8-KLeadership ChangesCorporate ChangesExhibits & Filings

Energy Transfer LP 8-K Report, Executive Changes (Dec 27, 2013)

Filed December 27, 2013For Securities:ETET-PI

Summary

This 8-K filing from Energy Transfer Equity, L.P. (ETE), dated December 27, 2013, details a rescission and amendment of a unit award for Group Chief Financial Officer Jamie Welch. Initially, Welch was to receive 750,000 common units of ETE, but due to issues with the Long-Term Incentive Plan preventing him from becoming a partner as intended, these awards were rescinded. A new Class D Unit Agreement was entered into, granting Welch 770,000 Class D Units. This new grant includes 20,000 additional units to compensate Welch for foregoing certain expense reimbursements and to restore the parties to their intended positions. The Class D Units have specific conversion timelines into ETE common units, subject to Welch's continued "Good Standing" with the company, with an acceleration clause upon a Change of Control. This filing also outlines the terms of these Class D Units, which share in distributions pro rata with common units but generally lack voting rights.

Key Highlights

  • 1Rescission of initial 750,000 common unit award to CFO Jamie Welch due to plan limitations.
  • 2Issuance of 770,000 Class D Units to Jamie Welch as a replacement award.
  • 3The new award includes 20,000 Class D Units as compensation for expense reimbursement and to achieve intended parity.
  • 4Class D Units are subject to a vesting schedule tied to specific dates (March 31, 2015, and March 31, 2018) and continued "Good Standing".
  • 5Class D Units will convert to ETE common units one-for-one upon conversion dates or immediately upon a Change of Control.
  • 6Class D Units share in partnership distributions on a pro rata basis with common units.
  • 7Class D Units generally do not possess voting rights, except in specific circumstances affecting their rights or as required by law.

Frequently Asked Questions

The original award of 750,000 common units to Jamie Welch was rescinded because provisions within ETE's Long-Term Incentive Plan prevented him from becoming a partner, which was the mutual intent of both Welch and ETE. The original agreements did not accomplish what the parties had agreed to.

Jamie Welch was issued 770,000 Class D Units. These units are a form of limited partnership interest that will convert into ETE common units over time, subject to certain conditions. They are designed to compensate him and restore the parties to their intended legal and financial positions after the rescission of the original award.

The Class D Units will convert into ETE common units on a one-for-one basis in two tranches: 30% on March 31, 2015, and the remaining 70% on March 31, 2018. This conversion is contingent upon Jamie Welch remaining in "Good Standing" with ETE. However, all Class D Units will convert immediately upon a Change of Control event.

Generally, Class D Units do not have voting rights. They are entitled to vote as a separate class only on matters that adversely affect their rights or preferences compared to other partnership interests, or when required by law.