Sunoco 2012 Annual Report Download - page 127

Under the general partner’s Annual Incentive Plan, the Compensation Committee has the discretion to
reduce the amounts payable to participants, or to determine that no amount will be paid, even if all
performance criteria for payout are met. The annual incentive awards are paid in cash. The annual
incentives earned by executive officers who were NEOs for 2012 are included in the Summary
Compensation Table on page 133 under “Non-Equity Incentive Plan Compensation.” Mr. Salinas and
the Sunoco Executives did not participate in our Annual Incentive Plan during 2012.
•Long-Term Incentive 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 common 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. Changes to any outstanding grant that would materially impair the rights of a
participant cannot be made without the consent of the participant. The Compensation Committee
also has the right to alter or amend the LTIP or any part of the LTIP from time to time, 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.
•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 is a phantom unit that 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 value of a common unit. 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 plan. Special one-time grants of restricted
units may be made at any time during the year, subject to the approval of the Compensation
Committee. These grants are infrequent, and generally are used for new hires, retention,
promotions and recognition of extraordinary accomplishments. The Compensation Committee
will determine 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
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. Under our current
LTIP, the Compensation Committee may grant either restricted units that vest over time with
continued service, or restricted units with performance-based vesting. The payout of time-vesting
restricted units is conditioned only upon continued employment through the end of each
applicable vesting period. At the discretion of the Compensation Committee, the vesting periods
for such grants typically ranges from three to five years, and these grants may be designed either
to pay out in full only at the end of such period, or to pay out incrementally in equal annual
installments during such period. Performance-based restricted units, on the other hand, are
designed to pay out only if certain performance measures have been met over the applicable
performance period, generally three years. As a result, the payout under an LTIP grant of
performance-based restricted units is influenced not only by performance in the year in which the
award is paid, but also by performance for the two prior years. The value received from all grants
of restricted units will be affected by any changes in the trading price of our common units during
the period between the grant date and the payment date.
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