ACADEMIA DE STUDII ECONOMICE BUCURETI

MANAGEMENTUL RISCULUI FINANCIAR INTERNAIONAL

Corporate
Governance
Exxon Mobil

MRFI an I
Vlad Andreea Elena

Bucureti, 2014
1. History

ExxonMobil Corporation, or Exxon Mobil, is an American multinational oil and

gas Corporation headquartered in Irving, Texas, United States. ExxonMobil
Corporation was formed in 1999 by the merger of two major oil companies, Exxon
and Mobil. Both Exxon and Mobil were descendants of the John D. Rockefeller
Corporation, Standard Oil which was established in 1870. The reputation of
Standard Oil in the public eye suffered badly after publication of Ida M. Tarbell's
classic expos The History of the Standard Oil Company in 1904, leading to a
growing outcry for the government to take action against the company.
By 1911, the Supreme Court of the United States ruled that Standard Oil
must be dissolved and split into 34 companies. Two of these companies were
Jersey Standard ("Standard Oil Company of New Jersey"), which eventually
became Exxon, and Socony ("Standard Oil Company of New York"), which
eventually became Mobil.
On June 16, 1998, Lee R. Raymond, Exxon's CEO, met with Lucio A. Noto,
Mobil's CEO, at Mobil's headquarters in Fairfax, Virginia. At the meeting, Raymond
and Noto had preliminary discussions about the possibility of a combination of
the two companies. Later management continued discussions and permanently
informed the Boards.
During November 1998, Exxon and Mobil exchanged due diligence request
lists and representatives and their advisors participated in a video conference
and numerous telephone calls and meetings to conduct reciprocal legal, business,
accounting and financial due diligence. A reciprocal confidentiality agreement
was entered into on November 12.
Over the course of the weekend of November 27, 1998, Exxon and Mobil
representatives and outside counsel continued discussions towards resolving
open issues. On the evening of November 30, Raymond and Noto reached
agreement in principle, subject to Board approval, on the exchange ratio and the
resulting exercise price in the stock option agreement
Following the approval of their Boards, Exxon and Mobil officially signed an
agreement and plan of merger on December 1, 1998. Shareholders of both Exxon
and Mobil approved the merger in May 1999. In September 29 of that year the
European Commission granted antitrust approval. In November 30, 1999, the
historic merger was completed. Mobil became a wholly owned subsidiary of
Exxon. The combined company changed its name to ExxonMobil Corporation.
Under the merger agreement, an Exxon subsidiary would merge into Mobil so that Mobil
becomes a wholly owned subsidiary of ExxonMobil. As a result, Exxon would hold 100% of Mobils
2

issued and outstanding voting securities. Holders of Mobil common stock would receive 1.32015
shares of Exxon common stock for each share of Mobil common stock. 5 days before the
announcement Exxon shares price was $72 and 2,431 million shares outstanding ($175 billion market
value) compared with $75.25 a share and 779.8 million shares outstanding for Mobil ($58.7 billion
market value). With the exchange ratio 1.32015, Exxon paid 1,029.4 million its shares for Mobil or
$74.1 billion. This was a $15.4 billion (26.2%) premium over Mobils market value or $94.9 a share.
After the price run-up Exxon shareholders would own approximately 70% of the combined
ExxonMobil entity, while Mobil shareholders would own approximately 30%. The merger qualified as
a tax-free reorganization in the US, and that it was accounted for on a pooling of interests basis.
In addition, the merger agreement provided for payment of termination fees of $1.5 billion.
Exxon and Mobil also entered into an option agreement that granted Exxon the option to purchase up
to 136.5 million shares (14.9%) of Mobil common stock at a strike price of $95.96. Exxon could
exercise the option after the occurrence of an event, entitling Exxon to receive the termination fee
payable by Mobil.
J.P. Morgan & Co. and Davis Polk & Wardwell advised Exxon, and Goldman Sachs & Co. and
Skadden, Arps, Meagher & Flom advised Mobil.
ExxonMobil is the world's largest company by revenue and in 2013, became
the largest publicly traded company by market capitalization in the world. The
company is ranked #5 globally in Forbes Global 2000 list in 2013. ExxonMobil's
reserves were 72 billion oil-equivalent barrels at the end of 2007 and, are
expected to last over 14 years. With 37 oil refineries in 21 countries constituting a
combined daily refining capacity of 6.3 million barrels (1,000,000 m 3), ExxonMobil
is the largest refiner in the world, a title that was also associated with Standard
Oil since its inCorporation in 1870.
2. Ownership and Management
2.1 Major Holders
Breakdown
% of Shares Held by All Insider and 5% Owners:

0%

% of Shares Held by Institutional & Mutual Fund Owners:

50%

% of Float Held by Institutional & Mutual Fund Owners:

50%

Number of Institutions Holding Shares:

Source: http://finance.yahoo.com/q/mh?s=XOM+Major+Holders

1890

Major Direct Holders

Holder

Shares

Reported

TILLERSON REX W

2,111,333

Dec 18, 2013

PRYOR STEPHEN D

993,958

Nov 26, 2013

HUMPHREYS DONALD D

780,118

Dec 18, 2012

DOLAN MICHAEL JAMES

690,466

Nov 26, 2013

SWIGER ANDREW P
602,222
Source: http://finance.yahoo.com/q/mh?s=XOM+Major+Holders

Nov 26, 2013

Top Institutional Holders

Holder

Shares

% Out

Value

Vanguard Group, Inc. (The)

224,864,557

5.15

19,347,346,484

Sep 30, 2013

State Street Corporation

184,366,570

4.22

15,862,899,682

Sep 30, 2013

BlackRock Institutional Trust Company, N.A.

116,572,914

2.67

10,029,933,520

Sep 30, 2013

Bank of New York Mellon Corporation

71,871,041

1.65

6,183,784,367

Sep 30, 2013

Northern Trust Corporation

67,232,406

1.54

5,784,676,212

Sep 30, 2013

Wellington Management Company, LLP

54,306,094

1.24

4,672,496,327

Sep 30, 2013

JP Morgan Chase & Company

49,476,465

1.13

4,256,955,048

Sep 30, 2013

BlackRock Fund Advisors

44,608,469

1.02

3,838,112,672

Sep 30, 2013

Bank of America Corporation

42,800,802

0.98

3,682,581,004

Sep 30, 2013

Berkshire Hathaway, Inc

40,089,371
0.92
Source: http://finance.yahoo.com/q/mh?s=XOM+Major+Holders

3,449,289,480

Sep 30, 2013

Top Mutual Fund Holders

Holder

Reported

Shares

% Out

Value

Reported

Vanguard Total Stock Market Index Fund

64,064,454

1.47

5,512,105,622

Sep 30, 2013

SPDR S&P 500 ETF Trust

44,383,656

1.02

4,148,984,162

Nov 30, 2013

Vanguard Institutional Index FundInstitutional Index Fund

43,061,497

0.99

3,705,011,201

Sep 30, 2013

Vanguard 500 Index Fund

42,133,495

0.96

3,625,165,909

Sep 30, 2013

Spartan 500 Index Fund

18,272,742

0.42

1,708,135,922

Nov 30, 2013

College Retirement Equities Fund-Stock

Account

15,081,871

0.35

1,297,644,180

Sep 30, 2013

Vanguard/Wellington Fund Inc.

15,176,704

0.35

1,322,801,520

Aug 31, 2013

Select Sector SPDR Fund-Energy Select

14,700,343

0.34

1,374,188,063

Nov 30, 2013

iShares Core S&P 500 ETF

14,083,029

0.32

1,316,481,550

Nov 30, 2013

Vanguard Index-Value Index Fund

13,064,192
0.30
Source: http://finance.yahoo.com/q/mh?s=XOM+Major+Holders

1,124,043,079

Sep 30, 2013

2.2 Management
ExxonMobil has a long history of leadership in the petroleum and petrochemical industries.
Rex W. Tillerson is the Chairman and the Chief Executive Officer. Born in Wichita Falls, Texas,
Rex Tillerson earned a bachelor of science degree in civil engineering at the University of Texas at
Austin before joining Exxon Company, U.S.A. in 1975 as a production engineer. In 1989, he became
4

general manager of Exxon Company USAs central production division, responsible for oil and gas
production operations throughout a large portion of Texas, Oklahoma, Arkansas and Kansas.
In 1992, Tillerson was named production advisor to Exxon Corporation. Three years later he
was named president of Exxon Yemen Inc. and Esso Exploration and Production Khorat Inc., and in
January 1998 became vice president of Exxon Ventures (CIS) Inc. and president of Exxon Neftegas
Limited. In those roles, he was responsible for Exxons holdings in Russia and the Caspian Sea as well
as the Sakhalin I consortium operations offshore Sakhalin Island, Russia.
In December 1999, he became executive vice president of ExxonMobil Development Company.
Tillerson was named senior vice president of ExxonMobil Corporation in August 2001, and was
elected president of the Corporation and member of the board of directors on March 1, 2004. He
assumed his current position on January 1, 2006.
Mark W. Albers is Exxons Senior Vice President. Born in Calgary, Alberta, Canada, and raised
in Texas, Albers joined the company in 1979 and holds a bachelor's degree in petroleum engineering
from Texas A&M University. In 2001, Mr. Albers became vice president, Africa, Chad/Nigeria for
ExxonMobil Development Company in Houston, and he served as executive assistant to the chairman
of ExxonMobil Corporation at headquarters in Irving, Texas, prior to becoming president of
ExxonMobil Development Company in October 2004. He was named senior vice president of
ExxonMobil Corporation in April 2007.
Michael Dolan is Senior Vice President of ExxonMobil Corporation in Irving, Texas. Dolan
joined Mobil Oil Corporation in 1980 at the Paulsboro, New Jersey research laboratory. Over the next
13 years, he worked in a variety of engineering and managerial positions supporting Mobil's
worldwide refineries. From September 2004, Mr. Dolan was president of ExxonMobil Chemical
Company and vice president of ExxonMobil Corporation until his appointment as senior vice
president of the Corporation in April 2008.
Andrew P. Swiger is Senior Vice President and Principal Financial Officer. Originally from
Washington, D.C., Andrew Swiger holds a bachelor of science degree in petroleum engineering from
the Colorado School of Mines.
He joined the company in 1978 as an operations engineer in Morgan City, Louisiana,
progressing through a series of upstream assignments in Africa, Europe, and North America. Swiger
was named executive vice president of ExxonMobil Production Company in 2004. He served in that
capacity until being named president of ExxonMobil Gas & Power Marketing in 2006, a position he
held until being elected as a senior vice president of the Corporation in 2009.
3. Corporate Governance Structures
3.1 The Board of Directors

The business and affairs of ExxonMobil are managed by or under the direction of its Board in
accordance with New Jersey law. The directors' fiduciary duty is to exercise their business judgment in
the best interests of ExxonMobil's shareholders.
The Board of Directors has adopted some guidelines to promote the effective functioning of the
Board and its committees.
The size of the Board will provide for sufficient diversity among non-employee directors while
also facilitating substantive discussions in which each director can participate meaningfully. The
Board size will be within the limits prescribed by ExxonMobil's By-Laws, which currently provide
that the Board may have no fewer than 10 and no more than 19 members. Normally, the Board intends
to have approximately 11 to 13 members with 2 to 3 employee directors and 9 to 10 non-employee
directors.
A substantial majority of the Board will consist of directors whom the Board has determined to
be independent. In general, an independent director must have no material relationship with
ExxonMobil, directly or indirectly, except as a director.
All directors will stand for election at the annual meeting of shareholders. In any non-contested
election of directors, any director nominee who receives a greater number of votes "withheld" from his
or her election than votes "for" such election shall tender his or her resignation.
The Board believes it is appropriate and efficient for ExxonMobil's Chief Executive Officer
(CEO) also to serve as Chairman of the Board. However, the Board retains the authority to separate
those functions if it deems such action appropriate in the future.
The independent members of the Board of Directors will annually select an independent director
to serve as Presiding Director. It is normally expected that the same director will serve as Presiding
Director for a minimum of two years.
The Board does not believe that former officers of ExxonMobil should continue to serve on the
Board after they no longer hold that officer position.
No director may stand for election after reaching age 72 unless the Board approves an exception
to the guideline on a case by case basis.
Directors are not subject to term limits except as a result of reaching the Board's mandatory
retirement age.
In view of those general guidelines, the Board has 12 members, 11 of them are from outside the
company, and 4 of them are CEOs of other major companies. The Chairman is the companys CEO,
Rex W. Tillerson.
The 12 Directors are:

Michael J. Boskin - T.M. Friedman Professor of Economics and Senior Fellow, Hoover

Institution, Stanford University;

Peter Brabeck-Letmathe - Chairman of the Board, Nestl;

Ursula M. Burns - Chairman of the Board and Chief Executive Officer, Xerox

Corporation;
Larry R. Faulkner - President Emeritus, the University of Texas at Austin;
Jay S. Fishman - Chairman of the Board and Chief Executive Officer, The Travelers

Companies;
Henrietta H. Fore - Chairman and Chief Executive Officer, Holsman International;
Kenneth C. Frazier - Chairman of the Board, President, and Chief Executive Officer,

Merck & Co;

William W. George - Professor of Management Practice, Harvard University;
Samuel J. Palmisano Former Chairman of the Board, IBM ;
Steven S Reinemund - Dean of Business, Wake Forest University;
Rex W. Tillerson - Chairman of the Board and Chief Executive Officer, ExxonMobil

Corporation;
Edward E. Whitacre, Jr. - Former Chairman of the Board, General Motors; Chairman
Emeritus, AT&T.

3.2 Board committees

The Board appoints Committees to help carry out its duties. In particular, Board Committees
work on key issues in greater detail than would be possible at full Board meetings. Each Committee
reviews the results of its meetings with the full Board. The committee appointments as of November
27, 2012 are listed below:

Audit Committee;
Compensation Committee;
Board Affairs Committee;
Finance Committee;
Public Issues and Contributions Committee;
Executive Committee.
4. Corporate Governance Code

ExxonMobil Corporation is committed to being the worlds premier petroleum and

petrochemical company. To that end, they must continuously achieve superior financial and operating
results while simultaneously adhering to high ethical standards.
The following principles guide Exxons relationships with their shareholders, customers,
employees, and communities:
Shareholders - Exxon is committed to enhancing the long-term value of the investment
dollars entrusted by their shareholders. By running the business profitably and

responsibly, they expect their shareholders to be rewarded with superior returns.

Customers - Success depends on Exxons ability to consistently satisfy ever changing
customer preferences. They commit to be innovative and responsive, while offering
high quality products and services at competitive prices.

Employees - The exceptional quality of their workforce provides a valuable competitive

edge. To build on this advantage, Exxon will strive to hire and retain the most qualified
people available and to maximize their opportunities for success through training and
development. Exxon is committed to maintaining a safe work environment enriched by

diversity and characterized by open communication, trust, and fair treatment.

Communities - Exxon commits to be a good corporate citizen in all the places they
operate worldwide. Exxon will maintain high ethical standards, obey all applicable
laws, rules, and regulations, and respect local and national cultures. Above all other
objectives, Exxon is dedicated to running safe and environmentally responsible
operations.

The policy of ExxonMobil Corporation is to comply with all governmental laws, rules, and
regulations applicable to its business.
The Corporations Ethics policy does not stop there. Even where the law is permissive, the
Corporation chooses the course of highest integrity. Local customs, traditions, and mores differ from
place to place, and this must be recognized. But honesty is not subject to criticism in any culture.
Shades of dishonesty simply invite demoralizing and reprehensible judgments. A well-founded
reputation for scrupulous dealing is itself a priceless corporate asset.
The Corporation cares how results are obtained, not just that they are obtained. Directors,
officers, and employees should deal fairly with each other and with the Corporations suppliers,
customers, competitors, and other third parties.
ExxonMobil Corporation aspires to be at the leading edge of competition in every aspect of
their business. That requires the Corporations resources financial, operational, technological, and
human to be employed wisely and evaluated regularly. While they maintain flexibility to adapt to
changing conditions, the nature of their business requires a focused, long-term approach. Exxon will
consistently strive to improve efficiency and productivity through learning, sharing, and implementing
best practices. Exxon will be disciplined and selective in evaluating the range of capital investment
opportunities available. The company will seek to develop proprietary technologies that provide a
competitive edge.
5. Corporate Governance Policies
5.1 Conflicts of Interest Policy
It is the policy of ExxonMobil Corporation that directors, officers, and
employees are expected to avoid any actual or apparent conflict between their
own personal interests and the interests of the Corporation. A conflict of interest
can arise when a director, officer, or employee takes actions or has personal
interests that may interfere with his or her objective and effective performance of
work for the Corporation. For example, directors, officers, and employees are
expected to avoid actual or apparent conflict in dealings with suppliers,
8

customers,

competitors,

and other third

parties.

Directors,

officers,

and

employees are expected to refrain from taking for themselves opportunities

discovered through their use of corporate assets or through their positions with
the Corporation.
Directors, officers, and employees are expected to avoid securities
transactions based on material, nonpublic information learned through their
positions with the Corporation. Directors, officers, and employees are expected to
refrain from competing with the Corporation.
5.2 Corporate Assets Policy
It is the policy of ExxonMobil Corporation that directors, officers, and
employees are expected to protect the assets of the Corporation and use them
efficiently to advance the interests of the Corporation. Those assets include
tangible assets and intangible assets, such as confidential information of the
Corporation. No director, officer, or employee should use or disclose at any time
during or subsequent to employment or other service to the Corporation, without
proper authority or mandate, confidential information obtained from any source
in the course of the Corporations business. Examples of confidential information
include nonpublic information about the Corporations plans, earnings, financial
forecasts, business forecasts, discoveries, competitive bids, technologies, and
personnel.
5.3 Directorships Policy
It is the policy of ExxonMobil Corporation to restrict the holding by officers
and employees of directorships in nonaffiliated, for-profit organizations and to
prohibit the acceptance by any officer or employee of such directorships that
would involve a conflict of interest with, or interfere with, the discharge of the
officers or employees duties to the Corporation. Any officer or employee may
hold

directorships

in

nonaffiliated,

nonprofit

organizations,

unless

such

directorships would involve a conflict of interest with, or interfere with, the

discharge of the officers or employees duties to the Corporation, or obligate the
Corporation to provide support to the nonaffiliated, nonprofit organizations.
Officers and employees may serve as directors of affiliated companies and
such service may be part of their normal work assignments. All directorships in
public companies held by directors of the Corporation are subject to review and
approval by the Board of Directors of the Corporation. In all other cases,
directorships in nonaffiliated, for-profit organizations are subject to review and
approval by the management of the Corporation, as directed by the Chairman.
9

5.4 Anti-Corruption Policy

It is the policy of ExxonMobil Corporation that directors, officers, employees,
and third parties acting on its behalf are prohibited from offering or paying,
directly or indirectly, any bribe to any employee, official, or agent of any
government, commercial entity, or individual in connection with the business or
activities of the Corporation. A bribe for purposes of this policy is any money,
goods, services, or other thing of value offered or given with the intent to gain
any improper advantage for the Corporation.
5.5 Antitrust Policy
It is the policy of ExxonMobil Corporation that directors, officers, and
employees are expected to comply with the antitrust and competition laws of the
United States and with those of any other country or group of countries which are
applicable to the Corporations business.
No director, officer, or employee should assume that the Corporations
interest ever requires otherwise. It is recognized that, on occasion, there may be
legitimate doubt as to the proper interpretation of the law. In such a
circumstance, it is required that the directors, officers, and employees refer the
case through appropriate channels to the Law Department for advice.
5.6 Environment Policy
The

Corporation

is

committed

to

continuous

efforts

to

improve

environmental performance throughout its operations.

Accordingly, the Corporations policy is to:

comply with all applicable environmental laws and regulations and

apply responsible standards where laws and regulations do not exist;

encourage concern and respect for the environment, emphasize
every employees responsibility in environmental performance, and

foster appropriate operating practices and training;

work with government and industry groups to

foster

timely

development of effective environmental laws and regulations based

on sound science and considering risks, costs, and benefits, including

effects on energy and product supply;

manage its business with the goal of preventing incidents and of
controlling emissions and wastes to below harmful levels; design,
operate, and maintain facilities to this end;
10

respond quickly and effectively to incidents resulting from its

operations, in cooperation with industry organizations and authorized

government agencies;
conduct and support research to improve understanding of the impact
of its business on the environment, to improve methods of
environmental protection, and to enhance its capability to make

operations and products compatible with the environment;

communicate with the public on environmental matters and share its
experience with others to facilitate improvements in industry

performance;
undertake appropriate reviews and evaluations of its operations to
measure progress and to foster compliance with this policy.

5.7 Product Safety Policy

It is Exxon Mobil Corporations policy to:

identify and manage risks associated with its products and not manufacture or sell
products when it is not possible through proper design, procedures, and practices to

provide an appropriate level of safety for people and the environment;

specify precautions required in handling, transporting, using, and disposing of its
products and take reasonable steps to communicate them to employees, customers, and

others who might be affected;

comply with all applicable laws and regulations and apply responsible standards where

laws and regulations do not exist;

work with government agencies and others, as appropriate, to develop responsible laws,

regulations, and standards based on sound science and consideration of risk;

include identification and control of potentially adverse health, safety, and
environmental effects as priority considerations in the planning and development of

products;
conduct and support research to extend knowledge about the health, safety and
environmental effects of its products, and promptly apply significant findings and, as
appropriate, share them with its employees, contractors, customers, the scientific

community, government agencies, and the public;

undertake appropriate reviews and evaluations of its operations to measure progress and
to foster compliance with this policy.

Exxon in his operations also employs other policies like: Gifts And Entertainment Policy,
Political Activities Policy, International Operations Policy, Health Policy, Safety Policy, Customer
Relations And Product Quality Policy, Alcohol And Drug Use Policy, Equal Employment Opportunity
Policy, and Harassment In The Workplace Policy.
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6. Management compensation
ExxonMobil uses a variety of management compensation methods. The management receives
salary, bonus, company stock, and other types of compensation. The full compensation summary and
the type of compensation are listed on the next page.

12

Summary Compensation Table

All
Other
Compensation
($)

Total
($)

Bonus
($)

Stock
Awards
($)

1,255,000
1,170,000
1,085,000

4,587,000
4,368,000
3,360,000
3,144,000
2,994,000
2,144,000

19,627,875
17,890,875
15,465,375
10,817,140
9,859,860
7,904,525

0
0
0
0
0
0

0
0
0
0
0
0

13,037,201
9,755,401
7,476,262
6,427,251
4,327,208
2,305,873

447,425
519,230
443,921
156,354
134,992
124,445

40,266,501
34,920,506
28,952,558
21,799,745
18,486,060
13,563,843

2012
2011

1,020,000
942,500

2,345,000
2,070,000

7,920,938
6,679,260

0
0

0
0

6,975,372
3,837,964

123,905
106,937

18,385,215
13,636,661

M.J. Dolan
Senior Vice President

2012
2011
2010

1,077,500
991,250
920,000

2,527,000
2,232,000
1,592,000

8,601,371
7,219,962
5,773,740

0
0
0

0
0
0

7,738,975
4,657,416
3,173,100

118,041
106,369
98,597

20,062,887
15,206,997
11,557,437

A.P. Swiger
Senior Vice President; PFO (effective
1/1/2013)

2012

962,500

2,174,000

7,327,740

7,281,545

102,616

17,848,401

Name and
Principal Position
R.W. Tillerson
Chairman and CEO

Year
2012
2011
2010

Salary
($)
2,567,000
2,387,000
2,207,000

D.D. Humphreys
PFO; Senior Vice President
(through 12/31/2012)

2012
2011
2010

M.W. Albers
Senior Vice President

Option
Awards
($)

NonEquity
Incentive
Plan
Compensation
($)

Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)

Source: http://www.sec.gov/Archives/edgar/data/34088/000119312513152355/d460324ddef14a.htm

13

7. Capital structure

Total Debt to Total Equity - 6.98 %

Total Debt to Total Capital - 6.53 %

Total Debt to Total Assets - 3.47 %

Long-Term Debt to Equity - 4.78 %

Long-Term Debt to Total Capital - 4.47 %

8. Relationship with suppliers

8.1 Supplier diversity
ExxonMobil has in place a disciplined qualification process for suppliers. Once the business
line has determined the operational requirements, procurement clearly communicates those
requirements to potential suppliers and incorporates the operational requirements into the proposed
agreement.
This process is used whether ExxonMobil is procuring a pump for a refinery, janitorial services
at an office building, or hiring a fabricator to build an offshore structure. Potential suppliers and their
capabilities are then assessed based on operational criticality and level of risk associated with the
material or service required. Considerations include:
Health and safety requirements;
Technical requirements;
Environmental requirements;
Emergency response capabilities;
Security and human rights standards;
Design, construction, and project assurance and procedures;
Product quality assurance, including product stewardship;
Supplier operating, maintenance, and control processes; and,
Financial qualifications.
Additionally, supplier selection takes into account both regulatory and ExxonMobil policies
regarding local hiring, material use, supplier diversity, indigenous peoples support, historically
underutilized segments of the population, and the local economy. ExxonMobil complies with specific
supplier-related requirements in each country where they operate.

14

When selecting a supplier, ExxonMobil evaluates the bids submitted and make a determination
based on quality, technical capabilities, and cost. When ExxonMobil are procuring a component for a
specific project, the safety and viability of the project may rely on assurances of product quality.
Currently ExxonMobil relies on more than 175,000 suppliers of goods and services, including
more than 85,000 third party contractor personnel.
8.1 Supplier development
Supplier development programs ensure that ExxonMobil's procurement activities strengthen
host country economies and promote ExxonMobil as a partner of choice.
It is one of ExxonMobils priorities to consider local suppliers as part of their project
agreements with host countries. ExxonMobil want to build and maintain globally competitive supply
chain infrastructure wherever they operate to enhance supply chain security and reduce operational
risk. Helping develop local suppliers to service the oil and gas industry is part of their national content
strategy.
Also, ExxonMobil cultivates diversity across their supply chain through their U.S.-based
Supplier Diversity Program. Supplier Diversity Program is a proactive business process to provide
diverse suppliers equal access to purchasing opportunities. It is consistent with Procurement's
processes and objective to source and deliver goods at the lowest total system cost. To be awarded
ExxonMobil business, as with any supplier, minority and woman-owned suppliers must meet
ExxonMobil's standard qualification requirements including technical, operational and safety
standards.
This initiative proactively includes qualified minority- and women-owned business enterprises
(MWBEs) in their procurement sourcing process. In 2011, ExxonMobil achieved a significant
milestone of purchasing materials and services worth $869 million in direct spend and $181 million in
spend leveraged through contracts where suppliers purchase from MWBEs on their behalf, for a total
annual spend of over $1 billion.
9. Acquisitions
In 2010 ExxonMobil bought XTO Energy Inc., placing a big bet on the future of the domestic
natural gas market. Exxon Mobil has agreed to issue 0.7098 of a share of common stock for each
common share of XTO. The deal represents a 25% premium to XTO stockholders. Shares of Exxon
Mobil, part of the Dow Jones Industrial Average, fell 4.3% to close at $69.69, while XTO Energy
jumped 15% to $47.86.
Also, this year (2013) ExxonMobil's 2.59 billion Canadian dollar ($2.52 billion USD)
acquisition of Celtic Exploration Ltd. has closed. Celtic's output and proved reserves are heavily
weighted towards natural gas. The transaction, which totals about $3.1 billion including debt
considerations, is Exxon's largest since it bought XTO Energy in 2010. Separately, Exxon's Imperial
Oil Ltd. subsidiary said it acquired a 50% participating interest in Celtic following the completion of
the transaction.

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10.

Corporate Citizenship

The ExxonMobil Foundation is the primary philanthropic arm of the ExxonMobil Corporation
in the United States. Founded in 1955 as Esso Education Foundation, the Foundations name was
changed to ExxonMobil Foundation in 2000 following the merger of Exxon Corporation and Mobil
Corporation.
Suzanne McCarron has served as President of the Foundation since May 2010. As president of
the Foundation, Ms. McCarron is responsible for guiding all of the Foundations philanthropic
activities, including its strategic focus on supporting key elements of the ExxonMobil Womens
Economic Opportunity Initiative, ExxonMobil Math and Science Initiative, and ExxonMobil Malaria
Initiative.
In 2012, together with its employees and retirees, ExxonMobil Corporation (NYSE:XOM), its
divisions and affiliates, and ExxonMobil Foundation provided $256 million in contributions
worldwide, of which $116 million was dedicated to education.
Their own spill prevention programs seeks to strengthen procedures, build in layers of
protection, inspect and maintain equipment, train operators, and conduct tests and drills.
However, in 2011, a pipeline breach in Montana resulted in an estimated 1,509 barrels of oil
being released into the Yellowstone River. This incident brought the total volume of hydrocarbons
spilled to land or water in 2011 to about 18 thousand barrels, with nearly 75 percent recovered at the
site of the spill. The number of non-marine hydrocarbon spills greater than 1 barrel in 2011 was 73
percent higher than in 2007 and 108 percent higher than 2010.
During 2011, vessels owned and operated by ExxonMobils marine affiliates surpassed more
than five years without any spills to water greater than 1 barrel. There were no spills from long-term
chartered ships in 2011.
Also in 2011, they continued their implementation of the downstream Global Human Factors
Best Practice Guide in order to instill a zero-spill mindset across ExxonMobil. This initiative is
helping Exxon effectively address refinery spills caused by human factors, which are down more than
40 percent over the past four years. ExxonMobil is also using a specialized risk tool to identify
infrastructure in need of upgrades to help them further avoid spills.
When it comes to the environment, ExxonMobil uses a systematic approach for protecting
biodiversity and ecosystem services that recognizes factors such as the rarity of individual species,
their habitats, their vulnerability, and cultural value. Ecosystem services are defined as the direct and
indirect benefits people obtain from the environment. They include, for example, food, water,
recreation, and climate regulation. Preserving the ability of the environment to provide these important
ecosystem services is a key environmental risk management area for ExxonMobil. To protect critical
ecosystem functions, and sensitive habitats, they take steps such as modifying engineering design,
construction, and operating practices, and enhancing wildlife habitats. ExxonMobil also supports
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advocacy, research, and partnerships to protect biodiversity and ecosystem services outside their fence
line.
The Papua New Guinea liquefied natural gas (PNG LNG) project operates in an area of valuable
and sensitive biodiversity. The company is implementing a Biodiversity Strategy to meet the projects
defined biodiversity objectives. Part of the Biodiversity Strategy involves the implementation of
biodiversity offsets. In collaboration with Conservation International, a nonprofit organization with
expertise in environmental and conservation practices, and in consultation with local organizations and
experts, the company is developing recommendations for implementing a Biodiversity Offset Delivery
Plan. Through this plan, they will seek to conserve land in particularly sensitive locations to safeguard
and promote stewardship of local biodiversity.
By the end of 2011, ExxonMobil had more than 2,700 hectares of land being actively managed
for the benefit of wildlife at 18 ExxonMobil sites, compared with 140 hectares in 2009.
Employees at ExxonMobil Chemical global headquarters in Houston, Texas, a certified Wildlife
Habitat site since 2010, learned of owls threatened by record droughts in the area. A volunteer team
coordinated with the Wildlife Center of Texas built an enclosure on the 14-hectare property and
reintroduced owls into the environment.
In Shanghai, 84 ExxonMobil volunteers have helped to re-establish local wetlands. ExxonMobil
is seeking to engage NGOs on conservation projects in key countries and near operating sites,
particularly to partner with them to implement specific programs with measurable, scientific results. In
2011, ExxonMobil contributed more than $2 million to organizations dedicated to biodiversity
protection and land conservation.

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