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Exhibit 10.8

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                                CORNERSTONE PROPANE


                                          
                                          
                             DEFERRED COMPENSATION PLAN



                                          
                              EFFECTIVE: JULY 1, 1998




                                          
                                    Prepared by:
                                          
                                          
                          William M. Mercer, Incorporated


                        Three Embarcadero Center, Suite 1500
                              San Francisco, CA  94111
                                          
                                          
                  THIS DOCUMENT HAS LEGAL AND TAX IMPLICATION AND 
                 SHOULD BE REVIEWED BY THE EMPLOYER'S LEGAL COUNSEL

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                                CORNERSTONE PROPANE
                             DEFERRED COMPENSATION PLAN


                                    ARTICLE I.
                                      PURPOSE
                                          
The purposes of this Plan are to allow a select group of Cornerstone Propane 
Partners, L.P. (the "Company") executives to defer receipt of compensation to 
which the executives would otherwise be entitled and to supplement qualified 
plan benefits.  This Plan is intended to be an unfunded plan of deferred 
compensation for a select group of management or highly compensated employees 
within the meaning of Title I of ERISA.  This Plan is effective July 1, 1998.

                                    ARTICLE  II.
                                    DEFINITIONS
                                          
Whenever referred to in this Plan, the following capitalized terms shall have
the meanings set forth below except where otherwise provided.  As used in the
Plan, the masculine, feminine and neuter genders and the singular and plural
numbers shall each be deemed to include the other or others.

2.1    "Account" means a Participant's Deferred Compensation Account(s) and SERP
       Account established pursuant to Article V.

2.2    "Annual Bonus" means an amount payable (but for deferral hereunder) to a
       Participant pursuant to the Company's Annual Incentive Plan.

2.3    "Base Salary" means a Participant's base salary.

2.4    "Beneficiary" means the person(s) designated in writing by the
       Participant to receive his benefits under the Plan if the Participant
       dies before receiving all of his benefits.  A Beneficiary designation
       must be signed and dated by the Participant and delivered to the
       Committee to become effective.  In the absence of a valid or effective
       Beneficiary designation, the Participant's surviving spouse shall be the
       Beneficiary or if there is none, the Beneficiary shall be the
       Participant's surviving descendants by right of representation, surviving
       parents or estate (in that order).

2.5    "Board" means the Board of Directors of Cornerstone Propane Partners,
       L.P.

2.6    "Committee" means the Company's Compensation Committee.  The Committee
       shall be the "plan administrator" under ERISA.

2.7    "Company" means Cornerstone Propane Partners, L.P.

2.8    "Deferral Election Form" means the agreement between a Participant and
       the Company whereby the Participant elects to reduce his Base Salary
       and/or Incentive Pay and the Company promises to pay him benefits under
       the Plan in the future.

2.9    "Employee" means a common law employee of the Company.

2.10   "ERISA" means the Employee Retirement Income Security Act of 1974, as
       amended from time to time.

2.11   "Incentive Pay" means a Participant's Annual Bonus or Other Incentive, as
       defined herein.

2.12   "Other Incentive" means an amount payable under Company incentive plans
       specified by the Board as eligible for deferral hereunder.


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2.13   "Participant" means (a) an Employee who is eligible to participate under
       Article III or (b) an individual who has an Account balance greater than
       zero.

2.14   "Payment Date" means the date on which a Participant's Account is to be
       paid or on which payment is to commence.  Except as otherwise provided in
       the Plan, the Payment Date for a Participant's Deferred Compensation
       Account(s) shall be as specified in Article IV, and the Payment Date for
       a Participant's SERP Account shall be the January 31 following the
       calendar year in which the Participant's Termination of Employment
       occurs.

2.15   "Plan" means the Cornerstone Propane Deferred Compensation Plan as set
       forth herein and as amended from time to time.

2.16   "Plan Year" means the period beginning July 1, 1998 and ending December
       31, 1998, and thereafter, the calendar year.

2.17   "SERP" means the supplemental executive retirement plan feature of the
       Plan.

2.18   "Termination of Employment" means any voluntary or involuntary
       termination of the Employee's employment with the Company.

2.19   "Valuation Date" means the last business day of each month.

2.20   "Valuation Period" means the period of time between Valuation Dates.
                                          
                                          
                                    ARTICLE III.
                                    ELIGIBILITY
                                          
3.1    The Committee shall determine which Employees are eligible to participate
       in the Plan each Plan Year, provided that only Employees who are members
       of a select group of management or highly compensated employees (within
       the meaning of ERISA Section 201(2)) shall be eligible.

3.2    The Committee shall notify each Employee of his eligibility and provide
       him with a copy of the Plan.

3.3    The Committee shall maintain a record of Plan Participants.


                                    ARTICLE IV.
                   PARTICIPATION IN DEFERRED COMPENSATION FEATURE
                                          
4.1    Prior to the beginning of each Plan Year, or if later, within 30 days of
       notification of first becoming eligible to participate in the Plan, a
       Participant may elect to defer receipt of future Base Salary by
       completing a Deferral Election Form prescribed by the Committee and
       specifying a percentage (in 1% increments up to a maximum of 75%) to be
       deferred.  Up to two times during a calendar year, a Participant may
       complete a Deferral Election Change Form to increase the percentage (in
       1% increments up to a maximum of 75%) of future Base Salary he wants to
       defer under the Plan.  These elections shall be effective as of the first
       payroll period beginning after the date the Deferral Election Form or
       Deferral Election Change Form is received by the Committee or such later
       date as the Committee specifies.  No election to defer Base Salary shall
       be effective prior to January 1, 1999.

4.2    A Deferral Election Form for Base Salary shall remain in effect until the
       earliest of:

       (a)     the end of the calendar year in which it became effective, or
       
       (b)     the first day of the payroll period beginning on or after the 
               date the Committee receives a completed and signed Deferral 
               Election Change Form by which the Participant indicates he 
               wants to increase the percentage of Base Salary deferred to 
               the Plan, on a prospective basis only, or


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       (c)     the first day of the payroll period beginning on or after the 
               date the Committee receives a signed and dated written 
               revocation from the Participant.

       An election to defer Base Salary may be revoked prospectively (under
       paragraph (c)), or modified to increase the elected percentage (under
       Section 4.1 and paragraph (b)), but may not be amended to otherwise
       increase or decrease the elected percentage.  A Participant who revokes
       an election pursuant to this Section shall not be eligible to resume
       deferral of Base Salary until the first day of the first Plan Year
       beginning after the revocation.

4.3    Prior to the end of the second quarter of the fiscal year for which an
       Annual Bonus is earned, a Participant may elect to defer receipt of such
       Incentive Pay by completing a Deferral Election Form prescribed by the
       Committee and specifying a percentage (in 1% increments up to a maximum
       of 100%) to be deferred.  The election shall be effective the date the
       Deferral Election Form is received by the Committee.

4.4    The timing of elections for the deferral of Other Incentives shall be
       determined by the Board in conjunction with approving deferral of such
       awards under the Plan.

4.5    An election to defer Incentive Pay shall be irrevocable.

4.6    The Participant shall also specify on the Deferral Election Form that all
       amounts credited to the Participant's Deferred Compensation Account
       pursuant to the Deferral Election Form (together with any gains or
       losses) shall be paid on one of the following Payment Dates:

       (a)     January 31 of a specified future year, or

       (b)     January 31 following the calendar year in which the Participant's
               Termination of Employment occurs, or

       (c)     the earlier of (a) or (b);

       provided, however, that the Participant shall have no more than three
       (3) Payment Dates in effect at any time.  Except as provided in
       Section 4.8, this election shall be irrevocable.

4.7    The Participant's Deferral Election Form shall specify that the 
       Participant's Deferred Compensation Account which is attributable to 
       deferrals made pursuant to the Deferral Election Form shall be paid 
       either:

       (a)     in a single lump sum on the Payment Date, or

       (b)     in substantially equal installments over a period of five or ten
               years as specified by the Participant on the Deferral Election
               Form, commencing on the Payment Date.

       Except as provided in Section 4.9, the election of a payment form shall
       be irrevocable.

4.8    Notwithstanding the Participant's election of a Payment Date, a
       Participant has a one-time opportunity to defer a Payment Date, provided
       the new Payment Date is at least two years after the original Payment
       Date.  This one-time designation of a later Payment Date is irrevocable,
       but is rendered ineffective if the Participant terminates employment
       before the original Payment Date.  To postpone a Payment Date, a
       Participant must provide the Committee with a signed and dated written
       notice, using a form prescribed by the Committee, no later than the
       December 31 prior to the beginning of the calendar year preceding the
       calendar year which includes the original Payment Date.  For example, if
       the Participant's original Payment Date is January 31, 2001, an election
       to further defer payment must be made no later than December 31, 1999,
       and must specify a new payment which is no earlier than January 31, 2003.

4.9    Notwithstanding the Participant's election of a payment form for 
       benefits attributable to his Deferred Compensation Account, a 
       Participant has a one-time opportunity to change his payment form 
       election.  This election of a different payment form is irrevocable, 
       but is rendered ineffective if the Participant terminates employment 
       before the original Payment Date.  To change a payment form election, a 
       Participant must provide the Committee with a signed and dated written 
       notice, using a form prescribed by the Committee, no later than 

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       the December 31 prior to the beginning of the calendar year preceding the
       calendar year which includes the Payment Date of the affected benefit.
                                          
                                          
                                     ARTICLE V.
                         PARTICIPATION IN THE SERP FEATURE
                                          
5.1    Within 30 days of notification of first becoming eligible to participate
       in the SERP feature of the Plan, a Participant shall indicate on a form
       prescribed by the Committee that his SERP Account shall be paid either
       (a) in a lump sum payment on the Payment Date, or (b) in substantially
       equal installments over a period of five or ten years as specified by the
       Participant commencing on the Payment Date. Except as specified in
       Section 5.2, the election of a payment form is irrevocable.

5.2    A Participant has a one-time opportunity to change his payment form
       election.  This election of a different payment form is irrevocable, but
       is rendered ineffective if the Participant terminates employment within
       one year of making the change.  To change a payment form election, a
       Participant must provide the Committee with a signed and dated written
       notice no later than the December 31 prior to the beginning of the
       calendar year preceding the calendar year which includes the Payment
       Date.
                                          
                                          
                                    ARTICLE VI.
                                      ACCOUNTS
                                          
6.1    The Company shall establish one or more Accounts in the name of each
       Participant on the Company's books and records for purposes of tracking
       the Participant's benefits under the Plan:  a Deferred Compensation
       Account if the Participant has elected to participate under Article IV
       and a SERP Account, if applicable.

       (a)     In lieu of paying Base Salary or Incentive Pay deferred pursuant
               to a Deferral Election Form, the Company shall credit the
               Participant's Deferred Compensation Account with amounts deferred
               under Article IV as of the last day of the payroll period in
               which deferred Base Salary would have otherwise been paid or as
               of the date the deferred Incentive Pay would otherwise have been
               paid to the Participant.  If the Participant has elected more
               than one Payment Date or different payment forms, separate
               sub-Accounts shall be maintained for each such Payment Date and
               payment form.

       (b)     Effective July 1, 1998, at the end of each month, the Company
               shall credit each Participant's SERP Account with an amount equal
               to 15% of the Participant's Base Salary for that month.

6.2    Each Account shall be credited on each Valuation Date with interest at a
       rate set by the Committee from time to time.  Unless changed by the
       Committee, the rate shall be the average of the Company's working capital
       Eurodollar borrowing rate on the first and last business days of the
       month for the month ending on the Valuation Date.  The Account shall
       continue to be credited with interest through the end of the month
       preceding the last payment.  The interest shall be applied to the Account
       balance as of the beginning of the Valuation Period increased by one-half
       of the amounts credited during the Valuation Period and decreased by
       one-half of the amount of any payments made during the Valuation Period. 
       At the Committee's discretion, the method of crediting interest or
       determining the interest rate may be prospectively changed.
                                          
                                          
                                    ARTICLE VII.
                                PAYMENT OF ACCOUNTS
                                          
7.1    A Participant's Deferred Compensation Accounts shall be paid (or payment
       shall commence) on the Payment Date(s) and in the form(s) specified in
       the Deferral Election Form(s).  A Participant's SERP Account shall be
       paid (or payment shall commence) on the Payment Date in the form elected
       by the Participant.


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7.2    If the Participant dies before receiving the entire balance in his
       Account(s), the remaining balance shall be paid to his Beneficiary in a
       single lump sum on January 31 following the year of death,
       notwithstanding the Participant's election of a later Payment Date.

7.3    All payments shall be in cash and shall be made subject to applicable
       federal and state income and employment taxes.  If benefits are subject
       to withholding of taxes before becoming payable, the Company will
       withhold from the Participant's current cash compensation.

7.4    Amounts credited to a Participant's SERP Account shall not be payable
       prior to the Participant's Termination of Employment.

7.5    Notwithstanding any other provision of this Plan to the contrary, in the
       event of a Participant's Termination of Employment, the Committee
       reserves the right in its sole and absolute discretion to disregard a
       Participant's election of a Payment Date or installment payments and to
       accelerate the payment of benefits hereunder to the Participant or
       Beneficiary.
                                          
                                          
                                   ARTICLE VIII.
                                PLAN ADMINISTRATION
                                          
8.1    This Plan shall be adopted by the Company and shall be administered by
       the Committee.

8.2    This Plan may be amended in any way or may be terminated, in whole or in
       part, at any time, at the discretion of the Board by a duly adopted Board
       resolution.  No amendment or termination of the Plan shall reduce the
       value of any Participant's Account determined as of the effective date of
       such amendment or termination.  This shall not be construed to prevent
       the Board from terminating the Plan and paying all benefits prior to the
       Payment Dates otherwise provided.

8.3    The Committee shall have the sole authority, in its full and absolute
       discretion, to adopt, amend and rescind such rules and regulations as it
       deems advisable in the administration of the Plan, to construe and
       interpret the Plan, the rules and regulations, and Plan forms, and to
       make all other determinations and interpretations of the Plan.  All
       decisions, determinations, and interpretations of the Committee shall be
       binding on all persons, except as otherwise provided by law.  Committee
       members who are Participants shall abstain from voting on any Plan
       matters that would cause them to be in constructive receipt of benefits
       under the Plan.  The Committee may delegate its responsibilities as it
       sees fit.


                                    ARTICLE IX.
                                   MISCELLANEOUS
                                          
9.1    The amounts credited to a Participant's Account are not held in escrow
       and are not secured by any specific assets of the Company or in which the
       Company has an interest.  The Company may make such arrangements as it
       desires to provide for the payment of benefits.  Neither the Participant,
       any Beneficiary nor the Participant's estate shall have any rights
       against the Company with respect to any portion of the Participant's
       Account except as a general unsecured creditor of the Company.  No
       Participant has an interest in his Account until the Participant actually
       receives payment.

9.2    No benefit under this Plan may be sold, assigned, transferred, conveyed,
       hypothecated, encumbered, anticipated, or otherwise disposed of, and any
       attempt to do so shall be void.  No such benefit shall, prior to receipt
       thereof by a Participant, be in any manner subject to the debts,
       contracts, liabilities, engagements, or torts of such Participant.

9.3    Nothing in this Plan shall be construed to limit in any way the right of
       the Company to terminate an Employee's employment at any time for any
       reason whatsoever with or without cause; nor shall it be evidence of any
       agreement or understanding, express or implied, that the Company (a) will
       employ an Employee in any 

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       particular position, (b) will ensure participation in any incentive 
       programs, or (c) will grant any awards from such programs.

9.4    Claims Procedures.

       (a)     Whenever a Participant incurs a Termination of Employment, the
               Committee shall determine the value of the Participant's Account.
               If the Participant (or Beneficiary) believes he is entitled to a
               greater benefit, he may file a written request for review of the
               benefit computation by the Committee.  The Committee may require
               additional information if necessary to process the request.  The
               Committee (or its delegate) shall review the request and within
               90 days of the Participant's request, the Committee shall provide
               written notice to any claimant whose claim for benefits under the
               Plan is being denied, in whole or in part.  Such notice shall be
               written in a manner calculated to be understood by the claimant
               and shall include:

               (i)   The specific reason or reasons for such denial;

               (ii)  Specific references to pertinent Plan provisions upon
                     which the denial is based;
          
               (iii) A description of any additional material or information
                     which may be needed to clarify the request, including an
                     explanation of why such information is required; and

               (iv)  An explanation of the Plan's claim review procedures.

       (b)     If an extension of time is required by special circumstances,
               written notice may be furnished to the claimant within the 90-day
               period referred to above which states the special circumstances
               requiring the extension and the date by which a decision can be
               expected, which shall be no more than 180 days from the date the
               claim was filed.  If no notice is received within 90 days of the
               date the claim is submitted, the claimant may assume his claim
               has been denied and may submit an appeal for review of the claim.

       (c)     Any claimant whose claim for benefits has been denied by the
               Committee may appeal to the Committee for a review of the denial
               by making a written request therefore within 60 days of receipt
               of a notification of denial.  The claimant may upon request to
               the Committee examine any pertinent documents.  The claimant may,
               if he chooses, submit to the Committee written issues, comments
               or other information upon which the claimant relies in support of
               his claim, or may request a representative to make such written
               submissions on his behalf.

               (i)   Within 60 days after receipt of a request for review, the
                     Committee shall notify the claimant in writing of its
                     decision, and, if the Committee confirms the denial in
                     whole or in part, the notice shall set forth the reasons
                     for the decision and specific reference to those Plan
                     provisions upon which the decision is based.

               (ii)  Notwithstanding the foregoing, if the Committee determines
                     that special circumstances require additional time for
                     processing, the Committee may extend such 60-day period,
                     but not by more than an additional 60 days, and shall
                     notify the claimant of such extension.

9.5    All Plan administrative expenses shall be paid by the Company.

9.6    The Company shall indemnify the Committee and each Committee member
       against any and all claims, losses, damages, expenses (including
       reasonable counsel fees), and liability arising from any action, failure
       to act, or other conduct in the member's official capacity, except when
       due to the individual's own gross negligence or willful misconduct.

9.7    The captions and headings in this Plan are for convenience only and shall
       not in any way affect the meaning or interpretation of the Plan.

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9.8    This Plan shall be construed and its provisions enforced and administered
       in accordance with the laws of the State of California except as
       otherwise provided in ERISA.


Date:               CORNERSTONE PROPANE PARTNERS, L.P.


          By   

          Title:     





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