Energy Transfer 2015 Annual Report Download - page 135

Table of Contents
Partnership’s internal earnings target generally based on targeted EBITDA (the “Earnings Target”) budget and the performance of each department compared
to the applicable departmental budget (with such performance measured based on the specific dollar amount of general and administrative expenses set for
each department). The two performance criteria are weighted 75% on the internal Earnings Target budget criteria and 25% on internal department financial
budget criteria. Internal Earnings Target is the primary performance factor in determining annual bonuses, while internal department financial budget criteria
is considered to ensure that the Partnership is effectively managing general and administrative costs in a prudent manner.
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 ETP Compensation Committee believes that Partnership performance at or above the internal Earnings Target and at or below internal
department financial budgets would support bonuses to our named executive officers ranging from 100% to 125% of their annual base earnings (which
amount reflects the actual base salary earned during the calendar year to reflect periods before and after any base salary adjustments). For 2015, in connection
with the Longnecker study, the ETP Compensation Committee adjusted the short-term annual cash bonus pool targets for each of the named executive
officers. The specific targets are as follows: for Mr. McCrea, 160% of his annual base earnings, which represents an increase from his previous level of 140%,
for Mr. Long, 125% of his annual base earnings, which represents an increase from his previous level of 120% and for Mr. Mason, 130% of his annual base
earnings, which represents an increase from his previous level of 120%. Mr. Ramsey’s target of 140% was approved by the ETP Compensation Committee
and set by his initial offer letter.
For 2015 at Sunoco Logistics annual bonuses were determined under the Sunoco Partners LLC Amended and Restated Annual Short-Term Incentive Bonus
Plan (the “SXL Bonus Plan”). Mr. Hennigan’s target of 140% of his annual base earnings, which represents an increase from his previous target of 135%, was
developed and approved by the SXL Compensation Committee of in response to the Longnecker study.
In respect of 2015 performance, in February 2016, the ETP Compensation Committee approved cash bonuses relating to the 2015 calendar year to Messrs.
Ramsey and Long in the amounts of $200,000 and $480,296, respectively. In the case of Mr. Ramsey, his bonus amount represents an upward adjustment
from his target of $97,175 at the Partnership’s 96.25% funding level, based on the Partnership’s achievement of 95% of the internal Earnings Target and
100% of the internal department financial budget criteria. Mr. Long’s award represents payout at his target bonus based on his annual base earnings at the
Partnership’s 96.25% funding level.
The ETE Compensation Committee approved a cash bonus relating to the 2015 calendar year to Mr. McCrea in the amount of $1,294,192, representing
payout at his target bonus based on the achievement of 95% of the internal Earnings Target and 100% of the internal department financial budget criteria.
With respect to Mr. Mason, in February 2016, the ETE Compensation Committee approved a one-time special incentive retention bonus in the amount of
$6,300,000 (the “Special Bonus”) of which $697,716 related to his 2015 bonus award under the Bonus Plan. The Special Bonus was approved by the ETE
Compensation Committee based on a recommendation of ETE senior management in recognition of, among other things, (i) Mr. Mason’s appointment as the
Executive Vice President and General Counsel of the general partner of ETE; (ii) his 2015 calendar year performance; and (iii) his contributions to ETE and
its family of partnerships on several key initiatives, including (a) the drop-down transactions by and between ETP and Sunoco LP, (b) the proposed merger
transaction between the ETE and The Williams Companies, Inc., (c) ETE’s liquefied natural gas (LNG) export project, and (d) the simplification of the overall
Energy Transfer family structure. The approval of the Special Bonus by the ETE Compensation Committee was conditioned upon entry by Mr. Mason into a
Retention Agreement with ETE (the “Retention Agreement”) which provides (i) if, prior to the third (3 rd) anniversary of the effective date of the Retention
Agreement, Mr. Mason’s employment with ETE or one of its affiliates terminates (other than as a result of (x) a termination without cause by ETE or by Mr.
Mason for Good Reason; (y) his death; or (z) his permanent disability as determined by ETE), he will be obligated to remit and repay one-hundred percent
(100%) of the Special Bonus to ETE; (ii) if, after the third (3rd) anniversary but prior to the fourth (4th) anniversary of the effective date of the Retention
Agreement, Mr. Mason’s employment with ETE or one of its affiliates terminates (other than as a result of (x) a termination without cause by ETE or by Mr.
Mason for Good Reason; (y) his death; or (z) his permanent disability as determined by ETE), he will be obligated to remit and repay seventy-five percent
(75%) of the Special Bonus to ETE; and (iii) if, after the fourth (4th) anniversary but prior to the fifth (5th) anniversary of the effective date of the Retention
Agreement, Mr. Mason’s employment with ETE or one of its affiliates terminates (other than as a result of (x) a termination without cause by ETE or by Mr.
Mason for Good Reason; (y) his death; or (z) his permanent disability as determined by ETE), he will be obligated to remit and repay fifty percent (50%) of
the Special Bonus to ETE. Mr. Mason and ETE entered into the Retention Agreement on February 24, 2016.
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