Exxon Mobil Corporation (XOM) Earnings Call Transcript & Summary

Good morning, and welcome to ExxonMobil's 2021 Annual Meeting of Shareholders. This broadcast will be recorded and contains copyrighted material. You may not record or rebroadcast is material without ExxonMobil's prior consent. At this time, I turn the call to Stephen Littleton, ExxonMobil's Vice President of Investor Relations and Secretary. Please go ahead.

Thank you, and good morning. Welcome to our 2021 Annual Shareholders Meeting. Darren Woods, ExxonMobil's Chairman and Chief Executive Officer, will preside over the formal meeting and will also provide a business review and address questions as time permits. If we are unable or the Chairman deems it inadvisable to proceed with the meeting, the meeting may be deferred or concluded in accordance with the rules of conduct. Updates will be posted on our Investor Relations website. This slide shows today's agenda. After the formal business of the meeting, Darren will provide a review of ExxonMobil's business. We will then abide to your questions. If you are a shareholder of record or the proxy, you can vote, or change your vote, prior to the closing of the polls by following the instructions on the virtual meeting website. If you have already submitted a proxy, you do not need to vote via the meeting website unless you want to change your vote. The Board of Directors has approved the rules of conduct governing today's meeting, which are posted on the Investor Relations website and on the virtual meeting website. Only shareholders as of the record date or their proxies may participate in the meeting. In order to ensure that shareholders have the ability to engage with management, shareholders may submit a question within the Ask a Question box on the meeting website. A list of registered shareholders is available for inspection through the virtual meeting website. Michael Barbera and Jason Graham of First Coast Results have been appointed the inspectors of election, and our their oath of office has been delivered to the Secretary. Notice of this meeting has been properly given. I will now turn the meeting over to ExxonMobil Chairman and Chief Executive Officer, Darren Woods.

Thank you, Stephen. Good morning, everyone. I now bring our meeting to order. The polls were opened 15 minutes prior to the meeting start time. I declare a quorum present and the meeting ready for business. I'm joined today by our Board of Directors standing for reelection. And as they appear on your screen, they are Michael Angelakis, Chairman and CEO of Atairos and former CFO of Comcast; Susan Avery, President Emerita of Woods Hole Oceanographic Institution; Angela Braly, former Chairman, President and CEO of Anthem; Ursula Burns, former Chairman and CEO of VEON; Kenneth Frazier, ExxonMobil's Lead Independent Director and Chairman and CEO of Merck; Joseph Hooley, former Chairman, President and CEO of State Street; Steven Kandarian, former Chairman, President and CEO of MetLife; Douglas Oberhelman, former Chairman and CEO of Caterpillar; Samuel Palmisano, former Chairman and CEO of IBM; Jeffrey Ubben, Founder, Portfolio Manager and Managing Partner of Inclusive Capital Partners; and Wan Zulkiflee, former President and Group CEO of Petronas. This group of independent directors has experiences leading some of the world's largest, most complex and successful companies. They bring a diverse range of backgrounds, knowledge and skills and are focused on delivering long-term shareholder value while guiding ExxonMobil's role in the transition to a lower carbon future. As demonstrated by the 6 highly qualified independent directors who have been added since 2017, including 4 in just the past year, Board refreshment is a key function of the Board Affairs Committee and a priority of the Board. The committee's responsible for identifying and evaluating director candidates who may be recommended in various ways, including by nonemployee directors and input from shareholders. It also receives support from third parties in identifying and evaluating board candidates. All candidates are assessed on the same basis. Their overall qualifications are evaluated based on the needs of the corporation and requirement to maintain the right Board composition for our company. This assessment includes consideration of diversity and the evolving business requirements critical to the company's long-term strategy. This is reflected in the recent director additions. We have added independent directors with expertise and capital allocation across the industries, complex corporate transitions, the energy industry, investor perspectives, international markets and environmental, social and governance practices. This has further strengthened the collective skill set of the Board, which continues to provide sound governance and risk management oversight with a strong commitment to increasing long-term shareholder value. With that, let's turn to the business of the meeting. I'm now placing the 10 items of formal business listed in the meeting notice, including the election of directors, before the meeting for a vote. The first proposal is the election of 12 directors. The Board nominates the 12 persons I introduced moments ago and were identified in ExxonMobil's proxy statement. As I mentioned, all 12 are currently serving as ExxonMobil directors. They are highly qualified, and the Board recommends a vote for each of the nominees. I also want to take this opportunity to recognize one of our directors who is retiring and not standing for reelection, William Weldon, who has served our Board for 8 years. I know I speak for the whole Board when I say we've enjoyed working with Bill over the years. We appreciate his leadership and the contributions he has made to the company. Thank you, Bill. We wish you all the best. Under our by-laws, shareholders are required to provide advanced notice of their intent to nominate candidates for election as directors. As you are likely aware, Engine No.1 gave notice to the company of his intentions to nominate 4 individuals to serve on the company's Board. The names of those candidates have been identified in the proxy materials sent to you by Engine No.1. We, hereby, waive the requirement for Engine No.1 to formally nominate its candidates at this meeting. As no other stockholder provided notice of director nominations, I declare the nominations for directors closed. At this time, we invite Charlie Penner of Engine No.1 to provide up to 5 minutes of remarks. Operator, please open his line.

Thank you, Mr. Chairman. I'll be brief. I was talking to one of our nominees last night as the votes were coming in, well after 1:00 his time, and saying it looks like he would fall short. And he smiled, and he said, "That's okay. I always thought it was a long shot. We'd win any seats, but I thought it was worth it." This is somebody who's been called one of the top CEOs in the world by Harvard Business Review 3 times and Business Person of the Year by Fortune, and he was asked to sign the Paris Pledge for Action and actually helped advance the goals of the Paris Agreement by successfully turning around a struggling energy company and generating a 5x return for his investors. His only flaw, as far as we can tell, is he's the easiest to sacrifice for the sake of moderation by at least some, who are serious about getting net zero, but worry about rocking the boat too much of ExxonMobil. Like all of our nominees, not just Anders, but also Greg Goff, Kaisa Hietala, and Andy [ Kershner ], all of whom have incredible track record of value creation and energy and were all willing to put themselves on the line for what they believe in. He did this because he thought he could help. He thought he could help a company that's been determined, in our opinion, to fight off the future for as long as possible, do a better job of preparing for it in the years to come. That change won't be easy. And even under the best in circumstances, it will take years. But that work, we believe has to begin now. Unfortunately, rather than being open to the idea of adding qualified energy experience to its Board, we believe ExxonMobil once again closed ranks, despite the increasingly diminished long-term returns of this approach and unfortunately, dismissed all these nominees as recently as yesterday's quote, unqualified. We believe that no matter what the outcome of today's vote, this is a Board that needs to look in the mirror and ask how it came to that. The good news, we believe, is that no matter what the outcome of today's vote, change is coming. Since this campaign started, ExxonMobil has promised, in a number of different ways, that it will stop fighting and start facing the future. These are promises that it cannot easily walk away from, at least not if shareholders hold the Board's feet to the fire. And so there's one thing that we've learned from this campaign, is that that's what it will take. I think we also learned that, that's what will take in an investment community that still too often treats acceptance of the idea that humanity will inevitably drive itself off a cliff, somehow is hard-headed realism or sound business practice. Again, changing that mindset and showing it can be done profitably will take time, but the trajectory has to start bending now. But we also learned that change can happen anywhere. It will always be a long shot. It will always be worth it. Thank you very much, Mr. Chairman.

Thank you, Charlie. Let me respond by first stating that we value the constructive engagement we've had with so many of our investors throughout the year. We appreciate the opportunity for an open and honest dialogue. We hear a broad and diverse range of views from our more than 2.8 million shareholders. They include our many employees and annuitants, sovereign wealth funds, descendants of investors who have shares passed down from generations, global index funds and newly formed investment firms. Through this ongoing engagement, we increased our understanding and appreciation for each other's points of view. On many occasions, we have incorporated input from shareholders in areas such as director qualifications and selection, enhanced disclosures and other matters. On this occasion, we respectfully disagree with Engine No. 1's conclusion and proposed approach. Our current Board of Directors is among the strongest in the corporate world. Individually, each director brings extensive knowledge, leadership experience at the most senior levels and valuable perspectives that serve our shareholders very well. Collectively, they have provided exceptional guidance and oversight during one of the most challenging periods our company has ever faced. And as a result, ExxonMobil is in a strong position to create differentiating value through the energy transition. Today, with the best investment opportunities we've had in 20 years, we are investing in our highest return assets to generate strong cash flows and earnings that will enable us to maintain and grow our reliable dividend, repay debt and invest in low-carbon technologies that are critical in helping society achieve its climate goals. We look forward to continuing to engage with shareholders, hearing your feedback, sharing our views and incorporating shareholder input as we position the company for success. The next item on the agenda is the ratification of PricewaterhouseCoopers as the independent auditor. The Board's Audit Committee has appointed PwC to audit ExxonMobil's financial statements for 2021. PwC is represented today by Tom Smith. The Audit Committee's reasons for recommending for the ratification PwC appear in the proxy statement. The next Board proposal calls for a shareholder advisory vote to approve executive compensation. The Board recommends a vote in favor of this proposal. The next order of business is the consideration of shareholder proposals. Details on the proposals can be found in the proxy statement posted in the Meeting Materials section on your display. I'll now turn it over to Stephen who will introduce the presenters.

Thank you, Darren. Please note, the polls will remain open through the shareholder proposals and until the question-and-answer period is complete. To ensure we have adequate time to hear the proposals as well as shareholders' questions, we have asked presenters of shareholder proposals to limit their comments to 3 minutes. To help with speakers manage their time, a tone will sound when there are 30 seconds remaining and again when there are 10 seconds remaining. The first shareholder proposal calls for an independent Chairman. Beth Pierce will present the proposal with a recorded statement. Operator, please play the recording.

Good morning, Mr. Chairman, members of the Board and fellow shareholders. My name is Beth Pearce, Treasurer of Vermont and the past President of the National Association of State Treasures. On behalf of the Vermont Pension Investment Committee and the various co-filers, I hereby move Item #4, which asks that our Board has an independent Chairman. An independent Chairman of the Board is one of the key pillars of good corporate governance. The Council of Institutional Investors, CII, which is a nonprofit, nonpartisan association and employee benefit funds charged with investing combined assets under management of approximately $4 trillion, advocates the Board should be chaired by an independent director. CII states, and I quote, "A CEO, who also serves as Chair can exert excessive influence on the Board and its agenda, weakening the Board's oversight of management. Separating the Chair and CEO positions reduces this conflict, and an independent Chair provides the clearer separation of power between the CEO and the rest of the Board." Studies show additional benefits for shareholders when the CEO and Chair roles is separated. A 2012 GMI study found that companies with independent Board Chairs paid less in CEO compensation and showed outperformance of 28%. Another found that in 2006, all of the underperforming North American CEOs with long tenure has either held an additional title of Company Chairman or served under Chairman who was the former CEO. Leading companies appear to agree as more are moving to separate roles. Board research and consulting firm, Spencer Stewart, reported in its 2020 Board Index Report that 55% of Boards have split the Chair and CEO roles and noted that 34% of the S&P 500 Boards have an independent Chair, up from 19% a decade ago. ExxonMobil shareholders had filed this proposal for at least 17 years and have yielded strong shareholder support. While we recognize the company has appointed a lead independent director and strengthened that role, we do not consider this to be an adequate substitute for an independent chair. At this stage in Exxon's history, it is vital to fully empower the Board to oversee our policies addressing systemic risks, like climate change, to preserve shareholder value rather than having management serve with controlling influence. We urge you to vote in favor of Item 4. Thank you.

Thank you, Beth. There's no question that a strong independent Board responsible for oversight of management, including the CEO, is important to effectively represent the interest of shareholders. And I will tell you that our Board is strong, independent and very actively engaged in all substantive matters. Our meetings encourage debate and provide for in-depth discussions on issues of importance to shareholders. However, giving up the Board's authority and flexibility to choose the best leadership structure is not in the best interest of shareholders nor does it enhance the Board's ability to provide effective oversight. Over the years, the Board has carefully considered this matter and currently believes that having the roles combined results in significant benefits. Our governance is strengthened by the annual selection of a lead director who provides independent oversight and acts as a liaison with the Chairman. Importantly, this person is selected by the independent directors. On top of that, the Board has been responsive to input from shareholders by broadening the authorities of the Lead Director position. So in addition to previously held responsibilities, the Lead Director now leads the annual performance evaluation of the Board, chairs the Board Affairs Committee and works with the Compensation Committee to oversee the annual evaluation of the CEO, the communication-resulting feedback and the review of CEO succession plans. The Board believes the current structure provides the greatest benefits for shareholders and importantly, preserves the Board's flexibility to determine the appropriate leadership and oversight structure. Therefore, the Board recommends shareholders vote against this proposal.

The next shareholder proposal relates to a special shareholder meeting. [ James McRitchie ] will present the proposal. Operator, please open his line. James, go ahead.

Is my line open?

Yes, sure, James.

Okay. Shareholder Proposal #5, special shareholder meeting improvement. Reading this for Ken's Diner. Shareholders ask our Board to amend governing documents to give the owners of combined 10% outstanding common stock the power to call a special meeting without need for court approval. A combined 10% of our outstanding common stock still means stock ownership of 25 billion of ExxonMobil stock per shares to call a special meeting. A special shareholder meeting is a means shareholders can use to raise important matters outside the normal annual meeting cycle, like the election of a new director. For instance, 438 million votes were cast against Mr. Ken Frazier, Merck's Chair, CEO and Exxon Lead Director in 2020. Having a chair CEO of another company as a Lead Director at ExxonMobil is like having a union boss at the pay of hourly workers. Shareholders deserve a lower stock ownership threshold to make up for the transition to online shareholder meetings that means that it's easier for management to dominate an online Special Shareholder Meeting. For instance, the 2021 Cold Annual Meeting was 9 minutes, an example of the near total dominance that management can now display as an online shareholder meeting is AT&T, which would not even let shareholders speak at 2 consecutive online shareholder meeting. Please vote yes, special shareholder meeting improvement, Proposal #5.

Thank you, James. We agree that shareholders should have the right to call a special meeting. In fact, we recently expanded that right so that shareholders now have 2 ways to make that happen. In response to shareholder feedback, we enhanced our bylaws so that shareholders holding at least 15% of shares outstanding can call a special meeting. Further, under New Jersey law where we are incorporated, shareholders holding 10% of outstanding stock have the right to call a special meeting upon showing good cause. This right has been in place for many years. Either option is more advantageous than requiring 25% of outstanding stock, which is the most common ownership threshold among S&P 500 companies. Therefore, the Board recommends shareholders vote against this proposal.

The next shareholder proposal would require a report on fossil fuel demand scenario analysis. I understand that John Geissinger will present the proposal with a recorded statement. Operator, please play the recording.

Members of the Board, Exxon employees and fellow shareholders, I am John Geissinger, Chief Investment Officer of Christian Brothers Investment Services, an asset management firm with $10 billion in assets under management. Across our portfolios, we hold $25 million in Exxon Securities. We believe the company's engineering skills and deep experience with large infrastructure projects can bring low carbon energies to scale for a growing population and making Exxon critical in the transition to a low-carbon economy. I am here today to move Item #6. Our shareholder proposal asks the Board to issue an audited report on how a significant reduction in fossil fuel demand envisioned in the IEA net zero 2050 scenario would affect our company's financial position and underlying assumptions. While Exxon tried to stop this proposal from going to a vote, the SEC rule that could go forward and as further evidence of our convictions, 3 of the world's leading proxy advisers, ISS, Glass Lewis and PERC, have recommended their clients vote in favor. Why? I will name just a few reasons. First, 9 of the 10 largest economies in the world have already proclaimed their intention to reduce their carbon admissions to net zero by mid-century. The U.S. administration is signaling intent to reach net zero, including a net zero power sector by 2035, all of which will significantly impact fossil fuels. Second, Exxon's energy sector peers are responding to these changes. Royal Dutch Shell, BP and Total have made more transparent disclosures in their audited financial statements, articulating climate change contingencies and risks. And finally, the new net zero by 2050 scenario and report shows that gas demand will decline by 55% and demand for oil by 75%, with no new investment in oil and gas fields necessary. This is our company's bread and butter, yet Exxon has not agreed to disclose to investors what a potential significant decline in demand will do to its financials. Even if the Board doesn't share the IEA's assessment, preparedness for a range of outcomes and reporting on the implications of the IEA scenario is prudent. The fact is, the landscape has changed. This report is required. We cannot simply assume that the fossil fuel sector will be as it always was. Events on climate risk are evolving rapidly. Our directors must show awareness of and responsiveness to changing circumstances and evolving risks and provide shareholders this disclosure. We look forward to continuing to engage with the company and encourage ExxonMobil to produce the report as outlined in Item 6. Furthermore, we encourage all shareholders to vote for this proposal and provide all investors the transparency and disclosure they deserve. Thank you.

Thank you, John. We recognize the value that transparent, accurate and timely disclosures bring to shareholders. And we are committed to providing information that is vetted by subject matter experts grounded in third-party data, rigorously analyzed and compliant with regulations. Our existing publications, specifically the energy and carbon summary, already cover a range of third-party scenarios, which are consistent with the scenario analysis guidance from the task force on climate-related financial disclosures. These include 74 lower 2-degree scenarios from the intergovernmental panel on climate change and scenarios from the International Energy Agency. Producing a separate report based on a single scenario, as recommended by the proponents, would significantly diminish our existing disclosures, which contemplates a wide range of credible third-party energy transition scenarios. Since we already published the energy and carbon summary annually and it contains a broad range of respected third-party scenarios on future energy supply and demand, this report is unnecessary. The Board recommends voting against this proposal.

The next shareholder proposal calls for a report on the cost and associated benefits of the company's environmental expenditures. I understand that Steve Milloy present the proposal. Operator, please open his line. Steve, go ahead.

Good morning. My name is Steve Milloy. At the 2018 Annual Meeting, I told Ben's CEO, Rex Tolleson, that a teasing climate activist would lead to disaster. I suggested a way out, ban these stupid shareholder proposals. I delivered the same message to current CEO, Darren Woods, in 2017. He didn't listen either, now we are in crisis. Political activists mask ready and shareholders stand to gain even more control over Exxon through, guess what, shareholder proposals. These activists hate our business and our country and have no use for us. This year, I propose that Exxon push back on climate idiocy by disclosing the actual cost and benefits of cutting emissions. The cost of the cuts that you see are very high, and the benefits are zero, but the ever Mr. Woods refuses to acknowledge his realities. Instead, he fantasies about appeasing the crazed political radicals who are the mortal enemies of us genuine shareholders. Let's review some realities. Both Joe Biden and John Kerry now admit that going to zero emissions will not solve whatever climate problem alarmist want you to imagine we have. Kerry said, "Even if the U.S. and China went to zero emissions tomorrow, that would not solve the imaginary climate problem." And of course, China is not going to zero emissions tomorrow or ever. China's goal is to be the loan global superpower by 2049. It's not worried about emissions of plant food. The UN says global emissions are going up with no end in sight. Meanwhile, Exxon's life getting products produce less than 1% of global emissions. Get the picture? Climate hysteria is a hoax, one being used to hijack our company and our country, yet Mr. Woods coddles the Exxon haters. He is complicit in their campaign to undermine our company. Mr. Woods wants Congress to pass a carbon tax. Obama Energy Secretary, Stephen Chu, said gasoline should cost at least $10 per gallon by 2023 to force down demand. Is that what Mr. Woods wants, to crush our customers and economy for no reason? Mr. Woods guidance's wish when Joe Biden rejoined the Paris Climate treaty. Now Joe Biden wants to cut U.S. emissions 50% by 2030, while our main adversary, China, doesn't have to cut anything. It will be impossible to cut emissions that much. But rest assured, the mere effort will not be Exxon-friendly, and the climate will remain the same. Mr. Woods' latest idea is to capture in-store emissions offshore. This foolish reduction is not physically, financially or politically possible. Even if it were, it would not satisfy the radical climate activists who are after political power, not lower emissions. Exxon mobile staff are brilliant when it comes to business. But when it comes to climate politics, Mr. Woods and his management team are just dumb as a box of rocks. So what is the path forward for Exxon's genuine investors? Well, Mr. Woods and the Board need to go. We need management who would defend our company against the climate gangsters. Next, Exxon needs to educate the public about what is really going on with climate. Stop the phony greenwashing, which as you can see from this meeting and the various lawsuits around the country has accomplished nothing instead bringing us to the brink of disaster. Tell the public that, that climate hysteria needs $10 of gasoline. Tell the public...

Steve, excuse me. You have exceeded your allotted time of 3 minutes. We ask that you please wrap this up. Steve?

Yes.

Are you finished? Do you want to wrap it up?

Yes. Well, you cut me off.

No. We said, go ahead and wrap it up.

Stop the phony greenwashing, which as you can see from this meeting and the various lawsuits around the country has accomplished nothing except bringing us to the break up disaster. Tell the public that climate hysteria needs $10 gasoline. $10 gasoline won't improve the climate, it will only make people poor and less free. That's the reality and the only reality that climate that matters. Vote for Item 7. Thank you.

Thanks, Steve. Once again, let me just state that we agree with the importance of transparency and accuracy in reporting. It's needed for our shareholders to appropriately assess potential risk and benefits of our investments. This proposal, however, implies that ExxonMobil is spending too much to address the risk of climate change. We disagree with that. We believe that our efforts to reduce greenhouse gas emissions have a long-term substantive benefit to the corporation and to society. In fact, we've seen over many years, numerous examples of where our investments to improve environmental performance also improved business results. There's a strong correlation between safe, reliable and responsible operations, including steps-reduced emissions and financial and operating performance. Later this morning, I will discuss some of the technologies we are working on to capitalize on potentially growing market segments, grow shareholder value and participate in the transition to a lower carbon future, consistent with the goals of the Paris agreement. I'll conclude by emphasizing that we work to be fully transparent and publicly provide information on activities and expenditures associated with environmental protection. This includes those associated with addressing the risk of climate change. The details related to these investments are available on our website and our energy and carbon summary, outlook for energy and sustainability report. Therefore, the Board recommends shareholders vote against this proposal.

The next shareholder proposal calls for a report on the company's political contributions. Tim Brennan will present this proposal. Operator, please open his line. Tim, go ahead.

Thank you. Thank you, Stephen. That was quite a speech there. Let me just assure you that we do not hate the company, we've been a long-term investor and only wish of success. Mr. Chairman, members of the Board and fellow shareholders, thank you for the opportunity to speak this morning. As Stephen said, I'm Tim Brennan, I'm representing the lead filer, the Unitarian Universalist Association, where I serve as the special adviser on responsible investing. I, hereby, move our Proposal #8 on your proxy card, which asks the company for full transparency on its political contributions, including indirect funding through trade associations. Like it or not, the 2020 election and especially the Capital riot have thrust corporation's political donations into the spotlight. Contributions to lawmakers and organizations that attempted to undermine confidence and the results of the presidential election have become big news. Many companies, including ours, reviewed their policies on election funding following that terrible day. One of the UUA's 7 principles calls on us to uphold the democratic process. We are deeply concerned that excessive spending and secret money and elections can corrupt democratic institutions and undermine public trust, especially if it comes without full transparency. Furthermore, we believe that transparency and accountability and corporate spending to influence elections are in the best interest of shareholders. The Wharton School and the Center for Political Accountability annually benchmark the political spending disclosure of leading U.S. public companies and published the results as the Zicklin Index. Our company scored a middling 61 out of 100, unimproved from 2019. In its statement of opposition included in the proxy statement, the Exxon Board argues that meeting the minimum legal standard is good enough. But according to the Zicklin Index, Exxon does not disclose entire categories of payments intended to influence elections, including payments to trade associations, independent expenditures and indirect contributions through so-called social welfare organizations. Such contributions are often called dark money because the source of the money need not be disclosed. Disclosing such indirect election-related spending, as this proposal requests, would bring our company in line with a growing number of leading corporations, including ConocoPhillips, Sempra, Newmont Corporation and Apache Corporation. Following the 2010 Citizens United case, which opened the floodgates of money in politics, Justice Scilia who voted with the majority said, "Requiring people to stand up in public for their political acts fosters civic courage without which democracy is doomed." Strong words. The opinion itself said transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages. As shareholders, we call on Exxon Board to commit itself to full transparency and not settle for the minimum standard of obeying the law. We urge shareholders to support this proposal. Thank you.

Thank you, Tim. In response to shareholder feedback, we have expanded disclosures on our website of our process governing the development of public positions as well as lobbying activities. Our website also discloses the company's political activity guidelines as well as multiyear contributions to candidates and political organizations. We fully comply with all disclosure requirements under federal and state law, which we believe are sufficient to ensure disclosure and transparency and provide a consistent and equitable standard for all reporting entities. In addition, the company's political contributions are subject to strict internal review processes, including approval by the Chairman and an annual review by the Board. For these reasons, the Board recommends a vote against this proposal.

The next shareholder proposal calls for a report on lobbying. I understand that Ricky Brooks will present the proposal with a recorded statement. Operator, please play the recording.

Hello. My name is [ Ricky Brooks ]. I work at ExxonMobil's Baytown, Texas refinery. I'm a member of USW Local 13-2001, and I am part of the nationwide council at ExxonMobil that includes workers in Clinton, New Jersey who have been negotiating for a fair labor contract with Exxon since June of 2018 and workers at Exxon's Beaumont Texas Refinery who are currently locked out by our company. The union continues that this lockout as well as the issues in Clinton, New Jersey, violates the National Labor Act. Therefore, on behalf of the USW, I hereby move Item 9 report on lobbying a proposal filed by the USW and 7 cosponsors. This year, the attack on the U.S. Capitol further revealed an entirely new level of reputational risk for corporate lobbying and political expenditures, particularly to third-party groups. Exxon shareholders face a dark money blind spot. When our company fails to disclose its trade association payments used for lobbying, especially when these lobbying efforts contradict with Exxon's public position like our company's continued involvement in trade associations that actively lobby against climate policy despite Exxon's public support for the Paris Agreement. As a refinery worker, I see firsthand what strong safety standards mean to our operations. As I mentioned last year, our company continues to support the Western States Petroleum Association, which is lobbying against and even sued the state of California for a safety program that would make oil refineries safer and protect workers like me and surrounding community members. Our company's undisclosed payments are part of a $47 million that Western States Petroleum Association spent on lobbying in California in the last 6 years. I also see how poor human capital management leads to high turnover, which further undermine safety of the refineries and its surrounding communities. For example, our company's involved with the U.S. Chamber of Commerce, which has spent more than $1.6 billion on federal lobbying since 1998 and is lobbying against the Protecting the Right to Organize Act, which is legislation that would give workers a voice to speak out for better working conditions and safer work practices. I believe the disclosure of our company's payments to trade associations and social warfare groups that influence public policy would allow shareholders to assess the company's management of risk. I urge that you all vote for Item 9. Thank you.

Thank you, Ricky. Risks associated with lobbying and political engagements are addressed as part of the Board's oversight of the company's enterprise risk framework, which includes potential reputational risk. We also follow a strict review and oversight process to ensure our public policy positions are aligned with lobbying activities. This process includes regular reviews of public issues with the management committee and the Board. The company's political contributions and lobbying expenditures are presented to the Board each year, and we issued public filings that include expenses associated with employee federal lobbying. These filings include amounts paid to trade associations, coalitions and think tanks that are spent as part of federal lobbying. Our positions on key issues and grassroots lobbying are publicly available on our website, where we also published details on our approach to and participation in trade associations. This includes a list of key recipient organizations and the primary policy topics relevant to ExxonMobil in which those organizations are involved. I want to emphasize that ExxonMobil lobbying activities are fully aligned with our public positions on issues, and we've continued to be responsive to shareholder input by making further enhancements to our website and proxy. The Board believes the company's detailed disclosures are appropriate and therefore, recommend you vote against this proposal.

The last shareholder proposal calls for a report on climate lobbying. I understand that Adam Kanzer will present the proposal with a recorded statement. Operator, please play the recording.

Good morning, Mr. Chairman, members of the Board, fellow shareholders. My name is Adam Kanzer. I'm Head of Stewardship for the Americas at BNP Paribas Asset Management. I'm here to move Proposal #10, seeking a report to understand how Exxon's lobbying aligns with the well below 2 degrees goal of the Paris agreement. Corporate lobbying activities that are inconsistent with meeting this critical goal presents significant financial risks to investors. These efforts also present systemic risks to our economies. Delays in implementation of the Paris Agreement increase the physical risks of climate change, threaten economic stability and introduce uncertainty and volatility into our portfolios. To mitigate these risks, we're asking our Board to evaluate and report to shareholders how Exxon's lobbying activities align with the Paris Agreement's goal and how the company is addressing any misalignments with that goal. This analysis should cover direct lobbying and indirect lobbying conducted by Exxon's trade associations. Only the ExxonMobil Board has access to the information needed to conduct this review. Without such a review, Exxon shareholders cannot fully assess whether Exxon or its trade associations are acting in the company's best long-term interests in support of its publicly stated policy positions. Further, we cannot fully evaluate the role ExxonMobil is playing to achieve a policy framework that promotes deep decarbonization, consistent with the Paris agreements well below 2 degrees goal. Companies that have published reviews of how their trade associations align with climate policy include Chevron, ConocoPhillips, Shell, BP, Total, Equinor and Repsol. These reports vary widely in quality, but each is a step in the right direction. Exxon has produced a political contributions and lobbying report in response to this proposal. The report does not mention the Paris agreements well below 2 degrees goal or net zero by 2050. It does not include an evaluation to determine whether the company's direct and indirect lobbying aligns with that goal. It does not identify any risks of misalignment or a process to manage those risks, and it says very little about Exxon's trade associations. The Board's statement and opposition to our proposal makes the following claim, drawn from that report, "Without exception, the company's lobbying efforts are aligned with its publicly available positions." But on a call with us, Exxon executives explained that this statement only applies to the company's direct lobbying. It doesn't apply to the positions taken by Exxon's trade associations. The basis for that statement isn't clear, and it isn't clear whether the Board exercises oversight of Exxon's trade association memberships at all. Exxon's also used the phrase, Paris aligned, to mean something other than well below 2 degrees and has expressed support for the Paris agreement without pledging to meet its goals. We look forward to continuing our dialogue to address these concerns, and I thank you for your attention.

Thank you, Adam. ExxonMobil has supported the goals of the Paris Agreement since its inception. The company has published on its website a report on its policies and processes with respect to lobbying that explains our policy positions and risk mitigation strategies. Without exception, the company's lobbying efforts are aligned with its publicly stated positions. This is covered across the corporation's website, the 2021 energy and the carbon summary, the sustainability report, press releases and exchange, ExxonMobil's community advocacy portal. The Board provides oversight on these matters through its stewardship of the company's enterprise risk framework, which includes considerations of potential or perceived financial, legal and reputational risk. Relevant business units and organizations provide regular reviews of public policy issues of significance, which are provided to both the management committee and to the Board. The Board believes the company's detailed disclosures are appropriate and, therefore, recommends you vote against this proposal.

Thank you, Darren. That concludes the presentation of the proposals. Given there are a considerable number of votes still coming in and we want to ensure all of our shareholders have the opportunity to express their views, we will now take a 1-hour recess and resume at 11:15 Central Time. Thank you. [Break]

Ladies and gentlemen, welcome back to ExxonMobil's 2021 Annual Meeting of Shareholders. I will now turn the call back to the speakers.

Welcome back, everyone. We will now move to our business review. First, I would like -- I would now like to call to your attention to our cautionary statement, which contains important information and disclosures regarding forward-looking statements made during today's presentation and discussion. As a reminder, the meeting contains proprietary and copyrighted materials. And the rules of the conduct prohibits recording and rebroadcast of the meeting without our consent. With that, I will turn it back to Darren Woods.

Thank you. Now it's my pleasure to provide the business review and show the progress we're making, especially given the extraordinary events that have transpired over the past 12 months. This time last year, the world was still in the early days of trying to understand and manage the many impacts of the COVID pandemic. Much of the globe was in government-mandated lockdowns. There were conflicting predictions over how long the pandemic would last, how deep the economic impacts might be and most importantly, what toll it might take on human life. Beyond the impact on people, the level of economic, professional and social uncertainty was unprecedented. As they have done time and again, the people of ExxonMobil rose to the challenge. And through their determination, commitment and hard work, we successfully navigated the circumstances of the past year, supported our communities and established a foundation for a very strong future. Even during the early stages of the pandemic, we knew we had to act decisively. Back in April of last year, we committed to bold actions, including some tough decisions to dramatically reduce spending while preserving value. We also made a decision to use our balance sheet to sustain our industry-leading dividend, a strong dividend that we have reliably paid to our shareholders for more than 70 years. In spite of the challenges, we never lost sight of the long-term fundamentals of our business. Economies would recover, the world's population would continue to grow and people would strive to become more prosperous, which in turn, would drive future demand for energy. To successfully meet the future demand, we have focused on 2 critical initiatives started well before the pandemic to improve our competitiveness and drive long-term shareholder value. The first was developing an industry-leading portfolio of advantaged investments to recapitalize our businesses and increase our capacity to generate earnings and cash. The second, which was completed in 2019, was the restructuring of our businesses to organize long value chains and consolidate critical competencies. This provided our workforce with a clear line of sight to the market, increased ownership for earnings at every level of the business and improved decision-making across the corporation. Importantly, it helped our people better relate their work to our bottom line. Our work is paying off. In 2020, we achieved industry-leading safety and best-ever reliability performance. We improved our cost competitiveness, including annual structural operating expense savings of $3 billion, which we expect to grow to roughly $6 billion per year by the end of 2023. We adjusted our capital investments in line with market conditions, focusing on our best assets, maintaining advantage and preserving value. We met or exceeded key business objectives in the Permian Basin in Guyana and the sales of polyethylene and lubricants, and we achieved our 2020 emission reduction goals for both methane and flaring, and established new emission reduction plans for 2025 that are consistent with the goals of the Paris Agreement. In a year that no one saw coming, we proved our resilience and we delivered on our commitments. Today, ExxonMobil is a stronger, more competitive company, which we are seeing in our results. In the first quarter, as the market began to recover, the company earned $2.7 billion and generated $9.3 billion in operating cash, which we used to fully fund our dividend, advance high-return investments and reduce our debt by over $4 billion. We expect to build on these results and advance our work to address society's goal for a lower carbon future while providing reliable and affordable energy. As we look to 2025, our plans will continue to reduce emissions from our operations and provide products that help our customers reduce their emissions. We will continue to proactively engage on climate policy and develop and deploy large-scale technology solutions to help society advance the goals of the Paris Agreement. Since 2016, we've reduced greenhouse gas emissions by 11%, which significantly exceeds the progress made by broader society. We expect additional reductions in the years to come. By 2025, our plans include a reduction in the greenhouse gas emissions intensity of our Upstream operations compared to 2016 levels. They also include significant reductions in methane and flaring intensity. These plans are also expected to result in a reduction of absolute greenhouse gas emissions from our Upstream operations, and put us on a path to lead the industry and greenhouse gas performance by 2030. We're also working to help reduce emissions in the highest emitting sectors of the economy. About 80% of future oil and gas demand is driven by 3 sectors: power generation, transportation and industrial manufacturing. At the same time, these 3 areas of the economy also account for the vast majority of the world's energy-related emissions. Unfortunately, today, there are insufficient practical solutions for reducing the emissions from these sectors in line with 1.5 or 2-degree scenarios. Fuel tech new solutions using new technology, our deep roots in science and technology, history of innovation and commitment to solving hard problems provide a foundation to potentially make a meaningful contribution in these 3 sectors. While wind and solar power are helping to decarbonize electricity generation, variability in resource quality and intermittency limit deployment. We are working on a lower-cost technology for capturing carbon to use with natural gas or in producing hydrogen to provide an emissions-free alternative. Electric vehicles are reducing emissions associated with passenger cars, but today's batteries don't have the energy density required for use in heavy-duty transportation, like long-haul trucking, container ships or airplanes. We are working to develop lower cost, reduced emission fuels like hydrogen or biofuels to provide a solution for this sector. In industrial manufacturing, where extremely high temperatures can be required, our work to develop lower-cost hydrogen and carbon capture could provide a needed solution. We're also working to develop less energy-intensive manufacturing processes. Successfully developing these technologies will help provide for a lower carbon future and will also help grow the value of our company. Using projections from the United Nation's Intergovernmental Panel on Climate Change, the future market for our existing businesses remains substantial, while potential for new technologies is immense. By 2040, the total addressable market for liquid fuels could reach $6 trillion and biofuels, $400 billion. Hydrogen barely registers today, but it could be a $1 trillion market in 2040. Chemical product sales could exceed $4 trillion. In carbon capture and storage, an area where we are the world's leader, could reach $2 trillion. To help capitalize on these potential growth markets, we launched our new Low Carbon Solutions business to advance large-scale carbon capture and storage projects, known as CCS, and to commercialize other technologies from our research and development portfolio. The business will focus on CCS initially, followed by other low-emissions technologies as they mature. We've hit the ground running with this new business, which is evaluating and advancing plans for multiple CCS opportunities around the world. In April, we introduced an innovative concept, a multi-industry CCS hub, to capture and store CO2 emissions from the heavy industry around the Houston Ship Channel. We think a carbon capture innovation zone, similar to an enterprise zone, where incentives and policies are designed to encourage economic growth, would help bring together the required government incentives and private sector investments, along with new policies and regulations needed to support large-scale emissions reductions. As currently envisioned, the project could capture 50 million metric tons of CO2 per year by 2030 and twice that amount by 2040, putting Houston well on its way to reaching its goal becoming carbon neutral by 2050. Since 2000, we've invested roughly $10 billion in lower-emissions technologies. Through 2025, our plans include an additional $3 billion of investments in lower-emissions solutions. With the right policies and continued public and private support, the opportunities that we're pursuing through the Low Carbon Solutions business could add substantially to this. At the same time, it will be essential to sustain our investments in oil and gas. Growing global populations and rising standards of living will drive the need for energy, especially in developing countries. And balancing the need for future energy demand and emissions reductions, the average of the Intergovernmental Panel On Climate Change's lower 2-degree scenarios projects a continued role for oil and gas through 2040, accounting for almost half of world demand. So while we work to a lower-carbon future, we must continue to provide affordable energy and products that society needs to support modern living. Without new investment, the supply of oil and natural gas declines by roughly 5% to 7% per year, referred to as the depletion rate. By 2040, depletion would reduce 2019's oil supply from 98 million barrels per day to 22 million barrels per day. This would leave the world more than 50 million barrels per day short of global demand, assuming the average of the IPCC's lower 2-degree scenarios. We're doing our best to help meet this demand and avoid a shortfall. Through our focused efforts, we've built the best portfolio of investment opportunities the company has had in decades. 90% of our upstream investments that develop resources over the next 5 years generates 10% rates of return at $35 per barrel or less. At today's prices, these projects are even more attractive, generating significant increases in earnings and cash flow. One of our most advantaged projects is in Guyana. It's the largest oil play discovered in the past decade, with estimated recoverable resources of around 9 billion oil equivalent barrels. Guyana's Liza Phase 1 development reached capacity of 120,000 barrels per day last year. Two additional projects, Liza Phase 2 and Payara, are in construction and on pace to begin production in 2022 and 2024, respectively. The next project, Yellowtail, is in the detailed planning stage, and we have a clear line of sight to 2 additional projects. The addition of Yellowtail to those projects already underway will result in production of more than 750,000 barrels of oil per day by 2026, bringing significant value to the country. With our current discoveries, we expect at least 10 production projects in total. The Permian Basin is another advantage, low cost of supply opportunity and one of our highest priority investments. The Permian offers unique short-cycle flexibility, which enables us to quickly adapt to market conditions, as we demonstrated in 2020. That flexibility extends to the balance of our acreage on federal and state lands. We have more than 10 billion oil equivalent barrels of estimated resource on largely contiguous acreage. We're making significant progress in growing the value of this opportunity as we drive greater efficiencies, lower drilling and completion cost, improve recovery rates and grow production with less capital. Over the past 6 years, our Permian operations have met or exceeded our projections for production every year. And as we look to 2025, daily production from the Permian could nearly double to 700,000 oil equivalent barrels. In Brazil, the Bacalhau development, with approximately 1 billion oil equivalent barrels of recoverable resource, further expands our portfolio of low cost of supply developments. We're working with the operator to deliver this high-return project in 2024. We're also growing our portfolio of high-performance chemical products. Despite the challenges from the pandemic, our Chemical business earned $2 billion in 2020 and has generated nearly double the industry average earnings over the past decade. In the first quarter, with a growing market recovery, the chemical company delivered earnings of $1.4 billion. A strong pipeline of new product developments and advantaged projects are expected to underpin the growth of high-performance products by over 60% through 2027. Rounding out the portfolio is our Downstream, which is organized into fuels and lubricant value chains, with most of the manufacturing facilities tightly integrated with our chemical plants. In fact, more than 75% of our downstream refinery capacity is integrated with chemicals. Investments in the Downstream are focused on improving the product yield of our integrated refineries, making higher-value products and further leveraging the benefits and integration. These industry advantage investments collectively yield a return in excess of 30%. Each of these investments are advantaged versus competition. Together, they represent the most attractive investment opportunities in the industry and the best the company has had in over 20 years. Results I've shared with you today demonstrate our strategy is working. We are absolutely focused on and committed to growing shareholder value. We're investing in a portfolio of opportunities with industry-leading returns, aggressively driving efficiencies, delivering industry-leading safety, reliability and environmental performance, paying a reliable and strong dividend, while further strengthening our balance sheet. And we're positioned to capture market opportunities that can create value as we address one of the largest, most complex challenges society's ever faced, a transition to a lower-carbon future. Looking ahead, I'm encouraged by the role we can play. I'm encouraged by the world's progress in overcoming the pandemic and a rebounding global economy. Most of all, I'm encouraged by the men and women of ExxonMobil, our Board, our management and all of our people. I'm proud of their resilience, the standards they hold themselves to and their commitment to providing products that the world needs to support modern living, to help society transition to a lower-carbon future and to growing shareholder value. Thank you for your trust and investment in ExxonMobil.

Thank you, Darren. We will now begin the question-and-answer period. Questions of general interest relating to ExxonMobil business, in accordance with the rules of conduct, will be considered during this question-and-answer period. In light of the number of business items on this year's agenda and the need to conclude the meeting within a reasonable period of time, we will do our best to respond to as many questions as we can. We received a number of questions on proxy cards, in advance through our website and submitted online during the meeting today. In the interest of time, some of these questions have been grouped by similar topic and summarized. Our first question is on the topic of shareholder returns. Darren, the stock price has improved over the past 6 months, but on a long-term basis, is still significantly down. When do you expect to see a turnaround?

Yes. Thanks, Stephen. I think good question and one that needs to be put into the context of a lot of work that we've been focused on for some time. Now if you think about the time cycle of the industry, the capital-intensive nature of the industry and the time required to upgrade that capital, it's -- there's a significant time lag between when you start and as you move forward in that progress to begin to realize. We started this back in 2017 as we looked at the future, recognizing the impact of unconventional oil and gas and the need to make sure that we had an asset base that could generate cash and earnings in a low-price environment. We identified a portfolio of investment opportunities in our Upstream business as well as Downstream and Chemicals. And as I've said many times before, is the best the company has had in over 2 decades. And began to progress those investments on a pace consistent with the need to drive that improvement in our capital base and do that by drawing down our balance sheet. We also recognize the need to become more efficient, more streamlined and started a process of restructuring our business that we completed in 2019, reorganized our Upstream and Downstream businesses, probably 16,000 job moves in the process of that restructuring, but resulted in an organization with a much clearer line of sight to the market, much more streamlined in an organization that was better able to connect its work and activities to our bottom line. That allowed us to begin the work of becoming more efficient in reducing our costs. We started that in late 2019. And obviously, with the pandemic hitting us, drove that very significantly, which resulted in the reductions that we talked about at the end of our plan process in 2020, where we have achieved $3 billion in structural cost reductions in 2020. We'll see that every year, and we continue to make reductions to 2023. We'll see a total of $6 billion of annual savings going forward. We've got additional work to continue to take advantage of the new organization and find opportunities to reduce our cost. The third leg in that stool that we have been working on is the expansion of our investments in alternative technologies and making sure the company was well positioned for a world that's transitioning and began investing more heavily and more broadly in alternative technologies. We launched a venture in carbon capture to look at opportunities to commercialize, not only the technology we've been developing, but situations where existing technologies could be deployed to reduce emissions. And of course, that translated into our Low Carbon Solutions business that we announced at the beginning of this year. So all those things together, I think, have positioned the company very well for a strong future. And as we've come out of the pandemic, you're seeing the results of that, that we've demonstrated in our first quarter. And I think we'll see that continue as we go through this year and on into the future, I think. So I'd say that we're in the process now of realizing the benefit of a lot of hard work across the organization to position the company for success, irrespective of the market environment that we found. So I'm very optimistic, as we look forward, that we're going to continue to see the benefits of that hard work.

Thank you, Darren. The next question is the topic of significant shareholder interest, the recent IEA net-zero emissions report. We've had several questions to come in on this topic. How does ExxonMobil view the new IEA special report on net-zero emissions? And does this change our view on our plans?

Thanks, Stephen. And that's obviously a question that's come up in quite a number of different forums. I think the first thing I'd say is it's helpful to have organizations really working hard to understand and analyze what it's going to take to achieve the ambitions of net zero by 2050. And the IEA report looks at what it will take by working backwards and solving for that objective. And I think it's important to read the full report. I think a lot of emphasis is on the headlines without really getting into the body of the report and 250 pages of analysis. The report, as you read through, it highlights really the challenges associated with achieving that objective of net zero by 2050, and the fact that it's going to take a lot of collaboration, coordination and technology breakthroughs and policy alignment to achieve those objectives. In fact, if you look at the report, about half of the emission savings in the scenario are dependent on technologies that today aren't commercial. And the other thing that hasn't been highlighted, people haven't recognized is, if you look at the report, it outlines the continued need for investment in oil and gas through 2040. They estimate an investment across the industry of $8 trillion through 2040 to offset the declines in existing fields. So I think, again, it just illustrates the importance of the continued role of oil and gas, but also the challenges associated with achieving the objective, the changes that are going to be required in society, the enormous investment required by society. And of course, there's also an assumption of very, very significant efficiency gains. All of that, I think, together, underscores the importance of the work that we're doing in this space, specifically on carbon capture and storage, biofuels and hydrogen, which are all part of our Low Carbon Solutions business and are highlighted in the report as essential technologies to helping solve this problem. So I think we -- the world needs to continue to look hard at the challenges. That's something we've been focused on for quite some time. There is no -- it's a complex problem, as I mentioned, a challenging one that impacts all aspects of society. And so I think the more work that we're doing across a broader set of entities to figure out how best to achieve that change at the lowest cost to society is productive work and work that we encourage.

We've also received several questions related to lower-carbon technologies and solutions. One of the questions focuses on renewables. So with the push towards renewable energy, wind and solar continue to increase and are helping to reduce global emissions yet ExxonMobil isn't pursuing these technologies. Why doesn't ExxonMobil become a player in the wind and solar sector?

Well, let me start by saying wind and solar are certainly important technologies and are going to play a very significant role in reducing society's emissions. And I would also add that we have looked at those technologies. In fact, our research organization have had specific programs looking at those technologies, really looking at ways that we might be able to leverage our technical capabilities, our scientific competencies and technology competencies to find ways to improve those technologies to lower their costs, to make them more affordable and more broadly deployed around the world. So a lot of work in looking at this space. And what I'd say is we haven't found an aspect of those technologies where we can contribute and add unique value and therefore, generate differentiated returns for our shareholders. At the same time, we have been very engaged in purchasing wind and solar power. And in fact, we are one of the largest buyers of wind and solar in the world. And those purchases play a very significant role in reducing our Scope 2 emissions. We've been very focused instead on what are the other areas or solutions that the world requires? And how can we contribute in those spaces? And that's what underpins the work that we've done in carbon capture, the work that we're trying to -- we're doing in hydrogen and then the ongoing work that we've had in biofuels. All of those technologies will complement wind and solar, will play an important role, but also have pretty high technology barriers to get over. And so I feel like focusing our areas in that space is how we can best contribute to society's ambition to the lower-carbon future.

Thank you, Darren. One of the topics of highest interest this morning is carbon capture and storage, which you just mentioned. We have had a number of questions on market feasibility for an application of CCS. Can you explain a little more about CCS? Why ExxonMobil is looking at it?

Sure. As I've said before in other forums, we have a very long history in carbon capture and storage. In fact, decades of experience in that business. In fact, we lead the world in capturing anthropogenic CO2. In fact, we represent 40% of all captured anthropogenic CO2 in the world. It's, as I said, a technology that's critical to success. The challenge is the existing technology set requires fairly highly concentrated sources of CO2 to be economic. And so one of the pieces of work that we've been doing is trying to develop technologies that are affordable and generate returns at lower concentration sources, less CO2 in the streams. And that's been behind the work that we've done with fuel cell energy. And the work that we're doing on direct air capture is trying to advance technologies that are more effective at capturing the CO2 at a lower cost. At the same time, we've been working hard to leverage our existing experience in this space, leverage our projects organization and our experience building large-scale projects and finding opportunities around the world where we might be able to deploy existing technologies to expedite the reduction of CO2 in line with the ambitions of many governments around the world. And so since 2018, when we launched a carbon capture and storage venture, we have been evaluating opportunities to deploy conventional CCS. One of them we announced earlier this year in the Gulf Coast, a very sizable opportunity to make a significant reduction in CO2.

Thank you, Darren. And in fact, it's interesting, one of the other topical question that has come in is about the project proposal in the Houston Ship Channel. Can you talk about the necessary conditions required to make the project successful?

Yes. It comes back to using existing technology. You need to have concentrated sources of CO2. And so one of the screening criterias we've used in looking for opportunities to deploy technology is that concentrated sources of CO2 and also to get your cost down-scale versus a CO2, so large volumes of CO2. And one of the areas where we identified that is the Houston Ship Channel, where there is an industrial concentration that has a mix of manufacturing facilities and power generation facilities that provide both the scale and higher concentrations to CO2 that help to make existing technologies more affordable. It's also located very close to large-scale storage spaces, which again is very important for the economics and the potential for this technology. And offshore, the U.S. Coast and the Gulf Coast, there is significant capacity in saline aquifers that are under the seabed, thousands of feet below the seabed, which have the potential to store hundreds of billions tons of CO2. In fact, the estimate from the DOE is about 100 years of the entire U.S.' emissions could be stored in the Gulf of Mexico. And so opportunity with a large storage space closely located to a source, the sources, and so you can build the pipeline to connect those sources with that storage. And so that makes this project kind of underpins the foundation for the financial success of this project. It also is very aligned with and consistent with the government's ambition, the Biden administration's ambition to advance -- aggressively advance CO2 reductions, and to do it in a way that's as cost-effective as possible. The opportunity in this space, if you look at the economics, the cost per ton of CO2 removed in this Houston Ship Channel proposal represents about 1/2 to 1/3 or 1/4 of some of the prices the government is currently paying to remove CO2 -- or incentivize removal of CO2 from the environment. So from a cost-effectiveness standpoint, it's also quite attractive. We'll need help in terms of the infrastructure required to support this. We'll need a policy that incentivizes this, and we think there are opportunities to leverage the existing Internal Revenue Code, where there's a Section 45Q that incentivizes CO2 storage. We'll need regulatory changes that allow us to source CO2 under the seabed. But all things consistent with existing mechanisms. And so an opportunity to extend current regulations, current mechanisms to drive this and do it in a way that's very cost effective. It has the potential to remove 50 million metric tons of CO2 per year by 2030, and we can double that to 100 million tons by 2040. And just to give you some perspective on that, 100 million metric tons of CO2 is roughly equivalent to taking 20 million cars off the road.

Thank you. Let's turn to the topic of plastic waste and recycling. There was a report released last week that listed ExxonMobil as one of the world's top producers of single-use plastic. In fact, ExxonMobil was one of just 20 companies responsible for producing more than half of all single-use plastic waste globally. What are you doing to reduce plastic use? Why don't you produce more recyclable products?

This is an area that -- where we share society's concerns about plastic waste and agree that it has to be addressed. And I would start by just pointing out that plastic waste is part of a much larger issue related to global waste and global waste management and the infrastructure associated with that. And if you think about the alternatives to plastics today, like steel, or aluminum, or glass, or paper, they generate about 5x the waste of that plastic. So the challenge here is with waste management. I'd also make the point that plastics today have a very positive societal impact. And they help to lightweight vehicles, provide stronger, lighter packaging and recycling. And so they help to address many of the other environmental concerns that we face, the challenges that we face. Plastics have more than 50% lower life cycle GHG emissions versus some of these alternatives. And so there's a lot of benefits to plastic. The challenge here is dealing with the cost, which is managing the waste. And to the second point of your question, there's also an opportunity to increase plastic recyclability, which is something that we have been working on and the technology associated with doing that at, again, a cost-effective manner. In fact, we have recently completed some trials at our Baytown refinery, which allows us to recycle plastic into new products. And so we've got a venture that we're working on in Europe as well. So there is an opportunity, again, leveraging our existing facility footprint, leveraging the integration that we have between our refineries and our chemical plants and leveraging our technology capabilities to contribute in this space of improving recyclability of plastic and moving -- helping the world move to a more circular economy. I think there's opportunities to improve on the waste handling and to improve on recycling of plastic. Both areas we're very, very focused on. Also very focused, obviously, in minimizing the waste and the impact that we have with our facilities with plastic.

Okay. I'm going to shift to a different topic area. It's related to cybersecurity. There was a major cybersecurity incident on the U.S. infrastructure earlier this month. How prepared is Exxon for such an event?

Well, I'd say this is an area that has been evolving with respect to the risk vectors for quite some time. And it's been an area that we've been very focused on for a long time. So there's a bit of an arms race that's happening in this space around the world and across different industries. And so something that we stay very focused on. We work very closely with the Board on and in fact, just provided them an update on that here recently. And the way we think about this risk is, one, thinking about prevention and the measures that we can put in place to prevent a cyberattack. And then, at the same time, how do you mitigate the impact of a cyberattack? And so we try to work both sides of that equation. Obviously, real important to put a lot of emphasis on minimizing the risk of a successful cyberattack and a number of systems that we've put in place to help manage that and to mitigate the threat of something in 2020. So a lot of system process and processes that we've put in place. Obviously, an important part of the equation to preventing attacks is the people who are using our systems and their behaviors. And so a lot of training in that space to help people understand the threat vectors here and how their behaviors and actions can minimize that threat, or in certain circumstances, aggravate the threat. So getting our folks to understand the role that they play has been a really important part in mitigating the threat. And we routinely test the organization to make sure that we keep them on their toes and as best as possible. Obviously, you can't guarantee 100% success with that, so, as I said, a lot of emphasis on making sure that we've got plans in place to respond to a successful attack. We've got substitute global communication platforms in place. We've got backup IT devices, and we've got BCPs that have alternative processes to make sure that we can access critical information. We have, over the years, built our systems to deliberately separate our operating and business environments to provide an additional layer of protection and to protect the operations of our facilities. And then put in backup systems and processes to help keep products moving and to maintain our ability to make and receive payments. And so I would say this is a lot of work that goes into this area. It's one that we're constantly evolving our work in, recognizing that it's a very dynamic landscape but a lot of effort and emphasis in this space. And we feel good about the progress that we made -- we've been making, but I don't think we'll ever be comfortable here.

Yes. Thank you, Darren. I'm going to pivot to, given everything that occurred in 2020, with a lot of questions around dividend. There have been a couple of questions on that topic. So one of the more frequent ones is currently, the ExxonMobil dividend rate is almost 6%. Can the company sustain this rate in the future?

That's -- if you come back to our capital allocation priorities that we have talked about for some time, the allocation priorities, it starts with given the depletion nature of our Upstream business, making sure that we have a portfolio of attractive investments that generate high returns in a variety of price environments that are advantaged versus the rest of industry. It's a really important pillar of our capital allocation priorities because it underpins the long-term success of the company and the generation of earnings and cash, which ultimately generate the funds to resource our other capital allocation priorities. The other priority in capital allocation is the balance sheet and making sure that we maintain a strong balance sheet to make sure that we have the potential to continue to invest in those attractive capital projects as we move through the cycles. And we know, as a capital-intensive industry, we're going to have commodity cycles and we're going to have to be successful in managing through those commodity cycles. And so maintaining a strong balance sheet is absolutely critical. And you will have seen that we leveraged that in the pandemic, wherein the industry and our company, more specifically, we're challenged with the impacts of the pandemic, the lock-ins, the economic -- reduction in the economic activity and the reduction in demand, which we continue to see the impact of that even today. And so use the balance sheet to help support us through that, and we're currently in the process of rebuilding that balance sheet. And of course, the third priority is to share the success of the company with our investors through the dividends and maintaining that. So those allocation priorities are -- been around for quite some time. We stay focused on that. And as we look going forward at how we maintain those and particularly how we maintain a reliable dividend, it brought us back to the priorities that I talked to you about in 2017 of recapitalizing the business and lowering our cost. And so that work positions the company for success, which then generates additional earnings, generates additional cash, which allows us to then pay the dividend. And I think it's less about the percentage and more about the absolute spend. And our plans, as we build them out and look at the future under a variety of different price environments, comprehend the commodity cycle and our ability to continue to pay the dividend. We feel very confident that with the investment that we have, we've got a good foundation for continuing those investments, continuing to build the potential to generate cash and earnings and continuing to sustain a very strong dividend.

Thank you, Darren. Well, speaking of investments, it appears the Guyana project continues to grow with every new discovery. With the project now seeing potentially 10 FPOs, how are you making sure that the people of Guyana share in the benefits of this project?

Well, that question, I think, really underpins almost every one of our projects that we develop around the world, which is making sure that the proposition that we're pursuing has a win-win-win value proposition. Obviously, the company has to see value proposition there, a win, so to speak, with respect to the investments that we're going to make, the risk that we run in making sure that we generate an appropriate return. I think the governments or the resource owners of the places that we invest in around the world have to see the benefits of ExxonMobil's participation and the returns that they can see with the development of the resources. And then of course, the communities and the constituents of those governments and the communities where we operate have to see the benefits of that. So that's been a priority for us since the beginning of the business, making sure that all of our stakeholders recognize the benefits of our participation. And that's been a focus for us as we've gone into Guyana to make sure that the community sees the benefit of ExxonMobil's participation and the benefits of the development of those resources. And I know the government is very focused on that. And so we've been working in partnership with the government to help facilitate that. We've launched -- we help support a local business center to make sure that we were developing local businesses and capabilities to provide employment within Guyana. Today, there's 2,600 Guyanese companies that are registered with that local business development center, and we're providing thousands and thousands of jobs for Guyanese on the project activities. I think, today, we've got about 2,300 Guyanese who are supporting our project activities. We've, along with our partners, have launched the Greater Guyana Initiative. Over 10 years, we pledged $100 million towards capacity development programs within Guyana. And we've got -- committed $13 million in community investments across all of Guyana since 2015, including $10 million to train Guyanese for sustainable job opportunities and to expand community support conservation. And so I think quite a bit of activities. The other thing I'd mention, too, is over 400,000 hours of training have been provided to our Guyanese staff since 2018. So a lot of activity in this space to make sure that the people of Guyana see the benefits of this resource development and ExxonMobil's participation. And I would say that's an objective that we extend to all of our investment opportunities around the world.

Thank you, Darren. Several of our shareholders asked questions about the asset sale forecast that we laid out several years ago. And we're just looking to see what is the latest status of our asset sales? And what do we think coming forward in the near term?

Sure. We announced some time ago, a fairly aggressive divestment program, particularly in the Upstream. We had a long history of divestments in Downstream and some in Chemicals. But as we looked at high-grading the investment, our capital portfolio, improving the earnings power, improving the cash generation potential of our assets, as we invested in that, we also look to opportunities to divest to make sure the organization was focused on the highest value opportunities, which underpin and is behind the divestment program that we announced. We were making good progress on that, and the marketing activities had a number of assets in the marketplace. And of course, the pandemic hit and the challenges that, that brought and the decline in the market really slowed down activity in that space. We managed to do some transactions in that environment. But as you can imagine, like ourselves, many in the industry were just challenged running their day-to-day businesses in the economic environment that resulted from the impact of the pandemic. I think as we come out of the pandemic and the economies begin to recover, we are seeing renewed interest in assets. And so I would say we're going to continue to market our assets. We're in a number of discussions today. And obviously, the success or not of those discussions are a function of finding a value proposition that both the buyer and the seller agrees to, and we're actively working that.

Okay. The next question concerns potential mergers and acquisitions. In the past, ExxonMobil has tended to lean in when they're down cycles and look for opportunities to acquire companies. Can you share the company's current thinking on these types of opportunities?

Yes. That's an area where we're -- so I think as we've talked about the need to improve the capital productivity of our business, and I've referenced the organic opportunities that we're pursuing investments that we're making ourselves, we also challenge ourselves to look for potential acquisition opportunities that would compete with our investment opportunities. And that's, frankly, given the strength of the organic opportunities that we have, that's a challenge to find an acquisition that successfully competes with that organic portfolio. But nonetheless, that's been an area that we remain focused on and consistently focused on and continue to evaluate opportunities as they present themselves or as we find and look for synergies that might exist with our existing operation. I think what's critical to a successful acquisition is finding an area where ExxonMobil can leverage some of its unique capability to deliver a differentiated value proposition. And obviously, that's an important aspect of a successful acquisition, so one that we continue to look for. It continues to make the opportunity list a lot narrower, but I think absolutely important if we're going to generate shareholder value with an acquisition.

Darren, you talked about some of your industry-leading assets. One is the Permian. Are you currently planning to increase Permian production to take advantage of the current price environment?

Well, as we've talked about before, Stephen, we look at a wide range of price scenarios and test our plans against those. And obviously, testing it on the low side is absolutely critical to make sure that the investments that we're making will generate good returns in the downside of the market, but we also look at what the upside might bring and how we might advance that. And I would say today, having gotten through the pandemic and leaned very hard on our balance sheet, the priorities that I have communicated in the past and we remain focused on, is rebuilding the strength of the balance sheet. So as prices rise well above our planning basis, we'll take that additional cash and make sure that we're using it to pay down debt and to reestablish the strength of the balance sheet so that we're positioned going forward for the next commodity cycle. And obviously, our view is that we are making good progress on that. We made good progress on -- in the first quarter, and I would expect to continue to make progress as we go through this year. And as our balance sheet returns back to levels that we are more comfortable with, we'll look for opportunities to deploy that cash consistent with our capital allocation priorities.

Okay. Well, switching to a different part of our business segment. There's a question about our large refining footprint. What is the plan to turn around this part of the business given some of the recent quarterly performance?

Well, I think in all these businesses, you got to put performance in the context of the broader commodity cycle. And I think, oftentimes, people lose sight of that, irrespective of the strength or weakness of any asset. They're all going to rise and fall on this macro commodity cycle. And the refining business has seen that macro environment degrade fairly significantly with the pandemic. In fact, today, the sectors that we're involved with, it remains one of the more challenged sectors because of the lack of demand in all of its products, most specifically jet associated with air travel. So that business today is challenged. But as the economies recover, as people start to travel, air traffic picks up, demand for jet picks up, we'll see those businesses, I think, return to profitability. And we're already beginning to see that with the economic activity picking up around the world with recovery of the pandemic. More structurally, we look to think -- we think about this business -- the refining business is a very mature business and with fairly low barriers to entry, and with growth primarily concentrated out in the Asia Pacific region. And so as we look at that refining footprint, we're looking where we have a unique advantage, something that contributes value above and beyond the refining business. And that tends to focus and concentrate on our integrated facilities where we have lubricants businesses, lubes businesses as well as chemical businesses. As you know, the chemical demand continues to grow, continues to have large demand for high-value products. And so I want to make sure that the refineries that support those Chemical businesses are tuned to the existing demand and are profitable in their own rights as they support more profitable Chemical businesses. And so that's where we've been focused. And if you look at the investments that we're making in the refining business, you'll see them concentrated in our integrated facilities where we have profitable and successful Chemical businesses. And so as you think about what we're doing in that space, that's a really fundamental foundational element of how we think about the Downstream. In areas where we don't have that integration or we don't see a unique advantage, a unique position within the market, then we'll look to -- I look for other alternatives for those refineries. You define somebody who has -- sees a higher value in that better fit with their portfolio, and we'll transact on that through a divestment. And you've seen us do that in refining business. And we'll continue to look for opportunities like that where it makes sense. And we've also taken steps, over the years and more recently here, to rationalize the refineries and make some of them terminals. So I think it's a multipronged attempt here to make sure that the refineries that we're in are successful and support successful lubricants and Chemical businesses.

Okay. Darren, thank you. Last question we have this morning focus on the company's financial plan. Can you comment on what you would do with excess cash? Would you prioritize increasing the dividend or accelerating projects and increasing capital spending?

Well, it comes back, I think the point that I made in one of the earlier responses is with our capital allocation priorities, our focus right now is rebuilding the balance sheet. And I would not envision putting more investment in the capital projects that we've got. When we went into the pandemic, we were very thoughtful around taking the portfolio of investment opportunities, testing them against potential environments going forward that were informed by the pandemic environment and the impact that it's had on the economy. I'm very pleased to say all those investments remained attractive even with the new testing informed by the pandemic. And so we built a plan to pace those investments out, and we're now executing that plan. And today, we remain very focused on that plan and the execution of that plan and the additional money that comes in with higher prices. We are making sure that we use that to position the balance sheet so that we -- our sheets that we're ready for the next commodity cycle.

Okay. Thank you, Darren. And I do want to thank our shareholders for the questions and for the time this morning. It appears that everyone has now had an opportunity to vote. I confirm that the authorized proxies in attendance today have cast all votes in accordance with the instructions indicated on the individual proxy cards. I will turn it back to you, Darren.

Thank you, Stephen. It is now 12:10 p.m. Central Time, on Wednesday, May 26, 2021, and I now declare the polls closed. This concludes the formal business of today's meeting.

Thank you, Darren. Due to the contested nature of this year's meeting and the complexities of the voting process, the inspectors of election may not be able to certify final voting results for some period of time. However, based on estimates provided by our proxy solicitors, McKinsey Partners, I am able to share the following expected outcomes on a preliminary basis. With respect to item 1, election of directors of the ExxonMobil director nominees, Michael Angelakis, Susan Avery, Angela Braly, Ursula Burns, Kenneth Frazier, Joseph Hooley, Jeffrey Ubben, Darren Woods have been reelected. Of the Engine 1 candidates, Gregory Goff, Kaisa Hietala have been elected. The outcome with respect to Steven Kandarian, Douglas Oberhelman, Sam Palmisano, Wan Zulkiflee, Alexander Karsner is not yet determined. On the remaining Board proposals, item 2 and 3, have been approved by a majority of votes cast. In regards to the shareholder proposals, item 4, 5, 6, 7 and 8 have not been approved by a majority of votes cast. Items 9 and 10 have been approved by a majority of votes cast. Final results will be posted on our website and filed on a Form 8-K. With that, I turn it back to you, Darren.

Thank you, Stephen. In closing, I'd like to say again that our Board has appreciated the opportunity to engage with many shareholders to hear your feedback and to share our views. We've heard from our shareholders today about their desire to catalyze further changes at ExxonMobil, and we are well positioned to respond. While there is still more to do, we're proud of the progress we've made. We have significantly reduced emissions and have set clear plans for further reductions. We've developed a portfolio of investment opportunities in high-return, low-cost of supply projects. And we've made substantial progress in our continued efforts to reduce costs, all of which will enhance performance and deliver significant shareholder value. We also substantially evolved the composition of our Board to ensure it has the right skills, experience and perspective to drive shareholder value as society transitions to a lower-carbon future. We welcome the new directors, Gregory Goff and Kaisa Hietala to the Board and look forward to working with them constructively and collectively on behalf of all shareholders. I'd also like to thank the directors who have done so much for ExxonMobil during this time on the Board and who will be stepping down. I'm personally very grateful for their services. As Stephen mentioned earlier, we will announce the final results of today's voting as soon as they become available from the independent inspectors of election. We intend to continue the momentum we've created with our portfolio build-out, recent reorganizations, launch of our Low Carbon Solutions business and effective response to the pandemic. That includes increased engagement with shareholders on areas such as strategy, investment priorities, the energy transition and corporate governance. For nearly 140 years, our company has been resilient and responsive to changes in global priorities. We've supplied the products to support almost every aspect of modern life and develop new technologies to meet global needs, including emissions reductions. We will continue to harness our culture of science and innovation to grow shareholder value and contribute meaningfully to society's goal of building a lower-carbon future. We look forward to continuing to engage with you about our progress. Thank you.