|ENTERPRISE PRODUCTS PARTNERS L P filed this Form 10-K on 02/28/2018|
The bonus awards are discretionary and, in combination with annual base salaries, are intended to yield competitive total compensation levels for the named executive officers and drive performance in support of our business strategies, as well as the performance of other EPCO affiliates for which the named executive officer may perform services. The annual bonus amount presented for each named executive officer reflects a general consideration of our overall financial results for those periods. This consideration takes into account a number of our financial measures (e.g., non-GAAP gross operating margin and distributable cash flow metrics) and our performance relative to peers, without any weight or formula given to any specific financial performance measures. In addition, a subjective judgment of each named executive officer’s performance for those periods is taken into account and reflected in the annual bonus amounts. The bonus amounts are also based on the level and position of such named executive officers and the relative compensation paid to our other executive officers.
Each of our named executive officers has been granted equity-based compensation. The amount of equity-based compensation granted to our named executive officers reflects a general consideration of our overall financial performance, along with a subjective judgment of each named executive officer’s contribution in support of that performance, without any weight or formula given to any specific financial performance measures. The value of equity-based awards granted to the named executive officers are also based on the level and position of such named executive officers and the relative compensation paid to our other executive officers. Each of the named executive officers received grants of phantom unit awards for the periods presented in the summary compensation table.
In addition, EPCO formed four limited partnerships (generally referred to as “Employee Partnerships”) in 2016 to serve as long-term incentive arrangements for key employees of EPCO by providing them a “profits interest” in an Employee Partnership. The names of the Employee Partnerships are EPD PubCo Unit I L.P. (“PubCo I”), EPD PubCo Unit II L.P. (“PubCo II”), EPD PubCo Unit III L.P. (“PubCo III”) and EPD PrivCo Unit I L.P. (“PrivCo I”). Each of our named executive officers participates in one of these Employee Partnerships.
EPCO expects to continue its policy of paying for limited perquisites attributable to our named executive officers. EPCO also makes matching contributions under its defined contribution plans for the benefit of our named executive officers in the same manner as it does for other EPCO employees.
EPCO does not offer our named executive officers a defined benefit pension plan. Also, none of our named executive officers had nonqualified deferred compensation during the three years ended December 31, 2017.
In addition to the other elements of compensation, we may use retention agreements as a means to reinforce and encourage the continued dedication of our named executive officers to EPCO and us as members of our executive management team. In January 2017, Mr. Secrest received a cash employee retention payment of $250,000, less applicable tax withholdings. This payment was the second, and final, payment made pursuant to retention agreement that EPCO entered into with Mr. Secrest in January 2014. The agreement provided for a three-year retention period, with an initial payment of $250,000 made in January 2016 and a second payment of $250,000 made in January 2017.
In order to qualify for the retention payments, Mr. Secrest was required to complete 24 months of continuous employment with EPCO (from the effective date of his retention agreement) to receive the first payment, and an additional 12 months of continuous employment to receive the second payment. Since Mr. Secrest devoted all of his time to our affairs since entering into the retention agreement, we were allocated all of the expense associated with these payments. Apart from this retention agreement, none of the named executive officers had employee retention agreements in place during the year ended December 31, 2017.
Overview of Decision-Making Process regarding Compensation of Named Executive Officers
The Audit and Conflicts Committee of our general partner, with input from the EPCO Trustees and EPCO’s human resources department, has ultimate decision-making authority with respect to the compensation of our CEO and our President. The compensation of our other named executive officers (other than any equity-based awards under EPCO’s long-term incentive plans) is determined by our CEO and our President. Neither EPCO nor our general partner has a separate compensation committee; however, grants of equity-based compensation under EPCO’s long-term incentive plans (e.g., phantom unit awards) to our named executive officers, including our CEO and our President, must be approved by the Audit and Conflicts Committee. The issuance of profits interest awards to the named executive officers during 2016 was approved by EPCO’s Board of Directors.