By ERNEST SCHEYDERNEW YORK (AP) ¿ The chairman, president and chief executive of Valero Energy Corp. received compensation valued at $6.6 million in 2008, a 50 percent decrease from the previous year, according to an Associated Press calculation of figures disclosed in a regulatory filing. The San Antonio, Texas-based company paid William R. Klesse $1.5 million in base salary, the same as 2007, and a bonus of $705,510, down 81 percent from a year earlier. Valero, the nation's largest independent oil refiner, determines bonuses using a formula that includes targets for earnings per share. The company posted a loss in 2008 as high energy prices stunted demand for gasoline and other refined products. That, in turn, pushed Klesse's bonus lower. Valero's compensation committee had bypassed the formula ¿ after a request from Klesse ¿ and approved a higher bonus, citing an increase in quarterly dividend, debt repayment and other factors. Klesse, 62, then asked that instead of the higher payout, a $50 bonus be paid to hourly and other employees participating in the company's bonus pool. The committee agreed.
Additionally, Valero award Klesse $138,494 in other compensation, including $25,073 in life insurance premiums, $1,128 for personal use of company aircraft, $5,070 for club membership fees, $94,117 for retirement plans and $239 for a home security system. The drop in total compensation for Klesse was partly due to a 47 percent decrease in stock and option awards, to a total of $4.3 million. Those awards are now worth more than when they were issued last October because of an increase in Valero's stock price since then. The Associated Press' calculations of total compensation include salary, bonus, performance-related incentives, perks, any above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. They may vary from totals listed in the summary compensation table in the company's proxy filed with the SEC. According to Valero's proxy filing, the compensation committee benchmarks its executive pay practices against a peer group of companies that includes BP PLC, Chevron Corp. and Tesoro Corp. The committee also has established a guideline for Klesse to own shares having a value of five times his base salary in order to align his interests with those of shareholders.
For 2008, Valero reported a loss of $1.13 billion, or $2.16 per share, compared with a profit of $5.23 billion, or $8.88 per share, in 2007. The stock fell 69 percent in 2008, to close the year at $21.64. Shares fell 28 cents to $18.22 in midday trading Wednesday.