Summary
This 8-K filing from Enterprise Products Partners L.P. (EPD) on December 10, 2010, primarily details the execution of retention agreements with key senior executives: Michael A. Creel (President and CEO), W. Randall Fowler (Executive Vice President and CFO), and A. James Teague (Executive Vice President and COO). These agreements are designed to ensure the continued service of these officers for a minimum of 48 months from December 1, 2010, by providing significant financial incentives. The agreements aim to retain critical leadership talent within Enterprise GP and its related entities, which are instrumental to the Partnership's operations and strategic direction.
Key Highlights
- 1Retention agreements were signed with top executives: Michael A. Creel, W. Randall Fowler, and A. James Teague.
- 2Michael A. Creel is set to receive a $10 million cash retention payment.
- 3W. Randall Fowler is set to receive a $5 million cash retention payment.
- 4A. James Teague is set to receive a $10 million cash retention payment, with potential for a performance-based payment up to $10 million under specific conditions.
- 5Payments are contingent on 48 months of continuous employment, with specific provisions for earlier payment upon 'Qualifying Termination' (death, disability, involuntary separation due to job elimination, reorganization, or sale of the company).
- 6A. James Teague has an additional performance incentive tied to designating a satisfactory Chief Operating Officer candidate.
- 7These payments are in addition to any other discretionary incentive compensation and may be allocated to the Partnership via an administrative services agreement.
Frequently Asked Questions
The primary purpose is to incentivize and retain key senior executives, specifically Michael A. Creel, W. Randall Fowler, and A. James Teague, by offering substantial cash payments contingent on their continued employment for a defined period (48 months).
The retention payments will be made within 30 days of a 'Qualifying Termination.' This includes termination due to the executive's death or disability, or an involuntary separation initiated by the company (e.g., job elimination, business reorganization, or sale of the company/partnership), provided it constitutes a 'separation from service' under IRS Section 409A.
Yes, A. James Teague is eligible for a performance payment based on designating a satisfactory candidate for the Chief Operating Officer role. He can receive either the retention payment or the performance payment, whichever is greater, but not both. The performance payment is calculated based on the duration of his service within a specific 'Performance Period'.
While the agreements are directly with Enterprise Products Company (EPCO), the filing notes that all or a portion of the compensation may be allocated to the Partnership. Investors should note these are significant cash outflows and may affect the Partnership's cash flow and potentially its reported earnings, depending on accounting allocations.