Sunoco 2012 Annual Report Download - page 129

utilizes Towers Watson to assist in the evaluation of grant recommendations. For the LTIP grants made
during 2012, the applicable guideline percentages for executive officers who were NEOs were as follows:
Name Title
LTIP Guideline
Percentage
Michael J. Hennigan ..... President and Chief Executive Officer 150%
Martin Salinas, Jr. ....... Chief Financial Officer Not Applicable
Kathleen Shea-Ballay .... Vice President, General Counsel & Secretary 75%
Lynn L. Elsenhans ...... Former Chairman and Chief Executive Officer Not Applicable
Brian P. MacDonald ..... Former Vice President and Chief Financial Officer Not Applicable
Michael J. Colavita ...... Former Interim Chief Financial Officer Not Applicable
Awards granted under the LTIP are based upon the common units representing limited partnership
interests in us. The expenses for LTIP equity awards are recognized ratably over the vesting period,
and are accelerated for vesting at retirement eligibility dates.
•Determination of LTIP Award Payout. Performance-based restricted unit awards granted under the
LTIP are generally designed to provide long-term incentive compensation that will pay out only if
certain pre-established performance measures have been met over an applicable performance period.
The performance period for the performance-based restricted units awarded in January 2010 ended
December 31, 2012. However, in October 2012, the Merger of Sunoco into ETP, and the related
transfer of equity ownership interests in our general partner from subsidiaries of Sunoco to ETP,
resulted in a “Change of Control” for purposes of the LTIP. As of the effective date of the Merger,
outstanding LTIP grants made prior to July 2010 automatically vested and became payable in
accordance with their respective terms. Outstanding time-vesting grants were paid out in full.
Performance-based grants outstanding for more than one year were paid out at the greater of the target
amount, or an amount in line with our actual performance immediately prior to the Merger.
Performance-based grants that were outstanding for one year or less were paid out at the target amount.
In July 2010, our LTIP was amended to provide for “double-trigger” vesting and payout in the event of
a Change of Control (as defined in the LTIP). Thus, in the event of a Change of Control, LTIP grants of
restricted units or unit options, made after July 2010, will automatically vest and become payable or
exercisable only if the grantee’s employment (or service as a director) is terminated as a result of a
“Qualifying Termination” (as defined in the LTIP) following such Change of Control.
For the performance-based LTIP grants made prior to October 2012, the Compensation Committee has
determined that eventual payout of such LTIP awards will depend upon our achievement of
performance levels based on two equally weighted performance measures: total unitholder return
(including cash distributions plus appreciation in unit price) relative to peer companies and
distributable cash flow, as measured by the distribution coverage ratio (defined as the sum of
distributable cash flow divided by the sum of the distributions paid to unitholders) relative to goals
defined by the Compensation Committee, both measured over a three-year performance cycle. Our peer
companies consist of other publicly traded master limited partnerships having a business mix
comparable to ours (the “LTIP Peer Group”).
For the 2012 fiscal year, the LTIP Peer Group consisted of the following companies: Boardwalk
Pipeline Partners, L.P.; Buckeye Partners LP; Crosstex Energy LP; El Paso Pipeline Partners, L.P.;
Enbridge Energy Partners LP; Energy Transfer Partners L.P.; Enterprise Products Partners LP; Holly
Energy Partners LP; Kinder Morgan Energy Partners LP; Magellan Midstream Partners LP; NuStar
Energy LP; ONEOK Partners LP; Plains All American Pipeline LP; and Spectra Energy Partners LP.
This LTIP Peer Group is reviewed annually with the assistance of Towers Watson. The performance
period for the 2012 annual LTIP awards ends December 31, 2014. Actual payout may range from zero
percent to 200 percent of the units granted to each recipient, based upon our performance with respect
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