<SEC-DOCUMENT>0001193125-22-109443.txt : 20220419
<SEC-HEADER>0001193125-22-109443.hdr.sgml : 20220419
<ACCEPTANCE-DATETIME>20220419162307
ACCESSION NUMBER:		0001193125-22-109443
CONFORMED SUBMISSION TYPE:	DEFA14A
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20220419
DATE AS OF CHANGE:		20220419

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			VALERO ENERGY CORP/TX
		CENTRAL INDEX KEY:			0001035002
		STANDARD INDUSTRIAL CLASSIFICATION:	PETROLEUM REFINING [2911]
		IRS NUMBER:				741828067
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		DEFA14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-13175
		FILM NUMBER:		22835169

	BUSINESS ADDRESS:	
		STREET 1:		P.O. BOX 696000
		CITY:			SAN ANTONIO
		STATE:			TX
		ZIP:			78269-6000
		BUSINESS PHONE:		2103454524

	MAIL ADDRESS:	
		STREET 1:		P.O. BOX 696000
		CITY:			SAN ANTONIO
		STATE:			TX
		ZIP:			78269-6000
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEFA14A
<SEQUENCE>1
<FILENAME>d328756ddefa14a.htm
<DESCRIPTION>DEFA14A
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<Center><DIV STYLE="width:8.5in" align="left">
 <P STYLE="line-height:1.0pt;margin-top:0pt;margin-bottom:0pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>UNITED STATES </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>SECURITIES AND EXCHANGE COMMISSION </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Washington, D.C. 20549 </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>SCHEDULE 14A
</B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Proxy Statement Pursuant to Section&nbsp;14(a) of the </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>Securities Exchange Act of 1934 </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Filed by the
Registrant&nbsp;&nbsp;&#9746; </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Filed by a party other than the Registrant&nbsp;&nbsp;&#9744; </P>
<P STYLE="margin-top:24pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Check the appropriate box: </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="5%" VALIGN="top" ALIGN="left">&#9744;</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Preliminary Proxy Statement </P></TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="5%" VALIGN="top" ALIGN="left">&#9744;</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left"><B>Confidential, for Use of the Commission Only (as permitted by Rule
<FONT STYLE="white-space:nowrap">14a-6(e)(2))</FONT></B> </P></TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%" VALIGN="top" ALIGN="left">&#9744;</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Definitive Proxy Statement </P></TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="5%" VALIGN="top" ALIGN="left">&#9746;</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Definitive Additional Materials </P></TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
<TD WIDTH="5%" VALIGN="top" ALIGN="left">&#9744;</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Soliciting Material Under Rule <FONT STYLE="white-space:nowrap">14a-12</FONT> </P></TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>Valero Energy Corporation </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>(Name of Registrant as Specified In Its Charter) </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>(Name of Person(s) Filing Proxy Statement, if other than the Registrant) </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Payment of Filing Fee (Check the appropriate box): </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#9746;</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">No fee required. </P></TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#9744;</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Fee paid previously with preliminary materials. </P></TD></TR></TABLE>
<P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">&#9744;</TD>
<TD ALIGN="left" VALIGN="top"> <P STYLE=" margin-top:0pt ; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman; " ALIGN="left">Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules
<FONT STYLE="white-space:nowrap">14a-6(i)(1)</FONT> and <FONT STYLE="white-space:nowrap">0-11.</FONT> </P></TD></TR></TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="line-height:1.0pt;margin-top:0pt;margin-bottom:0pt;border-bottom:1px solid #000000">&nbsp;</P> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">To Stockholders: </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Institutional Shareholder Services (&#147;ISS&#148;) issued its Proxy Analysis and Voting Recommendations (the &#147;Report&#148;) on Valero Energy Corporation
(&#147;Valero&#148;, the &#147;Company&#148;, &#147;we&#148;, &#147;us&#148; or &#147;our&#148;) on April&nbsp;15, 2022.</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">We write to highlight the
Report&#146;s misleading and flawed analysis, leading ISS to make an unsubstantiated and unwarranted voting recommendation on the advisory vote on executive compensation based on a material error. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">While we were unable to engage with ISS prior to the issuance of their Report, we have submitted through their electronic system a summary of their errors and
flawed analysis and requested that ISS reconsider their recommendation and issue an updated analysis and recommendation to stockholders. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">ISS&#146;s
recommendation to vote against Valero&#146;s executive pay is based on the following misleading and flawed factors: </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>ISS values long-term incentives
(LTI) based upon a single trading day price, which leads to an erroneous conclusion that CEO <FONT STYLE="white-space:nowrap">LTI-award</FONT> value increased year-over-year: </B></P>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">The ISS Report points to a perceived 35% increase in CEO long-term incentive (LTI) value in 2021 as its primary
criticism in its recommendation against Valero&#146;s Say-on-Pay. </P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR style = "page-break-inside:avoid">
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<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">As described on pages 44 and 45 of Valero&#146;s 2022 proxy statement, there was <B>NO CHANGE</B> to the CEO LTI
target value or granted value from 2020 to 2021 (awards were granted at a target value of $11.34M in each of 2020 and 2021). The discrepancy between the value calculated by ISS in their analysis and the value awarded by Valero&#146;s Human Resources
and Compensation Committee (the &#147;Committee&#148;) and Valero&#146;s other independent directors (the &#147;Independent Directors&#148;) is attributed to a different valuation methodology used by ISS. Valero uses a
<FONT STYLE="white-space:nowrap">15-trading</FONT> day valuation methodology to determine the number of shares granted to executives to avoid stock price volatility. ISS uses a date of grant valuation methodology. The ISS methodology is responsible
for ISS&#146;s claim of a year-over-year 35% increase in the CEO&#146;s awarded LTI value (as referenced on page 25 of the ISS report), which is misleading and not reflective of the decision by the Committee and the Independent Directors to hold the
CEO LTI award value flat year-over-year. </P></TD></TR></TABLE> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Inappropriate selection of the ISS peer group and major inconsistencies with year-over-year
comparison and between direct refining peers: </B></P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR style = "page-break-inside:avoid">
<TD WIDTH="5%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">ISS added five new companies to Valero&#146;s peer group that are not relevant to Valero&#146;s positioning
within the refining and downstream oil and gas sector. The first four companies are significantly smaller exploration and production and/or downstream logistic companies with a median revenue base that is 58% lower than the median of the companies
used by ISS in last year&#146;s testing, despite Valero having 2021 revenues that were approximately 75% higher than 2020 revenues. The fifth company is a company outside of our industry which produces electric vehicles and has a market
capitalization that is more than 20 times larger than Valero&#146;s. These are flawed peer group additions and they have led to an unwarranted conclusion that Valero&#146;s executive pay and 2021 financial performance are misaligned.
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">The peer group selected for Valero by ISS is significantly different from the selected peer group in their 2020
analysis, resulting in a wild swing in the CEO peer median year to year as used for the ISS quantitative pay for performance analyses &#150; $14.6M (2020)&nbsp;to $10.7M (2021). This wild swing, regardless of performance, would result in a pay for
performance misalignment in almost any given year. Most significantly, the peer group selected by ISS for Valero is materially different from one of our most comparable refining peers, with a substantially similar business model, operations,
revenues, and market capitalization. The peer median for this peer is $18.3M, which is <B><U>71% higher than Valero&#146;s peer median</U></B>. When viewed in this context, the peer group selected by ISS for Valero is not appropriate.
</P></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
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<TD ALIGN="left" VALIGN="top"> <P ALIGN="left" STYLE=" margin-top:0pt ; margin-bottom:0pt; font-family:Times New Roman; font-size:10pt">When using Valero&#146;s peer group, as disclosed on page 46 in our proxy materials, as well as multiple
third-party proprietary analyses, Valero&#146;s 2021 pay and performance shows strong alignment relative to appropriate peer companies. </P></TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">ISS has consistently recommended in the past several years to vote in favor of Valero&#146;s Say-on-Pay. The dramatic shift to recommend against Valero&#146;s
Say-on-Pay this year is based on ISS&#146;s flawed analysis and not on any changes to Valero&#146;s executive compensation. Valero&#146;s CEO target total pay remained flat from 2020 to 2021, including the LTI grant award referenced above. The only
change made by the Committee and the Independent Directors to the 2021 executive compensation program was the addition of the Energy Transition modifier to performance shares to align long-term incentive pay with Valero&#146;s industry-leading <FONT
STYLE="white-space:nowrap">low-carbon</FONT> strategy, which has received overwhelming positive responses from stockholders. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">For the foregoing reasons,
we urge all stockholders to reject ISS&#146;s recommendation and to vote&nbsp;&#147;FOR&#148;&nbsp;on Valero&#146;s Say-on-Pay proposal. </P>
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