SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Check the appropriate box:
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Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 14a-11(c) or Rule 14a-12
MOBIL CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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Notes:
[LOGO OF MOBIL CORPORATION APPEARS HERE]
NOTICE OF
1997
ANNUAL MEETING
AND
PROXY STATEMENT
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YOUR VOTE IS IMPORTANT!
PLEASE PROMPTLY MARK, SIGN, DATE AND RETURN YOUR
PROXY CARD IN THE ENCLOSED ENVELOPE.
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MOBIL CORPORATION
3225 GALLOWS ROAD
FAIRFAX, VIRGINIA 22037-0001
TABLE OF CONTENTS
PAGE
----
Chairman's Letter......................................................... 1
Notice of Annual Meeting.................................................. 2
Proxy Statement........................................................... 3
General Information...................................................... 3
Item 1--Election of Directors........................................... 3
Directors' Meetings and Compensation................................ 8
Committees of the Board............................................. 8
Item 2--Approval and Ratification of Appointment of Independent Audi-
tors................................................................... 10
Item 3--Proposal to Increase the Number of Authorized Shares of Common
Stock and to Change the Par Value Thereof, Preliminary to a Two-
For-One Stock Split .............................................. 10
Stockholder Proposals--General........................................... 11
Item 4--Limit Authority to Issue Preferred Stock........................ 12
Item 5--Cumulative Voting............................................... 13
Item 6--Discontinue Grants of Stock Options to Directors and Officers... 14
Item 7--Prohibit Executives from Exercising Stock Options for Six Months
after Announcements of Workforce Reductions....................... 15
Executive Compensation................................................... 17
Common Stock and Total Stock-Based Holdings of Directors, Nominees and
Executive Officers...................................................... 27
Proxies and Voting at the Meeting........................................ 28
Quorum and Vote Required for Approval.................................... 28
Attendance at Annual Meeting............................................. 29
Proxy Solicitation....................................................... 29
[LOGO OF MOBILE CORPORATION
APPEARS HERE] 3225 GALLOWS ROAD
FAIRFAX, VIRGINIA
22037-0001
LUCIO A. NOTO
CHAIRMAN OF THE
BOARD
CHIEF EXECUTIVE
OFFICER
March 18, 1997
Dear Mobil Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders to be
held in the Grand Ballroom, Hyatt Regency Reston, Reston Town Center, 1800
Presidents Street, Reston, Virginia, on May 8, 1997.
In addition to the formal items of business to be brought before the
meeting, there will be a report on our Company's operations during 1996,
followed by a question and answer period.
Your participation in Mobil's business is important, regardless of the
number of shares you hold. To ensure your representation, please sign, date
and return the enclosed proxy card promptly.
We look forward to seeing you on May 8th.
Sincerely,
/s/ Lucio A. Noto
Lucio A. Noto
Chairman of the Board and
Chief Executive Officer
1
NOTICE OF ANNUAL MEETING
MAY 8, 1997
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The Annual Meeting of Stockholders of Mobil Corporation will be held in the
Grand Ballroom at the Hyatt Regency Reston, Reston Town Center, 1800 Presidents
Street, Reston, Virginia 22090, on Thursday, May 8, 1997, at 10:00 A.M., for
the following purposes:
1. To elect five directors;
2. To approve and ratify the appointment of Ernst & Young LLP as independent
auditors;
3. To act upon a proposal to increase the number of authorized shares of
Common Stock and to change the par value thereof;
4. To act upon stockholder proposals;
and to transact such other business as properly may come before the meeting.
Stockholders of record at the close of business on March 10, 1997 are
entitled to receive notice of, and to vote at, the meeting. A list of
stockholders entitled to vote will be kept at the Hyatt Regency Reston, Reston
Town Center, 1800 Presidents Street, Reston, Virginia 22090, for a period of
ten days prior to the meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Charles H. DuBois
CHARLES H. DuBOIS
SECRETARY
MOBIL CORPORATION
3225 Gallows Road
Fairfax, Virginia 22037-0001
March 18, 1997
2
MOBIL CORPORATION
3225 GALLOWS ROAD
FAIRFAX, VIRGINIA 22037-0001
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Mobil Corporation ("Mobil", the "Corporation" or the
"Company") of proxies to be voted at the Annual Meeting of Mobil stockholders
on May 8, 1997. This Proxy Statement, the accompanying proxy card, and Annual
Report are being mailed to stockholders on or about March 18, 1997. Business
at the Annual Meeting is conducted in accordance with the procedures
determined by the presiding officer and is generally limited to matters
properly brought before the meeting by or at the suggestion of the Board of
Directors or by a stockholder pursuant to provisions requiring advance notice
and disclosure of relevant information.
The number of voting securities of Mobil outstanding on March 10, 1997, the
record date for the meeting, was (i)393,975,472 shares of common stock, $2.00
par value per share, each share being entitled to one vote, and (ii) 87,467.72
shares of Series B ESOP Convertible Preferred Stock, $1.00 par value per
share, each share being entitled to 100 votes, for a total of 402,722,244
votes.
Stockholders of record at the close of business on March 10, 1997, are
entitled to receive notice of the meeting and to vote the shares held on that
date. If a stockholder is a participant in Mobil's Stock Purchase and Dividend
Reinvestment Plan, the proxy card represents the number of shares in the Plan
account, as well as shares registered in the participant's name.
A stockholder who is a participant in the Mobil Oil Corporation Employees
Savings Plan and the Mobil Oil Corporation Employee Stock Ownership Plan will
receive a single proxy card which covers shares credited to such stockholder's
Plan account plus shares of record registered in the same name. Accordingly,
proxies executed by such a participant will serve as a voting instruction to
the Trustee of those Plans. If a participant's Plan account is not carried in
the same name as his or her shares of record, such participant will receive
separate proxy cards for both individual and Plan holdings. If a participant
in the Employees Savings Plan does not vote the shares credited to such
participant's Plan account, such shares will be voted by the Plan's Trustee at
the direction of Mobil. If a participant in the Employee Stock Ownership Plan
does not vote the shares credited to the participant's Plan account, such
shares will be voted by the Plan's Trustee in the same proportion as the
shares that are voted by the other participants in the Plan.
ITEM 1--ELECTION OF DIRECTORS
Mobil's Certificate of Incorporation classifies the Board of Directors into
three classes, as nearly equal in number as possible, the members of which
serve for three years. The terms of office of the members of one class of
directors expire each year in rotation so that the members of one class are
elected at each Annual Meeting for full three-year terms. The terms of office
of five of the present directors will expire at this Annual Meeting.
Four directors have been nominated for election for three-year terms
expiring at the Annual Meeting in 2000, and one director has been nominated
for election for the balance of a three-year term expiring at the Annual
Meeting in 1998, or until their successors are elected and qualified. The
terms of the other ten directors will continue as indicated below.
The ages of directors are as of March 1, 1997.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES LISTED
BELOW.
3
NOMINEES FOR TERMS EXPIRING IN 2000
[PHOTO OF DONALD V. FITES APPEARS HERE]
Donald V. Fites, age 63, has been a director since 1990. He is chairman and
chief executive officer of Caterpillar Inc. (heavy machinery). He is also a
director of First Chicago NBD Corporation and Georgia-Pacific Corporation. Mr.
Fites is a member of the Committee on Directors and Board Affairs and the
Management Compensation and Organization Committee.
[PHOTO OF CHARLES S. SANFORD, JR. APPEARS HERE]
Charles S. Sanford, Jr., age 60, has been a director since 1990. He is the
former chairman and chief executive officer of Bankers Trust New York
Corporation and its principal subsidiary, Bankers Trust Company. He is also a
director of J. C. Penney Company, Inc. Mr. Sanford is a member of the Committee
on Directors and Board Affairs and the Management Compensation and Organization
Committee.
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[PHOTO OF ROBERT G. SCHWARTZ APPEARS HERE]
Robert G. Schwartz, age 68, has been a director since 1987. He is the former
chairman of the board, president and chief executive officer of Metropolitan
Life Insurance Company. He is a director of Metropolitan Life Insurance
Company, COMSAT Corporation, Lone Star Industries, Inc., Lowe's Companies,
Inc., Potlatch Corporation and The Reader's Digest Association Inc. and is a
member of the board of trustees of Consolidated Edison Company of New York. Mr.
Schwartz is Chairman of the Management Compensation and Organization Committee
and a member of the Public Issues Committee.
[PHOTO OF IAIN D. T. VALLANCE APPEARS HERE]
Iain D. T. Vallance, age 53, has been a director since November 1, 1996. He
is chairman of British Telecommunications plc. He also serves as vice-chairman
of The Royal Bank of Scotland. Mr. Vallance is a member of the Audit Committee
and the Public Issues Committee.
4
NOMINEE FOR TERM EXPIRING IN 1998
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[PHOTO OF ROBERT O. SWANSON APPEARS HERE]
Robert O. Swanson, age 60, joined Mobil in 1958. He has been a director since
1991 and a director of Mobil Oil Corporation since 1990. Since September 1,
1996, Mr. Swanson has been an executive vice president with responsibility for
the Africa and Middle East, Asia/Pacific, Worldwide Chemical and Technology
business groups and the Office of Diversity and Inclusion. From 1993 to 1996, he
was a senior vice president with responsibility for Mobil Chemical Company;
Mobil Mining and Minerals Company; Mobil Land Development Corporation; and Mobil
Technology Company. From 1985 to 1993, he was executive vice president-
international of the Marketing and Refining Division of Mobil Oil Corporation.
Mr. Swanson is a member of the Executive Committee.
DIRECTORS WHOSE TERMS EXPIRE IN 1998
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[PHOTO OF LEWIS M. BRANSCOMB APPEARS HERE]
Lewis M. Branscomb, age 70, has been a director since 1978. He is Aetna
Professor, Public Policy and Corporate Management, Emeritus, and until July 1,
1996 was Director, Science, Technology and Public Policy, John F. Kennedy School
of Government, Harvard University. Dr. Branscomb is chairman of the Audit
Committee and a member of the Public Issues Committee.
[PHOTO OF PAUL J. HOENMANS APPEARS HERE]
Paul J. Hoenmans, age 64, joined Mobil in 1954. He has been a director since
1985 and a director of Mobil Oil Corporation since 1983. Since September 1,
1996, Mr. Hoenmans has been an executive vice president with responsibility for
the North America Exploration and Producing, New Exploration and Producing
Ventures/Exploration and Liquefied Natural Gas/Independent Power Projects
business groups. From 1986 to 1996, he was an executive vice president of Mobil
Oil Corporation and president of its Exploration and Producing Division. Mr.
Hoenmans is a member of the Executive Committee.
5
DIRECTORS WHOSE TERMS EXPIRE IN 1998
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[PHOTO OF ALLEN F. JACOBSON APPEARS HERE]
Allen F. Jacobson, age 70, has been a director since 1988. He is the former
chairman of the board and chief executive officer of Minnesota Mining and
Manufacturing Company (3M) (manufacturer of diversified products) and remains on
the 3M Board. He is also a director of Abbott Laboratories, Northern States
Power Company, U.S. WEST, Inc., Valmont Industries, Inc., Potlatch Corporation,
Sara Lee Corporation, Silicon Graphics, Inc., Deluxe Corporation and Prudential
Insurance Company of America. Mr. Jacobson is Chairman of the Committee on
Directors and Board Affairs and a member of the Management Compensation and
Organization Committee.
[PHOTO OF J. RICHARD MUNRO APPEARS HERE]
J. Richard Munro, age 66, has been a director since 1989. Since January 1,
1997, he has been chairman of the board of Genentech, Inc. (pharmaceuticals).
He is the former chairman of the executive committee of the board of directors,
co-chairman of the board and co-chief executive officer of Time-Warner Inc.
(publishing and communications), and remains on the board of that company. He
is also a director of Kmart Corporation and The Kellogg Company. Mr. Munro is a
member of the Management Compensation and Organization Committee and the Public
Issues Committee.
DIRECTORS WHOSE TERMS EXPIRE IN 1999
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[PHOTO OF CHARLES A. HEIMBOLD, JR. APPEARS HERE]
Charles A. Heimbold, Jr., age 63, has been a director since 1995. Since 1995,
Mr. Heimbold has been chairman and chief executive officer of Bristol-Myers
Squibb Company (consumer products and pharmaceuticals). He served as president
of Bristol-Myers Squibb Company from 1992 to 1994 and president and chief
executive officer from 1994 to 1995. Mr. Heimbold is a member of the Committee
on Directors and Board Affairs and the Audit Committee.
[PHOTO OF SAMUEL C. JOHNSON APPEARS HERE]
Samuel C. Johnson, age 68, has been a director since 1981. He is chairman of
the board of S. C. Johnson & Son, Inc. (chemical specialty products). He is also
a director of Deere and Company, H. J. Heinz Company, a director and chairman of
Johnson International Inc., and a director and chairman of Johnson Worldwide
Associates, Inc. Mr. Johnson is chairman of the Public Issues Committee and a
member of the Management Compensation and Organization Committee.
6
DIRECTORS WHOSE TERMS EXPIRE IN 1999
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[PHOTO OF HELENE L. KAPLAN APPEARS HERE]
Helene L. Kaplan, age 63, has been a director since 1989. She is Of Counsel
to Skadden, Arps, Slate, Meagher & Flom, a law firm which Mobil and/or
affiliates of Mobil retained in 1996 and may retain in 1997. Mrs. Kaplan is
also a director of Chase Manhattan Corporation, the May Department Stores
Company, Metropolitan Life Insurance Company and NYNEX. Mrs. Kaplan is a
member of the Committee on Directors and Board Affairs and the Audit
Committee.
[PHOTO OF LUCIO A. NOTO APPEARS HERE]
Lucio A. Noto, age 58, joined Mobil in 1962. He has been a director since
1988, chairman and chief executive officer since 1994, and president and chief
operating officer since 1993. He was previously chief financial officer
beginning in 1989. He has been a director of Mobil Oil Corporation since 1986
and chairman of the board and chief executive officer of Mobil Oil Corporation
since 1994. He is also a director of International Business Machines
Corporation. Mr. Noto is chairman of the Executive Committee.
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[PHOTO OF AULANA L. PETERS APPEARS HERE]
Aulana L. Peters, age 55, has been a director since 1992. She is a partner in
Gibson, Dunn & Crutcher, a law firm which Mobil and/or affiliates of Mobil
retained during 1996 and may retain in 1997. She is also a director of the
Minnesota Mining and Manufacturing Company, Callaway Golf Company, Merrill Lynch
& Co. and Northrop Grumman Corporation. Mrs. Peters is a member of the Audit
Committee and the Public Issues Committee.
[PHOTO OF EUGENE A. RENNA APPEARS HERE]
Eugene A. Renna, age 52, joined Mobil in 1968. He has been a director since
1986 and a director of Mobil Oil Corporation since 1985. Since September 1,
1996, Mr. Renna has been an executive vice president with responsibility for
the North America Marketing and Refining, Europe/Former Soviet Union, South
America and Supply, Trading and Transportation business groups. From 1986 to
1996, he was an executive vice president of Mobil Oil Corporation and
president of its Marketing and Refining Division. Mr. Renna is a member of the
Executive Committee.
7
DIRECTORS' MEETINGS AND COMPENSATION
During 1996, the Board of Directors met eleven times and all current
directors attended more than 75 percent of the meetings of the Board and their
respective Board committees.
Employee directors receive no additional compensation for service on the
Board of Directors or its Committees.
In January, 1997, the Board approved several changes in the compensation
program for non-employee directors. At that time, the Board voted to terminate
the retirement plan for such directors and to increase the number of stock
equivalents included in their annual retainer from 100 to 300. These changes,
recommended by the Committee on Directors and Board Affairs, were designed to
increase the stock-based portion of the non-employee directors' compensation,
thereby more closely aligning their interests with those of the stockholders,
without significantly changing the total amount of such compensation. Non-
employee directors now receive an annual retainer comprised of $36,000 and 300
shares of Mobil common stock in the form of stock equivalents. Non-employee
directors also receive a fee of $1,250 for each Board meeting and committee
meeting attended, plus travel allowances where appropriate. Directors who
chair committees receive additional annual fees of $8,000. Non-employee
directors may not participate in Mobil's incentive compensation or other
employee benefit programs. However, Mobil provides $100,000 of non-
contributory group life insurance and $500,000 of accidental death insurance
for accidents occurring while on Mobil business.
Under the Deferred Fee Plan, non-employee directors may defer, until
retirement, receipt of all or a part of their fees and the cash portion of
their annual retainers. Deferred amounts may either be credited with notional
interest or be represented by stock equivalents which earn notional dividends
equal to dividends declared on Mobil common stock. Notional interest on
deferred cash accounts is credited at the average rate for 10-year U.S.
Treasury bonds over a six-month period, plus 1%, currently 7.66% per year.
In order to compensate the non-employee directors for the amounts of the
retirement benefits they had accrued prior to the termination of the
retirement plan, such accrued benefits were vested. Each director elected
either to have the annual benefit accrued to the date of the plan's
termination paid after retirement, in accordance with the terms of the plan,
for the director's life plus up to eight years thereafter to a surviving
spouse or dependent, or to have the actuarial present value of his or her
accrued plan benefits credited to either a deferred cash account or a deferred
notional stock account. Deferred cash accounts are credited with notional
interest at the average rate for 10-year U.S. Treasury bonds over a six-month
period, plus 1%, currently 7.66% per year, while stock equivalents in deferred
notional stock accounts are credited with notional dividends equal to
dividends declared on Mobil common stock. Directors who have elected to have
accrued plan benefits credited to a deferred account will, after retirement,
receive the account balance (which in the case of a deferred notional stock
account will not be less than the account value at the termination of the
retirement plan) in the form of a lifetime annuity, in a lump sum, or in up to
ten annual installments.
COMMITTEES OF THE BOARD
The functions and current membership of the four standing committees
established by the Board are described below. Each committee met regularly
during the year and promptly following each meeting advised the full Board of
its actions and recommendations.
The AUDIT COMMITTEE, established in 1969, met three times during 1996. The
Committee reviews with the independent auditors and Mobil's General Auditor
the general scope of their respective audit coverages. Such reviews include
consideration of Mobil's accounting practices, procedures and system of
internal accounting controls and any significant problems encountered. The
Committee also recommends to the Board the appointment of Mobil's principal
independent auditors.
At least annually, the Committee reviews the services performed and the fees
charged by the independent auditors engaged by Mobil and determines that the
non-audit services rendered by the independent auditors do not compromise
their independence.
8
The independent auditors and Mobil's General Auditor have direct access to
the Committee and may discuss with it any matters which may arise in
connection with audits, the maintenance of internal accounting controls or any
other matters relating to Mobil's financial affairs. Furthermore, the
Committee may authorize the independent auditors to investigate any matters
which the Committee deems appropriate and may present its recommendations and
conclusions to the Board.
The Audit Committee is composed entirely of non-employee directors. Members
of the Committee are: Lewis M. Branscomb (Chairman), Charles A. Heimbold, Jr.,
Helene L. Kaplan, Aulana L. Peters and Iain D. T. Vallance.
The COMMITTEE ON DIRECTORS AND BOARD AFFAIRS, established in 1977, met three
times during 1996. The Committee reviews and makes recommendations to the
Board regarding corporate governance matters including effectiveness of the
Board, its committees and individual directors; procedures of the Board and
its committees; and the composition, duties and responsibilities of the
committees. The Committee also reviews and makes recommendations to the Board
regarding compensation and meeting fees of non-employee directors.
In addition, the Committee proposes to the Board a slate of directors for
election by the stockholders at the annual meeting and identifies and proposes
to the Board candidates to fill Board vacancies. The Committee considers
suggestions from many sources, including stockholders, regarding possible
candidates for director.
The Committee will consider candidates proposed by stockholders in
accordance with the following procedure:
Nominations should be sent to the Secretary of the Committee on Directors
and Board Affairs, Mobil Corporation, 3225 Gallows Road, Fairfax, Virginia
22037-0001. Nominations should describe the qualifications of the candidate
and should be accompanied by a written statement that the candidate is
willing to serve and is committed to representing the interests of all the
stockholders. Candidates must be endorsed by a member of the Committee on
Directors and Board Affairs or be supported by the holders of not less than
200 shares of common stock. This number is subject to periodic review by
the Committee on Directors and Board Affairs.
Nominations by stockholders may also be made at an annual stockholders'
meeting in the manner provided in the Corporation's By-Laws. The By-Laws
require, among other things, that written notice must be given to the
Corporation of such nominations, at least 90 days prior to the anniversary
date of the preceding annual meeting. For a description of the full procedure
governing such nominations, reference is made to the By-Laws, a copy of which
is available from the Secretary of the Corporation. At any meeting of
stockholders, the presiding officer may refuse to acknowledge the nomination
of any person not made in compliance with the procedure specified in the By-
Laws.
The Committee on Directors and Board Affairs is composed entirely of non-
employee directors. Members of the Committee are: Allen F. Jacobson
(Chairman), Donald V. Fites, Charles A. Heimbold, Jr., Helene L. Kaplan and
Charles S. Sanford, Jr.
The MANAGEMENT COMPENSATION AND ORGANIZATION COMMITTEE, established in 1960,
met seven times during 1996. The Committee reviews, approves and recommends to
the Board: (1) the Corporation's employee and management compensation and
benefit policies; (2) management incentive compensation plans, including stock
option plans; (3) the amount and form of compensation of employee directors
and senior managers of the Corporation, and (4) all senior management
appointments and any significant structural changes in the management and
organization of the Corporation. The Committee also administers the Mobil
incentive compensation and stock option plans.
The Management Compensation and Organization Committee is composed entirely
of non-employee directors. Members of the Committee are: Robert G. Schwartz
(Chairman), Donald V. Fites, Allen F. Jacobson, Samuel C. Johnson, J. Richard
Munro and Charles S. Sanford, Jr.
The report of the Committee on Executive Compensation is set forth beginning
on page 17.
The PUBLIC ISSUES COMMITTEE, established in 1973, met four times during
1996. The Committee reviews and makes recommendations regarding: (1) Mobil's
domestic and international policies, programs, position and
9
strategies involving political, social and environmental trends and issues;
(2) shareholder proposals; (3) support of business, charitable and educational
organizations; and (4) the Corporation's employment and workplace policies and
practices, including those relating to equal employment opportunity, non-
discrimination and diversity in the workplace. Additionally, in February,
1997, the Committee's responsibilities were increased by the addition of the
responsibility to review and make recommendations regarding the Corporation's
environmental, health and safety policies, programs, practices and
performance.
The Public Issues Committee is composed entirely of non-employee directors.
Members of the Committee are: Samuel C. Johnson (Chairman), Lewis M.
Branscomb, J. Richard Munro, Aulana L. Peters, Robert G. Schwartz and Iain D.
T. Vallance.
ITEM 2--APPROVAL AND RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors desires, in accordance with its established policy,
to obtain from the stockholders an indication of their approval or disapproval
of the Board's action in appointing Ernst & Young LLP, Fairfax Square-Tower
II, 8075 Leesburg Pike, Vienna, Virginia 22182-2709, as independent auditors
of Mobil and its subsidiaries for the year 1997.
Ernst & Young has been serving Mobil and its subsidiaries for many years. It
has no direct financial interest or any material indirect financial interest
in Mobil or any of its subsidiaries and while serving as independent auditor
has had no connection therewith in the capacity of promoter, underwriter,
voting trustee, director, officer or employee. During 1996, Ernst & Young
rendered audit services amounting to $12.6 million.
The Audit Committee recommended and the Board approved the appointment of
Ernst & Young as independent auditors. The Audit Committee, in arriving at its
recommendation to the Board, reviewed the performance of Ernst & Young in
prior years as well as the firm's reputation for integrity and competence in
the fields of accounting and auditing, and the status of litigation involving
the firm. The Audit Committee has expressed its satisfaction with Ernst &
Young in these respects.
Representatives of Ernst & Young will be present at the stockholders'
meeting and will have the opportunity to make such statements as they may
desire. They will also be available to respond to appropriate questions from
stockholders attending the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING RESOLUTION WHICH
WILL BE PRESENTED AT THE MEETING:
"RESOLVED, that the appointment, by the Board of Directors of the
Corporation, of Ernst & Young LLP as independent auditors of the
Corporation and its subsidiary companies, for the year 1997, be and hereby
is approved and ratified."
In the event the resolution is defeated, the adverse vote will be considered
a direction to the Board of Directors to select other auditors for the
following year. However, because of the difficulty and expense in making any
substitution of auditors so long after the beginning of the current year, it
is contemplated that the appointment for the year 1997 will be permitted to
stand unless the Board finds other good reasons for making a change.
ITEM 3--PROPOSAL TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
AND TO CHANGE THE PAR VALUE THEREOF
At a meeting held on January 31, 1997, the Board of Directors voted to
recommend to the stockholders that the number of authorized shares of the
common stock of the Corporation be increased from 600,000,000 shares of $2.00
par value per share to 1,200,000,000 shares of $1.00 par value per share. The
change will not affect the number of shares or the par value per share of
Mobil's preferred stock, which will continue to be comprised of 30,000,000
shares having a par value of $1.00 per share.
At the same meeting the Board announced its intention, if this proposal is
approved, to split the outstanding shares of common stock two-for-one (that
is, one new share will be issued for each existing share outstanding on May
20, 1997, the proposed record date for the split).
The Board of Directors believes that the proposed split of the common stock
is in the best interests of Mobil and its stockholders. The increase in the
number of authorized shares of Mobil common stock, if approved by the
10
stockholders, will indicate the stockholders' approval of the two-for-one
split and the split should tend to broaden the market for Mobil's common stock
and thus be of advantage to Mobil and its stockholders.
No change in stockholders' equity will result from the proposed stock split.
The aggregate amount of capital represented by the outstanding shares of
common stock will not change since the number of outstanding shares of common
stock will be doubled while the par value per share will be halved from $2.00
to $1.00.
Shares issued pursuant to the stock split will have the same rights as the
shares of common stock currently outstanding. Although the number of
authorized but unissued shares of common stock after the proposed stock split
will be twice the number of authorized but unissued shares before the split,
the relative potential for dilution will not change as the number of
outstanding shares will also be doubled. Mobil's management has no present
plans or understandings for the issuance of the additional authorized shares
contemplated by this proposal.
Upon the effectiveness of the stock split, appropriate adjustments would be
made to stock options, restricted stock, contingent stock allotments, deferred
share equivalents and other stock-based instruments awarded or acquired and to
be awarded or acquired under certain of the Company's compensation and benefit
programs, as well as to the number of shares of common stock purchasable under
the Company's Stock Purchase and Dividend Reinvestment Plan. Such adjustments
would also be made in respect of the outstanding shares of the Series B ESOP
Convertible Preferred Stock and the Preferred Share Purchase Rights attached
to the shares of common stock currently outstanding and to be attached to the
shares of common stock issued pursuant to the stock split. These Rights are
not currently exercisable.
The shares of common stock to be issued in connection with the split are to
be listed on the New York Stock Exchange. It is anticipated that the
certificates for the new shares of common stock will be mailed to stockholders
about June 24, 1997. EACH CERTIFICATE OUTSTANDING IMMEDIATELY PRIOR TO THE
SPLIT WILL CONTINUE TO REPRESENT THE NUMBER OF SHARES SHOWN ON THE CERTIFICATE
AND SHOULD BE RETAINED BY THE STOCKHOLDER.
Mobil has been advised by Samuel H. Gillespie III, Esq., Vice President and
General Counsel of Mobil, that the stock split will not result in taxable
income under the present provisions of the Internal Revenue Code. The new
shares will each have a basis for computing gain or loss equal to one-half of
the cost or other basis of the old shares and the holding period of the new
shares will be the same as the holding period for the old shares.
Charges for brokerage commissions and any stock transfer taxes after the
two-for-one split will probably be higher than in the case of the present
common stock, assuming transactions of equivalent dollar amounts.
The affirmative vote of a majority of the votes entitled to be cast by
Mobil's outstanding voting securities will be necessary for the adoption of
Item 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING RESOLUTION, WHICH
WILL BE PRESENTED AT THE MEETING:
"RESOLVED, that the Chairman of the Board and President or any Vice
President and the Secretary or any Assistant Secretary of the Company be
and they hereby are authorized to execute and file a Certificate of
Amendment pursuant to the provisions of The General Corporation Law of the
State of Delaware for the purpose of increasing the authorized common stock
of the Company from 600,000,000 shares of $2.00 par value to 1,200,000,000
share of $1.00 par value; and to do all acts and things necessary to comply
with the laws applicable to such increase in common stock and change in par
value."
STOCKHOLDER PROPOSALS--GENERAL
In addition to the matters to be presented by Mobil as set forth in the
Notice of Annual Meeting, stockholders are asked to consider four proposals
submitted by stockholders. Mobil knows of no other matters which properly may
be presented at the meeting. Proposals and suggestions received from
stockholders are given careful consideration. The Corporation has adopted a
number of such proposals and suggestions when they were in the best interests
of the Corporation and its stockholders.
Stockholder proposals are eligible for consideration for inclusion in the
proxy statement for the 1998 Annual Meeting if they are received by Mobil
before the close of business on November 18, 1997. Any proposal should be
directed to the attention of the Secretary, Mobil Corporation, 3225 Gallows
Road, Fairfax, Virginia 22037-0001.
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ITEM 4--LIMIT AUTHORITY TO ISSUE PREFERRED STOCK
Management has been advised that the College Retirement Equities Fund, 730
Third Avenue, New York, New York 10017, the holder of 4,234,999 shares of
Mobil common stock, intends to submit the following proposal at the meeting:
WHEREAS, the Company's Board of Directors has authority under the Company's
charter to issue one or more classes of so-called "blank check" preferred
stock, having such voting and other rights as the Board, in its sole
discretion, may determine:
WHEREAS, the Board may be able to deter unsolicited acquisition offers by
placing blank check preferred in friendly hands without seeking shareholder
approval;
WHEREAS, Delaware's anti-takeover statute enhances the Board's ability to
deter unsolicited takeover bids by placing a block of blank check preferred
in friendly hands;
WHEREAS, such use of blank check preferred by the Board could deprive
shareholders of the opportunity to consider valuable offers for their
stock;
RESOLVED that the shareholders request that the Board:
Adopt a policy of seeking shareholder approval prior to placing preferred
stock with any person or group except for the purpose of raising capital
in the ordinary course of business or making acquisitions and without a
view to effecting a change in voting power.
I. The Board can limit shifts in control of the Company by placing a block
of preferred stock in friendly hands without shareholder approval.
Blank check preferred can be issued by the Board for capital raising,
acquisitions or as an anti-takeover device, without shareholder approval.
The Board can use blank check preferred as an anti-takeover device to deter
unsolicited tender offers favorable to shareholders. For example, the Board
could issue blank check preferred to dilute the stock ownership of, or
create voting impediments for, an unsolicited acquiror. Since such uses of
blank check preferred could potentially diminish the value of the
shareholders' investment and decrease the market price of the Company's
shares, shareholder approval should be obtained before the Board uses blank
check preferred as an anti-takeover device.
II. Delaware's anti-takeover statute enhances the Board's ability to deter
takeovers by undertaking blocking transactions.
Delaware's anti-takeover statute enhances the Board's ability to deter a
takeover by placing blank check preferred in friendly hands. The statute
provides generally that unless an unsolicited acquiror obtains 85 percent
of the Company's voting stock in the transaction by which it obtains 15
percent, it is barred for three years from consummating a business
combination with the Company. The Board can thus effectively deter
unsolicited bids by placing a significant block of blank check preferred in
friendly hands, making it much harder (if not impossible) for an
unsolicited bidder to attain the 85 percent ownership it needs to be
exempted from the Delaware statute.
III. Blank check preferred should not be used by the Board to disadvantage
shareholders without their consent.
The Board's discretionary authority to issue blank check preferred should
only be exercised for corporate purposes demonstrably in the best interests
of shareholders. Good corporate governance requires that holders of a
majority of voting stock approve the use of blank check preferred as a
deterrent to unsolicited tender offers--a use that is not necessarily in
the best interests of shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF THIS
PROPOSAL.
This proposal was presented at each of the last three annual meetings, and
each year, a very large majority of the votes cast were voted against it. Your
Board continues to believe, for the same reasons previously articulated, that
its adoption would be unwise and adverse to the stockholders' interests.
12
First, and most importantly, the proposal would deprive the Board of one of
the means it now has to protect the stockholders' interests by deterring or
repulsing coercive, two-tier and bargain-price offers for the Company. The
capacity to issue preferred stock, together with other protective measures now
available, does not prevent tender offers, but serves to enhance the Board's
bargaining position on behalf of the stockholders if and when they might be
made. Your Board feels strongly that the elimination of any of those
protective measures would adversely affect that bargaining position, and thus
the interests of the stockholders. Any future issuance of preferred stock
would, of course, have to comply with the Board's fiduciary duty to act in the
best interests of the Corporation and its stockholders, subject to the
heightened level of scrutiny applied by the Delaware courts in takeover
situations. The proponent does not suggest that the Board has in the past
abused its authority to issue preferred stock and cites no reason as to why it
would not fully perform its fiduciary obligations in the future. In fact, the
Board has in the past always fulfilled these obligations in full measure, and
it would do so similarly in the future.
Second, the proposal could curtail the Corporation's ability to issue
preferred stock for financings, acquisitions and additional equity capital.
While it purports to permit the Board to issue preferred stock for these
purposes, it effectively negates this permission by requiring stockholder
approval if the issue effects a change in voting power. Since it is literally
impossible to issue any preferred stock which does not effect some change in
voting power from what it was immediately before, this requirement would be an
undesirable limitation on the Board's discretion in negotiating the issuance
of shares with underwriters in connection with capital raising or with
purchasers in a merger-acquisition situation, where voting rights, like the
dividend rate and other basic terms, are a matter of negotiation. Your Board
believes strongly that the imposition of any limitation on the Corporation's
ability to issue preferred stock for these purposes would not be in the best
interests of the Corporation and its stockholders.
FOR THE FOREGOING REASONS, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE ADOPTION OF THE PROPOSAL.
ITEM 5--CUMULATIVE VOTING
Management has been advised that Dr. Thomas R. Sifferman, 3051 Camino De Las
Piedras, El Cajon, California 92019, the beneficial owner of 136 shares of
Mobil common stock and 135 units of interest in shares of Series B ESOP
Convertible Preferred Stock (equivalent to 1.35 such shares), and John J.
Gilbert and Margaret R. Gilbert, 29 East 64th Street, New York, New York
10021-7043, the owners of 100 and 304 shares of Mobil common stock,
respectively, intend to submit the following proposal at the meeting:
IMPROVED ELECTION PROCEDURE INVOLVING CUMULATIVE VOTING FOR THE BOARD OF
DIRECTORS
WHEREAS,
Mobil has nomination procedures that make it difficult for stockholders to
have their nominees elected to the Board of Directors and
Directors are presently elected for a three year term with one vote
available for each nominee for each share voted.
BE IT RESOLVED THAT THE STOCKHOLDERS REQUEST MOBIL TO IMPLEMENT THE
PROPOSAL BELOW:
Change the election procedure for the Board of Directors TO ALLOW
CUMULATIVE VOTING (total votes are equal to the number of shares times
the number of directors to be elected). This proposal would only be
effective for nominees for Director at meetings subsequent to the 1997
Annual Meeting and would, therefore, not affect the unexpired terms of
the existing Directors.
If you agree with this proposal, please mark your proxy FOR. Otherwise, as
noted in last year's meeting notice, abstentions have "the same effect as
"no' votes."
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SUPPORTING STATEMENT
This proposal would allow stockholders to have more influence on the
election of THEIR (not management's) Board and, consequently, the future of
THEIR company.
Cumulative voting allows stockholders to select the nominee(s) they want to
vote for and to cast all their votes for a single (or several)
candidate(s). Therefore, nominee(s) that are receptive to stockholders'
rights (such as better nomination procedures and annual terms for
Directors) could be more easily elected. CALIFORNIA LAW requires state
pension and college funds to be voted in FAVOR of cumulative voting
proposals. Many successful corporations, such as PENNZOIL (ANOTHER OIL
COMPANY), LOCKHEED-MARTIN, AND INGERSOLL-RAND allow cumulative voting.
ALLEGHENY POWER SYSTEMS TRIED to take away cumulative voting, but their
stockholders did not allow this change which would have reduced stockholder
rights.
Current procedures allow nominations to the Committee on Directors and
Board Affairs (hereafter called "Affairs") by holders of not less than 200
shares.* However, the Affairs Committee rarely, if ever, approves any
stockholder candidates and effectively becomes a "GATEKEEPER" for the
Board. This pre-empts stockholder rights. Nomination at the Annual Meeting
itself is a SHAM since only "TOKEN" votes will be counted, because most
ballots are cast by proxy BEFORE THE MEETING.
In the last two years, two directors have been appointed that were NOT
initially approved by Mobil stockholders. Presently, an 80% affirmative
vote is needed to remove an incumbent Director. Cummulative [sic] voting,
however, would allow stockholders to remove these directors if the
stockholders wanted to.
Last year this proposal was presented for the first time in recent years
and received 24% affirmative (FOR) votes. Unfortunately, a high percentage
of ballots were abstentions (counted as no votes).
"Corporate Democracy, Inc." supports cumulative voting. WE strongly
encourage you to mark FOR on your ballot. Thanks.
*More shares are required TO NOMINATE a Director than TO BE a Director.
Interestingly, one Director only beneficially owned 100 SHARES at the 1996
Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF THIS
PROPOSAL.
Proposals calling for cumulative voting in the election of directors have
been submitted eight times in the past, most recently last year, and each was
defeated by an overwhelming majority of the votes cast on the proposal. The
Board of Directors believes that in a large publicly-held company such as
Mobil, each director should feel a responsibility to represent the
stockholders as a whole and not any special group of stockholders. Directors
elected through cumulative voting tend to be representatives of separate
groups of stockholders, each looking after special interests, and not working
together for the maximum benefit of all stockholders. The Board of Directors
therefore recommends a vote against the proposal.
FOR THE FOREGOING REASONS, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE ADOPTION OF THE PROPOSAL.
ITEM 6--DISCONTINUE GRANTS OF STOCK OPTIONS TO DIRECTORS AND OFFICERS
Management has been advised that Robert D. Morse, 212 Highland Ave.,
Moorestown, N.J. 08057-2717, the holder of 1,000 shares of Mobil common stock,
intends to submit the following proposal at the meeting:
PROPOSAL:
I propose that the Officers and Directors consider the discontinuance of
all options, rights, SAR's, etc. after termination of any existing
programs. This does not include any programs for employees.
REASONS:
These increased benefits have failed to produce the claim that it adds to
shareholder value and retains qualified personnel, simply because another
firm can offer higher benefits. These programs reduce your equity
14
at every redemption, increase administration costs of record keeping, and
proxy space; as much as 29 pages were used by one company on these programs
of self-benefits. Officers and directors are compensated enough to buy on
the open market, just as you and I, if they are so inclined. Please vote
YES and vote NO on nominees until they stop this practice. There were 19
million votes cast FOR in 1996, representing a good many shareholders.
If officers filled out a daily work-sheet, what would the output show?
Thank you!
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF THIS
PROPOSAL.
Mobil has not in the past granted stock options to its non-employee
directors. Accordingly, this proposal asks Mobil to consider the termination
of its practice of granting stock options to those employees who are directors
and/or officers (at present, there are 11 such employees). There would be no
change, however, in Mobil's practice of granting options to other key
employees who are not directors or officers (at present, over 1,200 such
employees are eligible for such grants).
Your Board sees no valid reason, and the proponent does not offer one, for
the adoption of a policy under which options would no longer be granted to 11
key employees who serve as directors and/or officers but could continue to be
granted to more than 1,200 other key employees who are not directors or
officers. More importantly, however, your Board believes strongly that
terminating the practice of granting stock options to any group of key
employees would not be in the interests of the stockholders.
Mobil grants stock options to key employees, including those who are
directors and/or officers, to emphasize the importance of increasing
stockholder value over the long term, and to encourage and facilitate the
employees' personal ownership of Mobil common stock. Under Mobil's stock
option program, each option's exercise price is the market price of the
Corporation's common stock on the date of grant. Thus, for the option to be of
value to the employee, the market price of the common stock must increase.
This serves to link directly the financial interests of key employees with
those of the stockholders, which helps to focus employee attention on
thestrategies and actions needed to create and enhance value for stockholders
over the long term. Eliminating this program for any group of key employees,
including those who are directors and/or officers, would, in the Board's view,
weaken this link in respect of such employees and therefore not be in the
stockholders' interests.
Mobil's stock option program also helps facilitate key employees' personal
ownership of Mobil common stock, which again serves to align their interests
with those of the stockholders. In this connection, the Company has developed
stock ownership guidelines to encourage all employees who participate in the
program to utilize the program for purposes of investing in and holding Mobil
stock. Eliminating this program for any group of key employees, including
those who are directors and/or officers, would make it substantially more
difficult for these employees to achieve significant stock ownership, a
consequence which, the Board believes, would not be in the stockholders'
interests.
Terminating the practice of granting stock options to employees who are
directors and/or officers could also adversely affect the Company's ability to
attract, retain and motivate the highly-qualified individuals needed to serve
in these positions. It would, in addition, remove a crucial element of
flexibility in setting their compensation and would place the Company at a
competitive disadvantage. Your Board believes that these consequences, too,
would not be in the stockholders' interests.
FOR THE FOREGOING REASONS, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE ADOPTION OF THE PROPOSAL.
ITEM 7--PROHIBIT EXECUTIVES FROM EXERCISING STOCK OPTIONS FOR SIX MONTHS AFTER
ANNOUNCEMENTS OF WORKFORCE REDUCTIONS
Management has been advised that the Teamsters Affiliates Pension Plan, 25
Louisiana Avenue, N.W., Washington, D.C. 20001, the holder of 11,400 shares of
Mobil common stock, intends to submit the following proposal at the meeting:
RESOLVED: That Mobil Corporation stockholders urge the Board of Directors
take the necessary steps to adopt a policy that no executives may cash in
on stock options within six months of the announcement of a significant
workforce (more than 1% of total workforce) reduction. This policy shall be
created in such a manner that it applies only to future contracts and does
not affect any current contractual obligations.
15
SUPPORTING STATEMENT: Stock options were created to reward good
performance. This proposal would help to ensure that options reward real
improvements in performance, rather than short-term stock boosts which are
sometimes associated with the announcements of major layoffs.
In April, 1995, Mobil Oil announced quarterly profits 19% above the
previous year's level. In early May, Mobil announced it would lay off 4,700
workers or about 9.2% of its workforce. On that day the market responded
enthusiastically by boosting the stock price $3.875. In that single day the
value of options held by CEO Lucio Noto increased by $995,166, nearly one
million dollars.
While Wall Street may give a temporary boost to stock prices at layoff
announcements, there is growing concern that downsizings do not translate
into long-term benefits for shareholders. Author Timothy Carpenter likens
such layoffs to "converting your favorite horse to the commodity status of
refined glue. Yes, it can be more efficient and profitable, but who or what
will replace the horse?"
A recent 7-year study of 25 large corporations noted that a 10% reduction
in employment caused an average of only a 1.5% reduction in operating
costs. After three years, the average downsized company's stock was up only
4.7%, compared with a typical increase of 34.4% for similar companies in
the same field that didn't reduce staff to the same extent.
As investors with a long-term horizon interested in building our
investments into the next century, we believe long-term growth at Mobil is
served by linking options to long-term company growth, rather than stock
market blips that have more to do with the zeitgeist on Wall Street than
with the real value of the company.
Mobil has demonstrated verbally its commitment to steps that promote the
long-range health of the company. Last year, Mobil representatives engaged
in productive discussions with several institutional shareholders about how
their relations with the military government of Nigeria might bear on the
stability of our company's oil production there given the potential for
civil war and retaliation against the government. Mobil responded with a
special shareholder report.
Similarly, we think this resolution will help Mobil executives sharpen
their focus on long- term as opposed to short-term solutions.
For the above reasons we urge you to vote FOR this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF THIS
PROPOSAL.
At Mobil, significant reductions in force are the result of restructurings
of the way Mobil conducts its business. Mobil does not like to undertake these
restructurings, nor does it do so lightly--each is preceded by extensive
studies. They are not undertaken simply to "hype" the stock price in the short
term. The fact is that Mobil's competitors are engaged in similar efforts, and
thus the fundamental purpose of the restructurings is to position Mobil to
compete more effectively, for the long term benefit of the shareholders and
continuing employees. As stated by Mobil's Chairman, Mr. Noto, when he
announced the restructuring which resulted in the workforce reduction cited by
the proponent: "Failure to change means failure to compete in the long term."
Your Board believes that effective mechanisms already exist to ensure that
Mobil executives focus on the long term. This focus is provided, in
particular, by Mobil's executive compensation program, of which stock option
grants are a key component, which provides executives with incentives and
rewards linked to growth in long-term shareholder value. Stock options are
granted also to encourage and facilitate executives' personal ownership of
Mobil stock, and Mobil has established stock ownership guidelines which
provide a strong incentive for executives to utilize their options to become
significant shareholders.
Moreover, the terms of Mobil's stock options serve to motivate Mobil
executives to act with a long-term view. Options now granted are not
exercisable for a period of three years from the date of grant. Since options
are granted each year, this rolling three-year exercise bar provides
executives with a very strong, continuing motivation to focus on the long
term, because at all times, executives have a substantial number of
unexercisable options, which will only have value if the stock price
appreciates over the long term.
16
The long-term returns that Mobil has provided to its shareholders
demonstrate unquestionably that decisions by Mobil executives on critically
important business issues are made with a long-term view. Among the most
significant of these decisions, of course, are decisions to restructure, and
in this connection, Mobil has been actively engaged in restructuring different
aspects of its business since the beginning of this decade. Over the past five
years of this period, the cumulative total return to Mobil's shareholders has
been better than the returns provided both by Mobil's peers and by the S&P 500
Index, as shown in the Performance Graph on page 21.
The ostensible purpose of this proposal is to help Mobil executives focus on
the long term rather than the short term. As noted earlier, your Board
believes that Mobil's executive compensation program already does this.
However, the policy proposed by the proponent is intended to disadvantage
executives when decisions are made to restructure the way in which the Company
conducts its business, and thereby discourage them from making those
decisions. But since such decisions are, as described above, made to benefit
the shareholders over the long term, and indeed have produced outstanding
results over that term, the policy actually seeks to discourage executives'
actions which benefit the shareholders' long-term interests.
FOR THE FOREGOING REASONS, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE ADOPTION OF THE PROPOSAL.
---------------
EXECUTIVE COMPENSATION
MANAGEMENT COMPENSATION AND ORGANIZATION COMMITTEE REPORT
The Management Compensation and Organization Committee of Mobil's Board of
Directors consists of six directors who are neither employees nor officers of
the Company. The Committee regularly reviews the Corporation's executive
compensation policies and programs and determines the compensation of the
senior executive officers. The Committee's decisions on compensation of the
Chairman and Chief Executive Officer and other employee directors are reviewed
with and approved by all of the non-employee directors, who constitute a
majority of the Board.
The executive compensation program includes four elements which, in the
Committee's view, constitute a flexible and balanced method of establishing
total compensation for senior management. The four compensation elements,
further discussed below, are: base salary, short-term incentive, long-term
incentive, and stock options.
The Committee's overall philosophy regarding the compensation of Mobil's
executive officers is that such officers should receive total compensation
that is equal to the average for comparable positions paid by the seven
petroleum comparator or peer companies referred to under "Base Salaries" below
when the Corporation's performance is average compared to those companies;
total compensation that is below the average for comparable positions when the
Corporation's comparative performance is below average; and total compensation
that is above average for comparable positions when the Corporation's
comparative performance is above average.
BASE SALARIES
The Committee annually reviews salary ranges for senior positions and
approves adjustments necessary to align these ranges with the competitive
rates of pay reported by seven major petroleum companies for similar
positions. These companies constitute Mobil's petroleum comparator group, as
named in the Performance Graph on page 21, except that the salary data for the
U.S. subsidiaries of British Petroleum Company p.l.c. and Royal Dutch
Petroleum Company/"Shell" Transport and Trading Company p.l.c. are used
because parent company data are not available. These seven companies have been
chosen as comparators because they are the major companies in direct
competition with Mobil in most of its areas of business.
17
The Committee annually adopts guidelines for executive salary increases
which are consistent with guidelines for all U.S. salaried employees. These
guidelines are generally based on the average salary increase budget within
the comparator group. Actual salaries within the established salary range are
determined based on the individual executive's performance and experience
level.
The Committee's guidelines apply to annual periods beginning on July 1. The
guidelines adopted by the Committee for the years beginning July 1, 1995 and
July 1, 1996 provided for lump sum payments to all U.S. salaried employees in
each of such years in lieu of increases to their base salaries. These
guidelines were adopted to permit the salary ranges and salaries of U.S.
salaried employees who are not eligible to receive short-term incentive awards
under the short-term incentive program described below to become aligned with
those of the groups of companies with which they are compared (which are
broader than the petroleum comparator group) and to facilitate implementation
of a variable pay program for such employees. The practice of paying lump sums
in lieu of increases in base salaries was extended, however, to employees who
are eligible for short-term incentive awards, consistent with the principle
that the same guidelines should apply to all U.S. salaried employees.
Accordingly, Mr. Noto received a lump sum payment of $50,000 last year, in
lieu of an increase to his base salary. This payment is included under the
heading "Other Compensation" in the Summary Compensation Table on page 22.
Mr. Noto's base salary continues to be substantially below both the average
and median base salary paid for a comparable position by the companies in the
petroleum comparator group.
SHORT-TERM INCENTIVE PROGRAM
The goal of the short-term incentive program is to place a portion of
executives' annual cash compensation at risk to encourage and reward sustained
high performance each year.
Under guidelines adopted by the Committee for administering the 1995 Mobil
Incentive Compensation and Stock Ownership Plan (the "1995 Plan"), under which
short-term incentive awards for 1996 were made, a short-term incentive award
target has been set for each eligible employee. This target is the difference
between the estimated total cash compensation (base salary plus short-term
incentive award) for comparable positions at the petroleum comparator
companies and the midpoint of the salary range for the employee's salary
grade. This target is then multiplied by a performance factor which, in the
case of the Chairman and Chief Executive Officer and the other four executive
officers identified in the Summary Compensation Table on page 22 (the "named
executive officers"), can range from 0 to 1.5 depending equally on the
Corporation's ranking in Return on Capital Employed and its Earnings per Share
growth during the preceding year, in each case relative to that of the peer
companies during the same year.
1996 was an excellent year for the industry in general, and Mobil achieved
record operating earnings. Based on the Corporation's performance during 1996,
however, Mobil's ranking among its peers was fourth in Return on Capital
Employed and seventh in Earnings per Share growth, indicating a somewhat below
average performance factor of .80. In addition, Mr. Noto was of the view, with
which the Committee concurred, that the operating performance in some segments
of the Company's business was sub-optimal. Accordingly, the Committee approved
an award of $650,000 for Mr. Noto, which was 11% less than the amount
determined by multiplying Mr. Noto's incentive award target by the 1996
performance factor. The Committee notes that this award does not exceed the
maximum award payable to Mr. Noto under the terms of the 1995 Plan as approved
by shareholders.
LONG-TERM INCENTIVE PROGRAM
The long-term incentive program links executive rewards to growth in long-
term shareholder value. The program focuses executives' attention on the
Corporation's performance over a period longer than one year. In the opinion
of the Committee, this program is a key tool in building value for Mobil
shareholders, because it rewards the strategic decisions on capital
investments which are necessary for success in the petroleum industry. It is
structured in four-year performance cycles during which achievement of longer
term financial, strategic, and operational objectives is measured. Contingent
stock equivalents (also know as performance shares) are allotted annually at
the beginning of each four-year performance period. The number of performance
shares allotted to each executive is calculated by multiplying base salary by
a percentage which varies with the position level, and then converting these
amounts into performance shares at the average market price over the 30
trading days immediately preceding the date of allotment. In accordance with
the 1991 Mobil Incentive Compensation and Stock
18
Option Plan, under which the contingent allotments for the 1993-1996 period
were made, amounts equal to dividends paid on Mobil common stock are paid
during the four-year cycle for the performance shares allotted. At the end of
the four-year performance period, the Committee determines what percent of the
performance share allotments should be converted into actual awards. The
policy for determining actual awards is based on Mobil's performance relative
to its petroleum comparator group using five criteria: earnings per share
growth, return on capital employed, total shareholder return, other defined
operating and financial factors relative to competition, and the degree to
which Mobil's internal corporate objectives are achieved. In assessing
performance for the cycle, the Committee assigns equal weight, or 20%, to each
of the five criteria. If the Committee approves any actual awards based on
Mobil's relative performance, its policy is to approve awards within a range
of 40% to 120% of the performance shares allotted. The design of the Plan
provides a normal award of 100% when Mobil achieves average performance within
its peer group, with higher or lower percentage payments for higher or lower
than average performance.
Mobil's performance for the 1993-1996 period was compared in detail with the
performance of the seven companies in its petroleum comparator group, using
the criteria defined above. Relative to the comparator group Mobil's annual
total return to shareholders ranked third at 22.6% over the four year cycle.
Mobil's relative ranking in earnings per share growth decreased over the
previous cycle to fourth and return on capital employed remained about the
same as in the last cycle, in the middle of the comparator group. Mobil
successfully achieved, or made significant progress towards achieving, all of
its stated internal objectives, and was especially successful in its cost
reduction initiatives. Taking all of these factors into account, the Committee
judged Mobil's overall performance to be at the average of its peers during
the performance cycle, and approved actual awards for the 1993-1996 period at
100% of the performance shares allotted.
These contingent allotments were made in January 1993 when the market value
of Mobil common stock was $62.54 per share. Actual awards at the end of the
cycle thus include appreciation in the market value of Mobil common stock of
$67.20 per share between January 1993 and January 1996. As a result, Mr. Noto
received an actual award of $1,089,086. This was based on an allotment of
8,394 shares which, based on the market value of Mobil common stock at the
time of the allotment of $62.54 per share, had a nominal "value" at the time
of grant equal to his then-annual salary as President of the Company.
STOCK OPTIONS
Stock options are granted to emphasize the importance of increasing
shareholder value over the long term, and to encourage and facilitate the
executives' personal ownership of Mobil stock. The Committee's policy is to
grant options annually, at fair market value, to sustain executives' long-term
perspective. The Committee has established stock ownership guidelines which
provide a strong incentive for executives to strive for long-term results and
to become significant Mobil shareholders. These guidelines call for executives
to own Mobil stock equal in value to a specified multiple of their respective
annual salaries, with the multiple increasing with increases in executives'
salary grades. A five year period for compliance with these guidelines is
provided for executives moving to positions requiring higher levels of stock
ownership.
Stock Option grant size is related to the level of responsibility and
individual performance of executives and is intended, in conjunction with the
Long-Term Incentive Program, to provide executives with the opportunity for
total average long-term incentive compensation equivalent to that afforded for
comparable positions by the petroleum comparator companies over time. Because
a number of Mobil's competitors have just one form of long-term compensation,
generally stock options, the grant size is not targeted to the number of
options granted by other companies.
In 1996, the Committee awarded Mr. Noto 70,000 stock options. This is the
same number granted in 1995 and the Committee believes it is competitively
justified as described above.
SUMMARY
The Committee believes that the compensation program described above
effectively links executive and shareholder interests and provides incentives
that are consistent with the long-term strategies required for success in the
petroleum industry. Generally, a majority share of senior executives' total
compensation is structured in the form of incentives which reward the
executive depending on corporate and individual performance. Within the
program's mix of performance-based incentives, an executive has an opportunity
to earn above average total compensation for above average corporate and
individual performance.
Each year, the Committee reviews the compensation program, giving particular
attention to the program's linkage to increasing shareholder value while
maintaining competitive total compensation within the petroleum
19
comparator group. Since the competitive market for executive talent extends
beyond the petroleum industry, cross checks are also made each year against a
broader comparator group. As in the prior year, in 1996 an independent
consultant reviewed for the Committee the total compensation of the Chairman
and Chief Executive Officer and other senior executives. This review was based
on a survey of comparable positions at eighteen other major corporations of
similar size, complexity and quality from both the oil and other industries.
In 1996, Mobil's total compensation for its senior executives was somewhat
below the average of the comparator group, at the 44th percentile, while the
Company's total return to shareholders was above the average of the group, at
the 83rd percentile.
EXECUTIVE COMPENSATION TAX DEDUCTIBILITY
Section 162(m) of the Internal Revenue Code of 1986 (the "Code") limits the
Company's Federal income tax deduction for certain executive compensation in
excess of $1 million paid to named executive officers. The $1 million
deduction limit does not apply, however, to "performance-based compensation"
as that term is defined in Section 162(m)(4)(C) of the Code and regulations
promulgated thereunder.
All awards made to the named executive officers under the 1995 Plan are
intended to qualify as performance-based compensation and should therefore be
fully deductible for Federal income tax purposes. Awards made under prior
Plans are deductible for Federal income tax purposes to the extent permitted
by transitional rules provided by Internal Revenue Service regulations.
The Committee recognizes the possibility that at times, the amount of the
base salary of a named executive officer, and other compensation not described
in the preceding paragraph, may exceed $1 million and therefore may not be
fully deductible for Federal income tax purposes. The Committee will make a
determination at any such time whether to authorize the payment of such
amounts without regard to deductibility or whether the terms of such payment
should be modified so as to preserve any deduction otherwise available.
Management Compensation and Organization Committee
Robert G. Schwartz, Chairman Samuel C. Johnson
Donald V. Fites J. Richard Munro
Allen F. Jacobson Charles S. Sanford, Jr.
20
PERFORMANCE GRAPH
- -----------------
The following graph compares the yearly percentage change in the cumulative
total shareholder return, including reinvested dividends, on Mobil common stock,
with two other indexes:
COMPARISON OF 5 YEAR TOTAL RETURN(1)
MOBILE, S&P 500 INDEX AND SEVEN MAJOR PETROLEUM COMPANIES(2)
Measurement Period S&P PETROLEUM
(Fiscal Year Covered) MOBIL 500 INDEX COMPANIES
- --------------------- --------------- --------- ----------
Measurement Pt-12/31/1991 $100 $100 $100
FYE 12/31/1992 $ 98 $108 $100
FYE 12/31/1993 $128 $118 $120
FYE 12/31/1994 $142 $120 $129
FYE 12/31/1995 $196 $165 $169
FYE 12/31/1996 $221 $203 $216
Assumes $100 invested on December 31, 1991 in Mobil common stock, S&P 500 Index,
and a composite index, weighted by market capitalization each year, of the
following seven major petroleum companies: Exxon Corporation, Chevron
Corporation, Amoco Corporation, Royal Dutch Petroleum Company/"Shell" Transport
and Trading Company p.l.c., Atlantic Richfield Company, British Petroleum
Company p.l.c., and Texaco, Inc.
- --------------
(1) Total return assumes reinvestment of dividends.
(2) Fiscal year ending December 31.
21
The following table presents information for the past three years for the
Chief Executive Officer and the other four most highly compensated executive
officers of Mobil.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
---------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------- ---------- ----------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION COMPEN- OPTIONS/ LTIP COMPEN-
AS OF DECEMBER 31, 1996 YEAR SALARY BONUS SATION(1) SARS(2) PAYOUTS SATION(3)
- --------------------------- ---- -------- -------- --------- ---------- ---------- ---------
Lucio A. Noto........... 1996 $850,000 $650,000 $ 72,883 70,000 $1,089,086 $113,000
chairman of the board 1995 833,333 675,000 93,028 70,000 870,733 74,383
and chief executive 1994 770,833 525,000 112,533 70,000 609,713 53,958
officer, Mobil
Corporation
Paul J. Hoenmans........ 1996 745,000 350,000 77,110 35,000 1,369,077 82,110
director and executive 1995 745,000 400,000 103,972 35,000 1,109,089 94,950
vice president, Mobil 1994 725,000 380,000 130,234 35,000 789,011 50,750
Corporation
Eugene A. Renna......... 1996 670,000 350,000 64,468 35,000 1,140,984 76,860
director and executive 1995 660,000 400,000 89,316 35,000 1,008,212 54,760
vice president, Mobil 1994 636,667 380,000 113,512 35,000 717,274 44,567
Corporation
Robert O. Swanson....... 1996 600,000 350,000 54,325 35,000 954,280 71,960
director and executive 1995 600,000 400,000 73,453 35,000 788,269 71,960
vice president, Mobil 1994 547,500 335,000 91,848 35,000 553,602 38,325
Corporation
Thomas C. DeLoach, Jr... 1996 470,000 225,000 32,530 27,500 598,906 49,400
senior vice president 1995 470,000 260,000 44,254 27,500 481,174 49,400
and chief financial 1994 421,250 250,000 53,550 25,000 290,397 29,488
officer, Mobil
Corporation
- -------
(1) Dividend equivalent payments in respect of allotments of contingent share
equivalents under the long-term incentive program.
(2) Number of shares covered by grants may be exercised as stock options only.
(3) Company allocations to Mobil's Supplemental Employees Savings Plan and in
1996 and 1995, respectively, transitional lump sum payments of $50,000 and
$15,000 to Mr. Noto, $28,000 and $40,000 to Mr. Hoenmans, $28,000 and
$8,000 to Mr. Renna, $28,000 and $28,000 to Mr. Swanson, and $20,000 and
$20,000 to Mr. DeLoach as a result of a change in the salary
administration policy for all U.S. salaried employees.
22
THE FOLLOWING TWO TABLES PRESENT FURTHER DETAILS ON STOCK OPTIONS.
OPTION/SAR GRANTS IN 1996
INDIVIDUAL GRANTS
----------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(2) GRANT DATE
OPTIONS EMPLOYEES OR BASE EXPIRATION ------------------------------------ PRESENT
NAME GRANTED(1) IN 1996 PRICE DATE 0% 5% 10% VALUE(3)
---- ---------- ---------- -------- ---------- ------- ---------- ----------- ----------
$115.00(4) $ 187.32(4) $ 298.28(4)
Lucio A. Noto........... 70,000 3.1% $115.00 2/21/2006 $ 0 5,062,400 12,829,600 $1,397,900
Paul J. Hoenmans........ 35,000 1.6% $115.00 2/21/2006 $ 0 2,531,200 6,414,800 $ 698,950
Eugene A. Renna......... 35,000 1.6% $115.00 2/21/2006 $ 0 2,531,200 6,414,800 $ 698,950
Robert O. Swanson....... 35,000 1.6% $115.00 2/21/2006 $ 0 2,531,200 6,414,800 $ 698,950
Thomas C. DeLoach, Jr. . 27,500 1.2% $115.00 2/21/2006 $ 0 1,988,800 5,040,200 $ 549,175
- -------
(1) Number of shares covered by grants which may be exercised as stock
options. Options may be granted to employees as Incentive Stock Options as
defined in the Internal Revenue Code ("qualified options") or options
which are not so qualified ("non-qualified options"). All options are
granted at an option price equal to the fair market value of a share of
Mobil common stock on the date of grant (but not less than the par value)
for up to ten years after grant as determined by the Management
Compensation and Organization Committee. All options are 100% exercisable
after three years. Options are not transferable by the employee. If the
employee dies before exercising an option, it may be exercised on behalf
of his or her estate or distributed to an heir or legatee.
(2) The figures shown are potential future undiscounted values and are
unrelated to the Grant Date Present Values shown in the next column.
(3) Value based on modified Black-Scholes option pricing model which includes
assumptions for variables such as interest rates, stock price volatility
and future dividend yield. The Company's use of this model should not be
construed as an endorsement of its accuracy. Whether the model assumptions
used will prove to be accurate cannot be known at the date of grant. The
Black-Scholes model produces a value based on freely tradeable securities.
Mobil employee stock options are not transferable so the "present value"
shown cannot be realized by the holder. Recognizing the limitations of the
model as described, the following assumptions were used to estimate the
Grant Date Present Value: dividend yield of 3.22%, five-year zero-coupon
risk-free interest rate of 5.55%, estimated volatility of 17% and
estimated average expected option term of five years. Mobil stock options
are issued at the fair market value of its stock on the date of grant, and
terminate if unexercised after ten years. The holder can derive a benefit
only to the extent the market value of Mobil common stock is higher than
the exercise price at the date of the actual exercise.
(4) If the assumed annual rate of stock price appreciation of 0%, 5% or 10%
per year should occur, the market value per share of Mobil common stock at
the end of the ten-year option term would be $115.00, $187.32, or $298.28,
as the case may be.
23
AGGREGATED OPTION/SAR EXERCISES IN 1996
AND YEAR-END OPTION/SAR VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS(4)
FY-END AT FY-END
---------------- ----------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(1) REALIZED(2) UNEXERCISABLE(3) UNEXERCISABLE(3)
---- --------------- ----------- ---------------- ----------------
Lucio A. Noto........... 16,444 $ 883,865 151,791 $7,798,559
140,000 2,953,125
Paul J. Hoenmans........ 28,251 $1,566,986 146,749 $8,089,689
70,000 1,476,563
Eugene A. Renna......... 6,073 $ 327,185 78,986 $4,069,507
70,000 1,476,563
Robert O. Swanson....... -- -- 35,000 $1,454,688
70,000 1,476,563
Thomas C. DeLoach, Jr... 1,239 $ 40,345 97,372 $5,372,446
55,000 1,160,156
- -------
(1) Represents number of shares covered by stock options or SARs exercised.
(2) Difference between exercise price and market value on date of exercise.
(3) Qualified options granted prior to 1995 were 100% exercisable after one
year; non-qualified options granted prior to 1995 were 50% exercisable
after one year; 100% exercisable after two years. All options granted in
1995 and thereafter are 100% exercisable after three years.
(4) Value of unexercised in-the-money options is based on the December 31,
1996 closing stock price of $122.25.
---------------
LONG-TERM INCENTIVE PROGRAM
CONTINGENT ALLOTMENTS IN 1996
NUMBER OF PERFORMANCE OR OTHER ESTIMATED FUTURE PAYOUTS
CONTINGENT STOCK PERIOD UNTIL -------------------------------
NAME EQUIVALENTS MATURATION OR PAYOUT THRESHOLD TARGET MAXIMUM
---- ---------------- -------------------- --------- ---------- ----------
Lucio A. Noto........... 9,020 1996-1999 $ 0 $1,102,695 $1,654,043
Paul J. Hoenmans........ 5,010 1996-1999 0 612,473 918,709
Eugene A. Renna......... 5,010 1996-1999 0 612,473 918,709
Robert O. Swanson....... 5,010 1996-1999 0 612,473 918,709
Thomas C. DeLoach, Jr... 3,105 1996-1999 0 379,586 569,379
Under this program, allotments of contingent stock equivalents (also known
as performance shares) are determined for participants annually, at the start
of a four-year performance period. These allotments are based on dollar
amounts, determined by reference to a participant's level within the Company
and the midpoint of the participant's salary grade at the beginning of each
period, which are then converted into performance shares at the average market
price for Mobil common stock over the 30 trading days immediately preceding
the allotment. Over the four-year cycle, dividend equivalents will be credited
with respect to these allotments and will be immediately converted into
additional performance shares. After the end of the period, the Management
Compensation and Organization Committee of the Board of Directors determines
the extent to which the contingent allotments should be converted into actual
awards. The Committee's policy in granting actual awards is based on Mobil's
performance relative to its petroleum comparator group using three criteria:
earnings per share growth, return on capital employed, and total shareholder
return.
Payouts under the program are based in part on the price of Mobil's common
stock. The price used for the estimates provided is $122.25 per share, the
closing price of Mobil common stock on the New York Stock Exchange on December
31, 1996. Actual payouts, if any, will be based on the mean of the high and
low sales prices of Mobil common stock on such Exchange for a period of 30
trading days immediately preceding the determination of the Committee referred
in the preceding paragraph.
24
PENSION TABLE
Mobil's Retirement Plan is qualified under the Internal Revenue Code of
1986, as amended, and is non-contributory. Employees who retire or terminate
as vested participants are entitled to receive retirement benefits computed
under a final average pay formula and may select either a life annuity or one
of several forms of settlement having an equivalent actuarial value at
retirement. The approximate annual annuity payable to employees in the higher
salary classifications is shown in the following table. To the extent these
amounts cannot be provided under the Retirement Plan due to the limitations
imposed by Sections 415 and 401(a)(17) of the Code, they will be provided for
Messrs. Noto, Hoenmans, Renna, Swanson and DeLoach under a supplemental
benefit plan which is not qualified under the Code.
ESTIMATED ANNUAL BENEFITS UNDER FINAL AVERAGE PAY FORMULA
EARNINGS CREDITED
FOR RETIREMENT
PLAN BENEFITS* YEARS OF SERVICE AT RETIREMENT
----------------- ------------------------------------------------------------------------
15 20 25 30 35 40 45
-------- -------- ---------- ---------- ---------- ---------- ----------
$ 600,000.............. $144,000 $192,000 $ 240,000 $ 288,000 $ 336,000 $ 384,000 $ 432,000
800,000.............. 192,000 256,000 320,000 384,000 448,000 512,000 576,000
1,000,000.............. 240,000 320,000 400,000 480,000 560,000 640,000 720,000
1,200,000.............. 288,000 384,000 480,000 576,000 672,000 768,000 864,000
1,400,000.............. 336,000 448,000 560,000 672,000 784,000 896,000 1,008,000
1,600,000.............. 384,000 512,000 640,000 768,000 896,000 1,024,000 1,152,000
1,800,000.............. 432,000 576,000 720,000 864,000 1,008,000 1,152,000 1,296,000
2,000,000.............. 480,000 640,000 800,000 960,000 1,120,000 1,280,000 1,440,000
2,200,000.............. 528,000 704,000 880,000 1,056,000 1,232,000 1,408,000 1,584,000
2,400,000.............. 576,000 768,000 960,000 1,152,000 1,344,000 1,536,000 1,728,000
2,600,000.............. 624,000 832,000 1,040,000 1,248,000 1,456,000 1,664,000 1,872,000
- -------
* All benefits shown are annual straight life annuities based on current
earnings credited for Retirement Plan benefits. Earnings credited for
Retirement Plan benefits represent one-third of the highest consecutive 36
months of base salary ("Salary" in the table on page 22) out of the last 120
months before retirement, plus one-third of 100% of the highest three
consecutive completed calendar years of short-term incentive compensation
("Bonus" in the table on page 22) awarded out of the last 10 completed
calendar years before retirement. Actual benefit payments would be slightly
lower than shown after integration with Social Security benefits, which
would vary with individual wage histories. Estimated credited years of
service are as follows for Mr. Noto, 36 years; Mr. Hoenmans, 42 years; Mr.
Renna, 28 years; Mr. Swanson, 39 years; and Mr. DeLoach, 28 years.
SPECIAL ARRANGEMENTS RELATING TO POSSIBLE CHANGE OF CONTROL--The Board of
Directors has defined certain events, which are described below, the
occurrence of which might precede either a threat or a major challenge to
control of the Corporation. The Board has indicated that certain arrangements
affecting executive employees, including Messrs. Noto, Hoenmans, Renna,
Swanson, and DeLoach, might, in the discretion of the Management Compensation
and Organization Committee, be implemented upon the occurrence of such events.
If an event that might precede a threat to control should occur, these
arrangements are accelerated consideration and vesting of awards under the
short-term and long-term incentive compensation programs and the Mobil
Management Retention Plan and acceleration of the right to exercise any
outstanding stock options not currently exercisable. If an event that might
precede a major challenge to control should occur, these arrangements are
payment of vested awards under the short-term and long-term incentive
compensation programs and funding of currently unfunded employee benefits. In
addition, if the employment of such persons is terminated within two years of
a change of control, as defined below, they would receive payment of special
termination allowances and reimbursement of any fees and expenses of counsel
in connection with employee claims and costs of financial counseling and tax
planning. The Board has also determined that special termination allowances
would be paid to all other employees whose employment is terminated within
designated periods following a change of control. Awards which would currently
be payable as of December 31, 1996, under Mobil's special termination
allowance plan, upon involuntary termination of employment after a change of
control, are as follows: Mr. Noto, $3,050,000; Mr. Hoenmans, $2,290,000; Mr.
Renna, $2,140,000; Mr. Swanson, $2,000,000; and Mr. DeLoach, $1,460,000.
25
Under Mobil's Management Retention Plan, conditional deferred awards, the
principal amount of which cannot exceed $1 million for any one person during
his or her working lifetime, have been made to selected executives whose
continued success is considered key to the long-term success of Mobil.
Payments, including either notional interest on the awards or the cash value
of dividend equivalents if awards are converted to share equivalents, are made
only after normal retirement, approved early retirement, death or long-term
disability. In the event of a change of control of the Corporation, deferred
awards plus either interest or the cash value of dividend equivalents would be
payable to participants whose employment has been or is to be terminated. The
amounts that would be payable as of December 31, 1996 in such an event are as
follows: Mr. Noto, $1,485,477; Mr. Hoenmans, $1,600,000 ; Mr. Renna,
$1,349,415; Mr. Swanson, $1,698,622, and Mr. DeLoach, $941,226.
The following are the events defined by the Board the occurrence of which
might precede a threat to control of the Corporation: (a) a stockholder or one
of a group of stockholders who or which is the beneficial owner of at least 5%
of Mobil's outstanding stock (an "interested stockholder") proposes removal of
a director or election of a director other than one nominated by the Board,
(b) any stockholder or group of stockholders acting in concert owns
beneficially or has acquired the right to vote shares representing more than
10% of Mobil's outstanding stock, (c) an announcement is made of a serious
tender offer for some or all of Mobil's outstanding stock, or (d) an
interested stockholder proposes a "business combination". A business
combination is (i) a merger between Mobil and the interested stockholder, (ii)
a sale or other disposition by Mobil of assets worth at least $100 million in
a transaction involving the interested stockholder, (iii) the issuance of
securities by Mobil to the interested stockholder in exchange for cash or
property (including stock or securities) worth at least $100 million, (iv) the
adoption of a plan to liquidate or dissolve Mobil, or (v) any reclassification
of Mobil's securities, recapitalization of the Corporation, merger of Mobil
with any of its subsidiaries or any other transaction which would have the
effect of increasing the proportionate share of Mobil's outstanding stock
owned by the interested stockholder. The following are the events defined by
the Board the occurrence of which might precede a major challenge to control
of the Corporation: (1) a date is set for a meeting of stockholders to
consider a business combination, (2) an interested stockholder begins to
solicit proxies to propose the election of a director, removal of an incumbent
director or a business combination, (3) an announcement is made of a serious
tender offer for some or all of Mobil's outstanding stock, or (4) any
stockholder or group of stockholders acting in concert owns beneficially or
has acquired the right to vote shares representing more than 25% of Mobil's
outstanding stock. A change of control occurs when the incumbent directors
(which term includes subsequent directors who are approved by at least a
majority of the incumbent directors) cease to constitute a majority of the
Board, any stockholder or group of stockholders acting in concert owns
beneficially or has acquired the right to vote shares representing more than
25% of Mobil's outstanding stock, or Mobil's stockholders approve the
liquidation or dissolution of Mobil, the sale of all of Mobil's assets, or a
reorganization or merger following which such stockholders own less than 50%
of the outstanding stock of the reorganized or merged company.
---------------
26
COMMON STOCK AND TOTAL STOCK-BASED HOLDINGS OF DIRECTORS, NOMINEES AND
EXECUTIVE OFFICERS
The following table sets forth, as of March 1, 1997, the shares of Mobil's
common stock, the shares of such stock acquirable within 60 days pursuant to
the exercise of employee stock options, the deferred share equivalents, and
the total Mobil stock-based holdings, which are beneficially owned by each
director and nominee for director, each executive officer named in the Summary
Compensation Table on page 22 who is not a director, and all directors and
executive officers as a group. The table indicates the alignment of these
individuals' personal financial interests with the interests of the Company's
stockholders because the value of their total holdings is dependent upon the
price of Mobil's stock.
SHARES TOTAL
ACQUIRABLE DEFERRED STOCK-
SHARES WITHIN SHARE BASED
DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS OWNED 60 DAYS EQUIVALENTS HOLDINGS
- ------------------------------------------ ------- ---------- ----------- ---------
Lewis M. Branscomb.................... 1,000 0 205 1,205
Thomas C. DeLoach, Jr................. 49,139 97,372 0 146,511
Donald V. Fites....................... 1,870 0 1,811 3,681
Charles A. Heimbold, Jr............... 1,000 0 624 1,624
Paul J. Hoenmans...................... 55,481 163,899 7,836 227,216
Allen F. Jacobson..................... 1,158 0 10,408 11,566
Samuel C. Johnson..................... 20,000 0 205 20,205
Helene L. Kaplan...................... 4,000 0 5,489 9,489
J. Richard Munro...................... 1,000 0 2,687 3,687
Lucio A. Noto......................... 63,342 121,791 12,993 198,126
Aulana L. Peters...................... 100 0 3,610 3,710
Eugene A. Renna....................... 56,855 63,986 0 120,841
Charles S. Sanford, Jr................ 2,001 0 2,039 4,040
Robert G. Schwartz.................... 1,000 0 8,364 9,364
Robert O. Swanson..................... 56,760 35,000 0 91,760
Iain D. T. Vallance................... 0 0 0 0
All directors and executive
officers as a group, including those
named above.......................... 361,055 618,935 56,828 1,036,818
Shares owned include 11,962 shares held by, and shares acquirable within 60
days include 17,150 shares acquirable by, family members or family trusts of
certain officers and directors as to which such persons disclaim beneficial
ownership. Shares owned also include 4,500 shares of restricted stock as to
which certain officers possess sole voting power, but no investment power,
during the restricted period. Sole discretion as to voting and investment
power exists as to all remaining shares which the directors and officers
presently hold. Deferred share equivalents are stock equivalents equal in
value to common stock which earn dividend equivalents equal to dividends
declared on common stock. Incentive awards to employees may be deferred and
paid in deferred share equivalents under the 1995 Mobil Incentive Compensation
and Stock Ownership Plan and its predecessors. Non-employee directors receive
a portion of their annual retainers in such equivalents and may elect to
receive all or part of their fees and the cash portion of their annual
retainers in such equivalents under the Deferred Fee Plan referred to on page
8. In addition, certain non-employee directors have elected to have the
actuarial present values of their accrued benefits under the terminated
retirement plan for non-employee directors credited to deferred share
equivalent accounts, as described under Directors' Meetings and Compensation
beginning on page 8. Individuals credited with deferred share equivalents have
neither investment nor voting powers in respect of such equivalents.
27
No individual named above owns more than 1% of Mobil's outstanding common
stock, nor do all directors and executive officers as a group, including those
named above. As of March 1, 1997, the Trustee under the Employees Savings Plan
of Mobil Oil Corporation held 15,164,859 shares of the common stock of Mobil
in such Plan, which is approximately 3.85% of the total number of shares of
common stock outstanding at that date. As of the same date, the Trustee under
the Mobil Employee Stock Ownership Plan, which is incorporated in the
Employees Savings Plan, held all 87,489 outstanding shares of Series B ESOP
Convertible Preferred Stock. The shares of common stock and preferred stock so
held by such Trustees together represented 5.93% of the votes which may be
cast by the voting securities of Mobil outstanding as of March 1, 1997. All
such shares of common stock are beneficially owned by participants in the
Employees Savings Plan; all such shares of Series B ESOP Convertible Preferred
Stock which have been allocated to participants in the Employee Stock
Ownership Plan, numbering 41,157, are beneficially owned by such participants,
the balance being held for such allocation over the life of the Plan.
---------------
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities and Exchange Act of 1934,
Mobil's directors and officers are required to file reports with the
Securities and Exchange Commission and the New York Stock Exchange, within
specified monthly and annual due dates, relating to their ownership of and
transactions in the Corporation's equity securities. Walter R. Arnheim, an
officer of the Corporation, inadvertently omitted 100 shares from the share
ownership reported in his initial required report and as a result the report
of such ownership was filed after the due date therefor.
---------------
PROXIES AND VOTING AT THE MEETING
Since many Mobil stockholders are unable to attend the Corporation's Annual
Meeting, the Board of Directors solicits proxies to give each stockholder an
opportunity to vote on all matters scheduled to come before the meeting and
set forth in this Proxy Statement. Stockholders are urged to read carefully
the material in this Proxy Statement; specify their choice on each matter by
marking the appropriate boxes on the enclosed proxy card; and sign, date and
return the card in the enclosed envelope.
If no choice is specified and the card is properly signed and returned, the
shares will be voted by the Proxy Committee as recommended by Mobil. A
stockholder who signs a proxy may revoke or revise that proxy at any time
before the meeting or, by voting by ballot at the meeting, cancel any proxy
previously returned.
Stockholder proxies are returned to the Corporation's independent proxy
processing agent and the vote is certified by independent Inspectors of
Election. Proxies and ballots that identify the vote of individual
stockholders are kept confidential until the final vote has been tabulated at
the Annual Meeting, except as necessary to meet legal requirements or in a
contested proxy solicitation, and in cases where stockholders write comments
on their proxy cards.
Mobil's Proxy Committee comprises the Chairman, Lucio A. Noto; Chief
Financial Officer, Thomas C. DeLoach, Jr.; and Secretary of the Corporation,
Charles H. DuBois. Proxy cards, unless otherwise indicated by the stockholder,
also confer upon the Proxy Committee discretionary authority to vote all
shares of the stock represented by the proxies on any matter which properly
may be presented for action at the meeting even if not covered herein. If any
of the nominees for director named in Item 1 beginning on page 4 should be
unavailable for election, the proxies will be voted for the election of such
other person as may be recommended by Mobil in place of such nominee.
QUORUM AND VOTE REQUIRED FOR APPROVAL
The holders of all outstanding shares of Mobil stock are entitled to vote in
person or by proxy on all matters which may come before the meeting. The
holders of shares entitled to cast not less than one-third of the votes must
be present in person or represented by proxy at the meeting in order to
constitute a quorum for the transaction of business; all shares present in
person or represented by proxy are counted for quorum purposes.
28
Directors are elected by a plurality of the votes of the shares present or
represented at the meeting and entitled to vote. Except as stated in Item 2 on
page 10 in respect of the appointment of independent auditors and in Item 3 on
page 11 in respect of the proposal to increase the number of authorized shares
of common stock and change the par value thereof, approval of each other
matter to be voted upon requires the affirmative vote of a majority of the
votes of shares present or represented at the meeting and entitled to vote on
such matter. Where a stockholder by marking a proxy form or ballot withholds a
vote on the election of any director or otherwise indicates that no vote is to
be cast on any specific matter to be voted upon (including a non-vote by a
broker pursuant to the rules of the New York Stock Exchange), such votes are
not counted as entitled to vote with respect to that election or subject
matter, as the case may be. Abstentions are counted as votes cast on any
matter to which they relate, except that they are not so counted for the
purpose of determining whether the percentage tests under the rules of the
Securities and Exchange Commission for resubmission of proxy statement
proposals have been met. Abstentions have the same effect as "no" votes since
in both instances the vote is not part of the affirmative vote required for
approval of the matter voted upon.
ATTENDANCE AT ANNUAL MEETING
All individuals attending must register before entering the meeting hall.
Priority seating will be given to stockholders of record, beneficial owners of
Mobil stock having evidence of such ownership, or their authorized
representatives, and invited guests of management. In addition, a stockholder
may bring a guest. In order that seating may be equitably allocated, a
stockholder wishing to bring more than one guest must write the Secretary of
the Corporation in advance of the meeting and receive written concurrence.
Those unable to attend may request from the Secretary a copy of the report of
the proceedings of the meeting.
PROXY SOLICITATION
The cost of soliciting proxies will be borne by Mobil. To assist in the
proxy solicitation, Mobil has engaged Morrow & Co., Inc. for a fee of $20,000
plus out-of-pocket expenses. Mobil will reimburse brokerage houses, banks and
other custodians, nominees, and fiduciaries for reasonable expenses, in
accordance with the regulations of the Securities and Exchange Commission, the
New York Stock Exchange, Inc. and other exchanges, in sending proxy materials
to beneficial owners.
Dated: March 18, 1997
29
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PRINTED [LOGO OF RECYCLED
IN PAPER APPEARS HERE]
U.S.A.
Mobil Corporation proxy
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SOLICITED BY THE BOARD OF DIRECTORS for Annual Meeting of Stockholders
GRAND BALLROOM
HYATT REGENCY RESTON
RESTON TOWN CENTER
1800 PRESIDENTS STREET
RESTON, VIRGINIA 22090
THURSDAY, MAY 8, 1997 AT 10:00 A.M.
The undersigned hereby appoints Lucio A. Noto, Thomas C. DeLoach, Jr. and
Charles H. DuBois and any one of them, each with power of substitution, the
attorneys of the undersigned to vote all shares held of record on the record
date by the undersigned, as directed and, in their discretion, on all other
matters which may properly come before the 1997 Annual Meeting of Stockholders
of Mobil Corporation, and any adjournment thereof. The undersigned directs said
proxies to vote as specified upon the items shown on the reverse side, which are
referred to in the Notice of Annual Meeting and set forth in the Proxy
Statement.
This card also provides voting instructions for shares held in the Stock
Purchase and Dividend Reinvestment Plan. For participants in the Mobil Oil
Employees Savings Plan and the Mobil Employee Stock Ownership Plan, if you wish
to provide voting instructions for the trustees for shares of Mobil stock
credited to your accounts, please fill in any sign this card and mail it in time
to be received no later than noon on May 5, 1997.
Your vote for five directors may be indicated on the reverse side. Donald V.
Fites, Charles S. Sanford, Jr., Robert G. Schwartz and Iain D.T. Vallance
have been nominated to serve for a term of three years to expire at the Annual
Meeting in 2000. Robert O. Swanson has been nominated to serve for the balance
of a three-year term to expire at the Annual Meeting in 1998.
You are encouraged to specify your choices by marking the appropriate boxes, SEE
REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations.
(Continued, and to be signed, on the reverse side)
. Fold and Detach Here and Read the Reverse Side .
The votes represented by this proxy will be voted as marked Please mark
by you. However, if you execute and return the proxy unmarked, your vote [X]
such votes will be voted "FOR" Proposals 1, 2 and 3 and with
"AGAINST" Proposals 4, 5, 6 and 7. an X
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The Board of Directors Recommends a Vote "FOR" Items 1, 2 and 3.
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1. Election of Directors WITHHELD
FOR FOR ALL FOR AGAINST ABSTAIN
Donald V. Fites [_] [_] 2. Ratification of Inde- [_] [_] [_]
Charles S. Sanford, Jr. pendent auditors
Robert G. Schwartz
Iain D. T. Vallance 3. Increase the number of [_] [_] [_]
Robert O. Swanson authorized shares of
common stock
Withheld for the following only (write the
nominee's name(s) in the space below)
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The Board of Directors Recommends a Vote "AGAINST" Items 4,
5, 6 and 7.
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FOR AGAINST ABSTAIN
4. Limit authority to [_] [_] [_]
issue preferred
stock
5. Cumulative voting [_] [_] [_]
6. Discontinue grants of [_] [_] [_]
stock options to
directors and officers
7. Prohibit stock option [_] [_] [_]
exercises after work-
force reductions
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Please date and sign below as your name appears to the left and return in the
enclosed envelope. If acting as executor, administrator, trustee, guardian,
etc., you should so indicate when signing. If the signer is a corporation,
please sign the full corporate name, by a duly authorized officer. If shares
are held jointly, each stockholder name should sign.
Dated , 1997
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Signature
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Signature if held jointly
. Fold and Detach Here and Read the Reverse Side .
Mobil Corporation
Dear Mobil Stockholder:
Please sign and date the above proxy card and return it promptly using the
enclosed envelope. Your voting instructions are confidential and will be seen
only by authorized personnel of the independent inspectors of election, except
as otherwise provided in the proxy statement.
Thank you for voting.
Charles H. DuBois
Secretary