Chevron Corporation (CVX) Earnings Call Transcript & Summary

Welcome to the 2020 Annual Meeting for Chevron Corporation. Our host for today's call is Mary Francis, Corporate Secretary and Chief Governance Officer. [Operator Instructions] I will now turn the call over to your host, Mary Francis, you may begin.

Thank you. Good morning, ladies and gentlemen, and welcome. I'm Mary Francis, Corporate Secretary and Chief Governance Officer of Chevron Corporation. We thank you for attending Chevron's 2020 Annual Meeting of Stockholders being held virtually this year due to the circumstances resulting from the COVID-19 outbreak. The agenda posted in the virtual annual meeting portal web page outlines today's order of business and the rules and procedures we will observe for the meeting. On behalf of the Board of Directors, I move all items of business and nominate the persons listed as nominees for directors. Now I would like to advise you that we have met the legal requirements for today's meeting. First, the Board of Directors declared March 30, 2020, as the record date for determining stockholders entitled to vote at this meeting. Second, we mailed or made available a proxy statement and annual report to all stockholders entitled to vote as of the record date. An affidavit of mailing these materials has been filed with the corporation's record. Third, we have the required quorum to proceed with the meeting. The inspector of elections reports that more than 1.5 billion shares, representing approximately 83% of Chevron's outstanding common stock are present by proxy today. Fourth, you may vote today by clicking on the vote button on the virtual annual meeting portal web page. The voting polls are now open. And they will remain -- they will close immediately following the preliminary report on voting and before the question-and-answer session. Since the items of business and nominations have been moved and the legal requirements reviewed, today's meeting has been duly convened and will be adjourned pursuant to the rules of conduct and procedures posted on the virtual annual meeting portal web page, if we are not able to proceed due to a technical malfunction. Please be reminded that forward-looking statements may be shared during today's meeting. We ask that you review the cautionary statement on the virtual annual meeting portal web page. We have been in contact with the presenters of stockholder proposals regarding how to access the meeting and present their proposals today. All have elected to provide an audio recording of their statement to be played in lieu of calling into the meeting. During the matters to be voted on period, the operator will play the prerecorded statement for the presenter. Following the presentation of stockholder proposals and the report of preliminary vote results, we will have a question-and-answer session where we will take questions submitted before the meeting through proxyvote.com and submitted during the meeting through the virtual annual meeting portal. I will state the name of the stockholder submitting the question if provided by the stockholder. As noted in the rules of conduct and procedures, we may summarize the question in the interest of time and clarity. If we are not able to get to every question submitted, we will post a summary of the remaining questions and answers on www.chevron.com. Thank you so much for attending our virtual annual meeting. It is now my great pleasure to introduce our Chairman and Chief Executive Officer, Mike Wirth.

Thank you, Mary. Well, good morning, and welcome to Chevron's 2020 Annual Meeting of Stockholders. I'll start by acknowledging the challenging times we're in. To our stockholders, please accept my best wishes for safety and good health to all of you. I'll say a few words about how Chevron is responding to the COVID-19 pandemic in a moment. This is our first virtual annual meeting of stockholders at Chevron. As with most companies, our Board agreed a virtual meeting was prudent given the COVID-19 health crisis. Although we're not meeting face-to-face, we expect to have a higher level of stockholder participation this year. We've also had 124 engagements with stockholders over the past year, a number of which included one or more Chevron directors. Your input and feedback are valued as we continually seek to improve how we conduct our business. Thank you for submitting questions in advance. I look forward to addressing those and any questions you might submit during the course of this meeting. Today, I'll provide a brief summary of our performance before moving to matters to be voted on. And finally, the question-and-answer period. Before I turn to those matters, I'd like to acknowledge the nominees for our Board of Directors who are joining us for today's meeting. They've achieved excellence in their fields, and they expect excellence from us. It's my pleasure to work with them. Wanda Austin, former President and CEO of The Aerospace Corporation; John Frank, Vice Chairman of Oaktree Capital Group; Alice Gast, President of Imperial College London; Rick Hernandez, Chairman and CEO of Inter-Con Security Systems; Wick Moorman, former Chairman and CEO of Norfolk Southern Corporation; Dambisa Moyo, CEO of Mildstorm; Debra Reed-Klages, former Chairman, CEO and President of Sempra Energy; Ron Sugar, former Chairman and CEO of Northrop Grumman Corporation; and Jim Umpleby, Chairman and CEO of Caterpillar. We count on our Directors for guidance. And with the depth and breadth of our current Board, Chevron is in good hands. Now I'd like to acknowledge Douglas Parker, a partner from PricewaterhouseCoopers and Wendy Shiba, the inspector of elections, who are also joining us for today's meeting. And now let's turn to our business. First and foremost, our thoughts are with those affected by COVID-19 and with the health care workers on the front lines battling to contain the outbreak. We continue to respond to the situation caused by the pandemic utilizing guidance provided by health authorities. Recognizing that the energy sector's continued operations are necessary to enable the security safety and health of all communities and are critical to support the first responders to the pandemic, our biggest challenges are to ensure safe access to our facilities and continuity of operations. We are successfully running essential facilities at operational levels necessary to meet current demand. We're taking strong precautionary measures to reduce the risk of exposure, including screening workers and visitors at these locations. Commodity prices have fallen significantly due to reduced demand resulting from the response to the pandemic and challenges of oversupply of crude oil. We expect our financial results will be depressed as long as current market conditions persist. Chevron is responding to these unprecedented challenges by focusing on the things we can control and with the commitment to protect the long-term health and value of the company. We entered this crisis well positioned with a strong balance sheet, flexible capital program and low breakeven price. Chevron has seen downturns before. We know what to do, and we're doing it. We'll now consider the matters to be voted on. When we get to the stockholder proposals, the operator will open the line for each presenter at my queue and each presenter will have 2 minutes to present their proposal. These are presented via prerecorded statements, as Mary mentioned earlier. I direct your attention to item 1 on the agenda. Your Board's proposal to elect 10 Director nominees. The persons who have been nominated are named in item 1 on the proxy card. You can read a short biography of each Director in the proxy statement. I now direct your attention to item 2 on the agenda. Your Board's proposal to ratify the Audit Committee's selection of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the company. You can read more about this in the proxy statement. I now direct your attention to item 3 on the agenda, an advisory vote on the compensation of the named executive officers identified in the proxy statement. You can read more about this in the proxy statement. I will now invite a presentation of item 4 on the proxy card regarding the stockholder proposal for a report on lobbying. I understand Justin Danhof of The National Center for Public Policy Research has submitted a prerecorded statement for this proposal.

I'm Justin Danhof, General Counsel with The National Center for Public Policy Research. I want to tell you about our proposal. We had 2 goals in filing this proposal. The first was to block a resolution from the Philadelphia Public Employees Retirement System from making it on to Chevron's proxy statement. The second goal is to encourage the company to stand up for its values and pro capitalist agenda in the face of attacks from this liberal pension fund in their cohorts. The Philly pension fund is part of a broad network of groups that operate under the As You Sow umbrella. They attempt to use corporations to silence speech and defund advocates of free enterprise. Following the Supreme Court's 2010 Citizens United decision, this network has filed hundreds of resolutions complaining about an alleged lack of transparency and accountability in corporate lobbying. However, such groups never express concern about the billions of corporate dollars that go to fund liberal clauses and politicians. Herein lies the hypocrisy of the proposal. This liberal network at PORS corporate speech when it it is perceived to skew to the political right yet it remains silent when speech supports favored leftist clauses. While many investors may have been [indiscernible] in the past, we hope you now understand this network's extremely partisan nature and deceptive tactics. This network complains the corporate relationships with groups, such as the U.S. Chamber of Commerce and the American Legislative Exchange Council, among other pro business organizations, exposed Chevron to "reputational risk". But considering that this network regularly smears these groups, this is a circular argument to void a fact. Groups such as the Chamber and ALEC promote a fair economic environment defied of excessive government regulation and owners corporate taxation. Such an environment would help not harm Chevron, but that's just what As You Sow wants an end to American capitalism by destroying private enterprise. So in future years and on other corporate proxy statements, if you see a proposal from the As You Sow orbit that seems to beg for transparency and accountability, please vote those down as well. Thank you.

Thank you, Mr. Danhof. Your Board of Directors recommends a vote against this proposal for the reasons indicated in your Board's response in the proxy statement. As indicated in that response, Chevron exercises its fundamental right and responsibility to participate in the political process and to ensure policymakers have the benefit of our expertise. We lobby ethically, constructively and in a nonpartisan manner. We agree that transparency and accountability are important. Chevron complies with all reporting and disclosure requirements imposed by the jurisdiction in which we lobby. In fact, our disclosures exceed what is legally required. Chevron's website provides extensive disclosure of our political activity, including a list of corporate level trade associations with dues over $100,000 and where a portion of the dues may be used for lobbying. This represents 94% of the company's annual trade association expenditures in 2019. Our political activities are subject to thorough review and oversight. The public policy committee reviews the policies, procedures and expenditures for Chevron's political activities, including political contributions and direct and indirect lobbying. You can read more about the Board's view on this proposal on Page 75 of the proxy statement. I will now invite a presentation of item 5 on the proxy card regarding the stockholder proposal to create a Board committee on climate risk. I understand Natasha Lamb has submitted a prerecorded statement for this proposal.

Good morning. My name is Natasha Lamb, and I move proposal #5 on behalf of Arjuna Capital, asking the Board to charter a new Board Committee on climate risk to evaluate the Board and management's climate strategy and to better inform for decision making on climate risks and opportunities. Board oversight of climate change strategy and planning is essential to address the existential threat of climate change to the fossil fuel industry and Chevron. Major oil companies face unprecedented disruption to their businesses driven by global imperatives to limit global warming and competition from noncarbon emitting technologies. As fiduciaries, our Board is responsible for stewardship of business performance and long-term strategic planning in light of risk factors, like climate science and policy. A failure to adequately plan for a low-carbon transition, including climate change policy, competition for renewables, peak oil demand and unburnable fossil fuel reserves may place investor capital at substantial risk. And certainly, a business strategy that fails to take these risks into account is unlikely to redirect company finances and innovative capacities to meet the formidable challenges posed by climate change and global temperature containment goals. Implementing the proposal would represent a prudent path forward by formalizing board level oversight of climate change strategy, so that company may remain successful in an increasingly decarbonizing economy. And while the ultimate responsibility for climate strategy should fall in the full Board, a Board Committee can conduct a more focused review than the full Board and, therefore, better inform and strengthen Board decision making. I urge shareholders, management and the Board to fully consider this strategically important issue. Thank you.

Thank you, Ms. Lamb. Your Board of Directors recommends a vote against this proposal for the reasons indicated in your Board's response in the proxy statement. As indicated in that response, climate change risks and opportunities are regularly assessed by the full Board and by existing Board committees. The Board oversees the company's risk management policies and practices, including those related to climate change. The Board also annually reviews long-term energy outlooks and leading indicators that could signify change. This includes drawing on external views. As part of this oversight, outside experts have met with the full Board to share differing perspectives on climate change and the energy transition and the associated risks and opportunities. The Board has access to Chevron's internal and external subject matter experts and engages them on climate change related issues, including the legislative and regulatory landscape, legal matters, technology and adaptation. We regularly assess our governance structure and the skills, experience and expertise to the Board to ensure that Chevron maintains an effective framework for managing the company's performance in mitigating risks to our business. You can read more about the Board's view on this proposal on Page 77 of the proxy statement. I will now invite a presentation of item 6 on the proxy card regarding a stockholder proposal to report on climate lobbying. I understand Adam Kanzer has submitted a prerecorded statement for this proposal.

Good morning, Mr. Chairman, members of the Board, fellow shareholders. My name is Adam Kanzer, Head of Stewardship for the Americas at BNP Paribas Asset Management. I'm here to move proposal #6, seeking a climate lobbying report. Corporate lobbying activities that are inconsistent with meeting the goals of the Paris Agreement, present regulatory, reputational and legal risks to investors. These efforts also present systemic risks to our economies. Delays in implementation of the Paris Agreement increase the physical risk of climate change, threatening economic stability and introducing uncertainty and volatility into our portfolios. We believe that Paris-aligned climate lobbying helps to mitigate these risks and contributes positively to the long-term value of our investment portfolios. Our proposal seeks to ensure that Chevron is appropriately managing these risks. The proposal asks our Board to evaluate and report to shareholders as Chevron's lobbying activities align with the Paris Agreement's goal to limit average global warming to well below 2 degrees celsius and how the company is addressing any misalignments. This analysis should cover direct lobbying and indirect lobbying conducted by Chevron's trade associations. More than 14 major European corporations have agreed to this request, including BP, Shell, Total, Equinor, Eni and Repsol. BP, Shell and Total belong to some of the same trade associations Chevron belongs to. Their analysis uncovered a range of misalignments on climate policy, including a few so serious they chose to leave the organization. For others, they will work within the organization to shift their position. Our proposal doesn't dictate what action Chevron can take if Paris misalignments are found. But these peer reports suggest that a review of trade associations is warranted. I want to thank Chevron for the constructive dialogue we've been having about this proposal, and I thank you for your attention.

Thank you, Mr. Kanzer. Your Board of Directors recommends a vote against this proposal for the reasons indicated in your Board's response in the proxy statement. As indicated in that response, we support the Paris Agreement and believe that taking action to address climate change is a smart thing to do. We're working to reduce our carbon intensity cost efficiently, increase renewables in support of our business and invest in the future, targeting breakthrough technologies. In addition, we work with governments and other stakeholders to develop climate policy that addresses environmental goals, while continuing to ensure critical access to affordable, reliable and ever cleaner energy. We support a well-designed price on carbon as the primary policy tool to achieve greenhouse gas reduction goals. As I mentioned earlier, our website provides extensive disclosure of Chevron's political activity, including a list of corporate level trade associations with dues paid over $100,000 and where a portion of the dues may be used for lobbying. We don't always agree with positions taken by other industry players or by trade associations. However, we remain confident that engaging in constructive dialogue through these associations provides the best opportunity to influence their positions and promotes the interests of our stockholders. You can read more about the Board's view on this proposal on Page 79 of the proxy statement. I will now invite a presentation of item 7 on the proxy card regarding a stockholder proposal to report on petrochemical risk. I understand Lila Holzman from As You Sow, has submitted a prerecorded statement for this proposal.

Good morning. My name is Lila Holzman, and I want to thank you for the opportunity to present proposal #7 submitted by As You Sow. The proposal requests a report on the public health risks of expanding petrochemical operations in areas increasingly likely to experience climate change induced storms, flooding and sea level rise. Due to the COVID-19 pandemic, this year has seen unprecedented disruption. This shock demonstrates how critical early action planning is to mitigate known and likely global catastrophes. Even as the energy sector grappled with the impacts of COVID-19, it must not put aside preparation to stand risks of the climate crisis. Petrochemical operations use dangerous chemicals that post threats when released to the environment. Already storms like Hurricane Harvey have shown how vulnerable plants operated by CPChem, a joint venture of Chevron and Phillips 66 are to extreme weather. During Hurricane Harvey, flooding at CPChem's facilities resulted in upsets and equipment malfunctions that led to alarming chemical leaks. Nearby community members reported health impacts, such as respiratory illness, nausea and headache. Some health issues may be long term and worse than captured by initial reports. We know hurricanes like Harvey are becoming more frequent and severe as the impacts of the climate crisis worsen. And yet, Chevron has plans to significantly expand petrochemical investments in high-risk regions, like the Gulf Coast. As investors, we seek disclosures with sufficient detail on how the company considers future severe and evolving climate risks. Existing risk management systems are proving demonstrably inadequate to handle new climate threats. This proposal will help the company better assess the risks of infrastructure harm, financial penalties, litigation, human health consequences and reputational damage. Disclosing such information will help investors assess weather and how well management's actions mitigate risk from expanding petrochemical investments in areas increasingly prone to climate change related impacts. Thank you.

Thank you, Ms. Holzman. Your Board of Directors recommends a vote against this proposal for the reasons indicated in your Board's response in the proxy statement. As indicated in that response, the environmental management element of the Operational Excellence Management System, or OEMS, calls for Chevron to protect the environment using a risk based approach, apply environmental design standards and a mitigation hierarchy to guide selection of safeguards and conduct monitoring, analyze performance and identify and address gaps. The proposal relates to the activities of Chevron Phillips Chemical LLC, or CPChem, a stand-alone enterprise, of which Chevron owns a 50% interest. CPChem utilizes its operational excellence system worldwide to assess and manage risks and audit performance against operational objectives and compliance requirements. CPChem's operational excellence system reflects the principles and approach of Chevron's OEMS. You can read more about the Board's view on this proposal on Page 81 of the proxy statement. I will now invite a presentation of item 8 on the proxy card regarding a stockholder proposal to report on human rights practices. I understand Sister Nora Nash of the Sisters of St. Francis of Philadelphia, has submitted a prerecorded statement for this proposal.

Good morning, Mr. Chairman, members of the Board, shareholders. I am Sister Nora Nash. I represent the Sisters of St. Francis of Philadelphia, American Home Missionary Society and 8 other ICCR cofilers. I hereby move shareholder proposal # 8 related to evaluating its human rights practices. As in the past, we commend the company for having a human rights policy and the Board's response indicate that you respect human rights. However, your response to this proposal and the company's actual policies processes and disclosure failed to meet both the financially material information and metrics required by SASB and international human rights frameworks. We request this report because we have seen no data to substantiate that Chevron is using the core international human rights framework to assess, identify, prevent, mitigate and remedy adverse human rights impacts. Chevron has not taken responsibility for the fact that it is Richmond's largest polluter in a time of climate crisis and corona pandemic. Not only does Chevron's existing human rights due diligence fail to address the risks, it fails to seriously invest the policy commitments. Investors and communities directly affected by its operations are unable to assess the effectiveness of its systems, its business has particularly negative impacts on environmental justice communities, which are disproportionately communities of color or low income, who bear the brunt of its environmental harms. The company fails to disclose assessment of salient risks, including excessive negative impacts as related to human health economic sustainability and quality of life. Chevron already knows that the office of environment held as assessment of 2019 identified the numerous toxic contaminants coming from California's refineries but citizens and shareholders have no knowledge related to how the company has assessed and curved emitting contaminants, such as ammonia, xylene, formaldehyde, methanol, benzene and numerous others. With this kind of knowledge, we expect that Chevron will give more serious considerations to assessing, mitigating and remediating impacts on human rights associated with its business and operations especially in environmental justice communities who are now more vulnerable and facing worse outcomes from the coronavirus. I thank you for listening and ask you to join us in voting for the proposal #8.

Well, thank you, Sister Nora. You've been a part of our annual meeting for many years on many different topics, and it's good to hear your voice. I hope you are doing well. Your Board of Directors recommends a vote against this proposal for the reasons indicated in your Board's response in the proxy statement. As indicated in that response, Chevron conducts its business responsibly providing energy that's essential to human progress while benefiting the communities where the company works. Our human rights policy reinforces Chevron's commitment to respecting human rights. It covers employees and the communities where they live and work, security providers, suppliers, contractors and other business partners. Chevron's management of community-related issues is integrated into its operational excellence management system. Within the OEMS, the stakeholder engagement and issues management process guides how Chevron manages social, political and reputational risks and opportunities. This includes soliciting input from communities and other stakeholders while systematically assessing risk and safeguards, such as social impact mitigations, grievance mechanisms and emergency response plans. The Board's public policy committee monitors social, political, environmental, human rights and public policy aspects of Chevron's business and the communities in which it operates. The additional report called for by the proposal is neither necessary nor an appropriate way to ensure the company meets its social and environmental responsibilities. You can read more about the Board's view on this proposal on Page 83 of the proxy statement. I will now invite a presentation of item 9 on the proxy card regarding a stockholder proposal to set special meetings threshold at 10%. I understand Jody Williams will present this proposal.

Good morning. I'm Jody Williams, Nobel Peace Prize Laureate standing on behalf of Newground Social Investment in Seattle to move special meeting proposal #9. Last month, 28 other nobel laureates and I released a statement supporting the $9.5 billion Ecuadorian judgment against Chevron for rainforest pollution. We also called on the Justice department to investigate Chevron's actions through law firm Gibson Dunn and District Judge Lewis Kaplan against Steven Donziger needs lawyer in the case. The much touted Chevron way states the company is "built on our values, which distinguish us and guide our actions. We conduct our business in a socially and environmentally responsible manner respecting the law on universal human rights to benefit the communities where we work. " Chevron's actions in Ecuador delie those lofty words. Apparently, shareholder, money and reputation is not the focus, nor is reflecting the Chevron way, using corporate money to retaliate and intimidate this Chevron's response, where it has spent a reported $2 billion to fight the case and revealing the lengths to which it will go to prevail. You don't have to believe me or the 28 other nobel laureates, go to Ecuador and bear witness yourself. The Board recommends a vote against 7 proposals on issues ranging from climate risk and lobbying to petrochemical risk, human rights practices and this proposal on special meetings. Each of these issues can threaten shareholder value and reputation for all these reasons and more. Therefore, I encourage to vote for proposal #9. Thank you.

Thank you, Ms. Williams. Although the proposal purports to address governance issues, the supporting statement and the comments from Ms. Williams make it clear that in reality, it is just a vehicle to discuss Mr. Steven Donziger's unsuccessful attempts to use the corrupt Ecuadorian litigation to try to extort a payment from Chevron. The 2014 decision of the U.S. Federal District Court in New York exposed to nearly 500 pages to true facts. Mr. Donziger and his accomplishes procured the Ecuadorian judgment through judicial bribery, fraud and corruption. The court found that Mr. Donziger engaged in multiple acts of racketeering, including extortion, witness tampering, money laundering, wire fraud, FCPA violations and obstruction of justice in obtaining the judgment and attempting to cover up his wrong doing. These findings were affirmed by the U.S. Court of Appeals for the second circuit. The Supreme Court refused to review the decision. The findings are now final. In 2018, an international tribunal in The Hague made the same findings of corruption as U.S. courts and in addition rejected the environmental allegations against Chevron. In more than 500 pages, the tribunal's decision details the corruption by Donziger and his team, finding the evidence to be an "overwhelming" and noting that I quote again, "short of a signed concession by the miscreants, the evidence established -- establishing ghost riding in this arbitration must be the most thorough documentary, video and testimonial proof of fraud ever put before an arbitral tribunal". Regarding the environmental issues, the international tribunal, which included a member appointed by Ecuador, unanimously confirmed that following the completion of an agreed environmental remediation program many years ago, the government of Ecuador released Chevron from the same environmental claims that the fraudulent Ecuadorian judgment purports to address. The fact is that the current environmental conditions in Ecuador are the sole responsibility of the government of Ecuador which has been the exclusive owner and operator for the last 28 years. Your Board of Directors recommends a vote against this proposal for the reasons indicated in your Board's response in the proxy statement. As indicated in that response, in 2010, stockholders representing 80% of common stock outstanding approved our current bylaw, establishing a 15% threshold to call special meetings. Our bylaws contain appropriate and reasonable requirements for calling special meetings. This proposal would eliminate these. The right of stockholders to be apprised of and vote on significant matters is protected by the existing threshold as well as state law and other regulations. You can read more about the Board's view on this proposal on Page 85 of the proxy statement. I will now invite a presentation of item 10 on the proxy card regarding a stockholder proposal for an independent Chairman. I understand Alec Baldwin will present this proposal.

Thank you, and good morning. My name is Alec Baldwin, and I stand on behalf of Newground Social Investment in Seattle to move the independent chair proposal #10. Chevron's Board has not protected shareholder value. A variety of issues outlined in the proposal demonstrate this, but it is most visible in the 50-year old environmental disaster the company bought in Ecuador where Chevron now has more than $9.5 billion in liability, ignores human suffering and uses shareholder money to personally attack the Ecuadorians attorney, Steven Donziger. Four key elements to remember, number one, none of the cases Chevron sites absolve it for clean up liability, even the Kaplan RICO decision states that. Number two, after Kaplan's RICO decision, Chevron's key witness under oath reversed his testimony admitted to lying on the stand and confessed that Chevron had coached him and paid him several million dollars to give the fraudulent testimony. Number three, Judge Kaplan has since been reprimanded for judicial overreach and the private law firm he appointed to prosecute Donziger lie about having previously been on Chevron's payroll. Number four, 29 nobel laureates recently signed a letter that urges cleanup and denounces Chevron's unprecedented actions against Donziger that tied to public opinion is turning. No company can perpetually avoid consequences. Harvey Weinstein thought that through intimidation and litigation he could avoid justice, but he now sits in jail. Chevron seems like the Harvey Weinstein of petroleum companies and shareholders should be terribly concerned about a corporate strategy that appeared to depend on luck not running out. Shareholders would have benefited had Chevron properly addressed its obligations when buying Texaco but then as now the company didn't have adequate insight or oversight, which is why I encourage a vote for this independent board chair proposal. Thank you.

Thank you, Mr. Baldwin. I'll address the stockholder proposal issue in a moment. But first, I must point out that Mr. Baldwin's statements about the Ecuadorian litigation and Mr. Donziger are false, just proven and offensive by decisions of multiple courts and tribunals. As I explained previously, Mr. Donziger is an adjudicated racketeer who, for many years, has unsuccessfully tried to cause the company to pay him money through a pressure campaign found by U.S. courts to be unlawful and extortionate. U.S. courts are not alone in condemning the corrupt judgment that Donziger procured in Ecuador. Decisions by courts in Argentina, Brazil, Canada, and Gibraltar, and a ruling by an international tribunal in the Hague confirmed that the fraudulent Ecuadorian judgment against Chevron should be unenforceable in any court that respects the rule of law. As to Mr. Donziger, the legal trouble he now faces are of his own making. Mr. Donziger has been suspended from the practice of law and in light of his recalcitrant disrespect for the judicial system in the rule of law, a U.S. federal court in New York has ordered him to stand trial on 6 counts of criminal contempt. Chevron is not a party to the criminal proceedings and did not institute them. The court initiated the proceedings on its own due to Mr. Donziger's violation of its prior judgment in multiple court orders. You can read more about the fraud on Pages 85 and 87 of the proxy statement. Your Board of Directors recommends a vote against this proposal for the reasons indicated in your Board's response in the proxy statement. As indicated in that response, the Board should have the flexibility to determine the best person to serve as Chairman. Whether that person is an independent Director or the CEO. The independent Directors review our leadership structure and elect the Chairman annually. The Board recognizes the importance of independent oversight of the CEO. We have a strong Lead Independent Director, who, among other duties, leads executive sessions of the Independent Directors following each Board meeting and provides feedback to the CEO, consults on an approved Board meeting agenda, schedules an information sent to the Board, calls meetings of the Independent Directors and leads the Independent Directors in the annual CEO performance evaluation. You can read more about the Board's views on its leadership structure on our website in Pages 19 through 20 and Page 87 of the proxy statement. That concludes the presentation of matters to be voted on. Next, we'll have a preliminary report on voting. I'll ask Mary to present the report. Mary?

Thank you, Mike. The preliminary report from the inspector of elections is based on proxies received prior to the start of this meeting. I want to emphasize that the following results are preliminary. Following today's meeting, our inspector of elections will verify the vote results and certify final vote results to us. We will report final results on www.chevron.com and in a filing with the U.S. Securities and Exchange Commission on Form 8-K in the next few days. The report of the inspector of elections is as follows and these items are listed in order on your agenda. Item 1. An average of 96% of the votes cast were voted for the 10 nominees for election to the Board of Directors. Item 2. 97% of the votes cast were voted for the ratification of the appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for 2020. Item 3. 92% of the votes cast were voted for Say on Pay. Item 4. 29% of the votes cast were voted for the proposal to report on lobbying. Item 5. 8% of the votes cast were voted for the proposal to create a Board Committee on climate change. Item 6. 53% of the votes cast were voted for the proposal to report on climate lobbying. Item 7. 46% of the votes cast were voted for the proposal to report on petrochemical risk. Item 8. 17% of the votes cast were voted for the proposal to report on human rights practices. Item 9. 34% of the votes cast were voted for the proposal to set special meetings threshold at 10%. Item 10. 27% of the votes cast were voted for the proposal for an independent Chairman. The Board will take into consideration the results of today's vote and the thoughtful discussions the company has had with its stockholders. This concludes the preliminary voting results. I now turn the meeting back over to Mike.

Okay. Thanks, Mary. That concludes the items of business for the meeting. The polls for voting are now closed, and we'll move to the Q&A portion of the meeting. We will start with questions that have been submitted in advance of today's meeting and then take questions that have been entered in the virtual annual meeting portal. Please note, we'll attempt to answer as many questions as time allows, and -- but only questions that are germane to the meeting. Any questions that we don't get to will be addressed on our website. So Mary, over to the first question.

Okay. The first question, how safe is our stock dividend? I am very concerned since the [indiscernible] .

Well, I appreciate that. We've been paying a lot of attention to our financial situation, obviously, as markets have really changed. We've got a long-standing financial framework that has the dividend as our #1 financial priority and have actually increased our annual dividend payout for 33 consecutive years and haven't cut our dividend since the great depression, almost 90 years ago. We entered this current market in very good shape with the balance sheet that is second to none in the industry. An advantaged portfolio with a low breakeven price and capital discipline that's part of our DNA. We've demonstrated that capital discipline in the last few months through the way we're managing our capital spending and have made adjustments in that -- in response to the market environment. And we've also demonstrated it through our discipline on transactions. All of this is evidence of our commitment to the dividend. The last thing I'll say is on our first quarter earnings call about a month ago, we laid out a stress test, where we showed the financial state of the company and our balance sheet, if we have 2 years of $30 Brent crude pricing, continue to invest in our business, sustain the dividend and it shows that we still exit 2021 with a very strong balance sheet and good financial health. So that was an attempt to lay out for investors the safety of our dividend and the actions we're taking to protect it. Thank you very much for your question.

The next question is from Pat Rutherford. What is the outlook going forward for OPEC+ abiding by the production quotas?

Yes. Rutherford, that's -- it's an interesting question. Certainly, not too long ago, we would talk about OPEC rather than OPEC+. In recent years, you've had nonmembers come together as producers with the intent of trying to ensure the market is balanced. And I think generally, you could observe that over the last few years, they have been relatively disciplined in inviting by quotas. The history has been somewhat spotty in that regard, if you go back over time. But I think in recent times, it's been pretty good. That said, we saw in early March that, that discipline broke down in a well-publicized dispute between countries, both in OPEC and then in the OPEC+ group, that could not reach agreements and began to engage in essentially a war for market share, increasing production right at the time when world demand was plummeting and prices reflect that. Subsequently, they've come back together and have reached a new agreement that's much larger than the one they walked away from in March. And to this point, although it's early days, people seem to be committed to abiding by those agreements. It's hard to project the future, and I certainly don't pretend to have unique insight into what each of these producing countries will actually do. I will say that I think everyone recognizes we're in a unique and unprecedented environment right now. And I think that all the producers are keenly aware of that, and that's reflected in their current actions. We'll have to see how that plays out over time.

The next question is, why aren't there more women on your Board? It should be at least 50% comprised of women. There are plenty of qualified women in the oil industry who would be excellent candidates for your Board.

Well, I appreciate that question. This is an issue that's very important to me. Look, I'm very proud of the women on our Board, and I'm proud of the men on our Board, too. Chevron is committed to diversity and inclusion at all levels of our company, and that includes the Board. It's a cornerstone of our corporate values of high performance, integrity, trust and partnership in protecting people in the environment. Today, we have 10 directors, 9 of whom are independent directors. 4 of those 9 or 44% of our current independent Board members are women. So while not quite at the 50% threshold that the questioner asked about, we're closing in on it. And I'm very proud of that. And we continue to seek out qualified candidates to join our Board with a focus on being sure that we're considering qualified women. If you go back to the 1970s, we've had women on our Board essentially continuously since the 1970s when Carla Hills, join our Board -- joined our Board and became the first female Board member back when we were still standard oil of California. And I think then and now our female Board members bring distinct skills, capability and experience that make us a better company. And I'm proud to serve alongside them and look to continue to improve the strength and quality of our Board at every opportunity.

Okay. Mike, we've received several questions from stockholders who want to know about the company's approach to climate change and our actions and investments in renewable energy.

Well, first, let me just say, we're committed to addressing the risk of climate change while continuing to deliver the energy the world needs. We're working to be part of the solution. Chevron, as I said earlier, supports the Paris Agreement. We're taking action to reduce our own emissions while supporting well-designed policies, such as price on carbon to efficiently and effectively reduce emissions economy wide. We're lowering the company's carbon intensity cost effectively. We're increasing the use of renewable energy across the board in our business where it makes good sense. And we're focused on investing in future breakthrough technologies that offer the potential to be both competitive, economically and scalable to make a difference in a world that needs ever more energy. So we've set 4 separate greenhouse gas intensity reduction goals that are tied to the compensation of nearly all our employees, including mine. We're part of the oil and gas climate initiative. In fact, the CEOs in that group put out a letter yesterday reaffirming our commitment to work on this big challenge. Collectively, we've committed over $1 billion to help develop new technologies and businesses to reduce greenhouse gas emissions. Separate from that, we've got our own venture capital fund, which has a $100 million fund to invest in technology to promote startups and ideas and opportunities to improve these technologies. We've invested more than $1 billion in carbon capture utilization and storage project, which is the largest carbon capture project on the planet today. And we continue to proactively consider climate change risks and opportunities in our business decisions. So look, we're taking a lot of actions. This is a big challenge. And no one company, no one industry will have all of the answers, but we need to engage in an honest and constructive conversation across the economy and get to work on this, which is what we're doing. Thank you for the question.

To the next question, with a downturn in the oilfield over the last few years, how will Chevron attract young/old talent back into this business, since so many have lost their jobs. Education is fine but experience is critical to everyday decision.

Well, I appreciate that question because people are the lifeblood of our industry, and we talk about human energy a lot at our company. And I'm very proud of the people that we have today. And I think continuing to attract top-tier talent is essential for a company to be competitive. I'll give you one example. We continue to see very good success recruiting on campus. Just this week, we began our internship program, which is an annual program normally done in person. This year, we are grading over 400 interns from a wide variety of universities to a virtual intern program. They've been introducing themselves this week on our internal social media website. It's fascinating to see the range of backgrounds that they bring to us both educationally and their life backgrounds. And we chose to go through with our internship program when I know a number of other companies who have chosen not to because of the pandemic. But our relationships with universities, with young people on campuses are very important. And likewise, I think the question may reference the fact that experience matters. And we have been bringing experienced people into our company over the last decade as we need them. And there will be, I think, people available. We're going through a tough patch right now, which means there is impact on jobs. And we continue to stay very engaged both at the university level and in the experienced recruiting community to be sure that we have access to the talent we'll need for the future.

Okay, the next question is submitted by Susan Rutherford who ask, would you discuss Chevron's portfolio in the Republic of Congo, Nigeria and Angola? What is your outlook for your African production?

Yes, Ms. Rutherford. Thank you for your question. We've got a long history in West Africa and the 3 countries that you note and continue to have strong businesses there that have been in our portfolio for decades, and we expect to be a part of our future. The reality is in a world with a global competition for investments and the capital discipline that we are exercising, we need to be sure that we're putting shareholder dollars into the best investments. And we work with countries around the world to be sure that the investment climate and investment framework is competitive so that they can compete for that investment. One of the countries you mentioned in particular, Angola, under the new President, has instituted significant reforms to their industry environment that have created an investment framework that is more attractive than it had previously been in Angola. And certainly, as an example of the kinds of things that are helpful. So these are big countries, Nigeria, Angola, particularly in our portfolio and ones that we intend to be part of our business well into the future. Thank you.

The next question is submitted by Mark Graham. For many years, corporations whose products or operations produce greenhouse gases have thought to confuse, mislead and deceive the public, the corporate mass media and the government by funding scientific research that is pseudoscientific and planned and executed in order to reach a predetermined conclusion, one that absolves the corporation of any capability and climate change. How much money has Chevron spent in the last 10 years on these activities?

Well, Mr. Graham, first of all, let me just tell you that we recognize the findings of the intergovernmental panel on climate change for the IPCC, that the use of our products contributes to increases in greenhouse gases, which can result in an increase in global temperatures. Chevron does not conduct original climate research. And for more than a decade, we've aligned our outlook and our activities with the principles of the IPCC. In fact, we have one of our employees that has been part of the group that received the Nobel Prize when the IPCC received that. We believe there's no evidence that Chevron has misled the public about climate change. We do not do original research on this or science on this and have not been part of any efforts to assert that we do. When plaintiffs who have filed these climate-related lawsuits against our company were forced to justify allegations like this in the court of law, they couldn't do so. And so I just think the whole premise for the question is broad and not applicable to us.

The next question is from Tim Goodman of EOS at Hermes Federated, who asks oil prices have been very low, even negative in 2020 caused by supply and demand factors. Stress testing for $30 a barrel does not seem much of a test. How does this affect the stress testing assumptions for oil prices that the company is and will use in the future before making CapEx project or other strategic decisions?

Yes. Maybe like the last question. The premise here, I think I would take a little bit of a different point of view on. We believe $30 for 2 years is a very good stress test or we wouldn't have used it. Remember, Brent averaged $50 in the first quarter of this year. So the average $30 for all of 2020, prices would have to be in the low 20s for the rest of this year. Prices are in the mid- to high 30s today. So I think it's an appropriate stress test. And look, it's a price that is likely below the level at which global reinvestment will allow supply to meet demand over time. But it's an appropriate level to test our balance sheet, our financial strength when we look at the moves that we will make and the commitments we have to meet our obligations over the next 2 years. So I think it was a very appropriate stress test. We've received a lot of feedback from investors that appreciated the transparency on that. And I think it's important not to conflate a near-term stress test of our financial strength and durability with a long-term view on the prices that will be necessary to incentivize reinvestment in our industry at a rate that will meet global demand. Our long-term price assumptions for making capital and project and other strategic decisions will be informed by a long-term view of supply, demand, technology, policy and other factors that will reflect the long-term market. And that's really -- it's a different set of assumptions. It's a different set of prices and a different purpose than the near-term stress test that we laid out in our call last month. Thank you.

The next question is from Michelle Piñon of the Sierra Club. Will Chevron commit to not pursue drilling in the Arctic National Wildlife Refuge?

Yes. So I'll say this, we support access to federal lands for responsible exploration and development of oil and natural gas resources, including the Arctic National Wildlife Refuge coastal plain. We're not speculating about future plans at ANWR. We'll consider this opportunity in the context of our global exploration portfolio and based on the technical data that we have. Thank you for the question.

Okay. The next question is, we have -- okay, filtering through this, we've received several questions about our industrial emissions from our refinery enrichment. Stockholders are asking how Chevron is ensuring that its emissions are not compounding health impacts to communities?

So look, we've been in Richmond for more than 100 years. We're proud of our ongoing partnership with the community there as a major contributor to the local economy and the regional economy. And we enable our communities to prosper by providing ever-cleaner products, good jobs, significant economic output, tax revenue, community support, volunteer hours by our employees. And we're a force for good in Richmond. And if you talk to the people, in Richmond, they will tell you that. The Richmond refinery continues to operate to supply products to our customers at the market's current demand rate. These are vital for the communities, well, to keep fluid flowing, to keep medical supplies going and the other things that I mentioned earlier. And our refinery workforce takes their role as good neighbors very seriously. We're continually working to reduce our environmental footprint and investing in new technologies. We've reduced criteria air emissions by 86% over the last 40 years there. We recently completed a modernization project to eliminate 50-year-old hydrogen production facilities with new plants that are much lower emitting and modern-day technology and it's an example of what we're continually doing in Richmond and elsewhere around the world, engaging with communities, working to reduce the footprint of our operations and being a good neighbor. Okay. Mary, I think we are getting close to the top of the hour. Let's squeeze in 2 more questions.

Okay. The next question is submitted by Brian Putt, who identifies as a retired Chevron employee and stockholder. With the challenges posed by the COVID-19 pandemic, what is Chevron doing to ensure production and construction continues in Kazakhstan?

Well, it's a great question, Mr. Putt. And you may have seen there have been some media reports. We've had -- we're doing testing around the world. And as I mentioned, we are working to keep workers safe around the world. In Kazakhstan, we have seen a COVID-19 outbreak. We had 2 months ago, close to 30,000 workers on-site there. It's a remote location where people live in relatively close quarters in normal times. And there was an outbreak that has spread. We've demobilized nearly 20,000 of that workforce. We are engaged in testing as people leave to ensure that they know whether or not they are COVID positive before they get on a bus or a plane or a train to return to their residents. And for those that are staying, and we have core critical path construction workers still on site, their housing quarters have been spread out, the PPE requirements have been increased, the testing activity has increased, and we are continuing to focus on ensuring that we identify and isolate any positive cases within that workforce. But it's a big project, a lot of people in a difficult and demanding location. And every day, our people are working very hard to respond to this pandemic. And it's a big job, and I think they're doing a fine job of dealing with a moving situation. Okay. Last question, Mary.

Okay. Last question, Occidental seems to be having serious cash flow problems. If they have to start selling off some or all of the Anadarko assets in the Permian Basin, will Chevron take some decisive action to secure those assets at a better price?

Well, look, I guess the M&A question had to come up. I can't discuss potential mergers and acquisitions. I can tell you, we are always actively looking for ways to high-grade our portfolio. Certainly, there are stresses on the various players in the industry today that could result in commercial opportunities, and we are alert to that, we monitor that. And if we see something that makes good sense for our shareholders, we certainly will consider it. I would tell you that our capital discipline, I think, is demonstrated by stepping away from the Anadarko deal a year ago and not engaging in a bidding war, we never increased our offer on that transaction because we saw the returns eroding the risk increasing and getting in a bidding war was something we viewed as risky for our shareholders. Instead, we walked away with $1 billion breakup fee, which I think was the right decision to make. And I think it's proven out for our shareholders and others that we manage that well. So we'll continue to exercise that discipline as we evaluate opportunities going forward. Okay. I really appreciate the questions there. And again, we'll post on our website responses to any questions that came in here late in the meeting that we haven't had an opportunity to address during the meeting. I also would encourage you maybe in closing here to read our new corporate sustainability report which has been released and has additional information about a number of the issues that were raised today and ones that I know are of concern to some of the proponents of proposals that we heard from. The report is available on the website you used to join our meeting or on chevron.com. Thank you for joining us. It's always good to hear from our stockholders. I hope you're leaving today with a deeper understanding of how we advance the business over the last year and our plans for the year ahead. I will now declare the meeting adjourned. Thank you.