Summary
This Form 8-K filing by Valero Energy Corporation (VLO) on October 23, 2006, details material definitive agreements related to executive compensation. Specifically, the company announced the entry into long-term incentive award agreements with its named executive officers on October 19, 2006. These awards include stock options, restricted stock, and performance share awards, all granted under the company's 2005 Omnibus Stock Incentive Plan. The grants are designed to align executive interests with shareholder value and reward future company performance.
Key Highlights
- 1Valero Energy Corporation granted long-term incentive awards to six named executive officers on October 19, 2006.
- 2Awards include stock options with a seven-year term and a strike price of $52.545, vesting in one-fifth increments annually.
- 3Restricted stock awards were also granted, subject to the same vesting schedule as the stock options.
- 4Performance share awards are contingent on Valero's total shareholder return relative to its peer group over rolling three-year periods.
- 5The exercise price for stock options was set at the average of the high and low sales prices on the grant date, per plan terms.
- 6Vesting for restricted stock and stock options begins one year after the grant date.
- 7Performance share payouts can range from 0% to 200% of the awarded portion based on Valero's quartile ranking in shareholder return.
Frequently Asked Questions
Valero issued three types of long-term incentive awards: stock options, restricted stock, and performance shares, all under its 2005 Omnibus Stock Incentive Plan.
The stock options and restricted stock vest in annual one-fifth increments, starting on the first anniversary of the grant date. The performance shares vest in annual one-third increments beginning in January 2008, contingent on performance standards and total shareholder return.
Performance share awards are tied to Valero's total shareholder return compared to its peer group over rolling three-year periods. Payouts can range from 0% to 200% of the vesting portion, with the highest payout (200%) awarded if Valero achieves the highest ranking within its peer group.
The exercise price for the stock options was $52.545 per share, which was set as the average of the high and low sales prices of Valero's common stock on the New York Stock Exchange on the grant date, as required by the 2005 Omnibus Stock Incentive Plan.