2018 Guide to Effective Proxies

2.3 Table of contents | 65 6 TH EDITION | GUIDE TO EFFECTIVE PROXIES VALERO ENERGY CORPORATION VERA BRADLEY, INC. W. R. BERKLEY WELLS FARGO Table of Contents AnnualMeetingofStockholders 1 InformationRegardingtheBoardofDirectors 3 IndependentDirectors 3 CommitteesoftheBoard 4 SelectionofDirectorNominees 5 LeadershipStructureoftheBoard 6 LeadDirectorandMeetingsofNon-Management Directors 6 RiskOversight 7 ClimateChangeDisclosure 8 ProposalNo.1—ElectionofDirectors 9 InformationConcerningNomineesandDirectors 9 IdentificationofExecutiveOfficers 14 BeneficialOwnershipofValeroSecurities 15 Section16(a)BeneficialOwnershipReporting Compliance 16 RiskAssessmentofCompensationPrograms 17 CompensationCommitteeReport 18 CompensationDiscussionandAnalysis 18 CompanyOverview 18 CompanyPerformance 19 AlignmentofExecutivePaytoCompanyPerformance 22 AdoptionofCompensationGovernanceBest Practices 25 DialogueWithStockholders 26 AdministrationofExecutiveCompensationPrograms 27 BenchmarkingData 27 ProcessandTimingofCompensationDecisions 28 ElementsofExecutiveCompensation 28 BenchmarkingCompetitivePayLevels 29 RelativeSizeofMajorCompensationElements 29 IndividualPerformanceandPersonalObjectives 30 BaseSalaries 31 AnnualIncentiveBonus 31 Long-TermIncentiveAwards 34 PerquisitesandOtherBenefits 35 Post-EmploymentBenefits 35 AccountingandTaxTreatment 36 Compensation-RelatedPolicies 37 CompensationConsultantDisclosures 39 EquityCompensationPlanInformation 40 ExecutiveCompensation 41 SummaryCompensationTable 41 GrantsofPlan-BasedAwards 43 OutstandingEquityAwards 46 OptionExercisesandStockVested 48 Post-EmploymentCompensation 49 PensionBenefits 49 NonqualifiedDeferredCompensation 51 PotentialPaymentsUponTerminationorChangeof Control 52 DirectorCompensation 55 PayRatioDisclosure 57 CertainRelationshipsandRelatedTransactions 58 ProposalNo.2—RatifyAppointmentofIndependent Auditors 60 KPMGLLPFees 61 ReportoftheAuditCommittee 62 ProposalNo.3—AdvisoryVotetoApprove CompensationofNamedExecutiveOfficers 63 ProposalNo.4—AmendtheRestatedCertificateof IncorporationtoRemoveSupermajorityVote Requirements 64 ProposalNo.5—AmendtheRestatedCertificateof IncorporationtoPermitStockholderstoActbyWritten Consent 69 Miscellaneous 70 GovernanceDocumentsandCodesofEthics 70 StockholderCommunications,Nominations,and Proposals 70 FinancialStatements 71 Householding 71 TransferAgent 71 TABLE OF CONTENTS PROXY SUMMARY i Fiscal2018BusinessHighlights i StrategicProgress i FinancialResults i ExecutiveCompensation ii CorporateGovernanceHighlights ii ShareholderEngagement iii BoardNominees iii Auditors iii QuestionsandAnswers iv NoteAboutForward-LookingStatements iv PROPOSAL NO. 1 ELECTION OF DIRECTORS 1 VOTE REQUIRED AND BOARD RECOMMENDATION 1 THE BOARD OF DIRECTORS 2 DirectorQualificationsandSelectionProcess 2 DirectorNomineesforElectionatthe2018Annual Meeting 2 DirectorsContinuinginOffice 3 CORPORATE GOVERNANCE 6 CorporateGovernanceGuidelines 6 ConflictofInterestandBusinessEthicsPolicy 6 CodeofEthicsforSeniorFinancialOfficers 6 RiskOversight 6 StockOwnershipGuidelines 7 Hedging,DerivativesandPledging 7 CompensationCommitteeInterlocksandInsider Participation 7 PolicyonRelatedPartyTransactions 7 RelatedPartyTransactionsforFiscal2018 7 FamilyRelationships 8 CopiesofGovernanceDocuments 8 THE BOARD AND ITS COMMITTEES 9 BoardResponsibilities 9 BoardIndependence 9 BoardLeadershipStructureandLeadIndependent Director 10 StandingCommitteesandMeetingsoftheBoard 10 AnnualBoardandCommitteeEvaluations 11 CommitteeCharters 11 CommunicationswithDirectors 11 DIRECTOR COMPENSATION 12 CashCompensationforNon-EmployeeDirectors 12 RestrictedStockUnitsforNon-EmployeeDirectors 12 Fiscal2018DirectorCompensation 12 PROPOSAL NO. 2 RATIFICATION OF INDEPENDENT AUDITOR 13 Proposal 13 PrincipalAccountingFeesandServices 13 VOTE REQUIRED AND BOARD RECOMMENDATION 13 AUDIT COMMITTEE REPORT 14 PROPOSAL NO. 3 ADVISORY VOTE ON EXECUTIVE COMPENSATION 15 Proposal 15 VOTE REQUIRED AND BOARD RECOMMENDATION 15 EXECUTIVE COMPENSATION 16 COMPENSATION COMMITTEE REPORT 16 EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS 16 OurCompensationPhilosophyandObjectives 17 CompensationMixandPayforPerformance 18 PayPolicies 19 HowWeMakeExecutiveCompensationDecisions 19 ElementsofOurExecutiveCompensationProgram inFiscal2018 20 PayRatioDisclosure 25 AgreementwithNamedExecutiveOfficer 26 CompensationandRisk 27 EffectofAccountingandTaxTreatmenton CompensationDecisions 27 COMPENSATION TABLES 28 SummaryCompensationTable 28 Fiscal2018GrantsofPlan-BasedAwards 29 OutstandingEquityAwardsatFiscalYear-End 30 OptionExercisesandSharesVested 32 PensionBenefits 32 NonqualifiedDeferredCompensation 32 PotentialPaymentsUponTerminationorChangein Control 33 SeveranceAgreementsandArrangements 35 QUESTIONS AND ANSWERS ABOUT THE PROXY AND THE 2018 ANNUAL MEETING 39 SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 42 OTHER BUSINESS & ADDITIONAL INFORMATION 44 Section16(A)BeneficialOwnershipReporting Compliance 44 Requirements,IncludingDeadlines,forSubmission ofProxyProposals,NominationofDirectorsand OtherBusinessofShareholders 44 Table of Contents OURSTRATEGYANDGOALS 2 OurLong-TermStrategy 2 DemonstratingProgressonOurSixGoals 3 TRANSFORMINGWELLSFARGO 5 OurJourneyandOurProgresstoRebuildTrust 5 KeyActionsTakenByOurBoardandOur Company 5 Assessing,Strengthening,andMeasuringOur Culture 8 CORPORATEGOVERNANCE 11 OurCorporateGovernanceFrameworkand Documents 11 ComprehensiveAnnualEvaluationofBoard Effectiveness 13 OurInvestorEngagementProgram 15 DemonstratedTrackRecordofResponsivenessto InvestorsandOtherStakeholders 16 StrongIndependentBoardLeadership 18 ManagementSuccessionPlanningandDevelopment 20 BoardRefreshmentandComposition 21 BoardSuccessionPlanning 21 BoardRefreshmentandBoardSize 22 BoardQualificationsandExperience 23 ImportanceofBoardDiversity 25 Item1–ElectionofDirectors 26 DirectorNomineesforElection 26 DirectorElectionStandardandNomination Process 33 DirectorOrientationProcessandContinuing Education 35 DirectorIndependence 35 OurBoardanditsCommittees 37 BoardandCommitteeMeetings;AnnualMeeting Attendance 37 CommitteesofOurBoard 37 OurBoard’sRoleinRiskOversight 44 CompensationCommitteeInterlocksandInsider Participation 45 DirectorCompensation 46 OURCOMMITMENTASASOCIALLYRESPONSIBLE COMPANY 49 INFORMATIONABOUTRELATEDPERSONS 51 RelatedPersonTransactions 51 RelatedPersonTransactionPolicyandProcedures 52 OWNERSHIPOFOURCOMMONSTOCK 54 DirectorsandExecutiveOfficers 54 PrincipalShareholders 57 EXECUTIVECOMPENSATION 58 IncentiveCompensationRiskManagementand TeamMemberPerformanceManagement 58 Item2–AdvisoryResolutiontoApprove ExecutiveCompensation 62 CompensationDiscussion&Analysis 63 2017CompensationandFinancialPerformance Overview 64 GovernanceFrameworkforCompensation Decisions 66 HowtheHRCConsidersPriorSayonPayVotes andInvestorFeedback 69 ExecutiveAccountability 70 CompensationElements 72 CompensationDecisionsforNamedExecutives 72 OtherCompensationComponents 78 TaxConsiderations 78 Conclusion 79 CompensationCommitteeReport 79 ExecutiveCompensationTables 80 2017SummaryCompensationTable 80 2017GrantsofPlan-BasedAwards 82 OutstandingEquityAwardsatFiscalYear-End 2017 84 2017OptionExercisesandStockVested 86 2017PensionBenefits 87 2017NonqualifiedDeferredCompensation 89 PotentialPost-EmploymentPayments 93 OurWorkforce 96 AUDITMATTERS 97 Item3–RatifyAppointmentofIndependent RegisteredPublicAccountingFirmfor2018 97 KPMGFees 97 AuditandExaminationCommitteePre-Approval PoliciesandProcedures 98 AuditandExaminationCommitteeReport 98 SHAREHOLDERPROPOSALS 99 OurCommitmenttoaBusinessStandards ReviewandReport 99 Item4–ShareholderProposal–Special ShareownerMeetings 100 Item5–ShareholderProposal–Reform ExecutiveCompensationPolicywithSocial Responsibility 102 Item6–ShareholderProposal–Reporton IncentiveCompensationandRisksofMaterial Losses 104 VOTINGANDOTHERMEETINGINFORMATION 107 VotingInformation 107 MeetingAdmissionInformation 110 ShareholderInformationforFutureAnnual Meetings 111 OtherInformation 112 Table of Contents 2018AnnualMeetingofStockholders 1 AlignmentwithStockholdersInterests 2 2017FinancialHighlights 3 ProxySummary 4 OurBusinessMustBeManagedwithaLong-TermPerspective 4 OurLong-TermPerspectiveHasDrivenSuperiorStockholderValueCreation 8 OurCompensationProgramsAreStructuredtoAlignEmployees’andDirectors’InterestswiththoseofStockholdersby RewardingLong-TermValueCreationandtoRetainTopTalent 9 NEOCompensationin2017ReflectsOurResults 12 OurCorporateGovernanceIsAlignedwithOurLong-TermPerspective 13 StockholderOutreach 17 CumulativeProgramChangesinResponsetoStockholderOutreach 19 Proposal1:ElectionofDirectors 20 OurDirectorsandDirectorNominees 20 Proposal2:Approvalofthe2018StockIncentivePlan 25 Proposal3:Non-BindingAdvisoryVoteonExecutiveCompensation 35 Proposal4:RatificationofAppointmentofIndependentRegisteredPublicAccountingFirm 36 ExecutiveOfficers 37 CorporateGovernanceandBoardMatters 38 Highlights 38 BoardCommittees 39 AdditionalInformationRegardingtheBoardofDirectors 42 CompensationCommitteeInterlocksandInsiderParticipation 46 CodeofEthics 46 CommunicationswithNon-ManagementDirectors 46 TransactionswithManagementandOthers 47 Total of 02 pages in section