Retention bonus flows to Enterprise Products exec…

Shareholders of Enterprise Products Partners L.P. (EPD) are probably happy that – for the 25th consecutive quarter – the company has increased its dividend. Just yesterday, Enterprise announced that it will pay a quarterly cash dividend of $0.5825 per share. To be sure, a 1.3% increase over last year’s distribution rate is modest, but it gives investors an annualized distribution of $2.33 for each share of common stock, compared to the $2.30 per share they got last year.

Investors aren’t the only ones with a reason to celebrate, though. William Ordemann, the Executive Vice President and Chief Operating Officer of Enterprise Products GP, LLC (the general partner of Enterprise Products Partners L.P.) has a few reasons to celebrate, as well.

Ordemann recently signed a Retention Agreement that promises him an extra $2.5 million (minus those pesky withholding taxes) if he stays with Enterprise until October 1, 2014. There are only a few circumstances under which Ordemann won’t get the money, such as if he voluntarily leaves, retires, or is terminated for cause. But he (or his beneficiaries) will get the money even if he dies or becomes disabled, or if Enterprise eliminates his job, reorganizes, or is sold to another company.

The Agreement (attached to this 8-K) explains that Enterprise

“…desires to enter into this Agreement… to encourage Employee to remain employed with Company, perform in a highly effective manner, and proactively execute the commercial strategy that the Company and its affiliates employ;…”

And it doesn’t preclude Ordemann from receiving other types of extra compensation, either. The filing states that the retention payment is in addition to any “discretionary incentive compensation” that Enterprise’s directors decide to pay him.

The payment works out to an extra $625,000 a year – or a smidge more than $1,712.32 a day – for Ordemann to keep doing his job, although he must stay for all four years to get any of it. To put that number in context, Ordemann’s FY 2009 base salary (the most recent number available) was $395,200, so this is a significant boost. Of course, his total comp for the year ended up at $3,134,862 after adding in his bonus, stock and option awards, and company-paid insurance premiums and retirement plan contributions.

Based on Enterprise’s March 1, 2010 10-K, we know that Ordemann (age 50 at the time) has been in his current roles since August 2007. But he’s actually been with the company since 1999, when Enterprise acquired midstream energy assets from affiliates of Shell Oil Company, where he started in 1997.

We don’t know whether Ordemann was contemplating a move to another oil and gas company or not, prompting Enterprise to sweeten the pot so that he’d stay. But regardless of what led to the agreement, most of us would probably find those 2-1/2 million reasons to stay pretty persuasive.

Update: On October 18, 2010, William Ordemann’s name also appeared in this DEFM 14A (merger proxy) filed by Enterprise GP Holdings, L.P. (EPE). Ordemann, whose age is now listed as 51, is also the Executive Vice President and Chief Operating Officer of this company and the Executive Vice President of Duncan Energy Partners, L.P. Several affiliated companies are attempting to merge; the filing states on page 5 that Ordemann is “…expected to be [one of] the executive officers of Holdings GP as the successor general partner of the Partnership following the merger.”

Image source: brianc via flickr


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