Energy Transfer 2012 Annual Report Download - page 125

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Compensation Philosophy
Our compensation program is structured to provide the following benefits:
• attract, retain and reward talented executive officers and key management employees by providing total compensation
competitive with that of other executive officers and key management employees employed by publicly traded limited
partnerships of similar size and in similar lines of business;
• motivate executive officers and key employees to achieve strong financial and operational performance;
• emphasize performance-based compensation; and
• reward individual performance.
Components of Executive Compensation
For the year ended December 31, 2012, the compensation paid to our named executive officers, other than our CEO, consisted of
the following components:
• annual base salary;
• non-equity incentive plan compensation consisting solely of discretionary cash bonuses;
• vesting of previously issued equity-based awards issued pursuant to our equity incentive plans;
• compensation resulting from the vesting of equity issuances made by an affiliate; and
• 401(k) plan contributions.
Mr. Warren, our CEO, has voluntarily elected not to accept any salary, bonus or equity incentive compensation (other than a salary
of $1.00 per year plus an amount sufficient to cover his allocated payroll deductions for health and welfare benefits).
Methodology
The Compensation Committee considers relevant data available to it to assess the competitive position with respect to base salary,
annual short-term incentives and long-term incentive compensation for our executive officers. The Compensation Committee also
considers individual performance, levels of responsibility, skills and experience.
Periodically, the Compensation Committee engages a third-party consultant to provide market information for compensation levels
at peer companies in order to assist the Compensation Committee in its determination of compensation levels for our executive
officers. Most recently, the Compensation Committee engaged Mercer Consulting Services (“Mercer”) during the year ended
December 31, 2010 to assist in the determination of compensation levels for our senior management. The results of this study
were utilized to determine long-term incentive awards and bonuses during 2012, 2011 and 2010. The consultant provided an
analysis of compensation for senior executives at the following 15 companies in the energy industry, comprised primarily of
midstream and exploration and production companies:
• Enterprise Products Partners L.P.
• Plains All American Pipeline, L.P.
• CenterPoint Energy, Inc.
• The Williams Companies, Inc.
• Sempra Energy
• Kinder Morgan Energy Partners, L.P.
• ONEOK Partners, L.P.
• Enbridge Energy Partners, L.P.
• Sunoco Logistics Partners L.P.
• Atmos Energy Corporation
• El Paso Corporation
• Spectra Energy Partners, LP
• Targa Resources Partners LP
• NuStar Energy L.P.
• Southern Union Company
The compensation analysis provided by Mercer covered annual salary, annual cash bonus and long-term incentive arrangements
for the senior executives of these companies. The Compensation Committee utilized the information provided by Mercer to compare
the levels of base salary, annual bonus and long-term equity incentives at these other companies with those of our named executive
officers to ensure that compensation of our named executive officers is competitive with the compensation for executive officers
of these other companies. The Compensation Committee did not attempt to benchmark the base salary, annual bonus or long-term
equity incentives to any percentage of, or numerical average of, the compensation levels at these other companies. Mercer did not
provide any non-executive compensation services for the Partnership during 2012, 2011 or 2010.
Base Salary. As discussed above, the base salaries of our named executive officers are determined by the Compensation Committee
after taking into account the recommendations of Mr. Warren. For 2012, the Compensation Committee approved an increase of
19% to Mr. McCrea's annual base salary, 18% to Mr. Salinas' annual base salary, and 16% to Mr. Mason's annual base salary. The
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