TESORO CORPORATION DESCRIPTION OF 2016 INCENTIVE COMPENSATION PROGRAM

Contract Categories: Human Resources - Bonus & Incentive Agreements
EX-10.63 4 tso10k2015-ex1063.htm DESCRIPTION OF 2016 INCENTIVE COMPENSATION PROGRAM Exhibit
Exhibit 10.63

TESORO CORPORATION
DESCRIPTION OF 2016 INCENTIVE COMPENSATION PROGRAM

On January 28, 2016, the Compensation Committee approved the terms of the 2016 Incentive Compensation Program (the “2016 ICP” or the “2016 Program”). In addition, the Compensation Committee approved the target payouts for our Chief Executive Officer other named executive officers. The 2016 Program consists of two components: Corporate and Business Unit performance, which are outlined below. The performance results of Tesoro Corporation (the “Company”) and the individual business units may be adjusted to take into account unbudgeted business decisions, unusual or non-recurring items, and other factors, as approved by the Compensation Committee, to determine the total amount, if any, available under the 2016 ICP. The Compensation Committee also has discretion to adjust individual awards based on their assessment of an individual executive’s performance relative to successful achievement of goals, business plan execution, and other leadership attributes.

Component 1 - Corporate Performance - measured against target with the range of outcomes between 0% and 200%. Corporate performance metrics include the following:
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Achievement of earnings before interest, taxes, depreciation and amortization (“EBITDA”) measured on a margin neutral basis (this is the most heavily weighted metric, constituting 50% of the bonus opportunity for the corporate performance component)

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Safety - Targeted improvement in recordable incidents (this metric constitutes 5% of the bonus opportunity for the corporate performance component)

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Process Safety Management - Targeted improvement in the number of process safety incidents (this metric constitutes 5% of the bonus opportunity for the corporate performance component)

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Environmental - Targeted improvement in the number of environmental incidents (this metric constitutes 5% of the bonus opportunity for the corporate performance component)

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Cost Management - Measurement of non-capital cash expenditure versus budget (this metric constitutes 17.5% of the bonus opportunity for the corporate performance component)

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Business Improvement - Targeted improvements from capital improvement initiatives, synergies related to asset acquisitions and other projects and initiatives (this metric constitutes 17.5% of the bonus opportunity for the corporate performance component)

Component 2 - Business Unit Performance - measured against target with the range of outcomes between 0% to 200%. Business Unit performance is measured through balanced scorecards with performance metrics including, but not limited to:
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Safety and Environmental

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Cost Management

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Improvements in EBITDA

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Business improvements and value creation initiatives