ExxonMobil

PRESENTED BY PHIL H. LATIMIER, Ph.D.

PHLatimer@aol.com

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SHAREHOLDER VALUE & CORPORATE GOVERNANCE FINAL PROJECT

PHLatimer@aol.com

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History of the Company
John D. Rockefeller
1882 Standard Oil Trust • Acquirement of Petroleum Interests

• 90% of control - Monopoly
PHLatimer@aol.com 3

1911
• U.S. Supreme Court ordered the dissolution of Standard Oil Trust • 34 Separate Companies “Jersey Standard" and "Socony“ Became Exxon and Mobil
PHLatimer@aol.com 4

• 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
PHLatimer@aol.com 5

the Biggest Oil Company. • Operates in over 100 countries.Nowadays ExxonMobil • Is based in Houston. Texas. • 2003 Stronger Earning Performance over the History $21.8 billions . • It is. World wide.Cash Flow • Sells more than 65 millions gallons of fuel every day. PHLatimer@aol.com 6 .5 billions .Net Incomes $30.

PHLatimer@aol.com 7 .

com 8 .PHLatimer@aol.

Corporate Manager’s Lee Raymond. Galante. President Harry Longwell. Tillerson. Senior Vice President 9 .com Edward G. Executive Vice President PHLatimer@aol. Chairman and Chief Executive Officer Rex W.

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

com 11 .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. policies and programs PHLatimer@aol. 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.

programs and practices • Executive Committee .It function when the Board of Directors is not in session.Create reports and recommendations to the Board of Directors • Public Issues Committee .Review the Corporation's financial policies.Review the Corporation's policies. PHLatimer@aol.Standing Committees (cont.com 12 . strategies and capital structure .) • Finance Committee .

and independence. performance.Standing committees (cont. Performance of the Corporation's internal audit function.com 13 . PHLatimer@aol. • Annual independent audit of the Corporation's financial statements. The independent auditors' qualifications. 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.) Audit Committee • • • • • • Conduction of the Corporation's financial reporting process.

Book Value Weigths PHLatimer@aol.com 14 .

7% Kp = 4.1% Ki = 3.4% PHLatimer@aol.9% Ks = 5.Calculation of the WACC 2001 Kd = 6.com 15 .

2% PHLatimer@aol.5% Kn = 5.Calculation of the WACC 2001 (cont) Kr = 5.9% Ka = 3.com 16 .

com 17 .Calculation of the WACC 2002 Kd = 6.2% Ki = 3.3% Ks = 3.7% Kp = 4.3% PHLatimer@aol.

9% Ka = 4.05% PHLatimer@aol.com 18 .3% Kn = 3.Calculation of the WACC 2002 (cont) Kr = 3.

3% Kp = 6.3% PHLatimer@aol.8% Ki = 4.Calculation of the WACC 2003 Kd = 6.3% Ks = 9.com 19 .

51% PHLatimer@aol.com 20 .1% Ka = 5.3% Kn = 10.Calculation of the WACC 2003 (cont) Kr = 9.

92% PHLatimer@aol.com 21 .Our Calculation: 5.51% 5.

000.306 22 PHLatimer@aol.000 (Weight .55 % •Common Equity at 5.93 % •BP Long Term Debt •BP Common Equity •$ 547.056.52) •$ 201.244 •$ 727.000 (Weight .629.000.Weighted Marginal Cost of Capital 2001 •Long Term Debt at 5.com .28) •$ 1.451.

com 23 .Weighted Marginal Cost of Capital 2001 (cont) PHLatimer@aol.

49) •$ 199.000.000 (Weight .com 24 .86 % •BP Long Term Debt •BP Common Equity •$ 396.Weighted Marginal Cost of Capital 2002 •Long Term Debt at 5.856 PHLatimer@aol.636.364 •$ 643.6 % •Common Equity at 3.670.000.31) •$ 811.000 (Weight .

com 25 .Weighted Marginal Cost of Capital 2002 (cont) PHLatimer@aol.

Weighted Marginal Cost of Capital 2003 • Long Term Debt at 6.000 (Weight .000.258 • $ 358.337.150.000 (Weight .08 % • BP Long Term Debt • BP Common Equity • $ 434.com 26 .317.4 % • Common Equity at 10.38) • $ 127.000.35) • $ 1.368 PHLatimer@aol.

Weighted Marginal Cost of Capital 2003 (cont) PHLatimer@aol.com 27 .

Investment Opportunities Schedule 2001 PHLatimer@aol.com 28 .

IOS and WMCC Schedules 2001 PHLatimer@aol.com 29 .

Investment Opportunities Schedule 2002 PHLatimer@aol.com 30 .

com 31 .IOS and WMCC Schedules 2002 PHLatimer@aol.

Investment Opportunities Schedule 2003 PHLatimer@aol.com 32 .

IOS and WMCC Schedules 2003 PHLatimer@aol.com 33 .

– Financing and investment transactions. PHLatimer@aol.com 34 . – Expenses. • Is subject to foreign currency exchange rate risk on: – Cash flows related to sales.FOREX • Conducts business in many foreign currencies.

(US Dollar) PHLatimer@aol. • Management selects the functional currency after evaluating this economic environment.FOREX • Functional Currency .com 35 .Primary economic environment in which the subsidiary operates.

Nigeria.FOREX Strategies • Upstream. • Crude and natural gas use US Dollar. Singapore).com 36 . Angola. Equatorial Guinea and the Middle East) PHLatimer@aol. (Malaysia. Indonesia. Downstream and chemicals operations normally use the local currency. except in highly inflationary countries (Latin America.

PHLatimer@aol.FOREX Strategies • Makes limited use of currency exchange contracts.com 37 . • Reduce the risk of adverse foreign currency movements related to certain foreign currency debt obligations .

FOREX Strategies • Low risk in changes in currency rates: Why? – Corporation size. PHLatimer@aol. – Complementary nature of the businesses. – Geographic diversity.com 38 .

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 PHLatimer@aol. Increasing Technology • Maximization of Profitability .com 39 . Increasing Globally.ExxonMobil Strategies Increasing Size.

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

PHLatimer@aol.com 41 .

Globally integrated Supply Chain .com 42 .5 billions of Return to Shareholders . in all aspects .Buying crude at different time and in different amounts. PHLatimer@aol.• Maintain Best in Class operations.Strategic Alliances • Provide Quality. value products and service to costumers • Lead Industry in Efficiency and Effectiveness -2003: $11.

com 43 .More than $2 million in research and partnership grants to global health organizations to combat malaria in African communities (04/23/04) . positioned ExxonMobil Chemical Oil Company as the American Safest Company.Occupational Hazards.• Maximize values from leading edge technology . PHLatimer@aol.Annually Investment of $600 millions • Improving and Maintenance of Image .$103 million in charitable contributions and community development investments (2003) .

Stock of Major Competitors PHLatimer@aol.com 44 .

com 45 .Market Value PHLatimer@aol.

com 46 .Revenues PHLatimer@aol.

Net Income PHLatimer@aol.com 47 .

PHLatimer@aol.com 48 .

.com 49 ..Vertical Integration • Organizational Structure .Global Functional Basis • Operational Integreaty Management System • Capitalize on integration with other ExxonMobil business PHLatimer@aol.Presence in More than 100 countries . • Exxon and Mobil merger .

• Addition of Human Rights to its Portafolio • Involment to Society • Local Employees • Support to Comunities • Global Integration PHLatimer@aol.Presence in More than 100 countries ..com 50 ..

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