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(as amended and restated through
October 15, 2008)
Valero Energy
Corporation
Annual Bonus Plan
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Article
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Topic
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Page
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1
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2
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2
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3
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3
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4
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4
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Determination of Bonus Awards
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4
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5
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5
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6
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5
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7
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Miscellaneous Terms and Provisions
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6
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1
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 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. 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.
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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.
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1.2
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“Board” means the Board
of Directors of the Company.
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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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1.4
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“Committee” means the
Compensation Committee of the Board.
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1.5
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“Company” means Valero
Energy Corporation and its Affiliates.
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1.6
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“Discretionary Adjustment
Factor” means the authority of the Committee:
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(i) to
determine whether to award a bonus to an individual;
(ii) to
adjust the Company’s total calculated bonus awards upward or
downward by up to a maximum 25 percentage points or
25 percent of the amount of the Bonus Target earned, whichever
is higher.
(iii) to
adjust or award the bonus amounts payable to subgroups of
Participants ( e.g ., retail Participants, refining
Participants) in greater or lesser percentages than amounts to be
paid to other Participants;
all such
discretion to be based upon such factors as the Committee deems
appropriate.
2
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1.7
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“Employee” means an
employee of the Company.
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1.8
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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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1.9
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“Participant” means an
Employee who is selected by the Committee to participate in the
Plan.
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1.10
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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.
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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.
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1.12
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“Plan Year” means the
Company’s fiscal year.
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1.13
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“Plan” means the Valero
Energy Corporation Annual Bonus Plan.
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Article 2 —
Administration
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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.
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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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2.23
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Construe all terms, provisions,
conditions, and limitations of the Plan in good faith. All
such
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