Sunoco 2012 Annual Report Download - page 142

the form of a single lump sum payment at retirement determined using interest rate and mortality table
assumptions applicable under current IRS regulations for qualified pension plans. The conversion interest
rate[s] assumed for lump sum payments are based on three segment rates under the Pension Protection Act
of 2006 and the lump sum mortality table is derived from IRS regulations. In addition, the value of the lump
sum payment includes the estimated value of the 50% postretirement death benefit payable, if married, to
the spouse of a retired participant under the SERP and Final Average Pay formula benefits described below.
It is assumed that 90% of all male members are married and 60% of females are married, with wives
assumed to be 3 years younger than husbands. The assumed retirement age for each executive is the earliest
age at which the executive could retire without any benefit reduction due to age. For NEOs, the assumed
retirement age is 60 (i.e., the earliest age at which the executive could retire without any benefit reduction
due to age), or actual age, if older than 60. Actual benefit present values will vary from these estimates
depending on many factors, including an executive’s actual retirement age, final service, future
compensation levels, interest rate movements and regulatory changes.
(3) Pursuant to his Offer Letter agreement with ETP, in connection with the Merger, Mr. Hennigan waived any
future rights or benefits to which he otherwise would have been entitled under both the SERP and the
Pension Restoration Plan, in return for which, the present value ($2,789,413) of such deferred compensation
benefits was credited to the Energy Transfer Partners Deferred Compensation Plan for Former Sunoco
Executives.
(4) Mr. Salinas is employed by ETP’s general partner, and does not participate in any of the Sunoco, Inc.
pension benefit plans.
(5) We do not reimburse Sunoco for the cost of pension benefits for Ms. Elsenhans, or Messrs. Colavita and
MacDonald. Their retirement benefits are paid for entirely by Sunoco.
The Sunoco, Inc. Retirement Plan
The Sunoco, Inc. Retirement Plan, or SCIRP, is a qualified defined benefit retirement plan that covers most
salaried and many hourly employees, including the NEOs. The SCIRP provides for normal retirement at age 65.
The plan includes two benefit formulas:
(1) Final Average Pay formula
• The benefit equals 1- 2/3 percent of Final Average Pay (the average earnings during the 36
consecutive months of highest earnings in the last ten years prior to retirement, or until June 30,
2010, whichever is sooner) multiplied by the credited service up to 30 years, plus 3/4 percent of
Final Average Pay multiplied by the credited service over 30 years.
• The benefit is then reduced by an amount equal to 1- 2/3 percent of the estimated Social Security
Primary Insurance amount multiplied by the credited years of service up to a maximum of 30
years.
• The benefit is further reduced by 5/12 percent for each month that retirement precedes age 60
(down to age 55), with the early retirement benefit at age 55 being 75 percent of the unreduced
benefit.
(2) Career Pay (cash balance) formula
• The retirement benefit is expressed as an account balance, comprised of pay credits and indexing
adjustments.
• Pay credits equal seven percent of pay for the year up to the Social Security (FICA) Wage Base,
($106,800 in 2011,and $110,100 in 2012) plus 12 percent of pay that exceeds the Wage Base for
the year.
• The indexing adjustment equals the account balance at the end of each month multiplied by the
monthly change in the All-Urban Consumer Price Index, plus 0.17 percent. However, if in any
month the adjustment would be negative, the adjustment would be zero for such month.
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