EXXON MOBIL

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ExxonMobil PRESENTED BY PHIL H. LATIMIER, Ph.D.
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SHAREHOLDER VALUE CORPORATE GOVERNANCE
FINAL PROJECT
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History of the Company
John D. Rockefeller

• 1882
• Standard Oil Trust
• Acquirement of Petroleum Interests
• 90 of control - Monopoly

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1911

• U.S. Supreme Court ordered the dissolution of
  Standard Oil Trust
• 34 Separate Companies

Jersey Standard" and "Socony Became Exxon and
Mobil
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• Next Two Decades
• Building of Business
• (Production, pipelines, refining,
  research)
• Since the end of World II
• Expanded market more than 100 countries
• 1999
• Exxon Mobil ExxonMobil
• 76.6 billions Merger
• Near 8 billions of Saving

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Nowadays ExxonMobil

• Is based in Houston, Texas.
• 2003
• Stronger Earning Performance over the
  History
• 21.5 billions - Net Incomes
• 30.8 billions - Cash Flow
• Sells more than 65 millions gallons of fuel every
  day.
• Operates in over 100 countries.
• It is, World wide, the Biggest Oil Company.

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Corporate Managers
Rex W. Tillerson, President
Lee Raymond, Chairman and Chief Executive Officer
Edward G. Galante, Senior Vice President
Harry Longwell, Executive Vice President
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Board

• Board Size
• - between 10 and 19 members
• Election of Directors
• - Shareholders Selection
• Mandatory Retirement
• - No director over 70 years.
• - Annually evaluation of Performance

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Standing Committees

• Compensation Committee
• Discharge the Board of Directors responsibilities
  relating to the evaluation and compensation of
  the Corporation's Chief Executive Officer and
  other senior executives.
• Board Affairs Committee
• Monitor compliance with good corporate governance
  standards
• Identification of qualified individuals to
  become Board members
• Recommend to the Board director nominees for
  election at the annual meeting of shareholders
• Advisory Committee on Contributions
• Provide oversight and direction to the
  Corporation's overall contributions objectives,
  policies and programs

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Standing Committees (cont.)

• Finance Committee
• - Review the Corporation's financial
  policies, strategies and capital structure
• - Create reports and recommendations to
  the Board of Directors
• Public Issues Committee
• - Review the Corporation's policies,
  programs and practices
• Executive Committee
• - It function when the Board of Directors
  is not in session.

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Standing committees (cont.)

• Audit Committee
• Conduction of the Corporation's financial
  reporting process.
• Integrity of the financial statements and other
  financial information
• Corporation's system of internal accounting and
  financial controls.
• Corporation's compliance with legal and
  regulatory requirements.
• Performance of the Corporation's internal audit
  function.
• The independent auditors' qualifications,
  performance, and independence.
• Annual independent audit of the Corporation's
  financial statements.

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Book Value Weigths
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Calculation of the WACC2001
Kd 6.1
Ki 3.7
Kp 4.9
Ks 5.4
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Calculation of the WACC2001 (cont)
Kr 5.5
Kn 5.9
Ka 3.2
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Calculation of the WACC2002
Kd 6.2
Ki 3.7
Kp 4.3
Ks 3.3
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Calculation of the WACC2002 (cont)
Kr 3.3
Kn 3.9
Ka 4.05
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Calculation of the WACC2003
Kd 6.8
Ki 4.3
Kp 6.3
Ks 9.3
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Calculation of the WACC2003 (cont)
Kr 9.3
Kn 10.1
Ka 5.51
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Our Calculation
5.92
5.51
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Weighted Marginal Cost of Capital2001

• Long Term Debt
• at 5.55
• Common Equity
• at 5.93
• BP Long Term Debt
• BP Common Equity

• 547,000,000
• (Weight .52)
• 201,000,000
• (Weight .28)
• 1,056,629,244
• 727,451,306

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Weighted Marginal Cost of Capital2001 (cont)
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Weighted Marginal Cost of Capital2002

• Long Term Debt
• at 5.6
• Common Equity
• at 3.86
• BP Long Term Debt
• BP Common Equity

• 396,000,000
• (Weight .49)
• 199,000,000
• (Weight .31)
• 811,636,364
• 643,670,856

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Weighted Marginal Cost of Capital2002 (cont)
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Weighted Marginal Cost of Capital2003

• Long Term Debt
• at 6.4
• Common Equity
• at 10.08
• BP Long Term Debt
• BP Common Equity

• 434,000,000
• (Weight .38)
• 127,000,000
• (Weight .35)
• 1,150,337,258
• 358,317,368

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Weighted Marginal Cost of Capital2003 (cont)
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Investment Opportunities Schedule2001
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IOS and WMCC Schedules2001
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Investment Opportunities Schedule2002
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IOS and WMCC Schedules2002
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Investment Opportunities Schedule2003
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IOS and WMCC Schedules2003
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FOREX

• Conducts business in many foreign currencies.
• Is subject to foreign currency exchange rate risk
  on
• Cash flows related to sales.
• Expenses.
• Financing and investment transactions.

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FOREX

• Functional Currency
• - Primary economic environment in which
  the subsidiary operates.
• Management selects the functional currency after
  evaluating this economic environment.
• (US Dollar)

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FOREX Strategies

• Upstream, Downstream and chemicals operations
  normally use the local currency, except in highly
  inflationary countries (Latin America,
  Singapore).
• Crude and natural gas use US Dollar.
• (Malaysia, Indonesia, Angola, Nigeria,
  Equatorial Guinea and the Middle East)

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FOREX Strategies

• Makes limited use of currency exchange contracts.
• Reduce the risk of adverse foreign currency
  movements related to certain foreign currency
  debt obligations .

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FOREX Strategies

• Low risk in changes in currency rates
• Why?
• Corporation size.
• Geographic diversity.
• Complementary nature of the businesses.

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ExxonMobil Strategies
Increasing Size, Increasing Globally, Increasing
Technology

• Maximization of Profitability
• - Capital Expenditure are focused

• Meet future Product Quality Requirements
• Reduce Environmental Affects
• Safety Systems
• Lower Operational Costs
• Produce Higher Values Products
• Lower Cost Raw Material

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• Identify and Pursue all attractive perforations
  opportunities
• - Research and Development
• - 90 of oil reserves are own by
  governments.
• - Upstream operation in more than 40
  countries
• Invest in projects that deliver superior return
• - 2003 Return of Capital of 21
• - Exxon is well positioned for
  long-term growth.
• - Exploration and Research in
  alternative energy.
• - Invest in oil company (forecast of
  performance)

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• Maintain Best in Class operations, in all aspects
• - Globally integrated Supply Chain
• - Strategic Alliances
• Provide Quality, value products and service to
  costumers
• Lead Industry in Efficiency and Effectiveness
• -2003 11.5 billions of Return to
  Shareholders
• - Buying crude at different time and
  in different amounts.

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• Maximize values from leading edge technology
• - Annually Investment of 600 millions
• Improving and Maintenance of Image
• - 103 million in charitable
  contributions and community development
  investments (2003)
• - More than 2 million in research
  and partnership grants to global health
  organizations to combat malaria in African
  communities (04/23/04)
• - Occupational Hazards, positioned
  ExxonMobil Chemical Oil Company as the American
  Safest Company.

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Stock of Major Competitors
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Market Value
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Revenues
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Net Income
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Presence in More than 100 countries ...

• Exxon and Mobil merger
• - Vertical Integration
• Organizational Structure
• - Global Functional Basis
• Operational Integreaty Management System
• Capitalize on integration with other ExxonMobil
  business

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Presence in More than 100 countries ...

• Addition of Human Rights to its Portafolio
• Involment to Society
• Local Employees
• Support to Comunities
• Global Integration