of The Toro Company. In particular, he serves as Chairman, President and Chief Executive Officer of a Fortune 500 public company, providing him insight into and experience with the operations, challenges, and complex issues facing large corporations. Mr. Thulin has also held numerous leadership positions in Asia Pacific, Europe, and the Middle East, areas where Chevron operates. As Chairman, President and Chief Executive Officer of 3M Company, Mr. Thulin oversees sustainability, one of the company’s key imperatives.

Age: 61 Director since: 2015
Committees: Board Nominating and Governance; Management Compensation
Other Public Company Boards: 3M Company


Carl Ware		Mr. Ware is a retired Executive Vice President of The Coca-Cola Company, the world’s largest beverage manufacturer. Prior Positions Held: Mr. Ware was a Senior Advisor to the Chief Executive Officer of The Coca-Cola Company from 2003 until 2005 and was Executive Vice President, Global Public Affairs and Administration, from 2000 until 2003. He was President of The Coca-Cola Company’s Africa Group, with operational responsibility for 50 countries in sub-Saharan Africa, from 1991 until 2000. Prior Public Company Boards (within the last five years): Coca-Cola Bottling Co. Consolidated; Cummins, Inc. Other Boards and Memberships: Clark Atlanta University; PGA TOUR Golf Course Properties, Inc. *Specific qualifications and experience relevant to Chevron* Mr. Ware has extensive board and senior executive–level expertise in business and operations. In particular, as a result of his 28-year career with The Coca-Cola Company and his service on the boards of Cummins and Coca-Cola Bottling, Mr. Ware has significant expertise in manufacturing, marketing, and public and international affairs. His tenure as President and Chief Operating Officer of Coca-Cola Africa provided in-depth knowledge of one of Chevron’s key areas of operations, and his tenure as Executive Vice President for Public Affairs and Administration provided additional public policy and environmental experience. In that position, Mr. Ware supervised companywide environmental policies, programs, and practices.

Age: 71 Director since: 2001
Committees: Management Compensation (Chair); Public Policy
Other Public Company Boards: None


Chevron Corporation—2015 Proxy Statement		9


ELECTION OF DIRECTORS


John S. Watson		Mr. Watson has been Chairman of the Board and Chief Executive Officer of Chevron since 2010. Prior Positions Held: Mr. Watson was Vice Chairman of the Board from 2009 until 2010. He was Executive Vice President of Strategy and Development from 2008 until 2009. From 2005 until 2008, he was President of Chevron International Exploration and Production Company, and from 2001 until 2005, he was Chief Financial Officer. In 1998, he was named Vice President with responsibility for strategic planning and mergers and acquisitions. Mr. Watson joined Chevron in 1980. Prior Public Company Boards (within the last five years): None. Other Boards and Memberships: American Petroleum Institute; American Society of Corporate Executives; The Business Council; Business Roundtable; JPMorgan International Council; National Petroleum Council; University of California Davis Chancellor’s Board of Advisors. *Specific qualifications and experience relevant to Chevron* Mr. Watson has extensive senior executive–level expertise at Chevron and in the energy industry with a strong knowledge of business, operations, strategy, markets, competitors, financial matters, energy policy, and environmental matters. In addition, his 34-year career at Chevron has at various times included principal responsibility for companywide finance, strategic planning, mergers and acquisitions, and international exploration and production. In 2000, Mr. Watson led Chevron’s integration effort following its successful acquisition of Texaco Inc., after which he became Chief Financial Officer. He is also active in a number of associations and organizations focusing on business, energy industry policy, and international relations.

Age: 58 Director since: 2009
Committees: None
Other Public Company Boards: None

Vote Required

Each Director nominee who receives a majority of the votes cast (i.e., the number of shares voted FOR a Director nominee must exceed the number of shares voted AGAINST that Director nominee, excluding abstentions) will be elected a Director, in an uncontested election. Any shares not voted (whether by abstention or otherwise) will have no impact on the elections. If you are a street name stockholder and do not vote your shares, your bank, broker, or other holder of record cannot vote your shares at its discretion in these elections.

If the number of Director nominees exceeds the number of Directors to be elected—a circumstance we do not anticipate—the Directors shall be elected by a plurality of the shares present in person or by proxy at the Annual Meeting, or any adjournment or postponement thereof, and entitled to vote on the election of Directors.

Your Board’s Recommendation

Your Board unanimously recommends that you vote FOR the 12 Director nominees named in this Proxy Statement.


10		Chevron Corporation—2015 Proxy Statement

Director Compensation

Overview

Our compensation for nonemployee Directors is designed to be competitive with other large, global energy companies and other large, capital-intensive, international companies, to link rewards to business results and stockholder returns, and to align stockholder and Director interests through increased Director ownership of Chevron common stock. We do not have a retirement plan for nonemployee Directors. Our executive officers are not paid additional compensation for their service as Directors.

The Board Nominating and Governance Committee evaluates and recommends to the nonemployee Directors of the Board the compensation for nonemployee Directors, and the nonemployee Directors of the Board set the compensation. Our executive officers have no role in determining the amount or form of nonemployee Director compensation. The Committee may retain the services of an independent compensation consultant to assist the Committee with its work.

In 2014, the Committee retained the services of an independent compensation consultant, Pearl Meyer & Partners, to assist the Committee with its biennial review of Chevron’s nonemployee Director compensation program. Under the retention agreement, the Committee has the exclusive right to select, retain, and terminate Pearl Meyer & Partners, as well as to approve any fees, terms, or other conditions of Pearl Meyer & Partners’ service. Pearl Meyer & Partners and its lead consultant report directly to the Committee but may work cooperatively with management to develop analyses and proposals when requested to do so by the Committee.

Pearl Meyer & Partners conducted a comprehensive review of the nonemployee Director compensation program, including a review of Director compensation arrangements at Chevron’s domestic oil peers (i.e., Anadarko Petroleum, ConocoPhillips, Devon Energy, ExxonMobil, Hess, Marathon Oil, Marathon Petroleum, Occidental Petroleum, Phillips 66, Tesoro, and Valero Energy) and Non-Oil Industry Peer Group Companies, which are identified in “Use of Peer Groups” in the “Compensation Discussion and Analysis” section of this Proxy Statement. Pearl Meyer & Partners does not provide any services to the Company.

Following its biennial review of the nonemployee Director compensation program, the Committee recommended only one change to the program for 2015: the payment of a $25,000 annual cash retainer for the independent Lead Director, in recognition of the Lead Director’s additional duties and time commitment, as discussed in the “Board Leadership and Independent Lead Director” section of this Proxy Statement. Otherwise, for 2015, nonemployee Directors will continue to receive total annual compensation of $375,000 per Director, with 40 percent paid in cash (or stock options at the Director’s election) and 60 percent paid in restricted stock units. Committee chairs will also continue to receive an additional $15,000 in cash for their services.

Below, we describe the nonemployee Directors’ 2014 annual compensation in more detail.

Cash or Stock Options (at the Director’s Election)

•

$150,000 annual cash retainer, paid in monthly installments beginning with the date the Director is elected to the Board.

•

$15,000 additional annual cash retainer for each Board committee chair, paid in monthly installments beginning with the date the Director becomes a committee chair.

•

Directors can elect to receive nonstatutory/nonqualified stock options instead of any portion of their cash compensation. Stock options are granted under the Chevron Corporation Nonemployee Directors’ Equity Compensation and Deferral Plan (NED Plan).

•

Directors can also elect to defer receipt of any portion of their cash compensation under the NED Plan.

Restricted Stock Units

•

$225,000 of the annual compensation is paid in the form of restricted stock units (RSUs) that are granted on the date of the annual meeting of stockholders at which the Director is elected.

•

If a Director is elected to the Board between annual meetings, a prorated grant can be made.

•

RSUs are subject to forfeiture (except when the Director dies, reaches mandatory retirement age of 72, becomes disabled, changes primary occupation, or enters government service) until the earlier of 12 months or the day preceding the first annual meeting of stockholders following the date of the grant.

•

RSUs are paid out in shares of Chevron common stock unless the Director has elected to defer the payout until retirement under the NED Plan.

Expenses and Charitable Matching Gift Program

Nonemployee Directors are reimbursed for out-of-pocket expenses incurred in connection with the business and affairs of Chevron. Nonemployee Directors are eligible to participate in Humankind, our charitable matching gift and community

involvement program, which is available to any employee, retiree, or Director. We will match contributions to eligible entities and grants for volunteer time, up to a maximum of $10,000 per year.


Chevron Corporation—2015 Proxy Statement		11


DIRECTOR COMPENSATION

Compensation During the Fiscal Year Ended December 31, 2014

The above-described choices available to Directors result in slight differences in reportable compensation, even though each Director was awarded the same amount (except for committee chairs, who received an additional $15,000 cash retainer). Specifically, one Director—Mr. Hernandez—elected to receive stock options for all of his annual cash retainer.

The following table sets forth the compensation of our nonemployee Directors for the fiscal year ended December 31, 2014. Mr. Huntsman joined the Board on January 15, 2014, and Mr. Cummings joined on December 10, 2014, and their compensation was prorated accordingly. Mr. Thulin joined the Board on January 28, 2015, after the reporting period covered in the following table.


Name	Fees Earned or Paid in Cash			Stock Awards⁽¹⁾		Option Awards⁽²⁾		All Other Compensation⁽³⁾		Total
Alexander B. Cummings Jr.	$	–	⁽⁴⁾	$	103,562		–	$	758	$	104,320
Linnet F. Deily	$	165,000	⁽⁵⁾	$	225,000		–	$	11,916	$	401,916
Robert E. Denham	$	165,000	⁽⁵⁾⁽⁶⁾	$	225,000		–	$	6,028	$	396,028
Alice P. Gast	$	150,000	⁽⁶⁾	$	225,000		–	$	5,251	$	380,251
Enrique Hernandez Jr.	$	–		$	225,000	$	150,000	$	15,664	$	390,664
Jon M. Huntsman Jr.	$	132,083	⁽⁷⁾	$	306,986		–	$	1,203	$	440,272
Charles W. Moorman IV	$	150,000	⁽⁶⁾	$	225,000		–	$	21,906	$	396,906
Kevin W. Sharer	$	150,000	⁽⁶⁾	$	225,000		–	$	3,737	$	378,737
John G. Stumpf	$	150,000		$	225,000		–	$	11,920	$	386,920
Ronald D. Sugar	$	165,000	⁽⁵⁾⁽⁶⁾	$	225,000		–	$	19,065	$	409,065
Inge G. Thulin	$	–	⁽⁸⁾	$	–		–	$	–	$	–
Carl Ware	$	165,000	⁽⁵⁾	$	225,000		–	$	5,488	$	395,488

(1)

Amounts reflect the grant date fair value for restricted stock units (RSUs) granted in 2014 under the NED Plan. We calculate the grant date fair value of these awards in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation — Stock Compensation (ASC Topic 718), for financial reporting purposes. The grant date fair value of these RSUs was $122.84 per unit, the closing price of Chevron common stock on May 27, 2014. For Mr. Cummings, reflects a grant date fair value of $104.86 per unit, the closing price of Chevron common stock on December 10, 2014, the day he joined the Board and received a prorated grant of 987 RSUs. For Mr. Huntsman, includes a grant date fair value of $119.18 per unit, the closing price of Chevron common stock on January 15, 2014, the day he joined the Board and received a prorated grant of 687 RSUs for the compensation period covering January 15, 2014, through May 27, 2014. RSUs accrue dividend equivalents, the value of which is factored into the grant date fair value. For purposes of this table only, estimates of forfeitures related to service-based vesting conditions have been disregarded. RSUs are payable in Chevron common stock.

At December 31, 2014, the following Directors had the following number of shares subject to outstanding stock awards or deferrals:


Name	Restricted Stock^(a)		Stock Units^(a)		Restricted Stock Units^(a)		Stock Units From Director’s Deferral of Cash Retainer^(b)		Total
Alexander B. Cummings Jr.		–		–		987		–		987
Linnet F. Deily		–		3,217		1,866		–		5,083
Robert E. Denham		3,298		10,230		19,165		17,045		49,738
Alice P. Gast		–		–		1,866		–		1,866
Enrique Hernandez Jr.		–		–		13,452		1,054		14,506
Jon M. Huntsman Jr.		–		–		1,866		–		1,866
Charles W. Moorman IV		–		–		5,737		2,895		8,632
Kevin W. Sharer		–		–		19,165		11,130		30,295
John G. Stumpf		–		–		1,866		–		1,866
Ronald D. Sugar		2,165		6,625		19,165		13,637		41,592
Inge G. Thulin		–		–		–		–		–
Carl Ware		6,942		18,184		19,165		431		44,722

(a)

Nonemployee Directors received awards of Restricted Stock and Stock Units from 2001 through 2006 and awards of RSUs beginning in 2007. Awards of Restricted Stock are fully vested and are settled in shares of Chevron common stock upon retirement. Awards of Stock Units are fully vested and are settled in shares of Chevron common stock in one to ten annual installments following the Director’s retirement, resignation, or death. The terms of awards of RSUs are described above.

(b)

Deferral elections must be made by December 31 in the year preceding the year in which the cash to be deferred is earned. Deferrals are credited, at the Director’s election, into accounts tracked with reference to the same investment fund options available to participants in the Chevron Deferred Compensation Plan for Management Employees II, including a Chevron Common Stock Fund. Distribution of deferred amounts is in cash except for amounts valued with reference to the Chevron Common Stock Fund, which are distributed in shares of Chevron common stock. Distribution will be made in either one or 10 annual installments for compensation deferred after December 31, 2004, and distributions will be made in one to 10 annual installments for compensation deferred prior to January 1, 2005. Any deferred amounts unpaid at the time of a Director’s death are distributed to the Director’s beneficiary.


12		Chevron Corporation—2015 Proxy Statement


								DIRECTOR COMPENSATION

(2)

For Directors electing stock options in lieu of all or a portion of the annual cash retainer, the stock options are granted on the date of the annual meeting of stockholders that the Director is elected. The stock options are exercisable for that number of shares of Chevron common stock determined by dividing the amount of the cash retainer subject to the election by the Black-Scholes value of a stock option on the date of grant. Elections to receive stock options in lieu of any portion of cash compensation must be made by December 31 in the year preceding the year in which the stock options are granted. The stock options have an exercise price based on the closing price of Chevron common stock on the date of grant.

Amounts reported here reflect the grant date fair value for stock options granted on May 28, 2014. The grant date fair value was determined in accordance with ASC Topic 718 for financial reporting purposes. The grant date fair value of each option is calculated using the Black-Scholes model. Stock options granted on May 28, 2014, have an exercise price of $122.52 and a grant date fair value of $25.07. The assumptions used in the Black-Scholes model to calculate this grant date fair value were: an expected life of 6.0 years, a volatility rate of 30 percent, a risk-free interest rate of 1.84 percent and a dividend yield of 3.55 percent. For purposes of this table only, estimates of forfeitures related to service-based vesting conditions have been disregarded.

Mr. Hernandez elected to receive all of his 2014 annual cash compensation in the form of stock options. The number of stock options granted in 2014 to Mr. Hernandez was 5,983. One-half of the stock options vest six months following the date of grant, and the remaining half vests on the earlier of 12 months or the day preceding the first annual meeting of stockholders following the date of grant. Stock options expire after 10 years.

At December 31, 2014, Ms. Deily had 1,456 outstanding and vested stock options, and Mr. Hernandez had 38,274 outstanding, vested and unvested stock options. Under the rules governing awards of stock options under the NED Plan, Directors who retire in accordance with Chevron’s Director Retirement Policy have until 10 years from the date of grant to exercise any outstanding option.

(3)	All Other Compensation for 2014 includes the following items:


	Insurance^(a)		Perquisites^(b)		Charitable^(c)
Alexander B. Cummings Jr.	$	758	$	–	$	–
Linnet F. Deily	$	758	$	1,158	$	10,000
Robert E. Denham	$	758	$	5,270	$	–
Alice P. Gast	$	758	$	4,493	$	–
Enrique Hernandez Jr.	$	758	$	4,906	$	10,000
Jon M. Huntsman Jr.	$	758	$	445	$	–
Charles W. Moorman IV	$	758	$	1,148	$	20,000
Kevin W. Sharer	$	758	$	2,979	$	–
John G. Stumpf	$	758	$	11,162	$	–
Ronald D. Sugar	$	758	$	18,307	$	–
Inge G. Thulin	$	–	$	–	$	–
Carl Ware	$	758	$	4,730	$	–

(a)

Amounts reflect the annualized premium for accidental death and dismemberment insurance coverage paid by Chevron.

(b)

For Ms. Deily and Ms. Gast and Messrs. Denham, Hernandez, Moorman, Sharer, Stumpf, Sugar, and Ware, includes the aggregate incremental cost to Chevron for expenses deemed perquisites incurred in connection with the Board of Directors’ October 2014 trip to Europe and Asia. Generally every two years, the Board travels to a selection of Chevron’s international locations of operation to gain additional insight into Chevron’s operations and to meet with local and expatriate Chevron management and personnel, as well as local, state, and national officials. Board member spouses are invited to attend the international Board trip to learn about Chevron’s operations, foster social interaction among the Directors and executives, attend receptions with local and expatriate Chevron employees and their families and local government officials, tour Chevron facilities, and participate in community engagement and other goodwill activities on behalf of Chevron. Amounts reported include the aggregate incremental costs incurred in connection with spousal attendance and attributed to the Director as a perquisite, including transportation (such as commercial air travel when in lieu of corporate air travel), lodging, meals, gifts, tours, and other activities for the spouse. For commercial air travel, lodging, meals, gifts, tours, and other activities, incremental cost reflects actual cost. For all Directors, except Messrs. Cummings and Thulin, includes the actual cost of annual service gift valued at $445, and for Messrs. Denham and Sharer, includes a milestone service award valued at $486 and $483, respectively.

(c)

Amounts paid in 2014 by Chevron in the Director’s name under Humankind, our charitable matching gift and grant for volunteer time program, to match donations made by the Directors in 2013 and/ or 2014.

(4)	Mr. Cummings joined the Board on December 10, 2014, and his prorated cash retainer was first paid in January 2015.

(5)	Amount includes the additional retainer for serving as a Board committee chair during 2014.

(6)	The Director has elected to defer some or all of the annual cash retainer under the NED Plan in 2014. None of the earnings under the NED Plan are above market or preferential.

(7)	Mr. Huntsman joined the Board on January 15, 2014.

(8)	Mr. Thulin joined the Board on January 28, 2015.


Chevron Corporation—2015 Proxy Statement		13

Corporate Governance

Overview

Chevron is governed by a Board of Directors and committees of the Board that meet throughout the year. Directors discharge their responsibilities at Board and committee meetings and also through other communications with management. Your Board is

committed to corporate governance structures and practices that help Chevron compete more effectively, sustain its success, and build long-term stockholder value.

Role of the Board of Directors

Your Board oversees and provides policy guidance on Chevron’s business and affairs. It monitors overall corporate performance, the integrity of Chevron’s financial controls, and the effectiveness of its legal compliance and enterprise risk management programs. Your Board oversees management and plans for the

succession of key executives. It also oversees Chevron’s strategic and business planning process. This is generally a year-round process, culminating in Board reviews of Chevron’s strategic plan, its business plan, the next year’s capital expenditures budget, and key financial and operational indicators.

Director Independence

Your Board has determined that each nonemployee Director who served in 2014 and each current nonemployee Director and nonemployee Director nominee is independent in accordance with the NYSE Corporate Governance Standards and that no material relationship exists that would interfere with the exercise of independent judgment in carrying out the responsibilities of a Director.

For a Director to be considered independent, the Board must determine that the Director does not have any material relationship with Chevron, other than as a Director. In making its determinations, the Board adheres to the specific tests for independence included in the NYSE Corporate Governance Standards. In addition, the Board has determined that the following relationships of Chevron Directors occurring within the last fiscal year are categorically immaterial to a determination of independence if the relevant transaction was conducted in the ordinary course of business:

•

a director of another entity if business transactions between Chevron and that entity do not exceed $5 million or 5 percent of the receiving entity’s consolidated gross revenues, whichever is greater;

•

a director of another entity if Chevron’s discretionary charitable contributions to that entity do not exceed $1 million or 2 percent of that entity’s gross revenues, whichever is greater, and if the charitable contributions are consistent with Chevron’s philanthropic practices; and

•

a relationship arising solely from a Director’s ownership of an equity or limited partnership interest in a party that engages in a transaction with Chevron as long as the Director’s ownership interest does not exceed 2 percent of the total equity or partnership interest in that other party.

These categorical standards are contained in our Corporate Governance Guidelines, which are available on our website at www.chevron.com and are available in print upon request.

Ms. Deily and Messrs. Cummings, Denham, Hernandez, Huntsman, Moorman, Sharer, Stumpf, Sugar, and Thulin are directors of for-profit entities with which Chevron conducts business in the

ordinary course. They, Dr. Gast, and Mr. Ware are also directors or trustees of, or similar advisors to, not-for-profit entities to which Chevron makes contributions. The Board has determined that all of these transactions and contributions were below the thresholds set forth in the first and second categorical standards described above (except as noted below) and are, therefore, categorically immaterial to the particular Director’s independence.

The Board reviewed the following relationships and transactions that existed or occurred in 2014 that are not covered by the categorical standards described above:

•

For Mr. Cummings, the Board considered that in 2014, Chevron purchased products and services from The Coca-Cola Company in the ordinary course of business, amounting to less than 0.026 percent of The Coca-Cola Company’s most recently reported annual consolidated gross revenues, and The Coca-Cola Company purchased products and services from Chevron, in the ordinary course of business, amounting to less than 0.012 percent of Chevron’s most recently reported annual consolidated gross revenues. Mr. Cummings is Executive Vice President and Chief Administrative Officer of The Coca-Cola Company. The Board concluded that these transactions would not impair Mr. Cummings’ independence.

•

For Dr. Gast, the Board considered that in 2014, Chevron contributed and matched various employee contributions to Lehigh University amounting to less than 0.089 percent of the University’s most recently reported annual gross revenues. Dr. Gast was the president of the University until July 2014. The Board also considered that in 2014, Chevron purchased services from Imperial College London amounting to less than 0.025 percent of Imperial College’s most recently reported annual gross revenues. Dr. Gast is the president of Imperial College. The Board concluded that these transactions would not impair Dr. Gast’s independence.

•

For Mr. Hernandez, the Board considered that in 2014, Chevron purchased services from Inter-Con Security Systems of Liberia Limited, a subsidiary of Inter-Con Security Systems, Inc., in the


14		Chevron Corporation—2015 Proxy Statement


								CORPORATE GOVERNANCE

ordinary course of business, amounting to less than one percent of Inter-Con’s most recent annual consolidated gross revenues. Mr. Hernandez is Chairman, Chief Executive Officer and President and a significant stockholder of Inter-Con, a privately held business. The Board concluded that these transactions would not impair Mr. Hernandez’s independence.

•

For Mr. Moorman, the Board considered that in 2014, Chevron purchased products and services from Norfolk Southern Corporation, in the ordinary course of business, amounting to less than 0.032 percent of Norfolk Southern’s most recently reported annual consolidated gross revenues, and Norfolk Southern purchased products and services from Chevron, in the ordinary course of business, amounting to less than 0.021 percent of Chevron’s most recently reported annual consolidated gross revenues. Mr. Moorman is the Chairman and Chief Executive Officer of Norfolk Southern. The Board concluded that these transactions would not impair Mr. Moorman’s independence.

•

For Mr. Sharer, the Board considered that in 2014, Chevron matched various employee contributions and purchased products and services from Harvard Business School, in the ordinary course of business, amounting to less than 0.001 percent of the business school’s most recently reported annual consolidated gross revenues. Mr. Sharer is a Senior Lecturer of Business Administration at Harvard Business School. The Board concluded that these transactions would not impair Mr. Sharer’s independence.

•

For Mr. Stumpf, the Board considered that in 2014, Chevron utilized Wells Fargo & Company for commercial banking, brokerage, and other services, in the ordinary course of business, amounting to less than 0.074 percent of Wells Fargo’s most recently reported annual consolidated gross revenues, and Wells Fargo paid to Chevron interest in connection with time deposits and similar transactions in the ordinary course of business, amounting to less than 0.004 percent of Chevron’s most recently reported annual consolidated gross revenues. Mr. Stumpf is the Chairman, Chief Executive Officer and President of Wells Fargo. The Board concluded that these transactions would not impair Mr. Stumpf’s independence.

•

For Mr. Thulin, the Board considered that in 2014, Chevron purchased products and services from 3M Company in the ordinary course of business, amounting to less than 0.002 percent of 3M Company’s most recently reported annual consolidated gross revenues, and 3M Company purchased products and services from Chevron, in the ordinary course of business, amounting to less than 0.001 percent of Chevron’s most recently reported annual consolidated gross revenues. Mr. Thulin is the Chairman, President, and Chief Executive Officer of 3M Company. The Board concluded that these transactions would not impair Mr. Thulin’s independence.

Board Leadership and Independent Lead Director

Under Chevron’s By-Laws, the positions of Chairman of the Board and Chief Executive Officer are separate positions that may be occupied by the same person. Chevron’s independent Directors select the Chairman of the Board annually. Thus, the Board has great flexibility to choose its optimal leadership structure depending upon Chevron’s particular needs and circumstances and to organize its functions and conduct its business in the most effective manner.

Annually, the Board Nominating and Governance Committee conducts an assessment of Chevron’s corporate governance structures and processes, which includes a review of Chevron’s Board leadership structure and whether combining or separating the roles of Chairman and CEO is in the best interests of Chevron’s stockholders. At present, Chevron’s Board believes that it is in the stockholders’ best interests for the CEO, Mr. Watson, to also serve as Chairman of the Board. The Board believes that having Mr. Watson serve as Chairman fosters an important unity of leadership between the Board and management that is subject to effective oversight by the independent Lead Director and the other independent Directors. The Board believes that it benefits from the significant knowledge, insight, and perspective of Chevron and the energy industry that Mr. Watson has gained throughout his 34 years with Chevron. Our business is highly complex and our projects have long lead times, with many of our major capital projects taking more than 10 years from the exploration phase to first production. The Board believes that Mr. Watson’s in-depth knowledge of the Company, coupled with his extensive

industry expertise, makes him particularly qualified to lead discussions of the Board. Having Mr. Watson serve as Chairman also promotes better alignment of Chevron’s long-term strategic development with its operational execution.

Significantly, the Board does not believe that combining the roles creates ambiguity about reporting relationships. Given the role of the independent Lead Director discussed below and the fact that the independent Directors, pursuant to their powers under the By-Laws, have affirmatively selected Mr. Watson for the positions of Chairman and CEO, annually set his compensation, and regularly evaluate his performance, the Board believes it is clear that Mr. Watson reports and is accountable to the independent Directors. Moreover, the Board does not believe that having the CEO also serve as Chairman inhibits the flow of information and interactions between the Board, management, and other Company personnel. To the contrary, the Board has unfettered access to management and other Company personnel, and the Board believes that having Mr. Watson in the roles of both Chairman and CEO facilitates the flow of information and communications between the Board and management, which enhances the Board’s ability to obtain information and to monitor management.

Your Board recognizes the importance of independent Board oversight of the CEO and management and has developed policies and procedures designed to ensure independent oversight. In addition to conducting an annual review of the


Chevron Corporation—2015 Proxy Statement		15


CORPORATE GOVERNANCE

CEO’s performance, the independent Directors meet in executive session at each Board meeting and discuss management’s performance and routinely formulate guidance and feedback, which the independent Lead Director provides to the CEO and other members of management.

Further, when the Board selects the CEO to also serve as Chairman, the independent Directors annually select an independent Lead Director, currently Mr. Denham. As described in the “Board Leadership and Lead Director” section of Chevron’s Corporate Governance Guidelines, the Lead Director’s responsibilities are to:

•

chair all meetings of the Board in the Chairman’s absence, including executive sessions;

•

serve as liaison between the Chairman and the independent Directors;

•

consult with the Chairman on and approve meeting agendas and schedules and information sent to the Board;

•

consult with the Chairman on other matters pertinent to Chevron and the Board;

•

call meetings of the independent Directors; and

•

if requested by major stockholders, be available as appropriate for consultation and direct communication.

The Board routinely reviews the Lead Director’s responsibilities to ensure that these responsibilities enhance its independent oversight of the CEO and management and the flow of information and interactions between the Board, management, and other Company personnel. In this respect, the Lead Director and Chairman collaborate closely on Board meeting schedules and agendas and information provided to the Board. These consultations and agendas and the information provided to the Board frequently reflect input and suggestions from other members of the Board and management. You can read more about these particular processes in the “Board Agenda and Meetings” section of Chevron’s Corporate Governance Guidelines.

Any stockholder can communicate with the Lead Director or any of the other Directors in the manner described in the “Communicating With the Board” section of this Proxy Statement.

Also, as discussed in more detail in the “Engagement” section of this Proxy Statement, the Board encourages a robust investor engagement program. During these engagements, Board leadership is a frequent topic of discussion. In general, investors have overwhelmingly communicated to Chevron, including those that are philosophically opposed to combining the positions of Chairman and CEO, that they have minimal, if any, concerns about your Board and individual Directors and about its policies and leadership structure. More specifically, these investors have voiced confidence in the strong counterbalancing structure of the robust independent Lead Director role.

Board Committees

Chevron’s Board of Directors has four standing committees: Audit; Board Nominating and Governance; Management Compensation; and Public Policy. The Audit, Board Nominating and Governance, and Management Compensation Committees are each constituted and operated according to the independence and other requirements of the Securities Exchange Act of 1934, as amended (Exchange Act) and the New York Stock Exchange (NYSE) Corporate Governance Standards. In addition, each member of the Compensation Committee is an “outside” Director for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended, and each member of the Audit Committee is financially literate and, other than Dr. Gast, an “audit committee financial expert,” as such terms are defined under the Exchange Act and related rules and the NYSE Corporate Governance Standards.

Each committee is chaired by an independent Director who determines the agenda, the frequency and length of the meetings, and who has unlimited access to management, information, and independent advisors, as necessary. Each non-employee Director generally serves on one or two committees. Committee members serve staggered terms enabling Directors to rotate periodically to different committees. Four- to six-year terms for committee chairs facilitates rotation of committee chairs while preserving experienced leadership.

Each Committee is governed by a written charter that can be viewed on Chevron’s website at www.chevron.com and is available in print upon request.


16		Chevron Corporation—2015 Proxy Statement


								CORPORATE GOVERNANCE


Committees and Membership		Committee Functions
Audit Ronald D. Sugar, Chair * Alexander B. Cummings Jr. Alice P. Gast Charles W. Moorman * Kevin W. Sharer * John G. Stumpf *		• Selects the independent registered public accounting firm for endorsement by the Board and ratification by the stockholders • Reviews reports of independent registered public accounting firm and internal auditors • Reviews and approves the scope and cost of all services (including nonaudit services) provided by the independent registered public accounting firm • Monitors the effectiveness of the audit process and financial reporting • Reviews the adequacy of financial and operating controls • Monitors implementation and effectiveness of Chevron’s compliance policies and procedures • Assists the Board in fulfilling its oversight of enterprise risk management, particularly financial risk • Evaluates the effectiveness of the Audit Committee
Board Nominating and Governance Robert E. Denham, Chair* Linnet F. Deily Jon M. Huntsman Jr. Inge G. Thulin		• Evaluates the effectiveness of the Board and its committees and recommends changes to improve Board, Board committee, and individual Director effectiveness • Assesses the size and composition of the Board • Recommends prospective Director nominees • Reviews and approves nonemployee Director compensation • Reviews and recommends changes as appropriate in Chevron’s Corporate Governance Guidelines, Restated Certificate of Incorporation, By-Laws, and other Board-adopted governance provisions • Reviews stockholder proposals and recommends Board responses to proposals • Assists the Board in fulfilling its oversight of enterprise risk management, particularly risks in connection with Chevron’s corporate governance structures and processes • Evaluates the effectiveness of the Board Nominating and Governance Committee
Management Compensation Carl Ware, Chair* Robert E. Denham Enrique Hernandez Jr.* Inge G. Thulin		• Conducts an annual review of the CEO’s performance • Reviews and recommends to the independent Directors the salary and other compensation for the CEO • Reviews and approves salaries and other compensation for executive officers other than the CEO • Administers Chevron’s executive incentive and equity-based compensation plans • Reviews Chevron’s strategies and supporting processes for management succession planning, leadership development, executive retention, and diversity • Assists the Board in fulfilling its oversight of enterprise risk management, particularly risks in connection with Chevron’s compensation programs • Evaluates the effectiveness of the Management Compensation Committee
Public Policy Linnet F. Deily, Chair Enrique Hernandez Jr.* Jon M. Huntsman Jr. Carl Ware*		• Identifies, monitors, and evaluates domestic and international social, political, human rights, and environmental trends and issues that affect Chevron’s activities and performance • Recommends to the Board policies, programs, and strategies concerning such issues • Recommends to the Board policies, programs, and practices concerning support of charitable, political, and educational organizations • Reviews annually the policies, procedures, and expenditures for Chevron’s political activities, including political contributions and direct and indirect lobbying • Reviews stockholder proposals and recommends Board responses to proposals • Assists the Board in fulfilling its oversight of enterprise risk management, particularly risks in connection with the social, political, environmental, and public policy aspects of Chevron’s business • Evaluates the effectiveness of the Public Policy Committee

Effective May 26, 2015, Dr. Sugar will rotate off the Audit Committee (AC) and replace Mr. Denham as the Chair of the Board Nominating and Governance Committee (BN&GC) and also join the Management Compensation Committee (MCC); Mr. Moorman will replace Dr. Sugar as Chair of the AC; Mr. Stumpf will rotate off the AC and join the BN&GC and MCC; Mr. Denham will rotate off the BN&GC and join the AC; and Mr. Hernandez will replace Mr. Ware as Chair of the MCC. Mr. Sharer will retire from the Board in 2015, effective as of the Annual Meeting.


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CORPORATE GOVERNANCE

Board and Committee Meetings and Attendance

In 2014, your Board held six Board meetings, with each meeting including an executive session of independent Directors presided over by Mr. Denham, our independent Lead Director, and 21 Board committee meetings, which included nine Audit Committee, five Board Nominating and Governance Committee, four Management Compensation Committee, and three Public Policy Committee meetings. All current Directors, other than Messrs. Cummings and Thulin, who joined the Board in December 2014 and January 2015, respectively, attended 81 percent or more of the Board meetings and their Board committee meetings

during 2014. Chevron’s policy regarding Directors’ attendance at the Annual Meeting, as described in the “Board Agenda and Meetings” section of Chevron’s Corporate Governance Guidelines (available at www.chevron.com), is that all Directors are expected to attend the Annual Meeting, absent extenuating circumstances. All current Directors attended the 2014 Annual Meeting, other than Messrs. Hernandez and Stumpf, who had unavoidable conflicts, and Messrs. Cummings and Thulin, who joined the Board following the meeting.

Board and Committee Oversight of Risk

One of the many duties of your Board is to oversee Chevron’s risk management policies and practices to ensure that the appropriate risk management systems are employed throughout the Company. Chevron faces a broad array of risks, including

market, operational, strategic, legal, political, and financial risks. The Board exercises its role of risk oversight in a variety of ways, including the following:


Board of Directors	•	Monitors overall corporate performance, the integrity of Chevron’s financial controls, and the effectiveness of its legal compliance and enterprise risk management programs, risk governance practices, and risk mitigation efforts, particularly with regard to those risks specified by the Company as “Risk Factors” in its Annual Report on Form 10-K
	•	Oversees management’s implementation and utilization of appropriate risk management systems at all levels of the Company, including operating companies, business units, corporate departments, and service companies
	•	Reviews specific facilities and operational risks as part of visits to Company operations
	•	Reviews portfolio, capital allocation, and geopolitical risks in the context of the Board’s annual strategy session and the annual business plan and capital budget review
	•	Receives reports from management on risk matters in the context of the Company’s strategic, business, and operational planning and decision making
	•	Receives reports from various centers of management-level risk expertise, including Corporate Strategic Planning, Legal, Corporate Compliance, Health, Environment and Safety, Information Technology, Security, Global Exploration and Reserves, Corporation Finance, and others
Audit Committee	•	Assists the Board in fulfilling its oversight of financial risk exposures and implementation and effectiveness of Chevron’s compliance programs
	•	Discusses Chevron’s policies with respect to financial risk assessment and financial risk management
	•	Meets with Chevron’s Chief Compliance Officer and representatives of Chevron’s Compliance Policy Committee to receive information regarding compliance policies and procedures and internal controls
	•	Meets with and reviews reports from Chevron’s independent registered public accounting firm and internal auditors
	•	Reports its discussions to the full Board for consideration and action when appropriate
Board Nominating and Governance Committee	•	Assists the Board in fulfilling its oversight of risks that may arise in connection with the Company’s governance structures and processes
Board Nominating and Governance Committee	•	Conducts an annual evaluation of the Company’s governance practices with the help of the Corporate Governance department
	•	Discusses risk management in the context of general governance matters, including, among other topics, Board and management succession planning, delegations of authority and internal approval processes, stockholder proposals and activism, and Director and officer liability insurance
	•	Reports its discussions to the full Board for consideration and action when appropriate
Management Compensation Committee	•	Assists the Board in fulfilling its oversight of risks that may arise in connection with Chevron’s compensation programs and practices
Management Compensation Committee	•	Reviews the design and goals of Chevron’s compensation programs and practices in the context of possible risks to Chevron’s financial and reputational well-being
	•	Reviews Chevron’s strategies and supporting processes for management succession planning, leadership development, executive retention, and diversity
	•	Reports its discussions to the full Board for consideration and action when appropriate
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 in which it operates
	•	Discusses risk management in the context of, among other things, legislative and regulatory initiatives, safety and environmental stewardship, community relations, government and nongovernment organization relations, and Chevron’s reputation
	•	Reports its discussions to the full Board for consideration and action when appropriate


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								CORPORATE GOVERNANCE

Succession Planning and Leadership Development

Succession planning and leadership development are top priorities for your Board and management. Annually, the nonemployee Directors review candidates for all senior management positions to ensure that qualified candidates are available for all positions and that development plans are being utilized to strengthen the skills and qualifications of candidates.

To assist the nonemployee Directors, the CEO periodically provides them with an assessment of senior executives and their potential to succeed to the position of CEO, as well as perspectives on potential candidates for other senior management positions.

Board and Committee Evaluations

Each year, your Board and its committees perform a rigorous self-evaluation. As required by Chevron’s Corporate Governance Guidelines, the Board Nominating and Governance Committee oversees this process. The performance evaluations solicit anonymous input from Directors regarding the performance and effectiveness of the Board, the Board Committees, and individual Directors and provide an opportunity for Directors to identify improvements. In addition, the independent Lead Director has individual conversations with each member of the Board, providing further opportunity for dialogue and improvement.

The Board Nominating and Governance Committee reviews the results and feedback from the evaluation process and makes recommendations for improvements as appropriate. The independent Lead Director leads a discussion of the evaluation results during an executive session of the Board and communicates relevant feedback to the Chairman and CEO. Your Board has successfully used this process to evaluate Board and committee effectiveness and identify opportunities to strengthen the Board.

Corporate Governance Guidelines

Your Board has adopted Corporate Governance Guidelines to provide a transparent framework for the effective governance of Chevron. The Corporate Governance Guidelines are reviewed regularly and updated as appropriate. The full text of the Corporate Governance Guidelines can be found on our website at www.chevron.com. They address, among other topics:

•

the role of the Board

•

Board membership criteria

•

Director independence

•

the selection of new Directors

•

Board size

•

Director terms of office

•

the election of Directors

•

Director retirement

•

Board leadership and the independent Lead Director

•

executive sessions

•

succession planning

•

Director compensation

•

Board access to senior management

•

Board performance evaluations

•

stock ownership guidelines

•

communicating with the Board

Business Conduct and Ethics Code

We have adopted a code of business conduct and ethics for Directors, officers (including the Company’s Chief Executive Officer, Chief Financial Officer, and Comptroller), and employees, known as the Business Conduct and Ethics Code. The code is available on our website at www.chevron.com and is available in print upon request. We will post any amendments to the code on our website.


Chevron Corporation—2015 Proxy Statement		19


CORPORATE GOVERNANCE

Engagement

Your Board believes that fostering long-term and institution-wide relationships with stockholders and maintaining their trust 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 and emerging issues to ensure that the Board and management understand and address the issues that are important to our stockholders.

In an effort to continuously improve Chevron’s governance processes and communications, Chevron has developed and follows an Annual Engagement Plan and Process to systematically identify and plan its engagements and to proactively address important issues. The Annual Engagement Plan and Process is supervised by an Engagement Steering Committee, which is composed of senior executive officers.

The Engagement Steering Committee meets periodically to discuss engagement efforts and key issues and trends.

Since Chevron’s last 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 more than 40 in-depth discussions with stockholders representing more than 30 percent of Chevron’s common stock outstanding. 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 gained valuable feedback during these engagements, and this feedback was shared with the Board and its relevant committees. For more information about these engagements, see the “Board Leadership and Independent Lead Director” and “Compensation Discussion and Analysis” sections of this Proxy Statement.

Communicating With the Board

The Board Nominating and Governance Committee reviews interested-party communications, including stockholder inquiries directed to nonemployee Directors. The Corporate Secretary and Chief Governance Officer compiles the communications, summarizes lengthy or repetitive communications, and regularly summarizes the communications received, the responses sent, and further disposition, if any. All communications are available to the Directors.

Interested parties wishing to communicate their concerns or questions about Chevron to the independent Lead Director or any other nonemployee Directors may do so by mail addressed to Lead Director or Nonemployee Directors, c/o Office of the Corporate Secretary and Chief Governance Officer, 6001 Bollinger Canyon Road, San Ramon, CA 94583-2324 or by email to corpgov@chevron.com.

Related Person Transactions

Review and Approval of Related Person Transactions

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 included in our Business Conduct and Ethics Code. Directors and 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 relationship that may give rise to a conflict of interest.

Your Board has charged the Board Nominating and Governance Committee to review related person transactions as defined by U.S. Securities and Exchange Commission (SEC) rules. The Committee has adopted guidelines to assist it with this review. Under these guidelines, all executive officers, Directors, and Director nominees must promptly advise the Corporate Secretary and Chief Governance Officer of any proposed or actual business and financial affiliations involving themselves or their immediate family members that, to the best of their knowledge after reasonable inquiry, could reasonably be expected to give rise to a reportable related person transaction. The Corporate Secretary and Chief Governance Officer will prepare a report summarizing

any potentially reportable transactions, and the Committee will review these reports and determine whether to approve or ratify the identified transaction. The Committee has identified the following categories of transactions that are deemed to be preapproved by the Committee, even if the aggregate amount involved exceeds the $120,000 reporting threshold identified in the SEC rules:

•

compensation paid to an executive officer if that executive officer’s compensation is otherwise reported in our Proxy Statement or if the executive officer is not an immediate family member of another Chevron executive officer or Director;

•

compensation paid to a Director for service as a Director if that compensation is otherwise reportable in our Proxy Statement;

•

transactions in which the related person’s interest arises solely as a stockholder and all stockholders receive the same benefit on a pro-rata basis;

•

transactions involving competitive bids (unless the bid is awarded to a related person who was not the lowest bidder or unless the bidding process did not involve the use of formal procedures normally associated with our competitive bidding procedures);

•

transactions involving services as a common or contract carrier or public utility in which rates or charges are fixed by law;


20		Chevron Corporation—2015 Proxy Statement


								CORPORATE GOVERNANCE

•

transactions involving certain banking-related services under terms comparable with similarly situated transactions;

•

transactions conducted in the ordinary course of business in which our Director’s interest arises solely because he or she is a director of another entity and the transaction does not exceed $5 million or 5 percent (whichever is greater) of the receiving entity’s consolidated gross revenues for that year;

•

charitable contributions by Chevron to an entity in which our Director’s interest arises solely because he or she is a director, trustee, or similar advisor to the entity and the contributions do not exceed, in the aggregate, $1 million or 2 percent (whichever is greater) of that entity’s gross revenues for that year; and

•

transactions conducted in the ordinary course of business and our Director’s interest arises solely because he or she owns an equity or limited partnership interest in the entity and the transaction does not exceed 2 percent of the total equity or partnership interests of the entity.

The Committee reviews all relevant information, including the amount of all business transactions involving Chevron and the entity with which the Director or executive officer is associated, and determines whether to approve or ratify the transaction. A Director will abstain from decisions regarding transactions involving that Director or his or her family members.

Related Person Transactions

Two immediate family members of Mr. Jay Johnson, Senior Vice President, Upstream, are employed by Chevron. In 2014, Mr. Johnson’s son, Samuel W. Johnson, received compensation consisting of approximately $117,000 in salary and annual bonus and approximately $262,000 in customary employee benefits, including expatriate benefits. In 2014, Mr. Johnson’s daughter, Alexandra Lakin, received compensation consisting of approximately $103,000 in salary and bonus and approximately $38,000 in customary employee benefits, including relocation benefits. These amounts reflect compensation that is consistent with the total compensation provided to other employees of the same level with similar responsibilities.

The Board Nominating and Governance Committee has reviewed and ratified these transactions under the standards described above.

Board Nominating and Governance Committee Report

The Board Nominating and Governance Committee (the Committee) is responsible for recommending to the Board the qualifications for Board membership, identifying, assessing, and recommending qualified Director candidates for the Board’s consideration, assisting the Board in organizing itself to discharge its duties and responsibilities, and providing oversight of Chevron’s corporate governance practices and policies, including an effective process for stockholders to communicate with the Board. The Committee is composed entirely of independent Directors as defined by the NYSE Corporate Governance Standards and operates under a written charter. The Committee’s charter is available on Chevron’s website at www.chevron.com and is available in print upon request.

The Committee’s role in and process for identifying and evaluating prospective Director nominees, including nominees recommended by stockholders, is described in the “Director Nomination Process” section of this Proxy Statement. In addition, the Committee makes recommendations to the Board concerning Director independence, Board committee assignments, committee chairs, Audit Committee “financial experts,” and the financial literacy of Audit Committee members. The Committee also reviews the process and the results of the annual performance evaluations of the Board, Board committees, and individual Directors.

The Committee regularly reviews trends and recommends best practices, initiates improvements, and plays a leadership role in maintaining Chevron’s strong corporate governance structures and practices. Among the practices the Committee believes demonstrate the Company’s commitment to strong corporate governance are the following:

•

annual election of all Directors;

•

supermajority of independent Directors;

•

majority vote standard for the election of Directors in uncontested elections, coupled with a Director resignation policy;

•

annual election of the Chairman of the Board by independent Directors;

•

annual election of an independent Lead Director by independent Directors;

•

annual performance assessment of the Board, Board committees, and individual Directors;

•

Director retirement policy;

•

annual succession planning sessions;

•

confidential stockholder voting policy;

•

minimum stockholding requirements for Directors and officers;

•

review and approval or ratification of “related person transactions” as defined by SEC rules;

•

policy to obtain stockholder approval of any stockholder rights plan;

•

right of stockholders to call for a special meeting; and

•

no supermajority voting provisions in Restated Certificate of Incorporation or By-Laws.

Stockholders can find additional information concerning Chevron’s corporate governance structures and practices in Chevron’s Corporate Governance Guidelines, By-Laws, and Restated Certificate of Incorporation, copies of which are available on Chevron’s website at www.chevron.com and are available in print upon request.

Respectfully submitted on March 24, 2015, by members of the Board Nominating and Governance Committee of your Board:

Robert E. Denham, Chair

Linnet F. Deily

Jon M. Huntsman Jr.

Inge G. Thulin


Chevron Corporation—2015 Proxy Statement		21


CORPORATE GOVERNANCE

Management Compensation Committee Report

The Management Compensation Committee (the Committee) of Chevron has reviewed and discussed with management the Compensation Discussion and Analysis beginning on page 24 of this Proxy Statement. Based on such review and discussion, the Committee recommended to the Board of Directors of the Corporation that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Corporation’s Annual Report on Form 10-K.

Respectfully submitted on March 24, 2015, by members of the Management Compensation Committee of your Board:

Carl Ware, Chair

Robert E. Denham

Enrique Hernandez Jr.

Inge G. Thulin

Audit Committee Report

The Audit Committee (the Committee) assists your Board in fulfilling its responsibility to oversee management’s implementation of Chevron’s financial reporting process. The Committee charter can be viewed on the Chevron website at www.chevron.com and is available in print upon request.

In discharging its oversight role, the Committee reviewed and discussed the audited financial statements contained in the 2014 Annual Report on Form 10-K with Chevron’s management and its independent registered public accounting firm. Management is responsible for the financial statements and the reporting process, including the system of disclosure controls and procedures and internal control over financial reporting. The independent registered public accounting firm is responsible for expressing an opinion on the conformity of Chevron’s financial statements with accounting principles generally accepted in the United States and on the effectiveness of the Company’s internal control over financial reporting.

The Committee met privately with the independent registered public accounting firm and discussed issues deemed significant by the accounting firm, and the Committee has discussed with the independent auditors the matters required to be discussed by Auditing Standard No. 16, “Communications With Audit Committees,” as adopted by the Public Company Accounting Oversight Board.

In addition, the Committee discussed with the independent registered public accounting firm its independence from Chevron and its management; received the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Committee concerning independence; and considered whether the provision of nonaudit services was compatible with maintaining the accounting firm’s independence.

In reliance on the reviews and discussions outlined above, the Committee has recommended to your Board that the audited financial statements be included in Chevron’s Annual Report on Form 10-K for the year ended December 31, 2014, for filing with the U.S. Securities and Exchange Commission.

Respectfully submitted on February 19, 2015, by the members of the Audit Committee of your Board:

Ronald D. Sugar, Chair

Alexander B. Cummings Jr.

Alice P. Gast

Charles W. Moorman

Kevin W. Sharer

John G. Stumpf


22		Chevron Corporation—2015 Proxy Statement

Board Proposal to Ratify the Appointment of the

Independent Registered Public Accounting Firm

(Item 2 on the Proxy Card)

Principal Accountant Fees and Services

The Audit Committee (the Committee), which is composed entirely of independent Directors, has selected PricewaterhouseCoopers LLP (PricewaterhouseCoopers) as our independent registered public accounting firm to audit the consolidated financial statements of Chevron and its subsidiaries for 2015 and the effectiveness of Chevron’s internal control over financial reporting. Your Board has endorsed this appointment.

PricewaterhouseCoopers previously audited the consolidated financial statements of Chevron during the years ended December 31, 2014 and 2013, and the effectiveness of Chevron’s internal control over financial reporting as of December 31, 2014. During the years ended December 31, 2014 and 2013, PricewaterhouseCoopers provided both audit and nonaudit services.

Aggregate fees for professional services rendered to us by PricewaterhouseCoopers for the years ended December 31, 2014 and 2013, were as follows (millions of dollars):


Services Provided	2014		2013
Audit	$	27.2	$	26.6
Audit Related	$	1.6	$	1.8
Tax	$	1.1	$	1.2
All Other	$	0.6	$	0.5
TOTAL	$	30.5	$	30.1

The Audit fees for the years ended December 31, 2014 and 2013, were for the audits of Chevron’s consolidated financial statements, statutory and subsidiary audits, issuance of consents, assistance with and review of documents filed with the U.S. Securities and Exchange Commission, and the audit of the effectiveness of internal control over financial reporting.

The Audit Related fees for the years ended December 31, 2014 and 2013, were for assurance and related services for employee benefit plan audits, due diligence related to mergers and acquisitions, accounting consultations and attest services that are

not required by statute or regulation, and consultations concerning financial accounting and reporting standards.

Tax fees for the years ended December 31, 2014 and 2013, were for services related to tax compliance, including the preparation of tax returns and claims for refund, and tax advice, including assistance with tax audits and appeals.

All Other fees for the years ended December 31, 2014 and 2013, included services rendered for software licenses, subscriptions, benchmark studies and surveys.

Audit Committee Preapproval Policies and Procedures

All 2014 audit and nonaudit services provided by PricewaterhouseCoopers were preapproved by the Committee. The nonaudit services that were approved by the Committee were also reviewed to ensure compatibility with maintaining PricewaterhouseCoopers’ independence.

The Committee has implemented preapproval policies and procedures related to the provision of audit and nonaudit services. Under these procedures, the Committee preapproves both the type of services to be provided by PricewaterhouseCoopers and the estimated fees related to these services. During the approval process, the Committee considers

the impact of the types of services and the related fees on the independence of PricewaterhouseCoopers. The services and fees must be deemed compatible with the maintenance of the PricewaterhouseCoopers’ independence, including compliance with SEC rules and regulations.

Throughout the year, the Committee reviews any revisions to the estimates of audit and nonaudit fees initially approved.

Representatives of PricewaterhouseCoopers will be present at the Annual Meeting, will have an opportunity to make statements if they desire, and will be available to respond to questions, as appropriate.

Vote Required

This proposal is approved if the number of shares voted FOR exceeds the number of shares voted AGAINST. Any shares not voted on this proposal (whether by abstention or otherwise) will have no impact on this proposal. If you are a street name stockholder and do not vote your shares, your bank, broker, or other holder of record can vote your shares at its discretion on this proposal.

Your Board’s Recommendation

Your Board unanimously recommends that you vote FOR the ratification of the appointment of PricewaterhouseCoopers LLP as Chevron’s independent registered public accounting firm.


Chevron Corporation—2015 Proxy Statement		23

Executive Compensation

Compensation Discussion and Analysis

A Message to Our Stockholders

“It is our responsibility to design and execute competitive compensation programs that further the interests of stockholders and demonstrate strong pay-for-performance. It is also our responsibility to ensure that your views on executive compensation are heard and represented.”

Carl Ware

Chair of the Management Compensation Committee

Dear Chevron Stockholder,

Chevron is proud to be part of your portfolio and the Management Compensation Committee (MCC) thanks you for your continued support. The MCC is composed solely of independent Directors. It is our responsibility to design and execute competitive compensation programs that further the interests of stockholders and demonstrate strong pay-for-performance. It is also our responsibility to ensure that your views on executive compensation are heard and represented.

The industry in which Chevron operates is highly complex and competitive. The long lead times on projects and decades long productive asset lives require a management team that is aligned with stockholder interests and capable of delivering today while continuing to position the Company for success in the future. Our intent is to have compensation programs that not only drive strong alignment with investors, but also are competitive within the industry to attract, motivate, and retain top-tier talent.

Each annual cycle, the MCC approves a governance calendar that ensures rigorous and systematic oversight of named executive officer (NEO) compensation. This Compensation Discussion and Analysis (CD&A) that follows, describes how the MCC applied its governance policies and processes to determine NEO compensation in 2014.

This CD&A describes a strong alignment between the Company’s demonstrated performance and our NEO compensation outcomes. In 2014, Chevron met or exceeded many important financial, operating, environmental, and safety objectives, and the MCC recognized that performance through payments from the annual incentive program. As a result of the current decline in oil prices, Chevron’s absolute and relative common stock price has been negatively impacted, and that performance is reflected in reduced projected value for the NEOs’ outstanding equity-based long-term incentive awards. The MCC remains committed to the continued alignment of compensation with performance on behalf of stockholders.

Chevron is well positioned to manage through a period of low oil prices, as we are experiencing today. The Company has purposely kept a strong balance sheet for periods precisely like this. Our management team is focused on running existing assets safely and reliably, keeping our major capital projects on track to deliver substantial volume growth by 2017, and carefully controlling capital and operating costs. Our existing compensation programs encourage excellent performance in each of these key areas.

We believe Chevron will come out of the current business climate even stronger than before and better positioned to deliver top-tier stockholder returns. We look forward to many successful years of partnership ahead.

Sincerely,

Management Compensation Committee


24		Chevron Corporation—2015 Proxy Statement


								EXECUTIVE COMPENSATION

Objectives of Our Executive Compensation Program

The overarching objective of our executive compensation program is to attract and retain seasoned management who will deliver long-term stockholder value. Our success is driven by our people.

The global energy business is the largest industry in the world and is very competitive. The lead times and project life spans in our business are generally very long. The development cycle of a major capital project, from exploration to first production, can be 10 years or longer. Equally important, the productive life spans of our assets can be several decades in most cases and in excess of 100 years for some assets.

Accordingly, we have designed our compensation programs to reward career employees. This reflects the fact that the productive life of our asset base spans generations of employees and that the development cycles of many current investment projects are longer than a named executive officer’s (NEO) tenure in a particular executive position.

Our management and employees have routinely delivered excellent long-term stockholder returns. The stock performance graph that follows shows how an investment in Chevron common stock would have performed versus an equal investment in either the S&P 500 Index or a hypothetical peer group portfolio of BP, ExxonMobil, Royal Dutch Shell, and Total equity securities over a five-year period ending December 31, 2014.

LOGO

The comparison includes the reinvestment of all dividends and is adjusted for stock splits, if any. The relative weightings of the constituent equity securities for this hypothetical peer group portfolio match the relative market capitalizations of BP, ExxonMobil, Royal Dutch Shell, and Total as of the beginning of the measurement period.

Our Pay Philosophy

Our compensation programs have been designed with several important values and objectives in mind. These include:

•

structuring our compensation programs in a manner that ensures strong alignment of the interests of our stockholders, the Company, and our employees and executives;

•

paying for performance;

•

structuring our compensation programs to reward career employees;

•

paying competitively, across all salary grades and across all geographies;

•

applying compensation program rules in a manner that is internally consistent; and

•

being metrics-driven and properly balanced in our emphasis on short-term and long-term objectives and our use of measures based on absolute performance, relative performance against industry peers, historical performance, and progress on key business initiatives.


Chevron Corporation—2015 Proxy Statement		25


EXECUTIVE COMPENSATION

Stockholder Engagement

As described in the “Corporate Governance—Engagement” section of this Proxy Statement, your Board believes that fostering long-term and institutionwide relationships with stockholders and maintaining their trust and goodwill is a core Chevron objective. Chevron conducts extensive engagements with its key stockholders and follows an Annual Engagement Plan and Process to systematically plan engagements and proactively address important issues. Among the issues routinely discussed in these engagements are Chevron’s executive compensation practices.

As measured by the results of our annual say-on-pay votes and feedback received during engagements, stockholders have generally expressed strong support for Chevron’s executive compensation practices. Since stockholders first voted on say-on-pay at Chevron in 2011, an average of 95 percent of votes cast have been cast in favor. Even so, based on feedback from stockholders received during our engagements this past year, we have identified additional opportunities to strengthen our disclosure and further highlight our pay-for-performance framework. The MCC believes the additional disclosure will further clarify the link between management’s and stockholders’ interests.


WHAT WE HEARD						WHAT WE’VE DONE

• It’s not clear how the MCC determines the Corporate Performance Rating that is used to calculate the value of Chevron Incentive Plan awards.						• Revised our Compensation Discussion and Analysis (CD&A) to (i) indicate the relative weightings the Committee assigns to the four broad categories of performance that it considers when setting the Corporate Performance Rating and (ii) describe the process for determining those weightings (see page 35).

• It’s not clear how awards under the Long-Term Incentive Plan are tied to Chevron’s performance.						• Revised our CD&A to highlight why the Committee feels that awards of stock options, performance shares, and restricted stock units are inherently tied to Chevron’s performance (see pages 38 through 40). • Revised our CD&A to highlight the link between compensation and performance by including a discussion of the CEO’s realizable compensation (see page 30).

• It’s not clear how the MCC assesses risk in the context of Chevron’s compensation policies and practices.						• Revised our CD&A to better describe the MCC’s annual compensation risk assessment process (see page 42).

• It’s not clear how the MCC determines intended value of awards vs. accounting value of awards under the Long-Term Incentive Plan.						• Revised our CD&A to describe and disclose the intended value of the CEO’s equity awards compared with the accounting value reflected in the Summary Compensation Table (see page 40).

At the Annual Meeting, the Company will hold its annual say-on-pay vote. The MCC will consider the results of the vote and continue to solicit feedback from stockholders on Chevron’s executive compensation practices as part of Chevron’s Annual Engagement Plan and Process.


26		Chevron Corporation—2015 Proxy Statement


								EXECUTIVE COMPENSATION

Best-Practice Features

Embedded in our overall compensation program are additional features that strengthen the links between the interests of our NEOs and those of our stockholders.


WHAT WE DO		WHAT WE DO NOT DO

ü	Stock ownership guidelines, for the CEO, five times base salary; Vice Chairman, Executive Vice Presidents, and Chief Financial Officer, four times base salary; Vice President and General Counsel, two times base salary	û	No excessive perquisites, all with a specific business rationale

ü	Deferred accounts are inaccessible until a minimum of one year following termination	û	No individual Supplemental Executive Retirement Plans

ü	Clawback provisions in the Chevron Incentive Plan, Long-Term Incentive Plan, Deferred Compensation Plan, Retirement Restoration Plan, and Employee Savings Investment Plan-Restoration Plan for misconduct	û	No stock option repricing, reloads, or exchanges without stockholder approval

ü	More than 90 percent of CEO’s pay is at risk	û	No loans or purchases of Chevron equity securities on margin

ü	Thorough assessment of Company and individual performance	û	No transferability of equity securities (except in the case of death or a qualifying court order)

ü	Robust succession planning process with Board review twice a year	û	No stock options granted below fair market value

ü	MCC composed entirely of outside, independent Directors	û	No hedging or pledging of Chevron equity securities

ü	Independent compensation consultant, hired by and reporting directly to the MCC	û	No change-in-control agreements for NEOs

ü	Negative discretion on performance share payouts	û	No tax gross-ups for NEOs

ü	CIP and certain LTIP awards (i.e., performance-based compensation) intended to qualify for deduction under Section 162(m) of Internal Revenue Code	û	No “golden parachutes” or “golden coffins” for NEOs

ü	Annual assessment of incentive compensation risks


Chevron Corporation—2015 Proxy Statement		27


EXECUTIVE COMPENSATION

Pay-for-Performance Framework

As described above, one of the important values and objectives of our compensation programs is that pay should be linked to Company and individual performance. To support this objective, the majority of executive pay is “at-risk” and composed of awards that are directly tied to Company and individual performance that drives stockholder value over the long term.

Components of Compensation

The material components of our executive compensation program and their purposes and key characteristics are summarized in the following chart.

LOGO


28		Chevron Corporation—2015 Proxy Statement


								EXECUTIVE COMPENSATION

Emphasis on Compensation Components That Are Tied to Performance

The Committee believes that a majority of an executive’s pay should be composed of awards that are directly tied to Company and individual performance and considers all elements of pay together when setting awards. For this reason, an executive’s compensation is paid principally in the form of LTIP Awards and CIP Awards.

The majority of the LTIP awards derive value directly from the Company’s common stock price appreciation, which is, in most respects, a reflection of Company performance, and therefore directly linked to stockholder returns. Stock option awards can be rendered worthless if the Company’s common stock price does not appreciate prior to expiration of the stock options. Performance share awards can be rendered worthless if Chevron ranks last in relative total shareholder return (TSR) for any given

three-year period as compared with the TSR of each company in our LTIP Performance Share Peer Group (i.e., BP, ExxonMobil, Royal Dutch Shell, and Total). Restricted stock units can deteriorate markedly in value from the grant date if Chevron performs poorly and its common stock price falls. Therefore, for the NEOs to earn competitive pay relative to industry peers, Chevron must show sustained competitive performance for the benefit of stockholders.

Similarly, CIP awards, as also described in the chart above and this CD&A, are tied to Company performance, and individual performance. For example, the Committee has complete discretion to severely restrict, and even score at zero, the Corporate Performance Rating and the Individual Performance Factor for CIP awards.

Significant Pay at Risk

Approximately 91 percent of the total direct compensation (base salary, CIP and LTIP) delivered to our CEO and 84 percent delivered to our other NEOs is at risk. By “at risk,” we mean there is no guarantee that the compensation values expected at the time individual awards were granted will be realized. This “at risk”

feature demonstrates management’s alignment with stockholders’ interests. In 2014, the portion of Mr. Watson’s total compensation that was at risk, along with those of the other NEOs, is illustrated as follows:

LOGO


Chevron Corporation—2015 Proxy Statement		29


EXECUTIVE COMPENSATION

CEO Realizable Pay

To illustrate the strong link between executive compensation and Company and individual performance, the following charts compare the CEO’s target compensation and realizable pay as of December 31, 2014, for 2012, 2013, and 2014 compensation.

(1)	Target Value at Award Date reflects: (i) base salary at year end, (ii) Target CIP Award, and (iii) intended grant date value of LTIP awards (60 percent stock options and 40 percent performance shares).

(2)

Realizable Value at 12/31/14 reflects: (i) paid base salary during calendar year; (ii) actual CIP Award, and (iii) actual LTIP award value at 12/31/14. For stock options: reflects difference between grant prices (2012 - $107.73; 2013 - $116.45; 2014 - $116.00) and Chevron common stock price at 12/31/14 ($112.18). For (i) 2013 and 2014 performance shares: reflects 12/31/14 TSR rank versus LTIP Performance Share Peer Group and performance modifier multiplied by Chevron’s common stock price at 12/31/14 ($112.18) and (ii) for 2012 performance shares: paid using 20-day average trailing price of Chevron common stock at 12/31/14 ($109.23).

The MCC believes the charts above demonstrate the CEO’s realizable compensation is significantly aligned with stockholder value creation, specifically common stock price appreciation and TSR. In each of the three years shown, the realizable value of Mr. Watson’s compensation package as of December 31, 2014, is less than the target value at award date, due primarily to a December 31, 2014 common stock price ($112.18) that was below the price on the date of grant of stock options. The realizable values he may ultimately earn will match or exceed targets only when Chevron’s common stock price increases and relative TSR improves.


30		Chevron Corporation—2015 Proxy Statement


								EXECUTIVE COMPENSATION

Use of Peer Groups

We are always competing for the best talent with our direct industry peers and with the broader market. Accordingly, the MCC regularly reviews the market data, pay practices, and ranges of specific comparator, or peer, companies to ensure that we continue to offer a relevant and competitive executive pay program each year. Our core peer group has had very few changes over the years. Throughout this Compensation Discussion and Analysis, we refer to three distinct peer groups, as described below.


Peer Group	Description	Purpose	Source
Oil Industry Peer Group (13 companies)	Represents companies with substantial U.S. or global operations that most nearly approximate the size, scope, and complexity of our business or segments of our business.	To understand how each NEO’s total compensation compares with the total compensation for reasonably similar industry specific positions at these companies.	Gathered from the Oil Industry Job Match Survey, an annual survey published by Towers Watson, and from these companies’ public disclosures.
Non-Oil Industry Peer Group (22 companies)	Represents companies of significant financial and operational size whose products are primarily commodities and that have, among other things, global operations, significant assets and capital requirements, long-term project investment cycles, extensive technology portfolios, an emphasis on engineering and technical skills, and extensive distribution channels.	To periodically compare our overall compensation practices (and those of the oil and energy industry, generally) against a broader mix of non-oil companies that are similar to Chevron in size, complexity, and scope of operations.	Gathered from the Total Compensation Measurement Database, a proprietary source of compensation and data analysis developed by Aon Hewitt.
LTIP Performance Share Peer Group (4 companies)	BP, ExxonMobil, Royal Dutch Shell, and Total.	To compare our total shareholder return over a three-year period to determine the payout value, if any, of performance share awards under our Long-Term Incentive Plan.	Gathered from the Oil Industry Job Match Survey, an annual survey published by Towers Watson, and from these companies’ public disclosures.

Oil Industry Peer Group (in order of decreasing market capitalization)


		Market Cap ($ millions)		Sales and Other Operating Revenues ($ millions)⁽¹⁾		Net Income ($ millions)
Company Name	Company Ticker	12/31/2014		FY2014		FY2014
ExxonMobil Corporation	XOM		391,482		364,763		32,520
Royal Dutch Shell plc	RDSA		213,191		421,105		14,874
Chevron Corporation	CVX		212,068		192,308		19,241
BP plc	BP		116,611		353,568		3,780
ConocoPhillips	COP		85,007		52,524		6,869
Occidental Petroleum Corporation	OXY		62,507		19,312		616
Anadarko Petroleum Corporation	APC		41,782		16,375		(1,750	)
Phillips 66	PSX		39,687		146,514		4,762
Valero Energy Corporation	VLO		25,802		130,844		3,630
Marathon Petroleum Corporation	MPC		25,290		91,132		2,524
Devon Energy Corporation	DVN		25,041		17,577		1,607
Hess Corporation	HES		22,070		10,737		2,317
Marathon Oil Corporation	MRO		19,093		10,846		3,046
Tesoro Corporation	TSO		9,386		40,052		843

(1)	Excludes excise, value-added and similar taxes.

The Oil Industry Peer Group companies most similar to Chevron in size, complexity, geographic reach, business lines, and location of operations are BP, ExxonMobil, and Royal Dutch Shell. These companies are key competitors for stockholder investments within the larger global energy sector. We also compete for stockholder interest with smaller companies, including the larger

independent exploration and production companies (ConocoPhillips, Occidental, Anadarko, etc.) and the larger independent refining and marketing companies (Valero, Tesoro, etc.). We compete with all of these companies for executive talent.


Chevron Corporation—2015 Proxy Statement		31


EXECUTIVE COMPENSATION

Non–Oil Industry Peer Group (in order of decreasing market capitalization)


		Market Cap ($ millions)		Sales and Other Operating Revenues ($ millions)⁽¹⁾		Net Income ($ millions)
Company Name	Company Ticker	12/31/2014		FY 2014		FY 2014
Johnson & Johnson	JNJ		292,703		74,331		16,323
General Electric Company	GE		253,766		106,758		15,233
Chevron Corporation	CVX		212,068		192,308		19,241
Pfizer Inc.	PFE		196,265		49,605		9,135
Verizon Communications Inc.	VZ		194,124		127,079		9,625
Intel Corporation	INTC		175,462		55,870		11,704
AT&T, Inc.	T		174,231		132,447		6,224
Merck & Co. Inc.	MRK		161,901		42,237		11,920
International Business Machines Corporation	IBM		158,781		90,736		12,022
Pepsico, Inc.	PEP		141,519		66,683		6,513
3M Company	MMM		104,514		31,821		4,956
The Boeing Company	BA		92,667		90,762		5,446
Honeywell International Inc.	HON		78,218		40,306		4,239
Hewlett-Packard Company⁽^²⁾	HPQ		73,602		111,053		5,013
Lockheed Martin Corporation	LMT		60,491		45,600		3,614
Ford Motor Co.	F		59,655		135,782		3,187
Duke Energy Corporation	DUK		59,087		23,427		1,883
Caterpillar Inc.	CAT		55,412		52,142		3,695
The Dow Chemical Company	DOW		53,754		58,167		3,772
Northrop Grumman Corporation	NOC		29,773		23,979		2,069
American Electric Power Co., Inc.	AEP		29,707		16,334		1,634
International Paper Company	IP		22,697		23,617		555
Alcoa Inc.	AA		18,614		23,906		268

(1)	Excludes excise, value-added and similar taxes.

(2)	Hewlett-Packard’s fiscal year ends on October 31. Accordingly, market capitalization reflects October 31, 2014, shares outstanding and December 31, 2014, common stock price. Sales and Other Operating Revenues and Net Income both reflect the fiscal year ended October 31, 2014.


32		Chevron Corporation—2015 Proxy Statement


								EXECUTIVE COMPENSATION

How Compensation Is Determined

Named Executive Officers

Chevron’s Named Executive Officers, or NEOs

John S. Watson, Chairman and Chief Executive Officer

George L. Kirkland, Vice Chairman and Executive Vice President, Upstream

Michael K. Wirth, Executive Vice President, Downstream & Chemicals

Patricia E. Yarrington, Vice President and Chief Financial Officer

R. Hewitt Pate, Vice President and General Counsel

Base Salary

Base salary is a fixed, competitive component of pay based on responsibilities, skills, and experience. Base salaries are reviewed periodically in light of market practices and changes in responsibilities.

How the CEO’s Base Salary Is Determined

The MCC’s independent consultant reviews and reports to the MCC on the relationship of Mr. Watson’s base salary to that of his peers in our Oil Industry and Non–Oil Industry Peer Groups. The MCC does not have a predetermined target or range within the Oil Industry Peer Group or Non–Oil Industry Peer Group as an objective for Mr. Watson’s base salary. Instead, the MCC exercises its discretion, taking into account the data provided by the MCC’s

independent consultant, the relative size, scope, and complexity of our business, Mr. Watson’s performance, and the aggregate amount of Mr. Watson’s compensation package. After considering these elements, the MCC makes a recommendation to the independent Directors, and the independent Directors determine Mr. Watson’s base salary.

How the Other NEOs’ Base Salaries Are Determined

For our other NEOs, base salary is a function of two things: (i) the NEO’s assigned base salary grade and (ii) individual qualitative considerations, such as individual performance, experience, skills, competitive positioning, retention objectives, and leadership responsibilities relative to other NEOs.

Each NEO is assigned a base salary grade. Each grade has a base salary minimum, midpoint, and maximum that constitute the salary range for that grade, except for the CEO and Vice Chairman positions, which do not have salary grade ranges because they are single incumbent positions. Salary grades and

the appropriate salary ranges are determined through market surveys of positions of comparable level, scope, complexity, and responsibility. The MCC annually reviews the base salary grade ranges and may approve increases in the ranges if it determines that adjustments are necessary to maintain competitiveness.

Mr. Watson makes recommendations to the MCC as to the base salaries for each of our other NEOs. The MCC makes base salary determinations for all NEOs, and the independent Directors of the Board review and ratify the determinations.

Adjustments in 2014 Base Salaries

The MCC adjusted our NEOs’ base salaries in 2014 as follows:


NEO	Position	2013 Base Salary		2014 Base Salary		Adjustment for 2014
John S. Watson	Chairman and Chief Executive Officer	$	1,800,000	$	1,836,000		2.0%
George L. Kirkland	Vice Chairman and Executive Vice President, Upstream	$	1,450,000	$	1,525,000		5.2%
Michael K. Wirth	Executive Vice President, Downstream & Chemicals	$	1,050,000	$	1,069,200		1.8%
Patricia E. Yarrington	Vice President and Chief Financial Officer	$	1,000,000	$	1,050,000		5.0%
R. Hewitt Pate	Vice President and General Counsel	$	825,000	$	850,000		3.0%

The MCC determined that these adjustments were appropriate to maintain compensation competitiveness in base salary structure and in light of each NEO’s 2014 individual performance highlights noted below.


Chevron Corporation—2015 Proxy Statement		33


EXECUTIVE COMPENSATION

Chevron Incentive Plan (CIP)

The CIP is designed to recognize annual performance achievements. Annual operating, financial, and health, environment and safety results figure prominently into this assessment, along with demonstrated progress on key business initiatives. Individual leadership is also recognized through this award. The award is delivered as an annual cash bonus based on a percentage of base salary and makes up approximately 16 percent of the CEO’s annual compensation and 21 percent of all other NEOs’ annual compensation. The CIP award calculation is consistent for all CIP-eligible Chevron employees, with the award target varying by pay grade. The award is calculated as follows:

Base Salary

Award Target

Corporate Performance Rating

Individual Performance Factor

Before the beginning of each performance year, the MCC establishes a CIP Award Target for each NEO, which is based on a percentage of the NEO’s base salary.

The MCC sets target awards based on the median award of our Oil Industry Peer Group. All individuals in the same salary grade have the same target, which provides internal equity and consistency.

After the end of the performance year, the MCC sets the Corporate Performance Rating. This rating reflects the MCC’s overall assessment of the Company’s performance for that year, based on a range of measures used to evaluate performance against plan in four broad categories:

• Financial

• Health, Environment, and Safety

• Operating Performance

• Milestones and Commercial

The MCC has discretion on weighting the categories and on weighting the measures within each category. Performance is viewed across multiple parameters (absolute results; results versus plan; results versus Oil Industry Peer Group and/or general industry; performance trends over time) and distinctions are made between the controllable and noncontrollable aspects of the measures.

With these measures as the foundation, the MCC exercises its discretion in setting the Corporate Performance Rating. The minimum Corporate Performance Rating is zero (i.e., no bonus payout), and the maximum is 200 percent.

The MCC also takes into account individual performance. This is largely a personal leadership dimension, recognizing the individual effort and initiative expended and demonstrated progress on key business initiatives during the course of the year. The MCC uses its judgment in analyzing the individual performance of each NEO, his or her enterprise and business segment leadership, and how the business units reporting to the NEO performed.

Mr. Watson makes recommendations to the MCC as to the Individual Performance Factor of each of our other NEOs.


34		Chevron Corporation—2015 Proxy Statement


								EXECUTIVE COMPENSATION

2014 CIP Results—Corporate Performance Rating

Our annual performance measures are reviewed in comparison with prior years, current-year plans, and the results of our Oil Industry Peer Group. The MCC also reviews actual annual cash award payments for the prior year for Chevron and our Oil Industry Peer Group, compared with actual business performance for Chevron and for our Oil Industry Peer Group. This comparison assures that our process for determining the Corporate Performance Rating is consistent with our Oil Industry Peer Group

and that actual awards are consistent with both Chevron performance and performance relative to our peers. The MCC reviews performance in four broad categories, which are assigned a weighting. Each category contains a range of performance measures that reinforce the importance of both short-term and long-term performance.


Category	Weight	Key Performance Measures
Financial	40%	• Earnings/ Earnings per Share • Return on Capital Employed • Total Shareholder Return (one, three, and five years)
Health, Environment, and Safety	20%	• Process Safety • Personal Safety • Environmental Performance
Operating Performance	25%	• Operating Expenses • Segment Earnings per Barrel • Production • Reserves • Asset Utilization Rates
Milestones and Commercial	15%	• Major Capital Projects • Commercial Transactions

The category weightings and key performance measures against the business plan are agreed to with the Board and the MCC at the beginning of each performance year. Mid-year and end-of-year reviews by the Board and MCC assess progress against this balanced set of performance measures. The key performance measures are described in detail in the section below.

The Corporate Performance Rating influences compensation outcomes, in a consistent manner, for most employees worldwide.

Therefore, in setting the overall corporate rating, the MCC also takes into account the need to provide competitive overall compensation not only for the NEOs, but also for the employee base as a whole.

The MCC set a Corporate Performance Rating of 105 percent for 2014. This overall rating is based on the following assessment of Chevron’s 2014 performance.

2014 Performance

Despite challenging industry conditions in the latter half of the year, particularly the sharp decline in crude oil prices, 2014 was a solid performance year for the Company. We had our best year ever on virtually every measure of personal safety, process safety, and petroleum spills. In Upstream, we had a number of operational successes: we achieved first production at key developments in the Gulf of Mexico, we reached important construction milestones at our Gorgon and Wheatstone LNG projects, and we had one of our best exploration years, with important discoveries in the Gulf of Mexico, Australia, West Africa, and the Permian Basin. In Downstream, we completed important reliability investments at our U.S. refineries, made significant progress on important growth investments, started commercial production at a new premium lubricants base oil facility in Pascagoula, Mississippi, and completed expansion of additive plants in Singapore and France.

Below we highlight the Company’s performance both in the four broad categories that form the basis of CIP award decisions and as compared with our LTIP Performance Share Peer Group (BP, ExxonMobil, Royal Dutch Shell, and Total). In the graphs that follow, earnings have been adjusted to exclude externally disclosed, significant items or activities that are not representative of underlying business operations, such as gains or losses associated with divestitures, asset impairments, and restructurings. We present a reconciliation of these non-Generally Accepted Accounting Principles (GAAP) financial measures to their most directly comparable GAAP financial measures in Appendix A to this Proxy Statement.


Chevron Corporation—2015 Proxy Statement		35


EXECUTIVE COMPENSATION

Financial Highlights

•

Achieved reported earnings of $19.2 billion, fifth highest in the Company’s history.

•

Posted a return on capital employed (ROCE) of 10.2 percent, second best among LTIP Performance Share Peer group.

•

Increased the quarterly dividend 7 percent, the 27th consecutive annual dividend payment increase.

•

Led the LTIP Performance Share Peer Group in total shareholder return for five-year and 10-year periods.

•

Second-best in rolling, five-year earnings-per-share growth.

LOGO

Health, Environment, and Safety Highlights

•

Best year overall in Operational Excellence performance.

•

An industry leader in Total Recordable Incident Rate and Days Away From Work Rate for five consecutive years.

•

Record low petroleum spill volume.

•

Record low number of Tier 1 Loss of Containment events (i.e., unplanned or uncontrolled release of material from primary containment that results in a serious outcome).

•

Sharply lower number of fatalities than in 2013.

LOGO

Operating Performance Highlights

•

Industry leader in earnings per barrel in the Upstream segment (fifth consecutive year).

•

2014 earnings negatively impacted by lower crude prices and higher weighting of liquids production versus peers.

•

Continued to be an industry leader in Upstream cash margins per barrel.

•

Achieved 89 percent reserves replacement ratio for 2014, 95 percent for the three-year period, and 96 percent for the five-year period.

•

Ranked No. 1 in earnings per barrel in the Downstream segment.

•

Higher refinery utilization rates than 2013.

LOGO

*	Barrels of Oil Equivalent

LOGO

Barrel


36		Chevron Corporation—2015 Proxy Statement


								EXECUTIVE COMPENSATION

Milestones and Commercial Highlights

During 2014, our Upstream and Downstream segments had a number of operational successes.

In Upstream, we achieved first production from the Jack/St. Malo and Tubular Bells deepwater developments in the Gulf of Mexico and the Bibiyana gas expansion project in Bangladesh. Our Gorgon and Wheatstone LNG projects reached important construction milestones. We made progress on our shale and tight resource developments in the Permian Basin, Argentina, and Canada. And we had one of our best exploration years, with important discoveries in the Gulf of Mexico, Australia, West Africa, and the Permian Basin.

In Downstream, we completed important reliability investments at our U.S. refineries, which contributed to improved financial and operational performance. We also made significant progress on important growth investments. The Company started commercial production at its new premium lubricants base oil facility in Pascagoula, Mississippi, and completed expansion of additive plants in Singapore and France. In addition, Chevron-Phillips Chemical LLC, the Company’s 50 percent-owned affiliate, achieved startup of the world’s largest on-purpose 1-hexene plant and progressed construction of its new ethane cracker and polyethylene units in Texas.

CIP Awards for 2014 Performance Year

The MCC and independent Directors of the Board assessed corporate and individual performance in making CIP awards based on 2014 performance.

As described above, performance is assessed against key performance measures on historical and relative competitive performance of the Company against our Oil Industry Peer

Group. In the MCC’s and the independent Directors’ assessment, the following CIP awards demonstrate the crucial connection between pay and performance, reinforce management’s accountability for the full spectrum of operating results, and support the objective of attracting and retaining seasoned management who will deliver long-term stockholder value.

2014 CIP Results—Individual Performance Highlights


NEO		Performance Highlights
John S. Watson		• Fifth-highest earnings in the Company’s history and top-tier return on capital employed • Outstanding personal safety, process safety, and spill performance • Led peer group in total shareholder return for the last five-year period • Major projects on track to meet 2017 volume targets • Exhibited strong leadership and acted decisively in response to declining oil prices
George L. Kirkland		• Competitor-leading earnings-per-barrel for fifth consecutive year, and top tier return on capital employed • Excellent exploration results—1.4 billion barrels of resource added with 66 percent success rate • Key 2014 project start-ups—Jack/ St. Malo, Tubular Bells, Bibiyana Expansion • LNG growth projects progressing on track—Gorgon, Wheatstone • Excellent leadership transition mentoring
Michael K. Wirth		• Competitor leading earnings per barrel and top tier return on capital employed • Exceptional personal and process safety results and improved refining reliability • Several major projects completed—Cedar Bayou 1-Hexene, Oronite Singapore Expansion, and Pascagoula Base Oil
Patricia E. Yarrington		• Effectively managed cash, debt, and other balance sheet matters through a volatile environment • Outstanding internal controls performance • Highly effective in engaging and building relationships with investor and finance communities
R. Hewitt Pate		• Exceptional progress on major litigation matters • Continued high quality support of commercial activity and significant transactions • Maintained strong corporate governance processes and controls


Chevron Corporation—2015 Proxy Statement		37


EXECUTIVE COMPENSATION

2014 CIP Results

Mr. Watson received an award of $3,100,000. This amount reflects the amount of his base salary ($1,836,000) multiplied by his CIP Award Target percentage of 150 percent multiplied by the Corporate Performance Rating of 105 percent, resulting in an award of $2,891,700. The remaining $208,300 of Mr. Watson’s award is attributable to the MCC’s and independent Directors’ assessment of his individual performance, as described above.

Mr. Kirkland received an award of $2,184,500. This amount reflects the amount of his base salary ($1,525,000) multiplied by his CIP Award Target percentage of 130 percent multiplied by the Corporate Performance Rating of 105 percent, resulting in an award of $2,081,625. The remaining $102,875 of Mr. Kirkland’s award is attributable to the MCC’s and independent Directors’ assessment of his individual performance, as described above.

Mr. Wirth received an award of $1,526,400. This amount reflects the amount of his base salary ($1,069,200) multiplied by his CIP Award Target percentage of 110 percent multiplied by the Corporate Performance Rating of 105 percent, resulting in an

award of $1,234,926. The remaining $291,474 of Mr. Wirth’s award is attributable to the MCC’s and independent Directors’ assessment of his individual performance, as described above.

Ms. Yarrington received an award of $1,309,800. This amount reflects the amount of her base salary ($1,050,000) multiplied by her CIP Award Target percentage of 110 percent multiplied by the Corporate Performance Rating of 105 percent, resulting in an award of $1,212,750. The remaining $97,050 of Ms. Yarrington’s award is attributable to the MCC’s and independent Directors’ assessment of her individual performance, as described above.

Mr. Pate received an award of $1,071,000. This amount reflects the amount of his base salary ($850,000) multiplied by his CIP Award Target percentage of 100 percent multiplied by the Corporate Performance Rating of 105 percent, resulting in an award of $892,500. The remaining $178,500 of Mr. Pate’s award is attributable to the MCC’s and independent Directors’ assessment of his individual performance, as described above.

Long-Term Incentive Plan (LTIP)

The key objective of our LTIP awards is to encourage performance that drives stockholder value over the long term. LTIP awards give our NEOs a meaningful equity stake in the business, an equity stake that vests over time. The amount of an NEO’s LTIP award at grant time is determined by the MCC with input from its independent compensation consultant, using Oil

Industry Peer Group compensation comparisons. The objective is to ensure that Chevron is competitive against the Oil Industry Peer Group on total compensation (cash plus equity), after allowing for appropriate distinctions based on size, scale, scope, and job responsibilities. Our LTIP awards typically consist of two equity components:


Component	Weight	How It Works
Stock Options¹	60%	• Strike price is equal to the closing common stock price on the grant date
		• Vest and become exercisable one-third per year, based on continued service for the first three years, and expire 10 years after the grant date
		• Gain realized depends on the common stock price at the exercise date compared with the strike price
		• Actual number of stock options granted is determined by dividing 60 percent of the value of the NEO’s LTIP award by an estimated Black-Scholes option value
Performance Shares²	40%	• Payout is dependent on Chevron’s total shareholder return (TSR) over a three-year period, compared with our LTIP Performance Share Peer Group
		• Payout can vary from zero to 200 percent of the cash value of the target number of shares, depending on this relative TSR ranking. The Committee in its judgment can apply negative discretion
		• Payout of 200 percent is earned only if Chevron’s TSR is better than all of our LTIP Performance Share Peer Group
		• Payout of zero percent is earned if Chevron’s TSR is last relative to all of our LTIP Performance Share Peer Group
		• Actual number of shares granted is determined by dividing 40 percent of the value of the NEO’s LTIP award by Chevron’s 20-day trailing average common stock price
		• Payment is made in cash

1	We report the value of each NEO’s 2014 stock option exercises in the “Option Exercises and Stock Vested in Fiscal Year 2014” table in this Proxy Statement.

2	We report the value of each NEO’s 2014 performance share payout in the “Option Exercises and Stock Vested in Fiscal Year 2014” table in this Proxy Statement.

We use LTIP awards because they derive value directly from the Company’s common stock price appreciation and, in the case of performance shares, TSR. Both reflect Company performance and are therefore directly linked to stockholder returns. To have value, stock options require appreciation in Chevron’s common stock price. Performance shares have value only if Chevron

achieves greater TSR than our LTIP Performance Share Peer Group. Restricted stock units can deteriorate markedly in value from the grant date if Chevron performs poorly. Therefore, for the NEOs to sustain competitive pay relative to industry peers, Chevron must show sustained competitive performance and Chevron’s stockholders must be rewarded with competitive TSR results.

From time to time, the Board may approve the grant of restricted stock units for special retention or incentive purposes.


38		Chevron Corporation—2015 Proxy Statement


								EXECUTIVE COMPENSATION

A Closer Look at LTIP Awards: Why a Mix of 60 Percent Stock Options and 40 Percent Performance Shares?

As described in the chart in the previous section, long-term incentive awards are typically awarded as 60 percent stock options and 40 percent performance shares. This combination provides a balance of awards, which the MCC believes appropriately serves both performance incentive and executive retention objectives. The 60/40 split of stock options and performance shares serves a retention objective in that it diversifies grant-recipient compensation risks. Performance shares have value based on Company performance relative to peers. They also provide some level of performance incentive even during periods of adverse equity market conditions, provided the Company performs favorably against its peers. Stock options have value when absolute stock prices rise, but do not retain value if macroeconomic or industry-specific conditions force an overall decline in equity values, irrespective of individual company performance results.

With stock options and performance shares as key compensation elements, our NEOs are:

•

fully aligned with the economic interests of our stockholders, on both a medium- and long-term time horizon;

•

significantly leveraged, from an ultimate compensation standpoint, to Chevron’s common stock price performance; and

•

rewarded based on a balance between relative (performance shares) and absolute (stock options) pay-for-performance measures.

The average hold time prior to exercising stock options is approximately six years for our LTIP population, reinforcing the long-term focus of our senior leaders on achieving sustainable, superior performance. Although stock options make up more than half of the potential value of an individual’s LTIP grant, the MCC believes our performance award structure should also focus on relative performance against our competitors and should not be tied solely to equity market fluctuations that can be driven by macro factors completely unrelated to the energy industry and Company performance.

Term of LTIP Awards

LOGO

A Closer Look at Performance Shares: Why Total Shareholder Return (TSR)?

The MCC continues to believe that TSR is the best overall pay-for-performance measure to align our NEOs’ performance with stockholder interests. TSR is the standard metric for stockholders to use in measuring Company performance because it easily allows for meaningful comparisons of our performance relative to other companies within our same industry, and it also allows for easy comparison with our stockholders’ other investment alternatives. It is objectively determined by third-party market participants independent of the Company’s judgment.

The MCC believes that Company performance on other measures—operational and financial, as well as short-term and long-term—is ultimately reflected in TSR results. Thus, over time, TSR offers the best indication of sustained performance across a number of important measures. It is also the measure that encourages the Company to adopt strategies and execute against those strategies to sustain its performance against key

industry competitors and against the broader market. Finally, TSR as an incentive metric is not vulnerable, as other financial metrics can be, to actions that optimize short-term gains at the expense of long-term value creation.

The value of the performance share payout depends on how our TSR ranks relative to that of our LTIP Performance Share Peer Group over a three-year performance period. TSR combines common stock price appreciation and dividends paid to show the total return to stockholders, expressed as an annualized percentage. The calculation assumes that dividends are reinvested in additional shares. The three-year period reflects an extended ownership period consistent with a long-term investor.

Depending on our TSR rank compared with that of our LTIP Performance Share Peer Group, the payout is calculated as follows:


Our Relative TSR Rank	Payout as a Percentage of Target
1		200%
2		150%
3		100%
4		50%
5		0%

Performance share payouts reported in the “Option Exercises and Stock Vested in Fiscal Year 2014” table in this Proxy Statement relate to performance shares granted in January 2012. For the three-year performance period ending December 31, 2014, Chevron ranked third in TSR among the five companies in the LTIP Performance Share Peer Group. This resulted in a payout of 100 percent of target.

The MCC has discretion to adjust the cash payout of performance shares downward if it determines that business or economic considerations warrant such an adjustment.


Chevron Corporation—2015 Proxy Statement		39


EXECUTIVE COMPENSATION

Performance shares awarded in January 2014 are not eligible for payout (if any) until expiration of the three-year performance period on December 31, 2016.

Additional details about performance share payouts can be found in the footnotes to the “Option Exercises and Stock Vested in Fiscal Year 2014” table in this Proxy Statement.

A Closer Look at LTIP Awards: Why Do We Sometimes Award Restricted Stock Units?

From time to time, the Board may approve the grant of restricted stock units (RSUs). RSUs are granted in recognition of strong performance as well as to incent continued employment.

Recipients will not recognize any value from a grant of RSUs unless they stay with the Company through the vesting dates of awards.

2014 LTIP Grants

In the “Summary Compensation Table” and the “Grants of Plan-Based Awards in Fiscal Year 2014” table in this Proxy Statement, we report the value and terms of the following LTIP awards granted in early 2014 to each NEO.

Each year the MCC determines an intended grant-date value of LTIP awards for the CEO and other NEOs. For the CEO, the MCC relies on input from our independent compensation consultant and the compensation comparison data, focusing on data from the Oil Industry Peer Group. The MCC also considers the CEO’s demonstrated performance and the Company’s size, scope, and complexity relative to the comparison companies.

For the other NEOs, the intended grant-date values are largely a function of the NEO’s salary grade. At the beginning of the performance year, the MCC sets an annual LTIP award target value for each salary grade as a multiple of salary, referencing median incentive opportunities awarded to executives in similar positions at companies in the Oil Industry Peer Group. Individual NEO awards may vary from the corresponding salary grade target based on Company, organization, or individual performance. Mr. Watson proposes LTIP awards for the NEOs other than himself based on the information above and his assessment of Company, organization, and individual officer performance. In January 2014, the MCC approved the following LTIP awards to the CEO and other NEOs.


NEO	Intended Grant Date Value ($)*		Stock Options*		Performance Shares*		RSUs
John S. Watson		$15,322,000		344,000		50,000		–
George L. Kirkland		$ 6,500,000		146,000		21,200		–
Michael K. Wirth		$ 3,810,000		90,000		11,500		–
Patricia E. Yarrington		$ 3,810,000		90,000		11,500		–
R. Hewitt Pate		$ 4,060,000		65,000		9,500		9,460

The number of awarded stock options and performance shares was determined based on the Company’s trailing average common stock price over a 20-day period in December 2013 and January 2014 ending eight days prior to the MCC meeting, an estimated Black Scholes value for stock options, and a performance share factor of 100 percent–equal to “target” performance. As these inputs may vary from those used for financial reporting, the Intended Grant Date Values shown above may not match the values presented in the “Summary Compensation Table” or the “Grants of Plan Based Awards Table” in this Proxy Statement.


40		Chevron Corporation—2015 Proxy Statement


								EXECUTIVE COMPENSATION

Retirement Programs and Other Benefits

NEOs, like all other employees, have retirement programs and other benefits as part of their overall compensation package at Chevron. We believe that these programs and benefits:

•

support our long-term investment cycle;

•

complement our career employment model; and

•

encourage retention and long-term employment.

Retirement Programs

All of our employees, including our NEOs, have access to retirement programs that are designed to allow them to accumulate retirement income. These programs include defined benefit (pension) and defined contribution (401(k) savings) plans, as well as other plans, that allow highly compensated employees to receive the same benefits they would have earned without the IRS limitations on qualified retirement plans under the Employee Retirement Income and Security Act.


Plan Name	Plan Type	How It Works	What’s Disclosed
Chevron Retirement Plan (CRP)	Qualified Defined Benefit (IRS §401(a))	Participants are eligible for a pension benefit when they leave the Company as long as they meet age, service, and other provisions under the plan.	In the “Summary Compensation Table” and “Pension Benefits Table” in this Proxy Statement, we report the change in pension value in 2014 and the present value of each NEO’s accumulated benefit under the CRP. The increase in pension value is not a current cash payment. It represents the increase in the value of the NEOs’ pensions, which are paid only after retirement.
Chevron Retirement Restoration Plan (RRP)	Nonqualified Defined Benefit	Provides participants with retirement income that cannot be paid from the CRP due to IRS limits on compensation and benefits.¹	In the “Pension Benefits Table” and accompanying narrative in this Proxy Statement, we describe how the RRP works and present the current value of each NEO’s accumulated benefit under the RRP.
Employee Savings Investment Plan (ESIP)	Qualified Defined Contribution (IRS §401(k))	Participants who contribute a percentage of their annual compensation (i.e., base salary and CIP award) are eligible for a Company-matching contribution, up to annual IRS limits.²	In the footnotes to the “Summary Compensation Table” in this Proxy Statement, we describe Chevron’s contributions to each NEO’s ESIP account.
Employee Savings Investment Plan Restoration Plan (ESIP-RP)	Nonqualified Defined Contribution	Provides participants with an additional Company-matching contribution that cannot be paid into the ESIP due to IRS limits on compensation and benefits.³	In the “Nonqualified Deferred Compensation Table” and accompanying narrative in this Proxy Statement, we describe how the ESIP-RP works and Chevron’s contributions to each NEO’s ESIP-RP account.
Deferred Compensation Plan (DCP)	Nonqualified Defined Contribution	Participants can defer up to: • 90 percent of CIP awards and LTIP performance share awards; and • 40 percent of base salary above the IRS limit (IRS §401(a)(17)) for payment after retirement or separation from service.	In the “Nonqualified Deferred Compensation Table” in this Proxy Statement, we report the aggregate NEO deferrals and earnings in 2014.

(1)	Employees whose compensation exceeds the limits established by the IRS for covered compensation and benefit levels. The 2014 IRS annual compensation limit was $260,000.

(2)

Participants who contribute at least 2 percent of their annual compensation to the ESIP receive a Company-matching contribution of 8 percent (or 4 percent if they contribute 1 percent). The annual limit for both employer and employee contributions to a qualified defined contribution plan was $52,000 in 2014.

(3)	Participants who contribute at least 2 percent of their annual compensation to the Deferred Compensation Plan receive a Company-matching contribution of 8 percent of their base salary that exceeds the IRS annual compensation limit.

Benefit Programs

The same health and welfare programs, including post-retirement health care, that are broadly available to our employees on U.S. payroll also apply to NEOs, with no other special programs except executive physicals (as described below under Perquisites).

Perquisites

Perquisites for NEOs are limited and consist principally of financial counseling fees, executive physicals, home security, and the aggregate incremental costs to Chevron for personal use of Chevron automobiles and aircraft. The MCC periodically reviews our policies with respect to perquisites. In the “Summary Compensation Table” in this Proxy Statement, we report the value of each NEO’s perquisites for 2014.


Chevron Corporation—2015 Proxy Statement		41


EXECUTIVE COMPENSATION

Compensation Governance

The MCC works very closely with its independent compensation consultant, Meridian Compensation Partners LLC, and management to examine pay and performance matters throughout the year, carefully assessing pay based on progress against business plans, individual performance and contributions, as well as Chevron’s performance relative to industry peers. The MCC then applies its judgment to make its decisions. The MCC solicits input from the CEO concerning the performance and

compensation of other NEOs. The CEO does not participate in discussions about his own pay; any proposed change to the compensation of the CEO is approved by the MCC and ratified by the independent Directors of the Board.

A complete description of the MCC’s authority and responsibility is provided in its charter, which is available on our website at www.chevron.com and in print upon request.

Independent Executive Compensation Advice

The MCC retains an independent compensation consultant—Meridian Compensation Partners LLC—to assist it with its duties. Meridian was engaged by the MCC in mid-2014, following a comprehensive Request for Proposal process and subsequent screening and selection. The MCC has the exclusive right to select, retain, and terminate Meridian, as well as to approve any fees, terms, and other conditions of its service. Meridian and its lead consultant report directly to the MCC, but when directed to do so by the MCC, they work cooperatively with Chevron’s management to develop analyses and proposals for the MCC. Meridian provides the following services to the MCC:

•

Education on executive compensation trends within and across industries;

•

Development of compensation philosophy and guiding principles and recommendations concerning compensation levels;

•

Selection of compensation comparator groups; and

•

Identification and resolution of technical issues associated with executive compensation plans, including tax, legal, accounting, and securities regulations.

Meridian does not provide any services to the Company. The MCC is not aware that any work performed by Meridian raised any conflicts of interest.

Compensation Risk Management

The MCC annually undertakes a risk assessment of Chevron’s compensation programs to ensure these programs are appropriately designed and do not motivate individuals or groups to take risks that are reasonably likely to have a material adverse effect on the Company. Following its most recent comprehensive review of the design, administration, and controls of these programs, the MCC was satisfied that Chevron’s programs are well structured with strong governance and oversight mechanisms in place to minimize and mitigate potential risks.

Stock Ownership Guidelines

We require our NEOs to hold prescribed levels of Chevron common stock, further linking their interests with those of our stockholders.


Position		Ownership Requirements
CEO		Five times base salary
Vice Chairman, Executive Vice Presidents, and Chief Financial Officer		Four times base salary
All other executive officers		Two times base salary

Executives have five years to attain their stock ownership guideline. Based upon our closing stock price on December 31, 2014, our CEO had a stock ownership base-salary multiple of 10.3 times, and all other NEOs met their requirement with an average stock ownership base-salary multiple of 7.20 times. The MCC believes these ownership levels provide adequate focus on our long-term business model.

Employment, Severance, or Change-in-Control Agreements

In general, we do not maintain employment, severance, or change-in-control agreements with our NEOs. Upon retirement or separation from service for other reasons, NEOs are entitled to certain accrued benefits and payments generally afforded other employees. We describe these benefits and payments in the “Pension Benefits Table,” the “Nonqualified Deferred Compensation Table” and the “Potential Payments Upon Termination or Change-in-Control” tables in this Proxy Statement.

In February 2012, Mr. Pate and Chevron mutually terminated his employment agreement described in our 2011 Proxy Statement in favor of an agreement relating solely to the vesting of Mr. Pate’s outstanding equity awards, if any, if Mr. Pate’s employment is terminated for any reason on or after August 1, 2019. We describe the effect of this agreement in the footnotes to Mr. Pate’s “Potential Payments Upon Termination or Change-in-Control” table in this Proxy Statement.


42		Chevron Corporation—2015 Proxy Statement


								EXECUTIVE COMPENSATION

Compensation Recovery Policies

The CIP, LTIP, Chevron Deferred Compensation Plan for Management Employees, Chevron Retirement Restoration Plan, and Employee Savings Investment Plan-Restoration Plan include provisions permitting us to “claw back” certain amounts of compensation awarded to an NEO at any time after June 2005 if an NEO engages in certain acts of misconduct, including, among other things: embezzlement; fraud or theft; disclosure of confidential information or other acts that harm our business, reputation, or employees; misconduct resulting in Chevron having to prepare an accounting restatement; or failure to abide by post-termination agreements respecting confidentiality, noncompetition, or nonsolicitation.

Tax Gross-Ups

We do not pay tax gross-ups to our NEOs.

Tax Deductibility of NEO Compensation

We have structured our CIP and certain LTIP awards with the intention of meeting the requirements for deductibility under Section 162(m) of the Internal Revenue Code, which permits Chevron to deduct certain compensation paid to our CEO and other three most highly paid executives (excluding our Chief Financial Officer) if such compensation in excess of $1 million is performance-based. While the MCC considers the deductibility of the compensation of our executives, in order to maintain flexibility and retain and motivate our executive officers, it does not require all compensation to be deductible. The portion of the base salaries in excess of $1 million for Mr. Watson, Mr. Kirkland and Mr. Wirth are not deductible; however, the MCC considers these salaries to be in the best interests of Chevron and its stockholders.


Chevron Corporation—2015 Proxy Statement		43

Executive Compensation

Summary Compensation Table

The following table sets forth the compensation of our named executive officers, or NEOs, for the fiscal years ending December 31, 2014, December 31, 2013, and December 31, 2012. The primary components of each NEO’s compensation are also described in our “Compensation Discussion and Analysis” in this Proxy Statement.


Name and Principal Position	Year		Salary ($)⁽¹⁾		Stock Awards ($)⁽²⁾		Option Awards ($)⁽³⁾		Non-Equity Incentive Plan Compensation ($)⁽⁴⁾		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)⁽⁵⁾		All Other Compensation ($)⁽⁶⁾		Total ($)
J.S. Watson, Chairman and CEO⁽⁷⁾		2014	$	1,825,500	$	4,816,500	$	8,586,240		$ 3,100,000		$ 7,364,392		$ 277,785	$	25,970,417
		2013	$	1,770,833	$	5,807,790	$	9,228,960		$ 3,200,000		$ 3,777,809		$ 231,911	$	24,017,303
		2012	$	1,670,833	$	7,095,660	$	9,807,000		$ 3,480,000		$ 9,948,194		$ 225,435	$	32,227,122
P.E. Yarrington, Vice President and Chief Financial Officer		2014	$	1,035,417	$	1,107,795	$	2,246,400		$ 1,309,800		$ 3,981,814		$ 100,131	$	9,781,357
		2013	$	979,583	$	1,668,195	$	2,521,440		$ 1,366,200		$ 1,368,897		$ 78,825	$	7,983,140
		2012	$	909,583	$	1,827,670	$	2,451,750		$ 1,339,200		$ 3,785,547		$ 95,294	$	10,409,044
G.L. Kirkland, Vice Chairman and Executive Vice President, Upstream⁽⁷⁾		2014	$	1,503,125	$	2,042,196	$	3,644,160		$ 2,184,500		$ 2,627,964		$ 141,872	$	12,143,817
		2013	$	1,435,417	$	2,725,775	$	3,655,080		$ 2,200,000		$ 899,106		$ 144,656	$	11,060,034
		2012	$	1,370,833	$	2,956,525	$	4,086,250		$ 2,200,000		$ 8,008,957		$ 132,153	$	18,754,718
M.K. Wirth, Executive Vice President, Downstream and Chemicals		2014	$	1,063,600	$	1,107,795	$	2,246,400		$ 1,526,400		$ 2,414,629		$ 128,417	$	8,487,241
		2013	$	1,035,417	$	1,546,072	$	2,278,260		$ 1,222,500		$ 178,937		$ 140,828	$	6,402,014
		2012	$	986,875	$	1,827,670	$	2,451,750		$ 1,260,000		$ 2,196,949		$ 115,224	$	8,838,468
R.H. Pate, Vice President and General Counsel		2014	$	842,708	$	2,012,495	$	1,622,400		$ 1,071,000		$ 230,483		$ 105,548	$	5,884,634
		2013	$	812,167	$	1,260,414	$	1,897,200		$ 953,400		$ 145,100		$ 82,448	$	5,150,729
		2012	$	768,750	$	1,290,120	$	1,821,300		$ 948,900		$ 145,851		$ 101,333	$	5,076,254

(1)

Reflects actual salary earned during the fiscal year covered. Compensation is reviewed after the end of each year, and salary increases, if any, are generally effective April 1 of the following year. The following table reflects the annual salary rate and effective date for 2014, 2013 and 2012 and the amounts deferred under the Deferred Compensation Plan for Management Employees II (DCP).


Name	Salary Effective Date		Salary		Total Salary Deferred Under the DCP
J.S. Watson		April 2014	$	1,836,000		$ 182,550
		April 2013	$	1,800,000		$ 177,083
		April 2012	$	1,700,000		$ 167,083
P.E. Yarrington		April 2014	$	1,050,000		$ 15,508
		April 2013	$	1,000,000		$ 14,492
		April 2012	$	930,000		$ 13,192
G.L. Kirkland		April 2014	$	1,525,000		$ 24,862
		April 2013	$	1,450,000		$ 23,608
		April 2012	$	1,400,000		$ 22,417
M.K. Wirth		April 2014	$	1,069,200		$ 16,072
		April 2013	$	1,050,000		$ 15,608
		April 2012	$	1,000,000		$ 14,737
R.H. Pate		April 2014	$	850,000		$ 101,125
		April 2013	$	825,000		$ 97,460
		April 2012	$	781,000		$ 10,375

We explain the amount of salary and nonequity incentive plan compensation in proportion to total compensation in our “Compensation Discussion and Analysis—Pay-for-Performance Framework—Significant Pay at Risk.”

(2)

Amounts for each fiscal year reflect the aggregate grant date fair value of performance shares and restricted stock units (RSUs) granted under the Long-Term Incentive Plan of Chevron Corporation (LTIP) on January 29, 2014. We calculate the grant date fair value of these awards in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (ASC Topic 718), as described in Note 21, “Stock Options and Other Share-Based Compensation,” to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2014. RSUs (when granted as part of annual LTIP award cycle each January) and performance shares do not accrue dividends or dividend equivalents. For purposes of this table only, estimates of forfeitures related to service-based vesting conditions for awards have been disregarded.


44		Chevron Corporation—2015 Proxy Statement


								EXECUTIVE COMPENSATION

For performance shares granted on January 29, 2014, the per-share grant date fair value was $96.33. We use a Monte Carlo approach to calculate estimated grant date fair value. To derive estimated grant date fair value per share, this valuation technique simulates total shareholder return (TSR) for the Company and our LTIP Performance Share Peer Group (BP, ExxonMobil, Royal Dutch Shell and Total) using market data for a period equal to the term of the performance period, correlates the simulated returns within the peer group to estimate a probable payout value, and discounts the probable payout value using a risk-free rate for Treasury bonds having a term equal to the performance period. Performance shares are paid in cash, and the cash payout, if any, is based on market conditions at the end of the performance period (January 2014 through December 2016). Payout is calculated in the manner described in Footnote 2 to the “Option Exercises and Stock Vested in Fiscal Year 2014” table in this Proxy Statement.

For Mr. Pate, the 2014 amount also includes the aggregate grant date fair value of 9,460 restricted stock units granted under the LTIP on January 29, 2014. The per-unit grant date fair value of the restricted stock units was $116.00, the closing price of Chevron common stock on the grant date. RSUs are paid in cash upon vesting and are payable following the third annual anniversary of the grant date. Total payout will be based on the Chevron common stock closing price on the vesting date. Estimates of forfeitures related to service-based vesting conditions have been disregarded.

The material terms of performance shares and RSUs granted in 2014 are described in the “Grants of Plan-Based Awards in Fiscal Year 2014” and “Outstanding Equity Awards at 2014 Fiscal Year-End” tables in this Proxy Statement.

(3)

Amounts for each fiscal year reflect the aggregate grant date fair value for nonstatutory/nonqualified stock options granted under the LTIP. We calculate the grant date fair value of these stock options in accordance with ASC Topic 718, as described in Note 21, “Stock Options and Other Share-Based Compensation,” to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2014. Stock options do not accrue dividends or dividend equivalents. For purposes of this table only, estimates of forfeitures related to service-based vesting conditions for awards have been disregarded. For stock options granted on January 29, 2014, the per-option grant date fair value was $24.96. The material terms of stock options granted in 2014 are described in the “Grants of Plan-Based Awards in Fiscal Year 2014” and “Outstanding Equity Awards at 2014 Fiscal Year-End” tables in this Proxy Statement.

(4)

2014 amounts reflect Chevron Incentive Plan (CIP) awards for the 2014 performance year that were awarded in April 2015. The following named executive officers elected to defer portions of their awards to the DCP as follows: Mr. Watson, 25 percent, or $775,000; Ms. Yarrington, 1 percent, or $13,098; Mr. Wirth, 90 percent, or $1,373,760; and Mr. Pate, 25 percent, or $267,750. See “Compensation Discussion and Analysis—How Compensation Is Determined—Chevron Incentive Plan (CIP)” for a detailed description of CIP awards.

(5)

2014 amounts represent the aggregate change in the actuarial present value of the NEO’s pension value for the Chevron Retirement Plan (CRP) and the Chevron Retirement Restoration Plan (RRP) from January 1, 2014, through December 31, 2014, expressed as a lump sum. The Deferred Compensation Plan for Management Employees and Deferred Compensation Plan for Management Employees II (both, the DCP) and ESIP Restoration Plan (ESIP-RP) do not pay above-market or preferential earnings and are not represented in this table. For purposes of this disclosure, we have used the same amounts required to be disclosed in the “Pension Benefits Table” in this Proxy Statement.

2014 changes in the actuarial present value of an NEO’s pension value are attributable to four factors.

First, increases in highest average earnings (HAE). For Messrs. Watson, Kirkland, and Wirth and Ms. Yarrington, HAE is the highest consecutive 36-month average base salary and CIP awards. For Mr. Pate, HAE is the highest five-year average base salary and CIP awards.

Second, lower interest and discount rate assumptions are used to estimate the value of the benefit. A lower interest rate produces a higher pension value. The lump sum interest rates for determining the actuarial present values of the pension benefit are based on the Pension Protection Act of 2006 lump sum interest rates, and such rates for 2015 are equivalent to a rate that is approximately 1 percent lower than the 2014 rates. In addition, this year’s discount rate, 3.70 percent, is 0.60 lower than last year’s discount rate, 4.3 percent.

Third, an additional year of age resulting in a shorter discount period from the assumed retirement age to current age. For all of the NEOs (except for Mr. Kirkland, who attained age 60 in 2010 and for whom the discount no longer applies because there is no period of time from the assumed retirement age to his current age), the discount period from the assumed retirement age to current age was shorter as of December 31, 2014. The result of a shorter discount period to retirement age is an increase in pension values.

Fourth, an additional year of benefit service earned in 2014. All of the NEOs worked for a full year in 2014, and therefore their pension benefits increased because they earned an additional year of benefit service. For Mr. Pate, the impact of an additional year of service is larger relative to the other NEOs’ since he has significantly fewer years of service.

The following table provides a breakdown of the percent change in the NEO’s pension values:


			Factors
Name	Total Percent Change in Pension Value, Jan. to Dec. 2014^(a)		Higher HAE		Lower Interest Rate and Discount Rate Assumptions		One Year Older		One Additional Year of Service
J.S. Watson		25%		3%		13%		6%		3%
P.E. Yarrington		30%		9%		12%		6%		3%
G.L. Kirkland		9%		2%		6%		-2%		3%
M.K. Wirth		26%		1%		15%		6%		4%
R.H. Pate		46%		11%		5%		5%		25%

(a)

Calculated as follows: (actuarial present value of accumulated benefit at December 31, 2014 (reported in the “Pension Benefits Table” in this Proxy Statement)—actuarial present value of accumulated benefit at December 31, 2013 (reported in the “Pension Benefits Table” in last year’s Proxy Statement)) / actuarial present value of accumulated benefit at December 31, 2013 (reported in the “Pension Benefits Table” in last year’s Proxy Statement).

Additional information concerning the present value of benefits accumulated by our NEOs under these defined benefit retirement plans is included in the “Pension Benefits Table” in this Proxy Statement.

(6)

All Other Compensation for 2014 includes the following items but excludes other arrangements that are generally available to our salaried employees on the U.S. payroll and do not discriminate in scope, terms, or operation in favor of our NEOs, such as our relocation, medical, dental, disability, and group life insurance programs.


	J.S. Watson		P.E. Yarrington		G.L. Kirkland		M.K. Wirth		R.H. Pate
ESIP Company Contributions^(a)	$	20,800	$	20,800	$	20,800	$	20,800	$	20,800
ESIP-RP Company Contributions^(a)	$	125,240	$	62,033	$	99,450	$	64,288	$	46,617
Perquisites^(b)
Financial Counseling	$	19,500	$	–	$	17,400	$	13,700	$	13,700
Motor Vehicles^(c)	$	4,718	$	–	$	3,645	$	–	$	–
Corporate Aircraft^(d)	$	101,112	$	–	$	–	$	–	$	–
Residential Security^(e)	$	2,259	$	–	$	–	$	420	$	4,029
Executive Physical	$	–	$	–	$	–	$	–	$	4,009
International Board Trip ^(f)	$	4,156	$	17,298	$	577	$	29,209	$	16,393
TOTAL, ALL OTHER COMPENSATION	$	277,785	$	100,131	$	141,872	$	128,417	$	105,548

(a)

The Employee Savings Investment Plan (ESIP) is a tax-qualified defined contribution plan open to employees on the U.S. payroll. The Company provides a matching contribution of 8 percent of annual compensation when an employee contributes 2 percent of annual compensation or 4 percent if they contribute 1 percent. Employees may also choose to contribute


Chevron Corporation—2015 Proxy Statement		45


EXECUTIVE COMPENSATION

an amount above 2 percent, but none of the amount above 2 percent is matched. The Company match up to IRS limits ($260,000 of income in 2014) is made to the qualified ESIP account. For amounts above the IRS limit, the executive can elect to have 2 percent of base pay directed into the DCP, and the Company will match those funds with a contribution to the nonqualified ESIP-RP. Company contributions to the ESIP-RP are described further in the “Nonqualified Deferred Compensation Table” of this Proxy Statement.

(b)

Items deemed perquisites are valued on the basis of their aggregate incremental cost to the Company. We do not provide tax gross-ups to our NEOs for any perquisites. Except in the case of motor vehicles (footnote (c)) and corporate aircraft (footnote (d)), aggregate incremental cost is the same as actual cost.

(c)

Aggregate incremental cost reflects the sum of (i) annual lease value multiplied by the percentage of mileage attributable to personal use and (ii) the cost of fuel for mileage attributable to personal use.

(d)

Generally, executives are not allowed to use Company planes for personal use. For security reasons, the CEO has been requested to use a Company plane in most instances of travel, including instances of travel deemed personal. On a very limited basis, the CEO may authorize the personal use of a Company plane by other persons if, for example, it is in relation to and part of a trip that is otherwise business-related or it is in connection with a personal emergency. Aggregate incremental cost was determined by multiplying the operating hours attributable to personal use by the average estimated direct operating costs and the addition of crew costs for overnight lodging, meals and other fees, as applicable.

(e)

Reflects actual costs of home security development, monitoring, and maintenance.

(f)

Reflects the aggregate incremental cost to Chevron for expenses deemed perquisites incurred in connection with the Board of Directors’ October 2014 trip to Europe and Asia. Generally every two years, the Board and senior management travel to a selection of Chevron’s international locations of operation to gain additional insight into Chevron’s operations and to meet with local and expatriate Chevron management and personnel, as well as local, state, and national officials. Board members’ and executives’ spouses are invited to attend the international Board trip to learn about Chevron’s operations, foster social interaction among the Directors and executives, attend receptions with local and expatriate Chevron employees and their families and local government officials, tour Chevron facilities, and participate in community engagement and other goodwill activities on behalf of Chevron. Amounts reported include the aggregate incremental costs incurred in connection with spousal attendance and attributed to the NEO as a perquisite, including transportation (such as commercial air travel when in lieu of corporate air travel), lodging, meals, gifts, tours, and other activities for the spouse. For commercial air travel, lodging, meals, gifts, tours, and other activities, incremental cost reflects actual cost.

(7)	Messrs. Watson and Kirkland are also Directors of the Company, but do not receive any additional compensation for their service.

Grants of Plan-Based Awards in Fiscal Year 2014

The following table sets forth information concerning the grants of nonequity and equity incentive plan awards to our named executive officers, or NEOs, in 2014. Nonequity incentive plan awards are made under our Chevron Incentive Plan (CIP), and equity incentive plan awards (performance shares, stock options and restricted stock unit awards) are made under our Long-Term Incentive Plan of Chevron Corporation (LTIP). These awards are also described in our “Compensation Discussion and Analysis” in this Proxy Statement.

Estimated Future Payouts
Under Nonequity Incentive
Plan Awards⁽¹⁾

Estimated Future Payouts
Under Equity Incentive Plan
Awards⁽²⁾

All Other
Stock
Awards:
Number of
Shares of
Stock

or Units
(#)⁽³⁾

All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)⁽⁴⁾

Exercise
or Base
Price of
Option
Awards
($/Sh)⁽⁵⁾

Grant

Date

Fair

Value

of Stock
and

Option
Awards⁽⁶⁾

Name

Award

Type

Grant

Date

Threshold

($)

Target
($)

Maximum
($)

Threshold
(#)

Target
(#)

Maximum
(#)

J.S. Watson

CIP

–

2,754,000

–

Perf Shares

1/29/2014

–

12,500

50,000

100,000

–

4,816,500

Options

1/29/2014

–

344,000

116.00

8,586,240

P.E. Yarrington

CIP

–

1,155,000

–

Perf Shares

1/29/2014

–

2,875

11,500

23,000

–

1,107,795

Options

1/29/2014

–

90,000

116.00

2,246,400

G.L. Kirkland

CIP

–

1,982,500

–

Perf Shares

1/29/2014

–

5,300

21,200

42,400

–

2,042,196

Options

1/29/2014

–

146,000

116.00

3,644,160

M.K. Wirth

CIP

–

1,176,120

–

Perf Shares

1/29/2014

–

2,875

11,500

23,000

–

1,107,795

Options

1/29/2014

–

90,000

116.00

2,246,400

R.H. Pate

CIP

–

850,000

–

Perf Shares

1/29/2014

–

2,375

9,500

19,000

–

915,135

Options

1/29/2014

–

65,000

116.00

1,622,400

RSUs

1/29/2014

–

9,460

–

1,097,360

(1)

The CIP is an annual incentive plan that pays a cash award for performance and is paid in April following the performance year. See our “Compensation Discussion and Analysis—How Compensation Is Determined—Chevron Incentive Plan (CIP)” for a detailed description of CIP awards, including the criteria for determining the amounts payable. “Target” is the percentage of the NEO’s base salary set by the Management Compensation Committee prior to the beginning of the performance year. Actual 2014 performance-year awards paid in March 2015 are reported in the “Summary Compensation Table” in the “Nonequity Incentive Plan Compensation” column. Under the CIP, there is no threshold or maximum award.

(2)

Reflects performance shares granted under the LTIP. See our “Compensation Discussion and Analysis—How Compensation Is Determined—Long-Term Incentive Plan (LTIP)” for a detailed description of performance share awards, including the criteria for determining the cash amounts payable. “Target” is the number of performance shares awarded in 2014. If there is a payout, “threshold” represents the lowest possible payout (25 percent of the grant) and “Maximum” reflects the highest possible payout (200 percent of the grant). Performance shares are paid out in cash, and the cash payout, if any, will occur at the end of the three-year performance period (January 2014 through December 2016). Payout is calculated in the manner described in Footnote 2 to the “Option Exercises and Stock Vested in Fiscal Year 2014” table in this Proxy Statement. Performance share awards do not accrue dividends or dividend equivalents.

(3)

Reflects RSUs granted under the LTIP. See our “Compensation Discussion and Analysis—How Compensation is Determined—Long Term Incentive Plan (LTIP)” for a detailed description of RSU awards. RSUs are paid in cash upon vesting and the payout will occur following the third annual anniversary of the grant date. Total payout will be based on the Chevron common stock closing price on the vesting date multiplied by the number of vested RSUs. RSUs (when granted as part of annual LTIP award cycle each January) do not accrue dividends or dividend equivalents.

(4)

Reflects nonstatutory/nonqualified stock options granted under the LTIP. See our “Compensation Discussion and Analysis—How Compensation Is Determined—Long-Term Incentive Plan (LTIP)” for a description of stock option awards. Stock options have a 10-year term and vest at the rate of 33.33 percent per year, with vesting occurring on the first, second, and third annual anniversary of the grant date. The value of stock options realized upon exercise is determined by multiplying the number of stock options by the difference between the fair market value at the time of exercise and the exercise price of the stock options. Stock option awards do not accrue dividends or dividend equivalents.

(5)	The exercise price is the closing price of Chevron common stock on the grant date.

(6)

We calculate the grant date fair value of each award in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (ASC Topic 718) and as described in Footnotes 2 and 3 to the “Summary Compensation Table” in this Proxy Statement.


46		Chevron Corporation—2015 Proxy Statement


								EXECUTIVE COMPENSATION

Outstanding Equity Awards at 2014 Fiscal Year-End

The following table sets forth information concerning the outstanding equity incentive awards at December 31, 2014, for each of our named executive officers, or NEOs.


	Option Awards										Stock Awards
Name⁽¹⁾	Grant Date of Option Awards		Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable⁽²⁾		Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)			Market Value of Shares or Units of Stock That Have Not Vested ($)⁽³⁾		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)⁽⁴⁾		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)⁽⁵⁾
J.S. Watson		1/29/2014				344,000	$	116.00		1/29/2024		–			–		97,000	$	16,322,190
		1/30/2013		125,666		251,334	$	116.45		1/30/2023
		1/25/2012		280,000		140,000	$	107.73		1/25/2022
		1/26/2011		340,000			$	94.64		1/26/2021
		1/27/2010		340,000			$	73.70		1/27/2020
		3/25/2009		170,000			$	69.70		3/25/2019
		3/26/2008		112,000			$	84.96		3/26/2018
		3/28/2007		125,000			$	74.08		3/28/2017
P.E. Yarrington		1/29/2014				90,000	$	116.00		1/29/2024		8,290	⁽⁶⁾	$	930,013		25,000	$	4,206,750
		1/30/2013		34,333		68,667	$	116.45		1/30/2023
		1/25/2012		70,000		35,000	$	107.73		1/25/2022
		1/26/2011		132,000			$	94.64		1/26/2021
		1/27/2010		135,000			$	73.70		1/27/2020
		3/25/2009		130,000			$	69.70		3/25/2019
		3/26/2008		39,000			$	84.96		3/26/2018
		3/28/2007		44,000			$	74.08		3/28/2017
G.L. Kirkland		1/29/2014				146,000	$	116.00		1/29/2024		–			–		42,700	$	7,185,129
		3/27/2013		4,666		9,334	$	120.19		3/27/2023
		1/30/2013		45,000		90,000	$	116.45		1/30/2023
		1/25/2012		116,666		58,334	$	107.73		1/25/2022
		1/26/2011		190,000			$	94.64		1/26/2021
		1/27/2010		190,000			$	73.70		1/27/2020
		3/25/2009		17,000			$	69.70		3/25/2019
		3/26/2008		112,000			$	84.96		3/26/2018
M.K. Wirth		1/29/2014				90,000	$	116.00		1/29/2024		8,290	⁽⁷⁾	$	930,013		23,900	$	4,021,653
		3/27/2013		1,000		2,000	$	120.19		3/27/2023
		1/30/2013		30,000		60,000	$	116.45		1/30/2023
		1/25/2012		70,000		35,000	$	107.73		1/25/2022
		1/26/2011		132,000			$	94.64		1/26/2021
		1/27/2010		135,000			$	73.70		1/27/2020
		3/25/2009		130,000			$	69.70		3/25/2019
		3/26/2008		112,000			$	84.96		3/26/2018
		3/28/2007		125,000			$	74.08		3/28/2017
R.H. Pate		1/29/2014				65,000	$	116.00		1/29/2024		26,870	⁽⁸⁾	$	3,014,251		19,700	$	3,314,919
		1/30/2013		25,833		51,667	$	116.45		1/30/2023
		1/25/2012		52,000		26,000	$	107.73		1/25/2022
		1/26/2011		95,000			$	94.64		1/26/2021
		1/27/2010		102,000			$	73.70		1/27/2020

(1)

Termination for reasons other than for misconduct may result in full or partial vesting of awards granted under the Long-Term Incentive Plan of Chevron Corporation (LTIP). Full or partial vesting depends upon the sum of an NEO’s age plus his or her years of service. This policy is a reflection of our belief that the LTIP should promote a career employment model designed to encourage retention and long-term employment. For a description of the effect of this policy on the outstanding LTIP awards of our NEOs, refer to the “Potential Payments Upon Termination or Change in Control” section of this Proxy Statement.

(2)	Stock options have a 10-year term and vest at the rate of 33.33 percent per year, with vesting occurring on the first, second, and third annual anniversary of the grant date. Stock option awards do not accrue dividends or dividend equivalents.

(3)	Market value is based upon number of restricted stock units (RSUs) that have not vested multiplied by $112.18, the closing price of Chevron common stock on 12/31/14.

(4)

Represents performance shares that vest and are paid out in cash at the end of the applicable three-year performance period. Payout is calculated in the manner described in Footnote 2 to the “Option Exercises and Stock Vested in Fiscal Year 2014” table in this Proxy Statement. Performance share awards do not accrue dividends or dividend equivalents. For Mr. Watson, 47,000 shares vest on 12/31/15 and 50,000 shares vest on 12/31/16; for Ms. Yarrington, 13,500 shares vest on 12/31/15 and 11,500 shares vest on 12/31/16; for Mr. Kirkland, 21,500 shares vest on 12/31/15 and 21,200 shares vest on 12/31/16; for Mr. Wirth, 12,400 shares vest on 12/31/15 and 11,500 shares vest on 12/31/16; and for Mr. Pate, 10,200 shares vest on 12/31/15 and 9,500 shares vest on 12/31/16.

(5)

Represents estimated cash payout value of performance shares and is based upon the number of performance shares multiplied by the assumed performance modifier of 150 percent multiplied by $112.18, the closing price of Chevron common stock on 12/31/14. The performance modifier for the most recent payout was 100 percent, which exceeded the threshold.


Chevron Corporation—2015 Proxy Statement		47


EXECUTIVE COMPENSATION

Accordingly, the estimated payout value is based upon 150 percent performance modifier, the next-highest performance modifier that exceeds the previous fiscal year’s performance modifier. The estimated payout value may not necessarily reflect the final payout, which will be calculated in the manner described in Footnote 2 to the “Option Exercises and Stock Vested in Fiscal Year 2014” table in this Proxy Statement.

(6)

Represents unvested portion of 15,000 RSUs granted on 12/6/11 (and not granted as part of annual LTIP award cycle each January) and subsequent dividend equivalents credited as additional RSUs. 50 percent vested on 12/6/13, and 50 percent will vest on 12/6/15 if Ms. Yarrington is employed through the vesting date. RSUs are paid out in cash upon vesting.

(7)

Represents unvested portion of 15,000 RSUs granted on 12/6/2011 (and not granted as part of annual LTIP award cycle each January) and subsequent dividend equivalents credited as additional RSUs. 50 percent vested on 12/6/13, and 50 percent will vest on 12/6/15 if Mr. Wirth is employed through the vesting date. RSUs are paid out in cash upon vesting.

(8)

Represents unvested portion of 22,500 RSUs granted on 12/6/11 (and not granted as part of annual LTIP award cycle each January) and subsequent dividend equivalents credited as additional RSUs. 30 percent vested on 12/6/14, 30 percent will vest on 12/6/16 and 40 percent will vest on 12/6/18 if Mr. Pate is employed through the respective vesting dates. Also includes 9,460 restricted stock units granted on 1/29/14 that will vest on 1/29/17 if Mr. Pate is employed through the vesting date. The 2014 RSU grant does not accrue dividend equivalents. RSUs are paid out in cash upon vesting.

Option Exercises and Stock Vested in Fiscal Year 2014

The following table sets forth information concerning the cash value realized by each of our named executive officers, or NEOs, upon exercise of stock options or vesting of restricted stock units and performance share awards in 2014.


	Option Awards				Stock Awards
Name	Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($)⁽¹⁾		Number of Shares Acquired on Vesting (#)⁽²⁾		Value Realized on Vesting ($)⁽²⁾
J.S. Watson		–	$	–		66,000	$	7,209,180
P.E. Yarrington		38,000	$	2,598,060		17,000	$	1,856,910	⁽³⁾
G.L. Kirkland		153,000	$	8,459,610		27,500	$	3,003,825
M.K. Wirth		75,000	$	5,439,113		17,000	$	1,856,910	⁽³⁾
R.H. Pate		–	$	–		19,386	$	2,137,545

(1)	Value realized upon exercise was determined by multiplying the number of stock options exercised by the difference between the weighted average fair market value of Chevron common stock on the exercise date and the exercise price of the stock options.


Name	Shares Acquired on Exercise		Grant Date		Exercise Price		Exercise Date		Weighted Average Fair Market Value on Exercise Date		Value Realized on Exercise
P.E. Yarrington		38,000		3/23/2006	$	56.63		5/12/2014	$	125.0000	$	2,598,060
G.L. Kirkland		3,000		3/25/2009	$	69.70		2/12/2014	$	112.9100	$	129,630
G.L. Kirkland		150,000		3/25/2009	$	69.70		5/06/2014	$	125.2332	$	8,329,980
M.K. Wirth		75,000		3/23/2006	$	56.63		8/29/2014	$	129.1515	$	5,439,113

(2)	Represents the cash value of vested restricted stock units and/or performance shares granted in 2012 for the performance period January 2012 through December 2014.

Restricted Stock Units (RSUs)

RSUs are valued by multiplying the number of units vested (including dividend equivalents credited as additional RSUs, if RSUs were not granted as part of annual LTIP award cycle each January) by the closing price of Chevron common stock on the vesting date, or, if the New York Stock Exchange is not open on the vesting date, by the closing price on the last date prior to the vesting date that the New York Stock Exchange is open. The following RSUs vested and were paid in cash in 2014. The reported value also includes a cash payment of $7,903 for the 12/10/14 dividends that were accrued and payable after the 12/6/14 vesting date:

Name

Shares Acquired
on Vesting

Grant
Date

Vest

Date

Closing Price Used

to Value Shares

Value Realized
on Vesting

R.H. Pate

7,386

12/06/2011

12/06/2014

110.87

826,785

Performance Shares

We calculate the cash value of performance share payouts as follows:

First, we calculate our total shareholder return (TSR) and the TSR of our LTIP Performance Share Peer Group (BP, ExxonMobil, Royal Dutch Shell and Total) for the three-year performance period. We calculate TSR for the three-year performance period as follows:


TSR =		(20-day average ending stock price (–) 20-day average beginning stock price (+) reinvested dividend value)
		20-day average beginning stock price

“Ending” refers to the last 20 days and “Beginning” refers to the first 20 days of the performance period that the New York Stock Exchange is open. In each instance, we use closing prices to calculate the 20-day average.

The results are expressed as an annualized average compound rate of return.

Second, we rank our TSR against the TSR of our LTIP Performance Share Peer Group to determine the performance modifier applicable to the awards. Our rank then determines what the performance modifier will be, as follows:


Our Rank	1st		2nd		3rd		4th		5th
Performance Modifier	200	%	150	%	100	%	50	%	–


48		Chevron Corporation—2015 Proxy Statement


								EXECUTIVE COMPENSATION

For example, if we rank first in TSR as compared with our LTIP Performance Share Peer Group, then the performance modifier would be 200 percent. Under the rules of the Long-Term Incentive Plan of Chevron Corporation (LTIP), in the event our measured TSR is within 1 percent of the nearest competitor(s), the results will be considered a tie, and the performance modifier will be the average of the tied ranks. For example, if Chevron ranks fifth in TSR and ties with the TSR of the company that ranks fourth, it will result in a modifier of 25 percent (the average of 50 percent and zero percent).

Third, we determine the cash value and payout of the performance share award, as follows:

Number

of Performance

Shares Granted

Performance

Modifier

20-Day Trailing Average Price of Chevron Common

Stock at the End of the Performance Period

Cash Value/Payout

For awards of performance shares made in 2012, the three-year performance period ended December 2014. Chevron ranked third in TSR among our LTIP Performance Share Peer Group, resulting in a performance modifier for the period of 100 percent. Accordingly, the cash value of the performance shares vested in 2014 for 2012 awards was calculated as follows:


	Shares Granted		x	Modifier		=	Shares Acquired on Vesting		x	20-Day Trailing Average Price		=	Cash Value/ Payout
J.S. Watson		66,000			100%			66,000			$ 109.23			$ 7,209,180
P.E. Yarrington		17,000			100%			17,000			$ 109.23			$ 1,856,910
G.L. Kirkland		27,500			100%			27,500			$ 109.23			$ 3,003,825
M.K. Wirth		17,000			100%			17,000			$ 109.23			$ 1,856,910
R.H. Pate		12,000			100%			12,000			$ 109.23			$ 1,310,760

(3)

The named executive officers elected to defer portions of their 2012 performance share grants to the Deferred Compensation Plan for Management Employees II (DCP) as follows: Ms. Yarrington elected to defer 1 percent, or $18,569, and Mr. Wirth elected to defer 90 percent, or $1,671,219. Provisions of the DCP and Ms. Yarrington’s and Mr. Wirth’s distribution elections are described in the footnotes to the “Nonqualified Deferred Compensation Table” in this Proxy Statement.

Pension Benefits Table

The following table sets forth information concerning the present value of benefits accumulated by our named executive officers, or NEOs, under our defined benefit retirement plans, or pension plans.

Name

Plan Name

Number of Years
Credited Service⁽¹⁾

Present Value of
Accumulated Benefit⁽²⁾

Payments During
Last Fiscal Year

J.S. Watson

Chevron Retirement Plan

$ 1,655,848

$ –