Energy Transfer 2015 Annual Report Download - page 134

Table of Contents
In conducting its review with respect to Sunoco Logistics’ executives that were considered to have roles consistent with those of an executive at an
independent publicly-traded entity, Longnecker worked with ETP and Sunoco Logistics to identify a “peer group” of companies in the energy industry that
most closely reflect Sunoco Logistics profile in terms of revenues, assets and market value as well as compete with Sunoco Logistics for talent at the senior
management level. The identified companies included:
Energy Peer Group:
• Buckeye Partners, L.P.
• PBF Energy Inc.
• Enbridge Energy Partners, L.P.
• Plains All American Pipeline, L.P.
• HollyFrontier Corporation
• Spectra Energy Corp.
• MarkWest Energy Partners, L.P.
• Targa Resources Corp.
• NGL Energy Partners LP
• Tesoro Corporation
• ONEOK Inc.
The compensation analysis provided by Longnecker covered all major components of total compensation, including annual base salary, annual short-term
cash bonus and long-term incentive awards for the senior executives for certain companies in the oil and gas industry. The compensation committee of the
general partner of Sunoco Logistics (“SXL Compensation Committee”) utilized the information provided by Longnecker to ensure that the total
compensation is both competitive with the market information received and consistent with ETE’s compensation philosophy. While Longnecker found that
Sunoco Logistics is achieving its stated objectives with respect to the “at-risk” approach, they also found that certain adjustments should be implemented to
allow Sunoco Logistics to achieve its targeted percentiles on base compensation and incentive compensation (short and long-term).
 Base salary is designed to provide for a competitive fixed level of pay that attracts and retains executive officers, and compensates them for
their level of responsibility and sustained individual performance (including experience, scope of responsibility and results achieved). The salaries of the
named executive officers are reviewed on an annual basis. As discussed above, the base salaries of our named executive officers are targeted to yield an
annual base salary slightly below the median level of market (i.e. approximately the 40th percentile of market) and are determined by the ETP Compensation
Committee after taking into account the recommendations of Mr. Warren. During the 2015 merit review process in July, the ETP Compensation Committee
approved an increase to Mr. McCrea of 6.3% to $850,000 from its prior level of $800,000; a 12.5% increase to Mr. Long to $450,000 from its prior level of
$400,000 and a 3.0% increase to Mr. Mason to $566,500 from its prior level of $550,000. The ETP Compensation Committee determined that the increases
to Messrs. McCrea, Long and Mason were warranted based on the results of the Longnecker study, the factors described below under “Annual Bonus” and, in
Mr. Long’s case, the increase in duties from his prior role with Regency Energy Partners LP. Mr. Ramsey’s base salary of $625,000, which was effective on his
commencement of employment, was approved by the ETP Compensation Committee and set forth in his offer letter. Our CEO (who has voluntarily elected to
forgo any base compensation) and Mr. Salinas (who was terminated prior to merit cycle review) did not receive any base salary adjustments during 2015.
In the case of Mr. Hennigan, the SXL Compensation Committee, in consultation with the General Partner, increased his base salary 4.2% to $625,000 from its
previous level of $600,000; this increase was approved in July 2015. Mr. Hennigan’s increase was based principally on the results of the Longnecker review
of Sunoco Logistics.
In addition, as reflected in the Compensation Discussion and Analysis of ETE, Mr. McCrea received an additional base compensation increase from $850,000
to $1,000,000 in connection with his appointment as Group Chief Operating Officer and Group Chief Commercial Officer of the general partner of ETE in
November 2015.
. In addition to base salary, the ETP 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 under the Bonus
Plan.
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. 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.
For 2015, annual bonuses awarded to Messrs. McCrea, Ramsey, Long and Mason were determined under the Bonus Plan. The ETP Compensation
Committee’s evaluation of performance and determination of an overall available bonus pool is based on the
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