2018 Guide to Effective Proxies

6 TH EDITION | GUIDE TO EFFECTIVE PROXIES 342 COMPENSATION DISCUSSION AND ANALYSIS ELEMENTS OF EXECUTIVE COMPENSATION—SUMMARY The primary elements of our 2017 executive compensation program are summarized in the table below. 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 nine-company Performance Peer group across a three-year period • Incentivizes shareholder 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 Fixed Variable 2017 TARGET PAY MIX FOR EXECUTIVES Variable pay tied to company performance represents the majority of total target pay for our executives as shown for the various executive levels below. CEO 12% Salary 17% Annual Incentive Bonus 71% Long-Term Incentives CFO 17% Salary 19% Annual Incentive Bonus 64% Long-Term Incentives EVP 24% Salary 19% Annual Incentive Bonus 57% Long-Term Incentives SVP 30% Salary 19% Annual Incentive Bonus 51% Long-Term Incentives 88% Variable Pay 83% Variable Pay 76% Variable Pay 70% Variable Pay 2018 PROXY STATEMENT 23 VALERO ENERGY CORPORATION