As filed with the Securities and Exchange Commission on May 11, 2011
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TESORO CORPORATION
(Exact Name of Registrant as Specified in its Charter)
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Delaware
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95-0862768
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(State or Other Jurisdiction of
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(I.R.S. Employer
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Incorporation or
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Identification Number)
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Organization)
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19100 Ridgewood Pkwy
San Antonio, Texas 78259
(Address of Principal Executive Offices) (Zip Code)
(210) 626-6000
(Registrant’s Telephone Number, Including Area Code)
TESORO CORPORATION 2011 LONG-TERM INCENTIVE PLAN
TESORO CORPORATION STOCK OPTION INDUCEMENT AWARD PROGRAM
(Full Title of the Plans)
Charles S. Parrish, Esq.
Tesoro Corporation
Executive Vice President, General Counsel and Secretary
19100 Ridgewood Pkwy.
San Antonio, Texas 78259
(Name and Address of Agent for Service)
(210) 626-6000
(Telephone Number, Including Area Code, of Agent for Service)
With copy to:
Elizabeth A. Ising, Esq.
Gibson, Dunn & Crutcher LLP
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
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Large accelerated filer
þ
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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(Do not check if a smaller reporting company)
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CALCULATION OF REGISTRATION FEE
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Proposed
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Proposed maximum
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maximum
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Amount of
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Title of securities
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Amount to be
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offering price per
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aggregate offering
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registration
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to be registered
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registered (1)
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share
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price
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fee
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Common Stock, par value
$0.16 2/3 per share (2)
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7,200,000
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$
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24.14
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(3)
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$
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173,808,000.00
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(3)
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$
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20,179.11
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Common Stock, par value
$0.16 2/3 per share (4)
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33,513
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$
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13.66
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(5)
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$
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457,787.60
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(5)
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$
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53.15
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Common Stock, par value
$0.16 2/3 per share (4)
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118,000
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$
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12.93
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(5)
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$
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1,525,740.00
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(5)
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$
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177.14
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(1)
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Pursuant to Rule 416(a) under the Securities Act of 1933, as amended (the “Securities
Act”), this Registration Statement also covers such indeterminable number of additional
shares of the Registrant’s Common Stock as may become issuable to prevent dilution in the
event of stock splits, stock dividends, or similar transactions.
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(2)
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Tesoro Corporation 2011 Long-Term Incentive Plan.
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(3)
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Estimated solely for the purpose of calculating the registration fee pursuant to Rule
457(c) and Rule 457(h) under the Securities Act, based upon the average of the high and low
prices of the Registrant’s Common Stock on the New York Stock Exchange on May 5, 2011.
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(4)
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Tesoro Corporation Stock Option Inducement Award Program.
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(5)
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Based upon the price at which the stock options may be
exercised, pursuant to Rule
457(h) under the Securities Act.
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EXPLANATORY NOTE
This Registration Statement on Form S-8 is filed by Tesoro Corporation (the “Registrant”),
relating to up to 7,200,000 shares of its common stock, par value $0.16 2/3 per share (“Common
Stock”), issuable to eligible officers, employees, non-employee directors and other service
providers of the Registrant and its subsidiaries under the Tesoro Corporation 2011 Long-Term
Incentive Plan (the “Plan”). This number includes 6,700,000 shares available for issuance under
the Plan plus up to 500,000 shares subject to outstanding awards under the Registrant’s 2006
Long-Term Incentive Plan that 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). This Registration Statement also relates to 151,513 shares of
Common Stock issuable pursuant to two stock option awards granted to the Registrant’s Chief
Executive Officer as inducement awards in connection with his commencement of employment with the
Registrant in May 2010.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.
Not filed as part of this Registration Statement pursuant to the Note to Part I of Form S-8.
Item 2. Registrant Information and Employee Plan Annual Information.
Not filed as part of this Registration Statement pursuant to the Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents, which have previously been filed by the Registrant with the
Securities and Exchange Commission (the “Commission”), are incorporated by reference herein and
shall be deemed to be a part hereof:
(1) The Registrant’s latest Annual Report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) or latest prospectus filed pursuant to Rule
424(b) under the Securities Act, that contains audited financial statements for the Registrant’s
latest fiscal year for which such statements have been filed;
(2) All other reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act since the
end of the fiscal year covered by the Registrant’s latest annual report or prospectus referred to
in (1) above; and
(3) The description of the Registrant’s Common Stock contained in the Registrant’s
Registration Statement on Form 8-A, filed with the Commission under Section 12(b) of the Exchange
Act on April 21, 1969 and amended by a Form 8 dated April 23, 1969, including any amendments or
reports filed for the purpose of updating such description.
In addition, all reports and other documents filed by the Registrant pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, subsequent to the date of this Registration
Statement and prior to the filing of a post-effective amendment hereto, which indicates that all
securities offered hereunder have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the
date of filing of such documents.
For purposes of this Registration Statement, any document or any statement contained in a
document incorporated or deemed to be incorporated herein by reference shall be deemed to be
modified or superseded to the extent that a subsequently filed document or a statement contained
herein or in any other subsequently filed document which also is or is deemed to be incorporated
herein by reference modifies or supersedes such document or such statement in such document. Any
statement so modified or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law provides that a corporation may indemnify
directors and officers as well as other employees and individuals against expenses (including
attorneys’ fees), judgments, fines, and amounts paid in settlement in connection with specified
actions, rules, or proceedings, whether civil, criminal, administrative, or investigative (other
than action by or in the right of the corporation — a “derivative action”), if they acted in good
faith and in a manner they reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no reasonable cause to
believe their conduct was unlawful. A similar standard is applicable in the case of derivative
actions, except that indemnification only extends to expenses (including attorneys’ fees) incurred
in connection with the defense or settlement of such action, and the statute requires court
approval before there can be any indemnification where the person seeking indemnification has been
found liable to the corporation. The statute provides that it is not exclusive of other
indemnification that may be granted by a corporation’s charter, by-laws, disinterested director
vote, stockholder vote, agreement, or otherwise.
Article 7 of the Registrant’s By-laws requires indemnification to the full extent authorized
or permitted by the laws of the State of Delaware of any person who is made, or threatened to be
made, a party to an action, suit or proceeding (whether civil, criminal,
administrative or investigative) by reason of the fact that he, his testator or intestate is or was
a director, officer, or employee of the Registrant or serves or served any other enterprise at the
request of the Company.
Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in
its certificate of incorporation that a director of the corporation shall not be personally liable
to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability for (i) any breach of the director’s duty of loyalty to the
corporation or its stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) payment of unlawful dividends or
unlawful stock purchases or redemptions, or (iv) any transaction from which the director derived an
improper personal benefit.
Article Ninth of the Registrant’s Restated Certificate of Incorporation, as amended, provides
that a director will not be personally liable to the Registrant or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the
director’s duty of loyalty to the Registrant or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, which concerns unlawful payment of dividends,
stock purchases or redemptions or (iv) for any transaction from which the director derived an
improper personal benefit.
The Registrant maintains directors’ and officers’ liability insurance which provides for
payment, on behalf of the directors and officers of the Registrant and its subsidiaries, of certain
losses of such persons (other than matters uninsurable under law) arising from claims, including
claims arising under the Securities Act, for acts or omissions by such persons while acting as
directors or officers of the Registrant and/or its subsidiaries, as the case may be.
The Registrant has entered into indemnification agreements with its directors and certain of
its officers.
Item 7. Exemption From Registration Claimed.
Not applicable.
Item 8. Exhibits.
Unless otherwise indicated below as being incorporated by reference to another filing of the
Registrant with the Commission, each of the following exhibits is filed herewith:
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Exhibit No.
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Exhibit Description
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4.1
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Restated Certificate of Incorporation of the Registrant (incorporated by reference herein to
Exhibit 3 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December
31, 1993, File No. 1-3473).
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4.2
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Amendment to Restated Certificate of Incorporation of the Registrant adding a new Article IX
limiting Directors’ Liability (incorporated by reference herein to Exhibit 3(b) of the
Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 1993, File No.
1-3473).
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Exhibit No.
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Exhibit Description
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4.3
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Certificate of Amendment, dated as of February 9, 1994, to Restated Certificate of
Incorporation of the Registrant amending Article IV, Article V, Article VII and Article VIII
(incorporated by reference herein to Exhibit 3(e) to the Registrant’s Annual Report on Form
10-K for the fiscal year ended December 31, 1993, File No. 1-3473).
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4.4
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Certificate of Amendment, dated as of August 3, 1998, to Certificate of Incorporation of the
Registrant, amending Article IV, increasing the number of authorized shares of Common Stock
from 50 million to 100 million (incorporated by reference herein to Exhibit 3.1 to the
Registrant’s Quarterly Report on Form 10-Q for the period ended September 30, 1998, File No.
1-3473).
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4.5
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Certificate of Ownership of Merger merging Tesoro Merger Corp. into Tesoro Petroleum
Corporation and changing the name of Tesoro Petroleum Corporation to Tesoro Corporation, dated
November 8, 2004 (incorporated by reference herein to Exhibit 3.1 to the Current Report on
Form 8-K filed on November 9, 2004, File No. 1-3473).
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4.6
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Certificate of Amendment, dated as of May 4, 2006, to Certificate of Incorporation of the
Registrant amending Article IV, increasing the number of authorized shares from 100 million to
200 million (incorporated by reference herein to Exhibit 3.1 to the Company’s Quarterly Report
on Form 10-Q for the period ended March 31, 2006, File No. 1-3473).
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4.7
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Certificate of Elimination, dated February 4, 2008 (incorporated by reference herein to
Exhibit 3.1 to the Current Report on Form 8-K filed February 6, 2008, File No. 1-3473).
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4.8
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Certificate of Elimination, dated March 7, 2008 (incorporated by reference herein to Exhibit
3.1 to the Current Report on Form 8-K filed on March 7, 2008, File No. 1-3473).
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4.9
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Amended and Restated Bylaws of Tesoro Corporation effective January 26, 2011 (incorporated by
reference herein to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on
January 28, 2011).
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5.1*
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Opinion of Gibson, Dunn & Crutcher LLP.
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23.1*
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Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5.1).
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23.2*
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Consent of Ernst & Young LLP.
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24.1*
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Power of Attorney (included on signature page hereto).
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99.1
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Tesoro Corporation 2011 Long-Term
Incentive Plan (incorporated by reference herein to Exhibit 10.1 to the Registrant’s
Current Report on Form 8-K filed on May 6, 2011).
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99.2*
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Tesoro Corporation Stock Option Inducement Award Program.
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Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the
Registration Statement (or the most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that which was registered) and
any deviation from the low or high end of the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the maximum aggregate offering
price set forth in the “Calculation of Registration Fee” table in the effective registration
statement; and
(iii) To include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to such information in
the Registration Statement;
p
rovided, however,
that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is contained in reports
filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration
Statement;
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time shall be deemed to be
the initial
bona fide
offering thereof; and
(3) To remove from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability of the Registrant under the Securities Act
to any purchaser in the initial distribution of the securities: The undersigned Registrant
undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this
Registration Statement, regardless of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser by means of any of the following
communications, the undersigned Registrant will be a seller to the purchaser and will be considered
to offer or sell such securities to such purchaser: (i) any preliminary prospectus or
prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to
Rule 424; (ii) any free writing prospectus relating to the offering prepared by or on behalf of the
undersigned Registrant or used or referred to by the undersigned Registrant; (iii) the portion of
any other free writing prospectus relating to the offering containing material information about
the undersigned Registrant or its securities provided by or on behalf of the undersigned
Registrant; and (iv) any other communication that is an offer in the offering made by the
undersigned Registrant to the purchaser.
(b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability
under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange
Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it
has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and
has duly caused this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of San Antonio, State of Texas, on this 11th day of May,
2011.
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TESORO CORPORATION
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By
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/s/ Gregory J. Goff
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Gregory J. Goff
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President and Chief Executive Officer
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POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Gregory J. Goff and Charles S. Parrish, and each of them, his true and
lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for
him or her and in his name, place and stead, in any and all capacities, to sign any and all
amendments, including post-effective amendments, to this Registration Statement, and any
registration statement relating to the offering covered by this Registration Statement and filed
pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying and confirming all
that each of said attorneys-in-fact and agents or their substitute or substitutes may lawfully so
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the dates indicated.
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Signature
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Title
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Date
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/s/ Gregory J. Goff
Gregory J. Goff
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President and Chief Executive Officer
(
Principal Executive
Officer
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May 11, 2011
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/s/ G. Scott Spendlove
G. Scott Spendlove
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Senior Vice President and
Chief Financial Officer
(
Principal Financial
Officer
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May 11, 2011
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/s/ Arlen O. Glenewinkel, Jr.
Arlen O. Glenewinkel, Jr.
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Vice President and
Controller
(
Principal
Accounting Officer
)
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May 11, 2011
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/s/ Steven H. Grapstein
Steven H. Grapstein
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Chairman of the Board of
Directors
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May 11, 2011
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/s/ Rodney F. Chase
Rodney F. Chase
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Director
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May 11, 2011
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/s/ Robert W. Goldman
Robert W. Goldman
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Director
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May 11, 2011
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/s/ J.W. Nokes
J.W. Nokes
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Director
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May 11, 2011
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/s/ Susan Tomasky
Susan Tomasky
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Director
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May 11, 2011
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/s/ Michael E. Wiley
Michael E. Wiley
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Director
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May 11, 2011
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/s/ Patrick Y. Yang
Patrick Y. Yang
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Director
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May 11, 2011
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EXHIBIT INDEX
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Exhibit No.
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Exhibit Description
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5.1
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Opinion of Gibson, Dunn & Crutcher LLP.
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23.1
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Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5.1).
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23.2
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Consent of Ernst & Young LLP.
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24.1
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Power of Attorney (included on signature page hereto).
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99.2
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Tesoro Corporation Stock Option Inducement Award Program.
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Exhibit 99.2
TESORO CORPORATION STOCK OPTION INDUCEMENT AWARD PROGRAM
Charles S. Parrish
Executive Vice President,
General Counsel and Secretary
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Tesoro Corporation
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19100 Ridgewood Parkway
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San Antonio, TX 78259
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210 626 4280
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210 745 4494 Fax
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May 6, 2010
Private and Confidential
Gregory J. Goff
President and Chief Executive Officer
Dear Greg:
Per your employment agreement with Tesoro Corporation (the “
Company
”) dated March 30, 2010 (the
“
Employment Agreement
”), you are hereby awarded the following inducement grants of long-term
incentive awards (the “
Awards
”) effective
May 3, 2010
(the “
Award Date
”) as detailed below. For
your reference, the closing price of the Company’s common stock on May 3, 2010 was $13.66. The
Awards are subject to the terms and conditions of this agreement.
Award No. 1
:
7,321
shares of Company’s common stock. You are fully vested in these
shares and, subject to applicable securities laws (as described in more detail below), may
sell them during an authorized window period subject to your prior discussion with legal to
assure compliance with the Company’s Insider Trading Policy. You will incur a tax
withholding obligation in connection with this portion of the Award on the Award Date. It
is a condition to the issuance of the shares to you that you pay this tax withholding
obligation.
Award No. 2
:
256,223
restricted stock units (“
RSUs
”). Each RSU represents the
right to receive one share of the Company’s common stock, subject to certain restrictions
set forth herein. Subject to your continued employment through each vesting date, the RSUs
will vest as follows: 50% of the RSUs will vest on May 3, 2011 and the remaining 50% will
vest on May 3, 2012. The units granted under this Award will remain in the custody of the
Company, or its authorized delegate, until you vest in the shares. Upon vesting, the vested
RSUs will be settled by crediting to your brokerage account with Fidelity
Investments one share of Company common stock per vested RSU as soon as practicable
following the vesting date (and in all events no later than the date that is two and
one-half (2 1/2) months after the end of the Company’s fiscal year in which the vesting date
occurs) less the number of shares withheld to cover your applicable income and employment
tax withholding(s).
You will have no rights of a stockholder (including, without limitation, dividend and voting
rights) with respect to shares of Company common stock covered by your RSUs until the RSUs
vest and the shares are issued to you.
Award No. 3
: Nonqualified stock option (the “
Option
”) to purchase
33,513
shares of
the Company’s common stock at an exercise price of
$13.66,
which is the fair market value of
the Company’s common stock on the Award Date. You may exercise your Option at any time
prior to the expiration date, to the extent you are vested in the Award, in whole or in part
(but not a fraction), by giving written notice to the Company, in a form satisfactory to the
Company, specifying the number of shares with respect to which you wish to exercise your
Option. It is a condition to exercise that you pay the aggregate exercise price for the
portion of the Option exercised (in the manner specified below), as well as the applicable
income and employment tax withholding(s), to the Company. Upon exercise, you will become
the record holder with respect to the purchased shares of the Company’s common stock. These
shares will be credited to your brokerage account with Fidelity Investments six months after
the date of exercise. Subject to your continued employment through each vesting date, the
Option will vest as follows: the Option will vest with respect to 30% of the shares subject
thereto on each of the first and second anniversaries of the Award Date and with respect to
the remaining 40% of the shares subject thereto on the third anniversary of the Award Date.
The Option will expire and no longer be exercisable on the tenth anniversary of the Award
Date (i.e. May 3, 2020 (the “
Expiration Date
”)); provided, however, that (i) if your
employment with the Company terminates prior to the Expiration Date for any reason other
than your death, Total Disability (as defined in the Employment Agreement) or Retirement (as
defined below), the Option will expire on the earlier of the Expiration Date and the date
that is one day less than three months after the date of your termination of employment;
(ii) if your employment with the Company terminates as a result of your death or Total
Disability, the Option will expire on the earlier of the Expiration Date and the first
anniversary of such termination of employment; and (iii) if your employment with the Company
terminates as a result of your Retirement,
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the Option will expire on the earlier
of the Expiration Date and the third anniversary of such termination of employment.
You may pay the exercise price and tax withholding obligation due in connection with the
exercise of all or a portion of your Option with any combination of the following: (a) cash,
certified check, bank draft or postal or express money order, (b) shares of the Company’s
common stock with a fair market value (as determined by the Company) on the date of exercise
equal to amount due, or (c) any other form of payment which is acceptable to the Company.
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You will not have any rights as a stockholder with respect to shares of Company common stock
covered by your Option until you exercise the Option and the shares are issued to you.
For purposes of your Option, “
Retirement
” means retirement in accordance with the terms of a
retirement plan that is qualified under section 401(a) of the Code and maintained by the
Company or an affiliate in which you are a participant.
Award No. 4
:
18,302
of restricted shares of the Company’s common stock (the
“
Restricted Stock
”). Under this Award, you are the record owner of the shares as of the
Award Date. Consequently, you will have the rights of a shareholder, including voting and
dividend rights, as of the Award Date. However, except as set forth below, if your
employment with the Company terminates prior to you becoming 100% vested in this Award, you
will forfeit your unvested shares. Subject to your continued employment through the vesting
date, this Award will vest with respect to 100% of the restricted shares on May 1, 2011.
The shares granted under this Award will remain in the custody of the Company, or its
authorized delegate, until you vest in the shares. Upon vesting, the vested shares less the
number of shares withheld to cover your applicable income and employment tax withholding(s)
to the Company will be credited to your brokerage account with Fidelity Investments.
Dividends paid with respect to your unvested Restricted Stock in cash or property other than
shares of Company common stock or rights to acquire shares of Company common stock will be
paid to you only at such time as the vesting restrictions on the Restricted Stock are
satisfied and will be paid as soon as administratively practicable following satisfaction of
the vesting restrictions on the Restricted Stock (and in all instances within two and
one-half (2
1
/2) months after the end of the Company’s fiscal year in which the
vesting date occurs). Forfeiture of the underlying Restricted Stock will result in a
forfeiture of any dividends paid with respect to the Restricted Stock. Dividends paid in
shares of Company common stock or rights to acquire shares of Company common stock will be
added to and become a part of the Restricted Stock.
Notwithstanding anything herein to the contrary, upon a termination of your employment with the
Company as described in Sections 6(a), 6(b), 6(e), or 7(a) of the Employment Agreement, the Awards
will become immediately and fully vested and, with respect to the Option, exercisable upon such
termination of employment. Notwithstanding anything herein to the contrary, upon a termination of
your employment with the Company for Cause as described in Section 6(c) of the Employment
Agreement, (i) all of the Awards granted hereunder that have not vested and, in the case of the
Option, been exercised prior to the date of termination will be immediately forfeited to the
Company and (ii) you will be required to repay to the Company any portion of the Awards that vested
and/or were exercised prior to the date of such termination of employment.
Notwithstanding anything herein to the contrary, by signing below you are acknowledging that you
understand that the shares of the Company’s common stock issued and/or issuable to you under the
Awards have not been registered under the Securities Act of 1933, as amended, by reason of a
specific exemption therefrom. You acknowledge that the shares of the Company’s common stock issued
and/or issuable pursuant to the Awards are “restricted securities” under
3
applicable U.S. federal and state securities laws and that, pursuant to these laws, you must hold
the shares indefinitely unless they are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration and qualification
requirements is available. You acknowledge that the Company has no obligation to register or
qualify the shares for resale. You further acknowledge that if an exemption from registration or
qualification is available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the shares, and requirements
relating to the Company which are outside of your control, and which the Company is under no
obligation and may not be able to satisfy.
The existence of the Awards shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or
other changes in the Company’s capital structure or its business, any merger or consolidation of
the Company, any issue of bonds, debentures, preferred or prior preference shares ahead of or
affecting the Company’s common stock, the dissolution or liquidation of the Company, any sale or
transfer of all or any part of its assets or business or any other corporate act or proceeding,
whether of a similar character or otherwise. If the Company shall effect a subdivision or
consolidation of the Company’s common stock or other capital readjustment, the payment of a stock
dividend, or other increase or reduction of the number of shares of common stock outstanding,
without receiving compensation therefor in money, services or property, then the number, class or
series and per share price of common subject to the Awards shall be appropriately adjusted in such
a manner as to entitle you to receive upon exercise of the Option or settlement of the other
Awards, for the same aggregate cash consideration, the equivalent total number and class or series
of stock you would have received had you exercised your Option or has the other Awards been settled
in full immediately prior to the event requiring the adjustment.
In the event of changes in the outstanding common stock by reason of recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes in
capitalization occurring after the date of the grant of any Award and not otherwise provided for
herein, any outstanding Award shall be subject to adjustment by the Committee in its sole and
absolute discretion as to the number and price of stock or other consideration subject to such
Award. The issuance by the Company of stock of any class or series, or securities convertible
into, or exchangeable for, stock of any class or series, for cash or property, or for labor or
services either upon direct sale or upon the exercise of rights or warrants to subscribe for them,
or upon conversion or exchange of stock or obligations of the Company convertible into, or
exchangeable for, stock or other securities, shall not affect, and no adjustment by reason of such
issuance shall be made with respect to, the number, class or series, or price of shares of stock
then subject to outstanding portion of the Option or other Awards.
The Awards, to the extent not yet settled by the issuance of fully vested shares of the Company’s
common stock, shall not be transferable by you other than by will or under the laws of descent and
distribution. The Option shall be exercisable, during your lifetime, only by you. In the
discretion of the Committee, any attempt to transfer an Award other than under the terms hereof may
terminate the Award.
Any question concerning the interpretation of this agreement or the Awards, any adjustments
required to be made to the Awards hereunder, and any controversy that may arise with respect to
4
the Awards will be determined by the Committee in its sole and absolute discretion. All decisions
by the Committee shall be final, binding and conclusive.
The granting of the Awards does not constitute an employment contract, express or implied, nor
impose upon the Company any obligation to employ or continue to employ you. The right of the
Company to terminate your employment of any person shall not be diminished or affected by reason of
the fact that the Awards have been granted, and nothing herein shall interfere with or limit in any
way the right of the Company to terminate your employment at any time or for any reason not
prohibited by law.
We highly value your contribution and commitment to the Company’s success and believe that these
Awards provide you a financial incentive that aligns with the interests of the Company’s
shareholders. Please acknowledge your agreement to the terms and conditions of this agreement and
the Awards granted hereunder by signing below.
Sincerely,
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/s/ Charles Parrish
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Charles Parrish
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Executive Vice President, General Counsel and Secretary
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ACCEPTANCE/ACKNOWLEDGMENT
By signing below, I verify my acceptance of the Awards and the terms and conditions of this
agreement and the Awards as set forth herein.
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May 6, 2010
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Gregory J. Goff
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Date
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5
Charles S. Parrish
Executive Vice President,
General Counsel and Secretary
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Tesoro Corporation
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19100 Ridgewood Parkway
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San Antonio, TX 78259
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210 626 4280
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210 745 4494 Fax
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May 6, 2010
Private and Confidential
Gregory J. Goff
President and Chief Executive Officer
Dear Greg:
I am very pleased to inform you that, effective
May 5, 2010
(the “
Award Date
”), the Compensation
Committee of the Board of Directors of Tesoro Corporation (the “
Company
”), pursuant to the terms of
your employment agreement dated March 30, 2010 (the “
Employment Agreement
”), has approved the
inducement grants to you of the long-term incentive awards (the “Awards”) detailed below. The
Awards are subject to the terms and conditions of this agreement.
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Award No. 1
: Nonqualified stock option (the “
Option
”) to purchase 118,000 shares of
the Company’s common stock at an exercise price of $12.93, which is the fair market value of
the Company’s common stock on the Award Date. You may exercise your Option at any time
prior to the expiration date, to the extent you are vested in the Award, in whole or in part
(but not a fraction), by giving written notice to the Company, in a form satisfactory to the
Company, specifying the number of shares with respect to which your wish to exercise your
Option. It is a condition to exercise that you pay the aggregate exercise price for the
portion of the Option exercised (in the manner specified below), as well as the applicable
income and employment tax withholding(s), to the Company. Upon exercise, you will become
the record holder with respect to the purchased shares of the Company’s common stock. These
shares will be credited to your brokerage account with Fidelity Investments six months after
the date of exercise. Subject to your continued employment through each vesting date, the
Option will vest with respect to 33%% of the shares subject thereto on each of the first
three anniversaries of the Award Date. The Option will expire and no longer be exercisable
on the tenth anniversary of the Award Date (i.e. May 5, 2020 (the “
Expiration Date
”));
provided, however, that (i) if your employment with the Company terminates prior to the
Expiration Date for any reason other than your death, Total Disability (as defined in the
Employment Agreement) or
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Retirement (as defined below), the Option will expire on the
earlier of the Expiration
Date and the date that is one day less than three months after the date of your termination
of employment; (ii) if your employment with the Company terminates as a result of your death
or Total Disability, the Option will expire on the earlier of the Expiration Date and the
first anniversary of such termination of employment; and (iii) if your employment with the
Company terminates as a result of your Retirement, the Option will expire on the earlier of
the Expiration Date and the third anniversary of such termination of employment.
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You may pay the exercise price and tax withholding obligation due in connection with the
exercise of all or a portion of your Option with any combination of the following: (a) cash,
certified check, bank draft or postal or express money order, (b) shares of the Company’s
common stock with a fair market value (as determined by the Company) on the date of exercise
equal to amount due, or (c) any other form of payment which is acceptable to the Company.
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You will not have any rights as a stockholder with respect to shares of Company common stock
covered by your Option until you exercise the Option and the shares are issued to you.
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For purposes of your Option, “
Retirement
” means retirement in accordance with the terms of a
retirement plan that is qualified under section 401(a) of the Code and maintained by the
Company or an affiliate in which you are a participant.
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Award No. 2
: 68,000 of restricted shares of the Company’s common stock (the
“
Restricted Stock
”). Under this Award, you are the record owner of the shares as of the
Award Date. Consequently, you will have the rights of a shareholder, including voting and
dividend rights, as of the Award Date. However, except as set forth below, if your
employment with the Company terminates prior to you becoming 100% vested in this Award, you
will forfeit your unvested shares. Subject to your continued employment through each
vesting date, this Award will vest with respect to 33’1/2% of the Restricted Stock on each
of the first three anniversaries of the Award Date. The shares granted under this Award
will remain in the custody of the Company, or its authorized delegate, until you vest in the
shares. Upon vesting, the vested shares less the number of shares withheld to cover your
applicable income and employment tax withholding(s) to the Company will be credited to your
brokerage account with Fidelity Investments.
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Dividends paid with respect to your unvested Restricted Stock in cash or property other than
shares of Company common stock or rights to acquire shares of Company common stock will be
paid to you only at such time as the vesting restrictions on the Restricted Stock are
satisfied and will be paid as soon as administratively practicable following satisfaction of
the vesting restrictions on the Restricted Stock (and in all instances within two and
one-half (21/2) months after the end of the Company’s fiscal year in which the vesting date
occurs). Forfeiture of the underlying Restricted Stock will result in a forfeiture of any
dividends paid with respect to the Restricted Stock. Dividends paid in shares of Company
common stock or rights to acquire shares of Company common stock
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will be added to and become a part of the Restricted Stock.
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Award No. 3
: $1,200,00 of performance cash units (“
Performance Units
”). This Award
is designed to reward you for the Company achieving established objectives for shareholder
return on both a relative and absolute basis. Subject to your continued employment through
the vesting date, this Award will vest at the end of a thirty-three month performance period
(commencing on April 1, 2010 and ending on December 31, 2012). At the end of the
performance period, the Performance Units will be adjusted based on the Company’s
Relative Total Shareholder Return
against the Performance Peer Group and S&P 500
Index and the
Absolute Total Shareholder Return
of the Company’s common stock over
the performance period. Should the performance threshold not be achieved at the end of the
performance period, you will not receive any payment in respect of the Performance Units.
For the 2010 grant, the Performance Units will be settled in cash as soon as practicable
following the vesting date (and in all events no later than the date that is two and
one-half (2 1/2) months after the end of the Company’s fiscal year in which the vesting date
occurs). At the time of vesting and payment of the Performance Units you will be required
to remit payment of the applicable income and employment tax withholding(s) to the Company,
which amounts may be withheld from the payment otherwise due in respect of the Performance
Units.
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You will have no rights of a stockholder with respect to the Performance Units, whether or
not the Performance Units vest and/or become payable hereunder.
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Please refer to the attached “Summary of Key Provisions” and “Performance Payout Tables” for
additional information regarding the vesting and settlement of the Performance Units, which
attachments are hereby incorporated into this agreement by this reference. To the extent of
any conflict between the terms and conditions of this agreement and the “Summary of Key
Provisions,” the terms and conditions of this agreement shall control.
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Notwithstanding anything herein to the contrary, upon a termination of your employment with the
Company as described in Sections 6(a), 6(b), 6(e), or 7(a) of the Employment Agreement, the Awards
will become immediately and fully vested and, with respect to the Option, exercisable upon such
termination of employment. Notwithstanding anything herein to the contrary, upon a termination of
your employment with the Company for Cause as described in Section 6(c) of the Employment
Agreement, (i) all of the Awards granted hereunder that have not vested and, in the case of the
Option, been exercised prior to the date of termination will be immediately forfeited to the
Company and (ii) you will be required to repay to the Company any portion of the Awards that vested
and/or were exercised prior to the date of such termination of employment.
Notwithstanding anything herein to the contrary, by signing below you are acknowledging that you
understand that the shares of the Company’s common stock issued and/or issuable to you under the
Awards have not been registered under the Securities Act of 1933, as amended, by reason of a
specific exemption therefrom. You acknowledge that the shares of the Company’s common stock issued
and/or issuable pursuant to the Awards are “restricted securities” under applicable U.S. federal
and state securities laws and that, pursuant to these laws, you must hold
8
the shares indefinitely unless they are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration and qualification
requirements is available. You acknowledge that the Company has no obligation to register or
qualify the shares for resale. You further acknowledge that if an exemption from registration or
qualification is available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the shares, and requirements
relating to the Company which are outside of your control, and which the Company is under no
obligation and may not be able to satisfy.
The existence of the Awards shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or
other changes in the Company’s capital structure or its business, any merger or consolidation of
the Company, any issue of bonds, debentures, preferred or prior preference shares ahead of or
affecting the Company’s common stock, the dissolution or liquidation of the Company, any sale or
transfer of all or any part of its assets or business or any other corporate act or proceeding,
whether of a similar character or otherwise. If the Company shall effect a subdivision or
consolidation of the Company’s common stock or other capital readjustment, the payment of a stock
dividend, or other increase or reduction of the number of shares of common stock outstanding,
without receiving compensation therefor in money, services or property, then the number, class or
series and per share price of common subject to the Awards shall be appropriately adjusted in such
a manner as to entitle you to receive upon exercise of the Option or settlement of the other
Awards, for the same aggregate cash consideration, the equivalent total number and class or series
of stock you would have received had you exercised your Option or has the other Awards been settled
in full immediately prior to the event requiring the adjustment.
In the event of changes in the outstanding common stock by reason of recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes in
capitalization occurring after the date of the grant of any Award and not otherwise provided for
herein, any outstanding Award shall be subject to adjustment by the Committee in its sole and
absolute discretion as to the number and price of stock or other consideration subject to such
Award. The issuance by the Company of stock of any class or series, or securities convertible
into, or exchangeable for, stock of any class or series, for cash or property, or for labor or
services either upon direct sale or upon the exercise of rights or warrants to subscribe for them,
or upon conversion or exchange of stock or obligations of the Company convertible into, or
exchangeable for, stock or other securities, shall not affect, and no adjustment by reason of such
issuance shall be made with respect to, the number, class or series, or price of shares of stock
then subject to outstanding portion of the Option or other Awards.
The Awards, to the extent not yet settled by the issuance of fully vested shares of the Company’s
common stock, shall not be transferable by you other than by will or under the laws of descent and
distribution. The Option shall be exercisable, during your lifetime, only by you. In the
discretion of the Committee, any attempt to transfer an Award other than under the terms hereof may
terminate the Award.
Any question concerning the interpretation of this agreement or the Awards, any adjustments
required to be made to the Awards hereunder, and any controversy that may arise with respect to
9
the Awards will be determined by the Committee in its sole and absolute discretion. All decisions
by the Committee shall be final, binding and conclusive.
The granting of the Awards does not constitute an employment contract, express or implied, nor
impose upon the Company any obligation to employ or continue to employ you. The right of the
Company to terminate your employment of any person shall not be diminished or affected by reason of
the fact that the Awards have been granted, and nothing herein shall interfere with or limit in any
way the right of the Company to terminate your employment at any time or for any reason not
prohibited by law.
We highly value your contribution and commitment to the Company’s success and believe that these
Awards provide you a financial incentive that aligns with the interests of the Company’s
shareholders. Please acknowledge your agreement to the terms and conditions of this agreement and
the Awards granted hereunder by signing below.
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Sincerely,
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/s/ Charles Parrish
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Charles Parrish
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Executive Vice President, General Counsel and Secretary
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ACCEPTANCE/ACKNOWLEDGMENT
By signing below, I verify my acceptance of the Awards and the terms and conditions of this
agreement and the Awards as set forth herein.
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May 6, 2010
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Gregory J. Goff
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Date
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10
