01—Abstract
Summary
Summary of the 10-K/A filed June 24, 2011. Cited figures are marked; the original filing is the authoritative source.
This filing is an amendment to Energy Transfer Equity, L.P.'s (ETE) 2010 Form 10-K, primarily addressing comments from the SEC related to executive compensation.
The document details the compensation philosophy, methodologies, and components for ETE's named executive officers, as well as those of its subsidiaries, Energy Transfer Partners, L.P. (ETP) and Regency Energy Partners LP (Regency).
Compensation strategies emphasize a significant incentive-based component, balancing short-term and long-term performance through discretionary cash bonuses and restricted unit awards. The report also outlines director compensation and discusses certain related-party transactions, particularly concerning the acquisition of Regency and ongoing shared services agreements with ETP and Regency.
02—Key points
Key Highlights
- The compensation philosophy for ETE and ETP is to attract, retain, and reward talented executives by offering competitive total compensation, emphasizing performance-based incentives, and aligning executive interests with unitholder interests.
- For 2010, ETE's President and CFO, John W. McReynolds, received total compensation of $2,103,962, comprising base salary, a discretionary cash bonus, and equity awards.
- ETP's CEO, Kelcy L. Warren, voluntarily took a nominal salary of $1.00 and received no bonus or equity awards, with his total compensation for 2010 being $2,766.
- Significant equity awards (restricted units) were granted to ETP's named executive officers in 2010, with vesting periods typically spanning five years, aimed at retention and long-term performance alignment.
- The acquisition of Regency in May 2010 involved complex transactions, including the issuance of preferred units and exchanges of interests, with special committees determining the fairness of these related-party transactions.
- Director compensation includes annual retainers, meeting fees, and equity awards for non-employee directors of ETE and its subsidiaries, reflecting their roles on various boards and committees.
- The filing clarifies that ETE and ETP do not have employment agreements providing for termination or severance benefits or payments upon a change in control, though incentive plans include provisions for accelerated vesting in such events.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Energy Transfer LP kept $0.03.
- Revenue$6.56B100.0%
- Cost of revenue−$4.07B62.1%
- Gross profit$2.49B37.9%
- Operating costs−$1.44B22.0%
- Operating income$1.04B15.9%
- Interest, other & tax−$851.0M13.0%
- Net income$193.0M2.9%
Where FY2010 revenue went
$6.56B- Cost of revenue: $4.10B, 63% of revenue
- Other operating costs: $1.18B, 18% of revenue
- Interest, other & tax: $851.0M, 13% of revenue
- Net income: $193.0M, 2.9% of revenue
- SG&A: $233.0M, 3.6% of revenue
Kept 2.9% as net incomeNet income $193.0M · 2.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-K/AFY2010filed June 24, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $6.56B$5.42B | +21.0% |
| Cost of Revenue | $4.10B$3.12B | +31.4% |
| Gross Profit | $2.49B$2.30B | +8.3% |
| SG&A Expenses | $233.00M$178.92M | +30.2% |
| Operating Expenses | $5.51B$4.31B | +28.0% |
| Operating Income | $1.04B$1.11B | −6.0% |
| Interest Expense | $625.00M$468.42M | +33.4% |
| Net Income | $193.00M$442.47M | −56.4% |
05—Questions
Frequently Asked Questions
What is the primary purpose of this 10-K Amendment?
This Amendment No. 1 to the 2010 Form 10-K is filed to respond to comments received from the SEC's Division of Corporation Finance regarding the original filing. It primarily focuses on providing additional detail and clarification concerning executive compensation and related party transactions.
How is executive compensation structured at Energy Transfer Equity (ETE) and Energy Transfer Partners (ETP)?
Both ETE and ETP utilize a compensation philosophy that emphasizes incentive-based pay, balancing short-term and long-term performance. Compensation typically includes base salary, discretionary cash bonuses tied to financial and individual performance, and equity incentive plan awards (primarily restricted units) designed to retain executives and align their interests with unitholders.
What were the key compensation elements for ETE's President and CFO, John W. McReynolds, in 2010?
In 2010, John W. McReynolds received a base salary, a discretionary cash bonus of $550,000, and equity awards with a grant date fair value of $995,500. His total compensation for the year was $2,103,962.
How were related-party transactions, such as the Regency acquisition, handled?
The filing indicates that for material related-party transactions, including the Regency acquisition, special committees were appointed by both parties involved. These committees reviewed the proposed transactions and determined whether the terms were fair and reasonable to their respective partnerships. The board of directors also reviews such transactions, often with advice from management and the Conflicts Committee.
06—Continue