CrossAmerica Partners LP
For the period ended Dec 31, 2023. Filed Feb 27, 2024.
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FY2023 · Filed Feb 27, 2024
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Item 11. Executive Compensation
COMPENSATION DISCUSSION AND ANALYSIS
We do not directly employ or compensate any of our executive officers, including our named executive officers who were serving as our executive officers at the end of the fiscal year ended December 31, 2023 (“NEOs”), or other employees who provide services necessary for managing our business. Under our Partnership Agreement, the General Partner manages our operations and activities on our behalf. Our General Partner also does not directly employ any of its executive officers or other employees. For our fiscal year ending December 31, 2023, our executive officers, including our NEOs, as more fully described below, were employed and compensated by an affiliate of the Topper Group.
For 2023, the provision of management services by, and payment to, the Topper Group was governed by the Omnibus Agreement.
Named Executive Officers
For 2023, our NEOs were:
Charles M. Nifong, Jr. –Mr. Nifong has served as our Chief Executive Officer and President since November 19, 2019.
Maura Topper – Ms. Topper has served as our Chief Financial Officer since August 11, 2021, during which 90% of Ms. Topper’s time was allocated to the Partnership.
David F. Hrinak –Mr. Hrinak has served as our Executive Vice President of Wholesale from February 14, 2020 through January 19, 2022 and our Executive Vice President since January 20, 2022. During 2023, 95% of Mr. Hrinak’s time was allocated to the Partnership.
Keenan D. Lynch – Mr. Lynch has served as our General Counsel since February 24, 2020 and Chief Administrative Officer since January 20, 2022. He previously served as Corporate Secretary from November 19, 2019 through January 19, 2022. During 2023, 85% of Mr. Lynch’s time was allocated to the Partnership.
Robert Brecker – Mr. Brecker has served as our Executive Vice President of Operations of the Partnership's Subsidiaries since January 20, 2022, and was designated an executive officer of the Partnership's subsidiaries on April 20, 2023. During 2023, 95% of Mr. Brecker's time was allocated to the Partnership.
The Partnership does not determine the compensation for its NEOs. For 2023, the compensation philosophy and practices of the Topper Group were used to determine the compensation of the NEOs and all compensation decisions were in the sole discretion of the Topper Group. The compensation philosophy and practices of the Topper Group were used to determine the total compensation of the NEOs and all compensation decisions were in the sole discretion of the Topper Group.
The compensation philosophies and practices of the Topper Group during 2023 are described below in this Compensation Discussion and Analysis, and the compensation actually awarded by the Topper Group to the NEOs for their services to the Partnership during 2023 is set out in the accompanying Summary Compensation Table and related compensation tables that follow this Compensation Discussion and Analysis.
Compensation
Objectives and Philosophy
The compensation philosophy of the Topper Group is based on performance and the achievement of predetermined objectives, and it is a reflection of the entrepreneurial culture of the Topper Group, which is a culture where the financial interests of its executives are aligned with the performance of the company and the investors they represent. The compensation strategy includes variable components linked to short term, medium term and long-term performance. The Topper Group compensation plans and programs for executives are designed to: (i) recruit, develop and retain talented executives; (ii) reward exceptional performance as measured by predetermined and quantifiable objectives; (iii) establish a direct relation between the interests of the executives and those of the shareholders of the Topper Group and the unitholders of the Partnership by favoring the creation of value in the short, medium and long term; (iv) encourage teamwork and promote company values; and (v) support the company’s business strategy. The Topper Group’s compensation plans and programs are established based on internal principles of equity that take into consideration the role, nature and level of each of the executives as well as external principles of equity such as fair, equitable and competitive compensation terms in comparison to peers as well as those of the market in general.
Elements of Executive Compensation
The three main components of the remuneration of the Topper Group’s executive compensation program are base salary, annual incentive plan and long-term incentive plan, as shown in the table below.
| Element | Description | Objectives |
|---|---|---|
| Base salary | Annual base salary is based on the functional responsibilities and competences of the executives | Attract, retain and motivate executives |
| 2023 Performance Based Bonus Compensation Policy | Performance based target bonus compensation policy ranging from 50% to 100% of base salary, which payment is determined by financial and operational objectives | Motivate executives to achieve objectives with a higher degree of difficulty and thereby achieve or exceed the business plan of the Partnership Create accountability among executives for the achievement of these financial objectives Align the short-term interests of executives with those of the Partnership and its unitholders |
| Long-term incentive compensation | Phantom stock unit plan with grants varying according to position held Performance payouts also vary depending on the achievement of special measurable objectives that are key to the financial success of the company | Align long-term interests of executives with those of the Partnership and its unitholders |
Base Salary
The human resources department of the Topper Group approved the following annualized base salaries for the 2023 fiscal year:
| Name | 2023 AnnualBase Salary ($) (1) |
|---|---|
| Charles M. Nifong, Jr. | 500,000 |
| Maura Topper | 325,000 |
| David F. Hrinak | 233,000 |
| Keenan D. Lynch | 300,000 |
| Robert Brecker | 325,000 |
(1)
The amount shown represents annualized base salary, not the portion allocated to the Partnership.
The Summary Compensation Table reflects the portion of the annualized base salary allocated to the Partnership. In addition, for Mr. Hrinak in lieu of increasing his annual base salary he received a $9,000 spot bonus on August 11, 2023.
Short-Term Incentive Compensation
Performance-Based Bonus Compensation Policy
The 2023 Performance-Based Bonus Compensation Policy (the “2023 Bonus Plan”) is one of the key components of the “at-risk” compensation. The 2023 Bonus Plan is utilized to reward short-term performance achievements and to motivate and reward executives for their contributions toward meeting financial and strategic goals.
For the NEOs, the Topper Group determined to include, as part of their compensation, the 2023 Bonus Plan for the fiscal year ending on December 31, 2023. As approved by the Board on February 23, 2023, the 2023 Bonus Plan included financial and operational objectives, each with a specified percentage weighting. For Mr. Nifong, the 2023 Bonus Plan is based on the achievement of (i) be financially efficient operators (76%); and (ii) maximizing the value of our portfolio through the class of trade conversions (24%). For Ms. Topper, the 2023 Bonus Plan is based on the achievement of (i) be financially efficient operators (53%), (ii) maximizing the value of our portfolio through the class of trade conversions (17%) and (iii) completion of department level goals supporting the previously outlined goals (30%). For Messrs. Hrinak, Lynch and Brecker, the 2023 Bonus Plan is based on the achievement of (i) be financially efficient operators (49%), (ii) maximizing the value of our portfolio through the class of trade conversions (21%) and (iii) completion of department level goals supporting the previously outlined goals (30%).
Under the 2023 Bonus Plan, Mr. Nifong’s target bonus is 100% of base salary with a payout range of 0% to 117% of base salary. Ms. Topper’s target bonus is 50% of base salary with a payout range of 0% to 112% of her target bonus. Mr. Hrinak’s target bonus is 75% of base salary with a payout range of 0% to 115% of his target bonus. Messrs. Lynch and Brecker’s target bonus is 50% of base salary with a payout range of 0% to 115% of their target bonus.
The purpose of the 2023 Bonus Plan is to motivate executives to achieve objectives with a higher degree of difficulty and thereby achieve or exceed the business plan of the Partnership.
Under the 2023 Bonus Plan, the attainment of performance metrics and the achievement factor are determined once the measurement period ends on December 31, 2023.
Based on the metrics, weightings assigned, and results achieved, the payout under the 2023 Bonus Plan for executive officers ranges from 74% to 90% of the target bonus amount. For non-senior management personnel, the bonus plan included departmental goals for each department that were weighted to arrive at a target bonus amount. Overall, the plan paid at a level of approximately 74% of target bonus, with certain personnel at either higher or lower amounts based on their individual and department level performance.
| Name | 2023 AnnualBase Salary(1) | Target Bonus Planas a % ofBase Salary | Bonus Plan Targetat 100% | 2023 Actual Bonus Plan as a % of Bonus Plan Target | 2023 Bonus Plan Payment Approved ($) (2) (3) |
|---|---|---|---|---|---|
| Charles M. Nifong, Jr. | $500,000 | 100% | $500,000 | 74% | $371,256 |
| Maura Topper | 325,000 | 50% | 162,500 | 89% | 145,000 |
| David F. Hrinak | 233,000 | 75% | 174,750 | 89% | 155,000 |
| Keenan D. Lynch | 300,000 | 50% | 150,000 | 87% | 130,000 |
| Robert Brecker | 325,000 | 50% | 162,500 | 90% | 146,000 |
(1)
The amounts shown represent annualized base salary, not the portion allocated to the Partnership.
(2)
The amounts shown will be paid in 2024.
(3)
The amounts will be paid as follows: the first $25,000 in cash and the remainder of the bonus will be paid 50% in cash and 50% in fully vested common units. The number of common units will be determined on a 20-day volume weighted average price through February 21, 2024 with a payment date on or before March 8, 2024.
Long-Term Incentive Compensation
2023 Grants of Equity Awards
Under the CrossAmerica Partners LP 2022 Incentive Award Plan, in 2023, an aggregate of 25,567 equity awards were granted to Messrs. Nifong, Lynch and Brecker, and Ms. Topper in the form of Time-Based Phantom Units (“TBUAs”) with the associated Distribution Equivalent Rights (“DERs”). Mr. Hrinak was not granted TBUAs in 2023. Of the total number of TBUAs granted, 50% will vest one-third on each December 31 over three years until December 31, 2026 if the executive remains employed over the vesting term, and 50% will vest upon death, disability or retirement, as long as such retirement is not adverse to the interests of the Partnership, as determined by the Board in its sole discretion.
In addition, Performance Based Awards (“PBUAs”) were granted to Messrs. Nifong, Lynch and Brecker, and Ms. Topper with an "Initial Target Dollar Amount" of $375,000, $112,500, $81,250 and $146,250, respectively, and will be calculated in dollar amounts and then converted into common units, or cash, or both, at the discretion of the Board, based on attainment of the Performance Goals as described below. Mr. Hrinak was not granted PBUAs in 2023. The PBUAs vest on December 31, 2026. Subject to certain discretionary adjustments as determined by the Board, the PBUAs are weighted 50% for Increase of Funds Flow from Operations per Unit and 50% for Partnership Leverage, with performance measured for the period from January 1, 2024 to December 31, 2026 (“Measurement Period”) and the reference period ending on December 31, 2023. The Board has the sole and complete discretion over the administration of the PBUAs under the CrossAmerica Partners LP 2022 Incentive Award Plan.
Increase in Funds Flow from Operations per Unit
The target value with respect to Increase in Funds Flow from Operations per Unit is determined as follows. First, the average Funds Flow from Operations per Unit will be calculated for the Measurement Period. Next, that number will be divided by the Funds Flow from Operations per Unit for the twelve-month period ending on December 31, 2023 as the reference period. The payout percentage for Increase in Funds Flow from Operations per Unit will range from 0-200% of 50% of the Initial Target Dollar Amount.
“Funds Flow from Operations per Unit” is defined as distributable cash flow per Unit, excluding maintenance capital expenditures or any other such capital expenditures typically included in calculating distributable cash flow.
Partnership Leverage
The target value associated with Partnership Leverage is determined as follows. First, Partnership Leverage will be calculated for each of the respective twelve-month periods ending on December 31, 2024, 2025 and 2026. Next, “Average Partnership Leverage” will be calculated as the sum of three times the Leverage for the year ending December 31, 2026, plus two times the Leverage for the year ending December 31, 2025, plus the Leverage for the year ending December 31, 2024, divided by six (i.e., Average Partnership Leverage will be a weighted average with greater emphasis given to the latter years in the Measurement Period). The payout percentage for Partnership Leverage will range from 0-200% of 50% of the Initial Dollar Target Amount.
“Partnership Leverage” is defined as the ratio of the Partnership’s total debt as of a specified date (as determined in accordance with the Partnership’s GAAP financial statements) divided by EBITDA for the twelve-month period prior to such specified date. In case of acquisitions, EBITDA will be calculated on a pro forma basis for such acquisitions, providing that the debt incurred for such acquisitions is reflected in the total debt amount.
Distributable cash flow per Unit and EBITDA are calculated consistent with the Partnership’s financial information filed with the Securities and Exchange Commission.
2020 PBUAs Results
In November 2020, we granted the 2020 PBUAs to Messrs. Nifong, Lynch and Brecker. The targets for the 2020 PBUA award included performance goals weighted 65% for Increase of Funds Flow from Operations per Unit and 35% for Partnership Leverage, with a performance period from January 1, 2021 to December 31, 2023 (“2020 Measurement Period”), subject to certain discretionary adjustments as determined by the Board. The Board calculated the Funds Flow from Operations per Unit to account for certain extraordinary periods of fuel margin during the 2020 Measurement Period as well as the issuance of the Preferred Membership Interests in 2022, and calculated the Partnership Leverage to account for cash holdings and certain gains on the sale of assets. The performance was calculated consistent with the Partnership’s financial information filed with the Securities and Exchange Commission and as adjusted in accordance with the preceding sentence. After careful consideration by the Board, a payout factor of 123% of the target dollar amount for the 2020 PBUAs was determined, based on the achievement of results against the pre-established target levels and application of the adjustments as described above. The table below shows the target dollar amount granted in 2020, the dollar payout earned and the actual number of units delivered.
| Named Executive Officer | Target Dollar Amount ($) | Payout % | Payout Dollar Amount ($) | Number of Units (1) |
|---|---|---|---|---|
| Charles M. Nifong, Jr. | $375,000 | 123% | $461,625 | 20,344 |
| Keenan D. Lynch | 101,040 | 123% | 124,381 | 5,481 |
| Robert Brecker | 52,416 | 123% | 64,524 | 2,844 |
(1) The number of units is equal to the payout dollar amount of the 2020 PBUA divided by the 20-day volume weighted average price through February 21, 2024 with a payment date on or before March 8, 2024.
Other Benefits
All NEOs were eligible after completing one year of service to participate in the Dunne Manning 401(k) plan, a qualified safe harbor plan with 100% match of employee contributions up to 4% of the executive’s base salary. All NEOs were eligible to receive voluntary benefit programs, including medical, dental, vision, life and disability insurance.
Other Compensation Policies and Practices
Restrictions on Hedging, Pledging and Other Transactions
Our Insider Trading Policy prohibits “Covered Persons” from (a) speculative transactions such as short sales, puts, calls or other similar derivative transactions, hedging or monetization transactions with respect to Partnership securities; (b) holding securities of the Partnership in a margin account; and (c) pledging Partnership securities as collateral for loans. For purposes of the Insider Trading Policy, Covered Persons are directors of the Partnership and our General Partner, executive officers of the Partnership or DMI or their affiliates, including our General Partner and those employees who have, or have access to, certain financial information regarding the Partnership and are designated as Covered Persons (and in each case their family members and controlled entities within the meaning of the Insider Trading Policy). Transactions that are otherwise prohibited by our Insider Trading Policy may be approved by the General Counsel of the General Partner, as the compliance officer of our Insider Trading Policy. Compliance with these policies is monitored by the Board. A copy of our Insider Trading Policy is available in its entirety on the CrossAmerica Partners’ website at www.crossamericapartners.com under the “Corporate Governance” tab in the “Investors” section.
Clawback Policy
We have adopted a “clawback” policy that applies to any bonuses and other incentive and equity compensation awarded to our executive officers. This policy provides that, in the event of a material restatement of the Partnership’s financial results due to material noncompliance with certain financial reporting requirements, the Board, or the appropriate committee of the Board, will review all such incentive compensation and, if such incentive compensation would have been lower had it been calculated based on the restated results, the Board, or the appropriate committee of the Board, will (to the extent permitted by law and as appropriate under the circumstances) use reasonable efforts to seek to recover for the benefit of the Partnership all or a portion of such incentive compensation, subject to a three-year look-back period.
In addition, in 2023, we adopted a new Clawback Policy for executive officers in order to comply with new SEC rules promulgated under the Dodd-Frank Act and NYSE listing standards. This policy applies to all incentive-based compensation (including cash bonus payments) received by our current and former Section 16 officers on or after October 2, 2023, the effective date specified in the NYSE listing standards.
Impact of Regulatory Requirements
Internal Revenue Code—We believe we are a limited partnership and not a corporation for U.S. federal income tax purposes. It is not entirely clear whether the compensation paid to the NEOs is subject to the deduction limitations under Section 162(m) of the Internal Revenue Code. If we are required to be treated as a corporation for U.S. federal income tax purposes, however, the limitations of Section 162(m) would apply. In any event, compensation decisions in respect of the NEOs will be made in a manner designed to best incentivize appropriate performance.
Accounting for Stock-Based Compensation—We account for stock-based compensation in accordance with the requirements of ASC 718–Compensation–Stock Compensation for all of our stock-based compensation plans. See Note 19 to the financial statements for a discussion of all assumptions made in the calculation of stock awards to our NEOs.
Compensation Committee Report*
The members of the Board have reviewed and discussed the Compensation Discussion and Analysis included in this Annual Report on Form 10-K with management and, based on such review and discussions and such other matters the Board deemed relevant and appropriate, the Board has approved the inclusion of the Compensation Discussion and Analysis in this Annual Report on Form 10-K.
Members of the Board:
Joseph V. Topper, Jr.
John B. Reilly, III
Justin A. Gannon
Thomas E. Kelso
Mickey Kim
Keenan D. Lynch
Charles M. Nifong, Jr.
Maura Topper
Kenneth G. Valosky
- As a publicly traded limited partnership, we are not required to and do not have a compensation committee. Accordingly, the Compensation Committee Report required by Item 407(e)(5) of Regulation S-K is given by the Board as specified by Item 407(e)(5)(i) of Regulation S-K.
The foregoing compensation committee report is not “soliciting material,” is not deemed filed with the SEC, and is not to be incorporated by reference into any of the Partnership’s filings under the Securities Act, or the Exchange Act, respectively, whether made before or after the date of this annual report on Form 10-K and irrespective of any general incorporation language therein.
Summary Compensation Table
The following table sets forth certain information with respect to compensation of our NEOs. Except for the management fee we paid to the Topper Group under the Omnibus Agreement, we did not pay or reimburse any cash compensation amounts to or for our NEOs in 2023. The amounts shown for Messrs. Hrinak, Lynch and Brecker and Ms. Topper represent only that portion allocable to the Partnership.
| Name and Principal Position | Year | Salary($) | Bonus($) (1) | StockAwards($) (2)(3) | OptionsAwards($) (4) | Non-EquityIncentive PlanCompensation($) (5) | All OtherCompensation($) (6) | Total($) (7) |
|---|---|---|---|---|---|---|---|---|
| Charles M. Nifong, Jr., | 2023 | 500,000 | — | 249,997 | — | 371,256 | 93,132 | 1,214,385 |
| President and Chief Executive Officer | 2022 | 500,000 | — | 250,005 | — | 375,000 | 75,485 | 1,200,490 |
| 2021 | 500,000 | — | 250,001 | — | 362,500 | 54,676 | 1,167,177 | |
| Maura Topper, Chief Financial Officer | 2023 | 292,500 | — | 97,509 | — | 145,000 | 31,880 | 566,889 |
| 2022 | 270,000 | — | 81,000 | — | 132,000 | 24,055 | 507,055 | |
| 2021 | 103,635 | 50,000 | 108,504 | — | 42,308 | 64,158 | 368,605 | |
| David F. Hrinak, | 2023 | 221,350 | 9,000 | — | — | 155,000 | 1,011 | 386,361 |
| Executive Vice President Wholesale | 2022 | 221,350 | 10,500 | — | — | 155,337 | 1,014 | 388,201 |
| 2021 | 221,350 | 75,000 | — | — | 126,694 | 1,010 | 424,054 | |
| Keenan D. Lynch | 2023 | 255,000 | — | 112,497 | — | 130,000 | 39,938 | 537,435 |
| General Counsel and Chief Administrative Officer | 2022 | 229,025 | — | 85,981 | — | 115,000 | 36,359 | 466,365 |
| 2021 | 229,025 | 37,048 | 85,876 | — | 97,672 | 27,055 | 476,676 | |
| Robert Brecker (8) | 2023 | 308,750 | — | 81,250 | — | 146,000 | 32,308 | 568,308 |
| Executive Vice President of Operations | ||||||||
(1)
For Mr. Hrinak the amount represents a spot bonus in the amount of $9,000 received in August 2023.
(2)
The amounts shown represent the grant date fair value of awards for each of the years shown computed in accordance with ASC 718–Compensation-Stock Compensation. See Note 19 to the financial statements for a discussion of all assumptions made in the calculation of this amount. The grant date fair value for the Performance Based Awards was $0 because the performance period commenced on January 1, 2024. The maximum amount payable pursuant to the Performance Based Awards is $750,000 for Mr. Nifong, $270,000 for Ms. Topper, $202,080 for Mr. Lynch and $162,500 for Mr. Brecker.
(3)
See the Grants of Plan-Based Awards table for more information regarding TBUAs and the PBUAs granted in 2023.
(4)
There were no stock options granted to NEOs in 2021, 2022 or 2023.
(5)
The amounts represent the earned portion of the bonus pursuant to the applicable Bonus Plan.
(6)
The amounts listed as “All Other Compensation” for 2023 are composed of these items:
| All Other Compensation · Nifong · Topper · Hrinak · Lynch · Brecker | |||||||
|---|---|---|---|---|---|---|---|
| Company Match to Defined Contribution Plan | 13,200 | 11,631 | — | 7,599 | 13,200 | 12,540 | |
| Cell phone taxable compensation | 900 | — | 855 | — | 855 | 855 | |
| Premiums for group-term life insurance | 252 | 227 | 156 | 214 | 252 | 239 | |
| Distribution Equivalent Rights | 78,780 | 20,022 | — | 32,125 | 18,674 | ||
| Total All Other Compensation | $93,132 | $31,880 | $1,011 | $39,938 | $32,308 | ||
(7)
Represents amounts allocated to the Partnership under the Omnibus Agreement.
(8)
Notwithstanding Mr. Brecker's designation as an executive officer effective on April 20, 2023, the amounts listed reflect Mr. Brecker's full year 2023 compensation.
Grants of Plan-Based Awards
The following table provides information regarding grants of plan-based awards to our NEOs during 2023. All equity awards shown were in the form of TBUAs or PBUAs. For Messrs. Hrinak, Lynch and Brecker and Ms. Topper, full dollar values are provided and not those allocable to the Partnership as shown in the Summary Compensation Table above.
| Estimated Future PayoutsUnder Non-EquityIncentive Plan Awards · Estimated Future PayoutsUnder EquityIncentive Plan Awards (1) · All OtherStock Awards:Number ofShares ofStock or Units (2) · Grant DateFair Valueof Stockand OptionAwards (3) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Name | GrantDate | Threshold($) | Target($) | Maximum($) | Threshold($) | Target($) | Maximum($) | (#) | ($) |
| Charles M. Nifong, Jr. | |||||||||
| CAPL 2023 Bonus Plan | — | 500,000 | 585,000 | — | — | — | — | — | |
| CAPL LTI Plan | 10/23/2023 | — | — | — | — | 375,000 | 750,000 | 11,809 | 249,997 |
| Maura Topper | |||||||||
| CAPL 2023 Bonus Plan | — | 162,500 | 181,838 | — | — | — | — | — | |
| CAPL LTI Plan | 10/23/2023 | — | — | — | — | 146,250 | 292,500 | 4,606 | 97,509 |
| David F. Hrinak | |||||||||
| CAPL 2023 Bonus Plan | — | 174,750 | 200,744 | — | — | — | — | — | |
| CAPL LTI Plan | — | — | — | — | — | — | — | — | |
| Keenan D. Lynch | |||||||||
| CAPL 2023 Bonus Plan | — | 150,000 | 172,313 | — | — | — | — | — | |
| CAPL LTI Plan | 10/23/2023 | — | — | — | — | 112,500 | 225,000 | 5,314 | 112,497 |
| Robert Brecker | |||||||||
| CAPL 2023 Bonus Plan | — | 162,500 | 186,672 | — | — | — | — | — | |
| CAPL LTI Plan | 10/23/2023 | — | — | — | — | 81,250 | 162,500 | 3,838 | 81,250 |
(1)
Represents an award of PBUAs under the long-term incentive plan. The PBUAs are granted and calculated in dollar amounts and then will convert into common units or cash, or both, at the discretion of the Board, based on attainment of the performance goals. Therefore, the columns in this table represent the dollar amounts and not the number of units. The PBUAs vest on December 31, 2026. The PBUAs are weighted 50% for Increase of Funds Flow from Operations per Unit and 50% for Partnership Leverage, with a performance period from January 1, 2024 to December 31, 2026 and the reference period ending on December 31, 2023.
(2)
Represents an award of TBUAs under the long-term incentive plan. Of this award, 50% will vest a third each on December 31, 2024, 2025 and 2026. The remaining 50% will vest upon death, disability or retirement with board approval.
(3)
The amounts shown represent the grant date fair value of the TBUAs computed in accordance with ASC 718– Compensation-Stock Compensation. See Note 19 to the financial statements for a discussion of all assumptions made in the calculation of this amount. The grant date fair value for the PBUAs was $0 because the performance period commenced on January 1, 2024.
Outstanding Equity Awards at Year End
The following table provides information regarding the number of outstanding equity awards held by our NEOs at December 31, 2023. For Messrs. Hrinak, Lynch and Brecker and Ms. Topper, full dollar values are provided and not those allocable to the Partnership.
| Stock Awards (1) | |||
|---|---|---|---|
| Name · Number ofShares or Unitsof Stock ThatHave NotVested (#) · Market Valueof Shares orUnits of StockThat Have NotVested ($) · EquityIncentive PlanAwardsNumberof UnearnedShares, Units,or Other RightsThat Have NotVested(#) · EquityIncentive PlanAwards: Marketor PayoutValue ofUnearnedShares, Unitsor Other RightsThat Have NotVested (6)(7)(8)($) | |||
| Charles M. Nifong, Jr. | |||
| CAPL 2023 Award (2) (6) | 11,809 | 269,245 | 375,000 |
| CAPL 2022 Award (3) (7) | 10,919 | 248,953 | 375,000 |
| CAPL 2021 Award (4) (8) | 8,145 | 185,706 | 750,000 |
| CAPL 2020 Award (5) | 8,458 | 192,842 | — |
| Maura Topper | |||
| CAPL 2023 Award (2) (6) | 4,606 | 105,017 | 146,250 |
| CAPL 2022 Award (3) (7) | 3,930 | 89,604 | 135,000 |
| CAPL 2021 Award (4) (8) | 2,933 | 66,872 | 270,000 |
| CAPL 2020 Award (5) | — | — | — |
| David F. Hrinak | |||
| CAPL 2023 Award | — | — | — |
| CAPL 2022 Award | — | — | — |
| CAPL 2021 Award | — | — | — |
| CAPL 2020 Award | — | — | — |
| Keenan D. Lynch | |||
| CAPL 2023 Award (2) (6) | 5,314 | 121,159 | 112,500 |
| CAPL 2022 Award (3) (7) | 4,413 | 100,616 | 101,040 |
| CAPL 2021 Award (4) (8) | 3,292 | 75,058 | 202,080 |
| CAPL 2020 Award (5) | 3,418 | 77,930 | — |
| Robert Brecker | |||
| CAPL 2023 Award (2) (6) | 3,838 | 87,506 | 81,250 |
| CAPL 2022 Award (3) (7) | 2,861 | 65,231 | 65,520 |
| CAPL 2021 Award (4) (8) | 1,708 | 38,942 | 104,832 |
| CAPL 2020 Award (5) | 1,773 | 40,424 | — |
(1)
The amounts below include TBUAs and PBUAs.
(2)
Fifty percent of the TBUAs will vest a third each on December 31, 2024, 2025 and 2026. The remaining 50% will vest upon death, disability, or retirement with board approval. The market value is based on the December 29, 2023, closing unit price of our common units.
(3)
Represents the unvested portion of the fifty percent of the TBUAs that will vest a third each on December 31, 2024 and December 31, 2025. The first third vested on December 31, 2023. The remaining 50% will vest upon death, disability or retirement with board approval. The market value is based on the December 29, 2023, closing unit price of our common units.
(4)
Represents the unvested portion of the fifty percent of the TBUAs that will vest the final third on December 31, 2024. The first third vested on December 31, 2022 and the second third on December 31, 2023. The remaining 50% will vest upon death, disability or retirement with board approval. The market value is based on the December 29, 2023, closing unit price of our common units.
(5)
Represents the unvested portion of fifty percent of the TBUAs that will vest upon death, disability or retirement with board approval. The market value is based on the December 29, 2023 closing unit price of our common units.
(6)
Represents the target dollar amount of the PBUAs that will convert into common units or cash, or both, at the discretion of the Board, based on attainment of the Performance Goals. The PBUAs vest on December 31, 2026. The PBUAs are weighted 50% for Increase of Funds Flow from Operations per Unit and 50% for Partnership Leverage, with a performance period from January 1, 2024, to December 31, 2026, and the reference period ending on December 31, 2023.
(7)
Represents the target dollar amount of the PBUAs that will convert into common units or cash, or both, at the discretion of the Board, based on attainment of the Performance Goals. The PBUAs vest on December 31, 2025. The PBUAs are weighted 65% for Increase of Funds Flow from Operations per Unit and 35% for Partnership Leverage, with a performance period from January 1, 2023, to December 31, 2025, and the reference period ending on December 31, 2022.
(8)
Per the SEC rules, this represents the maximum dollar amount of the PBUAs that will convert into common units or cash, or both, at the discretion of the Board because the award would have paid out above the target level based on attainment of the Performance Goals as of December 31, 2023. The PBUAs vest on December 31, 2024. The PBUAs are weighted 65% for Increase of Funds Flow from Operations per Unit and 35% for Partnership Leverage, with a performance period from January 1, 2022, to December 31, 2024, and the reference period ending on December 31, 2021.
Option Exercises and Equity Vested
The following table sets forth information regarding vesting during 2023 of equity awards held by our NEOs in respect of Partnership service. For Messrs. Hrinak, Lynch and Brecker and Ms. Topper, full dollar values are provided and not those allocable to the Partnership.
| Stock Awards | |||
|---|---|---|---|
| Name · Number ofShares or Unitsof StockAcquired onVesting(#) · Value Realizedon Vesting($) | |||
| Charles M. Nifong, Jr. | 7,959 | (1) | 172,153 |
| 7,040 | (2) | 160,512 | |
| 20,344 | (3) | 461,625 | |
| Maura Topper | 2,433 | (1) | 52,626 |
| 1,520 | (2) | 34,656 | |
| David F. Hrinak | 2,964 | (1) | 64,111 |
| Keenan D. Lynch | 2,047 | (1) | 44,277 |
| 2,846 | (2) | 64,889 | |
| 5,481 | (3) | 124,381 | |
| Robert Brecker | 2,661 | (1) | 57,557 |
| 1,591 | (2) | 36,275 | |
| 2,844 | (3) | 64,524 | |
(1)
Represents the portion of the bonus under the 2022 Performance Based Bonus Compensation Policy paid in fully vested common units in 2023.
(2)
Represents one third each of the TBUA phantom unit awards granted by the Partnership on October 25, 2022, October 25, 2021, and November 9, 2020, that vested on December 31, 2023 for Messrs. Nifong, Lynch and Brecker. For Ms. Topper it represents one third of the TBUA phantom unit award granted by the Partnership on October 25, 2022 and October 25, 2021, that vested on December 31, 2023.
(3)
Represents the number of common units to be issued on or before March 8, 2024, based on the 20-day volume weighted average price through February 21, 2024, in respect of the PBUA awards granted by the Partnership on November 9, 2020 that vested on December 31, 2023.
Potential Payments upon Termination or Change in Control
Our executive officers may be entitled to certain payments upon termination of their employment under certain circumstances, in each case, as more fully described below. Any such payments that are to be made in cash will be subject to reimbursement under the Omnibus Agreement.
Lehigh Gas Partners LP 2012 Incentive Award Plan
Under the Lehigh Gas Partners LP 2012 Incentive Award Plan and the award agreements, in the event an NEO’s employment is terminated for any reason, all outstanding TBUAs and PBUAs will be forfeited without payment, except that upon an NEO’s death or disability, the TBUAs will vest in full, and the PBUAs will be determined in accordance with its terms, subject to adjustments as the Board may make in its reasonable discretion. Upon a change in control of the Partnership, the Board in its sole discretion may determine the treatment. If, upon death or disability of any of Messrs. Nifong, Lynch and Brecker and Ms. Topper as of December 31,2023, their TBUAs will vest in full in the amounts of $378,548, $152,988, $79,367 and $66,872, respectively.
CrossAmerica Partners LP 2022 Incentive Award Plan
Under the CrossAmerica Partners LP 2022 Incentive Award Plan and the award agreements, in the event an NEO’s employment is terminated for any reason, all outstanding TBUAs and PBUAs will be forfeited without payment, except that upon an NEO’s death or disability, the TBUAs will vest in full, and the PBUAs will be determined in accordance with its terms, subject to adjustments as the Board may make in its reasonable discretion. Upon a change in control of the Partnership, the Board in its sole discretion may determine the treatment. If, upon death or disability of any of Messrs. Nifong, Lynch and Brecker and Ms. Topper as of December 31,2023, their TBUAs will vest in full in the amounts of $518,198, $221,776, $152,737 and $194,621, respectively. The PBUAs will be valued at zero as the performance period commences on January 1, 2024.
Principal Executive Officer Pay Ratio
We are providing the following information about the relationship of the annual total compensation of individuals providing services in respect to the Partnership and the annual total compensation of Charles M. Nifong, Jr., our Principal Executive Officer (our “PEO”):
For the year ended December 31, 2023:
the median of the annual total compensation of all individuals providing services in respect of the Partnership (other than our PEO) was $79,377; and
the annual total compensation of our PEO was $1,214,385.
Based on this information for 2023, we have determined that the ratio of our PEO’s annual total compensation to the annual total compensation of our median employee was 15:1. Our pay ratio figure was calculated in a manner consistent with Item 40(u) of Regulation S-K.
As of December 31, 2023, there were 195 employees of an affiliate of the Topper Group who provided substantial management services to us for the full year. As discussed in this Form 10-K, our PEO is an employee of an affiliate of the Topper Group, but we are including his annual total compensation in the determination of the PEO pay ratio, as required under SEC rules.
The date we used to identify our median employee was December 31, 2023.
We identified our median employee based on the aggregate salary actually paid during 2023 to these employees.
For purposes of determining aggregate salary, we included the amount of base salary and overtime the employee received during the year and all other pay elements related to base salary including, but not limited to, cash bonuses, holiday pay, vacation pay and other paid time off, if any. Aggregate salary amounts did not include any commissions or other compensation. In making this determination, we excluded any full-time and part-time permanent employees who were hired in 2023 but were not employed by us for the entire year ended December 31, 2023.
Once we identified our median employee, we then determined that employee’s annual total compensation, including any perquisites and other benefits, in the same manner that we determine the annual total compensation of our NEOs for purposes of the Summary Compensation Table disclosed above. The annual total compensation of our median employee was determined to be $79,377. This annual total compensation amount for our median employee was then compared to the total compensation of our PEO for 2023 of $1,214,385. The elements included in the PEO’s annual total compensation are fully discussed above in the footnotes to the Summary Compensation Table.
Director Compensation
Set out below is a discussion of compensation paid for 2023 to individuals who served as non-employee members of our Board during any portion of 2023.
Board members who were employees providing services in respect of the Partnership did not receive any separate compensation for their Board service.
Director Compensation for 2023
During the July 25, 2023 Board meeting a resolution was approved providing that each non-employee director would be granted cash compensation of $62,500 per year (paid on a quarterly basis) and equity awards with a grant date fair value of $62,500. The chairman of each of the audit committee and conflicts committee received additional cash compensation of $10,000 for 2023 (paid on a quarterly basis). In addition, each non-employee director received $1,000 per each Board meeting attended and $500 per each Committee meeting attended.
On July 25, 2023, Messrs. Gannon, Kelso, Kim, Reilly, Topper and Valosky received an award of 3,249 phantom units with a grant date fair value equal to $62,500 based on the closing price of the Partnership’s common units on the close of business the day prior to the date of grant as compensation for their service from June 28, 2023 until June 27, 2024. Such phantom units vest one year from the grant date of the award and include the payment made by the Partnership of distribution equivalent rights equal to the amount of distributions authorized to be paid to holders of common units of the Partnership.
Our directors are reimbursed for all out-of-pocket expenses in connection with attending meetings of the Board or its committees. To the extent permitted under Delaware law, each director is fully indemnified by us for actions associated with being a director.
The following table provides the compensation amounts for each of our non-employee directors for 2023.
| Directors | Fees Earned orPaid in Cash ($) (1) | Stock or UnitAwards and OptionAwards ($) (2) | All OtherCompensation ($) (3) | Total ($) |
|---|---|---|---|---|
| Justin A. Gannon (4) (5) | 81,500 | 62,500 | 6,605 | 150,605 |
| Mickey Kim (4) (5) | 81,500 | 62,500 | 6,605 | 150,605 |
| Kenneth G. Valosky (4) | 71,500 | 62,500 | 6,605 | 140,605 |
| J.B. Reilly Jr. (4) | 69,500 | 62,500 | 6,605 | 138,605 |
| Joseph V. Topper, Jr. (4) | 69,500 | 62,500 | 6,605 | 138,605 |
| Thomas E Kelso (6) | 64,129 | 62,500 | 3,924 | 130,553 |
(1)
Non-employee directors received a cash retainer of $62,500 (paid quarterly) and an additional $10,000 for chairs of the Committees. In addition, each non-employee director received $1,000 per each Board meeting attended and $500 per each Committee meeting attended.
(2)
Under the CrossAmerica Partners LP 2022 Incentive Award Plan, the directors received phantom units that can be converted to common units or cash, at the discretion of the Board. The amounts shown represent the grant fair value of awards for each of the years shown computed in accordance with ASC 718–Compensation-Stock Compensation. See Note 19 to the financial statements for a discussion of all assumptions made in the calculation of this amount.
(3)
Represents distribution equivalent rights on unvested units.
(4)
As part of the compensation to non-employee directors for the period June 28, 2023 to June 27, 2024, each of Messrs. Gannon, Kelso, Kim, Reilly, Topper and Valosky received an equity grant of 3,249 phantom units of the Partnership based upon a fair market value of $19.23 per unit, which was the NYSE closing price of our common units on July 24, 2023. These phantom unit awards were accompanied by tandem distribution equivalent rights that entitled the holder to cash payments equal to the amount of unit distributions authorized to be paid to the holders of Partnership common units. There are no other outstanding equity awards.
(5)
Messrs. Kim and Gannon received additional cash compensation of $10,000 per year for their service as chairman of the conflicts committee and audit committee, respectively.
(6)
Mr. Kelso was appointed on February 24, 2023 and as such, his cash retainer for the first quarter was prorated.
Compensation Committee Interlocks and Insider Participation
None of the directors or executive officers of our General Partner served as members of the compensation committee of another entity that has or had an executive officer who served as a member of our Board during 2023. We do not have a separate compensation committee. Decisions regarding the compensation of our NEOs for 2023 were made, as applicable, by the Topper Group as the owner of our General Partner prior to the GP Purchase.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.