Equity-Based Compensation Plans

2010 Long Term Incentive Plan

In 2010, we adopted the 2010 Long-Term Incentive Plan (the “2010 Plan”). The 2010 Plan provides for the awards of phantom units and distribution equivalent rights to members of our board of directors, and employees who provide services to us. Phantom units are notional units representing unfunded and unsecured promises to pay to the participant a specified amount of cash based on the market value of our common units should specified vesting requirements be met. Distribution equivalent rights (“DERs”) are tandem rights to receive on a quarterly basis a cash amount per phantom unit equal to the amount of cash distributions paid per common unit. The 2010 Plan is administered by the Governance, Compensation and Business Development Committee (the “G&C Committee”) of our board of directors. The G&C Committee (at its discretion) designates participants in the 2010 Plan, determines the types of awards to grant to participants, determines the number of units to be covered by any award, and determines the conditions and terms of any award including vesting, settlement and forfeiture conditions.

The compensation cost associated with the phantom units is re-measured each reporting period based on the market value of our common units, and is recognized over the vesting period. The liability recorded for the estimated amount to be paid to the participants under the 2010 LTIP is adjusted to recognize changes in the estimated compensation cost and vesting. Management’s estimates of the fair value of these awards granted in 2016 are adjusted for assumptions about expected forfeitures of units prior to vesting. For our performance-based awards, our fair value estimates are weighted based on probabilities for each performance condition applicable to the award.

During 2016, we granted 339,584 phantom units with tandem DERs at a weighted average grant fair value of $30.71 per unit. During 2015, we granted 212,825 phantom units with tandem DERs at a weighted average grant date fair value of $44.95 per unit. The phantom units granted during 2016 and 2015 were both service-based and performance-based awards. The service-based awards vest on the third anniversary of the date of grant. Performance-based phantom unit awards granted in 2015 and 2016 will vest on the third anniversary of issuance, in an amount ranging from 50% to 150% of the targeted number of phantom units, if certain quarterly cash distribution per common unit targets are achieved in the fourth quarter of 2018 and 2019, respectively. If the quarterly cash distribution per common unit is below the threshold target, all of the performance-based phantom units granted will be forfeited.

During 2014, we granted 125,988 phantom units with tandem DERs at a weighted average grant date fair value of $54.14 per unit. These phantom units will vest in April 2017, the third anniversary of the date of grant, at 150% of the targeted number of phantom units due to the distribution per common unit target achieved in the fourth quarter of 2016.

A summary of our phantom unit activity for our service-based and performance-based awards is set forth below:



	Service-Based Awards							Performance-Based Awards
	Number of Phantom Units		Average Grant Date Fair Value		Total Value (in thousands)			Number of Phantom Units		Average Grant Date Fair Value		Total Value (in thousands)
Unvested at December 31, 2015	132,676		$	48.09	$	6,380		344,208		$	47.78	$	16,446
Granted	84,997		$	31.67	2,692			254,587		$	30.38	7,734
Forfeited	(3,117	)	$	45.88	(143		)	(4,677	)	$	45.89	(215		)
Settled	(33,326	)	$	47.19	(1,573		)	(110,886	)	$	46.97	(5,208		)
Unvested at December 31, 2016	181,230		$	40.59	$	7,356		483,232		$	38.82	$	18,757

At December 31, 2016, we estimated the unrecognized compensation cost of our phantom awards to be approximately $10.5 million to be recognized over a weighted average period of approximately 1.5 years. We recorded $8.9 million and $7.7 million of compensation expense for the years ended December 31, 2016 and 2015, respectively. Our liability for these awards totaled $13.6 million and $12.3 million at December 31, 2016 and 2015, respectively.

Equity-Based Compensation Plan Expense

Equity-based compensation expense from our continuing operations during the three years ended December 31, 2016 was as follows:



	Expense Related to Equity-Based Compensation Plans
Consolidated Statement of Operations	2016		2015		2014
Supply and logistics operating costs	$	1,688	$	1,185	$	433
Marine transportation operating costs	1,089		851		626
Refinery services operating costs	547		227		(62		)
Offshore pipeline operating costs	681		94		—
General and administrative expenses	4,575		4,565		5,824
Total	$	8,580	$	6,922	$	6,821