SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
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
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- ------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- ------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
- ------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- ------------------------------------------------------------------------------
(5) Total fee paid:
- ------------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- ------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- ------------------------------------------------------------------------------
(3) Filing Party:
- ------------------------------------------------------------------------------
(4) Date Filed:
- ------------------------------------------------------------------------------
Notes:
[LOGO OF MOBIL CORPORATION APPEARS HERE]
NOTICE OF
1998
ANNUAL MEETING
AND
PROXY STATEMENT
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT!
PLEASE VOTE YOUR SHARES PROMPTLY
- --------------------------------------------------------------------------------
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
-------------------
Introduction............................................................ 3
Stockholders Entitled to Vote........................................... 3
Proxies and Voting at the Meeting....................................... 3
Proxies for Participants in Mobil Plans................................. 4
Proxy Committee......................................................... 4
Proxy Solicitation Costs................................................ 4
Quorum and Vote Required for Approval................................... 4
Attendance at Annual Meeting............................................ 5
Stockholder Proposals................................................... 5
PROPOSALS TO BE VOTED UPON .............................................. 5
--------------------------
Item 1--Election of Directors........................................... 5
Item 2--Approval and Ratification of Appointment of Independent Audi-
tors................................................................... 9
Item 3--Stockholder Proposal: Limit Authority to Issue Preferred Stock.. 10
Item 4--Stockholder Proposal: Cumulative Voting......................... 11
Item 5--Stockholder Proposal: Adopt Investment Guidelines for Country
Selection.............................................................. 13
BOARD OF DIRECTORS....................................................... 15
------------------
Directors' Meetings..................................................... 15
Directors' Compensation................................................. 15
Committees of the Board................................................. 15
EXECUTIVE COMPENSATION................................................... 17
----------------------
Management Compensation and Organization Committee Report............... 17
Performance Graph....................................................... 21
Summary Compensation Table.............................................. 22
Option Tables........................................................... 23
Long-Term Incentive Program Contingent Allotments in 1997............... 24
Pension Table........................................................... 25
Stock-Based Holdings of Directors, Nominees and Executive Officers...... 26
Section 16(a) Beneficial Ownership Reporting Compliance................. 27
Special Arrangements Relating to Possible Change of Control............. 27
[LOGO OF MOBIL CORPORATION APPEARS HERE]
3225 GALLOWS ROAD
FAIRFAX, VIRGINIA
22037-0001
LUCIO A. NOTO
CHAIRMAN OF THE
BOARD
CHIEF EXECUTIVE
OFFICER
March 23, 1998
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 14, 1998.
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 1997,
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 vote your
shares promptly. This year, stockholders of record and participants in Mobil's
Employees Savings Plan and Mobil's Employee Stock Ownership Plan may vote in
any one of three ways: by calling the toll-free number listed on the enclosed
proxy card; by using the Internet, as instructed on the proxy card; or by
signing, dating and returning the proxy card in the enclosed postage-paid
envelope.
I wish to call your attention to the retirement of Paul J. Hoenmans. Mr.
Hoenmans, who had been a director since 1985 and served as Executive Vice
President, retired September 1, 1997, after more than 43 years of service to
Mobil. We are very grateful to Mr. Hoenmans for his many contributions to
Mobil over the years.
We look forward to seeing you on May 14th.
Sincerely,
/s/ Lucio A. Noto
Lucio A. Noto
Chairman of the Board and
Chief Executive Officer
1
NOTICE OF ANNUAL MEETING
MAY 14, 1998
- -------------------------------------------------------------------------------
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 14, 1998, at 10:00
A.M., for the following purposes:
1. To elect six directors;
2. To approve and ratify the appointment of Ernst & Young LLP as independent
auditors;
3. 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 16, 1998 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/ CAROLE J. YALEY
CAROLE J. YALEY
SECRETARY
MOBIL CORPORATION
3225 Gallows Road
Fairfax, Virginia 22037-0001
March 23, 1998
2
MOBIL CORPORATION
3225 GALLOWS ROAD
FAIRFAX, VIRGINIA 22037-0001
PROXY STATEMENT
GENERAL INFORMATION
-------------------
INTRODUCTION
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 14, 1998. This Proxy Statement, the accompanying proxy card, and Annual
Report are being mailed to stockholders on or about March 23, 1998. 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 16, 1998, the
record date for the meeting, was (i) 781,848,393 shares of common stock, $1.00
par value per share, each share being entitled to one vote, and (ii)
169,824.85 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
798,830,878 votes.
STOCKHOLDERS ENTITLED TO VOTE
Stockholders of record at the close of business on March 16, 1998, are
entitled to receive notice of the meeting and to vote the shares held on that
date.
PROXIES AND VOTING AT THE MEETING
Your vote is important. 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 and vote on each
matter listed on the enclosed proxy card. Stockholders of record and
participants in the Employees Savings Plan of Mobil Oil Corporation and the
Mobil Oil Corporation Employee Stock Ownership Plan may vote in any one of
three ways: by calling the toll-free telephone number listed on the proxy
card; by using the Internet, in accordance with the instructions on the proxy
card; or by marking, signing, dating and returning the proxy card in the
enclosed postage-paid envelope. If no choice is specified on a proxy card and
the card is properly signed and returned, the shares will be voted by the
Proxy Committee as recommended by Mobil.
A stockholder may revoke a proxy at any time before it is voted at the
meeting by submitting a later-dated proxy (including a proxy given by
telephone or the Internet) or by giving written notice of revocation to the
Secretary of the Corporation. Voting by ballot at the meeting also revokes any
proxy previously given.
Stockholder proxies are communicated or sent 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.
3
PROXIES FOR PARTICIPANTS IN MOBIL PLANS
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 Employees Savings Plan of Mobil
Oil Corporation and the Mobil Oil Corporation Employee Stock Ownership Plan
will receive a single proxy card which covers shares credited to such
stockholder's Plan accounts plus shares of record registered in the same name.
Accordingly, proxies voted 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.
PROXY COMMITTEE
Mobil's Proxy Committee comprises the Chairman, Lucio A. Noto; President,
Eugene A. Renna; and Secretary of the Corporation, Carole J. Yaley.
Stockholder proxies, unless otherwise indicated by the stockholder, also
confer upon the Proxy Committee discretionary authority to vote all shares of
the stock represented thereby on any matter which properly may be presented
for action at the meeting even if not covered herein. At the date this proxy
statement went to press, Mobil knew of no matters, other than those set forth
herein, which properly may be presented for action at the meeting. If any of
the nominees for director named in Item 1 beginning on page 5 should be
unavailable for election, proxies conferring discretionary authority upon the
Proxy Committee will be voted for the election of such other person as may be
recommended by Mobil in place of such nominee.
PROXY SOLICITATION COSTS
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.
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.
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
beginning on page 9 in respect of the appointment of independent auditors,
approval of each other matter to be voted upon requires the affirmative vote
of a majority of the votes of the shares present or represented at the meeting
and entitled to vote on such matter. Where a stockholder 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
4
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.
STOCKHOLDER PROPOSALS
Stockholder proposals are eligible for consideration for inclusion in the
proxy statement for the 1999 Annual Meeting if they are received by Mobil
before the close of business on November 23, 1998. Any proposal should be
directed to the attention of the Secretary, Mobil Corporation, 3225 Gallows
Road, Fairfax, Virginia 22037-0001. 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.
PROPOSALS TO BE VOTED UPON
--------------------------
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 four of the present directors will expire at this Annual Meeting.
Five directors (one of whom is Mr. Noto) have been nominated for election to
three-year terms expiring at the annual Meeting in 2001, and one director (Mr.
Renna) has been nominated for election for the balance of a three-year term
expiring at the Annual Meeting in 2000, or until their successors are elected
and qualified. Messrs. Noto and Renna are currently serving terms expiring in
1999. If elected to the terms for which they have been nominated, they intend
to resign from the class of 1999. These actions will help ensure that the
classes of the directors are as nearly equal in number as possible. The terms
of the other eight directors will continue as indicated below.
The ages of directors are as of March 1, 1998.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES LISTED
BELOW.
5
NOMINEES FOR TERMS EXPIRING IN 2001
- -------------------------------------------------------------------------------
LEWIS M. BRANSCOMB ALLEN F. JACOBSON
[PHOTO OF LEWIS M. BRANSCOMB [PHOTO OF ALLEN F. JACOBSON
APPEARS HERE] APPEARS HERE]
Allen F. Jacobson, age 71, has been
Lewis M. Branscomb, age 71, has a director since 1988. He is the
been a director since 1978. He is former chairman of the board and
Aetna Professor, Public Policy and chief executive officer of Minnesota
Corporate Management, Emeritus, and Mining and Manufacturing Company (3M)
until 1996 was Director, Science, (manufacturer of diversified
Technology and Public Policy, John F. products). He is also a director of
Kennedy School of Government, Harvard U.S. WEST, Inc., Valmont Industries,
University. Dr. Branscomb is chairman Inc., Potlatch Corporation, Sara Lee
of the Audit Committee and a member Corporation, Silicon Graphics, Inc.,
of the Public Issues Committee. and Deluxe Corporation. Mr. Jacobson
is Chairman of the Committee on
Directors and Board Affairs and a
member of the Management Compensation
and Organization Committee.
- -------------------------------------- --------------------------------------
J. RICHARD MUNRO LUCIO A. NOTO
[PHOTO OF J. RICHARD MUNRO [PHOTO OF LUCIO A. NOTO
APPEARS HERE] APPEARS HERE]
J. Richard Munro, age 67, has been Lucio A. Noto, age 59, joined Mobil
a director since 1989. Since 1997, he in 1962. He has been a director since
has been chairman of the board of 1988 and chairman and chief executive
Genentech, Inc. (pharmaceuticals). He officer since 1994. He was president
is the former chairman of the and chief operating officer from 1993
executive committee of the board of until March 1, 1998. He has been a
directors, co-chairman of the board director of Mobil Oil Corporation
and co-chief executive officer of since 1986 and chairman of the board
Time-Warner Inc. (publishing and and chief executive officer of Mobil
communications). He is also a Oil Corporation since 1994. He is
director of Kmart Corporation, The also a director of International
Kellogg Company and Sensormatic Business Machines Corporation and
Company. Mr. Munro is a member of the Philip Morris Companies Inc. Mr. Noto
Management Compensation and is chairman of the Executive
Organization Committee and the Public Committee.
Issues Committee.
6
NOMINEE FOR TERM EXPIRING IN 2001 NOMINEE FOR TERM EXPIRING IN 2000
- -------------------------------------------------------------------------------
ROBERT O. SWANSON EUGENE A. RENNA
[PHOTO OF ROBERT O. SWANSON [PHOTO OF EUGENE A. RENNA
APPEARS HERE] APPEARS HERE]
Eugene A. Renna, age 53, joined
Robert O. Swanson, age 61, joined Mobil in 1968. He has been a director
Mobil in 1958. He has been a director since 1986 and President and Chief
since 1991 and a director of Mobil Operating Officer since March 1,
Oil Corporation since 1990. Since 1998. From 1996 until March 1, 1998,
1996, Mr. Swanson has been an Mr. Renna was an executive vice
executive vice president, and until president with responsibility for the
March 1, 1998 he had responsibility North America Marketing and Refining,
for the Africa and Middle East, Europe/Former Soviet Union, South
Asia/Pacific, Worldwide Chemical and America and Supply, Trading and
Technology business groups, Global Transportation business groups and,
Shared Services, Global Systems, from September 1, 1997, with
Global Procurement and the Office of responsibility also for the North
Diversity and Inclusion. From 1993 to America Exploration and Producing
1996, he was a senior vice president business group. From 1986 to 1996, he
with responsibility for Mobil was an executive vice president of
Chemical Company; Mobil Mining and Mobil Oil Corporation and president
Minerals Company; Mobil Land of its Marketing and Refining
Development Corporation; and Mobil Division. He has been a director of
Technology Company. Mr. Swanson is a Mobil Oil Corporation since 1985. Mr.
member of the Executive Committee. Renna is a member of the Executive
Committee.
DIRECTORS WHOSE TERMS EXPIRE IN 1999
- -------------------------------------------------------------------------------
CHARLES A. HEIMBOLD, JR. SAMUEL C. JOHNSON
[PHOTO OF CHARLES A. HEIMBOLD, JR. [PHOTO OF SAMUEL C. JOHNSON
APPEARS HERE] APPEARS HERE]
Charles A. Heimbold, Jr., age 64, Samuel C. Johnson, age 69, has been
has been a director since 1995. Since a director since 1981. He is chairman
1995, Mr. Heimbold has been chairman of the board of S. C. Johnson & Son,
and chief executive officer of Inc. (chemical specialty products).
Bristol-Myers Squibb Company He is also a director of Deere and
(consumer products and Company, H. J. Heinz Company, a
pharmaceuticals). He served as director and chairman of Johnson
president of Bristol-Myers Squibb International Inc., and a director
Company from 1992 to 1994 and and chairman of Johnson Worldwide
president and chief executive officer Associates, Inc. Mr. Johnson is
from 1994 to 1995. Mr. Heimbold is a chairman of the Public Issues
member of the Audit Committee, the Committee and a member of the
Committee on Directors and Board Management Compensation and
Affairs and the Finance Committee. Organization Committee.
7
DIRECTORS WHOSE TERMS EXPIRE IN 1999
- -------------------------------------------------------------------------------
HELENE L. KAPLAN AULANA L. PETERS
[PHOTO OF HELENE L. KAPLAN [PHOTO OF AULANA L. PETERS
APPEARS HERE] APPEARS HERE]
Aulana L. Peters, age 56, has been
Helene L. Kaplan, age 64, has been a director since 1992. She is a
a director since 1989. She is Of partner in Gibson, Dunn & Crutcher, a
Counsel to Skadden, Arps, Slate, law firm which Mobil and/or
Meagher & Flom, a law firm which affiliates of Mobil retained during
Mobil and/or affiliates of Mobil 1997 and may retain in 1998. She is
retained in 1997 and may retain in also a director of the Minnesota
1998. Mrs. Kaplan is also a director Mining and Manufacturing Company,
of Bell Atlantic Corporation, Chase Callaway Golf Company, Merrill Lynch
Manhattan Corporation, the May & Co. and Northrop Grumman
Department Stores Company and Corporation. Mrs. Peters is a member
Metropolitan Life Insurance Company. of the Audit Committee, the Finance
Mrs. Kaplan is a member of the Audit Committee and the Public Issues
Committee, the Committee on Directors Committee.
and Board Affairs and the Finance
Committee.
DIRECTORS WHOSE TERMS EXPIRE IN 2000
- -------------------------------------------------------------------------------
DONALD V. FITES CHARLES S. SANFORD,
JR.
[PHOTO OF DONALD V. FITES [PHOTO OF CHARLES S. SANFORD, JR.
APPEARS HERE] APPEARS HERE]
Donald V. Fites, age 64, has been a Charles S. Sanford, Jr., age 61,
director since 1990. He is chairman has been a director since 1990. He is
and chief executive officer of the former chairman and chief
Caterpillar Inc. (heavy machinery). executive officer of Bankers Trust
He is also a director of AT&T Corp. New York Corporation and its
and Georgia-Pacific Corporation. Mr. principal subsidiary, Bankers Trust
Fites is a member of the Committee on Company. He is also a director of J.
Directors and Board Affairs, the C. Penney Company, Inc. Mr. Sanford
Finance Committee and the Management is chairman of the Finance Committee
Compensation and Organization and a member of the Committee on
Committee. Directors and Board Affairs.
8
DIRECTORS WHOSE TERMS EXPIRE IN 2000
- -------------------------------------------------------------------------------
ROBERT G. SCHWARTZ IAIN D. T. VALLANCE
[PHOTO OF ROBERT G. SCHWARTZ [PHOTO OF IAIN D. T. VALLANCE
APPEARS HERE] APPEARS HERE]
Robert G. Schwartz, age 69, has Iain D. T. Vallance, age 54, has
been a director since 1987. He is the been a director since 1996. He is
former chairman of the board, chairman of British
president and chief executive officer Telecommunications plc. He also
of Metropolitan Life Insurance serves as vice-chairman of The Royal
Company. He is a director of Bank of Scotland. Mr. Vallance is a
Metropolitan Life Insurance Company, member of the Audit Committee, the
COMSAT Corporation, Lone Star Finance Committee and the Public
Industries, Inc., Lowe's Companies, Issues Committee.
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.
- -------------------------------------------------------------------------------
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 1998.
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 1997, Ernst & Young
rendered audit services amounting to $11.3 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 1998, be and hereby
is approved and ratified."
9
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 1998 will be permitted to
stand unless the Board finds other good reasons for making a change.
ITEM 3--STOCKHOLDER PROPOSAL: 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 8,946,900 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.
10
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 four annual meetings, and
each year, a 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.
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 4--STOCKHOLDER PROPOSAL: CUMULATIVE VOTING
Management has been advised that Dr. Thomas R. Sifferman, 3051 Camino De Las
Piedras, El Cajon, California 92019, the beneficial owner of 280 shares of
Mobil common stock and 270 units of interest in shares of Series B ESOP
Convertible Preferred Stock (equivalent to 2.7 such shares), and John J.
Gilbert and Margaret R. Gilbert, 29 East 64th Street, New York, New York
10021-7043, who own 200 and 152 shares of Mobil common stock, respectively,
act as co-trustees for 1,800 such shares and represent an additional family
interest of 600 such shares, intend to submit the following proposal at the
meeting:
RESOLVED: That the stockholders of Mobil Corporation, assembled in annual
meeting in person and by proxy, hereby request the Board of Directors to
take the steps necessary to provide for
11
cumulative voting in the election of directors, which means each
stockholder shall be entitled to as many votes as shall equal the number of
shares he or she owns multiplied by the number of directors to be elected,
and he or she may cast all of such votes for a single candidate, or any two
or more of them as he or she may see fit.
REASONS
Strong support along the lines we suggest were shown at the last annual
meeting when 24% was cast in favor of this approval.
California law still requires that unless stockholders have voted not to
have cumulative voting they will have it. Ohio also has the same provision.
The National Bank Act provides for cumulative voting. In many cases
companies get around it by forming holding companies without cumulative
voting. Banking authorities have the right to question the capability of
directors to be on banking boards. In many cases authorities come in after
and say the director or directors were not qualified. We were delighted to
see the SEC has finally taken action to prevent bad directors from being on
boards of public companies. The SEC should have hearings to prevent such
persons from becoming directors before they harm investors.
Many successful corporations have cumulative voting. Example, Pennzoil
defeated Texaco in that famous case. Texaco's recent problems might have
also been prevented with cumulative voting, getting directors on the board
to prevent such things. Ingersoll-Rand, also having cumulative voting won
two awards. Further, Union Pacific is a good example having troubles with
their freight shipments, which are backed up for a month. The merger with
Southern Pacific is part of the excuse. Just last year, Union Pacific took
away cumulative voting.
Lockheed-Martin, as well as VWR corporation, now has a provision that if
anyone has 40% or more of the shares cumulative voting applies; it does
apply at the latter company.
In 1995 American Premier adopted cumulative voting. Alleghany Power System
tried to take away cumulative voting, as well as put in a stagger system,
and stockholders defeated it, showing stockholders are interested in their
rights. Also, Hewlett Packard, a very successful company, has cumulative
voting.
If you agree, please mark your proxy FOR this resolution; otherwise it is
automatically cast against it, unless you have marked to abstain.
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 nine 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.
12
ITEM 5--STOCKHOLDER PROPOSAL: ADOPT INVESTMENT GUIDELINES FOR COUNTRY
SELECTION
Management has been advised that Robert Halfman, c/o Franklin Research &
Development Corporation, 711 Atlantic Avenue, Boston, Massachusetts 02111, the
beneficial owner of 500 shares of Mobil common stock, and the SEIU Master
Trust, 1313 L Street, N.W., Washington, DC 20005, the owner of 49,200 shares
of Mobil common stock, intend to submit the following proposal at the meeting:
WHEREAS: Mobil is one of the US companies with the largest oil operations
in Nigeria;
The illegitimate military regime of General Sani Abacha, which currently
rules Nigeria, has refused to recognize the results of the 1993 Nigerian
elections and has, according to Amnesty International, a long history of
systematic human rights violations;
The international outrage triggered by the execution of nine political
prisoners including the Ogoni leader, Ken Saro Wiwa, has focused attention
on the major oil companies in Nigeria, including Mobil;
Mobil is in direct partnership with wholly state-owned Nigerian National
Petroleum Company and has made payments, including royalties, fees and
taxes, to the military government;
The International Labor Organization has found Nigeria in violation of
internationally accepted labor standards and has demanded the release of
oil workers union leaders Frank Kokori, Milton Dabibi and others held
incommunicado without charge or trial;
The International Federation of Chemical, Energy, Mine and General Workers
Unions (ICEM) has called for a global embargo on Nigerian oil exports;
Africa Fund, Human Rights Watch, Rainforest Action Network, Sierra Club and
TransAfrica, have called for economic and political sanctions on Nigeria,
similar to those that were previously imposed on the apartheid regime in
South Africa;
Local governments in Alameda County (CA), Amherst (MA), Berkeley (CA),
Cambridge (MA) and Oakland (CA) have passed laws that effectively bar their
purchasing agents from buying goods or services from companies, such as
Mobil, which do business in Nigeria;
Consumers have boycotted and picketed Mobil service stations because of
Mobil's presence in Nigeria;
Growing public opposition to doing business in Nigeria may result in
further consumer and local government boycotts of Mobil, which may, in the
future, have significant material effects on our company;
Levi Strauss bases its decision on whether to do business in a certain
country based on criteria that include whether:
"Brand image would be adversely affected by a country's perception or
image among our customers and/or consumers"
"Human rights environment would prevent us from conducting business
activities in a manner that is consistent with the Global Sourcing
Guidelines and other Company policies"
"Political, economic and social environment would threaten the Company's
reputation and/or commercial interests"
RESOLVED: the Shareholders request the Board of Directors to review and
develop guidelines for country selection and report these guidelines to
shareholders and employees by October 1998. In its
13
review, the Board shall develop guidelines on maintaining investments in or
withdrawing from countries where:
. there is a pattern of ongoing and systematic violation of human rights,
. a government is illegitimate,
. there is a call by human rights advocates, pro-democracy organizations or
legitimately elected representatives for economic sanctions
. Mobil's long-term financial performance may be potentially threatened by
international criticism, economic sanctions and boycotts by consumers and
local governments.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF THIS
PROPOSAL.
Since Mobil was organized, in 1866, the Corporation has had policies
governing the conduct of its business. These policies were reaffirmed by the
Board of Directors most recently in 1997, when the Board approved revised and
restated "Mobil Business Conduct and Legal Compliance Policies." These
Policies are prefaced by the following statement of the Board:
"Mobil's worldwide business has flourished and grown for over 130 years.
Our success has resulted not simply from satisfying the public's need for
quality products at reasonable prices. It has also resulted from the
conduct of our business with integrity and with the observance of the
highest ethical and moral standards of the many countries in which we have
operated around the world.
"Mobil employees, wherever located, are expected to conduct their
operations in a lawful manner and in a manner which is consistent with the
highest ethical standards. Mobil's maintenance of the highest reputation
for integrity is essential and is not in any circumstances to be sacrificed
for the sake of results."
The Board believes that this is the best approach to the conduct of business
worldwide. The Board also believes that Mobil's active and sustained
involvement in each country where it does business offers significant socio-
economic benefits for the people of that country and that the way in which
Mobil treats its employees in that country, together with the extremely high
standards of ethics Mobil observes in its business operations in that country,
help the cause of constructive change in that country. The Board does not
believe, however, that it is appropriate for Mobil to attempt to develop
guidelines for country selection like those described in the proposal.
The proposal would, in effect, require that Mobil establish its own foreign
policy and, based on that policy, consider and deal with any political and
ideological issues which may arise in each country where the Corporation does
or proposes to do business. The Board feels strongly that it is neither
appropriate nor prudent for Mobil to seek to establish its own country-by-
country foreign policy. For such a policy, the Board believes that Mobil
should and must rely upon and strictly observe the laws and foreign policy
created by the U.S. Government.
Mobil is not unsympathetic to certain of the concerns expressed by the
proponent. In fact, Mobil has been and is concerned about the political
situation in Nigeria and its impact on human rights, and has taken every
reasonable opportunity, both in public and in private, to express its concerns
to the Nigerian government. Mobil believes, however, that it can best serve
the interests of its shareholders and at the same time make the best possible
contribution to the welfare and human rights of the peoples in the countries
where it operates by adhering strictly to the very high standards for the
conduct of its operations that are set forth in its policies which govern such
conduct.
FOR THE FOREGOING REASONS, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE ADOPTION OF THE PROPOSAL.
14
BOARD OF DIRECTORS
DIRECTORS' MEETINGS
During 1997, 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.
DIRECTORS' COMPENSATION
Employee directors receive no additional compensation for service on the
Board of Directors or its Committees. Each non-employee director receives an
annual retainer comprised of $36,000 and 600 shares of Mobil common stock in
the form of deferred common share 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 common share 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 7.19% per year.
COMMITTEES OF THE BOARD
The functions and current membership of the five standing committees
established by the Board are described below. Each committee meets regularly
during the year and promptly following each meeting advises the full Board of
its actions and recommendations.
The AUDIT COMMITTEE, established in 1969, met three times during 1997. 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.
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 1997. 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
15
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 five times during 1997. 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 and J.
Richard Munro. Charles S. Sanford, Jr. served as a member of the Committee
through February 27, 1998.
The report of the Committee on Executive Compensation is set forth beginning
on page 17.
The PUBLIC ISSUES COMMITTEE, established in 1973, met three times during
1997. The Committee reviews and makes recommendations regarding: (1) Mobil's
domestic and international policies, programs, position and strategies
involving political, social and environmental trends and issues; (2)
shareholder proposals; (3) support of business, charitable and educational
organizations; (4) the Corporation's employment and workplace policies and
practices, including those relating to equal employment opportunity, non-
discrimination and diversity in the workplace; and (5) the Corporation's
environmental, health and safety policies, programs, practices and
performance.
16
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.
The FINANCE COMMITTEE, which was established in February, 1998, will meet
for the first time in April, 1998. The Committee will review and make
recommendations to the Board regarding: the Corporation's financial structure,
condition and major policies; the Corporation's policies and programs for the
management of risk, including its insurance program; and the funding,
performance and administration of pension benefit plans.
The Finance Committee is composed entirely of non-employee directors.
Members of the Committee are Charles S. Sanford, Jr. (Chairman), Donald V.
Fites, Charles A. Heimbold, Helene L. Kaplan, Aulana L. Peters and Iain D.T.
Vallance.
EXECUTIVE COMPENSATION
----------------------
MANAGEMENT COMPENSATION AND ORGANIZATION COMMITTEE REPORT
The Management Compensation and Organization Committee of Mobil's Board of
Directors consists of 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 the 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.
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 ranges are
determined based on the individual executive's performance, position in the
salary range and experience level.
17
The Committee's guidelines apply to annual periods beginning on July 1. The
guidelines adopted by the Committee for the year beginning July 1, 1997
provided for base pay increases for employees whose salaries were below the
competitive rate for their jobs, and lump sum payments in lieu of base pay
increases for employees whose salaries were above the competitive rate for
their jobs. Mr. Noto's performance during 1997 was excellent--Mobil achieved
record operating earnings for the third consecutive year, largely because
sales volumes increased significantly, operating performance was excellent in
all business segments, and the company continued to benefit from expense
reduction programs and recently formed alliances. For this reason, and in view
of the fact that Mr. Noto's position in his salary range was below the
competitive rate for the job, the Board approved an increase in Mr. Noto's
base salary to $930,000.
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 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 1997 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 five 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.
Based on the Corporation's performance during 1997, Mobil's ranking among
its peers was fourth in return on capital employed and in earnings per share
growth, indicating an above average performance factor of 1.20. Accordingly,
the Committee approved an award of $1,130,400 for Mr. Noto, which was the
amount determined by multiplying Mr. Noto's incentive award target by the 1997
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 known 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 Option Plan, under which the
contingent allotments for the 1994-1997 period were made, amounts equal to
dividends paid on Mobil common stock were paid during the four-year cycle for
the performance shares allotted.
18
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 1994-1997 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 fourth at 20.5% over the four year cycle.
Mobil's relative ranking in earnings per share growth was also fourth and its
relative ranking in return on capital employed was fifth. 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 1994-1997 period at 100%
of the performance shares allotted.
These contingent allotments were made in January 1994 when the market value
of Mobil common stock was $39.31 per share, on a post-split basis. Actual
awards at the end of the cycle thus include appreciation in the market value
of Mobil common stock of $30.34 per share between January 1994 and January
1998. As a result, Mr. Noto received an actual award of $1,417,335. This was
based on an allotment of 20,350 shares, on a post-split basis, which, based on
the market value of Mobil common stock at the time of the allotment of $39.31
per share, had a nominal "value" at the time of grant equal to his then-annual
salary. Mr. Noto elected to defer two-thirds of this award and received 13,634
common share equivalents as a result of such deferral.
STOCK OPTIONS
Stock options are granted to emphasize the importance of increasing
shareholder value over the long term, and to encourage and facilitate
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 comparable to that afforded for
similar 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 1997, the Committee awarded Mr. Noto 280,000 stock options, on a post-
split basis. This grant included an annual grant of 140,000 options and a
special one-time grant of 140,000 options in recognition of special
achievements of long-term value to the Company. The Committee also noted that
19
on an ongoing basis, Mr. Noto's cash compensation has been low relative to
that paid by the petroleum comparator group for comparable positions. The
annual grant of 140,000 options was the same number granted in 1996, which the
Committee believes 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 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 1997 an outside 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 1997, Mobil's total compensation for its top senior executives was at the
56th percentile of the comparator group while Mobil's five year total return
to shareholders ranked in the middle of the group.
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's policy is to
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 five-year cumulative total shareholder
return, including reinvested dividends, on Mobil common stock, with two other
indexes:
COMPARISON OF FIVE YEAR TOTAL RETURN (1)
MOBIL, S&P 500, SEVEN MAJOR PETROLEUM COMPANIES (2)
[LINE GRAPH APPEARS HERE]
Date Mobil S&P 500 Petroleum Companies
- ---- ----- ------- -------------------
1992 $100 $100 $100
1993 $131 $110 $120
1994 $145 $112 $129
1995 $200 $153 $170
1996 $226 $188 $217
1997 $275 $251 $270
Assumes $100 invested on December 31, 1992, 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, the other four most highly compensated executive
officers of Mobil and a former director and executive vice president of Mobil
Corporation.
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, 1997 YEAR SALARY BONUS SATION(1) SARS (2) PAYOUTS SATION(3)
- --------------------------- ---- -------- ---------- --------- ---------- ---------- ---------
Lucio A. Noto........... 1997 $890,000(4) $1,130,400 $ 43,142 280,000 $1,417,335 $ 61,833
chairman of the board 1996 850,000 650,000 72,883 140,000 1,089,086 113,000
and chief executive 1995 833,333 675,000 93,028 140,000 870,733 74,383
officer, Mobil
Corporation
Eugene A. Renna......... 1997 670,000 473,900 32,355 70,000 1,062,967 84,349
director and executive 1996 670,000 350,000 64,468 70,000 1,140,984 76,860
vice president, Mobil 1995 660,000 400,000 89,316 70,000 1,008,212 54,760
Corporation
Robert O. Swanson....... 1997 617,500 473,900 27,500 70,000 903,473 43,020
director and executive 1996 600,000 350,000 54,325 70,000 954,280 71,960
vice president, Mobil 1995 600,000 400,000 73,453 70,000 788,269 71,960
Corporation
Thomas C. DeLoach, Jr... 1997 482,500 352,000 15,569 55,000 511,494 28,825
senior vice president 1996 470,000 225,000 32,530 55,000 598,906 49,400
and chief financial 1995 470,000 260,000 44,254 55,000 481,174 49,400
officer, Mobil
Corporation
Walter R. Arnheim....... 1997 352,000 183,700 8,357 33,000 274,552 40,690
treasurer, Mobil 1996 352,000 122,100 16,834 33,000 300,751 38,550
Corporation 1995 343,000 150,000 23,396 26,000 265,695 28,132
Paul J. Hoenmans........ 1997 496,666 315,900 37,755 50,000 1,161,170 78,595
retired director and 1996 745,000 350,000 77,110 70,000 1,369,077 82,110
executive vice 1995 745,000 400,000 103,972 70,000 1,109,089 94,950
president, 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.
All options have been adjusted to reflect the two-for-one stock split in
1997.
(3) Company allocations to Mobil's Supplemental Employees Savings Plan and in
1997, 1996 and 1995, respectively, lump sum payments in lieu of salary
increases of $0, $50,000 and $15,000 to Mr. Noto, $35,000, $28,000 and
$8,000 to Mr. Renna, $0, $28,000 and $28,000 to Mr. Swanson, $0, $20,000
and $20,000 to Mr. DeLoach, $15,000, $13,000 and $4,000 to Mr. Arnheim and
$35,000, $28,000 and $40,000 to Mr. Hoenmans, as a result of a change in
the salary administration policy for all U. S. salaried employees.
(4) Effective July 1, 1997, Mr. Noto's base salary was increased to $930,000.
22
OPTION TABLES
THE FOLLOWING TWO TABLES PRESENT FURTHER DETAILS ON STOCK OPTIONS, ALL OF
WHICH HAVE BEEN ADJUSTED TO REFLECT THE TWO-FOR-ONE STOCK SPLIT IN 1997.
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(2)
----------------------------------------- -------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES OR BASE EXPIRATION PRESENT
NAME GRANTED(1) IN 1997 PRICE DATE 0% 5% 10% VALUE(3)
---- ---------- ---------- -------- ---------- --------- ----------- ----------- ----------
$ 61.75(4) 100.58(4) 160.16(4)
Lucio A. Noto........... 280,000 6.0% $61.75 2/27/2007 $ 0 10,872,400 27,554,600 $3,088,400
Eugene A. Renna......... 70,000 1.5% $61.75 2/27/2007 $ 0 2,718,100 6,888,700 $ 772,100
Robert O. Swanson....... 70,000 1.5% $61.75 2/27/2007 $ 0 2,718,100 6,888,700 $ 772,100
Thomas C. DeLoach, Jr... 55,000 1.2% $61.75 2/27/2007 $ 0 2,135,650 5,412,550 $ 606,650
Walter R. Arnheim....... 33,000 0.8% $61.75 2/27/2007 $ 0 1,281,390 3,247,530 $ 363,990
Paul J. Hoenmans........ 50,000 1.1% $61.75 2/27/2007 $ 0 1,941,500 4,920,500 $ 551,500
OPTION/SAR GRANTS IN 1997
- -------
(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 3.43%, five-year zero-coupon
risk-free interest rate of 6.39%, estimated volatility of 16% 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 $61.75, $100.58, or $160.16, as
the case may be.
23
AGGREGATED OPTION/SAR EXERCISES IN 1997 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........... 60,000 $2,146,875 243,582 $ 8,668,810
560,000 8,973,125
Eugene A. Renna......... 41,450 $1,557,070 116,522 $ 4,139,247
210,000 3,755,938
Robert O. Swanson....... 0 $ 0 70,000 $ 2,229,063
210,000 3,755,938
Thomas C. DeLoach, Jr... 0 $ 0 194,744 $ 7,526,801
165,000 2,951,094
Walter R. Arnheim....... 0 $ 0 102,622 $ 3,959,273
92,000 1,570,938
Paul J. Hoenmans........ 27,796 $ 964,277 455,702 $13,792,702
0 0
- -------
(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,
1997 stock price of $72.1875.
---------------
LONG-TERM INCENTIVE PROGRAM CONTINGENT ALLOTMENTS IN 1997
All contingent allotments have been adjusted to reflect the two-for-one
stock split in 1997.
NUMBER OF PERFORMANCE OR OTHER ESTIMATED FUTURE PAYOUTS
CONTINGENT STOCK PERIOD UNTIL -------------------------------
NAME EQUIVALENTS MATURATION OR PAYOUT THRESHOLD TARGET MAXIMUM
---- ---------------- -------------------- --------- ---------- ----------
Lucio A. Noto........... 17,658 1997-2000 $ 0 $1,274,687 $1,912,030
Eugene A. Renna......... 9,668 1997-2000 0 697,909 1,046,863
Robert O. Swanson....... 9,668 1997-2000 0 697,909 1,046,863
Thomas C. DeLoach, Jr... 5,930 1997-2000 0 428,072 642,108
Walter R. Arnheim....... 2,646 1997-2000 0 191,008 286,512
Paul J. Hoenmans........ 9,668 1997-2000 0 116,294 174,441
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 participants' level within the Company and
the midpoint of the participants' 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.
24
Payouts under the program are based in part on the price of Mobil's common
stock. The price used for the estimates provided is $72.1875 per share, the
closing price of Mobil common stock on the New York Stock Exchange on December
31, 1997. 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. Estimated future payouts for Mr. Hoenmans reflect
a proration in proportion to completed months of service during the
performance cycle.
PENSION TABLE
Mobil employees in the higher salary classifications receive pension
benefits under two plans, which are non-contributory: a retirement plan
qualified under the Internal Revenue Code of 1986, as amended, which is non-
discriminatory, and a supplemental plan that provides benefits that cannot be
provided under the qualified plan, due to the limitations imposed by Sections
415 and 401(a)(17) of the Code, plus certain additional benefits. Employees
who retire or terminate as vested participants are entitled to receive
retirement benefits under these plans computed under a final average pay
formula. Benefits under the qualified plan are provided, at an employee's
election, either in the form of a life annuity or in one of several
alternative forms having an equivalent actuarial value. Benefits under the
supplemental plan, which will constitute the majority of the benefits payable
to Messrs. Noto, Renna, Swanson, DeLoach and Arnheim, are provided only in the
form of an annuity for a fixed number of years equal to one-half the
employee's life expectancy. The table below shows the annual annuity amount
that would be payable for life to employees in the higher salary
classifications, commencing at age 60 or older, if they were to elect a life
annuity under the qualified plan and if the benefits provided under the
supplemental plan for one-half the employee's life expectancy were converted
to a life annuity having an equivalent actuarial value.
ESTIMATED ANNUAL BENEFITS UNDER FINAL AVERAGE PAY FORMULA
EARNINGS CREDITED YEARS OF SERVICE AT RETIREMENT
FOR RETIREMENT ------------------------------------------------------------------------
PLAN BENEFITS* 15 20 25 30 35 40 45
----------------- -------- -------- ---------- ---------- ---------- ---------- ----------
$ 400,000.............. $104,000 $138,000 $ 172,000 $ 206,000 $ 241,000 $ 276,000 $ 311,000
600,000.............. 160,000 213,000 266,000 319,000 372,000 426,000 480,000
800,000.............. 216,000 288,000 359,000 431,000 503,000 576,000 649,000
1,000,000.............. 273,000 363,000 453,000 544,000 634,000 726,000 817,000
1,200,000.............. 329,000 438,000 547,000 656,000 766,000 876,000 986,000
1,400,000.............. 385,000 513,000 641,000 769,000 897,000 1,026,000 1,155,000
1,600,000.............. 441,000 588,000 735,000 881,000 1,028,000 1,176,000 1,324,000
1,800,000.............. 498,000 663,000 828,000 994,000 1,159,000 1,326,000 1,492,000
2,000,000.............. 554,000 738,000 922,000 1,106,000 1,291,000 1,476,000 1,661,000
2,200,000.............. 610,000 813,000 1,016,000 1,219,000 1,422,000 1,626,000 1,830,000
2,400,000.............. 666,000 888,000 1,110,000 1,331,000 1,553,000 1,776,000 1,999,000
2,600,000.............. 723,000 963,000 1,203,000 1,444,000 1,684,000 1,926,000 2,168,000
- -------
* 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. The amounts shown
reflect the estimated amount of the offset under the plan for Social
Security benefits. Estimated credited years of service are as follows for
Mr. Noto, 37 years; Mr. Renna, 29 years; Mr. Swanson, 40 years; Mr. DeLoach,
29 years; and Mr. Arnheim, 29 years.
25
STOCK-BASED HOLDINGS OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The following table sets forth 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 common share equivalents, and the total
Mobil stock-based holdings, which are beneficially owned by each director and
nominee for director, each current executive officer named in the Summary
Compensation Table on page 22 who is not a director, all directors and current
executive officers as a group, and the former executive officer named in the
Summary Compensation Table on page 22. 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 common stock.
COMMON
SHARES DEFERRED TOTAL
COMMON ACQUIRABLE COMMON STOCK-
DIRECTORS, NOMINEES AND CURRENT SHARES WITHIN SHARE BASED
EXECUTIVE OFFICERS OWNED 60 DAYS EQUIVALENTS HOLDINGS
- ------------------------------- ------- ---------- ----------- ---------
Walter R. Arnheim .................... 35,504 128,622 7,924 172,050
Lewis M. Branscomb.................... 2,000 0 1,036 3,036
Thomas C. DeLoach, Jr................. 98,663 249,744 7,078 355,485
Donald V. Fites....................... 3,853 0 4,343 8,196
Charles A. Heimbold, Jr............... 2,000 0 1,899 3,899
Allen F. Jacobson..................... 2,316 0 22,949 25,265
Samuel C. Johnson..................... 40,000 0 1,036 41,036
Helene L. Kaplan...................... 8,000 0 12,690 20,690
J. Richard Munro...................... 2,000 0 6,149 8,149
Lucio A. Noto......................... 132,746 355,000 54,737 542,483
Aulana L. Peters...................... 200 0 8,837 9,037
Eugene A. Renna....................... 117,324 186,522 7,846 311,692
Charles S. Sanford, Jr................ 4,002 0 4,813 8,815
Robert G. Schwartz.................... 2,000 0 18,779 20,779
Robert O. Swanson..................... 116,675 140,000 7,211 263,886
Iain D. T. Vallance................... 0 0 613 613
All directors and current executive
officers as a group, including those
named above.......................... 634,617 1,273,040 184,659 2,092,316
FORMER EXECUTIVE OFFICER
- ------------------------
Paul J. Hoenmans...................... 110,962 327,798 15,672 454,432
The information in the table is as of March 1, 1998, except it is as of
March 1, 1997 with respect to Mr. Hoenmans, who retired in 1997. Common shares
owned by directors and current executive officers include 11,263 shares held
by family members or family trusts of certain directors and officers, as to
which shares such persons disclaim beneficial ownership. Common shares owned
by directors and current executive officers also include 13,000 shares of
restricted stock held by certain officers as to which shares such 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 common shares which the directors and current executive officers
presently hold. Deferred common share equivalents
26
are stock equivalents equal in value to common stock which earn dividend
equivalents equal to dividends declared on common stock. Executive officers
are credited with deferred common share equivalents under the Supplemental
Employees Savings Plan of Mobil Oil Corporation, and incentive awards to such
officers may be deferred and paid in such 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 15. In addition, when the retirement plan for non-
employee directors was terminated in January, 1997, certain of such directors
elected to receive the actuarial present values of their accrued benefits
under that plan in such equivalents. Individuals credited with deferred common
share equivalents have neither investment nor voting powers in respect of such
equivalents.
No individual named above owns beneficially more than 1% of the outstanding
shares of either of Mobil's classes of voting securities, nor do all directors
and current executive officers as a group, including those named above. As of
March 1, 1998, the Trustee under the Employees Savings Plan of Mobil Oil
Corporation held 30,320,525 shares of the common stock of Mobil in such Plan,
which is approximately 3.88% 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 170,029 outstanding shares of the 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, 1998. 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
87,123, 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. Robert F. Amrhein, an
officer of the Corporation, inadvertently filed one monthly report relating to
one transaction after the due date therefor.
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, Renna,
Swanson, DeLoach and Arnheim, 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
27
currently be payable as of December 31, 1997, under Mobil's special
termination allowance plan, upon involuntary termination of employment after a
change of control, are as follows: Mr. Noto, $4,120,800; Mr. Renna,
$2,286,000; Mr. Swanson, $2,217,800; Mr. DeLoach, $1,694,000; and Mr. Arnheim,
$1,071,400.
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, 1997 in such an event are as
follows: Mr. Noto, $1,936,998; Mr. Renna, $1,759,626; Mr. Swanson, $2,214,858;
Mr. DeLoach, $1,227,366; and Mr. Arnheim, $793,769.
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.
Dated: March 23, 1998
28
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRINTED [LOGO OF RECYCLED
IN PAPER APPEARS HERE]
U.S.A.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Fold and Detach Here and Read the Reverse Side
--------------------------------------------------
VOTE BY TELEPHONE OR INTERNET
QUICK * * * EASY * * * IMMEDIATE
--------------------------------------------------
Your telephone or Internet vote authorizes the named attorneys to vote your
shares in the same manner as if your marked, signed and returned your proxy
card.
VOTE BY PHONE: FOR U.S. STOCKHOLDERS ONLY, CALL TOLL-FREE ON A TOUCH-TONE
TELEPHONE 1-800-840-1208 ANYTIME.
THERE IS NO CHARGE TO YOU FOR THIS CALL.
You will be asked to enter the 11-digit Control Number located
in the lower right-hand corner of this form.
--------------------------------------------------------------------------
OPTION A: To vote as the Board of Directors recommends on ALL items,
press 1.
--------------------------------------------------------------------------
--------------------------------------------------------------------------
OPTION B: If you choose to vote on each item separately, press 0. You
will hear these instructions:
--------------------------------------------------------------------------
Item 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL
nominees, press 9. To WITHHOLD FOR AN INDIVIDUAL nominee,
please specify on your proxy card and return card in the
enclosed envelope.
Item 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN,
press 0.
Item 3, 4, and 5: The instructions are the same as for item 2.
When asked, you must confirm your vote by pressing 1.
VOTE BY INTERNET: THE WEB ADDRESS IS http://www.mobil.com
THANK YOU FOR VOTING.
Call * * Toll-Free * * On a Touch-Tone Telephone
1-800-840-1208 - ANYTIME
There is NO CHARGE to you for this call.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Fold and Detach Here and Read the Reverse Side
Mobil Corporation
YOUR VOTE IS IMPORTANT!
You can vote in one of three ways:
1. For U.S. Stockholders only, call toll-free 1-800-840-1208 on a Touch-Tone
telephone and follow the instructions on the reverse side. There is NO
CHARGE to you for this call.
or
--
2. Vote by Internet at our Internet Address: http://www.mobil.com
or
--
3. Mark, sign and date your proxy card and return it promptly in the enclosed
envelope.
PLEASE VOTE
----------------------------------------------
IF YOU VOTED BY INTERNET OR BY THE PHONE,
THERE IS NO NEED TO RETURN YOUR PROXY CARD.
----------------------------------------------
Mobil Corporation proxy
- --------------------------------------------------------------------------------
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 14, 1998 AT 10:00 A.M.
The undersigned hereby appoints Lucio A. Noto, Eugene A. Renna and Carole J.
Yaley 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 1998 Annual Meeting of Stockholders of Mobil
Corporation, and any adjournment thereof. The undersigned directs said attorneys
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 shares of Mobil stock credited to your
accounts, please vote by telephone or by the Internet by noon on May 11, 1998 or
fill in and sign this card and mail it in time to be received no later than noon
on May 11, 1998.
Your vote for six directors may be indicated on the reverse side. Lewis M.
Branscomb, Allen F. Jacobson, J. Richard Munro, Lucio A. Noto and Robert O.
Swanson have been nominated to serve for a term of three years to expire at the
Annual Meeting in 2001. Eugene A. Renna has been nominated to serve for the
balance of a three-year term to expire at the Annual Meeting in 2000.
If you use this card to vote, 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)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
The votes represented by this proxy will be voted as marked by you. However, if
you execute and return the proxy unmarked, such votes will be voted "FOR"
Proposals 1 and 2 and "AGAINST" Proposals 3, 4 and 5.
Please mark your vote with an X [X]
- --------------------------------------------------------------------------------
The Board of Directors Recommends a Vote "FOR" Items 1 and 2.
- --------------------------------------------------------------------------------
1. Election of Directors WITHHELD
FOR FOR ALL
01 Lewis M. Branscomb [_] [_]
02 Allen F. Jacobson
03 J. Richard Munro
04 Lucio A. Noto
05 Robert O. Swanson
06 Eugene A. Renna
Withheld for the following only (write the nominee's name(s) in the space below)
- ----------------------------------------
FOR AGAINST ABSTAIN
2. Ratification of independent auditors [_] [_] [_]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Board of Directors Recommends a Vote "AGAINST" Items 3, 4 and 5.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
3. Limit authority to issue
preferred stock [_] [_] [_]
4. Cumulative voting [_] [_] [_]
5. Adopt investment guidelines
for country selection [_] [_] [_]
- --------------------------------------------------------------------------------
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
named should sign.
Dated , 1998
---------------------------------
--------------------------------------------
Signature
--------------------------------------------
Signature if held jointly