|
Delaware
|
|
1-3473
|
|
95-0862768
|
|
|
|
|
|
(State or other jurisdiction
of incorporation)
|
|
(Commission File Number)
|
|
(IRS Employer Identification No.)
|
19100 Ridgewood Pkwy
San Antonio, Texas
|
|
78259-1828
|
|
|
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
|
|
o
|
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
|
|
|
o
|
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
|
|
|
o
|
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
|
|
|
o
|
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
|
Named Executive Officers & Title
|
2017 Base Salary
|
Gregory J. Goff, Chairman, President and Chief Executive Officer
|
$1,600,000
|
Steven M. Sterin, Executive Vice President and Chief Financial Officer
|
$800,000
|
Keith M. Casey, Executive Vice President, Marketing & Commercial
|
$735,000
|
Cynthia J. Warner, Executive Vice President, Operations
|
$682,500
|
Named Executive Officers
|
Bonus Payment
|
Gregory J. Goff
|
$3,635,200
|
Steven M. Sterin
|
$1,125,540
|
Keith M. Casey
|
$924,810
|
Cynthia J. Warner
|
$768,773
|
•
|
Achievement of earnings before interest, taxes, depreciation and amortization measured on a margin neutral basis (this is the most heavily weighted metric constituting 50% of the bonus opportunity for the corporate performance component)
|
•
|
Growth & Productivity Improvements - Targeted improvements in growth and productivity to create value (this metric constitutes 20% of the bonus opportunity for the corporate performance component)
|
•
|
Cost Management - Measurement of operating expenditures versus budget (this metric constitutes 15% of the bonus opportunity for the corporate performance component)
|
•
|
Process Safety Management - Targeted improvement in the number of process safety incidents (this metric constitutes 7.5% of the bonus opportunity for the corporate performance component)
|
•
|
Environmental - Targeted improvement in the number of environmental incidents (this metric constitutes 7.5% of the bonus opportunity for the corporate performance component)
|
Named Executive Officers
|
Number of
Performance Shares
|
|
Number of
Market Stock Units
|
Gregory J. Goff
|
35,725
|
|
39,270
|
Steven M. Sterin
|
7,304
|
|
8,029
|
Keith M. Casey
|
9,019
|
|
9,914
|
Cynthia J. Warner
|
5,081
|
|
5,586
|
*10.1
|
|
Tesoro Corporation 2017 Performance Share Award Grant Letter
|
*10.2
|
|
Tesoro Corporation Performance Share Awards Granted in 2017 Summary of Key Provisions
|
*10.3
|
|
Tesoro Corporation 2017 Market Stock Unit Award Grant Letter
|
*10.4
|
|
Tesoro Corporation Market Stock Unit Awards Granted in 2017 Summary of Key Provisions
|
|
|
|
|
|
|
TESORO CORPORATION
|
|
||
|
By:
|
/s/ BLANE W. PEERY
|
|
|
|
|
Blane W. Peery
|
|
|
|
|
Vice President and Controller
|
|
Exhibit Number
|
|
Description
|
*10.1
|
|
Tesoro Corporation 2017 Performance Share Award Grant Letter
|
*10.2
|
|
Tesoro Corporation Performance Share Awards Granted in 2017 Summary of Key Provisions
|
*10.3
|
|
Tesoro Corporation 2017 Market Stock Unit Award Grant Letter
|
*10.4
|
|
Tesoro Corporation Market Stock Unit Awards Granted in 2017 Summary of Key Provisions
|
Purpose
|
w
To advance the interests of the Company by motivating plan participants to contribute to the long-term success and progress of the Company.
|
Eligibility
|
w
All senior executives and employees in the Company as approved by the Compensation Committee (“Committee”) of Tesoro Board of Directors.
|
Plan
|
w
This award is granted under the general terms and conditions of the
Amended and Restated 2011 Long-Term Incentive Plan.
|
Performance
Shares
|
w
A Performance Share Award is a grant of shares where the final payout upon vesting is contingent upon achieving specific performance goals during a specified performance period.
|
Performance
Period
|
w
The performance period for the Performance Share Award granted in
2017 is 36 months (February 14, 2017 to February 14, 2020).
|
Vesting
|
w
The Performance Share Award will vest at the end of the 36 month performance period, subject to achievement of the Section 162(m) goal described below.
|
Dividend
Equivalents
|
w
Dividend equivalents will be earned on the performance share award to the extent that the Company pays dividends to shareholders.
w
The dividend equivalents will be accrued over the performance period and paid in cash at the same time that the performance share award is distributed.
w
The dividend equivalents will be calculated and accrued based on the actual number of performance shares earned based on the actual performance results at the end of the performance period; provided, that for a terminated employee, the dividend equivalents will be pro- rated based upon the adjusted number of performance shares earned by such employee (as described below).
w
In no event will dividend equivalents be paid with respect to unearned performance shares.
|
Form and Timing of Payout
|
w
The Performance Share Award will be settled in common stock of the Company as soon as practical, but in any event within calendar year 2020.
|
|
|
Performance Share Awards Granted in 2017
|
1
|
Payout Range
|
w
The payout for the Performance Share Award can range from 0% to 200% as reflected in the Performance Payout Table.
w
I
f the Company’s TSR over the performance period is negative, the Committee has the authority to reduce the actual payout percentage below that is reflected in the Performance Payout Table.
|
Performance
Measures
|
The Performance Share Award will be measured using relative Total Shareholder Return (TSR) benchmarked against an index of the median TSR of the Performance Peer Group defined below.
For purposes of calculating TSR for the Company and our Performance Peer Group:
An average of the stock prices for the 30 business days preceding the beginning and end of the performance period will be used to calculate TSR. Normal dividends will be assumed to be reinvested in stock on the date the dividend is paid to shareholders. Any special dividends will not be included in the calculation.
At the end of the performance period, a TSR will be calculated for the Company and for each of the individual peers. The three-year TSR calculations for each of the peer group companies will be used to determine a benchmark index by taking the median (50% percentile) of these results. This benchmark index will be referred to as the Median Index TSR.
The difference between the Company’s TSR over the performance period and the Median Index TSR will be used to determine the payout percentage as shown in the payout table below. The payout percentage in the payout table below will be applied to the performance shares granted to the employee at time of grant, subject to the Committee’s discretion described above in the event the Company’s TSR over the performance period is negative.
|
Performance Share Awards Granted in 2017
|
2
|
|
|
Tesoro Performance Relative to the Index (Median Index TSR excluding Tesoro minus Tesoro TSR in Percentage Points Difference)
|
Payout %
(Payouts between points will be interpolated using a straight-line interpolation rounded to the nearest whole percent.)
|
|
<-33.33%
|
0%
|
|||
-30%
|
10%
|
|||
-20%
|
40%
|
|||
-10%
|
70%
|
|||
0%
|
100%
|
|||
10%
|
130%
|
|||
20%
|
160%
|
|||
30%
|
190%
|
|||
33.33%+
|
200%
|
|||
|
||||
Performance Peer Group
|
w
The Performance Peer Group are the following companies:
HollyFrontier, Marathon Petroleum, Phillips 66, Valero Energy, PBF Energy, Inc., XLE Energy Index and S&P 500 Index
If any peer company drops out during the performance period, their performance will be included as long as they are in place for at least half of the performance period.
|
Performance Share Awards Granted in 2017
|
3
|
Termination of Employment and Timing of Payout
|
w
Death/Disability - The payout of the award will be pro-rated based on the number of full months worked within the performance period divided by 36 and issued assuming target performance. Shares and any dividend equivalents will be issued as soon as administratively practical.
w
Retirement - The payout of the award will be pro-rated based on the number of full months worked within the performance period divided by 36 and adjusted for actual performance results at the end of the performance period. Shares and any dividend equivalents will be issued as soon as administratively practical within calendar year 2020.
w
Voluntary Termination (except as set forth below), Termination for Cause including a violation of Tesoro’s Code of Business Conduct, or involuntary termination without eligibility for severance under a Company sponsored severance plan - Award will be forfeited.
w
Involuntary Termination under circumstance qualifying for severance compensation under any severance plan sponsored by the Company (not in connection with a Change in Control) - The payout of the award will be pro-rated based on the number of full months worked (minimum of 12 months required) within the performance period divided by 36 and adjusted for actual performance results at the end of the period. Shares and any dividend equivalents associated with your shares will be issued as soon as administratively practical within calendar year 2020.
w
Involuntary Termination or Voluntary Termination for Good Reason within two years following a Change in Control - The full award (as converted as described below) and any associated dividend equivalents will be paid out as soon administratively practical.
w
Separation Under Severance/Separation Agreement - If an employee is terminated pursuant to a severance or separation agreement under any circumstance, the Committee may, at its discretion, further reduce the award payout percentage beyond the pro-rated reduction described above.
|
Performance Share Awards Granted in 2017
|
4
|
Good Reason (under Change in Control only)
|
w
Good Reason means the occurrence of any of the following:
w
without Participant's 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 Participant's positions, duties, responsibilities and status with the Company from those immediately prior to a Change in Control or a diminution in Participant's 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;
w
a material reduction by the Company in Participant's Base Salary, as in effect immediately prior to a Change in Control;
w
the failure by the Company 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;
w
the failure by the Company 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;
w
the occurrence of an event that meets the criteria set forth under the Company's relocation policy, as in effect from time to time, with respect to which either (i) the Participant fails to provide express written consent to the relocation or (ii) the Company fails to provide the relocation benefit set forth in such policy; or
w
any failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company.
|
Performance Share Awards Granted in 2017
|
5
|
Change in
Control
|
w
I
n the event of a Change in Control of the Company, the Performance Share Award will either be (i) assumed and continued by the acquirer or surviving corporation in the transaction, or (ii) paid out upon consummation of the Change in Control at the greater of the target amount or the actual performance at the time of the Change in Control.
w
If the Performance Share Award is assumed and continued in connection with a Change in Control, the award will be converted into a time-based restricted stock unit award upon consummation of the Change in Control with the number of shares subject to the award equal to the number of shares that would have been issued under the award using the greater of the target amount or the actual performance at the time of the Change in Control. Following such conversion, the award (including any dividend equivalents accrued on the shares subject to the converted award) will vest based on continued employment through the end of the performance period.
|
Section 162(m) Performance Goals
|
w
In addition to the performance criteria described above, the Performance Share Award will only be eligible to vest if the Company has positive net income (as determined under US GAAP) over at least one of the calendar years during the performance period.
|
Performance Share Awards Granted in 2017
|
6
|
Purpose
|
w
To advance the interests of Tesoro (the “Company”) by motivating plan participants to contribute to the long-term success and progress of the Company.
|
||
Eligibility
|
w
All senior executives and employees in the Company as approved by the Compensation Committee of Tesoro’s Board of Directors.
|
||
Plan
|
w
These awards are granted under the general terms and conditions of the Amended and Restated 2011 Long-Term Incentive Plan.
|
||
Market Stock Unit
|
w
A Market Stock Unit Award is a grant of stock units in which the number of shares of the Company’s common stock earned at vesting is based on the stock price performance.
|
||
Performance Period
|
w
The performance period for the Market Stock Unit Award granted in 2017 is 36 months (February 14, 2017 through February 14, 2020).
|
||
Vesting
|
w
The Market Stock Unit Award will vest at the end of the 36 month performance period.
|
||
Form and Timing of Payout
|
w
The Market Stock Unit Award will be settled in common stock of the Company within 2 ½ months after the end of the performance period.
|
||
Calculation of Market Stock Unit Award at Vesting
|
w
The number of shares earned at time of vesting will be calculated as follows:
Shares Earned at Vesting* = A times (C/B)
|
||
|
Symbol
|
Description
|
|
|
A
|
# of Targeted Market Stock Units at Grant
|
|
|
B
|
Average closing stock price for the 30 trading days** prior to the Grant Date
|
|
|
C
|
Average closing stock price for the 30 trading days** prior to the Vesting Date
|
|
|
*Shares Earned at Vesting is capped at 200% of number of Targeted Market Stock Units at Grant.
**Normal dividends are assumed to have been reinvested on the date they are paid in order to calculate the average 30-trading day stock price.
|
||
Payout Range
|
w
The payout for the Market Stock Unit Award can range from 50% to 200% based on stock price appreciation. However, there is no payout if the average closing stock price for the 30 trading days prior to the Vesting Date (or Change in Control) has decreased by more than 50% from the average closing stock price for the 30 trading days prior to the Grant Date.
|
Market Stock Unit Award Granted in 2017
|
1
|
Termination of Employment
|
w
Death/Disability - The payout of the award will be pro-rated based on the number of full months worked within the performance period divided by 36 and issued assuming target performance. Shares will be issued as soon as administratively practical.
w
Retirement - The payout of the award will be pro-rated based on the number of full months worked within the performance period divided by 36 and adjusted for actual performance results at the end of the performance period. Shares will be issued within 2 ½ months after the end of the performance period.
w
Voluntary Termination (except as set forth below), Termination for Cause including a violation of Tesoro’s Code of Business Conduct, or involuntary termination without eligibility for severance under a Company sponsored severance plan - Award will be forfeited.
w
Involuntary Termination under circumstances qualifying for severance compensation under any severance plan sponsored by the Company (not in connection with a Change in Control) - The payout of the award will be pro-rated based on the number of full months worked (minimum of 12 months required) within the performance period divided by 36 and adjusted for actual performance results at the end of the period. Shares will be issued within 2 ½ months after the end of the performance period.
w
Involuntary Termination or Voluntary Termination for Good Reason within two years following a Change in Control - The full award (as converted as described below) will be paid out as soon administratively practical.
w
Separation Under Severance/Separation Agreement - If an employee is terminated pursuant to a severance or separation agreement under any circumstance, the Committee may, at its discretion, further reduce the award payout percentage beyond the pro-rated reduction described above.
|
Market Stock Unit Award Granted in 2017
|
2
|
Good Reason (under Change in Control only)
|
w
Good Reason means the occurrence of any of the following:
w
without Participant's 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 Participant's positions, duties, responsibilities and status with the Company from those immediately prior to a Change in Control or a diminution in Participant's 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;
w
a material reduction by the Company in Participant's Base Salary, as in effect immediately prior to a Change in Control;
w
the failure by the Company 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;
w
the failure by the Company 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;
w
the occurrence of an event that meets the criteria set forth under the Company's relocation policy, as in effect from time to time, with respect to which either (i) the Participant fails to provide express written consent to the relocation or (ii) the Company fails to provide the relocation benefit set forth in such policy; or
w
any failure by the Company to obtain the assumption of this Agreement by any successor or assign of the Company.
|
Market Stock Unit Award Granted in 2017
|
3
|
Market Stock Unit Award Granted in 2017
|
4
|