Sunoco 2013 Annual Report Download - page 111

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financial performance objectives and (ii) the annual grant of restricted unit awards under the LTIP, which awards are intended
to provide a longer term incentive and retention value to our key employees to focus their efforts on increasing the market price
of our publicly traded units and to increase the cash distribution we pay to our unitholders. During 2013, where doing so was
determined to be a cost-effective and an administratively efficient means of providing benefits to its employees, our general
partner was a participating employer in certain compensation plans sponsored by ETP or its affiliates. We share in the costs
incurred by ETP and its affiliates, as applicable, for the benefits we receive from our participation in these plans. Included in
such benefit plans are certain of Sunoco’s plans, in which our general partner was a participating employer prior to the Merger
and continues to participate.
During 2013, the compensation for our executive officers, including our NEOs, but excluding Mr. Salinas, was
determined by our general partner’s Compensation Committee, which reviews the compensation program and makes changes
deemed appropriate and in the best interests of our unitholders and us. The Compensation Committee has authority over all
compensation decisions for our NEOs. Our compensation program is structured to provide the following benefits:
• reward executives with an industry-competitive total compensation package of competitive base salaries and
significant incentive opportunities, yielding a total compensation package approaching the top-quartile of the market;
• attract, retain and reward talented executive officers and key management employees by providing total compensation
competitive with that of other executive officers and key management employees employed by publicly traded limited
partnerships of similar size and in similar lines of business;
• motivate executive officers and key employees to achieve strong financial and operational performance;
• emphasize performance-based or “at-risk” compensation; and
• reward individual performance.
Compensation Methodology
Our general partner’s Compensation Committee considers relevant data available to it to assess our competitive position
with respect to base salary, annual bonuses and long-term incentive compensation for our executive officers. The Compensation
Committee also considers individual performance, levels of responsibility, skills and experience. During 2013, we transitioned
from our pre-Merger compensation methodology to a compensation methodology similar to that of ETP.
Because of the timing of the Merger and the transition of ownership of our general partner to ETP, for the 2013
compensation packages to our NEOs, our Compensation Committee considered ETP’s compensation methodology described
below as well as our general partner’s pre-Merger compensation methodology in determining the base salaries, bonus targets
and long term incentive awards for the NEOs. The pre-Merger compensation methodology took into account the compensation
analysis done by Compensation Advisory Partners LLC for the Compensation Committee in 2012, including additional
comparative market information provided by Towers Watson. This comparative market information included information
regarding compensation practices and programs based on an analysis of other publicly traded master limited partnerships and
general industry companies. The master limited partnership group consisted of 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, 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 L.P., Amerigas Partners LP and Suburban Propane Partners LP,
that may compete with our general partner for executive talent.
During 2013, ETP engaged Mercer (US) Inc. (“Mercer”) to conduct a review of the compensation levels of a number of
officers across all of its affiliates, including our NEOs, to provide market information with respect to compensation of such
officers. In particular, the review by Mercer was designed to (i) evaluate the market competitiveness of total compensation
levels for certain members of senior management, including our NEOs; (ii) assist in the determination of appropriate
compensation levels for senior management, including our NEOs, and (iii) confirm that our compensation programs were
yielding compensation packages consistent with our overall compensation philosophy. In respect of the Partnership, Mercer
benchmarked us against other companies with similar annual revenues and market-capitalization levels. In light of this review,
Mercer did not specifically benchmark our NEOs against any particular set of peer companies.
The compensation analysis provided by Mercer covered all major components of total compensation, including annual
base salary, annual short-term cash bonus and long-term incentive awards for the senior executives for certain companies in the
oil and gas industry. The Compensation Committee utilized the information provided by Mercer to ensure that the
compensation of our NEOs is competitive with the compensation for executive officers of the companies considered in
Mercer’s compensation analysis. Mercer did not provide any non-executive compensation services for ETP or the Partnership
during 2013.