Sunoco 2013 Annual Report Download - page 113

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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, 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. Changes to any outstanding grant that would materially impair the rights of a participant cannot be
made without the consent of the affected participant.
• 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 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 then-current
value of a common unit at the time of vesting. 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. 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.
Prior to the Merger, our equity awards were in the form of restricted unit awards that vested in
total on the third anniversary of the grant date and the payout of which was dependent on the
Partnership’s achievement of certain performance metrics and the participant’s continued
employment (or, as applicable, continued service relationship) with our general partner. After the
Merger, all of the restricted units granted have provided for vesting over a specified time period,
with vesting based solely on continued employment (or, as applicable, a continued service
relationship) as of each applicable vesting date, without regard to the satisfaction of any
performance objectives. This change resulted from the Compensation Committee’s determination
that vesting based on continued employment (or, as applicable, continued service), rather than the
satisfaction of performance objectives, was more generally prevalent with companies in the energy
industry.
Also prior to the Merger, the Compensation Committee granted equity awards in January of
the following year for performance during the previous year. Under the ETP compensation
methodology, equity awards are granted in December of the performance year. Because of the
timing of the transition to ETP’s compensation methodology, the Compensation Committee
continued the pre-Merger practice for the equity awards for performance during 2012 with such
awards being granted in January 2013. Upon transitioning to ETP’s compensation methodology, the
equity awards for performance during 2013 were granted in December 2013 rather than January
2014. Thus, the disclosures in this CD&A and accompanying tables regarding equity awards granted
in fiscal 2013 include equity awards granted for performance in both the 2012 (the January 2013
grants) and 2013 (the December 2013 grants) fiscal years. Going forward, the Partnership expects to
grant one equity award in December of the performance year. In addition, in January 2014, the
Compensation Committee approved an additional grant of restricted units to Mr. Hennigan for his
performance during 2013.
In January 2013, for their performance relative to the 2012 calendar year, the Compensation
Committee approved grants of restricted units to Mr. Hennigan, Ms. Shea-Ballay and Messrs.
Lauterbach and Chalson of 40,000 restricted units, 7,000 restricted units, 7,000 restricted units and
7,000 restricted units, respectively. These unit awards provide for vesting at a rate of 20% per year
over a five-year period, subject to continued employment through each specified vesting date. In
December 2013, as a result of the transition to the ETP compensation methodology, the
Compensation Committee approved grants of restricted units to Mr. Hennigan, Ms. Shea-Ballay and
Messrs. Lauterbach and Chalson of 43,700 restricted units, 7,000 restricted units, 7,000 restricted
units and 7,000 restricted units, respectively. These units vest, based upon continued employment or
service, at a rate of 60% after the third year of continuous employment or service and the remaining
40% after the fifth year of continuous employment or service. In addition, in January 2014, the
Compensation Committee approved a grant of restricted units to Mr. Hennigan of 5,000 restricted
units, which vest, based upon continued employment, at a rate of 60% after the third year of service
and the remaining 40% after the fifth year of service.