Document:

EX-10(b) (1)

Exhibit 10(b)
2012 Annual Incentive Program Summary

Magellan’s 2012 annual incentive program is a discretionary bonus program established by the Compensation Committee of the Board of Directors to encourage individual activities that will improve the overall financial and operational performance of Magellan Midstream Partners, L.P. The 2012 program payout will be based on a combination of company performance and individual performance as determined by results achieved in the 2012 calendar year.

A “Funding Metric” has been established that sets a floor of performance for the partnership below which no payout for any metric will be made. This mechanism reflects the view of management and the Compensation Committee that it is inappropriate to pay bonuses if the overall cash generation of Magellan drops significantly.  

An “Overriding Financial Trigger” has been set to allow for the results of the overall financial performance of the company to override the individual financial metrics set for the company.  It is intended to address a possible condition where, even though one of the financial metrics is down, the overall financial performance of the company is extremely strong.

The program also has other performance metrics that are used to measure profitability, safety, and operational and environmental stewardship.  Specific goals for levels of achievement have been set for each metric. Payouts under the plan begin after the threshold level of performance is achieved and the maximum payout occurs if results reach the stretch targets.  

If target performance is achieved, 100% of the calculated payout based on the percentages shown above is eligible to be paid under the program.  If stretch performance is achieved, 200% of the calculated payout is eligible to be paid.  If threshold is achieved, 50% of the calculated payout is eligible to be paid.  If the results are lower than threshold, 0% of the calculated payout is eligible to be paid.  The calculated payout percentage for performance between threshold and target, or between target and stretch, will be interpolated. Fifty percent (50%) of the eligible payout is subject to a personal performance adjustment. 

You are eligible for the 2012 Annual Incentive Program if you are a regular full-time or part-time employee with a standard hour classification of 20 or more hours per week.  Employees on military leave are also eligible for an award.  Ineligible employees include, but are not limited to, temporary employees, employees on leave with payout, contract employees, and those who employment ended prior to the award payout.  An employee hired after the final pay period in a calendar year will not receive a payout for that calendar year.  Eligible employees begin participating in the program on the first day of employment. 

Eligible earnings include your regular base pay and eligible overtime pay for the period in which you are a participant in the plan, including, but not limited to, hours worked during a normal workday, Paid Time Off (PTO), short term disability, holiday pay, jury duty pay, bereavement pay, and shift differentials, but excludes extraordinary compensation such as geographical differentials, etc.  Eligible earnings will exclude any unused PTO paid out after the employment retirement, termination or disability event.

To be eligible to receive an award, you must be employed during the calendar year including the last day of the calendar year and through the time the award is actually paid.  Exceptions to this requirement will be made where a participant’s employment is terminated as a result of retirement, death or the participant becomes eligible for long-term disability. Such employees will be eligible for a prorated award based on the portion of the year worked prior to the employment termination or disability event.    A participant whose employment is terminated anytime between the end of the calendar year but prior to the distribution of the award under any other circumstances shall forfeit any award payable under the AIP.  Forfeited awards will be allocated to all other eligible employees.  

After the eligible payout is determined based on the company metric results, an adjustment may be made based on the employee’s individual performance. This adjustment, if applied, would adjust 50% of an employee’s eligible incentive payout based on management’s assessment of the employee’s performance on individual goals and the employee’s performance of job responsibilities.  This adjustment can range from 0% to 200% of the 50% amount that is subject to the personal performance adjustment. 

2012 Annual Incentive Program Metrics

FUNDING GOAL
Metric                    Threshold
Distributable Cash Flow            Funding occurs at greater than or equal to $369 million

The threshold funding metric is based upon the amount of distributable cash flow required for MMP to maintain its 2011 fourth quarter distribution rate to unitholders throughout 2012.  Management believes that if overall company performance drops below the funding threshold that a payout would not be appropriate for any metric.

OVERRIDING FINANCIAL TRIGGER
Metric                Trigger
		
	EBITDA less Maintenance Capital (including commodities)
	The combined financial metrics will be reset to the greater of actual metric results or a Target level payout at results of $659 million or more.

PERFORMANCE GOALS
($ in Millions)

	
					
	Metric
	Weight
	Threshold
	Target
	Stretch

	EBITDA less Maintenance Capital (1) (2)
	65.00%
	$462
	$500
	$525

	Commodities (1)
	10.00%
	$79
	$109
	$134

	Operational Performance (3)
	15.00%
	Discretionary
	Discretionary
	Discretionary

	OSHA Incident Rate (IR) (3)
	5.00%
	1.26
	1
	0.70

	Human Error Releases (3)
	5.00%
	7
	4
	2

________________
        
		
	(1)
	The overriding financial trigger will change the payout to at least a target level payout for the financial metrics when overall financial results have exceeded the trigger.

		
	(2)
	EBITDA less Maintenance Capital excludes commodities.  

		
	(3)
	Payout will be zero if a fatality occurs related to activities under the control of Magellan.

METRIC ADJUSTMENTS

If an acquisition occurs during the year, the EBITDA less Maintenance Capital and the Commodities metrics will be adjusted to reflect the economics used to obtain approval of the acquisition. The Operational Performance, OSHA IR and Human Error Releases metrics will not be adjusted, nor will actual incidents be counted until the new locations have a full year to become compliant with Magellan’s System Integrity Plan policies and procedures.  New internal growth projects approved within a plan year will not change the metric targets for the plan year since these projects generally require several months to complete.EX-10(c) (1)

Exhibit 10(c)

Magellan GP, LLC
Non-Management Director
Compensation Program

Effective January 26, 2012

	
			
	 
	Compensation
	Timing of Payment(1)

	Annual Board Retainer:(2)
    Cash

    Common Units
	

$60,000

$85,000(3)
	

Paid quarterly as of January 1st , April 1st , July 1st and October 1st 

As of January 1st 

	Annual Chairman Retainer:(2) 
    Audit Committee
    Compensation Committee
    Conflicts Committee
    Presiding Director
	

$15,000
$10,000
$10,000
$5,000
	

Paid quarterly as of January 1st , April 1st , July 1st and October 1st 

	Meeting Fees: 
    Board Meeting Fees
    Committee Meeting Fees
	

$1,500 per meeting
$1,500 per meeting
	

Paid quarterly as of January 1st, April 1st, July 1st and October 1st 

		
	(1)
	For newly elected directors or a newly appointed committee chairman, the annual board retainer and annual chairman retainer, if applicable, are payable pro-rata for the year of election.  

		
	(2)
	Directors who resign from the board or relinquish their role of committee chairman after a payment date has occurred, but prior to the payment having been received, will receive a pro-rata annual board retainer and annual chairman retainer for the period of time between the payment date and the resignation/relinquishment. 

		
	(3)
	The number of common units to be issued for the annual board retainer will be determined based on the closing price on the first business day immediately following the January 1st payment date.EX-10(q) (2011 10K)

Exhibit 10(q)
FORM OF 2012
PHANTOM UNIT AGREEMENT
THIS PHANTOM UNIT AGREEMENT (this “Agreement”) is by and between Magellan GP, LLC (the “Company”) and [Employee Name] (the “Participant”). 
		
	1.
	Grant of Phantom Units.  The Company hereby grants to the Participant effective January 26, 2012, (the “Effective Date”), subject to the terms and conditions of the Magellan Midstream Partners Long-Term Incentive Plan, as amended and restated (the “Plan”) and this Agreement, the right to be eligible to receive a target grant of [number of units] Phantom Units with tandem distribution equivalent rights (“DERs”), of Magellan Midstream Partners, L.P. (the “Partnership”).  The number of Units received at the end of the Restricted Period (as defined herein) will be determined based on performance criteria, employment status at that time and any other relevant provisions of the Plan and this Agreement. These Units, including the tandem DERs, are referred to in this Agreement as “Phantom Units” during the Restricted Period.  Until the Phantom Units vest and are paid, the Participant shall have no rights as a unitholder of the Partnership with respect to the Phantom Units.

		
	2.
	Incorporation of Plan.  The Plan is hereby incorporated herein by reference and all capitalized terms used herein but not defined herein shall have the meaning set forth in the Plan.  The Participant acknowledges receipt of a copy of the Plan and hereby accepts the Phantom Units subject to all the terms and provisions of the Plan and this Agreement.

		
	3.
	Compensation Committee of the Board Decisions and Interpretations.  The Participant hereby agrees to accept as binding, conclusive and final all decisions and interpretations of the Compensation Committee of the Board (the “Committee”) of the Company upon any questions arising under the Plan and this Agreement.

		
	4.
	Restricted Period of Phantom Units.  The Restricted Period begins with the Effective Date and ends with the first of the following events:

		
	a.
	December 31, 2014; or

		
	b.
	Your Termination of Affiliation (excluding any transfer to an Affiliate of the Company) with the Company, voluntarily for Good Reason, or involuntarily (other than due to Cause) within two years following a Change of Control as set forth in the Plan.

		
	5.
	Payment of Phantom Units.   To be eligible to receive payment of the Phantom Units at the end of the Restricted Period, the Participant must be employed by the Company or its Affiliates at the end of the Restricted Period, or must have terminated employment during the Restricted Period due to Retirement, death, or Disability.   The final determination of the payout level of the Phantom Units will be based upon the performance metric outlined in Paragraph 7 below.  In addition, at the end of the Restricted Period the Company will pay to the Participant the value of the DERs on the gross number of Units received pursuant to the terms of this Agreement.  The value of the DERs shall be the amount of all distributions per Unit that would have been paid during the Restricted Period on the gross number of Units received, and no interest shall be paid on such amount. Such payment of DERs shall be in a number of additional Units equal to the value of the DERs divided by the closing price of the Units at the end of the Restricted Period, rounded up to the next whole Unit.  Subject to legal or contractual obligations, the Company will deliver to the Participant, or the Participant's legal representative, as soon as practicable after the final determination of payout levels by the Committee, a number of Units equal in value to the number of Phantom Units calculated pursuant to Paragraphs 

7 and 8 and the Units equal to the value of the DERs, less the number of Units required to cover minimum tax withholding requirements. The number of Units required to cover minimum tax withholding will be based on the closing price of the Units at the end of the Restricted Period.
 
		
	6.
	Termination of Employment Due to Retirement, Death or Disability.  In the event a Participant's employment with the Company or its Affiliates terminates prior to the end of the Restricted Period due to Retirement, death or Disability, the initial target grant of Phantom Units will be prorated based upon the Participant's months of employment between January 1, 2012 and December 31, 2014.  Such prorated amount will continue to be restricted and subject to the terms of this Agreement until the Restricted Period ends as provided in Section 4.a above.  All Phantom Units in excess of the prorated amount shall be forfeited. 

 
		
	7.
	Performance Metric.  

	
				
	 
	Threshold
	Target
	Stretch

	2014 Distributable Cash Flow per Unit
	$X.XX
	$X.XX
	$X.XX

	    (excluding commodities)
	 
	 
	 

		
	8.
	Determination of Payout Level

		
	(i)
	The number of Units awarded will be determined based on performance relative to the performance metric as follows:

	
		
	Below Threshold
	No payout

	Target Achieved
	100% of Units are paid out

	Stretch Achieved
	200% of Units are paid out

	The payout for results between threshold, target and stretch will be interpolated.

		
	(ii)
	The number of Units awarded will be subject to an increase or reduction of up to 20% based upon personal performance of Participant.

		
	9.
	Other Provisions.

		
	a.
	The Participant understands and agrees that payments under this Agreement shall not be used for, or in the determination of, any other payment or benefit under any continuing agreement, plan, policy, practice or arrangement providing for the making of any payment or the provision of any benefits to or for the Participant or the Participant's beneficiaries or representatives, including, without limitation, any employment agreement, any change of control severance protection plan or any employee benefit plan as defined in Section 3(3) of ERISA, including, but not limited to qualified and non-qualified retirement plans.

		
	b.
	Except as otherwise provided herein, and in the Plan, in the event that the Participant's employment with the Company or its Affiliates terminates prior to the vesting of the Phantom Units granted under this Agreement, such Phantom Units shall be forfeited. 

		
	c.
	The Participant acknowledges that this award and similar awards are made on a selective basis and are, therefore, to be kept confidential.

		
	d.
	Neither the Phantom Units, nor the Participant's interest in the Phantom Units, may be sold, assigned, transferred, pledged or otherwise disposed of or encumbered at any time prior to the vesting and payment of such Phantom Units under this Agreement.

		
	e.
	If the Participant at any time forfeits any or all of the Phantom Units pursuant to this Agreement, the Participant agrees that all of the Participant's rights to and interest in the Phantom Units shall terminate upon forfeiture without payment of consideration.

		
	f.
	The Committee shall make the determination as to whether an event has occurred resulting in the forfeiture of the Phantom Units, in accordance with this Agreement and the Plan, and all determinations of the Committee shall be final and conclusive.

		
	g.
	With respect to the right to receive payment of the Phantom Units under this Agreement, nothing contained herein shall give the Participant any rights that are greater than those of a general creditor of the Company.

		
	10.
	Notices.  All notices to the Company required hereunder shall be in writing and delivered by hand or by mail, addressed to Magellan Midstream Partners, L.P., One Williams Center, Mail Drop 28-4, Tulsa, Oklahoma 74172, Attention: Compensation Department.  Notices shall become effective upon their receipt by the Company if delivered in the forgoing manner.

Magellan GP, LLC

______________________________________________
Michael N. Mears
President and Chief Executive Officer 
Magellan GP, LLC

Dated:  January 26, 2012
Participant:
I acknowledge receipt of a copy of the Plan and hereby accept the terms and conditions of this Phantom Unit Agreement:
Dated this _____ day of _________, 2012.

________________________________
[Employee Name]

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