8-KLeadership ChangesMaterial AgreementsExhibits & Filings

VALERO ENERGY CORP/TX 8-K Report, Material Agreement (Jan 20, 2006)

Filed January 20, 2006For Securities:VLO

Summary

This Form 8-K filing from Valero Energy Corporation (VLO) on January 20, 2006, primarily details executive and director compensation decisions made in mid-January 2006. The Compensation Committee of the Board of Directors approved incentive bonus awards for the named executive officers for the 2005 fiscal year, as well as performance share awards under the 2005 Omnibus Stock Incentive Plan. These performance shares are tied to the company's total shareholder return relative to its peer group over rolling three-year periods, with payouts ranging from 0% to 200% of the vesting portion based on quartile ranking. Additionally, the filing announces the election of a new non-employee director, Irl F. Engelhardt, to the Board on January 19, 2006. Mr. Engelhardt is now eligible for the company's standard compensation arrangements for non-employee directors, including equity grants under the Restricted Stock Plan for Non-Employee Directors and the Non-Employee Director Stock Option Plan. He has also been appointed to the Board's Audit Committee and Executive Committee. These compensation details are crucial for understanding executive incentives and governance structure.

Key Highlights

  • 1Approval of 2005 incentive bonus awards for named executive officers under the Valero Energy Corporation Annual Bonus Plan.
  • 2Awarding of performance shares for named executive officers under the 2005 Omnibus Stock Incentive Plan.
  • 3Performance share payouts are contingent on Valero's total shareholder return relative to a peer group over rolling three-year periods, with performance-based vesting.
  • 4Payouts for performance shares can range from 0% to 200% of the vesting portion, depending on the company's performance quartile.
  • 5Election of Irl F. Engelhardt as a new non-employee director on January 19, 2006.
  • 6Mr. Engelhardt is eligible for equity compensation under the Restricted Stock Plan for Non-Employee Directors and Non-Employee Director Stock Option Plan.
  • 7Mr. Engelhardt appointed to the Audit Committee and Executive Committee of the Board.

Frequently Asked Questions

The main compensation decisions involved the approval of incentive bonus awards for the named executive officers for the 2005 fiscal year and the awarding of performance shares under the 2005 Omnibus Stock Incentive Plan. The performance shares are directly tied to the company's total shareholder return compared to its peers.

Performance shares vest annually in one-third increments. Upon vesting, the number of shares issued is determined by Valero's total shareholder return over rolling three-year periods. Payouts range from 0% to 200% of the vesting portion, depending on whether the company's performance falls into the last, third, second, or first quartile, with a bonus for being the highest-ranked in the peer group.

Irl F. Engelhardt was elected as a new non-employee director on January 19, 2006. He is eligible for the company's standard director compensation and has been appointed to serve on the Board's Audit Committee and Executive Committee.

The filing references several plans including the Valero Energy Corporation Annual Bonus Plan, the 2005 Omnibus Stock Incentive Plan, the Restricted Stock Plan for Non-Employee Directors, and the Non-Employee Director Stock Option Plan. Forms of agreement and plan details are incorporated by reference into this report and prior SEC filings, including proxy statements and other 8-K and 10-Q forms.