UNIT-BASED COMPENSATION

As of December 31, 2013, we sponsored the following long-term incentive plans:

•

The Fourth Amended and Restated 2000 Long-Term Incentive Plan (the 2000 LTIP), under which NuStar GP, LLC may award up to 3,250,000 NuStar Energy (NS) common units. Awards under the 2000 LTIP can include NS unit options, restricted units, performance awards, distribution equivalent rights (DER) and contractual rights to receive common units. As of December 31, 2013, NS common units that remained available to be awarded totaled 1,517,027 under the 2000 LTIP.

•

The 2006 Long-Term Incentive Plan (the 2006 LTIP) under which NuStar GP Holdings may award up to 2,000,000 NuStar GP Holdings (NSH) units to our employees, consultants and directors who perform services for us or our affiliates. Awards under the 2006 LTIP can include NSH unit options, performance awards, DER, restricted units, phantom units, unit grants and unit appreciation rights. As of December 31, 2013, a total of 1,494,177 NSH units remained available to be awarded under the 2006 LTIP.

The 2003 Employee Unit Incentive Plan (the UIP), under which NuStar GP, LLC awarded NS common units to employees of NuStar GP, LLC or its affiliates, terminated on June 16, 2013. The 2002 Unit Option Plan (the UOP), under which NuStar GP, LLC awarded NS unit options to officers and directors of NuStar GP, LLC or its affiliates, terminated on March 22, 2012.

We purchase NS common units as needed to satisfy awards granted under the 2000 LTIP, the UOP and the UIP.

The number of awards granted under the above-noted plans were as follows:



	Year Ended December 31,
	2013		2012		2011
	Granted	Vesting	Granted	Vesting	Granted	Vesting
2000 LTIP:
Performance awards	38,786	(a)	33,445	(a)	27,111	(a)
Restricted units (b)	269,182	1/5 per year	231,855	1/5 per year	208,195	1/5 per year
Restricted units (grants to non-employee directors of NuStar GP, LLC)	8,904	1/3 per year	8,170	1/3 per year	6,760	1/3 per year
UIP:
Restricted units (c)	—	—	15,382	1/5 per year	14,005	1/5 per year
2006 LTIP:
Restricted units	18,620	1/5 per year	25,640	1/5 per year	24,970	1/5 per year
Restricted units (grants to non-employee directors of NuStar GP Holdings) (d)	13,183	1/3 per year	10,601	1/3 per year	9,987	1/3 per year


(a)	Performance awards vest 1/3 per year if certain performance measures are met, as defined in the award agreements.


(b)	The 2000 LTIP restricted unit grants include 3,882 restricted unit awards granted to certain international employees for the year ended December 31, 2013, that vest 1/3 per year, as defined in the award agreements.


(c)	The UIP restricted unit grants include 3,392 and 2,880 restricted unit awards granted to certain international employees for the years ended December 31, 2012 and 2011, respectively, that vest 1/3 per year, as defined in the award agreements.


(d)	Expenses resulting from our awards to non-employee directors are not reimbursed by NuStar Energy and are included in “General and administrative expenses” on our consolidated statements of comprehensive income (loss).

As of December 31, 2013 and 2012, we had accrued $6.2 million and $10.4 million, respectively, for the outstanding awards of NS unit options, performance awards and restricted units in “Accrued compensation expense” on our consolidated balance sheets.

The following table summarizes information pertaining to long-term incentive plan compensation expenses:



	Year Ended December 31,
	2013		2012		2011
	(Thousands of Dollars)
Long-term incentive plan compensation expense charged to NuStar Energy	$	7,369	$	7,745	$	8,521
Expenses resulting from NuStar GP Holdings awards to non-employee directors	19		305		305

Unit Options

Under the terms of our unit option plan, the exercise price of options granted is not less than the fair market value of our common units on the date of grant. Options become exercisable pursuant to the individual written agreements between the participants and us, usually in five equal annual installments beginning at the date of grant, with unexercised options expiring seven to ten years from the date of grant.

The fair value of each NSH unit option grant was estimated using the Black-Scholes option-pricing model on the grant date. The expected life of NSH unit options granted is the period of time from the grant date to the date of expected exercise or other expected settlement. Expected volatility for NSH unit options is based on closing prices of NSH common units for periods corresponding to the life of options granted. Expected distribution yield is based on annualized distributions at the grant date for NSH unit options. The risk-free interest rate used is the implied yield currently available from the U.S. Treasury zero-coupon issues with a remaining term equal to the expected life of the options at the grant date for NSH unit options.

On November 16, 2007, we granted 324,100 NSH unit options at $31.55, which was our only grant of options under the 2006 LTIP. These options expire seven years from the grant date and vest in annual one-third increments beginning on November 16, 2010. The total intrinsic value of unit options exercised during each of the years ended December 31, 2013 and December 31, 2012 was $0.1 million. As of December 31, 2013, the aggregate intrinsic value of NSH unit options outstanding and exercisable was zero as their market value at December 31, 2013 was less than their exercise price. The number of NSH unit options exercised during each of the years ended December 31, 2013 and 2012 was 11,666 and 11,667, respectively. No NSH unit options were exercised during the year ended December 31, 2011. The balance of NSH unit options outstanding was 289,100 and 300,766 as of December 31, 2013 and 2012, respectively.

The following table summarizes the status of vested NSH unit options granted under the 2006 LTIP:



	Number of Unit Options	Weighted- Average Exercise Price Per Unit		Weighted- Average Remaining Contractual Term
				(in years)
Outstanding and exercisable as of December 31, 2013	289,100	$	31.55	0.9

Restricted Units

The following table summarizes information related to outstanding NSH restricted units awarded under the 2006 LTIP:



	Restricted Unit Grants to Employees		Restricted Unit Grants to Non- Employee Directors		Total		Weighted- Average Grant-Date Fair Value Per Unit
Balance as of January 1, 2013	65,418		19,311		84,729		$	29.74
Granted	18,620		13,183		31,803		$	27.87
Vested	(44,834	)	(11,300	)	(56,134	)	$	29.66
Balance as of December 31, 2013	39,204		21,194		60,398		$	28.83

The weighted-average grant-date fair value of NSH restricted units granted during the years ended December 31, 2013, 2012 and 2011 was $27.87, $28.77 and $30.53 per unit, respectively. The total fair value of NSH restricted units that vested during the years ended December 31, 2013, 2012 and 2011 was $1.5 million, $1.0 million and $0.7 million, respectively.