Employee Incentive Plans

3 Months Ended

Mar. 31, 2012

Deferred Compensation Arrangements [Abstract]

Employee Incentive Plans

(6)Employee Incentive Plans

• Long-Term Incentive Plans

The Company accounts for share-based compensation in accordance with FASB ASC 718, which requires that compensation related to all stock-based awards, including stock options, be recognized in the consolidated financial statements.

The Company and the Partnership each have similar unit or share-based payment plans for employees, which are described below. Amounts recognized in the condensedconsolidated financial statements with respect to these plans are as follows (in thousands):

		Three Months Ended
		March 31,
		2012		2011
Cost of share-based compensation charged to general and
	administrative expense	$	2,241	$	1,790
Cost of share-based compensation charged to operating expense			323		465
Total amount charged to income		$	2,564	$	2,255
Interest of non-controlling partners in share-based compensation		$	994	$	910
Amount of related income tax benefit recognized in income		$	582	$	499

(b)Partnership Restricted Units

The restricted units are valued at their fair value at the date of grant which is equal to the market value of common units on such date. A summary of the restricted unit activity for the three months ended March 31, 2012 is provided below:

		Three Months Ended March 31, 2012
				Weighted Average Grant-Date Fair Value
		Number of
Crosstex Energy, L.P. Restricted Units:		Units
Non-vested, beginning of period			949,844	$	10.45
	Granted		330,200		16.89
	Vested*		(216,447)		6.13
	Forfeited		(3,245)		13.38
Non-vested, end of period			1,060,352	$	13.33
Aggregate intrinsic value, end of period (in thousands)		$	18,121
_____________________
* Vested units include 60,401 units withheld for payroll taxes paid on behalf of employees.

The Partnership issued restricted units in 2012 to officers and other employees. These restricted units typically vest at the end of three years and are included in the restricted units outstanding and the current share-based compensation cost calculations at March 31, 2012.

A summary of the restricted units' aggregate intrinsic value (market value at vesting date) and fair value of units vested (market value at date of grant) during the three months ended March 31, 2012 and 2011 are provided below (in thousands):

	Three Months Ended
	March 31,
Crosstex Energy, L.P. Restricted Units:	2012		2011
Aggregate intrinsic value of units vested	$	3,511	$	4,239
Fair value of units vested	$	1,327	$	3,173
As of March 31, 2012, there was $8.7 million of unrecognized compensation cost related to non-vested restricted units. That cost is expected to be recognized over a weighted-average period of 2.1 years.

(c) PartnershipUnit Options

A summary of the unit option activity for the three months ended March 31, 2012 is provided below:

		Three Months Ended March 31, 2012
				Weighted
		Number of		Average
Crosstex Energy, L.P. Unit Options:		Units		Exercise Price
Outstanding, beginning of period			451,574	$	6.99
	Exercised		(34,668)		5.17
	Forfeited		(3,871)		18.38
Outstanding, end of period			413,035	$	7.05
Options exercisable at end of period			345,668
Weighted average contractual term (years) end of period:
	Options outstanding		6.9
	Options exercisable		6.7
Aggregate intrinsic value end of period (in thousands):
	Options outstanding	$	4,572
	Options exercisable	$	3,825

A summary of the unit options intrinsic value exercised (market value in excess of exercise price at date of exercise) and fair value of units exercised (value per Black-Scholes-Merton option pricing model at date of grant) during thethree months ended March 31, 2012andMarch 31, 2011 are provided below (in thousands):

	Three Months Ended
	March 31,
Crosstex Energy, L.P. Unit Options:	2012		2011
Intrinsic value of unit options exercised	$	411	$	506
Fair value of unit options vested	$	277	$	325
As of March 31, 2012, there was $0.2 million of unrecognized compensation cost related to non-vested unit options. That cost is expected to be recognized during 2012.

(d)Crosstex Energy, Inc.'s Restricted Stock

The Company's restricted shares are valued at their fair value at the date of grant which is equal to the market value of the common stock on such date. A summary of the restricted share activities for the three months ended March 31, 2012 is provided below:

		Three Months Ended
		March 31, 2012
		Number of Shares		Weighted Average Grant-Date Fair Value
Crosstex Energy, Inc. Restricted Shares:
Non-vested, beginning of period			1,221,351	$	7.40
	Granted		427,990		13.38
	Vested*		(216,447)		4.65
	Forfeited		(4,551)		8.73
Non-vested, end of period			1,428,343	$	9.61
Aggregate intrinsic value, end of period (in thousands)		$	20,197
________________________
* Vested shares include 58,247 shares withheld for payroll taxes paid on behalf of employees.

CEIissuedrestricted shares in 2012to officers and other employees. These restricted shares typically vest at the end of three years and are included in restricted shares outstanding and the current share-based compensation cost calculations at March 31, 2012.

A summary of the restricted shares' aggregate intrinsic value (market value at vesting date) and fair value of shares vested (market value at date of grant) during thethree months ended March 31, 2012 and March 31, 2011 are provided below (in thousands):

	Three Months Ended
	March 31,
Crosstex Energy, Inc. Restricted Shares:	2012		2011
Aggregate intrinsic value of shares vested	$	2,736	$	2,578
Fair value of shares vested	$	1,006	$	2,890
As of March 31, 2012, there was $8.6 million of unrecognized compensation costs related to non-vested CEI restricted shares. The cost is expected to be recognized over a weighted average period of 2.2 years.

(e)Crosstex Energy, Inc.'s Stock Options

CEI stock options have not been granted as a means of compensation since 2005. All options outstanding at December 31, 2009 were vested and exercisable with all associated costs recognized. The following is a summary of the CEI stock options outstanding as of March 31, 2012:

		Three Months Ended March 31, 2012
				Weighted
		Number of		Average
Crosstex Energy, Inc. Stock Options:		Shares		Exercise Price
Outstanding, beginning of period			37,500	$	6.50
	Forfeited		-		-
Outstanding, end of period			37,500	$	6.50
Options exercisable at end of period			37,500	$	6.50
Weighted average contractual term (years) end of period			2.7