Sunoco 2014 Annual Report Download - page 118

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new projects that are expected to result in increased cash flows from operations in future years, (iv) the completion of
mergers, acquisitions or similar transactions that are expected to be accretive to the Partnership and increase
distributable cash flow, and (v) the overall management of the Partnership's business.
• Long-Term Incentive Awards (Equity Awards):
• Why the LTIP was adopted: Long-term incentive awards for executive officers are granted under the LTIP in order
to promote achievement of our long-term strategic business objectives. The LTIP was designed to align the
economic interests of executive officers, key employees and directors with those of our unitholders; to provide
competitive compensation opportunities that can be realized through attainment of performance goals; and to
provide an incentive to management for continuous employment with the general partner and its affiliates. Long-
term incentive awards are based upon the common units representing limited partnership interests in us, although
they may be payable in common units, or in cash. The Compensation Committee administers the LTIP and, in its
discretion, may terminate or amend the LTIP at any time with respect to any units for which a grant has not yet
been made, including increasing the number of units that may be granted, subject to unitholder approval, as
required by the exchange upon which the common units are listed at that time. Changes to any outstanding grant
that would materially impair the rights of a participant cannot be made without the consent of the affected
participant.
• The elements of compensation under the LTIP: The LTIP provides for two types of awards: restricted units and
unit options.
• Restricted Units: Each restricted unit entitles the grantee to receive a common unit upon vesting or, in
the discretion of the Compensation Committee, an amount of cash equivalent to the then-current value of
a common unit at the time of vesting. From time to time, the Compensation Committee may make grants
under the plan to employees and/or directors containing such terms as the Compensation Committee
shall determine under the LTIP. The Compensation Committee determines the conditions upon which the
restricted units granted may become vested or forfeited, and whether or not any such restricted units will
have distribution equivalent rights ("DERs") entitling the grantee to receive an amount in cash equal to
cash distributions made by us with respect to a like number of our common units during the restricted
period.
Prior to the merger transaction with ETP (the "Merger"), our equity awards were in the form of
restricted unit awards that vested in total on the third anniversary of the grant date and the payout of
which was dependent on the Partnership's achievement of certain performance metrics and the grantee's
continued employment (or, as applicable, continued service relationship) with our general partner. The
last of such performance-based restricted unit awards were granted in January 2012, with the awards
vesting as of December 31, 2014.
Also prior to the Merger, the Compensation Committee granted equity awards in January of the
following year for performance during the previous year. Under the ETP compensation methodology,
equity awards are granted in December of the performance year. Because of the timing of the transition
to ETP's compensation methodology, the Compensation Committee continued the pre-Merger practice
for the equity awards for performance during 2012, with such awards being granted in January 2013.
Upon transitioning to ETP's compensation methodology, the equity awards for performance during 2013
were granted in December 2013 rather than January 2014, per precedent under our pre-Merger
compensation methodology. Thus, the disclosures in this CD&A and accompanying tables regarding
equity awards granted in fiscal 2013 include equity awards granted for performance in both the 2012 (the
January 2013 grants) and 2013 (the December 2013 grants) fiscal years. In fiscal 2014, the Partnership
did, and going forward, the Partnership expects to, grant one equity award in December of the
performance year; provided that, in January 2014, the Compensation Committee approved one additional
grant of restricted units to Mr. Hennigan for his performance during 2013.
In December of 2014, consistent with the compensation methodology of ETP, all of the restricted
units granted, including to the NEOs, provided for vesting of 60 percent at the end of the third year and
vesting of the remaining 40 percent at the end of the fifth year, subject to continued employment of the
NEO through each specified vesting date. These restricted unit awards entitle the grantee of the unit
awards to receive, with respect to each Partnership common unit, subject to such restricted unit award
that has not either vested or been forfeited, a DER cash payment promptly following each such
distribution by us to our unitholders. In approving the grant of such unit awards, the Compensation
Committee took into account the same factors as discussed above under the caption "Annual Bonuses,"
the long-term objective of retaining such individuals as key drivers of the Partnership's future success,