Energy Transfer 2010 Annual Report Download - page 108

The compensation analysis provided by Mercer covered annual salary, annual cash bonus and long-term
incentive arrangements for the senior executives of these companies. The Compensation Committee utilized the
information provided by Mercer to compare the levels of base salary, annual bonus and long-term equity
incentives at these other companies with those of our named executive officers to ensure that compensation of
our named executive officers is competitive with the compensation for executive officers of these other
companies. The Compensation Committee did not attempt to benchmark the base salary, annual bonus or long-
term equity incentives to any percentage of, or numerical average of, the compensation levels at these other
companies. Mercer did not provide any non-executive compensation services for the Partnership during 2010.
Base Salary. As discussed above, the base salaries of our named executive officers are determined by the
Compensation Committee after taking into account the recommendations of Mr. Warren. For 2009, the
Compensation Committee determined to freeze base salaries for our named executive officers at the same levels
as for 2008 due to the uncertainties related to the economy and the natural gas markets that existed at that time.
In 2010, the Compensation Committee approved increases in the annual base salaries of Messrs. McCrea, Salinas
and Mason of 3% each from their prior annual base salaries. The Compensation Committee determined that such
increases in annual base salary were warranted in light of their individual performance and levels of
responsibility related to the management of the Partnership.
Annual Bonus. In addition to base salary, the Compensation Committee makes a determination whether to award
our named executive officers, other than our CEO, discretionary annual cash bonuses following the end of the
year. 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. In this regard, the
Compensation Committee takes into account whether the Partnership achieved or exceeded its internal EBITDA
budget for the year, approved by the board of directors of our General Partner as discussed below, as an
important element in making its determinations with respect to annual bonuses. The Compensation Committee
does not establish its own financial performance objectives in advance for purposes of determining whether to
approve any annual bonuses. 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 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 earnings without considering the impact of interest, income taxes or certain other
non-cash items, such as depreciation and amortization. In general, the Compensation Committee believes that
Partnership performance at or above the internal financial budget would support bonuses to our named executive
officers ranging from 100% to 150% of their annual salary. The individual bonus amounts for each named
executive officer, other than our CEO, also reflect the Compensation Committee’s view of the impact of such
individual’s efforts and contributions towards (i) achievement of the Partnership’s success in exceeding its
internal financial budget, (ii) the development of new projects that are expected to result in increased cash flows
from operations in future years and (iii) the overall management of the Partnership’s business.
In February 2011, the Compensation Committee approved cash bonuses relating to the 2010 calendar year to
Messrs. McCrea, Salinas, Mason and Powers of $675,000, $430,000, $430,000, and $425,000, respectively. In
approving these cash bonuses, the Compensation Committee took into account the achievement by the
Partnership of 100% of its internal EBITDA budget for 2010 as well as the individual performances of these
individuals with respect to promoting the Partnership’s financial, strategic and operating objectives for 2010.
The Compensation Committee determined not to award any cash bonuses to the named executive officers for the
year ended December 31, 2009, based in part upon the recommendation of Mr. Warren, due to the failure of the
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