Energy Transfer 2012 Annual Report Download - page 126

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Compensation Committee determined that such increases were warranted based on the factors described below under “-Annual
Bonus.” The Compensation Committee also deemed the increases to be reasonable in light of the expanded roles that each of the
individuals serves with respect to the consolidated organization subsequent to the Citrus, Sunoco and Holdco transactions in 2012.
The Compensation Committee did not increase the base salary of Mr. Cargile given his employment with the Partnership began
in 2012.
Annual Bonus. In addition to base salary, the Compensation Committee makes a determination whether to award our named
executive officers, other than our CEO (who has voluntarily elected to forgo any annual bonuses), discretionary annual cash
bonuses following the end of the year. These discretionary bonuses, if awarded, are intended to reward our named executive
officers for the achievement of financial performance objectives during the year for which the bonuses are awarded in light of the
contribution of each individual to our profitability and success during such year. In this regard, the Compensation Committee takes
into account whether the Partnership achieved or exceeded its internal EBITDA budget for the year, which is approved by the
board of directors of our General Partner as discussed below, as an important element in making its determinations with respect
to annual bonuses. The Compensation Committee also considers the recommendation of our CEO in determining the specific
annual cash bonus amounts for each of the other named executive officers. The Compensation Committee does not establish its
own financial performance objectives in advance for purposes of determining whether to approve any annual bonuses, and the
Compensation Committee does not utilize any formulaic approach to determine annual bonuses.
The Partnership’s internal financial budgets are generally developed for each business segment, and then aggregated with
appropriate corporate level adjustments, to reflect an overall performance objective that is reasonable in light of market conditions
and opportunities based on a high level of effort and dedication across all segments of the Partnership’s business. The evaluation
of the Partnership’s performance versus its internal financial budget is based on the Partnership's EBITDA for a calendar year. In
general, the Compensation Committee believes that Partnership performance at or above the internal EBITDA budget would
support bonuses to our named executive officers ranging from 100% to 120% of their annual salary. The individual bonus amounts
for each named executive officer, other than our CEO, also reflect the Compensation Committee’s view of the impact of such
individual’s efforts and contributions towards (i) achievement of the Partnership’s success in exceeding its internal financial budget,
(ii) the development of new projects that are expected to result in increased cash flows from operations in future years, (iii) the
completion of mergers, acquisitions or similar transactions that are expected to be accretive to the Partnership and increase
distributable cash flow, and (iv) the overall management of the Partnership’s business.
In February 2013, the Compensation Committee approved cash bonuses relating to the 2012 calendar year to Messrs. McCrea,
Salinas, Mason and Cargile of $700,000, $375,000, $500,000 and $230,000, respectively. In approving the cash bonuses for
Messrs. McCrea, Salinas, Mason and Cargile, the Compensation Committee took into account the achievement by the Partnership
of approximately 95% of its internal EBITDA budget of $2.75 billion for 2012 as well as the individual performances of these
individuals with respect to promoting the Partnership's financial, strategic and operating objectives for 2012. The cash bonuses
for Messrs. Salinas and Cargile were consistent with the target. Mr. McCrea and Mr. Mason's cash bonuses exceeded target
amounts by 7% and 13%, respectively. With respect to Mr. McCrea, the Compensation Committee noted his leadership in the
successful development of several significant internal growth projects, including (i) the early completion of Lone Star's West Texas
Gateway NGL pipeline with estimated capital expenditures of approximately $917 million, (ii) the completion of Lone Star's first
NGL fractionation facility at Mont Belvieu, Texas with estimated capital expenditures of $390 million and the negotiation of
multiple long-term agreements to support Lone Star's planned construction of a second fractionation facility, (iii) the negotiation
of long-term commitments from producers to support the planned further expansion of our REM pipeline project and the
construction of a new processing facility in the Eagle Ford Shale in South Texas that was placed in service in December 2012. In
addition, the Compensation Committee recognized the increased scope of Mr. McCrea's responsibilities following the acquisitions
of Southern Union and Sunoco in 2012. With respect to Mr. Mason, the Compensation Committee took note of his key roles in
(i) successfully consummating the acquisition by ETE of Southern Union and ETP's acquisition of a 50% interest in Citrus Corp.,
(ii) effectively negotiating and consummating the merger of Sunoco and ETP and the related contribution by ETE of its interest
in Southern Union, and by ETP of its interest in Sunoco, to ETP Holdco, (iii) overseeing the successful negotiation of agreements
to sell Southern Union's Missouri Gas Energy and New England Gas Company divisions to the Laclede Entities for $1.035 billion
and (iv) effectively managing of the legal functions for ETE and ETP, as well as Southern Union and Sunoco as part of the ongoing
integration of those companies into Energy Transfer.
Equity Awards. Each of our 2004 Unit Plan and 2008 Incentive Plan authorizes the Compensation Committee, in its discretion,
to grant awards of restricted units, unit options and other awards related to our units upon such terms and conditions as it may
determine appropriate and in accordance with general guidelines as defined by each such plan. The Compensation Committee
determined and/or approved the terms of the unit grants awarded to our named executive officers, including the number of Common
Units subject to the unit award and the vesting structure of those unit awards. All of the awards granted to the named executive
officers under these equity incentive plans have consisted of restricted unit awards, which have required the achievement of certain
performance objectives in order for the awards to become vested or restricted unit awards that are subject to vesting over a specified
time period. Upon vesting of any unit award, ETP Common Units are issued.
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