Energy Transfer 2015 Annual Report Download - page 131

Table of Contents
Effective April 30, 2015, Mr. Salinas resigned as Chief Financial Officer of our General Partner and terminated his employment. In recognition of his services
to ETP, Mr. Salinas and ETP entered into a Separation and Non-Solicit Agreement and Full Release of Claims (the “Separation Agreement”), which became
effective, after expiration of a revocation period, on May 9, 2015. The Separation Agreement, from a compensation perspective provided for:
(i) Payment to Mr. Salinas of a lump sum total gross amount equal to $307,500, less all required government payroll deductions and withholding, which
is an amount equal to eight months of Mr. Salinas’ base salary;
(ii) An additional lump sum payment to Mr. Salinas of $546,750, less all required government payroll deductions and withholding, which is an amount
equal to Mr. Salinas’ target bonus award for 2015 under the Energy Transfer Partners, L.L.C. Annual Bonus Plan (the “Bonus Plan”);
(iii) Payment by ETP of the full cost of Mr. Salinas’ premium for continued health insurance coverage under ETP’s health insurance plan and the
Consolidated Omnibus Budget Reconciliation Act for a period of seven months; and
(iv) Acceleration of the vesting of all unvested restricted common units awarded to Mr. Salinas pursuant to the terms of the Second Amended and Restated
Partnership 2008 Long Term Incentive Plan (the “2008 Incentive Plan”) and the Sunoco Partners LLC Long Term Incentive Plan, as amended (the
“Sunoco Logistics Plan”). As of May 9, 2015, Mr. Salinas had outstanding awards under the 2008 Incentive Plan of 61,841 restricted common units
and 32,600 restricted common units under the Sunoco Logistics Plan that were otherwise not scheduled to vest until after the Employee’s termination
of employment.
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 highly competitive in the marketplace for
executive talent and abilities. Our General Partner seeks a total compensation program for the named executive officers that provides for a slightly below the
median market annual base compensation rate (i.e. approximately the 40th percentile of market) 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
time-based 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 generally on continued employment through each specified vesting date. Beginning in
December 2012, we began granting restricted unit awards that vest, based generally upon continued employment, at a rate of 60% after the third anniversary
of the award and the remaining 40% after the fifth anniversary of the award. Our General Partner believes that these equity-based incentive arrangements are
important in attracting and retaining our executives 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 executives, including the 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 or its controlled affiliates, 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 “ETP 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 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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