8-KLeadership ChangesMaterial AgreementsExhibits & Filings

VALERO ENERGY CORP/TX 8-K Report, Material Agreement (Dec 30, 2005)

Filed December 30, 2005For Securities:VLO

Summary

This Form 8-K filing by Valero Energy Corporation (VLO) on December 29, 2005, primarily addresses amendments to the performance award agreements for outgoing Chief Executive Officer, William E. Greehey, in connection with his retirement. The amendments ensure that Mr. Greehey's performance shares, tied to company performance for 2005, will vest according to the same schedule and performance metrics as other employees, despite his retirement occurring before the scheduled January 2006 vesting date. Additionally, the filing confirms Mr. Greehey's resignation as CEO, effective December 30, 2005, and his continued role as Chairman of the Board. It also reiterates the appointment of William R. Klesse as the new CEO, effective December 31, 2005. Minor amendments were made to comply with Section 409A of the Internal Revenue Code concerning deferred compensation for key employees, delaying the payout of certain performance shares by six months post-retirement.

Key Highlights

  • 1Amendments to CEO William E. Greehey's performance award agreements for 2003, 2004, and 2005 grants.
  • 2Amendments ensure Mr. Greehey's performance shares vest based on 2005 performance metrics at the same time as other employees.
  • 3These changes are necessitated by Mr. Greehey's retirement as CEO on December 30, 2005.
  • 4The filing confirms Mr. Greehey will remain as Chairman of the Board of Directors.
  • 5The company reiterates the appointment of William R. Klesse as the new CEO, effective December 31, 2005.
  • 6Amendments to 2003 and 2004 award agreements aim to comply with IRS Section 409A regarding deferred compensation timing.
  • 7Certain post-retirement performance share payouts are delayed by six months to comply with tax regulations.

Frequently Asked Questions

The performance award agreements for CEO William E. Greehey are being amended to ensure his performance shares, linked to company results from 2005, will vest in January 2006 under the same conditions and timing as other employees, despite his retirement as CEO on December 30, 2005.

Yes, the amendments ensure his awards will vest based on certified 2005 performance. However, to comply with IRS Section 409A, certain performance share payouts originally scheduled for vesting after December 31, 2004, will be delivered six months after his retirement date.

William R. Klesse, previously Executive Vice President and Chief Operating Officer, has been elected as the new CEO of Valero, effective December 31, 2005. He will also serve as a director and Vice Chairman of the Board.

Section 409A of the IRC deals with deferred compensation rules for key employees. The amendments to Mr. Greehey's 2003 and 2004 award agreements ensure that certain post-retirement payments are not made until at least six months after his separation from service as CEO, to comply with these tax regulations.