Exhibit 10.4
 
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Compensation and Benefits

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Market Stock Unit Award Granted in 2011

Summary of Key Provisions

 
Purpose
 
 * To advance the interests of Tesoro (the “Company”) by motivating plan
   participants to contribute to the long-term success and progress of the
   Company.

 
 
Eligibility
 
 * All senior executives and employees in salary grades 6 and above or as
   approved by the Compensation Committee of Tesoro’s Board of Directors.

 
 
Plan
 
 * These awards are granted under the general terms and conditions of the 2011
   Long-Term Incentive Plan.

 
Market Stock Unit
 
 * A Market Stock Unit Award is a grant of stock units in which the number of
   shares of the Company’s common stock earned at vesting is based on the stock
   price performance.

 
 
Performance Period
 
 * The performance period for the Market Stock Unit Award granted in 2011 is 36
   months from the effective date of the grant.

 
 
Vesting
 
 * The Market Stock Unit Award will vest at the end of the 36 month performance
   period.

 
Form and Timing of Payout
 
 * The Market Stock Unit Award will be settled in common stock of the Company
   within 2 ½ months after the end of the performance period.

 
Calculation of Market Stock Unit Award at Vesting
 
 * The number of shares earned at time of vesting will be calculated as follows:

 
Shares Earned at Vesting* = A times (C/B)
     Symbol       Description
       A       # of Targeted Market Stock Units at Grant
       B       Average closing stock price for the 30 trading days prior to the
Grant Date
       C       Average closing stock price for the 30 trading days prior to the
Vesting Date
 
*Shares Earned at Vesting is capped at 200% of number of Targeted Market Stock
Units at Grant.

Market Stock Unit Award Granted in 2011 
 
1

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Payout Range
 
 * The payout for the Market Stock Unit Award can range from 50% to 200% based
   on stock price appreciation.  However, there is no payout if the average
   closing stock price for the 30 trading days prior to the Vesting Date (or
   Change in Control) has decreased by more than 50% from the average closing
   stock price for the 30 trading days prior to the Grant Date.

 
 
Termination of Employment
 
 * Retirement – a pro-rated payout of shares will be issued based on the number
   of full months worked (minimum of 12 months required within the performance
   period based on the achievement of actual performance.  Shares will be issued
   within 2 ½ months after the end of the performance period.

 
 
 * All Other Terminations – award will be forfeited.

 
 
Change in Control
 
 
 * In the event of a Change in Control of the Company, the number of shares
   earned will be calculated as follows:

 
Shares Earned At Vesting* = A times (C/B)
      
      Symbol   Description
       A      # of Targeted Market Stock Units at Grant
       B       Average closing stock price for the 30 trading days prior to the
Grant Date
       C       Average closing stock price for the 30 trading days prior to the
Change in Control
 
*Shares Earned at Vesting is capped at 200% of number of Targeted Market Stock
Units at Grant.

Nothing herein is intended to modify any referenced Plan.  The applicable Plan
is the legally governing document and is the final authority on the terms of
such Plan unless the Compensation Committee of the Board of Directors (or in the
absence of the Compensation Committee, the Board itself) specifies otherwise
(either in an Award Agreement or otherwise).

Market Stock Unit Award Granted in 2011 

 
 
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