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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION |
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Washington, D.C. 20549 |
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FORM 8-K |
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CURRENT REPORT |
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Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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Date of Report (Date of earliest event reported): January 27, 2005 |
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VALERO L.P. |
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(Exact name of registrant as specified in its charter) |
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| Delaware |
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1-16417 |
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74-2956831 |
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| (State or other jurisdiction |
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Commission File Number |
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(IRS Employee |
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| of incorporation) |
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Identification No.) |
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One Valero Way |
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San Antonio, Texas |
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78249 |
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(Address of principal executive offices) |
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(Zip Code) |
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Registrant's telephone number, including area code: (210) 345-2000
_________________
Check the appropriate box below if
the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to
Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant
to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
| Item 1.01 |
Entry into a Material Definitive Agreement.
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On January 27, 2005, the Compensation
Committee (the “Committee”) of the Board of Directors (the “Board”) of
Valero GP, LLC (the “General Partner”), the general partner of the general
partner of Valero L.P. (the “Registrant”) approved certain compensation
arrangements for each of the Registrant’s “named executive officers” (as
defined in Item 402(a)(3) of Regulation S-K). All of the Board’s independent
directors serve on the Committee.
Incentive Bonus. The Committee
approved incentive bonus awards for 2004 for each of the Registrant’s named executive
officers pursuant to the terms of the Valero Energy Corporation Annual Bonus Plan (the
“Bonus Plan”). The General Partner is a wholly owned subsidiary of Valero Energy
Corporation (the “Company”), and has adopted the Bonus Plan. To calculate bonus amounts for 2004, the Committee started with the target
percentage of base salary for each executive, and then adjusted the target upward or
downward depending on the Company’s level of achievement with respect to certain
financial performance goals. In addition, the Committee could further adjust bonus awards
upward or downward by up to 25 percent, based upon such individual factors as the
Committee deemed appropriate. The following three quantitative measures of financial
performance were used to determine incentive bonuses for 2004; the performance factors
were given equal weight in determining potential adjustments to target percentages of base
salary:
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return on investment (“ROI”) of the Company compared with the average ROI for
its peer group for the 12-month period ended September 30, 2004; |
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earnings
per share ("EPS") of the Company compared to a target EPS approved in advance by the
Compensation Committee; and |
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total shareholder return (“TSR”) of the Company compared to a target TSR
approved in advance by the Committee (TSR measures the growth in the daily average closing
price per share of the Company’s Common Stock during the month of November, including
the reinvestment of dividends, compared with the daily average closing price of the
Company’s Common Stock during the corresponding period in the prior year). |
The 2004 incentive bonuses were
payable in cash, but participants could elect to use 25 percent of their bonus award
to purchase, at fair market value, limited partnership units of the Registrant.
The Bonus Plan (which is being filed
as an exhibit to this Current Report) and the disclosures stated above contain the
material terms and conditions for participation in the compensation arrangements described
in this Item. In reliance on Instruction 1 to Item 601(b)(10) of Regulation S-K, the
Company is not filing each individual’s personal arrangement under the Bonus Plan.
| Item 9.01 |
Financial Statements and Exhibits. |
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* filed herewith
SIGNATURE
Pursuant to the requirements of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
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VALERO L.P.
By: Riverwalk Logistics, L.P.
its general partner |
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By: Valero GP, LLC
its general partner |
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| Date: February 1, 2005 |
By: /s/Bradley C. Barron
Name: Bradley C. Barron
Title: Secretary
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EXHIBIT INDEX
Exhibit 10.01
Valero Energy Corporation
Annual Bonus Plan
Adopted April 28, 2004
Table of Contents
INTRODUCTION
The Valero Energy Corporation Annual
Bonus Plan (hereinafter referred to as the “Plan”) has been established for the
purpose of providing bonus compensation to eligible designated employees of Valero Energy
Corporation and its Affiliates (hereinafter collectively referred to as the
“Company”). The Company intends and desires to create individual performance
incentive by providing bonus compensation awards based upon individual contributions to
Company profitability by eligible designated employees. Such bonus compensation is
intended to encourage levels of individual performance that will assure focus by employees
on continued Company profitability. It is further intended that when added to other forms
of compensation the bonus compensation awards will result in total compensation to
employees in amounts that are competitive when Company performance is compared to peer
organizations.
For purposes of the Plan, unless the
context requires otherwise, the following terms should have the meanings set forth below.
| 1.1 |
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“Affiliate” means (a) any entity that, directly or indirectly through one or
more intermediaries, is controlled by the Company and (b) any entity in which the Company
has a significant equity interest, in each case determined by the Committee. |
| 1.2 |
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"Board"
means the Board of Directors of the Company. |
| 1.3 |
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“Bonus Target” means a percentage established to represent a normal or average
bonus percentage determined through competitive survey analysis and based on each
position’s relative importance to the overall financial success of the Company. |
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"Committee"
means the Compensation Committee of the Board. |
| 1.5 |
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"Company"
means Valero Energy Corporation and its Affiliates. |
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“Discretionary Adjustment Factor” means the authority of the Committee to adjust
the Company’s total calculated bonus awards upward or downward by up to 25% based
upon such factors as the Committee deems appropriate, and ultimately to determine whether
to award a bonus to any individual. |
| 1.7 |
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"Employee"
means an employee of the Company. |
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“Fair Market Value” means, with respect to any property (including, without
limitation, any shares, units or other securities), the fair market value of such property
determined by such methods or procedures as shall be established from time to time by the
Committee. Notwithstanding the foregoing, unless otherwise determined by the Committee,
the Fair Market Value of Company shares on a given date for purposes of the Plan shall be
the mean of the high and low sales prices of the shares on the New York Stock Exchange
Consolidated Exchange as reported in the consolidation transaction reporting system on
such date or, if such Exchange is not open for trading on such date, on the next following
date when such Exchange is open for trading. |
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"Participant"
means an Employee who is selected by the Committee to participate in the Plan. |
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“Peer Group” means those companies in the petroleum and energy services industry
sector designated by the Committee as comparator companies which will be benchmarked for
determining the Company’s performance as measured by selected Performance Criteria. |
| 1.11 |
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“Performance Criteria” means those performance measures approved by the
Compensation Committee that determine the level of Bonus Target to be earned, subject to
the Discretionary Adjustment Factor. |
| 1.12 |
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"Plan
Year" means the Company's fiscal year. |
| 1.13 |
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"Plan"
means the Valero Energy Corporation Annual Bonus Plan. |
| 2.1 |
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The Plan shall be administered by the Committee. The Committee shall consist of no less
than three “Non-Employee Directors” (as defined in Rule 16b-3 under the
Securities Exchange Act of 1934, as amended from time to time). In the event the Committee
fails to meet the foregoing criteria, then additional non-employee persons shall be
appointed by the Board for purposes of administering this Plan so that the committee
administering this Plan shall be composed solely of three or more Non-Employee Directors. |
| 2.2 |
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The
Committee is empowered to: |
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2.21 |
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Review
and approve all determinations relating to the eligibility of Participants; |
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2.22 |
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Make
rules and regulations for the administration of the Plan which are not inconsistent
with the terms and provisions hereof; |
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Construe
all terms, provisions, conditions, and limitations of the Plan in good faith. All
such determinations shall be final and conclusive on all parties of
interest; |
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Review
and approve determinations and computations concerning the amounts to which any
Participant or his beneficiary is entitled under the Plan; |
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Select,
employ, and compensate from time to time consultants, accountants, attorneys and other
agents as the Committee may deem necessary or advisable for the proper and efficient
administration of the Plan. |
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The foregoing list of express powers is not intended to be either complete or exclusive,
but the Committee shall, in addition, have such powers, whether or not expressly
authorized, that it may deem necessary, desirable, advisable, or proper for the
supervision and administration of the Plan. Except as otherwise specifically provided
herein, the decision or judgment of the Committee on any question arising hereunder in
connection with the exercise of any of its powers shall be final, binding, and conclusive
upon all parties concerned. |
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The Committee shall have the responsibility of authorizing payment to each eligible
Participant and directing that such payment be disbursed by the Company. |
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The
Board or the Committee may, at any time, amend or terminate the Plan. Such
amendments or terminations may be made without the consent of the
Participants. |
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The designation of Employees of the Company as Participants under the Plan shall be
approved by the Committee, and no Employee of the Company will have the right to require
the Committee to make him or her a Participant or to allow him or her to remain a
Participant under the Plan. |
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During the course of the Plan Year, the Committee shall review and approve those
Performance Criteria which will measure the Company’s financial, shareholder, and/or
operational performance for the applicable Plan Year. The Performance Criteria will be
developed by Company management and submitted to the Committee for review and discussion.
The Committee may request Company management to provide threshold, target, and maximum
levels of performance for each Performance Criteria considered. |
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The Company’s performance may be evaluated on an absolute basis by determining the
Company’s achievement versus a budgeted or pre-established level of performance
approved by the Committee. Likewise, the Company’s performance may be evaluated by
comparing the Company’s performance against a Peer Group’s performance
achievement for the same Performance Criteria. |
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When the Performance Criteria are established and approved during the course of the Plan
Year, the Committee may elect to weight each of the Performance Criteria based upon the
strategic importance of the respective Performance Criteria in consideration of the
Company’s annual business plan. The weightings of the Performance Criteria may change
from one Plan Year to the next. |
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In determining the Company’s performance during a measurement period, Performance
Criteria will be utilized. These Performance Criteria may be modified, deleted, or added
to from one Plan Year to the next as determined by the Committee in its judgment and
discretion. |
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Following the close of the Plan Year, the Committee will evaluate the Company’s
performance compared to the Performance Criteria. The results of this evaluation will
serve as the basis for the determination of the amount of Bonus Target earned, which may
range from 0 percent to as much as 200 percent of Participants’ Bonus Targets. At
this time, the Committee has the authority to consider the addition to or subtraction from
the bonus of as much as 25 percent of the Bonus Target for additional considerations of
management and/or Company performance. The application of this discretionary adjustment is
formally referred to as the Discretionary Adjustment Factor and may be applied only by
discretionary judgment of the Committee. |
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The Committee will normally authorize the payment of bonus awards in the first quarter
following the close of the Plan Year. However, the Committee reserves the right to
accelerate the determination and payment of bonus awards prior to the completion of the
Plan Year based on the estimated or expected performance of the Company for such Plan
Year. |
| 5.1 |
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Bonus Targets for each position are established based upon competitive survey data and the
position’s relative importance to the overall financial success of the Company. The
Committee shall review and approve a Bonus Target for each officer. |
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Each bonus award shall be calculated by using the established Bonus Target for
Participants in the Plan, adjusted by the results of the Performance Criteria and the
Committee’s Discretionary Adjustment Factor. A qualitative evaluation of the
participant’s performance may also be used to adjust a participant’s bonus
award. The established Bonus Target, as adjusted, will serve as the norm for a range of
possible bonus awards. |
| 6.1 |
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Bonuses payable under the Plan shall be paid in the form of cash in whole or in part or,
if permitted under applicable NYSE and SEC rules and regulations, in the form of common
stock of the Company in whole or in part. Under the Plan, if permitted under applicable
NYSE and SEC rules and regulations, certain Participants may also be provided with an
election to purchase, at Fair Market Value, common stock of the Company utilizing a
pre-determined portion of their bonus. |
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With respect to Plan bonuses payable in part or in whole in shares of common stock of the
Company, a Participant may pay all or part of the amount of any taxes required to be
collected or withheld by the Company upon payment of the Participant’s bonus by
electing, before an established date prior to the time of payment of the bonus, to have
the Company withhold from the number of common shares otherwise deliverable under the
bonus a number of common shares having a Fair Market Value on the established date not
exceeding the amount of the tax payment. However, for this purpose, Federal Income Tax may
be withheld at the highest personal tax rate then in effect. |
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The Committee may approve a deferral of the payment of bonuses with payment in whole at a
later date or in installments over a period of time. The length of time of deferral or
installment period will be determined at the discretion of the Committee. |
| 7.1 |
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No Employee shall have any claim or right to be paid a bonus or any form of award, and the
award of a bonus will not be construed as giving a Participant the right to be retained in
the employ of the Company. Further, the Company expressly reserves the right at any time
to terminate the employment of any Participant free from any liability under the Plan. |
| 7.2 |
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The validity, construction, and effect of the Plan and any actions taken or relating to
the Plan shall be determined in accordance with the laws of the State of Texas and
applicable Federal law. |
| 7.3 |
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The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business and/or assets of
the Company, expressly to assume and agree to perform the Company’s obligations under
this Plan in the same manner and to the same extent that the Company would be required to
perform them if no such succession had taken place. As used herein, the
“Company” shall mean the Company as hereinbefore defined and any aforesaid
successor to its business and/or assets. |
| 7.4 |
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No member of the Board or the Committee, nor any officer or Employee of the Company acting
on behalf of the Board or the Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to the Plan, and
all members of the Board or the Committee and each and any officer or Employee of the
Company acting on their behalf shall, to the extent permitted by law, be fully indemnified
and protected by the Company in respect of any such action, determination, or
interpretation. |
