Business Context and Reporting Period
This Form 8-K filing by Energy Transfer Equity, L.P. (ETE) is dated December 23, 2013. The report addresses a correction to a prior executive compensation agreement and the subsequent adoption of a new equity class to fulfill the original intent of the arrangement.
Key Financial Metrics
The filing does not provide financial performance data such as revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on corporate governance and executive compensation adjustments.
Material Changes
- Rescission of Prior Agreement: ETE and Jamie Welch, Group Chief Financial Officer and Head of Corporate Development, rescinded an April 29, 2013, agreement that awarded Welch 750,000 common units. The original agreement failed to make Welch a partner due to provisions in ETE's Long-Term Incentive Plan.
- New Compensation Structure: A new Class D Unit Agreement was executed on December 23, 2013, granting Welch 770,000 Class D Units. This total includes 20,000 units intended to compensate Welch for foregoing reimbursement of certain expenses.
- LP Agreement Amendment: The general partner adopted Amendment No. 4 to the Partnership Agreement to establish the terms of the new Class D Units.
Guidance, Outlook, and Terms of New Units
The filing details the specific terms of the Class D Units granted to Welch:
- Conversion Schedule: 30% of the units convert to ETE common units on a one-for-one basis on March 31, 2015. The remaining 70% convert on March 31, 2018.
- Conditions: Conversion is subject to Welch being in "Good Standing" with ETE. In the event of a Change of Control, all units convert immediately, and the Good Standing requirement ceases to apply.
- Distribution Rights: Class D Units share in Partnership distributions on a pro rata basis with common units.
- Voting Rights: Generally, Class D Units do not have voting rights, except on matters adversely affecting their rights or as required by law.
- Transferability: Units may not be transferred, sold, assigned, or pledged without the consent of ETE's general partner.
Investor Verification Checklist
- Verify the full text of the Class D Unit Agreement (Exhibit 10.1) for specific definitions of "Good Standing" and "Change of Control."
- Review Amendment No. 4 to the Partnership Agreement (Exhibit 3.1) to confirm the legal standing of Class D Units relative to other equity classes.
- Confirm the impact of the 20,000 additional units on the total compensation package relative to the original 750,000 unit offer.
- Monitor future filings for the actual conversion of these units in 2015 and 2018.