8-K/ALeadership Changes

Energy Transfer LP 8-K/A Report, Executive Changes (May 6, 2013)

Filed May 6, 2013For Securities:ETET-PI

Summary

This 8-K/A filing from Energy Transfer LP (ET), filed on May 5, 2013, provides an amendment to a previous report detailing the finalized compensation package for newly appointed Chief Financial Officer and Head of Business Development, Jamie Welch. The appointment is effective June 24, 2013. Investors should note the significant equity and cash components of Mr. Welch's compensation, designed to align his interests with long-term value creation for the partnership. The compensation package includes a substantial base salary, a guaranteed minimum bonus for 2013, and participation in existing incentive and benefit plans. A key component is a significant award of 750,000 restricted ETE common units with a multi-year vesting schedule, designed to incentivize long-term retention and performance. The structure of the restricted units, including accelerated vesting under specific termination or change in control scenarios, is designed to protect the executive's stake in such events. Additionally, Mr. Welch is expected to be appointed to the boards of directors of key subsidiaries, indicating a strategic leadership role within the broader Energy Transfer structure.

Key Highlights

  • 1Jamie Welch appointed as Chief Financial Officer and Head of Business Development, effective June 24, 2013.
  • 2Annual base salary for Mr. Welch set at $550,000.
  • 3Guaranteed minimum cash bonus for 2013 of not less than 100% of his base salary.
  • 4Awarded 750,000 restricted ETE common units with a staged vesting schedule (30% at 2 years, 35% at 5 years, 35% at 7 years).
  • 5Restricted units will vest upon termination without cause, termination for good reason, or a change in control of the Partnership.
  • 6Partnership obligated to make cash payments on unvested units equal to distributions made on common units.
  • 7Mr. Welch is expected to be appointed to the boards of directors of Energy Transfer Partners L.P., Regency Energy Partners LP, and Sunoco Logistics Partners L.P.

Frequently Asked Questions

Mr. Welch's compensation includes a $550,000 annual base salary, a minimum 100% bonus for 2013, participation in existing incentive and benefit plans, and 750,000 restricted ETE common units that vest over seven years. The total realizable value depends on future unit prices and distributions.

Mr. Welch received 750,000 restricted ETE common units. Vesting occurs over a seven-year period: 30% on the second anniversary of the award, 35% on the fifth anniversary, and the remaining 35% on the seventh anniversary, contingent on continued employment. Vesting is accelerated if his employment is terminated by the Partnership without cause, terminated by him for good reason, or if a change in control of the Partnership occurs.

In addition to his role as CFO and Head of Business Development, Mr. Welch is expected to be appointed to the boards of directors of Energy Transfer Partners L.P., Regency Energy Partners LP, and Sunoco Logistics Partners L.P., indicating a significant leadership presence across the Energy Transfer enterprise.

The Partnership is obligated to make cash payments to Mr. Welch for the unvested portion of his equity award. These payments will be equivalent in amount and timing to the cash distributions that Energy Transfer LP (ETE) makes on an equivalent number of its common units.