Energy Transfer 2012 Annual Report Download - page 124

116
ITEM 11. EXECUTIVE COMPENSATION
Overview
As a limited partnership, we are managed by our General Partner, which in turn is managed by its general partner, ETP LLC,
which we refer to in this Item as “our General Partner.” As of December 31, 2012 ETE owned 100% of our General Partner and
approximately 17% of our outstanding units. All of our employees are employed by and receive employee benefits from our
Operating Companies.
Compensation Discussion and Analysis
Named Executive Officers
We do not have officers or directors. Instead, we are managed by the board of directors of our General Partner, and the executive
officers of our General Partner perform all of our management functions. As a result, the executive officers of our General Partner
are essentially our executive officers, and their compensation is administered by our General Partner. This Compensation Discussion
and Analysis is, therefore, focused on the total compensation of the executive officers of our General Partner as set forth below.
The executive officers we refer to in this discussion as our “named executive officers” are the following officers of our General
Partner:
• Kelcy L. Warren, Chief Executive Officer;
• Marshall S. (Mackie) McCrea, III, President and Chief Operating Officer;
• Martin Salinas, Jr., Chief Financial Officer;
• Thomas P. Mason, Senior Vice President, General Counsel and Secretary; and
• Richard Cargile, President - Midstream.
Our General Partner’s Philosophy for Compensation of Executives
In general, our General Partner’s philosophy for executive compensation is based on the premise that a significant portion of each
executive’s compensation should be incentive-based and that executives' base salary levels should be competitive in the marketplace
for executive talent and abilities. Our General Partner also believes the incentives should be competitive in the marketplace and
balanced between short and long-term performance. Our General Partner believes this balance is achieved by (i) the payment of
annual discretionary cash bonuses that consider the achievement of the Partnership's financial performance objectives for a fiscal
year set at the beginning of such fiscal year and the individual contributions of our named executive officers to the success of the
Partnership and (ii) the annual grant of restricted unit awards under our equity incentive plans, which are intended to provide a
longer term incentive to our key employees to focus their efforts on increasing the market price of our publicly traded units and
to increase the cash distribution we pay to our Unitholders.
Prior to December 2012, our equity awards were primarily in the form of restricted unit awards that vest over a specified time
period, with substantially all of these awards vesting over a five-year period at 20% per year based on continued employment
through each specified vesting date. Beginning in December 2012, we began granting restricted unit awards that vest, based upon
continued employment, at a rate of 60% after the third year of service and the remaining 40% after the fifth year of service. Our
General Partner believes that these equity-based incentive arrangements are important in attracting and retaining our executive
officers and key employees as well as motivating these individuals to achieve our business objectives. The equity-based
compensation also reflects the importance we place on aligning the interests of our named executive officers with those of our
Unitholders.
While we are responsible for the direct payment of the compensation of our named executive officers as employees of ETP, ETP
does not participate or have any input in any decisions as to the compensation policies of our General Partner or the compensation
levels of the executive officers of our General Partner. The compensation committee of the board of directors of our General
Partner (the “Compensation Committee”) is responsible for the approval of the compensation policies and the compensation levels
of these executive officers. We directly pay these executive officers in lieu of receiving an allocation of overhead related to executive
compensation from our General Partner. For the year ended December 31, 2012, we paid 100% of the compensation of the executive
officers of our General Partner as we represent the only business currently managed by our General Partner.
For a more detailed description of the compensation of our named executive officers, please see “— Compensation Tables” below.
Table of Contents