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Notice of 2019 Annual Meeting of Stockholders
The 2019 annual meeting of stockholders of Valero Energy Corporation is scheduled to be held as follows:
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The purpose of the annual meeting is to consider and vote on the following:
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Due to the continued constraints and risks caused by the COVID-19 pandemic (including variants of the virus) and in order to protect and support the health and well-being of our employees and stockholders, the 2022 annual meeting of stockholders of Valero Energy Corporation is scheduled to be held in a virtual format as follows: | |||||||||||||||||||||
MEETING DATE & TIME: | MEETING SITE: | RECORD DATE: | |||||||||||||||||||
Thursday, April 28, 2022 11 a.m., Central Time | www.virtualshareholdermeeting.com/VLO2022 | March 3, 2022 | |||||||||||||||||||
The purpose of the annual meeting is to consider and vote on the following: | |||||||||||||||||||||
Voting Matters | Board Recommendation | Proxy Statement Disclosure | |||||||||||||||||||
(1)Elect Directors | FOR each director nominee | ||||||||||||||||||||
(2)Ratify KPMG LLP as independent | FOR |
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(3)Advisory vote to approve 2021 executive | FOR |
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(4)Stockholder proposal regarding report on near- and long-term greenhouse gas emissions targets | AGAINST | ||||||||||||||||||||
(5)Other matters, if any, properly brought before the |
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Valero Energy Corporation One Valero Way San Antonio, Texas 78249 March 17, 2022 | By order of Richard J. Walsh Senior Vice President, General Counsel and Secretary | |||||||||||||||||||
Contents | |||||
Peer Group and Benchmarking Data | ||||||||||||||
2022 ANNUAL MEETING OF STOCKHOLDERS - KEY VOTING AND MEETING INFORMATION | ||||||||||
Our Board is soliciting proxies to be voted at the Annual Meetingour annual meeting of Stockholdersstockholders on April 30, 201928, 2022 (the “Annual Meeting”). The accompanying notice describes the time, place, and purposes of the Annual Meeting. Action may be taken at the Annual Meeting or on any date to which the meeting may be adjourned.
We are mailing ourNotice of Internet Availability of Proxy Materials (“Notice”) to stockholders on or about March 20, 2019. On this date, you will be able to access our proxy materials on the website referenced in the Notice.
RECORD DATE, SHARES OUTSTANDING, QUORUM
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS |
PROXIES AND PROXY STATEMENT |
RECORD DATE, SHARES OUTSTANDING, AND QUORUM |
VOTING IN PERSON, REVOCABILITY OF PROXIES
2022 PROXY STATEMENT | 1 |
2022 ANNUAL MEETING OF STOCKHOLDERS | ||||||||
VIRTUAL MEETING FORMAT |
ASKING QUESTIONS AND PARTICIPATING IN THE VIRTUAL ANNUAL MEETING |
STOCKHOLDERS OF RECORD VS. BENEFICIAL OWNERS OF SHARES HELD IN “STREET NAME” |
your shares. If your shares of Common Stock are registeredheld by a broker, bank, or other holder of record, the Notice, proxy materials, or email with instructions are being forwarded to you by or on behalf of the broker, bank, or other holder of record, which is required to vote such shares in accordance with your name,instructions.
COMMON STOCK HELD BY CERTAIN VALERO BENEFIT PLANS |
2 | 2022 PROXY STATEMENT |
2022 ANNUAL MEETING OF STOCKHOLDERS | ||||||||
SHARES REGISTERED DIFFERENTLY AND HELD IN MORE THAN ONE ACCOUNT |
instructions on that website, or through the other methods listed below under “Voting By Proxy.”
DIFFICULTY LOCATING OR OBTAINING ONE OR MORE CONTROL NUMBERS |
VOTING BY PROXY |
2022 PROXY STATEMENT | 3 |
2022 ANNUAL MEETING OF STOCKHOLDERS | ||||||||
CHANGING AND REVOKING PROXIES |
VOTING DURING THE ANNUAL MEETING |
You may revoke your proxyshares associated with each control number you receive.
REQUIRED VOTES
Obtaining One or More Control Numbers” above for more information.
4 | 2022 PROXY STATEMENT |
2022 ANNUAL MEETING OF STOCKHOLDERS | ||||||||
REQUIRED VOTES |
Any director nominee who does not receive a majority of the votes cast is required to submit an irrevocable resignation to the Board, and the Nominating and Corporate Governance Committee will make a recommendation to the Board as to whether to accept or reject the resignation or take other action. The Board will, within 90 days following certification of the election results, publicly disclose its decision regarding any such resignation and the rationale behind the decision.
EFFECT OF ABSTENTIONS
EFFECT OF ABSTENTIONS |
2019 ANNUAL MEETING OF STOCKHOLDERS
BROKERNON-VOTES
Brokers holding shares must vote according to the specific instructions they receive from the beneficial owners of the stock. If your broker does not receive specific voting instructions from you, in somecertain cases the broker may vote the shares in the broker’s discretion.
SOLICITATION OF PROXIES
SOLICITATION OF PROXIES |
For participants in our qualified 401(k) plan (“Thrift Plan”), the expenses and variable amounts for any additional proxy card will represent (in addition to any shares held individually of record by the participant) the number of shares allocated to the participant’s account in the Thrift Plan. For shares held by the Thrift Plan, the proxy card will constitute an instruction to the trustee of the plan on how to vote those shares. Shares for which instructions are not received may be voted by the trustee per the terms of the plan.
2022 PROXY STATEMENT |
INFORMATION REGARDING THE BOARD OF DIRECTORS | ||||||||
Valero’s business is managed under the oversight of our Board. Our Board conducts its business through meetings of its members and its committees. During 2018,2021, our Board held seven meetings and the standing Board committees held 13a total of 16 meetings.
None
Independent Directors |
Independent Directors.OurCorporate Governance Guidelines require a majority of the Board to be independent. The Board presently has nine11 non-management directors and one member from management:management, Joseph W. Gorder (our Chief Executive Officer)Officer (“CEO”)). As a member of management, Mr. Gorder is not an independent director under NYSE listing standards.
Fred M. Diaz | Eric D. Mullins | Stephen M. Waters* | ||||||||||||||
H. Paulett Eberhart | Randall J. Weisenburger | |||||||||||||||
Kimberly S. Greene | Rayford Wilkins, Jr. | |||||||||||||||
Deborah P. Majoras | ||||||||||||||||
•is not a relationship that would preclude a determination of independence under Section 303A.02(b) of the NYSE Listed Company Manual;
•consists of charitable contributions by Valero to an organization in which a director is an executive officer that do not exceed the greater of $1 million or two percent of the organization’s gross revenue in any of the last three years;
•consists of charitable contributions to any organization with which a director, or any member of a director’s immediate family, is affiliated as an officer, director, or trustee pursuant to a matching gift program of Valero and made on terms applicable to employees and directors generally, or is in amounts that do not exceed $1 million per year; and
•is not a relationship required to be disclosed by Valero under Item 404 of RegulationS-K (regarding related personrelated-person transactions).
Under the NYSE’s listing standards, a director is not deemed independent unless the Board affirmatively determines that the director has no material relationship with Valero.
6 | 2022 PROXY STATEMENT |
INFORMATION REGARDING THE BOARD OF DIRECTORS | ||||||||
Committees of the Board | |||||||||||
Our Board has four committees: (1)Audit Committee, (2) Human Resources and Compensation Committee, (3) Nominating and Corporate Governance Committee, and (4)Sustainability and Public Policy Committee. | The committees’ charters are available on our website at: www.valero.com u Investors u ESG u Governance Documents u Charters |
Committee Structure/Composition Highlights | ||||||||
Diversity. 75% of our committee chairs, and at least one member of each committee, represent diversity of either gender or race/ethnicity. Focus on ESG and Sustainability. To help meet the growing importance and attention required by environmental, social, and governance (“ESG”) and sustainability matters, the Board recently formed a Sustainability and Public Policy Committee, which is in addition to the committees required by the NYSE. See the disclosures under “Newly Formed Committee” and “Sustainability and Public Policy Committee” below for further details on the recent formation of this committee and its duties. |
INFORMATION REGARDING THE BOARD OF DIRECTORS
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AUDIT COMMITTEE
2022 PROXY STATEMENT | 7 |
INFORMATION REGARDING THE BOARD OF DIRECTORS | ||||||||
Recent Cybersecurity and Related IT Highlights | ||||||||
Cybersecurity and IT Reports. At least once annually, our Senior Vice President and Chief Technology Officer and the head of our Internal Audit team provide a report to the Audit Committee on Valero’s information security operations, structure and framework, various cyber and IT security metrics, Valero’s cybersecurity management program, improvement efforts, future projects, and Valero’s governance and assessments related to cyber and IT security. Charter Amendment. In early 2022, the Audit Committee amended its charter to formalize its oversight responsibilities with respect to Valero’s initiatives and strategies respecting cybersecurity and IT risks. Incident Evaluation and Updates. In 2021, senior management at Valero delivered prompt and transparent update reports to the Audit Committee on matters such as (i) Valero’s internal investigation efforts following certain widely publicized cybersecurity incidents, and the conclusion that such events had no significant impact (none in the case of SolarWinds) to Valero’s IT systems and assets, and (ii) the implications of regulatory developments, such as the U.S. Transportation Security Administration’s new cybersecurity defense requirements. Chief Technology Officer is Named Executive Officer. As discussed further below, our Senior Vice President and Chief Technology Officer is one of our named executive officers for 2021, demonstrating the importance that Valero places on cyber and IT security. |
Recent Compliance Highlights | ||||||||
The Audit Committee has helped oversee Valero’s recent efforts in successfully expanding and enhancing the company’s commitment to compliance. Highlights of the recent actions the committee has taken or helped oversee include the following: New or Updated Corporate Policies.Valero has recently adopted several new or updated corporate policies including: •an updated Code of Business Conduct and Ethics; •an updated Anti-Bribery and Anti-Corruption Policy; and •a newConduct Guidelines for Business Partners. Enhanced Training and Communications. Valero’s compliance training, communications, and visibility initiatives have recently been enhanced through efforts such as: •mandatory training for existing and new employees on our Code of Business Conduct and Ethics; •a new compliance communications program, with numerous employee resources and a central repository of corporate policies; and •a rebranded and updated ethics helpline and an interactive website for online reporting. Increased Communication with Management. In2021, each regularly scheduled Audit Committee meeting included a compliance update report by our Chief Compliance Officer. |
2021. The committee is chaired by Randall J. Weisenburger. In February of 2022, Mr. Mullins was appointed to the Audit Committee and he no longer serves on the Nominating and Corporate Governance Committee. Mr. Waters will retire from the Board at the Annual Meeting and therefore is not a nominee for election to the Board at the Annual Meeting. We make additional disclosures about the Audit Committee in this proxy statement under the caption “Risk Oversight” and in connection with “Proposal No. 2—Ratify Appointment of KPMG LLP as Independent Auditors” below.
Members
8 | 2022 PROXY STATEMENT |
INFORMATION REGARDING THE BOARD OF DIRECTORS | ||||||||
Current members of the committee are: | Notes: | |||||||
•Randall J. Weisenburger (Chair), •H. Paulett Eberhart, •Eric D. Mullins*, and •Stephen M. Waters*. | Audit Committee Financial Experts. The Board has determined that each of the following directors is an “audit committee financial expert” (as defined by the SEC) and that each is “independent” under applicable regulations/standards: (1) Mr. Weisenburger, (2) Ms. Eberhart, (3) Mr. Mullins*, and (4) Mr. Waters*. For more information regarding the skills, experience, and diversity of the director nominees for the Annual Meeting, see “Proposal No. 1—Election of Directors—Summary of Each Director Nominee’s Skills and Attributes” and “—Nominees.” |
HUMAN RESOURCES AND COMPENSATION COMMITTEE |
Notes:
Audit Committee Financial Experts. The Board has determined that each of the following directors is an “audit committee financial expert” (as defined by the SEC)Human Resources and that each is “independent” under applicable regulations/standards: (1) Mr. Weisenburger, (2) Ms. Eberhart, and (3) Mr. Waters. For more information regarding their experience, see “Proposal No. 1—Election of Directors—Nominees.”
COMPENSATION COMMITTEE
The Compensation Committee reviews and reports to the Board on matters related to Valero’s compensation programs, policies, and strategies. The committee has direct responsibility to approve corporate goals and objectives relevant to CEO compensation, evaluate the CEO’s performance in light of those goals and objectives, and together with the other independent directors, determine and approve the CEO’s overall compensation. The committee also reviews and approves the corporate goals and objectives relevant to the compensation of other senior executives of Valero. Additionally, the committee reviews and approves any employment and severance agreements, change-of-control agreements, and provisions affecting compensation and benefits for our CEO and other senior executives.
Recent Charter Amendment for DEI/Human Capital Management | ||||||||
Committee Name and Duties.Given the growing importance and impact of DEI and human capital management related matters, in early 2022 the committee (i) formally changed its name to include “Human Resources” in order to more accurately reflect what the committee believes has become a fundamental aspect of its duties and responsibilities and (ii) amended its charter to specifically encompass oversight responsibilities with respect to DEI, human capital management, and leadership development. |
Recent ESG-Linked Pay Highlights | ||||||||
Energy Transition Modifier to Performance Shares. In 2021, our Human Resources and Compensation Committee strengthened the ties between executive compensation and ESG priorities through the addition of an energy transition modifier to our long-term incentive program, tying executive compensation with our publicly disclosed greenhouse gas (“GHG”) emissions reduction/offset target for 2025 and the deployment of capital to low-carbon projects and initiatives. ESG Component of Annual Bonus. Valero has historically included health, safety, and environmental (“HSE”) performance measures as part of the metrics of its annual bonus program. In 2020, the Human Resources and Compensation Committee approved a modification to our annual bonus program to also include ESG efforts and improvements, which contains multiple objectives, including objectives with respect to DEI. See the disclosures under the caption “Compensation Discussion and Analysis” for more information. |
Members of the Compensation Committee are:
Notes:
TheCompensation Committee Report for fiscal year 2018 appears in this proxy statement immediately preceding “Compensation Discussion and Analysis.”
2022 PROXY STATEMENT | 9 |
INFORMATION REGARDING THE BOARD OF DIRECTORS | ||||||||
Current members of the committee are: | Notes: | |||||||
•Rayford Wilkins, Jr. (Chair), •Philip J. Pfeiffer, and •Robert A. Profusek. | The Human Resources and Compensation Committee Report for fiscal year 2021 appears in this proxy statement immediately following “Compensation Discussion and Analysis.” For more information regarding the committee members’ skills, experience, and diversity, see “Proposal No. 1—Election of Directors—Summary of Each Director Nominee’s Skills and Attributes” and “—Nominees.” |
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE |
INFORMATION REGARDING THE BOARD OF DIRECTORSRecent Changes to Committee’s Name, Duties, and Membership
NOMINATING/GOVERNANCE AND PUBLIC POLICY COMMITTEE
The.
identify•identifying individuals qualified to become Board members, consistent with criteria approved by the Board;
recommend•recommending to the Board director nominees to stand for election at the annual meetings of stockholders;
develop•developing and recommendrecommending a set of corporate governance principles applicable to Valero;
assist the Board in identifying, evaluating, and monitoring public policy trends and social and political issues that could impact our business activities and performance;
assist the Board in oversight of Valero’s climate-related risks and opportunities;
consider and make recommendations for our strategies relating to corporate responsibility, contributions, and reputation management; and
oversee and lead•overseeing the Board’s and the committees’ annual self-evaluation of performance.
10 | 2022 PROXY STATEMENT |
INFORMATION REGARDING THE BOARD OF DIRECTORS | ||||||||
Recent Governance Highlights | ||||||||
Diverse Director Nominees. The committee amended its charter in 2021 to add a “Rooney Rule” that requires that the initial list of candidates from which director nominees are chosen must include, but need not be limited to, qualified diverse candidates. 60% of our independent director nominees represent diversity of either gender or race/ethnicity, with three female directors, two African American male directors, and one Hispanic male director. Diverse External Executive Officer Candidates. In 2022, the committee (and, subsequently, the full Board) approved a policy, included in Valero’s Corporate Governance Guidelines, which provides that when executive officers (as defined in Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of Valero are recruited from outside the company, the initial list of candidates will include qualified gender and racially diverse candidates among the candidates presented. Political Contributions and Lobbying. At several meetings in2021, the committee reviewed and discussed in detail Valero’s political contributions and lobbying activities, as well as Valero’s vetting efforts, contributions criteria, and risk mitigation procedures and efforts. In 2021, the committee also helped oversee the development and publication on Valero’s website of enhanced political contributions and lobbying disclosures, including its climate-lobbying alignment analysis and report. |
Recent ESG/Climate Highlights | ||||||||
Below are some (but not all) of the committee’s recent ESG/climate highlights prior to the February 2022 reallocation of such duties to the new Sustainability and Public Policy Committee. | ||||||||
ESG and Climate-Related Disclosures and Activities.Helped oversee numerous ESG and climate-related disclosures and activities as discussed further below under the caption “ESG and Climate-Related Disclosures and Actions,” including Valero’s: •disclosure on its progress towards the achievement of its global refinery GHG emissions reduction/offset target for 2025 (Scope 1 and 2); •establishment of a new 2035 target for global refinery GHG emissions reductions/offsets (Scope 1 and 2); •2021 report and scenario analysis developed in line with the recommendations of the Task-Force on Climate-related Financial Disclosures (“TCFD”); •enhanced Stewardship and Responsibility Report published in 2021, including the EEO-1 report setting forth U.S. workforce diversity statistics and data, and Valero’s Sustainability Accounting Standards Board (“SASB”) report; •response to the CDP’s Climate Change questionnaire in 2021; and •climate-lobbying alignment analysis and report undertaken and published in 2021. |
Current members of the committee are: | Notes: | ||||||||
•Kimberly S. Greene (Chair), •Fred M. Diaz, •Deborah P. Majoras, and •
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SUSTAINABILITY AND PUBLIC POLICY COMMITTEE |
2022 PROXY STATEMENT | 11 |
INFORMATION REGARDING THE BOARD OF DIRECTORS | ||||||||
The
Current members of the committee are: | Notes: | |||||||
•Deborah P. Majoras (Chair), •Kimberly S. Greene, •Robert A. Profusek, •Randal J. Weisenburger, and •Rayford Wilkins, Jr. | For more information regarding the committee members’ skills, experience, and diversity, see “Proposal No. 1—Election of Directors—Summary of Each Director Nominee’s Skills and Attributes” and “—Nominees.” |
12 | 2022 PROXY STATEMENT |
INFORMATION REGARDING THE BOARD OF DIRECTORS | ||||||||
Risk Oversight |
The following chart summarizes Valero’s risk identification, management, and oversight structure: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Full Board | ||||||||||||||||||||||||||||||||||||||||||||||||||
•Risk management is a responsibility of the full Board, and the Board exercises its oversight responsibilities directly and through its committees. •The full Board regularly receives reports from senior management and third parties on applicable topics, as well as from committee chairs on matters discussed at committee meetings, which helps to coordinate the Board’s risk oversight role. •Update reports from Valero’s senior management on operations, market performance and dynamics, finances, and legal and public policy matters are considered “standing meeting agenda items” and are generally delivered at each regularly scheduled meeting of the full Board. •Valero’s energy transition strategy is a priority and focus for the full Board. In fact, Valero’s energy transition strategy was the key topic at our annual strategic planning meeting this year, which lasted three days and featured presentations from outside third-party experts on climate, liquid fuels, energy transition, and policy matters. | ||||||||||||||||||||||||||||||||||||||||||||||||||
Audit Committee | Nominating and Corporate Governance Committee | Sustainability and Public Policy Committee | Human Resources and Compensation Committee | |||||||||||||||||||||||||||||||||||||||||||||||
Key areas of oversight and responsibility include Valero’s: •strategies and initiatives respecting cybersecurity and IT risks; •compliance with legal and regulatory requirements, with a focus on those with the potential to impact its financial statements or accounting policies; •financial statements and public financial information integrity; •global compliance program, and annual compliance plan; •policies and guidelines concerning financial risk exposures and the steps management has taken to monitor and control such exposures; and •internal audit function and independent auditor. | Key areas of oversight and responsibility include: •identifying individuals qualified to become Board members, and recommending to the Board director nominees; •developing and recommending a set of corporate governance principles applicable to Valero; •the Board’s and the committees’ annual self-evaluation of performance; •Valero’s new director orientation and director continuing education programs; and •any related-person transactions. | Key areas of oversight and responsibility include: •corporate responsibility and reputation management; •HSE matters; •sustainability and climate-related risks and opportunities; •social, community, and public policy strategies and initiatives; •political issues, including political contributions and lobbying activities; and •compliance with legal and regulatory requirements for the operations of the company. | Key areas of oversight and responsibility include: •matters related to our compensation programs, policies, and strategies; •management succession planning for Valero’s CEO and other senior executives; •Valero’s initiatives and strategies in the areas of DEI, human capital management, and leadership development; and •compliance with Valero’s stock ownership and retention guidelines. | |||||||||||||||||||||||||||||||||||||||||||||||
Management | ||||||||||||||||||||||||||||||||||||||||||||||||||
Engages in day-to-day risk identification and management, including: •executing our risk management and identification programs, plans and systems, including our Commitment to Excellence Management System, Environmental Excellence and Risk Assessment, and fuels compliance program; •taking an interdisciplinary approach that coordinates the views of various teams and subject-matter experts (“SMEs”) across Valero, and facilitates continual communication on risk-related matters; and •reporting to the Board and its committees, and engaging with stockholders and stakeholders throughout the year. | ||||||||||||||||||||||||||||||||||||||||||||||||||
2022 PROXY STATEMENT | 13 |
INFORMATION REGARDING THE BOARD OF DIRECTORS | ||||||||
14 | 2022 PROXY STATEMENT |
INFORMATION REGARDING THE BOARD OF DIRECTORS | ||||||||
Selection of Director Nominees |
The Nominating and Corporate Governance Committee will consider all candidates identified through the processes described above and will evaluate each of them on the same basis. The level of consideration the Committeecommittee will extend to a stockholder’s candidate will be commensurate with the quality and quantity of information about the candidate that the nominatingsuch stockholder makes availableprovides to the Committee.
committee.
EVALUATION OF DIRECTOR CANDIDATES
EVALUATION OF DIRECTOR CANDIDATES |
•applicable independence standards;
•skills and experience necessary for service on the Board’s committees; and
•skills and expertise to serve the needs of the Board as a whole.
INFORMATION REGARDING THE BOARD OF DIRECTORS
Each candidate must meet certain minimum qualifications, including:
•strong ethical principles and integrity;
•independence of thought and judgment;
•the ability to dedicate sufficient time, energy, and attention to the performance of duties, taking into consideration the candidate’s service on other public company boards; and
•skills and expertise complementary to those of the existing Board members; in this regard, consideration is given to the Board will consider itsBoard’s need for operational, managerial, financial, governmental, affairs, technology,international, legal/regulatory, energy, ESG and sustainability, HSE, cyber/IT security, human resources,capital management, or other skills and expertise.
•diversity conceptscharacteristics such as race, gender, race/ethnicity, national origin, age, tenure, and geography;
•the ability of a prospective candidate to work with the interpersonal dynamics of the Board and contribute to the Board’s collaborative culture.
Diversity. Although The effectiveness of these and other Valero governance principles and documents, as well as the performance of the Board does not establish specific goals with respectand its committees, are assessed on an annual basis through the process discussed below under “Board Evaluation Process.”
2022 PROXY STATEMENT | 15 |
INFORMATION REGARDING THE BOARD OF DIRECTORS | ||||||||
Diversity. The Board strongly values director candidates of gender and racial/ethnic diversity, and the Board’s overall diversity, including diversity of gender and race/ethnicity, is a significant consideration in any director nomination process. In furtherance of the Board’s diversity goals, in 2021 the Nominating and Corporate Governance Committee amended its charter with respect to the committee’s search for director nominees (a “Rooney Rule” amendment) to require that the initial list of candidates from which director nominees are chosen include, but need not be limited to, qualified diverse candidates. This requirement is communicated to those assisting with director searches, as necessary, and is also implemented through the exercise by the Nominating and Corporate Governance Committee of its oversight and responsibilities concerning Valero’s director nominations and governance principles. At this year’s Annual Meeting, the Board nominated 11 individuals who bring valuable diversity in terms of gender, race/ethnicity, industries represented, experience, skills, age, and tenure, among other attributes. The nominees range in age from 55 to 74. 30% of this year’s independent nominees are female and 60% represent diversity of gender or race/ethnicity. Additionally, 75% of our committee chairs, and at least one member of each committee, represent diversity of either gender or race/ethnicity. Refreshment. We do not set term limits for our directors. As stated in Article I of our Corporate Governance Guidelines, the Board believes that directors who have served on the Board for an extended period of time are able to provide valuable insight into the operations and future of Valero based on their experience with and understanding of Valero’s history, business, policy, and objectives. As an alternative to term limits, the Board believes that its evaluation and nomination processes serve as appropriate checks on each Board member’s continued effectiveness. Retirement Policy. Our directors are subject to a retirement policy (set forth in Article I of our Corporate Governance Guidelines). Under that policy, a director may serve on our Board until he or she reaches the age of 75. A director who turns 75 may serve the remainder of his or her term of office, which is deemed to end at the next annual meeting at which directors are elected. Two of our current directors will become subject to our director retirement policy effective, respectively, at our 2023 and 2024 annual stockholder meetings. Overboarding. Our overboarding policy helps ensure that a director is able to devote sufficient time and effort to their duties as a director. Under Article I of our Corporate Governance Guidelines, directors should not serve on more than three other public company boards in addition to our Board, and our CEO should not serve on more than two other public company boards in addition to our Board. When directors materially change their principal occupation or assume a new position with materially increased responsibilities, they are expected to consider (and to provide the Board the opportunity to consider) whether they will be able to continue to devote sufficient time to the affairs of the Board. None of our directors sit on the boards of more than three other public companies in addition to our Board, and our CEO does not sit on any other public company boards in addition to our Board. | BOARD REFRESHMENT | |||||||||||||||||||||||||
Since 2016: | ||||||||||||||||||||||||||
4 | new independent directors | 2016 | Ms. Eberhart and Ms. Greene | |||||||||||||||||||||||
2020 | Mr. Mullins | |||||||||||||||||||||||||
2021 | Mr. Diaz | |||||||||||||||||||||||||
2 | new women directors (currently 3 total) | 2016 | Ms. Eberhart and Ms. Greene | |||||||||||||||||||||||
2 | new racially/ethnically diverse directors (currently 3 total) | 2020 | Mr. Mullins | |||||||||||||||||||||||
2021 | Mr. Diaz | |||||||||||||||||||||||||
30% of our independent director nominees for 2022 are female and 60% represent diversity of either gender or race/ethnicity. | ||||||||||||||||||||||||||
Director Continuing Education |
16 | 2022 PROXY STATEMENT |
INFORMATION REGARDING THE BOARD OF DIRECTORS | ||||||||
Refreshment. We do not set term limits forapprised of updates and key information through constant communication, including (i) a weekly written update report prepared by our directors. As stated in Article I ofInvestor Relations team that features key market and peer data, analyst commentary, and other updates and (ii) a monthly written report from our CEO on our financial, operating, and HSE performance, and other legal, regulatory, ESG, sustainability, and business developments.
New Director Orientation |
Retirement Policy. see our culture first hand.
Board Evaluation Process |
OurCorporate Governance Guidelines and the charters of each of the Board’sour committees require the Board and the committees to conduct an annual performance evaluation. The Nominating/GovernanceNominating and Public PolicyCorporate Governance Committee oversees the Board and committee self-evaluationthis evaluation process.
At the end of each year, the directors complete detailed surveys designed to evaluate the performance of the Board and each of its standing committees. The surveys seek feedback on, among other things, Board and committee composition, the frequency, length, and content of Board and committee meetings, the quality of management’s presentations to the Board and the committees, the adequacy of the committees’ charters, and the performance of the Board and the committees in light of the responsibilities of each as established in theCorporate Governance Guidelines and the committees’ charters. Summary reports of the evaluation results are compiled and provided to each director. The summary reports are discussed at Board and/or committee meetings in executive session, led by the Chairchair of the Nominating/GovernanceNominating and Public PolicyCorporate Governance Committee, the Lead Director, and/or the Chairman of the Board, all of whom ensure that the Board or senior management, as appropriate, follow up on any identified areas for improvement.
2022 PROXY STATEMENT |
INFORMATION REGARDING THE BOARD OF DIRECTORS | ||||||||
Leadership Structure of the Board |
Leadership Structure of the Board
Our bylaws state that the Chairman of the Board has the power to preside at all meetings of the Board. Joseph W. Gorder, our Chief Executive Officer,CEO, serves as the Chairman of the Board. Although the Board believes that the combination of the Chairman and Chief Executive OfficerCEO roles is appropriate in current circumstances, Valero’sCorporate Governance Guidelines do not establish this approach as a policy, and in fact, the Chairman and Chief Executive OfficerCEO roles were separate fromfor a portion of 2005–2007 and from May–December 2014.
•lead the Board in productive, strategic planning;
•determine necessary and appropriate agenda items for meetings of the Board with input from the Lead Director and independent Board committee Chairs;chairs; and
•determine and manage the amount of time and information devoted to discussion of agenda items and other matters that may come before the Board.
Lead Director The independent directors routinely meet in executive session outside the presence of management, generally at each Board and committee meeting, and at a minimum, quarterly after each regularly scheduled Board meeting.Lead Director and Meetings of Non-Management Directors Non-ManagementWhile our DirectorsCorporate Governance GuidelinesOur do not require the Chairman and CEO roles be split or combined, when such roles are combined our Corporate Governance Guidelines require our independent directors to appoint a Lead Director whose responsibilities include leading the meetings of ournon-management directors outside the presence of management. Following the recommendation of the Nominating/Nominating and Corporate Governance and Public Policy Committee (and the Ad Hoc Evaluation Committee), the Board’s independent directors selected Robert A. Profusek to serve as Lead Director during 2019. He also served as Lead Director in 2018.2022. Our Board regularly meets in executive session outside the presence of management, generally at each Board and committee meeting, and at least quarterly after each regular Board meeting.Chairs,chairs, sets agendas and leads the discussion of regular meetings of the Board outside the presence of management, provides feedback regarding these meetings to the Chairman, and otherwise serves as liaison between the independent directors and the Chairman. The Lead Director regularly communicates with the Chairman between meetings of the Board to discuss policy issues, strategies, governance, and other matters that arise throughout the year. The Chairs of the Board’s committeesBoard committee chairs also communicate regularly with the Lead Director to discuss policy issues facing Valero and the Board and to recommend agenda items for consideration at future Board meetings. The Board believes that this approach appropriately and effectively complements Valero’s combined Chief Executive Officer/CEO/Chairman structure.(a)serving as a liaison between the Chairman and the independent directors,18 2022 PROXY STATEMENT (b)consulting with the Chairman on agendas for board meetings,INFORMATION REGARDING THE BOARD OF DIRECTORS (c)reviewing and approving information sent to the Board as and when appropriate,CEO Succession Planning (d)the authority to call meetings of the independent directors,(e)setting agendas and leading the discussion of regular executive session meetings of the Board outside the presence of management and providing feedback regarding these meetings to the Chairman, and(f)receiving, reviewing, and acting upon communications from stockholders or other interested parties when those interests should be addressed by a person independent of management.20192022 PROXY STATEMENT719
INFORMATION REGARDING THE BOARD OF DIRECTORS
The Board considers oversight of Valero’s risk management to be a responsibility of the full Board. The Board’s role in risk oversight includes receiving regular reports from its committees and from members of senior management on areas of material risk to Valero, or to the success of a particular project or endeavor under consideration, including operational, financial, legal, regulatory, strategic, political, reputational, environmental, cybersecurity, and climate-related risks. For example, in 2018 the Board completed a review with management of Valero’s policies and procedures concerning issues of workplace diversity, sexual harassment and discrimination, and ensuring a safe workplace.
The full Board (or appropriate Board committee) regularly receives reports from management to enable the Board (or committee) to assess Valero’s risk identification, risk management, and risk mitigation strategies. When a report is vetted at the committee level, the Chair of that committee thereafter reports on the matter to the full Board. This enables to the Board and its committees to coordinate the Board’s risk oversight role. The Board also believes that risk management is an integral part of Valero’s annual strategic planning process, which addresses, among other things, the risks and opportunities facing Valero in the long term.
One of the Audit Committee’s responsibilities is to discuss with management Valero’s major financial risk exposures and the steps Valero has taken to monitor and control those exposures, including our risk assessment and risk management policies. The Audit Committee also has oversight responsibility regarding management’s annual assessment of, and report on, Valero’s internal control over financial reporting. In addition, Valero’s Chief Information Officer reports regularly to the Audit Committee regarding Valero’s initiatives and strategies respecting cybersecurity and information technology risks.
Our Nominating/Governance and Public Policy Committee reviews our policies and performance in areas of employee and contractor safety, environmental compliance, governmental affairs, reputation management, climate-related risks and opportunities, contributions, and policy matters generally. Valero’s EVP & General Counsel and EVP & COO attend all meetings of the Committee. In addition, members from senior management report, at least annually, to the Committee regarding Valero’s safety and environmental risks, strategies, and assessments. The Committee also assists the Board in oversight of Valero’s disclosure of climate-related risks and opportunities (as described further in “Climate Change Disclosure” below).
Our Compensation Committee assesses the risk of our compensation programs. Our compensation consultant regularly attends meetings of the Committee to provide updates on compensation related risks and trends. See also, “Risk Assessment of Compensation Programs” elsewhere in this proxy statement.
STOCKHOLDER ENGAGEMENT | ||||||||
Engagement Process |
Engagement ProcessProactive.
Ongoing engagement with all of our stockholders is important to us. WeBesides responding to inquiries from our stockholders, we have established a proactive engagement program that seeks robust communication. Throughout the year we communicate with our stockholders through a variety of means, including direct interface, investor presentations, ESG presentations, our website, and the publications and reports we issue.
The members of our Human Resources and Compensation Committee, our Lead Director, and the chair of our Sustainability and Public Policy Committee have also participated in our engagements with stockholders when appropriate.
Throughout the year, we aim to keep our stockholders informed on improved or expanded disclosures and/or new initiatives. The following graphic depicts the ongoing elements of our engagement process.
process:
20 | 2022 PROXY STATEMENT |
Valero’s Responsiveness to Engagement |
Input from our stockholders This input helps us formulate an appropriate action plan for addressing certain issues. The publicationProcedures for communicating with us are stated under the caption “Stockholder Communications, Nominations and Proposals.”
Topics | How We Responded | ||||
ESG, GHG emissions targets, and climate-related disclosure. | •GHG Emissions Targets. We established and disclosed global refinery Scope 1 and 2 GHG emissions reduction/offset targets for 2025 and 2035, and announced in 2021 that we are on track to achieve our 2025 target. Both targets are based on a comprehensive roadmap with Board-approved projects and projects under development. •Third-Party Assurance of GHG Disclosures. In 2021, we engaged a third party to evaluate and issue an assurance statement on the accuracy and reliability of certain of our GHG emissions disclosures, and we anticipate obtaining assurance going forward. •TCFD Reports. In 2021, we published an updated TCFD Report and Scenario Analysis using the assumptions of the International Energy Agency’s (“IEA”) Sustainable Development Scenario, and we have committed to publish an updated TCFD Report and Scenario Analysis in 2022 using the assumptions of the IEA’s Net-Zero Emissions by 2050 Scenario. •SASB Reports. In 2020, we published our first SASB report, and in 2021 we published an updated SASB report with enhanced disclosures and performance metrics. We have committed to publishing a SASB report annually going forward. •CDP Questionnaire. We responded to the CDP Climate Change questionnaire in 2021. We have committed to responding annually going forward. •Stewardship and Responsibility Report. In 2021, the Stewardship and Responsibility Report featured Valero’s ESG initiatives, including our guiding principles, our low-carbon fuels strategy, HSE metrics, GHG emissions reduction/offset targets, human capital management and DEI efforts, community engagement and contributions, and governance. •ESG Overview. In 2021, we also enhanced the disclosures in the ESG Overview provided on our website to better meet our stockholders’ and stakeholders’ priorities and needs. •Environmental Justice Policy. We were one of the first major energy companies to have a formal environmental justice policy and an active environmental justice program. | ||||
Linking ESG and climate-related goals and compensation. | •Energy Transition Modifier to Performance Shares.In 2021, our Human Resources and Compensation Committee strengthened the ties between executive compensation and ESG priorities through the addition of an energy transition modifier to our long-term incentive program, tying executive compensation with our publicly disclosed GHG emissions reduction/offset target for 2025 and the deployment of capital to low-carbon projects and initiatives. •ESG Component of Annual Bonus.Valero has historically included HSE performance measures as part of the metrics of its annual bonus program. In 2020, the Human Resources and Compensation Committee approved a modification to our annual bonus program to also include ESG efforts and improvements, which contains multiple objectives, including objectives with respect to DEI. See the disclosures under the caption “Compensation Discussion and Analysis” for more information. |
STOCKHOLDER ENGAGEMENT | ||||||||
Investments in low-carbon projects. | •Low-Carbon Fuels Projects and Capital Investments. –We announced several low-carbon fuels projects in 2021, including our participation in a large-scale carbon capture and sequestration pipeline system in the Mid-Continent region of the U.S. that is expected to capture, transport, and store carbon dioxide that results from the ethanol manufacturing process at eight of our ethanol plants located in the U.S. Midwest. We expect to be the anchor shipper with those eight ethanol plants connected to the system. This project is expected to reduce the carbon intensity of this ethanol product and increase its value. –In 2021, we completed our renewable diesel plant expansion project, which increases the plant’s renewable diesel production capacity by 410 million gallons per year, to 700 million gallons per year in total, and provides production capacity of 30 million gallons per year of renewable naphtha (used for renewable gasoline and renewable plastics). –Also in 2021, we commenced construction of a second renewable diesel plant. Over the next 15 months, we expect to invest approximately $800 million to complete the construction of this second plant, which is expected to have production capacity of 470 million gallons of renewable diesel and 20 million gallons of renewable naphtha per year. –We allocated over 70% of our 2021 growth capital to low-carbon projects and initiatives and anticipate allocating approximately 50% of growth capital thereto in 2022. –We have invested $4.2 billion to date in our low-carbon fuels businesses. •Other Low-Carbon Opportunities. We continue to evaluate and advance investments in economic, low-carbon projects, such as sustainable aviation fuel, renewable hydrogen, renewable naphtha, arctic grade renewable diesel, corn fiber cellulosic ethanol, carbon sequestration, and other projects intended to lower the carbon intensity of our products. In evaluating such projects, we have applied the same 25% after-tax IRR hurdle rate as for other investments. | ||||
Board diversity and refreshment. | •Board Diversity and Refreshment. 60% of our independent director nominees represent diversity of either gender or race/ethnicity. Since 2016, we have added four new directors, each of whom represent diversity of gender or race/ethnicity. •Diversity for Director Searches. In 2021, our Nominating and Corporate Governance Committee amended its charter to require that the initial list of candidates from which director nominees are chosen include, but need not be limited to, qualified diverse candidates. •Enhanced Questionnaires and Disclosures. In 2022, we expanded the scope of information solicited by our annual questionnaires regarding the diversity attributes, skills, and experiences of our directors, which we used to enhance the skills and attributes matrix and director biographies set forth below. | ||||
Expanded political disclosures and climate-lobbying alignment analysis. | •Political Disclosures and Climate-Lobbying Alignment.In 2021, we expanded our political disclosures and conducted a climate-lobbying alignment analysis, and issued a report thereon. We intend to conduct this evaluation on an annual basis going forward. | ||||
DEI | •Diversity for Executive Officer Searches. In 2022, the Board approved a policy, included in our Corporate Governance Guidelines, which provides that when executive officers (as defined in Rule 3b-7 under the Exchange Act) of Valero are recruited from outside the company, the initial list of candidates will include qualified gender and racially diverse candidates among the candidates presented. •Diversity Recruiting and Retention. We have increased our efforts to recruit, retain, and promote a diverse workforce and foster a culture of inclusion through various efforts, including targeted recruiting strategies aimed at improving our outreach to underrepresented groups, and educational and training programs on topics such as objective hiring and the advantages of a diverse workforce. •Diversity Progress. Of our total employees as of December 31, 2021, approximately 30 percent of our global professional employees were female, 11 percent of our hourly employees were female, and 19 percent of total employees were female. Approximately 36 percent of our U.S. employees have self-identified as Hispanic or Latino, Black or African American, Asian, American Indian or Alaskan Native, Native Hawaiian or Other Pacific Islander, or as two or more races. •EEO-1 Report. In 2021, we published our EEO-1 report on U.S. workforce diversity data and statistics. |
In 2017 the Financial Stability Board’s Task Force on Climate-related Financial Disclosure (TCFD) issued its recommendations on reporting climate-related financial information. In September 2018, Valero published its climate report—
22 | 2022 PROXY STATEMENT |
ESG AND CLIMATE-RELATED DISCLOSURE AND ACTIONS | ||||||||
DISCLOSURES AND REPORTS |
2022 PROXY STATEMENT | 23 |
ESG AND CLIMATE-RELATED DISCLOSURES AND ACTIONS | ||||||||
PerGovernance).
ACTIONS AND OVERSIGHT |
Spotlight on COVID-19 | ||||||||
COVID-19.Since the onset of the COVID-19 pandemic, the Board has received multiple reports on COVID-19 related matters, including the measures Valero has taken with respect to safety protocols. Under the Board’s oversight, there have been no furloughs, layoffs or pay reductions due to COVID-19, and since the onset of the pandemic employee benefits were actually expanded to include, among other items, treatment of COVID-19 without member cost share, mental health benefits, expanded family illness leave, and broader access to employee 401(k). |
24 | 2022 PROXY STATEMENT |
PROPOSAL NO. 1—ELECTION OF DIRECTORS | ||||||||
(ITEM 1 ON THE PROXY CARD) | ||||||||||||||
(ITEM 1 ON THE PROXY CARD)
We do not have a classified board. Each of our directors stands for election every year at the annual meeting of stockholders. If elected at the | R | ||||||||
The Board recommends a vote “FOR” |
Majority Voting.Under our bylaws, each director is to be elected by the vote of the majority of the votes cast at the Annual Meeting if a quorum is present.Meeting. For this purpose, a “majority of the votes cast” means that the number of shares voted “for” a director’s election exceeds 50 percent of the number of votes cast with respect to that director’s election. Votes “cast” exclude abstentions. If any nominee is unavailable as a candidate at the time of the Annual Meeting, either the number of directors constituting the full Board will be reduced to eliminate the resulting vacancy, or the persons named as proxies will use their best judgment in voting for any available nominee.
Information Concerning Nominees and Directors See the disclosures under the caption “Required Votes” above for more information.
Information Concerning Nominees and Other Directors |
Directors | Director Since | Age as of 12/31/2018 | ||||||||
Joseph W. Gorder, Chairman of the Board, President, and Chief Executive Officer | 2014 | 61 | ||||||||
H. Paulett Eberhart | 2016 | 65 | ||||||||
Kimberly S. Greene | 2016 | 52 | ||||||||
Deborah P. Majoras | 2012 | 55 | ||||||||
Donald L. Nickles | 2005 | 70 | ||||||||
Philip J. Pfeiffer | 2012 | 71 | ||||||||
Robert A. Profusek | 2005 | 68 | ||||||||
Stephen M. Waters | 2008 | 72 | ||||||||
Randall J. Weisenburger | 2011 | 60 | ||||||||
Rayford Wilkins, Jr. | 2011 | 67 |
2022 ANNUAL MEETING - DIRECTOR NOMINEE PROFILE |
Nominees | Director Since | Age as of 12/31/2021 | ||||||
Joseph W. Gorder, Chairman of the Board and Chief Executive Officer | 2014 | 64 | ||||||
Fred M. Diaz | 2021 | 56 | ||||||
H. Paulett Eberhart | 2016 | 68 | ||||||
Kimberly S. Greene | 2016 | 55 | ||||||
Deborah P. Majoras | 2012 | 58 | ||||||
Eric D. Mullins | 2020 | 59 | ||||||
Donald L. Nickles | 2005 | 73 | ||||||
Philip J. Pfeiffer | 2012 | 74 | ||||||
Robert A. Profusek | 2005 | 71 | ||||||
Randall J. Weisenburger | 2011 | 63 | ||||||
Rayford Wilkins, Jr. | 2011 | 70 |
Average Age - 64.6 yrs | 4 New Directors Since 2016 | Gender | Race/Ethnicity | TOTAL - 6/11 |
PROPOSAL NO. 1 — ELECTION OF DIRECTORS | ||||||||
Summary of Each Director Nominee’s Skills and Attributes |
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HSE EXPERIENCE supports oversight of HSE matters and provides valuable knowledge and perspective on providing safe and responsible operations | l | l | l | l | l | l | l | l | l | l | ||||||||||||||||||||||||||||||||||
HUMAN CAPITAL MANAGEMENT EXPERIENCE supports oversight on matters such as succession planning, talent and leadership development, retention, compensation, and DEI initiatives and strategies | l | l | l | l | l | l | l | l | l | l | ||||||||||||||||||||||||||||||||||
CORPORATE GOVERNANCE EXPERIENCE provides understanding and insight in fostering operational excellence, disciplined capital management, and long-term value, while also maintaining high ethical standards | l | l | l | l | l | l | l | l | l | l | l | |||||||||||||||||||||||||||||||||
CYBERSECURITY/IT EXPERIENCE provides important knowledge and perspective in evaluating and overseeing the cyber and IT security risks facing Valero | l | l | l | l | l | l | ||||||||||||||||||||||||||||||||||||||
FINANCE/ACCOUNTING EXPERIENCE is valuable in evaluating Valero’s financial statements, capital structure, and financial risks and strategy | l | l | l | l | l | l | l | l | ||||||||||||||||||||||||||||||||||||
GLOBAL EXPERIENCE provides valuable business knowledge and perspective on our international operations and global commodity trade | l | l | l | l | l | l | l | |||||||||||||||||||||||||||||||||||||
GOVERNMENT, LEGAL, REGULATORY, AND COMPLIANCE EXPERIENCE contributes to the Board’s ability to guide Valero through complex government regulations, legal matters, and public policy issues, and supports Valero’s commitment to compliance | l | l | l | l | l | l | l | l | l | l | ||||||||||||||||||||||||||||||||||
RISK MANAGEMENT EXPERIENCE contributes to the identification, assessment, and prioritization of the risks facing Valero | l | l | l | l | l | l | l | l | l | l | l | |||||||||||||||||||||||||||||||||
ENERGY INDUSTRY EXPERIENCE is important in effectively assessing and managing the unique risks and opportunities faced by the energy industry | l | l | l | l | l | |||||||||||||||||||||||||||||||||||||||
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2022 PROXY STATEMENT |
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PROPOSAL NO. 1 — ELECTION OF DIRECTORS | ||||||||
Nominees |
JOSEPH W. GORDER | ||||||||
Featured experience, qualifications, and attributes :•Global energy business leadership his prior service as a director of another public company. •Refining and marketing operationsexperience as Valero’s President and Chief Operating Officer beginning in 2012. Prior to that, Mr. Gorder was Executive Vice President and Chief Commercial Officer (beginning in 2011), and led Valero’s European operations from its London office. Before that, he held several leadership positions with Valero and Ultramar Diamond Shamrock Corporation (UDS) with responsibilities including marketing & supply and corporate development. •HSE and human capital management experience through his various leadership and management roles at Valero over the past two decades, during which time he has been integrally involved in Valero’s diversification into ethanol and renewable diesel production and, as CEO, has steered Valero’s strategy to further increase its investments in economic low-carbon fuel projects. During this time he has also been actively involved in a wide array of matters facing Valero’s employees, such as the COVID-19 pandemic, among others. He also previously served as the chair of the compensation and benefits committee of another public company. Other public company boards(current): None Prior public company boards (in last five years): Anadarko Petroleum Corporation (NYSE: APC)
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Age: 64 Director Since: 2014 Chairman | ||||||||
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FRED M. DIAZ | |||||||
Featured experience, qualifications, and attributes :•Global business leadership experience as President, Chief Executive Officer and chairman of the board of directors of Mitsubishi Motors North America, Inc. from April 2018 to April 2020 and as General Manager, Performance Optimization Global Marketing and Sales of Mitsubishi Motors Corporation in Tokyo, Japan from July 2017 to April 2018. From April 2013 to July 2017, Mr. Diaz served in a number of roles for Nissan Motor Corporation, including Division Vice President & General Manager - North American Trucks and Light Commercial Vehicles, Sr. Vice President Sales & Marketing and Operations, and Division Vice President, Sales & Marketing and Parts & Service. Mr. Diaz also served in several roles for Fiat Chrysler Automobiles (FCA) from 2004 to April 2013, including President and CEO of the Ram Truck Brand, President and CEO of Chrysler Mexico, Head of National Sales, Regional Managing Director of the Denver Business Center, and Director of Dodge Brand Marketing Communications. •HSE, human capital management, and governance experience through his leadership and management roles in the transportation sector noted above, his current service on the boards of other public companies, including a company focused on designing and developing an electric taxi aircraft, and his current service as •Organizational leadership experience through his service as a Director Member of the Latino Corporate Directors Association (LCDA) and a National Association of Corporate Directors (NACD) Board Leadership Fellow. Other public company boards (current): SiteOne Landscape Supply, Inc. (NYSE: SITE) (f/k/a John Deere Landscapes LLC), Smith & Wesson Brands, Inc. (NASDAQ: SWBI), and Archer Aviation Inc. (NYSE: ACHR). Prior public company boards (in last five years): None | ||||||||
Age: 56 Director Since: 2021 Committee: Nominating and Corporate Governance Independent | ||||||||
2022 PROXY STATEMENT | 27 |
PROPOSAL NO. 1 — ELECTION OF DIRECTORS | ||||||||
H. PAULETT EBERHART | ||||||||
Featured experience, qualifications, and attributes: •Global business leadership experience as Board Chair and CEO of HMS Ventures (since 2014), a privately held business involved with technology services and the acquisition and management of real estate. From 2011 through March 2014, she served as President and CEO of CDI Corp. (NYSE: CDI), a provider of engineering and information technology outsourcing and professional staffing services. She served as a consultant to CDI from April 2014 through December During her tenure at Invensys and EDS noted below, she led businesses with clients across the globe. • Accountant and currently serves as the chair of the audit committee of another public company. • Ms. Eberhart also chaired the HSE Committee at Vine Energy Inc. and the Risk & Governance Committee at Anadarko Petroleum Corporation whose responsibilities included HSE. Other public company boards(current): LPL Financial Holdings Inc. (NASDAQ: LPLA), Fluor Corporation (NYSE: FLR), and KORE Group Holdings, Inc. (NYSE: KORE) Prior public company boards (in last five years): Anadarko Petroleum Corporation (NYSE: APC),
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Age: 68 Director Since: 2016 Committee: Audit Independent | ||||||||
PROPOSAL NO. 1—ELECTION OF DIRECTORS
KIMBERLY S. GREENE | ||||||||
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Featured experience, qualifications, and attributes :•Energy business leadership and human capital management experience at Southern Company Gas as Board Chair, Chief Executive Officer and President (since June 2018). She served as Executive Vice President and Chief Operating Officer of the Southern Company (NYSE: SO) from 2014 to May 2018. Prior to that, she was President and CEO of Southern Company Services, Inc. Ms. Greene began her career at Southern Company in 1991 and held positions of increasing responsibility in the areas of engineering, strategy, finance, and wholesale marketing, including Senior Vice President and Treasurer of Southern Company Services, Inc. from 2004 to 2007. She rejoined Southern Company in 2013.During her tenure in the leadership roles discussed above, she has been intimately involved in succession planning, talent and leadership development, retention, compensation, and DEI initiatives and strategies. •Finance expertise and regulatory business managementexperience as Executive Vice President and Chief Generation Officer of Tennessee Valley Authority (TVA). While at TVA (2007 to 2013), she served as Chief Financial Officer, Executive Vice President of financial services and Chief Risk Officer, as well as Group President for strategy and external relations. •Cybersecurity and HSE expertise through her various leadership and management roles in the natural gas and utilities sector, including on issues related to safety, emerging technologies, innovation, and STEM-related education, her service as an Oil & Natural Gas Liaison Co-Lead for the Electric Subsector Coordinating Council, which is the principal liaison between the U.S. federal government and the energy sector concerning national-level disasters or threats to critical infrastructure (including cybersecurity), and her involvement with various renewable projects and technologies at Southern Company Gas and its affiliates. •Organizational leadership and governance experience through her business leadership roles discussed above, and her service Medicine. Other public company boards(current): None Prior public company boards (in last five years): | |||||||
Age: 55 Director Since: 2016 Committees: Nominating and Corporate Governance (Chair); and Sustainability and Public Policy Independent | ||||||||
| 2022 PROXY STATEMENT |
PROPOSAL NO. 1 — ELECTION OF DIRECTORS | ||||||||
DEBORAH P. MAJORAS | ||||||||
Featured experience, qualifications, and attributes :• •Government, regulatory, legal, and cybersecurity experience through her legal leadership roles and experience at P&G and in private practice, her experience as Chair of the U.S. Federal Trade Commission (“FTC”) from 2004 until •Organizational leadership and governance experience through her business leadership experience discussed above, and her current service and leadership roles on the boards of the United States Golf Association, The Christ Hospital Health Network, Legal Aid Society of Greater Cincinnati, and Westminster College. Other public company boards(current): None Prior public company boards (in last five years): | ||||||||
Age: 58 Director Since: 2012 Committees: Sustainability and Public Policy (Chair); and Nominating and Corporate Governance Independent | ||||||||
Featured experience, qualifications, and attributes: •Energy business leadership experience as Chairman and Chief Executive Officer of Lime Rock Resources, a company that he co-founded in 2005, which acquires, operates, and improves lower-risk oil and natural gas properties. Mr. Mullins oversees all strategic, financial, and operational aspects of the Lime Rock Resources funds. From May 2011 through October 2015, he also served as the Co-Chief Executive Officer and Chairman of the Board of Directors of LRE GP, LLC, the general partner of LRR Energy, L.P., an oil and natural gas company. •HSE and human capital management experience through his current service on the public policy and sustainability committee of ConocoPhillips (where his committee oversight responsibilities include matters related to social, political, HSE, climate, operational integrity, and public policy matters), and his prior service on the safety and nuclear oversight committee of PG&E Corporation. •Management, accounting, and finance expertise as a Managing Director in the Investment Banking Division of Goldman Sachs where he led numerous financing, structuring, and strategic advisory transactions in the division’s Natural Resources Group. He has served as Chair of the Audit Committee for Anadarko Petroleum Corporation and as a member of the Audit Committee for PG&E Corporation. •Organizational leadership and governance expertise through his business leadership roles discussed above, his current and prior service on other public company boards, and his current service on the board of trustees of the Baylor College of Medicine. Other public company boards (current): ConocoPhillips (NYSE: COP) Prior public company boards (in last five years): Anadarko Petroleum Corporation (NYSE: APC), and PG&E Corporation (NYSE: PCG) | ||||||||
Age: 59 Director Since: 2020 Committee: Audit Independent | ||||||||
PROPOSAL NO. 1—ELECTION OF DIRECTORS
| 2022 PROXY STATEMENT | 29 |
PROPOSAL NO. 1 — ELECTION OF DIRECTORS | ||||||||
DONALD L. NICKLES | ||||||||
Featured experience, qualifications, and attributes :•Government affairs, HSE, regulatory and legal leadership and experience as U.S. Senator from Oklahoma for 24 years (retired 2005). He also served in the Oklahoma State Senate for two years. During his tenure as U.S. Senator, he was Assistant Republican Leader for six years, Chairman of the Republican Senatorial Committee, and Chairman of the Republican Policy Committee. He served as Chairman of the Budget Committee and as a member of the Finance and Energy and Natural Resources Committees. •Business leadershipexperience as current Chairman and Chief Executive Officer of The Nickles Group, a Washington-based consulting and business venture firm formed in 2005. • •Organizational leadership and governance experience through his business leadership experience discussed above, his current and former service on other public company boards, and his current service on the advisory board of the Oklahoma Medical Research Foundation, and the board of directors of Central Union Mission (Washington, DC). Other public company boards(current): Board of Trustees of Washington Mutual Investors Fund (AWSHX) Prior public company boards (in last five years): | ||||||||
Age: 73 Director Since: 2005 Committee:Nominating and Corporate Governance Independent | ||||||||
| PHILIP J. PFEIFFER | |||||||
Featured experience, qualifications, and attributes :•Business leadership, legal and human capital management expertise in the San Antonio office of Norton Rose Fulbright LLP, where he wasPartner-in-Charge for 25 years and led the office’s labor and employment practice (he presently serves Of Counsel). Prior to his retirement as a senior partner, Mr. Pfeiffer also served for over 10 years as a member of the law firm’s executive management committee. Through his litigation .•Organizational leadership and governance experience through board service and affiliations with Southwest Research Institute, United Way of San Antonio and Bexar County, San Antonio Medical Foundation, The Children’s Hospital of San Antonio Foundation, Alamo Area Council of Boy Scouts, and the Other public company boards(current): None Prior public company boards (in last five years): | ||||||||
Age: 74 Director Since: 2012 Committee: Human Resources and Compensation Independent | ||||||||
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PROPOSAL NO. 1—ELECTION OF DIRECTORS
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PROPOSAL NO. 1 — ELECTION OF DIRECTORS | ||||||||
ROBERT A. PROFUSEK | ||||||||
Featured experience, qualifications, and attributes :•Business leadership and capital marketsexpertise as a partner of the Jones Day law firm where Mr. Profusek chairs the firm’s global mergers and acquisitions practice. His law practice focuses on mergers, acquisitions, takeovers, restructurings, and corporate governance matters. •Public company governanceexperience and expertise through service as Valero’s Lead Director and the Lead Director of two other public companies. He is a frequent speaker regarding corporate takeovers and corporate governance, has authored orco-authored numerous articles, has testified before Congress and the SEC about takeover and compensation-related matters, and is a frequent guest commentator on CNBC, CNN, and Bloomberg TV. •Cybersecurity, ESG and human capital management experience through his current service as chair of the governance and sustainability committee of the board of a technology and electronics focused public company, his current service as chair of the compensation committee of another public company, his leadership and management role at the Jones Day law firm, and his extensive legal experience discussed above, including advising on various ESG-related issues and authoring ESG-focused legal articles. •Organizational leadership through his leadership roles discussed above, and his former service on the board of directors of the Legal Aid Society of New York City. Other public company boards(current): Kodiak Sciences Inc. (NASDAQ: KOD), and CTS Corporation
Prior public company boards (in last five years): | ||||||||
Age: 71 Director Since: 2005 Committees: Human Resources andCompensation; and Sustainability and Public Policy Independent Lead Independent Director | ||||||||
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|
RANDALL J. WEISENBURGER |
PROPOSAL NO. 1—ELECTION OF DIRECTORS
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Featured experience, qualifications, and attributes :•Global business leadership, • •Organizational leadership and governance experiencethrough his leadership roles and service on other public company boards discussed above, as well as his current service on the Board of Overseers of the Wharton School of Business at the University of Pennsylvania. Other public company boards(current): Carnival Corporation and Carnival plc (NYSE: CCL) , Corsair Gaming Inc. (NASDAQ: CRSR), and MP Materials Corp. (NASDAQ: MP) Prior public company boards (in last five years): | |||||||
Age: 63 Director Since: 2011 Committees:Audit (Chair); and Sustainability and Public Policy Independent | ||||||||
| 2022 PROXY STATEMENT | 31 |
PROPOSAL NO. 1 — ELECTION OF DIRECTORS | ||||||||
RAYFORD WILKINS, JR. | ||||||||
Featured experience, qualifications, and attributes: •Global business leadership, •HSE and human capital management experience through his service as CEO of Diversified Businesses of AT&T Inc. (NYSE: T), and his other business leadership experience discussed above, and his current service on the Compensation and Human Resources committee of Caterpillar Inc. (NYSE: CAT), and the Compensation, Management Development and Succession committee of Morgan Stanley (NYSE: MS). During his tenure as the chair of Valero’s Human Resources and Compensation Committee he has been integral to Valero’s progress in linking pay with HSE and ESG performance. •Organizational leadership and governance experience through his business leadership experience discussed above, his current service on other public company boards, and his current service on the Advisory Council of the McCombs School of Business at the University of Texas at Austin. Other public company boards(current): Morgan Stanley (NYSE: MS), and Caterpillar Inc. (NYSE: CAT) Prior public company boards (in last five years): | ||||||||
Age: 70 Director Since: 2011 Committees:Human Resources and Compensation (Chair); and Sustainability and Public Policy Independent | ||||||||
32 |
IDENTIFICATION OF EXECUTIVE OFFICERS | ||||||||
Officer Since | Age as of 12/31/2018 | |||
Joseph W. Gorder,President and Chief Executive Officer | 2003 | 61 | ||
Jay D. Browning, Executive Vice President and General Counsel | 1997 | 60 | ||
R. Lane Riggs, Executive Vice President and Chief Operating Officer | 2011 | 53 | ||
Donna M. Titzman,Executive Vice President and Chief Financial Officer | 2001 | 55 | ||
Gary K. Simmons, Senior Vice President–Supply, International Operations andSystems Optimization
|
2011
|
54
|
Officer Since | Age as of 12/31/2021 | |||||||
Joseph W. Gorder, Chief Executive Officer and Chairman of the Board | 2003 | 64 | ||||||
R. Lane Riggs, President and Chief Operating Officer | 2011 | 56 | ||||||
Jason W. Fraser, Executive Vice President and Chief Financial Officer | 2015 | 53 | ||||||
Gary K. Simmons, Executive Vice President and Chief Commercial Officer | 2011 | 57 | ||||||
Cheryl L. Thomas, Senior Vice President and Chief Technology Officer | 2011 | 60 | ||||||
Richard J. Walsh, Senior Vice President, General Counsel and Secretary | 2016 | 56 |
Mr. Riggswas elected Executive Vice President and Chief Operating Officer effective(since January 1, 2018. Prior2018), and prior to that he served as Executive Vice President–Refining Operations and Engineering since 2014,(since 2014), and Senior Vice President–Refining Operations since 2011. His previous(since 2011). He has held several leadership positions included Senior Vice President–Crude, Feedstock Supply & Tradingwith Valero overseeing refining operations, crude and Vice President–Refinery Planning & Economics for Valero’s refining division.feedstock supply, and planning and economics. Mr. Riggs also served on the board of directors of Valero Energy Partners GP LLC (the general partner of Valero Energy Partners LP (NYSE: VLP, no longer public)VLP)).
Ms. Titzman has served as from 2014 to 2019.
Mr. Simmonswas elected Senior Vice President–Supply, International Operations and Systems Optimization effective May 1, 2014. He previously served as Vice President–Crude and Feedstock Supply and Trading from 2012 to 2014, and Vice President–Supply Chain Optimization from 2011 to 2012. Mr. Simmons joined Valero in 1987 as a process engineer and has since held many leadership positions including Vice President and General Manager of Valero’s Ardmore and St. Charles refineries.
Michael S. Ciskowski served as Executive Vice President and Chief Financial Officer of Valero from August 2003 until his retirement effective May 3, 2018. Before that he served as Executive Vice President–Corporate Development since April 2003, and Senior Vice President in charge of business and corporate development since 2001.
Jason W. Fraser (age 50) was elected Executive Vice President and General Counsel effective January 1, 2019 (succeeding Mr. Browning). From May2019. In 2018, to January 1, 2019, Mr. Fraserhe served as Senior Vice President of Valero overseeing Valero’s Public Policy & Strategic Planning, Governmental Affairs, Investor Relations, and External Communications functions. From November 2016 to May 2018, heMr. Fraser served as Vice President-Public Policy��Policy & Strategic Planning, of Valero. Fromand from May 2015 to November 2016, Mr. Fraserhe served in London as Valero’s Vice President-Europe, overseeing Valero’s European commercial businesses. Prior to his service in London, he served inheld various leadership positions at Valero’s San Antonio headquarters, asincluding Senior Vice President & Deputy General Counsel of Valero Services, Inc. from 2013 to 2015. Prior to that, he held various roles includingand Senior Vice President-Specialty Products in the Valero family of companies.
2022 PROXY STATEMENT |
BENEFICIAL OWNERSHIP OF VALERO SECURITIES | ||||||||
SECURITY OWNERSHIP OF MANAGEMENT AND DIRECTORS |
SECURITY OWNERSHIP OF MANAGEMENT AND DIRECTORS
This table lists the beneficial ownership of our Common Stock as of February 20, 2019,1, 2022, by all directors and nominees, the executive officers named in the Summary Compensation Table, and the directors and executive officers of Valero as a group. No executive officer, director, or nominee for director owns any class of equity securities of Valero other than Common Stock. None of the shares listed below are pledged as security. The address for each person is One Valero Way, San Antonio, Texas 78249.
Name of Beneficial Owner | Shares Held (1) | Shares Under Options (2) | Total Shares | Percent of Class | ||||||||||
Jay D. Browning |
| 223,107 |
|
| 34,766 |
|
| 257,873 |
| * | ||||
H. Paulett Eberhart |
| 4,223 |
|
| — |
|
| 4,223 |
| * | ||||
Joseph W. Gorder |
| 467,602 |
|
| 161,297 |
|
| 628,899 |
| * | ||||
Kimberly S. Greene |
| 4,163 |
|
| — |
|
| 4,163 |
| * | ||||
Deborah P. Majoras |
| 19,282 |
|
| — |
|
| 19,282 |
| * | ||||
Donald L. Nickles |
| 25,767 |
|
| — |
|
| 25,767 |
| * | ||||
Philip J. Pfeiffer |
| 20,125 |
|
| — |
|
| 20,125 |
| * | ||||
Robert A. Profusek |
| 37,598 |
|
| — |
|
| 37,598 |
| * | ||||
R. Lane Riggs |
| 150,767 |
|
| 2,667 |
|
| 153,434 |
| * | ||||
Gary K. Simmons |
| 123,720 |
|
| 1,750 |
|
| 125,470 |
| * | ||||
Donna M. Titzman |
| 189,975 |
|
| 16,623 |
|
| 206,598 |
| * | ||||
Stephen M. Waters |
| 7,964 |
|
| — |
|
| 7,964 |
| * | ||||
Randall J. Weisenburger |
| 53,717 |
|
| — |
|
| 53,717 |
| * | ||||
Rayford Wilkins, Jr. |
| 31,409 |
|
| — |
|
| 31,409 |
| * | ||||
Directors and current executive officers as a group (14 persons)
|
| 1,359,419
|
|
| 217,103
|
|
| 1,576,522
|
| *
|
Name of Beneficial Owner | Shares Held (1) | Shares Under Options (2) | Total Shares | Percent of Class | ||||||||||
Fred M. Diaz (3) | — | — | — | * | ||||||||||
H. Paulett Eberhart | 6,735 | — | 6,735 | * | ||||||||||
Jason W. Fraser | 96,080 | — | 96,080 | * | ||||||||||
Joseph W. Gorder | 534,581 | 113,147 | 647,728 | * | ||||||||||
Kimberly S. Greene | 7,884 | — | 7,884 | * | ||||||||||
Deborah P. Majoras | 21,377 | — | 21,377 | * | ||||||||||
Eric D. Mullins | 755 | — | 755 | * | ||||||||||
Donald L. Nickles | 27,396 | — | 27,396 | * | ||||||||||
Philip J. Pfeiffer | 23,488 | — | 23,488 | * | ||||||||||
Robert A. Profusek | 38,892 | — | 38,892 | * | ||||||||||
R. Lane Riggs | 269,020 | 2,667 | 271,687 | * | ||||||||||
Gary K. Simmons | 168,684 | 1,750 | 170,434 | * | ||||||||||
Cheryl L. Thomas | 55,930 | — | 55,930 | * | ||||||||||
Stephen M. Waters | 11,454 | — | 11,454 | * | ||||||||||
Randall J. Weisenburger | 102,438 | — | 102,438 | * | ||||||||||
Rayford Wilkins, Jr. | 33,686 | — | 33,686 | * | ||||||||||
Directors and current executive officers as a group (17 persons) | 1,479,436 | 117,564 | 1,597,000 | * | ||||||||||
|
|
|
34 |
BENEFICIAL OWNERSHIP OF VALERO SECURITIES
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
BENEFICIAL OWNERSHIP OF VALERO SECURITIES | ||||||||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS |
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | ||||||||||||
The Vanguard Group 100 Vanguard Blvd Malvern PA 19355 | 46,455,727 (1) | 11.36% | ||||||||||||
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BlackRock, Inc. 55 East 52nd Street New York NY 10055 |
|
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|
| ||||||||||||
|
|
|
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37,549,543 (2) |
| 9.2% |
|
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers, directors, and greater than 10 percent stockholders to file with the SEC certain reports of ownership and changes in ownership of our Common Stock. We believe that all Section 16(a) reports applicable to our executive officers, directors, and greater than 10 percent stockholders for 2018 were filed on time, with the exception of one Form 4 filed on behalf of our director Paulett Eberhart, which was inadvertently filed late in 2018.
State Street Corporation State Street Financial Center One Lincoln Street Boston MA 02111 | 6.95% | |||||||||||||
2022 PROXY STATEMENT | 35 |
RISK ASSESSMENT OF COMPENSATION PROGRAMS | ||||||||
•the mix between fixed and variable, annual and long-term, and cash and equity compensation, designed to encourage strategies and actions that are in Valero’s long-term best interests;
•determination of incentive awards based on a variety of indicators of performance, thus diversifying the risk associated with a single indicator of performance;
•incorporation of relative total stockholder return into our incentive program, calibrating pay and performance relationships to companies facing the same or similar market forces as Valero;
•multi-year vesting periods for equity incentive awards, which encourage focus on sustained growth and earnings;
•maximum payout ceilings under our annual bonus program and performance share awards;
•restricted stock awards that help contain volatility of incentive awards and further align executives’ interests with long-term stockholder value creation; and
•our compensation-related policies, including our executive compensation “clawback” policyPolicy on Executive Compensation in Restatement Situations and stock ownership and retention guidelines (discussed under the caption “Compensation Discussion and Analysis—Compensation RelatedCompensation-Related Policies”).
36 | 2022 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
TABLE OF CONTENTS | ||||||||||||||
Peer Group and Benchmarking Data | ||||||||||||||
COMPENSATION DISCUSSION AND ANALYSIS
TABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS | |||||||||
Analysis — Overview |
The following Compensation Committee Report is not “soliciting material,” is not deemed filed with the SEC, and is not to be incorporated by reference into any of Valero’s filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this proxy statement and irrespective of any general incorporation language therein.
The Compensation Committee has reviewed and discussed the following Compensation Discussion and Analysis with management. Based on the foregoing review and discussions and such other matters the Compensation Committee deemed relevant and appropriate, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
Members of the Compensation Committee:
Rayford Wilkins, Jr., Chair
Philip J. Pfeiffer
Robert A. Profusek
VALERO’S STRATEGY FOR VALUE CREATION
Valero has three reporting segments – refining, renewable diesel and ethanol. The refining segment includes refining operations and associated marketing activities and logistics assets. Valero owns 15 refineries located in the United States, Canada and the United Kingdom. Valero’s renewable diesel segment includes the operations of Diamond Green Diesel, a joint venture which produces low-carbon renewable diesel fuel at its existing plant next to our St. Charles Refinery in Norco Louisiana, and with additional capacity expected in the first quarter of 2023 at a new plant to be located next to our Port Arthur Refinery in Texas, which is currently under construction. Valero’s renewable diesel business is currently the world’s second-largest renewable diesel producer. The ethanol segment, which is currently the world’s second-largest corn ethanol producer, includes Valero’s ethanol operations and associated marketing activities and logistics assets, with 12 plants throughout the U.S. Midwest. Valero’s renewable diesel and ethanol businesses have made Valero one of the world’s largest low-carbon fuels producers.
VALERO’S STRATEGY FOR VALUE CREATION |
•Utilize a disciplined capital allocation framework that delivers distinctive financial results and peer-leading returns to stockholders.
•Grow earnings through market expansion, margin improvement, and operating cost control.
2021 CHANGES AND HIGHLIGHTS |
2022 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
EXECUTIVE COMPENSATION DESIGN ELEMENTS |
Long-Term Incentive Program | |||||||||||||||||
50% | 50% | ||||||||||||||||
Performance Shares | Restricted Stock | ||||||||||||||||
•3-yr ratable vesting, with no re-testing •Primary performance measure: Relative TSR vs peer group •Secondary performance measure: Energy Transition modifier tied to GHG emissions reduction/offset target for 2025 and growth capital deployed for low-carbon projects •Range of payout: 0% to 200% of target | •3-yr ratable vesting •Value ultimately realized increases/decreases with the stock price movement |
Component | Metric(s) | Weight | Outcome Range | ||||||||
Financial | EPS* | 40% | 0% - 200% | ||||||||
Operational | a) Health, Safety, and Environment (HSE) b) Mechanical Availability c) Refining Cash Operating Expense Management | 40% | 0% - 200% | ||||||||
Strategic | Array of Initiatives, including ESG efforts and improvements | 20% | 0% - 200% | ||||||||
COMBINED: | 100% | 0% - 200% |
OPERATIONAL AND SAFETY PERFORMANCE DRIVES PROFITABILITY
Operating safely and reliably is Valero’s highest priority and is critically important to maximizing profitability. Ongoing improvement and excellent performance in key operational and safety measures have enabled Valero to improve its earnings capabilities and realize industry-leading returns. The following charts demonstrate Valero’s multi-year improvement in performance resulting from strategic investments and a disciplined focus on operational improvement, maintenance and safety programs.
MECHANICAL AVAILABILITY Valero's 97.2% mechanical availability for 20~ 8 represents highly reliable and industry-leading operations and near record performance. Excellent performance in this metric reflects our ability to avoid unplanned downtime and successfully execute planned and unplanned refinery maintenance.
PERSONNEL SAFETY Personnel safety continues to improve and to outperform the industry average.
COMPENSATION DISCUSSION AND ANALYSIS
TIER 1 PROCESS SAFETY (Process Safety Event Rate, Three- Year Rolling Averages) Valero has experienced significant and continuous improvement in process safety since 2010. A Tier 1 Process Safety Event represents the loss of primary containment of a fuel, feedstock, or hazardous chemical from equipment associated with a refinery processing unit or storage tank and typically results in a safety and/or environmental incident.
Valero seeks to be the leader among its peers in stockholder returns and makes operational and capital allocation decisions in support of this objective. Through targeted share buybacks and sustainable dividend growth, Valero has prioritized the delivery of cash returns to stockholders.
ANNUAL DIVIDEND PER SHARE AND WEIGHTED AVERAGE SHARES OUTSTANDING AS PERCENTAGE RELATIVE TO 2011
|
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
COMPENSATION DISCUSSION AND ANALYSIS
As
CEO PAY RATIO* | STOCK OWNERSHIP GUIDELINES** | ||||||||||
CEO : Median-Paid Employee 1 : 114 | Position/Level | Value of Shares Earned | |||||||||
Board | 5x Annual Cash Retainer | ||||||||||
CEO | 5x Base Salary | ||||||||||
President | 3x Base Salary | ||||||||||
EVP | 2x Base Salary | ||||||||||
SVP | 1x Base Salary | ||||||||||
VP | 1x Base Salary | ||||||||||
* See “Pay Ratio Disclosure” for more details. | ** See “Stock Ownership Guidelines” for more details. |
PAY AND PERFORMANCE OUTCOMES FOR 2021 |
Category | Metric | Target | Results | Target Achieved | Weighting | Outcome | |||||||||||||||||||||||||||||
Financial | Earnings Per Share (1) | $0.55 | $2.81 | 188.63% | 40.00% | 75.45% | |||||||||||||||||||||||||||||
Operational | Health, Safety & Environment | 100.00% | 199.00% | 199.00% | 13.33% | 26.53% | |||||||||||||||||||||||||||||
Mechanical Availability | 96.20% | 97.20% | 180.95% | 13.33% | 24.12% | ||||||||||||||||||||||||||||||
Refining Cash Operating Expense Management (2) | $127/EDC | $111/EDC | 200.00% | 13.34% | 26.68% | ||||||||||||||||||||||||||||||
Strategic | Strategic Execution Initiatives and Objectives | 100.00% | 150.00% | 150.00% | 20.00% | 30.00% | |||||||||||||||||||||||||||||
Achieved Annual Bonus Payout (vs Target) | 182.78% |
40 | 2022 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
Footnotes:
Performance Shares Grant (Year & Segment) | Final Percentile TSR Peers | Vesting Percentage of Target (Target = 100%) (Range of 0% to 200%) | ||||||
2018 (final of 3 segments) | 3 of 11 | 175.0% | ||||||
2019 (2nd of 3 segments) | 5 of 11 | 125.0% |
Performance Shares Grant (Year & Segment) | Metric | Result | Weighting | Vesting Percentage of Target (Target = 100%) (Range of 0% to 200%) | ||||||||||
2020 (2nd of 3 Segments) | Relative TSR Ranking | 5 of 11 | 75% | 125.00% | ||||||||||
3-Yr Avg ROIC | Below Min. | 25% | 00.00% | |||||||||||
Preliminary Vesting Percentage of Target: | 93.75% | |||||||||||||
Metric | Target | Results | Percent Added/Subtracted | |||||||||||
Energy Transition Modifier | Global Refinery Scope 1 and 2 GHG Emissions Reduction/Offsets vs Target* | ≥43.70%** | Exceeded Target | + 12.50% | ||||||||||
Low-carbon Projects and Initiatives as Percent of Growth CapEx | ≥40.00% | Exceeded Target | + 12.50% | |||||||||||
Final Vesting Percentage of Target | 118.75% |
| ||||||||||||||
Performance Shares Grant (Year & Segment) | Final Percentile TSR Ranking versus Peers | Vesting Percentage of Target (Target = 100%) (Range of 0% to 200%) | ||||||||||||
2021 (1st of 3 Segments) | 7 of 11 | 75.00% | ||||||||||||
Preliminary Vesting Percentage of Target: | 75.00% | |||||||||||||
Metric | Target | Results | % Added/Subtracted | |||||||||||
Energy Transition Modifier | Global Refinery Scope 1 and Emissions Reduction/Offsets vs Target* | ≥43.70%** | Exceeded Target | + 12.50% | ||||||||||
Low-carbon Projects and Initiatives as Percent of Growth CapEx | ≥40.00% | Exceeded Target | + 12.50% | |||||||||||
Final Vesting Percentage of Target | 100.00% |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
Company Performance Highlights—2018
Returned $3.08 billion
ESG AND EXECUTIVE COMPENSATION |
Compensation Program | Element | Weighting/ Impact | Key Characteristics | ||||||||
Annual Bonus (Short-Term Incentives) | Health, Safety & Environment Metric within the Operational Component | 13.3 percent of annual bonus | •Consists of seven separately weighted measures featuring both “leading” and “lagging” indicators across three operational groups (separate from reportable segments): Refining, Ethanol, and Logistics •Leading indicator metrics promote management behaviors including progress against pre-established criteria for inspections and action-items, which have proven to result in improved environmental and safety outcomes •Lagging indicators include “Environmental Scorecard Incidents” measuring the number of incidents reportable to regulatory agencies*; and Tier 1 Process Safety Event Rate which is a metric defined by the American Petroleum Institute (“API”) that looks at process safety events per 200,000 total employee and/or contractor working hours | ||||||||
Annual Bonus (Short-Term Incentives) | Strategic Execution | Up to 20 percent of annual bonus depending on subjective assessment of performance | •Includes “ESG Efforts & Improvements” as one of five key strategic areas •Significant achievements are reported and performance is subjectively assessed on five ESG initiatives: Environmental Stewardship, Sustainability, Diversity, Equality & Inclusion, Compliance, and Corporate Citizenship & Community | ||||||||
Performance Shares (Long-Term Incentives) | Energy Transition Modifier | +/- 25 percentage points to final payout of the performance share component of long-term incentives | •Performance is assessed based on the company’s progress in meeting the challenges of the energy transition, including (1) progress towards our publicly disclosed GHG emissions reduction/offset target for 2025, and (2) investment of growth capital into low-carbon initiatives and projects |
42 | 2022 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
VALERO’S COMPENSATION PHILOSOPHY
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COMPENSATION DISCUSSION AND ANALYSIS
Executive Transition
On May 3, 2018, Ms. Donna Titzman was promoted to the role of Executive Vice President and Chief Financial Officer (CFO), replacing Mr. Michael Ciskowski who retired. Unless noted otherwise, the elements and values of Valero’s 2018 executive pay program as described in this document reflect the CFO pay for Ms. Titzman.
ELEMENTS OF EXECUTIVE COMPENSATION—SUMMARY
The primary elements of our 2018 executive compensation program are summarized in the table below.
☑ | Balance compensation over short- and long-term | |||||||||||||||||||
☑ | Align the interests of executives and stockholders | ☑ | Facilitate retention of top executive talent | |||||||||||||||||
☑ | Manage risk and adopt best practices in executive pay | ☑ | Advance ESG objectives through executive incentives | |||||||||||||||||
ELEMENTS OF EXECUTIVE COMPENSATION — SUMMARY |
Element | Form | Key Characteristics | ||||||||||
Base Salary | Cash | • | Takes into consideration scope and complexity of the role, peer market data, experience of the incumbent, and individual performance | |||||||||
• | Aligned with competitive practices in order to support recruitment and retention of top talent | |||||||||||
Annual Bonus Plan | Performance-Based Cash | • | Variable component of annual pay focused on achievement of short-term annual financial, operational, and strategic objectives that are critical drivers for safe and reliable operations, returns to stockholders, | |||||||||
Long-term Incentive Program | Performance Shares (50%) | • | Measures relative Total Shareholder Return (TSR) against | |||||||||
and two unique metrics related to Energy Transition • | Incentivizes stockholder returns | |||||||||||
and commitment to our energy transition objectives • | Value delivered is driven by performance relative to relevant peers in industry and by our progress in advancing our low-carbon fuels strategy | |||||||||||
Restricted Stock (50%) | • | Vests 1/3 per year over three years | ||||||||||
• | Value delivered is driven by absolute performance of company stock | |||||||||||
• | Aids in retention of critical talent |
⬛ Fixed ⬛ Variable
2018 TARGET PAY MIX FOR EXECUTIVES Variable pay tied to company performance represents the majority of total target pay for our executives as shown for the various executive levels below.
|
Fixed | Variable | |||||||||||||
2022 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
Salary (Dec. 31, 2021) ($) | Target Annual Incentive Bonus ($) (1) | Target Long- term Incentives (Stock Awards) ($) (2) | Target Total Pay ($) | ||||||||||||||||||||
Gorder | CEO | 1,800,000 | 2,880,000 | 11,340,000 | 16,020,000 | ||||||||||||||||||
Riggs | President | 970,000 | 1,067,000 | 4,365,000 (3) | 6,402,000 | ||||||||||||||||||
Fraser | CFO | 825,000 | 825,000 | 3,300,000 | 4,950,000 | ||||||||||||||||||
Simmons | CCO | 700,400 | 700,400 | 2,276,300 | 3,677,100 | ||||||||||||||||||
Thomas | CTO | 662,300 | 529,840 | 1,490,175 | 2,682,315 | ||||||||||||||||||
44 | 2022 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
Footnotes:
|
|
While includes base salary, target bonus and target long-term incentives value.
PAY FOR PERFORMANCE ALIGNMENT RELATIVE TO PEERS
in recognition of individual performance.
2022 PROXY STATEMENT | 45 |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
PAY FOR PERFORMANCE ALIGNMENT RELATIVE TO PEERS |
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Footnotes:
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Valero’s Percentile Ranking vs. Peers(1) | |||||||||||||||||
Timeframe | Role | Relative Performance vs. Peers | Relative Pay(2) vs. Peers | ||||||||||||||
5 Years | CEO | 73rd percentile | 73rd percentile | ||||||||||||||
Top-5 Executives | 73rd percentile | 45th percentile |
COMPENSATION DISCUSSION AND ANALYSISFootnotes
:
3-YEAR CUMULATIVE REAL COMPENSATION PERCENTILE VS. CUMULATIVE TOTAL SHAREHOLDER RETURN PERCENTILE (1 /1/15-12/31/17)
| ||||||||
46 | 2022 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
Compensation Discussion and Analysis—Detail |
PAY FOR PERFORMANCE
PAY FOR PERFORMANCE |
•We target 50 percent of the long-term incentive value granted to our named executive officers to be awarded in the form of performance shares tied to relative TSR performance.
STOCKHOLDER ALIGNMENT
STOCKHOLDER ALIGNMENT |
•Our executive officers and directors are subject to meaningful stock ownership guidelines.
•We engage in stockholder outreach to solicit the input of stockholders to our pay programs.
COMPENSATION DISCUSSION AND ANALYSIS•
PROGRAM DESIGN
Incentives are balanced between absolute performance goals (rewarding the achievement ofpre-established goals) and relative measures (linking the incentives to surpassing the performance of our peers).
•We have maximum payout ceilingson both our annual bonus opportunities and our performance shares.
•Our executive pay programs include design features that mitigate against the risk of inappropriate behaviors.
PAY BENCHMARKING
•Our executive pay design aligns with typical practices among Valero’s peers and in general industry.
PAY BENCHMARKING |
•We benchmark against the median pay levels of the peer group for each of base pay, annual bonus, long-term incentives, and long-term incentives.
AVOID PROBLEMATIC PAY PRACTICES
AVOID PROBLEMATIC PAY PRACTICES |
•We have a policy stipulating that grants of performance shares contain “double trigger” terms and conditions for vesting in achange-of-control change of control context such that performance shares will vest on a partial, pro rata basis following termination of employment (rather than vesting automatically in full upon the change of control).
•Our long-term incentive program mandates that stock options cannot bere-priced without stockholder approval.
•Our executive officers and directors are prohibited from pledging shares of our Common Stock as collateral or security for indebtedness, and may not purchase, sell, or write calls, puts, or other options or derivative instruments that are designed to hedge or offset any decrease in the market value of our Common Stock.
•We have a “clawback”policy requiring the return of incentive payments in certain restatement situations.
GOOD GOVERNANCE
2022 PROXY STATEMENT | 47 |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
STRONG GOVERNANCE |
•Our Human Resources and Compensation Committee retains the services of an independent executive compensation consultant that provides services directly to the Committee.
•We conduct an annualsay-on-pay vote as recommended by our stockholders.
•We have a declassified board of directors;Board; all of our directors stand forre-election each year.
•Our Board has approved a limitation on the amount of equity compensation that may be paid to ournon-employee directors in any year.
•We currently have engaged a third-party to conduct a revieweleven independent directors (10 director nominees) who serve on four fully independent committees.
•Our Bylawsbylaws grant proxy access to our stockholders.
•Our Bylawsbylaws permit stockholders to call special meetings of stockholders.
Withwith Stockholdersmore fully described further in this proxy statement in the “Stockholder Engagement” section of this proxy statement.
section.30
PEER GROUP AND BENCHMARKING DATA |
48 | 2022 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
| ||
| ||
| ||
| ||
| ||
| ||
|
operations or are large, complex companies from general industry that are representative of the scale and complexity of Valero’s operations.
Compensation Comparator Peer Group | |||||
Chevron Corporation | General Motors Company | ||||
ConocoPhillips* | Halliburton Company | ||||
Dow Inc. | HollyFrontier Corporation* | ||||
EOG Resources, Inc.* | Marathon Petroleum Corporation* | ||||
Exxon Mobil Corporation | Occidental Petroleum Corporation* | ||||
Ford Motor Company | Phillips 66* |
After engaging with the independent compensation consultant, we believe that the Compensation Comparator Peer Group is relevant to our industry and business model, and provides the appropriate peer group to remain competitive in the market for executive talent. |
The Compensation Comparator Peer Group was approved by the Human Resources and Compensation Committee in October 2020 when 2021 executive pay levels were initially considered and established according to the annual pay review process as described further under the caption “Process and Timing of Compensation Decisions.”
operations or due to the members’ strong stock price correlation to Valero.
2022 PROXY STATEMENT | 49 |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
COMPENSATION DISCUSSION AND ANALYSIS
In October 2018,February of 2021, the Human Resources and Compensation Committee established a peer group for TSR measurement applicable to the 20182021 awards of performance shares (which have TSR measurement periods ending in 2019, 2020,2021, 2022, and 2021)2023). Removed fromIncluded in the peer group is the Energy Select Sector SPDR Fund (XLE) index, which serves as a proxy for 2018 was Andeavor,stock price performance of the energy sector and includes companies with which was acquiredwe compete for capital. The change in 2018 by Marathon Petroleum Corporation.the index price across the designated performance periods is measured as TSR. Valero is included in this peer group when results are calculated. In addition to Valero, the performance peer group for the 20182021 awards is composed of the following entities.
Performance Peer Group (for Relative TSR Comparison) | |||||
ConocoPhillips* | Marathon Petroleum Corporation* | ||||
CVR Energy Inc. | Occidental Petroleum Corporation* | ||||
Delek US Holdings | PBF Energy Inc. | ||||
EOG Resources, Inc.* | Phillips 66* | ||||
HollyFrontier Corporation* | Energy Select Sector SPDR Fund (XLE) |
| ||||
| ||||
| ||||
|
50 | 2022 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
elements.
•to provide compensation payouts that are tied to the performance of internal and external metrics both on a relative and absolute basis;
•to align executives’ pay opportunities with stockholder value creation; and
•to attract, motivate, and retain the best executive talent in our industry.
COMPENSATION DISCUSSION AND ANALYSIS
Our annual incentive bonus program rewards are tied to:
•Valero’s attainment of key financial performance measures;
•Valero’s success in key operational and strategic measures;
•safe operations;
•environmental responsibility;
•reliable operations;
cost management.
•long-term stock price performance (both absolute and relative to our peer group);
•payment of regular dividends.
The long-term incentive awards in our compensation program include performance shares and restricted stock. We believe that incentives that drive stockholder value should also drive executive officer pay. We note that performance shares, when issued, do not assure a payout to the executive officer unless and until stockholder value is created through both company performance andas measured through TSR relative to our peers.peers and progress and achievements related to our publicly announced GHG emissions reduction/offset target for 2025 and investments in low-carbon projects and initiatives. We also believe that executive officers should hold an equity stake in the company to further motivate the creation of stockholder value, and that retention of our industry-leading group of top executives is critical to our ongoing success, which is why we include awards of restricted stock in our long-term incentive program coupled with stock ownership guidelines.
2022 PROXY STATEMENT | 51 |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
BENCHMARKING COMPETITIVE PAY LEVELS |
We also benchmark annual bonus, long-term incentive targets (expressed as a percentage of base salary), and total targeted pay for each executive position by reference to the 50th percentile (median) benchmark of the Compensation Comparator Peer Group, and may make decisions to award above or below these targets based on individual circumstances (e.g., performance of the executive, internal parity, and management succession planning). Preserving flexibility to award incentive opportunities above or below the median peer levels helps tailor the incentives to the executive and the role, resulting in a more customized match of competitive pay opportunities andpay-for-performance design attributes.
THE ROLE OF INDIVIDUAL PERFORMANCE AND PERSONAL OBJECTIVES |
RELATIVE SIZE OF MAJOR COMPENSATION ELEMENTS
and performance objectives for, our named executive officers. Performance and compensation for our Chief Executive Officer are reviewed and approved by the Board’s independent directors with recommendations from the Human Resources and Compensation Committee. For officers other than the CEO, individual performance and compensation are evaluated by the Human Resources and Compensation Committee with recommendations from our Chief Executive Officer. Individual performance and objectives are specific to each officer position.
RELATIVE SIZE OF MAJOR COMPENSATION ELEMENTS |
COMPENSATION DISCUSSION AND ANALYSIS
The following graphics summarize the relative target pay mix of base salary and incentive compensation for 20182021 for our named executive officers.
| ||||||||
52 | 2022 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
INDIVIDUAL PERFORMANCE AND PERSONAL OBJECTIVES
The Compensation Committee evaluates the individual performance of, and performance objectives for, our named executive officers. Performance and compensation for our Chief Executive Officer are reviewed and approved by the Board’s independent directors with recommendations from the Compensation Committee. For officers other than the Chief Executive Officer, individual performance and compensation are evaluated by the Compensation Committee with recommendations from our Chief Executive Officer. Individual performance and objectives are specific to each officer position.
Criteria used to measure an individual’s performance may include assessment of objective criteria (e.g., execution of projects within budget parameters, improving an operating unit’s profitability, or timely completing an acquisition or divestiture) as well as qualitative factors such as the executive’s ability to lead, ability to communicate, and successful adherence to Valero’s stated values (i.e., commitment to safety, commitment to the environment, commitment to our communities, commitment to our employees, and commitment to our stakeholders). There are no specific weights assigned to these various elements of performance.
BASE SALARIES |
COMPENSATION DISCUSSION AND ANALYSIS
Base salaries for our named executive officers are approved by the Human Resources and Compensation Committee after taking into consideration median practices for comparable roles among the peer companies. The Human Resources and Compensation Committee also considers the recommendations of the Chief Executive Officer for officers other than the Chief Executive Officer. The base salary and all other compensation of the Chief Executive Officer are reviewed and approved by the independent directors of the Board.
ANNUAL INCENTIVE BONUS |
•the position of the named executive officer, which is used to determine a targeted percentage of base salary that may be awarded as incentive bonus;
•pre-established performance objectives that include a quantitative financial performance goal (Financial Performance Goal), operational performance goals (Operational Performance Goals), and qualitative goals and objectives related to Valero’s long-term strategy (Strategic Execution) for the completed year, which are categorized under specific strategic areas including the effectivedisciplined use of capital, (Strategic Company Performance Goals) for the completed fiscal year;returns to stockholders, operational excellence, organizational excellence, and
•a qualitative evaluation of the individual’s performance.
The
2022 PROXY STATEMENT | 53 |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
Earnings per common share – assuming dilution | $2.27 | ||||||||||
Exclude: Gain on sale of a portion of our interest in the MVP joint venture | ($0.12) | ||||||||||
Impairment charge for cancellation of the Diamond Pipeline extension | $0.04 | ||||||||||
Loss on early redemption and retirement of debt | $0.37 | ||||||||||
Adjustment for changes in certain statutory tax rates | $0.16 | ||||||||||
Adjustment for change in estimated useful life of two ethanol plants | $0.09 | ||||||||||
Adjusted EPS for Financial Performance Goal | $2.81 |
adjust results for this exceptional event. Valero’s 2021 financial performance was very strong considering the market challenges presented by the ongoing pandemic, the temporary shutdown of two refineries due to Hurricane Ida, and the impacts of Winter Storm Uri.
The
•Health, Safety, and Environment – Measures Valero’s achievements in the areas of health, safety, and environmental;
•Mechanical Availability – Measures Valero’s achievements in improving refining competitiveness through improved mechanical availability;availability within our refineries, with a performance scale, which generally reflects industry-wide performance comparisons; and
•Refining Cash Operating Expense Management – Measures Valero’s achievements in cost management.
54 | 2022 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
Metric | Description | Type | ||||||
Vessel/PSV Inspections | Number of vessel and pressure safety valve (PSV) inspections that are past-due | Leading | ||||||
PHA Action Items > 2 years (Non-Turnaround) | Number of corrective Process Hazard Analysis (PHA) action items identified through regulatory safety procedures reviews that are greater than 2 years old and are not yet completed | Leading | ||||||
HSE Audit Past-due Items | Number of past-due items identified through comprehensive internal audits to ensure compliance with regulations, permits and Valero standards | Leading | ||||||
Management Audits Percent | Percentage of audit items completed as identified through monthly safety and environmental program audits covering both work and confined space permitting, as well as ethanol loading | Leading | ||||||
Environmental Scorecard Incidents | Number of incidents reportable to regulatory agencies | Lagging | ||||||
Tier 1 API Process Safety Incidents/Rate | Number or rate of recordable safety incidents occurring in conjunction with a loss of process containment | Lagging | ||||||
Reliability Events | Number of events causing a plant outage of greater than one-half day | Lagging | ||||||
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
Strategic Company
Valero’sStrategic Company Performance Goalsscales for each of the Refining Vessel/PSV Inspection and Refining PHA Action Items > 2 years (Non-Turnaround) metrics were made even more difficult to achieve.
2022 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
Strategic Area | Initiative/Project/Objective | Progress & Key Accomplishments | ||||||
Returns to Stockholders | •Return cash to stockholders through dividends and stock buybacks | •Maintained quarterly dividend of $0.98 per share throughout the pandemic •Returned $1.6 billion to stockholders in 2021 through dividends | ||||||
Disciplined Use of Capital | •Balanced utilization of sustaining and growth capital vs target | •~ 40 percent of capital budget allocated to growth projects and > 70 percent of growth capital allocated to low-carbon projects and initiatives | ||||||
Operational Excellence | •Execution of capital projects and turnarounds | •Completed Cogen project at our Pembroke Refinery and low-carbon renewable diesel capacity expansion project at our St. Charles Refinery | ||||||
•Margin improvement and market expansion | •Commissioned Navigator Glass Mountain pipeline reversal and extension, which improved crude flexibility for our McKee Refinery •Increased Mexico and Peru volumes and profitability | |||||||
•Cost management and expense control | •Exceeded $190 million in newly-identified cost avoidance and savings | |||||||
Organizational Excellence | •Strategic communications | •Engagement efforts with ESG indices resulted in the inclusion of Valero in the FTSE USA Low Carbon Select Index | ||||||
•Succession planning and leadership development | •28 percent of Key Talent / Succession group received a developmental or promotional job change during 2021 with 100 percent of executive-level roles filled by internal promotions | |||||||
•Innovation | •Progressed carbon-sequestration, sustainable aviation fuels, and renewable hydrogen strategies | |||||||
•Public policy | •Valero low-carbon fuels supported jurisdictions across the world with stricter fuel efficiency standards and low-carbon fuels policies (such as California, Canada, the U.K. and the European Union) achieving GHG emissions reductions |
2022 PROXY STATEMENT | 57 |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
Strategic Area | Initiative/Project/Objective | Progress & Key Accomplishments | ||||||
Environmental, Social and Governance (ESG) Efforts & Improvement* | •Environmental stewardship | •Announced a new target of 100 percent GHG emissions reductions and offsets by 2035 for our global refinery Scope 1 & 2 emissions •Submitted responses to the 2021 CDP Climate Change questionnaire | ||||||
•Sustainability | •Published 2021 TCFD Report and Scenario Analysis, including Solomon’s conclusion that Valero’s overall refining portfolio would be resilient under the assumptions of the IEA’s carbon-constrained Sustainable Development Scenario •Initiated Ethanol Carbon Sequestration project with BlackRock and Navigator to lower carbon intensity of ethanol •GHG emissions disclosures were independently verified •Reported using ESG best-practice frameworks: SASB, TCFD and CDP | |||||||
•Diversity and inclusion | •Hosted most diverse summer internship class in company history (39 percent women, 33 percent minority) •Expanded Board diversity with more than 50 percent of current independent directors (and 60 percent of our 2022 independent director nominees) now representing gender or racial/ethnic diversity •Published our EEO-1 report (included within our 2021 Stewardship and Responsibility Report) | |||||||
•Compliance | •Launched new Compliance and Ethics page on internal employee website including capability for online violations reporting •Published our first Conduct Guidelines for Business Partners with our expectations to uphold high standards of business ethics and conduct | |||||||
•Corporate citizenship and community | •Record fundraising for Valero-sponsored Benefit for Children fundraising event associated with the Valero Texas Open of $16 million distributed to children’s charities •Disclosed political participation, Board oversight of political activities and climate-lobbying alignment | |||||||
58 | 2022 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
2021
Component | Weighting | Minimum | Target | Maximum | Achieved in 2021 | Bonus Percent Earned (1) | ||||||||||||||
Financial Performance Goal | ||||||||||||||||||||
I.EPS, adjusted ($/share) | 40.00% | $0.14 | $0.55 | $3.10 | $2.81 | 75.45% | ||||||||||||||
Operational Performance Goals | ||||||||||||||||||||
II.Health, Safety, and Environmental (2) | 13.33% | 0.00% | 100.00% | 200.00% | 199.00% | 26.53% | ||||||||||||||
III.Mechanical Availability (3) | 13.33% | 95.6% | 96.2% | 97.6% | 97.2% | 24.12% | ||||||||||||||
IV.Refining Cash Operating Expense Management (4) ($/EDC) | 13.34% | $150 | $127 | $118 | $111 | 26.68% | ||||||||||||||
Subtotal | 40.00% | subtotal | 77.33% | |||||||||||||||||
Strategic | ||||||||||||||||||||
V.Strategic Execution (5) | 20.00% | 0.00% | 100.00% | 200.00% | 150.00% | 30.00% | ||||||||||||||
Total | 100.00% | 182.78% |
Annual Incentive Bonus Performance Goals & Achievement | ||||||||||||||||||||||||||||
Component | Weighting | Minimum | Target | Maximum | Achieved in 2018 | Bonus Percent Earned (1) | ||||||||||||||||||||||
Financial Performance Goal | ||||||||||||||||||||||||||||
I. | EPS,adjusted($/share) | 40.00 | % | $1.24 | $4.96 | $9.92 | $7.37 | 66.87 | % | |||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Operational | ||||||||||||||||||||||||||||
II. | Health,Safety, and Environmental (2) | 13.33 | % | 0.00 | % | 112.50 | % | 225.00 | % | 219.76 | % | 29.30 | % | |||||||||||||||
III. | MechanicalAvailability (3) | 13.33 | % | 95.6 | 96.2 | 97.6 | 97.2 | 27.14 | % | |||||||||||||||||||
IV. | RefiningCash Operating Expense Management (4) |
| 13.34
| %
|
| $145
|
|
| $120
|
|
| $111
|
|
| $110
|
|
| 30.00
| %
| |||||||||
|
|
|
| |||||||||||||||||||||||||
subtotal | 40.00 | % | subtotal | 86.44 | % | |||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Strategic | ||||||||||||||||||||||||||||
V. | CompanyGoals and Objectives (4) | 20.00 | % | 20.00 | % | |||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Total | 100.00 | % | 173.31 | % |
Footnotes:
|
|
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|
|
2021.
Gorder | Titzman | Riggs | Browning | Simmons | ||||||||||||||||
Base Salary(1) | $ | 1,660,000 |
| $ | 641,667 |
| $ | 800,000 |
| $ | 650,000 |
| $ | 625,000 |
| |||||
Bonus Target Percentage(2)(8) |
| 160% |
|
| 65%/80% |
|
| 80% |
|
| 80% |
|
| 65% |
| |||||
Bonus Target Amount(3)(8) | $ | 2,656,000 |
| $ | 484,583 |
| $ | 640,000 |
| $ | 520,000 |
| $ | 406,250 |
| |||||
Bonus Percentage Achieved(4) |
| 173.31% |
|
| 173.31% |
|
| 173.31% |
|
| 173.31% |
|
| 173.31% |
| |||||
Earned Target Incentive Bonus(5) | $ | 4,603,114 |
| $ | 839,831 |
| $ | 1,109,184 |
| $ | 901,212 |
| $ | 704,072 |
| |||||
Bonus Amount Paid(6)(7) | $ | 4,625,000 |
| $ | 840,000 |
| $ | 1,110,000 |
| $ | 900,000 |
| $ | 705,000 |
|
Footnotes:
Gorder | Riggs | Fraser | Simmons | Thomas | |||||||||||||
Base Salary (1) | $1,800,000 | $970,000 | $825,000 | $700,400 | $662,300 | ||||||||||||
Bonus Target Percentage (2) | 160% | 110% | 100% | 100% | 80% | ||||||||||||
Bonus Target Amount (3) | $2,880,000 | $1,067,000 | $825,000 | $700,400 | $529,840 | ||||||||||||
Bonus Percentage Achieved (4) | 182.78% | 182.78% | 182.78% | 182.78% | 182.78% | ||||||||||||
Earned Target Incentive Bonus (5) | $5,264,064 | $1,950,263 | $1,507,935 | $1,280,191 | $968,442 | ||||||||||||
Bonus Amount Paid (6) | $5,264,064 | $1,950,263 | $1,507,935 | $1,280,191 | $968,442 |
|
|
|
COMPENSATION DISCUSSION AND ANALYSIS
Footnotes (cont.):
| ||||||||
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
| ||
LONG-TERM INCENTIVE AWARDS |
|
|
|
2021 under the 2020 OSIP.
and also achieve or exceed performance targets associated with our low-carbon fuels strategy as described below under the caption “Performance Shares—Energy Transition Modifier.”
60 | 2022 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
The performance shares awarded in 20182021 are subject to vesting in three increments with the following award design. The primary performance measure is relative TSR versus a peer group, which is weighted at 100 percent. After preliminary vesting has been determined based upon ouron relative TSR performance, an Energy Transition modifier containing two additional metrics (GHG emissions reduction/offset vs target and low-carbon investments as percent of growth CapEx) is applied, with each metric either adding or subtracting 12.5 percentage points to the preliminary vesting percentage, depending on performance. Overall final performance vesting is capped at 200 percent of target.
200% | 200% | 175% | 150% | 125% | 100% | 75% | 50% | 25% | 0% | 0% | |||||||||||||||||||||||||
Relative Rank | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 |
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| |
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| |
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|
Adjustment to PS Sub-Total | ||||||||||||||||||||||||||
Metric | Description | Target | If Meet or Exceed | If Fail to Meet | ||||||||||||||||||||||
Global Refinery Scope 1 and 2 GHG Emissions Reduction/Offsets vs Target | Final 2021 GHG emissions reductions and offsets results (compared to 2011 levels) meets or exceeds the target | ≥43.7% | Add 12.5 absolute percentage points | Subtract 12.5 absolute percentage points | ||||||||||||||||||||||
Low-carbon Investments as a Percent of Growth CapEx | Final 2021 percentage of growth capital spent on low-carbon projects and initiatives meets or exceeds the target | ≥40.0% | Add 12.5 absolute percentage points | Subtract 12.5 absolute percentage points | ||||||||||||||||||||||
2022 PROXY STATEMENT | 61 |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
Upon vesting,vest (see results calculation example below).
Component | Target Performance Shares <A> | Performance Result | Performance Outcome <B> | Component Weighting <C> | Sub-total of Common Stock (A x B x C) | ||||||||||||||||||||||||
Relative TSR | 1,000 | Ranked 4th of 11 | 150% | 100% | 1,500 | ||||||||||||||||||||||||
Energy Transition: GHG Emissions Reductions/Offsets | 1,000 | Exceeded Target | + 12.5% | N/A | 125 | ||||||||||||||||||||||||
Energy Transition: Low-Carbon Investments as Percent of Growth CapEx | 1,000 | Exceeded Target | + 12.5% | N/A | 125 | ||||||||||||||||||||||||
Aggregate Common Stock Earned | 1,750 | ||||||||||||||||||||||||||||
Aggregate Common Stock Earned <D> | Accumulated Dividends Per Share During the Performance Period <E> | Stock Price on Date of Vesting <F> | Additional Shares of Common Stock (D x E ÷ F) | ||||||||||||||||||||||||||
Dividend Equivalent Shares | 1,750 | $7.28 | $75.00 | 170 | |||||||||||||||||||||||||
Total Shares of Common Stock Earned | 1,920 |
62 | 2022 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
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| ||
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| ||
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| ||
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|
|
Common Stock.
PERQUISITES AND OTHER BENEFITS2019. The long-term incentive package awarded to Mr. Riggs in 2019 was valued at $5 million and comprises three grants of restricted shares, with the first two grants scheduled to vest over a three-year period, and the third grant scheduled to vest over a two-year period. In addition to appropriately rewarding Mr. Riggs for his expanded role, the long-term incentive agreement is intended to incentivize excellent performance and to ensure the retention of critical talent.
PERQUISITES AND OTHER BENEFITS |
2022 PROXY STATEMENT | 63 |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
These plans are further described in the disclosures under the caption “Executive Compensation—Post-Employment Compensation.”
64 | 2022 PROXY STATEMENT |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
ACCOUNTING TREATMENT
ACCOUNTING TREATMENT |
TAX TREATMENT |
COMPENSATION DISCUSSION AND ANALYSIS
TAX TREATMENT
Section 162(m) of the Internal Revenue Code of 1986 generally limits the deductibility of compensation paid to certain top executives to $1 million. In previous years, there was an exemption from this $1 million deduction limit for compensation payments that qualified as “performance-based” under applicable regulations. However, the enactment of the Tax Cuts and Jobs Act of 2017 eliminated the performance-based compensation exemption, except with respect to certain grandfathered arrangements.
We believe that outstanding stock options as well as performance shares granted in 2017, continue to qualify as performance-based compensation under the grandfather rules provided under the Tax Cuts and Jobs Act of 2017. Grants of restricted stock that are not subject to specific quantitative performance measures, and that were awarded in 2017 and earlier years, will likely not qualify as performance-based compensation under the Section 162(m) grandfather rules, and in such event, would be subject to Section 162(m) deduction restrictions.
POLICY ON VESTING OF PERFORMANCE SHARES UPON CHANGE OF CONTROL OF VALERO
POLICY ON VESTING OF PERFORMANCE SHARES UPON CHANGE OF CONTROL OF VALERO |
EXECUTIVE COMPENSATION CLAWBACK POLICY
EXECUTIVE COMPENSATION CLAWBACK POLICY |
COMPENSATION CONSULTANT DISCLOSURE POLICY
COMPENSATION CONSULTANT DISCLOSURE POLICY |
COMPENSATION DISCUSSION AND ANALYSIS | ||||||||
STOCK OWNERSHIP GUIDELINES
STOCK OWNERSHIP GUIDELINES |
Officer Position | Value of Shares Owned | |||||
Chief Executive Officer | 5x Base Salary | |||||
President | 3x Base Salary | |||||
Executive Vice Presidents | 2x Base Salary | |||||
Senior Vice Presidents | 1x Base Salary | |||||
Vice Presidents | 1x Base Salary |
PROHIBITION AGAINST HEDGING AND PLEDGING
As of December 31, 2021, all NEOs, including the Chief Executive Officer, met the stock ownership requirements as described.
PROHIBITION AGAINST HEDGING AND PLEDGING |
INSIDER TRADING POLICY
INSIDER TRADING POLICY |
HUMAN RESOURCES AND COMPENSATION COMMITTEE REPORT |
2022 PROXY STATEMENT |
COMPENSATION CONSULTANT DISCLOSURES | ||||||||
•assistance with establishing our overall executive compensation philosophy in light of our business strategies;
•assistance with selecting peer and comparator companies for benchmarking executive pay and monitoring Valero’s performance;
•assessment of competitive pay for our executives, with separate analyses of base salary, annual incentive, and long-term incentive compensation;
•assessment of, and recommendations for, our annual incentive bonus program;
•assessment of, and recommendation of enhancements to, our long-term incentive program strategy, including (i) the design of an appropriate mix of equity incentive vehicles, (ii) determination of performance measures and measurement techniques, and (iii) determination of competitive equity grant guidelines consistent with our overall pay philosophy;
•updates on trends and developments in executive compensation, new regulatory issues, and best practices;
•assessment of competitive pay for our directors; and
•assistance with proxy statement disclosures.
EQUITY COMPENSATION PLAN INFORMATION | ||||||||
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (#) | Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights ($) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (1) | |||||||||||||
Approved by stockholders: | |||||||||||||||
2011 Omnibus Stock Incentive Plan |
| 359,462 |
| $34.66 |
| 8,532,542 | |||||||||
2005 Omnibus Stock Incentive Plan |
| 223,831 |
| 17.70 |
| — | |||||||||
Not approved by stockholders: | |||||||||||||||
2003All-Employee Stock Incentive Plan (2) |
| 27,169 |
| 17.68 |
| — | |||||||||
Total |
| 610,462 |
| 27.68 |
| 8,532,542 |
2021.
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)(#) | Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights (b)($)(1) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in column (a)) (c)(2) | |||||||||
Approved by stockholders: | |||||||||||
2020 Omnibus Stock Incentive Plan | 321,241 (3) | — | 13,566,535 | ||||||||
2011 Omnibus Stock Incentive Plan | 505,467 (4) | 38.49 | — | ||||||||
Not approved by stockholders: | |||||||||||
none | — | — | — | ||||||||
Total | 826,708 | 38.49 | 13,566,535 |
|
|
2022 PROXY STATEMENT |
EXECUTIVE COMPENSATION | ||||||||
Summary Compensation Table |
Principal Position (1) | Year | Salary ($) | Stock Awards ($)(2)(3) | Option Awards ($)(4) | Non-Equity Incentive Plan Compensation ($)(5) | Change in Pension Value and Non- qualified Deferred Compensation Earnings ($)(6) | All Other Compensation ($)(7) | Total ($) | ||||||||||||||||||||||||
Joseph W. Gorder, Chairman of the Board, President & CEO |
| 2018 |
|
| 1,660,000 |
|
| 10,931,251 |
|
| — |
|
| 4,625,000 |
|
| 1,353,779 |
|
| 189,126 |
|
| 18,759,156 |
| ||||||||
| 2017 |
|
| 1,585,000 |
|
| 12,734,060 |
|
| — |
|
| 3,800,000 |
|
| 4,269,202 |
|
| 143,998 |
|
| 22,532,260 |
| |||||||||
| 2016 |
|
| 1,450,000 |
|
| 10,610,898 |
|
| — |
|
| 2,925,000 |
|
| 3,334,310 |
|
| 132,410 |
|
| 18,452,618 |
| |||||||||
Donna M. Titzman, EVP and CFO |
| 2018 |
|
| 641,667 |
|
| 1,508,905 |
|
| — |
|
| 840,000 |
|
| 382,570 |
|
| 70,593 |
|
| 3,443,735 |
| ||||||||
| (8 | ) |
| — |
| |||||||||||||||||||||||||||
| (8 | ) |
| — |
| |||||||||||||||||||||||||||
R. Lane Riggs, EVP and COO |
| 2018 |
|
| 800,000 |
|
| 2,200,997 |
|
| — |
|
| 1,110,000 |
|
| — |
|
| 103,172 |
|
| 4,214,169 |
| ||||||||
| 2017 |
|
| 700,000 |
|
| 2,710,576 |
|
| — |
|
| 925,000 |
|
| 1,743,387 |
|
| 96,683 |
|
| 6,175,646 |
| |||||||||
| 2016 |
|
| 640,000 |
|
| 2,191,016 |
|
| — |
|
| 725,000 |
|
| 1,206,237 |
|
| 73,248 |
|
| 4,835,501 |
| |||||||||
Jay D. Browning, EVP and General Counsel |
| 2018 |
|
| 650,000 |
|
| 1,713,993 |
|
| — |
|
| 900,000 |
|
| — |
|
| 96,783 |
|
| 3,360,776 |
| ||||||||
| 2017 |
|
| 620,000 |
|
| 2,039,272 |
|
| — |
|
| 790,000 |
|
| 1,436,316 |
|
| 86,737 |
|
| 4,972,325 |
| |||||||||
| 2016 |
|
| 595,000 |
|
| 1,773,224 |
|
| — |
|
| 640,000 |
|
| 973,148 |
|
| 71,101 |
|
| 4,052,473 |
| |||||||||
Gary K. Simmons, SVP-Supply, Int’l Ops. & Systems Optimization |
| 2018 |
|
| 625,000 |
|
| 1,174,051 |
|
| — |
|
| 705,000 |
|
| — |
|
| 81,590 |
|
| 2,585,641 |
| ||||||||
| 2017 |
|
| 600,000 |
|
| 1,398,749 |
|
| — |
|
| 620,000 |
|
| 1,345,120 |
|
| 88,961 |
|
| 4,052,830 |
| |||||||||
| 2016 |
|
| 565,000 |
|
| 1,203,887 |
|
| — |
|
| 500,000 |
|
| 876,063 |
|
| 57,980 |
|
| 3,202,930 |
| |||||||||
Michael S. Ciskowski, EVP and CFO (retired) (9) |
| 2018 |
|
| 336,706 |
|
| 1,257,034 |
|
| — |
|
| — |
|
| — |
|
| 40,349 |
|
| 1,634,089 |
| ||||||||
| 2017 |
|
| 930,000 |
|
| 4,687,459 |
|
| — |
|
| 1,625,000 |
|
| 3,118,093 |
|
| 87,568 |
|
| 10,448,120 |
| |||||||||
| 2016 |
|
| 890,000 |
|
| 4,057,373 |
|
| — |
|
| 1,320,000 |
|
| 1,855,463 |
|
| 91,783 |
|
| 8,214,619 |
|
The officers’ titles listed below are their current titles.
Principal Position (1) | Year | Salary ($) | Stock Awards ($)(2)(3) | Non-Equity Incentive Plan Compensation ($)(4) | Change in Pension Value and Non- qualified Deferred Compensation Earnings ($)(5) | All Other Compensation ($)(6) | Total ($) | Total Excluding Change in Pension Value ($)(7) | ||||||||||||||||||
Joseph W. Gorder, Chairman of the Board and CEO | 2021 | 1,800,000 | 13,360,052 | 5,264,064 | 2,030,418 | 230,172 | 22,684,706 | 20,654,288 | ||||||||||||||||||
2020 | 1,800,000 | 8,985,826 | 2,804,544 | 5,896,732 | 435,315 | 19,922,417 | 14,025,685 | |||||||||||||||||||
2019 | 1,745,000 | 14,485,699 | 4,100,000 | 7,484,813 | 384,999 | 28,200,511 | 20,715,698 | |||||||||||||||||||
Jason W. Fraser, EVP and Chief Financial Officer | 2021 | 825,000 | 3,540,493 | 1,507,935 | 2,408,782 | 104,961 | 8,387,171 | 5,978,389 | ||||||||||||||||||
2020 | 723,117 | 2,036,280 | 730,350 | 1,311,390 | 107,515 | 4,908,652 | 3,597,262 | |||||||||||||||||||
2019 | 600,000 | 2,280,836 | 700,000 | 1,811,402 | 120,288 | 5,512,526 | 3,701,124 | |||||||||||||||||||
R. Lane Riggs, President and Chief Operating Officer | 2021 | 970,000 | 6,956,013 | 1,950,263 | 3,093,788 | 172,559 | 13,142,623 | 10,048,835 | ||||||||||||||||||
2020 | 940,000 | 5,094,316 | 1,006,909 | 2,027,167 | 116,733 | 9,185,125 | 7,157,958 | |||||||||||||||||||
2019 | 840,000 | 4,792,892 | 1,250,000 | 4,245,462 | 121,662 | 11,250,016 | 7,004,554 | |||||||||||||||||||
Gary K. Simmons, EVP and Chief Commercial Officer | 2021 | 700,400 | 2,545,219 | 1,280,191 | 1,829,025 | 108,189 | 6,463,024 | 4,633,999 | ||||||||||||||||||
2020 | 680,000 | 1,618,614 | 662,184 | 1,371,059 | 112,244 | 4,444,101 | 3,073,042 | |||||||||||||||||||
2019 | 650,000 | 1,787,833 | 625,000 | 2,535,277 | 191,518 | 5,789,628 | 3,254,351 | |||||||||||||||||||
Cheryl L. Thomas, SVP and Chief Technology Officer | 2021 | 662,300 | 1,694,490 | 968,442 | 2,158,056 | 97,325 | 5,580,613 | 3,422,557 | ||||||||||||||||||
2020 | 606,250 | 1,172,125 | 500,923 | 1,117,343 | 85,221 | 3,481,862 | 2,364,519 | |||||||||||||||||||
(8) |
|
|
EXECUTIVE COMPENSATION
Footnotes to Summary Compensation Table (cont.):
footnote (2) continued
|
Gorder | Titzman | Riggs | Browning | Simmons | Ciskowski | |||||||||||||||||||
Restricted Stock |
| 4,992,528 |
|
| 804,978 |
|
| 953,774 |
|
| 774,480 |
|
| 531,415 |
|
| — |
| ||||||
Performance Shares |
| 5,938,723 |
|
| 703,927 |
|
| 1,247,223 |
|
| 939,513 |
|
| 642,636 |
|
| 1,257,034 |
| ||||||
Total(in dollars) |
| 10,931,251 |
|
| 1,508,905 |
|
| 2,200,997 |
|
| 1,713,993 |
|
| 1,174,051 |
|
| 1,257,034 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXECUTIVE COMPENSATION | ||||||||
Gorder | Fraser | Riggs | Simmons | Thomas | |||||||||||||
Restricted Stock | 6,536,498 | 1,902,475 | 4,516,329 | 1,312,514 | 859,615 | ||||||||||||
Performance Shares | 6,823,554 | 1,638,018 | 2,439,684 | 1,232,705 | 834,875 | ||||||||||||
Total (in dollars) | 13,360,052 | 3,540,493 | 6,956,013 | 2,545,219 | 1,694,490 |
Stock options were not granted to our named executive officers in 2021, 2020, or 2019. Additional information about the restricted stock and performance shares granted in 2021 is disclosed in the Grants of Plan-Based Awards table in this proxy statement. Additional information about stock awards is disclosed in Note 15 (Stock-Based Compensation) of Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2021.
70 | 2022 PROXY STATEMENT |
EXECUTIVE COMPENSATION | ||||||||
2022 PROXY STATEMENT | 71 |
EXECUTIVE COMPENSATION | ||||||||
Grants of Plan-Based Awards |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards
| Estimated Future Payouts Under Equity Incentive Plan Awards
| Grant Date Fair Value of Stock and Option Awards ($) (1)
| |||||||||||||||||||||||||||||||||||||||||||
Name
|
Grant Date
|
Threshold ($)
|
Target ($)
|
Maximum ($)
|
Threshold (#)
|
Target (#)
|
Maximum (#)
| ||||||||||||||||||||||||||||||||||||||
Joseph W. Gorder | n/a | (2 | ) | — | 2,656,000 | 5,312,000 | |||||||||||||||||||||||||||||||||||||||
10/31/2018 | (3 | ) | n/a | 54,020 | n/a | 4,992,528 | |||||||||||||||||||||||||||||||||||||||
n/a | (4 | ) | 54,020 | ||||||||||||||||||||||||||||||||||||||||||
10/31/2018 | (5 | ) | 18,007 | 36,014 | 1,823,929 | ||||||||||||||||||||||||||||||||||||||||
10/31/2018 | (5 | ) | 23,767 | 47,534 | 1,715,027 | ||||||||||||||||||||||||||||||||||||||||
10/31/2018 | (5 | ) | 27,473 | 54,946 | 2,399,767 | ||||||||||||||||||||||||||||||||||||||||
Donna M. Titzman | n/a | (2 | ) | — | 484,583 | 969,166 | |||||||||||||||||||||||||||||||||||||||
10/31/2018 | (3 | ) | n/a | 8,710 | n/a | 804,978 | |||||||||||||||||||||||||||||||||||||||
n/a | (4 | ) | 8,710 | ||||||||||||||||||||||||||||||||||||||||||
10/31/2018 | (5 | ) | 2,904 | 5,808 | 294,146 | ||||||||||||||||||||||||||||||||||||||||
10/31/2018 | (5 | ) | 2,500 | 5,000 | 180,400 | ||||||||||||||||||||||||||||||||||||||||
10/31/2018 | (5 | ) | 2,626 | 5,252 | 229,381 | ||||||||||||||||||||||||||||||||||||||||
R. Lane Riggs | n/a | (2 | ) | — | 640,000 | 1,280,000 | |||||||||||||||||||||||||||||||||||||||
10/31/2018 | (3 | ) | n/a | 10,320 | n/a | 953,774 | |||||||||||||||||||||||||||||||||||||||
n/a | (4 | ) | 10,320 | ||||||||||||||||||||||||||||||||||||||||||
10/31/2018 | (5 | ) | 3,440 | 6,880 | 348,438 | ||||||||||||||||||||||||||||||||||||||||
10/31/2018 | (5 | ) | 5,213 | 10,426 | 376,170 | ||||||||||||||||||||||||||||||||||||||||
10/31/2018 | (5 | ) | 5,983 | 11,966 | 522,615 | ||||||||||||||||||||||||||||||||||||||||
Jay D. Browning | n/a | (2 | ) | — | 520,000 | 1,040,000 | |||||||||||||||||||||||||||||||||||||||
10/31/2018 | (3 | ) | n/a | 8,380 | n/a | 774,480 | |||||||||||||||||||||||||||||||||||||||
n/a | (4 | ) | 8,380 | ||||||||||||||||||||||||||||||||||||||||||
10/31/2018 | (5 | ) | 2,794 | 5,588 | 283,004 | ||||||||||||||||||||||||||||||||||||||||
10/31/2018 | (5 | ) | 3,687 | 7,374 | 266,054 | ||||||||||||||||||||||||||||||||||||||||
10/31/2018 | (5 | ) | 4,470 | 8,940 | 390,455 | ||||||||||||||||||||||||||||||||||||||||
Gary K. Simmons | n/a | (2 | ) | — | 406,250 | 812,500 | |||||||||||||||||||||||||||||||||||||||
10/31/2018 | (3 | ) | n/a | 5,750 | n/a | 531,415 | |||||||||||||||||||||||||||||||||||||||
n/a | (4 | ) | 5,750 | ||||||||||||||||||||||||||||||||||||||||||
10/31/2018 | (5 | ) | 1,917 | 3,834 | 194,173 | ||||||||||||||||||||||||||||||||||||||||
10/31/2018 | (5 | ) | 2,547 | 5,094 | 183,792 | ||||||||||||||||||||||||||||||||||||||||
10/31/2018 | (5 | ) | 3,030 | 6,060 | 264,671 | ||||||||||||||||||||||||||||||||||||||||
Michael S. Ciskowski | n/a | (2 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
10/31/2018 | (3 | ) | n/a | — | — | — | |||||||||||||||||||||||||||||||||||||||
n/a | (4 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||
10/31/2018 | (5 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||
10/31/2018 | (5 | ) | 4,964 | 9,928 | 358,202 | ||||||||||||||||||||||||||||||||||||||||
10/31/2018 | (5 | ) | 10,290 | 20,580 | 898,832 | ||||||||||||||||||||||||||||||||||||||||
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | Grant Date Fair Value of Stock and Option Awards ($) (1) | |||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||
Joseph W. Gorder | n/a | (2) | – | 2,880,000 | 5,760,000 | ||||||||||||||||||||||||
02/23/2021 | (3) | n/a | 87,750 | n/a | 6,536,498 | ||||||||||||||||||||||||
n/a | (5) | 87,750 | |||||||||||||||||||||||||||
02/23/2021 | (6) | 29,250 | 58,500 | 2,351,993 | |||||||||||||||||||||||||
02/23/2021 | (6) | 22,907 | 45,814 | 2,420,812 | |||||||||||||||||||||||||
10/27/2021 | (6) | 19,837 | 39,674 | 2,050,749 | |||||||||||||||||||||||||
Jason W. Fraser | n/a | (2) | – | 825,000 | 1,650,000 | ||||||||||||||||||||||||
02/23/2021 | (3) | n/a | 25,540 | n/a | 1,902,475 | ||||||||||||||||||||||||
n/a | (5) | 25,540 | |||||||||||||||||||||||||||
02/23/2021 | (6) | 8,514 | 17,028 | 684,611 | |||||||||||||||||||||||||
02/23/2021 | (6) | 5,050 | 10,100 | 533,684 | |||||||||||||||||||||||||
10/27/2021 | (6) | 4,060 | 8,120 | 419,723 | |||||||||||||||||||||||||
R. Lane Riggs | n/a | (2) | – | 1,067,000 | 2,134,000 | ||||||||||||||||||||||||
02/23/2021 | (3) | n/a | 33,780 | n/a | 2,516,272 | ||||||||||||||||||||||||
02/23/2021 | (4) | n/a | 26,850 | n/a | 2,000,057 | ||||||||||||||||||||||||
n/a | (5) | 33,780 | |||||||||||||||||||||||||||
02/23/2021 | (6) | 11,260 | 22,520 | 905,417 | |||||||||||||||||||||||||
02/23/2021 | (6) | 8,587 | 17,174 | 907,474 | |||||||||||||||||||||||||
10/27/2021 | (6) | 6,063 | 12,126 | 626,793 | |||||||||||||||||||||||||
Gary K. Simmons | n/a | (2) | – | 700,400 | 1,400,800 | ||||||||||||||||||||||||
02/23/2021 | (3) | n/a | 17,620 | n/a | 1,312,514 | ||||||||||||||||||||||||
n/a | (5) | 17,620 | |||||||||||||||||||||||||||
02/23/2021 | (6) | 5,874 | 11,748 | 472,328 | |||||||||||||||||||||||||
02/23/2021 | (6) | 4,547 | 9,094 | 480,527 | |||||||||||||||||||||||||
10/27/2021 | (6) | 2,707 | 5,414 | 279,850 | |||||||||||||||||||||||||
Cheryl L. Thomas | n/a | (2) | – | 529,840 | 1,059,680 | ||||||||||||||||||||||||
02/23/2021 | (3) | n/a | 11,540 | n/a | 859,615 | ||||||||||||||||||||||||
n/a | (5) | 11,540 | |||||||||||||||||||||||||||
02/23/2021 | (6) | 3,847 | 7,694 | 309,337 | |||||||||||||||||||||||||
02/23/2021 | (6) | 2,677 | 5,354 | 282,905 | |||||||||||||||||||||||||
10/27/2021 | (6) | 2,347 | 4,694 | 242,633 |
72 | 2022 PROXY STATEMENT |
EXECUTIVE COMPENSATION | ||||||||
EXECUTIVE COMPENSATION | ||||||||
Footnotes to Grants of Plan-Based Awards table (con’t.):
|
|
|
|
|
|
|
(
performance shares deemed (under Topic 718) to have a grant date in 2021 | grant date fair value ($) | lowest possible performance ($) | highest level of performance ($) | ||||||||||||||
Gorder | 1st tranche of 2021 award | 29,250 | 2,351,993 | 0 | 4,664,205 | ||||||||||||
2nd tranche of 2020 award | 22,907 | 2,420,812 | 0 | 3,832,341 | |||||||||||||
3rd tranche of 2019 award | 19,837 | 2,050,749 | 0 | 3,587,720 | |||||||||||||
total 2021 grant date fair value | 6,823,554 | 0 | 12,084,266 | ||||||||||||||
Fraser | 1st tranche of 2021 award | 8,514 | 684,611 | 0 | 1,357,642 | ||||||||||||
2nd tranche of 2020 award | 5,050 | 533,684 | 0 | 844,865 | |||||||||||||
3rd tranche of 2019 award | 4,060 | 419,723 | 0 | 734,292 | |||||||||||||
total 2021 grant date fair value | 1,638,018 | 0 | 2,936,799 | ||||||||||||||
Riggs | 1st tranche of 2021 award | 11,260 | 905,417 | 0 | 1,795,520 | ||||||||||||
2nd tranche of 2020 award | 8,587 | 907,474 | 0 | 1,436,605 | |||||||||||||
3rd tranche of 2019 award | 6,063 | 626,793 | 0 | 1,096,554 | |||||||||||||
total 2021grant date fair value | 2,439,684 | 0 | 4,328,679 | ||||||||||||||
Simmons | 1st tranche of 2021 award | 5,874 | 472,328 | 0 | 936,668 | ||||||||||||
2nd tranche of 2020 award | 4,547 | 480,527 | 0 | 760,713 | |||||||||||||
3rd tranche of 2019 award | 2,707 | 279,850 | 0 | 489,588 | |||||||||||||
total 2021 grant date fair value | 1,232,705 | 0 | 2,186,969 | ||||||||||||||
Thomas | 1st tranche of 2021 award | 3,847 | 309,337 | 0 | 613,443 | ||||||||||||
2nd tranche of 2020 award | 2,677 | 282,905 | 0 | 447,862 | |||||||||||||
3rd tranche of 2019 award | 2,347 | 242,633 | 0 | 424,478 | |||||||||||||
total 2021 grant date fair value | 834,875 | 0 | 1,485,783 |
2022 PROXY STATEMENT |
EXECUTIVE COMPENSATION
Footnotes to Grants of Plan-Based Awards table (cont.):
footnote (5) continued
|
performance shares deemed (under Topic 718) to have a grant date in 2018
| grant date fair value ($)
| highest possible performance ($)
| ||||||||||||
Gorder |
1st tranche of 2018 award
|
|
18,007
|
|
|
1,823,929
|
|
|
3,647,858
|
| ||||
2nd tranche of 2017 award
|
|
23,767
|
|
|
1,715,027
|
|
|
3,430,054
|
| |||||
3rd tranche of 2016 award
|
|
27,473
|
|
|
2,399,767
|
|
|
4,799,534
|
| |||||
total 2018 grant date fair value
|
|
5,938,723
|
|
|
11,877,446
|
| ||||||||
Titzman |
1st tranche of 2018 award
|
|
2,904
|
|
|
294,146
|
|
|
588,292
|
| ||||
2nd tranche of 2017 award
|
|
2,500
|
|
|
180,400
|
|
|
360,800
|
| |||||
3rd tranche of 2016 award
|
|
2,626
|
|
|
229,381
|
|
|
458,762
|
| |||||
total 2018 grant date fair value
|
|
703,927
|
|
|
1,407,854
|
| ||||||||
Riggs |
1st tranche of 2018 award
|
|
3,440
|
|
|
348,438
|
|
|
696,876
|
| ||||
2nd tranche of 2017 award
|
|
5,213
|
|
|
376,170
|
|
|
752,340
|
| |||||
3rd tranche of 2016 award
|
|
5,983
|
|
|
522,615
|
|
|
1,045,230
|
| |||||
total 2018 grant date fair value
|
|
1,247,223
|
|
|
2,494,446
|
| ||||||||
Browning |
1st tranche of 2018 award
|
|
2,794
|
|
|
283,004
|
|
|
566,008
|
| ||||
2nd tranche of 2017 award
|
|
3,687
|
|
|
266,054
|
|
|
532,108
|
| |||||
3rd tranche of 2016 award
|
|
4,470
|
|
|
390,455
|
|
|
780,910
|
| |||||
total 2018 grant date fair value
|
|
939,513
|
|
|
1,879,026
|
| ||||||||
Simmons |
1st tranche of 2018 award
|
|
1,917
|
|
|
194,173
|
|
|
388,346
|
| ||||
2nd tranche of 2017 award
|
|
2,547
|
|
|
183,792
|
|
|
367,584
|
| |||||
3rd tranche of 2016 award
|
|
3,030
|
|
|
264,671
|
|
|
529,342
|
| |||||
total 2018 grant date fair value
|
|
642,636
|
|
|
1,285,272
|
| ||||||||
Ciskowski |
2nd tranche of 2017 award
|
|
4,964
|
|
|
358,202
|
|
|
716,404
|
| ||||
3rd tranche of 2016 award
|
|
10,290
|
|
|
898,832
|
|
|
1,797,664
|
| |||||
total 2018 grant date fair value
|
|
1,257,034
|
|
|
2,514,068
|
|
|
|
|
|
EXECUTIVE COMPENSATION | ||||||||
EXECUTIVE COMPENSATION
Outstanding Equity Awards at December 31, 2018
Outstanding Equity Awards at December 31, 2021 |
Option Awards
| Stock Awards
| |||||||||||||||||||||||||||||||||||||||||
Restricted Stock
| Performance Shares
| |||||||||||||||||||||||||||||||||||||||||
Number of Securities Underlying Unexercised Options (#) Exercisable
| Number of Securities Underlying Unexercised Options (#) Unexercisable
| Option Exercise Price ($)(1)
| Option Expiration Date
| Number of Shares or Units of Stock That Have Not Vested (#)
| Market Value of Shares or Units of Stock That Have Not Vested ($)(2)
| Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(2)
| Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2)
| |||||||||||||||||||||||||||||||||||
Joseph W. Gorder | 21,400 | — | 17.743 | 11/17/2020 | 15,949 | (3) | 1,195,697 | 19,590 | (7) | 1,468,662 | ||||||||||||||||||||||||||||||||
26,750 | — | 24.582 | 10/28/2021 | 27,594 | (4) | 2,068,722 | 54,946 | (8) | 4,119,302 | |||||||||||||||||||||||||||||||||
37,567 | — | 27.318 | 11/09/2022 | 32,763 | (5) | 2,456,242 | 71,300 | (9) | 5,345,361 | |||||||||||||||||||||||||||||||||
31,770 | — | 39.665 | 11/08/2023 | 54,020 | (10) | 4,049,879 | ||||||||||||||||||||||||||||||||||||
43,810 | — | 48.565 | 10/23/2024 | |||||||||||||||||||||||||||||||||||||||
Donna M. Titzman | 6,398 | — | 27.318 | 11/09/2022 | 1,594 | (3) | 119,502 | 2,000 | (7) | 149,940 | ||||||||||||||||||||||||||||||||
5,860 | — | 39.665 | 11/08/2023 | 3,033 | (4) | 227,384 | 5,253 | (8) | 393,817 | |||||||||||||||||||||||||||||||||
4,365 | — | 48.565 | 10/23/2024 | 2,272 | (6) | 170,332 | 7,500 | (9) | 562,275 | |||||||||||||||||||||||||||||||||
— | 5,282 | (5) | 395,992 | 8,710 | (10) | 652,989 | ||||||||||||||||||||||||||||||||||||
R. Lane Riggs | 2,667 | — | 48.565 | 10/23/2024 | 5,984 | (3) | 448,620 | 3,583 | (7) | 268,618 | ||||||||||||||||||||||||||||||||
10,427 | (4) | 781,712 | 11,966 | (8) | 897,091 | |||||||||||||||||||||||||||||||||||||
10,320 | (5) | 773,690 | 15,640 | (9) | 1,172,531 | |||||||||||||||||||||||||||||||||||||
10,320 | (10) | 773,690 | ||||||||||||||||||||||||||||||||||||||||
Jay D. Browning | 3,922 | — | 17.743 | 11/17/2020 | 2,595 | (3) | 194,547 | 3,433 | (7) | 257,372 | ||||||||||||||||||||||||||||||||
7,846 | — | 24.582 | 10/28/2021 | 4,281 | (4) | 320,947 | 8,940 | (8) | 670,232 | |||||||||||||||||||||||||||||||||
8,378 | — | 27.318 | 11/09/2022 | 5,082 | (5) | 380,998 | 11,060 | (9) | 829,168 | |||||||||||||||||||||||||||||||||
6,980 | — | 39.665 | 11/08/2023 | 8,380 | (10) | 628,249 | ||||||||||||||||||||||||||||||||||||
7,640 | — | 48.565 | 10/23/2024 | |||||||||||||||||||||||||||||||||||||||
Gary K. Simmons | 1,750 | — | 48.565 | 10/23/2024 | 3,030 | (3) | 227,159 | 2,333 | (7) | 174,905 | ||||||||||||||||||||||||||||||||
5,094 | (4) | 381,897 | 6,060 | (8) | 454,318 | |||||||||||||||||||||||||||||||||||||
5,750 | (5) | 431,078 | 7,640 | (9) | 572,771 | |||||||||||||||||||||||||||||||||||||
5,750 | (10) | 431,078 | ||||||||||||||||||||||||||||||||||||||||
Michael S. Ciskowski | 32,100 | — | 17.743 | 11/17/2020 | 7,770 | (7) | 582,517 | |||||||||||||||||||||||||||||||||||
44,940 | — | 24.582 | 10/28/2021 | 20,580 | (8) | 1,542,883 | ||||||||||||||||||||||||||||||||||||
32,570 | — | 27.318 | 11/09/2022 | 14,893 | (9) | 1,116,528 | ||||||||||||||||||||||||||||||||||||
23,330 | — | 39.665 | 11/08/2023 | |||||||||||||||||||||||||||||||||||||||
17,320 | — | 48.565 | 10/23/2024 | |||||||||||||||||||||||||||||||||||||||
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||
Restricted Stock | Performance Shares | |||||||||||||||||||||||||||||||||||||
Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($)(1) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | |||||||||||||||||||||||||||||||
Joseph W. Gorder | 37,567 | — | 27.318 | 11/09/2022 | 12,031 | (3) | 903,648 | 18,006 | (9) | 2,366,791 | ||||||||||||||||||||||||||||
31,770 | — | 39.665 | 11/08/2023 | 27,786 | (4) | 2,087,006 | 39,674 | (10) | 4,842,417 | |||||||||||||||||||||||||||||
43,810 | — | 48.565 | 10/23/2024 | 53,220 | (5) | 3,997,354 | 45,814 | (11) | 5,484,307 | |||||||||||||||||||||||||||||
— | 87,750 | (12) | 6,590,903 | |||||||||||||||||||||||||||||||||||
Jason W. Fraser | — | — | — | 4,060 | (3) | 304,947 | 2,150 | (9) | 282,639 | |||||||||||||||||||||||||||||
10,100 | (4) | 758,611 | 8,120 | (10) | 991,077 | |||||||||||||||||||||||||||||||||
25,540 | (5) | 1,918,309 | 10,100 | (11) | 1,209,046 | |||||||||||||||||||||||||||||||||
2,166 | (6) | 162,688 | 25,540 | (12) | 1,918,309 | |||||||||||||||||||||||||||||||||
R. Lane Riggs | 2,667 | — | 48.565 | 10/23/2024 | 3,678 | (3) | 276,255 | 3,440 | (9) | 452,162 | ||||||||||||||||||||||||||||
10,416 | (4) | 782,346 | 12,126 | (10) | 1,480,043 | |||||||||||||||||||||||||||||||||
18,129 | (4) | 1,361,669 | 17,174 | (11) | 2,055,911 | |||||||||||||||||||||||||||||||||
20,487 | (5) | 1,538,779 | 33,780 | (12) | 2,537,216 | |||||||||||||||||||||||||||||||||
26,850 | (7) | 2,016,704 | ||||||||||||||||||||||||||||||||||||
3,516 | (8) | 264,087 | ||||||||||||||||||||||||||||||||||||
Gary K. Simmons | 1,750 | — | 48.565 | 10/23/2024 | 1,642 | (3) | 123,331 | 1,916 | (9) | 251,844 | ||||||||||||||||||||||||||||
5,516 | (4) | 414,307 | 5,414 | (10) | 660,818 | |||||||||||||||||||||||||||||||||
10,686 | (5) | 802,626 | 9,094 | (11) | 1,088,644 | |||||||||||||||||||||||||||||||||
17,620 | (12) | 1,323,438 | ||||||||||||||||||||||||||||||||||||
Cheryl L. Thomas | — | — | — | — | 1,424 | (3) | 106,957 | 1,656 | (9) | 217,669 | ||||||||||||||||||||||||||||
3,248 | (4) | 243,957 | 4,694 | (10) | 572,939 | |||||||||||||||||||||||||||||||||
6,999 | (5) | 525,695 | 5,354 | (11) | 640,914 | |||||||||||||||||||||||||||||||||
11,540 | (12) | 866,769 |
EXECUTIVE COMPENSATION
Footnotes to Outstanding Equity Awards table:
|
|
|
|
|
|
|
|
|
|
EXECUTIVE COMPENSATION | ||||||||
76 | 2022 PROXY STATEMENT |
EXECUTIVE COMPENSATION | ||||||||
Option Exercises and Stock Vested |
Option Awards | Stock Awards (1) | |||||||||||||||
|
| |||||||||||||||
Name
| No. of Shares Acquired on Exercise (#)(2)
| Value Realized on Exercise ($)(3)
| No. of Shares Acquired on Vesting (#)(2)
| Value Realized on Vesting ($)(4)
| ||||||||||||
Joseph W. Gorder | 85,493 | 8,813,331 | ||||||||||||||
(5) | 41,115 | 3,788,979 | ||||||||||||||
(6) | 115,700 | 11,417,855 | ||||||||||||||
Donna M. Titzman | — | — | ||||||||||||||
(5) | 4,321 | 398,118 | ||||||||||||||
(6) | 11,423 | 1,127,279 | ||||||||||||||
R. Lane Riggs | — | — | ||||||||||||||
(5) | 14,780 | 1,362,410 | ||||||||||||||
(6) | 23,016 | 2,271,334 | ||||||||||||||
Jay D. Browning | — | — | ||||||||||||||
(5) | 6,728 | 619,982 | ||||||||||||||
(6) | 19,678 | 1,941,923 | ||||||||||||||
Gary K. Simmons | — | — | ||||||||||||||
(5) | 7,910 | 728,884 | ||||||||||||||
(6) | 13,374 | 1,319,813 | ||||||||||||||
Michael S. Ciskowski | 251,530 | 18,900,870 | ||||||||||||||
(5) | 31,278 | 3,516,429 | ||||||||||||||
(6) | 44,850 | 4,426,022 | ||||||||||||||
Option Awards | Stock Awards (1) | |||||||||||||
Name | No. of Shares Acquired on Exercise (#)(2) | Value Realized on Exercise ($)(3) | No. of Shares Acquired on Vesting (#)(2) | Value Realized on Vesting ($)(4) | ||||||||||
Joseph W. Gorder | 26,750 | 1,544,826 | ||||||||||||
(5) | 71,375 | 5,796,084 | ||||||||||||
(6) | 129,136 | 7,668,096 | ||||||||||||
Jason W. Fraser | — | — | ||||||||||||
(5) | 12,754 | 968,675 | ||||||||||||
(6) | 17,001 | 1,009,519 | ||||||||||||
R. Lane Riggs | — | — | ||||||||||||
(5) | 36,844 | 2,534,311 | ||||||||||||
(6) | 31,853 | 1,891,431 | ||||||||||||
Gary K. Simmons | — | — | ||||||||||||
(5) | 12,993 | 1,019,720 | ||||||||||||
(6) | 16,102 | 956,137 | ||||||||||||
Cheryl L. Thomas | — | — | ||||||||||||
(5) | 11,251 | 859,412 | ||||||||||||
(6) | 12,334 | 732,393 |
|
|
|
|
|
|
2022 PROXY STATEMENT |
EXECUTIVE COMPENSATION | ||||||||
PENSION BENEFITS |
Name
| Plan Name
| No. of Years Credited Service (#) (1)
| Present Value of Accumulated Benefits ($)
| Payments During Last Fiscal Year ($)
| ||||||||||
Joseph W. Gorder (2) | Pension Plan | 28.17 | 1,031,288 | — | ||||||||||
Excess Pension Plan | 16.67 | 6,809,435 | — | |||||||||||
SERP | 16.67 | 12,025,918 | — | |||||||||||
Donna M. Titzman | Pension Plan | 32.29 | 1,238,556 | — | ||||||||||
Excess Pension Plan | 32.29 | 2,585,419 | — | |||||||||||
SERP | 32.29 | 2,562,130 | — | |||||||||||
R. Lane Riggs | Pension Plan | 29.92 | 1,030,435 | — | ||||||||||
Excess Pension Plan | 29.92 | 2,803,920 | — | |||||||||||
SERP | 29.92 | 3,793,777 | — | |||||||||||
Jay D. Browning | Pension Plan | 25.29 | 1,140,912 | — | ||||||||||
Excess Pension Plan | 25.29 | 3,137,400 | — | |||||||||||
SERP | 25.29 | 3,163,698 | — | |||||||||||
Gary K. Simmons | Pension Plan | 31.52 | 1,145,869 | — | ||||||||||
Excess Pension Plan | 31.52 | 2,567,211 | — | |||||||||||
SERP | 31.52 | 2,522,130 | — | |||||||||||
Michael S. Ciskowski | Pension Plan | 32.63 | 1,750,153 | 72,315 | ||||||||||
Excess Pension Plan | 32.63 | — | 11,418,259 | |||||||||||
SERP | 32.63 | — | 5,523,088 | |||||||||||
2021.
Name | Plan Name | No. of Years Credited Service (#) (1) | Present Value of Accumulated Benefits ($) | Payments During Last Fiscal Year ($) | ||||||||||
Joseph W. Gorder (2) | Pension Plan | 31.17 | 1,372,258 | — | ||||||||||
Excess Pension Plan | 19.67 | 10,677,574 | — | |||||||||||
SERP | 19.67 | 23,228,771 | — | |||||||||||
Jason W. Fraser | Pension Plan | 22.96 | 923,367 | — | ||||||||||
Excess Pension Plan | 22.96 | 1,156,805 | — | |||||||||||
SERP | 22.96 | 5,856,793 | — | |||||||||||
R. Lane Riggs | Pension Plan | 32.92 | 1,544,321 | — | ||||||||||
Excess Pension Plan | 32.92 | 4,472,828 | — | |||||||||||
SERP | 32.92 | 10,977,401 | — | |||||||||||
Gary K. Simmons | Pension Plan | 34.52 | 1,666,479 | — | ||||||||||
Excess Pension Plan | 34.52 | 3,816,710 | — | |||||||||||
SERP | 34.52 | 6,487,381 | — | |||||||||||
Cheryl L. Thomas | Pension Plan | 37.5 | 2,044,296 | — | ||||||||||
Excess Pension Plan | 37.5 | 4,302,349 | — | |||||||||||
SERP | 37.5 | 5,706,410 | — |
|
|
2022.
78 | 2022 PROXY STATEMENT |
EXECUTIVE COMPENSATION | ||||||||
EXECUTIVE COMPENSATION
For employees hired prior to Jan.January 1, 2010, the Pension Plan (supplemented, as necessary, by the Excess Pension Plan) provides a monthly pension at normal retirement equal to 1.6 percent of the participant’s average monthly compensation (based upon earnings during the three consecutive calendar years during the last 10 years of the participant’s credited service affording the highest such average) times the participant’s years of credited service. This is known as the “Formula Provision.” Each of our named executive officersNEOs was hired prior to Jan.January 1, 2010.
points (age and vesting service) | annual pay credit percentage | |||||||
under 35 | 6.0% of eligible pay | |||||||
35–49 | 7.5% of eligible pay | |||||||
50–64 | 9.0% of eligible pay | |||||||
65–79 | 10.5% of eligible pay | |||||||
80+ | 12.0% of eligible pay |
SERP. Our Supplemental Executive Retirement Plan (SERP)
2022 PROXY STATEMENT | 79 |
EXECUTIVE COMPENSATION | ||||||||
Nonqualified Deferred Compensation |
EXECUTIVE COMPENSATION
Nonqualified Deferred Compensation
The following table describes contributions by Valero and each named executive officer under ournon-qualified nonqualified defined contribution and other deferred compensation plans during 2018.2021. The table also presents each named executive officer’s earnings, withdrawals (if any), andyear-end balances in these plans.
Executive Contributions in Last FY ($)
| Registrant Contributions in Last FY ($) (1)
| Aggregate Earnings in Last FY ($)
| Aggregate Withdrawals/ Distributions ($)
| Aggregate Balance at Last FYE ($)
| |||||||||||||||||||||||
Joseph W. Gorder |
Excess Thrift Plan |
|
— |
|
|
96,950 |
|
|
— |
|
|
— |
|
|
1,029,655 |
| |||||||||||
Donna M. Titzman | Excess Thrift Plan | — | 25,667 | — | — | 577,436 | |||||||||||||||||||||
R. Lane Riggs | Excess Thrift Plan | — | 36,750 | — | — | 289,367 | |||||||||||||||||||||
UDSNon-qualified 401(k) Plan (2) | — | — | (234 | ) | — | 43,816 | |||||||||||||||||||||
Jay D. Browning | Excess Thrift Plan | — | 26,250 | — | — | 463,659 | |||||||||||||||||||||
Gary K. Simmons | Excess Thrift Plan | — | 24,500 | — | — | 223,270 | |||||||||||||||||||||
UDSNon-qualified 401(k) Plan (2) | — | — | (7,128 | ) | — | 97,028 | |||||||||||||||||||||
Michael S. Ciskowski | Deferred Compensation Plan | — | — | (53,285 | ) | — | 365,259 | ||||||||||||||||||||
Excess Thrift Plan | — | 16,351 | — | 1,941,259 | — | ||||||||||||||||||||||
Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) (1) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(4) | ||||||||||||||||
Joseph W. Gorder | Excess Thrift Plan | — | 105,700 | — | — | 1,506,848 | ||||||||||||||
Jason W. Fraser | Excess Thrift Plan | — | 37,450 | — | — | 195,925 | ||||||||||||||
R. Lane Riggs | Excess Thrift Plan | — | 47,600 | — | — | 466,017 | ||||||||||||||
UDS Nonqualified 401(k) Plan (2) | — | — | 381 | — | 52,503 | |||||||||||||||
Gary K. Simmons | Excess Thrift Plan | — | 28,728 | — | — | 340,153 | ||||||||||||||
UDS Nonqualified 401(k) Plan (2) | — | — | 7,007 | — | 180,403 | |||||||||||||||
Cheryl L. Thomas | Excess Thrift Plan | — | 26,061 | — | — | 285,659 | ||||||||||||||
UDS Nonqualified 401(k) Plan (2) | — | — | 31,087 | — | 168,283 |
|
|
80 | 2022 PROXY STATEMENT |
EXECUTIVE COMPENSATION | ||||||||
None of our named executive officers participated in the DC Plan in 2021.
EXECUTIVE COMPENSATION
Potential Payments Upon Termination or Change of Control
CHANGE OF CONTROL SEVERANCE AGREEMENTS
CHANGE OF CONTROL SEVERANCE AGREEMENTS |
POLICY FEATURES
POLICY FEATURES |
TERMS AND CONDITIONS
TERMS AND CONDITIONS |
the •acquisition by an individual, entity, or group of beneficial ownership of 20 percent or more of our outstanding Common Stock;
the •ouster from the Board of a majority of the incumbent directors;
•consummation of a business combination (e.g., merger, share exchange).
•a diminution in the executive officer’s position, authority, duties and responsibilities;
2022 PROXY STATEMENT | 81 |
EXECUTIVE COMPENSATION | ||||||||
•failure of Valero’s successor to assume and perform under the agreement.
EXECUTIVE COMPENSATION
Potential Payments Under Change of Control Severance Agreements
Component of Payment | Gorder | Fraser | Riggs | Simmons | Thomas | ||||||||||||
Salary (2) | 5,400,000 | 1,650,000 | 1,940,000 | 1,400,800 | 1,324,600 | ||||||||||||
Bonus (2) | 15,792,192 | 1,650,000 | 2,134,000 | 1,400,800 | 1,059,680 | ||||||||||||
Pension, Excess Pension, and SERP | 10,338,964 | — | — | — | — | ||||||||||||
Contributions under Defined Contribution Plans | 378,000 | — | — | — | — | ||||||||||||
Health & Welfare Benefits (3) | 312,516 | 62,206 | 66,286 | 66,096 | 51,038 | ||||||||||||
Outplacement Services | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | ||||||||||||
Accelerated Vesting of Restricted Stock (4) | 6,988,009 | 3,144,555 | 6,239,840 | 1,340,263 | 876,609 | ||||||||||||
Accelerated Vesting of Performance Shares (5) | 4,535,818 | 1,127,401 | 1,641,679 | 834,021 | 562,048 |
|
|
Component of Payment | Gorder | Titzman | Riggs | Simmons | ||||||||||||
Salary (2) | 4,980,000 | 1,350,000 | 1,600,000 | 1,250,000 | ||||||||||||
Bonus (2) | 13,875,000 | 1,680,000 | 1,280,000 | 812,500 | ||||||||||||
Pension, Excess Pension, and SERP | 11,869,671 | 3,079,393 | — | — | ||||||||||||
Contributions under Defined Contribution Plans | 348,600 | 89,834 | — | — | ||||||||||||
Health & Welfare Plan Benefits (3) | 75,060 | 42,192 | 55,312 | 55,312 | ||||||||||||
Outplacement Services | 25,000 | 25,000 | 25,000 | 25,000 | ||||||||||||
Accelerated Vesting of Restricted Stock (4) | 5,720,661 | 913,210 | 2,004,023 | 1,040,134 | ||||||||||||
Accelerated Vesting of Performance Shares (5)
|
| 3,174,980
|
|
| 319,372
|
|
| 694,147
|
|
| 345,162
|
| ||||
|
Component of Payment | Gorder | Titzman | Riggs | Simmons | ||||||||||||
Salary, Bonus, Pension, Excess Pension, SERP, Contributions under Defined Contribution Plans, Health & Welfare Benefits | (6) | (6) | (6) | (6) | ||||||||||||
Accelerated Vesting of Restricted Stock (4)
|
| 5,720,661
|
|
| 913,210
|
|
| —
|
|
| —
|
| ||||
Component of Payment | Gorder | Fraser | Riggs | Simmons | Thomas | ||||||||||||
Salary, Bonus, Pension, Excess Pension, SERP, Contributions under Defined Contribution Plans, Health & Welfare Benefits | (6) | (6) | (6) | (6) | (6) | ||||||||||||
Accelerated Vesting of Restricted Stock (4) | 6,988,009 | — | — | — | — |
|
|
|
|
|
|
|
|
|
|
|
82 |
EXECUTIVE COMPENSATION | ||||||||
Footnotes for Potential Payments Under Change of Control Severance Agreements tables (cont.(con’t.):
Name | Salary | Bonus | ||||||
Joseph W. Gorder | 1,800,000 | 5,264,064 | ||||||
Jason W. Fraser | 825,000 | 825,000 | ||||||
R. Lane Riggs | 970,000 | 1,067,000 | ||||||
Gary K. Simmons | 700,400 | 700,400 | ||||||
Cheryl L. Thomas | 662,300 | 529,840 |
|
Name | Salary | Bonus | ||||||
Joseph W. Gorder | $ | 1,660,000 | $ | 4,625,000 | ||||
Donna M. Titzman | $ | 675,000 | $ | 840,000 | ||||
R. Lane Riggs | $ | 800,000 | $ | 640,000 | ||||
Gary K. Simmons | $ | 625,000 | $ | 406,250 | ||||
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2022 PROXY STATEMENT |
DIRECTOR COMPENSATION | ||||||||
This table summarizes compensation earned by our directors in 2018.
Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | Total ($) | |||||||||||||
H. Paulett Eberhart |
| 130,000 |
| 175,046 |
| 305,046 | |||||||||
Joseph W. Gorder |
| — |
| — |
| (2 | ) | ||||||||
Kimberly S. Greene |
| 130,000 |
| 175,046 |
| 305,046 | |||||||||
Deborah P. Majoras |
| 150,000 |
| 175,046 |
| 325,046 | |||||||||
Donald L. Nickles |
| 130,000 |
| 175,046 |
| 305,046 | |||||||||
Philip J. Pfeiffer |
| 130,000 |
| 175,046 |
| 305,046 | |||||||||
Robert A. Profusek |
| 160,000 |
| 175,046 |
| 335,046 | |||||||||
Susan Kaufman Purcell(retired May 3, 2018) |
| 65,000 |
| — |
| 65,000 | |||||||||
Stephen M. Waters |
| 130,000 |
| 175,046 |
| 305,046 | |||||||||
Randall J. Weisenburger |
| 150,000 |
| 175,046 |
| 325,046 | |||||||||
Rayford Wilkins, Jr. |
| 150,000 |
| 175,046 |
| 325,046 |
2021.
Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | Total ($) | |||||||||||||||
Fred M. Diaz | 43,333 | 133,396 | 176,729 | ||||||||||||||
H. Paulett Eberhart | 130,000 | 200,014 | 330,014 | ||||||||||||||
Joseph W. Gorder | — | — | (2) | ||||||||||||||
Kimberly S. Greene | 130,000 | 200,014 | 330,014 | ||||||||||||||
Deborah P. Majoras | 155,000 | 200,014 | 355,014 | ||||||||||||||
Eric D. Mullins | 130,000 | 200,014 | 330,014 | ||||||||||||||
Donald L. Nickles | 130,000 | 200,014 | 330,014 | ||||||||||||||
Philip J. Pfeiffer | 130,000 | 200,014 | 330,014 | ||||||||||||||
Robert A. Profusek | 165,000 | 200,014 | 365,014 | ||||||||||||||
Stephen M. Waters | 130,000 | 200,014 | 330,014 | ||||||||||||||
Randall J. Weisenburger | 155,000 | 200,014 | 355,014 | ||||||||||||||
Rayford Wilkins, Jr. | 155,000 | 200,014 | 355,014 |
| |||||
Name | Outstanding Stock | ||||
Fred M. Diaz | 2,021 | ||||
H. Paulett Eberhart | 6,679 | ||||
Kimberly S. Greene | 6,679 | ||||
Deborah P. Majoras | 6,679 | ||||
Eric D. Mullins | 6,679 | ||||
Donald L. Nickles | 6,679 | ||||
Philip J. Pfeiffer | 6,679 | ||||
Robert A. Profusek | 6,679 | ||||
Stephen M. Waters | 6,679 | ||||
Randall J. Weisenburger | 6,679 | ||||
Rayford Wilkins, Jr. | 6,679 |
Name | Unvested Restricted Stock | Stock Units | ||||||||
H. Paulett Eberhart | 2,607 | 1,557 | ||||||||
Kimberly S. Greene | 2,607 | 1,557 | ||||||||
Deborah P. Majoras | 2,829 | 1,557 | ||||||||
Donald L. Nickles | 2,829 | 1,557 | ||||||||
Philip J. Pfeiffer | 2,829 | 1,557 | ||||||||
Robert A. Profusek | 2,829 | 1,557 | ||||||||
Stephen M. Waters | 2,829 | 1,557 | ||||||||
Randall J. Weisenburger | 2,829 | 1,557 | ||||||||
Rayford Wilkins, Jr. | 2,829 | 1,557 |
| ||||||||
84 | 2022 PROXY STATEMENT |
DIRECTOR COMPENSATION | ||||||||
$10,000 or more.
DIRECTOR COMPENSATION
Our Compensation Committee reviews our director compensation program at least annually with assistance Non-employee directors are expected to hold shares of Common Stock having a value equal to five times the annual cash retainer and inputhave five years from our compensation consultant. The annual review includes an assessmentthe date of the director compensation programs of our peers and of industry trends and developments. On Nov. 1, 2017, following our Compensation Committee’s review of ournon-employee director compensation program and the programs of our peers,their initial election to the Board adopted a change in the equity portion of ournon-employee director compensation program by approving a grant of stock units to directors in lieu of shares of restricted stock.
meet that guideline.
In 2016, the Board previously approved a limitation on the amount of equity compensation that may be paid to ournon-employee directors in any year. The limitation was implemented via an amendment toAs provided in our 2011 Omnibus Stock Incentive Plan. The limitation provides that2020 OSIP, anon-employee director may not receive in any calendar year awards payable in shares of Common Stock that have a fair market value greater than $500,000 in the aggregate. We selected $500,000 as the amount of the limitation because we believe that it places a meaningful limit on awards to ournon-employee directors. While the amount of equity compensation awarded to ournon-employee directors in recent years has been considerably lower than this limit, we believe that setting a limitation at this level provides us with a reasonable degree of flexibility to make adjustments that we may in the future deem appropriate or necessary for our compensation program to remain competitive in the market.
2022 PROXY STATEMENT |
PAY RATIO DISCLOSURE | ||||||||
The median of the annual total compensation of all employees of Valero for 2021, except our CEO, for 2018 was $153,981,$198,219, and the annual total compensation of our CEO, Mr. Gorder, for 20182021 was $18,759,156$22,684,706 (as disclosed in the Summary Compensation Table). As a result, our CEO’s 20182021 annual total compensation was 122114 times that of the median annual total compensation of all employees of Valero.
OurThe pay ratio is based on a December 31, 2021, employee total employee population (U.S. andnon-U.S.) as of Dec. 31, 2018, was approximately 10,2509,813 employees. To determine the median employee for purposes of this disclosure, following thede minimis exemption under Item 402(u)(4)(ii) ofRegulation S-K, we excluded all of our employees in Peru (124(117 employees) and all of our employees in Mexico (8(42 employees); the excluded employees representrepresented less than five percent of our total employees. We did not exclude any employees under the data privacy exemption of Item 402(u)(4)(i).
Median Employee to CEO Pay Ratio | ||||||||||
Median Employee ($) | CEO ($) | |||||||||
Salary |
| 110,456 |
| 1,660,000 | ||||||
Stock Awards |
| — |
| 10,931,251 | ||||||
Non-Equity Incentive Plan Compensation |
| 16,272 |
| 4,625,000 | ||||||
Change in Pension Value and Nonqualified Deferred Compensation Earnings |
| — |
| 1,353,779 | ||||||
All Other Compensation |
| 27,253 |
| 189,126 | ||||||
Total Compensation |
| 153,981 |
| 18,759,156 | ||||||
Median Employee to CEO Pay Ratio | 1:122 |
Median Employee to CEO Pay Ratio | |||||||||||||||||
Median Employee ($) | CEO ($) | ||||||||||||||||
Salary | 129,774 | 1,800,000 | |||||||||||||||
Stock Awards | — | 13,360,052 | |||||||||||||||
Non-Equity Incentive Plan Compensation | 14,089 | 5,264,064 | |||||||||||||||
Change in Pension Value and Nonqualified Deferred Compensation Earnings | 15,872 | 2,030,418 | |||||||||||||||
All Other Compensation | 38,484 | 230,172 | |||||||||||||||
Total Compensation | 198,219 | 22,684,706 | |||||||||||||||
Median Employee to CEO Pay Ratio | 1:114 |
86 |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS | ||||||||
Review |
Review
Our Board adopted a Related Party TransactionTransactions Policy to establish procedures for the notification, review, approval, ratification, and disclosure of related party transactions. Under the policy, a related party transaction is a transaction, arrangement, or relationship in which (i) Valero (including any of its subsidiaries) was, is or will be a participant, (ii) the amount involved exceeds $120,000, and (iii) any “related person” had, has or will have a direct or indirect material interest. Under the policy, a related person means, generally, any person who would be deemed to be a “related person” as defined in Item 404 of SEC’s RegulationS-K. Under the policy, a related party transaction must be submitted to the Board’s Nominating/GovernanceNominating and Public PolicyCorporate Governance Committee for review and approval. The policy is available on our website at www.valero.com > Investors > Corporate GovernanceESG > Governance Documents.
Documents > Governance Policies.
2022 PROXY STATEMENT | 87 |
PROPOSAL NO. 2—RATIFY APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITOR | ||||||||
(ITEM 2 ON THE PROXY CARD) |
(ITEM 2 ON THE PROXY CARD)
The Audit Committee of the Board determined on Feb. 28, 2019,February 22, 2022, to engage KPMG LLP (“KPMG”) as Valero’s independent registered public accounting firm for the fiscal year ending Dec.December 31, 2019.2022. KPMG has served as Valero’s independent registered public accounting firm since 2004.
Representatives of KPMG are expected to be present at the Annual Meeting to respond to appropriate questions raised at the Annual Meeting or make appropriate statements at the Annual Meeting. | R | |||||||||||||
The Board recommends that the stockholders vote “FOR” this proposal. |
88 |
KPMG LLP FEES | ||||||||
2018 | 2017 | |||||||
Audit Fees (1) |
| 9.0 |
| $ | 7.6 |
| ||
Audit-Related Fees (2) |
| 0.4 |
|
| 0.3 |
| ||
Tax Fees (3) |
| 0.5 |
|
| 0.3 |
| ||
All Other Fees |
| — |
|
| — |
| ||
total | $ | 9.9 |
| $ | 8.2 |
|
2021 | 2020 | ||||||||||
Audit Fees (1) | 8.7 | 8.3 | |||||||||
Audit-Related Fees (2) | 0.5 | 0.4 | |||||||||
Tax Fees (3) | 0.6 | 0.2 | |||||||||
All Other Fees (4) | — | — | |||||||||
total | 9.8 | 8.9 |
| ||||||||||||||
Audit Committee Pre-Approval Policy |
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Audit CommitteePre-Approval Policy
2021.
2022 PROXY STATEMENT |
REPORT OF THE AUDIT COMMITTEE FOR FISCAL YEAR 2021 | ||||||||
Management is responsible for Valero’s internal controls and financial reporting process. KPMG LLP (KPMG)(“KPMG”), Valero’s independent registered public accounting firm for the fiscal year ended Dec.December 31, 2018,2021, is responsible for performing an independent audit of Valero’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”), and an audit of the effectiveness of Valero’s internal control over financial reporting in accordance with the standards of the PCAOB, and to issue KPMG’s reports thereon. The Audit Committee monitors and oversees these processes. The Audit Committee approves the selection and appointment of Valero’s independent registered public accounting firm and recommends the ratification of its selection and appointment to our Board.
Members of the
H. Paulett Eberhart
Stephen M. Waters
90 |
(ITEM 3 ON THE PROXY CARD)
PROPOSAL NO. 3—ADVISORY VOTE TO APPROVE COMPENSATION OF NAMED EXECUTIVE OFFICERS | ||||||||
(ITEM 3 ON THE PROXY CARD) |
Proxies will be voted for approval of the proposal unless otherwise specified. Approval of this proposal requires the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the proposal. | R | |||||||||||||
The Board recommends that the stockholders vote “FOR” this proposal. |
2022 PROXY STATEMENT | 91 |
PROPOSAL NO. 4—STOCKHOLDER PROPOSAL— REPORT ON NEAR- AND LONG-TERM GREENHOUSE GAS EMISSIONS TARGETS | ||||||||
(ITEM 4 ON THE PROXY CARD) |
T | ||||||||||||||
The Board recommends that the stockholders vote “AGAINST” this proposal. |
STOCKHOLDER PROPOSAL |
92 | 2022 PROXY STATEMENT |
PROPOSAL NO. 4 | ||||||||
BOARD RECOMMENDATION |
Governance Documentsthis proposal seeks a pro forma commitment that does not reflect an understanding of the resilience of our assets, the leading-edge strategy that Valero has developed to compete in a low-carbon world, and Codesthe robust reporting on our strategy and progress that we already disclose.
. Valero was the first traditional refiner to enter ethanol production in large scale and it has been producing low-carbon renewable diesel for the past 9 years. Valero is one of the few companies that has provided a clear roadmap to achieving aggressive GHG emissions reduction goals:
2022 PROXY STATEMENT | 93 |
PROPOSAL NO. 4 | ||||||||
94 | 2022 PROXY STATEMENT |
MISCELLANEOUS | ||||||||
Governance Documents and Codes of Ethics |
directors and covers many topics including, but not limited to, conflicts of interests, competition and fair dealing, discrimination and harassment, payments to government personnel, and employee complaint procedures.
•Restated Certificate of Incorporation
•Bylaws
•Code of Business Conduct and Ethics
•Code of Ethics for Senior Financial Officers
•Corporate Governance Guidelines
•Conduct Guidelines for Business Partners
•Human Resources and Compensation Committee Charter
Nominating/•Nominating and Corporate Governance Committee Charter
•Related Party Transactions Policy
•Compensation Consultant Disclosures Policy
•Policy on Executive Compensation in Restatement Situations
•Policy on Political Contributions, Lobbying, and Trade Associations
•Policy on Vesting of Performance Shares
Stockholder Communications, Nominations and Proposals |
the Exchange Act. The Corporate Secretary’s office will forward to the appropriate directors all correspondence, except for personal grievances, items unrelated to the functions of the Board, business solicitations, advertisements, and materials that are hostile, threatening, or profane.
2022 PROXY STATEMENT | 95 |
MISCELLANEOUS | ||||||||
MISCELLANEOUS
Other Business
If any matters not referred to in this proxy statement properly come before the Annual Meeting or any adjournments or postponements thereof, the enclosed proxies will be deemed to confer discretionary authority on the individuals named as proxies to vote the shares represented by proxy in accordance with their best judgments. The Board is not currently aware of any other matters that may be presented for action at the Annual Meeting.
Financial Statements |
Householding |
If you and another stockholder of record with whom you share an address are receiving multiple copies of our proxy materials, you can request to participate in householding and receive a single copy of our proxy materials in the future by calling Broadridge Financial Solutions, Inc. at 866-540-7095 or by writing to Broadridge Financial Solutions, Inc., Attn: Householding Dept., 51 Mercedes Way, Edgewood, NY 11717.
96 | 2022 PROXY STATEMENT |
MISCELLANEOUS | ||||||||
Transfer Agent |
Shareholder Communications
mail:
Louisville, KY 40233-5000
delivery:
Suite 1600
Louisville, KY 40202
(312) 360-5261
www.computershare.com
Annex A
Adjusted earnings per common share—assuming dilution
for the year ended December 31, 2018
Earnings per common share—assuming dilution (GAAP) | $ | 7.29 | ||
Exclude adjustments: | ||||
Blender’s tax credit attributable to Valero Energy Corporation stockholders (a) | 0.18 | |||
Texas City Refinery fire expenses (b) | (0.02 | ) | ||
Environmental reserve adjustments (c) | (0.20 | ) | ||
Loss on early redemption of debt (d) | (0.07 | ) | ||
Income tax benefit from tax reform (e) | 0.03 | |||
Total adjustments | (0.08 | ) | ||
Adjusted earnings per common share—assuming dilution
| $
| 7.37
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2022 PROXY STATEMENT |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report on Form10-K is/are available at www.proxyvote.com VALERO ENERGY CORPORATION ANNUAL MEETING OF STOCKHOLDERS April 30, 2019 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The stockholder(s) hereby revoke(s) all previous proxies and appoint(s) Joseph W. Gorder, Jason W. Fraser and J. Stephen Gilbert, or any of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of Valero Energy Corporation that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held on Tuesday, April 30, 2019 at 10:00 a.m., Central Time, at the Valero Energy Corporation offices located at One Valero Way, San Antonio, TX 78249, and any adjournment or postponement thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED ON THE REVERSE SIDE. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED “FOR” ALL NOMINEES FOR DIRECTOR, AND “FOR” PROPOSALS 2 AND 3. IF ANY OTHER MATTERS ARE VOTED ON AT THE MEETING, THIS PROXY WILL BE VOTED BY THE NAMED PROXIES ON SUCH MATTERS IN THEIR SOLE DISCRETION. YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE THE SHARES IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD. Continued and to be signed on reverse side