Employee Benefit Plans

12 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

Employee Benefit Plans

Employee Benefit Plans

The company has defined benefit pension plans for many employees. The company typically prefunds defined benefit plans as required by local regulations or in certain situations where prefunding provides economic advantages. In the United States, all qualified plans are subject to the Employee Retirement Income Security Act (ERISA) minimum funding standard. The company does not typically fund U.S. nonqualified pension plans that are not subject to funding requirements under laws and regulations because contributions to these pension plans may be less economic and investment returns may be less attractive than the company’s other investment alternatives.

The company also sponsors other postretirement benefit (OPEB) plans that provide medical and dental benefits, as well as life insurance for some active and qualifying retired employees. The plans are unfunded, and the company and retirees share the costs. For the company’s main U.S. medical plan, the increase to the pre-Medicare company contribution for retiree medical coverage is limited to no more than 4 percent each year. Certain life insurance benefits are paid by the company.

The company recognizes the overfunded or underfunded status of each of its defined benefit pension and OPEB plans as an asset or liability on the Consolidated Balance Sheet.

The funded status of the company’s pension and OPEB plans for 2022 and 2021 follows:

	Pension Benefits
	2022				2021				Other Benefits
	U.S.		Int’l.		U.S.		Int’l.		2022		2021
Change in Benefit Obligation
Benefit obligation at January 1	$	12,966	$	5,351	$	15,166	$	6,307	$	2,489	$	2,650
Service cost	432		83		450		123		43		43
Interest cost	318		137		235		137		60		53
Plan participants’ contributions	—		3		—		3		62		43
Plan amendments	40		38		—		—		18		—
Actuarial (gain) loss	(2,753)		(1,559)		(325)		(364)		(509)		(108)
Foreign currency exchange rate changes	—		(423)		—		(85)		(5)		(3)
Benefits paid	(1,290)		(276)		(2,560)		(746)		(220)		(189)
Divestitures/Acquisitions	—		—		—		—		—		—
Curtailment	—		—		—		(24)		—		—
Benefit obligation at December 31	9,713		3,354		12,966		5,351		1,938		2,489
Change in Plan Assets
Fair value of plan assets at January 1	9,919		4,950		9,930		5,363		—		—
Actual return on plan assets	(1,851)		(1,096)		997		166		—		—
Foreign currency exchange rate changes	—		(453)		—		(35)		—		—
Employer contributions	1,164		158		1,552		199		158		146
Plan participants’ contributions	—		3		—		3		62		43
Benefits paid	(1,290)		(276)		(2,560)		(746)		(220)		(189)
Fair value of plan assets at December 31	7,942		3,286		9,919		4,950		—		—
Funded status at December 31	$	(1,771)	$	(68)	$	(3,047)	$	(401)	$	(1,938)	$	(2,489)

Amounts recognized on the Consolidated Balance Sheet for the company’s pension and OPEB plans at December 31, 2022 and 2021, include:

	Pension Benefits
	2022				2021				Other Benefits
	U.S.		Int’l.		U.S.		Int’l.		2022		2021
Deferred charges and other assets	$	26	$	759	$	36	$	696	$	—	$	—
Accrued liabilities	(210)		(62)		(303)		(142)		(152)		(151)
Noncurrent employee benefit plans	(1,587)		(765)		(2,780)		(955)		(1,786)		(2,338)
Net amount recognized at December 31	$	(1,771)	$	(68)	$	(3,047)	$	(401)	$	(1,938)	$	(2,489)

For the year ended December 31, 2022, the decrease in benefit obligations was primarily due to actuarial gains caused by higher discount rates used to value the obligations and benefit payments paid to retirees in 2022. For the year ended December 31, 2021, the decrease in benefit obligations was primarily due to actuarial gains caused by higher discount rates used to value the obligations and large benefit payments paid to retirees in 2021.

Amounts recognized on a before-tax basis in “Accumulated other comprehensive loss” for the company’s pension and OPEB plans were $3,446 and $4,979 at the end of 2022 and 2021, respectively. These amounts consisted of:

	Pension Benefits
	2022				2021				Other Benefits
	U.S.		Int’l.		U.S.		Int’l.		2022		2021
Net actuarial loss	$	3,147	$	659	$	4,007	$	920	$	(392)	$	134
Prior service (credit) costs	40		107		2		75		(115)		(159)
Total recognized at December 31	$	3,187	$	766	$	4,009	$	995	$	(507)	$	(25)

The accumulated benefit obligations for all U.S. and international pension plans were $8,595 and $3,084, respectively, at December 31, 2022, and $11,337 and $4,976, respectively, at December 31, 2021.

Information for U.S. and international pension plans with an accumulated benefit obligation in excess of plan assets at December 31, 2022 and 2021, was:

	Pension Benefits
	2022				2021
	U.S.		Int’l.		U.S.		Int’l.
Projected benefit obligations	$	1,322	$	828	$	1,957	$	1,097
Accumulated benefit obligations	1,135		671		1,665		883
Fair value of plan assets	—		3		55		2

The components of net periodic benefit cost and amounts recognized in the Consolidated Statement of Comprehensive Income for 2022, 2021 and 2020 are shown in the table below:

	Pension Benefits
	2022				2021				2020				Other Benefits
	U.S.		Int’l.		U.S.		Int’l.		U.S.		Int’l.		2022		2021		2020
Net Periodic Benefit Cost
Service cost	$	432	$	83	$	450	$	123	$	497	$	130	$	43	$	43	$	38
Interest cost	318		137		235		137		353		175		60		53		71
Expected return on plan assets	(624)		(176)		(596)		(171)		(650)		(209)		—		—		—
Amortization of prior service costs (credits)	2		6		2		8		2		10		(27)		(27)		(28)
Recognized actuarial losses	218		15		309		46		385		45		13		16		3
Settlement losses	363		(6)		672		7		620		37		—		—		—
Curtailment losses (gains)	—		(5)		—		(1)		92		2		—		—		(27)
Total net periodic benefit cost	709		54		1,072		149		1,299		190		89		85		57
Changes Recognized in Comprehensive Income
Net actuarial (gain) loss during period	(279)		(257)		(725)		(408)		1,584		230		(514)		(111)		190
Amortization of actuarial loss	(581)		(5)		(981)		(73)		(1,005)		(98)		(13)		(15)		(4)
Prior service (credits) costs during period	40		38		—		—		—		—		18		—		—
Amortization of prior service (costs) credits	(2)		(6)		(2)		(11)		(2)		(17)		27		27		42
Total changes recognized in other comprehensive income	(822)		(230)		(1,708)		(492)		577		115		(482)		(99)		228
Recognized in Net Periodic Benefit Cost and Other Comprehensive Income	$	(113)	$	(176)	$	(636)	$	(343)	$	1,876	$	305	$	(393)	$	(14)	$	285

Assumptions The following weighted-average assumptions were used to determine benefit obligations and net periodic benefit costs for years ended December 31:

	Pension Benefits
	2022				2021				2020						Other Benefits
	U.S.		Int’l.		U.S.		Int’l.		U.S.		Int’l.		2022		2021		2020
Assumptions used to determine benefit obligations:
Discount rate	5.2	%	5.8	%	2.8	%	2.8	%	2.4	%	2.4	%	5.3	%	2.9	%	2.6	%
Rate of compensation increase	4.5	%	4.2	%	4.5	%	4.1	%	4.5	%	4.0	%	N/A		N/A		N/A
Assumptions used to determine net periodic benefit cost:
Discount rate for service cost	3.6	%	2.8	%	3.0	%	2.4	%	3.3	%	3.2	%	3.1	%	3.0	%	3.5	%
Discount rate for interest cost	2.8	%	2.8	%	1.9	%	2.4	%	2.6	%	3.2	%	2.4	%	2.1	%	3.0	%
Expected return on plan assets	6.6	%	3.9	%	6.5	%	3.5	%	6.5	%	4.5	%	N/A		N/A		N/A
Rate of compensation increase	4.5	%	4.1	%	4.5	%	4.0	%	4.5	%	4.0	%	N/A		N/A		N/A

Expected Return on Plan Assets The company’s estimated long-term rates of return on pension assets are driven primarily by actual historical asset-class returns, an assessment of expected future performance, advice from external actuarial firms and the incorporation of specific asset-class risk factors. Asset allocations are periodically updated using pension plan asset/liability studies, and the company’s estimated long-term rates of return are consistent with these studies. For 2022, the company used an expected long-term rate of return of 6.6 percent for U.S. pension plan assets, which account for 67 percent of the company’s pension plan assets.

The market-related value of assets of the main U.S. pension plan used in the determination of pension expense was based on the market values in the three months preceding the year-end measurement date. Management considers the three-month time period long enough to minimize the effects of distortions from day-to-day market volatility and still be contemporaneous to the end of the year. For other plans, market value of assets as of year-end is used in calculating the pension expense.

Discount Rate The discount rate assumptions used to determine the U.S. and international pension and OPEB plan obligations and expense reflect the rate at which benefits could be effectively settled, and are equal to the equivalent single rate resulting from yield curve analysis. This analysis considered the projected benefit payments specific to the company’s plans and the yields on high-quality bonds. The projected cash flows were discounted to the valuation date using the yield curve for the main U.S. pension and OPEB plans. The effective discount rates derived from this analysis were 5.2 percent, 2.8 percent, and 2.4 percent for 2022, 2021, and 2020, respectively, for both the main U.S. pension and OPEB plans.

Other Benefit Assumptions For the measurement of accumulated postretirement benefit obligation at December 31, 2022, for the main U.S. OPEB plan, the assumed health care cost-trend rates start with 6.6 percent in 2023 and gradually decline to 4.5 percent for 2032 and beyond. For this measurement at December 31, 2021, the assumed health care cost-trend rates started with 6.2 percent in 2022 and gradually declined to 4.5 percent for 2031 and beyond.

Plan Assets and Investment Strategy

The fair value measurements of the company’s pension plans for 2022 and 2021 are as follows:

	U.S.										Int’l.
	Total		Level 1		Level 2		Level 3		NAV		Total		Level 1		Level 2		Level 3		NAV
At December 31, 2021
Equities
U.S.1	$	1,677	$	1,677	$	—	$	—	$	—	$	491	$	491	$	—	$	—	$	—
International	1,285		1,284		—		1		—		356		355		—		1		—
Collective Trusts/Mutual Funds2	2,541		32		—		—		2,509		134		6		—		—		128
Fixed Income
Government	215		—		215		—		—		229		135		94		—		—
Corporate	660		—		660		—		—		532		2		530		—		—
Bank Loans	137		—		136		1		—		—		—		—		—		—
Mortgage/Asset Backed	1		—		1		—		—		4		—		4		—		—
Collective Trusts/Mutual Funds2	1,907		13		—		—		1,894		2,388		1		—		—		2,387
Mixed Funds3	—		—		—		—		—		99		12		87		—		—
Real Estate4	1,172		—		—		—		1,172		312		—		—		42		270
Alternative Investments	—		—		—		—		—		—		—		—		—		—
Cash and Cash Equivalents	264		263		1		—		—		161		89		3		—		69
Other5	60		(1)		14		46		1		244		—		17		113		114
Total at December 31, 2021	$	9,919	$	3,268	$	1,027	$	48	$	5,576	$	4,950	$	1,091	$	735	$	156	$	2,968
At December 31, 2022
Equities
U.S.1	$	1,358	$	1,358	$	—	$	—	$	—	$	164	$	164	$	—	$	—	$	—
International	946		946		—		—		—		120		120		—		—		—
Collective Trusts/Mutual Funds2	1,695		4		—		—		1,691		87		6		—		—		81
Fixed Income
Government	110		—		110		—		—		185		127		58		—		—
Corporate	680		—		680		—		—		343		15		328		—		—
Bank Loans	45		—		45		—		—		—		—		—		—		—
Mortgage/Asset Backed	1		—		1		—		—		4		—		4		—		—
Collective Trusts/Mutual Funds2	1,616		—		—		—		1,616		1,750		—		—		—		1,750
Mixed Funds3	—		—		—		—		—		87		14		73		—		—
Real Estate4	1,184		—		—		—		1,184		198		—		—		38		160
Alternative Investments	—		—		—		—		—		—		—		—		—		—
Cash and Cash Equivalents	200		25		—		—		175		80		69		2		—		9
Other5	107		37		15		54		1		268		—		18		85		165
Total at December 31, 2022	$	7,942	$	2,370	$	851	$	54	$	4,667	$	3,286	$	515	$	483	$	123	$	2,165

1U.S. equities include investments in the company’s common stock in the amount of $0 at December 31, 2022, and $0 at December 31, 2021.

2Collective Trusts/Mutual Funds for U.S. plans are entirely index funds; for International plans, they are mostly unit trust and index funds.

3Mixed funds are composed of funds that invest in both equity and fixed-income instruments in order to diversify and lower risk.

4The year-end valuations of the U.S. real estate assets are based on third-party appraisals that occur at least once a year for each property in the portfolio.

5The “Other” asset class includes net payables for securities purchased but not yet settled (Level 1); dividends and interest- and tax-related receivables (Level 2); insurance contracts (Level 3); and investments in private-equity limited partnerships (NAV).

The effects of fair value measurements using significant unobservable inputs on changes in Level 3 plan assets are outlined below:

	Equity		Fixed Income
	International		Corporate		Bank Loans		Real Estate		Other		Total
Total at December 31, 2020	$	1	$	—	$	2	$	45	$	45	$	93
Actual Return on Plan Assets:
Assets held at the reporting date	—		—		—		—		4		4
Assets sold during the period	—		—		—		(3)		—		(3)
Purchases, Sales and Settlements	—		—		(2)		—		4		2
Transfers in and/or out of Level 3	—		—		—		—		108		108
Total at December 31, 2021	$	1	$	—	$	—	$	42	$	161	$	204
Actual Return on Plan Assets:
Assets held at the reporting date	(1)		—		—		—		(18)		(19)
Assets sold during the period	—		—		—		(4)		—		(4)
Purchases, Sales and Settlements	—		—		—		—		(4)		(4)
Transfers in and/or out of Level 3	—		—		—		—		—		—
Total at December 31, 2022	$	—	$	—	$	—	$	38	$	139	$	177

The primary investment objectives of the pension plans are to achieve the highest rate of total return within prudent levels of risk and liquidity, to diversify and mitigate potential downside risk associated with the investments, and to provide adequate liquidity for benefit payments and portfolio management.

The company’s U.S. and U.K. pension plans comprise 94 percent of the total pension assets. Both the U.S. and U.K. plans have an Investment Committee that regularly meets during the year to review the asset holdings and their returns. To assess the plans’ investment performance, long-term asset allocation policy benchmarks have been established.

For the primary U.S. pension plan, the company’s Investment Committee has established the following approved asset allocation ranges: Equities 35–65 percent, Fixed Income 25–45 percent, Real Estate 5–25 percent, Alternative Investments 0–5 percent and Cash 0–15 percent. For the U.K. pension plan, the U.K. Board of Trustees has established the following asset allocation guidelines: Equities 5–15 percent, Fixed Income 35–45 percent, Real Estate 5–15 percent, and Cash 0–5 percent. The other significant international pension plans also have established maximum and minimum asset allocation ranges that vary by plan. Actual asset allocation within approved ranges is based on a variety of factors, including market conditions and illiquidity constraints. To mitigate concentration and other risks, assets are invested across multiple asset classes with active investment managers and passive index funds.

The company does not prefund its OPEB obligations.

Cash Contributions and Benefit Payments In 2022, the company contributed $1,164 and $158 to its U.S. and international pension plans, respectively. In 2023, the company expects contributions to be approximately $1,000 to its U.S. plans and $100 to its international pension plans. Actual contribution amounts are dependent upon investment returns, changes in pension obligations, regulatory environments, tax law changes and other economic factors. Additional funding may ultimately be required if investment returns are insufficient to offset increases in plan obligations.

The company anticipates paying OPEB benefits of approximately $150 in 2023; $158 was paid in 2022.

The following benefit payments, which include estimated future service, are expected to be paid by the company in the next 10 years:

	Pension Benefits				Other
	U.S.		Int’l.		Benefits
2023	$	903	$	203	$	152
2024	846		206		150
2025	854		214		148
2026	850		227		146
2027	840		236		145
2028-2031	4,066		1,306		708

Employee Savings Investment Plan Eligible employees of Chevron and certain of its subsidiaries participate in the Chevron Employee Savings Investment Plan (ESIP). Compensation expense for the ESIP totaled $283, $252 and $281 in 2022, 2021 and 2020, respectively.

Benefit Plan Trusts Prior to its acquisition by Chevron, Texaco established a benefit plan trust for funding obligations under some of its benefit plans. At year-end 2022, the trust contained 14.2 million shares of Chevron treasury stock. The trust will sell the shares or use the dividends from the shares to pay benefits only to the extent that the company does not pay such benefits. The company intends to continue to pay its obligations under the benefit plans. The trustee will vote the shares held in the trust as instructed by the trust’s beneficiaries. The shares held in the trust are not considered outstanding for earnings-per-share purposes until distributed or sold by the trust in payment of benefit obligations.

Prior to its acquisition by Chevron, Unocal established various grantor trusts to fund obligations under some of its benefit plans, including the deferred compensation and supplemental retirement plans. At December 31, 2022 and 2021, trust assets of $35 and $36, respectively, were invested primarily in interest-earning accounts.

Employee Incentive Plans The Chevron Incentive Plan is an annual cash bonus plan for eligible employees that links awards to corporate, business unit and individual performance in the prior year. Charges to expense for cash bonuses were $1,169, $1,165 and $462 in 2022, 2021 and 2020, respectively. Chevron also has the LTIP for officers and other regular salaried employees of the company and its subsidiaries who hold positions of significant responsibility. Awards under the LTIP consist of stock options and other share-based compensation that are described in Note 22 Stock Options and Other Share-Based Compensation.