To: Officers, Past Presidents, Committee Chairs, Area Vice Presidents, Chapter Presidents and Benefits Committee Members

From: Al Horan, Chair, Benefits Committee

Hello,

We appreciate the financial difficulties facing everyone in these uncertain times. We especially recognize the burden of our fellow retirees who are living on fixed pension incomes. Further, we understand that many retirees who receive monthly pensions have received either infrequent or no pension supplementation increases in the past. As you know last year we tried our best to convince Chevron to provide an increase in 2009. Unfortunately, given the state of the U.S. economy we understood the Company’s position to defer any action. When we met with Chevron last week we presented them with updated support for a Pension Supplementation increase in 2010 or sooner. The following are highlights from the presentation.

1.     CRA recognizes and understands that retiree benefits are granted at the discretion of Chevron. We are thankful for the Company’s past generosity in providing Pension Supplementations. The last increase was given in 2006 to individuals who retired before 1981.

2.     In May 2009 CRA’s delegates reconfirmed our desire to ask the Company to consider granting a Pension Supplementation increase in 2010 or sooner. This action reconfirmed the delegates’ position taken in May 2008, as presented to the Company in a Benefits Resolution in 2008.

3.     The Association is very concerned about the declining purchasing power of individuals who retired from Chevron or a legacy company on a fixed pension income. We feel that these retirees, in the long run, are disadvantaged relative to retirees who were able to receive the value of their pensions in a lump sum. Also, many retirees were not permitted by pension plan rules to elect lump sum settlements. We understand that Chevron added a lump sum provision to its pension plan in 1981, Gulf in 1986 and Texaco, Caltex and Unocal made it available to all retirees in the late 1970’s.

4.     Where lump sums were permitted, the conversions were generally made using preferential discount rates. It could be argued that preferential rates were used since these retirees were assuming any investment risk, mortality risk and they were forgoing consideration for any future Pension Supplementation. In the case of retirees who receive monthly pensions the Company and/or the pension fund assume any investment risk, mortality risk and the retirees would be considered for any future Pension Supplementation.

5.     To support our request we brought to the Company’s attention the financial predicaments faced by 26 long serving retirees who receive monthly pensions. These retirees are mainly in their 70’s or 80’s; they generally had 30 to 40 years’ service; they retired from Chevron or a legacy Company (Texaco, Gulf, Unocal or Caltex); they have experienced an increase in the cost-of-living that generally exceeds 100%; and where Pension Supplementation increases were provided they were quite small relative to the increase in the COL. In the cases of other retirees receiving monthly pensions we provided the following statistical summary:

a.     Individuals Retired in the 1980’s: Cost-of-living increased approximately 100%. Wages increased nationally about 115%. Social Security COLA’s totaled approximately 75%.

b.     Individuals Retired in the 1990’s: Cost-of-living increased approximately 50%. Wages increased nationally about 60%. Social Security COLA’s totaled approximately 40%.

6.     The Pension Supplementation increase that was granted in 2006 applied to individuals who retired before 1981. We pointed out that Gulf retirees who retired in the mid 1980’s when Gulf was acquired by Chevron are disadvantaged since they did not qualify for the 2006 increase and they did not have the ability to receive their pensions in a lump sum. In the case of former Texaco, Caltex and Unocal retirees, who may have qualified to receive the 2006 increase, they are still disadvantaged since we understand that for a number of years before the merger/acquisition with Chevron these companies did not grant Pension Supplementation increases.

7.     We suggested that in the intervening years between Pension Supplementation increases that the Company consider deferring retiree Medical Plan contribution increases.

8.     In closing, we thanked Chevron for the past Pension Supplementation increases and we asked them to consider the financial plight of retirees who are receiving monthly pensions when they deliberate the need for an immediate Pension Supplementation increase. We also thanked them for meeting with us and for allowing us to present them with additional support for a Pension Supplementation increase.

We also discussed with Chevron the National Health Insurance Reform proposals that are being debated in Washington. We mentioned to them that we value Chevron’s Medical Plans and we appreciate the concern expressed by some CRA Members about what may happen to our Chevron coverage in the future. At this point Chevron has not taken an official position with Washington. Any concerns are being expressed through trade associations. We were left with feeling that we should not be concerned about the future of our Medical Plan coverage.

We would appreciate if you could share this information with your Chapter Members. If you have any questions please let me know.

Regards,

Al