2024 ESG Report FINAL - Report - Page 68
Comprehensive Liquid Fuels Strategy
We are working to advance the future of energy with capital discipline, innovation and unmatched execution. We
support our commitment to stockholder returns with our comprehensive liquid fuels strategy that drives economic
growth projects and provides a viable path to reduce and displace GHG emissions.
Operations
Unmatched Execution with a Proven History of
Operational Excellence
• The lowest cash operating cost among peer
group while maintaining top-quartile operating
performance.
• Safe, reliable, environmentally responsible
operations have driven higher pro昀椀tability and
lower volatility through multiple commodity
cycles.
• Applying our liquid fuels manufacturing
expertise to optimize our integrated low-carbon
fuels businesses.
Capital Discipline
Demonstrated Commitment to Stockholders
• Disciplined capital allocation delivering peerleading free cash 昀氀ow yield and returns to
stockholders across margin cycles.
• Delivered on our annual payout ratio
commitment every year under current
management since 2014.
− Average payout ratio of 69% since 2014
(55% excluding 2020)
− Reduced our shares outstanding by over
36% since 2014
• 16% average annual Return on Invested
Capital (ROIC) since 2014.
Earnings Growth
Executive Compensation
Growth Through Innovation
Alignment of Executive Pay with Company
Performance and Long-Term Stockholder Value
Creation
• Re昀椀ning growth projects focused on operating
cost control, optimization and margin
improvement.
• Leveraging our global liquid fuels platform to
expand our long-term competitive advantage
with investments in economic low-carbon
projects.
• 25% after-tax IRR hurdle rate for growth
projects.
• Tight linkage of company performance and
executive pay.
• Alignment of interests of executives and
stockholders.
• Risk management and adoption of best
practices in executive pay.
• Balance of compensation over short- and
long-term periods.
• Retention of top executive talent.
Linkage of Executive Compensation to HSE, Sustainability and Climate
Annual Bonus Program - Valero’s annual bonus
program includes both HSE performance measures
and ESG efforts and improvements. Since 2022, the
Health, Safety and Environment sub-component
of the annual bonus program was improved by
adjusting targets for certain metrics and through the
implementation of a severity/volume enhancer on
the Environmental Scorecard Incidents metric.
See non-GAAP disclosures beginning on page 80.
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Long-Term Incentive (LTI) Program - A performance
share component was added to include ties between
executive compensation and our low-carbon fuels
strategy, including (i) progress towards the publicly
announced GHG emissions reduction/displacement
targets, and (ii) investment of growth capital
attributable to Valero into low-carbon initiatives.
