Chevron 2013 Annual Report Download - page 64

62 Chevron Corporation 2013 Annual Report
Prior to its acquisition by Chevron, Unocal established
various grantor trusts to fund obligations under some of its
benet plans, including the deferred compensation and sup-
plemental retirement plans. At December 31, 2013 and 2012,
trust assets of $40 and $48, respectively, were invested primar-
ily in interest-earning accounts.
Employee Incentive Plans e Chevron Incentive Plan is
an annual cash bonus plan for eligible employees that links
awards to corporate, business unit and individual perfor-
mance in the prior year. Charges to expense for cash bonuses
were $871, $898 and $1,217 in 2013, 2012 and 2011, respec-
tively. Chevron also has the LTIP for ocers and other
regular salaried employees of the company and its subsidiar-
ies who hold positions of signicant responsibility. Awards
under the LTIP consist of stock options and other share-
based compensation that are described in Note 20, beginning
on page 55.
Note 22
Equity
Retained earnings at December 31, 2013 and 2012, included
approximately $11,395 and $10,119, respectively, for the com-
pany’s share of undistributed earnings of equity affiliates.
At December 31, 2013, about 143 million shares of
Chevron’s common stock remained available for issuance from
the 260 million shares that were reserved for issuance under
the Chevron LTIP. In addition, approximately 204,000
shares remain available for issuance from the 800,000 shares
of the company’s common stock that were reserved for awards
under the Chevron Corporation Non-Employee Directors’
Equity Compensation and Deferral Plan.
Note 23
Other Contingencies and Commitments
Income Taxes e company calculates its income tax
expense and liabilities quarterly. ese liabilities generally
are subject to audit and are not nalized with the individual
taxing authorities until several years after the end of the
annual period for which income taxes have been calculated.
Refer to Note 15, beginning on page 51, for a discussion of
the periods for which tax returns have been audited for the
company’s major tax jurisdictions and a discussion for all
tax jurisdictions of the dierences between the amount of
tax benets recognized in the nancial statements and the
amount taken or expected to be taken in a tax return. As
discussed on page 53, Chevron completed its assessment of
the potential impact of the August 2012 decision by the U.S.
Court of Appeals for the ird Circuit that disallowed the
Historic Rehabilitation Tax Credits claimed by an unrelated
taxpayer. e ndings of this assessment did not result in a
and $225 in 2013, 2012 and 2011, respectively, represent
open market purchases.
Employee Stock Ownership Plan Within the Chevron
ESIP is anemployee stock ownership plan (ESOP). In 1989,
Chevron established a LESOP as a constituent part of the
ESOP. e LESOP provides partial prefunding of the compa-
ny’s future commitments to the ESIP. e debt associated with
the LESOP was retired in 2013 and the remaining unallocated
shares were distributed to ESIP participants during the year.
e company reports compensation expense equal to
LESOP debt principal repayments less dividends received
and used by the LESOP for debt service. Interest accrued on
LESOP debt was recorded as interest expense. Dividends paid
on LESOP shares were reected as a reduction of retained
earnings. All LESOP shares were considered outstanding for
earnings-per-share computations.
Total expense (credits) for the LESOP were $5, $1 and
$(1) in 2013, 2012 and 2011, respectively. e net expense
(credit) for the respective years were composed of compensa-
tion expenses (credits) of $4, $(2) and $(5) and charges to
interest expense for LESOP debt of $1, $3 and $4.
Of the dividends paid on the LESOP shares, $38, $18
and $18 were used in 2013, 2012 and 2011, respectively, to
service LESOP debt. e company also contributed $7 and
$2 in 2013 and 2012, respectively, to satisfy LESOP debt
service. No company contributions were required in 2011, as
dividends received by the LESOP were sucient to satisfy
LESOP debt service.
Shares held in the LESOP were released and allocated to
the accounts of ESIP participants based on debt service
deemed to be paid in the year in proportion to the total of
current-year and remaining debt service. LESOP shares as
of December 31, 2013 and 2012, were as follows:
ousands 2013 2012
Allocated shares 17,954 18,055
Unallocated shares – 1,292
Total LESOP shares 17,954 19,347
Benet Plan Trusts Prior to its acquisition by Chevron,
Texaco established a benet plan trust for funding obligations
under some of its benet plans. At year-end 2013, thetrust
contained 14.2 million shares of Chevron treasury stock. e
trust will sell the shares or use the dividends from the shares
to pay benets only to the extent that the company does
not pay such benets. e company intends to continue to
pay its obligations under the benet plans. e trustee will
vote the shares held in the trust as instructed by the trust’s
beneciaries. e shares held in the trust are not considered
outstanding for earnings-per-share purposes until distributed
or sold by the trust in payment of benet obligations.
Note 21 Employee Benefit Plans – Continued
Notes to the Consolidated Financial Statements
Millions of dollars, except per-share amounts