Sunoco Partners LLC, our general partner, is a wholly-owned, indirect subsidiary of Sunoco, Inc. Our general partner manages our operations and activities. Our general partner’s Board of Directors held seven meetings during 2009. The Board has established standing committees to consider designated matters. The standing committees of the Board are the Audit/Conflicts Committee and the Compensation Committee. The listing standards of the New York Stock Exchange, or NYSE, do not require boards of directors of publicly- traded master limited partnerships to be composed of a majority of independent directors nor are they required to have a standing nominating or compensation committee. However, our general partner’s Board of Directors has elected to have a standing compensation committee. The Board has adopted governance guidelines for the Board and charters for the standing committees.
The Audit/Conflicts Committee, in its role as an Audit Committee, oversees external financial reporting, engages independent auditors, and reviews procedures for internal auditing and the adequacy of internal accounting controls. In addition, the Audit/Conflicts Committee, in its role as a “Conflicts” Committee, reviews specific matters that the Board believes may involve conflicts of interest between us and Sunoco, Inc. and determines if the resolution of the conflict of interest is fair and reasonable to the Partnership. The Audit/ Conflicts Committee met as an Audit Committee eight times during 2009, and met as a Conflicts Committee 16 times during 2009. The current members of the Audit/Conflicts Committee are: L. Wilson Berry, Jr. (chairman), Stephen L. Cropper, and Philip L. Frederickson. The members of the Audit/Conflicts Committee consist of those directors of our general partner who are not also executive officers of our general partner or its parent, all of whom must meet certain independence and experience standards established by the NYSE to serve on an audit committee of a Board of Directors. To be considered an independent director under the NYSE listing standards, the Board of Directors must affirmatively determine that a director has no material relationship with us or our general partner. In making this determination, the Board of Directors adheres to all of the specific tests for independence included in the NYSE listing standards and our corporate governance guidelines, and considers all of the facts and circumstances it deems necessary or advisable to make such a determination. Our general partner’s Board of Directors has determined affirmatively that Messrs. Berry, Cropper and Frederickson each qualify as “independent” under our governance guidelines and the NYSE rules. Our general partner’s Board of Directors has also determined that, based upon relevant experience, each member of the Audit/Conflicts Committee (Messrs. Berry, Cropper, and Frederickson) is an “audit committee financial expert,” as defined in Item 407 of Regulation S-K of the Securities Exchange Act of 1934, as amended. A description of each member’s qualifications may be found elsewhere in this Item 10. In conjunction with regular meetings, the Audit/Conflicts Committee meets in executive session without members of management present. Mr. Berry leads these executive session meetings, the purpose of which is to promote open and candid discussion among the non-management and independent members of the general partner’s Board of Directors.
The Compensation Committee of the general partner’s Board of Directors oversees compensation decisions for the officers of the general partner and the administration of the compensation plans described below. The Compensation Committee held four meetings during 2009. The current members of the Compensation Committee are: L. Wilson Berry, Jr., Stephen L. Cropper (chairman), Lynn L. Elsenhans, and Philip L. Frederickson. Since Ms. Elsenhans is also is an officer and director of Sunoco, Inc., she recuses herself from Compensation Committee decisions relating to equity compensation awards.
In order that interested parties may be able to make their concerns known to the non-management directors, our unitholders and other interested parties may communicate directly with the general partner’s Board of Directors, with the non-management directors as a group, or with any director or committee chairperson by writing to such parties in care of Bruce D. Davis, Jr., Vice President, General Counsel and Secretary, Sunoco Partners LLC, 1818 Market Street, Suite 1500, Philadelphia, PA 19103-3615. Communications addressed to the Board generally will be forwarded either to the appropriate committee chairperson or to all directors.
Communications may be submitted confidentially and anonymously. Under certain circumstances, we or the general partner may be required by law to disclose the information or identity of the person submitting the communication. There were no material actions taken by the Board of Directors as a result of communications received during 2009 from unitholders or others. Certain concerns communicated to the general partner’s Board of Directors also may be referred to the general partner’s internal auditor or its General Counsel, in accordance with the general partner’s regular procedures for addressing such concerns. The chairman of the general partner’s Board of Directors or the chairman of the general partner’s Audit/Conflicts Committee may direct that certain concerns be presented to the Audit/Conflicts Committee, or to the full Board, or that they otherwise receive special treatment, including retention of external counsel or other advisors.
The executive officers of our general partner spend all of their time managing our business and affairs. Our general partner has adopted a Code of Ethics for Senior Officers, which applies to the principal executive officer, the principal financial officer, the principal accounting officer, the treasurer and persons performing similar functions for the general partner and its subsidiaries. In addition, our general partner has adopted a Code of Business Conduct and Ethics, which applies to all directors, officers and employees. The Code of Business Conduct and Ethics addresses ethical handling of actual or apparent conflicts of interest, compliance with applicable laws, rules and regulations, full, fair, accurate, timely and understandable disclosure in public communications, and prompt internal reporting of violations. In accordance with the disclosure requirements of applicable law or regulation, we intend to disclose any amendment to, or director or executive officer’s waiver from, any provision of these Codes, on our website, via a press release, or under Item 5.05 of a current report on Form 8-K.
We make available, free of charge within the “Corporate Governance” section of our website at
www.sunocologistics.com, and in print to any unitholder who so requests, the Code of Ethics for Senior Officers, the Code of Business Conduct and Ethics, the Audit/Conflicts Committee Charter, the Compensation Committee Charter, the Corporate Governance Guidelines and our limited partnership agreement. The information contained on, or connected to, our internet website is not incorporated by reference into this Form 10-K and should not be considered part of this or any other report that we file with, or furnish to, the SEC.
Directors and Executive Officers of Sunoco Partners LLC (our General Partner)
Our common unit holders do not nominate candidates for, or vote for the election of, the directors of the general partner. The general partner is a limited liability company, and its directors are elected by its members, all of which are corporate affiliates of Sunoco, Inc. The executive officers of the general partner are appointed by its directors. The following table shows information for the current directors and executive officers of Sunoco Partners LLC, our general partner. Executive officers and directors are elected for one-year terms.
Name Age Position with the General Partner
Lynn L. Elsenhans . . . 53 Chairman and Director
Deborah M. Fretz . . . 61 President, Chief Executive Officer and Director Cynthia A. Archer . . . 56 Director
L. Wilson Berry, Jr. . . 66 Director Stephen L. Cropper . . . 59 Director Bruce G. Fischer . . . 54 Director Philip L. Frederickson . . . 53 Director Brian P. MacDonald . . . 44 Director
Bruce D. Davis, Jr. . . 53 Vice President, General Counsel and Secretary David A. Justin . . . 57 Vice President, Operations
Michael J. Hennigan . . . 50 Vice President, Business Development Neal E. Murphy . . . 52 Vice President and Chief Financial Officer
Ms. Elsenhans was elected to the Board of Directors in August 2008 and was elected Chairman of the Board in October 2008. Ms. Elsenhans has been President and Chief Executive Officer of Sunoco, Inc. since August 2008 and Chairman of Sunoco, Inc. since January 1, 2009. Prior to that, she was Executive Vice President of Global Manufacturing for Shell Downstream, Inc. from 2005 to 2008. Ms. Elsenhans is a director of International Paper Company.
Ms. Fretz was elected President, Chief Executive Officer and director in October 2001. Ms. Fretz is a director of GATX Corporation.
Ms. Archer was elected to the Board of Directors in April 2002. Ms. Archer has been Vice President, Marketing and Development, Sunoco, Inc. since January 2001.
Mr. Berry was elected to the Board of Directors in March 2003. He is currently a consultant in the energy field. From 1998 until his retirement in 2000, Mr. Berry was Chief Executive Officer and President of Motiva Enterprises LLC, a refining and marketing joint venture in the Eastern United States, established by Shell Norco Refining Company, Texaco Refining and Marketing (East) Inc., and Saudi Refining Inc.
Mr. Cropper was elected to the Board of Directors in May 2002. Mr. Cropper is currently a private investor. From January 1996 until the time of his retirement in December 1998, he served as President and Chief
Executive Officer of Williams Energy Services, a diversified energy company. He is a director of Berry Petroleum, NRG Energy, Inc. and Rental Car Finance Corporation, a subsidiary of Dollar Thrifty Automotive Group, Inc.
Mr. Fischer was elected to the Board of Directors in April 2002. He has been Senior Vice President, Strategy and Portfolio for Sunoco, Inc. since October 2008. From January 2002 to October 2008, Mr. Fischer served as Senior Vice President, Sunoco Chemicals.
Mr. Frederickson was elected to the Board of Directors in January 2008. Mr. Frederickson was formerly Executive Vice President, Planning, Strategy & Corporate Affairs, for Conoco Phillips from 2006 until his retirement in January 2008. Prior to that, he was Executive Vice President, Commercial from 2002 to 2006. Mr. Frederickson is a director of Rosetta Resources, Inc.
Mr. MacDonald was elected to the Board of Directors in September 2009. He has been Senior Vice President and Chief Financial Officer of Sunoco, Inc. since August 2009. He was Chief Financial Officer of the Commercial Business Unit at Dell, Inc. from December 2008 until July 2009, and Corporate Vice President and Treasurer at Dell, Inc. from December 2002 until January 2009.
Mr. Davis was elected Vice President, General Counsel and Secretary in January 2004.
Mr. Hennigan was elected Vice President, Business Development in May 2009. Prior to that he was Senior Vice President, Business Improvement from October 2008 to May 2009, Senior Vice President, Supply, Trading, Sales and Transportation from February 2006 to October 2008, and Vice President, Product Trading, Sales and Supply March 2001 to February 2006 for Sunoco, Inc.
Mr. Justin was elected Vice President, Operations in April 2007. From November 2001 to April 2007, he served as Vice President, Eastern Operations.
Mr. Murphy was elected Vice President and Chief Financial Officer in April 2007. Prior to that, he was employed by Quaker Chemical Corporation, where he served as Vice President and Chief Financial Officer from July 2004 through March 2007.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires directors, executive officers and persons who beneficially own more than 10 percent of the units to file certain ownership reports with the Securities and Exchange Commission and the New York Stock Exchange. The Securities and Exchange Commission regulations also require that copies of these Section 16(a) reports be furnished us by such reporting persons. Based upon a review of copies of these reports, we believe all applicable Section 16(a) reports were timely filed.