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SECURITIES AND EXCHANGE COMMISSION
Exchange Act of 1934 (Amendment No. )
Filed by a Party other than the Registranto
þ | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
o | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material Pursuant to §240.14a-12 |
þ | No fee required. | |
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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(2) | Aggregate number of securities to which transaction applies: | ||
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o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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(1) | Elect three Class I directors to serve until the 2013 annual meeting of stockholders or until their respective successors are elected and have been qualified; | ||
(2) | Ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2010; | ||
(3) | Re-approve the 2005 Omnibus Stock Incentive Plan; | ||
(4) | Vote on an advisory resolution to ratify the 2009 compensation of the named executive officers listed in the proxy statement’s Summary Compensation Table; | ||
(5) | Vote on a stockholder proposal entitled, “Impact of Valero’s Operations on Rainforest Sustainability”; | ||
(6) | Vote on a stockholder proposal entitled, “Elimination of Classified Board”; | ||
(7) | Vote on a stockholder proposal entitled, “Disclosure of Political Contributions/Trade Associations”; | ||
(8) | Vote on a stockholder proposal entitled, “Stock Retention by Executives”; and | ||
(9) | Transact any other business properly brought before the meeting. |
By order of the Board of Directors, Jay D. Browning Senior Vice President-Corporate Law and Secretary | ||||
One Valero Way
San Antonio, Texas 78249
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ANNUAL MEETING OF STOCKHOLDERS
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• | 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 where a director is an executive officer and does not exceed the greater of $1 million or 2% of the organization’s gross revenue in any of the last three years; |
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• | 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; or is in amounts that do not exceed $1 million per year; and | ||
• | is not required to be, and it is not otherwise, disclosed in this proxy statement. |
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• | independence of thought and judgment; | ||
• | the ability to dedicate sufficient time, energy and attention to the performance of her or his 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, the Board will consider its need for operational, managerial, financial, governmental affairs, or other relevant expertise. |
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ELECTION OF DIRECTORS
(Item 1 on the Proxy Card)
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Executive Officer or | Age as of | Director | ||||||||||
Director Since (1) | 12/31/09 | Class (2) | ||||||||||
Nominees | �� | |||||||||||
Ruben M. Escobedo,Director | 1994 | 72 | I | |||||||||
Bob Marbut,Director | 2001 | 74 | I | |||||||||
Robert A. Profusek,Director | 2005 | 59 | I | |||||||||
Other Directors | ||||||||||||
Ronald K. Calgaard,Director | 1996 | 72 | II | |||||||||
Irl F. Engelhardt,Director | 2006 | 63 | II | |||||||||
Stephen M. Waters,Director | 2008 | 63 | II | |||||||||
Jerry D. Choate,Director | 1999 | 71 | III | |||||||||
William R. Klesse,Chairman of the Board,Chief Executive Officer, and President | 2001 | 63 | III | |||||||||
Donald L. Nickles,Director | 2005 | 61 | III | |||||||||
Susan Kaufman Purcell,Director | 1994 | 67 | III |
(1) | Dates reported include service on the Board of Directors of Valero’s former parent company prior to Valero’s separation from that company in 1997. | |
(2) | If elected, the terms of office of the Class I directors will expire at the 2013 Annual Meeting. The terms of office of the Class II directors will expire at the 2011 Annual Meeting, and the terms of office of the Class III directors will expire at the 2012 Annual Meeting. |
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Amount and Nature of | ||||||
Name and Address of Beneficial Owner | Beneficial Ownership | Percent of Class | ||||
AXA Financial, Inc. | 32,109,811 (1) | 5.7 | % | |||
1290 Avenue of the Americas | ||||||
New York, NY 10104 |
(1) | AXA Financial, Inc. filed with the SEC (pursuant to a joint filing agreement among AXA Financial, Inc., AXA Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, and AXA) a Schedule 13G on February 12, 2010, reporting that it or certain of its affiliates beneficially owned in the aggregate 32,109,811 shares, that it had sole voting power with respect to 23,877,058 shares and sole dispositive power with respect to 32,109,811 shares. |
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Shares Under | Percent | |||||||||||||||
Name of Beneficial Owner | Shares Held (1) | Options (2) | Total Shares | of Class | ||||||||||||
Kimberly S. Bowers | 79,530 | 39,125 | 118,655 | 0.02 | % | |||||||||||
Ronald K. Calgaard | 32,959 | 13,000 | 45,959 | * | ||||||||||||
Jerry D. Choate | 51,883 | 33,000 | 84,883 | * | ||||||||||||
Michael S. Ciskowski | 274,153 | 99,392 | 373,545 | 0.07 | % | |||||||||||
Irl F. Engelhardt | 26,708 | 5,000 | 31,708 | * | ||||||||||||
Ruben M. Escobedo | 21,756 | 0 | 21,756 | * | ||||||||||||
Joseph W. Gorder | 101,352 | 47,259 | 148,611 | 0.03 | % | |||||||||||
William R. Klesse | 874,860 | 574,741 | 1,449,601 | 0.26 | % | |||||||||||
Bob Marbut | 40,926 | 71,120 | 112,046 | * | ||||||||||||
Richard J. Marcogliese | 237,821 | 297,209 | 535,030 | 0.09 | % | |||||||||||
Donald L. Nickles | 14,683 | 11,000 | 25,683 | * | ||||||||||||
Robert A. Profusek | 14,544 | 11,000 | 25,544 | * | ||||||||||||
Susan Kaufman Purcell | 13,650 | 29,000 | 42,650 | * | ||||||||||||
Stephen M. Waters | 11,178 | 10,000 | 21,178 | * | ||||||||||||
Directors and executive officers as a group (15 persons) | 1,870,124 | 1,265,781 | 3,135,905 | * |
* | Indicates that the percentage of beneficial ownership of the directors, nominees, and by all directors and executive officers as a group does not exceed 1% of the class. | |
(1) | Includes shares allocated under the Thrift Plan through January 31, 2010, and shares of restricted stock. Restricted stock may not be disposed of until vested. This column does not include shares that could be acquired under options, which are reported in the column captioned “Shares Under Options.” | |
(2) | Represents shares of Common Stock that may be acquired under outstanding stock options currently exercisable and that are exercisable within 60 days from February 1, 2010. Shares subject to options may not be voted unless the options are exercised. Options that may become exercisable within such 60-day period only in the event of a change of control of Valero are excluded. |
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• | Assistance with the determination of appropriate peer and comparator companies for benchmarking executive pay and monitoring Valero’s performance; | ||
• | Assistance with the determination of Valero’s overall executive compensation philosophy in light of Valero’s business strategy and market considerations; | ||
• | Competitive pay assessment of target and actual total direct compensation for executives, with separate analyses of base salary, annual incentive, and long-term incentive compensation; | ||
• | Competitive pay assessment of director compensation; | ||
• | Assessment of, and recommendation of enhancements to, Valero’s annual incentive program with respect to both financial and operational performance metrics; | ||
• | Recommendations for Valero’s long-term incentive program strategy, including the appropriate mix of equity incentive vehicles and determination of competitive equity grant guidelines consistent with Valero’s overall pay philosophy; | ||
• | Independent assessment of the risk profile of Valero’s executive incentive plans to assess whether such plans encourage excessive financial risk on the part of plan participants; and | ||
• | Updates on trends and developments in executive compensation, new regulatory issues, and best practices. |
• | 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, |
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• | multi-year vesting periods for equity incentive awards, which encourage focus on sustained growth and earnings, and | ||
• | our compensation-related policies, including the executive compensation “clawback” policy and stock retention guidelines (discussed below under the caption “Compensation Discussion and Analysis — Compensation Related Policies”). |
Bob Marbut, Chairman
Jerry D. Choate
Robert A. Profusek
• | to produce long-term, positive results for our stockholders; | ||
• | to build stockholder wealth while practicing good corporate governance; | ||
• | to align executive incentive compensation with Valero’s short- and long-term performance results, with discrete measurements of such performance; and | ||
• | to provide market-competitive compensation and benefits to enable us to recruit, retain, and motivate the executive talent necessary to be successful. |
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BP PLC | Marathon Oil Corporation | |
Chevron Corporation | Murphy Oil Corporation | |
CITGO Petroleum Corporation | Occidental Petroleum Corporation | |
ConocoPhillips | Shell Oil Company (USA) | |
Exxon Mobil Corporation | Sunoco, Inc. | |
Hess Corporation | Tesoro Corporation | |
Koch Industries, Inc. |
Alon USA Energy Inc. | Holly Corporation | |
Chevron Corporation | Marathon Oil Corporation | |
ConocoPhillips | Murphy Oil Corporation | |
CVR Energy Inc. | Sunoco, Inc. | |
Exxon Mobil Corporation | Tesoro Corporation | |
Frontier Oil Corporation | Western Refining Inc. | |
Hess Corporation |
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• | determined annual incentive bonus for preceding fiscal year | ||
• | reviewed and certified financial performance for performance shares granted in prior years |
• | established financial performance objectives and operational and strategic performance objectives for annual incentive bonus | ||
• | established target levels of annual incentive and long-term incentive compensation for executive officers for the current fiscal year |
• | considered base salaries for executive officers for next fiscal year | ||
• | considered long-term incentive compensation awards for executive officers for current fiscal year |
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• | base salaries; | ||
• | annual incentive bonuses; | ||
• | long-term equity-based incentives, including: |
– | stock options | ||
– | restricted stock; and |
• | medical and other insurance benefits, retirement benefits, and other perquisites. |
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Percentage of Total Direct Compensation | ||||||||||||
Annual | ||||||||||||
Name | Base Salary | Incentive Bonus | Long-Term Incentives | |||||||||
William R. Klesse | 13 | % | 17 | % | 70 | % | ||||||
Richard J. Marcogliese | 16 | % | 20 | % | 64 | % | ||||||
Michael S. Ciskowski | 16 | % | 20 | % | 64 | % | ||||||
Kimberly S. Bowers | 24 | % | 20 | % | 56 | % | ||||||
Joseph W. Gorder | 24 | % | 20 | % | 56 | % |
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Name | Base Salary 12/31/2008 | Base Salary 12/31/2009 | ||||||
William R. Klesse | $ | 1,500,000 | $ | 1,500,000 | ||||
Richard J. Marcogliese | $ | 855,000 | $ | 955,000 | ||||
Michael S. Ciskowski | $ | 700,000 | $ | 750,000 | ||||
Kimberly S. Bowers | $ | 475,000 | $ | 494,000 | ||||
Joseph W. Gorder | $ | 445,000 | $ | 460,000 |
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• | the position of the named executive officer, which is used to determine a targeted percentage of annual base salary that may be awarded as incentive bonus based on the Compensation Comparator Group at the 65th percentile benchmark, with the targets ranging from a low of 80% of base salary to 135% of base salary for our Chief Executive Officer; | ||
• | Valero’s realization of quantitative financial performance goals and operational and strategic performance measures for the year; and | ||
• | a qualitative evaluation of the individual’s performance. |
Annual Incentive Bonus | ||||||||
Annual Incentive Bonus Target | Target as a Percentage of | |||||||
Name | as a Percentage of Base Salary | Total Direct Compensation | ||||||
William R. Klesse | 135 | % | 17 | % | ||||
Richard J. Marcogliese | 125 | % | 20 | % | ||||
Michael S. Ciskowski | 125 | % | 20 | % | ||||
Kimberly S. Bowers | 80 | % | 20 | % | ||||
Joseph W. Gorder | 80 | % | 20 | % |
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• | Valero’s earnings per share, or “EPS,” compared to threshold, target, and maximum EPS performance levels approved by the Compensation Committee; | ||
• | Valero’s total stockholder return, or “TSR,” compared to threshold, target, and maximum TSR performance levels approved by the Compensation Committee (TSR measures the growth in the daily average closing price per share of our Common Stock during the month of November, including the reinvestment of dividends, compared with the daily average closing price of our Common Stock during the corresponding period in the prior year); and | ||
• | Valero’s return-on-investment, or “ROI,” percentile ranking compared to the ROI percentile of the Peer Group for the 12-month period ended September 30, 2009, as approved by the Compensation Committee. |
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• | Valero’s achievements in health, safety, and environmental (“HS&E”); and | ||
• | Valero’s achievements in improving refining competitiveness through improved mechanical availability (“MA”); and | ||
• | Valero’s achievements in cost management and expense control (“CM&EC”). |
Refineries | Renewables | Logistics | Retail | |||||
Recordable Injury Rate | ||||||||
Target | 0.90 | 4.00 | 1.40 | 4.02 | ||||
Actual | 0.82 | 3.52 | 1.15 | 3.70 | ||||
Environmental Scorecard Incidents | ||||||||
Target | 430 | 54 | n/a | n/a | ||||
Actual | 275 | 39 | n/a | n/a | ||||
Reliability Incident Rate | ||||||||
Target | 1.25 | n/a | n/a | n/a | ||||
Actual | 1.29 | n/a | n/a | n/a | ||||
API Process Safety Incidents Rate | ||||||||
Target | 0.20 | 1.20 | n/a | n/a | ||||
Actual | 0.18 | 0.47 | n/a | n/a | ||||
HSE Audit Past Due Items | ||||||||
Target | 4.0 | n/a | 3.0 | n/a | ||||
Actual | 0.0 | n/a | 0.0 | n/a | ||||
Plant Outages (>1/2 day) | ||||||||
Target | n/a | 28 | n/a | n/a | ||||
Actual | n/a | 12 | n/a | n/a | ||||
Reportable Spills | ||||||||
Target | n/a | n/a | 5.0 | n/a | ||||
Actual | n/a | n/a | 2.0 | n/a |
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Refineries | Renewables | Logistics | Retail | |||||
Non-Reportable Spills | ||||||||
Target | n/a | n/a | 20.0 | n/a | ||||
Actual | n/a | n/a | 11.0 | n/a | ||||
Lost Time Injury Rate | ||||||||
Target | n/a | n/a | n/a | 0.80 | ||||
Actual | n/a | n/a | n/a | 0.69 | ||||
Environ’l Audits/Training Compliance | ||||||||
Target | n/a | n/a | n/a | 94.2% | ||||
Actual | n/a | n/a | n/a | 97.0% | ||||
Pendant Compliance | ||||||||
Target | n/a | n/a | n/a | 89.0% | ||||
Actual | n/a | n/a | n/a | 93.0% | ||||
Cash Handling | ||||||||
Target | n/a | n/a | n/a | $125 | ||||
Actual | n/a | n/a | n/a | $108 |
Klesse | Marcogliese | Ciskowski | Bowers | Gorder | ||||||||||||||||
Base salary (1) | $ | 1,500,000 | $ | 955,000 | $ | 750,000 | $ | 494,000 | $ | 460,000 | ||||||||||
Bonus target percentage (2) | 135 | % | 125 | % | 125 | % | 80 | % | 80 | % | ||||||||||
Bonus target amount (3) | $ | 2,025,000 | $ | 1,193,750 | $ | 937,500 | $ | 395,200 | $ | 368,000 | ||||||||||
Valero performance score (4) | 50 | % | 50 | % | 50 | % | 50 | % | 50 | % | ||||||||||
Bonus calculation (5) | $ | 1,012,500 | $ | 596,875 | $ | 468,750 | $ | 197,600 | $ | 184,000 | ||||||||||
Actual bonus amount paid (6) | $ | 0 | $ | 450,000 | $ | 450,000 | $ | 200,000 | $ | 200,000 |
(1) | As described in “Compensation Discussion and Analysis — Elements of Executive Compensation — Base Salaries.” | |
(2) | As described in “Compensation Discussion and Analysis — Elements of Executive Compensation — Annual Incentive Bonus.” | |
(3) | Determined by multiplying “base salary” times “bonus target percentage.” | |
(4) | Determined by adding Valero’s Financial Performance Measures score (times 50%) to Valero’s Operational and Strategic Measures score (times 50%). Valero’s total performance score can range from 0% to 200%. For 2009, Valero’s bonus performance score was 50% (representing 0% from the Financial Performance Measures segment plus 50% from the Operational and Strategic Measures segment). | |
(5) | Determined by multiplying “bonus target amount” by “Valero performance score.” | |
(6) | As disclosed in the Summary Compensation Table. The “actual bonus amount paid” reflects rounding adjustments, and in certain years (such as 2009) can reflect other adjustments based upon the exercise of discretion of the Chief Executive Officer and the Compensation Committee as described above in this subsection and in “Compensation Discussion and Analysis — Elements of Executive Compensation — Individual Performance and Personal Objectives.” |
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Long-Term Incentive Awards | Long-Term Incentive Awards | |||||||
Target as a Percentage of | Target as a Percentage of Total | |||||||
Name | Base Salary | Direct Compensation | ||||||
William R. Klesse | 540 | % | 70 | % | ||||
Richard J. Marcogliese | 415 | % | 64 | % | ||||
Michael S. Ciskowski | 415 | % | 64 | % | ||||
Kimberly S. Bowers | 230 | % | 56 | % | ||||
Joseph W. Gorder | 230 | % | 56 | % |
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Stock Option | Restricted Stock | |||||||||||||||
Stock Option | Target as a | Restricted Stock | Target as | |||||||||||||
Target as a | Percentage of Total | Target as a | Percentage of | |||||||||||||
Percentage of | Direct | Percentage of | Total Direct | |||||||||||||
Name | Base Salary | Compensation | Base Salary | Compensation | ||||||||||||
William R. Klesse | 270 | % | 35 | % | 270 | % | 35 | % | ||||||||
Richard J. Marcogliese | 207.5 | % | 32 | % | 207.5 | % | 32 | % | ||||||||
Michael S. Ciskowski | 207.5 | % | 32 | % | 207.5 | % | 32 | % | ||||||||
Kimberly S. Bowers | 115 | % | 28 | % | 115 | % | 28 | % | ||||||||
Joseph W. Gorder | 115 | % | 28 | % | 115 | % | 28 | % |
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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 |
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Change in | ||||||||||||||||
Pension Value | ||||||||||||||||
and Nonquali- | ||||||||||||||||
Stock | Option | fied Deferred | All Other | |||||||||||||
Awards | Awards | Compensation | Compensa- | |||||||||||||
Principal Position | Year | Salary ($) | Bonus ($) | ($)(1)(2) | ($)(1)(3) | Earnings($)(4) | tion ($)(5) | Total ($)(1) | ||||||||
William R. Klesse, | 2009 | 1,500,000 | — | 4,905,200 | 4,306,896 | 791,410 | 194,725 | 11,698,231 | ||||||||
Chief Executive Officer, | 2008 | 1,500,000 | 705,510 | 2,058,846 | 2,235,337 | 1,181,461 | 138,494 | 7,819,648 | ||||||||
President, and | 2007 | 1,500,000 | 3,720,015 | 5,330,393 | 2,696,100 | 1,122,665 | 117,110 | 14,486,283 | ||||||||
Chairman of the Board | ||||||||||||||||
Michael S. Ciskowski, | 2009 | 750,000 | 450,000 | 1,884,808 | 1,654,928 | 209,862 | 60,508 | 5,010,106 | ||||||||
Executive Vice President | 2008 | 700,000 | 513,912 | 739,152 | 802,477 | 636,887 | 56,880 | 3,449,308 | ||||||||
and Chief Financial | 2007 | 580,000 | 870,000 | 1,079,516 | 539,220 | — | 47,309 | 3,116,045 | ||||||||
Officer | ||||||||||||||||
Richard J. Marcogliese, | 2009 | 955,000 | 450,000 | 1,884,808 | 1,654,928 | 920,851 | 75,099 | 5,940,686 | ||||||||
Executive Vice President | 2008 | 855,000 | 627,707 | 902,724 | 980,081 | 1,757,183 | 72,049 | 5,194,744 | ||||||||
and Chief Operating | 2007 | 555,000 | 1,332,000 | 2,158,201 | 1,259,814 | 835,994 | 51,490 | 6,192,499 | ||||||||
Officer | ||||||||||||||||
Kimberly S. Bowers, | 2009 | 494,000 | 200,000 | 688,068 | 604,208 | 90,175 | 39,305 | 2,115,756 | ||||||||
Executive Vice President | 2008 | 475,000 | 217,954 | 278,551 | 302,479 | 185,353 | 38,643 | 1,497,980 | ||||||||
and General Counsel (6) | ||||||||||||||||
Joseph W. Gorder, | 2009 | 460,000 | 200,000 | 640,695 | 562,496 | 92,026 | 43,936 | 1,999,153 | ||||||||
Executive Vice President- | 2008 | 445,000 | 204,188 | 261,099 | 283,441 | 207,099 | 43,141 | 1,443,968 | ||||||||
Marketing and Supply | 2007 | 423,000 | 634,500 | 778,023 | 389,709 | 70,659 | 44,306 | 2,353,122 |
(1) | In accordance with SEC Release No. 33-9089 (December 16, 2009), which amended the manner in which certain stock-based awards must be disclosed, the amounts shown represent the grant date fair value of awards for each of the fiscal years shown, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation (FASB ASC Topic 718). The values for these columns no longer reflect the dollar amount recognized by Valero as expense in each fiscal year for financial statement reporting purposes. Accordingly, the compensation amounts shown in the columns above for “Stock Awards,” “Option Awards,” and “Total” for fiscal years 2008 and 2007 have been recomputed from the prior years’ proxy statement disclosures to reflect the grant date fair value of stock-based awards granted in those years. |
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(2) | The amounts shown represent the grant date fair value of awards of restricted stock (for 2009, 2008, and 2007) and performance shares (for 2007, performance shares were not granted in 2009 or 2008), and do not correspond to the actual value that will be recognized by the named executive officers. Performance shares are subject to market and performance conditions as described in “Compensation Discussion and Analysis – Long-Term Incentive Awards – Performance Shares.” See the Grants of Plan-Based Awards table for additional information regarding shares of restricted stock granted in 2009. | |
(3) | See the Grants of Plan-Based Awards table for information on stock options granted in 2009. For additional information about valuation assumptions for the 2009, 2008, and 2007 stock option grants, refer to Note 22 (“Stock Based Compensation”) of Notes to Consolidated Financial Statements in Valero’s Form 10-K for the years ended December 31, 2009, 2008, and 2007, respectively. | |
(4) | This column represents the sum of the change in pension value and non-qualified deferred compensation earnings in 2009, 2008, and 2007 for each of the named executive officers. See the “Pension Benefits Table” for additional information, including the present value assumptions used for these calculations. The actual change-in-value amount for Mr. Ciskowski for the year ended December 31, 2007, is a negative number, but is computed as a “zero amount” in the table above in accordance with Instruction 3 to Item 402(c)(2)(viii) of SEC’s Regulation S-K, which instructs that negative values may not be reflected in the sum reported in the table. For each of the named executive officers, the following table identifies the separate amounts attributable to (A) the aggregate change in the actuarial present value of the named executive officer’s accumulated benefit under all defined benefit and actuarial pension plans, including supplemental plans (but excluding tax-qualified defined contribution plans and nonqualified defined contribution plans), and (B) above-market or preferential earnings on compensation that is deferred on a basis that is not tax-qualified. |
Name | Year | (A) | (B) | Total | ||||
William R. Klesse | 2009 | $791,410 | $0 | $791,410 | ||||
2008 | 1,181,461 | $0 | 1,181,461 | |||||
2007 | 1,122,665 | 0 | 1,122,665 | |||||
Michael S. Ciskowski | 2009 | $209,862 | $0 | $209,862 | ||||
2008 | 636,887 | $0 | 636,887 | |||||
2007 | (62,988) | 0 | (62,988) | |||||
Richard J. Marcogliese | 2009 | $920,851 | $0 | $920,851 | ||||
2008 | 1,757,183 | $0 | 1,757,183 | |||||
2007 | 835,994 | 0 | 835,994 | |||||
Kimberly S. Bowers | 2009 | $90,175 | $0 | $90,175 | ||||
2008 | 185,353 | $0 | 185,353 | |||||
Joseph W. Gorder | 2009 | $92,026 | $0 | $92,026 | ||||
2008 | 207,099 | $0 | 207,099 | |||||
2007 | 70,659 | 0 | 70,659 |
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(5) | The amounts listed as “All Other Compensation” for the year ended December 31, 2009, are composed of the following items: |
Item of income (in dollars) | Klesse | Ciskowski | Marcogliese | Bowers | Gorder | |||||||||||||||
Valero contribution to Thrift Plan account | 14,700 | 14,700 | 14,700 | 14,700 | 14,700 | |||||||||||||||
Valero contribution to Excess Thrift Plan account | 75,300 | 30,300 | 42,600 | 14,300 | 12,900 | |||||||||||||||
Reimbursement of club membership dues * | — | 6,747 | 1,268 | 3,428 | 6,747 | |||||||||||||||
Imputed income for personal liability insurance | 1,554 | 1,554 | 1,554 | 1,554 | 1,554 | |||||||||||||||
Imputed income for tax return preparation | — | 850 | 850 | — | 850 | |||||||||||||||
Executive insurance premiums with respect to cash value life insurance | 91,058 | — | — | — | — | |||||||||||||||
Long-term disability premium imputed income | 4,549 | 4,549 | 4,549 | 4,549 | 4,549 | |||||||||||||||
Imputed income for insurance (life & survivor) over $50,000 | 7,564 | 1,808 | 9,510 | 774 | 2,636 | |||||||||||||||
Imputed income — gift award | — | — | 68 | — | — | |||||||||||||||
Total | 194,725 | 60,508 | 75,099 | 39,305 | 43,936 |
* | amounts stated for Mr. Marcogliese and Ms. Bowers represent reimbursement for only part of 2009; Mr. Marcogliese and Ms. Bowers elected to discontinue participation in our reimbursement program effective March 31, 2009, and September 15, 2009, respectively. |
(6) | Ms. Bowers was not a named executive officer for the year ended December 31, 2007. |
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FOR FISCAL YEAR ENDED DECEMBER 31, 2009
Exercise or | ||||||||||||||||||||||||||||
Estimated Future Payouts Under | Base Price | Closing | Grant Date Fair | |||||||||||||||||||||||||
Equity Incentive Plan Awards | of Option | Market Price | Value of Stock | |||||||||||||||||||||||||
Threshold | Target | Maximum | Awards | on Grant | and Option | |||||||||||||||||||||||
Name | Grant Date | (#) | (#) | (#) | ($/sh.) (1) | Date ($/sh.) | Awards ($)(2) | |||||||||||||||||||||
William R. Klesse | 10/15/09 | (3) | n/a | 252,650 | n/a | 4,905,200 | ||||||||||||||||||||||
10/15/09 | (4) | n/a | 611,775 | n/a | 19.415 | 20.15 | 4,306,896 | |||||||||||||||||||||
Michael S. Ciskowski | 10/15/09 | (3) | n/a | 97,080 | n/a | 1,884,808 | ||||||||||||||||||||||
10/15/09 | (4) | n/a | 235,075 | n/a | 19.415 | 20.15 | 1,654,928 | |||||||||||||||||||||
Richard J. Marcogliese | 10/15/09 | (3) | n/a | 97,080 | n/a | 1,884,808 | ||||||||||||||||||||||
10/15/09 | (4) | n/a | 235,075 | n/a | 19.415 | 20.15 | 1,654,928 | |||||||||||||||||||||
Kimberly S. Bowers | 10/15/09 | (3) | n/a | 35,440 | n/a | 688,068 | ||||||||||||||||||||||
10/15/09 | (4) | n/a | 85,825 | n/a | 19.415 | 20.15 | 604,208 | |||||||||||||||||||||
Joseph W. Gorder | 10/15/09 | (3) | n/a | 33,000 | n/a | 640,695 | ||||||||||||||||||||||
10/15/09 | (4) | n/a | 79,900 | n/a | 19.415 | 20.15 | 562,496 |
(1) | Valero’s 2005 Omnibus Incentive Plan provides that the exercise price for all options granted under the plan will be equal to the mean of the high and low reported sales price per share on the NYSE of our Common Stock on the date of grant. | |
(2) | The reported grant date fair value of stock and option awards was determined in compliance with FASB ASC Topic 718. | |
(3) | Represents a grant of shares of restricted stock. The shares vest (become nonforfeitable) in equal annual installments over a period of five years beginning in 2010. Fifty percent of the shares granted in 2009 are eligible for performance accelerated vesting (“Eligible Shares”). Therefore, notwithstanding the restricted shares’ regular five-year vesting schedule, to the extent any Eligible Shares have not yet vested per their regular vesting schedule, and to the extent the Eligible Shares have not been forfeited or otherwise canceled, all unvested Eligible Shares will vest automatically at the close of business on the last date of the period when the NYSE-reported closing price per share of Common Stock is $40.00 or higher for five consecutive trading days. Dividends on restricted stock are paid as and when dividends are declared and paid on our outstanding Common Stock. Restricted stock is more fully described in “Compensation Discussion and Analysis – Elements of Executive Compensation – Long-Term Incentive Awards.” |
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(4) | Represents a grant of options to purchase our Common Stock. The options vest (become nonforfeitable) in equal annual installments over a period of three years beginning in 2010, and will expire in 10 years from their date of grant. For financial reporting purposes, the fair value of stock options must be determined using an option-pricing model such as Black-Scholes or a binomial model taking into consideration the following: |
• | the exercise price of the option; | ||
• | the expected life of the option; | ||
• | the current price of the underlying stock; | ||
• | the expected volatility of the underlying stock; | ||
• | the expected dividends on the underlying stock; and | ||
• | the risk-free interest rate for the expected life of the option. |
The Black-Scholes option pricing model was used to determine grant date fair value. Options issued under our plans are not freely traded, and the exercise of such options is subject to substantial restrictions. The Black-Scholes model does not give effect to either risk of forfeiture or lack of transferability. The estimated values under the Black-Scholes model are based on assumptions as to variables such as interest rates, stock price volatility, and future dividend yield. The estimated values presented in this table were calculated using an expected average option life of 6.0 years, risk-free rate of return of 2.8%, average volatility rate of 47.8%, and a dividend yield of 3.1%, which is the expected annualized quarterly dividend rate in effect at the date of grant expressed as a percentage of the market value of our Common Stock on the date of grant. The actual value of stock options could be zero; realization of any positive value depends upon the actual future market performance of our Common Stock, the continued employment of the option holder throughout the vesting period, and the timing of the exercise of the option. Accordingly, the values set forth in this table may not be achieved. The actual value, if any, a person will realize upon exercise of an option will depend on the excess of the market value of our Common Stock over the exercise price on the date the option is exercised. The options are also described in “Compensation Discussion and Analysis – Elements of Executive Compensation – Long-Term Incentive Awards.” |
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AT DECEMBER 31, 2009
Stock Awards | ||||||||||||||||||||||||||||||||
Restricted Stock | Performance Shares | |||||||||||||||||||||||||||||||
Option Awards | Equity Incentive | Equity Incentive | ||||||||||||||||||||||||||||||
Plan Awards: | Plan Awards: | |||||||||||||||||||||||||||||||
Number of | Number of | Market Value | Number of | Market or | ||||||||||||||||||||||||||||
Securities | Securities | Number of | of Shares | Unearned Shares, | Payout Value of | |||||||||||||||||||||||||||
Underlying | Underlying | Shares or | or Units of | Units or | Unearned Shares, | |||||||||||||||||||||||||||
Unexercised | Unexercised | Option | Option | Units of Stock | Stock That | Other Rights | Units or Other | |||||||||||||||||||||||||
Options (#) | Options (#) | Exercise | Expira- | That Have | Have Not | That Have Not | Rights That Have | |||||||||||||||||||||||||
Name | Exercisable | Unexcercisable | Price ($)(1) | tion Date | Not Vested (#) | Vested ($)(2) | Vested (#)(2) | Not Vested ($)(2) | ||||||||||||||||||||||||
William R. Klesse | 108,000 | — | 9.825 | 10/29/13 | 3,120 | (3) | 52,260 | 9,263 | (10) | 155,155 | ||||||||||||||||||||||
102,392 | — | 11.5525 | 02/06/11 | 11,492 | (4) | 192,491 | 15,746 | (11) | 263,746 | |||||||||||||||||||||||
40,084 | — | 14.755 | 02/06/11 | 27,000 | (5) | 452,250 | 38,000 | (12) | 636,500 | |||||||||||||||||||||||
50,900 | — | 15.65 | 02/06/11 | 96,264 | (6) | 1,612,422 | ||||||||||||||||||||||||||
27,476 | — | 18.6125 | 02/06/11 | 252,650 | (7) | 4,231,888 | ||||||||||||||||||||||||||
26,164 | — | 18.0825 | 02/06/11 | |||||||||||||||||||||||||||||
68,000 | — | 21.355 | 10/21/14 | |||||||||||||||||||||||||||||
148,725 | 297,450 | (8) | 17.11 | 10/16/15 | ||||||||||||||||||||||||||||
— | 611,775 | (9) | 19.415 | 10/15/19 | ||||||||||||||||||||||||||||
Michael S. Ciskowski | 46,000 | — | 21.355 | 10/21/14 | 1,648 | (3) | 27,604 | 1,973 | (10) | 33,048 | ||||||||||||||||||||||
53,392 | 106,783 | (8) | 17.11 | 10/16/15 | 2,448 | (4) | 41,004 | 3,353 | (11) | 56,163 | ||||||||||||||||||||||
— | 235,075 | (9) | 19.415 | 10/15/19 | 5,400 | (5) | 90,450 | 7,500 | (12) | 125,625 | ||||||||||||||||||||||
34,560 | (6) | 578,880 | ||||||||||||||||||||||||||||||
97,080 | (7) | 1,626,090 | ||||||||||||||||||||||||||||||
Richard J. Marcogliese | 40,000 | — | 7.00 | 05/04/10 | 800 | (3) | 13,400 | 1,676 | (10) | 28,073 | ||||||||||||||||||||||
20,000 | — | 9.8625 | 06/16/11 | 2,184 | (4) | 36,582 | 2,993 | (11) | 50,133 | |||||||||||||||||||||||
60,000 | — | 8.43625 | 07/18/11 | 12,720 | (5) | 213,060 | 17,680 | (12) | 296,140 | |||||||||||||||||||||||
60,000 | — | 7.515 | 09/18/12 | 42,208 | (6) | 706,984 |
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Stock Awards | ||||||||||||||||||||||||||||||||
Restricted Stock | Performance Shares | |||||||||||||||||||||||||||||||
Option Awards | Equity Incentive | Equity Incentive | ||||||||||||||||||||||||||||||
Plan Awards: | Plan Awards: | |||||||||||||||||||||||||||||||
Number of | Number of | Market Value | Number of | Market or | ||||||||||||||||||||||||||||
Securities | Securities | Number of | of Shares | Unearned Shares, | Payout Value of | |||||||||||||||||||||||||||
Underlying | Underlying | Shares or | or Units of | Units or | Unearned Shares, | |||||||||||||||||||||||||||
Unexercised | Unexercised | Option | Option | Units of Stock | Stock That | Other Rights | Units or Other | |||||||||||||||||||||||||
Options (#) | Options (#) | Exercise | Expira- | That Have | Have Not | That Have Not | Rights That Have | |||||||||||||||||||||||||
Name | Exercisable | Unexcercisable | Price ($)(1) | tion Date | Not Vested (#) | Vested ($)(2) | Vested (#)(2) | Not Vested ($)(2) | ||||||||||||||||||||||||
Richard J. Marcogliese (cont.) | 32,000 | — | 9.825 | 10/29/13 | 97,080 | (7) | 1,626,090 | |||||||||||||||||||||||||
20,000 | — | 21.355 | 10/21/14 | |||||||||||||||||||||||||||||
65,209 | 130,416 | (8) | 17.11 | 10/16/15 | ||||||||||||||||||||||||||||
— | 235,075 | (9) | 19.415 | 10/15/19 | ||||||||||||||||||||||||||||
Kimberly S. Bowers | 9,600 | — | 9.825 | 10/29/13 | 292 | (3) | 4,891 | 346 | (10) | 5,796 | ||||||||||||||||||||||
9,400 | — | 21.355 | 10/21/14 | 824 | (4) | 13,802 | 1,126 | (11) | 18,861 | |||||||||||||||||||||||
20,125 | 40,250 | (8) | 17.11 | 10/16/15 | 2,160 | (5) | 36,180 | 3,000 | (12) | 50,250 | ||||||||||||||||||||||
— | 85,825 | (9) | 19.415 | 10/15/19 | 13,024 | (6) | 218,152 | |||||||||||||||||||||||||
35,440 | (7) | 593,620 | ||||||||||||||||||||||||||||||
Joseph W. Gorder | 14,400 | — | 9.825 | 10/29/13 | 640 | (3) | 10,720 | 1,273 | (10) | 21,323 | ||||||||||||||||||||||
14,000 | — | 21.355 | 10/21/14 | 1,842 | (4) | 30,854 | 2,523 | (11) | 42,260 | |||||||||||||||||||||||
18,859 | 37,716 | (8) | 17.11 | 10/16/15 | 3,936 | (5) | 65,928 | 5,470 | (12) | 91,623 | ||||||||||||||||||||||
— | 79,900 | (9) | 19.415 | 10/15/19 | 12,208 | (6) | 204,484 | |||||||||||||||||||||||||
33,000 | (7) | 552,750 |
(1) | Valero’s 2005 Omnibus Incentive Plan provides that the exercise price for all options granted under the plan will be equal to the mean of the high and low reported sales price per share on the NYSE of our Common Stock on the date of grant. | |
(2) | The assumed market values were determined using the closing market price of our Common Stock on December 31, 2009 ($16.75 per share). For a further discussion of the vesting of certain performance share awards (as noted in the following footnotes), see “Compensation Discussion and Analysis — Elements of Executive Compensation — Long-Term Incentive Awards — Performance Shares.” | |
(3) | The unvested portion of this award will vest on 10/20/10. | |
(4) | The unvested portion of this award will vest in equal installments on 10/19/10 and 10/19/11. |
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Footnotes to “Outstanding Equity Awards” table (cont.): | ||
(5) | The unvested portion of this award will vest in equal installments on 10/25/10, 10/25/11, and 10/25/12. | |
(6) | The unvested portion of this award will vest in equal installments on 10/16/10, 10/16/11, 10/16/12, and 10/16/13; 50% of the shares of restricted stock represented by this award are eligible for accelerated vesting as described in the footnotes to the “Grants of Plan Based Awards” table above (substituting “$60.00” for the “$40.00” stated therein). | |
(7) | The unvested portion of this award will vest in equal installments on 10/16/10, 10/16/11, 10/16/12, 10/16/13, and 10/16/14; 50% of the shares of restricted stock represented by this award are eligible for accelerated vesting as described in the footnotes to the “Grants of Plan Based Awards” table above. | |
(8) | The unvested portion of this award will vest in equal installments on 10/16/10, and 10/16/11. | |
(9) | The unvested portion of this award will vest in equal installments on 10/15/10, 10/15/11, and 10/15/12. | |
(10) | These performance shares vested on 01/25/10 at 50%, and shares of Common Stock equal to 50% of the number of vested performance shares were issued on that date. The value shown in the column, “Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested,” represents the market value of 100% of the performance shares at the closing price of Valero’s Common Stock on 12/31/09. | |
(11) | These performance shares vested on 01/25/10 at 50%, and shares of Common Stock equal to 50% of the number of vested performance shares were issued on that date. Per the terms of the performance share awards, 25% of the performance shares shown as unvested at 12/31/09 will be carried forward and will be eligible for vesting on the next normal vesting date of performance shares (expected to be in January 2011). The value shown in the column, “Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested,” represents the market value of 100% of the performance shares at the closing price of Valero’s Common Stock on 12/31/09. | |
(12) | Of these performance shares disclosed as unvested at 12/31/09, two-thirds of them vested on 01/25/10 at 50%, and shares of Common Stock equal to 50% of the number of vested performance shares were issued on that date. Per the terms of the performance share awards, 16.67% of the performance shares shown as unvested at 12/31/09 will be carried forward and will be eligible for vesting — together with the final one-third of performance shares that have not yet vested — on the next normal vesting date of performance shares (expected to be in January 2011). The value shown in the column, “Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested,” represents the market value of 100% of the performance shares at the closing price of Valero’s Common Stock on 12/31/09. |
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DURING THE FISCAL YEAR ENDED DECEMBER 31, 2009
Option Awards | Stock Awards (1) | |||||||||||||||
No. of Shares | Value | No. of Shares | Value | |||||||||||||
Acquired on | Realized on | Acquired on | Realized on | |||||||||||||
Name | Exercise (#)(2) | Exercise ($)(3) | Vesting (#)(2) | Vesting ($)(4) | ||||||||||||
William R. Klesse | 200,000 | 1,287,388 | 47,532 | 955,992 | ||||||||||||
Michael S. Ciskowski | 27,200 | 180,540 | 16,912 | 339,814 | ||||||||||||
Richard J. Marcogliese | — | — | 18,284 | 368,161 | ||||||||||||
Kimberly S. Bowers | — | — | 5,440 | 109,177 | ||||||||||||
Joseph W. Gorder | — | — | 7,125 | 143,497 |
(1) | Represents vested shares of restricted stock. | |
(2) | Represents the gross number of shares received by the named executive officer before deducting shares withheld from (i) an option’s exercise to pay the exercise price and/or tax obligation, or (ii) the vesting of restricted stock to pay the resulting tax obligation. | |
(3) | The reported value is determined by multiplying (i) the number of option shares, times (ii) the difference between the market price of the Common Stock on the date of exercise and the exercise price of the stock option. The value is stated before payment of applicable taxes. | |
(4) | The reported value is determined by multiplying number of vested shares by the market value of the shares on the vesting date. The value is stated before payment of applicable taxes. |
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Present | Payments | |||||||||||||
No. of Years | Value of | During | ||||||||||||
Credited | Accumulated | Last Fiscal | ||||||||||||
Name | Plan Name | Service (#) | Benefits ($) | Year ($) | ||||||||||
William R. Klesse (1) | Pension Plan | 22.92 | 898,172 | — | ||||||||||
Excess Pension Plan | 8.00 | 3,805,764 | — | |||||||||||
SERP | 8.00 | 848,587 | — | |||||||||||
Michael S. Ciskowski | Pension Plan | 24.25 | 531,819 | — | ||||||||||
Excess Pension Plan | 24.25 | 2,046,685 | — | |||||||||||
SERP | 24.25 | 482,926 | — | |||||||||||
Richard J. Marcogliese (2) | Pension Plan | 35.58 | 1,034,493 | — | ||||||||||
Excess Pension Plan | 35.58 | 5,121,267 | — | |||||||||||
SERP | 35.58 | 1,174,387 | — | |||||||||||
Kimberly S. Bowers | Pension Plan | 12.25 | 186,222 | — | ||||||||||
Excess Pension Plan | 12.25 | 344,087 | — | |||||||||||
SERP | 12.25 | 92,809 | — | |||||||||||
Joseph W. Gorder (3) | Pension Plan | 22.25 | 351,208 | — | ||||||||||
Excess Pension Plan | 7.67 | 378,240 | — | |||||||||||
SERP | 7.67 | 97,524 | — |
(1) | The 22.92 years of service stated for Mr. Klesse for the Pension Plan represent the sum of Mr. Klesse’s participation in (a) the Valero Pension Plan since the date of Valero’s acquisition of UDS in 2001 (eight years), and (b) the qualified pension plan of UDS prior to the date of Valero’s acquisition of UDS (14.92 years). (In addition, Mr. Klesse has approximately 18 years of service in a pension plan sponsored by an entity unaffiliated with Valero or UDS that was spun-off from a predecessor of UDS.) The eight years of service stated for Mr. Klesse for the Excess Pension Plan and SERP represent his participation in these plans since the date of Valero’s acquisition of UDS in 2001. | |
(2) | The years of service stated for Mr. Marcogliese represent his combined years of credited service in Valero’s plans (approximately 9.7 years) and the plan of Exxon Mobil Corporation (“ExxonMobil”), his previous employer (approximately 25.8 years). Valero’s plans “wrap around” the ExxonMobil plan such that Mr. Marcogliese’s ultimate pension benefit from Valero will be calculated generally by computing his benefit under the Valero plans using the combined years of service stated in the table above, and then subtracting the amounts accruing to Mr. Marcogliese under the ExxonMobil plan. | |
(3) | The 22.25 years of service stated for the Pension Plan represent the sum of Mr. Gorder’s participation in (a) the Valero Pension Plan since 2002 (7.67 years), (b) the qualified pension plan of UDS (11.5 years), and (c) a pension plan sponsored by an entity unaffiliated with Valero or UDS that was spun-off from a predecessor of UDS (3.08 years). In 2001, Mr. Gorder received a lump sum settlement relating to prior years of service. The Pension Plan amount stated above reflects the effect of offsetting Mr. Gorder’s accrued benefit under the Valero Pension Plan (using 22.25 years of credited service) by the value of his lump sum settlement in 2001. The 7.67 years of service stated for Mr. Gorder for the Excess Pension Plan and SERP represent his participation in these plans since the date of his commencement of employment with Valero. |
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FOR YEAR ENDED DECEMBER 31, 2009
Executive | Registrant | Aggregate | Aggregate | |||||||||||||||||||
Contribu- | Contribu- | Aggregate | Withdraw- | Balance | ||||||||||||||||||
tions in | tions in | Earnings in | als/Distri- | at Last | ||||||||||||||||||
Name | Plan Name | Last FY ($) | FY ($)(1) | Last FY ($) | butions ($) | FYE ($) | ||||||||||||||||
William R. | Deferred Compensation Plan | 220,551 | — | 322,720 | — | 1,346,355 | ||||||||||||||||
Klesse | Excess Thrift Plan | — | 75,300 | — | — | 263,910 | ||||||||||||||||
Diamond Shamrock Excess | ||||||||||||||||||||||
ESOP (2) | — | — | — | — | 389,849 | |||||||||||||||||
UDS Non-qualified 401(k) | ||||||||||||||||||||||
Plan (2) | — | — | (801,961 | ) | — | 1,152,556 | ||||||||||||||||
Diamond Shamrock Deferred | ||||||||||||||||||||||
Compensation Plan (2) | — | — | 32,228 | — | 535,954 | |||||||||||||||||
Michael S. | Deferred Compensation Plan | — | — | 29,167 | — | 143,128 | ||||||||||||||||
Ciskowski | Excess Thrift Plan | — | 30,300 | — | — | 158,880 | ||||||||||||||||
Richard J. | Deferred Compensation Plan | 126,400 | — | 3,891 | — | 449,201 | ||||||||||||||||
Marcogliese | Excess Thrift Plan | — | 42,600 | — | — | 158,169 | ||||||||||||||||
Kimberly S. | Deferred Compensation Plan | 79,189 | — | 46,394 | — | 237,086 | ||||||||||||||||
Bowers | Excess Thrift Plan | — | 14,300 | — | — | 33,471 | ||||||||||||||||
Joseph W. | Deferred Compensation Plan | — | — | — | — | — | ||||||||||||||||
Gorder | Excess Thrift Plan | — | 12,900 | — | — | 27,243 |
(1) | All of the amounts included in this column are included within the amounts reported as “All Other Compensation” for 2009 in the Summary Compensation Table. | |
(2) | Valero assumed the Diamond Shamrock Excess ESOP, UDS Non-qualified 401(k) Plan, and Diamond Shamrock Deferred Compensation Plan when we acquired UDS in 2001. These plans are frozen. Only Mr. Klesse has balances in these plans. |
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• | 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); | ||
• | approval by stockholders of the liquidation or dissolution of Valero. |
• | a diminution in the executive officer’s position, authority, duties and responsibilities; | ||
• | relocation of the executive; | ||
• | increased travel requirements; | ||
• | failure of Valero’s successor to assume and perform under the agreement. |
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“Cause” or Disability, or by the Executive for “Good Reason” (1) ($)
Klesse | Ciskowski | Marcogliese | Bowers | Gorder | ||||||||||||||||
Salary (2) | 4,500,000 | 2,250,000 | 2,865,000 | 988,000 | 1,380,000 | |||||||||||||||
Bonus (2) | 11,160,045 | 2,610,000 | 3,996,000 | 960,000 | 1,903,500 | |||||||||||||||
Pension, Excess Pension, and SERP | 6,340,509 | 2,402,561 | 6,658,481 | 417,528 | 1,007,915 | |||||||||||||||
Contributions under Defined Contribution Plans | 270,000 | 135,000 | 171,900 | 58,000 | 82,800 | |||||||||||||||
Health & Welfare Plan Benefits (3) | 51,858 | 28,200 | 45,774 | 30,124 | 45,480 | |||||||||||||||
Outplacement Services | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | |||||||||||||||
Accelerated Vesting of Stock Options (4) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Accelerated Vesting of Restricted Stock (5) | 6,541,311 | 2,364,028 | 2,596,116 | 866,645 | 864,736 | |||||||||||||||
Accelerated Vesting of Performance Shares (6) | 2,110,802 | 429,671 | 748,692 | 149,812 | 310,411 | |||||||||||||||
280G Tax Gross Up (7) | — | — | 6,203,006 | — | 1,703,245 |
Disability (8) and Termination by the Executive Other Than for “Good Reason” (9) ($)
Klesse | Ciskowski | Marcogliese | Bowers | Gorder | ||||||||||||||||
Accelerated Vesting of Stock Options (4) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Accelerated Vesting of Restricted Stock (5) | 6,541,311 | 2,364,028 | 2,596,116 | 866,645 | 864,736 | |||||||||||||||
Accelerated Vesting of Performance Shares (6) | 2,110,802 | 429,671 | 748,692 | 149,812 | 310,411 |
Klesse | Ciskowski | Marcogliese | Bowers | Gorder | ||||||||||||||||
Salary | (10 | ) | (10 | ) | (10 | ) | (10 | ) | (10 | ) | ||||||||||
Bonus | (10 | ) | (10 | ) | (10 | ) | (10 | ) | (10 | ) | ||||||||||
Pension, Excess Pension, and SERP | (10 | ) | (10 | ) | (10 | ) | (10 | ) | (10 | ) | ||||||||||
Contributions under Defined Contribution Plans | (10 | ) | (10 | ) | (10 | ) | (10 | ) | (10 | ) | ||||||||||
Health & Welfare Plan Benefits | (10 | ) | (10 | ) | (10 | ) | (10 | ) | (10 | ) | ||||||||||
Accelerated Vesting of Stock Options (4) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Accelerated Vesting of Restricted Stock (5) | 6,541,311 | 2,364,028 | 2,596,116 | 866,645 | 864,736 | |||||||||||||||
Accelerated Vesting of Performance Shares (6) | 2,110,802 | 429,671 | 748,692 | 149,812 | 310,411 |
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(1) | The agreements generally provide that if the company terminates the executive officer’s employment (other than for “cause,” death or “disability,” as defined in the agreement) or if the executive terminates his or her employment for “good reason,” as defined in the agreement, the executive is generally entitled to receive the following: (a) a lump sum cash payment equal to the sum of (i) accrued and unpaid compensation through the date of termination, including a pro-rata annual bonus (for this table, we assumed that the executive officers’ bonuses for the year of termination were paid at year end), (ii) three times the sum of the executive officer’s annual base salary (two times for Ms. Bowers) plus the executive officer’s highest annual bonus from the past three years, (iii) the amount of the actuarial present value of the pension benefits (qualified and nonqualified) the executive would have received for an additional three years of service (two years for Ms. Bowers), and (iv) the equivalent of three years (two years for Ms. Bowers) of employer contributions under Valero’s tax-qualified and supplemental defined contribution plans; (b) continued welfare benefits for three years (two years for Ms. Bowers); and (c) up to $25,000 of outplacement services. | |
(2) | Per SEC regulation, for purposes of this analysis we assumed each executive officer’s compensation at the time of each triggering event to be as stated below. The listed salary is the executive officer’s actual rate of pay as of December 31, 2009. The listed bonus amount represents the highest bonus earned by the executive in any of fiscal years 2007, 2008, or 2009 (the three years prior to the assumed change of control): |
Name | Salary | Bonus | ||||||
William R. Klesse | $ | 1,500,000 | $ | 3,720,015 | ||||
Michael S. Ciskowski | $ | 750,000 | $ | 870,000 | ||||
Richard J. Marcogliese | $ | 955,000 | $ | 1,332,000 | ||||
Kimberly S. Bowers | $ | 494,000 | $ | 480,000 | ||||
Joseph W. Gorder | $ | 460,000 | $ | 634,500 |
(3) | The executive is entitled to coverage under welfare benefit plans (e.g., health, dental, etc.) for three years (two years for Ms. Bowers) following the date of termination. | |
(4) | The amounts stated in the table represent the assumed cash value of the accelerated options derived by multiplying (x) the difference between $16.75 (the closing price of Common Stock on the NYSE on December 31, 2009), and the options’ exercise prices, times (y) the number of option shares. (As of December 31, 2009, all exercise prices for the executives’ unvested stock options were higher than the closing price of Common Stock.) | |
(5) | The amounts stated in the table represent the product of (x) the number of shares whose restrictions lapsed because of the change of control, and (y) $16.75 (the closing price of Common Stock on the NYSE on December 31, 2009). | |
(6) | The amounts stated in the table represent the product of (x) the number of performance shares whose vesting was accelerated because of the change of control, times 200%, times (y) $16.75 (the closing price of Common Stock on the NYSE on December 31, 2009). | |
(7) | If any payment or benefit is determined to be subject to an excise tax under Section 4999 of the Internal Revenue Code, the executive is entitled to receive an additional payment to adjust for the incremental tax cost of the payment or benefit. | |
(8) | If the executive officer’s employment is terminated by reason of death or disability, then his or her estate or beneficiaries will be entitled to receive a lump sum cash payment equal to any accrued and unpaid salary and vacation pay plus a bonus equal to the highest bonus earned by the executive in the prior three years (prorated to the date of termination; in this example, we assumed that the executive officers’ bonuses for the year of termination were paid at year end). In addition, in the case of disability, the executive would be entitled to any disability and related benefits at least as favorable as those provided by Valero under its plans and programs during the 120-days prior to the executive officer’s termination of employment. |
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(9) | If the executive voluntarily terminates employment other than for “good reason,” then he or she will be entitled to a lump sum cash payment equal to any accrued and unpaid salary and vacation pay plus a bonus equal to the highest bonus earned by the executive in the prior three years (prorated to the date of termination; in this example, we assumed that the executive officers’ bonuses for the year of termination were paid at year end). | |
(10) | The agreements provide for a three-year term of employment following a change of control. The agreements generally provide that the executive will continue to enjoy compensation and benefits on terms at least as favorable as in effect prior to the change of control. In addition, all outstanding equity incentive awards will automatically vest on the date of the change of control. |
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FOR THE YEAR ENDED DECEMBER 31, 2009
Fees Earned | Stock | Option | All Other | |||||||||||||||||
or Paid | Awards | Awards | Compensa- | |||||||||||||||||
Name | in Cash ($) | ($)(1) | ($)(1) | tion ($)(2) | Total ($) | |||||||||||||||
W.E. “Bill” Bradford | 130,000 | 160,010 | — | — | 290,010 | |||||||||||||||
Ronald K. Calgaard | 113,000 | 160,010 | — | — | 273,010 | |||||||||||||||
Jerry D. Choate | 120,000 | 160,010 | — | — | 280,010 | |||||||||||||||
Irl F. Engelhardt | 115,000 | 160,010 | — | — | 275,010 | |||||||||||||||
Ruben M. Escobedo | 131,000 | 160,010 | — | — | 291,010 | |||||||||||||||
William R. Klesse | — | — | — | — | (3 | ) | ||||||||||||||
Bob Marbut | 128,000 | 160,010 | — | — | 288,010 | |||||||||||||||
Donald L. Nickles | 105,000 | 160,010 | — | — | 265,010 | |||||||||||||||
Robert A. Profusek | 110,000 | 160,010 | — | — | 270,010 | |||||||||||||||
Susan Kaufman Purcell | 107,000 | 160,010 | — | 14,925 | 281,935 | |||||||||||||||
Stephen M. Waters | 105,000 | 160,010 | — | — | 265,010 |
(1) | In accordance with SEC Release No. 33-9089 (December 16, 2009), the amounts shown represent the grant date fair value of awards granted in 2009, computed in accordance with FASB ASC Topic 718. In 2009, each of our non-employee directors received a grant of restricted Common Stock (as described below). Valero did not grant any stock options to any non-employee director in 2009. |
Restricted | ||||||||
Stock | ||||||||
Name | Grant Date | (# of shares) | ||||||
W.E. “Bill” Bradford | 04/30/09 | 7,937 | ||||||
Ronald K. Calgaard | 04/30/09 | 7,937 | ||||||
Jerry D. Choate | 04/30/09 | 7,937 | ||||||
Irl F. Engelhardt | 04/30/09 | 7,937 | ||||||
Ruben M. Escobedo | 04/30/09 | 7,937 | ||||||
Bob Marbut | 04/30/09 | 7,937 | ||||||
Donald L. Nickles | 04/30/09 | 7,937 | ||||||
Robert A. Profusek | 04/30/09 | 7,937 | ||||||
Susan Kaufman Purcell | 04/30/09 | 7,937 | ||||||
Stephen M. Waters | 09/23/08 | 7,937 |
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The following table presents for each non-employee director as of December 31, 2009 (i) the shares of Common Stock that were subject to outstanding stock options (vested and unvested), and (ii) the number of unvested restricted shares of Common Stock held. Mr. Klesse’s balances are stated in the “Outstanding Equity Awards” table in this proxy statement. |
Outstanding | Unvested | |||||||
Name | Stock Options | Restricted Stock | ||||||
W.E. “Bill” Bradford | 49,000 | 8,308 | ||||||
Ronald K. Calgaard | 13,000 | 8,308 | ||||||
Jerry D. Choate | 33,000 | 8,308 | ||||||
Irl F. Engelhardt | 5,000 | 8,308 | ||||||
Ruben M. Escobedo | — | 8,308 | ||||||
Bob Marbut | 71,120 | 8,308 | ||||||
Donald L. Nickles | 11,000 | 8,308 | ||||||
Robert A. Profusek | 11,000 | 8,308 | ||||||
Susan Kaufman Purcell | 29,000 | 8,308 | ||||||
Stephen M. Waters | 10,000 | 10,097 |
(2) | The amount stated for Dr. Purcell represents payment made under Valero’s former retirement plan for non-employee directors. | |
(3) | In 2009, William R. Klesse served as Valero’s Chairman of the Board, Chief Executive Officer, and President. In 2009, he did not receive any compensation for his service as a member of the Board. Mr. Klesse’s compensation for service as Chief Executive Officer and President is presented earlier in this proxy statement in the compensation tables for our named executive officers. |
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RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
• | Audit Fees.The aggregate fees for fiscal year 2009 for professional services rendered by KPMG for the audit of the annual financial statements for the year ended December 31, 2009 included in Valero’s Form 10-K, review of Valero’s interim financial statements included in Valero’s 2009 Forms 10-Q, the audit of the effectiveness of Valero’s internal control over financial reporting, and services that are normally provided by the principal auditor (e.g.,comfort letters, statutory audits, attest services, consents and assistance with and review of documents filed with the SEC) were $5,812,059. | ||
• | Audit-Related Fees.The aggregate fees for fiscal year 2009 for assurance and related services rendered by KPMG that are reasonably related to the performance of the audit or review of Valero’s financial statements and not reported under the preceding caption were $216,500. These fees related to the audit of Valero’s benefit plans. |
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• | Tax Fees.The aggregate fees for fiscal year 2009 for professional services rendered by KPMG for tax compliance, tax advice and tax planning were $70,045. These fees were for consultation services on a state sales tax matter, cost segregation services for a certain property, and attestation services related to a federal grant. | ||
• | All Other Fees.The aggregate fees for fiscal year 2009 for services provided by KPMG, other than the services reported under the preceding captions, were $0. |
• | Audit Fees.The aggregate fees for fiscal year 2008 for professional services rendered by KPMG for the audit of the annual financial statements for the year ended December 31, 2008 included in Valero’s Form 10-K, review of Valero’s interim financial statements included in Valero’s 2008 Forms 10-Q, the audit of the effectiveness of Valero’s internal control over financial reporting, and services that are normally provided by the principal auditor (e.g.,comfort letters, statutory audits, attest services, consents and assistance with and review of documents filed with the SEC) were $7,029,541. | ||
• | Audit-Related Fees.The aggregate fees for fiscal year 2008 for assurance and related services rendered by KPMG that are reasonably related to the performance of the audit or review of Valero’s financial statements and not reported under the preceding caption were $254,800. These fees related to the audit of Valero’s benefit plans. | ||
• | Tax Fees.The aggregate fees for fiscal year 2008 for professional services rendered by KPMG for tax compliance, tax advice and tax planning were $0. | ||
• | All Other Fees.The aggregate fees for fiscal year 2008 for services provided by KPMG, other than the services reported under the preceding captions, were $0. |
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Ruben M. Escobedo, Chairman
Ronald K. Calgaard
Irl F. Engelhardt
Susan Kaufman Purcell
Stephen M. Waters
* | The material in this Report of the Audit Committee is not “soliciting material,” is not deemed filed with the SEC, and is not to be incorporated by reference in any of Valero’s filings under the Securities Act or the Exchange Act, respectively, whether made before or after the date of this proxy statement and irrespective of any general incorporation language therein. |
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RE-APPROVAL OF THE 2005 OMNIBUS STOCK INCENTIVE PLAN
(Item 3 on the Proxy Card)
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• | The option exercise price of stock options cannot be less than 100% of the fair market value of a share at the time the option is granted. | ||
• | The grant price of a stock appreciation right (“SAR”) cannot be less than 100% of the fair market value of a share at the time the SAR is granted. | ||
• | Repricing of stock options and SARs is not permitted. | ||
• | Not more than 4,000,000 million shares may be in the form of time-lapse restricted stock. | ||
• | Restricted stock or restricted stock unit awards that are not subject to a performance award will be subject to a minimum restriction period of three years from the date of grant. | ||
• | No plan participant may receive during any calendar year awards that are to be settled in shares covering an aggregate of more than 1,000,000 shares. | ||
• | No plan participant may receive during any calendar year awards that are to be settled in cash covering an aggregate of more than $20,000,000. | ||
• | The term of awards will not be longer than 10 years. | ||
• | The Plan does not contain an evergreen provision. |
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(Item 5 on the Proxy Card)
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(Item 6 on the Proxy Card)
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(Item 7 on the Proxy Card)
1. | Policies and procedures for political contributions and expenditures (both direct and indirect) made with corporate funds. | ||
2. | Monetary and non-monetary political contributions and expenditures not deductible under section 162 (e)(1)(B) of the Internal Revenue Code, including but not limited to contributions to or expenditures on behalf of political candidates, political parties, political committees and other political entities organized and operating under 26 USC Sec. 527 of the Internal Revenue Code and any portion of any dues or similar payments made to any tax exempt organization that is used for an expenditure or contribution that if made directly by the corporation would not be deductible under section 162 (e)(1)(B) of the Internal Revenue Code. The report shall include the following: |
a. | An accounting of Valero’s funds that are used for political contributions or expenditures as described above; | ||
b. | Identification of the person or persons in Valero who participated in making the decisions to make the political contribution or expenditure; and | ||
c. | The internal guidelines or policies, if any, governing Valero’s political contributions and expenditures. |
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(Item 8 on the Proxy Card)
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Number of | Number of | |||||||||||
Securities | Weighted- | Securities | ||||||||||
to be Issued | Average | Remaining Avail- | ||||||||||
Upon Exercise | Exercise Price | able for Future | ||||||||||
of Outstanding | of Outstanding | Issuance Under | ||||||||||
Options, Warrants | Options, Warrants | Equity Compen- | ||||||||||
and Rights (#) | and Rights ($) | sation Plans (1) | ||||||||||
Approved by stockholders: | ||||||||||||
2005 Omnibus Stock Incentive Plan | 5,616,224 | 19.80 | 12,002,043 | |||||||||
2001 Executive Stock Incentive Plan | 2,021,620 | 10.82 | — | |||||||||
Non-employee director stock option plan | 253,000 | 18.36 | — | |||||||||
Non-employee director restricted stock plan | — | — | 139,247 | |||||||||
UDS non-qualified stock option plans (2) | 760,814 | 10.36 | — | |||||||||
Premcor non-qualified stock option plans (2) | 767,315 | 24.79 | — | |||||||||
Not approved by stockholders: | ||||||||||||
1997 non-qualified stock option plans | 3,732,309 | 7.70 | — | |||||||||
2003 All-Employee Stock Incentive Plan (3) | 13,474,594 | 32.58 | 148,229 | |||||||||
Total | 26,625,876 | 23.75 | 12,289,519 | |||||||||
(1) | Securities available for future issuance under these plans can be issued in various forms, including without limitation restricted stock and stock options. | |
(2) | These plans were assumed by Valero, as applicable (i) on December 31, 2001, upon Valero’s acquisition of UDS, and (ii) on September 1, 2005, upon Valero’s acquisition of Premcor Inc. | |
(3) | Officers and directors of Valero are not eligible to receive grants under this plan. |
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Restated Certificate of Incorporation | Finance Committee Charter | |
Bylaws | Nominating/Governance Committee Charter | |
Code of Business Conduct and Ethics | Say on Pay Policy | |
Code of Ethics for Senior Financial Officers | Compensation Consultant Disclosures Policy | |
Corporate Governance Guidelines | Policy on Executive Compensation in Restatement Situations | |
Audit Committee Charter | Political Contributions Disclosures | |
Compensation Committee Charter | ||
Executive Committee Charter |
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Stockholder Communications
250 Royall Street
Canton, Massachusetts 02021
(888) 470-2938
(312) 360-5261
www.computershare.com
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2005 OMNIBUS STOCK INCENTIVE PLAN
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(a) | the stockholders of the Company approve any agreement or transaction pursuant to which: (i) the Company will merge or consolidate with any other Person (other than a wholly owned subsidiary of the Company) and will not be the surviving entity (or in which the Company survives only as the subsidiary of another entity); (ii) the Company will sell all or substantially all of its assets to any other Person (other than a wholly owned subsidiary of the Company); or (iii) the Company will be liquidated or dissolved; or | ||
(b) | any “person” or “group” (as these terms are used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934) other than the Company, any subsidiary of the Company, any employee benefit plan of the Company or its subsidiaries, or any entity holding Shares for or pursuant to the terms of such employee benefit plans, is or becomes an “Acquiring Person” as defined in the Rights Agreement (or any successor rights agreement) (or, if no Rights Agreement is then in effect, such person or group acquires or holds such number of shares as, under the terms and conditions of the most recent such rights agreement to be in force and effect, would have caused such person or group to be an “Acquiring Person” thereunder); or | ||
(c) | any “person” or “group” shall commence a tender offer or exchange offer for 15% or more of the Shares then outstanding, or for any number or amount of Shares which, if the tender or exchange offer were to be fully subscribed and all Shares for which the tender or exchange offer is made were to be purchased or exchanged pursuant to the offer, would result in the acquiring person or group directly or indirectly beneficially owning 50% or more of the Shares then outstanding; or | ||
(d) | individuals who, as of any date, constitute the Board (the “Incumbent Board”) thereafter cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person or group other than the Board; or | ||
(e) | the Distribution Date (as defined in the Rights Agreement) occurs; or | ||
(f) | any other event occurs that is or has been determined by the Board or the Committee to constitute a “Change of Control” hereunder. |
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1 | Reflects the 2-for-1 stock split of Valero’s common stock on December 15, 2005. |
Appendix A — Page 6
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(a) | The grant of an Award shall be authorized by the Committee and may be evidenced by an Award Agreement setting forth the Incentive or Incentives being granted, the total number of shares of Common Stock subject to the Incentive(s) or the value of the Performance Award (if applicable), the Option Price (if applicable), the Award Period, the Date of Grant, and such other terms, provisions, limitations, and performance objectives, as are approved by the Committee, but not inconsistent with the Plan. The Company may execute an Award Agreement with a Participant after the Committee approves the issuance of an Award. Any Award granted pursuant to this Plan must be granted within 10 years of the date of adoption of this Plan. The grant of an Award to a Participant shall not be deemed either to entitle the Participant to, or to disqualify the Participant from, receipt of any other Award under the Plan. | ||
(b) | If the Committee establishes a purchase price for an Award, the Participant must accept such Award within a period of 30 days (or such shorter period as the Committee may specify) after the Date of Grant by executing the applicable Award Agreement and paying such purchase price. |
6.2 | Limitations on Awards. |
(a) | The Plan is subject to the following limitations: |
(i) | The Option Price of Stock Options cannot be less than 100% of the Fair Market Value of a share of Common Stock on the Date of Grant of the Stock Option. | ||
(ii) | The SAR Price of a SAR cannot be less than 100% of the Fair Market Value of a share of Common Stock on the Date of Grant of the SAR. | ||
(iii) | Repricing of Stock Options and SARs or other downward adjustments in the Option Price or SAR Price of previously granted Stock Options or SARs, respectively, are prohibited, except in connection with certain capital adjustments as described in Article 14 or 15. | ||
(iv) | No more than 40% (4,000,000), of the available shares pursuant to Awards under the Plan may be in the form of time-lapse Restricted Stock. | ||
(v) | No Participant may receive during any calendar year Awards that are to be settled in Shares of Common Stock covering an aggregate of more than 1,000,000 Shares. | ||
(vi) | No Participant may receive during any calendar year Awards that are to be settled in cash covering an aggregate of more than $20,000,000. | ||
(vii) | The term of Awards may not exceed 10 years. |
(b) | Limited SARs granted in tandem with Stock Options or other Awards shall not be counted towards the maximum individual grant limitation set forth in this Section, as the Limited SAR will expire based on conditions described in Section 6.5(b), below. |
Appendix A — Page 7
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(a) | Legend on Shares. Each Participant who is awarded Restricted Stock shall be issued the number of shares of Common Stock specified in the Award Agreement for such Restricted Stock, and such shares shall be recorded in the share transfer records of the Company and ownership of such shares shall be evidenced by a certificate or book entry notation in the share transfer records of the Company. Such shares shall be registered in the name of the Participant, and shall bear or be subject to an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock, substantially as provided in Section 19.18 of the Plan. The Committee may require that the stock certificates or other evidence of ownership of the shares of Restricted Stock be held in custody by the Company until the restrictions thereon shall have lapsed, and that the Participant deliver to the Committee a stock power or stock powers, endorsed in blank, relating to the shares of Restricted Stock. | ||
(b) | Restrictions and Conditions. Shares of Restricted Stock and Restricted Stock Units shall be subject to the following restrictions and conditions: |
(i) | Subject to the other provisions of this Plan and the terms of the particular Award Agreements, during such period as may be determined by the Committee commencing on the Date of Grant (the “Restriction Period”), the Participant shall not be permitted to sell, transfer, pledge or assign shares of Restricted Stock and/or Restricted Stock Units. Any Restricted Stock or Restricted Stock Units not granted pursuant to a Performance Award, shall have a minimum Restriction Period of three years from the Date of Grant, provided that the Committee may provide for earlier vesting following a Change in Control or upon an Employee’s termination of employment by reason of death, disability or Retirement. Except for these limitations, the Committee may in its sole discretion, remove any or all of the restrictions on such Restricted Stock and/or Restricted Stock Units whenever it may determine that, by reason of changes in applicable laws or other changes in circumstances arising after the date of the Award, such action is appropriate. | ||
(ii) | Except as provided in subparagraph (i) above and subject to the terms of a Participant’s Award Agreement, the Participant shall have, with respect to his or her Restricted Stock, all of the rights of a stockholder of the Company, including the right to vote the shares, and the right to receive any dividends thereon. Certificates or evidence of ownership of shares of Common Stock free of restriction under this Plan shall be delivered to the Participant promptly after, and only after, the Restriction Period shall expire without forfeiture in respect of such shares of Common Stock. Certificates for the shares of Common Stock forfeited under the provisions of the Plan shall be promptly returned to the Company by the forfeiting Participant. Each Participant, by his or her acceptance of Restricted Stock, shall irrevocably grant to the Company a power of attorney to transfer any shares so forfeited to the Company and agrees to execute any documents requested by the Company in connection with such forfeiture and transfer. |
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(iii) | The Restriction Period of Restricted Stock and/or Restricted Stock Units shall commence on the Date of Grant and, subject to Article 15 of the Plan, unless otherwise established by the Committee in the Award Agreement setting forth the terms of the Restricted Stock and/or Restricted Stock Units, shall expire upon satisfaction of the conditions set forth in the Award Agreement; such conditions may provide for vesting based on (i) length of continuous service, (ii) achievement of specific business objectives, (iii) increases in specified indices, (iv) attainment of specified growth rates, or (v) other comparable Performance Measurements, as may be determined by the Committee in its sole discretion. |
(c) | Forfeiture. Except as otherwise determined by the Committee or the Chief Executive Officer, the provisions of Article 9 shall apply with respect to Restricted Stock granted hereunder. |
(a) | An SAR shall entitle the Participant at his election to surrender to the Company the SAR, or portion thereof, as the Participant shall choose, and to receive from the Company in exchange therefore cash in an amount equal to the excess (if any) of the Fair Market Value (as of the date of the exercise of the SAR) per share over the SAR Price per share specified in such SAR, multiplied by the total number of shares of the SAR being surrendered. In the discretion of the Committee, the Company may satisfy its obligation upon exercise of an SAR by the distribution of that number of shares of Common Stock having an aggregate Fair Market Value (as of the date of the exercise of the SAR) equal to the amount of cash otherwise payable to the Participant, with a cash settlement to be made for any fractional share interests, or the Company may settle such obligation in part with shares of Common Stock and in part with cash. | ||
(b) | A Limited SAR shall allow the Participant to receive from the Company cash in an amount equal to the excess (if any) of the Fair Market Value (as of the date of the exercise of the Limited SAR) per share over the Limited SAR Price per share specified in such Limited SAR, multiplied by the total number of shares of the Limited SAR being surrendered. The Company will satisfy its obligation with a cash settlement to be made for any fractional Limited SAR. Limited SARs will expire without consideration upon the vesting, exercise, or settlement, in shares and/or in cash, of Awards for which the Limited SAR was granted in tandem. |
(a) | Grant of Performance Awards.The Committee may issue Performance Awards in the form of Performance Units, Performance Shares, Performance Cash, or Dividend Equivalents to Participants subject to the Performance Goals and Performance Period as it shall determine. The terms and conditions of each Performance Award will be set forth in the related Award Agreement. The Committee shall have complete discretion in determining the number and/or value of Performance Awards granted to each Participant. Any Performance Units or Performance Shares granted under the Plan shall have a minimum Restriction Period of one year from the Date of Grant, provided that the Committee may provide for earlier vesting following a Change in Control or upon an Employee’s termination of employment by reason of death, disability or Retirement. Participants receiving Performance Awards are not required to pay the Company therefor (except for applicable tax withholding) other than the rendering of services. |
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(b) | Value of Performance Awards.The Committee shall set Performance Goals in its discretion for each Participant who is granted a Performance Award. Such Performance Goals may be particular to a Participant, may relate to the performance of the Subsidiary which employs him or her, may be based on the division which employs him or her, may be based on the performance of the Company generally, or a combination of the foregoing. The Performance Goals may be based on achievement of balance sheet or income statement objectives, or any other objectives established by the Committee. The Performance Goals may be absolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated. The extent to which such Performance Goals are met will determine the number and/or value of the Performance Award to the Participant. | ||
(c) | Form of Payment.Payment of the amount to which a Participant shall be entitled upon the settlement of a Performance Award shall be made in a lump sum or installments in cash, shares of Common Stock, or a combination thereof as determined by the Committee. |
(a) | Grant of Other Stock Based Awards. The Committee may issue to Participants, either alone or in addition to other Awards made under the Plan, Stock Unit Awards which may be in the form of Common Stock or other securities. The value of each such Award shall be based, in whole or in part, on the value of the underlying Common Stock or other securities. The Committee, in its sole and complete discretion, may determine that an Award, either in the form of a Stock Unit Award under this Section or as an Award granted pursuant to the other provisions of this Article, may provide to the Participant (i) dividends or Dividend Equivalents (payable on a current or deferred basis) and (ii) cash payments in lieu of or in addition to an Award. The Committee shall determine the terms, restrictions, conditions, vesting requirements, and payment rules (all of which are sometimes hereinafter collectively referred to as “rules”) of the Award and shall set forth those rules in the related Award Agreement. | ||
(b) | Rules. The Committee, in its sole and complete discretion, may grant a Stock Unit Award subject to the following rules: |
(i) | All rights with respect to such Stock Unit Awards granted to a Participant under the Plan shall be exercisable during his or her lifetime only by such Participant or his or her guardian or legal representative. | ||
(ii) | Stock Unit Awards may require the payment of cash consideration by the Participant in receipt of the Award or provide that the Award, and any Common Stock or other securities issued in conjunction with the Award be delivered without the payment of cash consideration. | ||
(iii) | The Committee, in its sole and complete discretion, may establish certain Performance Criteria that may relate in whole or in part to receipt of the Stock Unit Awards. | ||
(iv) | Stock Unit Awards may be subject to a deferred payment schedule and/or vesting over a specified employment period. | ||
(v) | The Committee as a result of certain circumstances may waive or otherwise remove, in whole or in part, any restriction or condition imposed on a Stock Unit Award at the time of Award. |
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(a) | Vesting andExercise. Except as otherwise provided in the Plan, or otherwise determined by the Committee and included in the applicable Award Agreement, a Stock Option, SAR or other Award having an exercise provision (each, an “Exercisable Award”) vests in and may be exercised by a Participant only while the Participant is and has continually been since the date of the grant of the Exercisable Award an Employee or Non-Employee Director. | ||
(b) | Voluntary Termination by Participant (Exercisable Awards). If a Participant’s employment or service as a Non-Employee Director with the Company is voluntarily terminated by the Participant (other than through retirement, death or disability; see Section 9.3 below), then: (i) that portion of any Exercisable Award that has not vested on or prior to such date of termination shall automatically lapse and be forfeited, and (ii) all vested but unexercised Exercisable Awards previously granted to that Participant under the Plan shall automatically lapse and be forfeited at the close of business on the 30th day following that date of such Participant’s termination, unless an Exercisable Award expires earlier according to its original terms. | ||
(c) | Involuntary Termination for Cause (Exercisable Awards). If a Participant’s employment or service as a Non-Employee director is involuntarily terminated by the Company for Cause: (i) that portion of any Exercisable Award that has not vested on or prior to such date of termination shall automatically lapse and be forfeited, and (ii) all vested but unexercised Exercisable Awards previously granted to that Participant under the Plan shall automatically lapse and be forfeited at the close of business on the 30th day following that date of such Participant’s termination, unless an Exercisable Award expires earlier according to its original terms. |
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(d) | Involuntary Termination Other Than For Cause (Exercisable Awards).If a Participant’s employment or service as a Non-Employee Director is involuntarily terminated by the Company other than for Cause: (i) that portion of any Exercisable Award that has not vested on or prior to such date of termination shall automatically lapse and be forfeited, and (ii) all vested but unexercised Exercisable Awards previously granted to that Participant under the Plan shall automatically lapse and be forfeited at the close of business on the last business day of the twelfth month following the date of the Participant’s termination, unless an Exercisable Award expires earlier according to its original terms. |
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APPLICABLE TO COVERED PARTICIPANTS
(a) | Increased revenue; | ||
(b) | Net income measures (including but not limited to income after capital costs and income before or after taxes); | ||
(c) | Stock price measures (including but not limited to growth measures and total stockholder return); | ||
(d) | Market share; | ||
(e) | Earnings per share (actual or targeted growth); | ||
(f) | Earnings before interest, taxes, depreciation, and amortization (“EBITDA”); | ||
(g) | Economic value added (“EVA®”); | ||
(h) | Cash flow measures (including but not limited to net cash flow and net cash flow before financing activities); | ||
(i) | Return measures (including but not limited to return on equity, return on average assets, return on capital, risk-adjusted return on capital, return on investors’ capital and return on average equity); | ||
(j) | Operating measures (including operating income, funds from operations, cash from operations, after-tax operating income, sales volumes, production volumes, and production efficiency); | ||
(k) | Expense measures (including but not limited to cost-per-barrel, overhead cost and general and administrative expense); | ||
(l) | Margins; | ||
(m) | Stockholder value; | ||
(n) | Total stockholder return; | ||
(o) | Proceeds from dispositions; | ||
(p) | Production volumes; | ||
(q) | Refinery runs or refinery utilization; | ||
(r) | Total market value; and | ||
(s) | Corporate values measures (including ethics compliance, environmental, and safety). |
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(a) | An appropriate adjustment shall be made in the maximum number of shares of Common Stock then subject to being awarded under the Plan and in the maximum number of shares of Common Stock that may be awarded to a Participant to the end that the same proportion of the Company’s issued and outstanding shares of Common Stock shall continue to be subject to being so awarded. | ||
(b) | Appropriate adjustments shall be made in the number of shares of Common Stock and the Option Price thereof then subject to purchase pursuant to each such Stock Option previously granted and unexercised, to the end that the same proportion of the Company’s issued and outstanding shares of Common Stock in each such instance shall remain subject to purchase at the same aggregate Option Price. | ||
(c) | Appropriate adjustments shall be made in the number of SARs and the SAR Price thereof then subject to exercise pursuant to each such SAR previously granted and unexercised, to the end that the same proportion of the Company’s issued and outstanding shares of Common Stock in each instance shall remain subject to exercise at the same aggregate SAR Price. | ||
(d) | Appropriate adjustments shall be made in the number of outstanding shares of Restricted Stock with respect to which restrictions have not yet lapsed prior to any such change. | ||
(e) | Appropriate adjustments shall be made with respect to shares of Common Stock applicable to any other Incentives previously awarded under the Plan as the Committee, in its sole discretion, deems appropriate, consistent with the event. |
CHANGE OF CONTROL
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(a) | In the event of a Change of Control, notwithstanding any other provision in this Plan to the contrary all unmatured installments of Incentives outstanding and not otherwise canceled in accordance with Section 15.3 above, shall thereupon automatically be accelerated and exercisable in full and all Restriction Periods applicable to Awards of Restricted Stock and/or Restricted Stock Units shall automatically expire. The determination of the Committee that any of the foregoing conditions has been met shall be binding and conclusive on all parties. |
(b) | In the event of a Change of Control, notwithstanding any other provision in this Plan and not otherwise canceled in accordance with Section 15.3 above, previously granted and unpaid Performance Cash and/or Dividend Equivalents or Performance Cash and/or Dividend Equivalents granted in the year during which the Change of Control occurs will be paid no later than 60 days from the date of the occurrence of such Change of Control. The amount of the Performance Cash and/or Dividend Equivalent payable shall be: |
(i) | One-half of the maximum value of Performance Cash and/or Dividend Equivalent payable pursuant to the terms and provisions of the Award (reduced by the application of the Committee’s negative discretion, if applicable) to such person if the Change of Control occurs before 50 percent of the Performance Period has elapsed; or |
(ii) | The full maximum value of the Performance Cash and/or Dividend Equivalent payable pursuant to the terms and provisions of the Award (reduced by the application of the Committee’s negative discretion, if applicable) to such person if the Change of Control occurs on or after 50 percent of the Performance Period has elapsed. |
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(a) | provide for the acceleration of any time periods relating to the vesting, exercise or realization of the Incentive so that the Incentive may be exercised or realized in full on or before a date fixed by the Committee; | ||
(b) | provide for the purchase of any Incentive, upon the Participant’s request, for an amount of cash equal to the amount that could have been attained upon the exercise of the Incentive or realization of the Participant’s rights in the Incentive had the Incentive been currently exercisable or payable; | ||
(c) | adjust any outstanding Incentive as the Committee deems appropriate to reflect the Change of Control or Dissolution Event; or | ||
(d) | cause any outstanding Incentive to be assumed, or new rights substituted therefor, by the acquiring or surviving corporation after a Change of Control or successor following a Dissolution Event. | ||
(e) | The Committee may in its discretion include other provisions and limitations in any Award Agreement as it may deem equitable and in the best interests of the Company. |
INCENTIVES GRANTED BY OTHER CORPORATIONS
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“Transfer of this stock is restricted in accordance with conditions printed on the reverse of this certificate.” |
“The shares of stock evidenced hereby are subject to and transferable only in accordance with the 2005 Valero Energy Corporation Omnibus Stock Incentive Plan, a copy of which is on file at the principal office of the Company in San Antonio, Texas. No transfer or pledge of the shares evidenced hereby may be made except in accordance with and subject to the provisions of said Plan. By acceptance of shares represented hereby, any holder, transferee or pledge beneficiary hereof agrees to be bound by all of the provisions of said Plan.” |
“Shares of stock represented hereby have been acquired by the holder for investment and not for resale, transfer or distribution, have been issued pursuant to exemptions from the registration requirements of applicable state and federal securities laws, and may not be offered for sale, sold or transferred other than pursuant to effective registration under such laws, or in transactions otherwise in compliance with such laws, and upon evidence satisfactory to the Company of compliance with such laws, as to which the Company may rely upon an opinion of counsel satisfactory to the Company.” |
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | VALER1 | KEEP THIS PORTION FOR YOUR RECORDS | ||
DETACH AND RETURN THIS PORTION ONLY | ||||
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
Vote on Directors | |||||||||
The Board of Directors recommends that you vote “FOR” all nominees. | |||||||||
1. | Elect three Class I directors to serve until the 2013 Annual Meeting of Stockholders or until their respective successors are elected and have been qualified: |
Nominees: | For | Against | Abstain | |||||
1a. Ruben M. Escobedo | o | o | o | |||||
1b. Bob Marbut | o | o | o | |||||
1c. Robert A. Profusek | o | o | o | |||||
Vote on Proposals | |
The Board of Directors recommends that you vote “FOR” proposals 2, 3 and 4. | For | Against | Abstain | |||||
2. | Ratify the appointment of KPMG LLP as Valero’s independent registered public accounting firm for 2010. | o | o | o | ||||
3. | Re-approve the 2005 Omnibus Stock Incentive Plan. | o | o | o | ||||
4. | Ratify the 2009 compensation of the named executive officers. | o | o | o | ||||
The Board of Directors recommends that you vote “AGAINST” proposals 5, 6, 7 and 8. | For | Against | Abstain | |||||
5. | Vote on a stockholder proposal entitled, “Impact of Valero’s Operations on Rainforest Sustainability.” | o | o | o | ||||
6. | Vote on a stockholder proposal entitled, “Elimination of Classified Board.” | o | o | o | ||||
7. | Vote on a stockholder proposal entitled, “Disclosure of Political Contributions/Trade Associations.” | o | o | o | ||||
8. | Vote on a stockholder proposal entitled, “Stock Retention by Executives.” | o | o | o | ||||
The above proposals are in addition to any other business properly brought before the meeting. |
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
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The Notice and Proxy Statement and Annual Report on Form 10-K are available at www.proxyvote.com.
ANNUAL MEETING OF STOCKHOLDERS
April 29, 2010