Sunoco 2012 Annual Report Download - page 123

During their tenure in 2012 as officers of our general partner, Ms. Elsenhans and Messrs. MacDonald, and
Colavita were also employees of Sunoco (the “Sunoco Executives”). In addition to rendering services to us, they
devoted a majority of their professional time to Sunoco during 2012. The Sunoco Executives participated in
employee benefit plans and arrangements sponsored by Sunoco. The compensation committee of Sunoco’s Board
of Directors determined the components of their compensation, including salary and annual incentive, and we
had no control over that compensation determination process.
Under the terms of the Omnibus Agreement with Sunoco, we paid an administrative fee to reimburse Sunoco
for the provision of general and administrative services for our benefit, including allocated expenses of Sunoco
personnel who provided corporate services to us. The amount reimbursed to Sunoco was determined based upon the
portion of professional time devoted to us by Sunoco personnel. In addition, each year our general partner
determines the aggregate amount to be reimbursed to Sunoco by us, taking into account the totality of services
performed for our benefit by the Sunoco Executives during the calendar year. See Item 13, “Certain Relationships,
Related Transactions and Director Independence” for further discussion of our relationships and transactions with
Sunoco, including reimbursement for the administrative services provided to us.
During 2012, Ms. Shea-Ballay and Mr. Hennigan were employees of our general partner and rendered their
services solely to us. Except as specified below, all compensation paid to these individuals is fully disclosed in
the tabular disclosure following this Compensation Discussion and Analysis (“CD&A”). Throughout the CD&A
discussion, the following individuals are referred to as the Named Executive Officers, or NEOs, and are included
in the Summary Compensation Table:
• Michael J. Hennigan — President and Chief Executive Officer
• Martin Salinas, Jr. — Chief Financial Officer
• Kathleen Shea-Ballay — Vice President, General Counsel & Secretary
• Lynn L. Elsenhans — Former Chairman and Chief Executive Officer
• Brian P. MacDonald — Former Chairman and Vice President and Chief Financial Officer
• Michael J. Colavita — Former Interim Chief Financial Officer
Compensation Philosophy and Objectives: Our general partner seeks to improve our financial and
operating performance and provide a desirable return on investment to holders of our common units, while
maintaining financial strength and flexibility. Our general partner provides a competitive compensation package
in order to attract highly competent and skilled executives to meet these objectives. During 2012, where doing so
was determined to be a cost-effective and administratively efficient means of providing benefits to its employees,
our general partner was a participating employer in certain benefit plans sponsored by Sunoco, including its
defined benefit pension plan. We reimbursed Sunoco for the benefits we received from our participation in these
plans.
During 2012, the compensation for our executive officers, including our NEOs, but excluding Mr. Salinas
and the Sunoco Executives, was determined by our general partner’s Compensation Committee. The
compensation program utilizes objectives and measurement criteria based upon performance relative to other
publicly traded master limited partnerships and general industry companies (adjusted for size), and this
compensation program is designed to provide the competitive level of total compensation needed to attract, retain
and motivate talented and experienced executives who can contribute to our success. The compensation program
emphasizes performance-based compensation (pay-at-risk), to promote achievement of short-term and long-term
business objectives consistent with our strategic plan and is structured so that the target compensation (base
salary and performance-based annual and long-term opportunities) is typically at the median of the general
industry market data. Executive compensation is aligned with the interests of our unitholders by providing annual
incentive awards directly tied to cash flow generation and long term incentives in the form of restricted units.
Our general partner also has adopted unit ownership guidelines requiring executives and certain other key
employees to own a certain level of common units, as further described herein. The Compensation Committee
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