

		2018 Proxy Statement \| 50



~~Tesoro Corporation Retirement Plan (the “Retirement Plan”)~~
~~Short Description~~	~~A tax-qualified pension plan with a monthly retirement benefit made up of two components:~~ •~~a Final Average Pay (FAP) benefit for service through December 31, 2010, and~~ •~~a Cash Balance account based benefit for service after December 31, 2010~~ ~~The final benefit payable under the Retirement Plan is equal to the value of the sum of both the FAP and the Cash Balance components on the participant’s benefit commencement date.~~
~~FAP Benefit (through 12/31/2010)~~	•1.1% of final average compensation for each year of service through December 31, 2010, plus 0.5% of final average compensation in excess of the Social Security Covered Compensation limit for each year of service through December 31, 2010, up to 35 years •Final average compensation is the monthly average of compensation (including base pay plus bonus but limited to the maximum compensation and benefit limits allowable for qualified plans under the Internal Revenue Code) over the consecutive 36-month period in the last 120 months preceding retirement that produces the highest average
~~Cash Balance Benefit (after 12/31/2010)~~	•~~For service after 2010, participants earn pay and interest credits:~~ o~~Pay credits are determined based on a percentage of eligible pay at the end of each quarter ranging from 4.5% to 8.5% of pay based on a participant’s age at the end of each quarter~~ o~~Interest is credited quarterly on account balances based on a minimum of 3%, the 10-Year Treasury Bonds or the 30-Year Treasury Bonds, whichever is higher~~
~~Timing of Benefit Payments~~	•~~Generally payable the first day of the month following the attainment of age 65 and the completion of at least 3 years of service~~ •~~Early Retirement:~~ oIf a participant qualifies for early retirement (age 50 with service plus age greater than or equal to 80, which is referred to as “80-point early retirement,” or age 55 with 5 years of service, which is referred to as “regular early retirement”), the FAP benefit component will be reduced by a subsidized early retirement factor prior to age 65. Under the 80-point early retirement definition, the FAP benefit component may be paid at age 60 without reduction or earlier than age 60 with a reduction of 5% per year for each year the age at retirement is less than 60. Under the regular early retirement definition, the FAP benefit component may be paid at age 62 without reduction or earlier than age 62 with a reduction of approximately 7.14% per year for each year prior to age 62. If an employee does not qualify for early retirement upon separation from service, they will be eligible for an actuarially equivalent FAP benefit based on their age at the date the benefit is paid without an early retirement subsidy oThe Cash Balance benefit component for service after 2010 is always based on the actual balance of the cash balance account as of the payment date and is not subject to any reduction for payment prior to normal retirement •~~As of the end of fiscal 2016:~~ o~~Mr. Goff meets the regular early retirement criteria~~ o~~Mr. Casey is vested under the Retirement Plan~~ o~~Mr. Sterin and Mmes. Rucker and Warner are not yet vested under the Retirement Plan~~

~~Tesoro Corporation~~ ~~2017 Proxy Statement 41~~

equivalent of 400% of the executive’s base pay, prior to the date of death, and (3) the benefit determined as if the executive had remained an active employee through age 65 and was paid a benefit at age 65. The monthly payment would be payable for the life of the beneficiary, reduced by the amount of the applicable Social Security benefits.

If the executive becomes disabled, he is entitled to the monthly retirement benefit for which he would be eligible at his normal retirement date, but based upon the service the participant would have accrued had he remained in active employment until his retirement date and continued at the same rate of earnings until that date. Monthly payments would be payable on the first day of the month following the date on which the executive has both attained age 65 and has a minimum of five years of service.

Following are the amounts to which Mr. Goff would be entitled under the plan under certain death and disability scenarios, in each case assuming the event occurred as of December 31, 2017:



Name	Monthly Death Benefit to Executive’s Beneficiary Before Age 62 ($)	Monthly Death Benefit to Executive’s Beneficiary After Age 62 ($)	Monthly Disability Benefit ($)
Goff	189,899	187,764	200,246

Supplemental Executive Retirement Plan (“Supplemental Plan”)

This is a non-qualified cash balance account based pension plan that provides eligible senior level executives who are hired on or after January 1, 2011 with a supplemental cash balance pension benefit in excess of those earned under the qualified Pension Plan. This plan was closed to new participants in 2015.

Pay credits under the plan are equal to 15% of eligible pay offset by the value of the pay credits allocated to the qualified Pension Plan. Interest is credited quarterly on account balances based on the greater of 3%, the 10-Year Treasury Bonds and the 30-Year Treasury Bonds. To be eligible to receive a payment under the plan, the executive must separate from the company after attaining age 50 with 80 points, or after attaining age 55 with at least 5 years of service.

As of December 31, 2017, Messrs. Sterin and Casey and Ms. Warner, who participate in the plan, had not yet met the eligibility requirements to receive a payment under the plan. Mr. Goff, who joined the Company prior to 2011, does not participate in the plan, nor does Ms. Rucker, who joined the Company after the plan was closed to new participants.

The plan also provides certain death and disability benefits. The death benefit is equal to the value of the vested account balance as of the date of death. The disability benefit provides continued pay and interest credits during the period of disability up to age 65.

Following are the present values, as of December 31, 2017, of these death and disability benefits for each participating NEO:



Name	Present Value of Death Benefit ($)	Present Value of Disability Benefit ($)
Sterin	724,198	4,126,179
Casey	866,873	3,156,848
Warner	531,734	1,550,124

Andeavor Restoration Pension Plan (“Restoration Plan”)

This plan is a non-qualified plan designed to restore the benefit which is not provided under the qualified Pension Plan due to compensation and benefit limitations imposed under the Internal Revenue Code. Any NEO terminating employment prior to becoming eligible for a benefit under either the Security Plan



~~Executive Security Plan (“ESP”)~~
~~Short Description~~ 51 \|	•~~A non-qualified pension plan that was closed to new participants in 2010.~~
~~Benefit Formula~~	•Final average compensation in the ESP is the highest three years of compensation out of the last seven calendar years that produces the highest average. Compensation includes base pay plus bonus (counted in the year earned not paid). •~~Gross monthly retirement benefit is equal to:~~ o~~4% of final average compensation for each of the first 10 years of service, plus~~ o~~2% of final average compensation for each of the next 10 years of service, plus~~ o~~1% of final average compensation for each of the last 10 years of service,~~ o~~for a maximum gross monthly retirement benefit of 70% of final average compensation for up to 30 years of service.~~ •~~Gross monthly retirement benefit is reduced by any benefits paid from the qualified Retirement Plan, and, after age 62, estimated Social Security benefits.~~
~~Vesting and Timing of Benefit Payments~~	•~~To qualify, a participant must separate from the company after attaining age 50 with 80 points or age 55 and with at least 5 years of service.~~ •~~Payment is equal to:~~ o~~the gross monthly retirement benefit may be paid on or after age 60 without a reduction, or~~ o~~earlier than age 60 with a reduction of 7% per year for each year less than 60 (pro-rated for partial years).~~ •~~As of the end of fiscal 2016, Mr. Goff is eligible to receive a payment.~~
~~Death and Disability Benefits~~	•The ESP provides for certain death and disability benefits. The death benefits in the ESP are equal to the greater of (1) the executive’s ESP benefit determined at date of death, (2) the actuarial equivalent of 400% of the executive’s base pay, prior to the date of death, or (3) the benefit determined as if the executive had remained an active employee through age 65 and was paid a benefit at age 65. Assuming that the following executives died on December 31, 2016, their monthly payment under the ESP, payable for the life of the beneficiary, would be the following, offset by the estimated Social Security benefit. •If the executive becomes disabled, the executive is entitled to the monthly retirement benefit for which he is eligible at his normal retirement date, but based upon the service the participant would have accrued had he remained in active employment until his retirement date and continued at the same rate of earnings until that date. Assuming that the following executives became disabled on December 31, 2016, their monthly payments under the ESP are payable on the first day of the month following the date on which the executive has attained both age 65 and has a minimum of five years of service.

Name
Monthly Death
Benefit to Executive’s
Beneficiary
Before Age 62 ($)
Monthly Death
Benefit to Executive’s
Beneficiary
After Age 62 ($)
Monthly Disability
Benefit ($)
Goff 190,563 188,503 199,444



~~Supplemental Executive Retirement Plan (“SERP”)~~
~~Short Description~~	A non-qualified cash balance account based pension plan that provides eligible senior level executives who are hired on or after January 1, 2011 with a supplemental cash balance pension benefit in excess of those earned under the qualified Retirement Plan. This plan was closed to new participants in 2015.
~~Benefit Formula~~	Pay credits are equal to 15% of eligible pay offset by the value of the pay credits allocated to the qualified Retirement Plan. Interest is credited quarterly on account balances based on a minimum of 3%, the 10-Year Treasury Bonds or the 30-Year Treasury Bonds, whichever is higher.
~~Vesting and Timing of Benefit Payments~~	In order to receive a payment under the SERP, a participant must separate from the company after attaining age 50 with 80 points or age 55 and with at least 5 years of service. As of the end of fiscal 2016, Mr. Sterin, Mr. Casey, and Ms. Warner had not met the eligibility requirements to receive a payment under the plan.
~~Death and Disability Benefits~~	The SERP provides for certain death and disability benefits. The death benefit is equal to the value of the vested account balance as of the date of death. The disability benefit provides continued pay and interest credits during the period of disability up to age 65.

Name Present Value of Death Benefit ($) Present Value of Disability Benefit ($)
Sterin 435,677 3,440,532
Casey 616,037 3,008,856
Warner 321,941 1,494,356

~~Tesoro Corporation~~ ~~2017 Proxy Statement 42~~

or the Supplemental Plan, as applicable, and after attaining three years of service credit, will receive a supplemental pension benefit under this plan.

The plan provides a benefit equal to the difference between the actual qualified Pension Plan benefit paid to the participant, and the benefit that would have otherwise been paid to the participant under the Pension Plan, without regard to certain Internal Revenue Code limits.



~~Tesoro Corporation Restoration Retirement Plan~~
~~Short Description~~	~~A non-qualified plan designed to restore the benefit which is not provided under the qualified Retirement Plan due to compensation and benefit limitations imposed under the Internal Revenue Code.~~ If any of the NEOs terminate employment prior to becoming eligible for a benefit under either the ESP or SERP, as applicable, and after attaining three years of service credit, they will receive a supplemental pension benefit under this plan.
~~Benefit Formula~~	Provides a benefit equal to the difference between the actual qualified Retirement Plan benefit paid to the participant, and the benefit that would have otherwise been paid to the participant under the Retirement Plan, without regard to certain Internal Revenue Code limits.
~~Death and Disability Benefits~~	Provides for certain death and disability benefits in the same manner as provided in the qualified Retirement Plan. Generally, the death benefit provides an equivalent FAP benefit and full Cash Balance account value as of the date of death. The disability benefit provides continued benefit accruals during the period of disability up to age 65. ~~As of December 31, 2016, the present value of these death and disability benefits were as follows: Ms. Rucker - $22,560 for death and $440,819~~ The plan also provides for certain death and disability benefits in the same manner as provided in the qualified Pension Plan. Generally, the death benefit provides an equivalent FAP benefit and full Cash Balance account value as of the date of death. The disability benefit provides continued benefit accruals during the period of disability up to age 65. As of December 31, 2017, the present value of these death and disability benefits for Ms. Rucker was $124,540 for death and $1,243,411 for disability.

Non-qualified Deferred Compensation in ~~2016~~

2017

The following table sets forth information regarding the contributions to and year-end balances under our non-qualified deferred compensation plan for the NEOs in ~~2016.~~2017.


Name	Executive Contributions in Last Fiscal Year ($) (a)	Registrant Contributions in Last Fiscal Year ($) (b)	Aggregate Earnings in Last Fiscal Year ($) (c)	Aggregate Withdrawals/ Distributions ($)	Aggregate Balance at Last Fiscal Year-End ($) (d)	Executive Contributions in Last Fiscal Year ($) (a)	Registrant Contributions in Last Fiscal Year ($) (b)	Aggregate Earnings in Last Fiscal Year ($) (c)	Aggregate Withdrawals/ Distributions ($)	Aggregate Balance at Last Fiscal Year-End ($) (d)
Goff	–	–	2,855	–	99,985	—	13,300	5,332	—	118,617
Sterin	38,838		1,991	–	99,064	—	5,246	13,533	—	117,844
Casey	42,358	36,046	18,022	–	196,495	51,181	41,927	39,898	—	329,502
Rucker	20,763		871	–	42,397	39,346	44,396	8,725	—	134,865
Warner	–		42	–	15,096	—	4,075	119	—	19,290


(a)	~~The amount~~Amounts shown ~~includes~~include amounts reflected in the base salary column of the Summary Compensation Table for ~~Messrs. Sterin and~~Mr. Casey and Ms. Rucker.


(b)	~~The amounts~~Amounts shown include amounts reflected in the All Other Compensation column of the Summary Compensation Table for ~~Messrs. Sterin and Casey and Ms. Rucker.~~each NEO.


(c)	~~The amount~~Amounts shown ~~reflects~~reflect the change in the market value pertaining to the investment funds in which the NEO has chosen to invest his or her contributions and our contribution under the ~~Tesoro Corporation~~Andeavor Executive Deferred Compensation Plan.


(d)	A portion of the amounts ~~disclosed~~shown in this column for ~~Mr. Goff, Mr. Casey, Mr. Sterin and Ms. Warner~~each NEO has previously been reported in Summary Compensation Tables for previous years.

Andeavor Executive Deferred Compensation Plan

This plan provides executives and key management personnel (including our NEOs) the opportunity to make additional pre-tax deferrals that cannot be made under our qualified 401(k) plan, due to salary and limitations imposed under the Internal Revenue Code.

Participants may elect to defer up to 50% of their base salary and/or up to 100% of their annual bonus compensation after FICA tax deductions. We match the participant’s base salary contributions dollar-for-dollar up to 6% of eligible earnings above the IRS salary limitation (i.e., $270,000 for 2017). The plan also permits us to make discretionary contributions to participants’ accounts from time to time in amounts and on such terms as we may determine. Participants who are eligible for supplemental retirement benefits under the Executive Security Plan described above are eligible to defer compensation under this plan, but are not eligible for the matching provisions of the plan. Participants vest in our matching contributions upon completing three years of service.



		2018 Proxy Statement \| 52



~~Tesoro Corporation Executive Deferred Compensation Plan (“EDCP”)~~
~~Short Description~~	•Provides executives and key management personnel (including our NEOs) the opportunity to make additional pre-tax deferrals that cannot be made under our qualified 401(k) plan (“Thrift Plan”), due to salary and limitations imposed under the Internal Revenue Code.
~~Participant Contributions~~	•~~Participants may elect to defer up to 50% of their base salary and/or up to 100% of their annual bonus compensation after FICA tax deductions.~~
~~Company Contributions~~	•~~We will match the participant’s base salary contributions dollar-for-dollar up to 6% of eligible earnings above the IRS salary limitation (i.e., $265,000 for 2016).~~ •~~Participants that are eligible for supplemental retirement benefits under the ESP are eligible to defer compensation under the EDCP, but are not eligible for the matching provisions of the EDCP.~~
~~Vesting~~	•~~A participant will vest in our matching contributions upon the completion of three years of service.~~

~~Tesoro Corporation~~ ~~2017 Proxy Statement 43~~

~~2016~~2017 Potential Payments Upon Termination or Change-in-Control

The following table reflects the estimated amount of compensation for each ~~of the NEOs~~NEO upon certain termination events. Such compensation is in addition to the pension benefits, including certain termination-related pension benefits, described above under ~~the heading~~ “Pension Benefits in ~~2016,~~2017.” ~~included in this Proxy Statement.~~ The amounts shown below assume that the applicable termination event occurred as of December ~~31, 2016~~29, 2017 and are based on the agreements and arrangements in place on ~~such~~that date. Amounts shown for accelerated equity vesting are calculated based on the closing stock price of our common stock on December ~~30, 2016~~29, 2017 of ~~$87.45.~~$114.34. The actual payments an executive would be entitled to may only be determined based upon the actual occurrence and circumstances surrounding the termination. The assumptions used in determining the estimated payments upon various termination scenarios are described below the table.

Our NEOs are eligible for certain benefits under our Executive Severance and Change-in-Control Plan (the “Severance Plan”) in the event of a termination without “~~Cause~~”“Cause”, a resignation with “~~Good~~“Good Reason,,” or a~~“Termination~~ “Termination following a Change-in-Control”in the event of a termination without cause or by the NEO with good reason within two years following a change-in-control (with such terms as defined in such plan).


Name	Scenario	Severance ($)	Accelerated Equity Vesting ($)	Retirement Benefits ($)	Health Benefits ($)	Outplacement Services ($)	Total ($)	Scenario	Severance ($)	Accelerated Equity Vesting ($)	Retirement Benefits ($)	Health Benefits ($)	Outplacement Services ($)	Total ($)
Goff	w/o Cause or w/ Good Reason	12,909,384	16,618,510	—	52,032	35,000	29,614,926	w/o Cause or w/ Good Reason	12,909,384	14,203,127	—	48,795	38,700	27,200,006
	Term. after Change-in-Control	12,480,000	23,687,596	—	42,043	—	36,209,639	Term. after Change-in-Control	12,480,000	29,977,320	—	42,860	—	42,500,180
	Retirement or Voluntary Term.	3,635,200	16,618,510	—			20,253,710	Retirement or Voluntary Term.	2,969,600	14,203,127	—			17,172,727
	Death	1,600,000	14,248,402	—			15,848,402	Death	1,600,000	14,203,127	—			15,803,127
	Disability	1,480,000	14,248,402	—			15,728,402	Disability	1,480,000	14,203,127	—			15,683,127
	w/Cause	—						w/Cause	—
Sterin	w/o Cause or w/ Good Reason	2,574,588	827,771	—	24,398	35,000	3,461,757	w/o Cause or w/ Good Reason	2,880,456	2,036,536	—	24,761	38,700	4,980,453
	Term. after Change-in-Control	3,825,000	2,199,895	—	40,663	—	6,065,558	Term. after Change-in-Control	4,200,000	5,911,526	—	41,269	—	10,152,795
	Retirement or Voluntary Term.	—						Retirement or Voluntary Term.	—
	Death	—	1,120,495	—			1,120,495	Death	—	2,742,358	—			2,742,358
	Disability	—	1,120,495	—			1,120,495	Disability	—	2,742,358	—			2,742,358
	w/Cause	—						w/Cause	—
Casey	w/o Cause or w/ Good Reason	2,493,514	2,201,011	—	24,398	35,000	6,954,934	w/o Cause or w/ Good Reason	2,947,782	2,036,536	—	24,761	38,700	5,047,779
	Term. after Change-in-Control	3,550,000	3,573,135	—	40,663	—	7,163,798	Term. after Change-in-Control	3,858,750	6,017,345	—	41,269	—	9,917,364
	Retirement or Voluntary Term.	—						Retirement or Voluntary Term.	—
	Death	—	1,978,337	—			1,978,337	Death	—	2,751,661	—			2,751,661
	Disability	—	1,978,337	—			1,978,337	Disability	—	2,751,661	—			2,751,661
	w/Cause	—						w/Cause	—
Rucker	w/o Cause or w/ Good Reason	1,356,250	90,087	—	19,178	35,000	1,500,515	w/o Cause or w/ Good Reason	2,798,805	751,675	—	24,761	38,700	3,613,941
	Term. after Change-in-Control	3,778,125	829,145	—	31,963	—	4,639,233	Term. after Change-in-Control	3,875,000	3,751,214	—	41,269	—	7,667,483
	Retirement or Voluntary Term.	—						Retirement or Voluntary Term.	—
	Death	—	276,382	—			276,382	Death	—	1,472,126	—			1,472,126
	Disability	—	276,382	—			276,382	Disability	—	1,472,126	—			1,472,126
	w/Cause	—						w/Cause	—
Warner	w/o Cause or w/ Good Reason	2,023,775	581,509	—	25,226	35,000	2,665,510	w/o Cause or w/ Good Reason	2,233,676	1,870,300	—	25,716	38,700	4,168,392
	Term. after Change-in-Control	3,087,500	3,775,929	—	42,043	—	6,905,472	Term. after Change-in-Control	3,412,500	4,413,838	—	42,860	—	7,869,198
	Retirement or Voluntary Term.	—						Retirement or Voluntary Term.	—
	Death	—	3,083,533	—			3,083,533	Death	—	2,076,309	—			2,076,309
	Disability	—	3,083,533	—			3,083,533	Disability	—	2,076,309	—			2,076,309
	w/Cause	—						w/Cause	—

Accrued Benefits.

In each termination scenario, each NEO would be entitled ~~to the following accrued benefits:~~to: any accrued but unpaid base salary to the date of termination; any accrued but unpaid expenses; any unused vacation pay; any unpaid bonuses for a prior period to which the NEO is entitled per the incentive compensation program; and any other benefits to which the NEO is entitled.

~~Severance~~.



o 53 \|	~~Involuntary Termination Without Cause or Voluntary Termination with Good Reason~~. Pursuant to the Executive Severance and Change-in-Control Plan, Mr. Goff will receive an amount equal to two times the sum of his base salary and the greater of his highest annual bonus earned under the applicable annual incentive compensation plan during the preceding three years or $450,000. For the other NEOs, their

~~Tesoro Corporation~~ ~~2017 Proxy Statement 44~~

Severance

Involuntary Termination Without Cause or Voluntary Termination with Good Reason

Pursuant to the Severance Plan, Mr. Goff would receive an amount equal to two times the sum of his base salary and the greater of his highest annual bonus earned under the applicable annual incentive compensation plan during the preceding three years or $450,000. The severance amount for each other NEO is based on a one-and-three-fourths multiple of ~~their~~his or her base salary and the average bonuses paid during the preceding three years, as ~~applicable (for each of Messrs. Sterin and Casey, and Mmes. Rucker and Warner – one and three-fourths times).~~applicable. Severance ~~will~~would be paid in a lump sum following the end of the six months after termination.

~~Involuntary Termination Following a Change-in-Control~~. Pursuant to the Executive Severance and Change-in-Control Plan, each NEO will receive an amount equal to a multiple of base salary and target annual bonus (Mr. Goff – three times; Messrs. Sterin and Casey, and Mmes. Rucker and Warner – two and one-half times). Severance amount will be paid in a lump sum six months after termination.

Involuntary Termination Following a Change-in-Control

Pursuant to the Severance Plan, each NEO would receive an amount equal to a multiple of base salary and target annual bonus (Mr. Goff – three times; Messrs. Sterin and Casey, and Mmes. Rucker and Warner – two and one-half times). The severance amount would be paid in a lump sum six months after termination.

Retirement or Voluntary Termination

Pursuant to the terms of Andeavor’s annual incentive program, upon retirement for any reason on or after July 1 of the applicable year, Mr. Goff would receive a pro-rated bonus for the year of termination, as he is retirement eligible. The other NEOs would not receive a pro-rated bonus as they are not retirement eligible.

Death

Pursuant to the Severance Plan, Mr. Goff would receive one additional year of base salary.

Disability

Pursuant to the Severance Plan, Mr. Goff would receive additional base salary for one year, offset by any payments that he would receive under our long-term disability plan for the period specified.


o	~~Retirement or Voluntary Termination~~. Pursuant to the terms of Tesoro’s annual incentive program, upon retirement for any reason on or after July 1 of the applicable year, Mr. Goff will receive a pro-rated bonus for the year of termination since he is retirement eligible. The other NEOs will not receive a pro-rated bonus since they are not retirement eligible.


o	~~Death~~. ~~Pursuant to the Executive Severance and Change-in-Control Plan, Mr. Goff will receive one additional year of base salary.~~


o	~~Disability~~. Pursuant to the Executive Security and Change-in-Control Plan, Mr. Goff will receive additional base salary for one year, offset by any payments that he would receive under our long-term disability plan for the period specified.

Accelerated Equity Vesting

Involuntary Termination Without Cause or Voluntary Termination with Good Reason

As Mr. Goff is retirement eligible, he would receive a pro-rated payout of his performance shares along with accrued cash dividend equivalents, his market stock units and his Andeavor Logistics performance phantom units along with accumulated distribution equivalent rights based on actual performance at the end of the performance period.

Messrs. Sterin and Casey, and Mmes. Rucker and Warner would receive (i) a pro-rated payout of their performance share awards granted in 2016 along with accrued cash dividend equivalents and (ii) market stock units granted in 2016 and 2015, in each case based on actual performance at the end of the performance period.

Messrs. Sterin and Casey and Ms. Rucker would receive a pro-rated payout of their Andeavor Logistics performance phantom units granted in 2016 along with accumulated distribution equivalent rights based on actual performance at the end of the performance period.

.Involuntary Termination Following a Change-in-Control

Each NEO would be 100% vested in all equity awards.

Performance share awards would be paid out at the greater of the target amount or the actual performance through a date determined by the Compensation Committee (or in the absence of the Compensation Committee, the Board of Directors) prior to the change-in-control along with the accrued cash dividend equivalents.



o		~~Involuntary Termination Without Cause or Voluntary Termination with Good Reason~~2018 Proxy Statement \| . 54



▪	As Mr. Goff is retirement eligible, he will receive a pro-rated payout of his performance shares along with accrued cash dividend equivalents, his market stock units and his TLLP performance phantom units along with accumulated distribution equivalent rights based on actual performance at the end of the performance period.


▪	Messrs. Sterin and Casey, and Mmes. Rucker and Warner will receive (i) a pro-rated payout of their performance share awards along with accrued cash dividend equivalents and (ii) (other than Ms. Rucker) market stock units granted in 2015 and 2014, in each case based on actual performance at the end of the performance period.


▪	Messrs. Sterin and Casey and Ms. Rucker will receive a pro-rated payout of their TLLP performance phantom units along with accumulated distribution equivalent rights based on actual performance at the end of the performance period.


▪	~~Ms. Warner, the only NEO with unvested restricted stock, will forfeit any unvested restricted stock.~~


o	~~Involuntary Termination Following a Change-in-Control~~.


▪	~~Each NEO will be 100% vested in all equity awards.~~


▪	For the performance share awards, the NEOs will be paid out at the greater of the target amount or the actual performance through a date determined by the Compensation Committee of the Board of Directors (or in the absence of the Compensation Committee, the Board itself) prior to the change-in-control along with the accrued cash dividend equivalents.


▪	For the market stock units granted in 2015 and 2014, the NEOs will earn the number of shares based on actual performance at the time of the change-in-control. For the market stock units granted in 2016, the NEOs will earn the number of shares based on the greater of target or actual performance.

▪

For the TLLP performance phantom units granted in 2015, Messrs. Goff, Sterin and Casey will vest in their TLLP performance phantom units at target and will be paid the accumulated distribution equivalent rights accumulated on those units at the time of the change-in-control. Beginning with the 2016 awards, Messrs. Goff, Sterin and Casey and Ms. Rucker will vest in their performance phantom units at the greater of actual performance or target and will be paid the accumulated distribution equivalent rights accumulated on those units.


▪	~~The value of accelerated unvested restricted stock granted to Ms. Warner represents the fair market value of such awards as of December 31, 2016 along with cash accrued dividends.~~

~~Tesoro Corporation~~ ~~2017 Proxy Statement 45~~

For the market stock units granted in 2015, the NEOs would earn the number of shares based on actual performance at the time of the change-in-control. For the market stock units granted in 2016 and 2017, the NEOs would earn the number of shares based on the greater of target or actual performance.

Andeavor Logistics performance phantom units would vest at the greater of actual performance or target and the accumulated distribution equivalent rights accumulated on those units would be paid.

Retirement or Voluntary Termination.

As Mr. Goff is retirement eligible, he would receive a pro-rated payout of his performance share awards along with accrued cash dividends and his market stock units based on actual performance at the end of the performance period. In addition, Mr. Goff would receive a pro-rated payout of his Andeavor Logistics performance phantom units along with accumulated distribution equivalent rights on those units based on actual performance at the end of the performance period. All the other NEOs would forfeit all their unvested performance shares and market stock units.

Death and Disability

As Mr. Goff is retirement eligible, his beneficiaries or estate would receive a pro-rated payout of his performance shares along with accrued cash dividend equivalents and his market stock units based on actual performance at the end of the performance period. In addition, Mr. Goff’s beneficiaries or estate would receive a pro-rated payout of his Andeavor Logistics performance phantom units along with accumulated distribution equivalent rights on those units based on actual performance at the end of the performance period.

The beneficiaries or the estate for each of Messrs. Sterin and Casey, and Mmes. Rucker and Warner would receive a pro-rated payout of their performance shares along with accrued cash dividend equivalents and their market stock units based on target performance. In addition, the beneficiaries or the estate for each of Messrs. Sterin and Casey, and Mmes. Rucker and Warner would receive a pro-rated payout of their Andeavor Logistics performance phantom units along with accumulated distribution equivalent rights on those units based on target performance.

Termination with Cause

Each NEO would forfeit all unvested equity awards upon termination.

▪

As Mr. Goff is retirement eligible, he will receive a pro-rated payout of his performance share awards along with accrued cash dividends and his market stock units based on actual performance at the end of the performance period. In addition, Mr. Goff will receive a pro-rated payout of his TLLP performance phantom units along with accumulated distribution equivalent rights on those units based on actual performance at the end of the performance period. All the other NEOs will forfeit all their unvested performance shares and market stock units.


▪	~~Ms. Warner, the only NEO with unvested restricted stock, will forfeit any unvested restricted stock.~~


o	~~Death and Disability~~.


▪	As Mr. Goff is retirement eligible, his beneficiaries or estate would receive a pro-rated payout of his performance shares along with accrued cash dividend equivalents and his market stock units based on actual performance at the end of the performance period.


▪	The beneficiaries or the estate for Messrs. Sterin and Casey, and Mmes. Rucker and Warner would receive a pro-rated payout of their performance shares along with accrued cash dividend equivalents and their market stock units based on target performance as of December 31, 2016.

▪

The TLLP performance phantom units granted in 2015 to Messrs. Goff, Sterin and Casey would vest at target and their beneficiaries or estates would be paid the accumulated distribution equivalent rights on those units as of December 31, 2016. As Mr. Goff is retirement eligible, he will receive a pro-rated award of his performance phantom units, granted in 2016, based on the actual performance at the end of the performance period along with the accumulated distribution equivalent rights. Each of the NEOS (other than Mr. Goff) will receive a pro-rated award of their performance phantom units, granted in 2016, based on the target performance with the accumulated distribution equivalent rights.


▪	~~The value of accelerated unvested restricted stock granted to Ms. Warner represents the fair market value of such awards as of December 31, 2016 along with cash accrued dividends.~~


o	~~Termination with Cause~~.~~Each NEO will forfeit all unvested equity awards upon termination due to a termination with Cause.~~

Health Coverage.

For each NEO, the amount represents the estimated health and welfare benefits provided to the executive.

Involuntary Termination Without Cause or Voluntary Termination with Good Reason

Pursuant to the Executive Severance and Change-in-Control Plan, Mr. Goff would receive health benefits to the extent that group health coverage was being provided by us and would continue until the earliest of the following to occur: two and one-half years after the date of his termination, his death, or he becomes covered by a comparable benefit by a subsequent employer. Messrs. Sterin and Casey, and Mmes. Rucker and Warner would receive medical benefits for a period of eighteen months from their date of termination.

Involuntary Termination Following a Change-in-Control

Pursuant to the Executive Severance and Change-in-Control Plan, Messrs. Goff, Sterin and Casey, and Mmes. Rucker and Warner would each receive thirty additional months coverage under our group medical plan.

Outplacement Services

Involuntary Termination Without Cause or Voluntary Termination with Good Reason

Pursuant to the Executive Severance and Change-in-Control Plan, each NEO would receive outplacement services for up to twelve months commencing after the date of his or her termination.



o 55 \|	I~~nvoluntary Termination Without Cause or Voluntary Termination with Good Reason~~.Pursuant to the Executive Severance and Change-in-Control Plan, Mr. Goff will receive health benefits to the extent that group health coverage is being provided by us and will continue until the earliest of the following to occur: two and one-half years after the date of the executive’s termination, the executive’s death, or if the executive becomes covered by a comparable benefit by a subsequent employer. Messrs. Sterin and Casey, and Mmes. Rucker and Warner will receive medical benefits for a period of eighteen months from their date of termination.


o	~~Involuntary Termination Following a Change-in-Control~~.~~Pursuant to the Executive Severance and Change-in-Control Plan, Messrs. Goff, Sterin and Casey, and Mmes. Rucker and Warner will each receive thirty additional months of our group medical plan.~~

~~Outplacement Services~~.


o	~~Involuntary Termination Without Cause or Voluntary Termination with Good Reason~~,Pursuant to the Executive Severance and Change-in-Control Plan, Messrs. Goff, Sterin and Casey, and Mmes. Rucker and Warner will receive outplacement services for up to twelve months commencing after the date of the executive’s termination.

~~Tesoro Corporation~~ ~~2017 Proxy Statement 46~~

Proposal No. 2

Advisory Vote to Approve Executive Compensation

Pursuant to Section 14A of the Exchange Act, we are asking stockholders to approve, on an advisory basis, the compensation of our named executive officers disclosed in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables, notes and narrative in this Proxy Statement.

As described under “Compensation Discussion and Analysis,” the Compensation Committee, comprised entirely of independent directors, has established executive compensation programs that reward both Company and individual performance. Our Compensation Committee consistently exercises great care and discipline in determining executive compensation and has structured our executive compensation programs to achieve the following key objectives:

Reward leaders for delivery of outstanding business results and driving a performance-oriented culture;

Promote and sustain exceptional performance over time to generate long-term growth in stockholder value; and

Lead in accordance with our guiding principles, which are core values, exceptional people, shared purpose, powerful collaboration and superior execution.

Please read the Compensation Discussion and Analysis beginning on page 27 of this Proxy Statement, which describes in more detail how our executive compensation programs operate and are designed to achieve our compensation objectives, as well as the Summary Compensation Table and other related compensation tables and narrative beginning on page 45, which provide detailed information on the compensation of our named executive officers. The Compensation Committee and the Board of Directors believe that our compensation programs are effective in achieving our goals and that the compensation of our named executive officers will contribute to our long-term success.

Although this advisory Say-on-Pay Vote is non-binding, the Board and the Compensation Committee will review and consider the voting results when making future decisions regarding our executive compensation programs.

Our Board of Directors recommends that you vote FOR the approval of the compensation paid to our named executive officers in 2017.



		2018 Proxy Statement \| 56

Audit-Related Matters

Audit Committee Report

Structure and Responsibilities of the Audit Committee

The Board of Directors has the ultimate authority for effective corporate governance, including oversight of our management. The Audit Committee assists the Board in fulfilling its responsibilities by overseeing the accounting and financial reporting processes, the audits of our consolidated financial statements and internal control over financial reporting, the qualifications and performance of our independent registered public accounting firm, and the performance of our internal audit function.

The Audit Committee currently consists of five directors, each of whom our Board has determined to meet the NYSE’s requirements of independence and financial literacy. The Board has also determined that each of Messrs. Chase, ~~Goldman~~Foster and Schumann and Ms. McCarthy qualifies as an “audit committee financial expert,” as defined by the SEC.

The Audit Committee operates under a written charter adopted by the Board of Directors, which is available on our website at ~~www.tsocorp.com~~www.andeavor.com under the heading “Investors” and the subheading “Corporate Governance.” The charter sets forth the Audit Committee’s responsibilities, which are summarized under “Corporate Governance and Board Matters - Board Leadership and Committees” beginning on page 9. The Committee reviews its charter annually and, when appropriate, makes recommendations for changes to the Board.

The Audit Committee met 1112 times during ~~2016~~2017 and met in executive session at 10 of such meetings. Specifically, the Audit Committee:

On a quarterly basis, reviewed and discussed with management and the independent registered public accounting firm our earnings releases and quarterly and annual reports on Form 10-Q and Form 10-K prior to filing with the SEC;

Reviewed and discussed with management, the internal auditor, and the independent registered public accounting firm management’s assessment of, and the independent registered public accounting firm’s opinion about, the effectiveness of our internal control over financial reporting;

Reviewed and discussed with management, the internal auditor, and the independent registered public accounting firm, as appropriate, the audit scopes and plans of both the internal audit function and independent registered public accounting firm;

Inquired about significant financial risk exposures, assessed the steps management is taking to control these risks, ~~and reviewed our policies for risk assessment and risk management,~~ including mitigations and controls designed to limit our exposure to commercial and commodities risks;

Met in periodic executive sessions with each of management, the internal auditor, and the independent registered public accounting firm, to discuss the results of their examinations, their evaluations of internal controls, and the overall quality of our financial reporting;

Met with the chief financial officer and controller to discuss the processes they have undertaken to evaluate the accuracy and fair presentation of our consolidated financial statements and the effectiveness of our systems of disclosure controls and procedures and internal control over financial reporting;

Met with the chief financial officer, chief information officer and controller regarding our technology systems and cyber-security detection and defense measures;

Reviewed and assessed the overall adequacy and effectiveness of our legal, regulatory and ethical compliance programs;

Reviewed our tax strategies and the implications of tax law changes;

Considered ~~and recommended to the Board~~ specific financing, dividend and stock repurchase ~~actions;~~actions recommended by management prior to their presentation to the Board for approval;



57 \|

Received reports about the receipt, retention, and treatment of financial reporting and other compliance concerns;

Reviewed with the ~~general counsel~~General Counsel legal and regulatory matters that may have a material impact on the consolidated financial statements or internal control over financial reporting; and

Reviewed the performance of our chief financial officer, controller and head of internal audit.

~~Tesoro Corporation~~ ~~2017 Proxy Statement 47~~

Oversight of Independent Registered Public Accounting Firm

Our management is primarily responsible for our internal control and financial reporting process. Our independent registered public accounting firm, Ernst & Young LLP (“EY”), is responsible for performing an independent audit of our consolidated financial statements and issuing opinions on the conformity of those audited financial statements with United States generally accepted accounting principles and the effectiveness of our internal control over financial reporting. The Audit Committee monitors our financial reporting process and reports to the Board on its findings.

The Audit Committee is responsible for the appointment, compensation and oversight of our independent registered public accounting firm. EY has served as our independent registered public accounting firm since 2008 and reports directly to the Audit Committee. Representatives of EY regularly meet with the Audit Committee without management present. Matters discussed between EY and the Audit Committee include significant accounting policies applied in our financial statements, alternative accounting treatments, and the overall quality of our financial reporting. The Audit Committee has the authority and receives appropriate funding, to obtain advice and assistance from outside legal, accounting or other advisers as it deems appropriate.

The Audit Committee annually reviews the independence, performance, quality control procedures and fees of EY prior to or in connection with the Audit Committee’s determination of whether to retain EY or engage another firm as our independent auditor. The Audit Committee also reviews the scope of and overall plans for the annual audit and approves the terms of EY’s engagement letter. Among other things, our annual evaluation of EY addresses EY’s independence; EY’s historical and recent performance as our independent auditor; the quality, effectiveness and candor of EY’s discussions with the Company and the Audit Committee; the quality, timeliness and clarity of materials presented by EY to the Audit Committee; the accessibility, responsiveness, technical competence, objectivity, efficiency and professionalism of the lead audit partner and other members of the audit team assigned to our account; the familiarity of EY with our operations and industry; external data relating to audit quality and performance, including PCAOB reports on EY and its peer firms; EY’s tenure as our independent auditor; the impact to the Company of changing auditors; and the appropriateness of EY’s fees.

Oversight of Internal Audit and Risk Management

The Audit Committee reviews the plan, scope and results of our internal audit, and evaluates the performance of our chief financial officer, head of internal audit and controller. The Audit Committee meets with our head of internal audit both with and without management to evaluate internal audit findings and performance. The Audit Committee also reviews ~~our~~management’s assessment and management of risk, ~~management policies,~~including major financial risks, as well as our major financial risk exposures and our plans and progress to control these risks.

~~2016~~2017 Actions of the Audit Committee

During ~~2016,~~2017, the Audit Committee fulfilled its duties and responsibilities as outlined in its charter. Among other things, the Audit Committee:

Reviewed and discussed with management and EY our quarterly unaudited consolidated financial statements and annual audited financial statements for the year ended December 31, ~~2016;~~2017;

Discussed with EY the matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board (“PCAOB”);



		2018 Proxy Statement \| 58

Discussed with EY matters related to its independence, and received the written disclosures and the letter from EY required by the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning the firm’s independence;

Discussed with management the processes undertaken to evaluate the accuracy and fair presentation of our consolidated financial statements and the effectiveness of our systems of disclosure controls and procedures and internal control over financial reporting; and

Reviewed and discussed with management, the internal auditor, and EY management’s assessment of the effectiveness of our internal control over financial reporting and EY’s opinion about the effectiveness of our internal control over financial reporting.

Based on the reports and discussions described above, the Audit Committee recommended to the Board, and the Board has approved, that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, for filing with the SEC.

~~Tesoro Corporation~~ ~~2017 Proxy Statement 48~~

The undersigned members of the Audit Committee have submitted this Report to the Board of Directors as of March ~~6, 2017.~~2, 2018.

Mary Pat McCarthy, Chair

Rodney F. Chase

~~Robert W. Goldman~~Paul L. Foster

William H. Schumann, III

Patrick Y. Yang



59 \|

Auditor Fees and Services

EY has served as our independent auditor since 2008. Pursuant to the five-year partner rotation requirement mandated by the Sarbanes-Oxley Act of 2002, EY’s lead engagement partner rotated after completion of the audit for the year ended December 31, 2014, and will rotate again no later than after completion of the audit for the year ended December 31, 2019. The process for selecting the new lead audit partner involved an assessment of many factors, including the candidates’ industry experience, broad-based business judgment, robust dialogue with the Audit Committee, ability to leverage the resources of EY, commitment to continuous improvement, objectivity and independence. The selection process also involved discussions with management regarding each of the candidates and a meeting between the Audit Committee and the final candidate for the role before his appointment. The following table presents fees billed for the years ended December 31, ~~2016~~2017 and ~~2015,~~2016, for professional services performed by EY. Note that this does not include fees paid directly by ~~TLLP~~Andeavor Logistics for professional services performed by EY.


	2016		2015		2017		2016
Audit Fees (a)		$4,100,239		$3,985,154		$6,846,610		$4,100,239
Audit-Related Fees (b)	—		5,000		—		—
Tax Fees (c)	27,000		—		—		27,000
All Other Fees (d)	3,821		3,990			$2,160	3,821
Total		$4,131,060		$3,994,144		$6,848,770		$4,131,060

(a)

Audit Fees represent the aggregate fees for professional services rendered by EY in connection with its audits of ~~Tesoro Corporation’s~~Andeavor’s consolidated financial statements, including the audits of internal control over financial reporting, reviews of the condensed consolidated financial statements included in our Quarterly Reports on Form 10-Q, statutory audits, regulatory filings, registration statements, comfort letters and accounting consultations. The increase in fees over ~~2015~~2016 was primarily related to additional services performed in connection with our ~~completion~~acquisitions of ~~more dropdown transactions with TLLP in 2016 than in 2015.~~Western Refining, Inc. and Western Refining Logistics, LP.


(b)	Audit-Related Fees represent the aggregate fees for professional services rendered by EY in connection with its audits and related services performed in connection with business dispositions and special reports.


(c)	Tax Fees represent the aggregate fees for tax services rendered by EY for matters such as consultation on income, sales, use and excise tax matters.


(d)	All Other Fees represent the aggregate fees billed by EY for information technology advisory services and a subscription to its web-based accounting and auditing research tool.

In accordance with the Audit Committee charter, all audit and permitted non-audit services performed by EY in ~~2016~~2017 and ~~2015~~2016 were pre-approved by the Audit Committee. The Audit Committee’s pre-approval procedures provide for pre-approval of specifically described audit, audit-related and tax services by the Audit Committee on an annual basis as long as the Audit Committee is informed of each service and the services do not exceed certain pre-established thresholds. The procedures also authorize the Audit Committee to delegate to the Chairman of the Audit Committee pre-approval authorization with respect to audit and permitted non-audit services; any such services that are approved by the Audit Committee Chairman must be ~~ratified~~presented at the next regularly scheduled meeting of the Audit Committee. The Audit Committee has determined that the relatively small amount of non-audit services rendered by EY (compared to both the overall amount of services rendered by EY to the Company and by EY to all of its customers) is compatible with maintaining EY’s independence.



		2018 Proxy Statement \| 60

~~Tesoro Corporation~~ ~~2017 Proxy Statement 49~~

Proposal No. 3

Ratification of Appointment of Accounting Firm

The Audit Committee has selected Ernst & Young LLP to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2018. See “Audit-Related Matters – Audit Committee Report” for additional detail regarding the process for this selection. As a matter of good corporate governance, the Board has directed that this appointment be submitted to our stockholders for ratification at the Annual Meeting. If the stockholders do not ratify the selection, the Audit Committee will reconsider whether to retain Ernst & Young LLP. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of us and our stockholders. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions.

Our Board of Directors recommends that you vote FOR the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018.



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Transactions with Related Parties

Except for transactions relating to Andeavor Logistics LP and its subsidiaries (described below under “Relationship with Andeavor Logistics”), we did not have any transactions with any related party requiring disclosure during 2017. Our Board has a written related-party transaction policy and procedures that apply to any “interested transaction,” which is any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships in which we are a participant, the aggregate amount involved since the beginning of the last completed fiscal year is or is expected to exceed $100,000, and in which a related party has a direct or indirect material interest. For purposes of the policy, a “related party” includes (1) any person who is or was (since the beginning of the last completed fiscal year), an executive officer, director or nominee for director, (2) any holder of more than 5% of our common stock, and (3) any immediate family member of any of the foregoing.

Our Governance Committee reviews the material facts of all “interested transactions,” and may approve or ratify such transactions, as appropriate. In determining whether to approve or ratify any such transaction, the Governance Committee may consider whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances, whether there are valid business reasons to enter into the transaction, whether the transaction would impair the independence of a director or present an improper conflict of interest for any director or executive officer, and any other factors it deems relevant.

The Chair of our Governance Committee has the authority to pre-approve or ratify any related-party transaction in which the aggregate amount involved is expected to be less than $1 million. Any such action by the Chair of our Governance Committee must be reported to our Governance Committee at its next regularly scheduled meeting.

The Governance Committee has reviewed and pre-approved certain categories of transactions under the terms of the policy. Information on transactions subject to pre-approval is maintained by the office of the General Counsel and provided to the Governance Committee for its review at least annually. The types of transactions deemed pre-approved include:

employment of executive officers if the compensation is reported in the annual proxy statement or was approved by the Compensation Committee;

director compensation;

transactions with other companies at which a related party’s only relationship is as an employee (other than an executive officer) if the aggregate amount involved does not exceed the greater of $1 million or 2% of that company’s total annual revenues;

charitable contributions to an organization, foundation or university at which a related party’s only relationship is as an employee (other than an executive officer) if the aggregate amount involved does not exceed the lesser of $1 million or 2% of that organization’s total annual receipts;

certain transactions with Tesoro Logistics GP, LLC (the “general partner”), Andeavor Logistics LP (“Andeavor Logistics”) and their subsidiaries (collectively, the “Andeavor Logistics entities”), as described below;

transactions where all stockholders receive proportional benefits;

transactions involving another public company with a common institutional shareholder;

transactions involving competitive bids;

regulated transactions; and

certain banking-related services.

Pre-approved transactions with the Andeavor Logistics entities include:

cash distributions by Andeavor Logistics to its unitholders;



		2018 Proxy Statement \| 62



~~Relationship with TLLP~~

sales of logistics assets by us to the Andeavor Logistics entities if approved by the Board or in certain situations the CEO;

pipeline transportation, trucking, terminal distribution, storage and similar services provided by the Andeavor Logistics entities pursuant to long-term, fee-based commercial agreements with us;

ongoing performance of the Fourth Amended and Restated Omnibus Agreement, as amended;

ongoing performance of the First Amended and Restated Secondment and Logistics Services Agreement or similar agreements under which we provide the Andeavor Logistics entities with certain operational services; and

any other transaction between us and the Andeavor Logistics entities for which the annual aggregate amount involved does not exceed $25 million.

Relationship with Andeavor Logistics

We own (directly and through our affiliates) approximately ~~34%~~59% of the interests in ~~Tesoro~~Andeavor Logistics LP (“~~TLLP”~~Andeavor Logistics”), including the 2% general partner interest held by our wholly owned indirect subsidiary Tesoro Logistics GP, LLC (the “general partner” ~~or “TLGP”~~). The general partner manages ~~TLLP’s~~Andeavor Logistics’ operations and activities through its officers and directors. Messrs. Goff and Sterin and Ms. Rucker serve as executive officers of both ~~Tesoro Corporation~~Andeavor and ~~TLGP.~~the general partner. In addition, Messrs. Goff, ~~Goldman,~~ Sterin, Stevens and Wiley serve as directors of ~~TLGP.~~the general partner.

Merger, Purchase and Sale Transactions

Effective October 30, 2017, Andeavor Logistics acquired Western Refining Logistics, LP (“WNRL”) at a purchase price of approximately $1.7 billion (the “WNRL Merger”). WNRL public unitholders received 0.5233 units of Andeavor Logistics for each WNRL unit held while we effectively received 0.4639 units as certain units held by our subsidiaries were canceled in the transaction. The combined effective exchange ratio for the WNRL Merger was 0.4921 units of Andeavor Logistics for every unit of WNRL.

Simultaneously with the closing of the WNRL Merger: (i) the IDRs held by the general partner were canceled, (ii) the general partner interests in Andeavor Logistics held by the general partner were converted into a non-economic general partner interest in Andeavor Logistics, and (iii) we and our affiliates, including the general partner, agreed to increase and extend existing waivers on distributions to us and our affiliates by $60 million to an aggregate of $160 million between 2017 and 2019. As consideration for this transaction, Andeavor Logistics issued the general partner, our wholly owned subsidiary, 78.0 million common units.

On November 8, 2017, Andeavor Logistics acquired logistics assets located in Anacortes, Washington from our subsidiary for total consideration of $445 million.

Distributions

~~TLLP~~Andeavor Logistics makes cash distributions to its unitholders, including to us as the direct and indirect holder of an aggregate ~~34,055,042~~127,889,386 common units, as well as a 2% general partner interest. If distributions exceed the minimum quarterly distribution and other higher target distribution levels, the general partner is entitled to increasing percentages of the distributions, up to 50% of the distributions above the highest target distribution level.units. During ~~2016, TLLP~~2017, Andeavor Logistics distributed approximately ~~$108.3~~$208.6 million to us with respect to common units and approximately ~~$137.1~~$127.0 million with respect to the general partner interest (including incentive distribution rights). ~~Tesoro~~We waived ~~its~~our right to ~~$10~~$50 million of distributions related to incentive distribution rights paid in ~~2016.~~ 2017.

In connection with ~~TLLP's November 2016 acquisition of crude oil, natural gas~~the WNRL Merger, we and ~~produced water gathering systems and natural gas processing facilities, TLGP~~our affiliates, including the general partner, agreed to ~~ratably reduce~~increase and extend existing waivers on distributions to us and our affiliates by $60 million to an aggregate of $160 million between 2017 and 2019.

Prior to the WNRL Merger, WNRL made cash distributions to its ~~quarterly distributions~~unitholders, including to Western Refining, Inc. (“Western Refining”), as the direct and indirect holder of approximately 32,018,847 common units. On August 18, 2017, WNRL distributed to Western Refining, our subsidiary following our acquisition



63 \|

of it on June 1, 2017, approximately $15 million with respect to common units and $4 million with respect to incentive distribution ~~rights by $100 million for distributions during 2017 and 2018.~~rights.

~~Purchase and Sale Transactions~~

Effective July 1, 2016, we entered into an agreement to sell certain terminalling and storage assets located in Alaska to TLLP in two phases. We completed the first phase on July 1, 2016 for consideration of approximately $240 million in cash and $26 million in equity from TLLP. We completed the second phase on September 16, 2016 for consideration of approximately $160 million in cash and $18 million in equity from TLLP. In connection with this transaction, in July 2016, we reimbursed TLLP for $4.0 million interest incurred in connection with borrowings under TLLP's secured dropdown credit facility.

Effective November 21, 2016, we sold certain terminalling and storage assets located in Martinez, California to TLLP for consideration of $400 million, comprised of $360 million in cash and approximately $40 million in equity from TLLP.

In December 2016, we sold additional assets in Kenai, Alaska, including an asphalt loading facility, asphalt and propane loading racks and a related truck scale, to TLLP for consideration of $5 million in cash.

Omnibus Agreement

We are party to ana Fourth Amended and Restated Amended Omnibus Agreement ~~(the~~(as amended, the “Omnibus Agreement”) with ~~TLLP, TLGP,~~Andeavor Logistics, the general partner, and various of our subsidiaries that addresses, among other things, the following matters:

~~TLLP’s~~Andeavor Logistics’s obligation to pay us an annual corporate services fee, currently in the amount of ~~$11~~approximately $13 million, for the provision by us of certain centralized corporate services, as well as its obligation to reimburse us for all other direct or allocated costs and expenses incurred by us or our affiliates on ~~TLLP’s~~Andeavor Logistics’s behalf;

an agreement from us and our subsidiaries TRMC and Tesoro Alaska Company not to compete with ~~TLLP~~Andeavor Logistics under certain circumstances;

~~TLLP’s~~Andeavor Logistics’s right of first offer to acquire certain logistics assets from us, and our subsidiaries TRMC and Tesoro Alaska Company LLC;

the indemnification obligations of the parties for certain claims, losses and expenses attributable to certain environmental, title, tax and other liabilities relating to assets contributed by us and our subsidiaries to ~~TLLP;~~Andeavor Logistics; and

the granting of a license from us to ~~TLLP~~Andeavor Logistics with respect to use of the ~~Tesoro~~Andeavor name and trademark.

So long as we control ~~TLGP,~~the general partner, the Omnibus Agreement will remain in full force and effect unless mutually terminated by the parties. If we cease to control the general partner, either we or the general partner may terminate the Omnibus Agreement, provided that the indemnification obligations of the parties made under the agreement will remain in full force and effect in accordance with their terms.

We charged ~~TLLP~~Andeavor Logistics approximately ~~$174.7~~$203.6 million pursuant to this agreement in ~~2016.~~

~~Tesoro Corporation~~ ~~2017 Proxy Statement 50~~

2017. In addition, we reimburse ~~TLLP~~Andeavor Logistics for certain expenses, capital expenditures and deferred charges identified in the Omnibus Agreement related to assets included in acquisitions from us. During ~~2016, TLLP~~2017 Andeavor Logistics charged us ~~$16.9 million, $22.1 million and $5.9~~$63.2 million related to expenses, capital expenditures and deferred tank reimbursement charges ~~respectively,~~ pursuant to the Omnibus Agreement.

Secondment and Logistics Services Agreement

Our subsidiaries are party to a First Amended and Restated Secondment Agreement among ~~TLGP,~~the general partner, our subsidiaries, Tesoro Alaska Company LLC, TRMC and Tesoro Companies, Inc. (Tesoro Alaska Company LLC, TRMC and Tesoro Companies, Inc. collectively the ~~“Tesoro~~“Andeavor Group”) under which the ~~Tesoro~~Andeavor Group provides ~~TLLP~~Andeavor Logistics with certain operational services, such as communications, electricity, software services, security, fire and safety, maintenance and certain environmental services. ~~TLLP~~Andeavor Logistics and its subsidiaries pay the ~~Tesoro~~Andeavor Group an annual service fee for services performed by certain of the ~~Tesoro~~Andeavor Group’s field-level employees. Additionally, employees of ~~TLGP~~the general partner may be seconded to ~~Tesoro~~Andeavor to provide operational and maintenance services related to certain assets, for which ~~Tesoro~~Andeavor reimburses ~~TLGP~~the general partner for the associated costs. We charged ~~TLLP~~Andeavor Logistics approximately ~~$17.8~~$28.7 million pursuant to this agreement during ~~2016,~~2017, and ~~TLLP~~Andeavor Logistics charged us approximately ~~$4.6~~$7.7 million.



		2018 Proxy Statement \| 64

Western Refining Omnibus and Services Agreements

We acquired Western Refining effective June 1, 2017; thus, the following reflects transactions between Western Refining and its subsidiaries, and WNRL and its subsidiaries, from June 1, 2017 through December 31, 2017.

Western Refining Omnibus Agreement – WNRL and Western Refining, and certain of their subsidiaries, were party to an Omnibus Agreement under which Western Refining provided, and WNRL reimbursed Western Refining for, certain general and administrative services, as well as certain other direct or allocated costs and expenses incurred by Western Refining on WNRL’s behalf. Western Refining also agreed to indemnify WNRL for certain environmental and other liabilities, and WNRL agreed to indemnify Western Refining for events and conditions associated with WNRL’s operations and for environmental liabilities related to WNRL’s assets. This agreement was terminated effective November 8, 2017, upon incorporation of the legacy Western Refining entities into the Fourth Amended and Restated Omnibus Agreement between Andeavor and Andeavor Logistics. From June 1, 2017 through December 31, 2017, Western Refining charged WNRL approximately $6.3 million pursuant to this agreement.

Operational Services Agreement – WNRL and Western Refining, and certain of their subsidiaries, were party to an Operational Services Agreement under which WNRL reimbursed Western Refining for Western Refining’s provision of certain personnel to provide operational services to WNRL and under WNRL’s supervision in support of its pipelines and gathering assets and terminalling and storage facilities, including routine and emergency maintenance and repair services, routine operational activities, routine administrative services, construction and related services and such other services as WNRL and Western Refining may mutually agree upon from time to time. This agreement was terminated effective as of January 1, 2018, pursuant to a Service Order under the First Amended and Restated Secondment and Logistics Service Agreement between Andeavor and Andeavor Logistics. From June 1, 2017 through December 31, 2017, Western Refining charged WNRL approximately $41.3 million pursuant to this agreement.

Shared Services Agreement – On October 30, 2014, Western Refining and its subsidiary, Northern Tier Energy LP, entered into a Shared Services Agreement pursuant to which Western Refining and Northern Tier would provide certain services to each other in support of their operations. On May 4, 2015, Western Refining entered into a Joinder Agreement with WNRL and Northern Tier that joined WNRL as a party to the agreement. Under the Joinder Agreement, WNRL provides certain scheduling and other services in support of Northern Tier’s operations and Northern Tier reimburses WNRL for the costs associated with providing such services. From June 1, 2017 through December 31, 2017, Northern Tier reimbursed WNRL approximately $0.4 million pursuant to this agreement.

Commercial Agreements

We have entered into various long-term, fee-based commercial agreements with ~~TLLP~~Andeavor Logistics under which ~~TLLP~~Andeavor Logistics provides various pipeline transportation, trucking, terminal distribution and storage services to us, and we commit to provide ~~TLLP~~Andeavor Logistics with minimum monthly throughput volumes of crude oil and refined products. Except for our trucking transportation services agreements, the commercial agreements generally have ten year initial terms. We believe the terms and conditions under these agreements, as well as our other agreements with ~~TLLP~~Andeavor Logistics described below, are generally no less favorable to either party than those that could have been negotiated with unaffiliated parties with respect to similar services. Descriptions of the services ~~TLLP~~Andeavor Logistics provides us under these commercial agreements and the approximate costs owed to ~~TLLP~~Andeavor Logistics under these categories of agreements in ~~2016~~2017 are:

High Plains Pipeline Gathering and Trucking ($~~79.1 million, including $3.6 million of imbalance settlements paid to TLLP)~~86.0 million) – aA pipeline transportation services agreement for the gathering and transporting ~~and~~of crude oil on ~~TLLP’s~~Andeavor Logistics’ High Plains system,



65 \|

as well as a crude oil trucking transportation services agreement for trucking related services and storage at the Bakken Area Storage ~~Hub;~~Hub.

Belfield Crude Oil Gathering Agreement ($17.1 million) – An agreement under which Andeavor Logistics performs crude oil gathering services for us in the Belfield Area related to the North Dakota and Processing Assets.

Terminalling Use, Services and Throughput ($~~450.7~~565.6 million) – ~~agreements~~Agreements for berth access, terminal use and services, storage and throughput at ~~TLLP’s~~Andeavor Logistics’ marine terminals, storage and marketing terminals and similar facilities, ~~including~~the Master Terminalling Services Agreement, the Martinez Terminalling Services Agreement, the ~~Nikiski~~Alaska Terminalling Services Agreement, the Southern California Terminalling Services Agreement and the Anacortes Terminalling Services Agreement, the Anacortes Storage ~~Service~~Services Agreement, the Carson Storage Services Agreement, the Kenai Storage Services Agreement, the Martinez Storage Services Agreement, the Anacortes Rail Facility track use and throughput agreement, the ~~Carson Coke Lease~~Long Beach Berth Access Use and ~~Handling agreements,~~Throughput Agreement, and numerous other ~~agreements;~~agreements.

Pipeline Transportation Services ($~~79.6~~94.1 million) – ~~pipeline~~Pipeline transportation services agreements for transporting crude oil, refined products and other commodities on ~~TLLP’s~~Andeavor Logistics’ short-haul pipeline systems in Salt Lake City and Los Angeles, as well as ~~TLLP’s~~Andeavor Logistics’ pipeline system in the Los Angeles area and a regulated common carrier refined products pipeline system connecting our Kenai refinery to ~~Anchorage;~~Anchorage.

Keep-Whole Commodity Agreement ($~~97.3~~88.9 million) – ~~TLLP~~Andeavor Logistics processes gas for certain producers under “keep-whole” processing agreements. Under a keep-whole agreement, a producer transfers title to the natural gas liquids (“NGLs”) produced during gas processing, and the processor, in exchange, delivers to the producer natural gas with a BTU content equivalent to the NGLs removed. The operating margin for these contracts is determined by the spread between NGL sales prices and the price paid to purchase the replacement natural gas (“Shrink Gas”). ~~TLLP~~Andeavor Logistics entered into a five-year agreement with us, which transfers the commodity risk exposure associated with these “keep-whole” processing agreements from ~~TLLP~~Andeavor Logistics to ~~Tesoro (the “Keep-Whole Commodity Agreement”).~~us. Under the Keep-Whole Commodity Agreement, we pay ~~TLLP~~Andeavor Logistics a processing fee for NGLs related to “keep-whole” agreements and deliver Shrink Gas to the producers on ~~TLLP’s~~Andeavor Logistics’ behalf. ~~TLLP~~Andeavor Logistics pays us a marketing fee in exchange for assuming the commodity risk. Terms and pricing under this agreement are revised each year. The Keep-Whole Commodity Agreement minimizes the impact on ~~TLLP~~Andeavor Logistics of commodity price movement during the annual period subsequent to renegotiation of terms and pricing each year. However, the annual fee ~~TLLP~~Andeavor Logistics charges us could be impacted as a result of any changes in the spread between the natural gas liquids sales prices and the price of natural gas.

~~Tesoro Corporation~~ ~~2017 Proxy Statement 51~~

~~TLLP’s~~Pipeline Transportation Tariffs – Andeavor Logistics’ Northwest Products System is a FERC-regulated system and we do not have any contractual agreements with ~~TLLP~~Andeavor Logistics related to the use of the system. However, ~~TLLP~~Andeavor Logistics charged us approximately ~~$10.7~~$11.6 million in pipeline transportation tariffs with respect to the use of such system in ~~2016.~~

~~Other Agreements~~

2017.

~~Anacortes Truck Rack Construction~~Western Refining Commercial Agreements

Following are descriptions of the commercial agreements between Western Refining and WNRL. We acquired Western Refining effective June 1, 2017; thus, amounts shown reflect the approximate revenue recognized by WNRL and its subsidiaries from June 1, 2017 through December 31, 2017.

WNRL Pipeline and Gathering Services Agreement ~~- TLLP constructed a new gasoline~~($57.0 million) – An agreement to transport crude oil on Andeavor Logistics’ Permian Basin system to our El Paso refinery and ~~diesel~~on Andeavor Logistics’ Four Corners system to our Gallup refinery. Andeavor Logistics charges us fees for pipeline movements, truck ~~rack~~offloading and product storage.

WNRL Terminalling, Transportation and Storage Services Agreement (Southwest) ($52.0 million) – A terminalling, transportation and storage services agreement under which Andeavor Logistics, among



		2018 Proxy Statement \| 66

other things, distributes products produced at our refineries, connects our refineries to third-party pipelines and systems and provides fee-based asphalt terminalling and processing services. At Andeavor Logistics’ network of crude oil and refined products terminals and related assets and storage facilities, Andeavor Logistics charges us fees for crude oil, blendstock and refined product storage, shipments into and out of storage and additive and blending services. At Andeavor Logistics’ asphalt plant and terminal in El Paso and its three stand-alone asphalt terminals, Andeavor Logistics charges us fees for asphalt storage, shipments into and out of asphalt storage and asphalt processing and blending.

WNRL Terminalling, Transportation and Storage Services Agreement (St. Paul Park) ($28.2 million) – An agreement under which Andeavor Logistics provides product storage services, product throughput services and product additive and blending services at the ~~site~~terminal facilities located at or near our refinery in St. Paul Park, Minnesota.

WNRL Wholesale Product Supply Agreement – A product supply agreement, as amended, under which we will supply and Andeavor Logistics will purchase approximately 79,000 bpd of refined products. The price per barrel will be based upon OPIS or Platts indices on the day of delivery. Pricing is subject to annual revision based on mutual agreement between us and Andeavor Logistics. The agreement provides for make-up payments to Andeavor Logistics in any month that Andeavor Logistics’ average margin on non-delivered rack sales is less than a certain amount. During 2017, Andeavor Logistics recorded $0.8 million in revenues related to make-up payments from Western Refining under this agreement.

WNRL Fuel Distribution and Supply Agreement ($10.1 million) – A fuel distribution and supply agreement under which we agreed to purchase all of our retail requirements for branded and unbranded motor fuels for its retail and unmanned fleet fueling sites at a price per gallon that is $0.03 above Andeavor Logistics’ cost. We have agreed to purchase a minimum of 21 Mbpd of branded and unbranded motor fuels for our retail and unmanned fleet fueling sites. In any month that we don’t purchase the minimum volume, we will pay Andeavor Logistics $0.03 per gallon shortfall. In any month in which we purchase volumes in excess of the ~~Anacortes terminal it acquired as part of its 2014 acquisition of west coast logistics assets from TRMC. TLLP contracted with TRMC to act as general contractor for~~minimum, Andeavor Logistics will pay us $0.03 per gallon over the ~~project. During 2016, we incurred an additional $0.9 million of capital expenditures related to~~minimum until the ~~project which are accounted for as a capital contribution to TLLP due to the related party nature~~balance of the ~~asset acquisition.~~trailing twelve month shortfall payments is reduced to $0.

WNRL Crude Oil Trucking Transportation Services Agreement ($28.4 million) – A ten-year crude oil trucking transportation services agreement, as amended, under which we have agreed to pay a flat rate per mile per barrel plus monthly fuel adjustments and customary applicable surcharges. The rates are subject to adjustment annually based on mutual agreement between us and Andeavor Logistics. We have agreed to contract a minimum of 1.525 million barrels of crude oil to Andeavor Logistics for hauling each month.

Asphalt Trucking Transportation Services Agreement ($6.1 million) – An asphalt trucking transportation services agreement under which we have agreed to pay a flat rate per mile per ton, with market adjustments, based on the distance between the applicable pick-up and delivery points, plus monthly fuel adjustments and customary applicable surcharges. The rates are subject to adjustment annually based on mutual agreement between us and Andeavor Logistics. Volumes of asphalt transported pursuant to this agreement will be credited, on a barrel per barrel basis, towards our contract minimum under the crude oil trucking transportation services agreement described above. Under this agreement, we have given Andeavor Logistics the first option to transport all asphalt volumes we transport by truck.

Other Agreements

Carson Assets Indemnity Agreement ~~- TLLP~~– Andeavor Logistics and TRMC entered into the Carson Assets Indemnity Agreement in connection with the December 2013 acquisition by ~~TLLP~~Andeavor Logistics of



67 \|

certain Los Angeles logistics assets. The Carson Assets Indemnity Agreement established indemnification for certain matters including known and unknown environmental liabilities arising out of the use or operation of the Los Angeles Terminal Assets and the Los Angeles Logistics Assets prior to the respective acquisition dates. The agreement also provides for reimbursement from TRMC to ~~TLLP~~Andeavor Logistics for repair and maintenance of the Los Angeles Terminal Assets and the Los Angeles Logistics Assets that are required to comply with current minimum standards under certain regulations. In December 2016, the parties agreed to extend the reimbursement period. During ~~2016~~,2017 we incurred approximately ~~$1.6~~$6.4 million related to expenses that were reimbursable to ~~TLLP.~~

Andeavor Logistics.

Carson Renewable Diesel Project - – Pursuant to an agreement effective December 31, 2016, ~~TLLP~~Andeavor Logistics will install certain renewable diesel equipment at the Carson products terminals, and we will reimburse ~~TLLP~~Andeavor Logistics for the ~~estimated $2.7 million~~ cost of the project. During ~~2016, TLLP recorded a receivable and deferred revenue balance of $1.9 million under this agreement.~~

~~Asphalt Rack Agreement~~ - ~~On December 31, 2016, we entered into~~2017, Andeavor Logistics incurred an ~~agreement with TLLP to sell an asphalt loading facility to TLLP, resulting in a contribution to TLLP of $0.2 million.~~

~~Also, we conveyed to TLLP the Tank 33 assets, and TLLP reimbursed us for $3 million of related capital expenditures. TLLP will continue to reimburse us for future costs related to the Tank 33 assets.~~

Avon Marine Terminal Capital Expenditures - Subsequent to TLLP's acquisition of the Avon marine terminal in connection with the terminalling and storage assets located in Martinez, California, we incurred approximately $13.4additional $0.8 million of capital expenditures related to the ~~renovation of the Avon marine terminal, which are accounted for as capital contributions to TLLP as prescribed by the Amended Omnibus Agreement.~~

~~Lease of Specified Capacity - Effective December 1, 2016, TLLP entered into a pipeline capacity lease agreement for a minimum of 5 Mbpd on a segment of the BakkenLink pipeline system purchased by~~project and charged us ~~in early 2016. The initial agreement has a term of six months, but can be extended on a month-to-month basis. For December 2016, TLLP paid BakkenLink $0.7 million.~~$2.7 million under this agreement.

~~Alaska Railroad Lease Assignment and Assumption Agreement~~ ~~- Effective October 27, 2016, we assigned TLLP the ground lease at the Anchorage 1 terminal between Alaska Railroad Corporation and Tesoro Alaska Petroleum Company, our wholly-owned subsidiary.~~

TRMC Crude Oil Purchase -– On February 2, 2016, Green River Processing, LLC (GRP), ~~TLLP's~~Andeavor Logistics’ wholly owned subsidiary, entered into a master netting arrangement with Ultra Resources, Inc., whereby GRP purchases crude oil on our behalf and nets the amount due to Ultra for the purchase with the receivable due from Ultra for the gathering services provided by GRP. During ~~2016,~~2017, GRP sold ~~$32.3~~$26.6 million of crude oil to us at the same price and on the same terms under which GRP purchased it.

Belfield Crude Oil Purchase – In connection with Andeavor Logistics’ acquisition of the North Dakota and Processing Assets on January 1, 2017, we entered into an agreement with Andeavor Logistics under which we agreed to purchase the crude oil volumes acquired during the closing of the acquisition. In 2017, we paid $1.2 million to Andeavor Logistics pursuant to this agreement.

Butane Sale at Belfield – Effective April 1, 2017, we and Andeavor Logistics entered into a butane sale agreement in the Belfield Area related to the North Dakota and Processing Assets. In 2017, we paid $9.0 million to Andeavor Logistics pursuant to this agreement.

Fuel Sales – An arrangement whereby a subsidiary of WNRL sells fuel at the rack to us. For the period from June 1, 2017, the date we acquired Western Refining, through December 31, 2017, we paid WNRL cash for these purchases aggregating $28.2 million.

Purchase of Natural Gas ~~- In November 2015, we and QEP Field Services, LLC (QEPFS), TLLP's wholly owned subsidiary, entered into an~~– An agreement whereby weTRMC, our subsidiary, may purchase a certain volume of natural gas each month based on ~~our~~TRMC’s needs and market conditions. In ~~2016, the total amount~~2017, we ~~purchased was 916,000 MMBTU for consideration of $1.8 million.~~paid $1.5 million to Andeavor Logistics pursuant to this agreement.

~~Tesoro Corporation~~ ~~2017 Proxy Statement 52~~



		2018 Proxy Statement \| 68

Stock Ownership Information

~~Stock Ownership Information~~

Security Ownership by Management

The following table shows the ~~beneficial ownership~~number of shares of our common stock ~~reported to us~~beneficially owned as of March 16, 2017, including shares as to which a vested right to acquire ownership exists within the meaning of Rule 13d-3(d)(1) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and shares credited to accounts under our Thrift Plan, for5, 2018, by each director and nominee, the NEOs and our current directors and executive officers as a group.

~~Includes shares of unvested restricted stock.~~

The ownership shown below Includes shares that the listed persons had the right to acquire through the exercise of stock options on March 16, 2017, or within 60 days thereafter, as well as restricted stock units granted to non-employee directors that will vest or be distributed within 60 days of March 16, 2017.

Units of phantom stock, payable in cash, which have been credited to the directors under the Board of Directors Deferred Compensation Plan and the Phantom Stock Plan are not included in the shares shown. Performance shares and market stock unit awards granted to executive officers for performance periods ending December 31, 2016 and later are not included in the shares shown.

Unless otherwise indicated, each person or member of the group listed has sole voting and investment power with respect to the shares of our common stock ~~listed.~~

listed and none of the shares of common stock shown are pledged as security. As of March ~~16, 2017,~~5, 2018, there were ~~117,379,880~~153,002,812 shares outstanding.

~~No director, NEO or executive officer beneficially owns more~~



	Aggregate Number of Shares Beneficially Owned		Percent of Total Outstanding Common Stock
Rodney F. Chase	12,323	(a)	*
Paul L. Foster	8,204,859		5.4%
Edward G. Galante	3,872	(a)	*
Gregory J. Goff	764,170	(b)	*
David Lilley	16,823	(c)	*
Mary Pat McCarthy	11,891	(d)	*
J.W. Nokes	34,345	(e)	*
William H. Schumann, III	2,917	(a)	*
Jeff A. Stevens	1,445,999		*
Susan Tomasky	9,663	(f)	*
Michael E. Wiley	41,150	(a)	*
Patrick Y. Yang	5,537	(a)	*
Keith M. Casey	90,070		*
Kim K.W. Rucker	–		*
Steven M. Sterin	36,126		*
Cynthia J. Warner	38,484		*
All Current Directors and Executive Officers as a Group (19 individuals)	10,729,789	(g)	7.0%

* Less than 1% of ~~our~~the shares of common ~~stock.~~stock outstanding.


(a)	Includes 2,028 restricted stock units that vest within 60 days of March 5, 2018.


(b)	Includes 151,513 exercisable options to acquire common stock and 620 shares held under the Andeavor 401(k) Plan.


(c)	Includes 3,717 restricted stock units that vest either within 60 days of March 5, 2018 or upon the director’s retirement from service on the board of directors.


(d)	Includes 11,052 restricted stock units that vest either within 60 days of March 5, 2018 or upon the director’s retirement from service on the board of directors.


(e)	Includes 6,174 restricted stock units that vest either within 60 days of March 5, 2018 or upon the director’s retirement from service on the board of directors.


(f)	Includes 4,063 restricted stock units that vest either within 60 days of March 5, 2018 or upon the director’s retirement from service on the board of directors.


(g)	In addition to the 151,513 options referenced above, includes an aggregate of 1,025 shares held under the Andeavor 401(k) Plan.



69 \|	~~Aggregate Number of Shares Beneficially Owned~~	~~Additional Information~~
~~Rodney F. Chase~~	~~10,295~~	~~Includes 2,035 shares underlying restricted stock units~~
~~Edward G. Galante~~	~~1,844~~
~~Gregory J. Goff~~	~~769,633~~	~~Includes 151,513 shares underlying stock options, 609 shares credited under the Tesoro Corporation Thrift Plan and 32,115 ROCE performance shares at target~~
~~Robert W. Goldman~~	~~49,697~~	~~Includes 9,000 shares underlying stock options and 6,567 shares underlying restricted stock units~~
~~David Lilley~~	~~14,295~~	~~Includes 3,724 shares underlying restricted stock units~~
~~Mary Pat McCarthy~~	~~9,863~~	~~Includes 9,024 shares underlying restricted stock units~~
~~J.W. Nokes~~	~~32,317~~	~~Includes 6,181 shares underlying restricted stock units~~
~~William H. Schumann, III~~	—
~~Susan Tomasky~~	~~7,635~~	~~Includes 2,035 shares underlying restricted stock units~~
~~Michael E. Wiley~~	~~39,822~~	~~Includes 9,000 shares underlying stock options and 2,035 shares underlying restricted stock units~~
~~Patrick Y. Yang~~	~~3,509~~	~~Includes 2,035 shares underlying restricted stock units~~
~~Keith M. Casey~~	~~30,596~~	~~Includes 3,680 ROCE performance shares at target~~
~~Kim K.W. Rucker~~	—
~~Steven M. Sterin~~	~~8,892~~
~~Cynthia J. Warner~~	~~27,411~~	~~Restricted stock that remains subject to vesting requirements~~
~~All Current Directors and Executive Officers as a Group~~ ~~(17 individuals)~~	~~1,010,716~~	~~Represents less than 1% of the shares outstanding~~

~~Tesoro Corporation~~ ~~2017 Proxy Statement 53~~

Ownership of ~~TLLP~~Andeavor Logistics Common Units

The following table shows the ~~beneficial ownership~~number of ~~our~~common units of ~~TLLP reported to us as of March 16, 2017, including units as to which a vested right to acquire ownership exists within the meaning of Rule 13d−3(d)(1) under the Exchange Act, for~~Andeavor Logistics beneficially owned by each director and nominee, the NEOs and our current directors and officers as a ~~group.~~group, as reported to us as of March 5, 2018. Unless otherwise indicated, each person or member of the group listed has sole voting and investment power with respect to the units listed. As of March ~~16, 2017,~~5, 2018, there were ~~107,996,246~~217,170,024 common units outstanding (including ~~34,055,042~~127,889,386 common units held by ~~Tesoro Corporation~~Andeavor and its affiliates). This table does not include (1) the 2,202,880 general partner units held by Tesoro Logistics GP, LLC or (2) phantom units held by certain of our executive officers that do not vest within 60 days of March 16, 2017. None of our executive officers or directors hold general partner units. No director, NEO or executive officer beneficially owns more than 1% of TLLP’s common units. Furthermore, the current directors and executive officers as a group do not own more than 1% of TLLP’s common units.



	Aggregate Number of ~~TLLP~~Andeavor Logistics Common Units Beneficially Owned		Percent of Total Outstanding Common Units
Rodney F. Chase	—–
Paul L. Foster	421,599		*
Edward G. Galante	1,180		*
Gregory J. Goff	~~97,690~~
~~Robert W. Goldman~~131,480	~~5,500~~	*
David Lilley	—–
Mary Pat McCarthy	—–
J.W. Nokes	—–
William H. Schumann, III	1,475		*
Jeff A. Stevens	317,226		*
Susan Tomasky	—–
Michael E. Wiley	1,400		*
Patrick Y. Yang	—–
Steven M. Sterin	~~3,814~~16,391		*
Keith M. Casey	—6,674		*
Kim K.W. Rucker	—–
Cynthia J. Warner	—–
All Current Directors and Executive Officers as a Group (1719 individuals)	~~111,059~~897,425		*

* Less than 1% of the common units outstanding.

~~Tesoro Corporation~~ ~~2017 Proxy Statement 54~~



		2018 Proxy Statement \| 70

Security Ownership by Certain Beneficial Owners

The following table sets forth information from filings made with the SEC as to each person or group who as of March ~~16, 2017~~5, 2018 beneficially owned more than 5% of the outstanding shares of our common stock.

Amount and Nature of
Beneficial Ownership
Name and Address of Beneficial Owner Number of Shares Percent of
Class (a)
The Vanguard Group, Inc. (b)
100 Vanguard Blvd.
Malvern, PA 19355
11,364,512

9.7%
State Street Corporation (c)
State Street Financial Center
One Lincoln Street
Boston, MA 02111
9,592,847 8.2%
BlackRock, Inc. (d)
55 East 52^nd Street
New York, NY 10055
8,849,154

7.5%
Stephen A. Cohen et al. (e)
72 Cummings Point Road
Stamford, CT 06902
6,598,110 5.6%



	Amount and Nature of Beneficial Ownership
Name and Address of Beneficial Owner	Number of Shares	Percent of Class (a)
The Vanguard Group, Inc. (b) 100 Vanguard Blvd. Malvern, PA 19355	15,802,223	10.3%
BlackRock, Inc. (c) 55 East 52nd Street New York, NY 10055	10,790,398	7.1%
Boston Partners (d) One Beacon Street 30th FL Boston, MA 02108	9,597,764	6.3%
Paul L. Foster (e) 123 W. Mills Avenue, Suite 600 El Paso, Texas 79901	8,206,634	5.4%
State Street Corporation (f) State Street Financial Center One Lincoln Street Boston, MA 02111	8,066,083	5.3%


(a)	Based on ~~117,379,880~~153,002,812 shares outstanding as of March ~~16, 2017.~~5, 2018.

(b)

According to Schedule 13G/A filed with the SEC on February ~~10, 2017,~~12, 2018, The Vanguard Group, Inc. has sole voting power with regard to ~~184,706~~207,157 shares of our common stock, shared voting power with regard to ~~21,684~~28,137 shares of our common stock, sole ~~investment~~dispositive power with regard to ~~11,156,140~~15,570,945 shares of our common stock and shared ~~investment~~dispositive power with regard to ~~208,372~~231,278 shares of our common stock.


(c)	According to Schedule 13G filed with the SEC on January 29, 2018, BlackRock, Inc. has sole voting power with regard to 9,254,305 shares of our common stock and sole dispositive power with regard to 10,790,398 shares of our common stock.


(d)	According to Schedule 13G filed with the SEC on February ~~9, 2017,~~13, 2018, Boston Partners has sole voting power with regard to 7,875,240 shares of our common stock and sole dispositive power with regard to 9,597,764 shares of our common stock.


(e)	Mr. Foster has sole voting power with regard to 1,406,447 shares of our common stock, shared voting power with regard to 6,800,187 shares of our common stock, sole dispositive power with regard to 1,406,447 shares of our common stock and shared dispositive power with regard to 6,800,187 shares of our common stock.


(f)	According to Schedule 13G filed with the SEC on February 13, 2018, State Street Corporation and certain of its direct and indirect subsidiaries have shared voting power and shared ~~investment~~dispositive power with ~~regard~~respect to ~~9,592,847~~8,066,083 shares of our common stock.


~~(d)~~	According to Schedule 13G/A filed with the SEC on January 27, 2017, BlackRock, Inc. has sole voting power with regard to 7,396,403 shares of our common stock and sole investment power with regard to 8,849,154 shares of our common stock.

~~(e)~~

According to Schedule 13G filed with the SEC on January 20, 2017, (i) Point72 Asset Management and Point72 Capital Advisors Inc., both of which are controlled by Steven A. Cohen, each have shared voting power with respect to 6,596,547 of such 6,598,110 shares and shared dispositive power with respect to 6,596,547 of such 6,598,110 shares, (ii) Cubist Systematic Strategies, LLC, which is controlled by Steven A. Cohen, has shared voting power with respect to 1,563 of such 6,598,110 shares and shared dispositive power with respect to 1,563 of such 6,598,110 shares and (iii) Steven A. Cohen has shared voting power and shared dispositive power over all such 6,598,110 shares.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors, executive officers and holders of more than 10% of our voting stock to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock or other equity securities. Based on a review of those forms provided to us and any written representations, we believe that during the year ended December 31, ~~2016,~~2017, our directors, executive officers and holders of more than 10% of our voting stock filed the required reports on a timely basis under Section 16(a)., except for a Form 3 for Michael J. Morrison, which underreported Mr. Morrison’s holdings due to an administrative error.

~~Tesoro Corporation~~ ~~2017 Proxy Statement 55~~

~~Items to Be Voted On~~

~~Proposal No. 1 – Election of Directors~~

At the Annual Meeting, stockholders are requested to elect ten directors to hold office until the 2018 Annual Meeting of Stockholders or until their successors are elected and qualified. Each of the nominees has indicated his or her willingness to serve as a director, if elected, and we have no reason to believe that any nominee will be unable to serve. The persons designated as proxies, however, reserve full discretion to cast votes for other persons in the event that any one or more of the nominees are unable to serve. Each of the director nominees, except for Mr. Schumann, who joined the Board in November 2016, is currently serving as a director after being elected at the 2016 Annual Meeting of Stockholders. Mr. Schumann was recommended to the Governance Committee by a third party search firm engaged by the Board.

Our Bylaws prescribe the voting standard for director elections as a majority of the votes cast in an uncontested election, such as this one, where the number of nominees does not exceed the number of directors to be elected. Under this standard, a nominee must receive more “FOR” votes than “AGAINST” votes to be elected as a director. Under our Corporate Governance Guidelines, each nominee who already serves as a director submits an advance, contingent, irrevocable resignation that the Board may accept if stockholders do not re-elect the director. In that event, the Governance Committee would promptly consider the resignation offer and make a recommendation to the Board. The Board would act on the Governance Committee’s recommendation and publicly disclose its decision regarding whether to accept the director’s resignation offer, or, if applicable, the reason(s) for rejecting the resignation offer, within 90 days from the date of the stockholder vote.



þ	~~Our Board of Directors recommends that you vote “FOR” the election to the Board of each of the following nominees.~~



71 \|	~~Rodney F. ChaseAge~~ 73 ~~Director since~~ ~~2006~~ ~~Former Energy Industry Executive~~

Mr. Chase served as the Non-Executive Chairman of Genel Energy plc, an international oil and gas exploration and production company, from 2011 until 2015, and Non-Executive Chairman of Computer Sciences Corporation, an information technology and professional services company, from 2012 until 2015. He previously served as Non-Executive Chairman for Petrofac Ltd. in the United Kingdom, an international oil and gas services company, from 2005 until May 2011, and as Deputy Chairman of Tesco plc in the United Kingdom, an international retailing company, until July 2010. Mr. Chase spent 39 years with BP plc, a large, international oil and gas company, holding positions within the upstream and downstream segments of the industry in Australia, Europe and North America. His background includes positions in shipping, refining, marketing, distribution, oil trading and gas as well as finance and strategic planning at the corporate executive level. From 2003 to 2008, Mr. Chase served as Senior Advisor for the U.S. and Europe for Lehman Brothers, Ltd., formerly an investment bank, in London, England.

~~Key Qualifications, Attributes, Skills and Experience:~~

~~Board Leadership, Industry and Strategic Planning Experience~~ – 50 years of experience in the energy industry, including service as the former Non-Executive Chairman of an international oil and gas services company (Petrofac) and a former executive of a large, international oil and gas company (BP)

~~Financial/Accounting Expertise~~ – ~~Former Chief Executive Officer of BP Finance International and Group Treasurer and former senior advisor for Lehman Brothers~~

~~Talent Management and Public Company Board Experience~~ – ~~Computer Sciences Corporation, Tesco, Petrofac~~

~~Other Current Directorships:~~ ~~Hess Corporation and HudsonField~~

~~Former Public Company Directorships:~~ Computer Sciences Corporation (from 2012 until 2015), Genel Energy, plc (from 2011 until 2015), Nalco Holding Co. (from 2005 until 2011), Petrofac Ltd. (from 2005 until 2011) and Tesco plc (from 2002 until 2010)

~~Tesoro Corporation~~ ~~2017 Proxy Statement 56~~



	~~Edward G. GalanteAge~~ 66 ~~Director since~~ ~~2016~~ ~~Former Senior Vice President and Member of the Management Committee of ExxonMobil Corporation~~

Mr. Galante served as Senior Vice President and a member of the Management Committee of ExxonMobil Corporation from 2001 until his retirement in 2006. Prior to that, he held various management positions of increasing responsibility during his more than 30 years with ExxonMobil Corporation, including serving as Executive Vice President of ExxonMobil Chemical Company from 1999 to 2001. Mr. Galante serves on the Board of the United Way Foundation of Metropolitan Dallas and is a Vice Chairman of the Board of Trustees of Northeastern University.

~~Key Qualifications, Attributes, Skills and Experience:~~

~~Industry, Operations, Management, Leadership, Strategic Planning and Talent Management Experience~~ – over 30 years of experience in the oil, gas, refining and chemical sectors of the energy industry, including service as a senior operating executive of ExxonMobil, one of the largest global energy companies, and as Chair of the Compensation and Management Committee of Praxair, Inc.

~~Risk Management Experience~~ – service on the Environmental, Health, Safety and Public Policy Committee of Celanese Corporation and the Technology, Safety, Sustainability Committee and the Governance and Nominating Committee of Praxair, Inc.

~~Public Company Board Experience~~ ~~– Celanese Corporation, Clean Harbors, Inc., Praxair, Inc. and Foster Wheeler AG~~

~~Financial/Accounting Expertise~~ ~~– service on the Audit Committees of Celanese Corporation and Foster Wheeler AG~~

~~Other Current Directorships:~~ ~~Celanese Corporation, Clean Harbors, Inc., Praxair, Inc.~~

~~Former Public Company Directorships:~~ ~~Foster Wheeler AG (from 2008 until 2014)~~



	~~Gregory J. GoffAge~~ 60 ~~Director since~~ ~~2010~~ ~~Chairman of the Board since December 31, 2014~~ ~~Our Chairman, President and Chief Executive Officer~~

Mr. Goff has served as our President and Chief Executive Officer since May 2010 and as our Chairman since December 31, 2014. Since December 2011, Mr. Goff has also served as Chairman of the Board of Directors and Chief Executive Officer of Tesoro Logistics GP, LLC, the general partner of Tesoro Logistics LP. Prior to joining us, Mr. Goff served as Senior Vice President, Commercial for ConocoPhillips Corporation, an international, integrated energy company, from 2008 to 2010. Mr. Goff also held various other positions at ConocoPhillips from 1981 to 2008, including Managing Director and CEO of Conoco JET Nordic from 1998 to 2000; Chairman and Managing Director of Conoco Limited, a UK-based refining and marketing affiliate, from 2000 to 2002; President of ConocoPhillips Europe and Asia Pacific downstream operations from 2002 to 2004; President of ConocoPhillips U.S. Lower 48 and Latin America exploration and production business from 2004 to 2006; and President of ConocoPhillips specialty businesses and business development from 2006 to 2008. Mr. Goff serves as Chairman of the Board of the American Fuel and Petrochemical Manufacturers trade association and on the National Advisory Board of the University of Utah Business School. Previously, Mr. Goff served on the board of Chevron Phillips Chemical Company and was a member of the upstream and downstream committees of the American Petroleum Institute. In addition, Mr. Goff has public company experience from his prior service on the board of directors of DCP Midstream GP, LLC.

~~Key Qualifications, Attributes, Skills and Experience:~~

~~President and CEO/Company Knowledge~~ – ~~As our Chairman, President and CEO, Mr. Goff brings to the Board a deep understanding of and unique perspective on our business and operations and the environment in which we operate.~~

~~Leadership, Industry and Strategic Planning Experience~~ – Current CEO of a large independent refining and petroleum products marketing company (Tesoro), current Chairman of a national trade association representing refiners and petrochemical manufacturers (American Fuel and Petrochemical Manufacturers) and as a former senior executive of an international energy company (ConocoPhillips) and former member of the upstream and downstream committees of a national oil and natural gas industry trade association (American Petroleum Institute)

~~Operations Experience~~ – ~~29 years of service in various positions with ConocoPhillips~~

~~Public Company Board Experience~~ – ~~DCP Midstream and Polyone Corporation~~

~~Tesoro Corporation~~ ~~2017 Proxy Statement 57~~

~~Other Current Directorships:~~ ~~Polyone Corporation, Tesoro Logistics GP, LLC, the general partner of Tesoro Logistics LP (a master limited partnership of which Tesoro and its subsidiaries own approximately 32%)~~

~~Former Public Company Directorships:~~ ~~DCP Midstream GP, LLC (from 2008 until 2010), QEP Midstream Partners, LP (from 2014 until 2015)~~



	~~David Lilley~~ ~~Age~~ 70 ~~Director since~~ ~~2011~~ ~~Former Chairman, President and Chief Executive Officer of Cytec Industries Inc.~~

Mr. Lilley is a retired Chairman, President and Chief Executive Officer of Cytec Industries Inc., a multi-billion dollar manufacturer of specialty chemicals and materials. He served as its Chairman from January 1999 through 2008 and as its President and Chief Executive Officer from May 1998 through 2008, having previously served as its President and Chief Operating Officer from January 1997. From 1994 until January 1997, he was a vice president of American Home Products Corporation. Prior to that he was a vice president and a member of the Executive Committee of American Cyanamid Company.

~~Key Qualifications, Attributes, Skills and Experience:~~

~~Chemicals Industry, Management and Leadership Experience, Global Business Perspective, Operations Knowledge and Strategy Experience~~ – ~~Over 29 years of experience in the chemicals industry, including services as past Chairman and CEO of Cytec Industries~~

~~Risk Management Experience~~ – Mr. Lilley’s leadership experience in a chemicals and manufacturing company and as a member of the Responsible Care Committee of the American Chemistry Council is also important in light of the Board’s oversight of our operations and adherence to safety and environmental requirements

~~Public Company Board Experience –~~ ~~Rockwell Collins, Inc., Public Service Enterprise Group Incorporated, Arch Chemicals, Inc. and Cytec Industries Inc.~~

~~Other Current Directorships:Rockwell Collins, Inc. and Public Service Enterprise Group Incorporated~~

~~Former Public Company Directorships:Arch Chemicals, Inc. (from 2007 until October 2011)~~



	~~Mary Pat McCarthy~~ ~~Age~~ 61 ~~Director since~~ ~~2012~~ ~~Former Vice Chairman of KPMG LLP~~

Mary Pat McCarthy retired from her position as Vice Chair of KPMG LLP, the U.S. member firm of the global audit, tax and advisory services firm, in 2011 after attaining such position in 1998. She joined KPMG LLP in 1977 and became a partner in 1987. She held numerous senior leadership positions in the firm, including Executive Director of the KPMG Audit Committee Institute from 2008 to 2011, Leader of the KPMG Client Care Program from 2007 to 2008, U.S. Leader, Industries and Markets from 2005 to 2006, and Global Leader, Information, Communication and Entertainment Practice from 1998 to 2004. Ms. McCarthy also served on the firm’s Management and Operations Committees. Ms. McCarthy is a member of the Risk Advisory Committee of the National Association of Corporate Directors and also serves as a director of Palo Alto Networks, Inc. and Mutual of Omaha, a mutual insurance company.

~~Key Qualifications, Attributes, Skills and Experience:~~

~~Financial/Accounting Experience –~~ ~~Over 34 years of experience with KPMG, including services as the audit and executive partner to national and international clients~~

~~Leadership and Talent Management Experience –~~ Service as Vice Chairman and in other leadership positions at KPMG; she also co-chaired the National Association of Corporate Directors’ Blue Ribbon Commission on Talent Development – A Boardroom Imperative

~~Tesoro Corporation~~ ~~2017 Proxy Statement 58~~

~~Strategy, Business Transformation, Audit Committee Effectiveness and Corporate Governance –~~ ~~Author of multiple books on risk, strategy and business transformation, and a frequent speaker on audit committee effectiveness and corporate governance at conferences, seminars and forums~~

~~Other Current Directorships:Palo Alto Networks, Inc. and Mutual of Omaha~~



	~~J. W. Nokes~~ ~~Age~~ 70 ~~Director since~~ ~~2007~~ ~~Former Executive Vice President of Worldwide Refining, Marketing, Supply and Transportation of ConocoPhillips~~

Mr. Nokes spent his 36-year career with ConocoPhillips, an international, integrated energy company, and retired in 2006 as Executive Vice President of Worldwide Refining, Marketing, Supply and Transportation. His background primarily includes refining, marketing, crude and products trading, commercial natural gas operations and transportation. He also had assignments in exploration and production, as well as strategic planning. In 1991, he was appointed Vice President of U.S. Marketing and Product Trading. From 1994 to 1999, he was Vice President of U.S. Downstream Business. For eight years beginning in 1999, he was Executive Vice President of Refining, Marketing, Supply and Transportation for the company’s global business. Mr. Nokes was a member of the World Business Council for Sustainable Development and sat on the Board of Directors of the American Petroleum Institute, as well as the American Petroleum Institute Transportation, Marketing and Downstream Committee. Mr. Nokes is also a director of Post Oak Bank, N.A., a Houston-based community bank, and is Lead Director of Albemarle Corporation.

~~Key Qualifications, Attributes, Skills and Experience:~~

~~Industry, Operations, International and Strategic Planning Experience –~~ 37 years of experience in the energy industry, including services as a former executive of an international, integrated energy company (ConocoPhillips), former director of a national oil and natural gas industry trade association (American Petroleum Institute) and former member of a global association of business leaders that promotes sustainable development (World Business Council for Sustainable Development)

~~Public Company Board Experience~~ – ~~Albemarle Corporation~~

~~Other Current Directorships:~~ ~~Albemarle Corporation (Non-Executive Chairman) and Post Oak Bank, N.A.~~



	~~William H. Schumann III~~ ~~Age~~ 66 ~~Director since~~ ~~2016~~ ~~Former Executive Vice President and Chief Financial Officer of FMC Technologies~~

Mr. Schumann served as Executive Vice President of FMC Technologies, a global provider of technology solutions for the energy industry, from 2007 until his retirement in 2012. From 2001 until 2011, he served as Chief Financial Officer of FMC Technologies. During his 30-year career at FMC and its predecessor, FMC Corporation, he served in a variety of roles, including Vice President, Corporate Development; Vice President and General Manager, Agricultural Products Group; Regional Director, North America Operations; Director of Investor Relations; and Treasurer. He served on the board of Great Lakes Advisors, a registered investment advisor, from 1992 to 2011. Mr. Schumann currently serves on the board of the Lake Forest Lake Bluff Historical Society.

~~Key Qualifications, Attributes, Skills and Experience~~:

• ~~Board Leadership, Strategic Planning Experience –~~ ~~Avnet, Inc. (Chairman); McDermott International; AMCOL International; URS Corporation; UAP Holding Corp~~

• ~~Financial/Accounting Expertise, Risk Management, Leadership, Strategic Planning and Talent Management Experience –~~ ~~Former Chief Financial Officer of FMC Technologies~~

• ~~Industry and Operations Experience –~~ ~~Over 30 years of experience providing technology solutions to energy sector clients at FMC Technologies~~

~~Other Current Directorships: Avnet, Inc., McDermott International~~

~~Tesoro Corporation~~ ~~2017 Proxy Statement 59~~

~~Former Public Company Directorships: AMCOL International (from 2012 until 2014); URS Corporation (2014); UAP Holding Corp (from 2005 until 2008)~~



	~~Susan Tomasky~~ ~~Age~~ 63 ~~Director since~~ ~~2011~~ ~~Lead Director since December 31, 2014~~ ~~Former President of AEP Transmission, a business division of American Electric Power Co.~~

Ms. Tomasky served as President of AEP Transmission, a business division of American Electric Power Co., Inc., an owner and operator of utility operating companies that produce, transmit and distribute electricity to over 5 million customers at retail in 11 states, from 2008 until July 2011. Ms. Tomasky previously served in other executive officer positions at American Electric Power Co., including Executive Vice President and General Counsel from 1998 to 2001, Executive Vice President of Finance and Chief Financial Officer from 2001 to 2006 and Executive Vice President of Shared Services from 2006 to 2008. Prior to joining American Electric Power Co., Ms. Tomasky served as a partner at the law firm of Hogan & Hartson (now Hogan Lovells), where she was a member of the firm’s energy group, and as General Counsel of the Federal Energy Regulatory Commission. Ms. Tomasky is a director of several private and non-profit organizations. She previously served as a director of the Federal Reserve Bank of Cleveland, a member bank in the Federal Reserve System.

~~Key Qualifications, Attributes, Skills and Experience:~~

~~Leadership and Strategic Planning Experience~~ – ~~Former President of a division of a large, public utility company (American Electric Power Co.)~~

~~Financial and Accounting Experience –~~ Chair of the Audit Committee of Public Services Enterprise Group, member of the Audit Committee of Summit Midstream Partners, LP, Chair of the Audit Committee of the Federal Reserve Bank of Cleveland and former Executive Vice President and Chief Financial Officer of a large, public energy company (American Electric Power Co.)

~~Government and Regulatory Experience and Legal Experience –~~ Former roles as a partner in the energy group of an international law firm (Hogan & Hartson) and as General Counsel of a federal government agency that regulates the energy industry (Federal Energy Regulatory Commission)

~~Other Current Directorships:~~ ~~Public Service Enterprise Group Incorporated and Summit Midstream Partners GP, LLC (the general partner of Summit Midstream Partners, LP)~~



	~~Michael E. Wiley~~ ~~Age~~ 66 ~~Director since~~ ~~2005~~ ~~Former Chairman of the Board, President and Chief Executive Officer of Baker Hughes Incorporated~~

Mr. Wiley has over 40 years of experience in the energy industry. Most recently he served as Chairman of the Board, President and Chief Executive Officer of Baker Hughes Incorporated, an oilfield services company, from August 2000 until his retirement in October 2004. He was President and Chief Operating Officer of Atlantic Richfield Company, an integrated energy company, from 1998 through May 2000. Prior to 1998, he served as Chairman, President and Chief Executive Officer of Vastar Resources, Inc., an independent oil and gas company. Mr. Wiley is a director of Bill Barrett Corporation, an independent oil and gas company, and Post Oak Bank, N.A., a Houston-based community bank. He also serves as Chairman of Independent Trustees of Fidelity Sector Portfolios.

~~Key Qualifications, Attributes, Skills and Experience:~~

~~Board leadership, Industry, Operations, Strategic Planning, Risk Management, and Talent Management Experience –~~Former Chairman, President and Chief Executive Officer of an oilfield services company (Baker Hughes Incorporated), former executive of an integrated energy company (Atlantic Richfield Company) and an independent exploration and production company (Vastar Resources, Inc.) and director of a privately held oil and gas company (Asia Pacific Exploration Consolidated)

~~Public Company Board Experience –~~ ~~Baker Hughes Incorporated, Bill Barrett Corporation and Spinnaker Exploration Company~~

~~Tesoro Corporation~~ ~~2017 Proxy Statement 60~~

~~Other Current Directorships:~~ Bill Barrett Corporation, Post Oak Bank, N.A., Tesoro Logistics GP, LLC, the general partner of Tesoro Logistics LP (a master limited partnership of which Tesoro and its subsidiaries own approximately 32%)



	~~Patrick Y. Yang~~ ~~Age~~ 69 ~~Director since~~ ~~2010~~ ~~Former Head of Global Technical Operations of F. Hoffmann-La Roche, Ltd.~~

Mr. Yang has over 30 years of experience in manufacturing and technology. From 2010 to 2013, Mr. Yang served as Executive Vice President and Head of Global Technical Operations for F. Hoffmann-La Roche Ltd., which operates in the pharmaceutical industry and sells products in more than 150 countries. Mr. Yang joined Roche in 2009, upon Roche’s acquisition of Genentech, Inc., and was responsible for the company’s pharmaceutical manufacturing, process development, engineering, quality, regulatory, supply chain and procurement functions. Before joining Roche, Mr. Yang served as Executive Vice President, Product Operations of Genentech, a biotechnology company, from 2005 to 2009 and in various other executive-level positions with Genentech from 2003 to 2005. Prior to joining Genentech, Mr. Yang worked for Merck & Co. from 1992 to 2003 as Vice President in manufacturing and for General Electric from 1980 to 1992 in manufacturing and technology. Since 2013, Mr. Yang has served as a biopharmaceutical industry scientific and business consultant.

~~Key Qualifications, Attributes, Skills and Experience:~~

~~Leadership, Operations, Strategic Planning, International, and Talent Management Experience –~~ ~~Former senior operations executive of a large, global pharmaceutical company (F. Hoffmann-La Roche) and a former senior operations executive of a biotechnology company (Genentech)~~

~~Operations Experience –~~ ~~Over 20 years spent working in manufacturing (Merck and General Electric)~~

~~Financial/Accounting and Risk Management Experience –~~ ~~Service on Genentech’s executive committee from 2004 until 2009~~

~~Other Current Directorships:~~ ~~Codexis, Inc., Amyris, Inc. and PharmaEssentia Corporation~~

~~Former Public Company Directorships:~~ ~~Celladon Corporation (from 2014 until 2015)~~



þ	~~Our Board of Directors recommends that you vote “FOR” the election to the Board of each of the foregoing nominees.~~

~~Tesoro Corporation~~ ~~2017 Proxy Statement 61~~

~~Proposal No. 2 – Advisory Vote to Approve Our Named Executive Officers’ Compensation~~

~~Reward leaders for delivery of outstanding business results and driving a performance-oriented culture;~~

~~Promote and sustain exceptional performance over time to generate long-term growth in stockholder value; and~~

~~Lead in accordance with our guiding principles, which are core values, exceptional people, shared purpose, powerful collaboration and superior execution.~~

Please read the Compensation Discussion and Analysis beginning on page 19 of this Proxy Statement, which describes in more detail how our executive compensation programs operate and are designed to achieve our compensation objectives, as well as the Summary Compensation Table and other related compensation tables and narrative beginning on page 36, which provide detailed information on the compensation of our named executive officers. The Compensation Committee and the Board of Directors believe that our compensation programs are effective in achieving our goals and that the compensation of our named executive officers will contribute to our long-term success.



þ	~~Our Board of Directors recommends that you vote “FOR” the approval of the compensation paid to our named executive officers in 2016.~~

~~Proposal No. 3 – Ratification of the Appointment of Ernst & Young LLP as Independent Registered Public Accounting Firm~~

The Audit Committee has selected Ernst & Young LLP to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2017. See “Audit-Related Matters – Audit Committee Report” for additional detail regarding the process for this selection. As a matter of good corporate governance, the Board has directed that such appointment be submitted to our stockholders for ratification at the Annual Meeting. If the stockholders do not ratify the selection, the Audit Committee will reconsider whether to retain Ernst & Young LLP. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of us and our stockholders. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.



þ	~~Our Board of Directors recommends that you vote “FOR” the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017.~~

~~Tesoro Corporation~~ ~~2017 Proxy Statement 62~~

~~Proposal No. 4 – Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation~~

Pursuant to Section 14A of the Exchange Act, we are asking stockholders to vote on whether future advisory votes on executive compensation of the nature reflected in Proposal No. 2 above should occur every year, every two years or every three years.

The Board of Directors has determined that holding an advisory vote on executive compensation every year is the most appropriate policy for us at this time, and recommends that stockholders vote for future advisory votes on executive compensation to occur every year. While our executive compensation program is designed to promote a long-term connection between pay and performance, executive compensation disclosures are made annually. Holding an annual advisory vote on executive compensation provides us with more direct and immediate feedback on our compensation disclosures. An annual advisory vote on executive compensation also is consistent with our practice of having all directors elected annually and annually providing stockholders the opportunity to ratify the Board of Directors’ selection of independent auditors.

We understand our stockholders may have different views as to the appropriate frequency for advisory votes on executive compensation, and we will carefully review the voting results on this proposal. Stockholders may specify one of four choices on the proxy card: one year, two years, three years, or abstain. Stockholders are not voting to approve or disapprove the Board’s recommendation. This advisory vote on the frequency of future advisory votes on executive compensation is non-binding on the Board of Directors. Notwithstanding the Board’s recommendation and the outcome of the stockholder vote, the Board may in the future decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to our compensation program.



þ	~~Our Board of Directors recommends that you vote to conduct future advisory votes on executive compensation every “ONE YEAR~~.”

~~Tesoro Corporation~~ ~~2017 Proxy Statement 63~~

~~2018~~2019 Stockholder Proposals

Director Nominations and Stockholder Proposals Submitted for Inclusion in our ~~2018~~2019 Proxy Statement:

For a stockholder proposal to be considered for inclusion in our proxy statement for the ~~2018~~2019 Annual Meeting of Stockholders pursuant to SEC Rule 14a-8, the Corporate Secretary must receive the written proposal at our principal executive offices no later than the close of business on November ~~22, 2017.~~15, 2018. Such proposals also must comply with the requirements of Rule 14a-8.

Eligible stockholders may nominate a candidate for election to the Board for inclusion in our proxy statement for the ~~2018~~2019 Annual Meeting of Stockholders in accordance with the “proxy access” provisions of our Bylaws. Stockholder nominations for director submitted for inclusion in our ~~2018~~2019 Proxy Statement must be received in writing by our Corporate Secretary no earlier than October ~~23, 2017,~~16, 2018, and not later than the close of business on November ~~22, 2017,~~15, 2018, and must otherwise comply with all of the requirements of the Bylaws.

Proposals and ~~"proxy access"~~“proxy access” director nominations should be addressed to:

Corporate Secretary

Andeavor
~~Tesoro Corporation~~
19100 Ridgewood Parkway
San Antonio, Texas 78259

Director Nominations and Stockholder Proposals Not Submitted for Inclusion in our ~~2018~~2019 Proxy Statement:

Our Bylaws also establish an advance notice procedure with regard to director nominations and stockholder proposals that are not submitted for inclusion in the proxy statement but that a stockholder instead wishes to present directly at an annual meeting. Under our Bylaws, notice of such nomination or stockholder proposal for the ~~2018~~2019 Annual Meeting of Stockholders must be delivered to the Corporate Secretary at the above address not earlier than January 4, ~~2018,~~2019, and not later than the close of business on February ~~5, 2018.~~4, 2019.

If the date of the annual meeting is more than 30 days before or more than 60 days after the anniversary of our annual meeting for the prior year, then the notice of a nomination or stockholder proposal must be delivered no earlier than the close of business on the 120th day prior to the meeting and not later than the close of business on the later of the 90th day prior to the meeting or, if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such meeting, the 10th day after the first public announcement of the meeting date.

All nominations and stockholder proposals submitted under our Bylaws must comply with the requirements of the Bylaws. The presiding officer of the Annual Meeting may refuse to acknowledge or introduce any such matter if notice of the matter is not received within the applicable deadlines or does not comply with our Bylaws.

~~Tesoro Corporation~~ ~~2017 Proxy Statement 64~~



		2018 Proxy Statement \| 72

Proposal No. 4

Approve the Andeavor 2018 Long-Term Incentive Plan

Overview

On March 2, 2018, the Board unanimously adopted and approved the adoption of our new Andeavor 2018 Long-Term Incentive Plan (the “2018 Plan”), and is submitting the 2018 Plan to stockholders for their adoption and approval at the 2018 Annual Meeting. The Board believes our interests are best advanced by stimulating the efforts of employees, officers and nonemployee directors, in each case who are selected to be participants, by heightening the desire of such persons to continue working toward and contributing to our success and progress. The 2018 Plan allows grants of incentive and nonqualified stock options, stock appreciation rights, restricted stock and restricted stock units, any of which may be performance-based, and for incentive bonuses. The Board has adopted and approved the 2018 Plan to permit us to continue to use stock-based compensation to align stockholder and participant interests and to motivate participants providing services to us.

Our stock-based compensation program is currently operated under the Andeavor Amended and Restated 2011 Long-Term Incentive Plan (the “Amended 2011 Plan”), as approved by our stockholders at our 2013 Annual Meeting. Upon approval of the 2018 Plan by stockholders, the Amended 2011 Plan will be frozen with respect to new awards effective as of the date of our 2018 Annual Meeting. As such, if the 2018 Plan is approved by stockholders, no further awards will be made under the Amended 2011 Plan after the date of the 2018 Annual Meeting.

Why You Should Vote For the 2018 Plan

The Board recommends that our stockholders approve the 2018 Plan because it believes our ability to grant equity-based awards continues to be crucial in allowing us to effectively compete for and appropriately motivate and reward key talent. It is in our and our stockholders’ long-term interest to provide additional incentive for eligible participants to improve financial performance, increase profits and strengthen the mutuality of interest between those persons and our stockholders through equity based awards and other incentives.

Our Board of Directors recommends that you vote FOR the Andeavor 2018 Long-Term Incentive Plan.

Promotion of Good Corporate Governance Practices

The Board believes the use of stock-based incentive awards promotes best practices in corporate governance by aligning participant’s interests with maximizing stockholder value. Specific features of the 2018 Plan that are consistent with good corporate governance practices include, but are not limited to:

options and stock appreciation rights may not be granted with exercise prices lower than the fair market value of the underlying shares on the grant date;

there can be no repricing of options or stock appreciation rights without stockholder approval, either by canceling the award in exchange for cash or a replacement award at a lower price or by reducing the exercise price of the award, other than in connection with a change in our capitalization;

minimum one (1) year vesting period for all awards, subject to a carve out for 5% of the shares available under the 2018 Plan that may be granted without regard to the one-year minimum vesting period;

in no event will dividends or dividend equivalents be currently payable with respect to unvested or unearned performance awards;

~~TESORO CORPORATION~~



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awards generally may not be transferred except by will or the laws of descent and distribution or, if approved by the administrator, to certain family members, family trusts, or family partnerships pursuant to a gift or domestic relations order; and

we have the authority under the 2018 Plan to cancel outstanding awards (vested or unvested) in the event the applicable plan participant engages in certain “acts of misconduct,” which is defined in the 2018 Plan to include engaging in any type of disloyalty to us and materially breaching confidentiality and noncompetition covenants with us.

Key Data

The following table includes information regarding all of our outstanding equity awards and shares available for future awards under our equity plans and equity award agreements as of March 5, 2018 (and without giving effect to this Proposal No. 4):



Total shares underlying all outstanding options	179,613
Weighted average exercise price of outstanding options	13.65
Weighted average remaining contractual life of outstanding options	2.20 years
Total shares underlying all outstanding and unvested time-based restricted stock and restricted stock unit awards	129,417
Total shares underlying outstanding unearned performance-based restricted stock and restricted stock unit awards (assuming a maximum payout) (a)	2,954,494
Total shares currently available for grant (assuming a maximum payout for performance-based awards) (a)	1,990,226


(a)	Includes performance-based MSUs and PSAs and reflects the number of MSUs and PSAs that would vest assuming maximum achievement of all performance goals.

2018 Plan Summary

The following summary of the material terms of the 2018 Plan are qualified in their entirety by reference to the complete statement of the 2018 Plan, which is set forth in Appendix A to this Proxy Statement.

Administration

The 2018 Plan will be administered by the Compensation Committee of the Board. Subject to the express provisions of the 2018 Plan, the administrator is authorized and empowered to do all things that it determines to be necessary or appropriate in connection with the administration of the 2018 Plan. In addition, the Compensation Committee may delegate any or all aspects of the day-to-day administration of the 2018 Plan to one or more of our officers or employees, and/or to one or more agents.

Participants

Any person who is an officer or employee of the Company or of any subsidiary will be eligible for selection by the administrator for the grant of awards under the 2018 Plan. In addition, nonemployee directors will be eligible for the grant of awards under the 2018 Plan as determined by the administrator. Options intending to qualify as “incentive stock options” (“ISOs”) within the meaning of Section 422 of the Code may only be granted to employees of the Company or any subsidiary. Approximately 14,300 employees and eleven non-employee directors currently qualify to participate in the 2018 Plan.

Shares Subject to the Plan and to Awards

The aggregate number of shares of our common stock issuable pursuant to the 2018 Plan shall not exceed 1,850,000, plus (i) any shares that, as of the date of the 2018 Annual Meeting, remain available for issuance pursuant to future awards under the Amended 2011 Plan, and (ii) any shares subject to outstanding awards under the Amended and Restated 2006 Long-Term Incentive Plan and the Amended 2011 Plan as of the date of the 2018 Annual Meeting that on or after such date cease for any reason to be subject to such awards (other than by reason of exercise or settlement of the awards to the extent



		2018 Proxy Statement \| 74

they are exercised for or settled in vested and nonforfeitable shares). The aggregate number of shares available for grant under the 2018 Plan and the number of shares subject to outstanding awards shall be subject to adjustment upon a change in our capitalization. The shares issued pursuant to awards granted under the 2018 Plan may be shares that are authorized and unissued or shares that were reacquired by us, including shares purchased in the open market.

As of March 5, 2018, there were 3,464,094 shares remained available for grant under future awards that could be granted under the Amended 2011 Plan (assuming that performance-based awards are paid out at target amounts). If the 2018 Plan is approved by stockholders, these 3,464,094 shares will cease to be available for issuance under the Amended 2011 Plan upon stockholder approval of the 2018 Plan and will become available for issuance under the 2018 Plan. As such, if the 2018 Plan is approved by stockholders, approximately 5,314,094 shares will initially be available for awards under the 2018 Plan.

The aggregate number of shares issued under the 2018 Plan at any time will equal only the number of shares actually issued upon exercise or settlement of an award. The aggregate number of shares available for awards under the 2018 Plan will not be reduced by (i) shares subject to awards that have been terminated, expired unexercised, forfeited or settled in cash, (ii) shares subject to awards that have been retained or withheld in payment or satisfaction of the exercise price, purchase price or tax withholding obligation of an award, or (iii) shares subject to awards that otherwise do not result in the issuance of shares in connection with payment or settlement thereof. In addition, shares that are delivered (either actually or by attestation) to the Company in payment or satisfaction of the exercise price, purchase price or tax withholding obligation of an award will be available for awards under the 2018 Plan.

The aggregate number of shares subject to awards granted under the 2018 Plan during any calendar year to any one participant will not exceed 500,000, which number will be subject in each case to possible adjustment upon a change in our capitalization. The aggregate number of shares that may be issued pursuant to the exercise of ISOs granted under the 2018 Plan will not exceed 1,850,000 which number shall be subject in each case to possible adjustment upon a change in our capitalization. The maximum cash amount payable pursuant to an incentive bonus earned for any twelve-month period to any participant under the 2018 Plan will not exceed $10,000,000.

The aggregate dollar value of equity-based awards (based on the grant date fair value of such awards) that may be granted under the 2018 Plan during any calendar year to any one nonemployee director will not exceed $250,000; provided, however, that in any calendar year in which a nonemployee director first joins the Board or is designated as Chairman of the Board or Lead Director, the maximum number of shares subject to awards granted to the participant may be up to $500,000 and the foregoing limits will not count any tandem stock appreciation rights.

Substitute awards (awards granted in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, by a company acquired by us or with which we combine) will not reduce the shares authorized for issuance under the 2018 Plan or authorized for grant to a participant in any calendar year. Additionally, in the event that a company acquired by us, or with which we combine, has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan may be used for awards under the 2018 Plan and will not reduce the shares authorized for issuance under the 2018 Plan.

Option Awards

The administrator will establish the exercise price per share under each option, which, other than in the event of options granted in connection with a merger or other acquisition, will not be less than the fair market value of a share on the date the option is granted. The administrator will establish the term of each option, which in no case may exceed a period of ten (10) years from the date of grant ; provided, however, the term of an option (other than an ISO) will be automatically extended if, at the time of its



75 \|

scheduled expiration, the applicable participant is prohibited by law or the Company’s insider trading policy from exercising the option, which extension shall expire on the thirtieth (30th) day following the date such prohibition no longer applies. Options granted under the 2018 Plan may either be ISOs or options which are not intended to qualify as ISOs, or nonqualified stock options (“NQSOs”). Other than in connection with a change in our capitalization, at any time when the exercise price of an option is above the fair market value of a share, we will not, without stockholder approval, cancel and re-grant such option, exchange such option for cash or a new award or otherwise reprice such option.

Stock Appreciation Rights

A stock appreciation right provides the right to the monetary equivalent of the increase in value of a specified number of the shares over a specified period of time after the right is granted. Stock appreciation rights may be granted to participants either in tandem with or as a component of other awards granted under the 2018 Plan (“tandem SARs”) or not in conjunction with other awards (“freestanding SARs”). All freestanding SARs will be granted subject to the same terms and conditions applicable to options as set forth above and in the 2018 Plan and all tandem SARs will have the same exercise price, vesting, exercisability, forfeiture and termination provisions as the award to which they relate. Other than in connection with a change in our capitalization, at any time when the exercise price of a stock appreciation right is above the fair market value of a share, we will not, without stockholder approval, cancel and re-grant such stock appreciation right, exchange such stock appreciation right for cash or a new award or otherwise reprice such stock appreciation right.

Restricted Stock and Restricted Stock Units

Restricted stock is an award or issuance of shares the grant, issuance, retention, vesting and/or transferability of which is subject during specified periods of time to conditions (including continued employment or performance conditions) and terms as the administrator deems appropriate. Restricted stock units are awards denominated in units of shares under which the issuance of shares is subject to conditions (including continued employment or performance conditions) and terms as the administrator deems appropriate.

Participants holding shares of restricted stock granted under the 2018 Plan may exercise full voting rights with respect to those shares during the period of restriction, unless determined otherwise by the administrator. Participants will have no voting rights with respect to shares underlying restricted stock units unless and until such shares are reflected as issued and outstanding shares on our stock ledger. Participants in whose name an award of restricted stock and/or restricted stock units is granted will be entitled to receive all dividends and other distributions paid with respect to the shares underlying such award, unless determined otherwise by the administrator. The administrator will determine whether any such dividends or distributions will be automatically reinvested in additional shares or will be payable in cash; provided that such additional shares and/or cash will be subject to the same restrictions and vesting conditions as the award with respect to which they were distributed. Notwithstanding anything herein to the contrary, in no event will dividends or dividend equivalents be currently payable with respect to unvested or unearned restricted stock or restricted stock units.

Incentive Bonuses

Each incentive bonus will confer upon the participant the opportunity to earn a future payment tied to the level of achievement with respect to one or more performance criteria established for a performance period of not less than one year. The administrator will establish the performance criteria and level of achievement versus these criteria that will determine the threshold, target and maximum amount payable under an incentive bonus, which criteria may be based on financial performance and/or personal performance evaluations.

Deferral of Gains

The administrator may, in an award agreement or otherwise, provide for the deferred delivery of shares upon settlement, vesting or other events with respect to restricted stock or restricted stock units, or in payment or satisfaction of an incentive bonus.



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Qualifying Performance Criteria

The administrator may establish performance criteria and level of achievement versus such criteria that will determine the number of shares, units or cash to be granted, retained, vested, issued or issuable under or in settlement of or the amount payable pursuant to an award, which criteria may be based on one or more of the following performance criteria, or derivations of such performance criteria or other standards of financial performance and/or personal performance evaluations, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or subsidiary, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group, in each case as specified by the Administrator: (i) cash flow (before or after dividends), (ii) earning (including earnings before interest and taxes, which is referred to as EBIT, and earnings before interest, taxes, depreciation and amortization, which is referred to as EBITDA) or earnings per share, (iii) stock price, (iv) return on equity, (v) total stockholder return, (vi) return on capital or investment (including return on total capital, return on invested capital, or return on investment), (vii) return on assets or net assets, (viii) market capitalization, (ix) economic value added, (x) debt leverage (debt to capital), (xi) revenue, (xii) income or net income, (xiii) operating income, (xiv) operating profit or net operating profit, (xv) operating margin or profit margin, (xvi) return on operating revenue, (xvii) cash from operations, (xviii) operating ratio, (xix) operating revenue, (xx) NSR and/or total backlog, (xxi) days sales outstanding, (xxii) customer service, (xxiii) operational safety, reliability and/or efficiency; (xxiv) environmental incidents; (xxv) personal safety; (xxvi) cost management; (xxvii) growth and productivity metrics; or (xxviii) synergies related to acquisitions or major capital projects or (xxix) such other performance criteria as may be determined by the administrator from time to time.

Settlement of Awards

Awards may be settled in shares, cash or a combination thereof, as determined by the administrator.

Minimum Vesting Provisions

Awards granted under the 2018 Plan may not become exercisable, vest or be settled, in whole or in part, prior to the one-year anniversary of the date of grant, except that the administrator may provide that awards become exercisable, vest or settle prior to such date in the event of the participant’s death or disability or in connection with a change in control. Notwithstanding the foregoing, up to 5% of the maximum aggregate number of shares authorized for issuance under the 2018 Plan may be issued pursuant to awards subject to any, or no, vesting conditions, as the administrator determines appropriate.

Agreement to Repayment of Incentive Compensation When Required Under Federal Law

To the extent any policy adopted by the New York Stock Exchange (or any other exchange on which the securities of the Company are listed) pursuant to Section 10D of the Securities Exchange Act of 1934 requires the repayment of incentive-based compensation received by a participant, whether paid pursuant to an award granted under the 2018 Plan or any other plan of incentive-based compensation maintained in the past or adopted in the future by the Company, by accepting an award under the 2018 Plan, the participant agrees to the repayment of such amounts to the extent required by such policy and applicable law.

Amendment and Termination

The Board may amend, alter or discontinue the 2018 Plan, and the administrator may amend or alter any agreement or other document evidencing an award made under the 2018 Plan, except no such amendment may, without the approval of our stockholders (other than in respect of a change in our capitalization), amend the 2018 Plan in any manner requiring stockholder approval by law or under the New York Stock Exchange listing requirements.

No amendment or alteration to the 2018 Plan or an award or award agreement may be made which would impair the rights of the holder of an award, without such holder’s consent, provided that no such consent will be required if the administrator determines in its sole discretion and prior to the date of any



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change-in-control that such amendment or alteration either is required or advisable in order for the Company, the 2018 Plan or the award to satisfy any law or regulation or to meet the requirements of or avoid adverse financial accounting consequences under any accounting standard.

Change-in-Control

Unless otherwise expressly provided in the award agreement or another contract, including an employment agreement, or under the terms of a transaction constituting a change-in-control, the administrator may provide that any or all of the following will occur upon a participant’s termination of employment within 24 months following a change-in-control: (i) in the case of an option or stock appreciation right, the participant will have the ability to exercise any portion of the option or stock appreciation right not previously exercisable, (ii) in the case of a performance award or incentive bonus, the participant will have the right to receive a payment equal to the target amount payable or, if greater, a payment based on performance through a date determined by the administrator prior to the change-in-control, and (iii) in the case of shares issued in payment of an incentive bonus, and/or in the case of outstanding restricted stock and/or restricted stock units, all conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such award will immediately lapse. Notwithstanding anything else in the 2018 Plan to the contrary, in the event of a change-in-control in which the acquiring or surviving company in the transaction does not assume or continue outstanding awards upon the change-in-control, immediately prior to the change-in-control, all awards that are not assumed or continued will be treated as follows effective immediately prior to the change-in-control: (a) in the case of an option or stock appreciation right, the participant will have the ability to exercise such option or stock appreciation right, including any portion of the option or stock appreciation right not previously exercisable, (b) in the case of a performance award or incentive bonus, the participant will have the right to receive a payment equal to the target amount payable or, if greater, a payment based on performance through a date determined by the administrator prior to the change-in-control, and (c) in the case of shares issued in payment of an incentive bonus, and/or in the case of outstanding restricted stock and/or restricted stock units, all conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such award will immediately lapse.

Adjustments

The number and kind of shares available for issuance under the 2018 Plan (including under any awards then outstanding), and the number and kind of shares subject to the individual limits set forth in the 2018 Plan, will be equitably adjusted by the administrator as it determines appropriate to reflect any reorganization, reclassification, combination of shares, stock split, reverse stock split, spin-off, dividend or distribution of securities, property or cash (other than regular, quarterly cash dividends), or any other event or transaction that affects the number or kind of shares of the Company outstanding. Such adjustment will be designed to comply with Sections 409A and 424 of the Code or, except as otherwise expressly provided in the 2018 Plan, may be designed to treat the shares available under the 2018 Plan and subject to awards as if they were all outstanding on the record date for such event or transaction or to increase the number of such shares to reflect a deemed reinvestment in shares of the amount distributed to our stockholders. The terms of any outstanding award will also be equitably adjusted by the administrator as to price, number or kind of shares subject to such award, vesting, and other terms to reflect the foregoing events, which adjustments need not be uniform as between different awards or different types of awards.

Transferability

Awards may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated by a participant other than by will or the laws of descent and distribution, and each option or stock appreciation right may be exercisable only by the participant during his or her lifetime. Notwithstanding the foregoing, to the extent permitted by the administrator, the person to whom an award is initially granted may make certain limited transfers to certain family members, family trusts, or family partnerships.



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No Right to Company Employment

Nothing in the 2018 Plan or an award agreement will interfere with or limit in any way our right, our subsidiaries and/or our affiliates’ right to terminate any participant’s employment, service on the Board or service for us at any time or for any reason not prohibited by law, nor will the 2018 Plan or an award itself confer upon any participant any right to continue his or her employment or service for any specified period of time. Neither an award nor any benefits arising under the 2018 Plan will constitute an employment contract with us, any subsidiary and/or any affiliates.

Compliance with Law

The 2018 Plan, the grant, issuance, vesting, exercise and settlement of awards thereunder, and our obligation to sell, issue or deliver shares under such awards, will be subject to all applicable foreign, federal, state and local laws, rules and regulations, stock exchange rules and regulations, and to such approvals by any governmental or regulatory agency as may be required. We will not be required to issue or deliver any certificates for shares prior to the completion of any registration or qualification of such shares under any federal or state law or issuance of any ruling or regulation of any government body which we will, in our sole discretion, determine to be necessary or advisable.

Effective Date and Termination of the 2018 Plan

The 2018 Plan was adopted by the Board on March 2, 2018. The 2018 Plan will become effective upon approval by our stockholders. The 2018 Plan will remain available for the grant of awards until March 1, 2028.

Federal Income Tax Treatment

The following discussion of the federal income tax consequences of the 2018 Plan is intended to be a summary of applicable federal law as currently in effect. It should not be taken as tax advice by 2018 Plan participants, who are urged to consult their individual tax advisors.

Stock Options

ISOs and NQSOs are treated differently for federal income tax purposes. ISOs are intended to comply with the requirements of Section 422 of the Code. NQSOs do not comply with such requirements.

An optionee is not taxed on the grant or exercise of an ISO. The difference between the exercise price and the fair market value of the shares on the exercise date will, however, be a preference item for purposes of the alternative minimum tax. If an optionee holds the shares acquired upon exercise of an ISO for at least two years following the option grant date and at least one year following exercise, the optionee’s gain, if any, upon a subsequent disposition of such shares is long term capital gain. The measure of the gain is the difference between the proceeds received on disposition and the optionee’s basis in the shares (which generally equals the exercise price). If an optionee disposes of stock acquired pursuant to exercise of an ISO before satisfying these holding periods, the optionee will recognize both ordinary income and capital gain in the year of disposition. We are not entitled to an income tax deduction on the grant or exercise of an ISO or on the optionee’s disposition of the shares after satisfying the holding period requirement described above. If the holding periods are not satisfied, we will be entitled to a deduction in the year the optionee disposes of the shares in an amount equal to the ordinary income recognized by the optionee.

In order for an option to qualify for ISO tax treatment, the grant of the option must satisfy various other conditions more fully described in the Code. We do not guarantee that any option will qualify for ISO tax treatment even if the option is intended to qualify for such treatment. In the event an option intended to be an ISO fails to so qualify, it will be taxed as an NQSO described below.

An optionee is not taxed on the grant of an NQSO. On exercise, the optionee recognizes ordinary income equal to the difference between the exercise price and the fair market value of the shares acquired on the date of exercise. We are entitled to an income tax deduction in the year of exercise in the amount recognized by the optionee as ordinary income. The optionee’s gain (or loss) on subsequent disposition



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of the shares is long term capital gain (or loss) if the shares are held for at least one year following exercise. We do not receive a deduction for this gain.

Stock Appreciation Rights

An optionee is not taxed on the grant of a stock appreciation right. On exercise, the optionee recognizes ordinary income equal to the cash or the fair market value of any shares received. We are entitled to an income tax deduction in the year of exercise in the amount recognized by the optionee as ordinary income.

Restricted Stock and Restricted Stock Units

Grantees of restricted stock or restricted stock units do not recognize income at the time of the grant. When the award vests or is paid, grantees generally recognize ordinary income in an amount equal to the fair market value of the stock or units at such time, and we will receive a corresponding deduction. However, no later than 30 days after a participant receives an award of restricted stock, the participant may elect to recognize taxable ordinary income in an amount equal to the fair market value of the shares at the time of receipt. Provided that the election is made in a timely manner, when the restrictions on the shares lapse, the participant will not recognize any additional income. If the participant forfeits the shares to us (e.g., upon the participant’s termination prior to vesting), the participant may not claim a deduction with respect to the income recognized as a result of the election. Dividends paid with respect to unvested shares of restricted stock generally will be taxable as ordinary income to the participant at the time the dividends are received.

Incentive Bonuses

A participant will have taxable income at the time an incentive bonus award becomes payable, and, if the participant has timely elected deferral to a later date, such later date. At that time, the participant will recognize ordinary income equal to the value of the amount then payable.

Company Deduction and Code Section 162(m)

The Amended 2011 LTIP was originally designed to allow us to provide “performance-based compensation” that was tax deductible without regard to the limits of Section 162(m) of the Internal Revenue Code and the regulations thereunder (Section 162(m)). However, the performance-based compensation exception under Section 162(m) was eliminated by the Tax Cuts and Jobs Act of 2017. As such, beginning in 2018, compensation payable, including under the 2018 Plan, to any covered employee as defined under Section 162(m) as amended (which generally include all of named executive officers, including the chief financial officer) in excess of $1,000,000 in any calendar year will not be deductible by us and our subsidiaries. The Compensation Committee may nonetheless grant compensation that is not deductible to the extent it determines appropriate.

New Plan Benefits

The benefits that will be awarded or paid under the 2018 Plan are not currently determinable. Such awards are within the discretion of the Compensation Committee, and the Compensation Committee has not determined future awards or who might receive them. Information about awards granted in fiscal year 2017 under the Amended 2011 Plan to our NEOs can be found in the table under the heading “Grants of Plan-Based Awards in 2017” on page 46 of this Proxy Statement. As of March 5, 2018, the closing price of a share of our common stock was $94.45.

Our Board of Directors recommends that you vote FOR the Andeavor 2018 Long-Term Incentive Plan.



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Appendix A

Andeavor 2018 Long-Term Incentive Plan


1.	Purpose

The purpose of the Andeavor 2018 Long-Term Incentive Plan (the “Plan”) is to advance the interests of Andeavor (the “Company”) by stimulating the efforts of employees, officers, non-employee directors and other service providers, in each case who are selected to be participants, by heightening the desire of such persons to continue working toward and contributing to the success and progress of the Company. The Plan supersedes the Company’s existing Amended and Restated 2011 Long-Term Incentive Plan with respect to future awards, and provides for the grant of Incentive and Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock and Restricted Stock Units, any of which may be performance-based, and for Incentive Bonuses, which may be paid in cash or stock or a combination thereof, as determined by the Administrator.


2.	Definitions

As used in the Plan, the following terms shall have the meanings set forth below:

(a)“2006 LTIP” means the Company’s Amended and Restated 2006 Long-Term Incentive Plan.

(b)“2011 LTIP” means the Company’s Amended and Restated 2011 Long-Term Incentive Plan.

(d)“Award” means an Incentive Stock Option, Nonqualified Stock Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit or Incentive Bonus granted to a Participant pursuant to the provisions of the Plan, any of which the Administrator may structure to qualify in whole or in part as a Performance Award.

(e)“Award Agreement” means a written or electronic agreement or other instrument as may be approved from time to time by the Administrator implementing the grant of each Award. An Award Agreement may be in the form of an agreement to be executed by both the Participant and the Company (or an authorized representative of the Company) or certificates, notices, memoranda or similar instruments as approved by the Administrator.

(f)“Board” means the board of directors of the Company.

(g)“Cause” means, unless otherwise set forth in an Award Agreement or other written agreement between the Company and the applicable Participant, a finding by the Administrator that a Participant, before or after his or her Termination of Employment (i) committed fraud, embezzlement, theft, felony or an act of dishonesty in the course of his employment by the Company or an affiliate which conduct damaged the Company or an affiliate or (ii) disclosed trade secrets of the Company or an affiliate. The findings and decision of the Administrator with respect to such matter, including those regarding the acts of the Participant and the damage done to the Company, will be final for all purposes. No decision of the Administrator, however, will affect the finality of the discharge of the individual by the Company or an affiliate.

(h)“Change in Control” means (i) there shall be consummated (A) any consolidation or merger of Company in which Company is not the continuing or surviving corporation or pursuant to which



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shares of Company’s common stock would be converted into cash, securities or other property, other than a merger of Company where a majority of the board of directors of the surviving corporation are, and for a one-year period after the merger continue to be, persons who were directors of Company immediately prior to the merger or were elected as directors, or nominated for election as director, by a vote of at least two-thirds of the directors then still in office who were directors of Company immediately prior to the merger, or (B) any sale, lease, exchange or transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of Company, or (ii) the shareholders of Company shall approve any plan or proposal for the liquidation or dissolution of Company, or (iii) (A) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934), other than Company or a Subsidiary thereof or any employee benefit plan sponsored by Company or a Subsidiary thereof, shall become the beneficial owner (within the meaning of Rule 13c-3 under the Securities Exchange Act of 1934) of securities of Company representing thirty-five percent (35%) or more of the combined voting power of Company’s then outstanding securities ordinarily (and apart from rights accruing in special circumstances) having the right to vote in the election of directors, as a result of a tender or exchange offer, open market purchases, privately negotiated purchases or otherwise, and (B) at any time during a period of one-year thereafter, individuals who immediately prior to the beginning of such period constituted the Board shall cease for any reason to constitute at least a majority thereof, unless election or the nomination by the Board for election by Company’s shareholders of each new director during such period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period.

(i)“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rulings and regulations issued thereunder.

(j)“Company” means Andeavor, a Delaware corporation.

(k)“Disability” means, as determined by the Administrator in its discretion exercised in good faith, a physical or mental condition of a Participant that would entitle him or her to payment of disability income payments under the Company’s long-term disability insurance policy or plan for employees as then in effect; or in the event that a Participant is not covered, for whatever reason under the Company’s long-term disability insurance policy or plan for employees or in the event the Company does not maintain such a long-term disability insurance policy, “Disability” means a permanent and total disability as defined in section 22(e)(3) of the Code. A determination of Disability may be made by a physician selected or approved by the Administrator and, in this respect, Participants shall submit to an examination by such physician upon request by the Administrator.

(l)“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor Act thereto.

(m)“Fair Market Value” means, as of any given date, the closing sales price on such date during normal trading hours (or, if there are no reported sales on such date, on the last date prior to such date on which there were sales) of the Shares on the New York Stock Exchange or, if not listed on such exchange, on any other national securities exchange on which the Shares are listed or on an inter-dealer quotation system, in any case, as reported in such source as the Administrator shall select. If there is no regular public trading market for the Shares, the Fair Market Value of the Shares shall be determined by the Administrator in good faith and in compliance with Section 409A of the Code.

(n)“Incentive Bonus” means a bonus opportunity awarded under Section 9 pursuant to which a Participant may become entitled to receive an amount based on satisfaction of enumerated performance criteria.

(o)“Incentive Stock Option” means a stock option that is intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code.



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(p)“Nonemployee Director” means each person who is, or is elected to be, a member of the Board and who is not an employee of the Company or any Subsidiary.

(q)“Nonqualified Stock Option” means a stock option that is not intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code.

(r)“Option” means an Incentive Stock Option and/or a Nonqualified Stock Option granted pursuant to Section 6 of the Plan.

(s)“Participant” means any individual described in Section 3 to whom Awards have been granted from time to time by the Administrator and any authorized transferee of such individual.

(t)“Performance Award” means an Award, the grant, issuance, retention, vesting or settlement of which is subject to satisfaction of one or more performance criteria pursuant to Section 13.

(u)“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d).

(v)“Plan” means the Andeavor 2018 Long-Term Incentive Plan as set forth herein and as amended from time to time.

(w)“Restricted Stock” means Shares granted pursuant to Section 8 of the Plan.

(x)“Restricted Stock Unit” means an Award granted to a Participant pursuant to Section 8 pursuant to which Shares or cash in lieu thereof may be issued in the future.

(y)“Retirement” means, unless otherwise set forth in an Award Agreement or other written agreement between the Company and the applicable Participant, (i) for employees: retirement from active employment with the Company and its Subsidiaries: (A) at or after age 55 with 5 years of service recognized by the Company or (B) at or after age 50 with 80 points (with points meaning the sum of the Participant’s age and years of service recognized by the Company at the time of retirement), and (ii) for Nonemployee Directors: retirement from active service with the Company after having served as a Nonemployee Director for at least an aggregate of three full years (excluding any service while a full-time employee of the Company). The determination of the Administrator as to an individual’s Retirement shall be conclusive on all parties.

(z)“Share” means a share of the Company’s common stock, $0.16²/₃ par value per share (or such other par value as may be designated by act of the Company’s stockholders), subject to adjustment as provided in Section 12.

(aa)“Stock Appreciation Right” means a right granted pursuant to Section 7 of the Plan that entitles the Participant to receive, in cash or Shares or a combination thereof, as determined by the Administrator, value equal to or otherwise based on the excess of (i) the Fair Market Value of a specified number of Shares at the time of exercise over (ii) the exercise price of the right, as established by the Administrator on the date of grant.

(ab)“Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company where each of the corporations in the unbroken chain other than the last corporation owns stock possessing at least 50 percent or more of the total combined voting power of all classes of stock in one of the other corporations in the chain, and if specifically determined by the Administrator in the context other than with respect to Incentive Stock Options, may include an entity in which the Company has a significant ownership interest or that is directly or indirectly controlled by the Company.



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(ac)“Substitute Awards” means Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.

(ad)“Termination of Employment” means ceasing to serve as an employee of the Company and its Subsidiaries or, with respect to a Nonemployee Director or other service provider, ceasing to serve as such for the Company, except that with respect to all or any Awards held by a Participant (i) the Administrator may determine that a leave of absence or employment on a less than full-time basis is considered a “Termination of Employment,” (ii) the Administrator may determine that a transition of employment to service with a partnership, joint venture or corporation not meeting the requirements of a Subsidiary in which the Company or a Subsidiary is a party is not considered a “Termination of Employment,” (iii) service as a member of the Board shall constitute continued employment with respect to Awards granted to a Participant while he or she served as an employee and (iv) service as an employee of the Company or a Subsidiary shall constitute continued employment with respect to Awards granted to a Participant while he or she served as a member of the Board or other service provider. The Administrator shall determine whether any corporate transaction, such as a sale or spin-off of a division or subsidiary that employs a Participant, shall be deemed to result in a Termination of Employment with the Company and its Subsidiaries for purposes of any affected Participant’s Awards, and the Administrator’s decision shall be final and binding.


3.	Eligibility

Any person who is an officer or employee (including any director who is also an employee, in his or her capacity as such) of the Company or of any Subsidiary shall be eligible for selection by the Administrator for the grant of Awards hereunder. To the extent provided by Section 5(d), any Nonemployee Director shall be eligible for the grant of Awards hereunder as determined by the Administrator. Options intending to qualify as Incentive Stock Options may only be granted to employees of the Company or any Subsidiary within the meaning of the Code, as selected by the Administrator.


4.	Effective Date and Termination of Plan

This Plan was originally adopted by the Board on March 2, 2018 (the “Effective Date”), subject to approval by the Company’s stockholders. The Plan shall remain available for the grant of Awards until March 2, 2028. Notwithstanding the foregoing, the Plan may be terminated at such earlier time as the Board may determine. Termination of the Plan will not affect the rights and obligations of the Participants and the Company arising under Awards theretofore granted and then in effect.


5.	Shares Subject to the Plan and to Awards

(a)Aggregate Limits. The aggregate number of Shares issuable pursuant to all Awards under this Plan shall not exceed 1,850,000, plus (i) any Shares that, as of the date of shareholder approval the Plan, remain available for issuance pursuant to future awards under the 2011 LTIP, and (ii) any Shares subject to outstanding awards under the 2006 LTIP or 2011 LTIP that on or after the date of shareholder approval the Plan cease for any reason to be subject to such awards (other than by reason of exercise or settlement of the awards to the extent they are exercised for or settled in vested and nonforfeitable shares). The aggregate number of Shares available for grant under this Plan and the number of Shares subject to outstanding Awards shall be subject to adjustment as provided in Section 12. The Shares issued pursuant to Awards granted under this Plan may be shares that are authorized and unissued or shares that were reacquired by the Company, including shares purchased in the open market.

(b)Issuance of Shares. For purposes of Section 5(a), the aggregate number of Shares issued under this Plan at any time shall equal only the number of Shares actually issued upon exercise or settlement of an Award under this Plan. The aggregate number of Shares available for Awards under this



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Plan at any time shall not be reduced by (i) Shares subject to Awards that have been terminated, expired unexercised, forfeited or settled in cash, (ii) Shares subject to Awards that have been retained or withheld by the Company in payment or satisfaction of the exercise price, purchase price or tax withholding obligation of an Award, or (iii) Shares subject to Awards that otherwise do not result in the issuance of Shares in connection with payment or settlement thereof. In addition, Shares that have been delivered (either actually or by attestation) to the Company in payment or satisfaction of the exercise price, purchase price or tax withholding obligation of an Award shall be available for Awards under this Plan.

(c)Tax Code Limits. The aggregate number of Shares subject to Awards granted under this Plan during any calendar year to any one Participant shall not exceed 500,000, which number shall be calculated and adjusted pursuant to Section 12, but which number shall not count any tandem SARs (as defined in Section 7). The aggregate number of Shares that may be issued pursuant to the exercise of Incentive Stock Options granted under this Plan shall not exceed 1,850,000, which number shall be calculated and adjusted pursuant to Section 12 only to the extent that such calculation or adjustment will not affect the status of any option intended to qualify as an Incentive Stock Option under Section 422 of the Code. The maximum cash amount payable pursuant to an Incentive Bonus earned for any 12-month period to any Participant under this Plan shall not exceed $10,000,000.

(d)Director Awards. The aggregate dollar value of equity-based Awards (based on the grant date fair value of such Awards) granted under this Plan during any calendar year to any one Nonemployee Director shall not exceed $250,000; provided, however, that in any calendar year in which a Nonemployee Director first joins the Board of Directors or is designated as Chairman of the Board of Directors or Lead Director, the maximum number of shares subject to Awards granted to the Participant may be up to $500,000 and the foregoing limits shall not count any tandem SARs (as defined in Section 7).

(e)Substitute Awards. Substitute Awards shall not reduce the Shares authorized for issuance under the Plan or authorized for grant to a Participant in any calendar year. Additionally, in the event that a company acquired by the Company or any Subsidiary, or with which the Company or any Subsidiary combines, has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for issuance under the Plan; provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were employees, directors or other service providers of such acquired or combined company before such acquisition or combination.


6.	Options

(a)Option Awards. Options may be granted at any time and from time to time prior to the termination of the Plan to Participants as determined by the Administrator. No Participant shall have any rights as a stockholder with respect to any Shares subject to Option hereunder until said Shares have been issued. Each Option shall be evidenced by an Award Agreement. Options granted pursuant to the Plan need not be identical but each Option must contain and be subject to the terms and conditions set forth below.

(b)Price. The Administrator will establish the exercise price per Share under each Option, which, in no event will be less than the Fair Market Value of the Shares on the date of grant; provided, however, that the exercise price per Share with respect to an Option that is granted in connection with a merger or other acquisition as a substitute or replacement award for options held by optionees of the acquired entity may be less than 100% of the market price of the Shares on the date such Option is



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granted if such exercise price is based on a formula set forth in the terms of the options held by such optionees or in the terms of the agreement providing for such merger or other acquisition that satisfies the requirements of (i) Section 409A of the Code, if such options held by such optionees are not intended to qualify as “incentive stock options” within the meaning of Section 422 of the Code, and (ii) Section 424(a) of the Code, if such options held by such optionees are intended to qualify as “incentive stock options” within the meaning of Section 422 of the Code. The exercise price of any Option may be paid in Shares, cash or a combination thereof, as determined by the Administrator, including an irrevocable commitment by a broker to pay over such amount from a sale of the Shares issuable under an Option, the delivery of previously owned Shares and withholding of Shares otherwise deliverable upon exercise.

(c)No Repricing without Stockholder Approval. Other than in connection with a change in the Company’s capitalization (as described in Section 12), the Company shall not, without stockholder approval, reduce the exercise price of an Option and, at any time when the exercise price of an Option is above the Fair Market Value of a Share, the Company shall not, without stockholder approval (except in the case of a change in control), cancel and re grant such Option, exchange such Option for cash or a new Award or otherwise reprice such Option.

(d)Provisions Applicable to Options. The date on which Options become exercisable shall be determined at the sole discretion of the Administrator and set forth in an Award Agreement. The Administrator shall establish the term of each Option, which in no case shall exceed a period of ten (10) years from the date of grant; provided, however, the term of an Option (other than an Incentive Stock Option) shall be automatically extended if, at the time of its scheduled expiration, the Participant holding such Option is prohibited by law or the Company’s insider trading policy from exercising the Option, which extension shall expire on the thirtieth (30th) day following the date such prohibition no longer applies. All Options granted shall be subject to Section 18(e).

(e)Termination of Employment: Unless an Option earlier expires upon the expiration date established pursuant to Section 6(d), upon the Participant’s Termination of Employment, his or her rights to exercise an Option then held shall be only as follows, unless the Administrator specifies otherwise (either in an Award Agreement or otherwise):

(i)General. In general, any portion of any Option that is not vested as of the date of a Participant’s Termination of Employment shall be forfeited and returned to the Company; provided, however, that, subject to the limits imposed by Section 18 hereof, the Administrator may, in its sole discretion, in the event of a Participant’s retirement or involuntary Termination of Employment as the result of a reduction in force program (as approved by the Administrator in its sole discretion), provide for accelerated vesting of unvested Options upon such terms and the Administrator deems advisable (either in an Award Agreement or otherwise).

(ii)Death. Upon the death of a Participant while in the employ of the Company or any Subsidiary or while serving as a member of the Board, the Participant’s Options then held shall be exercisable by his or her estate, heir or beneficiary at any time during the period ending on the earlier of the date that is one (1) year after the date of the Participant’s death or the date the Option would otherwise terminate, but only to the extent that the Options are exercisable as of the date of the Participant’s death. Any and all Options that are not exercised during such period shall terminate as of the end of such period.

If a Participant should die following his or her Termination of Employment, any Options that remain outstanding on the date of the Participant’s death shall be exercisable by his or her estate, heir or beneficiary at any time during the period ending on the earlier of the date that is one (1) year after the date of the Participant’s death or the date the Option would otherwise terminate, but only to the extent that the Option was exercisable as of the Participant’s death. Any and all of the deceased Participant’s Options that are not exercised during the such period shall terminate as of the end of such period. A Participant’s estate shall mean his or her legal representative or



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other person who so acquires the right to exercise the Option by bequest or inheritance or by reason of the death of the Participant.

(iii) Disability. Upon Termination of Employment as a result of the Participant’s Disability, the Participant’s Options then held shall be exercisable during the period ending on the earlier of the date that is one (1) year after the date of Participant’s Termination of Employment or the date the Option would otherwise terminate, but only to the extent that the Options are exercisable as of the Participant’s Termination of Employment. Any and all Options that are not exercised during such period shall terminate as of the end of such period.

(iv) Retirement. Upon the Participant’s Termination of Employment by reason of his or her Retirement, the Participant’s Options then held shall be exercisable during the period ending on the earlier of the date that is three (3) years after the date of the Participant’s Termination of Employment or the expiration date of such Option, but only to the extent that the Options are exercisable as of the date of the Participant’s Termination of Employment. Any and all Options that are not exercised during such period shall terminate as of the end of such period.

(v)Cause. Upon the date of a Participant’s Termination of Employment for Cause, any Option that is unexercised prior to the date of the Participant’s Termination of Employment shall terminate as of such date.

(vi) Other Reasons. Upon the date of a Participant’s Termination of Employment for any reason other than those stated above in Sections 6(e)(i), (e)(ii), (e)(iii), (e)(iv) and (e)(v) or as described in Section 15, the Participant’s Options then held shall be exercisable during the period ending on the earlier of the date that is three (3) months after the date of the Participant’s Termination of Employment or the expiration date of such Option, but only to the extent that the Options are exercisable as of the date of the Participant’s Termination of Employment. Any and all Options that are not exercised during such period shall terminate as of the end of such period.

(f)Incentive Stock Options. Notwithstanding anything to the contrary in this Section 6, in the case of the grant of an Option intending to qualify as an Incentive Stock Option: (i) if the Participant owns stock possessing more than 10 percent of the combined voting power of all classes of stock of the Company (a “10% Shareholder”), the exercise price of such Option must be at least 110 percent of the Fair Market Value of the Shares on the date of grant and the Option must expire within a period of not more than five (5) years from the date of grant, and (ii) Termination of Employment will occur when the person to whom an Award was granted ceases to be an employee (as determined in accordance with Section 3401(c) of the Code and the regulations promulgated thereunder) of the Company and its Subsidiaries. Notwithstanding anything in this Section 6 to the contrary, options designated as Incentive Stock Options shall not be eligible for treatment under the Code as Incentive Stock Options (and will be deemed to be Nonqualified Stock Options) to the extent that either (a) the aggregate Fair Market Value of Shares (determined as of the time of grant) with respect to which such Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Subsidiary) exceeds $100,000, taking Options into account in the order in which they were granted, or (b) such Options otherwise remain exercisable but are not exercised within three (3) months of Termination of Employment (or such other period of time provided in Section 422 of the Code).

(g)No Stockholder Rights. Participants shall have no voting rights and will have no rights to receive dividends or dividend equivalents in respect of an Option or any Shares subject to an Option until the Participant has become the holder of record of such Shares.


7.	Stock Appreciation Rights

Stock Appreciation Rights may be granted to Participants from time to time either in tandem with or as a component of other Awards granted under the Plan (“tandem SARs”) or not in conjunction with



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other Awards (“freestanding SARs”) and may, but need not, relate to a specific Option granted under Section 6. The provisions of Stock Appreciation Rights need not be the same with respect to each grant or each recipient. Any Stock Appreciation Right granted in tandem with an Award may be granted at the same time such Award is granted or at any time thereafter before exercise or expiration of such Award. All freestanding SARs shall be granted subject to the same terms and conditions applicable to Options as set forth in Section 6 and all tandem SARs shall have the same exercise price, vesting, exercisability, forfeiture and termination provisions as the Award to which they relate. Subject to the provisions of Section 6 and the immediately preceding sentence, the Administrator may impose such other conditions or restrictions on any Stock Appreciation Right as it shall deem appropriate. Stock Appreciation Rights may be settled in Shares, cash or a combination thereof, as determined by the Administrator and set forth in the applicable Award Agreement. Other than in connection with a change in the Company’s capitalization (as described in Section 12), the Company shall not, without stockholder approval, reduce the exercise price of a Stock Appreciation Right and, at any time when the exercise price of a Stock Appreciation Right is above the Fair Market Value of a Share, the Company shall not, without stockholder approval (except in the case of a change in control), cancel and re grant such Stock Appreciation Right , exchange such Stock Appreciation Right for cash or a new Award or otherwise reprice such Stock Appreciation Right.


8.	Restricted Stock and Restricted Stock Units

(a)Restricted Stock and Restricted Stock Unit Awards. Restricted Stock and Restricted Stock Units may be granted at any time and from time to time prior to the termination of the Plan to Participants as determined by the Administrator. Restricted Stock is an award of Shares, the grant, issuance, retention, vesting and/or transferability of which is subject during specified periods of time to such conditions (including continued employment or performance conditions) and terms as the Administrator deems appropriate. Restricted Stock Units are Awards denominated in units of Shares under which the issuance of Shares is subject to such conditions (including continued employment or performance conditions) and terms as the Administrator deems appropriate. Each grant of Restricted Stock and Restricted Stock Units shall be evidenced by an Award Agreement. Unless determined otherwise by the Administrator, each Restricted Stock Unit will be equal to one Share and will entitle a Participant to the issuance of one Share. However, to the extent determined by the Administrator, Restricted Stock and Restricted Stock Units may be satisfied or settled in Shares, cash or a combination thereof. Restricted Stock and Restricted Stock Units granted pursuant to the Plan need not be identical but each grant of Restricted Stock and Restricted Stock Units must contain and be subject to the terms and conditions set forth below.

(b)Contents of Agreement. Each Award Agreement shall contain provisions regarding (i) the number of Shares or Restricted Stock Units subject to such Award or a formula for determining such number, (ii) the purchase price of the Shares, if any, and the means of payment, (iii) the performance criteria, if any, and level of achievement versus these criteria that shall determine the number of Shares or Restricted Stock Units granted, issued, retainable and/or vested, (iv) such terms and conditions on the grant, issuance, vesting and/or forfeiture of the Shares or Restricted Stock Units as may be determined from time to time by the Administrator, (v) the term of the performance period, if any, as to which performance will be measured for determining the number of such Shares or Restricted Stock Units, and (vi) restrictions on the transferability of the Shares or Restricted Stock Units. Shares issued under a Restricted Stock Award may be issued in the name of the Participant and held by the Participant or held by the Company, in each case as the Administrator may provide.

(c)Vesting and Performance Criteria. The grant, issuance, retention, vesting and/or settlement of shares of Restricted Stock and Restricted Stock Units will occur when and in such installments as the Administrator determines or under criteria the Administrator establishes, which may include performance criteria as set forth in Section 13. All grants of Restricted Stock and Restricted Stock Units shall be subject to Section 18(e).



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(d)Termination of Employment: Upon the Participant’s Termination of Employment, his or her rights to unvested Restricted Stock or Restricted Stock Units then held shall be only as follows, unless the Administrator specifies otherwise (either in an Award Agreement or otherwise):

(i)Death, Disability, Retirement. In the event of a Participant’s Termination of Employment by reason of his or her death, Disability, or Retirement, any portion of any Award of Restricted Stock and/or Restricted Stock Units that is not vested as of the date of a Participant’s Termination of Employment shall immediately be forfeited by the Participant; provided, however, that, subject to the limits imposed by Section 18 hereof, the Administrator may, in its sole discretion, provide for accelerated vesting of unvested Restricted Stock and/or Restricted Stock Units upon such terms and the Administrator deems advisable (either in an Award Agreement or otherwise).

(ii)Other Reasons. In the event of a Participant’s Termination of Employment for any reason other than those stated above in Section 8(d)(i), any portion of any Award of Restricted Stock and/or Restricted Stock Units that is not vested as of the date of a Participant’s Termination of Employment shall immediately be forfeited by the Participant; provided, however, that the Administrator may, in its sole discretion, other than in the event of a Termination of Employment for Cause and in a manner consistent with the requirements of Section 8(c), provide for accelerated vesting of unvested Restricted Stock and/or Restricted Stock Units upon such terms and the Administrator deems advisable (either in an Award Agreement or otherwise).

(iii) Performance Awards. Notwithstanding anything in this Section 8(d) to the contrary, with respect to any Performance Award granted pursuant to this Section 8, in the event a Participant’s Termination of Employment by reason of his or her death, Disability, Retirement, or involuntary Termination of Employment by the Company without Cause during a performance period (and, unless otherwise determined by the Administrator, in the case of a termination by the Company without Cause, at least twelve (12) months after the beginning of the performance), the Participant shall receive a prorated payout of the Performance Award. The prorated payout shall be determined by the Administrator, in its sole discretion, and shall be based upon the length of time that the Participant held the Performance Award during the performance period and the Company’s actual results during the performance period as compared to the performance criteria to which the Performance Award is subject.

(e)Voting Rights. Unless otherwise determined by the Administrator, Participants holding shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those shares during the period of restriction. Participants shall have no voting rights with respect to Shares underlying Restricted Stock Units unless and until such Shares are reflected as issued and outstanding shares on the Company’s stock ledger.

(f)Dividends and Distributions. Participants in whose name an Award of Restricted Stock and/or Restricted Stock Units is granted shall be entitled to receive all dividends and other distributions paid with respect to the Shares underlying such Award, unless determined otherwise by the Administrator. The Administrator will determine whether any such dividends or distributions will be automatically reinvested in additional Shares or will be payable in cash; provided that such additional Shares and/or cash shall subject to the same restrictions and vesting conditions as the Award with respect to which they were distributed. Notwithstanding anything herein to the contrary, in no event shall dividends or dividend equivalents be currently payable with respect to unvested or unearned Restricted Stock or Restricted Stock Units.



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9.	Incentive Bonuses

(a)General. Each Incentive Bonus Award will confer upon the Participant the opportunity to earn a future payment tied to the level of achievement with respect to one or more performance criteria established for a performance period.

(b)Incentive Bonus Document. The terms of any Incentive Bonus will be set forth in an Award Agreement or other written document establishing the terms and conditions of the Award. Each such Award Agreement or other written document shall contain, as applicable, provisions regarding (i) the threshold, target and maximum amount payable to the Participant as an Incentive Bonus, (ii) the performance criteria and level of achievement versus these criteria that shall determine the amount of such payment, (iii) the term of the performance period as to which performance shall be measured for determining the amount of any payment, (iv) the timing of any payment earned by virtue of performance, (v) restrictions on the alienation or transfer of the Incentive Bonus prior to actual payment, (vi) forfeiture provisions and (vii) such further terms and conditions, in each case not inconsistent with this Plan as may be determined from time to time by the Administrator.

(c)Performance Criteria. The Administrator shall establish the performance criteria (as specified in Section 13) and level of achievement versus these criteria that shall determine the threshold, target and maximum amount payable under an Incentive Bonus, which criteria may be based on financial performance and/or personal performance evaluations.

(d)Timing and Form of Payment. The Administrator shall determine the timing of payment of any Incentive Bonus. Payment of the amount due under an Incentive Bonus may be made in cash or in Shares, as determined by the Administrator. The Administrator may provide for or, subject to such terms and conditions as the Administrator may specify, may permit a Participant to elect for the payment of any Incentive Bonus to be deferred to a specified date or event. Notwithstanding anything herein to the contrary, in no event shall dividends or dividend equivalents be payable with respect to unvested or unearned Incentive Bonus Awards paid in Shares.

(e)Discretionary Adjustments. Notwithstanding satisfaction of any performance goals the amount paid under an Incentive Bonus on account of either financial performance or personal performance evaluations may, to the extent specified in the Award Agreement or other written document establishing the terms and conditions of the Award, be reduced or increased by the Administrator on the basis of such further considerations as the Administrator shall determine.


10.	Deferral of Gains

The Administrator may, in an Award Agreement or otherwise, provide for the deferred delivery of Shares upon settlement, vesting or other events with respect to Restricted Stock or Restricted Stock Units, or in payment or satisfaction of an Incentive Bonus. Notwithstanding anything herein to the contrary, in no event will any deferral of the delivery of Shares or any other payment with respect to any Award be allowed if the Administrator determines, in its sole discretion, that the deferral would result in the imposition of the additional tax under Section 409A(a)(1)(B) of the Code. No Award shall provide for deferral of compensation that does not comply with Section 409A of the Code, unless the Board, at the time of grant, specifically provides that the Award is not intended to comply with Section 409A of the Code. The Company, the Board and the Administrator shall have no liability to a Participant, or any other party, if an Award that is intended to be exempt from, or compliant with, Section 409A of the Code is not so exempt or compliant or for any action taken by the Board or Administrator.


11.	Conditions and Restrictions Upon Securities Subject to Awards

The Administrator may provide that the Shares issued upon exercise of an Option or Stock Appreciation Right or otherwise subject to or issued under an Award shall be subject to such further



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agreements, restrictions, conditions or limitations as the Administrator in its discretion may specify prior to the exercise of such Option or Stock Appreciation Right or the grant, vesting or settlement of such Award, including without limitation, conditions on vesting or transferability, forfeiture or repurchase provisions and method of payment for the Shares issued upon exercise, vesting or settlement of such Award (including the actual or constructive surrender of Shares already owned by the Participant) or payment of taxes arising in connection with an Award. Without limiting the foregoing, such restrictions may address the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any Shares issued under an Award, including without limitation (i) restrictions under an insider trading policy or pursuant to applicable law, (ii) restrictions designed to delay and/or coordinate the timing and manner of sales by Participant and holders of other Company equity compensation arrangements, (iii) restrictions in connection with any underwritten public offering by the Company of the Company’s securities pursuant to an effective registration statement filed under the Securities Act of 1933, (iv) restrictions as to the use of a specified brokerage firm for such resales or other transfers, and (v) provisions requiring Shares to be sold on the open market or to the Company in order to satisfy tax withholding or other obligations.


12.	Adjustment of and Changes in the Stock

The number and kind of Shares available for issuance under this Plan (including under any Awards then outstanding), and the number and kind of Shares subject to the individual limits set forth in Section 5 of this Plan, shall be equitably adjusted by the Administrator as it determines appropriate to reflect any reorganization, reclassification, combination of shares, stock split, reverse stock split, spin-off, dividend or distribution of securities, property or cash (other than regular, quarterly cash dividends), or any other event or transaction that affects the number or kind of Shares of the Company outstanding. Such adjustment shall be designed to comply with Sections 409A and 424 of the Code or, except as otherwise expressly provided in Section 5(c) of this Plan, may be designed to treat the Shares available under the Plan and subject to Awards as if they were all outstanding on the record date for such event or transaction or to increase the number of such Shares to reflect a deemed reinvestment in Shares of the amount distributed to the Company’s securityholders. The terms of any outstanding Award shall also be equitably adjusted by the Administrator as to price, number or kind of Shares subject to such Award, vesting, and other terms to reflect the foregoing events, which adjustments need not be uniform as between different Awards or different types of Awards.

In the event there shall be any other change in the number or kind of outstanding Shares, or any stock or other securities into which such Shares shall have been changed, or for which it shall have been exchanged, by reason of a Change in Control, other merger, consolidation or otherwise, then the Administrator shall, in its sole discretion, determine the appropriate and equitable adjustment, if any, to be effected.

No right to purchase fractional shares shall result from any adjustment in Awards pursuant to this Section 12. In case of any such adjustment, the Shares subject to the Award shall be rounded down to the nearest whole share. The Company shall notify Participants holding Awards subject to any adjustments pursuant to this Section 12 of such adjustment, but (whether or not notice is given) such adjustment shall be effective and binding for all purposes of the Plan.

Unless otherwise expressly provided in the Award Agreement or another contract, including an employment agreement, or under the terms of a transaction constituting a Change in Control, the Administrator may provide that any or all of the following shall occur upon a Participant’s Termination of Employment within twenty-four (24) months following a Change in Control: (a) in the case of an Option or Stock Appreciation Right, the Participant shall have the ability to exercise any portion of the Option or Stock Appreciation Right not previously exercisable, (b) in the case of a Performance Award or Incentive Bonus, the Participant shall have the right to receive a payment equal to the target amount payable or, if greater, a payment based on performance through a date determined by the Administrator prior to the Change in Control, and (c) in the case of Shares issued in payment of an Incentive Bonus, and/or in the



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case of outstanding Restricted Stock and/or Restricted Stock Units, all conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such Award shall immediately lapse. Notwithstanding anything herein to the contrary, in the event of a Change in Control in which the acquiring or surviving company in the transaction does not assume, substitute or continue outstanding Awards upon the Change in Control, immediately prior to the Change in Control, all Awards that are not assumed, substituted or continued shall be treated as follows effective immediately prior to the Change in Control: (a) in the case of an Option or Stock Appreciation Right, the Participant shall have the ability to exercise such Option or Stock Appreciation Right, including any portion of the Option or Stock Appreciation Right not previously exercisable, (b) in the case of a Performance Award or Incentive Bonus, the Participant shall have the right to receive a payment equal to the target amount payable or, if greater, a payment based on performance through a date determined by the Administrator prior to the Change in Control, and (c) in the case of Shares issued in payment of an Incentive Bonus, and/or in the case of outstanding Restricted Stock and/or Restricted Stock Units, all conditions to the grant, issuance, retention, vesting or transferability of, or any other restrictions applicable to, such Award shall immediately lapse.


13.	Performance Awards

A Performance Award may be identified as “Performance Share”, “Performance Equity”, “Performance Unit” or other such term as chosen by the Administrator. The Administrator may establish performance criteria and level of achievement versus such criteria that shall determine the number of Shares, units, or cash to be granted, retained, vested, issued or issuable under or in settlement of or the amount payable pursuant to an Award, which criteria may be based on one or more of the following performance criteria, or derivations of such performance criteria or other standards of financial performance and/or personal performance evaluations, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or subsidiary, either individually, alternatively or in any combination, and measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group, in each case as specified by the Administrator: (i) cash flow (before or after dividends), (ii) earning (including earnings before interest and taxes, which is referred to as EBIT, and earnings before interest, taxes, depreciation and amortization, which is referred to as EBITDA) or earnings per share, (iii) stock price, (iv) return on equity, (v) total stockholder return, (vi) return on capital or investment (including return on total capital, return on invested capital, or return on investment), (vii) return on assets or net assets, (viii) market capitalization, (ix) economic value added, (x) debt leverage (debt to capital), (xi) revenue, (xii) income or net income, (xiii) operating income, (xiv) operating profit or net operating profit, (xv) operating margin or profit margin, (xvi) return on operating revenue, (xvii) cash from operations, (xviii) operating ratio, (xix) operating revenue, (xx) NSR and/or total backlog, (xxi) days sales outstanding, (xxii) customer service, (xxiii) operational safety, reliability and/or efficiency; (xxiv) environmental incidents; (xxv) personal safety; (xxvi) cost management; (xxvii) growth and productivity metrics; (xxviii) synergies related to acquisitions or major capital projects or (xxix) such other performance criteria as may be determined by the Administrator from time to time.


14.	Transferability

Each Award may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated by a Participant other than by will or the laws of descent and distribution, and each Option or Stock Appreciation Right shall be exercisable only by the Participant during his or her lifetime. Notwithstanding the foregoing, outstanding Options may be exercised following the Participant’s death by the Participant’s beneficiaries or as permitted by the Administrator. Further and notwithstanding the foregoing, to the extent permitted by the Administrator, the person to whom an Award is initially granted (the “Grantee”) may transfer an Award to any “family member” of the Grantee (as such term is defined in Section A.1(a)(5) of the General Instructions to Form S-8 under the Securities Act of 1933, as amended (“Form S-8”)), to trusts solely for the benefit of such family members and to partnerships in which such family members and/or trusts are the only partners; provided that, (i) as a condition thereof, the transferor



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and the transferee must execute a written agreement containing such terms as specified by the Administrator, and (ii) the transfer is pursuant to a gift or a domestic relations order to the extent permitted under the General Instructions to Form S-8. Except to the extent specified otherwise in the agreement the Administrator provides for the Grantee and transferee to execute, all vesting, exercisability and forfeiture provisions that are conditioned on the Grantee’s continued employment or service shall continue to be determined with reference to the Grantee’s employment or service (and not to the status of the transferee) after any transfer of an Award pursuant to this Section 14, and the responsibility to pay any taxes in connection with an Award shall remain with the Grantee notwithstanding any transfer other than by will or intestate succession.


15.	Suspension or Termination of Awards

Except as otherwise provided by the Administrator, if at any time (including after a notice of exercise has been delivered or an award has vested) the Chief Executive Officer or any other person designated by the Administrator (each such person, an “Authorized Officer”) reasonably believes that a Participant may have committed an Act of Misconduct as described in this Section 15, the Authorized Officer, Administrator or the Board may suspend the Participant’s rights to exercise any Option, to vest in an Award, and/or to receive payment for or receive Shares in settlement of an Award pending a determination of whether an Act of Misconduct has been committed.

If the Administrator or an Authorized Officer determines a Participant has committed an act of embezzlement, fraud, dishonesty, nonpayment of any obligation owed to the Company or any Subsidiary, breach of fiduciary duty, violation of Company ethics policy or code of conduct, or deliberate disregard of the Company or Subsidiary rules resulting in loss, damage or injury to the Company or any Subsidiary, or if a Participant makes an unauthorized disclosure of any Company or Subsidiary trade secret or confidential information, solicits any employee or service provider to leave the employ or cease providing services to the Company or any Subsidiary, breaches any intellectual property or assignment of inventions covenant, engages in any conduct constituting unfair competition, breaches any non-competition agreement, induces any Company or Subsidiary customer to breach a contract with the Company or any Subsidiary or to cease doing business with the Company or any Subsidiary, or induces any principal for whom the Company or any Subsidiary acts as agent to terminate such agency relationship (any of the foregoing acts, an “Act of Misconduct”), then except as otherwise provided by the Administrator, (i) neither the Participant nor his or her estate nor transferee shall be entitled to exercise any Option or Stock Appreciation Right whatsoever, vest in or have the restrictions on an Award lapse, or otherwise receive payment of an Award, (ii) the Participant will forfeit all outstanding Awards and (iii) the Participant may be required, at the Administrator’s sole discretion, to return and/or repay to the Company any then unvested Shares previously issued under the Plan. In making such determination, the Administrator or an Authorized Officer shall give the Participant an opportunity to appear and present evidence on his or her behalf at a hearing before the Administrator or its designee or an opportunity to submit written comments, documents, information and arguments to be considered by the Administrator.


16.	Compliance with Laws and Regulations

This Plan, the grant, issuance, vesting, exercise and settlement of Awards thereunder, and the obligation of the Company to sell, issue or deliver Shares under such Awards, shall be subject to all applicable foreign, federal, state and local laws, rules and regulations, stock exchange rules and regulations, and to such approvals by any governmental or regulatory agency as may be required. The Company shall not be required to register in a Participant’s name or deliver any Shares prior to the completion of any registration or qualification of such shares under any foreign, federal, state or local law or any ruling or regulation of any government body which the Administrator shall determine to be necessary or advisable. To the extent the Company is unable to or the Administrator deems it infeasible to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, the Company and its Subsidiaries shall be relieved of any liability with respect to the failure to issue or sell



93 \|

such Shares as to which such requisite authority shall not have been obtained. No Option shall be exercisable and no Shares shall be issued and/or transferable under any other Award unless a registration statement with respect to the Shares underlying such Option is effective and current or the Company has determined that such registration is unnecessary.

In the event an Award is granted to or held by a Participant who is employed or providing services outside the United States, the Administrator may, in its sole discretion, modify the provisions of the Plan or of such Award as they pertain to such individual to comply with applicable foreign law or to recognize differences in local law, currency or tax policy. The Administrator may also impose conditions on the grant, issuance, exercise, vesting, settlement or retention of Awards in order to comply with such foreign law and/or to minimize the Company’s obligations with respect to tax equalization for Participants employed outside their home country.


17.	Withholding

To the extent required by applicable federal, state, local or foreign law, a Participant shall be required to satisfy, in a manner satisfactory to the Company, any withholding tax obligations that arise by reason of an Option exercise, disposition of Shares issued under an Incentive Stock Option, the vesting of or settlement of an Award, an election pursuant to Section 83(b) of the Code or otherwise with respect to an Award. To the extent a Participant makes an election under Section 83(b) of the Code, within ten days of filing such election with the Internal Revenue Service, the Participant must notify the Company in writing of such election. The Company and its Subsidiaries shall not be required to issue Shares, make any payment or to recognize the transfer or disposition of Shares until all withholding tax obligations are satisfied. The Administrator may provide for or permit these obligations to be satisfied through the mandatory or elective sale of Shares and/or by having the Company withhold a portion of the Shares that otherwise would be issued to him or her upon exercise of the Option or the vesting or settlement of an Award, or by tendering Shares previously acquired. In addition, the Company shall be entitled to deduct from other compensation payable to each Participant any withholding tax obligations that arise in connection with an Award or require the Participant to pay such sums directly to the Company in cash or by check.


18.	Administration of the Plan

(a)Administrator of the Plan. The Plan shall be administered by the Administrator who shall be the Compensation Committee of the Board or, in the absence of a Compensation Committee, the Board itself. Any power of the Administrator may also be exercised by the Board, except to the extent that the grant or exercise of such authority would cause any Award or transaction to become subject to (or lose an exemption under) the short-swing profit recovery provisions of Section 16 of the Securities Exchange Act of 1934. To the extent that any permitted action taken by the Board conflicts with action taken by the Administrator, the Board action shall control. The Compensation Committee may by resolution authorize one or more officers of the Company to perform any or all things that the Administrator is authorized and empowered to do or perform under the Plan, and for all purposes under this Plan, such officer or officers shall be treated as the Administrator; provided, however, that the resolution so authorizing such officer or officers shall specify the total number of Awards (if any) such officer or officers may award pursuant to such delegated authority. No such officer shall designate himself or herself as a recipient of any Awards granted under authority delegated to such officer. In addition, the Compensation Committee may delegate any or all aspects of the day-to-day administration of the Plan to one or more officers or employees of the Company or any Subsidiary, and/or to one or more agents.

(b)Powers of Administrator. Subject to the express provisions of this Plan, the Administrator shall be authorized and empowered to do all things that it determines to be necessary or appropriate in connection with the administration of this Plan, including, without limitation: (i) to prescribe, amend and rescind rules and regulations relating to this Plan and to define terms not otherwise defined herein; (ii) to determine which persons are Participants, to which of such Participants, if any, Awards shall be granted



		2018 Proxy Statement \| 94

hereunder and the timing of any such Awards; (iii) to grant Awards to Participants and determine the terms and conditions thereof, including the number of Shares subject to Awards and the exercise or purchase price of such Shares and the circumstances under which Awards become exercisable or vested or are forfeited or expire, which terms may but need not be conditioned upon the passage of time, continued employment, the satisfaction of performance criteria, the occurrence of certain events, or other factors; (iv) to establish and verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any Award; (v) to prescribe and amend the terms of the agreements or other documents evidencing Awards made under this Plan (which need not be identical) and the terms of or form of any document or notice required to be delivered to the Company by Participants under this Plan; (vi) to approve such further actions as it determines necessary or appropriate to the administration of the Plan and Awards, such as correcting a defect or supplying any omission, or reconciling any inconsistency so that the Plan or any agreement or other documents evidencing Awards made under this Plan complies with applicable law, regulations and listing requirements and so as to avoid unanticipated consequences or address unanticipated events (including any temporary closure of the New York Stock Exchange, disruption of communications or natural catastrophe) deemed by the Administrator to be inconsistent with the purposes of the Plan or any agreement or other documents evidencing Awards made under this Plan, provided that no such action shall be taken absent stockholder approval to the extent required under Section 19; (vii) to determine whether, and the extent to which, adjustments are required pursuant to Section 12; (viii) to interpret and construe this Plan, any rules and regulations under this Plan and the terms and conditions of any Award granted hereunder, and to make exceptions to any such provisions if the Administrator, in good faith, determines that it is necessary to do so in light of extraordinary circumstances and for the benefit of the Company; (ix) to approve corrections in the documentation or administration of any Award; and (x) to make all other determinations deemed necessary or advisable for the administration of this Plan. The Administrator may, in its sole and absolute discretion, without amendment to the Plan, waive or amend the operation of Plan provisions respecting exercise after Termination of Employment or service to the Company or an affiliate and, except as otherwise provided herein, adjust any of the terms of any Award.

(c)Determinations by the Administrator. All decisions, determinations and interpretations by the Administrator regarding the Plan, any rules and regulations under the Plan and the terms and conditions of or operation of any Award granted hereunder, shall be final and binding on all Participants, beneficiaries, heirs, assigns or other persons holding or claiming rights under the Plan or any Award. The Administrator shall consider such factors as it deems relevant, in its sole and absolute discretion, to making such decisions, determinations and interpretations including, without limitation, the recommendations or advice of any officer or other employee of the Company and such attorneys, consultants and accountants as it may select.

(d)Subsidiary Awards. In the case of a grant of an Award to any Participant employed by a Subsidiary, such grant may, if the Administrator so directs, be implemented by the Company issuing Shares to the Subsidiary, for such lawful consideration as the Administrator may determine, upon the condition or understanding that the Subsidiary will transfer the Shares to the Participant in accordance with the terms of the Award specified by the Administrator pursuant to the provisions of the Plan. Notwithstanding any other provision hereof, such Award may be issued by and in the name of the Subsidiary and shall be deemed granted on such date as the Administrator shall determine.

(e)Minimum Vesting Provisions. Notwithstanding anything herein to the contrary, Awards granted under the Plan may not become exercisable, vest or be settled, in whole or in part, prior to the one-year anniversary of the date of grant, except that the Administrator may provide that Awards become exercisable, vest or settle prior to such date in the event of the Participant’s death or disability or in connection with a Change in Control. Notwithstanding the foregoing, up to 5% of the maximum aggregate number of Shares authorized for issuance under the Plan (as set forth in Section 5(a)) may be issued pursuant to Awards subject to any, or no, vesting conditions, as the Administrator determines appropriate.



95 \|


19.	Amendment of the Plan or Awards

The Board may amend, alter or discontinue this Plan and the Administrator may amend, or alter any agreement or other document evidencing an Award made under this Plan but, except as provided pursuant to the provisions of Section 12, no such amendment shall, without the approval of the stockholders of the Company amend the Plan in any manner requiring stockholder approval by law or under the New York Stock Exchange listing requirements.

No amendment or alteration to the Plan or an Award or Award Agreement shall be made which would impair the rights of the holder of an Award, without such holder’s consent, provided that no such consent shall be required if the Administrator determines in its sole discretion and prior to the date of any Change in Control that such amendment or alteration either (i) is required or advisable in order for the Company, the Plan or the Award to satisfy any law or regulation or to meet the requirements of or avoid adverse financial accounting consequences under any accounting standard, or (ii) is not reasonably likely to significantly diminish the benefits provided under such Award, or that any such diminishment has been adequately compensated.


20.	No Liability of Company

The Company and any Subsidiary or affiliate which is in existence or hereafter comes into existence, the Board, the Compensation Committee and the Administrator shall not be liable to a Participant or any other person as to: (i) the non-issuance or sale of Shares as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder; and (ii) any tax consequence expected, but not realized, by any Participant or other person due to the receipt, exercise or settlement of any Award granted hereunder.


21.	Non-Exclusivity of Plan

Neither the adoption of this Plan by the Board nor the submission of this Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or the Administrator to adopt such other incentive arrangements as either may deem desirable, and such arrangements may be either generally applicable or applicable only in specific cases.


22.	Governing Law

This Plan and any agreements or other documents hereunder shall be interpreted and construed in accordance with the laws of the Texas to the extent not preempted by federal law. Any reference in this Plan or in the agreement or other document evidencing any Awards to a provision of law or to a rule or regulation shall be deemed to include any successor law, rule or regulation of similar effect or applicability.


23.	No Right to Employment, Reelection or Continued Service

Nothing in this Plan or an Award Agreement shall interfere with or limit in any way the right of the Company, its Subsidiaries and/or its affiliates to terminate any Participant’s employment, service on the Board or service for the Company at any time or for any reason not prohibited by law, nor shall this Plan or an Award itself confer upon any Participant any right to continue his or her employment or service for any specified period of time. Neither an Award nor any benefits arising under this Plan shall constitute an employment contract with the Company, any Subsidiary and/or its affiliates. Subject to Sections 4 and 19, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Board without giving rise to any liability on the part of the Company, its Subsidiaries and/or its affiliates.



		2018 Proxy Statement \| 96


24.	Unfunded Plan

The Plan is intended to be an unfunded plan. Participants are and shall at all times be general creditors of the Company with respect to their Awards. If the Administrator or the Company chooses to set aside funds in a trust or otherwise for the payment of Awards under the Plan, such funds shall at all times be subject to the claims of the creditors of the Company in the event of its bankruptcy or insolvency.


25.	Section 409A

It is intended that any Options, Stock Appreciation Rights, and Restricted Stock issued pursuant to this Plan and any Award Agreement shall not constitute “deferrals of compensation” within the meaning of Section 409A of the Code and, as a result, shall not be subject to the requirements of Section 409A of the Code. It is further intended that any Restricted Stock Units and Incentive Bonuses issued pursuant to this Plan and any Award Agreement or other written document establishing the terms and conditions of the Award (which may or may not constitute “deferrals of compensation,” depending on the terms of each Award) shall avoid any “plan failures” within the meaning of Section 409A(a)(1) of the Code. The Plan and each Award Agreement or other written document establishing the terms and conditions of an Award is to be interpreted and administered in a manner consistent with these intentions. However, no guarantee or commitment is made that the Plan, any Award Agreement or any other written document establishing the terms and conditions of an Award shall be administered in accordance with the requirements of Section 409A of the Code, with respect to amounts that are subject to such requirements, or that the Plan, any Award Agreement or any other written document establishing the terms and conditions of an Award shall be administered in a manner that avoids the application of Section 409A of the Code, with respect to amounts that are not subject to such requirements.


26.	Required Delay in Payment on Account of a Separation from Service

Notwithstanding any other provision in this Plan, any Award Agreement or any other written document establishing the terms and conditions of an Award, if any Award recipient is a “specified employee,” as defined in Treasury Regulations Section 1.409A-1(i), as of the date of his or her “Separation from Service” (as defined in authoritative IRS guidance under Section 409A of the Code), then, to the extent required by Treasury Regulations Section 1.409A-3(i)(2), any payment made to the Award recipient on account of his or her Separation from Service shall not be made before a date that is six months after the date of his or her Separation from Service. The Administrator may elect any of the methods of applying this rule that are permitted under Treasury Regulations section 1.409A-3(i)(2)(ii).


27.	Agreement to Repayments of Incentive Compensation When Repayments Are Required Under Federal Law

This provision applies to any policy adopted by the New York Stock Exchange (or any other exchange on which the securities of the Company are listed) pursuant to Section 10D of the Securities Exchange Act of 1934. To the extent any such policy requires the repayment of incentive-based compensation received by a Participant, whether paid pursuant to an Award granted under this Plan or any other plan of incentive-based compensation maintained in the past or adopted in the future by the Company, by accepting an Award under this Plan, the Participant agrees to the repayment of such amounts to the extent required by such policy and applicable law.



97 \|

ANDEAVOR

ANNUAL MEETING OF ~~TESORO CORPORATION~~ANDEAVOR

Date: May 4, ~~2017~~2018

Time: 8:00 A.M. (Central Time)

Place: ~~Tesoro Corporation,~~Andeavor, 19100 Ridgewood Parkway,

San Antonio, Texas 78259

Please make your marks like this:

Use dark black pencil or pen only

The Board of Directors Recommends a Vote FOR proposals 1, 2, ~~and~~ 3 and ~~1 YEAR on proposal~~ 4.



1:	Election of 1012 directors (all nominated as directors to serve for the term indicated in the Proxy Statement):
			For	Against	Abstain		Directors Recommend ê
	01	Rodney F. Chase	o	o	o		For
	02	Paul L. Foster	o	o	o
	03	Edward G. Galante	o	o	o		For
	0304	Gregory J. Goff	o	o	o		For
	0405	David Lilley	o	o	o		For
	0506	Mary Pat McCarthy	o	o	o		For
	0607	J.W. Nokes	o	o	o		For
	0708	William H. Schumann, III	o	o	o		For
	0809	Jeff A. Stevens	o	o	o
	10	Susan Tomasky	o	o	o		For
	0911	Michael E. Wiley	o	o	o		For
	1012	Patrick Y. Yang	o	o	o		For
			For	Against	Abstain
2:	To approve our named executive ~~officers'~~officers’ compensation in an advisory vote;		o	o	o		For
3:	To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal year ~~2017;~~2018;		o	o	o		For
			~~1 Year~~	~~2 Years~~	~~3 Years~~	~~Abstain~~
4:	~~Advisory vote on~~To approve the ~~frequency of future advisory votes on executive compensation.~~Andeavor 2018 Long-Term Incentive Plan.		o	o	o	o	~~1 Year~~For



To attend the meeting and vote your shares in person, please mark this box.				o

Authorized Signatures - This section must be completed for your Instructions to be executed.




Please Sign Here				Please Date Above

Please Sign Here				Please Date Above
Please sign exactly as your name(s) appears on your stock certificate. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the proxy.

ANDEAVOR

Annual Meeting of Andeavor

to be held on Friday, May 4, 2018

for Holders as of March 5, 2018




INTERNET	VOTE BY:	TELEPHONE
Go To www.proxypush.com/andv =Cast your vote online. =View Meeting Documents.	OR	866-892-1741 =Use any touch-tone telephone. =Have your Proxy Card/Voting Instruction Form ready. =Follow the simple recorded instructions.
	MAIL
OR=Mark, sign and date your Proxy Card/Voting Instruction Form. =Detach your Proxy Card/Voting Instruction Form. =Return your Proxy Card/Voting Instruction Form in the postage-paid envelope provided.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED STOCKHOLDER OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS IN ITEM 1, AND FOR THE PROPOSALS IN ITEMS 2, 3 AND 4.

All votes must be received by 11:59 P.M., Eastern Time, May 3, 2018.

		PROXY TABULATOR FOR

		ANDEAVOR
		P.O. BOX 8016
		CARY, NC 27512-9903




EVENT #

CLIENT #

Revocable Proxy - Andeavor

Annual Meeting of Stockholders

May 4, 2018, 8:00 A.M. (Central Time)

This Proxy is Solicited on Behalf of the Board of Directors

The undersigned hereby appoints DATHAN C. VOELTER and ELISA D. WATTS, and each of them, as proxies of the undersigned, each with full power to act without the other and with full power of substitution, to vote all the shares of Common Stock of Andeavor which the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held at Andeavor, 19100 Ridgewood Parkway, San Antonio, Texas 78259 on Friday, May 4, 2018, @ 8:00 A.M. Central time, and at any adjournment or postponement thereof, with all the powers the undersigned would have if personally present, upon the matters set forth in the Notice of such meeting and in their discretion upon such other matters as may properly come before the meeting.

(TO BE SIGNED ON REVERSE SIDE)

ANDEAVOR

Andeavor 401(k) Plan

Date: May 4, 2018

Time: 8:00 A.M. (Central Time)

Place: Andeavor, 19100 Ridgewood Parkway,

San Antonio, Texas 78259

Please make your marks like this:

Use dark black pencil or pen only

The Board of Directors Recommends a Vote FOR proposals 1, 2, 3 and 4.



1:	Election of 12 directors (all nominated as directors to serve for the term indicated in the Proxy Statement):
			For	Against	Abstain	Directors Recommend ê
	01	Rodney F. Chase	o	o	o	For
	02	Paul L. Foster	o	o	o
	03	Edward G. Galante	o	o	o	For
	04	Gregory J. Goff	o	o	o	For
	05	David Lilley	o	o	o	For
	06	Mary Pat McCarthy	o	o	o	For
	07	J.W. Nokes	o	o	o	For
	08	William H. Schumann, III	o	o	o	For
	09	Jeff A. Stevens	o	o	o
	10	Susan Tomasky	o	o	o	For
	11	Michael E. Wiley	o	o	o	For
	12	Patrick Y. Yang	o	o	o	For
			For	Against	Abstain
2:	To approve our named executive officers’ compensation in an advisory vote;		o	o	o	For
3:	To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2018;		o	o	o	For
4:	To approve the Andeavor 2018 Long-Term Incentive Plan.		o	o	o	For



Authorized Signatures - This section must be completed for your Instructions to be executed.




Please Sign Here				Please Date Above

Please Sign Here				Please Date Above
Please sign exactly as your name(s) appears on your stock certificate. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the proxy.

ANDEAVOR

~~TESORO CORPORATION~~

Andeavor 401(k) Plan

Annual Meeting of ~~Tesoro Corporation~~Andeavor

to be held on ~~Thursday,~~Friday, May 4, ~~2017~~2018

for Holders as of Monday, March ~~16, 2017~~5, 2018




INTERNET	VOTE BY:	TELEPHONE
Go To www.proxypush.com/~~tso~~andv = Cast your vote online. = View Meeting Documents.	OR	~~866-390-9971~~ =~~Use any touch-tone telephone.~~ =~~Have your Proxy Card/Voting Instruction Form ready.~~ =~~Follow the simple recorded instructions.~~
	~~MAIL~~
OR=~~Mark, sign and date your Proxy Card/Voting Instruction Form.~~ =~~Detach your Proxy Card/Voting Instruction Form.~~ =~~Return your Proxy Card/Voting Instruction Form in the postage-paid envelope provided.~~
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED STOCKHOLDER OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS IN ITEM 1, FOR THE PROPOSALS IN ITEMS 2 AND 3, AND 1 YEAR ON PROPOSAL 4.

~~All votes must be received by 11:59 P.M., Eastern Time, May 3, 2017.~~

		~~PROXY TABULATOR FOR~~

		~~TESORO CORPORATION~~
		~~P.O. BOX 8016~~
		~~CARY, NC 27512-9903~~




~~EVENT #~~

~~CLIENT #~~

~~Revocable Proxy - Tesoro Corporation~~

~~Annual Meeting of Stockholders~~

~~May 4, 2017, 8:00 A.M. (Central Time)~~

~~This Proxy is Solicited on Behalf of the Board of Directors~~

The undersigned hereby appoints CARRIE P. RYAN and ELISA D. WATTS, and each of them, as proxies of the undersigned, each with full power to act without the other and with full power of substitution, to vote all the shares of Common Stock of Tesoro Corporation (the "Company") which the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held at Tesoro Corporation, 19100 Ridgewood Parkway, San Antonio, Texas 78259 on Thursday, May 4, 2017, @ 8:00 A.M. Central time, and at any adjournment or postponement thereof, with all the powers the undersigned would have if personally present, upon the matters set forth in the Notice of such meeting and in their discretion upon such other matters as may properly come before the meeting.

~~(TO BE SIGNED ON REVERSE SIDE)~~

~~TESORO CORPORATION~~

~~Tesoro Corporation Thrift Plan~~

~~Date:~~ ~~May 4, 2017~~

~~Time:~~ ~~8:00 A.M. (Central Time)~~

~~Place:~~ ~~Tesoro Corporation, 19100 Ridgewood Parkway,~~

~~San Antonio, Texas 78259~~

~~Please make your marks like this:~~ ~~Use dark black pencil or pen only~~

~~The Board of Directors Recommends a Vote~~ ~~FOR~~ ~~proposals 1, 2 and 3, and 1 YEAR on proposal 4.~~



1:	~~Election of 10 directors (all nominated as directors to serve for the term indicated in the Proxy Statement):~~
			~~For~~	~~Against~~	~~Abstain~~		~~Directors Recommend~~ ê
	01	~~Rodney F. Chase~~	o	o	o		~~For~~
	02	~~Edward G. Galante~~	o	o	o		~~For~~
	03	~~Gregory J. Goff~~	o	o	o		~~For~~
	04	~~David Lilley~~	o	o	o		~~For~~
	05	~~Mary Pat McCarthy~~	o	o	o		~~For~~
	06	~~J.W. Nokes~~	o	o	o		~~For~~
	07	~~William H. Schumann, III~~	o	o	o		~~For~~
	08	~~Susan Tomasky~~	o	o	o		~~For~~
	09	~~Michael E. Wiley~~	o	o	o		~~For~~
	10	~~Patrick Y. Yang~~	o	o	o		~~For~~
			~~For~~	~~Against~~	~~Abstain~~
2:	~~To approve our named executive officers' compensation in an advisory vote;~~		o	o	o		~~For~~
3:	~~To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2017;~~		o	o	o		~~For~~
			~~1 Year~~	~~2 Years~~	~~3 Years~~	~~Abstain~~
4:	~~Advisory vote on the frequency of future advisory votes on executive compensation.~~		o	o	o	o	~~1 Year~~



~~Authorized Signatures - This section must be completed for your Instructions to be executed.~~




~~Please Sign Here~~				~~Please Date Above~~

~~Please Sign Here~~				~~Please Date Above~~
Please sign exactly as your name(s) appears on your stock certificate. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the proxy.

~~TESORO CORPORATION~~

~~Tesoro Corporation Thrift Plan~~

~~Annual Meeting of Tesoro Corporation~~

~~to be held on Thursday, May 4, 2017~~

~~for Holders as of March 16, 2017~~




~~INTERNET~~	~~VOTE BY:~~	~~TELEPHONE~~
~~Go To~~ ~~www.proxypush.com/tso~~ =~~Cast your vote online.~~ =~~View Meeting Documents.~~	OR	~~866-390-9971~~866-892-1741 = Use any touch-tone telephone. = Have your Proxy Card/Voting Instruction Form ready. = Follow the simple recorded instructions.
	MAIL
OR = Mark, sign, and date your Proxy Card/Voting Instruction Form. = Detach your Proxy Card/Voting Instruction Form. = Return your Proxy Card/Voting Instruction Form in the postage-paid envelope provided.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED STOCKHOLDER OR, IF NO DIRECTION IS GIVEN, SHARES WILL NOT BE VOTED.

All votes must be received by 11:59 P.M., Eastern Time, May 1, ~~2017.~~2018.

		PROXY TABULATOR FOR

		~~TESORO CORPORATION~~ANDEAVOR
		P.O. BOX 8016
		CARY, NC 27512-9903




EVENT #

CLIENT #

Revocable Proxy - ~~Tesoro Corporation~~Andeavor

Annual Meeting of Stockholders

May 4, ~~2017,~~2018, 8:00 A.M. (Central Time)

This Proxy is Solicited on Behalf of the Board of Directors

The undersigned participant in the ~~TESORO CORPORATION THRIFT~~ANDEAVOR 401(k) PLAN (the ~~"Plan"~~“Plan”) hereby acknowledges receipt of the Notice of ~~2017~~2018 Annual Stockholders Meeting to be held at ~~Tesoro Corporation,~~Andeavor, 19100 Ridgewood Parkway, San Antonio, Texas 78259, on ~~Thursday,~~Friday, May 4, ~~2017~~2018 @ 8:00 A.M. Central time, and directs Fidelity Management Trust Company Trustee, to vote (or cause to be voted) all shares of Common Stock (or share equivalents) of ~~Tesoro Corporation (the "Company")~~Andeavor allocated to the ~~undersigned's~~undersigned’s account under the Plan(s) and held in the ~~Trustee's~~Trustee’s name at the close of business on Monday, March ~~16, 2017,~~5, 2018, at said meeting and at any adjournment or postponement thereof. Said Trustee is authorized to vote in accordance with the instructions given herein and in its discretion upon such other matters as may properly come before the meeting.

(TO BE SIGNED ON REVERSE SIDE)



When	~~NOTICE OF 2017 ANNUAL~~ ~~MEETING OF STOCKHOLDERS~~
~~WHEN~~	~~Thursday,~~Friday, May 4, ~~2017,~~2018, 8:00 AM Central Time
~~WHERE~~
Where	19100 Ridgewood Parkway, San Antonio, Texas 78259
~~PURPOSE OF MEETING AND AGENDA~~
Purpose of Meeting and Agenda	At the ~~2017~~2018 Annual Meeting, stockholders will vote:

	1.to elect the ~~ten~~twelve directors named in the Proxy Statement;

	2.to approve our named executive officers’ compensation in an advisory vote;

	3. to ratify the appointment of our independent registered public accounting firm for ~~2017;~~2018; and

	4.to ~~conduct an advisory vote on~~approve the ~~frequency of future advisory votes on executive compensation.~~ Andeavor 2018 Long-Term Incentive Plan.

	Stockholders also will transact any other business that may properly come before the meeting or any adjournment or postponement thereof.
~~WHO CAN VOTE~~
Who Can Vote	Stockholders of record at the close of business on Monday, March ~~16, 2017.~~5, 2018 are entitled to receive notice of and the right to vote at the Annual Meeting.
~~VOTING~~
Voting	Your vote is very important. Please submit your proxy or voting instructions as soon as possible, whether or not you plan to attend the Annual Meeting. Please refer to the enclosed proxy materials or the information forwarded by your bank, broker or other holder of record to see the voting methods that are available to you.
~~ADMISSION TO THE ANNUAL MEETING~~
Admission to the Annual Meeting	All of our stockholders are invited to attend the Annual Meeting. If you attend, you will need to bring valid, government-issued photo ~~identification. If you are a beneficial owner of our common stock, you will also need~~identification, as well as proof of stock ownership to be admitted. A recent brokerage statement or a letter from a bank or broker are examples of proof of ownership. Failure to bring such document or letter may delay your entry into or prevent you from attending our Annual Meeting. The doors to the meeting room will be closed promptly at the start of the meeting and stockholders will not be permitted to enter after that time.



NOTICE OF ~~2017~~2018 ANNUAL MEETING OF STOCKHOLDERS	i

2018 PROXY STATEMENT SUMMARY	iv

GENERAL INFORMATION ABOUT THE ~~2017~~2018 ANNUAL MEETING AND PROXY MATERIALS	1


CORPORATE GOVERNANCE	7
Overview	7
The Board of Directors	7
Director Qualifications and Nominations	78
Director Independence	9
Board Leadership and Committees	9
Director Orientation and Continuing Education	12
Board and Committee Performance ~~Self-Evaluations~~Assessments	12
Board of Directors’ Role in Succession Planning	12
Board Risk Oversight	1213
Risk Considerations in Our Compensation Programs	1314
Social Responsibility	14
~~Transactions with Related Parties~~	1415
Engaging with Our Board	1615


DIRECTOR COMPENSATION	17
Director Compensation Program	17
~~2016~~2017 Director Compensation Table	17
Director Stock Ownership Guidelines	18

PROPOSAL NO. 1 – ELECTION OF DIRECTORS	19

EXECUTIVE COMPENSATION – COMPENSATION DISCUSSION AND ANALYSIS	1927
Executive Summary	1927
Summary of Sound Executive Compensation Practices	2028
How We Determine Executive Compensation ~~Philosophy~~	21
~~Our Compensation Committee and Compensation Decision-Making Process~~	21
~~Compensation Consultants~~	22
~~Comparative Analysis~~	2229
Elements of Executive Compensation ~~/ Pay for Performance~~	2432
Stock Ownership Guidelines	3441
Equity ~~Grant/~~Grant and Trading Policies	3441
Deductibility of Executive Compensation	3542
Clawback Policy	3542
CEO Pay Ratio	43
Compensation Committee Interlocks	43
Compensation Committee Report	3544


EXECUTIVE COMPENSATION -– COMPENSATION TABLES AND NARRATIVE	3645
~~2016~~2017 Summary Compensation Table	3645
Grants of Plan-Based Awards	3746
Outstanding Equity Awards at Fiscal Year End	3847
Option Exercises and Stock Vested	4048
Retirement/Pension Benefits	49
Non-qualified Deferred Compensation	52
Potential Payments Upon Termination or Change-in-Control	53

PROPOSAL NO. 2 – ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION	56



~~Retirement/Pension Benefits~~	40
~~Non-qualified Deferred Compensation~~	43
~~Potential Payments Upon Termination or Change-in-Control~~	44


AUDIT-RELATED MATTERS	4757
Audit Committee Report	4757
Auditor Fees and Services	4960

PROPOSAL NO. 3 – RATIFICATION OF APPOINTMENT OF ACCOUNTING FIRM	61

~~RELATIONSHIP WITH TLLP~~RELATED PARTY TRANSACTIONS	5062
~~Distributions~~	50
~~Purchase and Sale Transactions~~	50
~~Omnibus Agreement~~	50
~~Secondment and Logistics Services Agreement~~	51
~~Commercial and Other Agreements~~	51


STOCK OWNERSHIP INFORMATION	5369
Security Ownership by Management	5369
Security Ownership by Certain Beneficial Owners	5571
Section 16(a) Beneficial Ownership Reporting Compliance	5571


~~ITEMS TO BE VOTED ON~~NEXT YEAR STOCKHOLDER PROPOSALS	56
~~Proposal No. 1 - Election of Directors~~	56
~~Proposal No. 2 - Advisory Vote to Approve Our Named Executive Officers’ Compensation~~	62
~~Proposal No. 3 - Ratification of the Appointment of Ernst & Young LLP as Independent Registered Public Accounting Firm~~	62
~~Proposal No. 4 - Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation~~	6372

PROPOSAL NO. 4 – APPROVE THE ANDEAVOR 2018 LONG-TERM INCENTIVE PLAN	73

APPENDIX A – ANDEAVOR 2018 ~~STOCKHOLDER PROPOSALS~~LONG-TERM INCENTIVE PLAN	6481



~~Meeting Information~~
~~Date and Time~~	~~Thursday, May 4, 2017, 8:00 AM Central Time~~
~~Location~~	~~19100 Ridgewood Parkway, San Antonio, Texas 78259~~
~~Record Date~~	~~March 16, 2017~~
~~Voting~~	At the close of business on the record date, there were 117,379,880 shares of our common stock outstanding and entitled to vote. The holders of our common stock are entitled to one vote for each share held by them for each director nominee and for each other matter to be voted on. We have no other voting securities outstanding.
~~Availability of Proxy Materials~~	~~This Proxy Statement and accompanying form of proxy are first being made available to stockholders on or about March 22, 2017.~~



~~Proposal~~ Friday, May 4, 2018, 8:00 AM Central Time	~~Board Voting Recommendation~~	~~Page Reference for More Information~~
~~Election of directors~~	~~FOR each nominee~~ þ	56Record Date: March 5, 2018
~~Advisory vote to approve our named executive officers’ compensation~~19100 Ridgewood Parkway	~~FOR~~ þ	62
San Antonio, Texas 78259


(1)	Title of each class of securities to which transaction applies:


(2)	Aggregate number of securities to which transaction applies:


(3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):



	Sincerely, Kim K.W. Rucker Executive Vice President, General Counsel and Secretary	March 15, 2018 San Antonio, Texas



Proposals	Board Recommendation	Page Reference
Proposal 1. Election of Directors	FOR each nominee	19
Proposal 2. Advisory Vote on Executive Compensation	FOR	56
Proposal 3. Ratify the ~~appointment~~Appointment of ~~Ernst & Young LLP as our independent registered public accounting firm for 2017~~Auditors	FOR þ	6261
~~Advisory vote on the frequency of future advisory votes on executive compensation~~Proposal 4. Approve 2018 Long-Term Incentive Plan	~~ONE YEAR~~ þ FOR	6373



ü	Annual election of directors	ü	Ongoing investor engagement
ü	Majority voting for all directors	ü	Independent directors meet without management
ü	Proxy access	ü	Annual Board and committee evaluations
ü	11 of our 12 directors are independent	ü	Board oversight of risk management
ü	Independent Lead Director	ü	Age limits for directors
ü	Experienced Board, diverse in terms of gender, experience, skills and tenure	ü	Stock ownership requirements for all directors and executive officers
ü	Board takes active role in succession planning and Board composition	ü	Policy on political contributions



Name	Age	Director Since	Occupation and Experience	Committee Memberships
Rodney F. Chase	73	2006	Former Energy Industry Executive Boards: Hess Corporation, HudsonField	Audit, Governance
Edward G. Galante	66	2016	Former Senior Vice President and Member of the Management Committee of ExxonMobil Corporation Boards: Celanese Corporation, Clean Harbors, Inc., Praxair, Inc.	Compensation, EHS&S
Gregory J. Goff, Chairman^(a)	60	2010	Chairman, President and CEO of Tesoro Corporation Boards: Polyone Corporation, Tesoro Logistics GP, LLC (the general partner of Tesoro Logistics LP)
David Lilley	70	2011	Former Chairman, President and CEO of Cytec Industries Inc. Boards: Rockwell Collins, Inc., Public Service Enterprise Group Incorporated	Compensation (Chair), EHS&S
Mary Pat McCarthy	61	2012	Former Vice Chair of KPMG LLP Boards: Palo Alto Networks, Inc., Mutual of Omaha	Audit (Chair), Governance
J.W. Nokes	70	2007	Former EVP of Worldwide Refining, Marketing, Supply and Transportation of ConocoPhillips; Non-Executive Chairman of Albemarle Corporation Boards: Albemarle Corporation, Post Oak Bank, N.A.	Compensation, EHS&S (Chair)
William H. Schumann, III	66	2016	Former Executive Vice President and Chief Financial Officer of FMC Technologies Boards: Avnet, Inc., McDermott International	Audit, Governance
Susan Tomasky, Lead Director	63	2011	Former President of AEP Transmission Boards: Public Service Enterprise Group Incorporated, Summit Midstream Partners GP, LLC (the general partner of Summit Midstream Partners, LP)	Governance (Chair)^(b)
Michael E. Wiley	66	2005	Former Chairman of the Board, President and CEO of Baker Hughes Incorporated Boards: Bill Barrett Corporation, Post Oak Bank, N.A., Tesoro Logistics GP, LLC (the general partner of Tesoro Logistics LP)	Compensation, EHS&S
Patrick Y. Yang	69	2010	Former Head of Global Technical Operations of F. Hoffmann-La Roche, Ltd. Boards: Codexis, Inc., Amyris, Inc, PharmaEssentia Corporation	Audit, Governance


~~(a)~~	~~As our CEO and President, Mr. Goff is our only non-independent director.~~


~~(b)~~	~~As independent Lead Director, Ms. Tomasky attends by invitation (as scheduling permits) and participates ex officio, but does not vote, in the meetings of the committees on which she does not serve.~~



A high level of INTEGRITY		Strong LEADERSHIP skills	Knowledge of CORPORATE GOVERNANCE requirements and practice	A proven record of SUCCESS	INNOVATIVE approaches to challenging issues
	~~Snapshot of 2017 Director Nominees~~


(4)	Proposed maximum aggregate value of transaction:


(1)	Amount Previously Paid:


(2)	Form, Schedule or Registration Statement No.:


(3)	Filing Party:



Our 12 Director nominees exhibit an effective mix of diversity, experience and fresh perspective:

Average Tenure	Average Age	Gender Diversity
6	66	17%




Years	Years	Women



~~Director Independence~~	~~• 9 out of our 10 director nominees are independent~~ ~~• Our CEO is the only management director~~ ~~• All of the Board Committees are composed exclusively of independent directors~~ ~~• The independent directors regularly hold executive sessions, led by the independent Lead Director~~
~~Independent Lead Director~~	~~• The independent directors have selected Susan Tomasky to serve as independent Lead Director~~ ~~• Among other responsibilities, the independent Lead Director:~~ ~~o Serves as liaison, and coordinates communications and activities, between the other independent directors and management~~ ~~o Works with the Chairman in setting the Board agenda by taking into consideration the objectives of management as well as the needs of the Board and its individual committees~~ o Works with the independent directors to establish and approve appropriate annual goals and objectives for the Chairman, and communicates to the Chairman the results of the formal evaluation conducted by the independent directors of the Chairman’s performance pertaining to established goals and objectives ~~o Attends by invitation (as scheduling permits) and participates ex officio, but does not vote, in the meetings of the committees on which she does not serve~~ ~~o Leads the recruitment and selection of new Board members with the Chairman~~ o Serves as an additional point of contact for stockholders, and communicates with stockholders in those circumstances where the Board determines that direct communication between the Board and stockholders is appropriate
~~Board Oversight of Risk Management~~	~~• The Board oversees risk management, focusing on our most significant risks~~
~~Stock Ownership Requirements~~	~~• Stock ownership requirement for CEO of 6x annual base salary~~ ~~• Stock ownership requirements for all directors and members of our executive management team~~
~~Board Practices~~	~~• Our Board and each of its Committees annually conduct an evaluation of their performance~~ ~~o Periodically enlist a third party to facilitate assessment and identify opportunities for improved individual and Board performance~~ • The Governance Committee reviews criteria for Board membership with the Board and considers changes as needed so that the Board as a whole continues to reflect the appropriate mix of skills and experience • Directors who turn 75 must tender a resignation for consideration by the Board and, unless specifically waived by the Board, such resignation will become effective at the next annual meeting after reaching age 75
~~Accountability~~	~~• All directors stand for election annually~~ ~~• In uncontested elections, directors must be elected by a majority of votes cast~~ • Through our "proxy access" Bylaw provision, eligible stockholders have the ability to include their own nominees for director in our proxy materials along with the Board-nominated candidates
~~Stockholder Engagement and Investor Outreach~~	• In the spring of 2016, Ms. Tomasky, as independent Lead Director, wrote a letter to each of our institutional stockholders known to hold at least 0.5% of our outstanding stock (which constituted slightly over 55% of our outstanding shares), inviting them to participate in one-on-one meetings with her to foster the Company’s efforts at stockholder engagement • We conduct investor outreach throughout the year to ensure that management and the Board understand and consider the issues that matter most to our stockholders and enable us to address them effectively



~~Revenue:~~ ~~$24.6~~ ~~billion~~ Revenue	~~Earnings Per Diluted Share from Continuing Operations:~~ ~~$6.04~~	Improvements to Operating Income	Dividends to ~~Stockholders:~~ ~~$2.10 per share~~ ~~a 14% increase over 2015~~ Stockholders	Return of Earnings to ~~Stockholders:~~Stockholders
$35 billion		$~~499~~505 million	$2.28 per share	Over $1 ~~million~~billion ~~through~~
An increase of 42% over 2016				Through stock repurchases and dividends



What We Do		What We Don’t Do
ü	Align Executive Pay with Company Performance	û	Guarantee Payouts on Performance-Based Awards
ü	Use Rigorous Performance Goals	û	Provide Employment Agreements
ü	Grant Performance-Based Long-Term Incentives	û	Pay Dividend Equivalents on Unvested Long-Term Incentives
ü	Cap Incentive Awards	û	Pay Tax Gross Ups
ü	Maintain Stock Ownership Guidelines	û	Provide Executive Perquisites
ü	Analyze Executive Compensation Risk	û	Allow Pledging or Hedging of Company Stock



What We Doü		What We Don’t Doû
•~~Align Executive Pay with Company Performance~~ •~~Use Rigorous Performance Goals~~ •~~Grant Performance-Based Long-Term Incentives~~ •~~Cap Incentive Awards~~ •~~Maintain Stock Ownership Guidelines~~ •~~Analyze Executive Compensation Risk~~ •ü	Retain an Independent Compensation Consultant •
ü	Impose a Clawback Policy •
ü	Mitigate Potential Dilution from Equity Awards
ü	• Double Trigger Equity Acceleration Upon Change-in-Control	•~~Guarantee Payouts on Performance-Based Awards~~ •~~Provide Employment Agreements~~ •~~Pay Dividend Equivalents on Unvested Long-Term Incentives~~ •~~Pay Tax Gross Ups~~ •~~Provide Executive Perquisites~~ •~~Allow Pledging or Hedging of Company Stock~~



2.Proposals	Board Recommendation	Page Reference
Proposal 1. Election of Directors	FOR each nominee	19
Proposal 2. Advisory Vote on Executive Compensation	FOR	56
Proposal 3. Ratify the Appointment of Auditors	FOR	61
Proposal 4. Approve 2018 Long-Term Incentive Plan	FOR	73


3.	What is the difference between holding shares as a stockholder of record and as a beneficial owner?



:	Vote by Internet,, by going to the web address www.proxypush.com/~~tso~~andv and following the instructions for Internet voting or, if you have received a paper copy of the proxy card by mail, by following the instructions on the proxy card. Your vote by Internet must be received by 11:59 PM Eastern Time on May 3, ~~2017.~~2018. If your shares are held in the ~~Tesoro Corporation Thrift~~Andeavor 401(k) Plan, your vote must be received by 11:59 PM Eastern Time on May 1, ~~2017.~~ 2018.
)	Vote by Telephone,, by dialing ~~1-866-390-9971~~1-866-892-1741 and following the instructions for telephone voting or, if you have received a paper copy of the proxy card by mail, by following the instructions on the proxy card. Your vote by telephone must be received by 11:59 PM Eastern Time on May 3, ~~2017.~~2018. If your shares are held in the ~~Tesoro Corporation Thrift~~Andeavor 401(k) Plan, your vote must be received by 11:59 PM Eastern Time on May 1, ~~2017.~~ 2018.



+	Vote by Mail,, by completing, signing, dating and mailing the proxy card mailed to you in the envelope provided. If you received a Notice of Internet Availability and would like to vote by mail, follow the instructions on the Notice of Internet Availability to request a paper copy of the proxy materials. Your vote by mail must be received by 11:59 PM Eastern Time on May 3, ~~2017.~~2018. If your shares are held in the ~~Tesoro Corporation Thrift~~Andeavor 401(k) Plan, your vote must be received by 11:59 PM Eastern Time on May 1, ~~2017.~~2018. If you vote by Internet or telephone, please do not mail your proxy card.
	Vote in Person,,by attending the Annual Meeting. Please refer to the instructions provided on the proxy card or Notice of Internet Availability. Please note that if your shares are held in the ~~Tesoro Corporation Thrift~~Andeavor 401(k) Plan, you may not vote in person at the Annual Meeting; instead you will need to submit your vote through one of the ways described above.



6. 3 \|	~~What if my shares are held in the Tesoro Corporation Thrift Plan?~~


7.	What if I am a stockholder of record and do not specify a choice for a matter when returning a proxy?


8.	What if I am a beneficial owner and do not give voting instructions to my broker, bank or other nominee?



~~Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to be held on May 4, 2017: This Proxy Statement and our 2016 Annual Report are also available at~~ 5 \|~~www.proxydocs.com/tso~~.


~~16.~~	What is householding? If I have multiple stockholders at my address, how can I get additional copies of proxy materials?



~~AUDIT COMMITTEE~~ ^(a)(b)(c)(d) Audit Committee
Ms. McCarthy (Chair) Mr. Chase Mr. ~~Goldman~~Foster Mr. Schumann Mr. Yang 1112 meetings in ~~2016~~2017	• Appoints and oversees ~~the independent registered public accounting firm, including its qualifications, independence and performance~~ ~~• Reviews the scope and results of the audit to be conducted by~~ the independent registered public accounting firm • Oversees our corporate accounting and financial reporting practices, including the quality and integrity of our financial statements • Oversees the organization, scope and performance of our internal audit function, including the annual internal audit plan • Oversees the ~~adequacy and~~ effectiveness of our internal controls over financial reporting • Assists the Board in fulfilling its oversight of management’s assessment and management of risk, including computerized information system controls and security, and any instances of fraud that involve management or other employees who have a significant role in the Company’s internal controls; as part of this responsibility, the Audit Committee meets regularly with the chiefmajor financial ~~officer, chief information officer and controller regarding our technology systems and cyber-security detection and defense measures~~risks • Oversees compliance with legal and regulatory requirements, including ~~the Company's Code of Business Conduct, and discusses with the General Counsel legal matters that could have a material impact on the Company~~ ~~• Reviews our tax strategies and the implications of tax law changes~~ • Reviews our policies that govern the processes by which risk assessment and risk management are addressed, as well as our major financial risk exposures and steps undertaken to monitor control these exposures, including mitigations and controls designed to limit our exposure to commercial and commodities risks ~~• Considers and recommends to the Board specific financing, dividends and stock repurchase actions, as well as major unbudgeted capital investments~~ • Oversees procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal controls, auditing or federal securities law matters, as well as procedures for the confidential and anonymous submission by employees of concerns regarding fraud, questionable accounting or auditing matters and federal securities law matters; meets regularly with the business compliance officer to discuss allegations regarding such matters, as well as claims regarding potential violation of our Code of Business Conduct



~~COMPENSATION COMMITTEE~~ ^(a)(b)(d) Compensation Committee
Mr. Lilley (Chair) Mr. Galante Mr. Nokes Mr. Wiley 57 meetings in ~~2016~~2017	• Oversees our overall compensation philosophy ~~and reviews industry pay practices, including governmental and regulatory developments~~ • Together with the other independent directors, led by the independent Lead Director, annually reviews and approves goals and objectives relevant to the compensation of the CEO • Determines and approves all aspects of direct and indirect compensation for our CEO and other members of our senior management • Reviews and approves the selection of peer group companies for comparative purposes for benchmarking compensation, equity and benefit decisions • Reviews and approves employment and severance arrangements and change-in-control plans affecting compensation and benefits of the CEO and senior management • ~~Approves~~Administers the Company’s executive incentive and ~~oversees the Company's annual incentive compensation program, all~~ equity-based incentive programs ~~and any other incentive compensation programs in which any senior officer is eligible to participate~~ • Oversees tax-qualified and non-qualified retirement plans and post-retirement health and welfare benefit plans • Oversees the assessment of risk associated with our compensation programs (such as the Incentive Compensation Program discussed in “Compensation Discussion and Analysis – Elements of Executive Compensation / Pay for Performance” and our commercial trader compensation program)


~~ENVIRONMENTAL, HEALTH, SAFETY~~
Environmental, Health, Safety & ~~SECURITY COMMITTEE~~ ^(a)(d)Security Committee
Mr. Nokes (Chair) Mr. Galante Mr. Lilley Mr. Stevens Mr. Wiley 5 meetings in ~~2016~~2017	• Reviews and approves at least annually our environmental, health, safety and security (“EHS&S”) policies • Reviews management’s programs for compliance with our ~~environmental, health, safety and security~~EHS&S policies, applicable laws and regulations • Reviews periodically with management its ~~environmental, health, safety and security~~EHS&S activities with respect to significant legal matters, and emerging or proposed laws or regulations that may have a material effect on our financial results or operations • Reviews and assesses periodically our significant ~~environmental, health, safety and security~~EHS&S liabilities reported in the financial statements • Reviews periodically significant capital expenditures that may have a material ~~environmental, health, safety or security~~EHS&S impact or risk exposure

~~GOVERNANCE COMMITTEE~~^(a)(d)

Governance Committee
Ms. Tomasky (Chair) Mr. Chase Mr. ~~Goldman~~Foster Ms. McCarthy Mr. Schumann Mr. Yang 65 meetings in ~~2016~~2017	• Recommends candidates for election to the ~~Board~~ ~~• Develops~~Board; develops and recommends to the Board the criteria for identifying and evaluating director candidates • Oversees the annual evaluation of the Board and the committees of the Board • Reviews and makes recommendations to the Board regarding the size, leadership structure, organization, composition and functioning of the Board, and the committees of the Board • Reviews and recommends to the Board ~~compensation for~~ non-employee directors compensation • Makes recommendations to the Board and Company management regarding new director orientation and continuing education for directors ~~• Reviews succession plans for our CEO~~ • Reviews our charitable and direct and indirect political contributions • Reviews and approves our related party transaction policies and procedures



a. 11 \|	~~The Board has determined that all members of this Committee meet the independence requirements of the NYSE.~~


c.	The Board has determined that each member of the Audit Committee is financially literate. In addition, the Board has determined that each of Messrs. Chase, Goldman, Schumann and Ms. McCarthy qualifies as an “audit committee financial expert,” as defined by SEC rules. No member of the Audit Committee serves on the audit committees of more than three public companies, including ours.