Valero
L.P.
Annual Bonus
Plan
Table of
Contents
Article
Topic
Page
1.
Definitions 2
2.
Administration
3
3.
Participation
4
4.
Determination of Bonus Awards
5
5.
Bonus
Targets 6
6.
Form of
Payment 6
7.
Miscellaneous Terms and
Provisions
7
INTRODUCTION
The Valero L.P.
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 GP, LLC 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.
Article 1 -
Definitions
For purposes of
the Plan, unless the context requires otherwise, the following
terms should have the meanings set forth below.
1.
"Affiliate" means (a) any
entity that, directly or indirectly through one or more
intermediaries, is controlled by or under common control with
Valero GP, LLC and (b) any entity in which Valero L.P. has a
significant equity interest, in each case determined by the
Committee.
2.
"Board"
means the Board of Directors of Valero GP, LLC.
3.
"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.
4.
"Committee" means the
Compensation Committee of the Board.
5.
"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.
6.
"Employee" means an employee
of the Company.
7.
"Fair
Market Value" means, with respect to any property (including,
without limitation, any 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 units on a given date
for purposes of the Plan shall be the closing sales prices of the
units 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.
8.
"Participant" means an
Employee who is selected by the Committee to participate in the
Plan.
9.
"Peer
Group" means those companies designated by the Committee as
comparable companies that will be benchmarked for determining the
Company's performance as measured by selected Performance
Criteria.
10.
"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.
11.
"Plan
Year" means Valero L.P.'s fiscal year.
12.
"Plan"
means the Valero L.P. Annual Bonus Plan.
Article 2 -
Administration
1.
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.
The
Committee is empowered to:
21.
Review
and approve all determinations relating to the eligibility of
Participants;
22.
Make
rules and regulations for the administration of the Plan which are
not inconsistent with the terms and provisions hereof;
23.
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;
24.
Review
and approve determinations and computations concerning the amounts
to which any Participant or his beneficiary is entitled under the
Plan; and
25.
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.
1.
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 spec
