Exxon Mobil's CEO Hosts Annual Shareholder Meeting (Transcript)

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Exxon Mobil Corporation (NYSE:XOM) Annual Shareholder Meeting May 30, 2012 10:00 AM ET


Rex W. Tillerson - Chairman, Chief Executive Officer, President, Chairman of Finance Committee and Chairman of Executive Committee

David S. Rosenthal - Vice President of Investor Relations and Secretary


Tracey Rembert

Michelle Miller

Michael Crosby

Patricia Daly

Rex W. Tillerson

It's a little bit after 9 a.m. so I would ask that the meeting please come to order. I'm Rex Tillerson, Chairman and Chief Executive Officer of the Exxon Mobil Corporation. And I am pleased that so many of you are with us today in person, but I also want to welcome our shareholders around the world who may be joining us by way of the Internet as well. I hope you enjoyed seeing the faces of employees in the montage that's been playing on the screen behind me and as well as hope you had an opportunity to meet some of our employees up close and personal in visiting the various exhibits in the foyer this morning. These are some of the more than 82,000 men and women of ExxonMobil, people who work 24/7, 365 days a year on your behalf around the world. Many of them are working in challenging locations to deliver the energy that consumers around the world need, and I am proud to represent them today and represent their efforts.

I'll have the opportunity to report to you on our financial and operating results, but I'm really reporting to you on their results, and I'm privileged to stand here today to speak on their behalf. David Rosenthal is seated to my right. He is the Vice President of Investor Relations and the Corporate Secretary. He will help me run the meeting today. I will introduce the members of the board to you later in the meeting.

As mentioned on Page 2 of the proxy statement, it is the policy of the corporation to provide shareholders an opportunity for privacy in voting. For shareholders who returned their proxy cards without written comments, the voted proxies have not been seen by nor reported to the corporation, except in aggregate numbers. Anyone turning in a proxy card at this meeting who wishes to keep his or her votes secret may obtain an envelope from the ushers. Proxy cards will be collected later in the meeting.

A list of shareholders entitled to vote at this meeting or at any adjournment thereof is available for inspection. If anyone wishes to examine this list, an usher will be pleased to direct you to the proper location. Charles Rossi and Shirley Nessralla of Computershare Trust Company have been appointed inspectors of the election for this meeting. They have taken an oath of office that has been delivered to the secretary for filing with the minutes of the meeting. Notice of this meeting has been properly given and the inspectors of election have determined that a quorum is present. There are more than 112,000 shareholders represented at this meeting, holding at least 3.8 billion shares or approximately 83% of the issued and outstanding shares of stock of the corporation entitled to vote. I direct that the inspectors' written determination as to the number of shares entitled to vote at the meeting be filed with the minutes. I declare a quorum present and the meeting ready for business.

I'd now like to explain our plan for conducting the meeting today. First, Secretary Rosenthal will outline the rules of conduct and how to gain recognition. Then I will make some brief comments about our business results and the future we see for your company. After that, the 9 items of business will be presented, beginning with the election of directors, the ratification of independent auditors, the advisory vote to approve executive compensation as required by law. Then we will continue with the 6 shareholder resolutions shown in the proxy statement, which was sent to all shareholders. As described in the annual meeting program, discussion on the 9 items of business will be deferred until all items have been presented. Time permitting, we will respond to some of the questions submitted ahead of time via proxy cards and the Internet. Upon completion of the discussion on the items of business and voting, the polls will be closed, the formal business of this year's annual meeting will be concluded, and the inspectors of election will prepare their preliminary voting report.

While this is occurring, there should be some time for additional comments and questions about ExxonMobil's business. When the inspectors are ready, I will ask them to give us their voting report. We will then conclude the meeting. At this time, let me turn the podium to David Rosenthal to discuss the rules of conduct.

David S. Rosenthal

Good morning. I would now like to cover several aspects of today's meeting. First, as we typically note at the outset of similar meetings, statements of future events or conditions included in Mr. Tillerson's remarks today are forward-looking statements. Actual future results, including demand growth and mix, resource recoveries, volume growth, capital expenditures and project outcomes could differ materially due to factors discussed and those noted under the caption Factors Affecting Future Results on the Investors section of our website. I also refer you to the frequently used terms posted on our website, which include definitions of some of the key financial and operating measures we will use today and additional important information.

Before we continue today, I would like to take this opportunity to familiarize everyone with the safety features of this auditorium. In case of an emergency, we will be notified through the public address system. Emergency exits for the ground level as shown on the screen above me, are situated at the rear of the auditorium, where you entered, and down front on either side. If we need to evacuate, just proceed to the nearest exit and the Meyerson personnel will guide you to the best way out. In addition, for safety reasons, please do not stand in the aisles or at the back of the hall and do not block the exits.

To ensure that the meeting is conducted in the interest of all shareholders, there are certain rules of conduct governing this meeting. These rules are posted on signs at the entrances to this meeting, are included in the program and are shown on the screen above me. Let me now cover several of the rules.

The distribution of pamphlets and other literature, banners, signs and other displays is strictly prohibited in this hall. Anyone who intentionally obstructs or interferes with this lawful meeting by physical action or verbal utterance is in violation of Texas law. Any persons engaging in such conduct will be asked to cease. And if they refuse, they will be escorted from 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.

Additional proposals may not be introduced from the floor. So we can be fair to speakers and other shareholders, please turn off all cell phones and pagers at this time.

In order to present a proposal, you must have checked in at the admissions desk in the lobby and verified that you are the proponent or a representative of the proponent duly authorized under New Jersey law. Presenters whose credentials have been verified will be given a blue presenters pass. If neither the proponent nor an authorized representative has checked in and obtained a presenters pass, we will presume the proponent is not present. And I will move the proposal for the purposes of the orderly conduct of the meeting and so that the shareholder votes cast may be recorded. However, I will not be acting as a representative of the proponent. The authorized presenter of a shareholder proposal will have up to 3 minutes to present the proposal. Time may not be shared with another speaker. No second to the motion is required. Discussion on all items of business will be deferred until the discussion period later in the meeting.

Only shareholders as of the record date or their properly appointed proxies are entitled to speak at this annual meeting of ExxonMobil shareholders. Shareholders making comments during the meeting must speak or have their words translated into English so that the majority of the shareholders present can understand what is being said. Comments that are offensive or otherwise inappropriate will not be permitted. We would also ask that any issues of personal interest that are not relevant to all shareholders be raised directly with appropriate company representatives outside of the annual meeting. We request that individual shareholders respect the rights of others to speak and keep their comments as brief as possible. As noted in the proxy statement, the Chairman has broad authority to conduct the meeting in an orderly and timely manner.

If you wish to make comments, you must first fill out a speaker identification card that is included in the program that was provided to you as you entered the lobby. This card confirms that you meet the requirements to speak at this meeting. Give the completed card to the usher when you are recognized to address the meeting.

To ensure that as many shareholders as possible who want to address the meeting today have the opportunity to do so, we ask you to follow these additional instructions. If you would like to address the meeting, move to a reserved aisle seat. Remain seated and raise your hand holding your speaker identification card to indicate to the Chairman that you wish to speak. When recognized by the Chairman, give your completed speaker card to the usher and a microphone will be provided. Stand and begin by stating your name. Unless otherwise provided in these rules, you may speak for up to 2 minutes. Due to the large number of items on today's agenda, and the need to conclude the meeting within a reasonable period of time, we cannot assure that every shareholder who wishes to speak will be able to do so. First priority will be given to those who have not yet had an opportunity to speak.

As we have done in the past, we have provided a timing system with lights that will help speakers manage their time. I would like to demonstrate the system at this time. When the Chairman recognizes a speaker and a microphone has been provided by the usher, a green light will come on at the displays on both sides of the stage. The hall microphones will be activated only after the speaker has been recognized by the Chairman. When the speaker's time remaining reaches 30 seconds, a yellow light will turn on. A red light will indicate the speaker is at the end of the time allowed. Thank you.

Rex W. Tillerson

Thank you, David. Shortly, we will address our items of business. I would first like to share with you some highlights from year 2011 financial and operating results and discuss ExxonMobil's competitive advantages.

Our approach to managing the business continues to distinguish ExxonMobil and places us in a unique position to help meet the world's evolving energy needs and deliver ongoing value to our shareholders over the long term. I'll start with a review of our financial and operating performance.

Overall, I'm pleased with our 2011 performance when assessed across a variety of financial and non-financial measures. First and most importantly, we continued a relentless focus on operational excellence, including safety performance and environmental management. We delivered excellent financial and operating results, including earnings of $41 billion, Upstream volume growth of 1% and a return on average capital employed of 24%. In addition, we invested a record $37 billion in capital expenditures to continue positioning the business for long-term growth and sustainability. These results reflect the strength of our proven business model, which has enabled us to consistently provide unmatched shareholder distributions, which were $29 billion in 2011 and contributed to a total shareholder return of about 19%. We again added more oil and natural gas reserves than we produced. This marks the 18th consecutive year our reserve replacement rate has exceeded 100%. These results reflect the hard work, the diligence and dedication of more than 80,000 men and women who work on ExxonMobil's behalf the world over.

Now I'll review safety and environmental performance in more detail. Nothing receives more management attention at ExxonMobil than the safety and health of our employees, our contractors, our customers and the people who live and work in the areas where we operate. Our vision that Nobody Gets Hurt is internalized in the company's culture and is a central, critical element of daily operational excellence. Our safety performance remains strong in the industry, with a relentless focus on effective risk management. Our 2011 safety data does represent a basis change as a result of including XTO for the first time. XTO has always been committed to operating in a safe and responsible manner, and indeed they were among the leaders of the segment of the industry that they previously performed in. ExxonMobil's systematic and disciplined approach to safety, security, health and environmental performance are under deployment throughout the XTO operations to further elevate performance in these important areas. Within ExxonMobil, we know good safety performance leads to good business performance. We also know that a safety culture has a positive influence on the behavior of each employee and contractor. Safety is a core value at ExxonMobil that influences decision-making at all times and at every level of the organization, and we are committed to improving upon past performance levels.

Let's now look at environmental performance. Meeting the world's growing need for energy, while minimizing the impacts on the environment is one of society's great challenges. At ExxonMobil, we have implemented rigorous environmental management programs that deliver ongoing improvement in global environmental performance. The results of this disciplined approach are significant, particularly in the area of energy efficiency. As an example, we are on track to meet a commitment made 10 years ago to improve energy efficiency by at least 10% across our entire worldwide Refining and Chemical operations by the year 2012. To our knowledge, we are the only company in our industry that will meet this commitment.

As indicated by the graph on this slide, we have reduced greenhouse gas emissions by nearly 14 million tonnes in the last 5 years, which is equivalent to taking almost 3 million cars off the road in the United States. We continue to progress initiatives to reduce the hydrocarbon flaring associated with our Upstream operations. Since 2007, we have decreased hydrocarbon flaring by 50%. Additionally, we continue to focus on reducing other releases. For example, ongoing efforts in our marine shipping organizations completed 2011 with 0 hydrocarbon spills from both company-operated and term-chartered vessels, the second consecutive year of such flawless performance. Environmental improvement plans are part of both current operations and new investment projects to ensure we protect tomorrow today.

Let's now look at 2011 earnings. ExxonMobil led the industry with earnings of $41 billion in 2011, an increase of 35% over 2010, reflecting solid performance across all 3 of our business lines. By applying our proven business approach, we continue to maximize the value of the asset base over the long term, providing resiliency through the business cycle.

To give these results further context, let's look closer at the Upstream operating performance relative to competition. ExxonMobil is the largest nongovernment-owned producer of oil and natural gas, with volumes of 4.5 million oil equivalent barrels per day in 2011. Upstream volumes grew just over 1% in 2011, supported by project and work program performance, in addition to continuing integration of XTO's world-class unconventional assets. Effective risk management and a focus on operational excellence underpin this performance. We were the only company in our peer group where the production increased last year.

Let's now look at return on capital employed. In 2011, ExxonMobil's return on average capital employed or ROCE was an industry-leading 24%, about 3 percentage points higher than the nearest competitor. Over the 5-year period of 2007 to 2011, ROCE averaged about 26%, nearly 6 percentage points higher than the nearest competitor or about 1/3 higher. ROCE performance exceeds competition due to our disciplined investing approach and the advantages of our integrated model, strong project management and our proprietary technologies. In 2011, we invested a record $37 billion in capital expenditures to continue positioning the business for long-term growth and sustainability. Over the past 5 years, we have invested $143 billion utilizing the corporation's financial strength and flexibility to invest through the business cycle and capture new opportunities. We pursued strategic opportunities in all regions of the world and across all of our business lines and continue to progress a number of major projects. Our approach to investing is to advance all attractive opportunities that provide acceptable returns when tested across a broad range of industry and market conditions, while maintaining a commitment to capital efficiency and discipline.

A measure of the value created through our financial and operating performance is the amount of free cash flow remaining after fully funding all attractive investment opportunities. Over the past 5 years, free cash flow before shareholder distributions was almost $146 billion. This is unmatched among our peers and higher than all of our competitors combined. Consistent, strong free cash flow generation provides capacity for robust shareholder distributions and a financial position that allows us to pursue all attractive opportunities.

Let's now look at distributions to shareholders. Dividend payouts were made with a view to building long-term shareholder value and providing reliable real dividend growth through not just the ups, but also the downs of the business cycle. Over the past 5 years, we distributed over $40 billion in dividends to shareholders. During this same period, we increased per share dividends 45%. Since 1983, through multiple business cycle expansions and contractions, shareholders have received annual per share dividend increases at an annualized growth rate of 5.7%, almost twice the rate of inflation. We recently announced a second quarter 2012 dividend payable on June 11 of $0.57 per share, a 21% increase over the previous quarter and above our long-term historic rate. In addition to growing dividends, we have provided added flexibility and returns to shareholders via share purchases. Share purchases are an efficient and flexible way of returning cash to our shareholders, while maintaining flexibility to balance the cash needs of the corporation. In 2011, distributions to shareholders through share purchases were $20 billion, purchases have reduced shares outstanding by over 30% since the Exxon and Mobil merger, including the impact of the shares issued for XTO. All shares issued for XTO were repurchased by the end of the first quarter of 2012, with total shares outstanding now lower than they were prior to the acquisition. We recently announced the continuation of $5 billion in quarterly share purchases for the second quarter of 2012. Because of our ongoing share purchase program, each share of ExxonMobil has an interest in 27% more reserves, 23% more production volumes than it did in 2007, well above our competitor group. Since 2007, ExxonMobil has delivered annualized oil equivalent reserve growth per share of 6.1% and 5.3% annualized production growth per share, over 3 percentage points higher than our nearest competitors. The combination of ExxonMobil's industry-leading business results and the distribution program represent a powerful approach to delivering shareholder value.

Now I'd like to share with you our views on the long-term trends that shape ExxonMobil's business plans. Each year, as most of you know, we take an in-depth look at the global energy marketplace, and we author a comprehensive report entitled, The Outlook for Energy. By the year 2040, the world's population is likely to expand by close to 2 billion people, approaching 9 billion inhabitants of the planet, while overall economic output will more than double. ExxonMobil's 2012 Outlook for Energy anticipates that global energy demand will grow by 30%, even with significant efficiency gains across the world. The chart on the left shows projected demand growth for the year 2010 to the year 2040 by energy type. Oil, gas and coal are the most widely used fuels today, providing about 80% of supplies. As we look ahead to the year 2040, we anticipate a gradual shift in the global energy mix. Oil will remain most prominent, while demand for natural gas will rise by about 60%, and we believe will surpass coal to become the second most widely used source of energy. Natural gas is increasingly recognized as a reliable, affordable and relatively cleaner fuel for a wide variety of applications, and its growing importance is supported by technologies that enable vast new supplies to be brought to the market. We expect global demand for the least carbon intensive fuels, natural gas, nuclear and renewables, will rise at a faster than average rate. The anticipated growth of these fuels will be driven significantly by power generation requirements as global electricity demand increases by 80%.

These charts show the increasing diversity of supply that will be needed to meet the world's energy needs in the future. We expect that liquid fuels will remain the world's largest energy source for the next 30 years. Advances in technology will continue to be important to help expand these liquid fuel supplies. As you can see on the chart on the left, as conventional crude oil production holds relatively flat, demand growth will be met by newer resources. Large gains are expected from global deepwater sources, with production more than doubling through the year 2040. Natural gas liquids supply is also expected to increase as production of these resources benefits from established techniques used to extract shale gas. We also expect to see significant growth from other unconventional resources, including oil sands and tight oil. Biofuels see gains as well, rising to around 5% of liquid supply.

On the rise of the supply and demand outlook for natural gas, which will be the fastest-growing major fuel over the next 3 decades. An increasing share of global natural gas demand is expected to be met by unconventional supplies such as those produced from shale formations. From 2010 to 2040, unconventional gas volume is expected to grow by 400% to meet this growing global demand. An implication of both the liquid fuels and gas outlook is that there is a growing requirement for unconventional resource development, along with the need to continue pursuing more traditional conventional resources. ExxonMobil is favorably positioned in each of these markets with our diverse global portfolio of high-quality operations and advantaged projects.

As we've reviewed in previous charts, the world will need to dramatically expand energy supplies in the decades ahead to meet the growing demand. The scale of the challenge is enormous and will require the pursuit of all economic options to expand supplies in a way that is safe, secure, affordable and environmentally responsible. An unprecedented $1.5 trillion per year of investment will be needed globally to expand and diversify the supply base. Governments will play a major role by maintaining sound and reliable policies that reduce investor uncertainty. We also know from experience that the best way to achieve our shared goal is by effectively managing and addressing the risk inherent in our business and by maintaining a relentless focus on operational excellence. A commitment to the development of new energy technologies is also required to both expand supply of traditional fuels, as well as advance new energy sources. ExxonMobil is well positioned to help meet the world's energy challenges as I'll describe in the next section.

ExxonMobil has established competitive advantages that are evident across each of our business lines. These competitive advantages set us apart and serve as the foundation for our ongoing success. Energy is more than a commodity. It is an enabler of progress. To support human progress, the world will need expanded supplies of affordable and reliable energy, requiring responsible development of all commercially viable energy sources and a diversity of supply. ExxonMobil is well positioned with our balanced portfolio of quality resources, projects, products and assets. We know that unprecedented levels of investment are needed to meet the scale of energy challenge, and ExxonMobil's financial strength allows us to continue our disciplined investing in strategic energy projects. Effective risk management and the highest operational standards are critical in developing energy sources responsibly. ExxonMobil's commitment to operational excellence guides our business decisions and operations around the world. In addition, our global integration not only provides efficiency of scale, but also allows us to share best practices and set consistent expectations and standards across all of our sites. Innovation and new technologies are needed to unlock potential new energy resources, making them safe and affordable. Our long-term commitment to research continues to deliver advantaged, high-impact technologies, and we continue to fund our world-class research efforts.

I'll now provide a brief overview of each of these competitive advantages. ExxonMobil has secured a balanced portfolio of quality resources, projects, products and assets across the Upstream, Downstream and Chemical businesses. I'll provide you a short overview of the breadth of our portfolio at each of our businesses, starting on this slide with the Upstream. ExxonMobil has a large diverse Upstream portfolio that spans multiple geographies and resource types, including energy sources that are growing -- of growing importance in meeting global energy demand. The size and diversity of our portfolio are unmatched by competitors. At year-end 2011, our resource base was over 87 billion oil equivalent barrels, a growth of over 15 billion oil equivalent barrels or almost 22% over the past 10 years. The chart on the left highlights the resource types in our portfolio. Conventional oil and gas, unconventional resources and heavy oil are the largest components.

As you can see on the right, geographically, nearly 60% of our resource base is located in the Americas, with the remainder distributed around the world. Our diverse resource base offers flexibility and provides risk mitigation against the pace of technology advancements and the uncertainties of geopolitical events.

Now let me provide a more detailed review of our Upstream portfolio by resource type, starting with conventional resources. Our high-quality portfolio of conventional assets continued to serve as a strong foundation for our overall resource base and deliver significant value. As shown by the blue dots, major development projects for conventional resources are underway around the globe. For example, in Nigeria, we have completed construction of 3 wellhead platforms as part of satellite projects. The project is on schedule to start up in late 2012, with peak capacity of 70,000 gross barrels per day. In Eastern Canada, the Hebron Project, which includes a gravity-based structure, topsides facilities and drill rig is progressing with full funding expected in the next 12 months. The red dots represent producing areas, like our Sakhalin-1 project in Russia. The Sakhalin-1 project has set and broken its own world record for the longest extended reach well, including the most recent well in Odoptu, with an extended reach of 7.1 miles. Conventional exploration activities are marked by yellow dots and include areas such as Vietnam, where we made a material gas discovery this past year. We also made oil and gas discoveries in Indonesia, near our Banyu Urip development. And looking ahead, we signed a Strategic Cooperation Agreement with Rosneft, covering 31 million acres in the Kara Sea in Russia, equivalent to the size of all the leased acres in the Gulf of Mexico. This frontier area ranks among the world's most promising and least explored offshore area, with high potential for oil and natural gas.

This chart reflects our unconventional tight oil and gas, shale oil and gas and coal bed methane portfolio. ExxonMobil is the largest producer of natural gas in the United States, with a leadership position in multiple unconventional plays. We are also continuing to build our position in a number of emerging liquids-rich plays. Our existing position in the United States is supported by a diverse portfolio that includes emerging unconventional resource opportunities in North and South America, Europe, Southeast Asia. In fact, we presently have access to more than 10 million net acres globally. Operational efficiency and technology are enhancing unconventional value by delivering high recoveries and low unit development cost. We are transferring operational knowledge and expertise from mature plays to newer plays as a key enabler to unlocking value in our global unconventional holdings.

A key area of growth for our resource base is heavy oil and oil sands, which provide long life plateau volumes. ExxonMobil holds advantaged, high-quality oil sands resources, including our Kearl development in Northern Alberta, which is expected to exceed 4 billion barrels. The initial development project with mining and extraction facilities is scheduled for completion late this year. We are applying our proprietary paraffinic froth treatment technology to eliminate the need for an on-site upgrader, which avoids a multibillion dollar capital investment and its associated operating expense. And by processing the oil only once in a refinery, instead of in an upgrader and a refinery, Kearl's full-cycle greenhouse gas emissions will be similar to many of the other crude oils currently processed in the United States. With this high-quality resource, combined with our proprietary technologies, proven project execution capability and operational excellence, we project that Kearl will be one of the lowest unit cost oil sands mining projects in the industry.

We've established a leading global capability in liquefied natural gas or LNG, building on over 3 decades of experience. Today, the operations we participate in account for 25% of the world's total LNG production, with marketing and operations activities spanning the globe. Of course, this success is built on very strong partnerships with host governments and national oil companies.

In Qatar, we and Qatar Petroleum were able to successfully develop a number of emerging LNG markets, enabling technologies including large LNG carriers, large trains and the first offshore LNG receiving terminal, helped to expand the global market. Today, we are progressing an additional 27 million to 28 million tonnes per year of new projects in Papua New Guinea and Australia, which are among the lowest unit development cost projects in the world. This, combined with our global gas marketing capabilities, generates maximum resource value.

ExxonMobil continues to build on our established deepwater capabilities. Our innovative design approaches and superior project execution in Angola, Nigeria and Equatorial Guinea have led to significant reduced cost and accelerated field start-ups. Recently, we've also applied innovative technologies to develop satellite fields through subsea tiebacks at existing facilities such as the Kizomba fields in Angola. And we're applying this in the Gulf of Mexico as well. The Gulf of Mexico continues to be an active area as we progress appraisal and development of our 4 recent discoveries, which include Hadrian South, Hadrian North, Lucius and Julia. The discoveries on our Hadrian blocks are among the most significant in the Gulf of Mexico in the past 10 years.

Other deepwater exploration programs have been quite active as well. Our recent Tanzania exploration well encountered significant hydrocarbons in a very high-quality reservoir. And in Romania, we drilled a successful deepwater play test on the Neptun block in the Black Sea.

We also possess competitive advantages in our balanced portfolio in the Downstream. ExxonMobil is the largest global integrated refiner, and our refineries are on average 60% larger than the industry. Additionally, our level of integration is unmatched, with more than 75% of our refineries integrated with chemicals or lube operations. These scale and integration advantages provide opportunities to improve profitability in our Downstream business. For example, our refineries are among the most efficient in their respective regions, as a result of continuous cost efficiency improvement, circuit optimization and reliable operations. We also capture significant value through feed flexibility, enabled by molecular level analysis, capital investments and proprietary technology advantages.

Our balanced portfolio also benefits from our unique Chemical business, which captures benefits of scale in commodity chemicals, while maximizing value from specialty chemicals. We pursue product lines where we have competitive advantage, and we have developed a strong position in all the markets we serve. Our Chemical facilities are strategically located around the world, enabling us to supply all major growth regions from our cost-competitive assets. High-volume commodity chemicals shown in red capture upside earnings when industry margins are strong. Specialty chemicals, shown in blue, provide a stable yet growing earnings base that in 2011 delivered a record $1.8 billion in earnings, over 3x the level only 10 years ago. Underpinning the success of our portfolio is the application of proprietary technology in the areas of advantaged feedstocks, lower-cost manufacturing and the development of new premium products.

The quality of our integrated Downstream and Chemical portfolio can be seen in their combined return on capital employed. Our proven business strategies and global integration have enabled us to generate significant shareholder value. From 2008 through 2011, the Downstream and Chemical business had combined average earnings of $8 billion per year. And as shown on the chart in red, they had a combined average return on capital employed of over 19%, nearly 3x higher than the competitor average.

Another competitive advantage is our disciplined investment process, which allows us to pursue attractive opportunities while maintaining an efficient and productive capital base. Our investments are tested across a range of economic conditions to ensure they are resilient throughout all business cycles. This slide shows 8 of the 22 major projects that we plan to start up between 2012 and 2014. In 2012 and 2013, we expect to start up 10 major projects, 7 of which are Upstream liquids projects, including 4 in West Africa, the Kashagan Phase 1 project in Kazakhstan and the Kearl oil sands project in Canada. We will also start up our Singapore Chemical expansion, the largest in the history of our Chemical business, which will double steam cracking capacity at that site.

In 2014, 12 projects are expected to come online, 7 of which are Upstream liquids projects, including Arkutun-Dagi in Russia, Nabiye in Canada and Banyu Urip in Indonesia. These projects will provide future production growth. Our relentless focus on operational excellence is another area that we know is a competitive advantage. A large component of operational excellence is, of course, managing risk. Risk management is fundamental to our business and we have established common worldwide approaches and expectations for addressing the risk that are inherent to our operations. These expectations are fully embedded in our culture, and we remain focused on continuously improving our ability to effectively identify and manage all risk.

Our approach is supported by well-developed, clearly defined policies and procedures to ensure that we have a structured globally consistent approach with the high standards in place at all locations. Management commitment and accountability in all aspects of the business are key to achieving expected results. In addition, we rigorously apply high standards in our operations upfront during the design stage to reduce and mitigate risk where possible. Employee and contractor training is an essential element to managing risk in order to achieve appropriate competencies at all levels within the organization, as well as to embed the right behaviors. We also employ a systematic approach to measure performance, and we seek continuous improvement across the business.

Our level of global integration also provides a unique competitive advantage. The effective and efficient implementation of our integrated business model allows ExxonMobil to maximize profitability at each step of the value chain from our holdings in the Upstream, through the complete supply chain at our manufacturing sites, all the way to finished products. Our global functional organization allows us to share best practices around the world and across business lines and implement the highest standards in areas such as risk management and operational excellence. Integration also provides efficiency due to scale, shared support services and purchasing power. In addition, we are able to develop and deploy new technologies that have application across multiple business lines, which maximizes the value created by our proprietary technologies. And by using an integrated general interest business view in all activities, we ensure maximum value for every molecule.

Our commitment to technology is another advantage. Advances in technology will continue to reshape the world's energy landscape. At ExxonMobil, we recognize that the world's growing energy needs will require technology breakthroughs to unlock potential new energy resources. That is why we maintain active research to discover innovative approaches to safely and economically develop both existing and next-generation energy sources. ExxonMobil applies technology to not only unlock resource value, but also to improve operations and deliver high-value products. Examples of how our technologies provide solutions are listed on the left. Our extended reach drilling technology has resulted in 23 of the 27 longest reach wells in the world, enabling us to access hard-to-reach reserves, reduce our environmental footprint and increase our capital efficiency.

In seismic processing, we have recently received patents for proprietary technology that allows unprecedented imaging and models of subsurface reservoirs. In the Arctic, we are working on ice characterization and ways to extend the drilling season beyond the available open water season. We are also advancing emerging technologies to further unlock oil sands value, with a game-changing oil sands extraction technology called Non-Aqueous Extraction or NAE. NAE uses a hydrocarbon solvent instead of water to separate bitumen and sand, which has the potential to significantly reduce freshwater use, eliminate new wet tailings ponds and increase recovery. We're continuing to research in synthetic lubricants to improve fuel economy, enhance wear protection and extend oil life. And our catalyst development has allowed us to expand feedstock flexibility in our Downstream and Chemical operations and improve product quality.

New technologies are a key contributor to our long-term success. That's why we support the education, training and research that spur innovation. Our support efforts begin in classrooms around the world and reach all the way to our world-class research facilities where we explore the fundamental science surrounding some of the most complex energy challenges.

We do this by consistently investing significant amounts in research and development with nearly $5 billion spent in the past 5 years. We attract and retain the brightest minds in our industry so our workforce has the highest technical and leadership capabilities. This commitment also extends to preparing the next generation of scientists and engineers through programs such as the National Math and Science Initiative in the United States.

We also recognize that behind every great breakthrough at ExxonMobil are teachers, teachers that inspired us. So we support programs that provide teachers the necessary skills to continue to motivate students to pursue careers in math and science. I want to pause now and show you a short video on how we feel about the important role that teachers play.


Rex W. Tillerson

I'm very proud of our operational performance and financial results this past year. Strong performance, together with our competitive advantages, is a powerful combination in meeting the world's growing energy challenge. Central to our strengths and competitive advantage is a steadfast commitment to operate with the highest standards of ethical behavior and corporate citizenship, building strong relationships with the customers that we serve and the communities where we operate. And I want to discuss some of this on the next slide.

ExxonMobil remains dedicated to supporting economic growth and opportunity worldwide. In the United States, we sponsor math and science programs to support teachers and students and to build a strong foundation for science, technology, engineering and math careers. In some nations, our corporate outreach means supporting social development or basic health initiatives. For example, we're a corporate leader in the global fight against malaria, which threatens more than half of the world's population. We have spent more than $110 million since the year 2000 to support malaria prevention and treatment efforts in Africa and other countries.

Another important ExxonMobil outreach effort is our Women's Economic Opportunity Initiative. Research has shown that one of the most powerful drivers of social development and progress is to expand economic opportunities for women. Enabling women to reach their economic potential is another critical driver of social development and progress. We provide support through our Women's Economic Opportunity Initiative, which is currently helping women in 88 countries fulfill their economic potential and drive change in their local communities.

We're dedicated to good corporate citizenship because it is the right thing to do and because it builds strong relationships with the customers we serve and the communities where we live and we operate. You'll find many reasons to be proud of your investment in ExxonMobil, and we remain committed to delivering value to our shareholders that I'll discuss on the next slides.

Our focus is to maximize shareholder return over a long period of time, and we strive to be a leader among our competitors and the broader market. For a capital-intensive industry like ours, with long cycle times to convert investments to earnings, financial results and stock market returns are, we believe, best viewed over extended periods of time.

Although our short-term performance matches the competitor average over the past 5 years, ExxonMobil has generated greater shareholder value than the broader market and greater value than the average of our competitors over the last 10-year and 20-year periods. Most dramatically, over the last decade, the S&P 500 annualized return was 2.9% versus ExxonMobil's annualized return of 10.4%.

I'll now recap why I believe ExxonMobil is well positioned for the future. As demonstrated by our strong financial and operating performance, we remain the leader in providing reliable, affordable energy in a safe, secure and environmentally responsible way, and we constantly strive to maximize long-term shareholder value. We have a balanced portfolio of quality, diverse resources and assets across the business, and our focus on disciplined selective investments underpins our ability to deliver superior returns.

With a focus on operational excellence, we develop and deploy systems to consistently apply high standards, leading to best-in-class operating performance and risk management. We capture substantial value across business lines through integration and have built processes and systems that enable our organization to capture the highest value for each molecule. We're proud of our ongoing efforts to identify and develop new technology that enables us to be more competitive and efficient.

And finally, our strong corporate citizenship is built on a commitment to operate safely, responsibly and in support of the long-term economic, social and environmental progress in the communities and the countries in which we operate.

So now I'd like to turn to the formal business meeting. To begin, let me make a few brief remarks on the shareholder proposals and voting. Each year, the corporation receives a number of suggestions from our shareholders. Some of these are in the form of proposals to be presented at the Annual Meeting, and I assure you, each is given very careful consideration. We seek dialogue with the sponsors of these proposals prior to this meeting. And when there's more time to better understand each other's position and points of view, we often find agreement.

Let me be clear on the conduct of the meeting. Recognizing that the majority of our shareholders have voted by proxy and are not present, we have established procedures to facilitate an orderly meeting. We've set up a process for speakers to identify themselves and to express their views, and we welcome those views. In order that as many shareholders as possible can participate, we have set time limits and a system of reminders to help speakers manage their time.

We have 9 items to consider. As Secretary Rosenthal said earlier, discussion on all items of business will be deferred to the discussion period. This will enable us to have some time for general comments and questions, as well as conclude the meeting in a reasonable time frame. At this time, for those of you who wish to leave the meeting at any time, let me express my appreciation again for your attendance.

Since we have a number of items yet to discuss on the program, and you've been sitting now for about an hour, I invite you to take a brief moment to stand in place and stretch your legs for a minute. I'd ask that you not leave the hall, however.

If you'd please take your seats. Have you ever had one of those tickles that just won't go away? So if you'll excuse me, I've got a lozenge in, see if I can't calm this thing down. The first item of business is the election of 11 directors. I nominate the 11 persons identified on Pages 17 through 20 of the proxy statement. These 11 people are highly qualified to serve on the board. All of our nominees are currently serving as ExxonMobil directors, and all board nominees are here today.

Now I'd like to ask the nominees who are present and seated to my right in the orchestra terrace to stand as their names are called so that you can recognize them, and then I will close the nominations. Michael Boskin, Peter Brabeck-Letmathe, Larry Faulkner, Jay Fishman, Henrietta Fore, Kenneth Frazier, William George, Sam Palmisano, Steve Reinemund and Ed Whitacre.

Before moving on, I also would like to recognize one person who is retiring from the ExxonMobil Board of Directors today. Marilyn Carlson Nelson has served as a director of your company since 1991, and I would like to recognize and thank Marilyn at this time for her many years of dedicated service.

I declare the polls open for all who want to vote in the election of directors and the 8 remaining items. If you wish to change your proxy instructions on the election of directors or any of the other 8 items, 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, and they will be collected after all items have been discussed.

The next item on the agenda is the ratification of PricewaterhouseCoopers as the independent auditors. The Audit Committee of the board has appointed PricewaterhouseCoopers to audit ExxonMobil's financial statements for the year 2012, and we are asking shareholders to ratify that appointment. PricewaterhouseCoopers is represented today by Mr. Alan Page. Alan, would you please stand? Thank you. The audit committee's reasons for recommending PricewaterhouseCoopers appear in the proxy statement. I move the adoption of the proposal shown on Page 61 of the proxy statement.

The next order of business is consideration of the board-sponsored proposal regarding executive compensation. The board proposal calls for a shareholder advisory vote to approve executive compensation as required by law. The board recommends a vote for this proposal as outlined on Pages 62 and 63 of the proxy statement.

The next order of business is consideration of the 6 shareholder proposals in the proxy statement. The first of these shareholder proposals regarding an independent Chairman is shown on Page 64 of the shareholder proposals in the proxy statement. The first of these shareholder proposals regarding an independent Chairman is shown on Page 64 of shareholder proposals in the proxy statement. The first of these shareholder proposals regarding an independent Chairman is shown on Page 64 of the proxy statement.

I understand that Ms. Tracey Rembert will present the proposal. Over here. Ms. Rembert?

Tracey Rembert

Good morning, fellow shareholders, ExxonMobil employees and board members. My name is Tracey Rembert, and I'm here on behalf of a group of filers for item #4, which is seeking an independent Chairman of the Board. Filers include Ram Trust Services, AFL-CIO, the Needmor Fund and several Rockefeller family members.

As many of you know that have been coming to these meetings for a number of years, this ask has been put in front of the board and has gained substantial shareholder support over these years. Exxon is a very unique company in that its corporate culture is very independent, long term and in some ways, very insular. People that come to work at ExxonMobil tend to stay here for their careers, and therefore, they have an ExxonMobil view of strategy, what needs to happen, operational excellence. As many people in the room know, this has been a core strength of the company over many decades of being in business. However, when it comes to corporate governance, a key issue that's in play is adaptability and a corporation's ability to change both with product demand, regulation, consumer preferences, et cetera, and having the same person that manages and oversees the company also be the Chairman of the Board, I think is a disservice to this company because the strength of the culture of the company which provides managerial and operational excellence is hard to bridge when those same folks that are very focused on what needs to get done within the company is also trying to have that 30,000-foot view of strategy, long-term issues, changes that are impacting the corporation and corporate governance and human rights and environmental controversies, et cetera.

I would say that to address the deficiency, I think, in terms of the insular corporate culture at Exxon, there really has to be an independent person leading the board. In the resolution itself, it states that 41% of the S&P now has a non-CEO leading the board, and we've seen that this has actually been really monumental when controversy has happened at the corporation for the company and board members to be able to address those controversies. And the proposal has great flexibility in making sure that Mr. Tillerson is not ousted as Chairman as he's serving, but that this reform, this much needed corporate governance structure will be put in place at a time that's suitable for the corporation itself.

On behalf of the filers of the proposal, we'd really like to get shareholder support on item #4 this year and for the board to really consider the heart of the ask and what shareholders are really seeking in terms of an independent lead of the board. Many institutional investors agree that a presiding independent lead director is not sufficient for the task of having independent leadership at the board level, and major proxy advisory firms have supported this proposal. Thank you so much.

Rex W. Tillerson

Thank you, Ms. Rembert, and the board recommends a vote against this proposal as outlined on Pages 64 and 65 of the proxy statement.

The next shareholder proposal regarding majority vote for directors is shown on pages 65 and 66 of the proxy statement. I understand that Mr. Marco Vargas [ph] will present the proposal. Mr. Vargas?

Unknown Shareholder

Thank you, Mr. Chairman. I am Marco Vargas [ph] representing the United Brotherhood of Carpenters pension fund. Our fund collectively hold approximately 1,252,500 shares of ExxonMobil common stock. We are committed to long-term owners. We appreciate the opportunity to gain instance [ph] of our majority vote shareholder proposal that we believe advances an important corporate governance reform. The Carpenters very much appreciate the positive constructive dialogue which we have maintained with ExxonMobil representatives over the past half decade an importance with corporate governance and executive compensation issues. However, over that time, we have failed in our efforts to encourage ExxonMobil to adopt a majority vote standard for director elections. We strongly believe that the combination of majority vote standards with the company's current director resignation policy would represent a strong election standard that we -- would best serve the interests of the company. A majority vote standard used in uncontested director elections establishes a meaningful vote, that's rightful and provide shareholders meaningful voting rights.

A companion resignation policy then provides a post-election process in which the board can exercise its judgment and make sufficient on continued status of election directors. This is exactly -- this isn't exactly what over 80% of the American largest corporations and all of ExxonMobil peer companies have done in recent years.

Once again, we urge the board to establish a majority vote standard along with its director resignation policy and join the mainstream of America corporations on the importance of election reform. Thank you, Mr. Chairman.

Rex W. Tillerson

Thank you, Mr. Vargas [ph]. The board recommends a vote against this proposal as outlined on Page 66 of the proxy statement.

The next shareholder proposal calls for a report on political contributions and is shown on Pages 66 and 67 of the proxy statement. I understand that Ms. Michelle Miller will present the proposal. Ms. Miller?

Michelle Miller

Good morning, Mr. Chairman, members of the Board of Directors and fellow shareholders. My name is Michelle Miller, and I am pleased to be presenting proposal #6 on today's ballot on behalf of Laborers National Pension Fund. The Laborers International Union of North America represents over 500,000 construction workers across the United States and Canada. These members belong to one of our union's 100 individual benefit funds. Collectively, these funds have over $34 billion in assets. We are long-term shareholders of ExxonMobil, and we believe strongly, as active investors, that we have a duty to ensure the companies we invest in have the best business practices surrounding governance, sustainability, transparency and executive compensation.

As long-term shareholders of ExxonMobil, we support transparency and accountability in corporate spending on lobbying and political activities. Those expenditures upon which we seek a report are those that Congress have said do not warrant a deduction as an ordinary and business expense, namely lobbying, participation in the political system by supporting or opposing candidates for office and trying to influence the general public or segments thereof as to elections, legislative matters or referenda. This includes payments to third parties, including trade associations and other tax-exempt groups, which payments are used for expenditures that would not be deductible if made by the company itself. Disclosure is consistent with public policy as we believe it is in the best interest of the company and its shareholders.

The Supreme Court's Citizen United decision recognized the importance of political spending disclosure when it said, "Disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and gives proper weight to different speakers and messages."

Gaps in transparency and accountability may expose the company to reputational and business risks that could threaten long-term shareholder value. Moreover, publicly available data does not provide a complete picture of the company's lobbying and political expenditures. Thus, the company's payments to trade associations for these purposes are undisclosed and unknown as are any payments to tax-exempt groups that work to influence legislation and political campaigns, as well as political opinion that could affect legislation or elections.

The funds involved can be significant. A 2010 Bloomberg story reported that several health insurers donated $86.2 million to the U.S. Chamber of Commerce in 2009 and '10 for advertisements, polling and grassroots events to drum up opposition to healthcare reform legislation. A former Federal Election Commission Chairman described this figure as breathtaking. We, therefore, move the following shareholder proposal, resolved that the shareholders of Exxon Mobil Corporation hereby request the company provide a report updated semi-annually disclosing the amounts that the company has paid or incurred with connections with influencing legislation, participating or intervening in any political campaign on behalf or in opposition to and the candidate for office in attempting to influence the general public or segments thereof with respect to elections, legislative matter or referenda. Thank you, Mr. Chairman.

Rex W. Tillerson

Thank you, Ms. Miller. The board recommends a vote against this proposal as outlined on Page 67 of the proxy statement.

The next shareholder proposal deals with an amendment to the corporation's EEO policy and is shown on Pages 67 and 68 of the proxy statement. I understand that Mr. George Wong will present the proposal. Mr. Wong?

George Wong

Mr. Chairman, Exxon Mobil Corporation Board of Directors, my fellow shareholders, my name is George Wong, and I am here today on behalf of the New York State Common Retirement Fund to introduce the Fund's resolution calling on our company to strengthen its policies against employment discrimination on the basis of sexual orientation and gender identity. The New York State Common Retirement Fund, holders of 16,190,716 shares of ExxonMobil believes that companies have a competitive advantage in recruiting and retaining employees from the widest possible talent pool and that discrimination based on non-job-related criteria can lead to less efficient business operations.

Over the last several years, a number of major U.S. corporations, including a large majority of the Fortune 500, have agreed to add formal and explicit commitments to bar discrimination based on sexual orientation and gender identity to their employee policy statement. Unfortunately, ExxonMobil is not one of these. Although the company claims that it does not discriminate in any way on the basis of sexual orientation, this claim is belied by the facts. Last fall, for example, New York state officials were informed by the company that it will not accept the validity of New York state marriages for the allocation of employee health benefits if the employees are gay. This is completely and totally unacceptable to us.

The New York State Common Retirement Fund believes that ExxonMobil should alter its policies and join with the overwhelming majority of major U.S. corporations in supporting both human rights and more efficient business operations. And on their behalf, I therefore submit the resolution to prohibit discrimination based on sexual orientation and gender identity found in your proxy materials. Thank you.

Rex W. Tillerson

Thank you, Mr. Wong. The board recommends a vote against this proposal as outlined on Pages 68 and 69 of the proxy statement.

The next shareholder proposal calls for a report on natural gas production and is shown on Pages 69 and 70 of the proxy statement. I understand that Fr. Michael Crosby will present the proposal. Fr. Crosby?

Michael Crosby

Thank you Mr. Tillerson and board and shareholders. I'm here to move the resolution that has been submitted by the Park Foundation on Page 69 and 70 of your proxy materials. It's about frac-ing, and I'm just going to read the resolved. Shareholders request the Board of Directors to prepare a report to investors by September 2012 on the short-term and long-term risk to the company's operations, finances and gas exploration associated with community concerns, known regulatory impact, moratoriums and public opposition to hydraulic fracturing and related natural gas development.

ExxonMobil has made a case that fracturing in itself, it argues, is safe. I'm not going to go into that debate which is still a debate. This resolution is highlighting the social impact on communities, neighborhoods, families who end up, as people in Texas know, people in Pennsylvania, New York know, the Dakotas know, is creating tremendous social conflict. This resolution is trying to address the fact that ExxonMobil, in making its case for the safety of fracturing, is not adequately addressing environmental and social concerns.

It's interesting, as I listened to your report, sir, this morning, with all the talk about the progress and the balanced portfolio and responsibility, there wasn't one mention of the word climate change, not one mention of the word global warming, and this company's management accepts the fact that there is climate change and the burning of fossil fuels and LNG or whatever else it may be or the fossil fuels that produce our product are creating climate change that is going to impact our children and our grandchildren.

There are social concerns about these and there's a social contract a company like Exxon has. And when you have the New York Times saying behind the scenes, this company was working with American Legislative Exchange Council to create legislation to keep it from getting sued or whatever else it may be by governments for consequences of climate change or fracturing, whatever else it may be, I think we need support for this resolution. So I thank you for listening, and I do ask you to seriously consider because this is the future of people in the planet.

Rex W. Tillerson

Thank you, Fr. Crosby. The board recommends a vote against this proposal as outlined on Pages 70 and 71 of the proxy statement.

The last shareholder proposal calls for greenhouse gas emissions goals and is shown on Page 71 of the proxy statement. I understand that Sister Patricia Daly will present the proposal. Sister Pat?

Patricia Daly

Yes, good morning, Mr. Tillerson, Mr. Rosenthal, members of our board and fellow shareholders. My name is Sister Pat Daly. I'm here representing my Dominican sisters, as well as dozens of other institutional shareholders, some of whom are members of the Interfaith Center on Corporate Responsibility, the American Baptist Churches and such. Others are public pension funds such as the state of Connecticut.

This is the only shareholder resolution you're seeing this year on global warming, specifically on global warming. There had been 3 resolutions filed. And because of the work that we've done with our company, we're down to this one. For 15, 18 years now, we've been talking with the people in our company, our predecessors of the people in front of us. We have a long history of trying to work things out. As Father Crosby said, we're here because this is a great company, a well-performing company, but we also have responsibilities beyond the bottom line, right? And we also know that companies who integrate social and environmental processes are the best performers.

I'm moving this shareholder resolution today and asking for our company to reduce -- to set goals, targets, to reduce greenhouse gas emissions both in product and operation. In many cases, we do this already. And the corporate culture of Exxon is why people who have worked for this company for so many years have been successful is because it's a goal-oriented company, all right? We succeed because of those goals. And yet, we experience a disconnect then if the company doesn't want to set goals in this area.

Our board members, we have -- our investors have worked with many of the companies that are represented here today from our board. You already introduced the [indiscernible] the companies, all right, who have taken very specific actions in reducing, whether it's goals or other initiative, travelers, cars and hotels, Nestlé, Merck, IBM, Pepsi and General Motors. We -- they have worked for years knowing not just in this issue, but in many other human rights and other social issues that companies are better for working with their shareholders, and they already have implemented what we're asking you to do today.

Mr. Rosenthal, I was very grateful to get your letter last week dated the 24th, where you said that because of a previous conversation that we had asking you to join the Carbon Action Initiative of the Carbon Disclosure Project so that you are seriously considering that. We're asking you to very seriously consider that, and I'll actually make the -- throw in an -- a little gift at the end. If you actually do join the CDP, which would necessitate setting goals, you don't need to see me here next year.

I know that would be awful for you.

Rex W. Tillerson

It would be.

Patricia Daly

You could also just take this dialogue off line, as we already do, and get work done behind the scenes. We could be very helpful in -- you've gone on record for your policy initiative around the support of a carbon tax. Let's go ahead and really take that out for a ride so that we can incentivize and really get an economic basis to support the new technologies and initiatives.

We want to continue to work with you. We think this is a no-brainer, this resolution for ExxonMobil. We already know that our independent directors have already implemented this in their companies, and we continue to want to stand here with you and protect the planet and really truly look at the future together. Thank you.

Rex W. Tillerson

Thank you, Sister Pat. The board recommends a vote against this proposal as outlined on Pages 71 and 72 of the proxy statement.

All items of business have now been introduced, so I invite any of you that want to, to stand and stretch your legs again for a minute. And for those of you who wish to address the meeting in the discussion period on these resolution items, this will be a good time to move toward those reserved seats on the aisle so that you will have ready access to a microphone.

Okay, if we could resume the meeting by please taking your seats. I would now open the floor for discussion on the items of business presented and would ask that during this segment, you try and direct your comments toward issues surrounding the various board and shareholder proposals. As I said earlier, we will have a general period later in the meeting for other topics that might be of interest to you. We've received a number of questions on proxy cards and through our website, and as time permits, we'll try to address some of those as well.

As described earlier, move to the aisle if you've not already done so, and if you're not already seated nearby. Remain seated and raise your hand holding your speaker identification card to indicate you want to address the meeting. When you are recognized, give your completed speaker identification card to the usher and a microphone will be provided. Again, we ask that you stand and identify yourself by stating your name. Bear in mind the rules of conduct shown on the program, make your comments as brief as possible, and again, we've provided the lighting system to simply help you manage your time.

And as a first priority, we will recognize those who have not yet had an opportunity to speak. So at this point, I welcome your comments or questions. There's one right over here.

Patrick Young

Good morning, Mr. Tillerson. My name is Patrick Young, I work for the United Steelworkers Union. We represent the hourly production and maintenance of the clerical employees at your refineries across the country, and I'm joined by many of those employees here. If you guys -- if you all want to identify yourselves, raise your hand. Just give a round of applause to the people who help make you all the profits that you reported today. I want to speak in favor of the resolution on amending the company's EEO policy. Our union is an organization that has gone through a lot of internal education to learn about gender discrimination, sexual orientation discrimination and gender identity discrimination. And if you feel uncomfortable in terms of implementing a policy, I'll offer our union's Civil and Human Rights department to help provide training to your leadership, your management and your employees on this very, very important topic.

I'd also like to invite you to go a step further and implement the EEO policies you currently have. As you know, the 40 clerical employees at the Baytown refinery are entirely women. Those folks have been without a contract and without a raise for 2 years. Meanwhile, the predominantly male production employees have received relatively modest pay increases over that period of time. So I'd strongly encourage you not only to amend your EEO policy to protect all of your employees, but also fully implement the policies you already have and give those clerical employees the raises that they deserve and the raises that male employees have already enjoyed. Thank you very much.

Rex W. Tillerson

Thank you. Over here on the right, to my right.

Unknown Shareholder

Hi, I'm Tom Seferin [ph], old retiree. I used to work in Dallas here, good to be back. I have some multiple comments so I'll try to stick them into the 2-minute time period. First of all, thanks for the good job you've been doing, appreciate the dividend, the stock prices, what have you, you've been doing a great job. So thank you, all, very much and the Board of Directors with your help.

Most of my comments are about the Board of Directors, so -- and I want to first of all congratulate Larry Faulkner for being one of the top 100 directors or officers in the National Association of Corporate Directors. Congratulations on that, very well done. Also, I'm concerned about the number of females on the board. We only have like 9% females on our Board of Directors and companies such as Merck, who are represented here, Board of Directors have 16%; IBM also on the board, 21%; Avon, which is run by a female, has more than 50%; Pepsi Cola, run by a female, has more than 25%. But more importantly than numbers is the quality. We want diversity, and you talked about initiatives in 88 countries for females, let's do it locally here in your company also.

I also support the idea of the EOC thing, our President's on record now for same-sex marriage, why can't we as ExxonMobil do the same type of thing and support EOC better?

Rex W. Tillerson

Thank you. Up over here.

Unknown Shareholder

Mr. Tillerson, my name is Richard Lansbury [ph], I'm with the United Steelworkers. I'm speaking for the motion #6 on reported political contributions. Between 1998 and 2009, ExxonMobil donated at least $1.4 million to the ultra right wing advocacy group, the American Legislative Exchange Council. Can you please provide a brief explanation of why you're able to spend that type of money on pushing the right wing political policies and you cannot afford to provide a modest pay increase for the clerical workers in Baytown, Texas?

Rex W. Tillerson

Well, it's not a question of affording. Obviously, we make a lot of money. It's a question of paying a competitive wage in the marketplace where our employees are working and ensuring that they are paid among the leaders, which is what our policy provides for compensation across all of our employment ranks. Plus a matter of analysis and a matter of what the market is telling us is an appropriate wage for various work groups. So it's not a matter of what we can afford or not afford. The only other comment I'd make in response is, your characterization of ALEC as an ultra right wing organization is, I think, a mischaracterization. We're involved in broad ranges of advocacy groups from all quarters of the political spectrum and it's important that we have an opportunity to talk about serious issues from the perspective of the corporation's and our shareholders' best interest. So you'll find us engaging with a broad array of people in the political world out there.

You need a mic -- yes, go ahead. Yes, you're on.

Unknown Shareholder

Is it not true that the major contributors of the ALEC fund are now bailing out because the legislative group are trying to lobby away workers' rights?

Rex W. Tillerson

I couldn't speak as to what others are doing.

Thank you. Let's see. Over here, the lady on the inside aisle.

Unknown Shareholder

Good morning. Thank you so much for letting me or allowing me to speak. My name is Charlotte Wells [ph], and I am the granddaughter of Carson Claymore [ph], who, when he was at World War I, received a letter from a friend, a buddy of his, that said there was this new company and he wanted to go work for it called Humble Oil. And so he left -- came back to Texas, he's actually from Arkansas, went to Texas and started working, laying pipeline. And I believe Cisco Texas -- anyway, I'm a proud granddaughter. I've been knowing -- I've known Humble Oil and Exxon for all my life. If we were coasting into a gasoline station, we were coasting into a Humble station, we didn't go to any other gas station.

But when the Exxon Valdez happened, I started looking very closely at the company because I received the annual report, really started scrutinizing them, looking at the Board of Directors to see if they reflected what our world looks like because ExxonMobil is a world company and look to see if I'm looking at the ethnicities, look to see if I'm looking at gender, looking at those things very carefully. And my mother and I have always voted on our proxy for more women. We tend to ask for that each time. But after the Exxon Valdez and looking at that, and watching the way that, that case was handled, I was extremely disappointed. I followed it all the way until the very end, which the case was drug out because I don't -- I think precedents didn't want to be set for human lives and for different things. So the courts drug it out, not because Exxon couldn't afford to pay it, but because they didn't want to set a precedent. So then we have the BP disaster, of which, I work with Waterkeeper Alliance. Waterkeeper's all over the world. We work for clean water. We work for -- to make our waters fishable, swimmable and drinkable and people all over the world -- they're looking at frac-ing in the Czech Republic. We're looking at frac-ing -- I'm sorry, I shouldn't call it frac-ing, natural gas drilling in other countries and all over, and what I see, I'm not happy with. And I don't think my grandfather would be either, as he looked -- because what he -- what Exxon and Humble did at that time was they valued their employees. They valued the community. And what I see where I live around Houston, Texas, there was a Baytown -- an incident at the Baytown refinery 2 weeks ago in which the employees were evacuated, but yet, the neighboring community was not notified of a terrible problem that the workers were leaving the area, yet the people living right beside it were not notified.

So I would like to see ExxonMobil start taking -- looking at the communities where you are doing something that could impact those communities and start listening to them. Listening to them, and then also the advertisements on television are extremely disturbing to see promotion and really kind of scaring people, saying that if we don't do this, then there won't be jobs. That's just not true. So I would like to see those advertisements: Let's talk about things that help our communities, let's talk about things that improve our health, let's talk about jobs for the long-term. Thank you so much.

Rex W. Tillerson

Thank you. Lady over here?

Michelle Kendig

Good morning, my name is Michelle Kendig. I actually work at one of your refineries in Torrance, California. I had a question, Mr. Tillerson, during the last round of negotiations with our union and the Baton Rouge refinery, your local management took a hard stance against implementing some key safety improvements that have been implemented in almost every other refinery in this country. I'd like to know, given the significant risk to the shareholder value associated with a serious accident at any of our refineries, how are you justifying cutting corners around safety?

Rex W. Tillerson

Well, I'd like to defer that to the question-and-answer period since this is on the items of business, but I'll respond quickly that we do not cut corners on safety. All negotiations of labor contracts are site-specific, so that we can address site-specific issues and circumstances. So it should not come as a surprise that you will find some differences in agreements from one site to the next because we want those agreements to recognize all the risk involved in that site, but we're not cutting any corners on safety, I can assure you of that.

The gentleman in the pink shirt to the back there?

Unknown Shareholder

Yes, my name is Bob Gun [ph], and I was raised in Baytown, Texas by the Exxon refinery. My dad went to work for them in January of 1942, that's when World War II started -- he was a senior research chemist. So it was Humble Oil and -- like this young lady said -- so I have a long history with Exxon and Humble. And on the good side, all of my life, as a son of an employee, I don't know of a more paternalistic company in the best sense than ExxonMobil. Another thing they did, my mother was an annuitant, Exxon matches 3:1 contributions to education in colleges. I bet you most of you don't know that. It is a wonderful company. They are very generous. It's very well run, and we're very fortunate to have this management and board. Thank you.

Rex W. Tillerson

Thank you. The lady to the right?

Unknown Shareholder

Hi, Mr. Tillerson and the board. You pretty much have used my idea to run the company, and I think it was the CEO and the Chairman of the Board are 2 powerful jobs. And symptomatic of the dangers inherent in both positions, being invested in one individual are lack of responsiveness and of arbitrariness, quoted from 2008 proxy statement. The CEO should not be his own overseer of policies and board affairs. A good example of that is to introduce my hatched idea of the seaweed oil and try to end up with the technology using the seaweed oil for biodiesel. Biodiesel will be the next renewable type of fuel, which is cleaner and give out a larger amount of energy compared to conventional fuel. It is appropriate for applications that require a smaller fuel tank than the ones used for conventional fuel. Biodiesel is meant to be used in standard diesel engines and is distinct from the waste sites -- waste oils used to fuel converted diesel engines. Biodiesel can be used alone or blended with petro diesel. Biodiesel has better lubricating properties and addition of it reduces fuel system wear and in low levels in high pressure systems increases the life of the fuel-injection equipment that relies on the fuel for its lubrication.

And according to the company, ExxonMobil has a succession planning process to fill senior executive positions by promoting from within. This is not adequately a sound discipline that works out every time for the leadership positions because that will make the successors all 2 of the same kind, all ExxonMobil breed. This would skew the company's thinking heavily towards the same directions and fundamentals. I think that leadership does not require thorough knowledge of the same kind, but diverse knowledge is more effective and applicable. I think that Exxon might need a sound short-term investment program, and I think that IPO provides a good source for short-term investment. I like to invest in companies that have good products and coupled with a good management team and proper pricing. This formula, combined with the statistics of stock performance, gives a high probability of success. I participated in the recent Louisiana oil spill cleanup by suggesting a safe cleanup method. The method involves digging out a large pit at the oil spill and line the pit with plastic liners and let the spilled oil to drain into it then suck it up in a later date.

The natural gas is a clean fuel and it is very applicable, but the drilling in the New York State has to put in a lot of thoughts because it has -- it comes very close to some of the -- a minute amount -- a minute portion of it comes close to the watershed system. And it pays to be careful, and attention should be given so that none of the potential hazards from drilling and collection of the -- collection in the region will leak into the watershed system.

Rex W. Tillerson

Ms. Wong [ph], can you begin to summarize?

Unknown Shareholder

Well, I think you should step down as the Chairman and let me be the Chairman.

Rex W. Tillerson

Okay. Thank you.

Unknown Shareholder

You and the CEO. And I think the board needs better guidance than you because they are not a standup board. They just do whatever that pleases you and the policy of the company. And the Board of Directors, they have some serious problems with the bylaws, and so I think you can use a hand with me.

Rex W. Tillerson

Okay, thank you. Father Crosby?

Michael Crosby

I'd like to speak to resolutions 8 and 9. In terms of the American Legislative Exchange Council related to 8, in the New York Times, it said last December, ALEC adopted model legislation based on a Texas law, addressing the public disclosure of chemicals and drilling fluid used to extract natural gas through hydraulic fracturing or frac-ing. A close reading of the bill indicates that it allows energy companies to withhold the names of certain fluid contents for reasons including that they may have been deemed trade secrets. But most telling is that it was sponsored by ExxonMobil, one of the largest practitioners of frac-ing, something not explained when ALEC lawmakers introduced their bills back home. So there is a connection, and I just wanted to report that. But when Sister Pat mentioned that there were 2 other resolutions, our province had submitted a resolution that was based on data from MIT, which is supported by ExxonMobil in terms of its future energy scenarios and the IEA. Two weeks ago, after asking over and over again for ExxonMobil's response to what MIT is saying in terms of its 2012 energy and climate outlook, which indicates the demand is going to go up and up and up, especially in developing countries. And ExxonMobil responded, were there in effect 5 areas where we support meeting this need. But the whole outlook of the MIT is saying the consequences of this increasing demand is going to have very serious consequences on climate, on people and the planet. I really feel that this disservice to the MIT server saying, "Yes, we're there to meet the need," but we won't even talk about the consequence of continued burning and use of fossil fuel. What does it profit, a company like this, to have all of this huge return at the expense of people and the planet? I think it's got to be considered. So I really support -- or ask you to support 8 and 9 resolutions.

Rex W. Tillerson

Thank you Father Crosby. Ms. Rembert?

Tracey Rembert

Thank you. Fellow shareholders, my name is Tracey Rembert, and I'm here on behalf of Ceres, a nonprofit based in Boston that oversees the Investor Network on Climate Risk. This network has 102 institutional investor members that oversee $10.5 trillion in assets under management. So we're talking about some of the largest public pension funds in the United States, mutual fund companies, labor pension funds and some of the largest asset managers on the planet. And they come together in this network to actually talk about climate risk issues, energy issues, best practices. And previously, when the network started, it was a lot about policies and disclosure in reporting. And now, clearly, shareholders' focus is on performance and best practice. Generally, our members are not monolithic, but most of them would support items #8 and 9, which is on a report on the impacts of hydraulic fracturing and on setting greenhouse gas goals for products and operations.

Investors, increasingly, when they're comparing companies across industries, they need numbers. They need records, they need performance and they actually want to see that leaders in the industry are setting best practices, particularly around controversial issues. Because for an issue like frac-ing, a number of large institutional investors for a number of years have been very active actually in promoting best practice in this space because there is enormous growth opportunity for frac-ing operations. But that growth is only going to happen if companies are setting the bar, and Mr. Tillerson, you know if a number of players are having spills and not living up to best practices, that's going to actually limit your license to operate in a number of states and/or cause moratorium, regardless of your individual performance. So again, we challenge the company and really hope to see you at the forefront of leadership on best practices for hydraulic fracturing and for greenhouse gas emissions. And you've talked for years about operational efficiencies, but you've really got to tackle the elephant in the room, which is the impact from your core products. And the maps that you had -- the charts you have in your presentation looked at all the different types of fuels and energy sources, but nowhere in there was algae biofuels or batteries or carbon sequestration or anything else. It didn't even equal 1% on your pie chart, and those are some of the strategies that can lower the GHG emissions from your products. So we want to see numbers, we want to see goals, we want to see best practices and you being active in leading with other institutions and your competitors in setting those best practices and really getting some hard targets on paper. Thank you.

Rex W. Tillerson

Thank you. The gentleman over here to my right?

David Martino

My name is David Martino, and I actually want to talk about item 8 and the frac-ing, but I'd first like to say, as far as the majority of directors and the Chairman and everything, why don't all you people go ahead and sell your stock, go buy Conoco or whoever the company is you're for voting, and they'll go to their meeting and say, "Why can't you be as profitable as Exxon?" And they're going to say, "We can't because we have a different type of management." Thank you.

Actually, I want to talk about frac-ing because I'm a geologist, and I've been in the oil and gas business for 52 years. And when I first joined the oil and gas industry, we were frac-ing wells 52 years ago and using chemicals to get the fluids down slicker and using it to hold the sand in place. And to my knowledge, we've never had a frac job contaminate freshwater. As we all know, the little town of Dimock, Pennsylvania made headlines when the environmental-inspired movie, Gasland, came out with their residents lighting up their water wells. Okay. Earlier this month, the EPA said drinking water is safe, and Dimock tested 61 homes. And so they found safe water. It should be noted that methane gas has been seeping from the surface in parts of the Marcellus Shale in Pennsylvania since 1790. Early reports show water was flaming back in 1795. Pennsylvania is not the only place gas has seeped to the surface. Colorado had a lawsuit during the early coal bed methane days, and it was against AMECO, and they ended up claiming that they were contaminated. And one of the people that testified was a fellow that stayed out drinking one night, came home and his doors were locked. His wife wouldn't let him in. So he went out in the barn, turned on the water and lit the gas and kept warm that way. AMECO won that lawsuit. There's a guy named William Hart, is credited with drilling the very first natural gas well in 1825. And this was drilled in Fredonia, New York, which is claiming they don't have any gas. The well was only 27 feet deep. How did he know where to drill? He listened to the Indians who identified a place called Burning Creek where methane had been bubbling up and burning for decades. Natural gas, oil and coal are the source of 84% of the energy consumed in this world.

I assume you all got here today, when you got up in your air-conditioned home, turned on your lights, cooked your food and then went ahead and combed your hair with a plastic comb, then brushed your teeth with a plastic brush, and then charged your iPhone and then drove your car here. Welcome to the modern world of fossil fuels, and thanks to Exxon, it's why we have it. Thank you.

Rex W. Tillerson

Thank you. The lady to my left?

Unknown Shareholder

I also wanted to speak in support of proposals #8 and 9, and I'm very concerned about the risk to shareholder value. And I know when I read the reports and the information on the website about hydraulic fracturing and tar sands and so forth, it paints a very nice picture, certainly, you see that kind of thing in the commercials as well. But as Ms. Rembert was saying, we really need to know more details about the actual risk to shareholder value. And living here in the Barnett Shale area, I'm quite familiar with real problems, real impacts and real risks. And it's very important to have full disclosure of all those risks. One, in particular, I'm concerned about with the subsidiary of XTO Energy that's doing much of the hydraulic fracturing around in the Barnett Shale and other places, of course, in the United States and the shale regions. There's a great concern about a particular well site that is being -- a permit is being sought to drill and frac close to the Joe Pool lake dam, and this is despite the Army Corps of Engineers stated concerns about the risk to thousands of persons and properties located downstream from possible contribution from a catastrophic dam failure. They recommend not doing any drilling or frac-ing within 3,000 feet of a dam, and I just think that shows a great deal of risk that is unnecessary. And I'm also concerned about the cost to the company and cost to individuals harmed by the very real adverse effects that are sometimes found with hydraulic fracturing.

And so I appreciate your interest. Those of you who have a chance to vote for those shareholder proposals, I think it would be good for all of us, for our shareholder value, to be aware of all those risks. Thank you.

Rex W. Tillerson

Thank you. Well, I believe all the items of business have now been covered. If any of you have proxy cards, please hand them to the ushers at this time. Those who have already returned their proxy cards need not vote by ballot, unless you wish to change your votes. If you wish to change your vote, simply mark the appropriate sections of the ballot. The ballots will now be collected and turned over to the inspectors of election to be counted. If you wish your ballot to be kept secret, the ushers will provide you with an envelope. The appointed proxies in attendance today hereby cast all votes, which we have been authorized to cast in accordance with the instructions indicated on the individual proxy cards. If you have proxies, please pass those to the ushers in the aisle.


Since proxies and ballots have been collected, I now declare the polls closed. While the inspectors of election are preparing their preliminary report, I will open the floor to answer a few more questions regarding ExxonMobil's business or entertain other comments or inputs you'd like to give us. I'll interrupt the discussion when the voting results are available and we'll report those to you.

So if you have questions at this time, we'll follow the same procedure or if you have comments you'd like to make.

Question-and-Answer Session

Rex W. Tillerson

The gentleman to my right?

Kenneth Duke

Mr. Tillerson, shareholders, my name is Kenneth Duke. I'm the President of USW Local 13-12 in Baton Rouge, Louisiana. I work in the Baton Rouge refinery. Mr. Tillerson, ExxonMobil claims that safety is a core value and it's committed to safety as ExxonMobil's most fundamental elements of their business, a cornerstone of responsible operations. However, during the recent OSHA inspection of just one operating unit at Baton Rouge refinery, over 20 serious safety violations were found. Yes, management at Baton Rouge refinery has taken a hard line against implementing key safety improvements that have been implemented at virtually every other refinery in the country. The management of Baton Rouge has rejected workers' requests to be full partners in the safety process. Management in Baton Rouge has rejected having a full-time safety process position, responsible for seeing process safety at our facility and perhaps resolving some of the problems that led to OSHA's issuing citations for 20 serious safety violations. When it comes to safety, there should be a level playing field and no second-class ExxonMobil refineries. Given the significant risk to shareholders' value associated with an accident at our refinery, I urge you to reconsider Baton Rouge management's rejecting increased employee participation in the safety process and Exxon Baton Rouge management's rejecting the same safety practices as they have at other ExxonMobil refineries.

Rex W. Tillerson

Let me comment on a couple of points you made. As to the OSHA inspection, you know that the OSHA cited the refinery for 20 serious violations. I'm sure, since you work there, you also know that on the final closeout of OSHA's inspection, that was reduced to one serious violation, which was the misplacement of an emergency exit sign on a roadway, and 4 nonserious violations. So I think in terms of our view of the safety of the workplace environment in Baton Rouge, we're quite confident that along with yourself, the employees and all the managers who -- and people who work in Baton Rouge, that they are operating that facility to the standards of safety and process safety that we would expect. I also further note that we're very disappointed that the union leadership has left the process safety committee and the Baton Rouge safety and health committee, I think, some 3 or 4 years ago. All the other refinery sites have safety and health committees which have active participation by union representatives. Only at Baton Rouge did the union leave that committee, and we don't really understand why. And we have -- you have had an open invitation to rejoin that group so you could be an active part of discussions at the refinery on process safety, and we hope that the union will come back and join that committee.

Kenneth Duke

We have returned to the joint health and safety committee, but when we try to give a letter of commitment to the company, saying that we wanted to be full partners in all safety processes, and that letter was rejected by the management.

Rex W. Tillerson

The gentleman over here to my left?

Unknown Shareholder

My name is Cameron Chandler [ph], and my question is about the recent action by the Federal Energy Regulatory Commission regarding an application by Cheniere and their plant for import and soon-to-be export of liquefied natural gas. And your general comments about the wonderful globalization of the domestic natural gas business.

Rex W. Tillerson

Well, if the -- I assume your question, too, is what our views are of the potential for export of natural gas and whether we might be examining that, and the answer is yes. We're studying the possibilities of exporting natural gas from North America, both the U.S. and Canada, because of the abundant supply that has now been confirmed in North America. And it would appear that we have adequate supplies to meet all the future growing demand here, as well as provide now a new export product for the United States, which is going to create jobs, it's going to create export value, taxes and whatnot to local communities and the federal governments and will be a positive contributor in the trade balance. So we're evaluating both exports from the Gulf Coast. We're also evaluating exports from Canada as well.

Gentleman to the left over here?

Unknown Shareholder

My name is Joe Meyer [ph] from Baton Rouge, Louisiana, the Baton Rouge refinery. I have over 45 years of service with the company. And I'm going to say that I think the board and the Chairman, over the years, have done an excellent job in running the corporation with several minor exceptions. One of them being the negotiations in Baton Rouge during the last negotiating period were very unfriendly, and I think over the past years of my service, I've seen the company's attitude towards the employees deteriorate. Years ago, we were a valuable, most prized company asset. But I think today, we're looked at more as a costly necessity. And I think that's the change that I see. Also, what Mr. Duke said, I think is somewhat true in a large degree because we were part of the safety committee years ago. It was a VPP committee. OSHA said this would not happen in Baton Rouge, and over a 7-year period, it finally didn't. The other thing was it turned into a bargaining committee and not a safety committee. And that's the reason why the union has departed. Although, now, we have rejoined it. Hopefully, we'll be able to resolve some safety concerns at the facility. In 2011, in Baton Rouge, there were over 270 safety incidents. So obviously, safety is a major concern when you only have 365 work days, it's a 24/7 operation. So there's a lot of accidents that happen in Baton Rouge. I think something needs to be done. And I'd also like to agree with the people who spoke on behalf of the lady in the Baytown facility. I understand what you said about the competitive pricing. But it's been over 2 years since these ladies have got a raise, and I think the company has a moral and nondiscriminatory obligation to help these women.

Rex W. Tillerson

The gentleman to my right.

Unknown Shareholder

Mr. Tillerson, my name is Arthur Martin [ph] from Houston, I just -- I have 2 matters. One, I want to recognize the remarkable performance quarterly, coordinator David Rosenthal executes in handling the questions of the analysts. He's really superior. Secondly, I just want to commend all the employees of ExxonMobil and thank them for making the 21% jolt in dividends possible. I thank all of them.

Rex W. Tillerson

Okay, Father Crosby?

Michael Crosby

My question is about speculation. With the portfolio that I'm responsible for, Schwab sends me what analysts are saying, and there was a very fascinating one 2 days ago, with the pros and cons around the price at the pump related to speculation by hedge funds. And I found it very fascinating that they said it could go in terms of an increase because of speculation at the pump, anywhere from -- or to source anywhere from 15% to 40% increase. And they quoted your predecessor, Lee Raymond, saying that he believed it was 40%. I'd like you to just comment on what do you think speculation by hedge funds, similar entities, are doing to impact the price at the source and the price at the pump.

Rex W. Tillerson

Well, it's a good question. It's one that a lot of people would like to understand better. It's also a very complicated system to understand the difference between pure speculative participants in the market and those who are undertaking what we would call, legitimate risk management actions around their business models. These are people who are huge fuel consumers like airlines, for instance, who want to mitigate some of the volatility in their future cost of their business, and fuel is a huge cost for many people's business. They're all playing and participating in that same market where someone is willing to take the other side of that risk and in effect, ensure that they can buy fuel for a certain price in the future. So clearly, there -- whether you want to call that legitimate hedging or you want to call it speculative trading, and without question, there are people, and they file openly, that they are in the business of making bets on the direction of price movements, both ups and downs. In fact, most of these players have positions on both sides. That's how they're managing their risk exposure. The -- your direct question of what do I think the impact is, is really difficult to discern. And I think you -- if you watch a lot of the debate that goes on, on C-SPAN, in hearings with the Congress, when you have officials from the Commodity Futures Trading Commission testifying, everyone has a difficult time sorting this because it involves so many participants with such large volumes and so many positions that are changing all the time. So I would first acknowledge, there is an element in the forward-price curve, clearly, that is translated back to today's prices of people who are making some judgment about the direction they think price is going to move in the future, and then they're taking a position based on their particular need to secure what they think they need. And to the extent that then adds to a price that would otherwise be based solely on a well-balanced supply-demand chain and marginal cost of the next barrel to meet the demand, that's the difference that you're looking for. It might be $10, it might be $20. It could be $30 on some occasions, all driven by people's perception of what they think may happen 30 days to 6 months to a year out. And if you're worried about a physical supply disruption in the Middle East, someone shutting down the Persian Gulf, then there's a large geopolitical speculative, if you want to call it, or a hedged component in there. If you're worried about regulations and laws curtailing supply, there's a speculation. If there's a new discovery of an area in the world that says, now, there's a brand-new supply and it's in a stable country, another element to push this price. So there's all kinds of activities and elements in the marketplace that people are looking to for some judgment about which way is the price going to go and then taking their positions. So that's not a real clear answer for you because I don't -- to date, I have never been able to find anyone, and it's not because we don't look, that could quantify exactly what that is at any moment in time. But without question, there is an element of the price that is reflecting what people's views about the future may hold for their security of energy and at what cost. But how big it is and how do you want to deal with that, is a very complicated question.

Let's see, I want to recognize some folks who have not spoken. The gentleman in the purple shirt?

Keith Cashio

Mr. Tillerson, I am Keith Cashio. I'm the Executive Vice President of USW 13-12. Speaking back to what Ken was talking about, I don't want to lose the fact that it's not just about shareholder value and it's not just about the statistics. Process safety is important because people can get killed. I had a friend that was killed. She hired on with me the same day I hired on. And that's the most important reason.

Rex W. Tillerson

And I couldn't agree with you more.

Okay, I'm going to call on folks that have not had yet a second opportunity to speak. So, Sister Pat, I'll begin with you.

Patricia Reno

This is really just a follow-up. As you know, for more than 40 years now, ICCL members have been working with companies, and we kind of move on to the next challenges, right? And Father Crosby raised the issue around overspeculation in markets. And really most of our members work in this area because of the rise in -- the spikes in food prices. Right? And obviously, they are -- that's not just siloed, obviously, energy prices affect world food prices as well. So we've been working with members of the CFTC, a number of large institutions in the financial sector. In a lot of ways, speculation can go on, and we want to make sure that you're actually doing your job. In some ways, oil prices are going on, you could be taking the last 3 months off, right? And they continue to generate profits, right? So -- but we want to make sure that this is really -- that our work here is not about large bets in the system, right? So have you taken any positions around -- policy positions around position limits in commodities trading or some of the other initiatives that are out there that can reign in -- that this is really about production. It's not really about making a bet. A couple of weeks ago, my -- at a First Communion in my family, an 11-year-old cousin say, "So what are you up to, Aunt Pat?" And I started to tell her about the meeting with a new commissioner at the CFTC. And she turned around and she said, "So Aunt Pat, it's like playing the lottery. The more people who are in it, the larger the payoff is going to be." And I was -- and you really don't want her in this room in another 10 years, I'll tell you. But it is a complicated issue, but there are still places that we can influence. So this is really about the integrity of our company and true profits, not just profits because of big betting.

Rex W. Tillerson

Well, let me first ensure that it's clear that ExxonMobil does know trading. We do know speculative buying. We do know hedging. We don't do derivatives. But many of our competitors do, they operate large trading desk. We do not. We prefer to be price-takers, not price-makers in the market, and are more concerned with developing the resources, operating the assets well and safely. And we're not interested in earning profits out of speculative activities, and so that is prohibited under our policies.

Patricia Reno

So actually some policy positions around position limits in others really could be very helpful in this space...

Rex W. Tillerson

You're speaking about in the political and regulatory way. Okay.

Our inspectors of election are ready to report, so I'm going to make this the last question. The gentleman to the right on the aisle there. No. Yes, sir, you.

Unknown Shareholder

Yes. Chance Reforme [ph], retiree. I'm really pleased by the ads you've been running through the science and math initiatives. I think it's really great. And some of the other ads, showing real people in your company that are doing stuff for the industry. So that's really fantastic. One thing that bothers me is I'm a former Mobil retiree, and we were talking about this 3 for 1 match, Mobil doesn't get matched like that. It gets 1 for 1. Also, if we do, it's called volunteer programs. If we put in 40 hours, our organization or charity gets $500. ExxonMobil, they must be better because they only have to work 20, half as much. So has any one looked at it recently at all or is there too much grandfathering times to it?

Rex W. Tillerson

Well, it's not been looked at for some time, but I appreciate your bringing it up.

Unknown Shareholder

Because I think it would be fair to more people to do that. And I think it's good to do these kind of things, so I think that's why we should do it.

Rex W. Tillerson

Thank you. Well, as I indicated, the inspectors of election are ready to report the preliminary vote. So if we may have the report, please.

Unknown Executive

Mr. Chairman, at least 3.8 billion shares of stock of the corporation have been voted on the 9 items of business discussed at today's meeting. Voting results are expressed as a percentage of totals votes cast. And according to New Jersey Corporate Law, extensions are not votes cast. Subject to the final tabulation of votes, which should not materially change the results, we report that on average, 97.5% of the shares cast were voted to elect as directors the 11 nominees listed in the proxy statement.

On the resolution concerning the ratification of independent auditors, approximately 98.6% of the shares voting thereon were voted for, and 1.4% were vote against.

On the resolution concerning an advisory vote to approve executive compensation, approximately 77.8% of the shares voting thereon were voted for, and 22.2% were voted against.

On the resolution concerning an independent Chairman, approximately 35.2% of the shares voting thereon were voted for, and 64.8% were voted against.

On the resolution concerning the majority vote of directors, approximately 43.3% of the shares voting thereon were voted for, and 56.7% were voted against.

On the resolution concerning a report on political contributions, approximately 23.6% of the shares voting thereon were voted for, and 76.4% were voted against.

On the resolution concerning an amendment of EEO Policy, approximately 20.6% of the shares voting thereon were voted for, and 79.4% were voted against.

On the resolution concerning a report on natural gas production, approximately 29.6% of the shares voting thereon were voted for and 70.4% were voted against.

On the resolution concerning greenhouse gas emissions goals, approximately 27.1% of the shares voting thereon were voted for, and 72.9% were voted against.

Our written reports will be submitted to the Secretary as soon as they are completed.

Rex W. Tillerson

Thank you. Well, as stated, the written report of the inspectors of election on each of these matters will be delivered to the Secretary and will be filed with the minutes of the meeting. The final votes on each of these matters will be available on the ExxonMobil website and will be filed with the SEC on Form 8-K.

In concluding the meeting, let me once again thank you all for attending. As I've said in the past, we really do appreciate your taking the time and the effort to travel here to be with us. I, particularly, appreciate the great interest and sincerity of interest you take in this corporation and its future success. While I know we don't always agree on everything, I take all of the input with a great deal of interest and assure you that it is given consideration after this meeting and in the board's further deliberations in the future. That is one of our great strengths, and I've noticed -- noted it often is that we have a large shareholder base and the value of that shareholder base is that it represents a broad range of diverse views about issues that are important to the people of our societies today and in the future. And we benefit from hearing all of those viewpoints, and I thank you for bringing them to us.

I also want to thank everyone for allowing us to conduct the meeting in a respectful and productive way this morning. So I appreciate you coming and expressing the ideas to us and hope all -- hope to see all of you again next year.

As I close every meeting, it's always great to see our long-time shareholders. It's wonderful to see you year-in and year-out. And for those of you that are first time or new shareholders, we look forward to you becoming long-term shareholders. So best wishes to all of you and safe travels. We are adjourned.

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