Exhibit 10.1

 

 

BUCKEYE PARTNERS, L.P.

 

 

ANNUAL INCENTIVE COMPENSATION PLAN

 

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ANNUAL INCENTIVE COMPENSATION PLAN

 

Buckeye Partners, L.P., a Delaware limited partnership, hereby establishes the
Buckeye Partners, L.P. Annual Incentive Compensation Plan, effective as of
January 1, 2009.  The Plan permits annual cash awards to Employees, based on the
achievement of pre-established Performance Goals.  The Plan will remain in
effect until terminated as herein provided.

 

ARTICLE I.  PLAN PURPOSES

 

The purposes of the Plan are to (a) provide incentives to achieve annual goals
established for the Participants and the Partnership that are considered
important for organizational success; and (b) reward performance with pay that
varies in relation to the extent to which the pre-established performance goals
are achieved.

 

ARTICLE II.  DEFINITIONS

 

The terms defined in this Article II shall, for all purposes of this Plan, have
the meanings herein specified, unless the context expressly, or by necessary
implication, requires otherwise:

 

2.01         “Actual Award” shall mean the actual dollar amount paid to a
Participant pursuant to the Plan.

 

2.02         “Administrator” shall mean the Committee; provided, however, that
the Chief Executive Officer of the General Partner or his designee (the “CEO”)
shall be the Administrator with respect to certain responsibilities as more
particularly set forth on Exhibit A.

 

2.03         “Affiliate” will have the meaning ascribed to such term in
Rule 12b-2 of the General Rules under the Securities Exchange Act of 1934, as
amended.  Any reference to an Affiliate in this Plan shall include an Affiliate
of the Partnership or the General Partner, as applicable, including Buckeye Pipe
Line Services Company.

 

2.04         “Base Salary” shall mean, as to any specific Performance Period,
the actual base salary paid by the Partnership or Affiliate to a Participant as
an Employee at the end of the Performance Period.  Base Salary (a) shall not be
reduced by the amount, if any, of any salary reduction contributions made to any
salary reduction plan or tax-qualified retirement plan; and (b) shall be
calculated exclusive of any payments under this Plan or other incentive plans,
programs or arrangements, bonus payments, overtime, severance payments, or other
special awards.

 

2.05         “Board” shall mean the Board of Directors of the General Partner.

 

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2.06         “Business Unit” shall mean the Pipeline Operations, Terminalling
and Storage, Natural Gas Storage, Energy Services, Buckeye Gulf Coast
Operations, or any other business unit as determined by the Administrator in its
sole discretion.

 

2.07         “Code” shall mean the Internal Revenue Code of 1986, as amended. 
Reference in the Plan to any section of the Code shall be deemed to include any
amendment or successor provisions to such section and any regulations under such
section.

 

2.08         “Committee” shall mean the Compensation Committee of the Board, or
such other committee as determined by the Board.

 

2.09         “Employee” shall mean a regular full-time salaried exempt employee
of the Partnership, General Partner or Affiliate.

 

2.10         “Executive Officers” shall mean the executive officers of the
Partnership, General Partner or Affiliate as defined in Rule 3b-7 of the
Exchange Act and as determined by the Administrator in its sole discretion.

 

2.11         “Financial Performance Goals” shall mean Performance Goals based
upon achievement of certain financial criteria established by the Administrator
in its sole discretion.  The Financial Performance Goals may be based on one or
more financial criteria, including, but not limited to, the following: EBITDA,
unit price, earnings per unit, net earnings, operating earnings, total capital
spending, maintenance capital spending, return on assets, total unit holder
return, return on equity, growth in assets, cash flow, market share,
distribution growth, distributable cash flow, relative performance to a
comparison group, or strategic business criteria, including, but not limited to,
meeting specified revenue goals, business expansion goals, cost targets or goals
relating to acquisitions or divestitures.

 

2.12         “General Partner” means Buckeye GP LLC, a Delaware limited
liability company, and any successor thereto.

 

2.13         “Individual Performance Goals” shall mean Performance Goals based
on the attainment of individual business objectives and/or personal performance
objectives.  Individual Performance Goals may include personal performance
objectives and measures such as teamwork, interpersonal skills, communication
skills, employee development, project management skills, and leadership, or
individual business objectives such as performance versus budget and attainment
of safety, operational incident and environmental goals.  The Individual
Performance Goals will be established by the Administrator in its sole
discretion or an immediate supervisor of a Participant to whom the Administrator
delegates such authority.

 

2.14         “Participant” shall mean an Employee approved for participation in
the Plan by the Administrator.  Participants shall be divided into Tiers as
determined by the

 

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Administrator in its sole discretion and as set forth on Exhibit B.  Any
Employee who is a participant in an annual incentive or bonus plan for Lodi Gas
Services, L.L.C. shall not be a Participant in this Plan or entitled to any
benefit herein.

 

2.15         “Partnership” means Buckeye Partners, L.P., a Delaware limited
partnership, and any successor thereto.

 

2.16         “Performance Goals” shall mean the Financial Performance Goals and
Individual Performance Goals applicable to each Participant, against which a
Participant’s performance shall be measured to determine if an Actual Award may
be payable under the Plan.

 

2.17         “Performance Period” shall mean the Plan Year during which time the
performance of Participants shall be measured.

 

2.18         “Plan” shall mean the Buckeye Partners, L.P. Annual Incentive
Compensation Plan, or if hereafter amended or supplemented, as so amended or
supplemented.

 

2.19         “Plan Year” shall mean the calendar year.

 

2.20         “Target Award Level” shall mean the target incentive amount that
may be paid to a Participant, which is intended to reward performance at a
certain established targeted level based on the achievement of Performance Goals
for the Performance Period.

 

2.21         “Tier” shall mean the category in which a Participant is placed for
purposes of establishing Target Award Levels and Performance Goals, as
determined by the Administrator in its sole discretion and as set forth on
Exhibit B and Exhibit C.

 

ARTICLE III.  CONSTRUCTION

 

3.01         Gender and Number.  The masculine pronoun whenever used in the Plan
shall include the feminine, and the feminine pronoun whenever used in the Plan
shall include the masculine, in each case as the context or facts may require.
Whenever any words are used herein in the singular, they shall be construed as
if they were also used in the plural in all cases where the context so applies.

 

3.02         Captions.  The captions to the articles and sections of this Plan
are for convenience only and shall not control or affect the meaning or
construction of any of its provisions.

 

3.03         Severability.  In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.

 

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3.04         Controlling Law.  The Plan and all related documents shall be
governed by and construed in accordance with the laws of the State of Delaware,
without regard to the conflict of law principles of any state.  Any persons or
companies who now are or shall subsequently become parties to the Plan shall be
deemed to consent to this provision.

 

3.05         No Right to Employment.  This Plan does not confer nor shall it be
construed as creating an express or implied contract of employment between any
Participant and the Partnership, General Partner or Affiliate or other party.
Nothing in the Plan shall interfere with or limit in any way the right of the
Partnership, General Partner or Affiliate to terminate any Participant’s
employment at any time, nor confer upon any Employee any right to continue in
the employment of the Partnership, General Partner or Affiliate.

 

ARTICLE IV.  ELIGIBILITY AND PARTICIPATION

 

4.01         Eligibility.  In order to be eligible to participate in the Plan
for a Performance Period, except as set forth in Section 4.03, an individual
must be (a) an Employee; (b) hired before the commencement of the last quarter
of the Performance Period; (c) employed on the last day of the Plan Year and
(d) employed on the date an Actual Award is paid as set forth herein.

 

4.02         No Right to Participation.  No Employee shall have a right to
participate in the Plan, regardless of prior participation in the Plan.

 

4.03         Status Change During Performance Period.  Unless otherwise
determined by the Administrator in its sole discretion, a Participant will
forfeit his or her right to an Actual Award if the Participant is not employed
on the date an Actual Award is paid pursuant to Section 6.01.  Notwithstanding
the foregoing, in the event a Participant is employed for at least six
(6) months during a Performance Period, and the Participant dies, becomes
disabled, or retires, the Administrator, in its sole discretion, may grant a
pro-rata award to such Participant.

 

ARTICLE V.  DETERMINATION OF AWARDS

 

5.01         Timing of Establishment of Performance Goals.  For each Performance
Period, the Administrator shall establish Performance Goals.  Performance Goals
will be allocated between Financial Performance Goals and Individual Performance
Goals so that the total allocation is one hundred percent (100%).  This
allocation may change each Plan Year as determined by the Administrator in its
sole discretion.  The Individual Performance Goals and Financial Performance
Goals may change each Plan Year as determined by the Administrator in its sole
discretion.

 

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5.02         Target Award Level. For each Performance Period, the Administrator
shall establish a Target Award Level for Participants that corresponds to the
achievement of the Performance Goals for the applicable Performance Period. 
Guidelines for Target Award Levels for Participants are set forth on Exhibit B
but the Administrator in its sole discretion may change the Target Award Levels
for Participants for each Performance Period.  The established Target Award
Level may vary for each Participant and need not by uniform among each Tier.

 

5.03         Establishment of Performance Goals.  Target Award Levels and
Performance Goals, including allocation between Financial Performance Goals and
Individual Performance Goals, will be established by the Administrator in its
sole discretion based on the principles set forth in Exhibit C.

 

5.04         Establishment of Target Award Level for Marketing/Commercial
Participants.  A high degree of flexibility is appropriate in establishing
Target Award Levels for Participants who are involved in marketing or commercial
activities.  As a result, for each Performance Period, the CEO may recommend to
the Administrator a Target Award Level that will represent a bonus opportunity
for such Participants in excess of the guidelines set forth on this Exhibit B. 
Actual Awards will be made from this additional Target Award Level at the end of
a Performance Period only in the event the Administrator determines that a
Participant has achieved results that have had a positive, material impact on
the financial performance of a Business Unit, or the Partnership on a
consolidated basis.

 

5.05         Calculation of Actual Awards. For each Performance Period, the
Administrator shall calculate an Actual Award based on the performance of the
Business Unit or Partnership, as applicable, compared against the Financial
Performance Goals and the Individual Performance Goals of the Participant.  The
Administrator shall have sole discretion in establishing the amount or
percentage of a Participant’s Actual Award relative to the Target Award Level
based on the level of achievement of the Performance Goals for the Performance
Period.  Notwithstanding the foregoing, the Administrator may establish minimum
levels of achievement for Performance Goals, below which no Participant shall
receive an Actual Award.

 

5.06         Changes in Performance Goals. Each Participant’s Actual Award shall
be based on the Target Award Levels established by the Administrator pursuant to
Section 5.02, provided that the Administrator may adjust Performance Goals to
take into account extraordinary or unanticipated circumstances or events.

 

5.07         Award Adjustments.  Actual Awards shall be discretionary, and no
Participant shall be entitled to an Actual Award under the Plan.  The
Administrator shall have the sole discretion to increase, reduce or eliminate
the amount of a Participant’s Actual Award otherwise payable under the Plan.

 

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ARTICLE VI.  PAYMENT OF ACTUAL AWARDS

 

6.01         Timing and Form of Payment.  No Participant shall be vested in
Actual Awards, nor Actual Awards made, prior to the end of the applicable
Performance Period.  A Participant’s Actual Award shall be paid in cash as soon
as practicable after the end of the Performance Period.  To the extent a
Participant has a “legally binding right” (within the meaning of Code
Section 409A) to his Actual Award, such Actual Award shall be paid in cash as
soon as practicable after, and no later than, March 15th following the end of
the calendar year in which the Award is no longer subject to a “substantial risk
of forfeiture” (within the meaning of Code Section 409A).

 

ARTICLE VII.  ADMINISTRATION

 

7.01         Administrator Authority.  The Plan shall be administered by the
Administrator, which, in addition to the other powers set forth herein, shall
have the full power, subject to, and within the limits of the Plan, to:

 

(a) make all determinations and interpretations and approve all rules as may be
necessary or advisable for the administration of the Plan, including, but not
limited to, those necessary to resolve any ambiguities with respect to any of
the terms and provisions of the Plan;

 

(b) exercise all powers and perform such acts in connection with the Plan as are
deemed necessary or appropriate to promote the best interests of the
Partnership, General Partner or Affiliate;

 

(c) determine the size and types of Target Award Levels and Actual Awards;

 

(d) determine the terms and conditions of Target Award Levels and Actual Awards
in a manner consistent with the Plan;

 

(e) construe and interpret the Plan and any agreement or instrument entered into
under the Plan;

 

(f) establish, amend or waive rules and regulations for the Plan’s
administration; and

 

(g) subject to the provisions of Article V, amend the terms and conditions of
any outstanding Target Award Levels to the extent such terms and conditions are
within the sole discretion of the Administrator as provided in the Plan.

 

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7.02         Authorized Agents. The Administrator may authorize any officer of
the General Partner to execute and deliver documents on behalf of the
Administrator, including administrative guidelines for this Plan.

 

7.03         Binding Decisions.  All determinations and decisions of the
Administrator as to any disputed question arising under the Plan, including
questions of construction and interpretation, shall be final, binding and
conclusive upon all parties.

 

ARTICLE VIII.  AMENDMENT AND TERMINATION

 

8.01         The Administrator may amend, suspend, or terminate the Plan or any
portion thereof at any time.

 

ARTICLE IX. MISCELLANEOUS

 

9.01         Nontransferability.  No right or interest of any Participant in the
Plan shall be assignable or transferable, or subject to any lien, directly, by
operation of law or otherwise, including, but not limited to, execution, levy,
garnishment, attachment, pledge and bankruptcy.

 

9.02         Tax Withholding.  The Partnership, the General Partner or
Affiliates, as applicable, shall have the right to deduct from all payments
under the Plan any foreign, federal, state or local income or other taxes
required by law to be withheld with respect to such payments.

 

9.03         Non-Uniform Determinations.  The Administrator’s determinations
under the Plan (including without limitation, determinations of the persons to
receive Awards, the form, amount, and timing of such payments, the terms and
provisions of such payments, and the agreement evidencing same) need not be
uniform and may be made selectively among persons who receive, or are eligible
to receive, Actual Awards under the Plan, whether or not such persons are
similarly situated.

 

9.04         No Fund.  The Partnership shall have no obligation to reserve or
otherwise fund in advance any amounts which are or may in the future become
payable under this Plan. Any funds, which the Partnership acting in its sole
discretion determines to reserve for future payments under this Plan, may be
commingled with other funds of the Partnership and need not in any way be
segregated from other assets or funds held by the Partnership.

 

9.05         Successors.  All obligations of the Partnership under the Plan
shall be binding upon and inure to the benefit of any successor of the
Partnership, whether the existence of such successor is the result of a direct
or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the Partnership.

 

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9.06         Other Plans.  Nothing contained in this Plan shall prevent the
Administrator or the Board from adopting other or additional compensation
arrangements, and such arrangements may be either generally applicable or
applicable only in specific cases.

 

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EXHIBIT A

 

Identity of Administrator

 

 

 

Compensation Committee

 

CEO

 

Subject-Matter Responsibilities

 

 

 

 

 

Target Award Levels

 

 

 

 

 

Executive Officers

 

X

 

 

 

Other Participants

 

 

 

X

 

Financial Goals

 

 

 

 

 

Executive Officers

 

X

 

 

 

Other Participants

 

X

 

 

 

Individual Goals

 

 

 

 

 

Executive Officers

 

X

 

 

 

Other Participants

 

 

 

X

 

Actual Financial Awards

 

 

 

 

 

Executive Officers

 

X

 

 

 

Other Participants

 

 

 

X

 

Actual Individual Awards

 

 

 

 

 

Executive Officers

 

X

 

 

 

Other Participants

 

 

 

X

 

 

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EXHIBIT B

 

Target Award Levels

 

A Target Award Level shall be determined for each Participant, based on the
percentage of a Participant’s Base Salary, which a Participant has the
opportunity to earn as an Actual Award for each Performance Period.  A
Participant’s Target Award Level shall be determined by the Administrator in its
sole discretion based on a Participant’s responsibility level or the position or
positions held during the Performance Period.  In establishing Target Award
Levels, the following guidelines shall apply, although the Administrator shall
have the sole discretion to establish different Target Award Levels for
individual Participants, or groups of Participants, within and among tiers:

 

(1)           Tier I Participant (Executive Officers specified by the
Committee): Target Award Level shall be based on 100% of Base Salary.

 

(2)           Tier II Participant (Executive Officers other than Tier I
Participants): Target Award Level shall be based on 50% of Base Salary.

 

(3)           Tier III Participant (Grade 18 and higher other than the Executive
Officers): Target Award Level shall be based on 50% of Base Salary.

 

(4)           Tier IV Participant (Grade 17): Target Award Level shall be based
on 30% of Base Salary.

 

(5)           Tier V Participant (Grade 15 and 16): Target Award Level shall be
based on 20% of Base Salary.

 

(6)           Tier VI Participant (Grade 12, 13 and 14): Target Award Level
shall be based on 15% of Base Salary.

 

(7)           Tier VII Participant (All other eligible Employees): Target Award
Level shall be based on 10% of Base Salary.

 

If any Participant holds more than one position during the Performance Period,
then the Administrator may designate different Target Award Levels with respect
to each position and the Actual Award will be pro-rated to reflect (to the
nearest semi-monthly increment) the period during which such Participant had
each Target Award Level.

 

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EXHIBIT C

 

Establishment of Performance Goals

 

The Administrator shall establish Target Award Levels on behalf of its
respective Participants based on their Tier and the applicable Performance Goals
as set forth in the table below.  A Participant earns an Actual Award for a
Performance Period based on the level of achievement of the Performance Goals
established by the Administrator allocated between Financial Performance Goals
and Individual Performance Goals as set forth in the table below.  The Financial
Performance Goals will be measured against the financial performance of a
Participant’s Business Unit within the Partnership and/or the Partnership on a
consolidated basis.  The Administrator in its sole discretion shall select the
applicable Financial Performance Goals and Individual Performance Goals for the
respective Performance Period from the table below.

 

Participant
Tier

 

Financial Performance Goals

 

Individuals Performance
Goals

 

Allocation of
Performance Goals to
Target Award Level

 

Allocation of Financial
Performance Goals

 

 

 

 

 

 

 

 

 

Tier I

 

To be determined by the Committee.

 

To be determined by the Committee.

 

75% based on Financial Performance Goals

25% based on Individual Performance Goals

Bonus will be adjusted based on performance relative to Performance Goal targets

 

Tier I Participant Financial Performance Goals shall be measured 100% against
financial performance of the Partnership, as a consolidated entity (the
“Consolidated Entity”).

 

 

 

 

 

 

 

 

 

Tier II

 

To be determined by the Committee.

 

To be determined by the Committee.

 

75% based on Financial Performance Goals

25% based on Individual Performance Goals

Bonus will be adjusted based

 

Depending upon the Participant’s primary job responsibilities, Tier II
Participant Financial Performance Goals shall be measured 100% against the
financial performance of the Consolidated Entity, or 75% against the financial
performance

 

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Participant
Tier

 

Financial Performance Goals

 

Individuals Performance
Goals

 

Allocation of
Performance Goals to
Target Award Level

 

Allocation of Financial
Performance Goals

 

 

 

 

 

 

on performance relative to Performance Goal targets

 

of the Participant’s Business Unit and 25% against the financial performance of
the Consolidated Entity.

 

 

 

 

 

 

 

 

 

Tier III

 

To be determined by the Committee.

 

To be determined by the CEO.

 

75% based on Financial Performance Goals

25% based on Individual Performance Goals

Bonus will be adjusted based on performance relative to Performance Goal targets

 

Depending upon the Participant’s primary job responsibilities, Tier III
Participant Financial Performance Goals shall be measured 100% against the
financial performance of the Consolidated Entity, or 75% against the financial
performance of the Participant’s Business Unit and 25% against the financial
performance of the Consolidated Entity.

 

 

 

 

 

 

 

 

 

Tier IV

 

To be determined by the Committee.

 

To be determined by the CEO.

 

50% based on Financial Performance Goals

50% based on Individual Performance Goals

Bonus will be adjusted based on performance relative to Performance Goal targets

 

Depending upon the Participant’s primary job responsibilities, Tier IV
Participant Financial Performance Goals shall be measured 100% against the
financial performance of the Consolidated Entity, or 75% against the financial
performance of the Participant’s Business Unit and 25% against the financial
performance of the Consolidated Entity.

 

 

 

 

 

 

 

 

 

Tier V

 

To be determined by the Committee.

 

To be determined by the CEO.

 

50% based on Financial Performance Goals

50% based on Individual

 

Depending upon the Participant’s primary job responsibilities, Tier V
Participant Financial Performance Goals shall be measured 100%

 

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Participant
Tier

 

Financial Performance Goals

 

Individuals Performance
Goals

 

Allocation of
Performance Goals to
Target Award Level

 

Allocation of Financial
Performance Goals

 

 

 

 

 

 

Performance Goals

Bonus will be adjusted based on performance relative to Performance Goal targets

 

against the financial performance of the Consolidated Entity, or 75% against the
financial performance of the Participant’s Business Unit and 25% against the
financial performance of the Consolidated Entity.

 

 

 

 

 

 

 

 

 

Tier VI

 

To be determined by the Committee.

 

To be determined by the CEO.

 

50% based on Financial Performance Goals

50% based on Individual Performance Goals

Bonus will be adjusted based on performance relative to Performance Goal targets

 

Depending upon the Participant’s primary job responsibilities, Tier VI
Participant Financial Performance Goals shall be measured 100% against the
financial performance of the Consolidated Entity, or 75% against the financial
performance of the Partnership’s Business Unit and 25% against the financial
performance of the Consolidated Entity.

 

 

 

 

 

 

 

 

 

Tier VII

 

To be determined by the Committee.

 

To be determined by the CEO.

 

50% based on Financial Performance Goals

50% based on Individual Performance Goals

Bonus will be adjusted based on performance relative to Performance Goal targets

 

Depending upon the Participant’s primary job responsibilities, Tier VII
Participant Financial Performance Goals shall be measured 100% against the
financial performance of the Consolidated Entity, or 75% against the financial
performance of the Participant’s Business Unit and 25% against the financial
performance of the Consolidated Entity.

 

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