8-KLeadership ChangesExhibits & Filings

Energy Transfer LP 8-K Report, Executive Changes (Jan 6, 2021)

Filed January 6, 2021For Securities:ETET-PI

Summary

Energy Transfer LP (ET) announced two key changes to its incentive compensation plans through amendments approved by its Board of Directors on December 30, 2020. The first change involves an amendment to the existing Long-Term Incentive Plan (LTIP), increasing the number of ET common units available for awards by 35,000,000. This action provides the company with greater flexibility to grant equity-based compensation to employees and management. The second significant development is the adoption of a new Long-Term Cash Restricted Unit Plan (CRU Plan). This plan allows for cash incentive awards to be granted, with the value of each award tied to the value of one ET common unit. Awards under the CRU Plan will vest over three years, with provisions for accelerated vesting in cases of death, disability, or a change in control of the company. These adjustments to the incentive compensation structure are designed to align employee interests with those of unitholders and to retain key talent.

Key Highlights

  • 1Energy Transfer LP's Board approved a Second Amendment to its Long-Term Incentive Plan (LTIP), increasing the pool of ET common units available for awards by 35,000,000.
  • 2A new Long-Term Cash Restricted Unit Plan (CRU Plan) was adopted, designed to provide cash incentive awards linked to the value of ET common units.
  • 3Awards under the CRU Plan will be settled in cash, with each award unit equivalent to the value of one ET common unit.
  • 4CRU Plan awards are designed to vest in three equal installments on the first, second, and third December 5th following the grant date.
  • 5The CRU Plan includes provisions for accelerated vesting of awards upon termination due to death or disability.
  • 6In the event of a 'Change in Control' as defined in the plan, all outstanding CRU Plan awards will receive accelerated vesting.
  • 7The amendments provide ET with enhanced tools for executive and employee compensation, aiming to attract and retain talent while aligning incentives with unit value.

Frequently Asked Questions

The increase of 35,000,000 ET common units under the Long-Term Incentive Plan (LTIP) provides Energy Transfer LP with more flexibility to grant equity-based awards, such as restricted units or unit options, to its employees and management. This is a common practice to align the interests of key personnel with those of unitholders and to incentivize long-term performance and retention.

Awards granted under the CRU Plan will be settled in cash. Although the award value is tied to the value of one ET common unit, the actual payout to the recipient will be in cash, not in the form of ET common units.

Awards under the CRU Plan will vest more quickly under specific circumstances. Accelerated vesting will occur if an individual's employment or service is terminated due to death or disability. Additionally, if a 'Change in Control' of Energy Transfer LP occurs, all outstanding awards under the CRU Plan will become fully vested.

The adoption of the CRU Plan introduces a new form of cash-based incentive compensation. While it aims to retain talent and align interests, the company will incur cash outflows upon vesting and payout of these awards. The specific financial impact will depend on the number of awards granted, their valuation, and the performance of ET's common units. The plan also outlines specific conditions under which the company must pay out awards, such as a change in control.