For 2011, the PPUs have a performance measurement of total shareholder return, or TSR, over the
Performance Period relative to a peer group of 13 other similar publicly held master limited partnerships that
we believe we compete with in the capital markets. The companies included in this peer group at the start of
2011 were the following:
Copano Energy, L.L.C.
ONEOK Partners, L.P.
Crestwood Midstream Partners LP
Penn Virginia Resource Partners, L.P.
Duncan Energy Partners L.P.
Regency Energy Partners LP
Enbridge Energy Partners, L.P.
Targa Resources Partners LP
Enterprise Products Partners L.P.
Western Gas Partners, LP
Inergy, L.P.
Williams Partners, L.P.
MarkWest Energy Partners, L.P.
If one of these peer companies is not publicly traded at the end of the Performance Period it will remain a
member of the peer group for purposes of ranking the peer group total shareholder return but it will go to the
bottom of the peer group ranking. If there is a combination of any of the peer group companies during the
Performance Period, the performance of the surviving entity will be used. No new companies will be added to
the peer group during the Performance Period (including a non-peer company) that may acquire a member of
the peer group).
These PPU and RPU awards were granted at the first regular meeting of the General Partner’s board of
directors during the first quarter of 2011. The number of awards granted to our executive officers is set forth in
the “Grants of Plan-Based Awards” table below. Award recipients also received the right to receive dividend
equivalent rights, or DERs, on the number of units earned during the Vesting Period. The DERs on the PPUs
will be paid in cash at the end of the Performance Period and the DERs on the RPUs will be paid quarterly in
cash during the Vesting Period. The amount paid on the DERs will equal the quarterly distributions actually
paid during the Performance Period and the Vesting Period on the number of PPUs or RPUs earned.
Our practice is to determine the dollar amount of long-term incentive compensation that we want to
provide, and to then grant a number of PPUs and RPUs that have a fair market value equal to that amount on
the date of grant, which is based on the closing price of our common units on the NYSE on the date of grant.
Target long-term incentive opportunities for executives under the plan are established as a percentage of base
salary, using the BDO study data for individuals in comparable positions.
The target 2011 long-term incentive opportunities, expressed as a percentage of base salary were as
follows:
Targeted
LTI
Opportunity
CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130%
CFO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80%
Vice President, General Counsel & Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80%
For the PPUs granted in 2011, the performance measure is total shareholder return over the Performance
Period relative to the peer group described above. This performance measure was initially designed and
proposed by the executive officers and presented to the Chairman of the General Partner’s board of directors.
These objectives were then considered and approved by the compensation committee and ultimately by the
board of directors of the General Partner. The compensation committee believes utilizing TSR as a performance
measure provides incentive for the continued growth of our operating footprint and distributions to unitholders.
We believe this performance measure provides management with appropriate incentives for our disciplined and
steady growth. If our TSR ranking among the companies listed in our peer group over the Performance Period
is below the 25
th
percentile, 0% — 50% of the performance units will vest. If the TSR ranking over the
Performance Period is greater than the 25
th
percentile but less than or equal to the 50
th
percentile, 50% — 100%
of the performance units will vest. If the TSR ranking over the Performance Period is greater than the 50
th
percentile but less than or equal to the 75
th
percentile, 100% — 175% of the performance units will vest. If the
TSR ranking over the Performance Period is greater than the 75
th
percentile, 175% — 200% of the performance
units will vest. Final vesting within a performance quartile will be determined by the compensation committee.
TSR is computed by using data obtained from Bloomberg for the peer group and will incorporate the average
closing prices of the twenty trading days ending on December 31, 2010 and December 31, 2013.
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