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Employee Incentive Plans
 9 Months Ended
Sep. 30, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Employee Incentive Plans

(7) Employee Incentive Plans

 

  • Long-Term Incentive Plans

 

The Company accounts for share-based compensation in accordance with FASB ASC 718, which requires 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 condensed consolidated financial statements with respect to these plans are as follows (in thousands):

 

   Three Months Ended Nine Months Ended 
   September 30, September 30, 
   2012 2011 2012 2011 
Cost of share-based compensation charged to general and              
 administrative expense $ 2,272 $ 1,367 $ 6,746 $ 4,753 
Cost of share-based compensation charged to operating expense    310   205   949   935 
Total amount charged to income  $ 2,582 $ 1,572 $ 7,695 $ 5,688 
Interest of non-controlling partners in share-based compensation $ 1,338 $ 638 $4,054 $ 2,310 
Amount of related income tax benefit recognized in income $ 459 $ 347 $1,347 $ 1,252 

(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 nine months ended September 30, 2012 is provided below:

 

 

   Nine Months Ended September 30, 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    371,600   16.81 
 Vested*    (261,768)   7.87 
 Forfeited    (41,617)   15.02 
Non-vested, end of period    1,018,059 $ 13.24 
Aggregate intrinsic value, end of period (in thousands)  $ 15,678   
_____________________ 
* Vested units include 63,512 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 September 30, 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 and nine months ended September 30, 2012 and 2011 are provided below (in thousands):

 

 

   Three Months Ended  Nine Months Ended 
   September 30,  September 30, 
 Crosstex Energy, L.P. Restricted Units: 2012 2011  2012 2011 
 Aggregate intrinsic value of units vested  $ 448 $ 329  $ 4,031 $ 6,438 
 Fair value of units vested  $ 452 $ 389  $ 2,060 $ 5,945 
          
  As of September 30, 2012, there was $6.3 million of unrecognized compensation cost related to non-vested restricted units. The cost is expected to be recognized over a weighted-average period of 1.4 years. 

(c) Partnership Unit Options

 

A summary of the unit option activity for the nine months ended September 30, 2012 is provided below:

 

   Nine Months Ended September 30, 2012 
      Weighted 
  Number ofAverage 
Crosstex Energy, L.P. Unit Options:UnitsExercise Price 
Outstanding, beginning of period    451,574 $ 6.99 
 Exercised    (69,773)   5.03 
 Forfeited    (11,281)   15.58 
Outstanding, end of period    370,520 $ 7.11 
Options exercisable at end of period    304,799    
Weighted average contractual term (years) end of period:       
 Options outstanding    6.4    
 Options exercisable    6.2    
Aggregate intrinsic value end of period (in thousands):       
 Options outstanding  $ 3,513    
 Options exercisable  $ 2,896    

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 the three and nine months ended September 30, 2012 and September 30, 2011 are provided below (in thousands):

 

   Three Months Ended  Nine Months Ended 
    September 30,  September 30, 
 Crosstex Energy, L.P. Unit Options: 2012 2011 2012 2011 
 Intrinsic value of unit options exercised  $ 327 $ 348 $ 805 $ 1,333 
 Fair value of unit options vested $ -  $ 1 $ 277 $ 562 
         
  As of September 30, 2012, there was $0.1 million of unrecognized compensation cost related to non-vested unit options. The cost is expected to be recognized over a weighted average period of 0.3 years. 

(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 nine months ended September 30, 2012 is provided below:

 

   Nine Months Ended 
 September 30, 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    476,451   13.27 
 Vested*    (282,494)   6.07 
 Forfeited    (57,162)   11.01 
Non-vested, end of period    1,358,146 $ 9.59 
Aggregate intrinsic value, end of period (in thousands)  $ 19,055   
________________________ 
* Vested shares include 62,546 shares withheld for payroll taxes paid on behalf of employees. 

CEI issued restricted shares in 2012 to 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 September 30, 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 the three and nine months ended September 30, 2012 and September 30, 2011 are provided below (in thousands):

 

 

   Three Months Ended   Nine Months Ended 
   September 30,   September 30, 
 Crosstex Energy, Inc. Restricted Shares: 2012 2011   2012 2011 
 Aggregate intrinsic value of shares vested  $ 537 $ 226  $ 3,963 $ 3,915 
 Fair value of shares vested  $ 448 $ 342  $ 1,714 $ 5,623 
          
  As of September 30, 2012 there was $6.3 million of unrecognized compensation cost related to CEI restricted shares for directors, officers and employees. The cost is expected to be recognized over a weighted average period of 1.4 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 September 30, 2012:

         
   Nine Months Ended September 30, 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 $0.00 
Options exercisable at end of period    37,500 $0.00