8-KShareholder Matters

VALERO ENERGY CORP/TX 8-K Report, Shareholder Vote Results (May 2, 2011)

Filed May 2, 2011For Securities:VLO

Summary

This 8-K filing reports the results of Valero Energy Corporation's (VLO) 2011 Annual Stockholders Meeting held on April 28, 2011. All management-proposed items, including the election of four Class II directors, the amendment to eliminate board classification, the ratification of KPMG LLP as auditor, the 2011 Omnibus Stock Incentive Plan, and the advisory vote on executive compensation, were approved by shareholders. The company also received strong support for its proposal to hold advisory votes on executive compensation annually. However, several shareholder proposals concerning political contributions and accident risk reduction were not approved. These included proposals for disclosure of political contributions, review of political contributions, and reporting on steps taken to reduce accident risk. The substantial broker non-votes on director elections and the stock incentive plan, along with a significant number of 'against' votes on executive compensation and the stock incentive plan, warrant attention and potential further analysis by investors regarding shareholder sentiment on these specific areas.

Key Highlights

  • 1All four nominated Class II directors (Ronald K. Calgaard, Stephen M. Waters, Randall J. Weisenburger, and Rayford Wilkins, Jr.) were elected with strong majority support.
  • 2Shareholders approved the amendment to the Certificate of Incorporation to eliminate the classification of the board of directors, moving towards an annually elected board.
  • 3KPMG LLP was ratified as Valero's independent registered public accounting firm for fiscal year 2011 with overwhelming support.
  • 4The 2011 Omnibus Stock Incentive Plan was approved, though it saw a notable number of 'against' votes and broker non-votes.
  • 5An advisory resolution to ratify the 2010 compensation of named executive officers was approved, but with a significant percentage of 'against' votes (32.54%), indicating some shareholder dissent.
  • 6Stockholders recommended holding advisory votes on executive compensation every year with a strong majority (95%).
  • 7Three shareholder proposals concerning political contributions and accident risk reduction were not approved by the required majority votes.

Frequently Asked Questions

Yes, all management-proposed items were approved by shareholders. This included the election of directors, an amendment to eliminate board classification, the ratification of the independent auditor, the 2011 Omnibus Stock Incentive Plan, and an advisory vote on executive compensation. Additionally, shareholders voted to hold advisory votes on executive compensation annually.

All three shareholder proposals, which focused on the disclosure and review of political contributions and reporting on accident risk reduction, were not approved.

While most management proposals passed overwhelmingly, the advisory vote on 2010 executive compensation saw a notable percentage of 'against' votes (32.54%). The 2011 Omnibus Stock Incentive Plan also received a substantial number of 'against' votes (13.21%) and a significant amount of broker non-votes.

The approval of the amendment to eliminate board classification means Valero's board of directors will move away from a staggered, multi-year election cycle. Directors will now be elected annually, which generally aligns with corporate governance best practices and can increase director accountability to shareholders.