8-KLeadership ChangesExhibits & Filings

VALERO ENERGY CORP/TX 8-K Report, Executive Changes (Nov 7, 2016)

Filed November 7, 2016For Securities:VLO

Summary

This 8-K filing by Valero Energy Corp. (VLO) primarily details the approval and granting of long-term incentive awards to its named executive officers on November 2, 2016. These awards, made under the 2011 Omnibus Stock Incentive Plan, consist of restricted shares and performance shares. The restricted shares will vest over three years, while the performance shares' vesting is tied to Valero's total shareholder return (TSR) relative to its peers, with potential payouts ranging from zero to 200 percent of the awarded shares, plus potential dividend equivalents. Additionally, the filing discloses the execution of a Change of Control Severance Agreement with R. Lane Riggs, Executive Vice President–Refining Operations and Engineering. This agreement is designed to protect Mr. Riggs' employment terms for a three-year period following a change of control event. Investors should note that these compensation-related disclosures are standard for executive teams and reflect the company's strategy for retaining and incentivizing key personnel.

Key Highlights

  • 1Valero Energy Corp. approved long-term incentive awards for named executive officers on November 2, 2016.
  • 2Awards include restricted shares vesting over three years starting November 2017.
  • 3Performance shares are tied to Total Shareholder Return (TSR) relative to peers.
  • 4Performance share payouts can range from 0% to 200% of the award, with potential for additional shares based on dividend equivalents.
  • 5A Change of Control Severance Agreement was executed with R. Lane Riggs, EVP–Refining Operations and Engineering.
  • 6The severance agreement provides protection for Mr. Riggs' employment terms for three years post-change of control.

Frequently Asked Questions

The long-term incentive awards, comprising restricted and performance shares, are designed to align the interests of Valero's named executive officers with those of shareholders. They aim to retain key talent by providing compensation tied to the company's future performance and stock price appreciation.

The performance shares vest based on Valero's Total Shareholder Return (TSR) compared to a peer group over specified periods. Payouts can range from zero to 200% of the target performance shares, and additional shares may be awarded based on accrued dividend equivalents, subject to achieving prescribed TSR rankings.

A Change of Control Severance Agreement is a contract that protects an executive's employment terms in the event of a merger, acquisition, or other significant change in company control. The agreement with R. Lane Riggs ensures his employment terms will not be materially adversely affected for a three-year period following such an event, providing stability and security for a key executive.

Yes, granting long-term incentive awards and entering into change of control agreements with key executives are common practices for publicly traded companies. These mechanisms are standard tools used by boards and compensation committees to attract, retain, and motivate senior management, and to provide executive stability during potential corporate transitions.