What are EBUs?

EBUs are “Earning Bonus Units,” which ExxonMobil employees may be awarded each year as part of their incentive bonus compensation. For those who receive both cash bonuses and EBUs, typically the EBUs are approximately equal to the cash bonus, i.e., half of the annual bonus component of incentive awards is paid through EBUs. Each employee who is awarded restricted stock, cash bonuses and/or EBUs should receive a package from the Corporation with a statement of how much/how many of each type of award they have received.

EBUs when granted have a stated value, such as $6.50 each. The stated value is the amount of earnings per share that ExxonMobil has to achieve before the EBUs are paid out to the employee. The earnings tally begins in the quarter after the grant, so typically, the accumulation begins with the earnings statement following the end of the 1Q in the year after the award is made, generally in late November. It usually takes four to six quarters of earnings before the EBU trigger is reached and the EBU cash payment is made.

Once the corporation’s earnings per share have accumulated to the EBU value or more, the EBU payment is made to the participant. Employees get the payment to their payroll bank of record. Retirees get the payment to an account established for them at Morgan Stanley. The payment is considered earned income and is subject to federal income tax withholding, and FICA and Medicare tax.

The only relation of EBUs to ExxonMobil common stock is the tie to accumulated earnings per share following the grant.

The philosophy behind the design of the incentive program is that restricted stock which only vests after three or seven years (for non-senior executive employees) is intended to promote long-term thinking by employees—make decisions that will be good for the stock price over the next three to seven years, while EBUs focus on more near-term performance, being paid out typically over four to six quarters.

Bonus Program Overview

A description of the bonus program (which is cash bonus money and EBUs) from the ExxonMobil 2019 Executive Compensation Overview is shown below.

EBUs Image

Disclaimer:  Design and implementation of the ExxonMobil incentive program is controlled by Exxon Mobil Corporation and subject to change.

Cerity Partners LLC (“Cerity Partners”) is an SEC-registered investment adviser with offices in California, Colorado, Florida, Illinois, Massachusetts, Michigan, New York, Ohio and Texas. Registration of an Investment Advisor does not imply any level of skill or training. There is no guarantee that the views and opinions expressed will come to pass.  For information pertaining to the registration status of Cerity Partners, please contact us or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). For additional information about Cerity Partners, including fees, conflicts of interest, and services, send for our disclosure statement as set forth on Form CRS and ADV Part 2 using the contact information herein. Please read the disclosure statement carefully before you invest or send money. Nothing contained herein shall constitute an offer to sell or solicitation of an offer to buy any security. You should not construe the information contained herein as personalized investment, tax, or legal advice.  Material in this publication is original or from published sources and is believed to be accurate. The information presented is subject to change without notice and is deemed reliable but is not guaranteed. Readers are cautioned to consult their own tax and investment professionals with regard to their specific situations. Cerity Partners is not endorsed by or affiliated with Exxon Mobil Corp.

Please read important disclosures here.