Sunoco 2013 Annual Report Download - page 130

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• Each NEO would be entitled to medical coverage for up to the period of severance received, at the
same rate that such benefits are generally provided to active employees.
• NEOs would receive a cash amount in lump sum equal to the NEO’s accrued but unused vacation
through the end of his or her employment termination date as defined in the plan.
• Each NEO would be entitled to outplacement benefits for up to the period of severance received.
• SCIRP/Pension Restoration Plan: NEOs hired prior to January 1, 1987 (Mr. Hennigan) would receive
benefits based upon the Final Average Pay formula of the SCIRP. SCIRP benefits for NEOs hired after the
January 1, 1987 conversion of SCIRP from a final average pay plan to a cash balance pension plan (Ms.
Shea-Ballay and Messrs. Lauterbach and Chalson) are calculated using the Career Pay formula. To the extent
that the amount payable exceeds the amount available under the SCIRP, the remaining amount would be paid
under the Pension Restoration Plan.
• LTIP: Under the LTIP, outstanding performance-based restricted units would be cancelled as of the
termination date. Outstanding time-based restricted units would be forfeited.
• Involuntary Termination-Change of Control
• SESP: This plan was adopted to retain executives in the event of a change of control, and to eliminate the
distraction and uncertainty such a transaction may create among management personnel, to the detriment of
the organization. Following the Merger, the SESP was amended to provide that the only eligible participants
under the plan are those employees who were eligible to participate on October 5, 2012, the date of the
Merger. Payment of severance benefits under this plan provides severance allowances to executives whose
employment is terminated in connection with, or following, a change of control. A “change of control” is
defined as any one or more of the following events:
• a transaction pursuant to which more than 50 percent of the combined voting power of the
outstanding equity interests in the general partner cease to be owned by Sunoco and its affiliates;
• a “Change in Control” of Sunoco, as defined from time to time in the Sunoco stock plans; or
• the general partner of the Partnership ceases to be an affiliate of Sunoco.
There is a “double trigger” mechanism for the payment of severance benefits under this plan, requiring
both a change of control and a qualifying termination of employment (as defined in the plan) following such
change of control to trigger payment. Severance benefits under this plan are paid in a lump sum equal to three
times annual compensation for the CEO, and two times annual compensation for the other NEOs. For these
purposes, annual compensation consists of:
• the executive’s annual base salary in effect immediately prior to a change of control or immediately
prior to the employment termination date, whichever is greater, plus
• the greater of 100 percent of the executive’s annual bonus target in effect immediately before the
change of control or employment termination date.
Although the SESP contains a formula for severance benefits, Mr. Hennigan’s severance upon a change
of control was set at $3,026,793 pursuant to his October 5, 2012 Offer Letter agreement with ETP.
Each eligible NEO would be entitled to medical, dental, vision and life insurance coverage for the
period of severance received, at the same rate that such benefits are generally provided to active employees of
the general partner. Each eligible NEO would also be entitled to outplacement benefits for the period of
severance received. In the case of a change of control, the plan also provides for the enhancement of certain
pension benefits.
• SCIRP: In the event of a change of control, the benefits of a participant whose employment began before
September 5, 2001, and who is terminated (as defined in the plan) following a change in control, become 100
percent vested and are increased as follows:
• Final Average Pay formula. A participant’s service is increased by three years, subject to reduction
for service for each completed month after the change in control. Final Average Pay will be the
greater of: (A) the regularly determined Final Average Pay, (B) Final Average Pay based on earnings
of the full month preceding the change in control, or (C) Final Average Pay based on earnings for the
month preceding the termination of employment. For purposes of (B) and (C) monthly earnings will
include base pay and 1/12 of the annual bonus target under the Bonus Plan.
• Career Pay (cash balance) formula. A participant’s service is increased by three years, subject to
reduction for service after the change in control. In the month of termination, a participant’s Career