Sunoco 2012 Annual Report Download - page 124

reviews the compensation program and makes changes deemed appropriate and in the best interests of our
unitholders and us. The Compensation Committee retains authority over all compensation decisions for our
NEOs (other than the Shared Executives). The general partner’s eligible executives participate in the defined
benefit programs and the qualified and non-qualified defined contribution plans of Sunoco.
Compensation Methodology: During 2012, our general partner utilized Compensation Advisory Partners
LLC as a consultant to: (1) assess the effectiveness and competitiveness of the compensation program; (2) assist
in evaluating and designing the compensation program; and (3) advise on executive compensation issues and
external trends going forward. In support of the analytical work to be performed by Compensation Advisory
Partners, our general partner engaged Towers Watson to provide comparative market information regarding:
• compensation practices and programs, based on an analysis of other publicly traded master limited
partnerships and general industry companies;
• base salaries paid to executive officers with responsibilities similar in breadth and scope to the general
partner at the publicly traded master limited partnership and general industry company level, for which
such applicable data exists; and
• the mix of total compensation (including base salary, annual incentive award levels, long-term
incentive award levels and short—and long-term incentive practices) paid to executive officers in
similar positions at such companies.
The master limited partnership group consists of the entities in the LTIP Peer Group (as discussed on pages
127 and 128) as well as a broader group of publicly traded master limited partnerships composed of companies
with varying levels of revenue, market capitalization and market maturity, including Markwest Partners LP,
Amerigas Partners LP and Suburban Propane Partners LP, that may compete with the general partner for
executive talent (together, the “MLP Group”). This MLP Group is reviewed annually with the assistance of the
compensation consultants engaged by our general partner, and the composition of the MLP Group may be
updated in order to reflect mergers, acquisitions, business bankruptcies and other similar events.
The Compensation Committee also reviews compensation data from the general industry on a position-by-
position basis to ascertain competitive rates of compensation. This survey data consists of general industry data
for executive positions reported in the Towers Watson Executive Compensation General Industry Database, a
proprietary compensation database of approximately 800 U.S. industrial companies that is updated annually. The
general industry data are collected at both the corporate (stand-alone parent company) and group (business unit
of a larger organization) levels, and then size-adjusted using regression analysis to revenues comparable to those
of our operating revenues plus either our crude oil acquisition and marketing margins (in the case of corporate
data), or our crude oil acquisition and marketing revenues (in the case of group data). The general industry group
together with the MLP Group form the “Compensation Comparative Group.”
The Compensation Committee reviewed the compensation data for each individual NEO (other than
Mr. Salinas and the Sunoco Executives) compared to the compensation of executives in similar positions with
similar responsibility levels in the Compensation Comparative Group. In its review for Ms. Shea-Ballay and
Mr. Hennigan during 2012, the Compensation Committee looked primarily at general industry compensation
data, but also reviewed the MLP Group data when such data was applicable to the specific executive position.
The three components of compensation for the NEOs (other than Mr. Salinas and the Sunoco Executives)
consist of base salary, annual incentives and long-term incentives, as discussed below. Compensation levels for
the NEOs were chosen to enhance our general partner’s ability to attract and retain a highly skilled and motivated
executive leadership team. Based upon the individual performance of each NEO, as well as our performance as a
whole, actual realized compensation may be higher or lower than the targets set under our Annual Incentive Plan,
or our LTIP. In each case, an executive’s salary and incentive opportunities ultimately were determined by the
unique responsibilities of his or her position. As a tool to assist in its review of executive compensation, the
Compensation Committee uses tally sheets that reflect all components of the executive’s total compensation,
including salary, annual incentives, and long-term incentives.
122