def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A INFORMATION
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TESORO CORPORATION
(Name of Registrant as Specified in Its Charter)
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TESORO CORPORATION
NOTICE OF 2011 ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 2011
Tesoro Corporation will hold its 2011 Annual Meeting of
Stockholders on Wednesday, May 4, 2011, at our principal
executive offices, 19100 Ridgewood Parkway, San Antonio,
Texas 78259, beginning at 4:00 P.M. Central Time:
1. To elect the eight
directors named in the Proxy Statement;
2. To conduct an
advisory vote on executive compensation;
3. To conduct an
advisory vote on the frequency of future advisory votes on
executive compensation;
4. To approve the
Tesoro Corporation 2011 Long-Term Incentive Plan;
5. To ratify the
appointment of Ernst & Young LLP as our independent
auditors for fiscal year 2011;
6. If properly
presented at the annual meeting, to consider a stockholder
proposal regarding a safety report; and
7. To transact such
other business as may properly come before the annual meeting or
any adjournment or postponement of the annual meeting.
Holders of common stock of record at the close of business on
March 15, 2011, are entitled to notice of, and to vote at,
the annual meeting.
Your vote is important. Whether or not you plan to attend the
meeting, please vote as soon as possible. If you received a
Notice of Internet Availability explaining how to access the
proxy materials over the Internet, a proxy card was not sent to
you and you may vote only by telephone or online unless you
request a printed copy of the proxy materials. If you received a
proxy card and other proxy materials by mail, you may vote by
mailing a completed proxy card, by telephone or online. For
specific voting instructions, please refer to the information
provided in the following Proxy Statement, together with your
proxy card or the voting instructions you receive by
e-mail or
that are provided via the Internet.
By Order of the Board of Directors,
CHARLES S. PARRISH
Secretary
March 24, 2011
San Antonio, Texas
NOTICE: If your shares are held through a broker, bank or
other nominee, you are the beneficial owner of those shares.
Brokers are not permitted to vote on any of the matters to be
considered at the annual meeting (other than the ratification of
the independent auditors) without instructions from the
beneficial owner. As a result, your shares will not be voted on
these matters unless you affirmatively vote your shares in one
of the ways indicated by your broker, bank or other nominee.
TESORO
CORPORATION
19100 RIDGEWOOD PARKWAY, SAN ANTONIO, TEXAS 78259
PROXY STATEMENT
2011 ANNUAL MEETING OF
STOCKHOLDERS
MAY 4, 2011
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Tesoro Corporation of
proxies to be voted at the 2011 Annual Meeting of Stockholders
(the 2011 Annual Meeting) to be held on Wednesday,
May 4, 2011, beginning at 4:00 P.M. Central Time at
our principal executive offices, 19100 Ridgewood Parkway,
San Antonio, Texas 78259, and at any adjournment or
postponement of the meeting. This Proxy Statement and
accompanying form of proxy are first being made available to
stockholders on or about March 24, 2011.
Each proxy will be voted as specified by the stockholder. Any
duly executed proxy not specifying the contrary will be voted in
accordance with the Boards recommendations as follows:
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Board
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Agenda Item
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Recommendation
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Election
of directors
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FOR
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Advisory
vote on executive compensation
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FOR
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Advisory
vote on frequency of future advisory votes on executive
compensation
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ONE YEAR
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Approval
of the Tesoro Corporation 2011 Long-Term Incentive Plan
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FOR
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Ratification
of Ernst & Young LLP as independent auditors
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FOR
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Stockholder
proposal regarding a safety report
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AGAINST
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At the close of business on March 15, 2011, the record date
for the 2011 Annual Meeting, there were 143,276,324 shares
of our common stock outstanding and entitled to vote. The
holders of our common stock are entitled to one vote for each
share held by them for each director nominee and for each other
matter to be voted on. We have no other voting securities
outstanding.
ELECTRONIC
AVAILABILITY OF PROXY MATERIALS
Under rules adopted by the Securities and Exchange Commission
(SEC), we are furnishing proxy materials to our
stockholders primarily via the Internet, instead of mailing
printed copies of those materials to each stockholder. On or
about March 24, 2011, we mailed to our stockholders (other
than those who previously requested electronic or paper
delivery) a Notice of Internet Availability containing
instructions on how to access our proxy materials, including our
Proxy Statement and our Annual Report. This process is designed
to expedite stockholders receipt of proxy materials, help
conserve natural resources and lower the cost of the meeting.
However, if you would prefer to receive printed proxy materials,
please follow the instructions on the Notice of Internet
Availability. If you have previously elected to receive our
proxy materials electronically, you will continue to receive
these materials via
e-mail
unless you elect otherwise.
At the 2011 Annual Meeting, the stockholders are requested to
elect eight directors to hold office until the 2012 Annual
Meeting of Stockholders or until their successors are qualified
and elected. Each of the nominees has indicated his or her
willingness to serve as a director, if elected, and we have no
reason to believe that any nominee will be unable to serve. The
persons designated as proxies, however, reserve full discretion
to cast votes for other persons in the event that any one or
more of the nominees are unable to serve.
Each of the director nominees was elected at the 2010 Annual
Meeting of Stockholders and is currently serving as a director,
except for Patrick Y. Yang and Susan Tomasky, who were appointed
as directors on December 8, 2010 and February 4, 2011,
respectively. Mr. Yang and Ms. Tomasky were
recommended to the Governance Committee by a third-party search
firm. William J. Johnson and Donald H. Schmude are not being
re-nominated for election as directors at the 2011 Annual
Meeting. Their service on the Board will end immediately prior
to the 2011 Annual Meeting, at which time the size of the Board
will be reduced from ten to eight directors. We thank
Messrs. Johnson and Schmude for their long-standing service
on the Board.
We have adopted a majority voting standard in director
elections. Our Bylaws prescribe the voting standard for director
elections as a majority of the votes cast in an uncontested
election, such as this one, where the number of nominees does
not exceed the number of directors to be elected. Under this
standard, a nominee must receive more FOR votes than
AGAINST votes in order to be elected as a director.
In a contested election, where the number of nominees exceeds
the number of directors to be elected (which is not the case at
the 2011 Annual Meeting), the directors will be elected by the
vote of a plurality of the votes cast on the election of
directors. Under our Corporate Governance Guidelines, each
nominee who already serves as a director submits an advance,
contingent, irrevocable resignation that the Board may accept if
stockholders do not re-elect the director. In that situation,
the Governance Committee will promptly consider the resignation
offer and make a recommendation to the Board. The Board will
then act on the Governance Committees recommendation and
will publicly disclose its decision regarding whether to accept
the directors resignation offer, or, if applicable, the
reason(s) for rejecting the resignation offer, within
90 days from the date of the certification of the
stockholder vote.
Director
and Nominee Experience and Qualifications
The Board believes that the Board, as a whole, should possess a
combination of skills, professional experience, and diversity of
backgrounds, experiences and perspectives necessary to oversee
our business. In addition, the Board believes that there are
certain attributes that every director should possess, which are
described below. Accordingly, the Board and the Governance
Committee consider the qualifications of directors and director
candidates individually and in the broader context of the
Boards overall composition and our current and future
needs.
The Governance Committee is responsible for reviewing with the
Board on an annual basis the criteria for Board membership in
the context of the current makeup of the Board. As set forth in
the Corporate Governance Guidelines, these criteria include
issues of diversity, age, education, skills, integrity,
leadership and judgment all in the context of an assessment of
the perceived needs of the Board at that point in time. The
Board, as a whole, should possess a combination of skills,
professional experience, and diversity of backgrounds,
experiences and perspectives necessary to oversee our business.
In addition, Board members generally should have knowledge of
our industry and should have background and experience that
demonstrates an understanding of the financial and operational
aspects, including the associated risks of a large, complex
company. The Governance Committee assesses the effectiveness of
its criteria when evaluating new director candidates and when
recommending director nominees to the Board.
In evaluating director candidates, and considering incumbent
directors for renomination, the Board and the Governance
Committee consider a variety of factors. These include each
nominees independence, financial
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literacy, personal and professional accomplishments, and
experience in light of our needs. Each director candidate must
supply information concerning these factors by completing and
submitting a Director and Officer Questionnaire, as required by
our Bylaws. For incumbent directors, the factors include
preparedness and past performance on the Board. Among other
things, the Board has determined that it is important to have
individuals with the following skills and experiences on the
Board:
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Leadership experience, as directors with experience in
significant leadership positions possess strong abilities to
motivate and manage others and to identify and develop
leadership qualities in others.
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Knowledge of our industry, particularly oil refining and
retail sales, which is relevant to understanding our business
and strategy.
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Operations experience, as it gives directors a practical
understanding of developing, implementing and assessing our
business strategy and operating plan.
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Legal experience, which is relevant to oversight of our
legal and compliance matters.
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Risk management experience, which is relevant to the
Boards oversight of our risk assessment and risk
management programs.
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Financial/accounting experience, particularly knowledge
of finance and financial reporting processes, which is relevant
to understanding and evaluating our capital structure and
overseeing the preparation of our financial statements.
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Government/regulatory experience, which is relevant to us
as we operate in a heavily regulated industry that is directly
affected by governmental requirements.
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Strategic planning experience, which is relevant to the
Boards review of our strategies and monitoring their
implementation and results.
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Talent management experience, which is valuable in
helping us attract, motivate and retain top candidates for
management positions.
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Public company board service, as directors who have
served on other public company boards have experience overseeing
and providing insight and guidance to management.
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The specific qualifications and experience of the individual
director nominees are set forth below under Director
Nominees. For more information on the director nomination
process, refer to Corporate Governance
Director Nomination Process below.
3
Director
Nominees
Our Board of Directors recommends that you vote
FOR the election to the Board of each of the
following nominees.
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Rodney F. Chase
Director since 2006
Age 67
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Non-Executive Chairman for Petrofac Ltd.
Mr. Chase has been Non-Executive Chairman for Petrofac Ltd. in the United Kingdom, an international oil and gas services company, since 2005. He also served as Deputy Chairman of Tesco plc in the United Kingdom, an international retailing company, from March 2004 until July 2010. Mr. Chase spent 39 years with BP plc, a large, international oil and gas company. He held positions within the upstream and downstream segments of the industry in Australia, Europe and North America. His background includes positions in shipping, refining, marketing, distribution, oil trading and gas as well as finance and strategic planning at the corporate executive level. In 1986, he was appointed Chief Executive Officer of BP Finance International and Group Treasurer. From 1999 to 2003, Mr. Chase served as Deputy Chief Executive Officer and President, Exploration, Production, Refining and Marketing. From 2003 to 2008, Mr. Chase served as Senior Advisor for the U.S. and Europe for Lehman Brothers, Ltd., formerly an investment bank, in London, England.
As the current Non-Executive Chairman of an international oil and gas services company (Petrofac) and a former executive of a large, international oil and gas company (BP), and with 39 years of experience in the energy industry, Mr. Chase brings to the Board leadership, industry and strategic planning experience. Mr. Chase also has financial/accounting (former Chief Executive Officer of BP Finance International and Group Treasurer and former senior advisor for Lehman Brothers), talent management and public company board experience (Computer Sciences Corporation, Nalco Holding, Petrofac).
Current Public Company Directorships: Computer Sciences Corporation, Nalco Holding Co. and Petrofac Ltd.
Former Public Company Directorships: Tesco plc (from 2002 until 2010)
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4
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Gregory J. Goff
Director since 2010 Age 54
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Our President and Chief Executive Officer
Mr. Goff has served as our President and Chief Executive Officer since May 2010. Prior to joining us, Mr. Goff served as Senior Vice President, Commercial for ConocoPhillips Corporation, an international, integrated energy company, from 2008 to 2010. Mr. Goff also held various other positions at ConocoPhillips from 1981 to 2008, including director and CEO of Conoco JET Nordic from 1998 to 2000; Chairman and Managing Director of Conoco Limited, a UK-based refining and marketing affiliate, from 2000 to 2002; President of ConocoPhillips European and Asia Pacific downstream operations from 2002 to 2004; President of ConocoPhillips U.S. Lower 48 and Latin America exploration and production business from 2004 to 2006; and President of ConocoPhillips specialty businesses and business development from 2006 to 2008. Mr. Goff serves as a director of the National Petrochemical & Refiners Association and on the National Advisory Board of the University of Utah Business School. Previously, Mr. Goff served on the board of Chevron Phillips Chemical Company, a private company, and was a member of the upstream and downstream committees of the American Petroleum Institute. Mr. Goffs employment agreement with us provides that he will be a member of the Board.
As our President and CEO, Mr. Goff brings to the Board a deep understanding of and unique perspective on our business and operations and the environment in which we operate. As the current CEO of a large international independent refining and petroleum products marketing company (Tesoro), current member of a national trade association representing refiners and petrochemical manufacturers (National Petrochemical & Refiners Association) and as a former senior executive of an international energy company (ConocoPhillips) and former member of the upstream and downstream committees of a national oil and natural gas industry trade association (American Petroleum Institute), Mr. Goff also brings to the Board leadership, industry and strategic planning experience. Mr. Goffs 29 years of service in various positions with ConocoPhillips also provides him with operations experience. In addition, Mr. Goff has public company board experience (DCP Midstream).
Former Public Company Directorships: DCP Midstream GP, LLC (from 2008 until 2010)
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5
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Robert W. Goldman
Director since 2004 Age 68
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Financial Consultant
Mr. Goldman has been an independent financial consultant since 2002. From July 1998 to October 2002, he was Senior Vice President and Chief Financial Officer of Conoco Inc., an international, integrated energy company. Prior to joining Conoco in 1988 as its Vice President and Controller and subsequently serving as Senior Vice President, Finance, he had worked for E.I. DuPont de Nemours & Co., Inc. in a variety of financial and operating roles. Mr. Goldman is a member of the Outside Advisory Council of Global Infrastructure Partners. He is a former chairman of the Accounting Committee of the American Petroleum Institute. He served as Vice President, Finance of the London-based World Petroleum Council from 2002 to July 2008.
As a financial consultant and former Senior Vice President and Chief Financial Officer of an international, integrated energy company (Conoco) and former chairman of the accounting committee at a national oil and natural gas industry trade association (American Petroleum Institute) and former finance executive of a global oil and gas forum (World Petroleum Council), Mr. Goldman brings to the Board industry-specific and financial/accounting experience. Mr. Goldman also has a background in operations (E.I. DuPont de Nemours & Co.) and public company board experience (El Paso Corporation, Parker Drilling Company, The Babcock & Wilcox Company and McDermott International).
Current Public Company Directorships: El Paso Corporation, Parker Drilling Company, and The Babcock & Wilcox Company
Former Public Company Directorships: McDermott International Inc. (from 2005 until 2010)
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Steven H. Grapstein
Chairman of the Board since 2010 Director since 1992 Age 53
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Chief Executive Officer of Como Holdings USA, Inc.
Mr. Grapstein has been Chief Executive Officer of Como Holdings USA, Inc. (formerly known as Kuo Investment Company and subsidiaries), an international investment group, since January 1997. From September 1985 to January 1997, Mr. Grapstein was a Vice President of Como Holdings USA, Inc. Mr. Grapstein also has held the position of Chairman of Presidio International dba A/X Armani Exchange, a fashion retail company, since 1999. He is also a director of several privately held hotel and real estate entities.
As the Chief Executive Officer of an international investment group (Como Holdings USA) and Chairman of a fashion retail company (Presidio International), Mr. Grapstein brings to the Board leadership, operations and financial/accounting experience. Mr. Grapstein also has talent management and public company board experience (Mulberry Group). In addition, Mr. Grapstein has extensive knowledge of our business from his tenure on our Board.
Current Public Company Directorships: Mulberry Group plc
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J.W. Nokes
Director since 2007 Age 64
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Former Executive Vice President of Worldwide Refining, Marketing, Supply and Transportation for ConocoPhillips
Mr. Nokes spent his 36-year career with ConocoPhillips, an international, integrated energy company and retired in 2006 as Executive Vice President of Worldwide Refining, Marketing, Supply and Transportation. His background primarily includes refining, marketing, crude and products trading, commercial natural gas operations and transportation. He also had assignments in exploration and production, as well as strategic planning. In 1991, he was appointed Vice President of U.S. Marketing and Product Trading. From 1994 to 1999, he was Vice President of U.S. Downstream Business. For eight years beginning in 1999, he was Executive Vice President of Refining, Marketing, Supply and Transportation for the companys global business. Mr. Nokes was a member of the World Business Council for Sustainable Development and sat on the Board of Directors of the American Petroleum Institute, as well as the American Petroleum Institute Transportation, Marketing and Downstream Committee. Mr. Nokes is also a director of Post Oak Bank, N.A., a Houston-based community bank.
As a former executive of an international, integrated energy company (ConocoPhillips) and former director of a national oil and natural gas industry trade association (American Petroleum Institute) and former member of a global association of business leaders that promotes sustainable development (World Business Council for Sustainable Development), and with 36 years of experience in the energy industry, Mr. Nokes brings to the Board industry, operations, international and strategic planning experience. Mr. Nokes also has public company board experience (Albemarle Corporation).
Current Public Company Directorships: Albemarle Corporation
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Susan Tomasky
Director since 2011 Age 57
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President of AEP Transmission, a business division of American Electric Power Co.
Ms. Tomasky has been President of AEP Transmission, a business division of American Electric Power Co., Inc., an owner and operator of utility operating companies that produce, transmit and distribute electricity to over 5 million customers at retail in 11 states, since 2008. Ms. Tomasky previously served in other executive officer positions at American Electric Power Co., including Executive Vice President and General Counsel from 1998 to 2001, Executive Vice President of Finance and Chief Financial Officer from 2001 to 2006 and Executive Vice President of Shared Services from 2006 to 2008. Prior to joining American Electric Power Co., Ms. Tomasky served as a partner at the law firm of Hogan & Hartson (now Hogan Lovells), where she was a member of the firms energy group, and as general counsel of the Federal Energy Regulatory Commission. Ms. Tomasky is a director of Mount Carmel Health Systems, a privately held healthcare company, the Columbus Regional Airport Authority and several non-profit organizations. Ms. Tomasky also serves as a director of the Federal Reserve Bank of Cleveland, a member bank in the Federal Reserve System, where she is Chair of the Audit Committee.
As the current President of a division of a large, public utility company (American Electric Power Co.), Ms. Tomasky brings to the Board leadership, industry and strategic planning experience. Ms. Tomasky also has financial and accounting experience from her role as Chair of the Audit Committee of the Federal Reserve Bank of Cleveland and former role as Executive Vice President and Chief Financial Officer of a large, public energy company (American Electric Power Co.). In addition, Ms. Tomasky brings to the Board government and regulatory experience and legal experience from her former roles as a partner in the energy group of an international law firm (Hogan & Hartson) and as general counsel of a federal government agency that regulates the energy industry (Federal Energy Regulatory Commission).
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Michael E. Wiley
Director since 2005
Age 60
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Former Chairman of the Board, President and Chief Executive Officer of Baker Hughes Incorporated
Mr. Wiley has 35 years of experience in the energy industry. Most recently he served as Chairman of the Board, President and Chief Executive Officer of Baker Hughes Incorporated, an oilfield services company, from August 2000 until his retirement in October 2004. Mr. Wiley was President and Chief Operating Officer of Atlantic Richfield Company, an integrated energy company, from 1998 through May 2000. Prior to 1998, he served as Chairman, President and Chief Executive Officer of Vastar Resources, Inc., an independent oil and gas company. Mr. Wiley is a director of Asia Pacific Exploration Consolidated, L.P., a privately held oil and gas company, and Post Oak Bank, N.A., a Houston-based community bank. He also serves as a Trustee of the Fidelity Funds.
As the former Chairman, President and Chief Executive Officer of an oilfield services company (Baker Hughes Incorporated) and former President and Chief Operating Officer of an integrated energy company (Atlantic Richfield Company) and director of a privately held oil and gas company (Asia Pacific Exploration Consolidated), and with 35 years of experience in the energy industry, Mr. Wiley brings to the Board leadership, industry, operations, strategic planning, and talent management experience. Mr. Wiley also has public company board experience (Bill Barrett Corporation).
Current Public Company Directorships: Bill Barrett Corporation
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Patrick Y. Yang
Director since 2010
Age 63
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Head of Global Technical Operations, F. Hoffmann-La Roche, Ltd.
Mr. Yang has over 30 years of experience in manufacturing and technology. Currently, he is Head of Global Pharmaceutical Technical Operations for F. Hoffmann-La Roche Ltd., which operates in the pharmaceutical and diagnostics industry and sells products in more than 150 countries. Mr. Yang joined Roche in March 2009, upon Roches merger with Genentech, Inc., and is responsible for the companys pharmaceutical manufacturing, process development, engineering, quality, regulatory, supply chain and procurement functions. Before joining Roche, Mr. Yang served as Executive Vice President, Product Operations of Genentech, a biotechnology company, from December 2005 to March 2009 and in various other executive-level positions with Genentech from December 2003 to December 2005. Prior to joining Genentech, Mr. Yang worked for Merck & Co. from 1992 to 2003 in manufacturing and for General Electric from 1980 to 1992 in manufacturing and technology.
As a senior operations executive of a large, global pharmaceutical company (F. Hoffmann-La Roche) and a former senior operations executive of a biotechnology company (Genentech), Mr. Yang brings to the Board leadership, operations, strategic planning, international, and talent management experience. Mr. Yang also has operations experience from over 20 years spent working in manufacturing (Merck and General Electric). Mr. Yang also has financial/accounting and risk management experience from his service on Genentechs executive committee from 2004 until 2009.
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9
Additional
Information about Certain Directors
Consistent with the director retirement policy in our Corporate
Governance Guidelines, William J. Johnson and Donald H. Schmude
are not being re-nominated for election as directors at the 2011
Annual Meeting.
Mr. Johnson, age 76, has served as a director on our
Board since 1996. Mr. Johnson has been a petroleum
consultant since 1994 and President, director and sole
stockholder of JonLoc Inc., a private oil and gas company, since
1994. Mr. Johnson previously served as President, Chief
Operating Officer and director of Apache Corporation, a publicly
held independent oil and gas company. Mr. Johnson
previously served on the board of directors of Apache
Corporation, Devon Energy Corporation, BJ Services Company, J.
Ray McDermott and Camco International. Mr. Johnson has
broad industry experience having been previously employed as a
senior executive at large integrated and smaller independent
companies. Mr. Johnson also has a strong background in
operations and corporate planning. In addition, Mr. Johnson
has extensive knowledge of the Company from his tenure on our
Board.
Mr. Schmude, age 75, has served as a director on our
Board since 1999. Mr. Schmude has 36 years of
experience in the energy industry with Texaco and Star
Enterprise, a Texaco and Saudi Aramco joint venture. Prior to
his retirement from Texaco in 1994, he was Vice President of
Texaco and President and Chief Executive Officer of Texaco
Refining & Marketing Inc. in Houston, Texas and Los
Angeles, California. He also served as Vice President of Texaco,
Inc., Special Projects, in Anacortes, Washington, and held
various refinery engineering, planning and marketing positions.
As a former executive of Texaco and Chief Executive Officer of
Texaco Refining & Marketing Inc., Mr. Schmude has
leadership, talent management and industry experience. In
addition, Mr. Schmude has extensive knowledge of the
Company from his tenure on our Board.
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We have a long-standing commitment to good corporate governance.
We have adopted Corporate Governance Guidelines that, along with
the charters of our Board committees, provide the framework for
our governance processes. Copies of the Corporate Governance
Guidelines and charters of our Board committees are posted on
our website at www.tsocorp.com under the heading
Investors and the subheading Board of
Directors. Printed copies of these documents are available
upon request to our Corporate Secretary.
Director
Independence
The Board of Directors currently consists of ten directors, nine
of whom are independent. The only current director who is not
considered to be independent is Mr. Goff, who serves as our
President and CEO. Bruce A. Smith, who served as President and
CEO until his retirement in May 2010 and as Chairman of the
Board until June 2010, was not considered to be independent. In
addition, the Board determined in early 2009 that
Mr. Bookout, who resigned from the Board in February 2010,
was an independent director.
The Board undertook its annual review of director independence
in February 2011 and in the process reviewed the independence of
each director. The purpose of these reviews was to determine
whether any of the directors had relationships or transactions
that were inconsistent with a determination that the nominee is
independent. During these reviews, among other things,
transactions and relationships between each director or any
member of his or her immediate family and us were considered.
Based on this review, the Board affirmatively determined that
each of the following directors has no material relationship
with us and has satisfied the independence requirements of the
New York Stock Exchange (NYSE): Ms. Tomasky and
Messrs. Chase, Goldman, Grapstein, Johnson, Nokes, Schmude,
Wiley and Yang.
Board
Leadership
Currently, Mr. Goff serves as our President and CEO, a
position he has held since May 2010, and Mr. Grapstein
serves as the independent Chairman of the Board. The Board
believes that the separation of the positions of the Chairman
and CEO is appropriate at this time as it allows our new CEO to
focus primarily on his management responsibilities. In addition,
the Board believes that a leadership structure that separates
the positions of Chairman and CEO, with the position of Chairman
being held by an independent director, currently is in our best
interests and the best interests of our stockholders as it
provides a clear distinction between the Boards role in
overseeing management and managements role in running the
business. However, our Bylaws permit the roles of Chairman and
CEO to be filled by the same or different individuals. This
allows the Board flexibility to determine from time to time
whether the two roles should be combined or separate based upon
our circumstances.
11
Committees
of the Board of Directors
The Board has the following standing
committees: Audit Committee, Compensation Committee,
Environmental, Health & Safety Committee, and
Governance Committee, each of which has a written committee
charter. The Board has determined that all of the members of the
Audit, Compensation and Governance Committees of the Board meet
the independence requirements of the NYSE and SEC. The primary
responsibilities of each of the standing committees, as well as
current membership and meeting information for 2010, are set
forth below.
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Environmental,
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Health
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Board of
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Director
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Audit
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Compensation
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& Safety
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Governance
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Directors
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Rodney F. Chase
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Chair
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X
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X
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Gregory J. Goff
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Robert W. Goldman
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X
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Chair
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X
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Steven H. Grapstein (1)
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X
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X
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Chair
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William J. Johnson (2)
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X
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X
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X
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J.W. Nokes
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Chair
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X
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Donald H. Schmude (2)
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X
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X
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X
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Susan Tomasky (1)
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X
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X
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Michael E. Wiley
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Chair
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X
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X
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Patrick Y. Yang
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X
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X
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X
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2010 Meetings
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5
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9
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7
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8
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7
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(1)
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The Board re-aligned its committee
membership on March 1, 2011. Prior to this date,
Mr. Grapstein was a member of the Audit and Governance
committees and Ms. Tomasky had not yet been appointed to
any committee. Mr. Grapstein did not join the Compensation
Committee until March 1, 2011.
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(2)
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Messrs. Johnson and Schmude
will not be serving on the Board following the 2011 Annual
Meeting.
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Audit
Committee
The Audit Committee assists the Board in fulfilling its
responsibility to us and our stockholders relating to its
oversight of management and its auditors concerning:
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Corporate accounting;
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Financial reporting practices;
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The quality and integrity of our financial reports; and
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Our systems of disclosure controls and procedures and internal
controls over financial reporting.
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For more information on the responsibilities and activities of
the Audit Committee, see Audit Committee Report
below.
The Board has determined that each member of the Audit Committee
is financially literate and that Messrs. Chase and Goldman
and Ms. Tomasky each qualify as an audit committee
financial expert, as defined by SEC rules. No member of
the Audit Committee serves on the audit committees of more than
three public companies, including us.
12
Compensation
Committee
The Compensation Committee discharges the responsibilities of
the Board to our stockholders with respect to our compensation
programs and compensation of our CEO and other members of our
senior management. Specifically, the Compensation Committee:
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Approves our compensation philosophy, the annual salary, annual
bonus, long-term compensation and other benefits for the CEO and
members of our senior management;
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Provides advice to the Governance Committee annually on Board
compensation; and
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Annually reviews the aggregate amount of base pay, bonuses,
equity and long-term incentives and other benefit programs for
employees below the senior management level, with an emphasis on
programs that develop leadership potential of managers and
executives.
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For more information on the responsibilities and activities of
the Compensation Committee, including the committees
processes for determining executive compensation, see
Compensation Discussion and Analysis below.
Environmental,
Health & Safety Committee
The Environmental, Health & Safety Committee assists
the Board in fulfilling its oversight responsibilities for
environmental, health and safety matters. Specifically, the
Environmental, Health & Safety Committee:
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Reviews and approves at least annually our environmental, health
and safety policies;
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Reviews managements programs for compliance with our
environmental, health and safety policies, applicable laws and
regulations;
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Reviews periodically with management its environmental, health
and safety activity with respect to significant legal matters,
and emerging or proposed laws or regulations that may have a
material effect on our financial or physical exposure;
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Reviews and assesses periodically our significant environmental,
health and safety liabilities reported in the financial
statements; and
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Reviews periodically significant capital expenditures that may
have a material environmental, health or safety impact or risk
exposure.
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Governance
Committee
The Governance Committee takes a leadership role in and provides
assistance to the Board in fulfilling its corporate governance
responsibilities to our stockholders. Specifically, the
Governance Committee:
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Identifies individuals qualified to become directors and
recommends candidates to the Board;
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Oversees the annual evaluation of the Board and the committees
of the Board; and
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Reviews and makes recommendations to the Board regarding:
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§
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the organization and structure of the Board and the committees
of the Board;
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§
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compensation for the non-employee members of the Board; and
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§
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the Corporate Governance Guidelines and other corporate
governance matters.
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Board
Risk Oversight
The Board of Directors is responsible for overseeing the
processes that management has established for assessing and
managing risk. The Board delegates oversight of certain
categories of risk to designated Board committees, which are
composed entirely of independent directors. The Audit Committee
oversees and is
13
responsible for reviewing our processes, including guidelines
and policies that govern the processes, for consistency with our
risk assessment and risk management policies. The Audit
Committee also oversees and is responsible for reviewing our
major financial risk exposures and the steps management has
undertaken to monitor and manage them, as well as financial
reporting and internal controls. The Environmental,
Health & Safety Committee oversees environmental,
health and safety risks and is responsible for reviewing our
policies, performance and practices relating to these risks to
our employees and assets, and the communities and environment in
which we operate. The committees report to the Board regularly
on matters relating to the specific areas of risk the committees
oversee.
The Board and the Audit and Environmental, Health &
Safety Committees annually discuss with management, including
members of the Executive Committee, our policies and practices
with respect to risk assessment and risk management. Throughout
the year, the Board and each of the Audit and Environmental,
Health & Safety Committees receive regular reports
from management regarding major risks facing us and the steps
management has taken to monitor and manage such risks. The Board
receives periodic reports from executive management on our
strategic risks. In addition, the Audit Committee receives
annual reports from management of the results of the annual
review and assessments conducted by management and discussed
below, to identify our annual priority risk profile. The Audit
Committee approves an annual internal audit plan which
incorporates our priority risk management activities and
receives regular reports of our audit activities throughout the
year. The Environmental, Health & Safety Committee
approves an annual environmental, health and safety plan which
also incorporates priority risks and receives regular reports
throughout the year from management and operating personnel of
our activities managing those risks.
We have established a management Risk Committee comprised of
senior level business management leadership from our financial,
strategic, governance and operational functions. The Risk
Committee reports to the management-level Executive
Committee consisting of our CEO, Senior Vice President and CFO,
Executive Vice President, Operations, Executive Vice President,
General Counsel and Secretary, Senior Vice President of Strategy
and Business Development, Senior Vice President of Human
Resources and Communications, Vice President of Corporate
Services, Vice President of Environment, Health and Safety and
President Tesoro Logistics. The Risk Committee is chaired by our
Vice President, Credit who also oversees our Enterprise Risk
Group. The Risk Committee and Enterprise Risk Group facilitate
an annual review to assess and prioritize the risks facing us.
Our subject matter experts participate in the annual review to
assess primarily financial, strategic, governance, and
operational risks. The Enterprise Risk Group continually
interacts with the Risk Committee and various levels of our
organization to assess the status and effectiveness of risk
responses, identify emerging risks and facilitate
managements enhancement of our risk assessment and
mitigation practices. The Risk Committee meets monthly
throughout the year to continually review priority risks, risk
responses and emerging risks and facilitate managements
continual improvement of monitoring and managing risks. The Vice
President, Credit meets periodically with the Executive
Committee to report on the activities of the Risk Committee.
Subcommittees of the Risk Committee exist to assess and manage
specific risks facing us.
Risk
Considerations in our Compensation Program
In January 2011, our management in consultation with the
Compensation Committees independent consultant performed
an assessment of the risk associated with our current
compensation programs. The Committee reviewed managements
assessment covering our employees, including executives, and
discussed the concept of risk as it relates to our compensation
programs. The assessment and discussions concluded the following:
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Our compensation programs appropriately balance fixed
compensation with short-term and long-term variable compensation
such that no single pay element would motivate employees to
engage in excessive risk taking.
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14
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The characteristics of our annual incentive program design do
not lend themselves to excessive risk taking by:
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§
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Consistently establishing the target value of annual incentives
on the basis of external market data and at levels relative to
total direct compensation (base salary plus short-term and
long-term incentives) that would not promote excessive
risk-taking to meet or exceed performance goals;
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§
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Funding annual incentive awards based on a variety of
pre-established performance conditions, thus diversifying the
risk associated with any single indicator of performance;
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§
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Incorporating pre-established caps in any awards; and
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§
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Establishing performance targets that are objectively determined
by verifiable results.
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Our long-term incentive program encourages employees to focus on
our long-term success by providing a mix of stock options and
performance units, which only reward employees if our stock
price increases or we meet specified performance goals, balanced
with time vested restricted stock, reducing the motivation
employees may have to take excessive risks.
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Our executive stock ownership guidelines promote having our
senior executives maintain a substantial stake in our long-term
success.
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We have established a clawback policy that allows
the Board of Directors to recoup incentive compensation received
by a senior executive for misconduct resulting in a material
financial restatement. The clawback policy is
discussed in more detail under the heading Compensation
Discussion and Analysis Clawback Policy in
this Proxy Statement.
Director
Nomination Process
The Governance Committee considers from time to time suitable
candidates for membership on the Board, including candidates
recommended by stockholders. In 2010, we used a third-party
search firm to help identify potential director candidates.
Stockholder candidates will be evaluated in accordance with the
criteria for director selection described above under
Director and Nominee Experience and Qualifications.
With respect to the 2012 Annual Meeting of Stockholders,
stockholders wishing to recommend a potential Board candidate
for the Governance Committees consideration must write to
the Corporate Secretary at the address set forth on page 78
of this Proxy Statement during the period beginning on
January 5, 2012, and ending on February 4, 2012, and
include the name of and contact information for the candidate.
Candidates recommended to the Governance Committee in accordance
with these procedures also will need to complete a Director and
Officer Questionnaire in the form we provide. Stockholders who
wish to nominate a director at an annual meeting in accordance
with our Bylaws should follow the instructions described below
under Stockholder Proposals.
Director
Attendance
The Board of Directors met seven times during 2010. Each
director as of the date of this Proxy Statement (excluding
Ms. Tomasky, who joined the Board in February
2011) attended more than 75% of the meetings of the Board
and committees on which such director served (held during the
period that such director served) during 2010. In addition, in
2010 the independent directors met in executive session, chaired
by the Chairman of the Board, four times. Our Corporate
Governance Guidelines provide that all members of the Board are
expected to attend our annual meeting of stockholders, and all
of our directors as of the date of this Proxy Statement
(excluding Mr. Yang, who joined the Board in December 2010,
and Ms. Tomasky, who joined the Board in February
2011) attended the 2010 Annual Meeting of Stockholders.
15
Code of
Conduct
We have adopted a Code of Business Conduct and Ethics for Senior
Financial Executives that is specifically applicable to the CEO,
the CFO, the Controller and persons performing similar
functions. In addition, we have a Code of Business Conduct that
applies to all of our directors, officers and employees. Both
the Code of Business Conduct and Ethics for Senior Financial
Executives and the Code of Business Conduct are available on our
website at www.tsocorp.com under the heading
Investors and the subheading Board of
Directors. Printed copies of these documents are available
upon request to our Corporate Secretary. We will post on our
website any amendments to, or waivers from, our Code of Business
Conduct and Ethics for Senior Financial Executives.
Communicating
with the Board
Persons may communicate with the Board, or directly with
Mr. Grapstein, Chairman of the Board, or the independent
members of the Board, by submitting such communication in
writing to:
c/o Chairman
of the Board of Directors
Tesoro Corporation
19100 Ridgewood Parkway
San Antonio, Texas 78259
In addition, the Audit Committee has established procedures for
the receipt, retention, and treatment of complaints received by
us regarding accounting, internal controls, or auditing matters
and the confidential, anonymous submission by our employees of
concerns regarding questionable accounting or auditing matters.
Persons wishing to communicate with our Audit Committee may do
so by submitting such communication in writing to:
c/o Chairman
of the Audit Committee
Tesoro Corporation
19100 Ridgewood Parkway
San Antonio, Texas 78259
16
We did not have any transactions with any related persons (as
described below) requiring disclosure since the beginning of
2010.
Our Board of Directors has not adopted a formal written
related-person transaction approval policy. However, we use the
procedure described below when reviewing, approving, or
ratifying related person transactions. For these
purposes, a related person is a director, nominee
for director, executive officer, or holder of more than 5% of
our common stock, or any immediate family member of any of the
foregoing. This procedure applies to any financial transaction,
arrangement or relationship or any series of similar financial
transactions, arrangements or relationships in which we are a
participant and in which a related person has a direct or
indirect interest, other than the following:
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Payment of compensation by us to a related person for the
related persons service in the capacity or capacities that
give rise to the persons status as a related
person;
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Transactions available to all employees or all stockholders on
the same terms;
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Purchases from us in the ordinary course of business at the same
price and on the same terms as offered to our other customers,
regardless of whether the transactions are required to be
reported in our filings with the SEC; and
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Transactions, which when aggregated with the amount of all other
transactions between the related person and us, involve less
than $120,000 in a fiscal year.
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Our Audit Committee approves any related-person transaction
before commencement of such transaction, provided that if the
related-person transaction is identified after it commences, it
is brought to the Audit Committee for ratification, amendment or
rescission. The Chairman of our Audit Committee has the
authority to approve or take other actions with respect to any
related-person transaction that arises, or first becomes known,
between meetings of the Audit Committee, provided that any
action by the Chairman of our Audit Committee must be reported
to our Audit Committee at its next regularly scheduled meeting.
Our Audit Committee analyzes the following factors, in addition
to any other factors the members of the Audit Committee deem
appropriate, in determining whether to approve a related-person
transaction:
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Whether the terms are fair to us;
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Whether the transaction is material to us;
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The role the related person has played in arranging the
transaction;
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The structure of the transaction; and
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The interests of all related persons in the transaction.
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Our Audit Committee may, in its sole discretion, approve or deny
any related-person transaction. Approval of a related-person
transaction may be conditioned upon us and the related person
following certain procedures designated by the Audit Committee.
17
Security
Ownership by Directors and Executive Officers
The following table shows the beneficial ownership of our common
stock reported to us as of March 10, 2011, including shares
as to which a vested right to acquire ownership exists (for
example, through the exercise of stock options) within the
meaning of
Rule 13d-3(d)(1)
under the Securities Exchange Act of 1934, as amended (the
Exchange Act) and shares credited to accounts under
our Thrift Plan, for each director and nominee, the CEO, the CFO
and our other three most highly compensated officers during 2010
and our current directors and officers as a group. Unless
otherwise indicated, each person or member of the group listed
has sole voting and investment power with respect to the shares
of our common stock listed. As of March 10, 2011, there
were 143,162,324 shares outstanding.
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Common
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Common
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Stock for
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Stock
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Common
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which
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Common Stock
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Underlying
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Stock
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Beneficial
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Total Stock-
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Owned of
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Exercisable
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Credited
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Ownership
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Based
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Record
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Options
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under
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is Otherwise
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Ownership
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Percent of
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(1)
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(2)
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Thrift Plan
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Attributed
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(3)
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Class
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Directors and Nominees
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Rodney F. Chase
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5,996
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19,000
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0
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-
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24,996
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*
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Gregory J. Goff
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93,623
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49,387
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569
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-
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143,579
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*
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Robert W. Goldman
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8,107
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37,000
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0
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-
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45,107
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*
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Steven H. Grapstein
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71,944
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39,000
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0
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21,502
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(6)
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132,446
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*
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William J. Johnson (4)
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36,039
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39,000
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0
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-
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75,039
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*
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J.W. Nokes
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6,066
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19,000
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0
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-
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25,066
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*
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Donald H. Schmude (4)
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16,970
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45,000
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0
|
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-
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|
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61,970
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*
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Susan Tomasky
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0
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0
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|
|
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0
|
|
|
|
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-
|
|
|
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0
|
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|
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*
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Michael E. Wiley
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12,942
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31,000
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0
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-
|
|
|
|
|
43,942
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick Y. Yang
|
|
|
|
3,000
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
|
|
-
|
|
|
|
|
3,000
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claude A. Flagg
|
|
|
|
36,068
|
|
|
|
|
191,334
|
|
|
|
|
2,405
|
|
|
|
|
-
|
|
|
|
|
229,807
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles S. Parrish
|
|
|
|
51,928
|
|
|
|
|
213,366
|
|
|
|
|
10,426
|
|
|
|
|
-
|
|
|
|
|
275,720
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Scott Spendlove
|
|
|
|
42,237
|
|
|
|
|
132,099
|
|
|
|
|
7,968
|
|
|
|
|
-
|
|
|
|
|
182,304
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory A. Wright (5)
|
|
|
|
96,705
|
|
|
|
|
341,500
|
|
|
|
|
10,096
|
|
|
|
|
-
|
|
|
|
|
448,301
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William J. Finnerty (5)
|
|
|
|
81,763
|
|
|
|
|
375,000
|
|
|
|
|
0
|
|
|
|
|
-
|
|
|
|
|
456,763
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Everett D. Lewis
|
|
|
|
155,653
|
|
|
|
|
362,466
|
|
|
|
|
1,196
|
|
|
|
|
-
|
|
|
|
|
519,315
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce A. Smith (5)
|
|
|
|
789,168
|
|
|
|
|
2,459,700
|
|
|
|
|
0
|
|
|
|
|
-
|
|
|
|
|
3,248,868
|
|
|
|
2.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Current Directors and Executive Officers as a Group (17
individuals)
|
|
|
|
1,508,209
|
|
|
|
|
4,353,852
|
|
|
|
|
32,660
|
|
|
|
|
21,502
|
|
|
|
|
5,916,223
|
|
|
|
4.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Less than 1.0%
|
|
(1)
|
|
Includes shares of unvested
restricted stock.
|
|
(2)
|
|
Includes shares that the listed
persons had the right to acquire through the exercise of stock
options on March 10, 2011, or within 60 days
thereafter.
|
18
|
|
|
(3)
|
|
Units of phantom stock, payable in
cash, which have been credited to the directors under the Board
of Directors Deferred Compensation Plan and the Phantom Stock
Plan and those awarded to Messrs. Smith, Wright, Finnerty
and Lewis are not included in the shares shown above.
|
|
(4)
|
|
Messrs. Johnson and Schmude
are not being re-nominated for election at the 2011 Annual
Meeting.
|
|
(5)
|
|
The beneficial ownership
information for former executives Messrs. Wright, Finnerty
and Smith is as of the dates of their last known common stock
balances: May 6, 2010, February 22, 2010 and
September 29, 2010, respectively.
|
|
(6)
|
|
Mr. Grapstein disclaims
beneficial ownership for the shares shown, which are held in
accounts for his spouse and minor children.
|
Security
Ownership by Certain Beneficial Owners
The following table sets forth information from filings made
with the SEC as to each person or group who as of
December 31, 2010 (unless otherwise noted) beneficially
owned more than 5% of the outstanding shares of our common stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of
|
|
|
|
Beneficial Ownership
|
|
|
|
Number of
|
|
|
Percent of
|
Name and Address of Beneficial
Owner
|
|
|
Shares
|
|
|
Class (1)
|
FMR LLC (2)
|
|
|
|
21,221,320
|
|
|
|
|
14.8
|
%
|
82 Devonshire Street
Boston, MA 02109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tradewinds Global Investors, LLC (3)
|
|
|
|
10,765,464
|
|
|
|
|
7.5
|
%
|
2049 Century Park East,
20th Floor
Los Angeles, CA 90067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlackRock Inc. (4)
|
|
|
|
8,113,092
|
|
|
|
|
5.7
|
%
|
40 East
52nd
Street
New York, NY 10022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State Street Corp. (5)
|
|
|
|
7,931,977
|
|
|
|
|
5.5
|
%
|
State Street Financial Center
One Lincoln Street
Boston, MA 02111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald Smith & Co., Inc. (6)
|
|
|
|
7,818,350
|
|
|
|
|
5.5
|
%
|
152 W. 57th Street
New York, New York 10019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Vanguard Group, Inc. (7)
|
|
|
|
7,119,807
|
|
|
|
|
5.0
|
%
|
100 Vanguard Blvd.
Malvern, PA 19355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Based on the number of shares
outstanding (143,162,324) on March 10, 2011, plus the
number of shares acquirable by the specified person(s) within
60 days of March 10, 2011.
|
|
(2)
|
|
According to a Schedule 13G
filed with the SEC on January 10, 2011, FMR LLC has sole
voting power with regard to 106,541 shares of our common
stock, shared voting power with regard to none of the shares of
our common stock, sole investment power with regard to
21,221,320 shares of our common stock and shared investment
power with regard to none of the shares of our common stock, and
Edward C. Johnson 3d has sole voting power with regard to none
of the shares of our common stock and sole investment power with
regard to 22,221,320 shares of our common stock.
|
|
(3)
|
|
According to a Schedule 13G/A
filed with the SEC on March 9, 2011, as of
February 28, 2011 Tradewinds Global Investors, LLC has sole
voting power with regard to 8,544,191 shares of our common
stock, shared voting power with regard to none of the shares of
our common stock, sole investment power with regard to
10,765,464 shares of our common stock and shared investment
power with regard to none of the shares of our common stock.
|
19
|
|
|
(4)
|
|
According to a Schedule 13G
filed with the SEC on February 9, 2011, BlackRock Inc. has
sole voting power and sole investment power with regard to
8,113,092 shares of our common stock.
|
|
(5)
|
|
According to a Schedule 13G
filed with the SEC on February 11, 2011, State Street Corp.
has shared voting power and shared investment power with regard
to 7,931,977 shares of our common stock. State Street
Bank & Trust Company disclaims beneficial
ownership of these shares.
|
|
(6)
|
|
According to a Schedule 13G
filed with the SEC on February 11, 2011, Donald
Smith & Co., Inc. has sole voting power with regard to
3,999,606 shares of our common stock and sole investment
power with regard to 7,818,350 shares of our common stock,
and Donald Smith Long/Short Equities Fund, L.P. has sole voting
power with regard to 36,147 shares of our common stock,
shared voting power with regard to none of the shares of our
common stock and sole investment power with regard to
7,818,350 shares of our common stock.
|
|
(7)
|
|
According to a Schedule 13G/A
filed with the SEC on February 9, 2011, The Vanguard Group,
Inc. has sole voting power with regard to 178,822 shares of
our common stock, sole investment power with regard to
6,940,985 shares of our common stock and shared investment
power with regard to 178,822 shares of our common stock.
|
20
Section 16(a) of the Exchange Act requires our directors,
executive officers and holders of more than 10% of our voting
stock to file with the SEC initial reports of ownership and
reports of changes in ownership of our common stock or other
equity securities. Based on a review of those forms provided to
us and any written representations, we believe that during the
year ended December 31, 2010, our directors, executive
officers and holders of more than 10% of our voting stock filed
the required reports on a timely basis under Section 16(a).
Director
Compensation Program
During 2010 we provided the following annual compensation to our
directors who are not employees. We do not pay employee
directors for Board service in addition to their regular
compensation.
Retainer and Fees
|
|
|
|
Non-Employee Director Annual
Retainers and Fees (1)
|
Board of Directors (2)
|
|
|
$220,000
|
|
|
|
|
Board Chair (3)
|
|
|
$200,000
|
|
|
|
|
Lead Director (3)
|
|
|
$25,000
|
|
|
|
|
Audit Committee Chair
|
|
|
$15,000
|
|
|
|
|
Compensation Committee Chair
|
|
|
$10,000
|
|
|
|
|
Environmental, Health & Safety Committee Chair
|
|
|
$8,000
|
|
|
|
|
Governance Committee Chair
|
|
|
$8,000
|
|
|
|
|
|
|
|
(1)
|
|
In addition to the retainers set
forth in the table, we reimburse our directors for travel and
lodging expenses that they incur in connection with their
attendance at meetings of the Board, meetings of any Board
committee of which they are members and our annual meeting of
stockholders.
|
|
(2)
|
|
The Annual Base Retainer of
$220,000 is payable 50% in cash and 50% in phantom stock (cash
denominated units which track our stock price and that must be
deferred for a minimum of three years before they may be
distributed to a director).
|
|
(3)
|
|
Effective June 4, 2010, the
Lead Director position was replaced with the non-employee Board
Chair position.
|
Information
on Director Compensation Plans
Board of
Directors Deferred Compensation Plan
Under the Tesoro Corporation Board of Directors Deferred
Compensation Plan (Deferred Compensation Plan), a
director electing to participate may defer a minimum of 20% and
up to 100% of his or her total cash compensation, including the
portion of any annual retainer fee paid in cash, for the ensuing
year into an interest-bearing deferred cash account maintained
by us, or with respect to the portion of the annual retainer
paid in cash only, into the directors deferred phantom
stock account. For amounts deferred into a cash account,
interest is applied each quarter to the beginning account
balance at the prime rate published in the Wall Street
Journal on the last business day of the quarter plus two
percentage points (5.25% at December 31, 2010). One-half of
each non-employee directors annual retainer fee is
mandatorily deferred as a non-elective contribution into a
deferred phantom stock account. The deferred phantom stock must
be held in the account for at least three years regardless of
whether or not the director is an active member of the Board. A
director may also elect to defer the phantom stock beyond the
mandatory three-year period.
21
All payments under the Deferred Compensation Plan are solely our
obligation. Upon the disability or death of a participating
director or upon a
Change-in-Control
(as defined in the Deferred Compensation Plan), the balance in
the directors account under the Deferred Compensation Plan
is payable to him or her or his or her beneficiary or
beneficiaries, as applicable, in one lump sum.
2010 Director
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned or
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
Paid in
|
|
|
|
Stock
|
|
|
|
Option
|
|
|
|
Compensation
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
Awards
|
|
|
|
Awards
|
|
|
|
Earnings
|
|
|
|
Compensation
|
|
|
|
|
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
($)
|
|
|
|
Total
|
|
Name
|
|
|
(1)
|
|
|
|
(2)(3)
|
|
|
|
(3)
|
|
|
|
(4)
|
|
|
|
(5)
|
|
|
|
($)
|
|
John F. Bookout III (6)
|
|
|
|
17,351
|
|
|
|
|
17,351
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
107
|
|
|
|
|
34,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rodney F. Chase
|
|
|
|
119,839
|
|
|
|
|
110,000
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
389
|
|
|
|
|
230,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert W. Goldman
|
|
|
|
118,000
|
|
|
|
|
110,000
|
|
|
|
|
-
|
|
|
|
|
24
|
|
|
|
|
389
|
|
|
|
|
228,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven H. Grapstein
|
|
|
|
240,786
|
|
|
|
|
110,000
|
|
|
|
|
-
|
|
|
|
|
137
|
|
|
|
|
98
|
|
|
|
|
351,021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William J. Johnson
|
|
|
|
110,000
|
|
|
|
|
110,000
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
633
|
|
|
|
|
220,633
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J.W. Nokes
|
|
|
|
118,000
|
|
|
|
|
110,000
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
254
|
|
|
|
|
228,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald H. Schmude
|
|
|
|
110,000
|
|
|
|
|
110,000
|
|
|
|
|
-
|
|
|
|
|
2,509
|
|
|
|
|
533
|
|
|
|
|
223,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael E. Wiley
|
|
|
|
120,000
|
|
|
|
|
110,000
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
161
|
|
|
|
|
230,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick Y. Yang (7)
|
|
|
|
7,097
|
|
|
|
|
97,097
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
104,194
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The following deferral elections of
fees earned in 2010 were made by directors pursuant to the Board
of Directors Deferred Compensation Plan: Mr. Goldman,
$35,400; Mr. Grapstein, $175,393; Mr. Schmude,
$110,000 and Mr. Yang, $7,097.
|
|
(2)
|
|
The amounts in the table reflect
one-half of each non-employee directors annual retainer
fees that are automatically deferred as a non-elective
contribution into the directors deferred phantom stock
account.
|
|
(3)
|
|
The table below reflects the total
options (no options were granted in 2010) and total phantom
stock units outstanding as of the end of the 2010 fiscal year
for each non-employee director.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Options
|
|
|
Total Phantom Stock
|
Director
|
|
|
Outstanding
|
|
|
Units Outstanding
|
John F. Bookout
|
|
|
|
19,000
|
|
|
|
|
6,576
|
|
|
|
|
|
|
|
|
|
|
|
|
Rodney F. Chase
|
|
|
|
19,000
|
|
|
|
|
14,083
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert W. Goldman
|
|
|
|
37,000
|
|
|
|
|
19,783
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven H. Grapstein
|
|
|
|
45,000
|
|
|
|
|
50,696
|
|
|
|
|
|
|
|
|
|
|
|
|
William J. Johnson
|
|
|
|
45,000
|
|
|
|
|
27,021
|
|
|
|
|
|
|
|
|
|
|
|
|
J.W. Nokes
|
|
|
|
19,000
|
|
|
|
|
13,902
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald H. Schmude
|
|
|
|
45,000
|
|
|
|
|
51,301
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael E. Wiley
|
|
|
|
31,000
|
|
|
|
|
14,358
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick Y. Yang
|
|
|
|
-
|
|
|
|
|
5,649
|
|
|
|
|
|
|
|
|
|
|
|
|
22
|
|
|
(4)
|
|
The amounts shown represent
interest credited under the Board of Directors Deferred
Compensation Plan exceeding 120% of the applicable federal rate.
|
|
(5)
|
|
Amounts shown are the premiums we
paid for group life and accidental death and dismemberment
insurance coverage prior to eliminating this benefit for active
and retired directors effective July 1, 2010.
|
|
(6)
|
|
Mr. Bookout resigned from the
Board effective February 25, 2010.
|
|
(7)
|
|
Mr. Yang was elected to the
Board effective December 8, 2010. In addition, he received
a sign-on award of $90,000, which was mandatorily deferred into
the directors deferred phantom stock account. This award
has been reflected in the Stock Award Column.
|
Director
Stock Ownership Guidelines
The Director Stock Ownership Guidelines require directors to own
stock (either directly or as deferred phantom shares) valued at
five times their annual cash retainer. Directors as of
May 1, 2009 have five years from that date to meet the
ownership target. New directors have five years from the date of
their initial election to the Board to meet their ownership
requirement. Once the requirement is met, the directors must
retain their level of ownership until they no longer serve on
the Board. All current directors either meet the guidelines or
are on track to do so within the required time period.
23
In accordance with recently adopted Section 14A of the
Exchange Act, and as a matter of good corporate governance, we
are asking stockholders to approve, on an advisory basis, the
compensation of our named executive officers disclosed in the
Compensation Discussion and Analysis, the Summary Compensation
Table and the related compensation tables, notes and narrative
in this Proxy Statement. As described below in the Compensation
Discussion and Analysis, the Compensation Committee has
structured our executive compensation program to achieve the
following key objectives:
|
|
|
|
|
Reward leaders for superior execution and delivery of
outstanding business results and driving a performance-oriented
culture;
|
|
|
|
Promote and sustain exceptional performance over time to
generate long-term growth in stockholder value; and
|
|
|
|
Inspire teamwork and motivate superior individual performance.
|
Our named executive officer compensation decisions in 2010
reflect these objectives. For example, the 2010 annual incentive
awards were paid between 107.5% and 115% of target for our named
executive officers, based on our strong operating performance.
In addition, we granted annual long-term incentive awards to our
named executive officers in May 2010 with a significant portion
(40%) in the form of performance units that will pay out based
on a combination of our relative performance against peers in
the refining and marketing industry and companies in the
S&P 500 index, and our absolute stockholder return.
We also took several actions in 2010 to strengthen our
commitment to best practices in our executive compensation
program, including:
|
|
|
|
|
Eliminated evergreen and excise tax
gross-up
provisions in new and amended executive employment agreements;
|
|
|
|
Adopted a clawback policy; and
|
|
|
|
Eliminated perquisites for senior management.
|
We urge stockholders to read the Compensation Discussion and
Analysis beginning on page 26 of this Proxy Statement,
which describes in more detail how our executive compensation
program operates and is designed to achieve our compensation
objectives, as well as the Summary Compensation Table and other
related compensation tables and narrative, appearing on
pages 39 through 61, which provide detailed information on
the compensation of our named executive officers. The
Compensation Committee and the Board of Directors believe that
the program articulated in the Compensation Discussion and
Analysis is effective in achieving our goals and that the
compensation of our named executive officers reported in this
Proxy Statement has contributed to our recent improvement and
will contribute to our long-term success.
This advisory vote, commonly referred to as a
say-on-pay
vote, is non-binding on the Board of Directors. Although
non-binding, the Board and the Compensation Committee will
review and consider the voting results when making future
decisions regarding our executive compensation program.
Our Board of Directors recommends that you vote
FOR the approval of the compensation paid to our
named executive officers disclosed in the Compensation
Discussion and Analysis, the Summary Compensation Table and the
related compensation tables, notes and narrative in this Proxy
Statement.
24
Pursuant to recently adopted Section 14A of the Exchange
Act, we are asking stockholders to vote on whether future
advisory votes on executive compensation of the nature reflected
in Proposal No. 2 above should occur every year, every
two years or every three years.
After careful consideration, the Board of Directors has
determined that holding an advisory vote on executive
compensation every year is the most appropriate policy for us at
this time, and recommends that stockholders vote for future
advisory votes on executive compensation to occur every year.
While our executive compensation program is designed to promote
a long-term connection between pay and performance, the Board of
Directors recognizes that executive compensation disclosures are
made annually. Given that the
say-on-pay
advisory vote provisions are new, holding an annual advisory
vote on executive compensation provides us with more direct and
immediate feedback on our compensation disclosures. However,
stockholders should note that because the advisory vote on
executive compensation occurs well after the beginning of the
compensation year, and because the different elements of our
executive compensation program are designed to operate in an
integrated manner and to complement one another, in many cases
it may not be appropriate or feasible to change our executive
compensation program in consideration of any one years
advisory vote on executive compensation by the time of the
following years annual meeting of stockholders. An annual
advisory vote on executive compensation also is consistent with
our practice of having all directors elected annually and
annually providing stockholders the opportunity to ratify the
Board of Directors selection of independent auditors.
We understand that our stockholders may have different views as
to what is an appropriate frequency for advisory votes on
executive compensation, and we will carefully review the voting
results on this proposal. Stockholders will be able to specify
one of four choices for this proposal on the proxy card: one
year, two years, three years, or abstain. Stockholders are not
voting to approve or disapprove the Boards recommendation.
This advisory vote on the frequency of future advisory votes on
executive compensation is non-binding on the Board of Directors.
Notwithstanding the Boards recommendation and the outcome
of the stockholder vote, the Board may in the future decide to
conduct advisory votes on a more or less frequent basis and may
vary its practice based on factors such as discussions with
stockholders and the adoption of material changes to our
compensation program.
Our Board of Directors recommends that you vote to conduct
future advisory votes on executive compensation every ONE
YEAR.
25
Compensation
Discussion and Analysis
Executive
Summary
This Compensation Discussion and Analysis
(CD&A) discusses the principles underlying our
executive compensation program and the key executive
compensation decisions that were made for 2010. It also explains
the most important factors relevant to such decisions. This
CD&A provides context and background for the compensation
earned by and awarded to our named executive officers
(NEOs), as reflected in the compensation tables that
follow the CD&A. Our NEOs for 2010 were as follows:
|
|
|
|
|
Gregory J. Goff, President and Chief Executive Officer;
|
|
|
|
G. Scott Spendlove, Senior Vice President and Chief Financial
Officer;
|
|
|
|
Charles S. Parrish, Executive Vice President, General Counsel
and Secretary;
|
|
|
|
Claude A. Flagg, Senior Vice President, Strategy and Business
Development;
|
Messrs. Smith, Wright and Finnerty were also NEOs during
the fiscal year but each of them retired from employment with us
in 2010. Mr. Lewis, also an NEO in 2010, will cease
employment with us effective March 31, 2011. The terms of
Messrs. Smiths, Wrights and Finnertys
retirements and Mr. Lewis separation are summarized
under the heading Potential Payments Upon Termination or
Change-In-Control
in this Proxy Statement.
|
|
|
|
|
Bruce A. Smith, Former Chairman of the Board of Directors,
President and Chief Executive Officer;
|
|
|
|
Gregory A. Wright, Former Executive Vice President and Chief
Financial Officer;
|
|
|
|
William J. Finnerty, Former Executive Vice President, Strategy
and Corporate Development; and
|
|
|
|
Everett D. Lewis, Former Executive Vice President and Chief
Operating Officer.
|
2010
Business Results
Our vision is to be the premier low-cost supplier of
transportation fuels in the refining and marketing business in
our markets, providing value for our customers while delivering
industry leading returns for our shareholders and conducting
ourselves responsibly in the communities in which we operate. To
achieve these goals we are pursuing the following strategic
priorities:
|
|
|
|
|
improve operational efficiency and effectiveness by focusing on
safety and reliability, system improvements and cost leadership;
|
|
|
|
drive commercial excellence by strengthening our supply and
trading activities to provide additional value to the business;
|
|
|
|
strengthen our financial position by exercising capital
discipline and focusing on improving our liquidity; and
|
|
|
|
capture value-driven growth through a focus on our logistics
assets and growing our marketing business.
|
During 2010, our goals were focused on optimizing cash flows
from operations by improving our capture of available margins,
devoting capital to income improvement projects, lowering
administrative costs and lowering our energy and maintenance
costs. Relative to these goals, during 2010 we:
|
|
|
|
|
improved our gross refining margin by $191 million and
improved our cash balance by approximately $235 million as
a result of our capital and non-capital initiatives to lower
transportation and feedstock costs, increase product margins and
improve refinery yields;
|
26
|
|
|
|
|
funded our capital spending of $287 million through cash
flows from operations of $385 million of which
approximately 10% was devoted to income improvement
projects; and
|
|
|
|
significantly reduced our employee benefit obligation by
$207 million primarily through changes to our
post-retirement life, medical and pension benefit programs.
|
In addition, we successfully transitioned to a new leadership
team, including the appointments of Mr. Goff as our CEO and
Mr. Spendlove as our CFO. As a step toward implementing our
value-creation strategy, we announced our intention to
form Tesoro Logistics LP, designed to take advantage of our
strategically advantaged logistics assets.
Our
Executive Compensation Framework
Our executive compensation framework is strategically designed
to align overall compensation with the successful delivery of
outstanding business results. Our executive compensation program
targets the market median for each element of direct
compensation (base salary, annual cash incentives and long-term
incentives) while allocating the majority of total direct
compensation to performance-based annual cash incentives and
long-term incentives. This approach allows us to reward our
executives for delivering value to stockholders while reducing
or eliminating overall compensation levels if we do not achieve
the results of our goals.
2010
Executive Compensation Program
Reflecting our business results and other considerations, the
Committees key compensation decisions in 2010 and early
2011 included:
|
|
|
|
|
Approval of a new compensation peer group consisting of
40 companies. The peer group consists of companies with
similar characteristics to our business and reflects the labor
market for our executive talent.
|
|
|
|
A base salary adjustment was approved for Mr. Spendlove in
recognition of the increased responsibilities associated with
his new role as CFO. Base salaries for our other NEOs were not
increased in 2010.
|
|
|
|
2010 annual incentive awards were paid between 107.5% and 115%
of target for our NEOs based on our strong operating
performance. The portion of the bonus program tied to safety was
not awarded in light of the incident at our Anacortes refinery.
Additional upward adjustments were made to incentive awards for
select NEOs to recognize outstanding individual performance.
|
|
|
|
The annual long-term incentive awards granted to our NEOs in May
2010 were lower than awards in 2009 (based on grant date fair
value), reflecting the lower values reported by our new peer
group. Approximately 40% of the 2010 awards granted to our NEOs
(30% for Messrs. Flagg and Spendlove) were made in the form
of performance units (based on targeted payout values). These
awards will pay out at a range of 0-200% of target and are based
on a combination of relative performance against peers in the
refining and marketing industries and companies in the S&P
500 index, and our absolute stockholder return over a
33-month
period through December 31, 2012. However, no awards will
be paid unless we achieve positive stockholder return for the
performance period.
|
|
|
|
Other actions taken to strengthen corporate governance and
compensation practices are summarized in the table below.
|
|
|
|
|
§
|
Eliminated evergreen provisions in employment
agreements. To align our employment agreements
with stockholder interests and best practices, we
amended employment agreements, including Mr. Lewis,
and entered into a new employment agreement with Mr. Goff
with fixed terms.
|
|
|
§
|
Eliminated excise tax
gross-ups
and additional service credit provisions from severance and
change- in-control arrangements. To reduce
amounts payable to executives terminated
|
27
|
|
|
|
|
involuntarily or upon a
change-in-control
event to competitive levels and to strengthen
stockholder-friendly pay practices, the amended employment
agreement with Mr. Lewis, and the new employment agreement
with Mr. Goff do not provide for excise tax
gross-ups or
additional service credit. For the foregoing reasons and to
eliminate need to offer new individual employment agreements, we
adopted a new Executive Severance and
Change-in-Control
Plan for participants not covered by the terms of an employment
agreement, including Messrs. Lewis (after his employment
agreement expired on January 31, 2011), Spendlove and Flagg
that does not provide for excise tax
gross-ups or
additional service credit.
|
|
|
|
|
§
|
Adopted a compensation recoupment (or clawback)
policy. To align pay practices with stockholder
interests by increasing accountability and discouraging
excessive risk-taking, we adopted a compensation recoupment
policy that allows the recapture of incentive payments paid to
an executive who engages in financial misconduct.
|
|
|
§
|
Eliminated perquisites for senior
management. To promote consistency with overall
competitive practices and our compensation philosophy and adopt
best practice design, we eliminated perquisites for
senior management.
|
The Committee believes the actions described above clearly
demonstrate our commitment to implementation and execution of a
results-oriented compensation program that reflects good
corporate governance practices.
Compensation
Philosophy
Our compensation philosophy is to offer competitive compensation
and benefit programs that will attract and retain the talented
executives and employees who are critical to executing our
strategic priorities and committed to increasing stockholder
value while adhering to our core values.
Our executive compensation program is designed around the
following principles:
|
|
|
|
|
Rewarding leaders for superior execution and delivery of
outstanding business results and driving a performance-oriented
culture;
|
|
|
|
Promoting and sustaining exceptional performance over time to
generate long-term growth in stockholder value;
|
|
|
|
Inspiring teamwork and motivating superior individual
performance.
|
Our executive compensation program is comprised of a mix of
fixed and variable cash and equity-based pay with a significant
portion of actual total compensation dependent on meeting
financial and operational objectives.
Our
Compensation Committee
All compensation and awards to our NEOs are approved by our
Compensation Committee, which is composed of three independent
directors. The CEO, the General Counsel or Associate General
Counsel - Corporate, the Senior Vice President, Human Resources
and Communication and the Managing Director, Compensation and
Benefits attend regular Compensation Committee meetings and
provide information, analysis, additional perspective, and
proposals for changes, as requested.
The Compensation Committee meets outside the presence of all of
our executive officers, including the NEOs, together with the
Committees compensation consultant, if requested, to
consider appropriate compensation for our CEO, taking into
consideration an annual review of the CEOs performance by
the independent members of the Board. The Board receives a list
of individual goals from the CEO each year during the first
quarter and the CEO formally reviews his performance against the
goals with the Board during the year and after the close of the
fiscal year. The independent Board members evaluate the
CEOs performance. The Compensation Committee uses this
performance evaluation, market data and input from its
compensation
28
consultant to determine the CEOs base salary, annual cash
incentive plan award payout and long-term equity incentive
awards.
For our other NEOs, our Compensation Committee annually reviews
the base salary and short-term and long-term compensation for
members of senior management, including the other NEOs.
Adjustments, if any, are made to the base salaries at the
discretion of the Committee after taking into consideration both
the comparative analysis described below under the heading
Comparative Analysis and input from our CEO.
Our CEO makes annual recommendations to the Compensation
Committee on the short-term and long-term compensation for
members of senior management, including the other NEOs. The
recommendations are made after finalizing our financial and
operational results for the prior fiscal year and are based on
the CEOs evaluation of each of the members
performance. Factors including financial and operational
results, individual contributions in obtaining those results and
achievement of individual goals are taken into consideration.
The CEOs recommendations are considered by the
Compensation Committee when making decisions on setting bonus
targets, payments under our annual cash incentive program and
grants of long-term equity incentive awards.
When approving changes in total compensation for our officers at
the Senior Vice President level and above and other employees
designated as Section 16b officers as defined by the SEC,
the Compensation Committee reviews individual compensation data
sheets, which provide information on each executives
current and past compensation including base salary, annual cash
incentive compensation, long-term equity incentive awards, and
wealth accumulation through participation in our
Company-sponsored benefit plans including, but not limited to,
deferred compensation plans. The Committee uses the data in the
individual compensation data sheets as an informational tool to
review how a change in the amount of each compensation element
affects the executives total compensation and to review
each executives total compensation in the aggregate. Based
upon its most recent review, the Compensation Committee
determined that total compensation, in the aggregate, for our
executives was consistent with the Compensation Committees
expectations and our compensation philosophy described above.
Compensation
Consultants
With respect to fiscal 2010 compensation decisions, the
Compensation Committee engaged Frederic W. Cook & Co.
(FW Cook) as a consultant to review our compensation
practices and to compare the compensation of our executive
officers to that of our peers, as discussed in further detail
below under the heading Comparative Analysis. During
fiscal 2010, FW Cook provided no services to us or management
other than its work providing executive compensation advice to
the Compensation Committee.
Comparative
Analysis
For fiscal 2010, FW Cook compared the relevant compensation for
our senior management positions with a group of
40 companies, which we refer to as our peer
group. For fiscal 2010, the Compensation Committee asked
FW Cook to review our historical compensation benchmarking
approach and provide recommended improvements. The peer group
used historically was called the smokestack industry
group and consisted of over 325 companies from various
industries. This broad peer group was used for benchmarking
purposes due to the limited number of size appropriate
independent refining peers.
FW Cook and management followed a systematic and principled
approach to the selection of the new peer group using the
following guiding principles:
|
|
|
|
|
The peer group should include a sufficient number of companies
to minimize
year-over-year
volatility in compensation data;
|
|
|
|
Selection criteria should be objective where possible and
include similar scale, industry, and business characteristics
that reflect our current circumstances as well as our business
direction; and
|
|
|
|
Companies should be US-based to facilitate compensation
comparisons.
|
29
Based on the principles outlined above, the following selection
criteria were approved by the Compensation Committee to develop
the peer group for fiscal 2010:
|
|
|
|
|
Asset/Capital intensive nature;
|
|
|
|
Primarily manufacturers in industries such as oil and gas,
chemicals, forest products and utilities in which commodity
prices heavily influence profitability;
|
|
|
|
Environmentally and safety focused;
|
|
|
|
Currently in a highly regulated business or whose core
operations are likely to be significantly impacted by proposed
regulations;
|
|
|
|
Operate a number of fixed manufacturing sites or plants; and
|
|
|
|
Companies should generally be no less than one-third and no
greater than three times our size as measured by revenue, total
assets, and market capitalization.
|
The members of our peer group for fiscal 2010 are included in
the table below. For purposes of the performance units granted
during fiscal 2010, we used a separate performance peer group,
as discussed in more detail below under the heading
Long-Term Incentives.
|
|
|
|
|
|
|
|
Air Products and Chemicals, Inc.
|
|
|
Marathon Oil Corporation
|
|
|
|
|
Alcoa Inc.
|
|
|
Mirant Corporation
|
|
|
|
|
Alliant Energy Corporation
|
|
|
Mosaic Company, The
|
|
|
|
|
Alon USA Energy, Inc.
|
|
|
Murphy Oil Corporation
|
|
|
|
|
Ameren Corporation
|
|
|
NSTAR
|
|
|
|
|
Calpine Corporation
|
|
|
NuStar Energy L.P.
|
|
|
|
|
Centerpoint Energy, Inc.
|
|
|
Pepco Holdings, Inc.
|
|
|
|
|
CHS Inc.
|
|
|
Potash Corporation of Saskatchewan Inc.
|
|
|
|
|
Constellation Energy Group, Inc.
|
|
|
PPG Industries, Inc.
|
|
|
|
|
Dow Chemical Company
|
|
|
PPL Corporation
|
|
|
|
|
Eastman Chemical Company
|
|
|
Praxair, Inc.
|
|
|
|
|
Eaton Corporation
|
|
|
Sempra Energy
|
|
|
|
|
El Paso Corporation
|
|
|
Smurfit Stone Container Corporation
|
|
|
|
|
Frontier Oil Corporation
|
|
|
Sunoco, Inc.
|
|
|
|
|
Hess Corporation
|
|
|
United States Steel Corporation
|
|
|
|
|
Holly Corporation
|
|
|
Valero Energy Corporation
|
|
|
|
|
Ingersoll-Rand plc
|
|
|
Western Refining, Inc.
|
|
|
|
|
Integrys Energy Group, Inc.
|
|
|
Weyerhaeuser Company
|
|
|
|
|
International Paper Company
|
|
|
Williams Companies, Inc.
|
|
|
|
|
Kimberly-Clark Corporation
|
|
|
XCEL Energy Inc.
|
|
|
|
|
30
Pursuant to the peer group listed above, the 2009 revenues (in
millions) range from $2,309 to $68,144; 2009 total assets (in
millions) range from $2,133 to $65,937; and market
capitalization (in millions) range from $50 to $44,145. We had
2009 revenues (in millions) of $16,872, 2009 total assets (in
millions) of $8,070 and market capitalization (in millions) of
$1,648.
In addition to data from the peer group, FW Cook also provided
data to the Compensation Committee from the following resources
to confirm and enhance the peer group market group:
|
|
|
|
|
Industry specific data from the Towers Perrin Oil Industry Group
(OIG) survey;
|
|
|
|
General industry data; and
|
|
|
|
Proxy executive compensation data for US-based independent
refiners.
|
We generally target base salaries, annual cash incentives and
long-term incentives to the 50th percentile of our peer
group. We have chosen the 50th percentile for these
compensation components because we believe it offers a fair and
competitive starting point to attract and retain critical
executive talent. Our emphasis on variable or at
risk components of incentive pay results in actual
compensation ranging above or below the median based on the
achievement of the objectives established in our annual and
long-term incentive plans and changes in the value of the
Companys stock.
Elements
of Executive Compensation
Our executive compensation program is designed to reflect the
philosophy and objectives described above. The elements of
executive pay are presented in the table below and discussed in
more detail in the following paragraphs.
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Component
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Type of
Payment/Benefit
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|
Purpose
|
Base Salary
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|
Fixed annual cash payments with each executive eligible for
annual increase.
|
|
|
Attract and retain talent. Designed to be competitive with those
of comparable companies.
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Annual Cash Incentives
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Performance-based annual cash payment.
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Pay for performance. Focus on corporate, team/business unit and
individual goals.
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Long-term Incentives
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Stock options, restricted stock, and performance units.
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Designed to align executive compensation with the long-term
interests of our stockholders by rewarding our executives for
excellent performance as it is reflected in our stock price.
|
Other Executive Benefits
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Retirement benefits and perquisites.
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Provide competitive benefits and retention. As of July 2010,
eliminated all executive perquisites for former, current and
future executives in alignment with best practice.
|
Health and Welfare Benefits
|
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|
Fixed compensation component, generally available to all
employees.
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|
Attract and retain talent. Designed to be competitive with those
of comparable companies.
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We determine the appropriate level for each compensation
component based in part, but not exclusively, on comparative
analysis against our peer group, our view of internal equity and
consistency, and other relevant considerations. In addition to
determining the appropriate level for each compensation
component, our Compensation Committee reviews total compensation
for alignment with our philosophy and for alignment with our
peer group. However, the Compensation Committee believes that
each compensation component should be considered separately and
that payments or awards derived from one component should not
negate or reduce payments or awards derived from other
components.
31
Our Compensation Committee has not adopted any formal or
informal policies or guidelines for allocating compensation
between long-term and annual compensation (base salary and
annual cash incentives), between cash and non-cash compensation,
or among different forms of non-cash compensation. The following
sets forth the relationship of each of the components of
compensation to total compensation for our CEO and NEOs for 2010.
Elements
of CEO 2010 Compensation*
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At-Risk Compensation:
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Annual Cash
|
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18%
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|
Incentive
|
|
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|
Performance
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25%
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Units
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Stock Options
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19%
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|
|
|
Total
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62%
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|
|
|
* |
The compensation elements above are based on
Mr. Goffs targeted compensation opportunities on an
annualized basis. 62% of his total compensation is considered
at risk and 43% is based upon achieving specific
performance measures.
|
Elements
of Other NEOs 2010 Compensation*
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At-Risk Compensation:
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Annual Cash
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|
21%
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Incentives
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|
|
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Performance
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19%
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Units
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Stock Options
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16%
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|
|
Total
|
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|
56%
|
|
|
|
|
* |
|
The compensation elements above are based on the targeted
compensation opportunities for Messrs. Spendlove, Parrish,
Flagg and Lewis, on an annualized basis. 56% of these other
NEOs total compensation is considered at risk
and 40% is based upon achieving specific performance measures. |
32
Base Salaries. Base salaries for our
NEOs are reviewed each year. When making base salary
determinations, the Compensation Committee considers
market-based salary rates at the 50th percentile of our
peer group as well as individual roles, experience, performance,
the relative importance of the position to us, the past
individual salary history and the competitive landscape for the
position (with no particular weighting assigned to any of these
factors).
The base salaries paid to our NEOs in 2010 are set forth below
in the Summary Compensation Table in this Proxy Statement. For
2010, with the exception of Messrs. Goff and Spendlove,
base salaries for the NEOs remained unchanged from their 2009
levels. Mr. Goff commenced his employment with us on
May 1, 2010; his initial base salary was established in
connection with the arms length negotiation of his
employment agreement with our independent directors.
Mr. Spendloves base salary was increased from
$340,000 to $400,000, effective September 10, 2010, in
connection with his promotion to Senior Vice President and Chief
Financial Officer.
Annual Performance Incentives. We believe that
annual cash based incentives promote managements efforts
to drive the achievement of annual performance goals and
objectives, which in turn helps to create additional shareholder
value. In March 2010, the Compensation Committee approved the
2010 incentive compensation program (the 2010 ICP)
based on managements recommendation. The 2010 ICP
structure approved for our senior executives was similarly used
across the Company for salaried and hourly incentive eligible
employees. The 2010 ICP used a mix of objectives designed to
focus management on key areas of performance. The 2010
performance measures were derived from shareholder value drivers
that were within the control and influence of management and
measured comparably from year to year. These measures focused on
two equally-weighted, independently achievable objectives:
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Financial effectiveness measured by
year-over-year
income improvements through execution of non-capital
initiatives. This metric promoted the importance of rewarding
measureable improvements resulting in profitability through
internal efforts.
|
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|
|
Operational performance measures included
improvements in the personal safety, process safety,
environmental incidents, and cost management. These metrics
emphasized the importance of environmental, safety and
reliability and support a focus on driving further efficiencies.
|
Potential payouts were based on pre-established threshold,
target and maximum performance levels. The Committee had further
discretion to decrease or increase payouts by up to 25% based
upon its assessment of quantitative and qualitative measures
relating to: our performance relative to our peers, market
expectations or broader indexes; progress in attaining strategic
goals; business unit performance; and leadership attributes
33
(no particular weighting was assigned to any measure). The
performance metrics and results under the 2010 ICP are
summarized in the table below:
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Goal
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Weighting
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Threshold
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Target
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Maximum
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Actual
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% Achieved
|
Financial Effectiveness: measured by
improvement in non-capital
improvement initiatives
(in $ millions)
|
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50%
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50
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165
|
|
|
231
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|
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$204
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|
|
160%
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
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|
Personal Safety: measured by
improvement in # of incidents
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|
|
7.5% - 15%
|
|
|
3-year average
(1.14)
|
|
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10%
improvement
over 3-year
average (1.03)
|
|
|
20%
improvement
over 3-year
average (.91)
|
|
|
.98
|
|
|
0*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Process Safety Management:
measured by improvement in # of
incidents
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|
|
0% - 7.5%**
|
|
|
3-year average
(11)
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|
|
20%
improvement
over 3-year
average (9)
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|
|
30%
improvement
over 3-year
average (8)
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|
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20
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|
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0
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|
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|
|
|
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|
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|
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Environmental: measured by
improvement in # of incidents
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0% - 7.5%**
|
|
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3-year average
(34)
|
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10%
improvement
over 3-year
average (31)
|
|
|
20%
improvement
over 3-year
average (27)
|
|
|
36
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Cost Management: measured by cash
expenditures as a % of total budget
|
|
|
27.5% - 35%
|
|
|
£
102.5 and >
97.5
|
|
|
£
97.5 and >
95
|
|
|
£
95
|
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|
97%
|
|
|
100%
|
|
|
|
|
|
|
|
|
|
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Overall Performance Achieved
|
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107.5% -
115%
|
|
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|
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*
|
|
The portion of the bonus program
tied to personal safety was not awarded in light of the incident
at our Anacortes refinery.
|
|
**
|
|
Process Safety and environmental
performance applied only to executives and employees in the
operations business units (e.g. refining).
|
Consistent with prior years, the target bonus opportunities for
the NEOs were set at the 50th percentile of our peer group.
With the exception of Messrs. Goffs and
Spendloves bonus targets, the NEOs target amounts
remained unchanged from 2009. Mr. Goffs targets were
set in connection with the arms length negotiation of his
employment agreement. Mr. Spendloves target bonus
percentage was increased by 10% in connection with his promotion
to CFO. For 2010, the NEO target bonus amounts, as a percentage
of base salary, were as follows: Mr. Goff 100%
(Mr. Goffs award payment was subject to proration for
the portion of the fiscal year that he was employed by us);
Mr. Spendlove 60%; Mr. Parrish
70%; Mr. Flagg 65%; Mr. Smith
120%; Mr. Wright 80%;
Mr. Finnerty 100% and
Mr. Lewis 90%. Messrs. Smith, Wright, and
Finnerty were not eligible for an annual incentive compensation
award due to their retirement during 2010.
In determining the annual incentive awards to our NEOs, the
Committee considered our overall performance in addition to
performance relative to the metrics established under the 2010
ICP summarized in
34
the table above. The table below provides the specific bonus
targets, level of achievement, discretionary adjustment, and
annual bonus payment for each NEO for 2010:
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|
Discretionary
|
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|
Bonus
|
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Calculated
|
|
|
|
Adjustment
|
|
|
|
|
|
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|
|
Eligible
|
|
|
|
Target
|
|
|
|
Performance
|
|
|
|
Bonus
|
|
|
|
(% Increase/
|
|
|
|
Total Bonus
|
|
Name
|
|
|
Earnings
|
|
|
|
Bonus %
|
|
|
|
Achieved (1)
|
|
|
|
Payout ($)
|
|
|
|
Decrease)
|
|
|
|
Payout ($)
|
|
Gregory J. Goff
|
|
|
|
571,154
|
|
|
|
|
100
|
%
|
|
|
|
109
|
%
|
|
|
|
622,558
|
|
|
|
|
20.5
|
%
|
|
|
|
750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
G. Scott Spendlove
|
|
|
|
356,385
|
|
|
|
|
60
|
%
|
|
|
|
115
|
%
|
|
|
|
217,483
|
|
|
|
|
10
|
%
|
|
|
|
239,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
Charles S. Parrish
|
|
|
|
500,000
|
|
|
|
|
70
|
%
|
|
|
|
115
|
%
|
|
|
|
402,500
|
|
|
|
|
10
|
%
|
|
|
|
442,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claude A. Flagg
|
|
|
|
420,000
|
|
|
|
|
65
|
%
|
|
|
|
107.5
|
%
|
|
|
|
293,475
|
|
|
|
|
10
|
%
|
|
|
|
322,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former Executive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Everett D. Lewis (2)
|
|
|
|
700,000
|
|
|
|
|
90
|
%
|
|
|
|
107.5
|
%
|
|
|
|
677,250
|
|
|
|
|
-
|
|
|
|
|
677,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Mr. Goffs bonus payout
was calculated based on corporate performance results of 109% of
target. Bonus payouts for the other NEOs were calculated based
on corporate performance results of 115% of target for
Administration employees (Messrs. Spendlove and Parrish)
and 107.5% of target for Operations employees
(Messrs. Flagg and Lewis).
|
|
(2)
|
|
Mr. Lewis will cease
employment with us effective March 31, 2011, after the
payout of bonuses for 2010 performance.
|
The 2010 ICP provided the Committee the discretion to increase
actual bonus payouts for the NEOs. In determining discretionary
adjustments, if any, for the NEOs, the Committee evaluated the
NEOs individual performance related to their individual
goals which were primarily related to the specific business
units or functions over which they had responsibility. Their
performance was assessed by the CEO and reviewed with the
Committee. The Committee and the other independent members of
the Board reviewed Mr. Goffs performance relative to
his individual performance goals. Mr. Goffs
individual specific goals are tied to our performance as a
whole. Upward adjustments were made to the ICP awards for
Messrs. Goff, Spendlove, Parrish, and Flagg in recognition
of success in meeting their individual strategic goals, changes
in responsibilities, and our overall superior performance,
especially in light of the extremely challenging operating
environment.
Inducement and Retention Bonuses. As an
inducement to entering into his employment agreement with us,
Mr. Goff received a $900,000 cash payment on May 1,
2010 and will receive an additional $250,000 cash payment on
May 1, 2011. In the event Mr. Goffs employment
is terminated by us for cause during the term of the employment
agreement, we will seek repayment or recovery of the cash
payments, as appropriate. Effective June 9, 2010, we
entered into an agreement with Mr. Lewis, which provided
him with a $400,000 special cash retention bonus if he continued
service with us through January 31, 2011.
Long-Term Incentives. We believe that
our senior executives, including our NEOs, should have an
ongoing stake in our success and their interests should be
aligned with those of our stockholders. Accordingly, we believe
that these executives should have a considerable portion of
their total compensation tied to stock price performance in the
form of equity incentives.
In March 2010, the Compensation Committee approved a long-term
incentive compensation strategy covering our NEOs and other key
employees. The 2010 compensation strategy addressed retention
through the grants of restricted stock (30% of the total award
for the CEO and Executive Vice Presidents, 34% for the Senior
Vice Presidents). The 2010 compensation strategy also addressed
stockholder alignment through use of stock options (30% of the
total award for the CEO and Executive Vice Presidents, 33% for
the Senior Vice Presidents) and performance units (40% of the
total award for the CEO and Executive Vice Presidents, 33% for
the Senior Vice Presidents, based on the targeted payout
values). The performance units will pay out at 0-200% of target
based on a combination of our:
|
|
|
|
|
Relative Total Stockholder Return (RTSR) from
April 1, 2010 through December 31, 2012 measured
against a performance peer group made up of Alon USA Energy,
Inc., Holly
|
35
|
|
|
|
|
Corporation, Frontier Oil Corporation, Western Refining, Inc.,
Valero Energy Corporation, Sunoco, Inc. and the
Standard & Poors 500 Index (S&P
500); and
|
|
|
|
|
|
Absolute stockholder return from April 1, 2010 through
December 31, 2012.
|
The performance peer group includes refining and marketing
companies that have common characteristics with us, not shared
by other companies in our peer group used solely for
compensation benchmarking purposes, or some of our larger
competitors within the oil and gas industry. In particular, the
companies in the performance peer group are dependent on the
margin environment to drive profitability and cash flow. We
think it is appropriate to measure our performance against this
performance peer group for RTSR purposes because they face
similar challenges in the marketplace and because we believe
investors view our businesses in a similar manner. Use of the
S&P 500 measurement will reflect our performance against a
broader index of large-cap common stock companies. Absolute
stockholder return is included as an element in determining
payout so that awards are not paid if stockholders do not earn
positive returns during the performance period.
In addition to the annual grant to the NEOs, as discussed above,
in connection with the arms length negotiation of
Mr. Goffs employment agreement, on May 3, 2010
we awarded him: unrestricted shares of our common stock with a
value of $100,000, restricted stock units with a value of
$3,500,000, vesting in equal installments on the first two
anniversaries of the grant date; stock options valued at
$250,000, vesting 30% on each of the first two anniversaries of
the grant date and 40% on the third anniversary of the grant
date; and restricted stock with a value of $250,000, vesting on
May 1, 2011. The equity awards provided to Mr. Goff
upon becoming CEO were intended to replace the value of
long-term incentive awards he forfeited when he resigned from
his previous employer and to provide immediate alignment of his
compensation with stockholders.
Executive Benefits. Historically, we
provided certain perquisites including, but not limited to,
reimbursement for certain club membership fees and financial
planning services. The perquisites that we provided were those
that we identified as most important in attracting and retaining
executives. In order to promote consistency with overall
competitive practices and our compensation philosophy and to
adopt a best practice compensation design, as of
July 1, 2010, our executive officers are no longer entitled
to any perquisites.
Retirement Plans. We maintain
non-contributory qualified and non-qualified retirement plans
that cover officers and other eligible employees. See the
discussion under the heading Pension Benefits in
2010 for a description of the plans.
Employment
Agreements and
Change-in-Control
and Termination Arrangements.
Our practice has been to enter into employment agreements with
certain of our NEOs in order to ensure continued stability,
continuity and productivity among members of our management
team. The severance and
change-in-control
provisions contained in employment agreements were designed to
protect our NEOs in the event of involuntary termination without
cause whether or not the termination results from a
change-in-control
under their employment agreements. These provisions helped us to
attract and retain talented individuals for certain important
positions. As described below and consistent with best
practices, in 2010 we amended existing agreements and in 2011 we
adopted a new Executive Severance and
Change-in-Control
Plan.
During the 2010 fiscal year, we entered into an amended and
restated employment agreement with Mr. Lewis (the
Amended Lewis Agreement) and a separation and waiver
of liability agreement with Mr. Finnerty (the
Finnerty Separation Agreement). The Amended Lewis
Agreement was effective on March 18, 2010 and aligned the
Amended Lewis Agreement with best practices with
respect to various items, including the replacement of an
automatically renewing term with a one-year term, the
elimination of entitlement to a Section 280G
gross-up
payment, and extra service credit for non-qualified benefits in
connection with a termination following a
change-in-control.
The Amended Lewis Agreement expired by its own terms on
January 31, 2011 and at such time Mr. Lewis was
eligible for potential termination benefits under the newly
adopted Executive Severance and
Change-in-Control
Plan, discussed below. The Finnerty
36
Separation Agreement was entered into on March 18, 2010 and
sets forth the terms of his separation from us as of
March 31, 2010.
On January 12, 2011, the Board approved and adopted a new
Executive Severance and
Change-in-Control
Plan. The new Plan reduces uncertainty for certain executives in
the event of a
change-in-control
or other events affecting the existence of the Company and
provides a benefit in the event of the termination of employment
of certain executives, including Messrs. Spendlove and
Flagg (and Mr. Lewis, upon his cessation of employment),
under certain conditions that are beyond the executives
control. The new Plan does not impact those NEOs who are covered
by severance and
change-in-control
provisions in their employment agreements and those NEOs and
other employees with whom we have management stability
agreements. The new Plan, which does not provide for excise tax
gross-ups or
additional service credit provisions, is market competitive with
amounts payable to executives terminated involuntarily or upon a
change-in-control
event, strengthens stockholder-friendly pay practices and
eliminates the need to offer new individuals employment
agreements.
Our employment agreements with the NEOs are summarized under the
heading Narrative to Summary Compensation Table and Grants
of Plan-Based Awards Table Employment
Agreements in this Proxy Statement. Our severance and
change-in-control
provisions for the NEOs are summarized under the heading
Potential Payments Upon Termination or
Change-In-Control
in this Proxy Statement.
Stock
Ownership Guidelines
Our Board has established stock ownership guidelines to:
|
|
|
|
|
Strengthen the alignment of senior executive interests with
those of stockholders;
|
|
|
|
Further promote our longstanding commitment to sound corporate
governance; and
|
|
|
|
Demonstrate the confidence in our long-term prospects by our
CEO, Executive Vice Presidents and Senior Vice Presidents.
|
Under these guidelines, each of the executives in the positions
named below is required to retain 50% of the net shares obtained
from an option exercise or restricted stock grant until he or
she satisfies the ownership guidelines based on a multiple of
salary as set forth in the following table. Each executive is
also required to retain that level of ownership for as long as
the individual is a part of our senior management team. All of
the NEOs are relatively new in their positions and as a result
are continuing to retain 50% of the net shares obtained from
stock option exercises or vesting of restricted stock grants in
order to meet the ownership guidelines.
|
|
|
|
Position
|
|
|
Stock Ownership
Guideline
|
Chief Executive Officer
|
|
|
5x annual base salary
|
|
|
|
|
Chief Operating Officer
|
|
|
4x annual base salary
|
|
|
|
|
Executive Vice Presidents
|
|
|
3x annual base salary
|
|
|
|
|
Senior Vice Presidents
|
|
|
2x annual base salary
|
|
|
|
|
2011
Compensation Program
On February 1, 2011, the Committee approved our 2011
compensation program which will, overall, remain consistent with
our 2010 compensation program. The 2011 Incentive Compensation
Program (the 2011 ICP) design is similar in many
aspects to the 2010 ICP as it focuses on internally driven
improvements in the business. There are, however, changes to the
program. With the exception of Mr. Goff, 2011 ICP payouts
will be determined by performance against pre-established
targets for corporate performance (50% weighting, comprised of
financial effectiveness (25% weighting) and operational
performance (25% weighting)) and business unit performance (50%
weighting). For Mr. Goff, 2011 ICP payouts will be
determined by performance against pre-established targets for
corporate performance (100% weighting, comprised of financial
effectiveness (50% weighting) and operational performance (50%
weighting)). Business unit performance was
37
added for the NEOs, other than Mr. Goff, because each of
them has responsibility for a specific business unit or several
business units. Our 2011 business plan targets growth in
earnings before interest, taxes, depreciation and amortization
(EBITDA), and as a result, EBITDA replaces non-capital
initiatives as the primary metric for financial effectiveness.
Consistent with the 2010 ICP, operational performance measures
include improvements in the personal safety, process safety,
environmental incidents, and cost management. Also, business
units will be measured using common criteria to promote
consistency. The program provides all employees the same upward
and downward bonus opportunity (0% below threshold; 50% at
threshold; 200% at maximum). The Committee will have further
discretion to decrease or increase payouts by up to 25% based
upon its assessment of quantitative and qualitative measures
relating to: our performance relative to our peers, market
expectations or broader indexes; progress in attaining strategic
goals; business unit performance; and leadership attributes (no
particular weighting will be assigned to any measure).
Equity
Grant/Trading Policies
The Compensation Committee has adopted an equity award
governance policy under which all long-term equity incentives
are granted at the Compensation Committees meeting in late
January or early February of each year. We have chosen this time
because it is the first meeting of each calendar year at which
our results of operations from the previous year are available
to the Compensation Committee. Among other things, the policy
prohibits the issuance of stock options at a price less than the
closing sale price of our common stock on the date of grant. We
delayed the timing of the 2011 grants because we are requesting
shareholder approval of a new long-term incentive plan at our
2011 Annual Meeting. We do not time equity grants in
coordination with the release of material non-public information.
We also maintain an insider trading policy which prohibits,
among other things, any employees and directors from entering
into transactions when in possession of material non-public
information or from participating in short-term trading or
hedging activities involving our securities. The policy requires
directors, senior executives and informational insiders to
follow preclearance procedures for all transactions involving
our securities.
Deductibility
of Executive Compensation
Section 162(m) of the Internal Revenue Code (the
Code) limits the tax deductibility by a publicly
held corporation of compensation in excess of $1 million
paid to certain executives, unless that compensation is
performance-based compensation as defined by the
Code. We believe that our stock option grants qualify as
performance-based compensation and are not subject to any
deductibility limitations under Section 162(m). The
Compensation Committee considers deductibility under
Section 162(m) with respect to other compensation
arrangements with executive officers. However, the Compensation
Committee and the Board believe that it is in our best interest
that the Committee retain its flexibility and discretion to make
compensation awards, whether or not deductible, in order to
foster achievement of performance goals established by the
Committee as well as other corporate goals important to our
success, such as encouraging employee retention and rewarding
achievement. Currently, the following components of our
executive compensation program are not eligible for
Section 162(m) deductibility: base salary, annual incentive
bonuses, time-based restricted stock awards, time-based
restricted stock unit awards and any personal benefits
considered to be income to our executives.
Clawback
Policy
In February 2010, we adopted a compensation recoupment, or
clawback policy that provides that in the event of a
material restatement of financial results due to misconduct, our
Board will review all incentive payments that were made to any
then existing senior vice president or above including our
controller on the basis of having met or exceeded specific
performance targets in grants or awards made after
February 2, 2010 which occur during the
24-month
period prior to restatement. If such payments would have been
lower had they been calculated based on such restated results,
the Board will, to the extent permitted by governing law, seek
to recoup for our benefit such payments to any then existing
senior vice president or above including our company controller
whose misconduct caused or significantly contributed to the
material restatement, as determined by the Board.
38
Compensation
Committee Report
Our Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management and, based on such review and discussions, the
Committee recommended to the Board that the Compensation
Discussion and Analysis be included in this Proxy Statement.
The undersigned members of the Compensation Committee have
submitted this Report to the Board of Directors as of
February 23, 2011.
Michael E. Wiley, Chairman
William J. Johnson
J.W. Nokes
2010
Summary Compensation Table
The following table sets forth information regarding the
compensation of our CEO, our CFO, our three other highest paid
executive officers (other than the CEO and CFO), as well as our
former CEO, CFO and former highest paid executive officer.
|
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|
Change in
|
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|
|
|
|
|
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|
|
|
|
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|
Pension Value
|
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|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
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|
Non-Equity
|
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and Nonqualified
|
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|
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|
|
|
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|
Stock
|
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|
Option
|
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|
Incentive Plan
|
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|
Compensation
|
|
|
All Other
|
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|
|
|
|
|
|
Awards
|
|
|
Awards
|
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|
Compensation
|
|
|
Earnings
|
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|
Compensation
|
|
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|
Name and
|
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|
|
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Salary
|
|
|
Bonus
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Total
|
Principal Position
|
|
|
Year
|
|
|
($)
|
|
|
($)(1)
|
|
|
(2)
|
|
|
(3)
|
|
|
(4)
|
|
|
(5)
|
|
|
(6)(7)
|
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($)
|
Gregory J. Goff
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
President and Chief Executive
|
|
|
|
2010
|
|
|
|
|
571,154
|
|
|
|
|
900,000
|
|
|
|
|
5,177,636
|
|
|
|
|
1,126,827
|
|
|
|
|
750,000
|
|
|
|
|
323,500
|
|
|
|
|
7,615
|
|
|
|
|
8,856,732
|
|
Officer (8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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G. Scott Spendlove
|
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|
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|
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|
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|
|
|
|
|
|
|
|
|
Senior Vice President
|
|
|
|
2010
|
|
|
|
|
356,385
|
|
|
|
|
-
|
|
|
|
|
178,622
|
|
|
|
|
124,792
|
|
|
|
|
239,231
|
|
|
|
|
357,779
|
|
|
|
|
16,500
|
|
|
|
|
1,273,309
|
|
and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
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|
|
|
|
|
|
|
|
Charles S. Parrish
|
|
|
|
2010
|
|
|
|
|
500,000
|
|
|
|
|
-
|
|
|
|
|
406,044
|
|
|
|
|
256,925
|
|
|
|
|
442,750
|
|
|
|
|
1,111,306
|
|
|
|
|
16,500
|
|
|
|
|
2,733,525
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
Executive Vice President, General
|
|
|
|
2009
|
|
|
|
|
477,945
|
|
|
|
|
-
|
|
|
|
|
339,120
|
|
|
|
|
483,690
|
|
|
|
|
-
|
|
|
|
|
365,474
|
|
|
|
|
16,500
|
|
|
|
|
1,682,729
|
|
|
|
|
|
|
|
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|
Counsel and Secretary
|
|
|
|
2008
|
|
|
|
|
429,454
|
|
|
|
|
-
|
|
|
|
|
278,760
|
|
|
|
|
637,956
|
|
|
|
|
-
|
|
|
|
|
258,286
|
|
|
|
|
17,273
|
|
|
|
|
1,621,729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Claude A. Flagg
|
|
|
|
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|
|
|
|
|
|
Senior Vice President,
|
|
|
|
2010
|
|
|
|
|
420,000
|
|
|
|
|
-
|
|
|
|
|
370,174
|
|
|
|
|
256,925
|
|
|
|
|
322,823
|
|
|
|
|
512,805
|
|
|
|
|
22,642
|
|
|
|
|
1,905,369
|
|
Strategy and Business Development
|
|
|
|
|
|
|
|
|
|
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|
|
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|
Former Executives
|
|
|
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|
|
|
|
|
|
|
|
Bruce A. Smith
|
|
|
|
2010
|
|
|
|
|
475,000
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
2,239,435
|
|
|
|
|
2,714,435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
Former Chairman of the Board of
|
|
|
|
2009
|
|
|
|
|
1,300,000
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
6,952,238
|
|
|
|
|
-
|
|
|
|
|
363,362
|
|
|
|
|
136,829
|
|
|
|
|
8,752,429
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
Directors, President and Chief Executive Officer (9)
|
|
|
|
2008
|
|
|
|
|
1,298,634
|
|
|
|
|
-
|
|
|
|
|
2,080,660
|
|
|
|
|
4,788,234
|
|
|
|
|
-
|
|
|
|
|
4,490,996
|
|
|
|
|
643,011
|
|
|
|
|
13,301,535
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
Gregory A. Wright
|
|
|
|
2010
|
|
|
|
|
240,100
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
371,560
|
|
|
|
|
611,660
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
Executive Vice
|
|
|
|
2009
|
|
|
|
|
637,000
|
|
|
|
|
-
|
|
|
|
|
706,500
|
|
|
|
|
1,025,423
|
|
|
|
|
-
|
|
|
|
|
401,378
|
|
|
|
|
85,618
|
|
|
|
|
2,855,919
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
President and Chief
Financial Officer (9)
|
|
|
|
2008
|
|
|
|
|
636,604
|
|
|
|
|
-
|
|
|
|
|
472,680
|
|
|
|
|
1,088,802
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
36,405
|
|
|
|
|
2,234,491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
and Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
|
Name and
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Total
|
Principal Position
|
|
|
Year
|
|
|
($)
|
|
|
($)(1)
|
|
|
(2)
|
|
|
(3)
|
|
|
(4)
|
|
|
(5)
|
|
|
(6)(7)
|
|
|
($)
|
William J. Finnerty
|
|
|
|
2010
|
|
|
|
|
218,376
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
2,483,893
|
|
|
|
|
2,702,269
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former Executive Vice President,
|
|
|
|
2009
|
|
|
|
|
777,000
|
|
|
|
|
-
|
|
|
|
|
706,500
|
|
|
|
|
1,025,423
|
|
|
|
|
-
|
|
|
|
|
773,371
|
|
|
|
|
32,522
|
|
|
|
|
3,314,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategy and Corporate
Development (9)
|
|
|
|
2008
|
|
|
|
|
776,686
|
|
|
|
|
-
|
|
|
|
|
577,720
|
|
|
|
|
1,327,590
|
|
|
|
|
-
|
|
|
|
|
1,157,041
|
|
|
|
|
43,969
|
|
|
|
|
3,883,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Everett D. Lewis
|
|
|
|
2010
|
|
|
|
|
700,000
|
|
|
|
|
-
|
|
|
|
|
663,810
|
|
|
|
|
433,102
|
|
|
|
|
677,250
|
|
|
|
|
1,104,772
|
|
|
|
|
9,800
|
|
|
|
|
3,588,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President
|
|
|
|
2009
|
|
|
|
|
700,000
|
|
|
|
|
-
|
|
|
|
|
876,060
|
|
|
|
|
1,270,492
|
|
|
|
|
-
|
|
|
|
|
362,722
|
|
|
|
|
9,800
|
|
|
|
|
3,219,074
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Chief Operating Officer (9)
|
|
|
|
2008
|
|
|
|
|
678,825
|
|
|
|
|
-
|
|
|
|
|
472,680
|
|
|
|
|
1,088,802
|
|
|
|
|
-
|
|
|
|
|
1,233,174
|
|
|
|
|
14,060
|
|
|
|
|
3,487,541
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The annual cash incentive award that was paid to the executive
officers is reflected under the Non-Equity Incentive Plan
Compensation column. The bonus amount for Mr. Goff
represents an inducement cash payment per his employment
agreement.
|
|
(2)
|
The amounts shown in this column reflect the aggregate grant
date fair value of restricted stock, restricted stock units,
performance units and common stock granted during the applicable
fiscal year, calculated in accordance with financial accounting
standards.
|
|
(3)
|
The amounts shown in this column reflect the aggregate grant
date fair value of stock options granted during the applicable
fiscal year, calculated in accordance with financial accounting
standards. See Note P Stock-Based Compensation
in the Notes to our Consolidated Financial Statements included
in our Annual Report on
Form 10-K
for the year ended December 31, 2010 for the valuation
assumptions used in determining the fair market value of option
grants.
|
|
(4)
|
The amounts shown in this column represent the annual cash
incentive awards earned under the 2010, 2009, and 2008 annual
incentive compensation programs. No bonuses were paid for 2009
or 2008 to the NEOs.
|
|
(5)
|
The amounts shown in this column reflect the change in pension
value during the fiscal year.
|
|
(6)
|
The table below provides the aggregate incremental cost of the
components included in the All Other Compensation Column for
2010.
|
|
(7)
|
The All Other Compensation values for 2008 were revised slightly
from those values previously disclosed in prior proxy statements
due to a revised calculation of dividends paid on restricted
stock for the applicable fiscal year.
|
2010 All Other Compensation ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory J.
|
|
|
G. Scott
|
|
|
Charles S.
|
|
|
Claude A.
|
|
|
|
Goff
|
|
|
Spendlove
|
|
|
Parrish
|
|
|
Flagg
|
Personal Use of Aircraft (a)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial and Tax Planning (b)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Social Club Membership (c)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
5,765
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Annual Physical (d)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thrift Plan Company Contributions (e)
|
|
|
|
7,615
|
|
|
|
|
16,500
|
|
|
|
|
16,500
|
|
|
|
|
16,877
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Gifts (f)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office Equipment (g)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance (h)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chairman of the Board Fees (i)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting Fees (j)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
7,615
|
|
|
|
|
16,500
|
|
|
|
|
16,500
|
|
|
|
|
22,642
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce A.
|
|
|
Gregory A.
|
|
|
William J.
|
|
|
Everett D.
|
Former Executives
|
|
|
Smith
|
|
|
Wright
|
|
|
Finnerty
|
|
|
Lewis
|
Personal Use of Aircraft (a)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial and Tax Planning (b)
|
|
|
|
35,000
|
|
|
|
|
31,466
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Social Club Membership (c)
|
|
|
|
-
|
|
|
|
|
2,395
|
|
|
|
|
5,698
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Annual Physical (d)
|
|
|
|
500
|
|
|
|
|
-
|
|
|
|
|
1,791
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thrift Plan Company Contributions (e)
|
|
|
|
16,500
|
|
|
|
|
16,500
|
|
|
|
|
16,500
|
|
|
|
|
9,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Gifts (f)
|
|
|
|
10,332
|
|
|
|
|
7,599
|
|
|
|
|
6,652
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office Equipment (g)
|
|
|
|
2,102
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance (h)
|
|
|
|
2,175,000
|
|
|
|
|
313,600
|
|
|
|
|
2,000,000
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chairman of the Board Fees (i)
|
|
|
|
1
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting Fees (j)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
453,252
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
2,239,435
|
|
|
|
|
371,560
|
|
|
|
|
2,483,893
|
|
|
|
|
9,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Personal Use of the Company Aircraft: The methodology that we
use to calculate the incremental direct operating cost for
personal use of the aircraft is based on the cost of fuel,
trip-related airport fees, and pilot meals and lodging. Since
the aircraft is primarily used for business travel, the
methodology excludes the fixed costs which do not change based
on the usage of the aircraft and non-trip related hangar and
maintenance expenses. Messrs. Goff and Smith reimbursed us
for personal use of the aircraft so there is no dollar amount
reported for 2010.
|
|
|
(b) |
Financial and Tax Planning: We provided financial and tax
planning services to officers and select key executives through
our preferred providers or through the executives own
financial planning firm. We provided reimbursement for these
expenses, subject to an annual limit of $15,000 for the
applicable year the expense is incurred and a one-time benefit
of $20,000 in the year following retirement. Effective
July 1, 2010, this benefit was eliminated.
|
|
|
(c) |
Social Club Memberships: We provided for the initiation fees and
dues for club memberships to social organizations and health
clubs to officers. We provided reimbursement for these expenses,
subject to the limits of total initiation fees not to exceed 10%
of the executives base pay in the aggregate and monthly
dues of up to $750 in the aggregate. Effective July 1,
2010, this benefit was eliminated.
|
|
|
(d) |
Executive Annual Physical: We provided for annual physicals to
our officers and to select key executives including travel costs
associated with receiving this benefit. Effective July 1,
2010, this benefit was eliminated.
|
|
|
(e) |
Thrift Plan Company Contributions: We provided matching
contributions dollar for dollar up to 7% of eligible earnings
for all our employees who participate in the Thrift Plan.
|
|
|
(f) |
Retirement Gifts: We provided retirement gifts (watches and
earrings) to departing officers and / or their spouses.
|
|
|
(g)
|
Office Equipment: We provided certain office equipment to
Mr. Smith as part of his retirement.
|
|
(h)
|
Severance: The severance amounts are per the terms and
conditions of Messrs. Smiths and Wrights
employment agreement and Mr. Finnertys separation
agreement and were paid as contractually required.
Messrs. Smiths and Wrights severance amounts
were determined by taking the executives base salary from
date of retirement to a specified date defined in their
employment agreement (December 31, 2011 for Mr. Smith
and November 1, 2010 for Mr. Wright).
Mr. Finnertys severance amount was an agreed upon
amount per his separation agreement.
|
|
|
(i)
|
Chairman of the Board Fees: Per Mr. Smiths employment
agreement, he received compensation for his role as Chairman of
the Board for up to a year after his retirement. Mr. Smith
served as Chairman of the Board from May 1, 2010 through
June 3, 2010.
|
|
(j)
|
Consulting Fees: Per Mr. Finnertys separation
agreement, he received payment for six months ($75,542 per
month) for consulting services.
|
|
|
(8)
|
Effective May 1, 2010, Mr. Goff was named President
and Chief Executive Officer.
|
|
(9)
|
These NEOs retired from employment with us in 2010:
Mr. Smith, April 30, 2010; Mr. Wright,
May 5, 2010 and Mr. Finnerty, March 31, 2010.
Mr. Lewiss employment with us will cease effective
March 31, 2011.
|
41
Grants of
Plan-Based Awards in 2010
The following table sets forth information regarding the grants
of annual cash incentive compensation, common stock, stock
options, restricted stock and performance units to our NEOs.
|
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|
|
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|
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|
|
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|
|
|
|
|
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|
|
|
|
|
|
|
|
All
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Other
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Stock
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All Other
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Awards:
|
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Option
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|
|
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|
|
Grant
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|
|
|
|
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|
|
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Number
|
|
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Awards:
|
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Exercise
|
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|
Date Fair
|
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of
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Number of
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or Base
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|
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Value of
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|
Estimated Future Payouts Under
|
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Shares
|
|
|
Securities
|
|
|
Price of
|
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|
Stock and
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|
|
Non-Equity Incentive Plan Awards (1)
|
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|
of Stock
|
|
|
Underlying
|
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|
Option
|
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|
Option
|
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|
|
|
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|
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|
or Units
|
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|
Options
|
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|
Awards
|
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|
Awards
|
|
|
|
Award
|
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|
Grant
|
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|
Threshold
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Target
|
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|
Maximum
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|
(#)
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|
(#)
|
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|
($/Sh)
|
|
|
($)
|
Name
|
|
|
Type
|
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(2)
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|
|
(2)
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|
|
(3)
|
|
|
(4)
|
Gregory J. Goff(5)
|
|
|
Annual Incentive
|
|
|
n/a
|
|
|
|
-
|
|
|
|
|
571,154
|
|
|
|
|
1,142,308
|
|
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|
|
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|
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|
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|
|
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|
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|
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|
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|
|
|
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|
|
|
|
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|
|
|
|
|
|
|
|
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|
|
|
|
|
|
Common Stock
|
|
|
5/3/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
5/3/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,513
|
|
|
|
|
13.66
|
|
|
|
|
260,623
|
|
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|
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|
|
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|
|
|
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|
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|
|
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
5/3/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,302
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,005
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock Units
|
|
|
5/3/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
256,223
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,500,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
118,000
|
|
|
|
|
12.93
|
|
|
|
|
866,204
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
|
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|
|
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|
|
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|
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|
|
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|
Restricted Stock
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
879,240
|
|
|
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|
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|
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|
|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
Performance Units
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
448,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
G. Scott Spendlove
|
|
|
Annual Incentive
|
|
|
n/a
|
|
|
|
52,007
|
|
|
|
|
189,115
|
|
|
|
|
378,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
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|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,000
|
|
|
|
|
12.93
|
|
|
|
|
124,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
129,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Units
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
132,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,322
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles S. Parrish
|
|
|
Annual Incentive
|
|
|
n/a
|
|
|
|
87,500
|
|
|
|
|
350,000
|
|
|
|
|
875,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
|
|
|
12.93
|
|
|
|
|
256,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
271,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Units
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
360,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
134,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claude A. Flagg
|
|
|
Annual Incentive
|
|
|
n/a
|
|
|
|
75,075
|
|
|
|
|
273,000
|
|
|
|
|
546,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
|
|
|
12.93
|
|
|
|
|
256,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
271,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Units
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
264,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce A. Smith
|
|
|
Annual Incentive
|
|
|
n/a
|
|
|
|
390,000
|
|
|
|
|
1,560,000
|
|
|
|
|
3,900,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory A. Wright
|
|
|
Annual Incentive
|
|
|
n/a
|
|
|
|
127,400
|
|
|
|
|
509,600
|
|
|
|
|
1,274,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William J. Finnerty
|
|
|
Annual Incentive
|
|
|
n/a
|
|
|
|
194,250
|
|
|
|
|
777,000
|
|
|
|
|
1,942,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Everett D. Lewis
|
|
|
Annual Incentive
|
|
|
n/a
|
|
|
|
157,500
|
|
|
|
|
630,000
|
|
|
|
|
1,575,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,000
|
|
|
|
|
12.93
|
|
|
|
|
433,102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
439,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Units
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
224,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
These columns show the range of awards under our 2010 ICP, which
is described in the section Annual Performance
Incentives in the Compensation Discussion and Analysis.
The threshold column represents the minimum payout
for the performance metrics under the 2010 ICP assuming that the
minimum level of performance was attained. The
target column represents the amount payable if the
performance metrics were reached. The maximum column
represents the maximum payout for the performance metrics under
the 2010 ICP assuming that the maximum level of performance was
attained.
|
|
(2)
|
The amounts shown in these columns represent the number of
shares of common stock, restricted stock, restricted stock
units, stock options and performance units (to be settled in
cash) granted during 2010. No phantom stock options were issued
to NEOs in 2010. The awards granted for Mr. Goff (except
his performance units) were granted using Treasury Shares. The
grants for Messrs Spendlove, Parrish, Flagg and Lewis, as well
as Mr. Goffs performance unit award were granted
under the 2006 Long-Term Incentive Plan as described in the
section Long-Term Incentives in the Compensation
Discussion and Analysis.
|
|
(3)
|
The exercise price per share is the closing price of our common
stock on the NYSE on the date of the option grant.
|
|
(4)
|
The amounts shown in this column represent the grant date fair
value of the awards computed in accordance with financial
accounting standards.
|
42
|
|
(5) |
For Mr. Goff, the above table reflects the prorated annual
incentive that he was eligible for in 2010 as well as the awards
received as inducement awards, granted May 3, 2010, and
annual awards, granted May 5, 2010, per his employment
agreement.
|
Narrative
to Summary Compensation Table and Grants of Plan-Based Awards
Table
Employment
Agreements
We have entered into employment agreements and arrangements with
our NEOs, the significant terms of which are detailed below.
Mr. Goff. Mr. Goffs employment
agreement, negotiated at arms length with our independent
directors, has a three-year term commencing on May 1, 2010.
At the end of the fiscal year his base salary was $900,000. He
is entitled to participate in our annual incentive compensation
plan with a target incentive bonus of at least 100% of his
annual base salary, with payments to be determined based upon
the achievement of performance goals established by our
Compensation Committee under such plan. As an inducement to
entering into the his employment agreement, Mr. Goff
received the following compensation (the Inducement
Awards) effective May 3, 2010 unless noted otherwise:
(i) $900,000 cash payment on May 1, 2010;
(ii) unrestricted shares of our common stock with a value
of $100,000; (iii) a grant of restricted stock units with a
value of $3,500,000; (iv) a grant of stock options valued
at $250,000; and (v) a grant of restricted common stock
with a value of $250,000. Additionally, Mr. Goff will
receive a cash payment of $250,000 on May 1, 2011, subject
to continued employment.
Mr. Parrish. Mr. Parrishs
employment agreement has an initial term ending May 7, 2012
and renews thereafter for an additional year on each annual
anniversary date of the agreement (May 7), unless we terminate
the agreement in accordance with its terms. At the end of the
fiscal year, his base salary was $500,000. He is entitled to
participate in our annual incentive compensation plan with a
target incentive bonus of at least 70% of his annual base
salary, with payments to be determined based upon the
achievement of performance goals established by our Compensation
Committee under such plan.
Mr. Smith. Mr. Smiths amended
employment agreement had a term which expires on
December 31, 2011. His base salary prior to his retirement
was $1,300,000, and he was entitled to participate in an annual
incentive compensation program established in a manner
consistent with his position and consistent with the evaluation
of his performance by the independent directors of the Board.
The target incentive bonus was to be 120% of his base salary as
in effect each year; however, his actual annual bonus could
range from 0% to 300% and was to be determined based upon
achievement of performance goals established by the Compensation
Committee. Mr. Smiths employment agreement provided
that he would terminate his employment by retirement during the
term of the agreement if a successor CEO was elected by the
Board of Directors; provided, however, that he would continue as
Chairman of the Board for up to one year after his termination
for $1 if requested by the Board. As discussed above, a
successor, Mr. Goff, was appointed by the Board to serve as
our new President and CEO effective May 1, 2010.
Mr. Wright. Mr. Wrights
amended employment agreement had a term which expired on
November 1, 2010. His base salary prior to retirement was
$637,000, and he was entitled to participate in our annual
incentive compensation plan with a target incentive bonus of at
least 65% of his annual base salary, with payments to be
determined based upon the achievement of performance goals
established by our Compensation Committee under such plan.
Mr. Finnerty. On March 18, 2010, we
entered into the Finnerty Separation Agreement. The Finnerty
Separation Agreement is summarized under the heading
Potential Payments Upon Termination or
Change-In-Control
in this Proxy Statement. Mr. Finnertys amended
employment agreement, as in place on or prior to the Finnerty
Separation Agreement, renewed for an additional year on each
annual anniversary date of the agreement (February 2), unless we
terminated the agreement in accordance with its terms. Prior to
his retirement, his base salary was $777,000 and he was entitled
to participate in our annual incentive compensation plan with a
target incentive bonus of at least 65% of his annual base
salary, with payments to be determined based upon the
achievement of performance goals established by our Compensation
Committee under such plan.
43
Mr. Lewis. On March 18, 2010, we
entered into the Amended Lewis Agreement. Pursuant to the
Amended Lewis Agreement, the term of the agreement expired on
January 31, 2011, Mr. Lewiss base salary was
$700,000, and he was entitled to participate in our annual
incentive compensation plan with a target incentive bonus of at
least 90% of his annual base salary, with payments to be
determined based upon the achievement of performance goals
established by our Compensation Committee under such plan.
Mr. Lewis will cease to be employed by us effective
March 31, 2011.
Outstanding
Equity Awards at 2010 Fiscal Year End
The following table sets forth the outstanding equity awards of
our NEOs at the end of 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards (1)
|
|
|
|
Stock Awards (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
|
|
|
|
Unearned
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Unearned
|
|
|
|
Shares,
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
Value of
|
|
|
|
Shares,
|
|
|
|
Units or
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
|
Shares or
|
|
|
|
Units or
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
|
Units of
|
|
|
|
Units of
|
|
|
|
Rights
|
|
|
|
Rights
|
|
|
|
|
|
|
|
|
Unexercised
|
|
|
|
Unexercised
|
|
|
|
Option
|
|
|
|
|
|
|
|
Stock
|
|
|
|
Stock That
|
|
|
|
That Have
|
|
|
|
That Have
|
|
|
|
|
|
|
|
|
Options
|
|
|
|
Options
|
|
|
|
Exercise
|
|
|
|
Option
|
|
|
|
That Have
|
|
|
|
Have Not
|
|
|
|
Not
|
|
|
|
Not
|
|
|
|
|
Grant
|
|
|
|
(#)
|
|
|
|
(#)
|
|
|
|
Price
|
|
|
|
Expiration
|
|
|
|
Not
|
|
|
|
Vested ($)
|
|
|
|
Vested
|
|
|
|
Vested ($)
|
|
Name
|
|
|
Date
|
|
|
|
Exercisable
|
|
|
|
Unexercisable
|
|
|
|
($)
|
|
|
|
Date
|
|
|
|
Vested (#)
|
|
|
|
(3)
|
|
|
|
(#)(4)
|
|
|
|
(4)
|
|
|
|
|
|
5/5/2010
|
|
|
|
|
-
|
|
|
|
|
118,000
|
|
|
|
|
12.93
|
|
|
|
|
5/5/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/3/2010
|
|
|
|
|
-
|
|
|
|
|
33,513
|
|
|
|
|
13.66
|
|
|
|
|
5/3/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory J. Goff
|
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68,000
|
|
|
|
|
1,260,720
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/3/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,302
|
|
|
|
|
339,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/3/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
256,223
|
(5)
|
|
|
|
4,750,374
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,200,000
|
|
|
|
|
2,400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/5/2010
|
|
|
|
|
-
|
|
|
|
|
17,000
|
|
|
|
|
12.93
|
|
|
|
|
5/5/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/20/2009
|
|
|
|
|
12,666
|
|
|
|
|
25,334
|
|
|
|
|
14.13
|
|
|
|
|
2/20/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/30/2008
|
|
|
|
|
10,333
|
|
|
|
|
5,167
|
|
|
|
|
40.40
|
|
|
|
|
1/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/1/2007
|
|
|
|
|
23,000
|
|
|
|
|
-
|
|
|
|
|
41.58
|
|
|
|
|
2/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/2/2006
|
|
|
|
|
28,600
|
|
|
|
|
-
|
|
|
|
|
33.68
|
|
|
|
|
2/2/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Scott Spendlove
|
|
|
|
2/1/2005
|
|
|
|
|
14,000
|
|
|
|
|
-
|
|
|
|
|
16.38
|
|
|
|
|
2/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
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|
|
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|
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|
|
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|
|
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|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/3/2004
|
|
|
|
|
10,000
|
|
|
|
|
-
|
|
|
|
|
11.97
|
|
|
|
|
6/3/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/24/2002
|
|
|
|
|
10,000
|
|
|
|
|
-
|
|
|
|
|
6.70
|
|
|
|
|
1/24/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
185,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,000
|
|
|
|
|
149,720
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/30/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
|
19,290
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
132,000
|
|
|
|
|
264,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/5/2010
|
|
|
|
|
-
|
|
|
|
|
35,000
|
|
|
|
|
12.93
|
|
|
|
|
5/5/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/20/2009
|
|
|
|
|
25,000
|
|
|
|
|
50,000
|
|
|
|
|
14.13
|
|
|
|
|
2/20/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/30/2008
|
|
|
|
|
23,866
|
|
|
|
|
11,934
|
|
|
|
|
40.40
|
|
|
|
|
1/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/1/2007
|
|
|
|
|
44,000
|
|
|
|
|
-
|
|
|
|
|
41.58
|
|
|
|
|
2/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/2/2006
|
|
|
|
|
44,900
|
|
|
|
|
-
|
|
|
|
|
33.68
|
|
|
|
|
2/2/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles S. Parrish
|
|
|
|
2/1/2005
|
|
|
|
|
17,000
|
|
|
|
|
-
|
|
|
|
|
16.38
|
|
|
|
|
2/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/3/2004
|
|
|
|
|
10,000
|
|
|
|
|
-
|
|
|
|
|
11.98
|
|
|
|
|
6/3/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,000
|
|
|
|
|
389,340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,000
|
|
|
|
|
299,440
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/30/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,300
|
|
|
|
|
44,367
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
360,000
|
|
|
|
|
720,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards (1)
|
|
|
|
Stock Awards (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
|
|
|
|
Unearned
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Unearned
|
|
|
|
Shares,
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
Value of
|
|
|
|
Shares,
|
|
|
|
Units or
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
|
Shares or
|
|
|
|
Units or
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
|
Units of
|
|
|
|
Units of
|
|
|
|
Rights
|
|
|
|
Rights
|
|
|
|
|
|
|
|
|
Unexercised
|
|
|
|
Unexercised
|
|
|
|
Option
|
|
|
|
|
|
|
|
Stock
|
|
|
|
Stock That
|
|
|
|
That Have
|
|
|
|
That Have
|
|
|
|
|
|
|
|
|
Options
|
|
|
|
Options
|
|
|
|
Exercise
|
|
|
|
Option
|
|
|
|
That Have
|
|
|
|
Have Not
|
|
|
|
Not
|
|
|
|
Not
|
|
|
|
|
Grant
|
|
|
|
(#)
|
|
|
|
(#)
|
|
|
|
Price
|
|
|
|
Expiration
|
|
|
|
Not
|
|
|
|
Vested ($)
|
|
|
|
Vested
|
|
|
|
Vested ($)
|
|
Name
|
|
|
Date
|
|
|
|
Exercisable
|
|
|
|
Unexercisable
|
|
|
|
($)
|
|
|
|
Date
|
|
|
|
Vested (#)
|
|
|
|
(3)
|
|
|
|
(#)(4)
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/5/2010
|
|
|
|
|
-
|
|
|
|
|
35,000
|
|
|
|
|
12.93
|
|
|
|
|
5/5/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/20/2009
|
|
|
|
|
25,000
|
|
|
|
|
50,000
|
|
|
|
|
14.13
|
|
|
|
|
2/20/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/30/2008
|
|
|
|
|
18,000
|
|
|
|
|
9,000
|
|
|
|
|
40.40
|
|
|
|
|
1/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/1/2007
|
|
|
|
|
36,000
|
|
|
|
|
-
|
|
|
|
|
41.58
|
|
|
|
|
2/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/2/2006
|
|
|
|
|
39,600
|
|
|
|
|
-
|
|
|
|
|
33.68
|
|
|
|
|
2/2/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claude A. Flagg
|
|
|
|
2/1/2005
|
|
|
|
|
10,400
|
|
|
|
|
-
|
|
|
|
|
16.38
|
|
|
|
|
2/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/3/2005
|
|
|
|
|
16,668
|
|
|
|
|
-
|
|
|
|
|
15.37
|
|
|
|
|
1/3/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,000
|
|
|
|
|
389,340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,000
|
|
|
|
|
299,440
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/30/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,734
|
|
|
|
|
33,449
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
264,000
|
|
|
|
|
528,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/20/2009
|
|
|
|
|
1,078,000
|
(7)
|
|
|
|
-
|
|
|
|
|
14.13
|
|
|
|
|
2/19/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/30/2008
|
|
|
|
|
268,700
|
|
|
|
|
-
|
|
|
|
|
40.40
|
|
|
|
|
1/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/1/2007
|
|
|
|
|
304,000
|
|
|
|
|
-
|
|
|
|
|
41.58
|
|
|
|
|
2/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
2/2/2006
|
|
|
|
|
330,000
|
|
|
|
|
-
|
|
|
|
|
33.68
|
|
|
|
|
2/2/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
2/1/2005
|
|
|
|
|
336,600
|
|
|
|
|
-
|
|
|
|
|
16.38
|
|
|
|
|
2/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce A. Smith (8)
|
|
|
|
7/15/2004
|
|
|
|
|
377,000
|
|
|
|
|
-
|
|
|
|
|
14.69
|
|
|
|
|
7/15/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
3/27/2003
|
|
|
|
|
120,000
|
|
|
|
|
-
|
|
|
|
|
4.50
|
|
|
|
|
3/27/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
11/19/2002
|
|
|
|
|
80,000
|
|
|
|
|
-
|
|
|
|
|
4.50
|
|
|
|
|
11/19/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/19/2002
|
|
|
|
|
200,000
|
|
|
|
|
-
|
|
|
|
|
3.00
|
|
|
|
|
11/19/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11/19/2002
|
|
|
|
|
243,400
|
|
|
|
|
-
|
|
|
|
|
1.93
|
|
|
|
|
11/19/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/25/2002
|
|
|
|
|
320,000
|
|
|
|
|
-
|
|
|
|
|
6.66
|
|
|
|
|
3/25/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
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|
|
|
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|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/20/2009
|
|
|
|
|
159,000
|
(7)
|
|
|
|
-
|
|
|
|
|
14.13
|
|
|
|
|
2/19/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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|
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|
|
|
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|
|
|
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|
|
|
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|
|
|
|
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|
|
|
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|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/30/2008
|
|
|
|
|
61,100
|
|
|
|
|
-
|
|
|
|
|
40.40
|
|
|
|
|
1/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory A. Wright (8)
|
|
|
|
2/1/2007
|
|
|
|
|
70,000
|
|
|
|
|
-
|
|
|
|
|
41.58
|
|
|
|
|
2/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/2/2006
|
|
|
|
|
72,600
|
|
|
|
|
-
|
|
|
|
|
33.68
|
|
|
|
|
2/2/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/1/2005
|
|
|
|
|
70,000
|
|
|
|
|
-
|
|
|
|
|
16.38
|
|
|
|
|
2/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/15/2004
|
|
|
|
|
67,800
|
|
|
|
|
-
|
|
|
|
|
14.69
|
|
|
|
|
7/15/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/20/2009
|
|
|
|
|
53,000
|
(7)
|
|
|
|
-
|
|
|
|
|
14.13
|
|
|
|
|
3/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/30/2008
|
|
|
|
|
49,666
|
|
|
|
|
24,834
|
|
|
|
|
40.40
|
|
|
|
|
3/31/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/1/2007
|
|
|
|
|
94,000
|
|
|
|
|
-
|
|
|
|
|
41.58
|
|
|
|
|
3/31/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/2/2006
|
|
|
|
|
91,600
|
|
|
|
|
-
|
|
|
|
|
33.68
|
|
|
|
|
3/31/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
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|
|
|
|
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|
|
|
|
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|
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|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William J. Finnerty (9)
|
|
|
|
2/1/2005
|
|
|
|
|
90,000
|
|
|
|
|
-
|
|
|
|
|
16.38
|
|
|
|
|
3/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/3/2004
|
|
|
|
|
9,300
|
|
|
|
|
-
|
|
|
|
|
14.17
|
|
|
|
|
3/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/15/2004
|
|
|
|
|
15,600
|
|
|
|
|
-
|
|
|
|
|
14.69
|
|
|
|
|
3/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,334
|
|
|
|
|
623,846
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/30/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,767
|
|
|
|
|
91,955
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards (1)
|
|
|
|
Stock Awards (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
|
|
|
|
Unearned
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Unearned
|
|
|
|
Shares,
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
Value of
|
|
|
|
Shares,
|
|
|
|
Units or
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
|
Shares or
|
|
|
|
Units or
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
|
Units of
|
|
|
|
Units of
|
|
|
|
Rights
|
|
|
|
Rights
|
|
|
|
|
|
|
|
|
Unexercised
|
|
|
|
Unexercised
|
|
|
|
Option
|
|
|
|
|
|
|
|
Stock
|
|
|
|
Stock That
|
|
|
|
That Have
|
|
|
|
That Have
|
|
|
|
|
|
|
|
|
Options
|
|
|
|
Options
|
|
|
|
Exercise
|
|
|
|
Option
|
|
|
|
That Have
|
|
|
|
Have Not
|
|
|
|
Not
|
|
|
|
Not
|
|
|
|
|
Grant
|
|
|
|
(#)
|
|
|
|
(#)
|
|
|
|
Price
|
|
|
|
Expiration
|
|
|
|
Not
|
|
|
|
Vested ($)
|
|
|
|
Vested
|
|
|
|
Vested ($)
|
|
Name
|
|
|
Date
|
|
|
|
Exercisable
|
|
|
|
Unexercisable
|
|
|
|
($)
|
|
|
|
Date
|
|
|
|
Vested (#)
|
|
|
|
(3)
|
|
|
|
(#)(4)
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/5/2010
|
|
|
|
|
-
|
|
|
|
|
59,000
|
(10)
|
|
|
|
12.93
|
|
|
|
|
5/5/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/20/2009
|
|
|
|
|
65,666
|
(7)
|
|
|
|
131,334
|
(7)
|
|
|
|
14.13
|
|
|
|
|
2/19/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/30/2008
|
|
|
|
|
40,733
|
|
|
|
|
20,367
|
|
|
|
|
40.40
|
|
|
|
|
1/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/1/2007
|
|
|
|
|
70,000
|
|
|
|
|
-
|
|
|
|
|
41.58
|
|
|
|
|
2/1/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/2/2006
|
|
|
|
|
46,400
|
|
|
|
|
-
|
|
|
|
|
33.68
|
|
|
|
|
2/2/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/1/2005
|
|
|
|
|
40,000
|
|
|
|
|
-
|
|
|
|
|
16.38
|
|
|
|
|
2/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/3/2004
|
|
|
|
|
8,900
|
|
|
|
|
-
|
|
|
|
|
14.17
|
|
|
|
|
8/3/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Everett D. Lewis
|
|
|
|
7/15/2004
|
|
|
|
|
16,400
|
|
|
|
|
-
|
|
|
|
|
14.69
|
|
|
|
|
7/15/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/29/2003
|
|
|
|
|
80,000
|
|
|
|
|
-
|
|
|
|
|
3.88
|
|
|
|
|
4/29/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
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|
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|
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|
|
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|
|
|
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|
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|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/25/2002
|
|
|
|
|
20,000
|
|
|
|
|
-
|
|
|
|
|
6.66
|
|
|
|
|
3/25/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,000
|
(11)
|
|
|
|
630,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/20/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,334
|
(11)
|
|
|
|
773,566
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/30/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,900
|
|
|
|
|
75,231
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/5/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
600,000
|
(12)
|
|
|
|
1,200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Stock options awarded prior to 2008
are fully vested. The vesting schedules for the options awards
are as follows:
|
|
|
|
|
|
|
|
|
|
Grant Date
|
|
|
|
Vesting Schedule
|
|
|
Remaining Vesting Schedule
|
|
5/5/2010
|
|
|
|
331/3%
vests each year for three years from date of grant
|
|
|
5/5/2011, 5/5/2012, 5/5/2013
|
|
5/3/2010
|
|
|
|
30% vests each year for first two years from date of grant and
40% vests in third year from date of grant
|
|
|
5/3/2011, 5/3/2012, 5/3/2013
|
|
2/20/2009
|
|
|
|
331/3%
vests each year for three years from date of grant
|
|
|
2/20/2011, 2/20/2012
|
|
1/30/2008
|
|
|
|
331/3%
vests each year for three years from date of grant
|
|
|
1/30/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
The vesting schedules for
restricted stock awards are as follows:
|
|
|
|
|
|
|
|
Grant Date
|
|
|
Vesting Schedule
|
|
|
Remaining Vesting Schedule
|
5/5/2010
|
|
|
331/3%
vests each year for three years from date of grant
|
|
|
5/5/2011, 5/7/2012, 5/6/2013
|
5/3/2010
|
|
|
100% vests on 5/2/2011
|
|
|
5/2/2011
|
2/20/2009
|
|
|
331/3%
vests each year for three years from date of grant
|
|
|
2/22/2011, 2/21/2012
|
1/30/2008
|
|
|
331/3%
vests each year for three years from date of grant
|
|
|
1/31/2011
|
|
|
|
|
|
|
|
|
|
|
(3)
|
|
The closing stock price of our
common stock on 12/31/10 of $18.54 as reported on the NYSE was
used to calculate the market value of the unvested stock awards.
|
46
|
|
|
(4)
|
|
This award represents performance
units, which is the right to receive a cash payment at the end
of the performance period depending on our achievement of
objective performance measures. This award will vest at the end
of a thirty-three month performance period (April 1, 2010
through December 31, 2012) and the payout value shown
assumes a payout at maximum.
|
|
(5)
|
|
Shares of restricted stock units
which vest 50% each year for two years from date of grant with a
remaining vesting schedule of 5/3/2011 and 5/3/2012.
|
|
(6)
|
|
The market value also includes any
outstanding dividends that will be paid to the executive at time
of vesting of such restricted stock awards. The amounts of
outstanding dividends included with the market value for the
executives for the 1/30/08 and the 2/20/09 grants are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued Cash
|
|
|
|
Accrued Cash
|
|
|
|
|
Dividends for Grant
|
|
|
|
Dividends for Grant
|
|
Name
|
|
|
Date 1/30/08 ($)
|
|
|
|
Date 2/20/09 ($)
|
|
G. Scott Spendlove
|
|
|
|
750
|
|
|
|
|
1,400
|
|
Charles S. Parrish
|
|
|
|
1,725
|
|
|
|
|
2,800
|
|
Claude A. Flagg
|
|
|
|
1,301
|
|
|
|
|
2,800
|
|
Former Executives
|
William J. Finnerty
|
|
|
|
3,575
|
|
|
|
|
5,833
|
|
Everett D. Lewis
|
|
|
|
2,925
|
|
|
|
|
7,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7)
|
|
This award represents phantom stock
options for which the appreciated value is payable in cash. For
Messrs. Smith, Wright and Finnerty, their phantom stock
option award is already vested. Upon Mr. Lewis
cessation of employment effective March 31, 2011, he will
forfeit 65,667 phantom stock options.
|
|
(8)
|
|
As a result of
Messrs. Smiths and Wrights retirements, per
their employment agreements, all unvested awards were
immediately vested and all grants maintained their full
remaining original term.
|
|
(9)
|
|
As a result of
Mr. Finnertys retirement, per his employment
agreement, all unvested phantom stock options were forfeited and
all stock options or restricted stock awards will continue to
vest for two years from his retirement date.
|
|
(10)
|
|
Upon Mr. Lewis cessation
of employment effective March 31, 2011, 59,000 unvested
stock options granted on 5/5/2010 will be forfeited.
|
|
(11)
|
|
Upon Mr. Lewis cessation
of employment effective March 31, 2011, a total of
54,667 shares of unvested restricted stock will be
forfeited (5/5/2010 grant date 34,000; 2/2/2009
grant date 20,667).
|
|
(12)
|
|
Upon Mr. Lewis cessation
of employment effective March 31, 2011, 381,818 performance
units will be forfeited.
|
47
Option
Exercises and Stock Vested in 2010
The following table reflects the aggregate value realized by the
NEOs for option exercises and for restricted stock that vested
in 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
Value Realized on
|
|
|
|
|
|
Value Realized on
|
|
|
|
Number of Shares
|
|
|
Exercise
|
|
|
Number of Shares
|
|
|
Vesting
|
|
|
|
Acquired on Exercise
|
|
|
($)
|
|
|
Acquired on Vesting
|
|
|
($)
|
|
Name
|
|
(#)
|
|
|
(1)
|
|
|
(#)
|
|
|
(2)
|
|
Gregory J. Goff (3)
|
|
|
-
|
|
|
|
-
|
|
|
|
7,321
|
|
|
|
100,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
G. Scott Spendlove
|
|
|
-
|
|
|
|
-
|
|
|
|
5,000
|
|
|
|
62,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles S. Parrish
|
|
|
-
|
|
|
|
-
|
|
|
|
12,500
|
|
|
|
160,440
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Claude A. Flagg
|
|
|
-
|
|
|
|
-
|
|
|
|
11,533
|
|
|
|
147,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Former Executives
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce A. Smith (4)
|
|
|
600,000
|
|
|
|
4,773,810
|
|
|
|
49,268
|
|
|
|
688,535
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory A. Wright (4)
|
|
|
-
|
|
|
|
-
|
|
|
|
61,268
|
|
|
|
801,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William J. Finnerty
|
|
|
-
|
|
|
|
-
|
|
|
|
26,033
|
|
|
|
334,139
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Everett D. Lewis
|
|
|
70,000
|
|
|
|
521,473
|
|
|
|
28,034
|
|
|
|
355,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The value realized on exercise is the aggregate excess over the
fair market value of the option at the time of the exercise and
the exercise price of the option multiplied by the number of
options exercised. |
|
(2) |
|
The value realized is the closing stock price of our common
stock on the vesting date multiplied by the number of shares of
restricted stock that vested including any dividends that were
paid upon vesting. Of the amounts realized, the amounts paid in
dividends to the NEOs upon vesting were: Mr. Spendlove,
$2,150; Mr. Parrish, $6,945; Mr. Flagg, $6,080;
Mr. Smith, $42,178; Mr. Wright, $27,165;
Mr. Finnerty, $14,468 and Mr. Lewis, $13,973. |
|
(3) |
|
The number and value reflected in the Stock Awards column for
Mr. Goff represents the common stock that he received as
part of his employment agreement upon hire. |
|
(4) |
|
As part of Messrs. Smiths and Wrights
employment agreement, all of their unvested equity awards became
immediately vested upon their retirement. That portion of the
amount realized on the stock awards reflected in the table above
that became immediately vested included dividends equating to
$247,376 for Mr. Smith and $494,911 for Mr. Wright. |
48
Pension
Benefits in 2010
The estimated pension benefits provided under the Tesoro
Corporation Retirement Plan and Executive Security Plan for each
of the NEOs are set forth below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present Value of
|
|
|
|
|
|
|
|
|
|
Years of
|
|
|
Accumulated
|
|
|
Payments
|
|
|
|
|
|
|
Credited
|
|
|
Benefit ($)
|
|
|
During Last Fiscal
|
Name
|
|
|
Plan Name
|
|
|
Service
|
|
|
(1)
|
|
|
Year ($)
|
Gregory J. Goff
|
|
|
Tesoro Corporation Retirement Plan
Executive Security Plan
|
|
|
.7
.7
|
|
|
19,050
304,450
|
|
|
-
-
|
G. Scott Spendlove
|
|
|
Tesoro Corporation Retirement Plan
Executive Security Plan
|
|
|
9
9
|
|
|
195,383
843,697
|
|
|
-
-
|
Charles S. Parrish
|
|
|
Tesoro Corporation Retirement Plan
Executive Security Plan
|
|
|
17
17
|
|
|
496,922
2,708,688
|
|
|
-
|
Claude A. Flagg
|
|
|
Tesoro Corporation Retirement Plan
Executive Security Plan
|
|
|
6
6
|
|
|
191,471
1,513,601
|
|
|
-
-
|
Former Executives
|
Bruce A. Smith
|
|
|
Tesoro Corporation Retirement Plan
Executive Security Plan
|
|
|
-
-
|
|
|
-
-
|
|
|
715,134
15,507,421
|
Gregory A. Wright
|
|
|
Tesoro Corporation Retirement Plan
Executive Security Plan
|
|
|
-
-
|
|
|
-
-
|
|
|
611,545
6,802,128
|
William J. Finnerty
|
|
|
Tesoro Corporation Retirement Plan
Executive Security Plan
|
|
|
6
-
|
|
|
264,332
-
|
|
|
-
4,281,496
|
Everett D. Lewis
|
|
|
Tesoro Corporation Retirement Plan
Executive Security Plan
|
|
|
12
12
|
|
|
498,219
5,884,957
|
|
|
-
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The present values of the
accumulated plan benefits are equal to the value of the
retirement benefits at the earliest unreduced age for each plan
utilizing the same assumptions used as of December 31, 2010
for financial reporting purposes. These assumptions include a
discount rate of 5.55%, the RP 2000 Mortality Table projected to
2011 and for the Tesoro Corporation Retirement Plan, the lump
sum was determined using an interest rate of 5.55% and the PPA
2011 Mortality Table. As provided under the Plan,
Mr. Finnerty has not made an election for payment.
|
Tesoro
Corporation Retirement Plan
The Tesoro Corporation Retirement Plan (the Retirement
Plan), is a tax-qualified pension plan. In June 2010, the
Compensation Committee of the Board of Directors approved
changes to the Retirement Plan effective January 1, 2011.
The monthly retirement benefit is made up of two components: a
Final Average Pay (FAP) benefit for service through
December 31, 2010 and a Cash Balance account based benefit
for service after December 31, 2010. The final benefit
payable under the Plan will be the value of the sum of both the
FAP and the Cash Balance components as of a participants
payment date.
Under the FAP component, the benefit formula is equal to 1.1% of
final average compensation for each year of service through
December 31, 2010 plus 0.5% of average compensation in
excess of the Social Security Covered Compensation limit for
each year of service through December 31, 2010 up to
35 years. Final average compensation is the monthly average
of compensation over the consecutive
36-month
period in the last 120 months preceding retirement that
produces the highest average. Compensation includes base pay
plus bonus but limited to the maximum compensation and benefit
limits allowable under qualified plans under the Internal
Revenue Code. Certain employees who were part of a prior
acquisition may be eligible for special provisions which
generally provide for a FAP benefit based on the greater of
(1) the FAP formula using total combined service with us
and the prior employer, reduced by the amount earned under the
prior employers pension plan, and (2) the current FAP
formula using only service since becoming our employee.
Under the Cash Balance component, for service after 2010,
participants earn quarterly pay and interest credits which are
allocated to a hypothetical account balance. Pay credits are
determined based on a percentage of eligible pay at the end of
each quarter ranging from 4.5% to 8.5% of pay based on a
participants age at the end of each quarter. Interest is
credited quarterly on account balances based on the yields of
10-Year
Treasury Bonds.
49
The Retirement Plan benefit is generally payable at the
plans normal retirement date which is the first day of the
month following the attainment of the later of age 65 or
3 years of service. However, a participant may commence
their benefit prior to the plans normal retirement date.
If a participant qualifies for early retirement (age 50
with service and age greater than or equal to 80
80-point early retirement OR
age 55 with 5 years of service regular
early retirement), the FAP benefit component will be reduced by
a subsidized early retirement factor prior to age 65. Under
the 80-point early retirement definition, the FAP benefit
component may be paid at age 60 without reduction or
earlier than age 60 with a reduction of 5% per year for
each year the age at retirement is less than 60. Under the
regular early retirement definition, the FAP benefit component
may be paid at age 62 without reduction or earlier than
age 62 with a reduction of approximately 7.14% per year for
each year that age at retirement is less than 62. If an employee
does not qualify for early retirement upon separation from
service, they will be eligible for an actuarially equivalent FAP
benefit based on their age at the date the benefit is paid
without an early retirement subsidy. The Cash Balance benefit
component for service after 2010 is always based on the actual
balance of the cash balance account as of the payment date and
is not subject to any reduction for payment prior to normal
retirement.
As of the end of fiscal 2010, both Mr. Lewis and
Mr. Flagg were eligible for early retirement, with
Mr. Lewis being eligible for an unreduced FAP benefit and
Mr. Flagg being eligible for a reduced early retirement FAP
benefit. Messrs. Spendlove and Parrish are eligible to
commence their benefit but are not yet eligible for early
retirement subsidies under the FAP benefit. All four are
eligible to receive the full value of their Cash Balance
benefit. Mr. Goff is not yet vested under the Retirement
Plan.
The Retirement Plan benefit is generally payable in the form of
a lifetime monthly annuity payment. At the employees
election, a reduced benefit may be paid that continues a portion
of the reduced payment over the lifetime of a beneficiary, if
the beneficiary outlives the employee. In lieu of monthly
payments, the employee may elect a lump sum form of payment.
Executive
Security Plan
The Executive Security Plan (ESP) is a non-qualified
pension plan. Under the ESP, the gross monthly retirement
benefit is equal to 4% of final average compensation for each of
the first 10 years of service plus 2% of final average
compensation for each of the next 10 years of service plus
1% of final average compensation for each of the last
10 years of service, for a maximum gross monthly retirement
benefit of 70% of final average compensation for up to
30 years of service. This gross monthly retirement benefit
is reduced by any benefits paid from the qualified Retirement
Plan, benefits from any predecessor plan if service is
recognized for purposes of the ESP and, after age 62,
estimated Social Security benefits. Final average compensation
in the ESP is the highest three years of compensation out of the
last seven calendar years prior to retirement that produces the
highest average. Compensation includes base pay plus bonus (in
the year earned not paid). In 2010 the ESP was closed to new
participants.
Generally, only service with us or our affiliates is included in
the ESP. As a result of acquisitions, certain executives may
receive credited service with prior employers for the ESP with
an offset for any qualified or non-qualified retirement benefits
paid by the prior employer.
To qualify for a benefit under the ESP, a participant must
separate from the company after attaining age 50 with 80
points or age 55 and with at least 5 years of service.
Once eligible for a benefit, the gross monthly retirement
benefit may be paid on or after age 60 without a reduction
or earlier than age 60 with a reduction of 7% per year for
each year less than 60 (prorated for partial years). As of the
end of fiscal 2010, Mr. Lewis was eligible for retirement
benefits under the plan without any reduction. Mr. Flagg
was eligible for reduced retirement benefits. Messrs. Goff,
Spendlove, and Parrish were not currently eligible for
retirement benefits under the ESP.
The ESP provides for certain death and disability benefits. The
death benefits in the ESP are equal to the greater of
(1) the executives ESP benefit determined at date of
death, (2) the actuarial equivalent of 400% of the
executives base pay, prior to the date of death, or
(3) the benefit determined as if the executive had remained
an active employee through age 65 and was paid a benefit at
age 65. Assuming that the following
50
executives died on December 31, 2010, their monthly payment
under the ESP, payable for the life of the beneficiary, would be
the following, offset by the estimated Social Security benefit.
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|
|
|
|
|
|
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|
Monthly Death
|
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|
Monthly Death
|
|
|
|
Benefit to Executives
|
|
|
Benefit to Executives
|
|
|
|
Beneficiary
|
|
|
Beneficiary
|
NEO
|
|
|
Before Age
62 ($)
|
|
|
After Age 62 ($)
|
Gregory J. Goff
|
|
|
|
39,816
|
|
|
|
|
38,073
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|
G. Scott Spendlove
|
|
|
|
6,198
|
|
|
|
|
4,681
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|
Charles S. Parrish
|
|
|
|
18,122
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|
|
|
|
16,454
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|
Claude A. Flagg
|
|
|
|
20,544
|
|
|
|
|
18,724
|
|
Former Executives
|
Bruce A. Smith
|
|
|
|
N/A
|
|
|
|
|
N/A
|
|
Gregory A. Wright
|
|
|
|
N/A
|
|
|
|
|
N/A
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|
William J. Finnerty
|
|
|
|
N/A
|
|
|
|
|
N/A
|
|
Everett D. Lewis
|
|
|
|
N/A
|
|
|
|
|
41,621
|
|
|
|
|
|
|
|
|
|
|
|
|
If the executive becomes disabled, the executive is entitled to
the monthly retirement benefit for which he is eligible at his
normal retirement date, but based upon the service the
participant would have accrued had he remained in active
employment until his retirement date and continued at the same
rate of earnings until that date. Assuming that the following
executives became disabled on December 31, 2010, their
monthly payments under the ESP are payable on the first day of
the month following the date on which the executive has attained
both age 65 and has a minimum of five years of service.
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Monthly Disability
|
NEO
|
|
|
Benefit
|
Gregory J. Goff
|
|
|
64,549
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G. Scott Spendlove
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|
|
18,097
|
Charles S. Parrish
|
|
|
31,724
|
Claude A. Flagg
|
|
|
23,767
|
Former Executives
|
Bruce A. Smith
|
|
|
N/A
|
Gregory A. Wright
|
|
|
N/A
|
William J. Finnerty
|
|
|
N/A
|
Everett D. Lewis
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45,595
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|
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|
Pursuant to Section 409A of the Code, a participant must
wait six months, except in the event of death, before receiving
a distribution of his benefit from the ESP. Distributions at
retirement or termination will be made in accordance with the
existing distribution election made by the participant. The ESP
provides for a life annuity or lump sum payment upon
termination. Mr. Spendlove has elected to receive an
annuity form of payment upon termination while the remaining
NEOs have elected to receive a lump sum form of payment upon
termination.
Tesoro
Corporation Supplemental Executive Retirement Plan
The Supplemental Executive Retirement Plan (SERP) is
a non-qualified cash balance account based pension plan that was
approved and adopted by the Compensation Committee on
January 12, 2011. The SERP provides eligible senior level
executives, who are hired on or after January 12, 2011, a
supplemental pension benefit in excess of those earned under the
qualified retirement plan. Currently there are no NEOs that are
eligible to participate in the SERP.
51
Tesoro
Corporation Restoration Retirement Plan
Messrs. Lewis and Flagg will receive all of their
supplemental pension benefits pursuant to the ESP. If
Messrs. Goff, Spendlove and Parrish terminate employment
prior to becoming eligible for a benefit under the ESP, they
will receive a supplemental pension benefit under the Tesoro
Corporation Restoration Retirement Plan (the Restoration
Retirement Plan), a non-qualified pension plan. The
purpose of the Restoration Retirement Plan is to restore the
benefit which is not provided under the qualified Retirement
Plan due to compensation and benefit limitations imposed under
the Internal Revenue Code.
The Restoration Retirement Plan provides a benefit equal to the
difference between the actual qualified Retirement Plan benefit
paid to the participant, and the benefit that would have
otherwise been paid to the participant under the Retirement
Plan, without regard to the limitations of Section 401(a)
(17) and Section 415 of the Internal Revenue Code.
Upon termination, if the present value of the Restoration
Retirement Plan benefit is less than or equal to $100,000, the
automatic form of payment is a lump sum. If the present value of
the Restoration Retirement Plan benefit is greater than
$100,000, the automatic form of payment is a lifetime annuity or
any annuity form of payment available under the Retirement Plan,
as elected by the participant.
Nonqualified
Deferred Compensation in 2010
The following table sets forth information regarding the
contributions to and year-end balances under our nonqualified
deferred compensation plan for the NEOs in 2010.
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Aggregate
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Aggregate
|
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Executive
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Registrant
|
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Earnings in
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Withdrawals/
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Aggregate
|
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Contributions
|
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Contributions
|
|
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Last Fiscal
|
|
|
Distributions
|
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Balance at Last
|
|
|
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in Last Fiscal
|
|
|
in Last Fiscal
|
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|
Year
|
|
|
in Last Fiscal
|
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|
Fiscal Year-
|
Name
|
|
|
Year ($)
|
|
|
Year ($)
|
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|
($)(1)
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|
Year ($)
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End ($)
|
Gregory J. Goff
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-
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|
|
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-
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|
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-
|
|
|
|
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-
|
|
|
|
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-
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G. Scott Spendlove
|
|
|
|
24,947
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|
|
|
|
-
|
|
|
|
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36,548
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|
|
|
|
(18,834)
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|
|
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275,438
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Charles S. Parrish
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|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
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|
Claude A. Flagg
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
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24,809
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|
|
|
|
-
|
|
|
|
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138,305
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|
Former Executives
|
Bruce A. Smith
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|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
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|
|
-
|
|
|
|
|
-
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|
Gregory A. Wright
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|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
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|
William J. Finnerty
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
Everett D. Lewis
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|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
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(1)
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|
The amount shown reflects the
change in the market value pertaining to the investment funds in
which the NEOs have chosen to invest their contributions and our
contribution under the Tesoro Corporation Executive Deferred
Compensation Plan.
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Tesoro
Corporation Executive Deferred Compensation Plan
Our NEOs are eligible to participate in the Tesoro Corporation
Executive Deferred Compensation Plan (EDCP). The
purpose of the EDCP is to provide executives and key management
personnel the opportunity to make additional pre-tax deferrals
capped under our qualified 401(k) plan (the Thrift
Plan), due to salary and deferral limitations imposed
under the Internal Revenue Code and as an additional resource
for tax planning.
Participants may elect to defer up to 50% of their base salary
and/or up to
100% of their annual bonus compensation after FICA tax
deductions. We will match the participants base salary
contributions
dollar-for-dollar
up to 4% of eligible earnings above the IRS salary limitation
(i.e., $245,000 for 2010). A participant will vest in our
matching contributions upon the completion of three years of
service. Participants who are eligible for supplemental
retirement benefits under the ESP or an executive employment
agreement,
52
are eligible to defer compensation under the EDCP, but are not
eligible for the matching provisions of the EDCP. The EDCP also
permits us to make discretionary contributions to
participants accounts from time to time in amounts and on
terms as we may determine. No such additional discretionary
contributions have been made on behalf of any of our senior
executives accounts to date.
Participants are able to direct investment selections for their
own accounts and may change the investment allocation at any
time, subject to certain restrictions. The investment selection
generally includes mutual funds available through the Thrift
Plan.
As imposed by Section 409A of the Code, a participant must
wait six months, except in the event of a death, before
receiving a distribution of their benefit from the EDCP.
Distributions at retirement or termination will be in accordance
with the distribution election made by the participant at the
time of his or her deferral election. Participants may select
distributions in the form of a lump sum or installments (no more
frequently than monthly) over a period of two to fifteen years.
If a participant does not designate a distribution direction at
the time of deferral, the default distribution is a lump sum
payment on the seventh month following retirement or
termination. For vested deferral account balances less than
$100,000 at the time of termination, distribution will be in the
form of a lump sum, paid in cash, regardless of the
participants distribution selection.
2010
Potential Payments Upon Termination or
Change-In-Control
The following tables reflect the estimated amount of
compensation for Messrs. Goff, Spendlove, Parrish and Flagg
upon certain termination events. Such compensation is in
addition to the pension benefits, including certain
termination-related pension benefits, described under the
heading Pension Benefits in 2010, included in this
Proxy Statement. The amounts shown below assume that the
applicable termination occurred as of December 31, 2010 and
are based on the agreements and arrangements in place on such
date. The actual payments an executive would be entitled to may
only be determined based upon the actual occurrence and
circumstances surrounding the termination. As of the end of the
fiscal year, Mr. Spendlove and Mr. Flagg were only
entitled to termination-related benefits under their management
stability agreements and the Enhanced Severance Policy for
Senior Vice Presidents. On January 12, 2011, we adopted the
Executive Severance and
Change-in-Control
Plan, in which Messrs. Spendlove and Flagg participate.
Thus, for the discussion and tables below, weve assumed
that Messrs. Spendlove and Flagg were subject to their
management stability agreements and the Plan. Following the
tables is a discussion of what Messrs. Smith, Wright,
Finnerty and Lewis actually received upon their termination of
employment with us.
Below are the assumptions used in determining the estimated
payments upon various termination scenarios.
Payments Made Upon Any Termination
Scenario. Each NEO is entitled to the following
upon any termination scenario:
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Accrued Benefits. Each NEO would be
entitled to the following accrued benefits: any accrued but
unpaid base salary to the date of termination; any qualified
reimbursable business expenses incurred through the date of
termination; any unused vacation pay; any unpaid bonuses for a
prior period to which the NEO is entitled either per their
employment agreement or the incentive compensation program; and
any other benefits to which the NEO is entitled.
|
Payments Made Upon Involuntary Termination Without Cause or
Voluntary Termination with Good Reason (as defined below).
Pursuant to Messrs. Goff or Parrishs employment
agreements or the Executive Severance and
Change-in-Control
Plan for Messrs. Spendlove and Flagg, each NEO is entitled
to the following upon a termination by us without cause, and
only by Messrs. Goff or Parrish, for good reason as defined
in their employment agreements.
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Severance. Mr. Goff will receive
an amount equal to two times the sum of his base salary and the
greater of his highest annual bonus earned under the applicable
annual incentive compensation plan during the preceding three
years or $450,000. For the other NEOs, their severance amount is
based on a multiple of their base salary and bonus
(Mr. Spendlove and Mr. Flagg one and
one-half
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53
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times; and Mr. Parrish two times).
Messrs. Goff and Parrish will also receive a prorated bonus
for the year of termination.
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Equity Vesting. Mr. Goff will be
fully vested in all his equity awards. Messrs. Spendlove
and Flagg will forfeit any unvested equity awards.
Mr. Parrish will continue to vest in all stock options and
restricted stock awards over the two-year period commencing on
the date of termination. For all NEOs, since they are required
to work a minimum of 12 months to get a payout of their
performance unit award and they did not work the required
minimum period by the end of the year, they will not receive a
performance unit payout.
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Health Coverage. Mr. Goff will
receive health benefits to the extent that group health coverage
is being provided by us to other similarly situated employees
and will continue until the earliest of the following to occur:
two and one-half years after the date of Mr. Goffs
termination, his death, or if he becomes covered by a comparable
benefit by a subsequent employer. For Messrs. Spendlove and
Flagg, they will receive medical benefits for a period of
eighteen months from date of termination. If Mr. Parrish is
terminated prior to his 55th birthday, we will provide him,
his spouse and his dependents, at our expense, continuing health
coverage, but only to the extent such arrangements are available
to our retirees, until the earliest to occur of
Mr. Parrishs death or the date he becomes covered for
a comparable benefit by a subsequent employer. If
Mr. Parrish is terminated on or after his
55th birthday, he is entitled to participate in our
post-retirement benefit programs on the same basis as our other
retirement eligible employees.
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Retirement Benefits. Mr. Parrish
will receive additional years of service and age credit under
the ESP to the extent necessary to determine his benefit
thereunder as if he had attained age 55 with 20 years
of service.
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Outplacement
Services. Messrs. Spendlove and Flagg
will receive outplacement services for up to twelve months
commencing after the date of the executives termination.
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Definitions.
|
Messrs. Goffs and Parrishs employment agreement
defines cause and good reason as follows (these definitions have
been simplified for purposes of this Proxy Statement):
Cause is limited to (i) willful misconduct by
the executive with regard to us which has a material adverse
effect on us; (ii) willful refusal of the executive to
attempt to follow the proper written direction of the CEO or the
Board, as applicable; (iii) substantial and continuing
willful refusal by the executive to attempt to perform the
duties required of him; (iv) material breach of a fiduciary
duty to us through misappropriation of our funds or property; or
(v) the executive being convicted of or a plea of nolo
contendere to the charge of a felony.
Good Reason means the occurrence or failure to cause
the occurrence, as the case may be, without the executives
express written consent, of any of the following circumstances:
(i) any material diminution of the executives
positions, duties or responsibilities or the assignment to the
executive of duties or responsibilities that are inconsistent
with the executives position; (ii) removal of the
executive from officer positions with us as specified in the
employment agreement or removal of the executive from any of his
then officer positions; (iii) requiring the
executives principal place of business to be located other
than in the San Antonio, Texas greater Metropolitan region;
(iv) a failure by us (x) to continue any bonus plan,
program or arrangement in which the executive is entitled to
participate (the Bonus Plans) or (y) to
continue the executive as a participant in the Bonus Plans on at
least the same basis as to the potential amount of the bonus the
executive participated in prior to any change in such plans or
awards; (v) any material breach by us of any provision of
the employment agreement; or (vi) the failure of any
successor to us to assume our obligations under the employment
agreement.
54
The Executive Severance and
Change-in-Control
Plan defines cause as follows (this definition has been
simplified for purposes of this Proxy Statement):
Cause means: (i) the conviction of or a plea of
nolo contendere to the charge of a felony; (ii) a willful
refusal to perform, or gross negligence in performing, the
participants duties and responsibilities; (iii) a
material breach of fiduciary duty to us through the
misappropriation of our funds or property; or (iv) the
unauthorized absence of the participant from work for a period
of thirty or more working days out of a consecutive forty-five
working day period.
Payments Made Upon Termination in Connection With a
Change-in-Control. Pursuant
to the employment agreements for Messrs. Goff and Parrish,
or management stability agreements for Messrs. Spendlove
and Flagg, in the event of a termination by us without cause or
by an NEO with good reason within two years following a
change-in-control,
each NEO will receive benefits as follows:
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Severance. Each NEO will receive a
multiple of base salary and target annual bonus
(Messrs. Goff and Parrish three times;
Messrs. Spendlove and Flagg two and one-half
times) as well as a prorated bonus for the year of termination
for each NEO.
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Equity Vesting. Each NEO will be 100%
vested in all equity awards.
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Health Coverage. Messrs. Spendlove
and Flagg will receive health and welfare coverage for thirty
months. If Mr. Parrish is terminated prior to his
55th birthday, we will provide him and his dependents
continuing health coverage, at our expense, but only to the
extent such arrangements are available to our retirees, until
the earliest to occur of Mr. Parrishs death or the
date he becomes covered by a comparable benefit by a subsequent
employer. If Mr. Parrish is terminated on or after his
55th birthday, he is entitled to participate in our
post-retirement benefit programs on the same basis as our other
retirement eligible employees.
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Retirement
Benefits. Messrs. Spendlove, Parrish and
Flagg will receive additional years of service credit under the
current non-qualified supplemental pension plans
(Messrs. Spendlove and Flagg two and one-half
years; Mr. Parrish three years).
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Tax
Gross-Up. Mr. Parrish
is entitled, per the terms of his employment agreement, to a
Section 280G tax
gross-up
payment if his termination-related payments become subject to
excise taxes imposed by Section 4999 of the Internal
Revenue Code. Mr. Parrishs employment agreement has
an initial term ending May 7, 2012 and renews thereafter
for an additional year on each annual anniversary date of the
agreement (May 7), unless we terminate the agreement in
accordance with its terms.
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Definitions.
|
Messrs. Goffs and Parrishs employment
agreements, the management stability agreements and the
Executive Severance and
Change-in-Control
Plan define
change-in-control
as follows (this definition has been simplified for purposes of
this Proxy Statement):
Change-in-Control
means (i) there shall be consummated (a) any
consolidation or merger of Company in which the Company is not
the continuing or surviving corporation or pursuant to which
shares of the Companys common stock would be converted
into cash, securities or other property, other than a merger of
the Company where a majority of the board of directors of the
surviving corporation are, and for a one-year period (two-year
period, in the case of the management stability agreements)
after the merger continue to be, persons who were directors of
the Company immediately prior to the merger or were elected as
directors, or nominated for election as directors, by a vote of
at least two-thirds of the directors then still in office who
were directors of the Company immediately prior to the merger,
or (b) any sale, lease, exchange or transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company; or (ii) the
stockholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company; or (iii) (x) any
person (as such term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act other than the Company or a
subsidiary thereof
55
or any employee benefit plan sponsored by the Company or a
subsidiary thereof, shall become the beneficiary owner (within
the meaning of Rule
13d-3 under
the Exchange Act) of securities of the Company representing 35%
(20%, in the case of the management stability agreements) or
more of the combined voting power of the Companys then
outstanding securities ordinarily (and apart from rights
accruing in special circumstance) having the right to vote in
the election of directors, as a result of a tender or exchange
offer, open market purchases, privately negotiated purchases or
otherwise, or (y) at any time during a period of one year
thereafter, individuals who immediately prior to the beginning
of such period constituted the Board of Directors cease for any
reason to constitute at least a majority thereof, unless
election or the nomination by the Board of Directors for
election by the Companys stockholders of each new director
during such period was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the
beginning of such period.
The management stability agreements and the Executive Severance
and
Change-in-Control
Plan defines good reason as follows (this definition has been
simplified for purposes of this Proxy Statement):
Good Reason means the occurrence of any of the
following: (i) without Participants express written
consent, the assignment to Participant of any duties
inconsistent with the employment of Participant immediately
prior to the
Change-in-Control,
or a significant diminution of Participants positions,
duties, responsibilities and status with us from those
immediately prior to a
Change-in-Control
or a diminution in Participants titles or offices as in
effect immediately prior to a
Change-in-Control,
or any removal of Participant from, or any failure to reelect
Participant to, any of such positions; (ii) a material
reduction by us in Participants base salary, as in effect
immediately prior to a
Change-in-Control;
(iii) the failure by us to continue benefits, including but
not limited to, thrift, pension, life insurance, and health
plans, substantially equal in value, in the aggregate, to those
in which Participant is participating or is eligible to
participate at the time of the
Change-in-Control
except as otherwise required by the terms of such plans as in
effect at the time of any
Change-in-Control;
(iv) the failure by us to continue in effect any incentive
plan or arrangement in which Participant is participating at the
time of a
Change-in-Control
(or to substitute and continue other plans or arrangements
providing the Participant with substantially similar benefits),
except as otherwise required by the terms of such plans as in
effect at the time of any
Change-in-Control;
(v) the occurrence of an event that meets the criteria set
forth under our relocation policy, as in effect from time to
time, with respect to which either (a) the Participant
fails to provide express written consent to the relocation or
(b) we fail to provide the relocation benefit set forth in
such policy; or (vi) any failure by us to obtain the
assumption of this Agreement by any of our successors or assigns.
Payments Made Upon Termination Due to
Retirement. In the event of an NEOs
termination due to retirement, the NEO will receive the
following benefits:
|
|
|
|
|
Severance. At the Boards
discretion, pursuant to the terms of our annual incentive
compensation program, upon retirement for any reason on or after
June 30 of the applicable year, each NEO will receive a pro
rated bonus for the year of termination.
|
|
|
|
Equity Vesting. Pursuant to the terms
of outstanding award agreements, each NEO will receive a payout
of their performance unit award based on the number of full
months worked divided by the thirty-three months based on actual
performance.
|
Payments Made Upon Death. In the event of an
NEOs termination due to death, the NEOs estate or
beneficiaries will receive the following benefits:
|
|
|
|
|
Severance. At the Boards
discretion, pursuant to the terms of our annual incentive
compensation program, upon termination due to death, each NEO
will receive a pro rated bonus for the year of termination. In
addition, Mr. Goff and Mr. Parrish will receive one
additional year of base salary in accordance with their
employment agreements.
|
56
|
|
|
|
|
Equity Vesting. Pursuant to the terms
of outstanding award agreements, each NEO will receive a payout
of their performance unit award based on the number of full
months worked divided by the thirty-three months based on actual
performance. In addition, Mr. Parrish will be fully vested
in his stock options and restricted stock in accordance with the
terms of his employment agreement.
|
Payments Made Upon Disability. In the event of
an NEOs termination due to disability, the NEO will
receive the following benefits:
|
|
|
|
|
Severance. At the Boards
discretion, pursuant to the terms of our annual incentive
compensation program, upon termination due to disability, each
NEO will receive a pro rated bonus for the year of termination.
In addition, Mr. Goff and Mr. Parrish will receive
additional base salary (one year for Mr. Goff and two
additional years for Mr. Parrish) in accordance with their
employment agreements, offset by any payments that they would
receive under our long-term disability plan for the period
specified.
|
|
|
|
Equity Vesting. Pursuant to the terms
of outstanding award agreements, each NEO will receive a payout
of their performance unit award based on the number of full
months worked divided by the thirty-three months based on actual
performance. In addition, Mr. Parrish will be fully vested
in his stock options and restricted stock in accordance with his
employment agreement.
|
Payments Made Upon Involuntary Termination with
Cause. In the event of an NEOs termination
with cause the NEO will not be entitled to additional benefits
other than:
|
|
|
|
|
Severance. Messrs. Goff and
Parrish will receive any earned but unpaid bonuses for prior
years based on their employment agreements. For Mr. Goff,
his receipt of an earned but unpaid bonus for prior years is
based on the extent other similarly situated executives at the
time receive a bonus as well.
|
|
|
|
Equity Vesting. Each NEO will forfeit
all outstanding equity awards.
|
Termination
Tables
Potential
Payments Upon a Termination Without Cause or With Good
Reason
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
Mr. Goff
|
|
|
Mr. Spendlove
|
|
|
Mr. Parrish
|
|
|
Mr. Flagg
|
Components
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
Severance (1)
|
|
|
|
3,450,000
|
|
|
|
|
960,000
|
|
|
|
|
2,142,750
|
|
|
|
|
1,039,500
|
|
Value of Accelerated Equity (2)
|
|
|
|
9,984,988
|
|
|
|
|
-
|
|
|
|
|
954,765
|
|
|
|
|
-
|
|
Retirement Benefits
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
3,650,317
|
(3)
|
|
|
|
-
|
|
Health Benefits (4)
|
|
|
|
20,910
|
|
|
|
|
19,929
|
|
|
|
|
243,516
|
|
|
|
|
585
|
|
Outplacement Services (5)
|
|
|
|
-
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
15,000
|
|
Total
|
|
|
|
13,455,898
|
|
|
|
|
994,929
|
|
|
|
|
6,991,348
|
|
|
|
|
1,055,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Mr. Goffs severance
amount is based on two times his base salary and the greater of
his highest annual bonus earned under the applicable annual
incentive compensation plan during the preceding three years or
$450,000. For the other NEOs, their severance amount is
based on a multiple of their base salary and bonus
(Mr. Spendlove and Mr. Flagg one and
one-half times; and Mr. Parrish two times). The
severance amount also includes a prorated bonus for the year of
termination for Messrs. Goff and Parrish. For
Messrs. Goff and Parrish, their severance (excluding the
prorated bonus) will be paid in a lump sum as soon as
administratively practicable following six months after
termination, and one-half of which will be paid during the
two-year period beginning as soon as administratively
practicable following six months after termination in the same
manner as if the NEO had remained
|
57
|
|
|
|
|
an active employee. For
Messrs. Spendlove and Flagg, their severance will be paid
in a lump sum following the end of the six months after
termination.
|
|
(2)
|
|
Mr. Goff will be fully vested
in all his equity awards. Messrs. Spendlove and Flagg will
forfeit any unvested equity awards. Mr. Parrish will
continue to vest in all stock options and restricted stock
awards over the two-year period commencing on the date of
termination. For all NEOs, since they are required to work a
minimum of 12 months to get a payout of their performance
unit awards and they did not work the required minimum period by
the end of the year, they were not eligible to receive a
performance unit award payout. The value of accelerated equity
represents the aggregate excess over the fair market value of
the unvested stock options as of December 31, 2010 over the
grant price of the stock options that accelerates in connection
with the termination event. The value also includes the fair
market value of the unvested restricted stock and restricted
stock units as of December 31, 2010 that accelerates in
connection with the termination event. The value of the
accelerated restricted stock was calculated using the fair
market value of our common stock as of December 31, 2010.
|
|
(3)
|
|
Mr. Parrish will receive
additional years of service credit and age credit under the ESP
as if he had attained age 55 and completed 20 years of
service.
|
|
(4)
|
|
For each NEO, the amount represents
the estimated health and welfare benefits provided to the
executive. Mr. Goff will receive health benefits to the
extent that group health coverage is being provided by us and
will continue until the earliest of the following to occur: two
and one-half years after the date of the executives
termination, the executives death, or if the executive
becomes covered by a comparable benefit by a subsequent
employer. For Messrs. Spendlove and Flagg, they will
receive medical benefits for a period of eighteen months from
date of termination. For Mr. Parrish, if he is terminated
prior to his 55th birthday, the continuation of all health
benefits will continue until the earliest to occur of
Mr. Parrishs death or the date he becomes covered by
a comparable benefit by a subsequent employer.
|
|
(5)
|
|
Messrs. Spendlove and Flagg
will receive outplacement services for up to twelve months
commencing after the date of the executives termination.
|
Potential
Payments Upon a Termination in Connection with a
Change-in-Control
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
Mr. Goff
|
|
|
Mr. Spendlove
|
|
|
Mr. Parrish
|
|
|
Mr. Flagg
|
Components
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
Severance (1)
|
|
|
6,150,000
|
|
|
1,839,231
|
|
|
2,992,750
|
|
|
|
2,055,323
|
|
Value of Accelerated Equity (2)
|
|
|
11,484,988
|
|
|
726,503
|
|
|
1,599,997
|
|
|
|
1,469,079
|
|
Retirement Benefits (3)
|
|
|
-
|
|
|
227,138
|
|
|
373,838
|
|
|
|
800,127
|
|
Health Benefits (4)
|
|
|
-
|
|
|
39,859
|
|
|
243,516
|
|
|
|
9,957
|
|
Gross-up (5)
|
|
|
-
|
|
|
-
|
|
|
1,131,650
|
|
|
|
-
|
|
Total
|
|
|
17,634,988
|
|
|
2,832,731
|
|
|
6,341,751
|
|
|
|
4,334,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
For each NEO, their severance
amounts include a multiple of the sum of base salary plus target
annual bonus (Messrs. Goff and Parrish three
times and Messrs Spendlove and Flagg two and
one-half times) as well as a prorated bonus for the year of
termination for each NEO. Mr. Goffs severance
(excluding the prorated bonus) will be paid one-half in a lump
sum and one-half in substantially equal monthly installments
during the two-year period beginning as soon as administratively
practicable following six months after termination. For
Messrs. Spendlove, Parrish and Flagg, their severance
amount (excluding the prorated bonus, as applicable) will be
paid in a lump sum six months after their termination.
|
|
(2)
|
|
Each NEO will be fully vested in
all stock options, restricted stock, restricted stock units,
phantom stock options, and performance units. The value of
accelerated equity represents the aggregate excess over the fair
market value of the unvested stock options and phantom stock
options as of December 31, 2010 over the grant price of the
options that accelerates in connection with the
change-in-control.
The value also includes the fair market value of the unvested
restricted stock and restricted stock units as of
December 31, 2010 that accelerates in connection with the
change-in-control.
The value of the accelerated restricted stock was calculated
using the fair market value of our common stock as of
December 31, 2010. The performance units are valued based
on the greater of target or the actual performance of relative
and absolute total shareholder returns as of December 31,
2010.
|
58
|
|
|
(3)
|
|
The retirement benefit for
Messrs. Spendlove, Flagg and Parrish reflects the value of
the additional years of service credit using the same
assumptions as of December 31, 2010 that are used for
financial reporting purposes, as discussed under the heading
Pension Benefits in 2010, contained in this Proxy
Statement (Messrs. Spendlove and Flagg two
years; Mr. Parrish three years).
|
|
(4)
|
|
The estimated health and welfare
benefits represent for Messrs. Spendlove and Flagg the
health and welfare benefits that they will receive for thirty
months after termination. For Mr. Parrish, if he is
terminated prior to his 55th birthday, the continuation of all
health benefits will continue until the earliest to occur of
Mr. Parrishs death or the date he becomes covered by
a comparable benefit by a subsequent employer.
|
|
(5)
|
|
The amount in the table is based on
an Internal Revenue Code Section 280G excise tax rate of
20%, a 35% federal income tax rate and a 1.45% Medicare tax
rate. As of December 31, 2010, only Mr. Parrish would
have received a tax
gross-up for
a termination in connection with a
change-in-control.
|
Potential
Payments Upon a Termination Due to Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
Mr. Goff
|
|
|
Mr. Spendlove
|
|
|
Mr. Parrish
|
|
|
Mr. Flagg
|
Components
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
Severance (1)
|
|
|
750,000
|
|
|
239,231
|
|
|
442,750
|
|
|
|
322,823
|
|
Value of Equity (2)
|
|
|
290,909
|
|
|
32,000
|
|
|
87,273
|
|
|
|
64,000
|
|
Total
|
|
|
1,040,909
|
|
|
271,231
|
|
|
530,023
|
|
|
|
386,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The severance amount includes the
prorated bonus for the year of termination for each NEO.
|
|
(2)
|
|
Each NEO will receive a payout of
their performance unit award based on the number of full months
worked divided by the thirty-three months based on actual
performance. The value reflected above assumes that we paid out
at target at the end of the performance period.
|
Potential
Payments Upon a Termination Due to Death
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
Mr. Goff
|
|
|
Mr. Spendlove
|
|
|
Mr. Parrish
|
|
|
Mr. Flagg
|
Components
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
Severance (1)
|
|
|
1,650,000
|
|
|
239,231
|
|
|
942,750
|
|
|
|
322,823
|
|
Value of
Accelerated Equity (2)
|
|
|
290,909
|
|
|
32,000
|
|
|
1,237,270
|
|
|
|
64,000
|
|
Total
|
|
|
1,940,909
|
|
|
271,231
|
|
|
2,180,020
|
|
|
|
386,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The severance amounts include one
additional year of base salary for Messrs. Goff and
Parrish. The severance amount also includes the prorated bonus
for the year of termination for each NEO.
|
|
(2)
|
|
Mr. Parrish will be fully
vested in his stock options and restricted stock with up to one
year for the executives estate or beneficiary to exercise
stock options. The value of accelerated equity represents the
aggregate excess over the fair market value of the unvested
stock options as of December 31, 2010 over the grant price
of the stock options that accelerates in connection with the
termination event. The value also includes the fair market value
of the unvested restricted stock as of December 31, 2010
that accelerates in connection with the termination event. The
value of the accelerated restricted stock was calculated using
the fair market value of our common stock as of
December 31, 2010. Each NEO will receive a payout of their
performance unit award based on the number of full months worked
divided by the thirty-three months based on actual performance.
The value reflected above assumes that we pay out at target at
the end of the performance period.
|
59
Potential
Payments Upon a Termination Due to Disability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
Mr. Goff
|
|
|
Mr. Spendlove
|
|
|
Mr. Parrish
|
|
|
Mr. Flagg
|
Components
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
Severance (1)
|
|
|
1,470,000
|
|
|
239,231
|
|
|
1,082,750
|
|
|
|
322,823
|
|
Value of
Accelerated Equity (2)
|
|
|
290,909
|
|
|
32,000
|
|
|
1,237,270
|
|
|
|
64,000
|
|
Total
|
|
|
1,760,909
|
|
|
271,231
|
|
|
2,320,020
|
|
|
|
386,823
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The severance amounts include
additional years of base salary (one year for Mr. Goff and
two years for Mr. Parrish), offset by any payments that
they would receive under our long-term disability plan for the
period specified. The severance amount also includes the
prorated bonus for the year of termination for each NEO.
|
|
(2)
|
|
Mr. Parrish will be fully
vested in his stock options and restricted stock with up to one
year from the date of termination due to disability to exercise
stock options. The value of accelerated equity represents the
aggregate excess over the fair market value of the unvested
stock options as of December 31, 2010 over the grant price
of the stock options that accelerates in connection with the
termination event. The value also includes the fair market value
of the unvested restricted stock as of December 31, 2010
that accelerates in connection with the termination event. The
value of the accelerated restricted stock was calculated using
the fair market value of our common stock as of
December 31, 2010. Each NEO will receive a payout of their
performance unit award based on the number of full months worked
divided by the thirty-three months based on actual performance.
The value reflected above assumes that we pay out at target at
the end of the performance period.
|
Potential
Payments Upon a Termination With Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
Mr. Goff
|
|
|
Mr. Spendlove
|
|
|
Mr. Parrish
|
|
|
Mr. Flagg
|
Components
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
Severance (1)
|
|
|
750,000
|
|
|
-
|
|
|
442,750
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Messrs. Goff and Parrish will
receive any earned, but unpaid bonuses for any prior period per
their employment agreements.
|
Terminations of Messrs. Smith and
Wright. Pursuant to the terms of their employment
agreements, upon their respective retirements,
Messrs. Smith and Wright became entitled to the following:
(i) base salary from the date of retirement through
December 31, 2011 for Mr. Smith and November 1,
2010 for Mr. Wright; (ii) a pro rata bonus under the
annual incentive compensation plan; (iii) a special bonus
award representing the difference, if any, between (a) the
executives actual pension benefit under the ESP and the
applicable subsection of the executives employment
agreement and (b) the ESP pension benefit he would have
received had he retired effective May 31, 2009 under the
terms of the ESP and the applicable section of the
executives employment agreement; and (iv) immediate
vesting of all equity awards upon the executives
retirement.
Finnerty Separation Agreement. We entered into
the Finnerty Separation Agreement, effective March 31, 2010
(the Separation Date). Under the terms of the
Finnerty Separation Agreement, Mr. Finnerty consulted with
the CEO from time to time at the CEOs request. As
consideration for his consulting services, we paid
Mr. Finnerty the sum of $75,542 per month for six months
following the Separation Date. Mr. Finnerty also received a
one-time cash severance payment of $2,000,000, continued company
paid health care for two and one-half years, continued vesting
of all unvested stock options and restricted stock during the
two-year period following the Separation Date, and two years
after the Separation Date to exercise stock options granted
after February 2, 2005. The Finnerty Separation Agreement
also includes confidentiality, non-disparagement,
non-disclosure, non-solicitation and release of claims covenants
and other details regarding outplacement services and the
benefits coverage applicable to Mr. Finnerty.
60
Termination of Mr. Lewis. Pursuant to the
terms of the Executive Severance and
Change-in-Control
Plan, upon Mr. Lewis cessation of employment
effective March 31, 2011, Mr. Lewis became entitled to
the following: (i) an amount equal to one and three-fourths
times the sum of his base salary and bonus ($2,327,500, payable
six months after termination); (ii) medical benefits for a
period of eighteen months from the date of termination;
(iii) outplacement services for up to twelve months
commencing after the date of termination; and (iv) because
he is retirement-eligible, a payout of his performance unit
award based on the number of full months worked divided by the
thirty-three months based on actual performance (estimated at
$250,000, based on current performance level). Among other
benefits in which Mr. Lewis was already vested in as of his
termination of employment, was a $400,000 special cash retention
bonus pursuant to a June 9, 2010 agreement between
Mr. Lewis and the Company, which provided that he would
earn such bonus if he remained employed with us through
January 31, 2011.
61
Overview
On February 23, 2011, the Board unanimously adopted and
approved our 2011 Long-Term Incentive Plan (the 2011
Plan), and is submitting the 2011 Plan to stockholders for
their adoption and approval at the 2011 Annual Meeting. The
Board believes our interests are best advanced by stimulating
the efforts of employees, officers, nonemployee directors and
service providers, in each case who are selected to be
participants, by heightening the desire of such persons to
continue working toward and contributing to our success and
progress. The 2011 Plan allows grants of incentive and
nonqualified stock options, stock appreciation rights,
restricted stock and restricted stock units, any of which may be
performance-based, and for incentive bonuses. The Board has
adopted and approved the 2011 Plan to permit us to continue to
use stock-based compensation to align stockholder and
participant interests and to motivate participants providing
services to us. Our stock-based compensation program is
currently operated under the Tesoro Corporation Amended and
Restated 2006 Long-Term Incentive Plan (the 2006
LTIP) and the Tesoro Corporation 2006 Long-Term Stock
Appreciation Rights Plan (together with the 2006 LTIP, the
Prior Plans). Upon approval of the 2011 Plan by
stockholders, the Prior Plans will be frozen with respect to new
awards effective as of the date of our 2011 Annual Meeting. As
such, if the 2011 Plan is approved by stockholders, no further
awards will be made under any of the Prior Plans after the date
of the 2011 Annual Meeting.
Why You
Should Vote For the 2011 Plan
The Board recommends that our stockholders approve the 2011 Plan
because it believes our ability to grant equity-based awards
continues to be crucial in allowing us to effectively compete
for and appropriately motivate and reward key talent. It is in
our and our stockholders long-term interest to provide
additional incentive for eligible participants to improve
financial performance, increase profits and strengthen the
mutuality of interest between those persons and our stockholders
through equity based awards and other incentives.
Promotion
of Good Corporate Governance Practices
The Board believes the use of stock-based incentive awards
promotes best practices in corporate governance by aligning
participants interests with maximizing stockholder value.
Specific features of the 2011 Plan that are consistent with good
corporate governance practices include, but are not limited to:
|
|
|
|
|
options and stock appreciation rights may not be granted with
exercise prices lower than the fair market value of the
underlying shares on the grant date;
|
|
|
|
there can be no repricing of options or stock appreciation
rights without stockholder approval, either by canceling the
award in exchange for cash or a replacement award at a lower
price or by reducing the exercise price of the award, other than
in connection with a change in our capitalization;
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shares shall not again be made available for issuance under the
2011 Plan if such shares are: (i) shares that were subject
to a stock-settled stock appreciation right and were not issued
upon the net settlement or net exercise of such stock
appreciation right, (ii) shares used to pay the exercise
price of an option, (iii) shares delivered to or withheld
by us to pay the withholding taxes related to an award, or
(iv) shares repurchased on the open market with the
proceeds of an option exercise;
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in no event will dividends or dividend equivalents be currently
payable with respect to unvested or unearned performance awards;
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62
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awards generally may not be transferred except by will or the
laws of descent and distribution or, if approved by the
administrator, to certain family members, family trusts, or
family partnerships pursuant to a gift or domestic relations
order; and
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we have the authority under the 2011 Plan to cancel outstanding
awards (vested or unvested) in the event the applicable plan
participant engages in certain acts of misconduct,
which is defined in the 2011 Plan to include engaging in any
type of disloyalty to us and materially breaching
confidentiality and noncompetition covenants with us.
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Key
Data
The following table includes information regarding all of our
outstanding equity awards and shares available for future awards
under our equity plans as of March 15, 2011 (and without
giving effect to this Proposal No. 4):
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Total shares underlying all outstanding options
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7,174,274
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Weighted average exercise price of outstanding options
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$
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23.75
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Weighted average remaining contractual life of outstanding
options
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4.94 years
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Total shares underlying all outstanding and unvested restricted
stock and restricted stock unit awards
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1,586,173
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Shares available for future awards that could be issued under
the Prior Plans
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580,324
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Section 162(m)
of the Code
The Board believes that it is in our best interests and the best
interests of our stockholders to continue to provide for an
equity incentive plan under which compensation awards made to
our executive officers can qualify for deductibility by us for
federal income tax purposes. Accordingly, the 2011 Plan has been
structured in a manner such that awards granted under it can
satisfy the requirements for performance-based
compensation within the meaning of Section 162(m) of the
Code. In general, under Section 162(m), in order for us to
be able to deduct compensation in excess of $1,000,000 paid in
any one year to our chief executive officer or any of our three
other most highly compensated executive officers (other than our
chief financial officer), such compensation must qualify as
performance-based. One of the requirements of
performance-based compensation for purposes of
Section 162(m) is that the material terms of the
performance goals under which compensation may be paid be
disclosed to and approved by our stockholders. For purposes of
Section 162(m), the material terms include (i) the
employees eligible to receive compensation, (ii) a
description of the business criteria on which the performance
goal is based and (iii) the maximum amount of compensation
that can be paid to an employee under the performance goal. With
respect to the various types of awards under the 2011 Plan, each
of these aspects is discussed below, and stockholder approval of
the 2011 Plan will be deemed to constitute approval of each of
these aspects of the 2011 Plan for purposes of the approval
requirements of Section 162(m).
2011 Plan
Summary
The following summary of the material terms of the 2011 Plan are
qualified in their entirety by reference to the complete
statement of the 2011 Plan, which is set forth in
Appendix A to this Proxy Statement.
Administration
The 2011 Plan will be administered by the Compensation Committee
of the Board. Subject to the express provisions of the 2011
Plan, the administrator is authorized and empowered to do all
things that it determines to be necessary or appropriate in
connection with the administration of the 2011 Plan. In
addition,
63
the Compensation Committee may delegate any or all aspects of
the
day-to-day
administration of the 2011 Plan to one or more of our officers
or employees,
and/or to
one or more agents.
Participants
Any person who is a current or prospective officer or employee
or other service provider of the Company or of any subsidiary
will be eligible for selection by the administrator for the
grant of awards under the 2011 Plan. In addition, nonemployee
directors will be eligible for the grant of awards under the
2011 Plan as determined by the administrator. Options intending
to qualify as incentive stock options
(ISOs) within the meaning of Section 422 of the
Code may only be granted to employees of the Company or any
subsidiary. Approximately 5,200 employees and 9 nonemployee
directors currently qualify to participate in the 2011 Plan.
Shares Subject
to the 2011 Plan and to Awards
The aggregate number of shares of our common stock issuable
pursuant to the 2011 Plan may not exceed 6,700,000, plus any
shares subject to outstanding awards under the 2006 LTIP as of
the date of the 2011 Annual Meeting that on or after such date
cease for any reason to be subject to such awards (other than by
reason of exercise or settlement of the awards to the extent
they are exercised for or settled in vested and nonforfeitable
shares). The aggregate number of shares available for grant
under the 2011 Plan and the number of shares subject to
outstanding awards shall be subject to adjustment upon a change
in our capitalization. The shares issued pursuant to awards
granted under the 2011 Plan may be shares that are authorized
and unissued or shares that were reacquired by us, including
shares purchased in the open market.
As noted above, as of March 15, 2011, 580,324 shares
remained available for issuance under future awards that could
be granted under the Prior Plans (which shares will cease to be
available for issuance under the Prior Plans upon stockholder
approval of the 2011 Plan).
As such, if the 2011 Plan is approved by stockholders,
approximately 6,700,000 shares will initially be available
for awards under the 2011.
The aggregate number of shares issued under the 2011 Plan at any
time will equal only the number of shares actually issued upon
exercise or settlement of an award. Shares subject to an award
under this Plan shall not again be made available for issuance
under this Plan if such shares are: (i) shares that were
subject to a stock-settled stock appreciation right and were not
issued upon the net settlement or net exercise of such stock
appreciation right, (ii) shares used to pay the exercise
price of an option, (iii) shares delivered to or withheld
by us to pay the withholding taxes related to an award, or
(iv) shares repurchased on the open market with the
proceeds of an option exercise. Shares subject to awards that
have been canceled, expired, forfeited and shares subject to
awards settled in cash shall not count as shares issued under
the 2011 Plan.
The aggregate number of shares subject to awards granted under
the 2011 Plan during any calendar year to any one participant
will not exceed 750,000, which number will be subject in each
case to possible adjustment upon a change in our capitalization.
The aggregate number of shares that may be issued pursuant to
the exercise of ISOs granted under the 2011 Plan will not exceed
6,700,000, which number shall be subject in each case to
possible adjustment upon a change in our capitalization. The
maximum cash amount payable pursuant to that portion of an
incentive bonus earned for any twelve-month period to any
participant under the 2011 Plan that is intended to satisfy the
requirements for performance-based compensation
under Section 162(m) of the Code will not exceed
$10,000,000.
The aggregate number of shares subject to awards granted under
the 2011 Plan during any calendar year to any one nonemployee
director will not exceed 25,000; provided, however, that in the
calendar year in which a nonemployee director first joins the
Board or is first designated as Chairman of the Board or Lead
Director, the maximum number of shares subject to awards granted
to the participant may be up to two hundred percent (200%) of
the number of shares set forth in the foregoing limits and the
foregoing limits will not count any tandem stock appreciation
rights.
Substitute awards (awards granted in assumption of, or in
substitution or exchange for, awards previously granted, or the
right or obligation to make future awards, by a company acquired
by us or with
64
which we combine) will not reduce the shares authorized for
issuance under the 2011 Plan or authorized for grant to a
participant in any calendar year. Additionally, in the event
that a company acquired by us, or with which we combine, has
shares available under a pre-existing plan approved by
stockholders and not adopted in contemplation of such
acquisition or combination, the shares available for grant
pursuant to the terms of such pre-existing plan may be used for
awards under the 2011 Plan and will not reduce the shares
authorized for issuance under the 2011 Plan.
Option
Awards
The administrator will establish the exercise price per share
under each option, which, other than in the event of options
granted in connection with a merger or other acquisition, will
not be less than the fair market value of a share on the date
the option is granted. The administrator will establish the term
of each option, which in no case may exceed a period of ten
(10) years from the date of grant. Options granted under
the 2011 Plan may either be ISOs or options which are not
intended to qualify as ISOs, or nonqualified stock options
(NQSOs). Other than in connection with a
change in our capitalization, at any time when the exercise
price of an option is above the fair market value of a share, we
will not, without stockholder approval, (i) reduce the
exercise price of such option, (ii) exchange such option
for cash, another award or a new option or stock appreciation
right with a lower exercise or base price or
(iii) otherwise reprice such option.
Stock
Appreciation Rights
A stock appreciation right provides the right to the monetary
equivalent of the increase in value of a specified number of the
shares over a specified period of time after the right is
granted. Stock appreciation rights may be granted to
participants either in tandem with or as a component of other
awards granted under the 2011 Plan (tandem SARs) or
not in conjunction with other awards (freestanding
SARs). All freestanding SARs will be granted subject to
the same terms and conditions applicable to options as set forth
above and in the 2011 Plan and all tandem SARs will have the
same exercise price, vesting, exercisability, forfeiture and
termination provisions as the award to which they relate.
Other than in connection with a change in our
capitalization, at any time when the exercise price of a stock
appreciation right is above the fair market value of a share, we
will not, without stockholder approval, (i) reduce the
exercise or base price of such stock appreciation right,
(ii) exchange such stock appreciation right for cash,
another award or a new option or stock appreciation right with a
lower exercise or base price or (iii) otherwise reprice
such stock appreciation right.
Restricted
Stock and Restricted Stock Units
Restricted stock is an award or issuance of shares the grant,
issuance, retention, vesting
and/or
transferability of which is subject during specified periods of
time to conditions (including continued employment or
performance conditions) and terms as the administrator deems
appropriate. Restricted stock units are awards denominated in
units of shares under which the issuance of shares is subject to
conditions (including continued employment or performance
conditions) and terms as the administrator deems appropriate.
Other than with respect to awards to nonemployee directors, the
grant, issuance, retention, vesting
and/or
settlement of shares under any restricted stock or restricted
stock unit award that is based on performance criteria and level
of achievement versus such criteria will be subject to a
performance period of not less than 12 months, and the
grant, issuance, retention, vesting
and/or
settlement of shares under any restricted stock or restricted
stock unit award that is based solely upon continued employment
and/or the
passage of time may not vest or be settled in full prior to the
36th month following its date of grant, except that the
administrator may provide for the satisfaction
and/or lapse
of all conditions under any such award in the event of the
participants death, disability, retirement or in
connection with a
change-in-control,
and the administrator may provide that any such restriction or
limitation will not apply in the case of a restricted stock or
restricted stock unit award that is issued in payment or
settlement of compensation that has been earned by the
participant. In addition, the administrator may grant awards of
restricted stock
and/or
restricted stock units
65
that result in issuing up to 5% of the maximum aggregate number
of shares authorized for issuance under the 2011 Plan without
regard to the minimum vesting requirements set forth in the
preceding sentence.
Participants holding shares of restricted stock granted under
the 2011 Plan may exercise full voting rights with respect to
those shares during the period of restriction, unless determined
otherwise by the administrator. Participants will have no voting
rights with respect to shares underlying restricted stock units
unless and until such shares are reflected as issued and
outstanding shares on our stock ledger. Participants in whose
name an award of restricted stock
and/or
restricted stock units is granted will be entitled to receive
all dividends and other distributions paid with respect to the
shares underlying such award, unless determined otherwise by the
administrator. The administrator will determine whether any such
dividends or distributions will be automatically reinvested in
additional shares or will be payable in cash; provided that such
additional shares
and/or cash
will subject to the same restrictions and vesting conditions as
the award with respect to which they were distributed.
Notwithstanding anything herein to the contrary, in no
event will dividends or dividend equivalents be currently
payable with respect to unvested or unearned performance
awards.
Incentive
Bonuses
Each incentive bonus will confer upon the participant the
opportunity to earn a future payment tied to the level of
achievement with respect to one or more performance criteria
established for a performance period of not less than one year.
The administrator will establish the performance criteria and
level of achievement versus these criteria that will determine
the threshold, target and maximum amount payable under an
incentive bonus, which criteria may be based on financial
performance
and/or
personal performance evaluations.
Deferral
of Gains
The administrator may, in an award agreement or otherwise,
provide for the deferred delivery of shares upon settlement,
vesting or other events with respect to restricted stock or
restricted stock units, or in payment or satisfaction of an
incentive bonus.
Qualifying
Performance Criteria
The administrator may establish performance criteria and level
of achievement versus such criteria that will determine the
number of shares, units or cash to be granted, retained, vested,
issued or issuable under or in settlement of or the amount
payable pursuant to an award, which criteria may be based on
qualifying performance criteria (as described below)
or other standards of financial performance
and/or
personal performance evaluations. In addition, the administrator
may specify that an award or a portion of an award is intended
to satisfy the requirements for performance-based
compensation under Section 162(m) of the Code,
provided that the performance criteria for such award or portion
of an award that is intended by the administrator to satisfy the
requirements for performance-based compensation
under Section 162(m) of the Code will be a measure based on
one or more qualifying performance criteria selected by the
administrator and specified at the time the award is granted.
The administrator will certify the extent to which any
qualifying performance criteria have been satisfied, and the
amount payable as a result thereof, prior to payment, settlement
or vesting of any award that is intended to satisfy the
requirements for performance-based compensation
under Section 162(m) of the Code. Notwithstanding
satisfaction of any performance goals, the number of shares
issued under or the amount paid under an award may be reduced,
but not increased, by the administrator on the basis of such
further considerations as the administrator in its sole
discretion may determine.
For purposes of the 2011 Plan, the term qualifying
performance criteria means any one or more of the
following performance criteria, or derivations of such
performance criteria, either individually, alternatively or in
any combination, applied to either the Company as a whole or to
a business unit or subsidiary, either individually,
alternatively or in any combination, and measured either
annually or cumulatively over a period of years, on an absolute
basis or relative to a pre-established target, to previous
years results or to a designated comparison group, in each
case as specified by the administrator: (i) cash flow
(before or after dividends), (ii) earning or earnings per
share (including earnings before interest, taxes, depreciation,
and
66
amortization), (iii) stock price, (iv) return on
equity, (v) total stockholder return, (vi) return on
capital or investment (including return on total capital, return
on invested capital, or return on investment), (vii) return
on assets or net assets, (viii) market capitalization,
(ix) economic value added, (x) debt leverage (debt to
capital), (xi) revenue, (xii) income or net income,
(xiii) operating income, (xiv) operating profit or net
operating profit, (xv) operating margin or profit margin,
(xvi) return on operating revenue, (xvii) cash from
operations, (xviii) operating ratio, (xix) operating
revenue, (xx) NSR
and/or total
backlog, (xxi) days sales outstanding, (xxii) customer
service, (xxiii) operational safety, reliability
and/or
efficiency, and (xxiv) environmental incidents.
To the extent consistent with Section 162(m) of the Code,
the administrator (i) may appropriately adjust any
evaluation of performance under a qualifying performance
criterion to eliminate the effects of charges for
restructurings, discontinued operations, extraordinary items and
all items of gain, loss or expense determined to be
extraordinary or unusual in nature or related to the acquisition
or disposal of a segment of a business or related to a change in
accounting principle all as determined in accordance with
applicable accounting provisions, as well as the cumulative
effect of accounting changes, in each case as determined in
accordance with generally accepted accounting principles or
identified in our financial statements or notes to the financial
statements, and (ii) may appropriately adjust any
evaluation of performance under a qualifying performance
criteria to exclude any of the following events that occurs
during a performance period: (a) asset write-downs,
(b) litigation, claims, judgments or settlements,
(c) the effect of changes in tax law or other such laws or
provisions affecting reported results, (d) accruals for
reorganization and restructuring programs and (e) accruals
of any amounts for payment under the 2011 Plan or any other
compensation arrangement maintained by us.
Settlement
of Awards
Awards may be settled in shares, cash or a combination thereof,
as determined by the administrator.
Amendment
and Termination
The Board may amend, alter or discontinue the 2011 Plan, and the
administrator may amend or alter any agreement or other document
evidencing an award made under the 2011 Plan, except no such
amendment may, without the approval of our stockholders (other
than in respect of a change in our capitalization), amend the
2011 Plan in any manner requiring stockholder approval by law or
under the New York Stock Exchange listing requirements.
No amendment or alteration to the 2011 Plan or an award or award
agreement may be made which would impair the rights of the
holder of an award, without such holders consent, provided
that no such consent will be required if the administrator
determines in its sole discretion and prior to the date of any
change-in-control
that such amendment or alteration either is required or
advisable in order for the Company, the 2011 Plan or the award
to satisfy any law or regulation or to meet the requirements of
or avoid adverse financial accounting consequences under any
accounting standard.
Change-in-Control
Unless otherwise expressly provided in the award agreement or
another contract, including an employment agreement, or under
the terms of a transaction constituting a
change-in-control,
the administrator may provide that any or all of the following
will occur upon a participants termination of employment
within 24 months following a
change-in-control:
(i) in the case of an option or stock appreciation right,
the participant will have the ability to exercise any portion of
the option or stock appreciation right not previously
exercisable, (ii) in the case of a performance award or
incentive bonus, the participant will have the right to receive
a payment equal to the target amount payable or, if greater, a
payment based on performance through a date determined by the
administrator prior to the
change-in-control,
and (iii) in the case of shares issued in payment of an
incentive bonus,
and/or in
the case of outstanding restricted stock
and/or
restricted stock units, all conditions to the grant, issuance,
retention, vesting or transferability of, or any other
restrictions applicable to, such award will immediately lapse.
Notwithstanding anything else in the 2011 Plan to the contrary,
in the
67
event of a
change-in-control
in which the acquiring or surviving company in the transaction
does not assume or continue outstanding awards upon the
change-in-control,
immediately prior to the
change-in-control,
all awards that are not assumed or continued will be treated as
follows effective immediately prior to the
change-in-control:
(a) in the case of an option or stock appreciation right,
the participant will have the ability to exercise such option or
stock appreciation right, including any portion of the option or
stock appreciation right not previously exercisable, (b) in
the case of a performance award or incentive bonus, the
participant will have the right to receive a payment equal to
the target amount payable or, if greater, a payment based on
performance through a date determined by the administrator prior
to the
change-in-control,
and (c) in the case of shares issued in payment of an
incentive bonus,
and/or in
the case of outstanding restricted stock
and/or
restricted stock units, all conditions to the grant, issuance,
retention, vesting or transferability of, or any other
restrictions applicable to, such award will immediately lapse.
Adjustments
The number and kind of shares available for issuance under the
2011 Plan (including under any awards then outstanding), and the
number and kind of shares subject to the individual limits set
forth in the 2011 Plan, will be equitably adjusted by the
administrator as it determines appropriate to reflect any
reorganization, reclassification, combination of shares, stock
split, reverse stock split, spin-off, dividend or distribution
of securities, property or cash (other than regular, quarterly
cash dividends), or any other event or transaction that affects
the number or kind of shares of the Company outstanding. Such
adjustment will be designed to comply with Sections 409A
and 424 of the Code or, except as otherwise expressly provided
in the 2011 Plan, may be designed to treat the shares available
under the 2011 Plan and subject to awards as if they were all
outstanding on the record date for such event or transaction or
to increase the number of such shares to reflect a deemed
reinvestment in shares of the amount distributed to our
stockholders. The terms of any outstanding award will also be
equitably adjusted by the administrator as to price, number or
kind of shares subject to such award, vesting, and other terms
to reflect the foregoing events, which adjustments need not be
uniform as between different awards or different types of awards.
Transferability
Awards may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated by a participant other than
by will or the laws of descent and distribution, and each option
or stock appreciation right may be exercisable only by the
participant during his or her lifetime. Notwithstanding the
foregoing, to the extent permitted by the administrator, the
person to whom an award is initially granted may make certain
limited transfers to certain family members, family trusts, or
family partnerships.
No Right
to Company Employment
Nothing in the 2011 Plan or an award agreement will interfere
with or limit in any way our right, our subsidiaries
and/or our
affiliates right to terminate any participants
employment, service on the Board or service for us at any time
or for any reason not prohibited by law, nor will the 2011 Plan
or an award itself confer upon any participant any right to
continue his or her employment or service for any specified
period of time. Neither an award nor any benefits arising under
the 2011 Plan will constitute an employment contract with us,
any subsidiary
and/or any
affiliates.
Compliance
with Law
The 2011 Plan, the grant, issuance, vesting, exercise and
settlement of awards thereunder, and our obligation to sell,
issue or deliver shares under such awards, will be subject to
all applicable foreign, federal, state and local laws, rules and
regulations, stock exchange rules and regulations, and to such
approvals by any governmental or regulatory agency as may be
required. We will not be required to issue or deliver any
certificates for shares prior to the completion of any
registration or qualification of such shares under any federal
or state law or issuance of any ruling or regulation of any
government body which we will, in our sole discretion, determine
to be necessary or advisable.
68
Effective
Date and Termination of the 2011 Plan
The 2011 Plan will become effective upon approval by our
stockholders. The 2011 Plan will remain available for the grant
of awards until the 10th anniversary of the date that the
Board approved the 2011 Plan.
Federal
Income Tax Treatment
The following discussion of the federal income tax consequences
of the 2011 Plan is intended to be a summary of applicable
federal law as currently in effect. It should not be taken as
tax advice by 2011 Plan participants, who are urged to consult
their individual tax advisors.
Stock
Options
ISOs and NQSOs are treated differently for federal income tax
purposes. ISOs are intended to comply with the requirements of
Section 422 of the Code. NQSOs do not comply with such
requirements.
An optionee is not taxed on the grant or exercise of an ISO. The
difference between the exercise price and the fair market value
of the shares on the exercise date will, however, be a
preference item for purposes of the alternative minimum tax. If
an optionee holds the shares acquired upon exercise of an ISO
for at least two years following the option grant date and at
least one year following exercise, the optionees gain, if
any, upon a subsequent disposition of such shares is long-term
capital gain. The measure of the gain is the difference between
the proceeds received on disposition and the optionees
basis in the shares (which generally equals the exercise price).
If an optionee disposes of stock acquired pursuant to exercise
of an ISO before satisfying these holding periods, the optionee
will recognize both ordinary income and capital gain in the year
of disposition. We are not entitled to an income tax deduction
on the grant or exercise of an ISO or on the optionees
disposition of the shares after satisfying the holding period
requirement described above. If the holding periods are not
satisfied, we will be entitled to a deduction in the year the
optionee disposes of the shares in an amount equal to the
ordinary income recognized by the optionee.
In order for an option to qualify for ISO tax treatment, the
grant of the option must satisfy various other conditions more
fully described in the Code. We do not guarantee that any option
will qualify for ISO tax treatment even if the option is
intended to qualify for such treatment. In the event an option
intended to be an ISO fails to so qualify, it will be taxed as
an NQSO described below.
An optionee is not taxed on the grant of an NQSO. On exercise,
the optionee recognizes ordinary income equal to the difference
between the exercise price and the fair market value of the
shares acquired on the date of exercise. We are entitled to an
income tax deduction in the year of exercise in the amount
recognized by the optionee as ordinary income. The
optionees gain (or loss) on subsequent disposition of the
shares is long-term capital gain (or loss) if the shares are
held for at least one year following exercise. We do not receive
a deduction for this gain.
Stock
Appreciation Rights
An optionee is not taxed on the grant of a stock appreciation
right. On exercise, the optionee recognizes ordinary income
equal to the cash or the fair market value of any shares
received. We are entitled to an income tax deduction in the year
of exercise in the amount recognized by the optionee as ordinary
income.
Restricted
Stock and Restricted Stock Units
Grantees of restricted stock or restricted stock units do not
recognize income at the time of the grant. When the award vests
or is paid, grantees generally recognize ordinary income in an
amount equal to the fair market value of the stock or units at
such time, and we will receive a corresponding deduction.
However, no later than 30 days after a participant receives
an award of restricted stock, the participant may elect to
recognize taxable ordinary income in an amount equal to the fair
market value of the shares at the time of receipt. Provided that
the election is made in a timely manner, when the restrictions
on the shares lapse, the participant will not recognize any
additional income. If the participant forfeits the shares to us
(e.g., upon the
69
participants termination prior to vesting), the
participant may not claim a deduction with respect to the income
recognized as a result of the election. Dividends paid with
respect to unvested shares of restricted stock generally will be
taxable as ordinary income to the participant at the time the
dividends are received.
Incentive
Bonuses
A participant will have taxable income at the time an incentive
bonus award becomes payable, and, if the participant has timely
elected deferral to a later date, such later date. At that time,
the participant will recognize ordinary income equal to the
value of the amount then payable.
Company
Deduction and Code Section 162(m)
For the individual serving as our chief executive officer at the
end of the taxable year and for the individuals serving as our
officers or the officers of a subsidiary at the end of such year
who are among the three highest compensated officers (other than
the chief executive officer and chief financial officer) for
proxy reporting purposes, Section 162(m) of the Code limits
the amount of compensation otherwise deductible by us and our
subsidiaries for such year to $1,000,000 for each such
individual except to the extent that such compensation is
performance-based compensation. We expect that
NQSOs, ISOs and stock appreciation rights should qualify as
performance-based compensation. The Compensation Committee may
establish performance conditions and other terms with respect to
grants of restricted stock, restricted stock units and incentive
compensation awards in order to qualify such grants as
performance-based compensation for purposes of
Section 162(m).
New Plan
Benefits
The benefits that will be awarded or paid under the 2011 Plan
are not currently determinable. Such awards are within the
discretion of the Compensation Committee, and the Compensation
Committee has not determined future awards or who might receive
them. Information about awards granted in fiscal year 2010 under
our Prior Plans to our NEOs can be found in the table under the
heading Grants of Plan-Based Awards in 2010 on
page 42 of this Proxy Statement. As of March 15, 2011,
the closing price of a share of our common stock was $24.84.
Our Board of Directors recommends that you vote
FOR the adoption and approval of our 2011 Long-Term
Incentive Plan.
Equity
Compensation Plan Information Table
The following table summarizes, as of December 31, 2010,
certain information regarding equity compensation to our
employees, officers, directors and other persons under our
equity compensation plans.
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Number of Securities
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Remaining Available for
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Future Issuance under
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Number of Securities to
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Weighted-Average
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Equity Compensation
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be Issued Upon Exercise
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Exercise Price of
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Plans (Excluding
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of Outstanding Options,
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Outstanding Options,
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Securities Reflected in the
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Plan Category
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Warrants and Rights
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Warrants and Rights
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Second Column)
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Equity compensation plans approved by security holders
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7,226,097
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$
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23.58
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549,635
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Equity compensation plans not approved by security
holders (1)(2)
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201,513
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$
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10.82
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|
-
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Total
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7,427,610
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$
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23.23
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549,635
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(1) |
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The Key Employee Stock Option Plan was approved by our Board of
Directors in November 1999 and provided for stock option grants
to eligible employees who are not our executive officers. The
options expire 10 years after the date of grant. Our Board
of Directors suspended any future grants under this plan in 2003. |
|
(2) |
|
Stock options granted in connection with the inducement awards
of the CEO Agreement were not granted under an equity
compensation plan. |
70
The Audit Committee has selected Ernst & Young LLP to
serve as our independent auditors for the fiscal year ending
December 31, 2011. Although stockholder ratification is not
required, the Board has directed that such appointment be
submitted to our stockholders for ratification at the 2011
Annual Meeting as a matter of good corporate governance. If the
stockholders do not ratify the selection, the Audit Committee
will reconsider whether or not to retain Ernst & Young
LLP. Even if the selection is ratified, the Audit Committee in
its discretion may select a different registered public
accounting firm at any time during the year if it determines
that such a change would be in the best interests of us and our
stockholders. A representative of Ernst & Young LLP is
expected to be present at the 2011 Annual Meeting, will have an
opportunity to make a statement if he or she desires to do so
and is expected to be available to respond to appropriate
questions.
Audit
Fees for 2010 and 2009
The following table presents fees for the years ended
December 31, 2010 and 2009, for professional services
performed by Ernst & Young LLP (EY).
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2010
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2009
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Audit Fees (1)
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$3,630,460
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$3,110,689
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Audit-Related Fees (2)
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$95,000
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|
|
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-
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Tax Fees (3)
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$93,685
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|
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$123,517
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All Other Fees (4)
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$3,017
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|
|
|
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$2,865
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Total
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$3,822,162
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$3,237,071
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(1)
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Audit Fees represent the aggregate
fees for professional services rendered by EY in connection with
its audits of our consolidated financial statements, reviews of
the condensed consolidated financial statements included in our
Quarterly Reports on
Form 10-Q
and services that were provided in connection with statutory and
regulatory filings. The audit fees include the audit of our
internal control over financial reporting as required by
Section 404 of the Sarbanes-Oxley Act of 2002. The audit
fees also include fees for professional services rendered by EY
in connection with our filing of the registration statement on
Form S-1
related to the formation of Tesoro Logistics LLP.
|
|
|
|
(2) |
|
Audit-Related Fees represent the aggregate fees for professional
services rendered by EY in connection with its audits of our
employee benefit plan. |
|
(3) |
|
Tax Fees represent the aggregate fees for tax services rendered
by EY for matters such as consultation on income, sales, use and
excise tax matters. |
|
(4) |
|
All Other Fees represent the aggregate fees paid to EY for a
subscription to its web-based accounting and auditing research
tool. |
In accordance with the Audit Committee charter, all audit and
permitted non-audit services to be performed by EY must be
approved in advance by the Audit Committee. All audit and
non-audit services performed by EY have been pre-approved by the
Audit Committee. The Audit Committee has determined that the
non-audit services rendered by EY are compatible with
maintaining EYs independence.
Our Board of Directors recommends that you vote
FOR the ratification of the selection of
Ernst & Young LLP as our independent auditors for the
fiscal year ending December 31, 2011.
71
Audit
Committee Report
The Audit Committee represents and assists the Board in
fulfilling its responsibilities for general oversight of the
integrity of our financial statements, our compliance with legal
and regulatory requirements, the independent auditors
qualifications and independence, the performance of our internal
audit function and independent audit firm, and risk assessment
and risk management.
The Audit Committee manages our relationship with our
independent auditors (which report directly to the Audit
Committee). The Audit Committee has the authority to obtain
advice and assistance from outside legal, accounting or other
advisors as the Audit Committee deems necessary to carry out its
duties and receives appropriate funding, as determined by the
Audit Committee, from us for such advice and assistance.
Our management is primarily responsible for our internal control
and financial reporting process. Our independent auditors,
Ernst & Young LLP, are responsible for performing an
independent audit of our consolidated financial statements and
issuing opinions on the conformity of those audited financial
statements with United States generally accepted accounting
principles and the effectiveness of our internal control over
financial reporting. The Audit Committee monitors our financial
reporting process and reports to the Board on its findings.
In this context, the Audit Committee hereby reports as follows:
|
|
|
|
1.
|
The Audit Committee has reviewed and discussed the audited
financial statements with management.
|
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|
2.
|
The Audit Committee has discussed with the independent
registered public accounting firm the matters required to be
discussed by applicable Public Company Accounting Oversight
Board (PCAOB) standards.
|
|
|
3.
|
The Audit Committee has received the written disclosures and the
letter from the independent auditors required by the PCAOB
regarding the independent auditors communications with the
Audit Committee concerning independence, and has discussed with
the independent auditors their independence.
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|
4.
|
Based on the review and discussions referred to in paragraphs
(1) through (3) above, the Audit Committee recommended
to the Board, and the Board has approved, that the audited
financial statements be included in our Annual Report on
Form 10-K
for the year ended December 31, 2010, for filing with the
SEC.
|
The undersigned members of the Audit Committee have submitted
this Report to the Board of Directors as of February 23,
2011.
Rodney F.
Chase, Chairman
Robert W. Goldman
Steven H. Grapstein
Patrick Y. Yang
72
The following stockholder proposal will be voted on at the 2011
Annual Meeting only if properly presented by or on behalf of the
stockholder proponent. The name, address and shareholdings of
the stockholder proponent will be supplied promptly upon oral or
written request.
Resolved, that the shareholders of Tesoro Corporation
(the Company) urge the Board of Directors (the
Board) to prepare a report, within ninety days of
the 2011 annual meeting of stockholders, at reasonable cost and
excluding proprietary and personal information, on the steps the
Company has taken to reduce the risk of accidents. The report
should describe the Boards oversight of process safety
management, staffing levels, inspection and maintenance of
refineries and other equipment.
Supporting
Statement:
The 2010 BP Deepwater Horizon explosion and oil spill in the
Gulf of Mexico resulted in the largest and most costly human and
environmental catastrophe in the history of the petroleum
industry. Eleven workers were killed when the BP Deepwater
Horizon drilling platform exploded. In 2005, an explosion at
BPs refinery in Texas City, Texas, cost the lives of 15
workers, injured 170 others, resulting in the largest fines ever
levied by the Occupational, Safety and Health Administration
(OSHA) (BP Faces Record Fine for 05
Refinery Explosion, New York Times,
10/30/2009).
In April 2010 an explosion at our refinery in Anacortes,
Washington, killed seven workers and resulted in more than six
months of downtime at the 120,000 barrels per day refinery
(Tesoro Sees Anacortes at Planned Rates by mid-Nov.,
Reuters,
11/5/2010).
The director of the Washington State Department of Labor and
Industry stated that The bottom line is this incident, the
explosion and these deaths were preventable, and levied an
initial penalty of $2.39 million (State Fines Tesoro
$2.4 Million in Deadly Refinery Blast, Skagit Valley
Herald,
10/4/2010).
We believe that OSHAs National Emphasis Program for
petroleum refineries has revealed an industry-wide pattern of
non-compliance with safety regulations. In the first year of
this program, inspections of 14 refineries exposed 1,517
violations, including 1,489 for process safety management,
prompting OSHAs director of enforcement to declare
The state of process safety management is frankly just
horrible. (Process Safety Violations at Refineries
Depressingly High, OSHA Official Says, BNA
Occupational Safety and Health Reporter,
8/27/2009).
OSHA has recorded safety violations at our Company. Since 2005,
OSHA inspectors have revealed 59 safety violations, (48 process
safety management violations, of which 33 were categorized as
willful and 13 categorized as serious).
http://osha.gov/pls/imis/establishment.inspection_detail?id=313641250&id=313640
799&id=314251315&id=312412166&id=309918610&i-d=312459290&id=125740290
and
http://www.ini.wa.gov/Main/Docs/TesoroCitation-NoticeInspectionNo314251315.pdf
In our opinion, the cumulative effect of petroleum industry
accidents, safety violation citations from federal and state
authorities, and the publics heightened concern for safety
and environmental hazards in the petroleum industry represents a
significant threat to our Companys stock price
performance. We believe that a report to shareholders on the
steps our Company has taken to reduce the risk of accidents will
provide transparency and increase investor confidence in our
Company.
Board of
Directors Response
The Board recommends you vote AGAINST this proposal for the
following reasons:
The Board believes that the report requested by the stockholder
proposal is unnecessary because of our extensive safety efforts
and because the Board has instructed us to expand our current
disclosures by November 30, 2011 to address the matters
requested by this proposal.
We have a long history of dedication to safety, and we are
committed to leading, motivating and facilitating continuous
safety improvements. We consider safety an integral part of our
business, as
73
demonstrated by the information on our environmental, health and
safety programs and policies in the Social
Responsibility section of our website at
www.tsocorp.com.
Moreover, our leadership reinforces our commitment to safety.
For example, the Boards Environmental, Health &
Safety Committee assists the Board in fulfilling its oversight
responsibilities for our environmental, health and safety
matters. Pursuant to its charter, the Committee reviews and
approves at least annually our environmental, health and safety
policies and reviews managements programs for compliance
with these policies, as well as applicable laws and regulations,
and reviews our environmental, health and safety performance.
The Board and the Environmental, Health & Safety
Committee carefully considered this proposal. Based on the
recommendation of the Environmental, Health & Safety
Committee, the Board determined that we should supplement the
information already available on our website with the
proposals request for additional information regarding our
existing policies, initiatives and efforts to reduce the risk of
accidents.
In light of the foregoing, the Board believes that the requested
report is unnecessary and not in the best interests of our
stockholders. Therefore, the Board recommends a vote AGAINST
this proposal.
Our Board of Directors recommends that you vote
AGAINST the stockholder proposal regarding a safety
report.
74
|
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|
Record Date
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|
|
March 15, 2011
|
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Quorum
|
|
|
Majority of shares
outstanding on the record date must be present in person or by
proxy
Abstentions, broker
non-votes (described below) and shares as to which a stockholder
withholds voting authority will be included for purposes of
determining the presence of a quorum
|
|
Shares Outstanding
|
|
|
143,276,324 shares of common stock outstanding as of March
15, 2011
|
|
Record Owners versus Beneficial Owners
|
|
|
Record Owners. If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, you are considered the stockholder of record with respect to those shares, and access to these proxy materials is being provided directly to you by us.
Beneficial Owners. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of the shares held in street name. Access to these proxy materials is being provided to you by your broker or nominee who is considered the stockholder of record with respect to those shares.
|
|
Voting by Record Owners
|
|
|
Vote by
Internet, by going to the web address www.proxypush.com/tso
and following the instructions for Internet voting or, if you
have received a paper copy of the proxy card by mail, by
following the instructions on the proxy card. Your vote by
Internet must be received by 11:59 P.M. Eastern Time on May
3, 2011. If your shares are held in the Tesoro Corporation
Thrift Plan or Tesoro Corporation Retail Savings Plan, your vote
must be received by 11:59 P.M. Eastern Time on May 1,
2011.
Vote by
Telephone, by dialing 1-866-390-9971 and following the
instructions for telephone voting or, if you have received a
paper copy of the proxy card by mail, by following the
instructions on the proxy card. Your vote by telephone must be
received by 11:59 P.M. Eastern Time on May 3, 2011. If your
shares are held in the Tesoro Corporation Thrift Plan or Tesoro
Corporation Retail Savings Plan, your vote must be received by
11:59 P.M. Eastern Time on May 1, 2011.
Vote by Mail,
by completing, signing, dating and mailing the proxy card mailed
to you in the envelope provided. If you received a Notice of
Internet Availability and would like to vote by mail, follow the
instructions on the Notice of Internet Availability to request a
paper copy of the proxy materials. Your vote by mail must be
received by 11:59 P.M. Eastern Time on May 3, 2011. If your
shares are held in the Tesoro Corporation Thrift Plan or Tesoro
Corporation Retail Savings Plan, your vote must be received by
11:59 P.M. Eastern Time on May 1, 2011. If you vote by
Internet or telephone, please do not mail your proxy card.
Vote in Person,
by attending the 2011 Annual Meeting. Photo identification will
be required to attend the 2011 Annual Meeting. Please refer to
the instructions provided on the proxy card or Notice of
Internet Availability.
|
|
75
|
|
|
|
Voting by Beneficial Owners
|
|
|
You will receive separate voting instructions from your broker,
bank or other nominee explaining how to vote your shares. Please
note that if your shares are held of record by a broker, bank or
other nominee and you wish to vote at the meeting, you will not
be permitted to vote in person at the meeting unless you first
obtain a legal proxy issued in your name from the record holder.
|
|
Participants in the Tesoro Corporation Thrift Plan and Retail
Savings Plan
|
|
|
Participants in the Tesoro Corporation Thrift Plan or the Tesoro
Corporation Retail Savings Plan may instruct Fidelity Management
Trust Company, as trustee for such plans, how to vote all shares
of our common stock allocated to their accounts. If a
participant in the Tesoro Corporation Thrift Plan or the Tesoro
Corporation Retail Savings Plan does not instruct Fidelity
Management Trust Company how to vote, the shares of our common
stock allocated to such participants accounts will not be
voted.
|
|
Changing Your Vote
|
|
|
Whether you vote by telephone, Internet or mail, you can change or revoke your proxy before it is voted at the meeting by:
Submitting a new proxy card bearing a later date;
Voting again by telephone or the Internet at a later time;
Giving written notice before the meeting to our Secretary at the address set forth on the cover of this Proxy Statement stating that you are revoking your proxy; or
Attending the 2011 Annual Meeting and voting your shares in person. Please note that your attendance at the meeting will not alone serve to revoke your proxy.
|
|
Vote Required
|
|
|
Election of
Directors. The election of each director nominee requires a
majority of the votes cast at the 2011 Annual Meeting. A
majority of the votes cast means that the number of
votes cast FOR a nominee must exceed the number of
votes cast AGAINST such nominees election.
Abstentions and broker non-votes will have no effect on the
outcome of the vote.
Other Matters to be
Voted On. Approval of each of the other proposals that will
be voted on at the 2011 Annual Meeting requires the affirmative
vote of a majority of the shares present in person or
represented by proxy at the meeting and entitled to vote on the
matter. Abstentions will have the same effect as
AGAINST votes. Broker non-votes will have no effect
on the outcome of the votes. In addition, with respect to the
approval of the Tesoro Corporation 2011 Long-Term Incentive
Plan, NYSE rules require that the total votes cast also
represent over 50% of all shares entitled to vote on this
proposal.
|
|
Broker Non-Votes
|
|
|
A broker non-vote occurs when a broker submits a proxy that
states that the broker does not vote for some or all of the
proposals, because the broker has not received instructions from
the beneficial owners on how to vote on the proposals and does
not have discretionary authority to vote in the absence of
instructions. Under NYSE rules, your broker may vote shares held
in street name on the ratification of the selection of our
independent auditors without instruction from you. However, your
broker may not vote these shares on any other matter to be voted
on at the 2011 Annual Meeting without instruction from you.
|
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76
|
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|
Voting Instructions
|
|
|
The proxies identified on the back of the proxy will vote your
shares in accordance with your instructions. If you sign and
return your proxy card or otherwise vote without giving specific
voting instructions, the proxies will vote your shares in
accordance with the voting recommendations of the Board, as
described above. The Board does not intend to bring any other
business before the meeting, and it is not aware that anyone
else intends to do so. If any other business comes before the
meeting, it is the intention of the persons named in the
enclosed form of proxy to vote as proxies in accordance with
their best judgment.
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|
Voting Results
|
|
|
The preliminary voting results will be announced at the 2011
Annual Meeting. The final results will be published in a Current
Report on Form 8-K that we will file within four business days
after the 2011 Annual Meeting.
|
|
Proxy Solicitation
|
|
|
We will bear the cost
of the solicitation.
In addition to the use
of the Internet and mails, our directors, officers and
employees, without additional compensation, may solicit proxies
by personal interview, telephone, telegram or otherwise.
We have retained a
professional proxy soliciting organization, Innisfree M&A
Incorporated (Innisfree), to aid in the solicitation
of proxies from brokers, bank nominees and other institutional
owners, and possibly individual holders of record of
1,000 shares or more, by personal interview, telephone or
similar means. We will pay Innisfree its customary fees,
estimated not to exceed $8,500, and will reimburse Innisfree for
certain expenses.
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77
Stockholder
Proposals
For a stockholder proposal to be considered for inclusion in our
proxy statement for the 2012 Annual Meeting of Stockholders
pursuant to SEC
Rule 14a-8,
the Corporate Secretary must receive the written proposal at our
principal executive offices no later than November 25,
2011. Such proposals also must comply with the requirements of
Rule 14a-8.
Proposals should be addressed to:
Corporate
Secretary
Tesoro Corporation
19100 Ridgewood Parkway
San Antonio, Texas 78259
Our Bylaws also establish an advance notice procedure with
regard to director nominations and stockholder proposals that
are not submitted for inclusion in the proxy statement but that
a stockholder instead wishes to present directly at an annual
meeting. Under our Bylaws, notice of such nomination or
stockholder proposal for the 2012 Annual Meeting of Stockholders
must be delivered to the Corporate Secretary at the above
address:
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Not earlier than the close of business on January 5,
2012, and
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Not later than the close of business on February 4, 2012.
|
If the date of the annual meeting is more than 30 days
before or more than 60 days after the anniversary of our
annual meeting for the prior year, then the notice of a
nomination or stockholder proposal must be delivered no earlier
than the close of business on the 120th day prior to the
meeting and not later than the close of business on the later of
the 90th day prior to the meeting or, if the first public
announcement of the date of such annual meeting is less than
100 days prior to the date of such meeting, the
10th day after the first public announcement of the meeting
date.
All nominations and stockholder proposals submitted under our
Bylaws must comply with the requirements of the Bylaws. You may
contact the Corporate Secretary for a copy of the relevant Bylaw
provisions.
Householding
of Proxy Materials
To reduce the expense of delivering duplicate proxy materials to
stockholders who may have more than one account holding our
stock but who share the same address, we have adopted a
procedure approved by the SEC called householding.
Under this procedure, certain stockholders of record who have
the same address and last name will receive only one copy of the
proxy statement and annual report, or Notice of Internet
Availability, as applicable, until such time as one or more of
these stockholders notifies us that they want to receive
separate copies. In addition, the broker, bank or other nominee
for any stockholder who is a beneficial owner of our stock may
deliver only one copy of the proxy statement and annual report,
or Notice of Internet Availability, as applicable, to multiple
stockholders who share the same address, unless that broker,
bank or other nominee has received contrary instructions from
one or more of the stockholders. This procedure reduces
duplicate mailings and saves printing costs and postage fees, as
well as natural resources. Stockholders who participate in
householding will continue to have access to and utilize
separate proxy voting instructions.
If, now or in the future, you no longer wish to participate in
householding and would prefer to receive a separate annual
report and proxy statement, or Notice of Internet Availability,
please notify us by calling our Investor Relations Department at
1-800-837-6768
or by sending a written request to our Corporate Secretary at
the address listed above, and we will promptly deliver a
separate copy of these materials. Record owners who are
receiving multiple copies and wish to receive only one, please
call our Investor Relations Department at the number listed
above or send a written request to our Corporate Secretary at
the address listed above. Beneficial owners who are receiving
multiple copies and wish to receive only one, please notify your
broker, bank or other nominee.
78
As of the date of this Proxy Statement, our management has no
knowledge of any matters to be presented for consideration at
the 2011 Annual Meeting other than those referred to above. If
any other matters properly come before the meeting, the persons
named in the accompanying form of proxy intend to vote such
proxy to the extent entitled in accordance with their best
judgment.
Upon the written request of any person whose proxy is
solicited hereunder, we will furnish without charge to such
person a copy of its Annual Report filed with the SEC on
Form 10-K,
including financial statements and schedules thereto, for the
fiscal year ended December 31, 2010. Such written request
is to be directed to:
Tesoro
Corporation
19100 Ridgewood Parkway
San Antonio, Texas 78259
Attention: Investor Relations
Important Notice Regarding the Availability of Proxy
Materials for the Stockholders Meeting to be held on May 4,
2011: This Proxy Statement and our 2010 Annual Report on
Form 10-K
are available at www.proxydocs.com/tso.
By Order of the Board of Directors,
CHARLES S. PARRISH
Secretary
March 24, 2011
79
Appendix A
Tesoro Corporation 2011 Long-Term Incentive Plan
The purpose of the Tesoro Corporation 2011 Long-Term Incentive
Plan (the Plan) is to advance the interests of
Tesoro Corporation (the Company) by stimulating the
efforts of employees, officers, non-employee directors and other
service providers, in each case who are selected to be
participants, by heightening the desire of such persons to
continue working toward and contributing to the success and
progress of the Company. The Plan supersedes the existing Tesoro
Corporation Amended and Restated 2006 Long-Term Incentive Plan
and the Tesoro Corporation 2006 Long-Term Stock Appreciation
Rights Plan with respect to future awards, and provides for the
grant of Incentive and Nonqualified Stock Options, Stock
Appreciation Rights, Restricted Stock and Restricted Stock
Units, any of which may be performance-based, and for Incentive
Bonuses, which may be paid in cash or stock or a combination
thereof, as determined by the Administrator.
As used in the Plan, the following terms shall have the meanings
set forth below:
(a) 2006 LTIP means the Tesoro Corporation
Amended and Restated 2006 Long-Term Incentive Plan.
(b) Administrator means the Administrator of
the Plan in accordance with Section 18.
(c) Award means an Incentive Stock Option,
Nonqualified Stock Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit or Incentive Bonus granted to a
Participant pursuant to the provisions of the Plan, any of which
the Administrator may structure to qualify in whole or in part
as a Performance Award.
(d) Award Agreement means a written or
electronic agreement or other instrument as may be approved from
time to time by the Administrator implementing the grant of each
Award. An Agreement may be in the form of an agreement to be
executed by both the Participant and the Company (or an
authorized representative of the Company) or certificates,
notices or similar instruments as approved by the Administrator.
(e) Board means the board of directors of the
Company.
(f) Cause means, unless otherwise set forth in
an Award Agreement or other written agreement between the
Company and the applicable Participant, a finding by the
Administrator that a Participant, before or after his
Termination of Employment (i) committed fraud,
embezzlement, theft, felony or an act of dishonesty in the
course of his employment by the Company or an affiliate which
conduct damaged the Company or an affiliate or
(ii) disclosed trade secrets of the Company or an
affiliate. The findings and decision of the Administrator with
respect to such matter, including those regarding the acts of
the Participant and the damage done to the Company, will be
final for all purposes. No decision of the Administrator,
however, will affect the finality of the discharge of the
individual by the Company or an affiliate.
(g) Change in Control means (i) there
shall be consummated (A) any consolidation or merger of
Company in which Company is not the continuing or surviving
corporation or pursuant to which shares of Companys common
stock would be converted into cash, securities or other
property, other than a merger of Company where a majority of the
board of directors of the surviving corporation are, and for a
one-year period after the merger continue to be, persons who
were directors of Company immediately prior to the merger or
were elected as directors, or nominated for election as
director, by a vote of at least two-thirds of the directors then
still in office who were directors of Company immediately prior
to the merger, or (B) any sale, lease, exchange or transfer
(in one transaction or a series of related transactions) of all
or substantially all of the assets of Company, or (ii) the
shareholders of Company shall approve any
A-1
plan or proposal for the liquidation or dissolution of Company,
or (iii) (A) any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934), other than Company or a Subsidiary thereof or any
employee benefit plan sponsored by Company or a Subsidiary
thereof, shall become the beneficial owner (within the meaning
of
Rule 13c-3
under the Securities Exchange Act of 1934) of securities of
Company representing thirty-five percent (35%) or more of the
combined voting power of Companys then outstanding
securities ordinarily (and apart from rights accruing in special
circumstances) having the right to vote in the election of
directors, as a result of a tender or exchange offer, open
market purchases, privately negotiated purchases or otherwise,
and (B) at any time during a period of one-year thereafter,
individuals who immediately prior to the beginning of such
period constituted the Board shall cease for any reason to
constitute at least a majority thereof, unless election or the
nomination by the Board for election by Companys
shareholders of each new director during such period was
approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such
period.
(h) Code means the Internal Revenue Code of
1986, as amended from time to time, and the rulings and
regulations issues thereunder.
(i) Company means Tesoro Corporation, a
Delaware corporation.
(j) Disability means, as determined by the
Administrator in its discretion exercised in good faith, a
physical or mental condition of a Participant that would entitle
him or her to payment of disability income payments under the
Companys long-term disability insurance policy or plan for
employees as then in effect; or in the event that a Participant
is not covered, for whatever reason under the Companys
long-term disability insurance policy or plan for employees or
in the event the Company does not maintain such a long-term
disability insurance policy, Disability means a
permanent and total disability as defined in
section 22(e)(3) of the Code. A determination of Disability
may be made by a physician selected or approved by the
Administrator and, in this respect, Participants shall submit to
an examination by such physician upon request by the
Administrator.
(k) Exchange Act means the Securities Exchange
Act of 1934, as amended from time to time, or any successor Act
thereto.
(l) Fair Market Value means, as of any given
date, the closing sales price on such date during normal trading
hours (or, if there are no reported sales on such date, on the
last date prior to such date on which there were sales) of the
Shares on the New York Stock Exchange or, if not listed on such
exchange, on any other national securities exchange on which the
Shares are listed or on an inter-dealer quotation system, in any
case, as reported in such source as the Administrator shall
select. If there is no regular public trading market for the
Shares, the Fair Market Value of the Shares shall be determined
by the Administrator in good faith and in compliance with
Section 409A of the Code.
(m) Incentive Bonus means a bonus opportunity
awarded under Section 9 pursuant to which a Participant may
become entitled to receive an amount based on satisfaction of
such performance criteria as are specified in the Award
Agreement.
(n) Incentive Stock Option means a stock option
that is intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code.
(o) Nonemployee Director means each person who
is, or is elected to be, a member of the Board and who is not an
employee of the Company or any Subsidiary.
(p) Nonqualified Stock Option means a stock
option that is not intended to qualify as an incentive
stock option within the meaning of Section 422 of the
Code.
(q) Option means an Incentive Stock Option
and/or a
Nonqualified Stock Option granted pursuant to Section 6 of
the Plan.
(r) Participant means any individual described
in Section 3 to whom Awards have been granted from time to
time by the Administrator and any authorized transferee of such
individual.
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(s) Performance Award means an Award, the
grant, issuance, retention, vesting or settlement of which is
subject to satisfaction of one or more performance criteria
pursuant to Section 13.
(t) Person shall have the meaning ascribed to
such term in Section 3(a)(9) of the Exchange Act and used
in Sections 13(d) and 14(d) thereof, including a
group as defined in Section 13(d).
(u) Plan means the Tesoro Corporation 2011
Long-Term Incentive Plan as set forth herein and as amended from
time to time.
(v) Qualifying Performance Criteria has the
meaning set forth in Section 13(b).
(w) Restricted Stock means Shares granted
pursuant to Section 8 of the Plan.
(x) Restricted Stock Unit means an Award
granted to a Participant pursuant to Section 8 pursuant to
which Shares or cash in lieu thereof may be issued in the future.
(y) Retirement means, unless otherwise set
forth in an Award Agreement or other written agreement between
the Company and the applicable Participant, (i) for
employees: retirement from active employment with the Company
and its Subsidiaries: (A) at or after age 55 with
5 years of service recognized by the Company or (B) at
or after age 50 with 80 points (with points meaning the sum
of the Participants age and years of service recognized by
the Company at the time of retirement). The determination of the
Administrator as to an individuals Retirement shall be
conclusive on all parties, and (ii) for Nonemployee
Directors: retirement from active service with the Company after
having served as a Nonemployee Director for at least an
aggregate of three full years (excluding any service while a
full-time employee of the Company).
(z) Share means a share of the Companys
common stock,
$0.161/2
par value per share (or such other par value as may be
designated by act of the Companys stockholders), subject
to adjustment as provided in Section 12.
(aa) Stock Appreciation Right means a right
granted pursuant to Section 7 of the Plan that entitles the
Participant to receive, in cash or Shares or a combination
thereof, as determined by the Administrator, value equal to or
otherwise based on the excess of (i) the Fair Market Value
of a specified number of Shares at the time of exercise over
(ii) the exercise price of the right, as established by the
Administrator on the date of grant.
(bb) Subsidiary means any corporation (other
than the Company) in an unbroken chain of corporations beginning
with the Company where each of the corporations in the unbroken
chain other than the last corporation owns stock possessing at
least 50 percent or more of the total combined voting power
of all classes of stock in one of the other corporations in the
chain, and if specifically determined by the Administrator in
the context other than with respect to Incentive Stock Options,
may include an entity in which the Company has a significant
ownership interest or that is directly or indirectly controlled
by the Company.
(cc) Substitute Awards means Awards granted or
Shares issued by the Company in assumption of, or in
substitution or exchange for, awards previously granted, or the
right or obligation to make future awards, by a company acquired
by the Company or any Subsidiary or with which the Company or
any Subsidiary combines.
(dd) Termination of Employment means ceasing to
serve as an employee of the Company and its Subsidiaries or,
with respect to a Nonemployee Director or other service
provider, ceasing to serve as such for the Company, except that
with respect to all or any Awards held by a Participant
(i) the Administrator may determine that a leave of absence
or employment on a less than full-time basis is considered a
Termination of Employment, (ii) the
Administrator may determine that a transition of employment to
service with a partnership, joint venture or corporation not
meeting the requirements of a Subsidiary in which the Company or
a Subsidiary is a party is not considered a Termination of
Employment, (iii) service as a member of the Board
shall constitute continued employment with respect to Awards
granted to a Participant while he or she served as an employee
and (iv) service as an employee
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of the Company or a Subsidiary shall constitute continued
employment with respect to Awards granted to a Participant while
he or she served as a member of the Board or other service
provider. The Administrator shall determine whether any
corporate transaction, such as a sale or spin-off of a division
or subsidiary that employs a Participant, shall be deemed to
result in a Termination of Employment with the Company and its
Subsidiaries for purposes of any affected Participants
Awards, and the Administrators decision shall be final and
binding.
Any person who is a current or prospective officer or employee
(including any director who is also an employee, in his or her
capacity as such) or other service provider of the Company or of
any Subsidiary shall be eligible for selection by the
Administrator for the grant of Awards hereunder. To the extent
provided by Section 5(d), any Nonemployee Director shall be
eligible for the grant of Awards hereunder as determined by the
Administrator. Options intending to qualify as Incentive Stock
Options may only be granted to employees of the Company or any
Subsidiary within the meaning of the Code, as selected by the
Administrator.
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4.
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Effective
Date and Termination of Plan
|
This Plan was adopted by the Board on February 23, 2011 and
will become effective upon approval by the Companys
stockholders (the Effective Date), which approval
must be obtained within twelve (12) months of the adoption
of this Plan by the Board. The Plan shall remain available for
the grant of Awards until the tenth (10th) anniversary of the
date of Board approval of the Plan. Notwithstanding the
foregoing, the Plan may be terminated at such earlier time as
the Board may determine. Termination of the Plan will not affect
the rights and obligations of the Participants and the Company
arising under Awards theretofore granted and then in effect.
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5.
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Shares Subject
to the Plan and to Awards
|
(a) Aggregate Limits. The aggregate
number of Shares issuable pursuant to all Awards under this Plan
shall not exceed 6,700,000, plus any Shares subject to
outstanding awards under the 2006 LTIP that on or after the
Effective Date cease for any reason to be subject to such awards
(other than by reason of exercise or settlement of the awards to
the extent they are exercised for or settled in vested and
nonforfeitable shares). The aggregate number of Shares available
for grant under this Plan and the number of Shares subject to
outstanding Awards shall be subject to adjustment as provided in
Section 12. The Shares issued pursuant to Awards granted
under this Plan may be shares that are authorized and unissued
or shares that were reacquired by the Company, including shares
purchased in the open market.
(b) Issuance of Shares. For purposes of
Section 5(a), the aggregate number of Shares issued under
this Plan at any time shall equal only the number of Shares
actually issued upon exercise or settlement of an Award under
this Plan. Without limiting the foregoing, Shares subject to an
Award under this Plan shall not again be made available for
issuance under this Plan if such shares are: (i) shares
that were subject to a stock-settled Stock Appreciation Right
and were not issued upon the net settlement or net exercise of
such Stock Appreciation Right, (ii) shares used to pay the
exercise price of an Option, (iii) shares delivered to or
withheld by the Company to pay the withholding taxes related to
an Award, or (iv) shares repurchased on the open market
with the proceeds of an Option exercise. In addition, Shares
subject to Awards that have been canceled, expired or forfeited
and shares subject to Awards settled in cash shall not count as
shares issued under this Plan.
(c) Tax Code Limits. The aggregate number
of Shares subject to Awards granted under this Plan during any
calendar year to any one Participant shall not exceed 750,000,
which number shall be calculated and adjusted pursuant to
Section 12 only to the extent that such calculation or
adjustment will not affect the status of any Award intended to
qualify as performance-based compensation under
Section 162(m) of the Code but which number shall not count
any tandem SARs (as defined in Section 7). The aggregate
number of Shares that may be issued pursuant to the exercise of
Incentive Stock Options granted under this Plan shall not exceed
6,700,000, which number shall be calculated and adjusted
pursuant to Section 12 only to the extent
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that such calculation or adjustment will not affect the status
of any option intended to qualify as an Incentive Stock Option
under Section 422 of the Code. The maximum cash amount
payable pursuant to that portion of an Incentive Bonus earned
for any
12-month
period to any Participant under this Plan that is intended to
satisfy the requirements for performance-based
compensation under Section 162(m) of the Code shall
not exceed $10,000,000.
(d) Director Awards. The aggregate number
of Shares subject to Awards granted under this Plan during any
calendar year to any one Nonemployee Director shall not exceed
25,000; provided, however, that in the calendar year in which a
Nonemployee Director first joins the Board of Directors or is
first designated as Chairman of the Board of Directors or Lead
Director, the maximum number of shares subject to Awards granted
to the Participant may be up to two hundred percent (200%) of
the number of shares set forth in the foregoing limits and the
foregoing limits shall not count any tandem SARs (as defined in
Section 7).
(e) Substitute Awards. Substitute Awards
shall not reduce the Shares authorized for issuance under the
Plan or authorized for grant to a Participant in any calendar
year. Additionally, in the event that a company acquired by the
Company or any Subsidiary, or with which the Company or any
Subsidiary combines, has shares available under a pre-existing
plan approved by stockholders and not adopted in contemplation
of such acquisition or combination, the shares available for
grant pursuant to the terms of such pre-existing plan (as
adjusted, to the extent appropriate, using the exchange ratio or
other adjustment or valuation ratio or formula used in such
acquisition or combination to determine the consideration
payable to the holders of common stock of the entities party to
such acquisition or combination) may be used for Awards under
the Plan and shall not reduce the Shares authorized for issuance
under the Plan; provided that Awards using such available shares
shall not be made after the date awards or grants could have
been made under the terms of the pre-existing plan, absent the
acquisition or combination, and shall only be made to
individuals who were employees, directors or other service
providers of such acquired or combined company before such
acquisition or combination.
(a) Option Awards. Options may be granted
at any time and from time to time prior to the termination of
the Plan to Participants as determined by the Administrator. No
Participant shall have any rights as a stockholder with respect
to any Shares subject to Option hereunder until said Shares have
been issued. Each Option shall be evidenced by an Award
Agreement. Options granted pursuant to the Plan need not be
identical but each Option must contain and be subject to the
terms and conditions set forth below.
(b) Price. The Administrator will
establish the exercise price per Share under each Option, which,
in no event will be less than the Fair Market Value of the
Shares on the date of grant; provided, however, that the
exercise price per Share with respect to an Option that is
granted in connection with a merger or other acquisition as a
substitute or replacement award for options held by optionees of
the acquired entity may be less than 100% of the market price of
the Shares on the date such Option is granted if such exercise
price is based on a formula set forth in the terms of the
options held by such optionees or in the terms of the agreement
providing for such merger or other acquisition. The exercise
price of any Option may be paid in Shares, cash or a combination
thereof, as determined by the Administrator, including an
irrevocable commitment by a broker to pay over such amount from
a sale of the Shares issuable under an Option, the delivery of
previously owned Shares and withholding of Shares otherwise
deliverable upon exercise.
(c) No Repricing without Stockholder
Approval. Other than in connection with a change
in the Companys capitalization (as described in
Section 12), at any time when the exercise price of an
Option is above the Fair Market Value of a Share, the Company
shall not, without stockholder approval, (i) reduce the
exercise price of such Option, (ii) exchange such Option
for cash, another Award or a new Option or Stock Appreciation
Right with a lower exercise or base price or
(iii) otherwise reprice such Option.
(d) Provisions Applicable to Options. The
date on which Options become exercisable shall be determined at
the sole discretion of the Administrator and set forth in an
Award Agreement. The Administrator shall establish the term of
each Option, which in no case shall exceed a period of ten
(10) years from the date of grant.
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(e) Termination of Employment: Unless an
Option earlier expires upon the expiration date established
pursuant to Section 6(d), upon the Participants
Termination of Employment, his or her rights to exercise an
Option then held shall be only as follows, unless the
Administrator specifies otherwise (either in an Award Agreement
or otherwise):
(i) General. In general, any portion of
any Option that is not vested as of the date of a
Participants Termination of Employment shall be forfeited
and returned to the Company; provided, however, that the
Administrator may, in its sole discretion, in the event of a
Participants retirement or involuntary Termination of
Employment as the result of a reduction in force program (as
approved by the Administrator in its sole discretion), provide
for accelerated vesting of unvested Options upon such terms and
the Administrator deems advisable (either in an Award Agreement
or otherwise).
(ii) Death. Upon the death of a
Participant while in the employ of the Company or any Subsidiary
or while serving as a member of the Board, the
Participants Options then held shall be exercisable by his
or her estate, heir or beneficiary at any time during the period
ending on the earlier of the date that is one (1) year
after the date of the Participants death or the date the
Option would otherwise terminate, but only to the extent that
the Options are exercisable as of that date. Any and all Options
that are not exercised during such period shall terminate as of
the end of such period.
If a Participant should die following his or her Termination of
Employment, any Options that remain outstanding on the date of
the Participants death shall be exercisable by his or her
estate, heir or beneficiary at any time during the period ending
on the earlier of the date that is one (1) year after the
date of the Participants death or the date the Option
would otherwise terminate, but only to the extent that the
Option was exercisable as of the Participants death. Any
and all of the deceased Participants Options that are not
exercised during the such period shall terminate as of the end
of such period. A Participants estate shall mean his or
her legal representative or other person who so acquires the
right to exercise the Option by bequest or inheritance or by
reason of the death of the Participant.
(iii) Disability. Upon Termination of
Employment as a result of the Participants Disability, the
Participants Options then held shall be exercisable during
the period ending on the earlier of the date that is one
(1) year after the date of Participants Termination
of Employment or the date the Option would otherwise terminate,
but only to the extent that the Options are exercisable as of
that date. Any and all Options that are not exercised during
such period shall terminate as of the end of such period.
(iv) Retirement. Upon the
Participants Termination of Employment by reason of his or
her Retirement, the Participants Options then held shall
be exercisable during the period ending on the earlier of the
date that is three (3) years after the date of the
Participants Termination of Employment or the expiration
date of such Option, but only to the extent that the Options are
exercisable as of the date of the Participants Termination
of Employment. Any and all Options that are not exercised during
such period shall terminate as of the end of such period.
(v) Cause. Upon the date of a
Participants Termination of Employment for Cause, any
Option that is unexercised prior to the date of the
Participants Termination of Employment shall terminate as
of such date.
(vi) Other Reasons. Upon the date of a
Participants Termination of Employment for any reason
other than those stated above in Sections 6(e)(i), (e)(ii),
(e)(iii), (e)(iv) and (e)(v) or as described in Section 15,
the Participants Options then held shall be exercisable
during the period ending on the earlier of the date that is
three (3) months after the date of the Participants
Termination of Employment or the expiration date of such Option,
but only to the extent that the Options are exercisable as of
the date of the Participants Termination of Employment.
Any and all Options that are not exercised during such period
shall terminate as of the end of such period.
(f) Incentive Stock
Options. Notwithstanding anything to the contrary
in this Section 6, in the case of the grant of an Option
intending to qualify as an Incentive Stock Option: (i) if
the Participant owns stock possessing more than 10 percent
of the combined voting power of all classes of stock of the
Company (a 10% Shareholder), the exercise price of
such Option must be at least 110 percent of the Fair Market
Value
A-6
of the Shares on the date of grant and the Option must expire
within a period of not more than five (5) years from the
date of grant, and (ii) Termination of Employment will
occur when the person to whom an Award was granted ceases to be
an employee (as determined in accordance with
Section 3401(c) of the Code and the regulations promulgated
thereunder) of the Company and its Subsidiaries. Notwithstanding
anything in this Section 6 to the contrary, options
designated as Incentive Stock Options shall not be eligible for
treatment under the Code as Incentive Stock Options (and will be
deemed to be Nonqualified Stock Options) to the extent that
either (a) the aggregate Fair Market Value of Shares
(determined as of the time of grant) with respect to which such
Options are exercisable for the first time by the Participant
during any calendar year (under all plans of the Company and any
Subsidiary) exceeds $100,000, taking Options into account in the
order in which they were granted, or (b) such Options
otherwise remain exercisable but are not exercised within three
(3) months of Termination of Employment (or such other
period of time provided in Section 422 of the Code).
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7.
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Stock
Appreciation Rights
|
Stock Appreciation Rights may be granted to Participants from
time to time either in tandem with or as a component of other
Awards granted under the Plan (tandem SARs) or not
in conjunction with other Awards (freestanding SARs)
and may, but need not, relate to a specific Option granted under
Section 6. The provisions of Stock Appreciation Rights need
not be the same with respect to each grant or each recipient.
Any Stock Appreciation Right granted in tandem with an Award may
be granted at the same time such Award is granted or at any time
thereafter before exercise or expiration of such Award. All
freestanding SARs shall be granted subject to the same terms and
conditions applicable to Options as set forth in Section 6
and all tandem SARs shall have the same exercise price, vesting,
exercisability, forfeiture and termination provisions as the
Award to which they relate. Subject to the provisions of
Section 6 and the immediately preceding sentence, the
Administrator may impose such other conditions or restrictions
on any Stock Appreciation Right as it shall deem appropriate.
Stock Appreciation Rights may be settled in Shares, cash or a
combination thereof, as determined by the Administrator and set
forth in the applicable Award Agreement. Other than in
connection with a change in the Companys capitalization
(as described in Section 12), at any time when the exercise
price of a Stock Appreciation Right is above the Fair Market
Value of a Share, the Company shall not, without stockholder
approval, (i) reduce the exercise or base price of such
Stock Appreciation Right, (ii) exchange such Stock
Appreciation Right for cash, another Award or a new Option or
Stock Appreciation Right with a lower exercise or base price or
(iii) otherwise reprice such Stock Appreciation Right.
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8.
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Restricted
Stock and Restricted Stock Units
|
(a) Restricted Stock and Restricted Stock Unit
Awards. Restricted Stock and Restricted Stock
Units may be granted at any time and from time to time prior to
the termination of the Plan to Participants as determined by the
Administrator. Restricted Stock is an award of Shares, the
grant, issuance, retention, vesting
and/or
transferability of which is subject during specified periods of
time to such conditions (including continued employment or
performance conditions) and terms as the Administrator deems
appropriate. Restricted Stock Units are Awards denominated in
units of Shares under which the issuance of Shares is subject to
such conditions (including continued employment or performance
conditions) and terms as the Administrator deems appropriate.
Each grant of Restricted Stock and Restricted Stock Units shall
be evidenced by an Award Agreement. Unless determined otherwise
by the Administrator, each Restricted Stock Unit will be equal
to one Share and will entitle a Participant to either the
issuance of Shares or payment of an amount of cash determined
with reference to the value of Shares. To the extent determined
by the Administrator, Restricted Stock and Restricted Stock
Units may be satisfied or settled in Shares, cash or a
combination thereof. Restricted Stock and Restricted Stock Units
granted pursuant to the Plan need not be identical but each
grant of Restricted Stock and Restricted Stock Units must
contain and be subject to the terms and conditions set forth
below.
(b) Contents of Agreement. Each Award
Agreement shall contain provisions regarding (i) the number
of Shares or Restricted Stock Units subject to such Award or a
formula for determining such number, (ii) the purchase
price of the Shares, if any, and the means of payment,
(iii) the performance criteria, if any, and level
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of achievement versus these criteria that shall determine the
number of Shares or Restricted Stock Units granted, issued,
retainable
and/or
vested, (iv) such terms and conditions on the grant,
issuance, vesting
and/or
forfeiture of the Shares or Restricted Stock Units as may be
determined from time to time by the Administrator, (v) the
term of the performance period, if any, as to which performance
will be measured for determining the number of such Shares or
Restricted Stock Units, and (vi) restrictions on the
transferability of the Shares or Restricted Stock Units. Shares
issued under a Restricted Stock Award may be issued in the name
of the Participant and held by the Participant or held by the
Company, in each case as the Administrator may provide.
(c) Vesting and Performance Criteria. The
grant, issuance, retention, vesting
and/or
settlement of shares of Restricted Stock and Restricted Stock
Units will occur when and in such installments as the
Administrator determines or under criteria the Administrator
establishes, which may include Qualifying Performance Criteria.
Other than with respect to Awards to Nonemployee Directors, the
grant, issuance, retention, vesting
and/or
settlement of Shares under any such Award that is based on
performance criteria and level of achievement versus such
criteria will be subject to a performance period of not less
than twelve months, and the grant, issuance, retention, vesting
and/or
settlement of Shares under any Restricted Stock or Restricted
Stock Unit Award that is based solely upon continued employment
and/or the
passage of time may not vest or be settled in full prior to the
thirty-sixth month following its date of grant, except that the
Administrator may provide for the satisfaction
and/or lapse
of all conditions under any such Award in the event of the
Participants death, disability, Retirement or in
connection with a Change in Control, and the Administrator may
provide that any such restriction or limitation will not apply
in the case of a Restricted Stock or Restricted Stock Unit Award
that is issued in payment or settlement of compensation that has
been earned by the Participant. In addition, the Administrator
may grant awards of Restricted Stock
and/or
Restricted Stock Units that result in issuing up to 5% of the
maximum aggregate number of Shares authorized for issuance under
the Plan (as set forth in Section 5(a)) without regard to
the minimum vesting requirements set forth in the preceding
sentence. Notwithstanding anything in this Plan to the contrary,
the performance criteria for any Restricted Stock or Restricted
Stock Unit that is intended to satisfy the requirements for
performance-based compensation under
Section 162(m) of the Code will be a measure based on one
or more Qualifying Performance Criteria selected by the
Administrator and specified when the Award is granted.
(d) Termination of Employment: Upon the
Participants Termination of Employment, his or her rights
to unvested Restricted Stock or Restricted Stock Units then held
shall be only as follows, unless the Administrator specifies
otherwise (either in an Award Agreement or otherwise):
(i) Death, Disability, Retirement. In the
event of a Participants Termination of Employment by
reason of his or her death, Disability, or Retirement, any
portion of any Award of Restricted Stock
and/or
Restricted Stock Units that is not vested as of the date of a
Participants Termination of Employment shall immediately
be forfeited by the Participant; provided, however, that the
Administrator may, in its sole discretion, provide for
accelerated vesting of unvested Restricted Stock
and/or
Restricted Stock Units upon such terms and the Administrator
deems advisable (either in an Award Agreement or otherwise).
(ii) Other Reasons. In the event of a
Participants Termination of Employment for any reason
other than those stated above in Section 8(d)(i), any
portion of any Award of Restricted Stock
and/or
Restricted Stock Units that is not vested as of the date of a
Participants Termination of Employment shall immediately
be forfeited by the Participant; provided, however, that the
Administrator may, in its sole discretion, other than in the
event of a Termination of Employment for Cause and in a manner
consistent with the requirements of Section 8(c), provide
for accelerated vesting of unvested Restricted Stock
and/or
Restricted Stock Units upon such terms and the Administrator
deems advisable (either in an Award Agreement or otherwise).
(iii) Performance Awards. Notwithstanding
anything in this Section 8(d) to the contrary, with respect
to any Performance Award granted pursuant to this
Section 8, in the event a Participants Termination of
Employment by reason of his or her death, Disability,
Retirement, or involuntary Termination of Employment by the
Company without Cause during a performance period (and, unless
otherwise determined by the Administrator, in the case of a
termination by the Company without Cause,
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at least twelve (12) months after the beginning of the
performance), the Participant shall receive a prorated payout of
the Performance Award. The prorated payout shall be determined
by the Administrator, in its sole discretion, and shall be based
upon the length of time that the Participant held the
Performance Award during the performance period and the
Companys actual results during the performance period as
compared to the performance criteria to which the Performance
Award is subject.
(e) Discretionary Adjustments and
Limits. Subject to the limits imposed under
Section 162(m) of the Code for Awards that are intended to
qualify as performance-based compensation,
notwithstanding the satisfaction of any performance goals, the
number of Shares granted, issued, retainable
and/or
vested under an Award of Restricted Stock or Restricted Stock
Units on account of either financial performance or personal
performance evaluations may, to the extent specified in the
Award Agreement, be reduced, but not increased, by the
Administrator on the basis of such further considerations as the
Administrator shall determine.
(f) Voting Rights. Unless otherwise
determined by the Administrator, Participants holding shares of
Restricted Stock granted hereunder may exercise full voting
rights with respect to those shares during the period of
restriction. Participants shall have no voting rights with
respect to Shares underlying Restricted Stock Units unless and
until such Shares are reflected as issued and outstanding shares
on the Companys stock ledger.
(g) Dividends and
Distributions. Participants in whose name an
Award of Restricted Stock
and/or
Restricted Stock Units is granted shall be entitled to receive
all dividends and other distributions paid with respect to the
Shares underlying such Award, unless determined otherwise by the
Administrator. The Administrator will determine whether any such
dividends or distributions will be automatically reinvested in
additional Shares or will be payable in cash; provided that such
additional Shares
and/or cash
shall subject to the same restrictions and vesting conditions as
the Award with respect to which they were distributed.
Notwithstanding anything herein to the contrary, in no event
shall dividends or dividend equivalents be currently payable
with respect to unvested or unearned Performance Awards.
(a) General. Each Incentive Bonus Award
will confer upon the Participant the opportunity to earn a
future payment tied to the level of achievement with respect to
one or more performance criteria established for a performance
period of not less than one year.
(b) Incentive Bonus Document. The terms
of any Incentive Bonus will be set forth in an Award Agreement
or other written document establishing the terms and conditions
of the Award. Each such Award Agreement or other written
document shall contain provisions regarding (i) the
threshold, target and maximum amount payable to the Participant
as an Incentive Bonus, (ii) the performance criteria and
level of achievement versus these criteria that shall determine
the amount of such payment, (iii) the term of the
performance period as to which performance shall be measured for
determining the amount of any payment, (iv) the timing of
any payment earned by virtue of performance,
(v) restrictions on the alienation or transfer of the
Incentive Bonus prior to actual payment, (vi) forfeiture
provisions and (vii) such further terms and conditions, in
each case not inconsistent with this Plan as may be determined
from time to time by the Administrator.
(c) Performance Criteria. The
Administrator shall establish the performance criteria and level
of achievement versus these criteria that shall determine the
threshold, target and maximum amount payable under an Incentive
Bonus, which criteria may be based on financial performance
and/or
personal performance evaluations. The Administrator may specify
the percentage of the target Incentive Bonus that is intended to
satisfy the requirements for performance-based
compensation under Section 162(m) of the Code.
Notwithstanding anything to the contrary herein, the performance
criteria for any portion of an Incentive Bonus that is intended
by the Administrator to satisfy the requirements for
performance-based compensation under
Section 162(m) of the Code shall be a measure based on one
or more Qualifying Performance Criteria selected by the
Administrator and specified at the time the Incentive Bonus is
granted. The Administrator shall certify the extent to which any
Qualifying Performance Criteria has been satisfied, and the
amount payable as a result thereof, prior to payment of any
Incentive Bonus that is intended to satisfy the requirements for
performance-based compensation under
Section 162(m) of the Code.
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(d) Timing and Form of Payment. The
Administrator shall determine the timing of payment of any
Incentive Bonus. Payment of the amount due under an Incentive
Bonus may be made in cash or in Shares, as determined by the
Administrator. The Administrator may provide for or, subject to
such terms and conditions as the Administrator may specify, may
permit a Participant to elect for the payment of any Incentive
Bonus to be deferred to a specified date or event.
(e) Discretionary
Adjustments. Notwithstanding satisfaction of any
performance goals the amount paid under an Incentive Bonus on
account of either financial performance or personal performance
evaluations may, to the extent specified in the Award Agreement
or other written document establishing the terms and conditions
of the Award, be reduced or increased by the Administrator on
the basis of such further considerations as the Administrator
shall determine; provided, however, that with respect to Awards
that are intended to qualify as performance-based
compensation under Section 162(m) of the Code, the
Administrator shall not have the discretion to increase the
amount paid under an Incentive Bonus.
The Administrator may, in an Award Agreement or otherwise,
provide for the deferred delivery of Shares upon settlement,
vesting or other events with respect to Restricted Stock or
Restricted Stock Units, or in payment or satisfaction of an
Incentive Bonus. Notwithstanding anything herein to the
contrary, in no event will any deferral of the delivery of
Shares or any other payment with respect to any Award be allowed
if the Administrator determines, in its sole discretion, that
the deferral would result in the imposition of the additional
tax under Section 409A(a)(1)(B) of the Code. No Award shall
provide for deferral of compensation that does not comply with
Section 409A of the Code, unless the Board, at the time of
grant, specifically provides that the Award is not intended to
comply with Section 409A of the Code. The Company shall
have no liability to a Participant, or any other party, if an
Award that is intended to be exempt from, or compliant with,
Section 409A of the Code is not so exempt or compliant or
for any action taken by the Board.
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11.
|
Conditions
and Restrictions Upon Securities Subject to Awards
|
The Administrator may provide that the Shares issued upon
exercise of an Option or Stock Appreciation Right or otherwise
subject to or issued under an Award shall be subject to such
further agreements, restrictions, conditions or limitations as
the Administrator in its discretion may specify prior to the
exercise of such Option or Stock Appreciation Right or the
grant, vesting or settlement of such Award, including without
limitation, conditions on vesting or transferability, forfeiture
or repurchase provisions and method of payment for the Shares
issued upon exercise, vesting or settlement of such Award
(including the actual or constructive surrender of Shares
already owned by the Participant) or payment of taxes arising in
connection with an Award. Without limiting the foregoing, such
restrictions may address the timing and manner of any resales by
the Participant or other subsequent transfers by the Participant
of any Shares issued under an Award, including without
limitation (i) restrictions under an insider trading policy
or pursuant to applicable law, (ii) restrictions designed
to delay
and/or
coordinate the timing and manner of sales by Participant and
holders of other Company equity compensation arrangements,
(iii) restrictions in connection with any underwritten
public offering by the Company of the Companys securities
pursuant to an effective registration statement filed under the
Securities Act of 1933, (iv) restrictions as to the use of
a specified brokerage firm for such resales or other transfers,
and (v) provisions requiring Shares to be sold on the open
market or to the Company in order to satisfy tax withholding or
other obligations.
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12.
|
Adjustment
of and Changes in the Stock
|
The number and kind of Shares available for issuance under this
Plan (including under any Awards then outstanding), and the
number and kind of Shares subject to the individual limits set
forth in Section 5 of this Plan, shall be equitably
adjusted by the Administrator as it determines appropriate to
reflect any reorganization, reclassification, combination of
shares, stock split, reverse stock split, spin-off, dividend or
distribution of securities, property or cash (other than
regular, quarterly cash dividends), or any other event or
transaction that affects the number or kind of Shares of the
Company outstanding. Such adjustment shall be designed to comply
with Sections 409A and 424 of the Code or, except as
otherwise expressly provided in
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Section 5(c) of this Plan, may be designed to treat the
Shares available under the Plan and subject to Awards as if they
were all outstanding on the record date for such event or
transaction or to increase the number of such Shares to reflect
a deemed reinvestment in Shares of the amount distributed to the
Companys securityholders. The terms of any outstanding
Award shall also be equitably adjusted by the Administrator as
to price, number or kind of Shares subject to such Award,
vesting, and other terms to reflect the foregoing events, which
adjustments need not be uniform as between different Awards or
different types of Awards.
In the event there shall be any other change in the number or
kind of outstanding Shares, or any stock or other securities
into which such Shares shall have been changed, or for which it
shall have been exchanged, by reason of a Change in Control,
other merger, consolidation or otherwise, then the Administrator
shall, in its sole discretion, determine the appropriate and
equitable adjustment, if any, to be effected.
No right to purchase fractional shares shall result from any
adjustment in Awards pursuant to this Section 12. In case
of any such adjustment, the Shares subject to the Award shall be
rounded down to the nearest whole share. The Company shall
notify Participants holding Awards subject to any adjustments
pursuant to this Section 12 of such adjustment, but
(whether or not notice is given) such adjustment shall be
effective and binding for all purposes of the Plan.
Unless otherwise expressly provided in the Award Agreement or
another contract, including an employment agreement, or under
the terms of a transaction constituting a Change in Control, the
Administrator may provide that any or all of the following shall
occur upon a Participants Termination of Employment within
twenty-four (24) months following a Change in Control:
(a) in the case of an Option or Stock Appreciation Right,
the Participant shall have the ability to exercise any portion
of the Option or Stock Appreciation Right not previously
exercisable, (b) in the case of a Performance Award or
Incentive Bonus, the Participant shall have the right to receive
a payment equal to the target amount payable or, if greater, a
payment based on performance through a date determined by the
Administrator prior to the Change in Control, and (c) in
the case of Shares issued in payment of an Incentive Bonus,
and/or in
the case of outstanding Restricted Stock
and/or
Restricted Stock Units, all conditions to the grant, issuance,
retention, vesting or transferability of, or any other
restrictions applicable to, such Award shall immediately lapse.
Notwithstanding anything herein to the contrary, in the event of
a Change in Control in which the acquiring or surviving company
in the transaction does not assume or continue outstanding
Awards upon the Change in Control, immediately prior to the
Change in Control, all Awards that are not assumed or continued
shall be treated as follows effective immediately prior to the
Change in Control: (a) in the case of an Option or Stock
Appreciation Right, the Participant shall have the ability to
exercise such Option or Stock Appreciation Right, including any
portion of the Option or Stock Appreciation Right not previously
exercisable, (b) in the case of a Performance Award or
Incentive Bonus, the Participant shall have the right to receive
a payment equal to the target amount payable or, if greater, a
payment based on performance through a date determined by the
Administrator prior to the Change in Control, and (c) in
the case of Shares issued in payment of an Incentive Bonus,
and/or in
the case of outstanding Restricted Stock
and/or
Restricted Stock Units, all conditions to the grant, issuance,
retention, vesting or transferability of, or any other
restrictions applicable to, such Award shall immediately lapse.
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13.
|
Qualifying
Performance-Based Compensation
|
(a) General. The Administrator may
establish performance criteria and level of achievement versus
such criteria that shall determine the number of Shares, units,
or cash to be granted, retained, vested, issued or issuable
under or in settlement of or the amount payable pursuant to an
Award, which criteria may be based on Qualifying Performance
Criteria or other standards of financial performance
and/or
personal performance evaluations. A Performance Award may be
identified as Performance Share, Performance
Equity, Performance Unit or other such term as
chosen by the Administrator. In addition, the Administrator may
specify that an Award or a portion of an Award is intended to
satisfy the requirements for performance-based
compensation under Section 162(m) of the Code,
provided that the performance criteria for such Award or portion
of an Award that is intended by the Administrator to satisfy the
requirements for performance-based compensation
under Section 162(m) of the Code shall be a measure based
on one or more Qualifying Performance Criteria selected by the
Administrator and specified at the time the Award is granted.
The
A-11
Administrator shall certify the extent to which any Qualifying
Performance Criteria has been satisfied, and the amount payable
as a result thereof, prior to payment, settlement or vesting of
any Award that is intended to satisfy the requirements for
performance-based compensation under
Section 162(m) of the Code. Notwithstanding satisfaction of
any performance goals, the number of Shares issued under or the
amount paid under an award may, to the extent specified in the
Award Agreement, be reduced, but not increased, by the
Administrator on the basis of such further considerations as the
Administrator in its sole discretion shall determine.
(b) Qualifying Performance Criteria. For
purposes of this Plan, the term Qualifying Performance
Criteria shall mean any one or more of the following
performance criteria, or derivations of such performance
criteria, either individually, alternatively or in any
combination, applied to either the Company as a whole or to a
business unit or Subsidiary, either individually, alternatively
or in any combination, and measured either annually or
cumulatively over a period of years, on an absolute basis or
relative to a pre-established target, to previous years
results or to a designated comparison group, in each case as
specified by the Administrator: (i) cash flow (before or
after dividends), (ii) earning or earnings per share
(including earnings before interest, taxes, depreciation and
amortization), (iii) stock price, (iv) return on
equity, (v) total stockholder return, (vi) return on
capital or investment (including return on total capital, return
on invested capital, or return on investment), (vii) return
on assets or net assets, (viii) market capitalization,
(ix) economic value added, (x) debt leverage (debt to
capital), (xi) revenue, (xii) income or net income,
(xiii) operating income, (xiv) operating profit or net
operating profit, (xv) operating margin or profit margin,
(xvi) return on operating revenue, (xvii) cash from
operations, (xviii) operating ratio, (xix) operating
revenue, (xx) NSR
and/or total
backlog, (xxi) days sales outstanding, (xxii) customer
service, (xxiii) operational safety, reliability
and/or
efficiency; (xxiv) environmental incidents. To the extent
consistent with Section 162(m) of the Code, the
Administrator (A) shall appropriately adjust any evaluation
of performance under a Qualifying Performance Criteria to
eliminate the effects of charges for restructurings,
discontinued operations, extraordinary items and all items of
gain, loss or expense determined to be extraordinary or unusual
in nature or related to the acquisition or disposal of a segment
of a business or related to a change in accounting principle all
as determined in accordance with applicable accounting
provisions, as well as the cumulative effect of accounting
changes, in each case as determined in accordance with generally
accepted accounting principles or identified in the
Companys financial statements or notes to the financial
statements, and (B) may appropriately adjust any evaluation
of performance under a Qualifying Performance Criteria to
exclude any of the following events that occurs during a
performance period: (i) asset write-downs,
(ii) litigation, claims, judgments or settlements,
(iii) the effect of changes in tax law or other such laws
or provisions affecting reported results, (iv) accruals for
reorganization and restructuring programs and (v) accruals
of any amounts for payment under this Plan or any other
compensation arrangement maintained by the Company.
Each Award may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated by a Participant other than
by will or the laws of descent and distribution, and each Option
or Stock Appreciation Right shall be exercisable only by the
Participant during his or her lifetime. Notwithstanding the
foregoing, to the extent permitted by the Administrator, the
person to whom an Award is initially granted (the
Grantee) may transfer an Award to any family
member of the Grantee (as such term is defined in
Section 1(a)(5) of the General Instructions to
Form S-8
under the Securities Act of 1933, as amended
(Form S-8)),
to trusts solely for the benefit of such family members and to
partnerships in which such family members
and/or
trusts are the only partners; provided that, (i) as a
condition thereof, the transferor and the transferee must
execute a written agreement containing such terms as specified
by the Administrator, and (ii) the transfer is pursuant to
a gift or a domestic relations order to the extent permitted
under the General Instructions to
Form S-8.
Except to the extent specified otherwise in the agreement the
Administrator provides for the Grantee and transferee to
execute, all vesting, exercisability and forfeiture provisions
that are conditioned on the Grantees continued employment
or service shall continue to be determined with reference to the
Grantees employment or service (and not to the status of
the transferee) after any transfer of an Award pursuant to this
Section 14, and the responsibility to pay any taxes in
connection with an Award shall remain with the Grantee
notwithstanding any transfer other than by will or intestate
succession.
A-12
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15.
|
Suspension
or Termination of Awards
|
Except as otherwise provided by the Administrator, if at any
time (including after a notice of exercise has been delivered or
an award has vested) the Chief Executive Officer or any other
person designated by the Administrator (each such person, an
Authorized Officer) reasonably believes that a
Participant may have committed an Act of Misconduct as described
in this Section 15, the Authorized Officer, Administrator
or the Board may suspend the Participants rights to
exercise any Option, to vest in an Award,
and/or to
receive payment for or receive Shares in settlement of an Award
pending a determination of whether an Act of Misconduct has been
committed.
If the Administrator or an Authorized Officer determines a
Participant has committed an act of embezzlement, fraud,
dishonesty, nonpayment of any obligation owed to the Company or
any Subsidiary, breach of fiduciary duty, violation of Company
ethics policy or code of conduct, or deliberate disregard of the
Company or Subsidiary rules resulting in loss, damage or injury
to the Company or any Subsidiary, or if a Participant makes an
unauthorized disclosure of any Company or Subsidiary trade
secret or confidential information, solicits any employee or
service provider to leave the employ or cease providing services
to the Company or any Subsidiary, breaches any intellectual
property or assignment of inventions covenant, engages in any
conduct constituting unfair competition, breaches any
non-competition agreement, induces any Company or Subsidiary
customer to breach a contract with the Company or any Subsidiary
or to cease doing business with the Company or any Subsidiary,
or induces any principal for whom the Company or any Subsidiary
acts as agent to terminate such agency relationship (any of the
foregoing acts, an Act of Misconduct), then except
as otherwise provided by the Administrator, (i) neither the
Participant nor his or her estate nor transferee shall be
entitled to exercise any Option or Stock Appreciation Right
whatsoever, vest in or have the restrictions on an Award lapse,
or otherwise receive payment of an Award, (ii) the
Participant will forfeit all outstanding Awards and
(iii) the Participant may be required, at the
Administrators sole discretion, to return
and/or repay
to the Company any then unvested Shares previously issued under
the Plan. In making such determination, the Administrator or an
Authorized Officer shall give the Participant an opportunity to
appear and present evidence on his or her behalf at a hearing
before the Administrator or its designee or an opportunity to
submit written comments, documents, information and arguments to
be considered by the Administrator.
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16.
|
Compliance
with Laws and Regulations
|
This Plan, the grant, issuance, vesting, exercise and settlement
of Awards thereunder, and the obligation of the Company to sell,
issue or deliver Shares under such Awards, shall be subject to
all applicable foreign, federal, state and local laws, rules and
regulations, stock exchange rules and regulations, and to such
approvals by any governmental or regulatory agency as may be
required. The Company shall not be required to register in a
Participants name or deliver any Shares prior to the
completion of any registration or qualification of such shares
under any foreign, federal, state or local law or any ruling or
regulation of any government body which the Administrator shall
determine to be necessary or advisable. To the extent the
Company is unable to or the Administrator deems it infeasible to
obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Companys counsel to be
necessary to the lawful issuance and sale of any Shares
hereunder, the Company and its Subsidiaries shall be relieved of
any liability with respect to the failure to issue or sell such
Shares as to which such requisite authority shall not have been
obtained. No Option shall be exercisable and no Shares shall be
issued
and/or
transferable under any other Award unless a registration
statement with respect to the Shares underlying such Option is
effective and current or the Company has determined that such
registration is unnecessary.
In the event an Award is granted to or held by a Participant who
is employed or providing services outside the United States, the
Administrator may, in its sole discretion, modify the provisions
of the Plan or of such Award as they pertain to such individual
to comply with applicable foreign law or to recognize
differences in local law, currency or tax policy. The
Administrator may also impose conditions on the grant, issuance,
exercise, vesting, settlement or retention of Awards in order to
comply with such foreign law
and/or to
minimize the Companys obligations with respect to tax
equalization for Participants employed outside their home
country.
A-13
To the extent required by applicable federal, state, local or
foreign law, a Participant shall be required to satisfy, in a
manner satisfactory to the Company, any withholding tax
obligations that arise by reason of an Option exercise, the
vesting of or settlement of an Award, an election pursuant to
Section 83(b) of the Code or otherwise with respect to an
Award. To the extent a Participant makes an election under
Section 83(b) of the Code, within ten days of filing such
election with the Internal Revenue Service, the Participant must
notify the Company in writing of such election. The Company and
its Subsidiaries shall not be required to issue Shares, make any
payment or to recognize the transfer or disposition of Shares
until all withholding tax obligations are satisfied. The
Administrator may provide for or permit these obligations to be
satisfied through the mandatory or elective sale of Shares
and/or by
having the Company withhold a portion of the Shares that
otherwise would be issued to him or her upon exercise of the
Option or the vesting or settlement of an Award, or by tendering
Shares previously acquired. In addition, the Company shall be
entitled to deduct from other compensation payable to each
Participant any withholding tax obligations that arise in
connection with an Award or require the Participant to pay such
sums directly to the Company in cash or by check.
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18.
|
Administration
of the Plan
|
(a) Administrator of the Plan. The Plan
shall be administered by the Administrator who shall be the
Compensation Committee of the Board or, in the absence of a
Compensation Committee, the Board itself. Any power of the
Administrator may also be exercised by the Board, except to the
extent that the grant or exercise of such authority would cause
any Award or transaction to become subject to (or lose an
exemption under) the short-swing profit recovery provisions of
Section 16 of the Securities Exchange Act of 1934 or cause
an Award designated as a Performance Award not to qualify for
treatment as performance-based compensation under
Section 162(m) of the Code. To the extent that any
permitted action taken by the Board conflicts with action taken
by the Administrator, the Board action shall control. The
Compensation Committee may by resolution authorize one or more
officers of the Company to perform any or all things that the
Administrator is authorized and empowered to do or perform under
the Plan, and for all purposes under this Plan, such officer or
officers shall be treated as the Administrator; provided,
however, that the resolution so authorizing such officer or
officers shall specify the total number of Awards (if any) such
officer or officers may award pursuant to such delegated
authority. No such officer shall designate himself or herself as
a recipient of any Awards granted under authority delegated to
such officer. In addition, the Compensation Committee may
delegate any or all aspects of the
day-to-day
administration of the Plan to one or more officers or employees
of the Company or any Subsidiary,
and/or to
one or more agents.
(b) Powers of Administrator. Subject to
the express provisions of this Plan, the Administrator shall be
authorized and empowered to do all things that it determines to
be necessary or appropriate in connection with the
administration of this Plan, including, without limitation:
(i) to prescribe, amend and rescind rules and regulations
relating to this Plan and to define terms not otherwise defined
herein; (ii) to determine which persons are Participants,
to which of such Participants, if any, Awards shall be granted
hereunder and the timing of any such Awards; (iii) to grant
Awards to Participants and determine the terms and conditions
thereof, including the number of Shares subject to Awards and
the exercise or purchase price of such Shares and the
circumstances under which Awards become exercisable or vested or
are forfeited or expire, which terms may but need not be
conditioned upon the passage of time, continued employment, the
satisfaction of performance criteria, the occurrence of certain
events, or other factors; (iv) to establish and verify the
extent of satisfaction of any performance goals or other
conditions applicable to the grant, issuance, exercisability,
vesting
and/or
ability to retain any Award; (v) to prescribe and amend the
terms of the agreements or other documents evidencing Awards
made under this Plan (which need not be identical) and the terms
of or form of any document or notice required to be delivered to
the Company by Participants under this Plan; (vi) to
determine whether, and the extent to which, adjustments are
required pursuant to Section 12; (vii) to interpret
and construe this Plan, any rules and regulations under this
Plan and the terms and conditions of any Award granted
hereunder, and to make exceptions to any such provisions if the
Administrator, in good faith, determines that it is necessary to
do so in light of extraordinary circumstances and for the
benefit of the Company; (viii) to approve corrections in
the documentation or administration of any Award; and
(ix) to make
A-14
all other determinations deemed necessary or advisable for the
administration of this Plan. The Administrator may, in its sole
and absolute discretion, without amendment to the Plan, waive or
amend the operation of Plan provisions respecting exercise after
Termination of Employment or service to the Company or an
affiliate and, except as otherwise provided herein, adjust any
of the terms of any Award.
(c) Determinations by the
Administrator. All decisions, determinations and
interpretations by the Administrator regarding the Plan, any
rules and regulations under the Plan and the terms and
conditions of or operation of any Award granted hereunder, shall
be final and binding on all Participants, beneficiaries, heirs,
assigns or other persons holding or claiming rights under the
Plan or any Award. The Administrator shall consider such factors
as it deems relevant, in its sole and absolute discretion, to
making such decisions, determinations and interpretations
including, without limitation, the recommendations or advice of
any officer or other employee of the Company and such attorneys,
consultants and accountants as it may select.
(d) Subsidiary Awards. In the case of a
grant of an Award to any Participant employed by a Subsidiary,
such grant may, if the Administrator so directs, be implemented
by the Company issuing Shares to the Subsidiary, for such lawful
consideration as the Administrator may determine, upon the
condition or understanding that the Subsidiary will transfer the
Shares to the Participant in accordance with the terms of the
Award specified by the Administrator pursuant to the provisions
of the Plan. Notwithstanding any other provision hereof, such
Award may be issued by and in the name of the Subsidiary and
shall be deemed granted on such date as the Administrator shall
determine.
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19.
|
Amendment
of the Plan or Awards
|
The Board may amend, alter or discontinue this Plan and the
Administrator may amend, or alter any agreement or other
document evidencing an Award made under this Plan but, except as
provided pursuant to the provisions of Section 12, no such
amendment shall, without the approval of the stockholders of the
Company amend the Plan in any manner requiring stockholder
approval by law or under the New York Stock Exchange listing
requirements.
No amendment or alteration to the Plan or an Award or Award
Agreement shall be made which would impair the rights of the
holder of an Award, without such holders consent, provided
that no such consent shall be required if the Administrator
determines in its sole discretion and prior to the date of any
Change in Control that such amendment or alteration either is
required or advisable in order for the Company, the Plan or the
Award to satisfy any law or regulation or to meet the
requirements of or avoid adverse financial accounting
consequences under any accounting standard.
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20.
|
No
Liability of Company
|
The Company and any Subsidiary or affiliate which is in
existence or hereafter comes into existence shall not be liable
to a Participant or any other person as to: (i) the
non-issuance or sale of Shares as to which the Company has been
unable to obtain from any regulatory body having jurisdiction
the authority deemed by the Companys counsel to be
necessary to the lawful issuance and sale of any Shares
hereunder; and (ii) any tax consequence expected, but not
realized, by any Participant or other person due to the receipt,
exercise or settlement of any Award granted hereunder.
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21.
|
Non-Exclusivity
of Plan
|
Neither the adoption of this Plan by the Board nor the
submission of this Plan to the stockholders of the Company for
approval shall be construed as creating any limitations on the
power of the Board or the Administrator to adopt such other
incentive arrangements as either may deem desirable, including
without limitation, an arrangement not intended to qualify under
Section 162(m) of the Code, and such arrangements may be
either generally applicable or applicable only in specific cases.
A-15
This Plan and any agreements or other documents hereunder shall
be interpreted and construed in accordance with the laws of the
Texas to the extent not preempted by federal law. Any reference
in this Plan or in the agreement or other document evidencing
any Awards to a provision of law or to a rule or regulation
shall be deemed to include any successor law, rule or regulation
of similar effect or applicability.
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23.
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No Right
to Employment, Reelection or Continued Service
|
Nothing in this Plan or an Award Agreement shall interfere with
or limit in any way the right of the Company, its Subsidiaries
and/or its
affiliates to terminate any Participants employment,
service on the Board or service for the Company at any time or
for any reason not prohibited by law, nor shall this Plan or an
Award itself confer upon any Participant any right to continue
his or her employment or service for any specified period of
time. Neither an Award nor any benefits arising under this Plan
shall constitute an employment contract with the Company, any
Subsidiary
and/or its
affiliates. Subject to Sections 4 and 19, this Plan and the
benefits hereunder may be terminated at any time in the sole and
exclusive discretion of the Board without giving rise to any
liability on the part of the Company, its Subsidiaries
and/or its
affiliates.
The Plan is intended to be an unfunded plan. Participants are
and shall at all times be general creditors of the Company with
respect to their Awards. If the Administrator or the Company
chooses to set aside funds in a trust or otherwise for the
payment of Awards under the Plan, such funds shall at all times
be subject to the claims of the creditors of the Company in the
event of its bankruptcy or insolvency.
It is intended that any Options, Stock Appreciation Rights, and
Restricted Stock issued pursuant to this Plan and any Award
Agreement shall not constitute deferrals of
compensation within the meaning of Section 409A of
the Code and, as a result, shall not be subject to the
requirements of Section 409A of the Code. It is further
intended that any Restricted Stock Units and Incentive Bonuses
issued pursuant to this Plan and any Award Agreement or other
written document establishing the terms and conditions of the
Award (which may or may not constitute deferrals of
compensation, depending on the terms of each Award) shall
avoid any plan failures within the meaning of
Section 409A(a)(1) of the Code. The Plan and each Award
Agreement or other written document establishing the terms and
conditions of an Award is to be interpreted and administered in
a manner consistent with these intentions. However, no guarantee
or commitment is made that the Plan, any Award Agreement or any
other written document establishing the terms and conditions of
an Award shall be administered in accordance with the
requirements of Section 409A of the Code, with respect to
amounts that are subject to such requirements, or that the Plan,
any Award Agreement or any other written document establishing
the terms and conditions of an Award shall be administered in a
manner that avoids the application of Section 409A of the
Code, with respect to amounts that are not subject to such
requirements.
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26.
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Required
Delay in Payment on Account of a Separation from
Service
|
Notwithstanding any other provision in this Plan, any Award
Agreement or any other written document establishing the terms
and conditions of an Award, if any Award recipient is a
specified employee, as defined in Treasury
Regulations
Section 1.409A-1(i),
as of the date of his or her Separation from Service
(as defined in authoritative IRS guidance under Section 409A of
the Code), then, to the extent required by Treasury Regulations
Section 1.409A-3(i)(2),
any payment made to the Award recipient on account of his or her
Separation from Service shall not be made before a date that is
six months after the date of his or her Separation from Service.
The Administrator may elect any of the methods of applying this
rule that are permitted under Treasury Regulations
section 1.409A-3(i)(2)(ii).
A-16
TESORO CORPORATION
ANNUAL MEETING OF TESORO CORPORATION
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Date: |
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May 4, 2011 |
Time: |
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4:00 P.M. (Central Time) |
Place: |
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Tesoro Corporation, 19100 Ridgewood Parkway, San Antonio, Texas 78259 |
Please make your marks like this: ý Use dark black pencil or pen only
Board of Directors Recommends a Vote FOR proposals 1, 2, 4 and 5,
1 YEAR on proposal 3 and AGAINST proposal 6.
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1: |
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Election of 8 directors (all nominated as directors
to serve for the term indicated in the Proxy Statement): |
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Directors
Recommend |
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For |
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Against |
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Abstain |
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â |
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01 Rodney F. Chase |
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o |
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o |
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o |
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For |
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02 Gregory J. Goff |
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o |
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o |
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o |
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For |
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03 Robert W. Goldman |
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o |
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o |
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o |
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For |
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04 Steven H. Grapstein |
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o |
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o |
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o |
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For |
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05 J.W. Nokes |
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o |
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o |
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o |
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For |
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06 Susan Tomasky |
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o |
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o |
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For |
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07 Michael E. Wiley |
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o |
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o |
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For |
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08 Patrick Y. Yang |
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o |
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o |
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For |
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For |
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Against |
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Abstain |
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2: |
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To conduct an advisory vote on executive compensation;
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o |
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o |
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o |
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For |
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1 year |
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2 years |
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3 years |
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Abstain |
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3: |
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To conduct an advisory vote on the frequency of future advisory votes on executive compensation; |
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o |
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o |
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o |
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o |
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1
Year |
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For |
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Against |
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Abstain |
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4: |
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To approve the Tesoro Corporation 2011 Long-Term Incentive Plan; |
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o |
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o |
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o |
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For |
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5: |
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To ratify the appointment of Ernst
& Young LLP as our independent auditors for fiscal year 2011; and |
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o |
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o |
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o |
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For |
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6: |
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If properly presented at the annual meeting, to consider a stockholder proposal regarding a safety report. |
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o |
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o |
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o |
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Against |
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To attend the meeting and vote your shares in person, please mark this box. |
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o |
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Authorized Signatures - This section must be completed for your Instructions to be executed. |
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Please Sign Here |
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Please Date Above |
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Please Sign Here |
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Please Date Above |
Please sign exactly as your name(s) appears on your stock certificate. If held in joint tenancy,
all persons should sign. Trustees, administrators, etc., should include title and authority.
Corporations should provide full name of corporation and title of authorized officer signing the proxy.
TESORO CORPORATION
Annual Meeting of Tesoro Corporation
to be held on Wednesday, May 4, 2011
for Holders as of March 15, 2011
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VOTED BY: |
INTERNET |
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TELEPHONE |
Go To |
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866-390-9971 |
www.proxypush.com/tso |
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Use any touch-tone telephone. |
Cast your vote online.
View Meeting Documents. |
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OR |
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Have your Proxy Card/Voting Instruction Form ready. |
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Follow the simple recorded instructions. |
MAIL
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OR |
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Mark,
sign and date your Proxy Card/Voting Instruction Form. |
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Detach your Proxy Card/Voting Instruction Form. |
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Return your Proxy Card/Voting Instruction Form in the postage-paid envelope provided. |
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED FOR THE
ELECTION OF THE DIRECTORS IN ITEM 1, FOR THE PROPOSALS IN ITEMS 2, 4 AND 5, 1 YEAR ON THE
PROPOSAL IN ITEM 3 AND AGAINST THE PROPOSAL IN ITEM 6.
All votes must be received by 11:59 P.M., Eastern Time, May 3, 2011.
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PROXY TABULATOR FOR
TESORO CORPORATION
P.O. BOX 8016
CARY, NC 27512-9903 |
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EVENT # |
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CLIENT # |
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OFFICE # |
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Revocable Proxy Tesoro Corporation
Annual Meeting of Stockholders
May 4, 2011, 4:00 p.m. (Central Time)
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints CHARLES S. PARRISH and D. JEFFREY HAFFNER, and each of them, as
proxies of the undersigned, each with full power to act without the other and with full power of
substitution, to vote all the shares of Common Stock of Tesoro Corporation (the Company) which
the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held at Tesoro
Corporation, 19100 Ridgewood Parkway, San Antonio, Texas 78259 on Wednesday, May 4, 2011, at 4:00
P.M. Central time, and at any adjournment or postponement thereof, with all the powers the
undersigned would have if personally present, upon the matters set forth in the Notice of such
meeting and in their discretion upon such other matters as may properly come before the meeting.
(TO BE SIGNED ON REVERSE SIDE)
TESORO CORPORATION
Tesoro Corporation Thrift Plan
and/or
Tesoro Corporation Retail Savings Plan
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|
|
Date: Time: |
|
May 4, 2011 4:00 P.M. (Central Time)
|
Place: |
|
Tesoro Corporation, 19100 Ridgewood Parkway, San Antonio, Texas 78259 |
Please make your
marks like this: x Use dark black pencil or pen
only
Board of Directors
Recommends a Vote FOR proposals 1, 2, 4 and 5,
1 YEAR on proposal 3 and AGAINST proposal 6.
1: Election of 8 directors (all nominated as directors to serve for the term indicated in the Proxy Statement):
|
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Directors |
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Recommend |
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For |
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Against |
|
Abstain |
|
ê |
01 Rodney F. Chase |
|
o |
|
|
|
o |
|
o |
|
For |
02 Gregory J. Goff |
|
o |
|
|
|
o |
|
o |
|
For |
03 Robert W. Goldman |
|
o |
|
|
|
o |
|
o |
|
For |
04 Steven H. Grapstein |
|
o |
|
|
|
o |
|
o |
|
For |
05 J.W. Nokes |
|
o |
|
|
|
o |
|
o |
|
For |
06 Susan Tomasky |
|
o |
|
|
|
o |
|
o |
|
For |
07 Michael E. Wiley |
|
o |
|
|
|
o |
|
o |
|
For |
08 Patrick Y. Yang |
|
o |
|
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|
o |
|
o |
|
For |
|
|
|
|
|
|
|
|
|
|
|
|
|
For |
|
Against |
|
Abstain |
|
|
|
|
2: To conduct an advisory vote on executive
compensation; |
|
o |
|
o |
|
o |
|
|
|
For |
|
|
1 year |
|
2 years |
|
3 years |
|
Abstain |
|
1 |
3: To conduct an advisory vote on the frequency of
future advisory votes on executive compensation; |
|
o |
|
o |
|
o |
|
o |
|
Year |
|
|
|
|
|
|
|
|
|
|
|
|
|
For |
|
Against |
|
Abstain |
|
|
|
|
4: To approve the Tesoro Corporation 2011
Long-Term Incentive Plan; |
|
o |
|
o |
|
o |
|
|
|
For |
|
|
|
|
|
|
|
|
|
|
|
5: To ratify the appointment of Ernst & Young
LLP as our independent auditors for fiscal
year 2011; and |
|
o |
|
o |
|
o |
|
|
|
For |
|
|
|
|
|
|
|
|
|
|
|
6: If properly presented at the annual meeting,
to consider a stockholder proposal regarding
a safety report. |
|
o |
|
o |
|
o |
|
|
|
Against |
|
|
|
|
|
|
|
To attend the meeting and vote your shares in person, please mark this box. |
|
o |
|
|
|
|
|
|
|
Authorized Signatures - This section must be
completed for your Instructions to be executed. |
|
|
|
|
|
|
|
|
Please Sign Here |
|
Please Date Above |
|
|
|
|
|
|
Please Sign Here |
|
Please Date
Above |
Please sign exactly as your name(s) appears on your stock certificate. If held in joint tenancy,
all persons should sign. Trustees, administrators, etc., should include title and authority.
Corporations should provide full name of corporation and title of authorized officer signing the
proxy.
TESORO CORPORATION
Tesoro Corporation Thrift Plan
and/or
Tesoro Corporation Retail Savings Plan
Annual Meeting of Tesoro Corporation
to be held on Wednesday, May 4, 2011
for Holders as of March 15, 2011
VOTED BY:
|
|
|
INTERNET |
|
TELEPHONE |
Go To
www.proxypush.com/tso |
|
866-390-9971 |
|
|
|
|
|
|
Cast your vote
online. View Meeting Documents. |
|
OR
|
|
Use any touch-tone
telephone. Have your Proxy Card/Voting Instruction Form
ready. Follow the simple recorded instructions. |
MAIL
|
|
|
OR |
|
Mark,
sign and date your Proxy Card/Voting Instruction Form.
Detach
your Proxy Card/Voting Instruction Form.
Return
your Proxy Card/Voting Instruction Form in the postage-paid envelope
provided. |
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED
STOCKHOLDER OR, IF NO DIRECTION IS GIVEN, SHARES WILL NOT BE VOTED.
All votes must be received by 11:59 P.M., Eastern Time, May 1, 2011.
|
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|
|
|
|
|
|
PROXY TABULATOR FOR
TESORO CORPORATION |
|
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|
P.O. BOX 8016 |
|
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|
CARY, NC 27512-9903 |
|
|
|
|
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|
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|
EVENT # |
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|
CLIENT # |
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|
|
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|
OFFICE #
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|
Revocable Proxy Tesoro Corporation
Annual Meeting of Stockholders
May 4, 2011, 4:00 p.m. (Central Time)
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned participant in the TESORO CORPORATION THRIFT PLAN and/or TESORO CORPORATION RETAIL
SAVINGS PLAN (the Plan(s)) hereby acknowledges receipt of the Notice of 2011 Annual Stockholders
Meeting to be held at Tesoro Corporation, 19100 Ridgewood Parkway, San Antonio, Texas 78259, on
Wednesday, May 4, 2011, at 4:00 P.M. Central time, and directs Fidelity Management Trust Company
Trustee, to vote (or cause to be voted) all shares of Common Stock (or share equivalents) of Tesoro
Corporation (the Company) allocated to the undersigneds account under the Plan(s) and held in
the Trustees name at the close of business on March 15, 2011, at said meeting and at any
adjournment or postponement thereof. Said Trustee is authorized to vote in accordance with the
instructions given herein and in its discretion upon such other matters as may properly come before
the meeting.
(TO BE SIGNED ON REVERSE SIDE)