DEF 14A of Valero Energy Corp/TX, Mar 19, 2020

DEF 14A of Valero Energy Corp/TX

Filed Mar 19, 2020 · FY20190001193125-20-078074

Open on EDGAR

  1. Committees of the Board

    Committees of the Board

  2. Committees of the Board

    | Our Board has three standing committees: | | The committees’ charters are available on our website at: www.valero.com (u) Investors (u) Corporate Governance (u) Governance Documents (u) Charters. | | | Audit Committee, | | | | Compensation Committee, and | | | | Nominating/Governance and Public Policy Committee. | |

  3. Committees of the Board

    AUDIT COMMITTEE The Audit Committee assists the Board in oversight of the integrity of Valero’s financial statements and public financial information, Valero’s compliance with legal and regulatory requirements, the qualifications and independence of Valero’s independent auditor, and the performance of Valero’s internal audit function and independent auditors. The Audit Committee is directly responsible for the appointment, compensation determination, retention, and oversight of the independent auditors retained to audit Valero’s financial statements. The committee is responsible for the audit fee negotiations and fee approval associated with Valero’s retention of the independent auditing firm. The committee annually reviews and evaluates the qualifications, performance, and independence of Valero’s independent auditing firm, and reviews and evaluates the lead partner of the independent auditor team. In conjunction with the mandated rotation of the audit firm’s lead engagement partner, the committee is involved in the selection of the audit firm’s new lead engagement partner. The committee has oversight responsibility regarding management’s annual assessment of, and report on, Valero’s internal control over financial reporting. The committee also oversees Valero’s initiatives and strategies respecting cybersecurity and information technology risks. The Audit Committee met five times in 2019. We make additional disclosures about the Audit Committee in this proxy statement under the caption “Risk Oversight” and in connection with “Proposal No. 2—Ratify Appointment of KPMG LLP as Independent Auditors.” Members of the Audit Committee are:

  4. Committees of the Board

    | • | Randall J. Weisenburger (Chair), |

  5. Committees of the Board

    | • | H. Paulett Eberhart, and |

  6. Committees of the Board

    | • | Stephen M. Waters. |

  7. Committees of the Board

    Notes: Audit Committee Financial Experts. The Board has determined that each of the following directors is an “audit committee financial expert” (as defined by the SEC) and that each is “independent” under applicable regulations/standards: (1) Mr. Weisenburger, (2) Ms. Eberhart, and (3) Mr. Waters. For more information regarding their experience, see “Proposal No. 1—Election of Directors—Nominees.” COMPENSATION COMMITTEE The Compensation Committee reviews and reports to the Board on matters related to compensation programs, policies, and strategies. The committee has direct responsibility to approve corporate goals and objectives relevant to CEO compensation, evaluate the CEO’s performance in light of those goals and objectives, and together with the other independent directors, determine and approve the CEO’s overall compensation. The committee also reviews and approves the corporate goals and objectives relevant to the compensation of other senior executives of Valero. The committee conducts periodic reviews of director compensation and makes recommendations to the full Board regarding the independent directors’ compensation. The committee reviews Valero’s employee compensation policies and programs, adopts and reviews Valero’s equity compensation plans, oversees the administration of Valero’s compensation plans, and approves amendments to and interpretations of Valero’s compensation plans. As disclosed further below under the caption “CEO Succession Planning,” the committee reviews and makes regular reports to the Board regarding management succession planning for the CEO and other senior executives. The committee also exercises oversight over Valero’s initiatives and strategies in the areas of diversity, inclusion, and human capital.

  8. Committees of the Board

    | 4 | |

  9. Committees of the Board

    The Compensation Committee’s duties are further described in “Compensation Discussion and Analysis” below and in the committee’s charter. The Compensation Committee met seven times in 2019. The Compensation Committee has, for administrative convenience, delegated authority to our Chief Executive Officer to make non-material amendments to Valero’s benefit plans and to make limited grants of equity awards to new hires who are not executive officers. Members of the Compensation Committee are:

  10. Committees of the Board

    | • | Rayford Wilkins, Jr. (Chair), |

  11. Committees of the Board

    | • | Philip J. Pfeiffer, and |

  12. Committees of the Board

    | • | Robert A. Profusek. |

  13. Committees of the Board

    Notes: The Compensation Committee Report for fiscal year 2019 appears in this proxy statement immediately preceding “Compensation Discussion and Analysis.” Compensation Committee Interlocks and Insider Participation: There are no compensation committee interlocks. None of the members of the Compensation Committee has served as an officer or employee of Valero or had any relationship requiring disclosure by Valero under Item 404 of the SEC’s Regulation S-K, which addresses related-person transactions. NOMINATING/GOVERNANCE AND PUBLIC POLICY COMMITTEE The Nominating/Governance and Public Policy Committee assists the Board in its oversight responsibilities with respect to corporate governance, Board membership, climate and environmental matters, public policy trends, and corporate responsibility and reputation. The committee met three times in 2019. The committee’s specific purposes are to:

  14. Committees of the Board

    | • | identify individuals qualified to become Board members, consistent with criteria approved by the Board; |

  15. Committees of the Board

    | • | recommend to the Board director nominees to stand for election at the annual meetings of stockholders; |

  16. Committees of the Board

    | • | develop and recommend a set of corporate governance principles applicable to Valero; |

  17. Committees of the Board

    | • | assist the Board in identifying, evaluating, and monitoring public policy trends and social and political issues that could impact Valero’s business activities and performance; |

  18. Committees of the Board

    | • | assist the Board in oversight of Valero’s health, safety, and environmental matters as well as climate-related risks and opportunities; |

  19. Committees of the Board

    | • | consider and make recommendations for our strategies relating to corporate responsibility, political contributions, and reputation management; and |

  20. Committees of the Board

    | • | oversee and lead the Board’s and the committees’ annual self-evaluation of performance. |

  21. Committees of the Board

    Following the committee’s assessment of the pertinent qualifications, skills, independence, and experience of Eric D. Mullins as a potential director, the committee recommended to the full Board the election of Mr. Mullins as a director, and he was elected to the Board on Jan. 23, 2020. Members of the committee are:

  22. Committees of the Board

    | • | Deborah P. Majoras (Chair), |

  23. Committees of the Board

    | • | Kimberly S. Greene |

  24. Committees of the Board

    | • | Eric D. Mullins * |

  25. Committees of the Board

    | • | Donald L. Nickles. |

  26. Committees of the Board

    | Mr. Mullins joined the committee in 2020.* |

  27. Committees of the Board

    Notes: The committee recommended to the Board the directors listed in this proxy statement in Proposal No. 1 as nominees for election as directors at the Annual Meeting. The committee also considered and recommended the appointment of a Lead Director to preside at meetings of the independent directors without management, and recommended assignments for the Board’s committees. The full Board approved the recommendations of the committee and adopted resolutions approving the slate of director nominees to stand for election at the Annual Meeting, the appointment of a Lead Director, and Board committee assignments.

  28. Committees of the Board

    | 2020 PROXY STATEMENT | 5 |

  29. Selection of Director Nominees

    Selection of Director Nominees The Nominating/Governance and Public Policy Committee solicits recommendations for Board candidates from a number of sources, including our directors, our officers, and third-party research. In addition, the Committee will consider candidates submitted by stockholders when submitted in accordance with the procedures described in this proxy statement under the caption “Miscellaneous—Stockholder Communications, Nominations, and Proposals.” The Committee will consider all candidates identified through the processes described above and will evaluate each of them on the same basis. The level of consideration the Committee will extend to a stockholder’s candidate will be commensurate with the quality and quantity of information about the candidate that the nominating stockholder makes available to the Committee. Proxy Access. Our amended and restated bylaws permit a stockholder, or a group of up to 20 stockholders, that has owned at least three percent of our outstanding Common Stock for at least three years to nominate and include in our proxy statement candidates for our Board, subject to certain requirements. Each stockholder, or group of stockholders, may nominate candidates for director, up to a limit of the greater of two or 20 percent of the number of directors on the Board. Any nominee must meet the qualification standards listed in our bylaws. The procedures for nominating a candidate pursuant to our proxy access provisions are described in this proxy statement under the caption “Miscellaneous—Stockholder Communications, Nominations, and Proposals.” EVALUATION OF DIRECTOR CANDIDATES Our Corporate Governance Guidelines vest the Nominating/Governance and Public Policy Committee with responsibility for reviewing the composition of the Board as well as the qualifications of the individual members of the Board and its various committees. This review includes consideration of the directors’ independence, character, judgment, integrity, diversity, age, skills (including financial literacy) and experience in the context of the overall needs of the Board. The Committee’s assessments include consideration of:

  30. Selection of Director Nominees

    | • | applicable independence standards; |

  31. Selection of Director Nominees

    | • | skills and experience necessary for service on the Board’s committees; and |

  32. Selection of Director Nominees

    | • | skills and expertise to serve the needs of the Board as a whole. |

  33. Selection of Director Nominees

    Each candidate must meet certain minimum qualifications, including:

  34. Selection of Director Nominees

    | • | strong ethical principles and integrity; |

  35. Selection of Director Nominees

    | • | independence of thought and judgment; |

  36. Selection of Director Nominees

    | • | the ability to dedicate sufficient time, energy, and attention to the performance of duties, taking into consideration the candidate’s service on other public company boards; and |

  37. Selection of Director Nominees

    | • | skills and expertise complementary to those of the existing Board members; in this regard, the Board will consider its need for operational, managerial, financial, governmental affairs, energy, sustainability, technology, human resources, or other expertise. |

  38. Selection of Director Nominees

    The Committee also considers:

  39. Selection of Director Nominees

    | • | diversity concepts such as race, gender, national origin, age, and geography; |

  40. Selection of Director Nominees

    | • | the ability of a prospective candidate to work with the interpersonal dynamics of the Board and contribute to the Board’s collaborative culture. |

  41. Selection of Director Nominees

    Based on this initial evaluation, the Committee will determine whether to interview a proposed candidate and, if warranted, will recommend that one or more of its members, other members of the Board, and/or senior officers, as appropriate, interview the candidate. Following this process, the Committee ultimately determines its list of nominees and recommends the list to the full Board for consideration and approval. Diversity. Although the Board does not establish specific goals with respect to diversity, the Board’s overall diversity is a significant consideration in the director nomination process. For this year’s election, the Board has nominated 11 individuals who bring valuable diversity to the Board in terms of gender, ethnicity, industries represented, experience, age, and tenure. The nominees range in age from 53 to 73. Five of this year’s nominees (50% of our independent directors) represent diversity of ethnicity or gender. Three of the nominees have served on the Board for less than five years. Refreshment. We do not set term limits for our directors. As stated in Article I of our Corporate Governance Guidelines, the Board believes that directors who have served on the Board for an extended period of time are able to provide valuable insight into the

  42. Selection of Director Nominees

    | 6 | |

  43. Selection of Director Nominees

    operations and future of Valero based on their experience with and understanding of Valero’s history, policy, and objectives. As an alternative to term limits, the Board believes that its evaluation and nomination processes serve as an appropriate check on each Board member’s continued effectiveness. Retirement Policy. Our directors are subject to a retirement policy (set forth in Article I of our Corporate Governance Guidelines). Under that policy, a director may serve on our Board until he or she reaches the age of 75. A director who turns 75 may serve the remainder of his or her term of office, which shall be deemed to end at the next annual meeting of stockholders at which directors are elected.

  44. Information Concerning Nominees and Directors

    Information Concerning Nominees and Directors Each of the following is a nominee for election as a director at the Annual Meeting. There is no family relationship among any of the executive officers or nominees for director. There is no arrangement or understanding between any director or any other person pursuant to which the director was or is to be selected a director or nominee.

  45. Information Concerning Nominees and Directors

    | Directors | Director Since | Age as of 12/31/2019 | | Joseph W. Gorder, Chairman of the Board and Chief Executive Officer | 2014 | 62 | | H. Paulett Eberhart | 2016 | 66 | | Kimberly S. Greene | 2016 | 53 | | Deborah P. Majoras | 2012 | 56 | | Eric D. Mullins | 2020 | 57 | | Donald L. Nickles | 2005 | 71 | | Philip J. Pfeiffer | 2012 | 72 | | Robert A. Profusek | 2005 | 69 | | Stephen M. Waters | 2008 | 73 | | Randall J. Weisenburger | 2011 | 61 | | Rayford Wilkins, Jr. | 2011 | 68 |

  46. Information Concerning Nominees and Directors

    | 2020 PROXY STATEMENT | 13 |

  47. Summary of Board Skills and Attributes

    Summary of Board Skills and Attributes Our directors have an effective mix of backgrounds, knowledge, and skills. The table below provides a summary of certain collective competencies and attributes of the Board nominees. The lack of an indicator for a particular item does not mean that the director does not possess that skill or experience. We look to each director to be knowledgeable in all of these areas. Rather, the indicator represents that the item is a core competency that the director brings to the Board. Our directors have a wide range of additional skills and experience not mentioned above, which they bring to their role as directors to Valero’s benefit, including experience in the energy industry, and the technology/cybersecurity, consumer goods, human capital, corporate governance, and nonprofit leadership areas. Our directors’ skills and experience are further described in the directors’ biographies on the following pages.

  48. Summary of Board Skills and Attributes

    | 14 | |

  49. Nominees

    Nominees

  50. Nominees

    | Age: 62 Director Since: 2014 Chairman | JOSEPH W. GORDER Featured experience, qualifications, and attributes: • Global energy business leadership at Valero Energy Corporation as Chairman of the Board and Chief Executive Officer (since 2014), and President (from 2012 to Jan. 2020). • Refining and marketing operations experience as Valero’s President and Chief Operating Officer beginning in 2012. Prior to that, Mr. Gorder was Executive Vice President and Chief Commercial Officer (beginning in 2011), and led Valero’s European operations from its London office. Before that, he held several leadership positions with Valero and Ultramar Diamond Shamrock Corporation (UDS) with responsibilities including marketing & supply and corporate development. Other public company boards (current): none Prior public company boards (in last five years): Anadarko Petroleum Corporation (NYSE: APC), Valero Energy Partners LP (NYSE: VLP) |

  51. Nominees

    | Age: 66 Director Since: 2016 Committee: Audit Independent | H. PAULETT EBERHART Featured experience, qualifications, and attributes: • Business leadership as Board Chair and CEO of HMS Ventures (since 2014), a privately held business involved with technology services and the acquisition and management of real estate. From 2011 through March 2014, she served as President and CEO of CDI Corp. (NYSE: CDI), a provider of engineering and information technology outsourcing and professional staffing services. She served as a consultant to CDI from April 2014 through December 2014. Ms. Eberhart also served as Board Chair and CEO of HMS Ventures from January 2009 until January 2011. • Information technology, management, accounting, and finance expertise at Invensys Process Systems, Inc. (Invensys), a process automation company (President and CEO from 2007 to 2009), and Electronic Data Systems Corporation (EDS) (1978 to 2004), an information technology and business process outsourcing company. She was President of Americas of EDS (2003 to March 2004), and served as President of Solutions Consulting at EDS (2002 to 2003). Ms. Eberhart is a Certified Public Accountant. • Public company governance expertise through her service as Lead Director for another public company. Other public company boards (current): LPL Financial Holdings Inc. (NASDAQ: LPLA) Prior public company boards (in last five years): Anadarko Petroleum Corporation (NYSE: APC), CDI Corp. (NYSE: CDI), Cameron International Corporation (NYSE: CAM), Ciber, Inc. (NYSE: CBR), Advanced Micro Devices, Inc. (NASDAQ: AMD). |

  52. Nominees

    | 2020 PROXY STATEMENT | 15 |

  53. Nominees

    | Age: 53 Director Since: 2016 Committee: Nom/Gov & Public Policy Independent | KIMBERLY S. GREENE Featured experience, qualifications, and attributes: • Energy business leadership at Southern Company Gas as Board Chair, Chief Executive Officer and President (since June 2018). She served as Executive Vice President and Chief Operating Officer of the Southern Company (NYSE: SO) from 2014 to May 2018. Prior to that, she was President and CEO of Southern Company Services, Inc. Ms. Greene began her career at Southern Company in 1991 and held positions of increasing responsibility in the areas of engineering, strategy, finance, and wholesale marketing, including Senior Vice President and Treasurer of Southern Company Services, Inc. from 2004 to 2007. She rejoined Southern Company in 2013. • Finance expertise and regulatory business management experience as Executive Vice President and Chief Generation Officer of Tennessee Valley Authority (TVA). While at TVA (2007 to 2013), she served as Chief Financial Officer, Executive Vice President of financial services and Chief Risk Officer, as well as Group President for strategy and external relations. • Organizational leadership experience through service on the boards of the American Gas Association, The Alliance Theater (Atlanta), Metro Atlanta Chamber of Commerce, and Morehouse School of Medicine. Other public company boards (current): none Prior public company boards (in last five years): none |

  54. Nominees

    | Age: 56 Director Since: 2012 Committee: Nom/Gov & Public Policy (Chair) Independent | DEBORAH P. MAJORAS Featured experience, qualifications, and attributes: • Public company leadership and governance experience as Chief Legal Officer and Secretary of The Procter & Gamble Company (P&G) (NYSE: PG) since 2010. She joined P&G in 2008 as Senior Vice President and General Counsel. • Government, regulatory, and legal experience as Chair of the U.S. Federal Trade Commission from 2004 until 2008. From 2001 to 2004, Ms. Majoras was Deputy Assistant Attorney General in the U.S. Department of Justice, Antitrust Division. Ms. Majoras joined the law firm of Jones Day in 1991, and became a partner in 1999. • Organizational leadership experience through service on the boards of the United States Golf Association, The Christ Hospital Health Network, Legal Aid Society of Greater Cincinnati, and Westminster College. Other public company boards (current): none Prior public company boards (in last five years): none |

  55. Nominees

    | 16 | |

  56. Nominees

    | Age: 57 Director Since: 2020 Committee: Nom/Gov & Public Policy Independent | ERIC D. MULLINS Featured experience, qualifications, and attributes: • Energy business leadership as the Managing Director and Co-Chief Executive Officer of Lime Rock Resources, a company that he co-founded in 2005, which acquires, operates, and improves lower-risk oil and natural gas properties. Mr. Mullins oversees all strategic, financial, and operational aspects of the Lime Rock Resources funds. From May 2011 through October 2015, he also served as the Co-Chief Executive Officer and Chairman of the Board of Directors of LRE GP, LLC, the general partner of LRR Energy, L.P., an oil and natural gas company. • Management, accounting, and finance expertise as a Managing Director in the Investment Banking Division of Goldman Sachs where he led numerous financing, structuring, and strategic advisory transactions in the division’s Natural Resources Group. He has served as Chair of the Audit Committee for Anadarko Petroleum Corporation and as a member of the Audit Committee for PG&E Corporation. • Organizational leadership through service on the board of trustees of the Baylor College of Medicine. Other public company boards (current): PG&E Corporation (NYSE: PCG) Prior public company boards (in last five years): Anadarko Petroleum Corporation (NYSE: APC) |

  57. Nominees

    | Age: 71 Director Since: 2005 Committee: Nom/Gov & Public Policy Independent | DONALD L. NICKLES Featured experience, qualifications, and attributes: • Government affairs leadership and experience as U.S. Senator from Oklahoma for 24 years (retired 2005). He also served in the Oklahoma State Senate for two years. During his tenure as U.S. Senator, he was Assistant Republican Leader for six years, Chairman of the Republican Senatorial Committee, and Chairman of the Republican Policy Committee. He served as Chairman of the Budget Committee and as a member of the Finance and Energy and Natural Resources Committees. • Business leadership as current Chairman and Chief Executive Officer of The Nickles Group, a Washington-based consulting and business venture firm formed in 2005. • Organizational leadership through service on the advisory board of the Oklahoma Medical Research Foundation and the board of directors of Central Union Mission (Washington, DC). Other public company boards (current): Board of Trustees of Washington Mutual Investors Fund (AWSHX) Prior public company boards (in last five years): none |

  58. Nominees

    | 2020 PROXY STATEMENT | 17 |

  59. Nominees

    | Age: 72 Director Since: 2012 Committee: Compensation Independent | PHILIP J. PFEIFFER Featured experience, qualifications, and attributes: • Business leadership, legal and human capital expertise in the San Antonio office of Norton Rose Fulbright LLP, where he was Partner-in-Charge for 25 years and led the office’s labor and employment practice (he presently serves Of Counsel). Through his service with the firm for almost 50 years, Mr. Pfeiffer assisted employers in traditional management–union matters, complex civil rights matters, employment discrimination cases, affirmative action compliance, employment torts, alternative dispute resolution, employment contracts, and ERISA litigation. • Organizational leadership through board service and affiliations with Southwest Research Institute, United Way of San Antonio and Bexar County, San Antonio Medical Foundation, The Children’s Hospital of San Antonio Foundation, Alamo Area Council of Boy Scouts, and the Cancer Therapy and Research Center. Other public company boards (current): none Prior public company boards (in last five years): none |

  60. Nominees

    | Age: 69 Director Since: 2005 Lead Director Committee: Compensation Independent | ROBERT A. PROFUSEK Featured experience, qualifications, and attributes: • Business leadership and capital markets expertise as a partner of the Jones Day law firm where Mr. Profusek chairs the firm’s global mergers and acquisitions practice. His law practice focuses on mergers, acquisitions, takeovers, restructurings, and corporate governance matters. • Public company governance experience and expertise through service as Valero’s Lead Director and the Lead Director of two other public companies. He is a frequent speaker regarding corporate takeovers and corporate governance, has authored or co-authored numerous articles, has testified before Congress and the SEC about takeover and compensation-related matters, and is a frequent guest commentator on CNBC, CNN, and Bloomberg TV. • Organizational leadership through service on the board of directors of the Legal Aid Society of New York City. Other public company boards (current): Kodiak Sciences Inc. (NASDAQ: KOD), CTS Corporation (NYSE: CTS) Prior public company boards (in last five years): none |

  61. Nominees

    | 18 | |

  62. Nominees

    | Age: 73 Director Since: 2008 Committee: Audit Independent | STEPHEN M. WATERS Featured experience, qualifications, and attributes: • Financial business leadership as the managing partner of Compass Partners Capital since 2018, the managing partner of Compass Partners Advisers LLP and its predecessor partnerships (since 1996), Managing Partner of Compass Partners Capital (since 2018), and Chief Executive of Compass Partners European Equity Fund from 2005 to 2013. • Finance and global experience from his service in several capacities at Morgan Stanley, including Co-Head of the Mergers and Acquisitions department from 1990 to 1992, Co-Chief Executive Officer of Morgan Stanley Europe from 1992 to 1996, and as a member of its worldwide Firm Operating Committee from 1992 to 1996. From 1974 to 1988, he was with Lehman Brothers, co-founding the Mergers and Acquisitions department in 1977, becoming a partner in 1980, and serving as Co-Head of the Mergers and Acquisitions department from 1985 to 1988. • Organizational leadership through service on the board of trustees of the United States Naval Institute Foundation. Other public company boards (current): Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) Prior public company boards (in last five years): none |

  63. Nominees

    | Age: 61 Director Since: 2011 Committee: Audit (Chair) Independent | RANDALL J. WEISENBURGER Featured experience, qualifications, and attributes: • Global business leadership and capital markets and finance expertise as the managing member of Mile 26 Capital, LLC, an investment fund based in Greenwich, Connecticut (since 2014), and service as Executive Vice President and Chief Financial Officer of Omnicom Group Inc. (NYSE: OMC) from 1998 through 2014. Prior to joining Omnicom, he was a founding member of Wasserstein Perella and a former member of First Boston Corporation. At Wasserstein Perella, Mr. Weisenburger specialized in private equity investing and leveraged acquisitions, and in 1993, he became President and CEO of the firm’s private equity subsidiary. • Organizational leadership through service on the board of directors of Acosta Sales and Marketing, and Corsair Components, Inc.; and the Board of Overseers of the Wharton School of Business at the University of Pennsylvania. Other public company boards (current): Carnival Corporation and Carnival plc (NYSE: CCL) Prior public company boards (in last five years): none |

  64. Nominees

    | 2020 PROXY STATEMENT | 19 |

  65. Nominees

    | Age: 68 Director Since: 2011 Committee: Compensation (Chair) Independent | RAYFORD WILKINS, JR. Featured experience, qualifications, and attributes: • Global business leadership and technology and finance expertise as CEO of Diversified Businesses of AT&T Inc. (NYSE: T), where he was responsible for international investments, AT&T Interactive, AT&T Advertising Solutions, customer information services, and the consumer wireless initiative in India. He retired from AT&T at the end of March 2012. Mr. Wilkins held several other leadership positions at AT&T and its predecessor companies, including Group President and CEO of SBC Enterprise Business Services and President and CEO of SBC Pacific Bell. • Organizational leadership through service on the Advisory Council of the McCombs School of Business at the University of Texas at Austin. Other public company boards (current): Morgan Stanley (NYSE: MS), Caterpillar Inc. (NYSE: CAT) Prior public company boards (in last five years): none |

  66. Nominees

    For information regarding the nominees’ Common Stock holdings, compensation, and other arrangements, see “Information Regarding the Board of Directors,” “Beneficial Ownership of Valero Securities,” “Compensation Discussion and Analysis,” and “Compensation of Directors” elsewhere in this proxy statement.

  67. Nominees

    | 20 | |

  68. Nominees

    IDENTIFICATION OF EXECUTIVE OFFICERS The following table lists Valero’s executive officers (for purposes of Rule 3b-7 under the Securities Exchange Act of 1934), described below using their current titles. As used in this proxy statement, our “named executive officers” are the five persons listed in the Summary Compensation Table. There is no arrangement or understanding between any executive officer listed below or any other person under which the executive officer was or is to be selected as an officer.

  69. Nominees

    | | Officer Since | Age as of 12/31/2019 | | Joseph W. Gorder, Chief Executive Officer and Chairman of the Board | 2003 | 62 | | R. Lane Riggs, President and Chief Operating Officer | 2011 | 54 | | Jason W. Fraser, Executive Vice President and General Counsel | 2015 | 51 | | Gary K. Simmons, Executive Vice President and Chief Commercial Officer | 2011 | 55 | | Donna M. Titzman, Executive Vice President and Chief Financial Officer | 2001 | 56 |

  70. Nominees

    Mr. Gorder. Mr. Gorder’s biographical information appears above under the caption “Information Concerning Nominees and Directors—Nominees.” Mr. Riggs was elected President and Chief Operating Officer on Jan. 23, 2020. He previously served as Executive Vice President and Chief Operating Officer (since Jan. 1, 2018), and prior to that as Executive Vice President–Refining Operations and Engineering (since 2014), and Senior Vice President–Refining Operations (since 2011). He has held several leadership positions with Valero overseeing refining operations, crude and feedstock supply, and planning and economics. Mr. Riggs also served on the board of directors of Valero Energy Partners GP LLC (the general partner of Valero Energy Partners LP (NYSE: VLP)) from 2014 to 2019. Mr. Fraser was elected Executive Vice President and General Counsel effective Jan. 1, 2019. Prior to that, he served as Senior Vice President overseeing Valero’s Public Policy & Strategic Planning, Governmental Affairs, Investor Relations, and External Communications functions (from May 2018). From Nov. 2016 to May 2018, Mr. Fraser served as Vice President-Public Policy & Strategic Planning, and from May 2015 to Nov. 2016, he served in London as Vice President-Europe, overseeing Valero’s European commercial businesses. Prior to his service in London, he served in Valero’s San Antonio headquarters as Senior Vice President & Deputy General Counsel of Valero Services, Inc. (2013 to 2015). Prior to that, he held various leadership roles with Valero, including Senior Vice President-Specialty Products of Valero Marketing and Supply Company. Mr. Simmons was elected Executive Vice President and Chief Commercial Officer on Jan. 23, 2020. He previously served as Senior Vice President–Supply, International Operations and Systems Optimization (since May 2014), and prior to that as Vice President–Crude and Feedstock Supply and Trading (2012 to 2014), and Vice President–Supply Chain Optimization (2011 to 2012). Mr. Simmons has held many leadership positions with Valero including Vice President and General Manager of Valero’s Ardmore and St. Charles refineries. Ms. Titzman has served as Executive Vice President and Chief Financial Officer since May 3, 2018. From 2013 to May 2018, she served as Senior Vice President and Treasurer having responsibility for banking, cash management, customer credit, investment management, and risk management. She has also served as Chief Financial Officer and director of Valero Energy Partners GP LLC (the general partner of Valero Energy Partners LP (NYSE: VLP)) from 2013 to 2019. She has held various leadership positions with Valero before being elected Treasurer in 1998, and Vice President and Treasurer in 2001. Ms. Titzman is a Certified Public Accountant.

  71. Nominees

    | 2020 PROXY STATEMENT | 21 |

  72. Nominees

    BENEFICIAL OWNERSHIP OF VALERO SECURITIES SECURITY OWNERSHIP OF MANAGEMENT AND DIRECTORS This table lists the beneficial ownership of our Common Stock as of Feb. 1, 2020, by all directors and nominees, the executive officers named in the Summary Compensation Table, and the directors and executive officers of Valero as a group. No executive officer, director, or nominee for director owns any class of equity securities of Valero other than Common Stock. None of the shares listed below are pledged as security. The address for each person is One Valero Way, San Antonio, Texas 78249.

  73. Nominees

    | Name of Beneficial Owner | Shares Held (1) | Shares Under Options (2) | Total Shares | Percent of Class | | H. Paulett Eberhart | 4,571 | — | 4,571 | * | | Jason W. Fraser | 47,734 | — | 47,734 | * | | Joseph W. Gorder | 449,811 | 139,897 | 589,708 | * | | Kimberly S. Greene | 5,720 | — | 5,720 | * | | Deborah P. Majoras | 19,548 | — | 19,548 | * | | Eric D. Mullins | — | — | — | * | | Donald L. Nickles | 26,033 | — | 26,033 | * | | Philip J. Pfeiffer | 20,914 | — | 20,914 | * | | Robert A. Profusek | 37,864 | — | 37,864 | * | | R. Lane Riggs | 182,752 | 2,667 | 185,419 | * | | Gary K. Simmons | 128,982 | 1,750 | 130,732 | * | | Donna M. Titzman | 204,076 | 16,623 | 220,699 | * | | Stephen M. Waters | 9,521 | — | 9,521 | * | | Randall J. Weisenburger | 55,274 | — | 55,274 | * | | Rayford Wilkins, Jr. | 32,198 | — | 32,198 | * | | Directors and current executive officers as a group (15 persons) | 1,224,998 | 160,937 | 1,385,935 | * |

  74. Nominees

    | Indicates that the percentage of beneficial ownership does not exceed 1% of the class.* |

  75. Nominees

    | Includes shares allocated under the Thrift Plan and shares of restricted stock. The balance shown for Mr. Waters includes 500 shares held in a trust for which Mr. Waters is a beneficiary.(1) |

  76. Nominees

    | Represents shares of Common Stock that may be acquired under outstanding stock options currently exercisable and that are exercisable within 60 days from Feb. 1, 2020.(2) |

  77. Nominees

    | 22 | |

  78. Alignment of Executive Pay to Company Performance

    | | Balance compensation over short- and long-term | | | Facilitate retention of top executive talent |

  79. Alignment of Executive Pay to Company Performance

    | Element | Form | | Key Characteristics | | Base Salary | Cash | • | Takes into consideration scope and complexity of the role, peer market data, experience of the incumbent, and individual performance | | | | • | Aligned with competitive practices in order to support recruitment and retention of top talent | | Annual Bonus Plan | Performance-Based Cash | • | Variable component of annual pay focused on achievement of short-term annual financial, operational and strategic objectives that are critical drivers for safe and reliable operations, returns to stockholders, and the disciplined use of capital | | Long-term Incentive Program | Performance Shares (50%) | • | Measures relative Total Shareholder Return (TSR) against ten-company Performance Peer group across a three-year period | | | | • | Incentivizes stockholder returns | | | | • | Value delivered is driven by performance relative to relevant peers in industry | | | Restricted Stock (50%) | • | Vests 1/3 per year over three years | | | | • | Value delivered is driven by absolute performance of company stock | | | | • | Aids in retention of critical talent |

  80. Target Total Pay

    | | | Salary ($) | Target Annual Incentive Bonus ($) (1) | Target Long- term Incentives (Stock Awards) ($) (2) | Target Total Pay ($) | | Gorder | CEO | 1,745,000 | 2,792,000 | 10,990,000 | 15,527,000 | | Titzman | CFO | 725,000 | 580,000 | 2,500,000 | 3,805,000 | | Riggs | COO | 840,000 | 840,000 | 3,360,000(3) | 5,040,000 | | Fraser | General Counsel | 600,000 | 480,000 | 2,250,000 | 3,330,000 | | Simmons | SVP | 650,000 | 422,500 | 1,500,000 | 2,572,500 |

  81. Target Total Pay

    | Represents Salary multiplied by the executive’s target bonus percentage as described below under the heading, “Annual Incentive Bonus.”(1) |

  82. Target Total Pay

    | Represents Salary multiplied by the executive’s target long-term incentive percentage as described below under the heading, “Long Term Incentive Awards.”(2) |

  83. Target Total Pay

    | Excludes a $1 million restricted stock award associated with the Long-Term Incentive Agreement with Mr. Riggs as described below under the heading, “Long Term Incentive Awards.”(3) |

  84. Target Total Pay

    | • | The values disclosed in the Summary Compensation Table for long-term incentives are calculated in accordance with SEC disclosure requirements and can differ substantially from the values calculated for Target Total Pay, which are used for administering compensation decisions. Most notably, the disclosed values for performance shares in the Summary Compensation Table represent three different tranches from three unique awards (granted in 2017, 2018, and 2019) which include adjustments for predicted performance (see footnote (2) of the Summary Compensation Table for further details), whereas the value of performance shares in Target Total Pay represents the full 2019 award grant which was administered based on the average closing stock price for the 15 trading days ending the day before the grant. For example, in 2019 the value disclosed for performance shares within the long-term incentive column of the Summary Compensation Table for Mr. Gorder was $3.1 million higher than the comparable Target Total Pay value as administered by the Compensation Committee ($8.58 million versus $5.49 million). Refer to the “Grants of Plan-based Awards” tables and associated footnotes in this proxy statement for more detailed information regarding the 2019 long-term incentive grants. |

  85. Target Total Pay

    Other factors contributing to differences between the disclosed values in the Summary Compensation Table and the values shown within Target Total Pay include the actual annual bonus amount paid versus the target annual bonus value (as discussed further below under the caption, "Annual Incentive Bonus") and, for restricted stock grants, the difference between the stock price associated with the grant date fair value of the award (as required for the Summary Compensation Table disclosure) and the stock price used to determine the number of restricted shares granted in order to achieve the target value (average closing stock price for 15 days prior to grant as described previously).

  86. Target Total Pay

    | Base salary plus target bonus plus target long-term incentives value.* |

  87. Target Total Pay

    | Current Compensation Comparator Group of 12 peers as approved by the Compensation Committee in October 2019 and as described in the “Benchmarking Data” section of this document. Peer company Dow, Inc. is excluded from the analysis as 3-year and 5-year pay data is not available. Pay comparisons are drawn against the “Top-5” group of executives at Valero and the peers, inclusive of the CEO, the CFO, and the three highest-paid other executive officers.(1) |

  88. Target Total Pay

    | Represents “realizable” pay as reported in company annual proxy statements and includes: salaries; annual bonuses earned; long-term incentive awards that have vested or been exercised; the increase/decrease in long-term incentive awards that are still outstanding; and one-off payments like severance to outgoing executives and sign-on awards for incoming executives.(2) |

  89. Adoption of Compensation Governance Best Practices

    | • | Incentive compensation (annual bonus and long-term incentives) represents the majority (ranging from 75 percent to 89 percent) of the targeted direct compensation of our named executive officers. |

  90. Adoption of Compensation Governance Best Practices

    | • | We target 50 percent of the long-term incentive value granted to our named executive officers to be awarded in the form of performance shares tied to relative TSR performance. |

  91. Adoption of Compensation Governance Best Practices

    | • | We use multiple performance metrics to motivate achievements that complement one another and that contribute to the long-term creation of stockholder value. |

  92. Adoption of Compensation Governance Best Practices

    | • | Incentives are balanced between absolute performance goals (rewarding the achievement of pre-established goals) and relative measures (linking the incentives to surpassing the performance of our peers). |

  93. Adoption of Compensation Governance Best Practices

    | • | We have maximum payout ceilings on both our annual bonus opportunities and our performance shares. |

  94. Adoption of Compensation Governance Best Practices

    | • | Valero’s revenues and market capitalization are within a reasonable range of the median revenues and market capitalization of the peer group of companies within our industry against which we benchmark our executives’ pay, reflecting that we make pay comparisons in a size-appropriate fashion. |

  95. Adoption of Compensation Governance Best Practices

    | • | We benchmark against the median pay levels of the peer group for each of base pay, annual bonus, long-term incentives, and total target pay. |

  96. Adoption of Compensation Governance Best Practices

    | • | We have eliminated all change-in-control gross-ups for potential parachute excise taxes and maintain a policy against the implementation of change-in-control arrangements that contain gross-ups. |

  97. Adoption of Compensation Governance Best Practices

    | • | We have a policy stipulating that grants of performance shares contain “double trigger” terms and conditions for vesting in a change-of-control context such that performance shares will vest on a partial, pro rata basis following termination of employment (rather than vesting automatically in full upon the change of control). |

  98. Adoption of Compensation Governance Best Practices

    | • | Our long-term incentive program mandates that stock options cannot be re-priced without stockholder approval. |

  99. Adoption of Compensation Governance Best Practices

    | • | Our Compensation Committee retains the services of an independent executive compensation consultant that provides services directly to the Committee. |

  100. Adoption of Compensation Governance Best Practices

    | • | Our Board has approved a limitation on the amount of equity compensation that may be paid to our non-employee directors in any year. |

  101. Dialogue With Stockholders

    | • | Within the 2020 Annual Incentive Bonus program, the Strategic segment includes an expanded array of strategic initiatives and projects, which will be assessed annually. Included are financial, operational, organizational and ESG-related initiatives, which contribute to the overall success of the company during the year and support the company’s long-term strategy. The change is more fully described under the caption, “Annual Incentive Bonus.” |

  102. Dialogue With Stockholders

    | • | The 2020 Performance Shares component of the Long-term Incentives program has been expanded to include a returns-based performance measure (Return on Invested Capital) in addition to continued utilization of a relative TSR performance measure. The change is more fully described under the caption, “Long-term Incentive Awards.” |

  103. Administration of Executive Compensation Programs

    Administration of Executive Compensation Programs Our executive compensation programs are administered by our Board’s Compensation Committee. The Committee is composed of three independent directors from our Board. They do not participate in our executive compensation programs. Policies adopted by the Committee are implemented by our compensation and benefits staff. In 2019, the Committee retained Exequity LLP as an independent compensation consultant for executive and director compensation matters. The nature and scope of the consultant’s services are described below under the caption, “Compensation Consultant Disclosures.” BENCHMARKING DATA The Compensation Committee uses peer group compensation data to assess benchmarks of base salary, annual incentive compensation, and long-term incentive compensation. The Committee uses the Compensation Comparator Group (further described below) to benchmark compensation for our named executive officers. This reference is sometimes referred to in this proxy statement as “compensation survey data” or “competitive survey data.”

  104. Compensation Comparator Group

    Compensation Comparator Group The Compensation Comparator Group (applicable to 2019 salary and bonus decisions) comprises the following companies that engage in U.S. domestic oil and gas operations:

  105. Compensation Comparator Group

    | BP p.l.c. | Marathon Oil Corporation | | Chevron Corporation | Marathon Petroleum Corporation | | Exxon Mobil Corporation | Murphy Oil Corporation | | Hess Corporation | Phillips 66 | | HollyFrontier Corporation | Royal Dutch Shell plc |

  106. Compensation Comparator Group

    The Compensation Comparator Group is relevant to our business because we compete with the member companies for talent at every level from entry-level employees to senior executives. We believe that our pay comparisons are size-appropriate because the median revenues and market capitalization of the Compensation Comparator Group are both within a reasonable range of Valero’s revenues and market capitalization for the period covered in the pay study. Both were below Valero’s revenues and market capitalization. Our understanding of this group’s compensation programs and levels is vitally important in order to remain competitive in the market for employee talent. Given Valero’s size and complexity, our employees at all levels would be qualified candidates for similar jobs at any of the companies included in this group. The Compensation Comparator Group was approved by the Compensation Committee in October 2018 when 2019 executive pay levels were initially considered and established according to the annual pay review process as described further under the caption, “Process and Timing of Compensation Decisions.”

  107. Compensation Comparator Group

    | 2020 PROXY STATEMENT | 35 |

  108. Compensation Comparator Group

    In October 2019, the Compensation Committee considered and approved changes to the Compensation Comparator Group, which was utilized in establishing 2019 LTI targets and awards as described further under the caption, “Long-term Incentive Awards.” The Compensation Committee established the new group after considering (i) companies with geographic proximity to Valero; (ii) companies within an appropriate and comparable size based on revenues and market capitalization, (iii) companies generally employing typical U.S.-based approaches to executive pay; and (iv) companies outside of the oil and gas industry that have similar organizational complexity, operational scope, and that perform similarly to Valero. Changes to the Compensation Comparator Group include the elimination of BP p.l.c., Royal Dutch Shell plc, Hess Corporation, Marathon Oil Corporation, and Murphy Oil Corporation; the addition of ConocoPhillips, EOG Resources, Inc., Halliburton Company, Occidental Petroleum Corporation, Dow Inc., Ford Motor Company, and General Motors Company. Marathon Petroleum Corporation, Phillips 66, Chevron Corporation, Exxon Mobil Corporation, and HollyFrontier Corporation were retained as peer companies. Our compensation and benefits staff, under supervision of the Compensation Committee, develops recommendations for base salary, bonuses, and other compensation arrangements using the compensation survey data with assistance from Exequity. Our use of the data is consistent with our philosophy of providing executive compensation and benefits that are competitive with companies that we compete with for executive talent. In addition, the competitive compensation survey data and analyses assist the Compensation Committee in assessing our pay levels and targets relative to companies in the Compensation Comparator Group. See “Elements of Executive Compensation—Benchmarking Competitive Pay Levels.”

  109. Performance Peer Group

    Performance Peer Group We also use a peer group for purposes of determining the relative performance of Valero’s total stockholder return (TSR). We use this relative TSR metric in our performance shares incentive program. The 2019 performance peer group was selected based on the members’ engagement in U.S. domestic refining and marketing operations or due to the members’ strong stock price correlation to Valero. Our use of different peer groups for compensation and performance is based on our belief that when measuring business performance, companies with a similar business model should be included. But we also recognize that comparing the performance of Valero’s generally non-integrated operations with those of upstream and integrated oil companies can result in anomalies due to the mismatch in how similar industry-specific events can impact companies with these varying business models. In addition, there are relatively few companies in our business against which clear comparisons can be drawn, rendering a peer group composition more challenging than in most industries. In October 2019, the Compensation Committee established a peer group for TSR measurement applicable to the 2019 awards of performance shares (which have TSR measurement periods ending in 2020, 2021, and 2022). Removed from the peer group for the 2019 awards were BP p.l.c. and Royal Dutch Shell plc, while ConocoPhillips, EOG Resources, Inc., and Occidental Petroleum Corporation were added. Also added was the Energy Select Sector SPDR Fund (XLE) index, which includes 30 energy companies and serves as a proxy for stock price performance of the energy sector and includes companies with which we compete for capital. The change in the index price across the designated performance periods will be measured as TSR. The Compensation Committee believes that the revised performance peer group represents an improved group of companies for making head-to-head performance comparisons in a competitive operating environment that is primarily characterized by US-based downstream refining operations. Valero is included in this peer group when results are calculated. In addition to Valero, the performance peer group for the 2019 awards is composed of the following 10 members.

  110. Performance Peer Group

    | ConocoPhillips | Marathon Petroleum Corporation | | CVR Energy Inc. | Occidental Petroleum Corporation | | Delek US Holdings | PBF Energy Inc. | | EOG Resources, Inc. | Phillips 66 | | HollyFrontier Corporation | Energy Select Sector SPDR Fund (XLE) |

  111. Performance Peer Group

    PROCESS AND TIMING OF COMPENSATION DECISIONS The Compensation Committee has reviewed and approved all compensation targets and payments for the named executive officers each year in conjunction with Valero’s annual strategic planning meeting (October or November). The Chief Executive Officer evaluates the performance of the other executive officers and develops individual recommendations based upon the competitive survey data. The Chief Executive Officer and the Committee may make adjustments to the recommended compensation based upon an assessment of an individual’s performance and contributions to Valero. The compensation for the Chief Executive Officer is reviewed by the Compensation Committee and recommended to the Board’s independent directors for approval. This assessment is based on the

  112. Performance Peer Group

    | 36 | |

  113. Performance Peer Group

    competitive survey data and other factors described in this Compensation Discussion and Analysis, and adjustments may be made based upon the independent directors’ evaluation of the Chief Executive Officer’s performance and contributions. We evaluate the total compensation opportunity offered to each executive officer at least once annually. The Compensation Committee establishes the target levels of annual incentive and long-term incentive compensation for the current fiscal year based upon its review of competitive market data provided by Exequity. The Compensation Committee also reviews competitive market data for annual salary rates for executive officer positions for the next fiscal year and recommends new salary rates to become effective the next fiscal year. The Compensation Committee may, however, review salaries or grant long-term incentive awards at other times during the year because of new appointments or promotions. Our Compensation Committee does not time the grants of long-term incentive awards around Valero’s release of undisclosed material information. In January 2020 the Compensation Committee approved a change to the timing of the annual grant of long-term incentive awards to executive officers. In 2019 and prior years, annual grants were administered in the fourth quarter in conjunction with the annual review of executive compensation. Beginning in 2020, annual grants of long-term incentive awards are now administered in the first quarter to better align with market practices and to more closely coincide with base salary changes, which typically occur effective January 1. The 2020 annual long-term incentive awards for executive officers were administered in February 2020.

  114. Elements of Executive Compensation

    | • | to provide compensation payouts that are tied to the performance of internal and external metrics both on a relative and absolute basis; |

  115. Elements of Executive Compensation

    | • | Valero’s attainment of key financial performance measures; |

  116. Elements of Executive Compensation

    | • | long-term stock price performance (both absolute and relative to our peer group); and |

  117. Elements of Executive Compensation

    The following graphics summarize the relative target pay mix of base salary and incentive compensation for 2019 for our named executive officers. When setting executive compensation, the Compensation Committee considers the amount and form of compensation payable to an executive officer. The Committee seeks to achieve an appropriate balance between immediate cash rewards for the achievement of company and personal objectives and long-term incentives that align the interests of our officers with those of our stockholders. The size of each element is based on the assessment of competitive market practices as well as company and individual performance. The Compensation Committee analyzes Total Target Pay from a market competitive perspective, and then evaluates each component relative to its market reference. The Committee believes that making a significant portion of an executive officer’s incentive compensation contingent on long-term stock price performance more closely aligns the executive officer’s interests with those of our stockholders. Because we place a large amount of Total Target Pay at risk in the form of variable pay (annual bonus and long-term incentives), the Committee generally does not adjust current compensation based upon realized gains or losses from prior incentive awards or current stock holdings. For example, we normally will not change the size of a target long-term incentive grant in a particular year solely because of Valero’s stock price performance during the immediately preceding years. The Compensation Committee recognizes that the refining and marketing industry is volatile and strives to maintain a measure of predictability consistent with a substantial reliance on variable compensation structures in furtherance of a fundamental pay-for-performance philosophy. INDIVIDUAL PERFORMANCE AND PERSONAL OBJECTIVES The Compensation Committee evaluates the individual performance of, and performance objectives for, our named executive officers. Performance and compensation for our Chief Executive Officer are reviewed and approved by the Board’s independent directors with recommendations from the Compensation Committee. For officers other than the Chief Executive Officer, individual performance and compensation are evaluated by the Compensation Committee with recommendations from our Chief Executive Officer. Individual performance and objectives are specific to each officer position. Criteria used to measure an individual’s performance may include assessment of objective criteria (e.g., execution of projects within budget parameters, improving an operating unit’s profitability, or timely completing an acquisition or divestiture) as well as qualitative factors such as the executive’s ability to lead, ability to communicate, and successful adherence to Valero’s stated values (i.e., commitment to safety, commitment to the environment, commitment to our communities, commitment to our employees, and commitment to our stakeholders). There are no specific weights assigned to these various elements of performance. BASE SALARIES Base salaries for our named executive officers are approved by the Compensation Committee after taking into consideration median practices for comparable roles among the peer companies. The Compensation Committee also considers the recommendations of the

  118. Elements of Executive Compensation

    Chief Executive Officer for officers other than the Chief Executive Officer. The base salary and all other compensation of the Chief Executive Officer are reviewed and approved by the independent directors of the Board. Base salaries are reviewed annually and may be adjusted to reflect promotions, the assignment of additional responsibilities, individual performance, or the performance of Valero. Salary changes resulting from the annual review are typically made effective on January 1. Salaries are also periodically adjusted to remain competitive with companies within the compensation survey data. An executive’s compensation typically increases in relation to his or her responsibilities within Valero. ANNUAL INCENTIVE BONUS We believe that the achievement of short-term financial and operational performance objectives is critical to creating long-term stockholder value. The annual incentive bonus is designed to incentivize executives to achieve industry-leading results as reflected through business-critical financial, operational, and strategic performance measures. We continue as the premier operator in the fuels manufacturing and marketing industry through disciplined execution of our strategic plan and daily focus on operational excellence by our employees and management team. The annual incentive bonus design guides and incentivizes this daily focus with particular emphasis on ensuring safety and protection of our employees, contractors and communities. Our additional focus on operating our plants reliably at the lowest cost allows us to maximize profitability in all margin environments. The Compensation Committee considers the following to determine bonuses for each officer:

  119. Elements of Executive Compensation

    | • | the position of the named executive officer, which is used to determine a targeted percentage of base salary that may be awarded as incentive bonus; |

  120. Elements of Executive Compensation

    | • | pre-established performance objectives that include a quantitative financial performance goal (Financial Performance Goal), operational performance goals (Operational Performance Goals), and qualitative goals and objectives including the effective use of capital (Strategic Company Performance Goals) for the completed fiscal year; and |

  121. Operational Performance Goals

    Operational Performance Goals The Operational Performance Goals considered for our annual incentive bonuses, as established and approved by the Compensation Committee in the first quarter of the performance year, are measured against:

  122. Operational Performance Goals

    | • | Valero’s achievements in the areas of health, safety, and environmental stewardship including environmental scorecard incidents, process safety incidents, reportable spills, environmental management system scores, and health & safety management system scores; |

  123. Operational Performance Goals

    | • | Valero’s achievements in improving refining competitiveness through improved mechanical availability; and |

  124. Operational Performance Goals

    | • | Valero’s achievements in managing refinery operating costs. |

  125. Operational Performance Goals

    | 40 | |

  126. Operational Performance Goals

    These Operational Performance Goals are set at levels deemed to be challenging to achieve, but reasonably attainable with strong performance. We believe that these measures appropriately reflect key business objectives of Valero. After completion of the fiscal year, each of the Operational Performance Goals is measured against Valero’s actual performance in these areas and the minimum, target, and maximum levels established by the Compensation Committee. Valero’s performance score for 2019 for this category was 85.30 percent (versus a target score of 40.00 percent). For additional details on Valero’s 2019 performance versus targeted amounts for our Operational Performance Goals, see the “Annual Incentive Bonus Performance Goals” table that follows in this section.

  127. Strategic Company Performance Goals

    Strategic Company Performance Goals Valero’s Strategic Company Performance Goals were established in the first quarter of the 2019 performance year by the Chief Executive Officer and approved by the Compensation Committee. Included in these goals for 2019 was a qualitative capital-based performance measure assessed by the Compensation Committee through Return on Capital Employed (ROCE) and a qualitative assessment by the Compensation Committee of cost control initiatives. After completion of the fiscal year, the Strategic Company Performance Goals were evaluated as a whole. Significant achievements in this area for 2019 included: (i) the creation of long-term stockholder value and the return of cash to stockholders through a quarterly cash dividend increase from $0.80 per share to $0.90 per share and $0.78 billion of common stock repurchases; (ii) the return of 43% of adjusted net cash provided by operating activities to stockholders through dividends and stock buybacks which is in line with management’s payout goal; (iii) the successful completion of capital projects to expand our market reach and capture margins including the completion of an alkylation unit at our Houston refinery and of the Central Texas Pipelines and Terminals project; (iv) the successful execution of Valero’s capital expenditures plan, which totaled $2.6 billion for 2019; (v) ROCE achievement of 6.9%; and (vi) identified cost savings and expense management totaling $177 million. Valero’s performance score for 2019 for this category was 20.0 percent (versus a target score of 20.0 percent). In January 2020, the Compensation Committee approved changes to the Strategic Company Performance Goals component of the 2020 Annual Incentive Bonus program. This component now includes evaluation by the Compensation Committee of accomplishments related to a comprehensive array of strategic initiatives and projects (detailed in the table below), which contribute to the overall success of the company during the year and support the company’s long-term strategy.

  128. Strategic Company Performance Goals

    | Strategic Area | | Initiative/Project/Objective | | Returns to Stockholders | • | Return cash to stockholders through dividends and stock buybacks | | Disciplined Use of Capital | • | Balanced utilization of sustaining and growth capital vs target | | Operational Excellence | • | Execution of capital projects and turnarounds | | | • | Margin improvement and market expansion | | | • | Cost management and expense control | | Organizational Excellence | • | Strategic communications | | | • | Succession planning and leadership development | | | • | Innovation | | | • | Public policy | | Environmental, Social and Governance (ESG) Efforts & Improvement | • | Environmental stewardship | | | • | Sustainability | | | • | Diversity and inclusion | | | • | Compliance | | | • | Corporate citizenship and community |

  129. Strategic Company Performance Goals

    | 2020 PROXY STATEMENT | 41 |

  130. Valero’s Achievement of Performance Goals for 2019

    Valero’s Achievement of Performance Goals for 2019 The following table details the performance targets and final results of Valero’s achievements in 2019 for each of the sub-components of the bonus program’s Financial Performance Goal, Operational Performance Goals, and Strategic Goals.

  131. Valero’s Achievement of Performance Goals for 2019

    | Annual Incentive Bonus Performance Goals and Achievement | | | | | | | | | | Component | Weighting | Minimum | Target | Maximum | Achieved in 2019 | Bonus Percent Earned (1) | | Financial Performance Goal | | | | | | | | | I. | EPS,adjusted ($/share) | 40.00% | $1.66 | $6.65 | $13.30 | $5.88 | 39.78% | | Operational | | | | | | | | | II. | Health,Safety, and Environmental (2) | 13.33% | 0.0% | 112.5% | 225.0% | 221.87% | 29.58% | | III. | MechanicalAvailability (3) | 13.33% | 95.6 | 96.2 | 97.6 | 97.0 | 25.72% | | IV. | RefiningCash Operating Expense Management (4) ($/EDC) | 13.34% | $145 | $120 | $111 | $110 | 30.00% | | | subtotal | 40.00% | | | | subtotal | 86.30% | | Strategic | | | | | | | | | V. | CompanyGoals and Objectives (5) | 20.00% | | | | | 20.00% | | Total | | 100.00% | | | | | 145.08% |

  132. Valero’s Achievement of Performance Goals for 2019

    Footnotes:

  133. Valero’s Achievement of Performance Goals for 2019

    | Represents performance achieved in 2019 and component percent weighting.(1) |

  134. Valero’s Achievement of Performance Goals for 2019

    | Consists of 14 separately weighted health, safety, and environmental metrics across Valero’s three business units with an aggregated performance score opportunity ranging from 0% to 225%. Performance measures include environmental scorecard incidents, process safety incidents, reportable spills, environmental management system scores, and health & safety management system scores. Performance “achieved” was at 98.6% of maximum.(2) |

  135. Valero’s Achievement of Performance Goals for 2019

    | Using the Mechanical Availability scoring from the industry-standard Solomon Associates survey in which “Target” represents median performance.(3) |

  136. Valero’s Achievement of Performance Goals for 2019

    | Using the Cash Operating Expense per EDC (Equivalent Distillation Capacity) metric as reported in the industry-standard Solomon Associates survey in which “Target” represents median performance (lower is better).(4) |

  137. Valero’s Achievement of Performance Goals for 2019

    | As established by the Compensation Committee in consultation with the CEO, and includes a qualitative assessment of progress against strategic objectives, use of capital and cost control initiatives. Performance “achieved” was at maximum. Changes to the Strategic segment for 2020 are described more fully under the caption, “Strategic Company Performance Goals” in this section.(5) |

  138. Valero’s Achievement of Performance Goals for 2019

    The final 2019 bonus amounts paid to our named executive officers were determined as a function of: (i) Valero’s performance as measured against the financial, operational, and strategic performance goals, and (ii) the Committee’s assessment of the named executive officers’ individual performance in 2019. The following table summarizes the 2019 bonus amounts paid to our named executive officers:

  139. Valero’s Achievement of Performance Goals for 2019

    | | Gorder | Titzman | Riggs | Fraser | Simmons | | Base Salary (1) | $1,745,000 | $725,000 | $840,000 | $600,000 | $650,000 | | Bonus Target Percentage (2) | 160% | 80% | 100% | 80% | 65% | | Bonus Target Amount (3) | $2,792,000 | $580,000 | $840,000 | $480,000 | $422,500 | | Bonus Percentage Achieved (4) | 145.08% | 145.08% | 145.08% | 145.08% | 145.08% | | Earned Target Incentive Bonus (5) | $4,050,634 | $841,464 | $1,218,672 | $696,384 | $612,963 | | Bonus Amount Paid (6) | $4,100,000 | $842,000 | $1,250,000 | $700,000 | $625,000 |

  140. Valero’s Achievement of Performance Goals for 2019

    Footnotes:

  141. Valero’s Achievement of Performance Goals for 2019

    | Base salary is the officer’s base salary at December 31, 2019.(1) |

  142. Valero’s Achievement of Performance Goals for 2019

    | Bonus target as a percentage of base salary.(2) |

  143. Valero’s Achievement of Performance Goals for 2019

    | 42 | |

  144. Valero’s Achievement of Performance Goals for 2019

    Footnotes (cont.):

  145. Valero’s Achievement of Performance Goals for 2019

    | Determined by multiplying “Bonus target percentage” times “Base salary.”(3) |

  146. Valero’s Achievement of Performance Goals for 2019

    | Valero’s performance score for “Bonus percentage achieved” was 145.08% based on results of the Annual Incentive Bonus Performance Goals detailed in the previous table.(4) |

  147. Valero’s Achievement of Performance Goals for 2019

    | Determined by multiplying “Bonus target amount” times “Bonus percentage achieved.”(5) |

  148. Valero’s Achievement of Performance Goals for 2019

    | As disclosed in the Summary Compensation Table. The actual amount paid was determined based on: (i) Valero’s performance as measured against financial, operational, and strategic goals, and (ii) the Committee’s assessment of the named executive officers’ individual performance in 2019.(6) |

  149. Valero’s Achievement of Performance Goals for 2019

    LONG-TERM INCENTIVE AWARDS We provide stock-based, long-term compensation to our executive officers through our stockholder-approved equity plan. The plan provides for a variety of stock and stock-based awards, including restricted stock which vests over a period (at least three years) determined by the Compensation Committee, and performance shares that vest (become non-forfeitable) contingent upon Valero’s achievement of an objective performance goal. For 2019, the mix of long-term incentives awarded to our named executive officers was split evenly, on a share value basis, between grants of restricted stock and awards of performance shares. We believe that these awards create a powerful link between the creation of stockholder value and executive pay delivered. In addition, we believe that the balance between absolute performance alignment through restricted shares, and the relative performance objectives underscored by the relative TSR performance shares, is appropriate. In order for executives to fully realize their targeted opportunities, Valero must both perform well and beat the stock price performance of companies in the Performance Peer Group listed above under the caption “Administration of Executive Compensation Programs—Benchmarking Data—Performance Peer Group.” For each officer, a target amount of long-term incentives is established and is expressed as a percentage of base salary. In establishing award sizes, the Compensation Committee makes primary reference to median peer company grant levels and makes individualized determinations of award sizes based on additional factors such as: each executive’s experience and contribution to company success, internal parity, and management succession. In addition, an executive’s targeted award may be adjusted based upon the Compensation Committee’s determination of the officer’s individual performance, which (for officers other than the Chief Executive Officer) takes into consideration the recommendation of the Chief Executive Officer.

  150. Performance Shares

    Performance Shares For 2019, performance share targets represent 50 percent of each executive officer’s long-term incentive target on a share value basis. Performance shares are payable in shares of Common Stock on the vesting dates of the performance shares. Shares of Common Stock are earned with respect to vesting performance shares only upon Valero’s achievement of TSR objectives (measured in relation to the TSR of our peers). Shares not earned in a given performance period expire and are forfeited. Performance shares are also subject to potential forfeiture if an executive terminates his or her employment prior to vesting. The performance shares awarded in 2019 are subject to vesting in three increments, based upon our TSR compared to our peer group during one-year, two-year, and three-year performance periods. Performance periods measure TSR based on the average closing stock prices for the final 15 trading days of December at the beginning and end of the performance periods, including dividends. At the end of each performance period, our TSR for the period is compared to the TSR of our performance peer group. Shares of Common Stock are awarded based on Valero’s TSR performance versus the peers’ TSR. If Valero’s relative TSR ranking equals the median of the peer group, 100% of the target shares are earned; if Valero ranks in the first or second position among the peers, 200% of the target shares will be earned; if Valero ranks in the last or second-to-last position among the peers, 0% of the target shares will be earned. TSR performance ranking between the second and second-to-last positions will result in payouts determined by straight-line interpolation (unless Valero’s TSR rank equals the median in which case 100% of the target shares will be earned). Additional shares of Common Stock may be earned based on the accumulated value of dividends paid on Valero’s Common Stock during the pertinent performance period. The amount of accumulated dividends is multiplied by the earned percentage payout (if any) for the performance shares, and the product is divided by the fair market value of the Common Stock on the performance shares’ vesting date. The resulting amount is paid in a whole number of shares of Common Stock. The value of the dividends credited to the outstanding performance shares is paid to participants only to the extent that the underlying performance shares earn shares of Common Stock, based on Valero’s TSR performance, and is paid (in shares of Common Stock) only when the underlying performance shares vest. Upon vesting, officers can designate up to 50% of the after-tax vested shares of Common Stock to be delivered in cash. If a cash payment is elected, the total number of after-tax shares to be delivered is multiplied by the fair market value of the Common Stock on

  151. Performance Shares

    | 2020 PROXY STATEMENT | 43 |

  152. Performance Shares

    the performance shares’ vesting date, and the product is multiplied by the cash payment election percentage designated by the award recipient. The resulting amount is paid in cash, with the remainder paid in shares of Common Stock. As shown in the following table, the vesting outcomes for Valero’s previously granted and outstanding Performance Shares which had performance periods ending on December 31, 2019 effectively demonstrates the alignment of Valero’s long-term incentive program to the interests of Valero’s stockholders.

  153. Performance Shares

    | Performance Shares Grant (Year & Segment) | Final Percentile TSR Ranking versus Peers | Vesting Percentage of Target (Target = 100%) (Range of 0% to 200%) | | 2016 (final of 3 segments) | 3 of 9 | 200.0% (1) | | 2017 (2nd of 3 segments) | 3 of 9 | 166.7% | | 2018 (1st of 3 segments) | 2 of 9 | 200.0% |

  154. Performance Shares

    | The 2016 TSR performance measurement scale provided for maximum payout (200% of target) if Valero’s TSR performance was in the 75(th) percentile or above of performance within the peer group. This differs from the 2017 and 2018 TSR performance measurement scales which match the 2019 measurement scale as described previously in this section and which require a TSR rank of 1(st) or 2(nd) position within the peer group for maximum payout.(1) |

  155. Performance Shares

    In 2020, the Compensation Committee approved new metrics for purposes of the Performance Shares component of the 2020 Annual Long-term Incentive program. In addition to continued utilization of a performance measure based on TSR performance relative to a peer group, the performance shares will also include a performance measure based on Valero’s Return on Invested Capital (ROIC) over a three-year period versus a target. The performance shares awards for 2020 retain the primary design elements as previously described in this section, but will now have the performance-based vesting criteria segmented such that 75% of the target award will be measured against Valero’s relative TSR versus a peer group performance measure and the remaining 25% measured against Valero’s ROIC versus a target performance measure.

  156. Restricted Stock

    Restricted Stock Restricted stock targets represent the remaining 50 percent of each executive officer’s long-term incentive target on a share value basis. Restricted stock is subject to forfeiture if an executive terminates his or her employment prior to vesting (other than upon retirement and other than following a permitted voluntary termination following a change in control). Dividends are paid on shares of restricted stock as and when dividends are declared and paid on Valero’s outstanding common stock. Our mix of long-term incentives provides an appropriate balance between the pay-for-performance attributes of performance shares and the equity alignment and retentive qualities of restricted shares. This mix also generally aligns with market practices, and thus supports recruitment and retention of top-quality executive talent. The Compensation Committee considers and grants long-term incentive awards to our officers and certain other employees annually; grants were made previously during the fourth quarter in conjunction with the last regularly scheduled meeting of the Compensation Committee for the year. The performance shares and restricted stock components of our executive officers’ 2019 long-term incentive awards were granted in October 2019. Beginning in 2020, long-term incentive awards to our officers will be granted annually during the first quarter of the year in order to better align annual pay decisions and awards across salary, target bonus, and long-term incentives, and to align with competitive practices. Long-Term Incentive Agreement with Mr. Riggs. On Nov. 2, 2019, Mr. Riggs’s operations responsibilities were expanded to oversee not only refining operations but also Valero’s mid-stream and renewable fuels operations. In order to reward Mr. Riggs for his expanded role, and also to help ensure continued retention over the coming years, the Compensation Committee approved restricted share awards to Mr. Riggs in December 2019. The long-term incentive package awarded to Mr. Riggs in December is valued at $5 million and comprises three grants of restricted shares that are scheduled to vest over a three-year period. In addition to appropriately rewarding Mr. Riggs for his expanded role, the long-term incentive agreement is intended to incentivize excellent performance and to ensure the retention of critical talent. The first grant of 10,548 restricted shares (valued at $1 million) is included in the disclosures for the Summary Compensation Table and Grants of Plan-Based Awards table in this proxy statement. The second grant (27,194 restricted shares, valued at $2 million) was made on Feb. 26, 2020. The third grant of restricted shares (to be valued at $2 million) is scheduled to be made in February 2021, subject to the continued employment of Mr. Riggs on that date.

  157. Restricted Stock

    | 44 | |

  158. Restricted Stock

    The target pay mix and other descriptions of Mr. Riggs’s annual compensation included in this Compensation Discussion and Analysis excludes the values and terms specific to the long-term incentive agreement described above. The long-term incentive agreement pertains to an award that is specifically targeted at the retention of Mr. Riggs throughout the covered period and is not an integral part of his regular, annual compensation program. PERQUISITES AND OTHER BENEFITS Consistent with our goal of providing compensation and benefits that are aligned with market practices among our peers, officers are eligible to receive reimbursement for club dues, federal income tax preparation, home security protection, and an annual health examination. We do not provide executive officers with automobiles or automobile allowances or supplemental executive medical coverage. We provide other benefits, including medical, life, dental, and disability insurance in line with competitive market conditions. Our named executive officers are eligible for the same benefit plans provided to our other employees, including our Thrift Plan and insurance and supplemental plans chosen and paid for by employees who desire additional coverage. Consistent with typical practices among our peers, executive officers and other employees whose compensation exceeds certain limits are eligible to participate in non-qualified excess benefit programs whereby those individuals can choose to make larger contributions than allowed under the qualified plan rules and receive correspondingly higher benefits. These plans are described below. POST-EMPLOYMENT BENEFITS

  159. Nonqualified Deferred Compensation Plans

    Nonqualified Deferred Compensation Plans Deferred Compensation Plan. Our named executive officers are eligible to participate in our Deferred Compensation Plan (“DC Plan”). The DC Plan is offered to align with competitive practices among our peers, and thereby support recruitment and retention of executive talent. The DC Plan permits eligible employees to defer a portion of their salary and/or bonus until separation (i.e., retirement or termination of employment). Under the DC Plan, each year eligible employees are permitted to elect to defer up to 30 percent of their salary and/or 50 percent of their cash bonuses to be earned for services performed during the following year. We have not made discretionary contributions to participants’ accounts, and currently we have no plans to do so. All amounts credited under the DC Plan (other than discretionary credits) are immediately 100 percent vested. Any discretionary credits, if ever granted, will vest in accordance with the vesting schedule determined at the time of the grant of discretionary credits. Participant accounts are credited with earnings (or losses) based on investment fund choices made by the participants among available funds selected by Valero’s Benefits Plans Administrative Committee. Excess Thrift Plan. Our Excess Thrift Plan provides benefits to participants in our Thrift Plan whose annual additions to the Thrift Plan are subject to the limitations on annual additions as provided under Section 415 of the Internal Revenue Code, and/or who are constrained from making maximum contributions under the Thrift Plan by Section 401(a)(17) of the Internal Revenue Code, which limits the amount of an employee’s annual compensation which may be taken into account under that plan. Two separate components comprise the Excess Thrift Plan: (i) an “excess benefit plan” as defined under Section 3(36) of ERISA; and (ii) a plan that is unfunded and maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees. Additional information about these plans and contributions made by Valero and each of our named executive officers under non-qualified defined contribution and other deferred compensation plans are presented in this proxy statement under the caption “Executive Compensation—Nonqualified Deferred Compensation.”

  160. Nonqualified Deferred Compensation Plans

    | 2020 PROXY STATEMENT | 45 |

  161. Change of Control Severance Arrangements

    Change of Control Severance Arrangements We have change of control severance agreements with each of our named executive officers. The agreements are intended to assure the continued objectivity and availability of the officers in the event of any merger or acquisition that would likely threaten the job security of many top executives. These arrangements are also intended to maintain executive focus and productivity in a period of uncertainty. If a change of control occurs during the term of an agreement, the agreement becomes operative for a fixed three-year period. The agreements provide generally that the officers’ terms and conditions of employment will not be adversely changed during the three-year period after a change of control. For information regarding payments that may be made under these agreements, see the disclosures in this proxy statement under the caption “Executive Compensation—Potential Payments upon Termination or Change of Control.”

  162. Accounting and Tax Treatment

    Accounting and Tax Treatment ACCOUNTING TREATMENT Compensation expense for our share-based compensation plans is based on the fair value of the awards granted and is recognized in income on a straight-line basis over the shorter of (a) the requisite service period of each award, or (b) the period from the grant date to the date retirement eligibility is achieved if that date is expected to occur during the nominal vesting period. Specific components of our stock-based compensation programs are discussed in Note 14 of Notes to Consolidated Financial Statements in Valero’s Annual Report on Form 10-K for the year ended Dec. 31, 2019. TAX TREATMENT Section 162(m) of the Internal Revenue Code of 1986 generally limits the deductibility of compensation paid to certain top executives to $1 million. In previous years, there was an exemption from this $1 million deduction limit for compensation payments that qualified as “performance-based” under applicable regulations. However, the enactment of the Tax Cuts and Jobs Act of 2017 eliminated the performance-based compensation exemption, except with respect to certain grandfathered arrangements. We believe that outstanding stock options, as well as performance shares granted in 2017, continue to qualify as performance-based compensation under the grandfather rules provided under the Tax Cuts and Jobs Act of 2017. Grants of restricted stock that are not subject to specific quantitative performance measures, and that were awarded in 2017 and earlier years, will likely not qualify as performance-based compensation under the Section 162(m) grandfather rules, and in such event, would be subject to Section 162(m) deduction restrictions. Prospectively, for pay vehicles granted and earned in 2019 and beyond, the Tax Cuts and Jobs Acts of 2017 eliminated the deductibility of most components of pay to certain top executives to the extent that such pay exceeds $1 million in a year. Consistent with Valero’s historic approach to deductibility under former Section 162(m), the Compensation Committee will continue to exercise flexibility and discretion in determining whether any given form of pay should be designed and administered to qualify for full deductibility.

  163. Compensation-Related Policies

    Compensation-Related Policies POLICY ON VESTING OF PERFORMANCE SHARES UPON CHANGE OF CONTROL OF VALERO Our Board has adopted a policy regarding the vesting of performance shares upon a change of control of Valero. The policy provides that performance shares granted to participants in Valero’s equity incentive plans will not vest automatically upon the date of a change of control (as defined in the applicable plan) of Valero. The policy further provides that in making awards of performance shares to participants, the Compensation Committee may provide in the award agreement with the participant that if a participant’s employment with Valero is terminated following a change of control, any unvested performance shares held by the participant will vest on a partial, pro rata basis on the date of the participant’s termination of employment, with such qualifications for an award as the Committee may determine. The policy is available on our website at www.valero.com > Investors > Corporate Governance > Governance Documents. EXECUTIVE COMPENSATION CLAWBACK POLICY Under our executive compensation clawback policy, in the event of a material restatement of Valero’s financial results, the Board, or the appropriate committee thereof, will review all bonuses and other incentive and equity compensation awarded to our executive

  164. Compensation-Related Policies

    Officers and non-employee directors have five years after becoming subject to the guidelines to meet the requisite ownership threshold and, once attained, are expected to continuously own sufficient shares to meet that threshold. PROHIBITION AGAINST HEDGING AND PLEDGING Our policies prohibit our directors, officers, and employees from speculating in our stock, which includes short selling (profiting if the market price of our stock decreases), buying or selling publicly traded options (including writing covered calls), hedging, or any other type of derivative arrangement that has a similar economic effect. In addition, our directors and officers are prohibited from pledging shares of Common Stock as collateral or security for indebtedness. Compliance with the guidelines is monitored by the Compensation Committee. The full text of our guidelines is included in our Corporate Governance Guidelines (as Article IX), available on our website at www.valero.com > Investors Relations > Corporate Governance > Governance Documents. INSIDER TRADING POLICY Our Securities Trading Policy prohibits our officers, directors, and employees from purchasing or selling Valero securities while in possession of material, nonpublic information, or otherwise using such information for their personal benefit or in any manner that would violate applicable laws and regulations.

  165. Compensation-Related Policies

    | • | assistance with selecting peer and comparator companies for benchmarking executive pay and monitoring Valero’s performance; |

  166. Compensation-Related Policies

    | • | assessment of competitive pay for our executives, with separate analyses of base salary, annual incentive, and long-term incentive compensation; |

  167. Compensation-Related Policies

    | • | assessment of, and recommendations for, our annual incentive bonus program; |

  168. Compensation-Related Policies

    | • | assessment of, and recommendation of enhancements to, our long-term incentive program strategy, including (i) the design of an appropriate mix of equity incentive vehicles, (ii) determination of performance measures and measurement techniques, and (iii) determination of competitive equity grant guidelines consistent with our overall pay philosophy; |

  169. Compensation-Related Policies

    | • | assistance with implementation of the 2020 Omnibus Stock Incentive Plan; |

  170. Compensation-Related Policies

    | • | assessment of competitive pay for our directors; and |

  171. Compensation-Related Policies

    | Securities available for future issuance under these plans can be issued in various forms, including restricted stock, performance shares, stock unit awards, and stock options.(1) |

  172. Compensation-Related Policies

    | The number of securities remaining available for future issuance under the 2011 Omnibus Stock Incentive Plan (2011 OSIP) as of Feb. 28, 2020, is 7,202,491.(2) |

  173. Compensation-Related Policies

    | Additional disclosures about the 2011 OSIP may be found in Proposal No. 4—Approve the 2020 Omnibus Stock Incentive Plan. |

  174. Summary Compensation Table

    Summary Compensation Table This table summarizes the compensation paid to our named executive officers for fiscal years 2019, 2018, and 2017. The elements of compensation listed in the table are described in the Compensation Discussion and Analysis section of this proxy statement and in the table’s footnotes. The officers’ titles listed below are their current titles.

  175. Summary Compensation Table

    | Principal Position (1) | Year | Salary ($) | Stock Awards ($)(2)(3) | Non-Equity Incentive Plan Compensation ($)(4) | Change in Pension Value and Non- qualified Deferred Compensation Earnings ($)(5) | All Other Compensation ($)(6) | Total ($) | Total Excluding Change in Pension Value ($)(7) | | Joseph W. Gorder, Chairman of the Board and CEO | 2019 | 1,745,000 | 14,485,699 | 4,100,000 | 7,484,813 | 360,440 | 28,175,952 | 20,691,139 | | | 2018 | 1,660,000 | 10,931,251 | 4,625,000 | 1,353,779 | 189,126 | 18,759,156 | 17,405,377 | | | 2017 | 1,585,000 | 12,734,060 | 3,800,000 | 4,269,202 | 143,998 | 22,532,260 | 18,263,058 | | Donna M. Titzman, EVP and Chief Financial Officer | 2019 | 725,000 | 2,685,278 | 842,000 | 3,573,309 | 80,275 | 7,905,862 | 4,332,553 | | | 2018 | 641,667 | 1,508,905 | 840,000 | 382,570 | 70,593 | 3,443,735 | 3,061,165 | | | (8) | | | | | | | | | R. Lane Riggs, President and Chief Operating Officer | 2019 | 840,000 | 4,792,892 | 1,250,000 | 4,245,462 | 108,056 | 11,236,410 | 6,990,948 | | | 2018 | 800,000 | 2,200,997 | 1,110,000 | — | 103,172 | 4,214,169 | 4,214,169 | | | 2017 | 700,000 | 2,710,576 | 925,000 | 1,743,387 | 96,683 | 6,175,646 | 4,432,259 | | Jason W. Fraser, EVP and General Counsel | 2019 | 600,000 | 2,280,836 | 700,000 | 1,811,402 | 110,874 | 5,503,112 | 3,691,710 | | | (9) | | | | | | | | | | (9) | | | | | | | | | Gary K. Simmons, EVP and Chief Commercial Officer | 2019 | 650,000 | 1,787,833 | 625,000 | 2,535,277 | 175,412 | 5,773,522 | 3,238,245 | | | 2018 | 625,000 | 1,174,051 | 705,000 | — | 81,590 | 2,585,641 | 2,585,641 | | | 2017 | 600,000 | 1,398,749 | 620,000 | 1,345,120 | 88,961 | 4,052,830 | 2,707,710 |

  176. Summary Compensation Table

    Footnotes to Summary Compensation Table:

  177. Summary Compensation Table

    | The persons listed in this table are referred to in this proxy statement as our “named executive officers” (NEOs).(1) |

  178. Summary Compensation Table

    | The amount shown is the “grant date fair value” of stock awards (restricted stock and performance shares) computed under Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation–Stock Compensation (FASB ASC Topic 718). The grant date fair values are higher than the “target value” of stock awards for each NEO due to reasons more fully described in Compensation Discussion and Analysis and below in this footnote. The target values of stock awards for the NEOs were (rounded): Mr. Gorder ($10,990,000), Ms. Titzman ($2,500,000), Mr. Riggs ($3,360,000), Mr. Fraser ($2,250,000), and Mr. Simmons ($1,500,000)(2) |

  179. Summary Compensation Table

    | The grant date fair values disclosed under FASB ASC Topic 718 for our performance share awards include the values of certain tranches of unvested performance shares that were awarded in years prior to the fiscal year shown in the table. The computations of grant date fair values for performance shares are more fully described in footnote (6) to the Grants of Plan-Based Awards table in this proxy statement. |

  180. Summary Compensation Table

    (footnote (2) continues on the following page)

  181. Summary Compensation Table

    | 50 | |

  182. Summary Compensation Table

    Footnotes to Summary Compensation Table (cont.): footnote (2) continued

  183. Summary Compensation Table

    | The dollar values included in the “Stock Awards” column include the following components: |

  184. Summary Compensation Table

    | | Gorder | Titzman | Riggs | Fraser | Simmons | | Restricted Stock | 5,900,119 | 1,341,432 | 2,803,504 | 1,207,586 | 805,057 | | Performance Shares | 8,585,580 | 1,343,846 | 1,989,388 | 1,073,250 | 982,776 | | Total (in dollars) | 14,485,699 | 2,685,278 | 4,792,892 | 2,280,836 | 1,787,833 |

  185. Summary Compensation Table

    | The process used to value and grant restricted stock and performance shares to our NEOs in 2019 is consistent with previous years. For restricted stock awards, the disclosed grant date fair values are higher than the target values for each officer due to the difference between (i) the stock price used to determine the number of restricted shares granted to achieve the target value (determined by using the average closing stock price for the 15 trading days ending the day before the grant) and (ii) the grant date fair value of the award as computed under FASB ASC Topic 718. The target values of restricted stock awards for 2019 were (rounded): Mr. Gorder ($5,495,000), Ms. Titzman ($1,250,000), Mr. Riggs ($1,680,000), Mr. Fraser ($1,125,000), and Mr. Simmons ($750,000). The final value realized by each named executive officer will be determined at a later date upon award vesting. |

  186. Summary Compensation Table

    | For performance shares, the grant date fair values disclosed represent the aggregated fair values of three tranches from three separate award years as required under FASB ASC Topic 718 (i.e., first tranche of 2019 award, second tranche of 2018 award, and third tranche of 2017 award). These are deemed to be three separate grants for determining fair value and each is deemed to have a grant date in 2019 per FASB ASC Topic 718. As further described in footnote (6) to the Grants of Plan-Based Awards table, the expected conversion rate (probable outcome) for each of these awards determines a unique fair value per share for each tranche. The expected conversion rates are 112.47% for the 2019 award, 169.95% for the 2018 award, and 142.27% for the 2017 award. The target values for the 2019 grants of performance shares to our NEOs (described further in Compensation Discussion and Analysis) were (rounded): Mr. Gorder ($5,495,000), Ms. Titzman ($1,250,000), Mr. Riggs ($1,680,000), Mr. Fraser ($1,125,000), and Mr. Simmons ($750,000) |

  187. Summary Compensation Table

    | Stock options were not granted to our named executive officers in 2019, 2018, or 2017. Additional information about the restricted stock and performance shares granted in 2019 is disclosed in the Grants of Plan-Based Awards table in this proxy statement. Additional information about restricted stock is disclosed in Note 14 (Stock-Based Compensation) of Notes to Consolidated Financial Statements in Valero’s Annual Report on Form 10-K for the year ended December 31, 2019.(3) |

  188. Summary Compensation Table

    | Represents amounts earned under our annual incentive bonus plan, as described in “Compensation Discussion and Analysis—Elements of Executive Compensation—Annual Incentive Bonus.”(4) |

  189. Summary Compensation Table

    | This column represents the sum of the change in pension value and nonqualified deferred compensation earnings for each of the NEOs. There are no above-market or preferential earnings on non-tax-qualified deferred compensation amounts included in the table presented above. The NEOs participate in the same pension and non-qualified deferred compensation plans as similarly situated Valero employees (senior-level Valero executive leadership). The narrative disclosures following the Pension Benefits table describe the present value assumptions used for these calculations. Additional information about Valero’s defined benefit plans is disclosed in Note 13 (Employee Benefit Plans) of Notes to Consolidated Financial Statements in Valero’s Annual Report on Form 10-K for the year ended December 31, 2019.(5) |

  190. Summary Compensation Table

    | The following table lists the components of (i) the increase or decrease in total pension values for 2018, and (ii) the increase in total pension values for 2019 for our NEOs. |

  191. Summary Compensation Table

    | | Gorder | Titzman | Riggs | Fraser | Simmons | | Components of change in value (rounded to ‘000s): | | | | | | | 2018 | | | | | | | one year increase in age | 628,000 | 207,000 | 262,000 | 81,000 | 225,000 | | one year increase in service | 1,200,000 | 195,000 | 272,000 | 127,000 | 220,000 | | pay changes | 1,457,000 | 888,000 | 635,000 | 278,000 | 160,000 | | assumption changes (primarily decrease in present values due to increase in the discount rates used to determine benefits) | (1,931,000) | (908,000) | (1,205,000) | (423,000) | (923,000) | | Total change in pension value 2018 | 1,354,000 | 382,000 | (36,000) | 63,000 | (318,000) | | 2019 | | | | | | | one year increase in age | 900,000 | 262,000 | 311,000 | 99,000 | 256,000 | | one year increase in service | 1,227,000 | 203,000 | 264,000 | 124,000 | 204,000 | | pay changes | 1,993,000 | 1,267,000 | 1,220,000 | 622,000 | 389,000 | | assumption changes (primarily increase in present values due to decrease in the discount rates used to determine benefits) | 3,364,000 | 1,841,000 | 2,451,000 | 967,000 | 1,686,000 | | Total change in pension value 2019 | 7,484,000 | 3,573,000 | 4,246,000 | 1,812,000 | 2,535,000 |

  192. Summary Compensation Table

    | 2020 PROXY STATEMENT | 51 |

  193. Summary Compensation Table

    Footnotes to Summary Compensation Table (cont.): footnote (5) continued

  194. Summary Compensation Table

    | The discount rates used in 2019, 2018, and 2017 to determine the present value of accumulated benefits are listed in the disclosures following the Pension Benefits table. |

  195. Summary Compensation Table

    | Disclosures in the Summary Compensation Table for 2018 compensation show a zero value for Mr. Riggs and Mr. Simmons per Instruction 3 to Item 402(c)(2)(viii) of Regulation S-K. The actual aggregate changes in the actuarial present value of these officers’ accumulated benefits under their defined benefit and actuarial pension plans (including supplemental plans) were negative values. These negative values were: Mr. Riggs (-$35,467), Mr. Simmons (-$317,781). |

  196. Summary Compensation Table

    | Amounts listed as “All Other Compensation” for 2019 are composed of the following items. Any amount in excess of $10,000 (whether or not such amount may be deemed to be a perquisite or other personal benefit) is separately quantified.(6) |

  197. Summary Compensation Table

    | For Mr. Gorder: Valero contributions to the officer’s Thrift Plan account ($19,600), Valero contributions to the officer’s Excess Thrift Plan account ($102,550), home security ($28,449), gross up payment for home security imputed income ($18,458), an executive physical exam, reimbursement of club membership dues, Valero-provided dollars for the purchase of health and welfare benefits ($26,779), imputed income related to payment of UK income tax for trailing income from prior work assignment in England ($153,847), imputed income for tax return preparation fees. |

  198. Summary Compensation Table

    | For Ms. Titzman: Valero contributions to the officer’s Thrift Plan account ($19,600), Valero contributions to the officer’s Excess Thrift Plan account ($31,150), an executive physical exam, Valero-provided dollars for the purchase of health and welfare benefits ($24,895), imputed income for tax return preparation fees. |

  199. Summary Compensation Table

    | For Mr. Riggs: Valero contributions to the officer’s Thrift Plan account ($19,600), Valero contributions to the officer’s Excess Thrift Plan account ($39,200), home security, gross up payment for home security imputed income, an executive physical exam, reimbursement of club membership dues, Valero-provided dollars for the purchase of health and welfare benefits ($30,084), imputed income for tax return preparation fees. |

  200. Summary Compensation Table

    | For Mr. Fraser: Valero contributions to the officer’s Thrift Plan account ($19,600), Valero contributions to the officer’s Excess Thrift Plan account ($22,400), home security, gross up payment for home security imputed income, reimbursement of club membership dues, Valero-provided dollars for the purchase of health and welfare benefits ($30,084), imputed income related to payment of UK income tax for trailing income from prior work assignment in England ($17,699), imputed income for tax return preparation fees. |

  201. Summary Compensation Table

    | For Mr. Simmons: Valero contributions to the officer’s Thrift Plan account ($19,600), Valero contributions to the officer’s Excess Thrift Plan account ($25,900), home security ($52,155), gross up payment for home security imputed income ($33,839), an executive physical exam, reimbursement of club membership dues ($10,904), Valero-provided dollars for the purchase of health and welfare benefits ($30,084). |

  202. Summary Compensation Table

    | The values in this column represent the “Total” compensation for 2019 for each NEO when excluding the year-over-year changes to the present values of accumulated benefits under the pension and nonqualified deferred compensation plans, which can increase or decrease significantly from year-to-year due to the actuarial assumptions used in a given year (primarily the discount rates used to determine the present value of accumulated benefits). See footnote (5) above for the specific impact of assumption changes to the total change in pension values in 2019 versus 2018.(7) |

  203. Summary Compensation Table

    | The amounts reported in this column are calculated by subtracting the change in pension values reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column, from the amounts reported in the Total compensation column. The amounts reported in this column differ from, and are not substitutes for, the amounts reported in the Total compensation column. |

  204. Summary Compensation Table

    | Ms. Titzman was not a named executive officer for 2017.(8) |

  205. Summary Compensation Table

    | Mr. Fraser was not a named executive officer for 2018 or 2017.(9) |

  206. Summary Compensation Table

    | 52 | |

  207. Grants of Plan-Based Awards

    Grants of Plan-Based Awards The following table describes plan-based awards for our named executive officers in 2019.

  208. Grants of Plan-Based Awards

    | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | Grant Date Fair Value of Stock and Option Awards ($) (1) | | Name | Grant Date | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | Joseph W. Gorder | n/a | (2) | — | 2,792,000 | 5,584,000 | | | | | | | 10/30/2019 | (3) | | | | n/a | 59,510 | n/a | 5,900,119 | | | n/a | (5) | | | | | 59,510 | | | | | 10/30/2019 | (6) | | | | | 19,836 | 39,672 | 2,220,640 | | | 10/30/2019 | (6) | | | | | 18,007 | 36,014 | 3,023,916 | | | 10/30/2019 | (6) | | | | | 23,766 | 47,532 | 3,341,024 | | Donna M. Titzman | n/a | (2) | — | 580,000 | 1,160,000 | | | | | | | 10/30/2019 | (3) | | | | n/a | 13,530 | n/a | 1,341,432 | | | n/a | (5) | | | | | 13,530 | | | | | 10/30/2019 | (6) | | | | | 4,510 | 9,020 | 504,895 | | | 10/30/2019 | (6) | | | | | 2,903 | 5,806 | 487,501 | | | 10/30/2019 | (6) | | | | | 2,500 | 5,000 | 351,450 | | R. Lane Riggs | n/a | (2) | — | 840,000 | 1,680,000 | | | | | | | 10/30/2019 | (3) | | | | n/a | 18,190 | n/a | 1,803,448 | | | 12/18/2019 | (4) | | | | n/a | 10,548 | n/a | 1,000,056 | | | n/a | (5) | | | | | 18,190 | | | | | 10/30/2019 | (6) | | | | | 6,064 | 12,128 | 678,865 | | | 10/30/2019 | (6) | | | | | 3,440 | 6,880 | 577,679 | | | 10/30/2019 | (6) | | | | | 5,213 | 10,426 | 732,844 | | Jason W. Fraser | n/a | (2) | — | 480,000 | 960,000 | | | | | | | 10/30/2019 | (3) | | | | n/a | 12,180 | n/a | 1,207,586 | | | n/a | (5) | | | | | 12,180 | | | | | 10/30/2019 | (6) | | | | | 4,060 | 8,120 | 454,517 | | | 10/30/2019 | (6) | | | | | 2,150 | 4,300 | 361,050 | | | 10/30/2019 | (6) | | | | | 1,833 | 3,666 | 257,683 | | Gary K. Simmons | n/a | (2) | — | 422,500 | 845,000 | | | | | | | 10/30/2019 | (3) | | | | n/a | 8,120 | n/a | 805,057 | | | n/a | (5) | | | | | 8,120 | | | | | 10/30/2019 | (6) | | | | | 2,706 | 5,412 | 302,937 | | | 10/30/2019 | (6) | | | | | 1,917 | 3,834 | 321,922 | | | 10/30/2019 | (6) | | | | | 2,546 | 5,092 | 357,917 |

  209. Grants of Plan-Based Awards

    Footnotes to Grants of Plan-Based Awards table:

  210. Grants of Plan-Based Awards

    | The reported grant date fair value of stock awards was determined in compliance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718. Stock options were not granted to our named executive officers in 2019.(1) |

  211. Grants of Plan-Based Awards

    | Represents potential awards under our annual incentive bonus program. Actual amounts earned by our NEOs for 2019 are reported in the Summary Compensation Table under the column “Non-Equity Incentive Plan Compensation.” The “target” amounts listed in the Grants of Plan-Based Awards table are computed by multiplying base salary by 160%, 80%, 100%, 80%, and 65% for Mr. Gorder, Ms. Titzman, Mr. Riggs, Mr. Fraser, and Mr. Simmons, respectively.(2) |

  212. Grants of Plan-Based Awards

    | 2020 PROXY STATEMENT | 53 |

  213. Grants of Plan-Based Awards

    Footnotes to Grants of Plan-Based Awards table (cont.):

  214. Grants of Plan-Based Awards

    | Represents an award of restricted stock granted Oct. 30, 2019. The shares are scheduled to vest (become nonforfeitable) annually in equal one-third increments. Dividends on the restricted shares are paid as and when dividends are declared and paid on our Common Stock. Restricted stock awards are more fully described in “Compensation Discussion and Analysis—Elements of Executive Compensation—Long-Term Incentive Awards—Restricted Stock.” For each NEO, the dollar amount stated in the column “Grant Date Fair Value of Stock and Option Awards” is included within the amount listed in the “Stock Awards” column of the Summary Compensation Table and in footnote (2) to the Summary Compensation Table.(3) |

  215. Grants of Plan-Based Awards

    | Represents an award of restricted stock granted Dec. 18, 2019. The shares are scheduled to vest (become nonforfeitable) annually in equal one-third increments. The grant was made pursuant to a long-term incentive agreement with Mr. Riggs. The agreement is described in “Compensation Discussion and Analysis—Elements of Executive Compensation—Long-Term incentive Awards—Restricted Stock—Long-Term Incentive Agreement with Mr. Riggs.” The dollar amount stated in the column “Grant Date Fair Value of Stock and Option Awards” is included within the amount listed in the “Stock Awards” column of the Summary Compensation Table and in footnote (2) to the Summary Compensation Table.(4) |

  216. Grants of Plan-Based Awards

    | Represents the number of performance shares awarded under our 2011 Omnibus Stock Incentive Plan to our NEOs on Oct. 30, 2019 under our long-term incentive awards program described in “Compensation Discussion and Analysis—Elements of Executive Compensation—Long-Term Incentive Awards—Performance Shares.” Per the awards’ terms, on a normal vesting date officers can earn, in shares of Common Stock, from 0% to 200% of the number of performance shares that are vesting, based upon Valero’s achievement of objective performance measures during the performance periods prescribed by our Compensation Committee.(5) |

  217. Grants of Plan-Based Awards

    | The performance shares are scheduled to vest annually in one-third increments (tranches) in January 2021, January 2022, and January 2023, with any resulting payout at those times conditioned upon Valero’s performance during the pertinent performance periods. Only the first tranche of these performance shares is deemed to have a “grant date” in 2019, as explained in footnote (6) below. Our disclosures referenced by footnote (5) are for information purposes only, and tie to the disclosures made by our NEOs in 2019 on Forms 4 in compliance with Section 16 of the Exchange Act. Our disclosures in footnote (6) below are intended to comply with the requirements of Item 402 of Regulation S-K with respect to “grants” of performance shares. |

  218. Grants of Plan-Based Awards

    | Item 402(d)(2)(viii) of Regulation S-K requires us to disclose the “grant date fair value” of equity awards “computed in accordance with FASB ASC Topic 718” (Topic 718). Our performance shares are awarded in three tranches, with the tranches having measurement periods (the performance period) of differing lengths. The first tranche of an award has a performance period of 12 months, the second tranche of an award has a performance period of 24 months, and the third tranche of an award has a performance period of 36 months.(6) |

  219. Grants of Plan-Based Awards

    | The amounts referenced by footnote (6) in the Grants of Plan-Based Awards table above represent three tranches from three separate award years—namely, the first tranche of performance shares awarded in 2019 (awarded on Oct. 30, 2019), the second tranche of performance shares awarded in 2018 (awarded on Oct. 31, 2018), and the third tranche of performance shares awarded in 2017 (awarded on Nov. 1, 2017). Under Topic 718, each of these tranches is deemed to be a separate “grant” for fair value purposes, and each is deemed to have a “grant date” in 2019, that is, Oct. 30, 2019, the date when the Compensation Committee established the peer group of companies for these tranches. The dollar amounts included in the table represent the grant date fair values from the three tranches that are deemed to have a grant date in 2019. |

  220. Grants of Plan-Based Awards

    | For each NEO, the sum of the dollar amounts stated in the Grants of Plan-Based Awards table’s column entitled “Grant Date Fair Value of Stock and Option Awards” is also included in the Summary Compensation Table, first, within the amount listed in the “Stock Awards” column of the Summary Compensation Table, and second, in footnote (2) to the Summary Compensation Table. |

  221. Grants of Plan-Based Awards

    (footnote (6) continues on the following page)

  222. Grants of Plan-Based Awards

    | 54 | |

  223. Grants of Plan-Based Awards

    Footnotes to Grants of Plan-Based Awards table (cont.): footnote (6) continued

  224. Grants of Plan-Based Awards

    | The grant date fair values for the performance shares included in the Grants of Plan-Based Awards table are summarized in the following table. |

  225. Grants of Plan-Based Awards

    | | performance shares deemed (under Topic 718) to have a grant date in 2019 | | grant date fair value ($) | lowest possible performance ($) | highest possible performance ($) | | Gorder | 1st tranche of 2019 award | 19,836 | 2,220,640 | 0 | 4,441,280 | | | 2nd tranche of 2018 award | 18,007 | 3,023,916 | 0 | 6,047,832 | | | 3rd tranche of 2017 award | 23,766 | 3,341,024 | 0 | 6,682,048 | | | total 2019 grant date fair value | | 8,585,580 | 0 | 17,171,160 | | Titzman | 1st tranche of 2019 award | 4,510 | 504,895 | 0 | 1,009,790 | | | 2nd tranche of 2018 award | 2,903 | 487,501 | 0 | 975,002 | | | 3rd tranche of 2017 award | 2,500 | 351,450 | 0 | 702,900 | | | total 2019 grant date fair value | | 1,343,846 | 0 | 2,687,692 | | Riggs | 1st tranche of 2019 award | 6,064 | 678,865 | 0 | 1,357,730 | | | 2nd tranche of 2018 award | 3,440 | 577,679 | 0 | 1,155,358 | | | 3rd tranche of 2017 award | 5,213 | 732,844 | 0 | 1,465,688 | | | total 2019 grant date fair value | | 1,989,388 | 0 | 3,978,776 | | Fraser | 1st tranche of 2019 award | 4,060 | 454,517 | 0 | 909,034 | | | 2nd tranche of 2018 award | 2,150 | 361,050 | 0 | 722,100 | | | 3rd tranche of 2017 award | 1,833 | 257,683 | 0 | 515,366 | | | total 2019 grant date fair value | | 1,073,250 | 0 | 2,146,500 | | Simmons | 1st tranche of 2019 award | 2,706 | 302,937 | 0 | 605,874 | | | 2nd tranche of 2018 award | 1,917 | 321,922 | 0 | 643,844 | | | 3rd tranche of 2017 award | 2,546 | 357,917 | 0 | 715,834 | | | total 2019 grant date fair value | | 982,776 | 0 | 1,965,552 |

  226. Grants of Plan-Based Awards

    | 2019 Award. For performance shares awarded on Oct. 30, 2019, the grant date (per Topic 718) for the first tranche is deemed to have occurred in 2019. The performance shares in this tranche were deemed to have an expected conversion rate (probable outcome) of 112.47% with a fair value per share of $111.95. The fair values of the second and third tranches will be determined on their respective Topic 718 grant dates. |

  227. Grants of Plan-Based Awards

    | 2018 Award. For performance shares awarded on Oct. 31, 2018, the grant date (per Topic 718) for the second tranche is deemed to have occurred in 2019. The performance shares in this tranche were deemed to have an expected conversion rate (probable outcome) of 169.95% and fair value per share of $167.93. The fair value of the third tranche will be determined on its Topic 718 grant date. |

  228. Grants of Plan-Based Awards

    | 2017 Award. For performance shares awarded on Nov. 1, 2017, the grant date (per Topic 718) for the third tranche is deemed to have occurred in 2019. The performance shares in this tranche were deemed to have an expected conversion rate (probable outcome) of 142.27% and fair value per share of $140.58. |

  229. Grants of Plan-Based Awards

    | All Awards. For all awards, the “highest possible performance” values listed above assume achievement of the highest level of possible performance conditions (that is, vesting at 200% of target) per SEC Regulation S-K, Instruction 3 to Item 402(c)(2)(v). |

  230. Grants of Plan-Based Awards

    | 2020 PROXY STATEMENT | 55 |

  231. Outstanding Equity Awards at December 31, 2019

    Outstanding Equity Awards at December 31, 2019 This table describes unexercised stock options, unvested shares of restricted stock, and unvested performance shares held by our named executive officers as of Dec. 31, 2019.

  232. Outstanding Equity Awards at December 31, 2019

    | | Option Awards | | | | Stock Awards | | | | | | | | | | Restricted Stock | | Performance Shares | | | | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($)(1) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(2) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | | Joseph W. Gorder | 26,750 | — | 24.582 | 10/28/2021 | 13,797(3) | 1,292,089 | 27,473(8) | 5,145,693 | | | 37,567 | — | 27.318 | 11/09/2022 | 21,842(4) | 2,045,503 | 47,533(9) | 5,936,060 | | | 31,770 | — | 39.665 | 11/08/2023 | 36,092(5) | 3,380,016 | 54,020(10) | 6,745,329 | | | 43,810 | — | 48.565 | 10/23/2024 | | | 59,510(11) | 5,573,112 | | Donna M. Titzman | 6,398 | — | 27.318 | 11/09/2022 | 1,517(3) | 142,067 | 2,626(8) | 491,850 | | | 5,860 | — | 39.665 | 11/08/2023 | 1,515(6) | 141,880 | 5,000(9) | 624,411 | | | 4,365 | — | 48.565 | 10/23/2024 | 3,521(4) | 329,742 | 8,710(10) | 1,087,651 | | | | | | | 8,205(5) | 768,398 | 13,530(11) | 1,267,085 | | R. Lane Riggs | 2,667 | — | 48.565 | 10/23/2024 | 5,214(3) | 488,291 | 5,983(8) | 1,120,616 | | | | | | | 6,880(4) | 644,312 | 10,426(9) | 1,302,023 | | | | | | | 18,190(5) | 1,703,494 | 10,320(10) | 1,288,624 | | | | | | | 10,548(7) | 987,820 | 18,190(11) | 1,703,494 | | Jason W. Fraser | — | — | — | | 1,834(3) | 171,754 | 1,833(8) | 343,321 | | | | | | | 822(6) | 76,980 | 3,666(9) | 457,818 | | | | | | | 4,300(4) | 402,695 | 6,450(10) | 805,390 | | | | | | | 12,180(5) | 1,140,657 | 12,180(11) | 1,140,657 | | Gary K. Simmons | 1,750 | — | 48.565 | 10/23/2024 | 2,170(3) | 203,221 | 3,030(8) | 567,519 | | | | | | | 3,320(4) | 310,918 | 5,093(9) | 636,057 | | | | | | | 4,924(5) | 461,133 | 5,750(10) | 718,015 | | | | | | | | | 8,120(11) | 760,438 |

  233. Outstanding Equity Awards at December 31, 2019

    | 56 | |

  234. Outstanding Equity Awards at December 31, 2019

    Footnotes to Outstanding Equity Awards table:

  235. Outstanding Equity Awards at December 31, 2019

    | Our equity plans provide that the exercise price for all stock options must not be less than the mean of our Common Stock’s high and low NYSE reported sales price per share on the date of grant.(1) |

  236. Outstanding Equity Awards at December 31, 2019

    | The assumed market values were determined using the closing market price of our Common Stock on Dec. 31, 2019 ($93.65 per share). For a further discussion of the vesting of performance share awards (as noted in the following footnotes), see “Compensation Discussion and Analysis—Elements of Executive Compensation—Long-Term Incentive Awards—Performance Shares.”(2) |

  237. Outstanding Equity Awards at December 31, 2019

    | The unvested portion of this award is scheduled to vest on Nov. 1, 2020.(3) |

  238. Outstanding Equity Awards at December 31, 2019

    | The unvested portion of this award is scheduled to vest in equal installments on Oct. 31, 2020 and Oct. 31, 2021.(4) |

  239. Outstanding Equity Awards at December 31, 2019

    | The unvested portion of this award is scheduled to vest in equal installments on Oct. 30, 2020; Oct. 30, 2021; and Oct. 30, 2022.(5) |

  240. Outstanding Equity Awards at December 31, 2019

    | The unvested portion of this award is scheduled to vest in equal installments on May 3, 2020 and May 3, 2021.(6) |

  241. Outstanding Equity Awards at December 31, 2019

    | The unvested portion of this award is scheduled to vest in equal installments on Dec. 18, 2020; Dec. 18, 2021; and Dec. 18, 2022.(7) |

  242. Outstanding Equity Awards at December 31, 2019

    | These performance shares vested on Jan. 23, 2020 at 200% of target. The value shown in the column, “Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested,” represents the market value of 200% (the actual payout amount) of the performance shares at the closing price of our Common Stock on Dec. 31, 2019 ($93.65 per share).(8) |

  243. Outstanding Equity Awards at December 31, 2019

    | One-half of these performance shares vested on Jan. 23, 2020 at 166.7% of target; the other half is scheduled to vest in January 2021. The value shown in the column, “Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested,” represents, for the performance shares that vested on Jan. 23, 2020, the market value of 166.7% (the actual payout amount) of the performance shares at the closing price of our Common Stock on Dec. 31, 2019 ($93.65 per share), and for the remaining one-half, the market value of 100% (assumed) of the closing price of our Common Stock on Dec. 31, 2019.(9) |

  244. Outstanding Equity Awards at December 31, 2019

    | One-third of these performance shares vested on Jan. 23, 2020 at 200% of target; an additional one-third is scheduled to vest in January 2021, and the final one-third is scheduled to vest in January 2022. The value shown in the column, “Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested,” represents, for the performance shares that vested on Jan. 23, 2020, the market value of 200% (the actual payout amount) of the performance shares at the closing price of our Common Stock on Dec. 31, 2019 ($93.65 per share), and for the remaining two-thirds, the market value of 100% (assumed) of the closing price of our Common Stock on Dec. 31, 2019.(10) |

  245. Outstanding Equity Awards at December 31, 2019

    | These performance shares are scheduled to vest in one-third increments in each of January 2021, January 2022, and January 2023. The value shown in the column, “Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested,” represents the market value of 100% of the performance shares at the closing price of our Common Stock on Dec. 31, 2019.(11) |

  246. Outstanding Equity Awards at December 31, 2019

    | 2020 PROXY STATEMENT | 57 |

  247. Option Exercises and Stock Vested

    Option Exercises and Stock Vested The following table provides information regarding (i) stock option exercises by our named executive officers, and (ii) the vesting of restricted stock and performance shares held by our named executive officers during 2019 on an aggregated basis.

  248. Option Exercises and Stock Vested

    | | Option Awards | | Stock Awards (1) | | | Name | No. of Shares Acquired on Exercise (#)(2) | Value Realized on Exercise ($)(3) | No. of Shares Acquired on Vesting (#)(2) | Value Realized on Vesting ($)(4) | | Joseph W. Gorder | 21,400 | 1,665,531 | | | | (5) | | | 40,667 | 4,038,762 | | (6) | | | 13,544 | 1,072,211 | | Donna M. Titzman | — | — | | | | (5) | | | 5,628 | 549,836 | | (6) | | | 1,383 | 109,485 | | R. Lane Riggs | — | — | | | | (5) | | | 14,637 | 1,454,775 | | (6) | | | 2,478 | 196,171 | | Jason W. Fraser | — | — | | | | (5) | | | 6,229 | 612,637 | | (6) | | | 923 | 73,069 | | Gary K. Simmons | — | — | | | | (5) | | | 5,667 | 561,752 | | (6) | | | 1,614 | 127,772 |

  249. Option Exercises and Stock Vested

    Footnotes to Option Exercises and Stock Vested table:

  250. Option Exercises and Stock Vested

    | Represents shares of Common Stock from the vesting of restricted stock and performance shares in 2019.(1) |

  251. Option Exercises and Stock Vested

    | Represents the gross number of shares received by the named executive officer before deducting any shares withheld from (i) an option’s exercise to pay the exercise price and/or tax obligation, or (ii) the vesting of restricted stock or performance shares to pay the resulting tax obligation.(2) |

  252. Option Exercises and Stock Vested

    | The reported value is determined by multiplying (i) the number of option shares, times (ii) the difference between the market price of the Common Stock on the date of exercise and the exercise price of the stock option. The value is stated before payment of applicable taxes.(3) |

  253. Option Exercises and Stock Vested

    | The reported value is determined by multiplying number of vested shares by the market value of the shares on the vesting date. The value is stated before payment of applicable taxes.(4) |

  254. Option Exercises and Stock Vested

    | Represents number of shares of Common Stock and value related to vesting of restricted stock.(5) |

  255. Option Exercises and Stock Vested

    | Represents number of shares of Common Stock and value related to vesting of performance shares.(6) |

  256. Option Exercises and Stock Vested

    | 58 | |

  257. Post-Employment Compensation

    Post-Employment Compensation PENSION BENEFITS The following table describes the accumulated benefits of our named executive officers under Valero’s tax-qualified defined benefit plan and supplemental retirement plans during 2019.

  258. Post-Employment Compensation

    | Name | Plan Name | No. of Years Credited Service (#) (1) | Present Value of Accumulated Benefits ($) | Payments During Last Fiscal Year ($) | | Joseph W. Gorder (2) | Pension Plan | 29.17 | 1,216,569 | — | | | Excess Pension Plan | 17.67 | 8,474,289 | — | | | SERP | 17.67 | 17,660,595 | — | | Donna M. Titzman | Pension Plan | 33.29 | 1,568,361 | — | | | Excess Pension Plan | 33.29 | 3,351,769 | — | | | SERP | 33.29 | 5,039,285 | — | | R. Lane Riggs | Pension Plan | 30.92 | 1,331,031 | — | | | Excess Pension Plan | 30.92 | 3,689,999 | — | | | SERP | 30.92 | 6,852,565 | — | | Jason W. Fraser | Pension Plan | 20.96 | 782,914 | — | | | Excess Pension Plan | 20.96 | 835,257 | — | | | SERP | 20.96 | 2,598,622 | — | | Gary K. Simmons | Pension Plan | 32.52 | 1,460,260 | — | | | Excess Pension Plan | 32.52 | 3,311,886 | — | | | SERP | 32.52 | 3,998,341 | — |

  259. Post-Employment Compensation

    Footnotes to Pension Benefits table:

  260. Post-Employment Compensation

    | The years of credited service for our NEOs include five years of service (6.5 years for Mr. Fraser) in our plans’ “Cash Balance Provision” starting on Jan. 1, 2015 (Mr. Fraser’s participation in the Cash Balance Provision commenced July 1, 2013). The remainder of the NEOs’ years of service is in the “Formula Provision” of our plans. The Formula Provision and the Cash Balance Provision are described in the narrative disclosures that follow this table.(1) |

  261. Post-Employment Compensation

    | The 29.17 years of service stated for Mr. Gorder for the Pension Plan represent the sum of his participation in (a) the Valero Pension Plan since 2002 (17.67 years), and (b) the qualified pension plan of UDS (11.5 years). In 2001, Mr. Gorder received a lump sum settlement relating to prior years of service. The Pension Plan amount stated above reflects the effect of offsetting Mr. Gorder’s accrued benefit under the Valero Pension Plan by the value of his lump sum settlement in 2001. In addition, Mr. Gorder has approximately three years of service in a pension plan sponsored by an entity unaffiliated with Valero or UDS that was spun-off from a predecessor of UDS. The 17.67 years of service stated for Mr. Gorder for the Excess Pension Plan and SERP represent his participation since the date of his commencement of employment with Valero.(2) |

  262. Post-Employment Compensation

    The present values stated above were calculated using the same interest rates and mortality tables we use for our financial reporting. Present values at Dec. 31, 2019 were determined using plan specific discount rates (3.29 percent for Pension Plan, 2.92 percent for Excess Pension Plan, 2.74 percent for SERP) and the plans’ earliest unreduced retirement age (i.e., age 62). The present values reflect postretirement mortality rates based on the PRI-2012 mortality table projected generationally using scale MP-2019. No decrements were included for pre-retirement termination, mortality, or disability. When applicable, lump sums were determined based on a 3.29 percent interest rate and the mortality table prescribed by the IRS in Notice 2019-26 for distributions in 2020.

  263. Post-Employment Compensation

    | Discount rates used to determine present value of accumulated benefits (%) | | | | | plan | 2017 | 2018 | 2019 | | Pension Plan | 3.71 | 4.40 | 3.29 | | Excess Pension Plan | 3.39 | 4.07 | 2.92 | | SERP | 3.37 | 4.02 | 2.74 |

  264. Post-Employment Compensation

    | 2020 PROXY STATEMENT | 59 |

  265. Post-Employment Compensation

    Pension Plan. Under our Pension Plan, an eligible employee who is at least 55 years old may elect to retire prior to the normal retirement age of 65, provided the employee has completed as least five years of vesting service. Under the plan’s early retirement provisions, an employee may elect to commence a benefit upon retirement or delay payments to a later date. Pension payments from the Formula Provision (defined below) that begin after age 55 and before age 62 are reduced by four percent for each full year between the benefit start date and the employee’s 62nd birthday. The four-percent reduction is prorated for a partial year. The formula used to calculate the benefit and the optional forms of payment are otherwise the same as for normal retirement. Mr. Gorder, Ms. Titzman, and Mr. Simmons were eligible for early retirement benefits. For employees hired prior to Jan. 1, 2010, the Pension Plan (supplemented, as necessary, by the Excess Pension Plan) provides a monthly pension at normal retirement equal to 1.6 percent of the participant’s average monthly compensation (based upon earnings during the three consecutive calendar years during the last 10 years of the participant’s credited service affording the highest such average) times the participant’s years of credited service. This is known as the “Formula Provision.” Each of our named executive officers was hired prior to Jan. 1, 2010. For employees hired on or after Jan. 1, 2010, the Pension Plan (supplemented, as necessary, by the Excess Pension Plan) is a cash balance benefit that provides a monthly pension at normal retirement based on annual employer contributions that are based on years of service, eligible compensation, and pay credits. This is known as the “Cash Balance Provision.” After a one-year waiting period, pay credits are retroactive to the participant’s date of hire and are based on years of service and eligible compensation.

  266. Post-Employment Compensation

    | points (age and vesting service) | annual pay credit percentage | | under 35 | 6.0% of eligible pay | | 35–49 | 7.5% of eligible pay | | 50–64 | 9.0% of eligible pay | | 65–79 | 10.5% of eligible pay | | 80+ | 12.0% of eligible pay |

  267. Post-Employment Compensation

    In addition to pay credits, participants will also be eligible for monthly interest credits based on the 10-Year U.S. treasury note rate with a minimum of 3 percent. In 2013, we began to implement changes to certain of our U.S. qualified pension plans that cover the majority of our U.S. employees. Benefits under our primary pension plan changed from a final average pay formula (the Formula Provision) to the Cash Balance Provision with staged effective dates from July 1, 2013 through Jan. 1, 2015, depending on the age and service of the affected employees. All final average pay benefits under the Formula Provision were frozen as of Dec. 31, 2014. On Jan. 1, 2015, participants formerly under the Formula Provision in the Pension Plan transitioned to the Cash Balance Provision, with all future Pension Plan benefits to be earned under the new cash balance formula. Excess Pension Plan. Our Excess Pension Plan provides benefits to those employees whose pension benefits under our defined benefit Pension Plan are subject to limitations under the Internal Revenue Code, or are otherwise indirectly constrained by the Code from realizing the maximum benefit available to them under the terms of Pension Plan. The Excess Pension Plan is designed as an “excess benefit plan” as defined under §3(36) of ERISA, for those benefits provided in excess of section 415 of the Code. The Excess Pension Plan is not intended to be either a qualified plan under the provisions of Section 401(a) of the Code, or a funded plan subject to the funding requirements of ERISA. Subject to other terms of the Excess Pension Plan, the benefit payable under the plan in the Formula Provision is generally an amount equal to “x” minus “y”, where “x” is equal to 1.6 percent of a participant’s final average monthly earnings (as determined under the Excess Pension Plan) multiplied by the participant’s number of years of credited service, and “y” is equal to the participant’s benefit that is payable under the Pension Plan. The benefit payable under the Excess Pension Plan in the Cash Balance Provision is generally an amount equal to “x” minus “y”, where “x” is equal to the accumulated account balance that the participant would be entitled to receive without regard to the limitations, and “y” is equal to the participant’s accumulated account balance that is payable under the Pension Plan. The Excess Pension Plan benefit is made in a lump sum. A participant’s benefits under the Excess Pension Plan will vest concurrently with the vesting of the participant’s benefits under the Pension Plan. SERP. Our Supplemental Executive Retirement Plan (SERP) provides an additional benefit equal to 0.35 percent times the product of the participant’s years of credited service (maximum 35 years) multiplied by the excess of the participant’s average monthly compensation over the lesser of 1.25 times the monthly average (without indexing) of the social security wage bases for the 35-year period ending with the year the participant attains social security retirement age, or the monthly average of the social security wage

  268. Post-Employment Compensation

    | 60 | |

  269. Post-Employment Compensation

    base in effect for the year that the participant retires. The participant’s most highly compensated consecutive 36 months of service are considered. The SERP benefit payment is made in a lump sum. A participant in the SERP will vest in the SERP benefit when he or she reaches age 55 (and has completed at least five years of credited service). An executive will become a participant in the SERP as of the date he or she is selected and named in the minutes of the Compensation Committee for inclusion as a participant in the SERP. Compensation for purposes of the Pension Plan, Excess Pension Plan, and SERP includes salary and bonus. No extra years of credited service have been granted to any of our named executive officers.

  270. Nonqualified Deferred Compensation

    Nonqualified Deferred Compensation The following table describes contributions by Valero and each named executive officer under our nonqualified defined contribution and other deferred compensation plans during 2019. The table also presents each named executive officer’s earnings, withdrawals (if any), and year-end balances in these plans.

  271. Nonqualified Deferred Compensation

    | | | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) (1) | Aggregate Earnings in Last FY ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | | Joseph W. Gorder | Excess Thrift Plan | — | 102,550 | — | — | 1,411,478 | | Donna M. Titzman | Excess Thrift Plan | — | 31,150 | — | — | 785,911 | | R. Lane Riggs | Excess Thrift Plan | — | 39,200 | — | — | 403,859 | | | UDS Nonqualified 401(k) Plan (2) | — | — | 4,066 | — | 47,883 | | Jason W. Fraser | Excess Thrift Plan | — | 22,400 | — | — | 96,258 | | Gary K. Simmons | Excess Thrift Plan | — | 25,900 | — | — | 303,061 | | | UDS Nonqualified 401(k) Plan (2) | — | — | 27,849 | — | 124,877 |

  272. Nonqualified Deferred Compensation

    Footnotes to Nonqualified Deferred Compensation table:

  273. Nonqualified Deferred Compensation

    | All of the amounts included in this column are also included within the amounts reported as “All Other Compensation” for 2019 in the Summary Compensation Table.(1) |

  274. Nonqualified Deferred Compensation

    | Valero assumed the UDS Nonqualified 401(k) Plan when Valero acquired UDS in 2001. This plan is frozen.(2) |

  275. Nonqualified Deferred Compensation

    Our Deferred Compensation Plan and Excess Thrift Plan are described in “Compensation Discussion and Analysis—Elements of Executive Compensation—Post-Employment Benefits.” The following terms also apply to these plans. Under the Deferred Compensation Plan (DC Plan), participants may elect when and over what period of time their deferrals will be distributed based on plan provisions. Participants may elect to have their accounts distributed in a lump sum on a specified date, at least three-to-five years after the year of the deferral election. Participants may, at the time of their deferral elections, choose to have their accounts distributed as soon as reasonably practical following retirement or other termination, or on the first day of January following the date of retirement or termination. Participants may also elect to have their accounts distributed in one lump-sum payment or in two- to 15-year installments upon retirement. Upon a participant’s death, the participant’s beneficiary will receive the participant’s DC Plan balance in one lump-sum payment within 90 days following the participant’s death. Upon a change in control of Valero, all DC Plan accounts are immediately vested in full, and distributions are thereafter made in accordance with the plan’s normal distribution provisions. None of our named executive officers participated in the DC Plan in 2019. The Excess Thrift Plan provides benefits to participants of our qualified thrift plan whose accounts would not otherwise be credited with company matching contributions due to certain IRS limits on contributions and/or compensation. The Excess Thrift Plan is neither a qualified plan for federal tax purposes nor a funded plan subject to ERISA. Two separate components comprise the Excess Thrift Plan: (i) an “excess benefit plan” as defined under Section 3(36) of ERISA; and (ii) a plan that is unfunded and maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees.

  276. Nonqualified Deferred Compensation

    | 2020 PROXY STATEMENT | 61 |

  277. Potential Payments Upon Termination or Change of Control

    Potential Payments Upon Termination or Change of Control CHANGE OF CONTROL SEVERANCE AGREEMENTS Our executive officers have change of control severance agreements with Valero. The agreements seek to assure the continued availability of the officers in the event of a change of control of Valero. When a change of control occurs, the agreements become operative for a fixed three-year period. The agreements provide that the officers’ terms of employment will not be changed materially during the three years following a change of control. Each agreement subjects the officer to certain obligations of confidentiality, both during the term and after termination, for information relating to Valero that the officer acquired during his employment. The footnotes to the tables that accompany these disclosures further describe the terms and conditions of the agreements. When determining the amounts and benefits payable under the agreements, the Compensation Committee and Valero sought to secure compensation that is competitive in our market to recruit and retain executive talent. Consideration was given to the principal economic terms found in change of control severance agreements of other publicly traded companies. POLICY FEATURES Our Board has adopted a policy regarding the vesting of performance shares in a change-of-control context. The policy provides that performance shares will not vest automatically upon the date of a change of control of Valero. Instead, the performance share agreements contain a double trigger feature, so that accelerated vesting of performance shares will not occur until the officer’s employment is terminated following a change of control. At that time, any unvested performance shares held by the officer will vest on a partial, pro rata basis, commensurate with the officer’s months of service during the applicable performance period. Our change of control severance agreements do not contain tax gross-up benefits. In 2013, all agreements were amended to eliminate the gross-up benefit that formerly entitled the officers to receive a payment to make them whole for any excise tax on excess parachute payments imposed under Section 4999 of the Internal Revenue Code. Valero has adopted a policy that this benefit may not be included in any future change of control agreements. TERMS AND CONDITIONS For purposes of the agreements, “change of control” means any of the following (subject to additional particulars as stated in the agreements):

  278. Potential Payments Upon Termination or Change of Control

    | • | acquisition by an individual, entity, or group of beneficial ownership of 20 percent or more of our outstanding Common Stock; |

  279. Potential Payments Upon Termination or Change of Control

    | • | ouster from the Board of a majority of the incumbent directors; |

  280. Potential Payments Upon Termination or Change of Control

    | • | consummation of a business combination (e.g., merger, share exchange). |

  281. Potential Payments Upon Termination or Change of Control

    In the agreements, “cause” is defined to mean, generally, the willful and continued failure of the officer to perform substantially the officer’s duties or illegal or gross misconduct by the officer that is materially and demonstrably injurious to Valero. “Good reason” is defined to mean, generally:

  282. Potential Payments Upon Termination or Change of Control

    | • | a diminution in the executive officer’s position, authority, duties and responsibilities; |

  283. Potential Payments Upon Termination or Change of Control

    | • | relocation of the executive (or increased travel requirements); or |

  284. Potential Payments Upon Termination or Change of Control

    | • | failure of Valero’s successor to assume and perform under the agreement. |

  285. Potential Payments Upon Termination or Change of Control

    The following tables disclose potential payments (calculated per SEC regulations) to our named executive officers in connection with a change of control of Valero. If an officer’s employment is terminated for “cause,” the officer will not receive any benefits or compensation other than accrued salary or vacation pay that was unpaid as of the date of termination; therefore, there is no presentation of termination for “cause” in the following tables. Values in the tables assume that a change of control occurred on Dec. 31, 2019, and that the officer’s employment was terminated on that date. Mr. Gorder and Ms. Titzman have grandfathered forms of agreements entered into in 2007. The form of agreement for Messrs. Riggs, Fraser, and Simmons (entered into in 2016 and thereafter) represent the current form of agreement approved by our Compensation Committee for our executive officers. The current form of agreement requires termination of employment following a change of control (double trigger) for accelerated vesting of stock options and restricted stock (the grandfathered agreements for Mr. Gorder and Ms. Titzman accelerate vesting of stock options and restricted stock upon occurrence of the change of control). All forms of agreement

  286. Potential Payments Upon Termination or Change of Control

    | 62 | |

  287. Potential Payments Upon Termination or Change of Control

    for our NEOs require a double trigger for the acceleration of performance shares. Other differences in benefits payable under the grandfathered agreements and our current form of agreement are described in the footnotes to the following table.

  288. Potential Payments Under Change of Control Severance Agreements

    Potential Payments Under Change of Control Severance Agreements

  289. Potential Payments Under Change of Control Severance Agreements

    | A. | Termination of Employment (i) by the Company other than |

  290. Potential Payments Under Change of Control Severance Agreements

    | for “Cause” or (ii) by the Executive for “Good Reason” (1) ($) |

  291. Potential Payments Under Change of Control Severance Agreements

    | Component of Payment | Gorder | Titzman | Riggs | Fraser | Simmons | | Salary (2) | 5,235,000 | 1,450,000 | 1,680,000 | 1,200,000 | 1,300,000 | | Bonus (2) | 13,875,000 | 1,684,000 | 1,680,000 | 960,000 | 845,000 | | Pension, Excess Pension, and SERP | 10,270,498 | 2,785,082 | — | — | — | | Contributions under Defined Contribution Plans | 366,450 | 101,500 | — | — | — | | Health & Welfare Plan Benefits (3) | 80,337 | 49,790 | 60,168 | 60,168 | 60,168 | | Outplacement Services | 25,000 | 25,000 | 25,000 | 25,000 | 25,000 | | Accelerated Vesting of Restricted Stock (4) | 6,717,608 | 1,382,087 | 3,823,917 | 1,792,086 | 975,271 | | Accelerated Vesting of Performance Shares (5) | 3,180,448 | 420,769 | 654,333 | 310,356 | 339,856 |

  292. Potential Payments Under Change of Control Severance Agreements

    | B. | Continued Employment Following Change of Control (6) ($) |

  293. Potential Payments Under Change of Control Severance Agreements

    | Component of Payment | Gorder | Titzman | Riggs | Fraser | Simmons | | Salary, Bonus, Pension, Excess Pension, SERP, Contributions under Defined Contribution Plans, Health & Welfare Benefits | (6) | (6) | (6) | (6) | (6) | | Accelerated Vesting of Restricted Stock (4) | 6,717,608 | 1,382,087 | — | — | — |

  294. Potential Payments Under Change of Control Severance Agreements

    Footnotes for Potential Payments Under Change of Control Severance Agreements tables:

  295. Potential Payments Under Change of Control Severance Agreements

    | If the officer’s employment is terminated by the company other than for “cause,” or if the officer terminates his or her employment for “good reason,” the officer is generally entitled to receive the following:(1) |

  296. Potential Payments Under Change of Control Severance Agreements

    | a lump sum cash payment equal to the sum of:(a) |

  297. Potential Payments Under Change of Control Severance Agreements

    | accrued and unpaid compensation through the date of termination, including a pro-rata annual bonus (for this table, we assumed that the officer’s bonus for the year of termination was paid at year-end);(i) |

  298. Potential Payments Under Change of Control Severance Agreements

    | two times (three times for Mr. Gorder, per his grandfathered form of agreement) the sum of (A) the officer’s annual base salary plus (B) the officer’s eligible bonus amount;(ii) |

  299. Potential Payments Under Change of Control Severance Agreements

    | (iii) | the actuarial present value of the pension benefits (qualified and nonqualified) Mr. Gorder would have received for an additional three years of service (two years of service for Ms. Titzman) (Messrs. Riggs, Fraser, and Simmons do not participate in this element of compensation); and |

  300. Potential Payments Under Change of Control Severance Agreements

    | for Mr. Gorder, the equivalent of three years (two years for Ms. Titzman) of employer contributions under Valero’s tax-qualified and supplemental defined contribution plans (Messrs. Riggs, Fraser and Simmons do not participate in this element of compensation);(iv) |

  301. Potential Payments Under Change of Control Severance Agreements

    | continued welfare benefits for two years (three years for Mr. Gorder); and(b) |

  302. Potential Payments Under Change of Control Severance Agreements

    | up to $25,000 of outplacement services.(c) |

  303. Potential Payments Under Change of Control Severance Agreements

    | If employment is terminated by reason of death or disability, the officer’s estate will be entitled to receive a lump sum cash payment equal to any accrued and unpaid salary and vacation pay plus a prorated bonus amount earned per the terms of the agreement. In the case of disability, the officer would be entitled to disability and related benefits at least as favorable as those provided by Valero under its programs during the 120 days prior to the officer’s termination of employment. |

  304. Potential Payments Under Change of Control Severance Agreements

    | If the officer voluntarily terminates employment other than for “good reason,” he or she will be entitled to a lump sum cash payment equal to any accrued and unpaid salary and vacation pay plus a prorated bonus amount earned per the terms of the agreement. |

  305. Potential Payments Under Change of Control Severance Agreements

    | 2020 PROXY STATEMENT | 63 |

  306. Potential Payments Under Change of Control Severance Agreements

    Footnotes for Potential Payments Under Change of Control Severance Agreements tables (cont.):

  307. Potential Payments Under Change of Control Severance Agreements

    | We assumed each officer’s compensation at the time of the triggering event to be as stated below. The listed salary is the executive officer’s rate of pay as of Dec. 31, 2019. The listed bonus amounts for Mr. Gorder and Ms. Titzman represent the highest bonus earned by the executive in any of fiscal years 2017, 2018, or 2019 (the three years prior to the assumed change of control). The listed bonus amounts for Messrs. Riggs, Fraser, and Simmons represent the target bonus in effect prior to the assumed change of control.(2) |

  308. Potential Payments Under Change of Control Severance Agreements

    | Name | Salary | Bonus | | Joseph W. Gorder | 1,745,000 | 4,625,000 | | Donna M. Titzman | 725,000 | 842,000 | | R. Lane Riggs | 840,000 | 840,000 | | Jason W. Fraser | 600,000 | 480,000 | | Gary K. Simmons | 650,000 | 422,500 |

  309. Potential Payments Under Change of Control Severance Agreements

    | The executive is entitled to coverage under health and welfare benefit plans (e.g., health, dental, etc.) for two years (three years for Mr. Gorder) following the date of termination.(3) |

  310. Potential Payments Under Change of Control Severance Agreements

    | For Mr. Gorder and Ms. Titzman, upon a change of control of Valero, the vesting periods on outstanding stock options and shares of restricted stock are automatically accelerated to the date of the change of control. For Messrs. Riggs, Fraser, and Simmons, the vesting periods on outstanding stock options and shares of restricted stock are accelerated following a change of control upon the executive’s termination of employment (double trigger) so long as the termination is (i) other than for cause, in the case of involuntary termination, or (ii) for “good reason,” in the case of voluntary termination.(4) |

  311. Potential Payments Under Change of Control Severance Agreements

    | There are no values presented in the foregoing tables for accelerated vesting of stock options because all of the stock options held by our NEOs are fully vested. |

  312. Potential Payments Under Change of Control Severance Agreements

    | For shares of restricted stock, the amounts stated in the table represent the product of (a) the number of shares for which vesting is accelerated, and (b) $93.65 (the closing price of Common Stock on the NYSE on Dec. 31, 2019). |

  313. Potential Payments Under Change of Control Severance Agreements

    | Outstanding performance shares do not vest automatically upon a change of control of Valero. Instead, accelerated vesting of performance shares occurs when the executive’s employment with Valero is terminated following a change of control (double trigger). In that event, the unvested performance shares held by the officer will vest on a partial, pro rata basis on the date of the officer’s termination of employment.(5) |

  314. Potential Payments Under Change of Control Severance Agreements

    | The amounts disclosed in the table assume that a change of control occurred Dec. 31, 2019. For outstanding performance shares awarded in 2017, the amount included in the table represents a pro rata payout of common shares based upon the officer’s 24 months of service during the shortened performance period ending Dec. 31, 2019 (pro rata shares times $93.65, the closing price of Common Stock on the NYSE on Dec. 31, 2019), assuming a payout at 100%. |

  315. Potential Payments Under Change of Control Severance Agreements

    | For outstanding performance shares awarded in 2018, the amount included in the table represents a pro rata payout of common shares based upon the officer’s 12 months of service during the shortened performance periods ending Dec. 31, 2019 (pro rata shares times $93.65), assuming a payout at 100%. |

  316. Potential Payments Under Change of Control Severance Agreements

    | For outstanding performance shares awarded in 2019, the amount included in the table is zero because the first measurable performance period for the shares would begin Jan. 1, 2020, and the officer will have zero months of service during any measurable performance period; therefore zero shares of Common Stock would be earned. |

  317. Potential Payments Under Change of Control Severance Agreements

    | The agreements provide for a three-year term of employment following a change of control, and generally provide that the officer will continue to enjoy compensation and benefits per the terms in effect prior to the change of control. In addition, for Mr. Gorder and Ms. Titzman, all outstanding stock options and shares of restricted stock will vest on the date of the change of control (see footnote (4) above).(6) |

  318. Potential Payments Under Change of Control Severance Agreements

    | 64 | |

  319. Potential Payments Under Change of Control Severance Agreements

    DIRECTOR COMPENSATION This table summarizes compensation earned by our directors in 2019.

  320. Potential Payments Under Change of Control Severance Agreements

    | | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | Total ($) | | H. Paulett Eberhart | 130,000 | 175,000 | 305,000 | | Joseph W. Gorder | — | — | (2) | | Kimberly S. Greene | 130,000 | 175,000 | 305,000 | | Deborah P. Majoras | 150,000 | 175,000 | 325,000 | | Eric D. Mullins | — | — | (3) | | Donald L. Nickles | 130,000 | 175,000 | 305,000 | | Philip J. Pfeiffer | 130,000 | 175,000 | 305,000 | | Robert A. Profusek | 160,000 | 175,000 | 335,000 | | Stephen M. Waters | 130,000 | 175,000 | 305,000 | | Randall J. Weisenburger | 150,000 | 175,000 | 325,000 | | Rayford Wilkins, Jr. | 150,000 | 175,000 | 325,000 |

  321. Potential Payments Under Change of Control Severance Agreements

    Footnotes to Director Compensation table:

  322. Potential Payments Under Change of Control Severance Agreements

    | The amounts shown represent the grant date fair value of stock unit awards granted in 2019, computed in compliance with FASB ASC Topic 718. Valero did not grant stock options to any director in 2019. The following table presents for each non-employee director nominee the number of unvested restricted shares of Common Stock and stock units held as of Dec. 31, 2019. There are no outstanding stock options (vested or unvested) held by any of our non-employee directors.(1) |

  323. Potential Payments Under Change of Control Severance Agreements

    | Name | Unvested Restricted Stock | Unvested Stock Units | | H. Paulett Eberhart | 903 | 2,164 | | Kimberly S. Greene | 903 | 2,164 | | Deborah P. Majoras | 903 | 2,164 | | Eric D. Mullins | — | — | | Donald L. Nickles | 903 | 2,164 | | Philip J. Pfeiffer | 903 | 2,164 | | Robert A. Profusek | 903 | 2,164 | | Stephen M. Waters | 903 | 1,933 | | Randall J. Weisenburger | 903 | 2,164 | | Rayford Wilkins, Jr. | 903 | 2,164 |

  324. Potential Payments Under Change of Control Severance Agreements

    | Mr. Gorder did not receive any compensation as director of Valero in 2019. His compensation for service as an executive officer in 2019 is presented in this proxy statement in the compensation tables for our named executive officers.(2) |

  325. Potential Payments Under Change of Control Severance Agreements

    | Mr. Mullins joined the Board on Jan. 23, 2020.(3) |

  326. Potential Payments Under Change of Control Severance Agreements

    Our non-employee directors earn an annual cash retainer of $130,000. Valero pays an annual retainer in lieu of separate meeting fees. In addition to the retainer, in 2019, directors who chaired the Audit, Compensation, and Nominating/Governance and Public Policy Committees earned an additional $20,000 cash payment for their service as Chair, and Mr. Profusek earned an additional $30,000 cash payment for his service as Lead Director. Directors are reimbursed for expenses of meeting attendance. Directors who are employees of Valero do not receive compensation for serving as directors. In addition to annual cash payments, in 2019, each non-employee director who was re-elected on the date of our annual stockholders meeting received an equity grant in the form of stock units (described below) valued at $175,000 (calculated pursuant to FASB ASC Topic 718). Grants of equity awards supplement the cash compensation paid to our non-employee directors and serve to increase our

  327. Potential Payments Under Change of Control Severance Agreements

    | 2020 PROXY STATEMENT | 65 |

  328. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION directors’ identification with the interests of our stockholders through ownership of Common Stock. Non-employee directors are expected to hold shares of Common Stock having a value equal to five times the annual cash retainer and have five years from the date of their initial election to the Board to meet that guideline. Each stock unit represents the right to receive one share of Valero Common Stock, and is scheduled to vest (become nonforfeitable) in full on the date of Valero’s next annual meeting of stockholders for the election of directors. Directors may elect to defer receipt of the common shares for an additional one-year following the vesting date of the stock units. The stock unit award includes a dividend equivalent award, representing the right to receive, on the vesting date of the stock unit award, a payment in cash in an amount equal to the cumulative amount of dividends paid to holders of Common Stock during the period when the stock unit remained outstanding prior to vesting — calculated as if each stock unit held by the director was an outstanding share of Common Stock. The Compensation Committee reviews our director compensation program at least annually with assistance and input from our compensation consultant. The annual review includes an assessment of the director compensation programs of our peers and of industry trends and developments. On Sept. 5, 2019, following our Compensation Committee’s review of our non-employee director compensation program and the programs of our peers, the Board adopted certain changes to our director compensation program. These changes, effective Jan. 1, 2020, are (i) an increase in the value of annual equity awards to $200,000, (ii) an increase in Lead Director pay to $35,000 per year, and (iii) an increase in committee chair pay to $25,000 per year. The annual cash retainer of $130,000 for each director remained unchanged. The changes were approved to more closely align our program with that of our peers and with general industry practice. The Board previously approved a limitation on the amount of equity compensation that may be paid to our non-employee directors in any year. The limitation was implemented via an amendment to our 2011 Omnibus Stock Incentive Plan (the same limitation is contained in the proposed 2020 Omnibus Stock Incentive Plan). The limitation provides that a non-employee director may not receive in any calendar year awards payable in shares of Common Stock that have a fair market value greater than $500,000 in the aggregate. We selected $500,000 as the amount of the limitation because we believe that it places a meaningful limit on awards to our non-employee directors. While the amount of equity compensation awarded to our non-employee directors in recent years has been considerably lower than this limit, we believe that setting a limitation at this level provides us with a reasonable degree of flexibility to make adjustments that we may in the future deem appropriate or necessary for our compensation program to remain competitive in the market.

  329. DIRECTOR COMPENSATION

    | 66 | |

  330. DIRECTOR COMPENSATION

    PAY RATIO DISCLOSURE The following disclosure are made pursuant to Item 402(u) of SEC Regulation S-K. The median of the annual total compensation of all employees of Valero for 2019, except our CEO, was $272,417, and the annual total compensation of our CEO, Mr. Gorder, for 2019 was $28,175,952 (as disclosed in the Summary Compensation Table). As a result, our CEO’s 2019 annual total compensation was 103 times that of the median annual total compensation of all employees of Valero. To determine the median of the annual total compensation of all employees, we first identified the median employee using the sum of base pay, annual bonus, and the grant date fair value of long-term incentive awards. Once the median employee was identified, we then determined the median employee’s annual total compensation as of Dec. 31, 2019 using the Summary Compensation Table methodology set out in Item 402(c)(2)(x) of SEC Regulation S-K. In determining our pay ratio for 2019, we referred to the same employee who was identified as our median employee as of Dec. 31, 2018. We determined that there have been no changes to our employee population or employee compensation arrangements in 2019 that we believe would significantly impact our pay ratio disclosure and thus require identification of a new median employee. Our total employee population (U.S. and non-U.S.) as of Dec. 31, 2019, was approximately 10,225 employees. To determine the median employee for purposes of this disclosure, following the de minimis exemption under Item 402(u)(4)(ii) of Regulation S-K, we excluded all of our employees in Peru (118 employees) and all of our employees in Mexico (16 employees); the excluded employees represent less than five percent of our total employees. We did not exclude any employees under the data privacy exemption of Item 402(u)(4)(i).

  331. DIRECTOR COMPENSATION

    | | Median Employee to CEO Pay Ratio | | | | Median Employee ($) | CEO ($) | | Salary | 113,770 | 1,745,000 | | Stock Awards | — | 14,485,699 | | Non-Equity Incentive Plan Compensation | 14,030 | 4,100,000 | | Change in Pension Value and Nonqualified Deferred Compensation Earnings | 109,770 | 7,484,813 | | All Other Compensation | 34,847 | 360,440 | | Total Compensation | 272,417 | 28,175,952 | | Median Employee to CEO Pay Ratio | 1:103 | |

  332. DIRECTOR COMPENSATION

    | 2020 PROXY STATEMENT | 67 |

  333. DIRECTOR COMPENSATION

    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS