Chevron Corporation (CVX)

Director Compensation

Our compensation for nonemployee Directors is designed to be competitive with our major global energy competitors and other major capital-intensive international companies across industries, to link rewards to business results and stockholder returns, and to facilitate increased ownership of Chevron common stock. We do not have a retirement plan for nonemployee Directors. Our executive officers are not paid additional compensation for their services as Directors.

The Board Nominating and Governance Committee evaluates and recommends to the independent Directors of the Board the compensation for nonemployee Directors, and the independent Directors of the Board set the compensation. Our executive officers have no role in determining the amount or form of compensation. During 2008, the Committee retained the services of an independent compensation consultant, Pearl Meyer & Partners, to assist the Committee with its biennial review of Chevron’s nonemployee Director compensation program. The Committee has the exclusive right to select, retain and terminate Pearl Meyer & Partners as well as to approve any fees, terms or other conditions of Pearl Meyer & Partners’ service. Pearl Meyer & Partners and its lead consultant report directly to the Committee, but may work cooperatively with management to develop analyses and proposals when requested to do so by the Committee. Pearl Meyer & Partners conducted a comprehensive review of Chevron’s nonemployee Director compensation, including a review of director compensation arrangements at Chevron’s Oil Industry Peer Group and Non-Oil Industry Peer Group (the constituent companies of which are identified in “Peer Group Practices” in the Compensation Discussion and Analysis above).

The nonemployee Directors’ compensation program did not change in 2008. Nonemployee Directors continued to receive total annual compensation of $290,000 per Director with 40% to be paid in cash and 60% to be paid in restricted stock units. Beginning with the 2009 Annual Meeting, nonemployee Directors will receive total annual compensation of $300,000 per Director, with 39% to be paid in cash and 61% to be paid in restricted stock units. Committee chairmen will continue to receive an additional $10,000 in cash for their services.

Below, we describe the nonemployee Directors’ 2008 annual compensation:

Director Compensation