PBF Energy 2012 Annual Report Download - page 42

We are controlled by Blackstone and First Reserve through their ownership of units of PBF LLC, and their
interests may differ from those of our public stockholders.
We are controlled by Blackstone and First Reserve, who collectively beneficially own in the aggregate
approximately 70.2% of the combined voting power of our common stock. As a result, Blackstone and First
Reserve have the ability to elect all of our directors and thereby control our policies and operations, including the
appointment of management, future issuances of securities, the incurrence of debt by us, amendments to our
organizational documents and the entering into of extraordinary transactions, and their interests may not in all
cases be aligned with our Class A common stockholders’ interests.
For example, the pre-IPO owners of PBF LLC may have different tax positions which could influence their
decisions regarding whether and when to dispose of assets, whether and when to incur new or refinance existing
indebtedness, especially in light of the existence of the tax receivable agreement described below. In addition, the
structuring of future transactions may take into consideration these tax or other considerations even where no
similar benefit would accrue to our Class A common stockholders or us. See “Item 13. Certain Relationships and
Related Transactions, and Director Independence.”
Blackstone and First Reserve may have an interest in pursuing acquisitions, divestitures and other
transactions that, in their judgment, could enhance their equity investment, even though such transactions might
involve risks to our Class A common stockholders. For example, they could cause us to make acquisitions that
increase our indebtedness or to sell revenue-generating assets. So long as they continue to beneficially own a
majority of the combined voting power of us and PBF LLC, they will have the ability to control the vote in any
election of directors. In addition, pursuant to the stockholders agreement we entered into with Blackstone and
First Reserve, Blackstone and First Reserve have the ability to nominate a number of our directors, including a
majority of our directors, so long as certain ownership thresholds are maintained. See “Item 13. Certain
Relationships and Related Transactions, and Director Independence.” This concentration of ownership may have
the effect of delaying, preventing or deterring a change of control of our company. Lastly, Blackstone and First
Reserve are in the business of making investments in companies and may from time to time acquire and hold
interests in businesses that compete directly or indirectly with us. Our certificate of incorporation contains a
provision renouncing our interest and expectancy in certain corporate opportunities identified by Blackstone or
First Reserve. They may also pursue acquisition opportunities that are complementary to our business and, as a
result, those acquisition opportunities may not be available to us.
We will be required to pay the holders of PBF LLC Series A Units for certain tax benefits we may claim
arising in connection with our initial public offering and future exchanges of PBF LLC Series A Units for
shares of our Class A Common Stock and related transactions, and the amounts we may pay could be
significant.
In connection with our initial public offering, we entered into a tax receivable agreement that provides for
the payment from time to time by PBF Energy to the holders of PBF LLC Series A Units of 85% of the benefits,
if any, that PBF Energy is deemed to realize as a result of (i) the increases in tax basis resulting from its
acquisitions of PBF LLC Series A Units in connection with our initial public offering or in the future and
(ii) certain other tax benefits related to our entering into the tax receivable agreement, including tax benefits
attributable to payments under the tax receivable agreement. See “Item 13. Certain Relationships and Related
Transactions, and Director Independence.”
We expect that the payments that we may make under the tax receivable agreement will be substantial.
Assuming no material changes in the relevant tax law, and that we earn sufficient taxable income to realize all
tax benefits that are subject to the tax receivable agreement, we expect future payments under the tax receivable
agreement relating to the purchase by PBF Energy of PBF LLC Series A Units as part of our initial public
offering to aggregate approximately $160.0 million and to range over the next 5 years from approximately $1.0
million to $18.1 million per year and decline thereafter. Future payments by us in respect of subsequent
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