Energy Transfer 2013 Annual Report Download - page 124

Table of Contents
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 of Midstream Operations.
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 or “at-risk” compensation and that executives’ total compensation levels should be very competitive in the marketplace for executive
talent and abilities. Our General Partner seeks a total compensation program that provides for a slightly below the median market annual base compensation
rate but incentive-based compensation composed of a combination of compensation vehicles to reward both short and long-term performance that are both
targeted to pay-out at approximately the top-quartile of market. Our General Partner believes the incentive-based 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 the achievement of the annual financial
performance objectives and (ii) the annual grant of restricted unit awards under our equity incentive plan(s), which awards are intended to provide a longer
term incentive and retention value 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, 2013, 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.
Compensation Philosophy
Our compensation program is structured to provide the following benefits:
•reward executives with an industry-competitive total compensation package of competitive base salaries and significant incentive opportunities yielding a
total compensation package approaching the top-quartile of the market;
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