2018
On behalf of your
A commitment
Chairman of the Board and
Chief Executive Officer
Growing shareholder distributions. We understand the importance of shareholder distributionsgive back, we want it to be with purpose and emphasize growing those distributions through share repurchases and dividends. In 2015, we increased the dividend by 12 percent and returned $2.7 billion of capital to shareholders through dividends and share repurchases.
Your vote is important. Whether or not you plan to attend the annual meeting in person, and no matter how many shares you own, please vote by telephone or on the Internet, or mark your vote on the enclosed proxy card and sign, date, and return it by mail. For additional information on voting your shares, please see the instructions in the proxy statement on page 57.
Safety. Honor. Commitment. These arealigned with the values that guide howwe operate under every day,” Knoyle said.
Sincerely,
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NOTICE OF | |
You can vote if you were a shareholder of record on March 12, 2018. Shareholders as of the Record Date are invited to attend the annual meeting. Our statement and accompanying proxy are being provided to shareholders on or about March 28, 2018. 20184, 2016
9, 2018 at 9:00 A.M. Central Daylight TimeMarriott WestchaseMemorial City2900 Briarpark Drive945 Gessner Road
Houston, Texas 77042 ITEMS OF BUSINESS
(281) 501-4300two Directorsthree directors named in this proxy statement2.Company'sCompany’s independent registered public accounting firm for fiscal year 201620183.4.Directorsdirectors5. RECORD DATERecord Date11, 2016. ANNUAL REPORTAnnual Report20152017 Annual Report to Shareholders accompanies, but is not part of, these proxy materials. PROXY VOTINGVote Right AwayShareholders as of the Record Date are invitedYour vote is very important to attend the annual meeting. Whether or notus and to our business. Even if you plan to attend our Annual Meeting in person, please vote in advanceright away using any of the meeting by using one of the methods described in thisfollowing methods. BY INTERNET USING YOUR COMPUTER BY TELEPHONE BY MAILING YOUR PROXY CARD
www.proxyvote.com
(800) 690-6903
and send by mail in the enclosed postage-paid envelope statement.
Corporate Secretary2016
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Shareholder and Community Engagement
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Board’s Role in Risk Oversight
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2017 Company Performance Summary
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CEO Pay Ratio
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NON-EMPLOYEE DIRECTOR COMPENSATION
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TABLE OF CONTENTS
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APPENDIX A—NON-GAAP FINANCIAL MEASURES
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If you are a beneficial owner and do not give your broker instructions on how to vote your shares, the broker will return the proxy card to us without voting on proposals not considered "routine." This is known as a broker non-vote. Only the ratification of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2016 is considered to be a routine matter. 2017.
PROPOSALS REQUIRING YOUR VOTE
VOTE RIGHT AWAY
Your vote is very important to us and to our business. Even if you plan to attend our Annual Meeting in person, please read this proxy statement carefully and vote right away using any of the following methods. In all cases, have your proxy card or voting instruction card in hand and follow the instructions.
If you hold your Phillips 66 stock in a brokerage account (that is in "street name"), your ability to vote by telephone or over the Internet depends on your broker's voting process. Please follow the directions on your proxy card or voting instruction card carefully. If you plan to vote in person at the Annual Meeting and you hold your Phillips 66 stock in street name, you must obtain a proxy from your broker and bring that proxy to the meeting.
If you hold your stock through a Phillips 66 employee benefit plan, please see page 58 for information about voting.
VISIT OUR WEBSITE
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PROXY SUMMARY
WE ARE PHILLIPS 66
We are a diversified energy manufacturing and logistics company withcompany. With a unique portfolio of assets in the Midstream, Chemicals, Refiningmidstream, chemicals, refining, and Marketingmarketing and Specialties businesses.specialties businesses, the Company processes, transports, stores and markets fuels and products globally. Our industry is vitally important to the globalworld-wide economy. Fossil fuels, particularly oil and natural gas, continue to beare the world'sworld’s primary energy source and are expected to remain so for decades to come. These sources are abundant and reliable, affordable and efficient. Phillips 66's mission66’s vision is to provide energy and improve lives through operating excellence, delivering energy in a safe, efficientsafely, efficiently and environmentally responsible way.sustainably. We improve lives by responsibly providing access to energy which isproducts that are essential tofor a high standard of living and health throughout the world.
Since the Company's inception
Our financial performance in 2015 demonstrates the resiliency of our diversified portfolio in a low commodity price environment. We create value by focusingfocus on operating excellence, enhancingwith a record low safety rate. We also enhanced returns in our Refining business and deliveringexecuted on our Midstream and Chemicals businesses’ growth programs. Our balance sheet is strong, and we maintain a disciplined approach to capital allocation. In 2017, we increased our dividend by 11% and returned nearly $3 billion to shareholders through dividends and share repurchases.
PROXY SUMMARY
OUR 2015 SAY-ON-PAY VOTE RESULT AND SHAREHOLDER ENGAGEMENT EFFORT
At our 2015 Annual Meeting of Shareholders, holders of approximately 95 percent of our outstanding shares who castcompanies and, on an advisory vote on the Company's Say-on-Pay proposal voted in favor of the Company's executive compensation programs. Throughout the past year, we have engaged in dialogue with our largest shareholders, representing about 40 percent of shares outstanding, on various corporate governance topics, including executive compensation, and have received positive feedback. The Human Resources and Compensation Committee, which we may refer to as the Compensation Committee, values these discussions and encourages shareholders to provide comments about our executive compensation programs.
Based on the results of the 2015 vote and our ongoing dialogue with shareholders, as well as consideration of evolving best practices, the Compensation Committee has continued to examine our compensation programs to ensure that alignment with shareholders remains strong. While we received no prescriptive suggestions in these meetings with shareholders, we heard a consistent theme regarding the appropriate size and segment mix of our performance peer group, which we discussed further with the Compensation Committee. As a result, the Compensation Committee approved changes to our 2015 performance peer group. The peer group examination and the associated changes are discussed further in ourCompensation Discussion & Analysis underPeer Group Comparisons beginning on page 27.
PROXY SUMMARY
SUMMARY OF COMPENSATION BEST PRACTICES
In conjunction with our corporate strategy, executive compensation philosophy and shareholder feedback, the following best practices are reflected in our executive compensation programs:
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GOVERNANCE HIGHLIGHTS
This year, we are again asking shareholders to vote on a management proposal to move to the annual election of all Directors. See page 56 for details of that proposal. In addition, we already follow these other corporate governance best practices:
PROXY SUMMARY
BOARD DIVERSITY AND INDEPENDENCE
Our business requires that we not only bring together a knowledgeable and qualified leadership team, but one with a diversity ofdiverse backgrounds, experienceexperiences and thought.perspectives. The composition of our Board and the experiences and backgrounds of our executives reflect the Company’s ongoing organizational commitment to diversity. The Nominating and Governance Committee seeks Board members who possess the highest personal and professional ethics, integrity and values, and are committed to representing the long-term interests of the Company’s shareholders. The Nominating Committee regularly reviews the
ATTEND OUR 2016 ANNUAL MEETING OF SHAREHOLDERS
| | | | | | | | | VOTES REQUIRED FOR APPROVAL | | |
| PROPOSAL 1 | | | Election of Directors | | | FOR each Nominee | | | Majority of votes cast | |
| PROPOSAL 2 | | | Ratification of the Appointment of Ernst & Young LLP | | | FOR | | | Majority of votes present | |
| PROPOSAL 3 | | | Advisory Approval of Executive Compensation | | | FOR | | | Majority of votes present | |
| PROPOSAL 4 | | | Management Proposal Regarding the Annual Election of Directors | | | FOR | | | 80% of Voting Stock | |
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| ✓ Robust shareholder engagement program covering large percentage of outstanding shares and proxy advisory firms | |
| ✓ Independent Lead Director with clearly defined responsibilities | |
| ✓ Risk oversight by the full Board and Committees | |
| ✓ Regular Board and Committee self-evaluations | |
| ✓ Provide 3%/3 year/20% proxy access right | |
| ✓ Majority voting for directors | |
| ✓ Substantial majority of independent directors | |
| ✓ Independent Board Committees | |
| ✓ Executive sessions of independent directors | |
| ✓ Stock ownership guidelines | |
| ✓ Prohibition on pledging and hedging of our stock | |
| ✓ Clawback policy | |
| ✓ Company does not have a poison pill | |
9, 2018.
The Nominating
Chairman and CEO Roles
Although the Board of Directors has the authority to separate the positions of Chairman and CEO if it deems appropriate, the Board believes it iscounsels management in the bestlong-term interest of the Company's shareholders to combine them. Doing so enables one person to guide the Board in setting priorities for the Company and in addressing the risks and challenges the Company faces. The Board of Directors believes that, while its non-employee Directors bring a diversity of skills and perspectives to the Board, the Company's CEO, by virtue of his day-to-day involvement in managing the Company, currently is best suited to serve as Chairman and perform this unified role.
The Board of Directors believes that no single organizational model is the best and most effective in all circumstances. As a consequence, the Board of Directors periodically considers whether the offices of Chairman and CEO should continue to be combined and who should serve in such capacities. The Board of Directors also periodically reexamines its corporate governance policies and leadership structure to ensure that they continueour shareholders. We continuously strive to meet the Company's needs.
Independent Director Leadership
Theour vision of providing energy and improving lives, guided by our four pillars of sustainability:
CORPORATE GOVERNANCE OF THE COMPANY
Mr. McGraw served as our Lead Director in 2015. In February 2016, the Board of Directors appointed Mr. Tilton as the Lead Director. In appointing a Lead Director, the Board of Directors considered it useful and appropriate to designate an independent Director to serve in a lead capacity to coordinate the activities of the non-employee Directors and to perform such other duties and responsibilities as the Board of Directors may determine. Specifically, those duties include:
The Board of Directors believes that its current structure and processes encourage its non-employee Directors to be actively involved in guiding the work of the Board. The chairs of the Board's committees review their agendas and committee materials in advance, communicating directly with other Directors and members of management as each deems appropriate. Moreover, each Director is free to suggest agenda items and to raise matters at Board and committee meetings that are not on the agenda.
Our Corporate Governance Guidelines require that the non-employee Directors meet in executive session at every meeting and, when there are non-employee Directors who are not independent, that the independent Directors meet in executive session at least annually. The Lead Director presides at such executive sessions. Each executive session may include discussionsestablish a common set of among other things, (1) the performance of the Chairman and the CEO, (2) matters concerning the relationship of the Board of Directors with the members of senior management, and (3) such other matters as the non-employee Directors deem appropriate. No formal action of the Board of Directors is taken at these meetings, although the non-employee Directors may subsequently recommend matters for consideration by the full Board. The Board of Directors may invite guest attendees to make presentations, respond to questions, or provide counsel on specific matters within their areas of expertise.
CORPORATE GOVERNANCE OF THE COMPANY
The charters for our Audit Committee, Executive Committee, Compensation Committee, Nominating Committee, and Public Policy Committee can be found in the "Investors" section on the Phillips 66 website under the "Governance" caption. Shareholders may also request printed copies of these charters by following the instructions located under the caption "Available Information" on page 61.
The Corporate Governance Guidelines also contain director independence standards, which are consistent with the standards set forth in the NYSE listing standards,expectations to assist the Board of Directorsand its committees in determining the independence of the Company's Directors.performing their duties. The Board of Directors has determined that each Director, except Mr. Garland, meets the standards regarding independence set forth in theGuidelines are reviewed at least annually, and updates are made as necessary to reflect changing regulatory requirements, evolving best practices and input from shareholders and other stakeholders.
The Company's guiding principles
| | | | ADAMS | | | MR. FERGUSON | | | MR. GARLAND | | | MR. LOOMIS | | | MR. LOWE | | | MR. MCGRAW | | | MS. RAMOS | | | MR. TILTON | | | MS. TSCHINKEL | | | DR. WHITTINGTON | |
| Experience (Skills and Qualifications) | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
| Public Company CEO | | | | | | ✔ | | | ✔ | | | | | | | | | ✔ | | | ✔ | | | ✔ | | | | | | | |
| Financial Reporting | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | |
| Industry | | | ✔ | | | ✔ | | | ✔ | | | | | | ✔ | | | | | | ✔ | | | ✔ | | | | | | ✔ | |
| Global | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | |
| Environmental | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | | | | ✔ | | | ✔ | | | ✔ | | | ✔ | |
| Risk Management | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | |
| Demographic/Background | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
| Independent | | | Yes | | | Yes | | | No | | | Yes | | | Yes | | | Yes | | | Yes | | | Yes | | | Yes | | | Yes | |
| Gender | | | Male | | | Male | | | Male | | | Male | | | Male | | | Male | | | Female | | | Male | | | Female | | | Female | |
| Tenure (years) | | | 1.4 | | | 5.9 | | | 5.9 | | | 5.9 | | | 5.9 | | | 5.9 | | | 1.4 | | | 5.9 | | | 5.9 | | | 5.8 | |
| Age (years) | | | 67 | | | 63 | | | 60 | | | 69 | | | 59 | | | 69 | | | 61 | | | 69 | | | 70 | | | 70 | |
| | | | MR. ADAMS | | | MR. FERGUSON | | | MR. GARLAND | | | MR. LOOMIS | | | MR. LOWE | | | MR. MCGRAW | | | MS. RAMOS | | | MR. TILTON | | | MS. TSCHINKEL | | | DR. WHITTINGTON | |
| Audit and Finance | | | | | | Chair | | | | | | X | | | X | | | | | | X | | | | | | X | | | | |
| Executive | | | | | | X | | | Chair | | | X | | | X | | | | | | | | | X | | | | | | X | |
| Human Resources and Compensation | | | X | | | | | | | | | | | | | | | X | | | | | | X | | | | | | Chair | |
| Nominating and Governance | | | | | | X | | | | | | Chair | | | | | | | | | X | | | | | | | | | X | |
| Public Policy | | | X | | | X | | | | | | X | | | Chair | | | X | | | X | | | X | | | X | | | X | |
| Audit and Finance Met 11 times in 2017 Current Members: J. Brian Ferguson (Chair) William R. Loomis, Jr. John E. Lowe Denise L. Ramos Victoria J. Tschinkel | | | Primary Responsibilities: Discusses, with management, the independent auditors and the internal auditors, the integrity of the Company’s accounting policies, internal controls, financial statements, and financial reporting practices, and select financial matters, covering the Company’s capital structure, complex financial transactions, financial risk management, retirement plans and tax planning. Reviews significant corporate risk exposures and steps management has taken to monitor, control and report such exposures. Monitors the qualifications, independence and performance of our independent auditors and internal auditors. Monitors our compliance with legal and regulatory requirements and corporate governance guidelines, including our Code of Business Ethics and Conduct. Maintains open and direct lines of communication with the Board and our management, internal auditors and independent auditors. Financial Expertise, Financial Literacy and Independence: The Board has determined that Messrs. Ferguson, Loomis, Lowe and Ms. Ramos satisfy the SEC’s criteria for “audit committee financial experts.” Additionally, the Board has determined that each of the members of the Audit and Finance Committee are independent pursuant to SEC and NYSE requirements and are financially literate within the meaning of the NYSE listing standards. | |
| Executive Did not meet in 2017 Current Members: Greg C. Garland (Chair) J. Brian Ferguson William R. Loomis, Jr. John E. Lowe Glenn F. Tilton Marna C. Whittington | | | Primary Responsibilities: Exercises the authority of the full Board between Board meetings on all matters other than (1) those expressly delegated to another committee of the Board, (2) the adoption, amendment or repeal of any of our By-Laws and (3) those that cannot be delegated to a committee under applicable statute or our Certificate of Incorporation or By-Laws. | |
| Human Resources and Compensation Met 6 times in 2017 Current Members: Marna C. Whittington (Chair) Gary K. Adams Harold W. McGraw III Glenn F. Tilton | | | Primary Responsibilities: Oversees our executive compensation policies, plans, programs and practices. Assists the Board in discharging its responsibilities relating to the fair and competitive compensation of our executives and other key employees. Reviews at least annually the performance (together with the Lead Director) and sets the compensation of the CEO. Additional information about the Compensation Committee can be found in the COMPENSATION DISCUSSION AND ANALYSIS. Independence: Each member of the Compensation Committee is independent under the Company’s Corporate Governance Guidelines and the NYSE listing standards for directors and compensation committee members. | |
| Nominating and Governance Met 3 times in 2017 Current Members: William R. Loomis, Jr. (Chair) J. Brian Ferguson Denise L. Ramos Marna C. Whittington | | | Primary Responsibilities: Selects and recommends director candidates to the Board to be submitted for election at annual meetings and to fill any vacancies on the Board. Recommends committee assignments to the Board. Reviews and recommends to the Board compensation and benefits policies for our non-employee directors. Reviews and recommends to the Board appropriate corporate governance policies and procedures for our Company. Conducts an annual assessment of the qualifications and performance of the Board. Reviews and reports to the Board annually on succession planning for the CEO. Independence: Each member of the Nominating and Governance Committee is independent under the Company’s Corporate Governance Guidelines and the NYSE listing standards for directors. | |
| Public Policy Met 4 times in 2017 Current Members: John E. Lowe (Chair) Gary K. Adams J. Brian Ferguson William R. Loomis, Jr. Harold W. McGraw III Denise L. Ramos Glenn F. Tilton Victoria J. Tschinkel Marna C. Whittington | | | Primary Responsibilities: Advises the Board on current and emerging domestic and international public policy issues. Assists the Board with the development, review and approval of policies and budgets for charitable and political contributions and activity. Advises the Board on compliance with policies, programs and practices regarding social risks and health, safety and environmental protection. Independence: Each member of the Public Policy Committee is independent under the Company’s Corporate Governance Guidelines and the NYSE listing standards for directors. | |
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| Mailing Address: | | | Corporate Secretary Phillips 66 P.O. Box Houston, TX | |
| Phone Number: | | | (281) 293-6600 | |
Internet: | | | “ | |
Recognizing that director attendance at the Company's Annual Meeting can provide the Company's shareholders with an opportunity to communicate with the Directors about issues affecting the Company, the Company actively encourages our Directors to attend the Annual Meeting of Shareholders. All of our Directors attended the 2015 Annual Meeting of Shareholders.
The Board of Directors met eight times in 2015. Each Director attended at least 75 percent of the aggregate of:
The Company's management is responsible for the day-to-day conduct of our businesses and operations, including management of risks the Company faces. In furtherance of this responsibility, our management has established an enterprise risk management program designed to identify and facilitate management of the significant and diverse risks facing the Company and the approaches to mitigate such risks. The Board of Directors has broad oversight responsibility over the Company's enterprise risk management program and is updated by management on its development and implementation. In this oversight role, the Board of Directors is responsible for satisfying itself that the risk management processes designed and implemented by the Company's management are functioning as intended, and that necessary steps are taken to foster a culture of risk-adjusted decision making throughout the organization.
In executing its responsibilities, the Board of Directors has delegated to individual committees certain elements of this oversight function, while retaining oversight responsibility for strategic risks. In this context, the Board of Directors delegated authority to the Audit Committee to facilitate coordination among the Board's committees with respect to oversight of the Company's risk management programs. Accordingly, the Audit Committee regularly receives updates on the enterprise risk management program and discusses the Company's risk assessment and risk management policies to ensure that our risk management programs are functioning properly.
CORPORATE GOVERNANCE OF THE COMPANY
The Board of Directors, either directly or through its committees, exercises its oversight function with respect to all material risks to the Company, which are identified and discussed in the Company's public filings with the SEC. The Board of Directors receives regular updates from its committees on individual areas of risk falling within each committee's area of oversight and expertise, as outlined below:
CODE OF BUSINESS ETHICS AND CONDUCT
Phillips 66 has adopted a Code of Business Ethics and Conduct for Directors and Employees designed to help resolve ethical issues in an increasingly complex global business environment. Our Code of Business Ethics and Conduct applies to all directors and employees, including the CEO and the Chief Financial Officer. Our Code of Business Ethics and Conduct covers topics including, but not limited to, conflicts of interest, insider trading, competition and fair dealing, discrimination and harassment, confidentiality, payments to government personnel, anti-boycott laws, U.S. embargoes and sanctions, compliance procedures and employee complaint procedures. Our Code of Business Ethics and Conduct is posted on the "Investors" section of our website under the "Governance" caption. Shareholders may also request printed copies of our Code of Business Ethics and Conduct by following the instructions located under the caption "Available Information" on page 61.
Our Code of Business Ethics and Conduct requires that all directors and executive officers promptly bring to the attention of the General Counsel and, in the case of Directors, the Chair of the Nominating Committee or, in the case of executive officers, the Chair of the Audit Committee, any transaction or relationship that arises and of which she or he becomes aware that reasonably could be expected to constitute a related party transaction. Any such transaction or relationship is reviewed by the Company's management and the appropriate Board Committee to ensure that it does not constitute a conflict of interest and is reported appropriately. Additionally, the Nominating Committee conducts an annual review of related party transactions between each of our directors and the Company (and its subsidiaries) and makes recommendations to the Board regarding the continued independence of each Board member. In 2015, there were no related party transactions in
CORPORATE GOVERNANCE OF THE COMPANY
which the Company (or a subsidiary) was a participant and in which any director or executive officer (or their immediate family members) had a direct or indirect material interest. The Nominating Committee also considered relationships that, while not constituting related party transactions where a director had a direct or indirect material interest, nonetheless involved transactions between the Company and an organization with which a director is affiliated, either directly or as a partner, shareholder or officer. The Nominating Committee determined that there were no transactions impairing the independence of any member of the Board.
BOARD AND COMMITTEE EVALUATIONS
Each committee performs an annual self-assessment, and the Nominating Committee and Lead Director oversee an annual self-assessment of the Board, which includes an evaluation survey and individual discussions between the Lead Director and each other Director. A summary of the results of each committee's self-assessment is presented to the committee and discussed in executive session. The Lead Director presents a summary of the results of the Board evaluation to the Board in executive session. Any matters requiring further action are identified and action plans developed to address the matter.
NOMINATING PROCESSES OFTHE NOMINATING AND GOVERNANCE COMMITTEE
The Nominating Committee consists of three non-employee Directors, all of whom are independent under NYSE listing standards and our Corporate Governance Guidelines. The Nominating Committee identifies, investigates and recommends director candidates to the Board of Directors with the goal of creating a balance of knowledge, experience and diversity. Generally, the Nominating Committee identifies candidates through the use of a search firm or the business and organizational contacts of the directors and management. Our By-Laws permit shareholders to nominate candidates for director election at a shareholders meeting whether or not such nominee is submitted to and evaluated by the Nominating Committee. Shareholders who wish to submit nominees for election at an annual or special meeting of shareholders should follow the procedures described under "Submission of Future Shareholder Proposals" on page 61. The Nominating Committee will consider director candidates recommended by shareholders. If a shareholder wishes to recommend a candidate for nomination by the Nominating Committee, he or she should follow the same procedures referred to above for nominations to be made directly by the shareholder. In addition, the shareholder should provide such other information deemed relevant to the Nominating Committee's evaluation. Candidates recommended by the Company's shareholders are evaluated on the same basis as candidates recommended by the Company's directors, CEO, other executive officers, third-party search firms or other sources.
Directorsdirectors are divided into three classes, which are to be as nearly equal in size as possible, with one class being elected each year. The Board of Directors has set the current number of Directorsdirectors at eight,ten, with two classes of three Directorsdirectors each and one class of two Directors.four directors. Any director vacancies created between annual shareholder meetings (such as by a current director'sdirector’s death, resignation or removal for cause or an increase in the number of directors) may be filled by a majority vote of the remaining directors then in office. Any director appointed in this manner would hold office for a term expiring at the annual meeting of shareholders at which the term of office of the class to which he or she has been appointed expires. If a vacancy resulted from an action of our shareholders, only our shareholders would be entitled to elect a successor.the nomineeseach nominee for director, as well as key experiences, qualifications, attributes and skills that led the Nominating Committee to conclude that such personeach nominee is currently qualified to serve as a director, are set forth on the following pages.NOMINEES FOR DIRECTORS TO BE ELECTED AT THE 2016 ANNUAL MEETING
.three-year term endingThree-Year Term Ending at the 20192021 Annual Meeting"FOR"“FOR” EACH OF THE FOLLOWING DIRECTOR NOMINEES.Greg C. Garland, 58Director since April 2012Mr. Garland serves as Chairman and CEO of Phillips 66. He was appointed Senior Vice President, Exploration and Production-Americas for ConocoPhillips in 2010. He was previously President and CEO of Chevron Phillips Chemical Company LLC (CPChem) from 2008 to 2010, having served as Senior Vice President, Planning and Specialty Products, CPChem, from 2000 to 2008. Mr. Garland also serves on the boards of Amgen Inc. and Phillips 66 Partners GP LLC, the general partner of Phillips 66 Partners LP.Skills and qualifications:Mr. Garland's 35-year career with Phillips Petroleum Company, CPChem and ConocoPhillips, and as CEO of Phillips 66, makes him well qualified to serve both as a Director and as Chairman of the Board. Mr. Garland's extensive experience in the energy industry makes his service as a Director invaluable to the Company. In addition to his other skills and qualifications, Mr. Garland's role as both Chairman and CEO of Phillips 66 serves as a vital link between the Board of Directors and management, allowing the Board to perform its oversight role with the benefit of management's perspective on business and strategy. 14 2016 PROXY STATEMENT
Director since April 2012
Director since April 2012
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Victoria J. Tschinkel Age 70 Director since April 2012 | | | Ms. Tschinkel currently serves as the Vice Chairman of 1000 Friends of Florida and previously was its Chairwoman. In addition, Ms. Tschinkel is a director of the National Fish and Wildlife Foundation, serving on the Gulf Benefits Committee. She served as State Director of the Florida Nature Conservancy from 2003 to 2006, was senior environmental consultant to Landers & Parsons, a Tallahassee, Florida law firm, from 1987 to 2002, and was the Secretary of the Florida Department of Environmental Regulation from 1981 to 1987. | |
Director since April 2012
Mr. Lowe served as assistant to the CEO of ConocoPhillips, a position he held from 2008 until May 2012. He previously held a series of executive positions with ConocoPhillips, including Executive Vice President, Exploration and Production, from 2007 to 2008, and Executive Vice President, Commercial, from 2006 to 2007. Mr. Lowe is a Special Executive Advisor to Tudor, Pickering, Holt & Co. and serves on the boards of TransCanada Corporation and Apache Corporation, where he serves as non-executive Chairman.
Skills and qualifications:
Mr. Lowe has served on the boards of DCP Midstream, LLC and CPChem, two of the Company's significant joint ventures. He has extensive experience in and knowledge of the energy industry through his service on these boards and his 30-year career with Phillips Petroleum Company and ConocoPhillips.
The following Directorsdirectors will continue in office until the end of their respective terms. Included below is a listing of each continuing Director'sdirector’s name, age, tenure and qualifications.
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Greg C. Garland Age 60 Director since April 2012 |
Director since April 2012
Mr. Loomis has been an independent financial advisor since 2009. He was a general partner and managing director of Lazard Freres & Co. from 1984 to 2002, the CEO of Lazard LLC from 2000 to 2001 and a limited managing director of Lazard LLC from 2002 to 2004. He currently serves on the board of L Brands, Inc.
Skills and qualifications:
Mr. Loomis has extensive executive experience, financial expertise and substantial history as a senior strategic advisor to complex businesses and multiple executives.
| | Mr. Garland serves as Chairman and CEO of Phillips 66. He was appointed Senior Vice President, Exploration and Production-Americas for ConocoPhillips in 2010. He was previously President and CEO of Chevron Phillips Chemical Company LLC (CPChem) from 2008 to 2010, having served as Senior Vice President, Planning and Specialty Products, CPChem, from 2000 to 2008. Mr. Garland serves on the boards of Amgen Inc. and Phillips 66 Partners GP LLC, the general partner of Phillips 66 Partners LP. | |
| Gary K. Adams Age 67 Director since October 2016 | | | Mr. Adams is the former chief advisor of chemicals for IHSMarkit. He started his chemical industry career with Union Carbide. After 15 years serving in a number of positions at Union Carbide, Mr. Adams joined Chemical Market Associates Inc. (CMAI). He served as President, CEO and Chairman of the Board of CMAI from 1997 until its acquisition by IHS in 2011. Mr. Adams is a director of Trecora Resources and previously served on the boards of Westlake Chemical Partners LP from 2014 to 2016 and Phillips 66 Partners LP from 2013 to 2016. Director Qualifications: Mr. Adams has a lengthy tenure and extensive experience in the energy industry, including leadership experience with operating responsibilities and in-depth knowledge of the chemicals market. | |
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Director since April 2012
Mr. Tilton served as Chairman ofDirectors Whose Terms Expire at the Midwest of JPMorgan Chase & Co. from 2011 to June 2014. From September 2002 to October 2010, he served as Chairman, President and CEO of UAL Corporation, a holding company, and United Air Lines, Inc., an air transportation company and wholly-owned subsidiary of UAL Corporation. Mr. Tilton previously spent more than 30 years in increasingly senior roles with Texaco Inc., including Chairman and CEO in 2001. He currently serves on the boards of Abbott Laboratories and AbbVie Inc. (as lead director).
Skills and qualifications:
Mr. Tilton has strong management experience overseeing complex multinational businesses operating in highly regulated industries, as well as 30-years experience in the energy industry and expertise in finance and capital markets matters.
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Director since May 2012
Dr. Whittington was CEO of Allianz Global Investors Capital, a diversified global investment firm, from 2002 until her retirement in January 2012. She was Chief Operating Officer of Allianz Global Investors, the parent company of Allianz Global Investors Capital, from 2001 to 2011. Prior to that, she was Managing Director and Chief Operating Officer of Morgan Stanley Asset Management. Dr. Whittington started in the investment management industry in 1992, joining Philadelphia-based Miller Anderson & Sherrerd. Previously, she was Executive Vice President and CFO of the University of Pennsylvania, from 1984 to 1992. Earlier, she served as Budget Director and, subsequently, Secretary of Finance for the State of Delaware. Dr. Whittington served on the board of Rohm & Haas Company from 1989 to 2009 and currently serves on the boards of Macy's, Inc. and Oaktree Capital Group, LLC.
Skills and qualifications:
Dr. Whittington has extensive knowledge of and substantial experience in financial, investment, and banking matters. She also provides valuable insight from her previous experience serving on the board of a chemicals company and as a statewide cabinet officer.
| John E. Lowe Age 59 Director since April 2012 | | | Mr. Lowe served as assistant to the CEO of ConocoPhillips, a position he held from 2008 until 2012. He previously held a series of executive positions with ConocoPhillips, including Executive Vice President, Exploration and Production, from 2007 to 2008, and Executive Vice President, Commercial, from 2006 to 2007. Mr. Lowe is a Senior Executive Advisor to Tudor, Pickering, Holt & Co. He served on the board of Agrium Inc. from 2010 to 2015 and currently serves on the boards of TransCanada Corporation and Apache Corporation, where he is Non-Executive Chairman. Director Qualifications: Mr. Lowe has relevant industry financial expertise in addition to his extensive experience in and knowledge of the energy industry. | |
| Denise L. Ramos Age 61 Director since October 2016 | | | Ms. Ramos has served as the Chief Executive Officer, President and a director of ITT Inc. (formerly ITT Corporation) since 2011. She previously served as Senior Vice President and Chief Financial Officer of ITT. Prior to joining ITT, Ms. Ramos served as Chief Financial Officer for Furniture Brands International from 2005 to 2007. From 2000 to 2005, Ms. Ramos served as Senior Vice President and Corporate Treasurer at Yum! Brands, Inc. and Chief Financial Officer for the U.S. division of KFC Corporation. Ms. Ramos began her career in 1979 at Atlantic Richfield Company (ARCO), where she spent more than 20 years serving in a number of finance positions including Corporate General Auditor and Assistant Treasurer. Ms. Ramos served on the board of Praxair, Inc. from 2014 to 2016. She serves on the board of trustees for the Manufacturers Alliance for Productivity and Innovation, and is a member of the Business Council. Director Qualifications: Ms. Ramos has more than two decades of experience in the oil and gas industry and possesses significant retail and customer-centric experience. In addition to her financial expertise, she has extensive operational and manufacturing experience with industrial companies. | |
DIRECTORS WHOSE TERMS EXPIRE AT THE 2018 ANNUAL MEETING
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Director since April 2012
Mr. Ferguson retired as Chairman of Eastman Chemical Company (Eastman) in 2010 and as CEO of Eastman in 2009. He becameDirectors Whose Terms Expire at the Chairman and CEO of Eastman in 2002. He currently serves on the board of Owens Corning.
Skills and qualifications:
Mr. Ferguson has over 30 years of leadership experience in international business, industrial operations, strategic planning and capital raising strategies, as well as in executive compensation.
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Director since April 2012
Mr. McGraw is Chairman Emeritus of McGraw Hill Financial having served as Chairman of the Board from 1999 until 2015, as CEO from 1998 to November 2013 and as President and Chief Operating Officer from 1993 to November 2013. Mr. McGraw has been the Chairman of the International Chamber of Commerce since July 2013. He currently serves on the board of United Technologies Corporation.
Skills and qualifications:
As a former CEO and Chairman of the Board of a large, global public company with a significant role in the financial reporting industry, Mr. McGraw's experience allows him to provide Phillips 66 with valuable global financial, corporate governance and operational expertise.
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PROPOSAL 1: Election of Directors
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Director since April 2012
Ms. Tschinkel currently serves as the Vice-Chairwoman of 1000 Friends of Florida and previously was its Chairwoman. In addition, Ms. Tschinkel is a director of the National Fish and Wildlife Foundation, serving on the Gulf Benefits Committee. She served as State Director of the Florida Nature Conservancy from 2003 to 2006, was senior environmental consultant to Landers & Parsons, a Tallahassee, Florida law firm, from 1987 to 2002, and was the Secretary of the Florida Department of Environmental Regulation from 1981 to 1987.
Skills and qualifications:
Ms. Tschinkel's extensive environmental regulatory experience makes her well qualified to serve as a member of the Board. In addition, her relationships and experience working within the environmental community position her to advise the Board on the impact of our operations in sensitive areas.
Our By-Laws require directors to be elected by the majority of the votes cast with respect to such director (i.e., the number of votes cast "for" a director must exceed the number of votes cast "against" that director). If a nominee who is serving as a Director is not elected at the Annual Meeting and no one else is elected in place of that Director, then, under Delaware law, the Director would continue to serve on the Board of Directors as a "holdover director." However, under our By-Laws, the holdover director would be required to tender his or her resignation to the Board. The Nominating Committee then would consider and recommend to the Board whether to accept or reject the tendered resignation, or whether some other action should be taken. The Board of Directors would then make a decision whether to accept the resignation taking into account the recommendation of the Nominating Committee. The Director who tenders his or her resignation would not participate in the Board's decision. The Board is required to publicly disclose (by a press release, a filing with the SEC or other broadly disseminated means of communication) its decision regarding the tendered resignation and the rationale behind the decision within 90 days from the date of the certification of the election results. In a contested election (a situation in which the number of nominees exceeds the number of directors to be elected), the standard for election of directors will be a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors.
For information on the compensation of our non-employee Directors, please see the the discussion beginning on page 51.
NOMINATIONS
In selecting the 2016 nominees for Director, the Nominating Committee sought candidates who possess the highest personal and professional ethics, integrity and values, and are committed to representing the long-term interests of the Company's shareholders. In addition to reviewing a candidate's background and accomplishments, the Nominating Committee reviewed candidates in the context of the current composition of the Board and the evolving needs of the Company's businesses. The Nominating Committee also considered the number of boards on which the candidate already serves. It is the Board's policy that at all times at least a substantial majority of its members meets the standards of independence promulgated by the NYSE and the SEC, and as set forth in the Company's Corporate Governance Guidelines. The Nominating Committee also seeks to ensure that the Board reflects a range of talents, ages, skills, experiences, diversity, and expertise, particularly in the areas of accounting and finance, management, domestic and international markets, leadership, and energy-related industries, sufficient to provide sound and prudent guidance with respect to the Company's operations and interests. The Board seeks to maintain a diverse membership, but does not have a separate policy on diversity. The Board also requires that its members be able to dedicate the time and resources necessary to ensure the diligent performance of their duties on the Company's behalf, including attending Board and applicable committee meetings.
The following are some of the key qualifications and skills the Nominating Committee considered in evaluating the director nominees. The individual biographies above provide additional information about each nominee's specific experiences, qualifications and skills.
PROPOSAL 1: Election of Directors
Age 69 Director since April 2012 | | | Mr. Loomis has been an independent financial advisor since 2009. He was a general partner and Managing Director of Lazard Freres & Co. from 1984 to 2002, the CEO of Lazard LLC from 2000 to 2001 and a Limited Managing Director of Lazard LLC from 2002 to 2004. Mr. Loomis served as a director of L Brands Inc. from 2005 to 2016. Director Qualifications: Mr. Loomis has extensive executive experience and financial expertise, as well as substantial history as a senior strategic advisor to complex businesses and multiple executives. | |
| Glenn F. Tilton Age 69 Director since April 2012 | | | Mr. Tilton served as Chairman of the Midwest of JPMorgan Chase & Co. from 2011 to 2014. From 2002 to 2010, he served as Chairman, President and CEO of UAL Corporation, a holding company, and United Air Lines, Inc., an air transportation company and wholly-owned subsidiary of UAL Corporation. Mr. Tilton previously spent more than 30 years in increasingly senior roles with Texaco Inc., including Chairman and CEO in 2001. He served as Non-Executive Chairman of the Board of United Continental Holdings Inc. from 2010 to 2013 and currently serves on the boards of Abbott Laboratories and AbbVie Inc. (as lead director). Director Qualifications: Mr. Tilton has strong management experience overseeing complex multinational businesses operating in highly regulated industries, as well as 30 years of experience in the energy industry and expertise in finance and capital markets matters. | | |||||||||||
| Marna C. Whittington Age 70 Director since May 2012 | | |
The lack of a "ü" for a particular item does not mean that the director does not possess that qualification, characteristic, skill or experience. We look to each director to be knowledgeable in these areas; however, the "ü" indicates that the item is a specific qualification, characteristic, skill or experience that the director brings to the Board.
PROPOSAL 1: Election of Directors
COMMITTEES OF THE BOARD
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Director Qualifications: Dr. Whittington has extensive knowledge of and substantial experience in financial, investment, and banking matters, and has served on compensation committees. She also provides valuable insight from her previous experience serving on the
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Approval
SERVICES PROVIDED BY THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
selection of that firm as the Company’s independent registered public accounting firm. Even if the selection is ratified, the Audit Committee may in its discretion select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders.
| Fees (in millions) | | | 2017 | | | 2016 | |
| Audit Fees(1) | | | $11.8 | | | $13.5 | |
| Audit-Related Fees(2) | | | 0.6 | | | 0.6 | |
| Tax Fees(3) | | | 0.2 | | | 0.2 | |
| All Other Fees | | | 0.2 | | | 0.2 | |
| Total | | | $12.8 | | | $14.5 | |
Fees (in millions) | 2015 | 2014 | |||||
| | | | | | | |
Audit Fees(1) | $ | 11.8 | $ | 11.6 | |||
Audit-Related Fees(2) | 0.7 | 0.8 | |||||
Tax Fees(3) | | 0.4 | | 0.5 | |||
All Other Fees | — | — | |||||
| | | | | | | |
Total | $ | 12.9 | $ | 12.9 | |||
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PROPOSAL 2: Ratification of the Appointment of Ernst & Young LLP
2017.
COMPENSATION DISCUSSION AND ANALYSIS
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0.14 | | Our combined TRR was the lowest in our Company history and | ||
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At the end of 2015, Mr. Maxwell retired. In January 2016, Kevin J. Mitchell became our Executive Vice President and Chief Financial Officer.
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During the largest turnaround year in our Company’s history, our assets were available to run 3.5% more than our target goal. | ||||||||
| #1 | | | For the second year in a row we had the lowest number of Reportable Environmental Events in our Company’s history. | | |||
| | | Six refineries were recognized in 2017 as 2016 American Fuel & Petrochemical Manufacturers Safety Award winners, with one receiving the Distinguished Safety Award—our industry’s highest level of safety recognition. | | ||||
| | | 33% | | | CPChem recently completed its U.S. Gulf Coast Petrochemicals project consisting of a world-scale ethane cracker and two polyethylene units. The project increases CPChem’s global ethylene and polyethylene capacity by approximately 33%. | | |
| $2.4 billion | | | We completed a $2.4 billion dropdown of Refining and Midstream assets into Phillips 66 Partners LP (PSXP). | | |||
| | | | | In Refining, we aim to be an efficient, low-cost, and reliable operator. We invest in smaller, high-return, quick payout projects to enhance margins. During 2017, we increased heavy crude processing capability at the Billings Refinery and completed a diesel recovery project at the Ponca City Refinery. | | ||
| $6.3 billion | | | Our Adjusted Controllable Costs were 2% below budget, while absorbing company growth. We have successfully executed the construction of major projects and maintained our disciplined approach to capital allocation. | | |||
| | | 11% | | | We increased our quarterly dividend by 11%, our seventh increase in 5 years. | | |
| 21% | | | Our diversified structure allows us to invest where profitable across multiple streams of business, delivering a 2017 TSR of 21%. Our cumulative TSR since our Company inception in May 2012 through the end of 2017 was 257%—outperforming both our peer group and the broader market. | | |||
| $3.0 billion | | | In 2017, we delivered $3 billion to shareholders through dividends and share repurchases. Since our inception in 2012, we have distributed $16.4 billion to shareholders, through dividends, share repurchases and share exchanges. | | |||
| | | 25% | | | Approximately 25% of our global workforce resided in locations impacted by Hurricane Harvey, yet almost all assets were operating by mid-September. We provided employees with $4.3 million in financial assistance through emergency cash and interest free loans, and donated an additional $4 million to charitable relief efforts. | | |
| 73,000 | | | Last year, our employees volunteered 73,000 hours to organizations in their local communities. Additionally, Phillips 66 provided $28 million in financial support to organizations promoting education, environmental sustainability, and community safety and preparedness. | | |||
| ✔ | | | Internally we focused on achievement of our corporate priorities centered around promoting a culture of inclusion and diversity, building leadership capabilities, and maximizing the performance of our people. | |
Our industry is vitally important to the global economy. Fossil fuels, particularly oil and natural gas, continueANALYSIS
We are a diversified energy manufacturing and logistics company with a unique portfolio of assets in the Midstream, Chemicals, Refining and Marketing & Specialties businesses. We are focused on processing, transporting, storing and marketing fuels and products globally. Integral to our portfolio of assets is our master limited partnership, Phillips 66 Partners LP (PSXP).
The 2015 energy landscape highlighted the volatile nature of our industry. Our operating plans reflect this changing environment; however, our overriding objective remains the same—enable our high-performing workforce to execute our corporate strategy efficiently and effectively and remain vigilant and focused on safety and operating excellence in order to:
One way we measure progress toward implementing our corporate strategy is through enterprise value growth.industry cycles. Through our disciplined capital allocation model, we increase our enterprise value by strategically investing capital in our higher-returnhigher-valued businesses while returning a significant portion of capital to shareholders through dividends and share repurchases.
| Name | | | Title | |
| Greg Garland | | | Chairman and CEO | |
| Robert Herman | | | Executive Vice President, Refining | |
| Paula Johnson | | | Executive Vice President, Legal and Government Affairs, General Counsel and Corporate Secretary | |
| Kevin Mitchell | | | Executive Vice President, Finance and CFO | |
| Tim Taylor | | | President | |
Our 2015
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| | DELIVERED VIA | | | TARGET AMOUNT | | | PERFORMANCE DRIVERS (AND WEIGHTINGS) | | |||||
| Base Salary | | | Cash | | | Benchmarked to compensation peer group median; adjusted for experience, responsibility, performance and potential | | | Annual fixed cash compensation to attract and retain NEOs | | |||
| Annual Incentive | | | Variable Cash Incentive Program (VCIP) | | | | | Adjusted EBITDA (40%) Operating Excellence (35%) Adjusted Controllable Costs (15%) High-Performing Organization (10%) Individual Modifier (+/- 50% of target) | | ||||
| Long-Term Incentives (LTI) | | | Performance Share Program (PSP) (3-year performance period) | | | 50% of LTI Target | | | Absolute ROCE (25%) Relative ROCE (25%) Relative TSR (50%) | ||||
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| | | | Stock Option Program(1) | | | 25% of LTI Target | | | Long-term stock price appreciation | | |||
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Our compensation programs support
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COMPENSATION DISCUSSION AND ANALYSIS
Compensation Mix Puts Significant Pay at Risk
2015 Principal Elements
The following table summarizesCEO and 65 percent of other NEOs target compensation mix. For both the principal elementsCEO and other NEOs, target mix percentages are commensurate with their levels of the executive compensationresponsibility. Further detail on all of these programs and the performance drivers of each element.
The Compensation Committee believes this mix is aligned with our compensation philosophy, reflects the cyclical nature of our business and supports executive retention.
Target Mix
CEO target
| WE DO... | |
| ✔ Target the majority of NEO compensation to be performance based | |
| ✔ Link NEO compensation to shareholder value creation by having a significant portion of compensation at risk | |
| ✔ Apply multiple performance metrics aligned with our corporate strategy to measure our performance | |
| ✔ Cap maximum payouts under our VCIP and equity programs | |
| ✔ Employ a “double trigger” for severance benefits and equity awards under our Key Employee Change in Control Severance Plan (CICSP) | |
| ✔ Include absolute and relative metrics in our LTI programs | |
| ✔ Maintain stock ownership guidelines for executives—Chief Executive Officer (CEO) 6x base salary; other NEOs 3-5x base salary | |
| ✔ Balance, monitor and manage compensation risk through regular assessments and robust clawback provisions | |
| ✔ Have extended vesting periods on stock awards, with a minimum one-year vesting period required for stock and stock option awards | |
| ✔ Intend to qualify compensation payments for deductibility under Section 162(m) | |
| ✔ Maintain a fully independent Compensation Committee | |
| ✔ Retain an independent compensation consultant | |
| ✔ Hold a Say-on-Pay vote annually | |
COMPENSATION DISCUSSION AND ANALYSIS
TARGETS AND PAYOUTS FOR COMPENSATION ELEMENTS
Peer Group Comparisons
In 2015, consistent with investor feedback and best practices, we enhanced our peer group comparisons to better reflect our business segments and long-term strategy. We use a performance peer group to evaluate our business results. We believe that our performance peer group is representative of the companies that investors use for relative performance comparisons. We use a compensation peer group to evaluate and determine our compensation levels for our NEOs. Our compensation peer group is comprised of a mix of companies from our performance peer group and companies from the broader market. The mix includes companies from the broader market because we draw our executive talent from a candidate pool that extends beyond the energy industry. We utilized the following peer groups for performance comparisons and compensation decisions.
Performance Peer Group Phillips 66 is uniquely positioned in the energy industry with a large refining base, a growing midstream NGL business and significant petrochemical exposure. To reflect our unique portfolio of assets, we expanded our peer group for performance comparison purposes to include companies from all three of our major businesses. The table below presents the sixteen companies in our 2015 performance peer group.
| WE DO NOT... | | ||
| ✗ Provide excise tax gross-ups to our NEOs under our CICSP | | ||
| ✗ Reprice stock options without shareholder approval | | ||
✗ Price stock options below grant date fair market value | ||||
✗ Allow share recycling for stock options | ||||
✗ Have evergreen provisions in our active equity plans | ||||
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In addition to the companies in our performance peer group, we evaluate our TSR performance against the S&P 100 Index. The Compensation Committee believes that the S&P 100 is an appropriate comparison for performance purposes because these are the companies with which we compete for capital in the broader market.
Compensation Peer Group Compensation peers include companies that are reasonably comparable to Phillips 66 based on three primary criteria—assets, market capitalization, and business operations. Revenue is a secondary criteria due to the nature of our operations. The Compensation Committee believes reviewing each of these criteria is necessary in order to fully reflect the complex nature of our business and determine the optimal group of companies with which to compare Phillips 66.
Because our executive talent pool is broader than the energy industry, our compensation peer group consists of some of the companies from our performance peer group and large industrial companies with significant capital investments and complex international operations. At the time this compensation peer group was last reviewed in 2015, we were, in comparison to this group, in the 46th percentile in assets, 30th percentile in market capitalization and 93rd percentile in revenue. The 2015 compensation peer group is comprised of the following 26 companies.
Allow hedging or pledging of Phillips 66 stock, or trading of Phillips 66 stock outside of approved windows | |
| WE DO NOT... | |
| ✗ Pay dividends during the performance period on PSP targets | |
| ✗ Allow transfer of equity awards (except in the case of death) | |
| ✗ Provide separate supplemental executive retirement benefits for individual NEOs | |
| ✗ Maintain individual change-in-control agreements | |
| ✗ Have an employment agreement with the CEO | |
| ✗ Have excessive perquisites | |
COMPENSATION DISCUSSION AND ANALYSIS
Below is a summary of the annualized base salary for each NEO for 2015.2017. Because these amounts reflect each NEO'sNEO’s annualized salary as of the dates indicated, this information may vary from the information provided in the "SUMMARY COMPENSATION TABLESummary Compensation Table" on page 40,, which reflects actual base salary earnings in 2015,2017, including the effect of salary changes during the year.
| Name | | | Salary as of 1/1/2017 ($) | | | Salary as of 3/1/2017 ($) | | | Salary as of 12/31/2017 ($) | |
| Greg Garland | | | 1,625,016 | | | 1,675,008 | | | 1,675,008 | |
| Robert Herman | | | 670,008 | | | 693,480 | | | 693,480 | |
| Paula Johnson | | | 704,568 | | | 749,664 | | | 749,664 | |
| Kevin Mitchell | | | 692,136 | | | 712,920 | | | 712,920 | |
| Tim Taylor | | | 1,080,768 | | | 1,124,016 | | | 1,124,016 | |
NAME | POSITION | BASE SALARY AS OF DECEMBER 31, 2014 ($) | BASE SALARY AS OF DECEMBER 31, 2015 ($)(1) | |||
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Mr. Garland | Chairman and Chief Executive Officer | 1,522,512 | 1,575,816 | |||
Ms. Johnson | Executive Vice President and General Counsel | 610,008 | 671,016 | |||
Mr. Maxwell | Executive Vice President and Chief Financial Officer | 775,008 | 806,016 | |||
Mr. Taylor | President | 985,008 | 1,024,416 | |||
Mr. Ziemba | Executive Vice President, Refining | 679,272 | 701,352 | |||
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Mr. Garland, Ms. Johnson and Messrs. Maxwell, Taylor and ZiembaAll NEOs received base salary increases effective JulyMarch 1, 2015,2017, as part of the annual merit cycle for all employees. These merit increases in base salary broughtrealigned each applicable NEO'sNEO’s base salary in line with the respective compensation peer group levels and reflect thatreflected each NEO metNEO’s achievement of established performance requirements for their respective roles.corresponding to his or her role. The Compensation Committee determined these adjustments were appropriate to maintain our competitiveness in the market. Ms. Johnson received a grade promotion, effective July 1, 2015. This promotion prompted other actions, including target VCIP increases and supplemental prospective performance plan awards.
Each NEO's baseperformance. Through our metrics, we designed our VCIP award is tied solelyprogram to align annual awards with shareholder interests and execution of our corporate performance rather thanstrategy. We do not tie NEO VCIP awards to the performance of any individual business unit. We believe this structure is inserves the best interests of shareholders as it promotes collaboration across the organization.
The annual payout for NEOs is delivered as a cash bonus and is calculated as follows:
COMPENSATION DISCUSSION AND ANALYSIS
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| Adjusted EBITDA We believe Adjusted EBITDA is useful in evaluating our annual core operating performance and how we determine enterprise value. Our threshold represents the Adjusted EBITDA required to cover our sustaining capital and shareholder dividend commitments. To ensure we continue to deliver on our growth strategy, the target and maximum for Adjusted EBITDA represent returns that are 1.5 percent and 3.0 percent above our Weighted Average Cost of Capital (WACC), respectively. Based on actual Company performance, the Compensation Committee determined that a | |||
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Generally, target performance results in 100 percent payout of target bonus opportunity. Less-than-target performance will normally result in a payout between zero and 99 percent of target. Greater-than-target performance generally results in a payout between 10086 percent of target and the maximum 200was earned for this metric. Overall performance was 13 percent before individual adjustment.
below target due primarily to market volatility, which was partially offset by exceptional operating excellence. Adjusted EBITDA, as used for VCIP, is a non-GAAP financial measure. See Safety, Process Safety and Appendix A for additional information.
In 2015, both our Total Recordable Rate (TRR)stewardship, and effectively manage unplanned downtime.
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| COMPANY RESULTS | PAYOUT LEVELS BASED ON PERFORMANCE | | | | |||||||||||||||||
SAFETY, PROCESS SAFETY AND OPERATING EXCELLENCE METRICS | PAYOUT % | | CORPORATE PAYOUT | |||||||||||||||||||
TARGET | ACTUAL | | 175-200% | 100-175% | 50-100% | 0-50% | | WEIGHT | ||||||||||||||
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Combined TRR | 0.43 | 0.19 | 1st Quartile | 2nd Quartile | 3rd Quartile | 4th Quartile | 185% | 5% | 9.25% | |||||||||||||
Combined LWCR | 0.10 | 0.03 | 1st Quartile | 2nd Quartile | 3rd Quartile | 4th Quartile | 185% | 5% | 9.25% | |||||||||||||
Process Safety Rate | 0.09 | 0.08 | 1st Quartile | 2nd Quartile | 3rd Quartile | 4th Quartile | 150% | 5% | 7.50% | |||||||||||||
Environmental Events | 150 | 142 | <125 | 125-150 | 150-175 | >175 | 140% | 5% | 7.00% | |||||||||||||
Capacity Utilization | 90% | 91% | >94% | 90%-94% | 86%-90% | <86% | 140% | 5% | 7.00% | |||||||||||||
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Total Safety, Process Safety and Operating Excellence | 160% | 25% | 40.00% | |||||||||||||||||||
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Cost Management
Cost management maintains focus
| | | | Payout Levels Based on Performance | | | 2017 Results | | | Payout % | | |||||||||
| | | | 0% | | | 50% | | | 100% | | | 200% | | ||||||
| Combined TRR | | | > 0.38 | | | 0.38 | | | 0.30 | | | 0.24 | | | 0.14 | | | 180% | |
| Combined LWCR | | | > 0.08 | | | 0.08 | | | 0.06 | | | 0.04 | | | 0.04 | | | 200% | |
| Process Safety Rate | | | > 0.09 | | | 0.09 | | | 0.08 | | | 0.05 | | | 0.03 | | | 180% | |
| Environmental Events | | | > 163 | | | 163 | | | 142 | | | 123 | | | 103 | | | 200% | |
| Asset Availability | | | < 92.4% | | | 92.4% | | | 94.1% | | | 95.8% | | | 97.6% | | | 200% | |
| Combined Operating Excellence | | | | | | | | | | | | | | | | | | 192% | |
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| COMPANY RESULTS | PAYOUT LEVELS BASED ON PERFORMANCE | | | | |||||||||||||||||||
| PAYOUT % | | CORPORATE PAYOUT | |||||||||||||||||||||
COST METRIC | TARGET | ACTUAL | | 150-200% | 100-150% | 100% | 50-100% | 0% | | WEIGHT | ||||||||||||||
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Cost Management* ($MM) | $6,155 | $5,853 | <Target–2% | Target–1% | Target | <Target+5% | >Target+5% | 180% | 25% | 45.00% | ||||||||||||||
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Return on Capital Employed
ROCE
In 2015,performance, the Compensation Committee considereddetermined that our VCIP ROCE120 percent of target was 7.2 percentage points above our target and that we were seventh out of 17 companies in our performance peer group, when determining a 145 percent payoutearned for ROCE.
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RETURN ON CAPITAL EMPLOYED METRIC | COMPANY RESULTS | PAYOUT LEVELS BASED ON PERFORMANCE | | | | |||||||||||||||||||||||||||
PAYOUT % | | CORPORATE PAYOUT | ||||||||||||||||||||||||||||||
TARGET | ACTUAL | | 200% | 175% | 150% | 125% | 100% | 75% | 50% | 25% | 0% | | WEIGHT | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Absolute VCIP ROCE* | 8.9% | 16.1% | | >11.9% | 11.2% | 10.4% | 9.7% | 8.9% | 8.2% | 7.4% | 6.7% | <5.9% | | 200% | 12.5% | 25% | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PAYOUT LEVELS BASED ON PERFORMANCE | ||||||||||||||||||||||||||||||||
| | | | | 160-200% | 80-160% | 25-80% | 0% | | | | | | | | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Relative VCIP ROCE* | Median of peers | 7th | | | 1st-4th | 5th-10th | 11th-15th | 16th or 17th | | | | | | 90% | 12.5% | 11.25% | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 145% | 25% | 36.25% | |||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The following chart shows our VCIP ROCE performance relative to our peers.
RELATIVE VCIP ROCE(1)(PERCENT)
Adjusted Earnings
Adjusted earnings measures how effectively we are delivering on our growth, returns and distribution strategies. We measure our adjusted earnings compared to budgeted targets.
In 2015, we set an aggressive target in an increasingly uncertain commodity environment and outperformed our budget by 60 percent. Total adjusted earnings were $4.2 billion. Additionally, we generated cash from operations of $5.9 billion, excluding working capital. Although a strictly formulaic result would have produced a higher payout percentage, the
Compensation Committee exercised negative discretion to reflect the current market environment when determining a 175 percent payout for adjusted earnings.
| | | | | | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| COMPANY RESULTS | PAYOUT LEVELS BASED ON PERFORMANCE | | | | |||||||||||||||||||||||
| PAYOUT % | | CORPORATE PAYOUT | |||||||||||||||||||||||||
EARNINGS METRIC | TARGET | ACTUAL | | 200% | 170-199% | 125-169% | 100-124% | 70-99% | 25-69% | 0% | | WEIGHT | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted Earnings* (millions) | $2,619 | $4,193 | $4,200 | $3,500 | $3,000 | $2,600 | $2,300 | $1,900 | <$1,000 | 175% | 25% | 43.75% | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Corporate Payout
| Metric | | | Payout Percentage | | | Weight | | | Corporate Amount | |
| Adjusted EBITDA | | | 86% | | | 40% | | | 35% | |
| Operating Excellence | | | 192% | | | 35% | | | 67% | |
| Adjusted Controllable Costs | | | 173% | | | 15% | | | 26% | |
| High-Performing Organization | | | 120% | | | 10% | | | 12% | |
| Total Corporate Payout | | | | | | | | | 140% | |
METRIC | PAYOUT PERCENTAGE | WEIGHT | CORPORATE PAYOUT | |||||||
---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | |
Safety, Process Safety and Operating Excellence | | 160% | | 25% | | 40.00% | ||||
Cost Management | 180% | 25% | 45.00% | |||||||
Return on Capital Employed | | 145% | | 25% | | 36.25% | ||||
Adjusted Earnings | 175% | 25% | 43.75% | |||||||
Total Corporate Payout | | | | | | 165.00% | ||||
| | | | | | | | | | |
Applying Project-Based and Shareholder Metrics to the Annual VCIP Payout
The Compensation Committee has the authority to adjust our NEOs’ individual VCIP payouts by +/–50 percent of the formula-based target payout amount.payout. The Compensation Committee appliesmay apply an additional individual performance adjustment to reflect project-based accomplishments that drove or detracted from shareholder value or for market-based considerations to more closely align the payout with shareholder returns. This flexibility allows us to reflect our unique business strategy and portfolio of assets as well as differentiate individual executive performance. The Compensation Committee made adjustments to individual compensation levelsVCIP payouts for NEOs based on their responsibility for the success of projects and initiatives leadingthat lead to the successful execution of our strategy and the senior executives responsible for the success of these projects and initiatives.
The following initiatives and results were considered when making individual adjustment decisions.
| | | | GROWTH INITIATIVES | | | IMPROVING RETURNS | | | DISTRIBUTIONS | | ||||||||||||||||||||||||||||||||||||||
| | | | Beaumont Expansion | | | Pipeline Investments | | | CP Chem Capacity | | | DCP Restructure and Expansion | | | PSXP Transactions | | | High Return Refining Projects | | | Commercial Rebranding | | | Sustainability Initiatives | | | Control Costs | | | |||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||
| Greg Garland | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | |||||||||||||||||
| Robert Herman | | | ✔ | | | ✔ | | | ✔ | | | | | | ✔ | | | ✔ | | | | | | ✔ | | | ✔ | | | | | |||||||||||||||||
| Paula Johnson | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | | | | | | | ✔ | | | ✔ | | | | | |||||||||||||||||
| Kevin Mitchell | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | | | | | | | ✔ | | | ✔ | | | ✔ | | |||||||||||||||||
| Tim Taylor | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | | | | ✔ | | | ✔ | | | ✔ | | | | |
NAME | ELIGIBLE EARNINGS ($) | TARGET VCIP PERCENTAGE(1) | CORPORATE PAYOUT PERCENTAGE | INDIVIDUAL PERFORMANCE ADJUSTMENT PERCENTAGE | TOTAL PAYOUT ($) | |||||
---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | |
Mr. Garland | 1,549,164 | 160.00% | 165% | 20% | 4,585,525 | |||||
Ms. Johnson | 640,512 | 86.00% | 165% | 20% | 1,019,055 | |||||
Mr. Maxwell | 790,512 | 100.00% | 165% | 20% | 1,462,447 | |||||
Mr. Taylor | 1,004,712 | 110.00% | 165% | 35% | 2,210,366 | |||||
Mr. Ziemba | 690,312 | 83.00% | 165% | 15% | 1,031,326 | |||||
| | | | | | | | | | |
| | | | ($) | | | Target VCIP Percentage (%) | | | Corporate Payout Percentage (%) | | | Individual Performance Adjustment (%) | | | Total Payout ($) | |
| Greg Garland | | | 1,666,676 | | | 160% | | | 140% | | | —% | | | 3,733,354 | |
| Robert Herman | | | 689,568 | | | 85% | | | 140% | | | —% | | | 820,586 | |
| Paula Johnson | | | 742,148 | | | 90% | | | 140% | | | 15% | | | 1,035,296 | |
| Kevin Mitchell | | | 709,456 | | | 85% | | | 140% | | | 15% | | | 934,708 | |
| Tim Taylor | | | 1,116,808 | | | 110% | | | 140% | | | 15% | | | 1,904,158 | |
COMPENSATION DISCUSSION AND ANALYSIS
Long-Term Incentive (LTI) Programs
Our LTI programs are designed to:
Our programs deliver 50 percent of long-term target value in the form of Performance Share Units (PSUs), 25 percent in the form of stock options and 25 percent in the form of RSUs.
There
PSP 2013-2015 Payout
For 2015, the Compensation Committee considered the following results when approving the payout for PSP 2013-2015.
RELATIVE PSP ROCE(1)(PERCENT)
COMPENSATION DISCUSSION AND ANALYSIS
RELATIVE TSR(PERCENT)
Return on Capital Employed
ROCE is an important measure of Company growth and overall performance. The Compensation Committee has used a ROCE measure as a metric in both the PSP program and the VCIP program; however, each applies ROCE to a different time period.
The target for absolute performance is based on our WACC for the performance period.
During the PSP 2013-2015 performance period, our absolute PSP ROCE was 15.8 percent, or 6.4 percentage points above our WACC target. Our relative performance was fifth out of 17 peer companies. The Compensation Committee used these results when determining a 180 percent payout for ROCE.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
RETURN ON CAPITAL EMPLOYED | COMPANY RESULTS | PAYOUT LEVELS BASED ON PERFORMANCE | PAYOUT | CORPORATE | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
METRIC | TARGET | ACTUAL | 200% | 175% | 150% | 125% | 100% | 75% | 50% | 25% | 0% | % | WEIGHT | PAYOUT | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Absolute PSP ROCE* | 9.4% | 15.8% | | 12.4% | 11.7% | 10.9% | 10.2% | 9.4% | 8.7% | 7.9% | 7.2% | 6.4% | | 200% | 25% | 50% | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| COMPANY RESULTS | PAYOUT LEVELS BASED ON PERFORMANCE | | | | |||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | CORPORATE PAYOUT | |||||||||||||||||||||||||||||
| TARGET | ACTUAL | | | 160-200% | 80-160% | 25-80% | 0% | | PAYOUT % | WEIGHT | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Relative PSP ROCE* | Relative Ranking | 5th | | 1st-4th | 5th-10th | 11th-15th | 16th-17th | | 160% | 25% | 40% | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 180% | 50% | 90% | |||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Shareholder Return
TSR for the performance period is compared to our performance peer group and the S&P 100. Our TSR for the 3-year performance period was 72.3 percent, fifth out of 18 (including the S&P 100 Index) on a relative basis. The Compensation Committee used this ranking when determining a 160 percent payout for our TSR performance.
| | | | | | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| COMPANY RESULTS | PAYOUT LEVELS BASED ON PERFORMANCE | | | | |||||||||||||||||
TOTAL SHAREHOLDER RETURN METRIC | PAYOUT % | | CORPORATE PAYOUT | |||||||||||||||||||
TARGET | ACTUAL | | 160-200% | 80-160% | 25-80% | 0% | | WEIGHT | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Relative Total Shareholder Return | Relative Ranking | 5th | 1st-4th | 5th-10th | 11th-15th | 16th-18th | 160% | 50% | 80% | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | |
Total PSP 2013-2015 Payout
The formulaic result of these metrics yielded a Total PSP 2013-2015 payout of 170 percent.
METRIC | PAYOUT PERCENTAGE | WEIGHT | CORPORATE PAYOUT | |||
---|---|---|---|---|---|---|
| | | | | | |
PSP ROCE | 180% | 50% | 90% | |||
Relative TSR | 160% | 50% | 80% | |||
Total PSP 2013-2015 Payout | 170% | |||||
| | | | | | |
COMPENSATION DISCUSSION AND ANALYSIS
In addition, for PSP 2013-2015 the Compensation Committee could apply performance adjustments to the payout of up to +/–By delivering 50 percent based on individual performance. The maximum payout inclusive of Company and individual performance adjustments is capped at 200 percent of target. Targets are prorated for changes in salary grade level during the remaining portion of the relevant performance period. The CEO provides input on individual adjustments for all NEOs (other than himself).
Accordingly, the Compensation Committee approved the following payouts for each NEO for the PSP 2013-2015 performance period:
NAME | TARGET SHARES (#) | CORPORATE PAYOUT PERCENTAGE | INDIVIDUAL PERFORMANCE ADJUSTMENT(1) | TOTAL SHARES(2) (#) | TOTAL VALUE ($) | |||||
---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | |
Mr. Garland | 96,129 | 170% | — | 163,419 | 12,848,002 | |||||
Ms. Johnson | 17,799 | 170% | — | 30,258 | 2,378,884 | |||||
Mr. Maxwell | 23,967 | 170% | — | 40,744 | 3,203,293 | |||||
Mr. Taylor | 32,358 | 170% | — | 55,009 | 4,324,808 | |||||
Mr. Ziemba | 20,480 | 170% | — | 34,816 | 2,737,234 | |||||
| | | | | | | | | | |
2015 LTI Targets
The Company uses the compensation peer group described on page 27 to benchmark compensation levels and establish multiples of base salary tied to the median LTI opportunities for similar roles at peer organizations.
PSP 2015-2017 Targets
Throughthrough the PSP, a significant portion of NEO compensation is tied to Company and individual performance over a three-year period, which is evaluated by the Compensation Committee when determining payouts. Each year, the Compensation Committee establishes metrics that will be used to evaluate Company performance relative to internal performance goals as well as appropriate peer groups for the following three years.
performance.
| Metric | | | Weight | | | Performance Share Program 2015-2017 | | ||||||
| Threshold(1) | | | Target(2) | | | Maximum(3) | | ||||||
| Absolute ROCE | | | 25% | | | 3.8% average of 2015 (4.3%), 2016 (4.4%), and 2017 (2.8%) delivers sustaining capital and shareholder dividend commitments over 3-year period | | | 10.4% average of 2015 (10.4%), 2016 (10.8%), and 2017 (9.9%) delivers WACC +1.5% over 3-year period | | | 11.9% average of 2015 (11.9%), 2016 (12.3%), and 2017 (11.4%) delivers WACC +3.0% over 3-year period | |
| Relative ROCE | | | 25% | | | above 10th percentile of Performance Peers | | | median of Performance Peers | | | above 90th percentile of Performance Peers | |
| Relative TSR | | | 50% | | | above 10th percentile of Performance Peers | | | median of Performance Peers | | | above 90th percentile of Performance Peers | |
Individual performance adjustments of up to +/–50 percent of targets can be set at the beginning of120 percent.
For PSP 2015-2017, the PSP continued to be 50was 10.1 percent, or 0.3 percentage points below target, resulting in a payout of 97 percent of target for PSP Absolute ROCE, also weighted at 25 percent. Absolute ROCE, as used in our PSP program, is a non-GAAP financial measure. See Appendix A for additional information.
SUMMARY COMPENSATION TABLE.
Generally, stock
COMPENSATION DISCUSSION AND ANALYSIS
Restricted Stock Units
retention.
Driving Future Shareholder Value
Our strong 2015 results and the success of our strategic initiatives outlined previously were due in large part to the strong management and oversight of our key senior executives. When determining individual adjustments for the performance-based programs, the
2015 LTI Target Compensation
| NAME | | | PSP 2017-2019(1) ($) | | | STOCK OPTIONS(2) ($) | | | RSUs(3) ($) | | | TOTAL TARGET ($) | |
| Greg Garland | | | 5,898,808 | | | 2,949,404 | | | 2,949,404 | | | 11,797,616 | |
| Robert Herman | | | 1,142,364 | | | 519,256 | | | 571,182 | | | 2,232,802 | |
| Paula Johnson | | | 1,278,791 | | | 581,269 | | | 639,395 | | | 2,499,455 | |
| Kevin Mitchell | | | 1,072,811 | | | 536,405 | | | 536,405 | | | 2,145,621 | |
| Tim Taylor | | | 2,593,843 | | | 1,080,768 | | | 1,296,922 | | | 4,971,533 | |
NAME | PSP 2015-2017(1) ($) | STOCK OPTIONS(2) ($) | RSUs(3) ($) | TOTAL TARGET ($) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | |
Mr. Garland | | 5,526,719 | | 2,763,359 | | 2,763,359 | | 11,053,437 | |||||
Ms. Johnson | 1,040,064 | 472,756 | 520,032 | 2,032,852 | |||||||||
Mr. Maxwell | | 1,491,890 | | 678,132 | | 745,945 | | 2,915,967 | |||||
Mr. Taylor | 2,265,518 | 985,008 | 1,182,010 | 4,432,536 | |||||||||
Mr. Ziemba | | 1,158,159 | | 526,436 | | 579,079 | | 2,263,674 | |||||
| | | | | | | | | | | | | |
| 2017 Compensation Peer Group | | ||||||
| 3M Company (MMM) | | | E. I. du Pont de Nemours and Company (DD) | | | Lockheed Martin Corporation (LMT) | |
| Archer-Daniels-Midland Company (ADM) | | | Ford Motor Company (F) | | | LyondellBasell Industries N.V. (LYB) | |
| The Boeing Company (BA) | | | General Dynamics Corporation (GD) | | | Marathon Petroleum Corporation (MPC) | |
| Caterpillar Inc. (CAT) | | | General Motors Company (GM) | | | Tesoro Corporation (TSO) | |
| Chevron Corporation (CVX) | | | Halliburton Company (HAL) | | | United Technologies Corporation (UTX) | |
| Deere and Company (DE) | | | Honeywell International Inc. (HON) | | | Valero Energy Corporation (VLO) | |
| The Dow Chemical Company (DOW) | | | Johnson Controls, Inc. (JCI) | | | | |
| 2018 Compensation Peer Group | | ||||||
| Anadarko Petroleum Corporation (APC) | | | Enterprise Products Partners L.P. (EPD) | | | Honeywell International Inc. (HON) | |
| Andeavor (ANDV) | | | Exxon Mobil Corporation (XOM) | | | LyondellBasell Industries N.V. (LYB) | |
| Archer-Daniels-Midland Company (ADM) | | | Ford Motor Company (F) | | | Marathon Petroleum Corporation (MPC) | |
| Chevron Corporation (CVX) | | | General Motors Company (GM) | | | Schlumberger Limited (SLB) | |
| ConocoPhillips (COP) | | | Halliburton Company (HAL) | | | Valero Energy Corporation (VLO) | |
| DowDuPont Inc. (DWDP) | | | | | | | |
| Refining and Marketing | | | Midstream | | | Chemicals | |
| Delek US Holdings, Inc. (DK) | | | Energy Transfer Equity, L.P. (ETE) | | | Celanese Corporation (CE) | |
| HollyFrontier Corporation (HFC) | | | Enterprise Products Partners L.P. (EPD) | | | The Dow Chemical Company (DOW) | |
| Marathon Petroleum Corporation (MPC) | | | ONEOK, Inc. (OKE) | | | Eastman Chemical Company (EMN) | |
| PBF Energy Inc. (PBF) | | | Targa Resources Corp. (TRGP) | | | Huntsman Corporation (HUN) | |
| Tesoro Corporation (TSO) | | | | | | Westlake Chemical Corporation (WLK) | |
| Valero Energy Corporation (VLO) | | | | | | | |
| Western Refining Inc. (WNR) | | | | | | | |
previously:
SUMMARY COMPENSATION DISCUSSION AND ANALYSISTABLE
wasand Mr. Taylor were the only NEONEOs in 20152017 designated by the Board as requiring increased security under this program. ThisThe program allows for certain additional security measures in specific situations when the senior executive is traveling
.
table.
divestitures.
COMPENSATION DISCUSSION AND ANALYSIS
Personal Use of Company Aircraft
| ||||||
EXECUTIVE LEVEL | ||||||
---|---|---|---|---|---|---|
| | SALARY MULTIPLE | | |||
| Chairman and CEO | | 6 | | ||
| President | | 5 | | ||
| Executive Vice President | | 3-5 | |
RSUs, but not
For 2015 after the Compensation Committee believes it has taken the necessary stepslegislative change, no assurance can be given that any compensation originally intended to qualify payments made undersatisfy the VCIP and awards made under the LTI programs (PSP and RSUs) as performance-based under IRCrequirements for exemption from Section 162(m).
will, in fact, be fully deductible.
The Compensation Committee retains Meridian Compensation Partners, LLC as its independent executive compensation consultant. The Compensation Committee has evaluated whether Meridian's work raised any conflict of interest and determined that no such conflict exists.
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Risk Assessment
planning.
NEOs.
”
COMPENSATION DISCUSSION AND ANALYSIS
Meetings
. Directors.Additionally, the Compensation Committee meets jointly with the Lead Director, who is also a member of the Compensation Committee, at least annually to evaluate the performance of the CEO. In 2015,2017, the Compensation Committee had five regularly scheduled meetings and one additional telephonic meeting. More information regarding the Compensation Committee'sCommittee’s activities at such meetings can be found in the "COMPENSATION DISCUSSION AND ANALYSISCompensation Discussion and Analysis" beginning on page 24.Receives•Regularly consultant, and, when deemed appropriate, independent legal counsel, regularly reviews its responsibilities and governance practices in light of ongoing changes in the legal and regulatory arena and trends in corporate governance. This review is aided by the Company's management and consultants, the Compensation Committee's independent compensation consultant, and, when deemed appropriate, independent legal counselgovernance;•AnnuallyDirectorsDirectors;•AnnuallyCommittee'sCommittee’s actions and seeks ideas to improve its processes and oversightoversight;•RegularlyCompany'sCompany’s executive compensation programs are having the desired effects without encouraging an inappropriate level of riskrisk; and•RegularlyDirectors
statement.
2017.
J. Brian Ferguson, Chairman
| NAME AND POSITION | | | YEAR | | | SALARY(1) ($) | | | BONUS(2) ($) | | | STOCK AWARDS(3) ($) | | | OPTION AWARDS(4) ($) | | | NON-EQUITY INCENTIVE PLAN COMPENSATION(5) ($) | | | CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS(6) ($) | | | ALL OTHER COMPENSATION(7) ($) | | | TOTAL ($) | | |||||||||||||||||||||||||||
| Greg Garland Chairman and CEO | | | | | 2017 | | | | | | 1,666,676 | | | | | | — | | | | | | 8,785,668 | | | | | | 2,951,040 | | | | | | 3,733,354 | | | | | | 6,270,030 | | | | | | 244,128 | | | | | | 23,650,896 | | |
| | | 2016 | | | | | | 1,616,816 | | | | | | — | | | | | | 8,677,840 | | | | | | 2,861,166 | | | | | | 3,751,013 | | | | | | 7,897,187 | | | | | | 251,272 | | | | | | 25,055,294 | | | |||
| | | 2015 | | | | | | 1,549,164 | | | | | | — | | | | | | 8,290,120 | | | | | | 2,763,828 | | | | | | 4,585,525 | | | | | | 5,531,249 | | | | | | 211,253 | | | | | | 22,931,139 | | | |||
| Robert Herman Executive Vice President, Refining | | | | | 2017 | | | | | | 689,568 | | | | | | — | | | | | | 1,701,495 | | | | | | 520,672 | | | | | | 820,586 | | | | | | 208,340 | | | | | | 1,572,730 | | | | | | 5,513,391 | | |
| | | 2016 | | | | | | 661,608 | | | | | | — | | | | | | 1,621,773 | | | | | | 486,432 | | | | | | 815,432 | | | | | | 223,973 | | | | | | 646,450 | | | | | | 4,455,668 | | | |||
| | | 2015 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | |||
| Paula Johnson Executive Vice President, Legal and Government Affairs, General Counsel and Corporate Secretary | | | | | 2017 | | | | | | 742,148 | | | | | | — | | | | | | 1,904,666 | | | | | | 581,728 | | | | | | 1,035,296 | | | | | | 1,125,884 | | | | | | 82,714 | | | | | | 5,472,436 | | |
| | | 2016 | | | | | | 698,976 | | | | | | — | | | | | | 1,847,570 | | | | | | 553,992 | | | | | | 912,164 | | | | | | 939,432 | | | | | | 90,168 | | | | | | 5,042,302 | | | |||
| | | 2015 | | | | | | 640,512 | | | | | | — | | | | | | 1,802,647 | | | | | | 472,884 | | | | | | 1,019,055 | | | | | | 592,646 | | | | | | 71,233 | | | | | | 4,598,977 | | | |||
| Kevin Mitchell Executive Vice President, Finance and CFO | | | | | 2017 | | | | | | 709,456 | | | | | | — | | | | | | 1,597,830 | | | | | | 537,632 | | | | | | 934,708 | | | | | | 124,156 | | | | | | 93,540 | | | | | | 3,997,322 | | |
| | | 2016 | | | | | | 688,448 | | | | | | — | | | | | | 1,732,942 | | | | | | 520,212 | | | | | | 760,735 | | | | | | 100,918 | | | | | | 67,857 | | | | | | 3,871,112 | | | |||
| | | 2015 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | |||
| Tim Taylor President | | | | | 2017 | | | | | | 1,116,808 | | | | | | — | | | | | | 3,863,324 | | | | | | 1,082,048 | | | | | | 1,904,158 | | | | | | 298,946 | | | | | | 197,064 | | | | | | 8,462,348 | | |
| | | 2016 | | | | | | 1,071,376 | | | | | | — | | | | | | 3,729,811 | | | | | | 1,025,223 | | | | | | 1,826,696 | | | | | | 325,493 | | | | | | 169,570 | | | | | | 8,148,169 | | | |||
| | | 2015 | | | | | | 1,004,712 | | | | | | — | | | | | | 3,447,557 | | | | | | 985,332 | | | | | | 2,210,366 | | | | | | 183,866 | | | | | | 133,338 | | | | | | 7,965,171 | | |
NAME AND POSITION | YEAR | SALARY ($)(1) | BONUS ($)(2) | STOCK AWARDS ($)(3) | OPTION AWARDS ($)(4) | NON-EQUITY INCENTIVE PLAN COMPENSATION ($)(5) | CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS ($)(6) | ALL OTHER COMPENSATION ($)(7) | TOTAL ($) | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Greg C. Garland, Chairman | | 2015 | | 1,549,164 | | — | | 8,290,120 | | 2,763,828 | | 4,585,525 | | 5,531,249 | | 211,253 | | 22,931,139 | ||||||||||
and CEO | | 2014 | | 1,510,427 | | — | | 8,732,652 | | 2,393,385 | | 2,658,351 | | 8,984,486 | | 229,132 | | 24,508,433 | ||||||||||
| | 2013 | | 1,441,667 | | — | | 7,276,484 | | 2,658,045 | | 4,108,750 | | 4,045,846 | | 311,413 | | 19,842,205 | ||||||||||
Paula A. Johnson, Executive | 2015 | 640,512 | — | 1,802,647 | 472,884 | 1,019,055 | 592,646 | 71,233 | 4,598,977 | |||||||||||||||||||
Vice President and General | 2014 | 596,676 | — | 1,634,565 | 371,420 | 590,709 | 879,304 | 76,683 | 4,149,357 | |||||||||||||||||||
Counsel | 2013 | 501,105 | — | 1,671,395 | 201,240 | 732,865 | 280,204 | 75,173 | 3,461,982 | |||||||||||||||||||
Greg G. Maxwell, Executive | | 2015 | | 790,512 | | — | | 2,237,846 | | 678,240 | | 1,462,447 | | 112,616 | | 95,704 | | 5,377,365 | ||||||||||
Vice President and CFO | | 2014 | | 714,286 | | — | | 2,206,861 | | 504,070 | | 772,143 | | 308,349 | | 83,743 | | 4,589,452 | ||||||||||
| | 2013 | | 633,546 | | — | | 1,899,948 | | 412,542 | | 1,013,039 | | 74,263 | | 130,368 | | 4,163,706 | ||||||||||
Tim G. Taylor, President | 2015 | 1,004,712 | — | 3,447,557 | 985,332 | 2,210,366 | 183,866 | 133,338 | 7,965,171 | |||||||||||||||||||
2014 | 888,188 | — | 3,451,492 | 570,395 | 1,052,503 | 199,465 | 107,152 | 6,269,195 | ||||||||||||||||||||
2013 | 717,285 | — | 2,130,711 | 538,317 | 1,264,574 | 169,823 | 169,629 | 4,990,339 | ||||||||||||||||||||
Larry M. Ziemba, | | 2015 | | 690,312 | | — | | 1,737,253 | | 527,520 | | 1,031,326 | | 594,011 | | 92,695 | | 4,673,117 | ||||||||||
Executive Vice President, | | 2014 | | 674,396 | | — | | 1,712,742 | | 504,070 | | 671,698 | | 1,110,517 | | 110,040 | | 4,783,463 | ||||||||||
Refining | | 2013 | | 626,768 | | — | | 1,829,619 | | 400,803 | | 1,002,202 | | 246,458 | | 122,450 | | 4,228,300 | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The amounts shown for stock awards reflect awards under our PSP and RSU programs, and any off-cycle awards. No off-cycle awards were granted to our NEOs during 2015. These include awardshas a performance period that are expected to be finalized as late asended in 2017. The amounts shown for awards from the PSP relate totarget award included in 2016 has a performance periodsperiod that beganends in 2013, 2014 and 2015 and2018. The PSP target award included in 2017 has a performance period that endends in 2015, 2016 and 2017, respectively.
2019.
$4,087,219.
| NAME | | | COMPANY CONTRIBUTIONS TO NONQUALIFIED DEFINED CONTRIBUTION PLANS(a) ($) | | | EXECUTIVE GROUP LIFE INSURANCE PREMIUMS(b) ($) | | | EXECUTIVE HEALTH SERVICES(c) ($) | | | FINANCIAL COUNSELING(d) ($) | | | MATCHING CONTRIBUTIONS UNDER THE TAX-QUALIFIED SAVINGS PLAN(e) ($) | | | MATCHING GIFT PROGRAM(f) ($) | | | MISCELLANEOUS PERQUISITES AND TAX PROTECTION(g) ($) | | | PERSONAL USE OF COMPANY AIRCRAFT(h) ($) | |
| Greg Garland | | | 97,767 | | | 13,200 | | | 962 | | | 16,810 | | | 18,900 | | | 15,000 | | | 22,333 | | | 59,156 | |
| Robert Herman | | | 29,370 | | | 3,558 | | | 747 | | | 16,796 | | | 18,900 | | | 1,000 | | | 1,502,359 | | | — | |
| Paula Johnson | | | 33,050 | | | 2,048 | | | — | | | — | | | 18,900 | | | 20,000 | | | 8,716 | | | — | |
| Kevin Mitchell | | | 30,762 | | | 1,958 | | | 847 | | | 16,687 | | | 18,900 | | | 12,000 | | | 12,386 | | | — | |
| Tim Taylor | | | 59,277 | | | 8,845 | | | 1,008 | | | 16,614 | | | 18,900 | | | — | | | 35,762 | | | 56,658 | |
NAME | YEAR | PERSONAL USE OF COMPANY AIRCRAFT ($)(a) | AUTOMOBILE PROVIDED BY COMPANY ($)(b) | HOME SECURITY ($)(c) | EXECUTIVE GROUP LIFE INSURANCE PREMIUMS ($)(d) | MISCELLANEOUS PERQUISITES AND TAX REIMBURSEMENTS ($)(e) | MATCHING GIFT PROGRAM ($)(f) | MATCHING CONTRIBUTIONS UNDER THE TAX-QUALIFIED SAVINGS PLAN ($)(g) | COMPANY CONTRIBUTIONS TO NONQUALIFIED DEFINED CONTRIBUTION PLANS ($)(h) | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mr. Garland | | 2015 | | 23,712 | | 8,279 | | 6,688 | | 7,994 | | 9,664 | | — | | 26,500 | | 128,416 | ||||||||||
Ms. Johnson | 2015 | — | — | — | 1,768 | 331 | 5,083 | 26,500 | 37,551 | |||||||||||||||||||
Mr. Maxwell | | 2015 | | — | | 249 | | — | | 4,079 | | 4,825 | | 7,500 | | 26,500 | | 52,551 | ||||||||||
Mr. Taylor | 2015 | 5,435 | — | — | 7,958 | 5,474 | 14,000 | 26,500 | 73,971 | |||||||||||||||||||
Mr. Ziemba | | 2015 | | — | | — | | — | | 5,468 | | 3,196 | | 15,000 | | 26,500 | | 42,531 | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | ESTIMATED FUTURE PAYOUTS UNDER NON-EQUITY INCENTIVE PLAN AWARDS(2) | | | ESTIMATED FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS(3) | | | ALL OTHER STOCK AWARDS: NUMBER OF SHARES OF STOCK OR UNITS(4) (#) | | | ALL OTHER OPTION AWARDS: NUMBER OF SECURITIES UNDERLYING OPTIONS (#) | | | EXERCISE OR BASE PRICE OF OPTION AWARDS ($/SH) | | | GRANT DATE FAIR VALUE OF STOCK AND OPTION AWARDS(5) ($) | |||||||||||||||||||||||||||||||||||||||||
| NAME | | | GRANT DATE(1) | | | THRESHOLD ($) | | | TARGET ($) | | | MAXIMUM ($) | | | THRESHOLD (#) | | | TARGET (#) | | | MAXIMUM (#) | | |||||||||||||||||||||||||||||||||||||||||||
| Greg Garland | | | | | | | | | | | — | | | | | | 2,666,682 | | | | | | 6,666,705 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — |
| | | 2/7/2017 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 37,584 | | | | | | — | | | | | | — | | | | | | 2,949,404 | |||
| | | 2/7/2017 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 74,371 | | | | | | 148,742 | | | | | | — | | | | | | — | | | | | | — | | | | | | 5,836,264 | |||
| | | 2/7/2017 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 174,000 | | | | | | 78.475 | | | | | | 2,951,040 | |||
| Robert Herman | | | | | | | | | | | — | | | | | | 586,133 | | | | | | 1,465,333 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — |
| | | 2/7/2017 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 7,279 | | | | | | — | | | | | | — | | | | | | 571,220 | |||
| | | 2/7/2017 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 14,403 | | | | | | 28,806 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,130,275 | |||
| | | 2/7/2017 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 30,700 | | | | | | 78.475 | | | | | | 520,672 | |||
| Paula Johnson | | | | | | | | | | | — | | | | | | 667,933 | | | | | | 1,669,833 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — |
| | | 2/7/2017 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 8,148 | | | | | | — | | | | | | — | | | | | | 639,414 | |||
| | | 2/7/2017 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 16,123 | | | | | | 32,246 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,265,252 | |||
| | | 2/7/2017 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 34,300 | | | | | | 78.475 | | | | | | 581,728 | |||
| Kevin Mitchell | | | | | | | | | | | — | | | | | | 603,038 | | | | | | 1,507,595 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — |
| | | 2/7/2017 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,835 | | | | | | — | | | | | | — | | | | | | 536,377 | |||
| | | 2/7/2017 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 13,526 | | | | | | 27,052 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,061,453 | |||
| | | 2/7/2017 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 31,700 | | | | | | 78.475 | | | | | | 537,632 | |||
| Tim Taylor | | | | | | | | | | | — | | | | | | 1,228,489 | | | | | | 3,071,223 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — |
| | | 2/7/2017 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 16,527 | | | | | | — | | | | | | — | | | | | | 1,296,956 | |||
| | | 2/7/2017 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 32,703 | | | | | | 65,406 | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,566,368 | |||
| | | 2/7/2017 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 63,800 | | | | | | 78.475 | | | | | | 1,082,048 |
| | | | | | | | ALL OTHER STOCK AWARDS: NUMBER OF SHARES OF STOCK OR UNITS (#) | ALL OTHER OPTION AWARDS: NUMBER OF SECURITIES UNDERLYING OPTIONS (#) | | GRANT DATE FAIR VALUE OF STOCK AND OPTION AWARDS ($)(4) | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | ESTIMATED FUTURE PAYOUTS UNDER NON-EQUITY INCENTIVE PLAN AWARDS(2) | ESTIMATED FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS(3) | EXERCISE OR BASE PRICE OF OPTION AWARDS ($/SH) | ||||||||||||||||||||||||||||||
NAME | GRANT DATE(1) | THRESHOLD ($) | TARGET ($) | MAXIMUM ($) | THRESHOLD (#) | TARGET (#) | MAXIMUM (#) | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mr. Garland | | | | — | | 2,478,662 | | 6,196,655 | | — | | — | | — | | — | | — | | — | | — | ||||||||||||
| | 2/3/2015 | | — | | — | | — | | — | | — | | — | | 37,275 | | — | | — | | 2,763,382 | ||||||||||||
| | 2/3/2015 | | — | | — | | — | | — | | 83,303 | | 166,606 | | — | | — | | — | | 5,526,738 | ||||||||||||
| | 2/3/2015 | | — | | — | | — | | — | | — | | — | | — | | 146,700 | | 74.135 | | 2,763,828 | ||||||||||||
Ms. Johnson | — | 550,840 | 1,377,100 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
2/3/2015 | — | — | — | — | — | — | 7,015 | — | — | 520,057 | ||||||||||||||||||||||||
2/3/2015 | — | — | — | — | 15,676 | 31,352 | — | — | — | 1,040,024 | ||||||||||||||||||||||||
7/1/2015 | — | — | — | — | 3,722 | 7,444 | — | — | — | 242,566 | ||||||||||||||||||||||||
2/3/2015 | — | — | — | — | — | — | — | 25,100 | 74.135 | 472,884 | ||||||||||||||||||||||||
Mr. Maxwell | | | | — | | 790,512 | | 1,976,280 | | — | | — | | — | | — | | — | | — | | — | ||||||||||||
| | 2/3/2015 | | — | | — | | — | | — | | — | | — | | 10,062 | | — | | — | | 745,946 | ||||||||||||
| | 2/3/2015 | | — | | — | | — | | — | | 22,487 | | 44,974 | | — | | — | | — | | 1,491,900 | ||||||||||||
| | 2/3/2015 | | — | | — | | — | | — | | — | | — | | — | | 36,000 | | 74.135 | | 678,240 | ||||||||||||
Mr. Taylor | — | 1,105,183 | 2,762,958 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
2/3/2015 | — | — | — | — | — | — | 15,944 | — | — | 1,182,008 | ||||||||||||||||||||||||
2/3/2015 | — | — | — | — | 34,148 | 68,296 | — | — | — | 2,265,549 | ||||||||||||||||||||||||
2/3/2015 | — | — | — | — | — | — | — | 52,300 | 74.135 | 985,332 | ||||||||||||||||||||||||
Mr. Ziemba | | | | — | | 572,959 | | 1,432,398 | | — | | — | | — | | — | | — | | — | | — | ||||||||||||
| | 2/3/2015 | | — | | — | | — | | — | | — | | — | | 7,811 | | — | | — | | 579,068 | ||||||||||||
| | 2/3/2015 | | — | | — | | — | | — | | 17,457 | | 34,914 | | — | | — | | — | | 1,158,185 | ||||||||||||
| | 2/3/2015 | | — | | — | | — | | — | | — | | — | | — | | 28,000 | | 74.135 | | 527,520 | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2017.
RSUs.
| | | | | | | | | | OPTION AWARDS(1) | | | STOCK AWARDS | |||||||||||||||||||||||||||||||||||||||||
| NAME | | | GRANT DATE(2) | | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS EXERCISABLE(3) (#) | | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS UNEXERCISABLE (#) | | | OPTION EXERCISE PRICE ($) | | | OPTION EXPIRATION DATE | | | NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED(4) (#) | | | MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED ($) | | | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED(5) (#) | | | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED ($) | ||||||||||||||||||||||||||
| Greg Garland | | | | | 2/9/2012 | | | | | | 42,728 | | | | | | — | | | | | | 32.030 | | | | | | 2/9/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — |
| | | 2/7/2013 | | | | | | 158,500 | | | | | | — | | | | | | 62.170 | | | | | | 2/7/2023 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | |||
| | | 2/6/2014 | | | | | | 126,300 | | | | | | — | | | | | | 72.255 | | | | | | 2/6/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | |||
| | | 2/3/2015 | | | | | | 97,800 | | | | | | 48,900 | | | | | | 74.135 | | | | | | 2/3/2025 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | |||
| | | 2/2/2016 | | | | | | 56,466 | | | | | | 112,934 | | | | | | 78.620 | | | | | | 2/2/2026 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | |||
| | | 2/7/2017 | | | | | | — | | | | | | 174,000 | | | | | | 78.475 | | | | | | 2/7/2027 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | |||
| | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 589,087 | | | | | | 59,586,150 | | | | | | 148,369 | | | | | | 15,007,524 | |||
| Robert Herman | | | | | 2/9/2012 | | | | | | 47,433 | | | | | | — | | | | | | 32.030 | | | | | | 2/9/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — |
| | | 2/7/2013 | | | | | | 12,300 | | | | | | — | | | | | | 62.170 | | | | | | 2/7/2023 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | |||
| | | 2/6/2014 | | | | | | 11,400 | | | | | | — | | | | | | 72.255 | | | | | | 2/6/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | |||
| | | 2/3/2015 | | | | | | 15,666 | | | | | | 7,834 | | | | | | 74.135 | | | | | | 2/3/2025 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | |||
| | | 2/2/2016 | | | | | | 9,600 | | | | | | 19,200 | | | | | | 78.620 | | | | | | 2/2/2026 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | |||
| | | 2/7/2017 | | | | | | — | | | | | | 30,700 | | | | | | 78.475 | | | | | | 2/7/2027 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | |||
| | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 74,420 | | | | | | 7,527,583 | | | | | | 28,232 | | | | | | 2,855,667 | |||
| Paula Johnson | | | | | 2/7/2013 | | | | | | 12,000 | | | | | | — | | | | | | 62.170 | | | | | | 2/7/2023 | | | | | | — | | | | | | — | | | | | | — | | | | | | — |
| | | 2/6/2014 | | | | | | 19,600 | | | | | | — | | | | | | 72.255 | | | | | | 2/6/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | |||
| | | 2/3/2015 | | | | | | 16,733 | | | | | | 8,367 | | | | | | 74.135 | | | | | | 2/3/2025 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | |||
| | | 2/2/2016 | | | | | | 10,933 | | | | | | 21,867 | | | | | | 78.620 | | | | | | 2/2/2026 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | |||
| | | 2/7/2017 | | | | | | — | | | | | | 34,300 | | | | | | 78.475 | | | | | | 2/7/2027 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | |||
| | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 77,663 | | | | | | 7,855,612 | | | | | | 31,878 | | | | | | 3,224,460 | |||
| Kevin Mitchell | | | | | 2/3/2015 | | | | | | 6,600 | | | | | | 3,300 | | | | | | 74.135 | | | | | | 2/3/2025 | | | | | | — | | | | | | — | | | | | | — | | | | | | — |
| | | 2/2/2016 | | | | | | 10,266 | | | | | | 20,534 | | | | | | 78.620 | | | | | | 2/2/2026 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | |||
| | | 2/7/2017 | | | | | | — | | | | | | 31,700 | | | | | | 78.475 | | | | | | 2/7/2027 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | |||
| | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 16,604 | | | | | | 1,679,495 | | | | | | 28,303 | | | | | | 2,862,848 | |||
| Tim Taylor | | | | | 2/7/2013 | | | | | | 32,100 | | | | | | — | | | | | | 62.170 | | | | | | 2/7/2023 | | | | | | — | | | | | | — | | | | | | — | | | | | | — |
| | | 2/6/2014 | | | | | | 30,100 | | | | | | — | | | | | | 72.255 | | | | | | 2/6/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | |||
| | | 2/3/2015 | | | | | | 34,866 | | | | | | 17,434 | | | | | | 74.135 | | | | | | 2/3/2025 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | |||
| | | 2/2/2016 | | | | | | 20,233 | | | | | | 40,467 | | | | | | 78.620 | | | | | | 2/2/2026 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | |||
| | | 2/7/2017 | | | | | | — | | | | | | 63,800 | | | | | | 78.475 | | | | | | 2/7/2027 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | |||
| | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 164,115 | | | | | | 16,600,232 | | | | | | 64,508 | | | | | | 6,524,984 |
| | OPTION AWARDS(1) | STOCK AWARDS | |||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
NAME | GRANT DATE(2) | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE(3) | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE | OPTION EXERCISE PRICE ($) | OPTION EXPIRATION DATE | NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#)(7) | MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED ($) | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (#)(8) | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED ($) | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mr. Garland | | 2/10/2011 | | 12,165 | | — | | 31.250 | | 2/10/2021 | | — | | — | | — | | — | ||||||||||
| | 2/9/2012 | | 169,228 | | — | | 32.030 | | 2/9/2022 | | — | | — | | — | | — | ||||||||||
| | 2/7/2013 | | 105,666 | | 52,834 | (4) | | 62.170 | | 2/7/2023 | | — | | — | | — | | — | |||||||||
| | 2/6/2014 | | 42,100 | | 84,200 | (5) | | 72.255 | | 2/6/2024 | | — | | — | | — | | — | |||||||||
| | 2/3/2015 | | — | | 146,700 | (6) | | 74.135 | | 2/3/2025 | | — | | — | | — | | — | |||||||||
| | — | | — | | — | | — | | — | | 791,372 | | 64,734,230 | | 340,474 | | 27,850,773 | ||||||||||
Ms. Johnson | 2/10/2011 | 16,735 | — | 31.250 | 2/10/2021 | — | — | — | — | |||||||||||||||||||
2/9/2012 | 23,406 | — | 32.030 | 2/9/2022 | — | — | — | — | ||||||||||||||||||||
2/7/2013 | 8,000 | 4,000 | (4) | 62.170 | 2/7/2023 | — | — | — | — | |||||||||||||||||||
2/6/2014 | 6,533 | 13,067 | (5) | 72.255 | 2/6/2024 | — | — | — | — | |||||||||||||||||||
2/3/2015 | — | 25,100 | (6) | 74.135 | 2/3/2025 | — | — | — | — | |||||||||||||||||||
— | — | — | — | — | 106,216 | 8,688,469 | 66,898 | 5,472,256 | ||||||||||||||||||||
Mr. Maxwell | | 2/9/2012 | | 35,419 | | — | | 32.030 | | 2/9/2022 | | — | | — | | — | | — | ||||||||||
| | 2/7/2013 | | 16,400 | | 8,200 | (4) | | 62.170 | | 2/7/2023 | | — | | — | | — | | — | |||||||||
| | 2/6/2014 | | 8,866 | | 17,734 | (5) | | 72.255 | | 2/6/2024 | | — | | — | | — | | — | |||||||||
| | 2/3/2015 | | — | | 36,000 | (6) | | 74.135 | | 2/3/2025 | | — | | — | | — | | — | |||||||||
| | — | | — | | — | | — | | — | | 143,936 | | 11,773,965 | | 77,358 | | 6,327,884 | ||||||||||
Mr. Taylor | 2/9/2012 | 77,260 | — | 32.030 | 2/9/2022 | — | — | — | — | |||||||||||||||||||
2/7/2013 | 21,400 | 10,700 | (4) | 62.170 | 2/7/2023 | — | — | — | — | |||||||||||||||||||
2/6/2014 | 10,033 | 20,067 | (5) | 72.255 | 2/6/2024 | — | — | — | — | |||||||||||||||||||
2/3/2015 | — | 52,300 | (6) | 74.135 | 2/3/2025 | — | — | — | — | |||||||||||||||||||
— | — | — | — | — | 209,688 | 17,152,478 | 128,094 | 10,478,089 | ||||||||||||||||||||
Mr. Ziemba | | 2/10/2011 | | 72,630 | | — | | 31.250 | | 2/10/2021 | | — | | — | | — | | — | ||||||||||
| | 2/9/2012 | | 101,909 | | — | | 32.030 | | 2/9/2022 | | — | | — | | — | | — | ||||||||||
| | 2/7/2013 | | 15,933 | | 7,967 | (4) | | 62.170 | | 2/7/2023 | | — | | — | | — | | — | |||||||||
| | 2/6/2014 | | 8,866 | | 17,734 | (5) | | 72.255 | | 2/6/2024 | | — | | — | | — | | — | |||||||||
| | 2/3/2015 | | — | | 28,000 | (6) | | 74.135 | | 2/3/2025 | | — | | — | | — | | — | |||||||||
| | — | | — | | — | | — | | — | | 205,711 | | 16,827,160 | | 67,298 | | 5,504,976 | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EXECUTIVE COMPENSATION TABLES
2017 Mr. Garland Ms. Johnson Mr. Maxwell Mr. Taylor Mr. Ziemba20152015:2017: OPTION AWARDS STOCK AWARDS NAME NUMBER OF
SHARES
ACQUIRED ON
EXERCISE
(#) VALUE REALIZED
ON EXERCISE
($) NUMBER OF
SHARES
ACQUIRED ON
VESTING
(#) VALUE REALIZED
ON VESTING
($) — — 24,808 1,977,818 — — 4,181 318,677 — — 4,165 331,864 — — 2,452 195,486 74,467 5,256,366 — — 44 2016 PROXY STATEMENT OPTION AWARDS NAME
ACQUIRED ON EXERCISE
(#)
UPON EXERCISE
($)
ACQUIRED ON VESTING
(#)
UPON VESTING
($) Greg Garland — — 168,612 15,397,642 Robert Herman — — 33,029 2,973,062 Paula Johnson — — 31,245 2,910,325 Kevin Mitchell — — 60,844 5,338,637 Tim Taylor — — 53,299 5,064,448
2017
| | | | TITLE I | | | TITLE II(1) | | | TITLE IV | | |||
| Current Eligibility | | | |||||||||||
Mr. Garland | | | Mr. | | | Ms. Johnson | | |||||||
| Normal Retirement | | | Age 65 | | | Age 65 | | | Age 65 | | |||
| Early Retirement(2) | | | Age 55 with five years of service or if laid off during or after the year in which the participant reaches age 50 | | | Executives may receive their vested benefit upon termination of employment at any age | | | Age 50 with ten years of service | | |||
| Benefit Calculation | | | Calculated as the product of 1.6 percent times years of credited service multiplied by the final average eligible earnings | | | Based on monthly pay and interest credits to a nominal cash balance account created on the first day of the month after an | | | Calculated as the product of 1.6 percent times years of credited service multiplied by the final average eligible earnings | | |||
| Final Average Earnings Calculation | | | Calculated using the three highest consecutive compensation years in the last ten calendar years before retirement plus the year of retirement | | | N/A | | | Calculated using the higher of the highest three years of compensation or the highest consecutive 36 months of compensation | | |||
| Eligible Pension Compensation | | | Includes salary and annual bonus | | | Includes salary and annual bonus | | | Includes salary and annual bonus | | |||
| Benefit Vesting | | | All participants are vested in this title | | | Employees vest after three years of service | | | All participants are vested in this title | | |||
| Payment Types | | | Allows payments in the form of several annuity types or a single lump sum | ||||||||||
| IRS limitations | | | Benefits under all Titles are limited by the | ||||||||||
|
Interest credits are applied to the cash balance account each month. This credit is calculated by multiplying the value of the account by the interest credit rate, based on 30-year U.S. Treasury security rates adjusted quarterly.
EXECUTIVE COMPENSATION TABLES
The following table provides information on nonqualified deferred compensation as of December 31, 2015:
| NAME | | | APPLICABLE PLAN(1) | | | BEGINNING BALANCE ($) | | | EXECUTIVE CONTRIBUTIONS IN LAST FISCAL YEAR ($) | | | COMPANY CONTRIBUTIONS IN THE LAST FISCAL YEAR(2) ($) | | | AGGREGATE EARNINGS IN LAST FISCAL YEAR(3) ($) | | | AGGREGATE WITHDRAWALS/ DISTRIBUTIONS ($) | | | AGGREGATE BALANCE AT LAST FISCAL YEAR END(4) ($) | |||||||||||||||||
| Greg Garland | | | Phillips 66 Defined Contribution Make-Up Plan | | | | | 993,005 | | | | | | — | | | | | | 97,767 | | | | | | 170,517 | | | | | | — | | | | | | 1,261,289 |
| | | | Phillips 66 Key Employee Deferred Compensation Plan | | | | | 1,102,782 | | | | | | — | | | | | | — | | | | | | 132,417 | | | | | | — | | | | | | 1,235,199 |
| Robert Herman | | | Phillips 66 Defined Contribution Make-Up Plan | | | | | 310,148 | | | | | | — | | | | | | 29,370 | | | | | | 55,330 | | | | | | — | | | | | | 394,848 |
| | | | Phillips 66 Key Employee Deferred Compensation Plan | | | | | 1,789,519 | | | | | | — | | | | | | — | | | | | | 330,195 | | | | | | — | | | | | | 2,119,714 |
| Paula Johnson | | | Phillips 66 Defined Contribution Make-Up Plan | | | | | 193,359 | | | | | | — | | | | | | 33,050 | | | | | | 36,523 | | | | | | — | | | | | | 262,932 |
| | | | Phillips 66 Key Employee Deferred Compensation Plan | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — |
| Kevin Mitchell | | | Phillips 66 Defined Contribution Make-Up Plan | | | | | 50,139 | | | | | | — | | | | | | 30,762 | | | | | | 9,428 | | | | | | — | | | | | | 90,329 |
| | | | Phillips 66 Key Employee Deferred Compensation Plan | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — |
| Tim Taylor | | | Phillips 66 Defined Contribution Make-Up Plan | | | | | 475,232 | | | | | | — | | | | | | 59,277 | | | | | | 66,467 | | | | | | — | | | | | | 600,976 |
| | | | Phillips 66 Key Employee Deferred Compensation Plan | | | | | 1,845,271 | | | | | | — | | | | | | — | | | | | | 226,966 | | | | | | — | | | | | | 2,072,237 |
NAME | APPLICABLE PLAN(1) | BEGINNING BALANCE ($) | EXECUTIVE CONTRIBUTIONS IN LAST FISCAL YEAR ($) | COMPANY CONTRIBUTIONS IN THE LAST FISCAL YEAR ($)(2) | AGGREGATE EARNINGS IN LAST FISCAL YEAR ($)(3) | AGGREGATE WITHDRAWALS/ DISTRIBUTIONS ($) | AGGREGATE BALANCE AT LAST FISCAL YEAR END ($)(4) | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | |
Mr. Garland | Phillips 66 Defined Contribution Make-Up Plan | | 675,010 | — | 128,416 | 24,906 | — | 828,332 | |||||||
| Phillips 66 Key Employee Deferred Compensation Plan | | 1,138,685 | — | — | (105,411) | — | 1,033,274 | |||||||
Ms. Johnson | Phillips 66 Defined Contribution Make-Up Plan | 107,048 | — | 37,551 | 4,409 | — | 149,008 | ||||||||
Phillips 66 Key Employee Deferred Compensation Plan | — | — | — | — | — | — | |||||||||
Mr. Maxwell | Phillips 66 Defined Contribution Make-Up Plan | | 153,194 | — | 52,551 | 9,765 | — | 215,510 | |||||||
| Phillips 66 Key Employee Deferred Compensation Plan | | 511,916 | — | — | (10,498) | — | 501,418 | |||||||
Mr. Taylor | Phillips 66 Defined Contribution Make-Up Plan | 311,459 | — | 73,971 | 6,758 | — | 392,188 | ||||||||
Phillips 66 Key Employee Deferred Compensation Plan | 1,694,316 | — | — | 12,153 | — | 1,706,469 | |||||||||
Mr. Ziemba | Phillips 66 Defined Contribution Make-Up Plan | | 568,904 | — | 42,531 | (10,486) | — | 600,949 | |||||||
| Phillips 66 Key Employee Deferred Compensation Plan | | 894,773 | — | — | 18,186 | — | 912,959 | |||||||
| | | | | | | | | | | | | | | |
The tables at the end of this section summarize the potential value, as of December 31, 2015, of the incremental benefits to be received by each NEO due to an involuntary termination without cause or a change in control event as of December 31, 2015.
Although normal retirement age under our benefit plans is 65, early retirement provisions allow receipt of benefits at earlier ages if vesting requirements are met. For our incentive compensation programs (VCIP, RSU, Stock Options, and PSP), early retirement is generally defined as termination at or after the age of 55 with five years of service.
EXECUTIVE COMPENSATION TABLES
Mr. Garland, Mr. Herman, or Mr. Taylor, would have been treated as a retirement. Because the NEOs other than Ms. Johnson were then eligible for retirement, under these programs, theyand each would have been able to resign and retainretained all awards earned under the current PSP and earlier programs. As a result, thesuch, awards to them under these programs are not included in the incremental amounts reflected in the tablestable below. Please see the "OUTSTANDING EQUITY AWARDS AT FISCAL YEAR ENDOutstanding Equity Awards at Fiscal Year End" table on page 43 for more information. Our compensation programs provide for the following upon retirement:
In addition, Cash payments include VCIP earned during the fiscal year, amounts contributed and vested under our NEOs participatedefined contribution plans, and amounts accrued and vested under our pension plans.
common:
Amounts payable under the ESP are offset by any payments or benefits payable under any of our other plans, and may also be reduced in the event of willful and bad faith conduct demonstrably injurious to the Company. As described above, the ESP and CICSP are Company plans under which awards and payments are subject to clawback provisions and to forfeiture or recoupment, in whole or in part, under applicable law, including the Sarbanes-Oxley Act and the Dodd-Frank Act.
year.
After a change in control, the CICSP may not be amended or terminated if doing so would be adverse to the interestsall equity awards and lapsing of any eligible participant without the participant's written consent. Amounts payable under the CICSP are offset by anyrestrictions.
Certain assumptions have been made in preparing each of the tables below. Benefits that would be available generallypayable to alleach NEO upon separation as a result of disability or substantially all salaried employees on the U.S. payrollto each NEO’s estate as a result of death are not included in the amounts shown. The following assumptions were also made:
| | | INVOLUNTARY NOT-FOR-CAUSE TERMINATION (NOT CIC) ($) | | | INVOLUNTARY OR GOOD REASON TERMINATION (CIC) ($) | | | DEATH ($) | | | DISABILITY ($) | | |
| Greg Garland | | | | | | | | | | | | | |
| Severance Payment | | | 11,693,852 | | | 21,993,568 | | | — | | | — | |
| Accelerated Equity(1) | | | — | | | — | | | — | | | — | |
| Life Insurance | | | — | | | — | | | 3,350,016 | | | — | |
| TOTAL | | | 11,693,852 | | | 21,993,568 | | | 3,350,016 | | | — | |
| Robert Herman | | | | | | | | | | | | | |
| Severance Payment | | | 2,824,345 | | | 5,107,043 | | | — | | | — | |
| Accelerated Equity(1) | | | — | | | — | | | — | | | — | |
| Life Insurance | | | — | | | — | | | 1,386,960 | | | — | |
| TOTAL | | | 2,824,345 | | | 5,107,043 | | | 1,386,960 | | | — | |
| Paula Johnson | | | | | | | | | | | | | |
| Severance Payment | | | 4,035,516 | | | 7,007,389 | | | — | | | — | |
| Accelerated Equity(1) | | | 13,224,509 | | | 13,224,509 | | | 13,224,509 | | | 13,224,509 | |
| Life Insurance | | | — | | | — | | | 1,499,328 | | | — | |
| TOTAL | | | 17,260,025 | | | 20,231,898 | | | 14,723,837 | | | 13,224,509 | |
| Kevin Mitchell | | | | | | | | | | | | | |
| Severance Payment | | | 2,933,182 | | | 4,399,774 | | | — | | | — | |
| Accelerated Equity(1) | | | 5,920,091 | | | 5,920,091 | | | 5,920,091 | | | 5,920,091 | |
| Life Insurance | | | — | | | — | | | 1,425,840 | | | — | |
| TOTAL | | | 8,853,273 | | | 10,319,865 | | | 7,345,931 | | | 5,920,091 | |
| Tim Taylor | | | | | | | | | | | | | |
| Severance Payment | | | 5,173,256 | | | 10,106,224 | | | — | | | — | |
| Accelerated Equity(1) | | | — | | | — | | | — | | | — | |
| Life Insurance | | | — | | | — | | | 2,248,032 | | | — | |
| TOTAL | | | 5,173,256 | | | 10,106,224 | | | 2,248,032 | | | — | |
EXECUTIVE COMPENSATION TABLES
shown at target payout levels. For the PSP awards, Restricted Stock and RSUs,These amounts reflect the closing price of our common stock, as reported on the NYSE, on December 31, 201529, 2017 ($81.80)101.15).
Mr. Garland
EXECUTIVE BENEFITS AND PAYMENTS UPON TERMINATION | INVOLUNTARY NOT-FOR-CAUSE TERMINATION (NOT CIC) ($) | INVOLUNTARY OR GOOD REASON TERMINATION (CIC) ($) | DEATH ($) | DISABILITY ($) | ||||
---|---|---|---|---|---|---|---|---|
| | | | | | | | |
Base Salary | 3,151,632 | 4,727,448 | — | — | ||||
Short-term Incentive | 5,042,612 | 10,150,652 | — | — | ||||
2013-2015 (performance period) | — | — | — | — | ||||
2014-2016 (performance period) | — | — | — | — | ||||
2015-2017 (performance period) | — | — | — | — | ||||
Restricted Stock/Units from prior performance | — | — | — | — | ||||
Stock Options/SARs: | ||||||||
Unvested and Accelerated | — | — | — | — | ||||
Incremental Pension | 5,076,655 | 6,229,676 | — | — | ||||
Post-employment Health & Welfare | 43,280 | 64,920 | — | — | ||||
Life Insurance | — | — | 3,151,632 | — | ||||
| | | | | | | | |
| 13,314,179 | 21,172,696 | 3,151,632 | — | ||||
| | | | | | | | |
Ms. Johnson
EXECUTIVE BENEFITS AND PAYMENTS UPON TERMINATION | INVOLUNTARY NOT-FOR-CAUSE TERMINATION (NOT CIC) ($) | INVOLUNTARY OR GOOD REASON TERMINATION (CIC) ($) | DEATH ($) | DISABILITY ($) | ||||
---|---|---|---|---|---|---|---|---|
| | | | | | | | |
Base Salary | 1,342,032 | 2,013,048 | — | — | ||||
Short-term Incentive | 1,194,408 | 1,985,361 | — | — | ||||
2013-2015 (performance period) | 2,378,884 | 2,378,884 | 2,378,884 | 2,378,884 | ||||
2014-2016 (performance period) | 865,771 | 865,771 | 865,771 | 865,771 | ||||
2015-2017 (performance period) | 538,326 | 538,326 | 538,326 | 538,326 | ||||
Restricted Stock/Units from prior performance | 6,213,364 | 6,213,364 | 6,213,364 | 6,213,364 | ||||
Stock Options/SARs: | ||||||||
Unvested and Accelerated | 379,603 | 395,636 | 395,636 | 395,636 | ||||
Incremental Pension | 2,324,070 | 2,647,479 | — | — | ||||
Post-employment Health & Welfare | 14,617 | 21,926 | — | — | ||||
Life Insurance | — | — | 1,342,032 | — | ||||
| | | | | | | | |
| 15,251,075 | 17,059,795 | 11,734,013 | 10,391,981 | ||||
| | | | | | | | |
EXECUTIVE COMPENSATION TABLES
Mr. Maxwell
EXECUTIVE BENEFITS AND PAYMENTS UPON TERMINATION | INVOLUNTARY NOT-FOR-CAUSE TERMINATION (NOT CIC) ($) | INVOLUNTARY OR GOOD REASON TERMINATION (CIC) ($) | DEATH ($) | DISABILITY ($) | ||||
---|---|---|---|---|---|---|---|---|
| | | | | | | | |
Base Salary | 1,612,032 | 2,418,048 | — | — | ||||
Short-term Incentive | 1,612,032 | 2,677,773 | — | — | ||||
2013-2015 (performance period) | — | — | — | — | ||||
2014-2016 (performance period) | — | — | — | — | ||||
2015-2017 (performance period) | — | — | — | — | ||||
Restricted Stock/Units from prior performance | — | — | — | — | ||||
Stock Options/SARs: | ||||||||
Unvested and Accelerated | — | — | — | — | ||||
Incremental Pension | 206,905 | 279,446 | — | — | ||||
Post-employment Health & Welfare | 32,195 | 48,293 | — | — | ||||
Life Insurance | — | — | 1,612,032 | — | ||||
| | | | | | | | |
| 3,463,164 | 5,423,560 | 1,612,032 | — | ||||
| | | | | | | | |
Mr. Taylor
EXECUTIVE BENEFITS AND PAYMENTS UPON TERMINATION | INVOLUNTARY NOT-FOR-CAUSE TERMINATION (NOT CIC) ($) | INVOLUNTARY OR GOOD REASON TERMINATION (CIC) ($) | DEATH ($) | DISABILITY ($) | ||||
---|---|---|---|---|---|---|---|---|
| | | | | | | | |
Base Salary | 2,048,832 | 3,073,248 | — | — | ||||
Short-term Incentive | 2,253,716 | 3,475,616 | — | — | ||||
2013-2015 (performance period) | — | — | — | — | ||||
2014-2016 (performance period) | — | — | — | — | ||||
2015-2017 (performance period) | — | — | — | — | ||||
Restricted Stock/Units from prior performance and inducement | — | — | — | — | ||||
Stock Options/SARs: | ||||||||
Unvested and Accelerated | — | — | — | |||||
Incremental Pension | 184,395 | 276,592 | — | — | ||||
Post-employment Health & Welfare | 46,453 | 69,680 | — | — | ||||
Life Insurance | — | — | 2,048,832 | — | ||||
| | | | | | | | |
| 4,533,396 | 6,895,136 | 2,048,832 | — | ||||
| | | | | | | | |
Mr. Ziemba
EXECUTIVE BENEFITS AND PAYMENTS UPON TERMINATION | INVOLUNTARY NOT-FOR-CAUSE TERMINATION (NOT CIC) ($) | INVOLUNTARY OR GOOD REASON TERMINATION (CIC) ($) | DEATH ($) | DISABILITY ($) | ||||
---|---|---|---|---|---|---|---|---|
| | | | | | | | |
Base Salary | 1,402,704 | 2,104,056 | — | — | ||||
Short-term Incentive | 1,164,244 | 2,510,850 | — | — | ||||
2013-2015 (performance period) | — | — | — | — | ||||
2014-2016 (performance period) | — | — | — | — | ||||
2015-2017 (performance period) | — | — | — | — | ||||
Restricted Stock/Units from prior performance | — | — | — | — | ||||
Stock Options/SARs: | ||||||||
Unvested and Accelerated | — | — | — | |||||
Incremental Pension | 269,656 | 419,727 | — | — | ||||
Post-employment Health & Welfare | 46,086 | 69,128 | — | — | ||||
Life Insurance | — | — | 1,402,704 | — | ||||
| | | | | | | | |
| 2,882,690 | 5,103,761 | 1,402,704 | — | ||||
| | | | | | | | |
NON-EMPLOYEE DIRECTOR COMPENSATION
directors.
| | | | LEAD / CHAIR | | | MEMBER | |
| Lead Director | | | $50,000 | | | N/A | |
| Audit and Finance Committee | | | $25,000 | | | $10,000 | |
| Human Resources and Compensation Committee | | | $25,000 | | | $10,000 | |
| All Other Committees | | | $10,000 | | | N/A | |
| LEAD / CHAIR | MEMBER | |||||
---|---|---|---|---|---|---|---|
| | | | | | | |
Lead Director | | $50,000 | | N/A | |||
Audit and Finance Committee | $25,000 | $10,000 | |||||
Human Resources and Compensation Committee | | $20,000 | | $7,500 | |||
All Other Committees | $10,000 | N/A | |||||
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The total annual cash compensation is payable in monthly cash installments. Directors may elect, on an annual basis, to receive all or part of their cash compensation in unrestricted stock or in RSUs (such unrestricted stock or RSUs are issued on the last business day of the month valued using the average of the high and low prices of Phillips 66 common stock as reported on the NYSE on such date), or to have the amount credited to the Director'sdirector’s deferred compensation account as described below. The RSUs issued in lieu of cash compensation are subject to the same restrictions as the annual RSUs described above under "Equity Compensation.Compensation"
Program Changes for 2016
The Nominating Committee annually evaluates the non-employee Director compensation program. Taking into account that no changes had been made to the program since our spin-off in 2012 and studying the director compensation at our peers and across market indices, the Nominating Committee recommended, and the Board approved, an increase in non-employee Director compensation beginning January 1, 2016. The annual equity grant was increased to $200,000 and the cash compensation was increased to $125,000. Further, the additional cash compensation for committee or leadership service was revised as set forth below:
| LEAD / CHAIR | MEMBER | |||||
---|---|---|---|---|---|---|---|
| | | | | | | |
Lead Director | | $50,000 | | N/A | |||
Audit and Finance Committee | $25,000 | $10,000 | |||||
Human Resources and Compensation Committee | | $25,000 | | $10,000 | |||
All Other Committees | $10,000 | N/A | |||||
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Deferral of Compensation
NON-EMPLOYEE DIRECTOR COMPENSATION
funds and similar investment choices (including Phillips 66 common stock) selected by the Directordirector from a list of investment choices available under the Director Deferral Plan.
Directors'
.
.
Directors are
| NAME | | | FEES EARNED OR PAID IN CASH(1) ($) | | | STOCK AWARDS(2) ($) | | | OPTION AWARDS ($) | | | NON-EQUITY INCENTIVE PLAN COMPENSATION ($) | | | CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS ($) | | | ALL OTHER COMPENSATION(3) ($) | | | TOTAL ($) | |
| Gary K. Adams | | | 135,000 | | | 200,001 | | | — | | | — | | | — | | | 1,146 | | | 336,147 | |
| J. Brian Ferguson | | | 150,000 | | | 200,001 | | | — | | | — | | | — | | | 343 | | | 350,344 | |
| William R. Loomis, Jr. | | | 145,000 | | | 200,001 | | | — | | | — | | | — | | | 20,412 | | | 365,413 | |
| John E. Lowe | | | 145,000 | | | 200,001 | | | — | | | — | | | — | | | 15,095 | | | 360,096 | |
| Harold W. McGraw III | | | 135,000 | | | 200,001 | | | — | | | — | | | — | | | 353 | | | 335,354 | |
| Denise L. Ramos | | | 135,000 | | | 200,001 | | | — | | | — | | | — | | | 8,039 | | | 343,040 | |
| Glenn F. Tilton | | | 185,000 | | | 200,001 | | | — | | | — | | | — | | | 22,940 | | | 407,941 | |
| Victoria J. Tschinkel | | | 135,000 | | | 200,001 | | | — | | | — | | | — | | | 22,702 | | | 357,703 | |
| Marna C. Whittington | | | 150,000 | | | 200,001 | | | — | | | — | | | — | | | 22,372 | | | 372,373 | |
NAME | FEES EARNED OR PAID IN CASH ($)(1) | STOCK AWARDS ($)(2) | OPTION AWARDS ($) | NON-EQUITY INCENTIVE PLAN COMPENSATION ($) | CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS ($) | ALL OTHER COMPENSATION ($)(3) | TOTAL ($) | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | | | | | | |
J. Brian Ferguson | | 135,000 | | 170,010 | | — | | — | | — | | 2,777 | | 307,787 | ||||||||
William R. Loomis, Jr. | 140,000 | 170,010 | — | — | — | 33,342 | 343,352 | |||||||||||||||
John E. Lowe | | 120,000 | | 170,010 | | — | | — | | — | | 10,400 | | 300,410 | ||||||||
Harold W. McGraw III | 182,500 | 170,010 | — | — | — | 356 | 352,866 | |||||||||||||||
Glenn F. Tilton | | 122,500 | | 170,010 | | — | | — | | — | | 16,547 | | 309,057 | ||||||||
Victoria J. Tschinkel | 135,000 | 170,010 | — | — | — | 15,964 | 320,974 | |||||||||||||||
Marna C. Whittington | | 125,000 | | 170,010 | | — | | — | | — | | 20,072 | | 315,082 | ||||||||
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NON-EMPLOYEE DIRECTOR COMPENSATION
NAME | PERSONAL USE OF COMPANY AIRCRAFT ($)(a) | MISCELLANEOUS PERQUISITES AND TAX REIMBURSEMENTS ($)(b) | MATCHING GIFT AMOUNTS ($)(c) | TOTAL ($) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | |
Mr. Ferguson | | 1,821 | | 956 | | — | | 2,777 | |||||
Mr. Loomis | 2,578 | 10,764 | 20,000 | 33,342 | |||||||||
Mr. Lowe | | — | | 3,150 | | 7,250 | | 10,400 | |||||
Mr. McGraw | — | 356 | — | 356 | |||||||||
Mr. Tilton | | — | | 1,547 | | 15,000 | | 16,547 | |||||
Ms. Tschinkel | — | 964 | 15,000 | 15,964 | |||||||||
Dr. Whittington | | 1,803 | | 3,269 | | 15,000 | | 20,072 | |||||
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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table lists outstanding equity grants for each non-employee Director as of December 31, 2015:
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OPTION EXERCISES AND STOCK VESTED FOR 2015
The following table summarizes the value received from stock option exercises and stock grants vested in 2015:
NAME | NUMBER OF SHARES ACQUIRED ON EXERCISE (#) | VALUE REALIZED ON EXERCISE ($) | NUMBER OF SHARES ACQUIRED ON VESTING (#) | VALUE REALIZED ON VESTING ($) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | |
Mr. Ferguson | | — | | — | | — | | — | |||||
Mr. Loomis | — | — | — | — | |||||||||
Mr. Lowe | | — | | — | | — | | — | |||||
Mr. McGraw | — | — | — | — | |||||||||
Mr. Tilton | | — | | — | | — | | — | |||||
Ms. Tschinkel | — | — | 1,306 | 77,850 | |||||||||
Dr. Whittington | | — | | — | | — | | — | |||||
| | | | | | | | | | | | | |
| PLAN CATEGORY | | | NUMBER OF SECURITIES TO BE ISSUED UPON EXERCISE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS(1,2) (a) | | | WEIGHTED-AVERAGE EXERCISE PRICE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS(3) (b) | | | NUMBER OF SECURITIES REMAINING AVAILABLE FOR FUTURE ISSUANCE UNDER EQUITY COMPENSATION PLANS (EXCLUDING SECURITIES REFLECTED IN COLUMN (a))(4) (c) | |
| Equity compensation plans approved by security holders | | | 10,521,382 | | | 58.34 | | | 35,673,784 | |
| Equity compensation plans not approved by security holders | | | 0 | | | 0 | | | 0 | |
| Total | | | 10,521,382 | | | 58.34 | | | 35,673,784 | |
Plan category | NUMBER OF SECURITIES TO BE ISSUED UPON EXERCISE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS(1,2) (a) | WEIGHTED-AVERAGE EXERCISE PRICE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS(3) (b) | NUMBER OF SECURITIES REMAINING AVAILABLE FOR FUTURE ISSUANCE UNDER EQUITY COMPENSATION PLANS (EXCLUDING SECURITIES REFLECTED IN COLUMN (a))(4) (c) | |||||||
---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | |
Equity compensation plans approved by security holders | | 12,746,393 | $ | 41.27 | | 40,694,393 | ||||
Equity compensation plans not approved by security holders | — | — | — | |||||||
| | | | | | | | | | |
Total | | 12,746,393 | $ | 41.27 | | 40,694,393 | ||||
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HOLDINGS OF MAJOR SHAREHOLDERSshareholder's Schedule 13Gshareholder’s most recent ownership filing with the SEC): COMMON STOCK NAME AND ADDRESS
SHARES
CLASS Berkshire Hathaway Inc.(1)
3555 Farnam Street
Omaha, Nebraska 68131 45,689,892 9.8% The Vanguard Group(2)
100 Vanguard Blvd.
Malvern, PA 19335 31,919,497 6.8% BlackRock, Inc.(3)
55 East 52nd Street
New York, NY 10055 27,591,749 5.9% COMMON STOCK NAME AND ADDRESS NUMBER OF SHARES PERCENT OF CLASS Berkshire Hathaway Inc.(1)
3555 Farnam Street
Omaha, Nebraska 68131
75,550,745 14.32% BlackRock, Inc.(2)
55 East 52nd Street
New York, NY 10055 28,243,947 5.35% The Vanguard Group(3)
100 Vanguard Blvd.
Malvern, PA 19335
31,318,814 5.94% (1)16, 2016,21, 2018, by Warren E. Buffett on behalf of himself and Berkshire Hathaway Inc., National Indemnity Company, National Liability & Fire Insurance Co., Berkshire Hathaway Assurance Corp., Columbia Insurance Company, Fruit of the LoomBerkshire Hathaway Consolidated Pension Plan Master Trust, Flightsafety International Inc. Retirement Income Plan, GeicoGEICO Corporation Pension Plan Trust, Johns Manville Corporation Master Pension Trust, and General Re Corp. Employee Retirement Trust, as updated by the most recent Form 4 filed by such ownership group dated February 12, 2016, which also added National Fire & Marine Insurance Co., Berkshire Hathaway Homstate Insurance Co., and Berkshire Hathaway SpecialtyHomestate Insurance Co. to the ownership group.Company.(2)10, 2016,9, 2018, by The Vanguard Group on behalf of itself, Vanguard Fiduciary Trust Company, and Vanguard Investments Australia, Ltd.(Channel Islands) Ltd., BlackRock (Luxembourg) S.A., BlackRock (Netherlands) B.V., BlackRock Fund Managers Limited,Ltd, BlackRock Life Limited, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited, BlackRock Asset Management Schweiz AG, BlackRock (Singapore) Limited, BlackRock Advisors (UK) Limited, BlackRock Fund Advisors, BlackRock International Limited, BlackRock Institutional Trust Company, N.A., BlackRock Japan Co. Ltd., BlackRock Capital Management, Inc., FutureAdvisor, Inc., and BlackRock Asset Management North Asia Limited, and Xulu, Inc.(3)Based solely on an Amendment to Schedule 13G filed with the SEC on February 11, 2016, by The Vanguard Group on behalf of itself, Vanguard Fiduciary Trust Company, and Vanguard Investments Australia, Ltd.54 2016 PROXY STATEMENT
| | | | NUMBER OF SHARES OR UNITS | | ||||||
| NAME OF BENEFICIAL OWNER | | | TOTAL COMMON STOCK BENEFICIALLY OWNED | | | RESTRICTED/DEFERRED STOCK UNITS(1) | | | OPTIONS EXERCISABLE WITHIN 60 DAYS(2) | |
| Mr. Garland | | | 225,995 | | | 483,918 | | | 645,161 | |
| Ms. Johnson | | | 37,213 | | | 71,324 | | | 89,999 | |
| Mr. Mitchell | | | 34,220 | | | 24,538 | | | 40,999 | |
| Mr. Taylor | | | 73,761 | | | 128,003 | | | 176,232 | |
| Mr. Herman | | | 26,942 | | | 67,081 | | | 124,066 | |
| Mr. Adams | | | 4,901 | | | — | | | — | |
| Mr. Ferguson | | | 234 | | | 20,657 | | | — | |
| Mr. Loomis(3) | | | 72,582 | | | 22,623 | | | — | |
| Mr. Lowe | | | 30,000 | | | 20,657 | | | — | |
| Mr. McGraw(4) | | | 873 | | | 39,942 | | | — | |
| Ms. Ramos | | | — | | | 5,004 | | | — | |
| Mr. Tilton | | | 5,900 | | | 20,657 | | | — | |
| Ms. Tschinkel(5) | | | 42,830 | | | 10,258 | | | — | |
| Dr. Whittington | | | 2,500 | | | 20,657 | | | — | |
| Directors and Executive Officers as a Group (15 Persons) | | | 560,879 | | | 958,669 | | | 1,094,056 | |
| NUMBER OF SHARES OR UNITS | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
NAME OF BENEFICIAL OWNER | TOTAL COMMON STOCK BENEFICIALLY OWNED | RESTRICTED/DEFERRED STOCK UNITS(1) | OPTIONS EXERCISABLE WITHIN 60 DAYS(2) | |||||||
| | | | | | | | | | |
Mr. Garland | | 72,577 | | 676,428 | | 472,993 | ||||
Ms. Johnson | 17,595 | 87,200 | 73,574 | |||||||
Mr. Maxwell(3) | | 32,398 | | 104,488 | | 89,751 | ||||
Mr. Mitchell(3) | 5,972 | 55,862 | 3,300 | |||||||
Mr. Taylor | | 36,183 | | 172,262 | | 136,159 | ||||
Mr. Ziemba | 10,643 | 177,254 | 225,504 | |||||||
Mr. Ferguson | | 234 | | 15,276 | | — | ||||
Mr. Loomis | 59,902 | 17,123 | — | |||||||
Mr. Lowe | | 30,000 | | 15,276 | | — | ||||
Mr. McGraw(4) | 873 | 33,390 | — | |||||||
Mr. Tilton | | 5,900 | | 15,276 | | — | ||||
Ms. Tschinkel(5) | 36,619 | 11,399 | — | |||||||
Dr. Whittington | | 2,500 | | 15,276 | | — | ||||
Directors and Executive Officers as a Group (14 Persons)(3) | 291,443 | 1,408,947 | 1,073,495 | |||||||
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term.
Applicable rules permit brokers
” vote of a majority of shares present in person or represented by proxy at the meeting.
envelope.
ABOUT THE ANNUAL MEETING
How do I vote if I hold my stock through a Phillips 66 employee benefit plan?
envelope.
8, 2018. The contact information for our Corporate Secretary may be found under COMMUNICATIONS WITH OUR BOARD.
meeting.
2018.
”
ABOUT THE ANNUAL MEETING
for fiscal year 2016, "2018, “FOR"” the approval of the compensation of our Named Executive Officers, and "“FOR"” the proposal regarding the declassification of the Board of Directors.
ABOUT THE ANNUAL MEETING
What is the cost of this proxy solicitation?
AND DIRECTOR NOMINATIONS
| YEAR ENDED DECEMBER 31, 2017 | | | MILLIONS OF DOLLARS | |
| Net Income | | | $ 5,248 | |
| Plus: | | | | |
| Income tax expense (benefit) | | | (1,693) | |
| Net interest expense | | | 407 | |
| Depreciation and amortization (D&A) | | | 1,318 | |
| EBITDA | | | 5,280 | |
| Adjustments: | | | | |
| Impairments by equity affiliates | | | 64 | |
| Pending claims and settlements | | | (57) | |
| Gain on consolidation of business | | | (423) | |
| Equity affiliate ownership restructuring | | | — | |
| Recognition of deferred logistics commitments | | | — | |
| Railcar lease residual value deficiencies and related costs | | | — | |
| Pension settlement expense | | | 83 | |
| Hurricane-related costs | | | 210 | |
| Proportional share of selected equity affiliates income taxes | | | 69 | |
| Proportional share of selected equity affiliates net interest | | | 66 | |
| Proportional share of selected equity affiliates D&A | | | 682 | |
| EBITDA attributable to Phillips 66 noncontrolling interests | | | (211) | |
| Certain tax impacts | | | (23) | |
| VCIP Adjusted EBITDA | | | $ 5,740 | |
| | | | MILLIONS OF DOLLARS (except as indicated) | | |||||||||
| | | | PSP Average 2015-2017 | | | 2017 | | | 2016 | | | | |
| PSP ROCE | | | | | | | | | | | | | |
| Numerator | | | | | | | | | | | | | |
| Net income | | | | | | $ 5,248 | | | 1,644 | | | 4,280 | |
| After-tax interest expense | | | | | | 285 | | | 220 | | | 201 | |
| GAAP ROCE earnings | | | | | | 5,533 | | | 1,864 | | | 4,481 | |
| Adjustments(1) | | | | | | (2,837) | | | (57) | | | (34) | |
| PSP ROCE Earnings | | | | | | 2,696 | | | 1,807 | | | 4,447 | |
| Denominator | | | | | | | | | | | | | |
| GAAP average capital employed(2) | | | | | | 35,700 | | | 33,344 | | | 31,749 | |
| In-process capital | | | | | | (2,233) | | | (3,097) | | | (3,016) | |
| Cash adjustment | | | | | | (60) | | | (37) | | | (1,141) | |
| PSP Average Capital Employed | | | | | | $ 33,407 | | | 30,210 | | | 27,592 | |
| | | | | | | | | | | | | | |
| PSP ROCE (percent) | | | 10.1% | | | 8.1% | | | 6.0% | | | 16.1% | |
| GAAP ROCE (percent) | | | 11.7% | | | 15.5% | | | 5.6% | | | 14.1% | |
how effectively we manage costs versus internal targets. Management uses this measure as a factor in its assessment of performance for the purposes of compensation decisions. Adjusted Controllable Costs is a non-GAAP financial measure because it excludes certain costs that management believes are not directly relevant to compensation decisions. A reconciliation of Adjusted Controllable Costs to the sum of operating expenses and selling, general and administrative expenses, the most directly comparable GAAP measures, is set forth below.TableContents YEAR ENDED DECEMBER 31, 2017 Operating Expenses $ 4,699 Selling, General and Administrative Expenses 1,695 Adjustments: Certain employee benefits (161) Consolidation of business impacts 53 Turnaround timing impacts 59 Foreign currency and weather impacts (49) Adjusted Controllable Costs $ 6,296
cause.
and filling of vacancies in respect of such director or directors shall be governed by the resolution of the Board of Directors so providing for the establishment of such series and by applicable law.
BCB. There shall be no limitation on the qualification of any person to be a director or on the ability of any director to vote on any matter brought before the Board or any Board committee, except (i) as required by applicable law, (ii) as set forth in this Certificate of Incorporation or (iii) any By-Law adopted by the Board of Directors with respect to the eligibility for election as a director or the qualification for continuing service as a director upon reaching a specified age or, in the case of employee directors, with respect to the qualification for continuing service of directors upon ceasing employment from the Corporation.
CDC. Except as (i) required by applicable law or (ii) set forth in this Certificate of Incorporation, at all meetings of the Board of Directors, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors.
DED. The following provisions are inserted for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:
The discussion of our results in this proxy statement includes references to our "adjusted earnings," "cash from operations, excluding working capital," "VCIP ROCE," "PSP ROCE," and "cost management" amounts. "Adjusted controllable costs" is used interchangeably with "cost management," and "ROCE" is displayed on both an absolute basis and a basis relative to our peer group. These measures are not measures of financial performance under U.S. generally accepted accounting principles (GAAP) and may not be defined and calculated by other companies using the same or similar terminology.
Adjusted Earnings
Adjusted earnings is a non-GAAP financial measure because it excludes from net income certain items of expense or income that management does not consider representative of our core operating performance. Management uses this measure as a factor in its assessment of performance for the purposes of compensation decisions. A reconciliation of adjusted earnings to net income attributable to Phillips 66, the most directly comparable GAAP financial measure, is set forth below.
YEARS ENDED DECEMBER 31 | 2014 | MILLIONS OF DOLLARS 2015 | |||||
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Net Income Attributable to Phillips 66 | $ | 4,762 | $ | 4,227 | |||
Adjustments: | |||||||
Asset dispositions | | (494 | ) | | (265 | ) | |
Impairments | 200 | 256 | |||||
Pending claims and settlements | | (10 | ) | | (23 | ) | |
Lower-of-cost-or-market inventory adjustments | 30 | 33 | |||||
Pension settlement expenses | | — | | 49 | |||
Certain tax impacts | — | (84 | ) | ||||
Discontinued operations | | (706 | ) | | — | ||
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Adjusted earnings | $ | 3,782 | $ | 4,193 | |||
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Cash from Operations, excluding working capital
Cash from operations, excluding working capital provides a view of how much cash our operating activities generate, without regard to working capital changes, which can create timing differences that may cause variability in a given period's cash flow. A reconciliation of cash from operations, excluding working capital to cash provided by operating activities, the most directly comparable GAAP financial measure, is set forth below.
YEAR ENDED DECEMBER 31 | MILLIONS OF DOLLARS 2015 | |||
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| | | | |
Cash provided by operating activities (CFO) | $ | 5,713 | ||
Adjustments: | ||||
Net working capital impacts | | 221 | ||
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CFO excluding working capital | $ | 5,934 | ||
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VCIP and PSP ROCE
We believe VCIP ROCE and PSP ROCE are important metrics for evaluating the quality of capital allocation decisions, measuring portfolio value, and measuring the efficiency and profitability of capital investments. Management uses these measures as factors in its assessment of performance for the purposes of compensation decisions. VCIP ROCE and PSP ROCE are ratios, the numerator of which is adjusted earnings plus after-tax interest expense, and the denominator of which is average adjusted total equity plus total debt.
Our calculation of absolute VCIP ROCE and PSP ROCE, which is based on full-year 2015 results, and their reconciliation to ROCE prepared using GAAP amounts, is set forth below.
| MILLIONS OF DOLLARS EXCEPT AS INDICATED | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
YEARS ENDED DECEMBER 31 | PSP AVERAGE 2013–2015 | 2015 | 2014 | 2013 | |||||||||
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Phillips 66—Absolute VCIP/PSP ROCE | | | | | |||||||||
Numerator | |||||||||||||
Net Income | | | | 4,280 | | 4,797 | | 3,743 | |||||
After-tax interest expense | 201 | 173 | 178 | ||||||||||
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GAAP ROCE earnings | | | | 4,481 | | 4,970 | | 3,921 | |||||
VCIP adjustments* | (34 | ) | (980 | ) | 182 | ||||||||
| | | | | | | | | | | | | |
VCIP ROCE earnings | | | | 4,447 | | 3,990 | | 4,103 | |||||
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Denominator | |||||||||||||
GAAP average capital employed** | | | | 31,749 | | 29,595 | | 28,130 | |||||
In-process capital | (3,016 | ) | (1,675 | ) | (370 | ) | |||||||
VCIP cash adjustment | | | | (1,141 | ) | | (2,303 | ) | | (1,437 | ) | ||
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VCIP average capital employed | 27,592 | 25,617 | 26,323 | ||||||||||
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VCIP/PSP ROCE (percent) | | 15.8% | | 16.1% | | 15.6% | | 15.6% | |||||
GAAP ROCE (percent) | 14.9% | 14.1% | 16.8% | 13.9% | |||||||||
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Our calculation of relative VCIP ROCE and PSP ROCE, which is based on annualized September year-to-date 2015 results, and their reconciliation to ROCE prepared using GAAP amounts, is set forth below.
| MILLIONS OF DOLLARS EXCEPT AS INDICATED | ||||||||||||
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YEARS ENDED DECEMBER 31 | PSP AVERAGE 2013–2015 | SEP YTD 2015 | 2014 | 2013 | |||||||||
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Phillips 66—Absolute VCIP/PSP ROCE | | | | | |||||||||
Numerator | |||||||||||||
Net Income | | | | 3,614 | | 4,797 | | 3,743 | |||||
After-tax interest expense | 153 | 173 | 178 | ||||||||||
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GAAP ROCE earnings | | | | 3,767 | | 4,970 | | 3,921 | |||||
VCIP adjustments* | (94 | ) | (980 | ) | 182 | ||||||||
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VCIP ROCE earnings | | | | 3,673 | | 3,990 | | 4,103 | |||||
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Denominator | |||||||||||||
GAAP average capital employed** | | | | 31,801 | | 29,595 | | 28,130 | |||||
In-process capital | (3,016 | ) | (1,675 | ) | (370 | ) | |||||||
VCIP cash adjustment | | | | (1,103 | ) | | (2,303 | ) | | (1,437 | ) | ||
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VCIP average capital employed | 27,682 | 25,617 | 26,323 | ||||||||||
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VCIP/PSP ROCE (percent)*** | | 16.2% | | 17.7% | | 15.6% | | 15.6% | |||||
GAAP ROCE (percent) | 15.5% | 15.8% | 16.8% | 13.9% | |||||||||
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Cost Management
Cost management uses "adjusted controllable costs" as a measure of how effectively we manage costs versus internal targets. Management uses this measure as a factor in its assessment of performance for the purposes of compensation decisions. Adjusted controllable costs is a non-GAAP financial measure because it excludes certain costs that management believes are not directly relevant to VCIP compensation decisions. A reconciliation of adjusted controllable costs to the sum of operating expenses and selling, general and administrative expenses, the most directly comparable GAAP measures, is set forth below.
YEAR ENDED DECEMBER 31 | MILLIONS OF DOLLARS 2015 | |||
---|---|---|---|---|
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Operating expenses | $ | 4,294 | ||
Selling, general and administrative expenses | 1,670 | |||
Adjustments: | | |||
Certain employee benefits | (268 | ) | ||
Foreign currency and utility price impacts | | 157 | ||
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VCIP controllable costs | $ | 5,853 | ||
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