Company: IMO
Filing Date: 2025-02-19
Form Type: 10-K
Source: 0000049938-25-000015
Chunk: 193

Company: IMPERIAL OIL LTD
Filing Date: 2025-02-19
Form: 10-K
Item: Item 16
Chunk 193
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 times and risk profile

•Investment decisions in a capital-intensive industry and management of risk play out over time horizons often decades in length, through volatile commodity price cycles, requiring executives to maintain a long-term view when making decisions.

•Long restriction periods ensure that a significant portion of pay reflects the outcome of these decisions and aligns with the experience of long-term shareholders.

•A formula-based program would require a shorter time horizon to set meaningful, credible targets. A shorter-term program could encourage short-term decision making, which is not aligned with the long investment lead times and capital-intensive nature of the business.

•Example below shows net cash flow of a typical Imperial project aligning with the restricted stock program design for the Imperial CEO. It illustrates that short-term vesting occurs prior to determination of project financial success or failure and that longer-term vesting better aligns with shareholder returns resulting from investment decisions.

1 Refer to definitions and frequently used terms on page 172

161

Share-denominated basis aligns award values with shareholder outcomes

•Uniquely long restriction periods result in a need to apply performance metrics at grant, versus at vest.

•Restricted stock award grant levels are established based on pay grade and individual performance.

•The executive resources committee does not adjust share grants to offset changes in share price, which results in executives seeing a one-for-one change in compensation through share price.

•A share-denominated approach1 coupled with long restriction periods defines the risk/reward profile of stock-based performance awards and results in a greater degree of volatility versus alternate programs with a dollar-denominated approach.1

2024 decisions

•As in prior years, and as a matter of principle, the committee did not adjust share grants to offset changes in the share price, thus maintaining strong alignment in the experience of our executives and our long-term shareholders.

•Award grants for named executive officers reflect individual performance.

•Long-term award value up, reflective of strong stock price, $100.29 at 2024 grant versus $77.12 in 2023, and $72.62 in 2022.

Stock ownership1

•It is Imperial's policy that executives maintain significant stock ownership, with no accelerated vesting at retirement.

•The chairman, president and chief executive officer must, within three years of appointment, acquire shares of the company, including common shares and restricted stock units, of a value no less than five times base salary. B.W. Corson’s 2024 stock ownership, as shown on page 147, exceeds the minimum