ASM 2019

May 29, 2019

Good morning, ladies and gentlemen. May I ask that you please take your seats. I am Neil Hansen, Vice President of Investor Relations and Corporate Secretary. Please let me introduce Darren Woods, our Chairman, President and CEO, who will now provide some opening remarks. Thank you, Neil. Well, good morning, everyone. Welcome. I'm very pleased to have you all here this morning and glad that we could have our shareholders who are participating via the Internet. I'd like to now bring our meeting to order. For those of you who are here at the meeting, I hope that you took the opportunity to meet and speak to some of our employees in the lobby this morning. I'd like to begin today by recognizing them. So if I could ask all of our employees to please stand. Thank you. These men and women are among the 70,000 people around the world who are working for you, our shareholders. The results I share with you today are their results and I will tell you it is a privilege to represent them and to speak on their behalf. Consistent with the past meetings, the Corporate Secretary will administer the proceedings and help run this morning's meeting. So at this time, let me turn the meeting over to Neil. Thank you, Darren. I'd first like to familiarize everyone with the safety features of this room. In case of an emergency, we will be notified through the public address system. Emergency exits, as shown on the screen behind me, are situated at the back and right of the room. If we need to evacuate, please proceed to the nearest exit and the ushers and hotel staff will guide you out of the building. In addition, for safety reasons, please do not block the aisles and do not block the exits. I would now like to draw your attention to our cautionary statement. This statement contains important information regarding today's presentation and discussion. You may also refer to our corporate website for additional information on factors affecting future results as well as supplemental information defining key terms that we will use throughout the meeting today. Next, I would like to provide an outline of today's proceedings. We'll begin by summarizing guidelines for the meeting, including how to be recognized, the proposals to be covered and the process for voting on them. We will declare a quorum allowing us to begin the business of the meeting. Then we will give an update on ExxonMobil's plans to grow shareholder value. Next, the items of business will be presented and any remaining votes cast. Polls will then be closed and the Inspector of Election will provide the preliminary voting results. That will conclude the formal business of the meeting. We'll then have a brief period for any questions or comments. Following the discussion, Darren will close the meeting with some final remarks. To ensure the meeting is productive and concluded and conducted in the interest of all shareholders, there are certain guidelines governing this event. In the program, you will find the rules of conduct to ensure an orderly meeting that respects the rights of all shareholders. Disruptions of the speaker or the Chairman are not permitted and will be viewed as intentional interference with the meeting. Only shareholders as of the record date or their properly appointed proxies will be entitled to speak during the meeting. The laws of New Jersey where ExxonMobil is incorporated provide that no business can be brought up for a vote unless proper notice has been given to all shareholders. Therefore, in fairness to other shareholders not in attendance and in keeping with the laws that govern our annual meeting, formal business at today's meeting is restricted to the items included in this year's proxy statement. In order to present a proposal, you must have checked in at the admissions desk and verified that you are a proponent or a duly authorized proxy under New Jersey law. Presenters whose credentials have been verified will be given a blue presenters pass. If neither the proponent nor an authorized proxy has checked in, we'll presume the proponent is not present. And I will move the proposal so that the shareholder votes may be recorded. However, I will not be acting as representative of the proponent. The authorized presenter of a shareholder proposal will have up to 2 minutes to present the proposal while the usher holds the microphone. Time may not be shared with another speaker and no second to the motion is required. During the discussion period, if you wish to make comments, please fill out the speaker identification card that was included in the program provided to you as you entered the lobby. Only shareholders and their proxies are entitled to speak. To indicate that you wish to speak, please move to a reserved aisle seat, remain seated and raise your hand while holding your speaker identification card. When recognized, give your completed speaker card to the usher. Please stand and begin by stating your name. You may speak for up to 2 minutes while the usher holds the microphone. We request that individual shareholders respect the rights of others to speak by keeping your comments brief. And we ask that matters of personal interest not relevant to all shareholders be raised directly with appropriate company representatives outside of the annual meeting. Due to the need to conclude the meeting within a reasonable amount of time, we can't assure that every shareholder who wishes to speak will be able to do so. As we've done in the past, we have provided a timing system of lights that will help speakers manage their time. I would now like to demonstrate the system. When a speaker is recognized and an usher has arrived with a microphone, a green light will come on at the displays on both sides of the stage. The microphone will be activated only after the speaker has been recognized. When the speaker's time remaining reaches 30 seconds, a yellow light will turn on. A red light will indicate list of proposals that will be presented and voted on during the meeting. There are 10 items of business. We'll begin with the 3 Board proposals, the election of directors, ratification of independent auditors and an advisory vote to approve executive compensation. We will then continue with the 7, just the policy of the corporation to provide confidential voting to shareholders. If you didn't include comments with your vote, your proxy card hasn't been seen by the company. Anyone wishing to vote in secret at this meeting can obtain an envelope from the ushers. Proxy cards will be collected later in the meeting. A list of shareholders entitled to vote is available for your inspection. If anyone wishes to examine the list, Anasher will direct you to the proper location. Shirley Nesrella of Computershare Trust has been appointed the Inspector of Election for this meeting. She has taken an oath of office that has been delivered to the Secretary for filing with the minutes. Notice of this meeting has been properly given. The Inspector of Election has determined that a quorum is present. There are 3,600,000,000 shares represent ready for business. Before going to the formal business though, I'd like to share my perspective about our and the role we play in the world's changing energy landscape. Over the past year, I've been engaging with governments and the communities we serve, visiting our facilities and meeting with many of our dedicated employees. Throughout these visits, I was constantly reminded of the importance of the work we do, the benefits our products provide and the quality of our people. ExxonMobil employees are a global community, responsibly developing the energy and the products that improve people's lives. We're dedicated to doing our jobs with great care for people and the environment. I'm proud to be part of this community, and I know that many of you are too. Our commitment to excellence and our focus on growing value is delivering results. Let me turn to some of those now. Our business performed well last year. We made good progress on our plans to strengthen the company. Our goal is to double 2017 earnings and operating cash flow by 2025 and increase return on capital employed to 15%. Last year's earnings were over $20,000,000,000 Our cash flow was double that. When you adjust for tax reform and impairments, earnings were up about 40% over 2017, driven by higher prices, greater liquids production and value from our North American operations. We delivered this by taking full advantage of our competitive strengths. Thanks to the hard work and dedication of our people, we grew the cumulative value of our investment portfolio by $40,000,000,000 Over the long term, disciplined investment through the ups and the downs of the commodity cycle and strong operating performance are key to delivering growth in earnings, cash flow and return on capital. As we look to the future and growing our business, it's critical that we address society's ambition to reduce global emissions. Over the past year, I've met with policymakers from both sides of the aisle, NGOs, academia in a climate change dialogue at the Vatican. ExxonMobil joined the oil and gas climate initiative. We continued our work in support of a carbon tax. In an important step for industry, we also supported strong regulations for methane emissions. Engagement on climate is important. We're working on solutions through fundamental research and development for new technologies is also important. Conventional technologies like wind and solar play a valuable role in reducing emissions, but they have their limits. Under the Paris Agreement, which we support, national commitments fall short of delivering the agreement's ambitions, largely due to the lack of affordable alternatives. The world needs additional solutions. And that's where we think we can add significant value. Leveraging ExxonMobil's experience in the global energy system and our strong foundation in research and development. We're working on potential technology breakthroughs that provide reliable, affordable and cleaner energy on demand and at scale. We're doing our part to address society's dual challenge, providing affordable energy to people around the world, fueling economic growth and improving living standards, while at the same time reducing environmental impacts. Energy underpins almost every aspect of our daily lives, providing light and heat for homes and schools, broadening access to medical treatment and education, extending life expectancies, enabling clean water and more productive agriculture for growing populations. These life changing benefits help billions of people escape poverty. They also increase the global demand for energy and the potential for environmental impacts. Our approach to climate change has 4 components. 1st, we start at home, mitigating emissions from our operations. Last year, we set goals to reduce methane emissions by 15% and flaring by 25%. We're on track to meet both. 2nd, we help consumers reduce their emissions. Our advanced fuels, lubes and lightweight plastics are a few examples of how we make a significant contribution here. 3rd, we leverage our long history and deep understanding of the global energy system to engage with policymakers. And finally, perhaps most importantly, we work on breakthrough technologies to fill the void in today's solution set, Technologies that could make a real difference such as next generation biofuels for transport, carbon capture for power generation and new industrial processes to reduce energy use. We take a unique approach by advancing fundamental research both internally and through external collaborations. You may have read about our recent agreement with the U. S. Department of Energy's National Labs. We're committing to 10 years of work and up to $100,000,000 to advance fundamental research and demonstrate new lower emissions technologies. The agreement adds to our work with more than 80 universities around the world and with 5 energy centers at MIT, Princeton, Stanford, the University of Texas and 2 national universities in Singapore. In addition, we partner with private sector companies that have unique capabilities critical to potential breakthroughs such as synthetic genomics on our algae biofuels. Meeting society's growing desire for energy solution We are committed to doing our part, focusing on the areas that leverage our strengths and addressing critical gaps in what's available today. We don't believe that society has to choose between economic prosperity or reducing the risk of climate change. We can do both, which is what we are working on. I'm very optimistic about the future. Let me now turn and review the plans we have for our business and our contribution to global economic growth. In building our strategy and plans, we start with the fundamentals, trends in populations and demographics, economic growth, evolving technologies and government policy. Here are a few of the most relevant highlights. This chart shows the percentage increase of several key indicators. Over the next 2 decades, the global population is expected to grow by 30% to 9,000,000,000 people. GDP in the middle class will roughly double in size. Technologies will improve. Government policies that attempt to balance economic cost with environmental benefits, roughly in line with the current commitments of the Paris Agreement, will be implemented. Our outlook projects a 25% increase in energy demand. Oil demand is expected to grow by 0 point 7% a year, driven by commercial transport and chemical feedstocks. Natural gas demand will grow by 1.3% a year to meet electricity and industrial demand. Now some of you may think that growth does not sound like much, but when you factor in depletion rates, new oil production needs to increase by 8% a year and natural gas by 6%. Even under hypothetical scenarios where technology breakthroughs and government policies put the world on a 2 degree path, large investments in new oil and gas supplies are still required due to the significant depletion rates. In fact, the International Energy Agency estimates our industry needs to invest $21,000,000,000,000 over the next 2 decades on new energy projects to offset depletion and continue to meet the energy needs of the world's growing population and increasing middle class. In the Chemical and Downstream businesses, demand fundamentals are driving our investments to upgrade production to higher value products. For example, distillate demand for diesel and jet fuel will increase as economic growth spurs commercial transportation and aviation. Demand for fuel oil will decline significantly from 2020 with new environmental standards. We also expect the demand for high value chemical products to continue to increase as more people move into the middle class and demand better performing products. Of course, these fundamentals apply to all of industry. Our challenge is to leverage our unique set of competitive advantages to realize more value from these fundamentals than our competitors. And this starts with our people. Getting the people part right is the foundation of everything we do. We recruit talented people and retain the vast majority for an entire career. This provides us with a workforce of unsurpassed experience and industry knowledge. Our focus on functional excellence ensures we develop the right expertise and apply it consistently to the highest standards. Technology is another area where we have a differentiated approach. It helps us to respond to supply and demand changes and meet society's evolving needs. Our scale provides a large base to leverage the value of our technology. It also helps us accelerate learning and gives us the financial capacity to take advantage of investment opportunities in any financial environment. And our integrated businesses enables us to capture benefits across the entire value chain. We're leveraging these advantages across each one of our business lines as we pursue the best portfolio of investment opportunities we've had in over 2 decades. In the upstream, we are focusing on 5 outstanding and our LNG opportunities in Mozambique and Papua New Guinea. Since last year, we have made good progress with each and identified significantly more potential. I shared our plans last year for the Permian. At that time, we expected to produce 600,000 oil equivalent barrels a day by 2025. With the development work we completed since that time, we've nearly doubled that to 1,000,000 barrels a day by 2024. We are gaining additional value from the pipelines and terminals we're building that connect our Gulf Coast refineries and chemical plants to our Permian production. In Guyana, we continue to make new discoveries with the total number of successful exploration wells now at 13. Recent discoveries will add to the 5,500,000,000 barrels we currently estimate as recoverable resources. Guyana's first oil production is on track for early next year, just 5 years after discovery, well ahead of industry average. By 2025, we'll be producing at least 750,000 barrels a day. Offshore Brazil, we hold more than 2,000,000 net acres in one of the world's most promising exploration plays. We're now finalizing our development plans for the Carpara resource with production targeted for 2024 or sooner. Over the past year, we've extended our global leadership in LNG. This is evidenced by our Mozambique opportunity where we hold a 25% interest in Area 4. This block holds an estimated 85,000,000,000,000 cubic feet of natural gas. Last year, we captured another 4,000,000 gross acres with exploration starting next year. This is one of the world's largest and most cost competitive LNG supplies. Projects of this size play to our strengths, enabling us to maximize the value of the resource for the people of Mozambique. Turning to Papua New Guinea. We're expanding our highly successful LNG project to double its capacity. Our facilities are currently operating at more than 99% reliability and production is at more than 8,000,000 tonnes, 20% above design capacity. We're now working on adding 3 new LNG trains and are continuing to explore for gas in the country's Highlands. We're applying our competitive advantages across our Downstream and Chemical businesses as well. Over the past 5 years, their combined annual earnings have averaged more than $9,000,000,000 We aim to double 2017 earnings potential by 2025 with investments that leverage our proprietary technology. A great example of this is the new hydrocracker at our Rotterdam refinery, which started up late last year. Using technology that we developed, we are now upgrading low value product streams directly into higher value base stocks and distillates, a first for industry. This project alone should produce $300,000,000 a year in earnings, making Rotterdam one of the world's most profitable refineries. Other investments are underway in the U. S. And Asia, increasing our refining and chemical capacity, capitalizing on our growing U. S. Position and serving Asia's fast growing chemical markets. To summarize, we are committed to growing the value of your company. We are well on our way to meeting the goals we laid out last year, doubling 2017 earnings potential by 2025 and growing cash flow potential to more than $60,000,000,000 essentially twice our 2017 levels. The work we have done since I spoke with you last year has added to this growth, increasing our cumulative earnings potential by 5% and cash flow potential by 7%. The advantaged investments that deliver this growth also improve our return on capital employed, which by 2025 will be around double that of 2017. This growth is critical to maintaining our reliable and growing dividend, which has increased annually for the past 37 years at an average of more than 6%. We remain committed to sharing the company's success with our shareholders. Higher earnings and increased cash flow from our investments are very good means to doing this. We are equally committed to helping society reduce global emissions, while supporting growth and prosperity, effectively addressing the dual challenge. With the dedication of our people, the competitive advantages we built over generations, our robust investment portfolio and the progress we've made in the past 12 months, I'm more confident than ever that we'll meet this ambitious goal and create sustained industry leading value. Thank you for your support and continued commitment to our people and our great company. Neil? We'll now turn to the thank you. We'll now turn to the formal business of the meeting. The proposals will be presented in the order they appear in the proxy statement. If you wish to change your proxy instructions on any of the proposals or if you have not submitted a proxy and wish to vote by ballot, they are available from the ushers. Please raise your hand if you would like a ballot at any time during the formal business. The ballots will be collected after all items have been introduced. Darren will now proceed with the presentation of the proposals. I'm now placing the 10 items of formal business listed in the notice, including the election of directors before the meeting for a vote. The polls are now open. The first proposal is the election of 10 directors. The Board nominates the 10 people identified in the proxy statement. All 10 are highly qualified to serve on the Board. All the nominees are currently serving as ExxonMobil Directors. I'd like to ask each of our nominees to stand as their names are called. Susan Avery, Angela Brawley, Ursula Burns, Kenneth Frazier, Stephen Kandarian, Douglas Oberhelman, Samuel Palmisano, Steven Reinemann, William Weldon. Thank you. The next item on the agenda is the ratification of PricewaterhouseCoopers as the independent auditor. The Board's audit committee has appointed PwC to audit ExxonMobil's financial statements for 2019. We are asking shareholders to ratify that appointment. PwC is represented today by Tom Smith. Tom, would you please stand? Thanks, Tom. The Audit Committee's reasons for recommending PwC appear in the proxy statement. The Audit Committee recommends a vote to adopt this proposal. The next Board proposal calls for a shareholder advisory vote to approve executive compensation. The Board recommends a vote in favor of this proposal. The next order of business is the consideration of shareholder proposals. But before we begin, I'd like to provide some context. Proposals in the proxy statement do not represent the full scope of shareholders' suggestions or discussions. Last year, for example, we engaged with shareholders holding more than 35% of total shares outstanding and nearly 2 thirds of institutional shareholdings. Shareholder input is taken seriously and considered in company deliberations and disclosures. It's also important to note that we agree with the underlying principles and stated objectives for all the proposals being considered today. We only disagree on the best means of achieving these objectives. With that, let's turn to the 7 shareholder proposals. For those following along, details can be found in the proxy statement. The first shareholder proposal calls for an independent Chairman. I understand that Edward Mason will present the proposal. Thank you, Chairman. Good morning. My name is Edward Mason from the Church Commissioners, the Church of England's Endowment Fund. I'm presenting Item 4 on behalf of the Kestrel Foundation. The proposal requests the separation of the positions of Chair and CEO when a new CEO is next chosen. This is plain good governance. The proposal is backed by the Church Commissioners and New York State Common Retirement Fund as engagement leads for Exxon in Climate Action 100 plus an initiative supported by investors with $33,000,000,000,000 in assets, which asked companies to make emissions reductions across their value chain consistent with the goals of the Paris Agreement. Good governance supports good climate strategy and shareholder engagement. Members of the board, last week I was in Aberdeen at BP's AGM. There, shareholders overwhelmingly passed a shareholder resolution filed by BP's Climate Action 100 plus Leads and backed by the BP Board calling on the company to disclose annually the consistency of its capital expenditure with the goals of the Paris Agreement. Engagement had been intensive, meaningful and independent director led in an approach to climate strategy sorry, and ended in an approach to climate strategy and disclosure that company and investors alike support. Today in Dallas, there is no proposal from Exxon's Climate Action 100 plus Leads because the company has omitted it from the ballot, nor is there any agreed way forward. Company and investors have been in open about climate strategy and disclosure. Recent steps the company has made in the last month to start to make arrangements for dialogue with the Climate Action 1 100 plus Group at independent director level are welcome. But the fact that it has taken so long to get to this point reflects how painfully slow progress has been to date with Exxon on climate change. Members of the Board, Climate Action 100 plus investors look forward to the intensive, meaningful engagement that has been delayed for too long. My hope is that by this time next year, Exxon will, like BP, Shell and Total, have started to map out a future consistent with the goals of the Paris Agreement. Nothing less will do. I urge you vote for Item 4. Thank you, Ed. I think I got a little bit off subject with respect to the proposal. Let me just maybe make a couple of comments with respect to the concerns that you raised. I would tell you that we understand the concerns and share your desire to meaningfully address climate change. And I think ExxonMobil plays a pretty important role in that, both today and in the future. And we take our actions and responsibilities seriously. In fact, if you as you recall, we recently announced targets to reduce methane emissions and flaring, and we continue to challenge our business to reduce those across all of our operations around the globe. We take it seriously. The Board has been engaged. And I would tell you too that we've had many, many discussions not only with your organization, but with many groups outside who have this concern. And I think are making very good progress in addressing some of the fundamental challenges associated with the risk of climate change. With respect to an independent Chairman, we agree with the importance of strong and independent Board. A strong board is dedicated to representing the interest of shareholders and providing oversight of company's management, including me, the CEO. And I can assure you that our Board does this. A combined Chairman and CEO position does not undermine this objective. On our Board, 9 out of our 10 Directors are independent, including the Presiding Director. The Board believes that independent leadership is effectively provided by the Presiding Director. Also the Board Affairs Committee, the Public Issues and Contributions Committee, the Audit Committee and the Compensation Committee are all chaired by an independent director. The Board believes it should retain flexibility to determine the leadership structure that best serves the interest of shareholders. Therefore, the Board recommends shareholders vote against this proposal. Let's move to the next shareholder proposal, which calls for special shareholder meetings. I understand that Natasha Lam will present the proposal. Thank you. Good morning. Good morning. My name is Natasha Lam. I've been asked to present proposal 5 on special shareholder meeting improvement, which is sponsored by Kenneth Steiner of Great Neck New York. Shareholders ask the Board of Directors to take the steps necessary to amend the governing documents to give the owners of a combined 10% of the outstanding common stock the power to call a special share owner meaning without forcing shareholders to petition a court of law in order to do so. ExxonMobil is in a small minority of companies that require 10% of shareholders to go to court in order to call for a special shareholder meeting. Plus, ExxonMobil has an unlimited budget to oppose such a request in a court of law and shareholders lack such a budget. Special meetings allow shareholders to vote on important matters such as electing new directors that can arise between annual meetings. This proposal topic won more than 70% support at Edwards Life Sciences and SunEdison in 2013. The 70% support would have been higher if more shareholders had access to independent proxy voting advice. A shareholder ability to call a special meeting would put shareholders in a better position to give continuing input on improving the membership of the Board of Directors. This topic is more important since at Exxon, there is no oversight of the CEO by an independent Board Chairman. This proposal needs attention needs added attention since Exxon's stock has fallen from $100 to $73 in the 5 years leading up to today. Please vote yes for special shareholder meeting improvement proposal number 5. Thank you. Thank you, Natasha. We agree that shareholders should have a meaningful right to call a special meeting. And that right today is already provided for in New Jersey where we incorporated. Current law allows shareholders holding 10% of our company's outstanding stock to call special meetings with a showing of good cause. We believe the requirement to show good cause is prudent. It demonstrates legitimate purpose and it protects against abuse. The Board has done nothing to restrict that right. In fact, the Board has indicated it will waive the requirement to show good cause If it agrees, the purpose for the special meeting is legitimate. Therefore, the Board recommends shareholders vote against this proposal. The next shareholder proposal asked that a Board matrix be included in the proxy statement. I understand that Ed Mason will present this proposal as well. Thank you again, Chairman. I'm presenting Item 6 on behalf of the New York City Controller, Scott Stringer, and 4 of New York City's 5 pension funds. The proponents have $183,000,000,000 in assets under management and are substantial long term Exxon shareholders with Item 6 calls Item 6 calls for disclosure of a board matrix that includes each director's gender and race, ethnicity as well as their skills, experience and attributes that are most relevant in light of the company's business, long term strategy and risks. Members of the Board, this week's Economist describes ExxonMobil as a notable laggard on climate change. All the while, the climate emergency is deepening, the clamor for action is growing, and governments are starting to chart a course towards net 0 emissions. Exxon urgently requires a strategy to reduce emissions across its value chain in line with the goals of the Paris Agreement as over 320 institution investors participating in Climate Action 100 plus are calling for. Exxon needs a plan for net zero emissions early in the second half of this century. Fellow shareowners, a diverse board in terms of relevant skills and gender and race ethnicity is a better board. While ExxonMobil's board is comprised of highly accomplished individuals, without a matrix, it is difficult for investors to assess the Board collectively, difficult to see how each individual's attributes complement those of colleagues. The proposed matrix would give shareowners a big picture view of directors' attributes and how they fit together. As the energy transition proceeds, we will be placing great reliance on our board. Exxon's peers such as Chevron and Occidental disclose the board matrix. This submission is easy to fix, and I urge you vote for item 6. Thank you, Ed. I appreciate your comments. And let me just say that we agree that diversity of experience, background, gender and ethnicity are all critical components of an effective Board. And our Board benefits from varying perspectives that this diversity brings. We conferred with the proponents of this proposal and we did make changes to our proxy statement this year to make it easier for shareholders to judge the collective competency of the Board. However, we don't agree that a prescribed format for characterizing our Board's diversity is required believe that it may even mislead shareholders in some instances. Instead, we've provided detailed and specific information easily located in the proxy statement and on our website for each individual director. We also provided an overview of the collective competency and diversity of the entire Board. The Board, therefore, recommends shareholders vote against this proposal. The next shareholder proposal calls for a specific Board Climate Change Committee, and I understand that Natasha Lam will present this proposal. Hello again. My name is Natasha Lam and I'm here on behalf of Arjuna Capital to move proposal number 7, which asks our company to establish a focused board committee with oversight of climate issues. Climate change poses an emergency threat to the human race, the global economy and the future of our company. Investor capital is at substantial risk in the face of climate change policy, competition from renewables, peak oil demand and unburnable fossil fuel reserves. This proposal seeks contractual clarity to ensure that the existential threats of climate change are being addressed in-depth by the Board. Despite global agreement that limits on the consumption of fossil fuels are needed to contain global warming to less than 2 degrees Celsius, it appears that our company's trajectory is built upon the expectation of increasing fossil fuel demand and consumption. Business strategy based on this assumption is unlikely to redirect company finances and innovative capacities to meet the formidable challenges posed by climate change and temperature containment goals. Establishing a Board Committee with delineated duties can ensure that climate change is given adequate rather than tangential focus. A Climate Change Committee can better inform and strengthen the entire Board, making it more climate competent. A committee is a straightforward way for a Board to create clear lines of responsibility, a contractual level of clarity about who is responsible overseeing and setting policy on climate change and a delineation of liability for failure of care. Given the existential nature of the climate crisis, we believe the status quo is insufficient. I urge shareholders, management and the Board to fully consider the strategically important issue. Thank you. Thank you, Natasha. I just want to be really oversight of all company risks, including climate related risk. We take that responsibility very seriously. We have a comprehensive framework to assess our business risk, including the change and the risk associated with climate change. And then for more than a decade, at least one session of the full Board each year a frequent topic of conversations and review at other sessions of the Board as circumstances warrant. The Board committees are also empowered to provide additional insight on the risk faced by the company. The Board Audit Committee assesses our overall risk management approach. The Public Issues and Contributions Committee regularly reviews safety, health and environmental performance, including the steps taken to identify and manage climate related risk. Given the already established risk assessment process and structure, the Board is confident that this matter is appropriately addressed and therefore recommend the shareholders vote against this proposal. The public health risk of our Gulf Coast Petrochemicals investments. I understand that Lila Holzman will present the proposal. Good morning, Mr. Chairman, members of the Board, fellow shareholders. My name is Lila Holzman, and I would like to thank you for the opportunity to present proposal number 8 submitted by Asusow. The proposal requests a report assessing the public health risks of expanding petrochemical operations in areas increasingly prone to climate change induced storms, flooding and sea level rise. Petrochemical operations use hazardous chemicals that are dangerous when released to the environment. Already, storms like Hurricane Harvey have shown how vulnerable Exxon's plants are to extreme weather. During Hurricane Harvey, flooding at Exxon's facilities resulted in upsets and equipment malfunction that led to alarming chemical leaks. Nearby community members reported health impacts such as respiratory illness, nausea, headache and others. Some health issues may be long term and worse than captured by initial reports. We know that hurricanes like Harvey are becoming more frequent and severe as the impacts of the climate crisis worsen. And yet, Exxon has stated plans to significantly expand petrochemical investments in high risk regions like the Gulf Coast. Exxon's available disclosures lack critical detail on any efforts to consider the future of severe and evolving climate risks in its decision making regarding where and how to invest in the build out of sensitive infrastructure. Existing risk management systems are proving demonstrably inadequate to handle new climate threats, and the company is already facing legal challenges on infrastructure damage, financial penalties, litigation, human health consequences and reputational damage. It will further provide more transparent analysis to shareholders who must assess the strength of management's actions to mitigate risks from petrochemical investments in areas increasingly prone to climate change induced storm, flooding and sea level rise. Thank you. Thank you, Lila. I just want to say that your focus and concern about how our company manages exposure and risk is very much in line with how we've run this business for the past 137 years. And I want to be very clear about our overall approach with regard to risk and operations. ExxonMobil only invests for the potential levels, so the report is unnecessary. In fact, you can be sure that any development we progress has been subject to a rigorous and comprehensive assessment process, a process that considers the full range of potential both from the past and looking forward to the future. Understanding these risks enables us to develop measures to avoid or mitigate or remedy them. This work is done jointly with the communities where we seek to advance the project. We work with a variety of stakeholder groups, neighbors, local governments and regulatory officials. The Board recommends voting against this proposal. The next shareholder proposal will require a report on the company's political contributions. I understand that Kathy Mulvey will present the proposal. Kathy? Good morning, Mr. Chair, members of the Board, shareholders. I'm Kathy Mulvey representing the filer, the Unitarian Universalist Association for whom I serve as Chair of the Socially Responsible Investing Committee. I hereby move our proposal item number 9 on your proxy card, which requests that the company report to shareholders on policies and procedures for making political contributions with corporate funds and on election related contributions and expenditures. 1 of the UUA's 7 principles calls us to uphold the democratic process. We are deeply concerned that excessive spending and so called dark money in elections can corrupt the democratic process. We believe that more robust disclosure is needed to demonstrate leadership on corporate governance and to mitigate reputational risks at a time of growing shareholder concern about misalignment between companies' stated values and positions and their political activity, particularly on climate change issues. ExxonMobil ranks in the middle of the pack on the Center For Political Accountability's Zicklin Index, which benchmarks disclosure and oversight of political spending by leading U. S. Public companies. ExxonMobil fails to disclose substantial amounts of its election spending, including independent expenditures, support for ballot measures, payments to trade associations and to other non profit entities such as 501(4) Groups. As of 2017, more than 200 companies in the S and P 500 disclosed information about their trade association memberships and or payments. ExxonMobil was not among them. Disclosing direct and indirect election related spending would bring our company in line with others in the industry, such as ConocoPhillips, Noble Energy and Apache Corporation. Since the 2010 U. S. Supreme Court decision in Citizens United, disclosure of political expenditures is the primary means by which shareholders can hold their corporate fiduciaries accountable. We believe that improved disclosure is necessary to ensure that corporate expenditures are in the best interest of the company and its shareholders. Therefore, we urge shareholders to support this proposal. Thank you. Thank you, Kathy. I'll tell you the Board agrees that transparency and accountability are important components of our company's political spending. And we fully comply with all disclosure requirements and we fully comply with all disclosure requirements under federal and state laws, which we believe are adequate and equitable. In addition, using our website, we disclose the company's political activities guidelines as well as multiyear contributions to candidates and political organizations. Finally, the company's political contributions are subject to strict internal review processes, including approval by the Chairman and an annual review by the Board. For these reasons, the Board recommends a vote against this proposal. The final shareholder proposal calls for a report on lobbying. I understand that Ricky Brooks will present the proposal. Good morning. Good morning. My name is Ricky Brooks. I'm a 20 year employee at ExxonMobil at the Baytown Refinery. On behalf of the United Steelworkers and the 20 co filers, hereby move Item 10, shareholder proposal asking our company to provide a report on its state and federal lobbying expenditures, including indirect funding of lobbying through trade associations. Trade associations routinely lobbying against safety regulations. The National Association of Manufacturers, which Exomo belongs to, opposed OSHA's 2016 rule to limit silica exposure. Also the Chamber of Commerce and other groups successfully lobbied to roll back workplace injury and reporting requirements in January of 2019. ExxonMobil operates in a potentially dangerous industry and any safety risks extend to shareholders in the form of potential lawsuits, liability and reputational damage to the company. We recognize that our company and its employees do what they can to alleviate safety risk. However, shareholders should still be made aware of groups that Exomo supports financially that openly oppose common sense safety regulations. In regards to workers' rights, many trade associations actively lobby for repealing protections like the Davis Bacon Act. Our company's success depends on having an economy that supports middle class jobs. The Davis Bacon Act ensures that contractors bidding on public projects cannot undercut other bidders by paying their workers less. There are also concerns about the trade groups lobbying against responsible climate change policies. ExxonMobil understands this and has expanded its public policy advocacy on climate, including urging the United States to stay in the peer support of climate and supporting reasonable regulations on methane reduction. Recently, investors in Europe urged over 50 companies to ensure all lobbying related to climate change was consistent with the goals of the Paris Accord, ExxonMobil to consider doing the same. We urge the shareholders to vote for this proposal and mandate our company supply the necessary report. Lastly, it is unfortunate that again I have to voice support for several Australian Unions that have for over 700 days continued to fight for their fair treatment of over 200 maintenance workers who saw their terms and conditions of their work decimated by UGL and SO contractor. Likewise, I would like to mention our support for 200 independent laboratory employees, union members employed at ExxonMobil in New Jersey, who have gone about 1 year without a contract. Thank you. Thank you, Ricky. And let me just say thank you for the 20 years of service you gave to our Baytown refinery. It's great organization. I think you'll know if having worked in our company for 20 years, there is no principle or of our employees, but the people who come to our plants and the communities that we operate in. And that remains a steadfast principle that we stay focused on. And I would tell you, I've made great progress over the years on. With respect to your broader points, I think the Board fully supports accountability. And as with our political contributions, we support appropriate transparency and disclosure of lobbying activities and expenditures. We believe our compliance with existing federal and state disclosure requirements achieve this objective. ExxonMobil complies not only with the letter, but also with the spirit of all federal and state requirements. These requirements have been in place for many years and are comprehensive. We report our federal lobbying expenses to Congress on a quarterly basis. We also outline the specific issues lobby. So to summarize, the Board believes the company's existing disclosures are appropriate and therefore recommends the vote against this proposal. Thank you. This concludes the presentation of the proposals. I'll now hand it back over to Neil to begin the final quoting period. All right. Thank you, Darren. All items of business have been introduced. If any of you have proxy cards, please hand them to the ushers at this time. Those who previously returned their proxy cards need not vote by ballot unless they wish to change their votes. If you would like to change your votes, simply mark the appropriate sections of the ballot. The ballots will now be collected and turned over to the Inspector of Election to be counted. If you wish your ballot to be kept secret, the ushers will provide you with an envelope. If you have proxies, please pass those to the ushers in the aisle. While the ballots are being collected, I invite any who would like to stand and stretch for a minute. For those of you who wish to address the meeting in the discussion period, this would be a good time to move to the reserve seats on the aisles. Let's resume the meeting. If you would, please take your seats. We're gonna go ahead and resume the meeting. Please take your seats. All right. Thank you. Okay, I'll turn it now over to Darren to continue with the meeting. Okay. The authorized proxies in attendance today have cast all votes in accordance with the instructions indicated on the individual proxy cards. Since the proxies have been voted and ballots collected, I declare the polls closed. Inspector of election is ready to report the preliminary vote. May we have your report, please? Mr. Chairman, at least 3,600,000,000 shares of the stock of the corporation have been voted on the 10 items of business discussed at today's meeting. Voting results are expressed as a percentage of total votes cast. According to New Jersey corporate law, abstentions are not votes cast. Subject to the final tabulation of votes, which should not materially change the results, we report that on average 93.3% of the votes cast were voted to elect as directors the 10 nominees listed in the proxy statement. Voting thereon were voted for and 3.2% were voted against. On the resolution concerning an advisory vote to approve executive compensation, approximately 91.6% of the shares voting thereon were voted for and 8.4% were voted against. On the resolution concerning an independent chairman, approximately 40.8% of the shares voting there were voted for and 59.2% were voted against. On the resolution concerning special shareholder meetings, approximately 42.4% of the shares voting thereon were voted for and 57.6% were voted against. On the resolution concerning a Board matrix, approximately 29.8% of the shares voting thereon were voted for and 70.2% were voted against. On the resolution concerning a Climate Change Board Committee, approximately 7.4% of the shares voting thereon were voted for and 92.6% were voted against. On the resolution concerning a report on risk of Gulf Coast Petrochemical Investments, approximately 20 5.0% of the shares voting thereon were voted for and 75.0% were voted against. On the resolution concerning a report on political contributions, approximately 26.1% of the shares voting thereon were voted for and 73.9% were voted against. On the resolution concerning a report on lobbying, approximately 37.3 percent of the shares voting thereon were voted for and 62.7% were voted against. All written reports will be submitted to the secretary as soon as they are completed. Thank you. Thanks for the report. This concludes the formal business of today's meeting. I'd now like to turn it over to Neil to moderate our questions and answer session and open the floor for any questions regarding ExxonMobil's business. Neil? Thank you, Darren. Please note that the written report of the Inspector of Election will be filed with the minutes of the meeting and the final votes on each of these matters will be available on the ExxonMobil website and filed with the SEC. Let's now move to the question and answer session. We received a number of questions on proxy cards and through our website. As time permits, we will try to address some of those questions. If you want to speak, remain seated and raise your speaker identification card. When recognized, give your completed speaker identification card to the usher. Please stand and begin by stating your name. You may speak for up to 2 minutes while the usher holds the microphone. Please make your comments as brief as possible, so we can accommodate as many speakers as time allows. We will continue to use the lighting system to help you manage your time. First priority will be given to those who have not yet had an opportunity to speak. And we welcome your questions or comments at this time. Why don't we begin over here on the left, the gentleman in the tie on the aisle here. Good morning, Mr. Chairman and Board of Directors. My name is Doctor. Rick Hammer and I am here on behalf of Mercy Investments. I'm a professor of biology at Hardin Simmons University in Adelene, Texas. Our research focuses on urban ecology, urban biodiversity and the sustainability of urban green spaces. Texans are no strangers to the impacts of climate change. Many communities in Houston are still recovering from Hurricane Harvey, a storm which was made worse and more likely by warm and gushing waters due to rising carbon emissions. As an expert in local biodiversity, I have seen the impacts in my and your own backyard. Urban green spaces are facing increased threats to the short and long term sustainability as a result of altered temperature and precipitation trends. More extreme weather is harming plant and wildlife biodiversity. For example, our recent study documented the decline in urban bee abundance and diversity as a result of urban warming. And yet, ExxonMobil has failed to take responsibility for your contribution to climate impacts and help prepare and protect Texans and our neighbors along the Gulf Coast from the impacts of your product. ExxonMobil facilities stand to benefit from taxpayer funded storm barriers being built by the state. Meanwhile, communities on the Gulf Coast are still rebuilding their homes and we know that more storms are on the way as climate change caused by your product makes extreme weather events more likely. In the face of all this, you still fail to invest properly in lowering your emissions to achieve the Paris Agreement goal of limiting global warming to well below 2 degrees Celsius, striving for 1.5 degrees Celsius. Your $9,000,000,000 investment in lowering your emissions since 2000 pales in comparison to your $30,000,000,000 investment in drilling for new oil and gas this year alone. You claim to support the Paris agreement, but your business plan gives no indication that you're serious about achieving its goals. Why is ExxonMobil still failing to lead the way on protecting our safety and curbing your emissions? Thank you very much. Thank you and thank you for coming today. I would tell you, I understand the concern. And as I said earlier today, ExxonMobil is very committed to doing our part in addressing concern. I think if we step back and look at the risk associated with climate change, it comes back to emissions and the level of emissions globally emitted from energy sources. What are those three key areas? It's power generation, industrial processes and transportation, okay? If we're going to move and reach society's aspiration for reliable and affordable energy while reducing the emissions, we have to address the emissions in those 3 critical sectors. Today, we have solutions or partial solutions for each of those. I start with power generation. We have wind and solar. Those are challenged by intermittency with no technical solution available today and they're challenged by areas that don't have the solar exposure they need or the wind consistently. And so there's a gap in addressing one of the key drivers of emissions to solve this global problem. How is the gap going to get filled? Our view is with 135 years of experience in the energy system, the global energy system, and decades decades of investment and fundamental research and science that we can play an important role. And in fact, we are in a unique position to play a role in that space to identify the alternatives that society is missing. And I would tell you we are very committed to that. And I referenced in my talk several things that we're doing in that space, teaming up with outside universities, creating energy centers to look at alternatives, partnering with private companies to try to fill the gap in the solution sets available today. And I would tell you that's where our investments are. That's what's going to be required to make the step change or to make the change that society is asking for. And for power generation, it's critical that somebody does that. We're also looking at carbon capture and storage, an opportunity to basically capture carbon, keep it out of the air and we've got advanced work happening in that space. If you move to transportation, the challenge in transportation is heavy duty commercial transport, aviation, heavy duty trucking. There is no viable solution today. There is no viable electric alternative today. So we need a solution set to fill that void. That's why we're working on algae biofuels as a liquid dense energy source to try to fill that gap with lower emissions. And then if you look at industrial processes, there is no solution today. That's about a third of the emissions. Society needs a solution set for the industrial process piece. We're working on that with our carbon capture and storage advances that we're working on, the science that we're doing in that space. We're also looking at reengineering industrial process. It's something that we have a lot of experience in to see if we can reengineer how the industry works today to lower emissions. So when you think ask what ExxonMobil is doing in this space, I would tell you we are pursuing the fundamental research, which will be absolutely necessary to make the technology breakthroughs required to achieve society's ambitions in this space. We're also very committed on our environmental footprint and the work that we're doing at each of our facilities to reduce our emissions, to reduce our methane. I talked about the targets we set there. We're also focused on providing customers with alternatives that lower their emissions. So we're trying to cover the entire space, recognizing where the gaps are and where ExxonMobil can make a contribution and a significant contribution. Remember, any solution set has to work at scale. This is a large global challenge. We need large globally applicable solutions. Okay? Thank you for your question. Okay. Again, the gentleman here on the left. Right here, Nate, in the back. There you go. Nate, right there, right across from you, sorry. Thank you. My name is Julian Martinez, and I represent Sarah Jods with Progress National. Sarah National is a non profit organization assisting over 1,300,000 individuals a year with their employment, economic and educational needs. We would like to acknowledge ExxonMobil's role in investing and supporting the Latino community. Lack of Hispanic representation on your board is an issue that we raise every year and become more critical and it becomes more critical with each year. This problem needs solving because Latinos currently compromise over 18% of the United States population. And by 2,050, it is predicted that Latinos will be 120,000,000 people, 29% of the population. There are approximately 4,400,000 Latino owned businesses in the United States that contribute more than $700,000,000,000 to the U. S. Economy. Hispanics in the U. S. Represent $1,500,000,000,000 in buying power, making our community the 7th largest economy in the world. Hispanic Association of Corporate Responsibility, I share, has a corporate inclusion index that rates corporations in the areas of employment, procurement, philanthropy and governance. We would like to see ExxonMobil participate in next year's index. We believe we'll help you become an even better company. We would like to acknowledge that ExxonMobil does invest in and support the Latino community through organizations such as Hispanic Heritage Foundation, Hispanic Scholarship Fund and your Latino Resources Group Global Organization For the Advancement of Latinos. With a growing Latino population and an increasing amount of Latino business owners in the United States, we know that ExxonMobil will continue to reflect and represent Latinos. CERN National's President and CEO Ignacio Salazar has recently been appointed to API's Energy Resource Collaborative, which is aimed at working with STEM Education and Diverse Workforce for the future initiatives. We have worked with ExxonMobil in the past, and we would like to continue that relationship. We'd like to request a meeting with some of your senior executives to discuss our future working relationship. Thank you. Thank you, Julien. I think you bring up a really important area that our business stays focused on, which is making sure that our entire workforce, not just our Board and leadership, reflects the broader society and reflects the value of the diversity and opinions and experiences that people bring into the discussion and debate. I am personally a very big believer that the best solutions come from an engaged discussion and debate with multiple perspectives. And so we are actively working that. We really start at the beginning of the pipeline. So in order for us to build the capacity and the capability and the diversity that we look for at the senior levels in the company, you've got to start at the beginning where you recruit and you hire. And then make sure that as people advance that you're tracking that and that people are giving the same opportunities and moved at the same rate across the company irrespective of gender or ethnicity or any other distinguishing characteristic. We work that pretty hard. One of the big challenges and you referenced it in your comments is making sure that the pool available for the company to recruit is big enough and broad enough to come in and compete in the company and fill the beginning of the pipeline, which has been a big focus area for us as a company is our outreach in STEM to make sure that we're a diverse population coming in at the front that we can then spend their career developing. A very important goal, recognize the importance of it and we're committed to continuing to work it. It's an important part of the business. Thank you. Let's go to the gentleman here in the front with the glasses on. I'm Malcolm Shaw from Dallas, Mr. Chairman. Malcolm. My question is, are we using our former Chairman, Rex Tillerson, and former Secretary of State in any capacity in advising ExxonMobil or on foreign policy? Thank you for the question. I have to say it's the first one of those I've heard. It's interesting. Let me just give you a little bit of perspective. When I came into this job, I outreached essentially to all of the senior management that had been in the company and retired to make sure that I was using their experience and their resources and perspective to kind of help inform me as I thought about this company and where we wanted to take it. And so I've met with many of our past and retired senior executives at a variety of levels within the company to give them a chance to share their perspective and the wisdom that has come for the multiple years decades that they've worked within the company. In that respect, Rex is no different than that. With the exception that I had I was fortunate to be made President and spend a year working very closely with Rex prior to assuming this role. And so while his movement into Secretary of State was a surprise, the transition was not. And so he spent a lot of time over the course of that year really understanding how Rex thought about the business and his perspective. And if we were to face a situation where his unique perspective based on past experiences within the company would be relevant, I would have no hesitation to reach out and talk to him about that. Can't say that many of those have come up frankly. And with respect to his service to our country as Secretary of State, frankly, we have engagements with a broad range of parties. We get that tend to look for REX in that particular capacity. But thank you for your question. I think we have time for one last question. Let's go to the back here on the left. It's very difficult to see. Russell, there you go, right there, the man in the suit there. Good morning, fellow stockholders. My name is Joe Meyer, retired employee. And I'd just like to again mention the fact that the LPS safety program is one of the main concerns our employees have. It's an old, outdated, modified program that was developed during World War II And I believe that senior management and with help from the employees if necessary, should be able to come up with a more modern up to date safety program that helps both the company, the stockholders and management because everybody wants to go home safe. No one wants to come to work and not come home with all the hands and fingers in their life. So I think this program, this LPS program was good during today, right after World War II, but here we are in 2019. We definitely need a better, more modern program for our employees. Thank you. Thank you, Joe. And thank you for your service and thank you for your focus on the safety of our facilities and the people who work in them. Just a couple of perspectives to share with you. What I would say is, I don't have quite the depth of history you have for LPS dating back to the war. But what I will tell you is in implementing LPS And so while it may be an old system, it certainly has And so while it may be an old system, it certainly has provided improvements in results for our broader ExxonMobil population, primarily because it instills a culture of caring for your coworkers and watching out for yourself and others. And I think that is a big benefit when somebody when you're not relying on yourself, it actually has somebody else helping you through your day's work and making sure that you stay safe. Having said that, I'll take your challenge in terms of looking for the best that's out there in in our ability to improve our safety performance because that is a journey that we have been on, as you know, for many, many decades. It continues to be a journey that we will be on for many decades to come. And finding the best way to successfully keep the people who come to work at ExxonMobil safe is a top priority of mine and the rest of our senior management. So in fact, we just had a meeting with all of our top leaders to talk about doing some work to see if we can go out and test to make sure that we are using the best tools and techniques to keep our people safe. And so we're working on that. We'll see where we get to, but I'll take your challenge to make sure that we are using the absolutely best thing to keep people safe. It's the right challenge and one that I would wholeheartedly embrace. So thank you. Well, let me just say thank you for your questions and much more importantly for your interest in our business. Before we conclude this 137th Annual Meeting of ExxonMobil Corporation, I'd like to briefly summarize some of the key points we covered today. Let me start with we're proud of our accomplishments over the past year, not just for the strong financial results for 2018, but in making substantial progress on the plans for the future. We're excited about the prospects for growth that I outlined at last year's meeting and updated you on this morning. They're built on a strong foundation that many of you here today helped to build and an established track record for growing and maintaining our position as one of the world's leading companies. Our success comes from a long held commitment to creating value for shareholders, consumers and society at large. And I can assure you that, that commitment won't change. It's the foundation of all that we do. We've laid out an exciting future for ExxonMobil and our shareholders. We're confident in our plans and we're grateful for your steadfast support. In closing out today's meeting, I'd like to play a very short video that highlights your company's work. Thank you very much. Thank you for coming. The meeting is now closed. I wish all of you safe travels. Good day.