UNIT-BASED COMPENSATION

2006 LTIP

We sponsor the 2006 Long-Term Incentive Plan (the LTI Plan) under which NuStar GP Holdings may award up to 2,000,000 NSH units to our employees, consultants and directors who perform services for us or our affiliates. Awards under the LTI Plan can include NSH unit options, performance units, distribution equivalent rights (DERs), restricted units, phantom units, unit grants and unit appreciation rights. As of December 31, 2017, a total of 1,391,259 NSH units remained available to be awarded under the LTI Plan. Effective on the date of the Employee Transfer and the Assignment Agreement, we retain the expense associated with awards granted under the LTI Plan to our employees, whereas these expenses were previously reimbursed by NuStar Energy.

Restricted Units. What we refer to as “restricted units” are considered phantom units as they represent the right to receive our common units upon vesting. The following table summarizes information related to outstanding NSH restricted units awarded under the LTI Plan:



	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, 2015	39,090		20,425		59,515		$	31.13
Granted	26,240		12,814		39,054		$	23.80
Vested	(11,403	)	(10,086	)	(21,489	)	$	30.80
Balance as of December 31, 2015	53,927		23,153		77,080		$	27.51
Granted	32,456		12,126		44,582		$	25.42
Vested	(15,251	)	(11,637	)	(26,888	)	$	28.23
Balance as of December 31, 2016	71,132		23,642		94,774		$	26.32
Granted	45,965		22,042		68,007		$	15.40
Vested	(19,890	)	(11,282	)	(31,172	)	$	27.10
Balance as of December 31, 2017	97,207		34,402		131,609		$	20.49

The outstanding restricted units granted to domestic employees are equity-classified awards and generally vest over five years, beginning one year after the grant date. The outstanding restricted units granted to non-employee directors (NEDs) are equity-classified awards that vest over three years, beginning one year after the grant date. The fair value of these awards is measured at the grant date.

The following table presents supplemental information regarding our restricted unit awards:



	Year Ended December 31,
	2017		2016		2015
	(Thousands of Dollars, Except Unit Data)
DERs paid to restricted unitholders	$	206	$	167	$	129
Fair value of restricted units that vested during the period	$	477	$	700	$	379
Units issued for settlement of awards vested, net of employee tax withholding requirements	25,383		21,200		17,272

Unrecognized compensation cost related to our equity-classified awards totaled $2.5 million as of December 31, 2017, which we expect to recognize over a weighted-average period of 3.6 years.

2000 LTIP

Prior to the Employee Transfer, we sponsored the Long-Term Incentive Plan (the 2000 LTIP), under which NuStar GP, LLC could award up to 3,250,000 NS common units, and NuStar Energy reimbursed NuStar GP, LLC for all employee costs, including unit-based compensation costs. Awards under the 2000 LTIP could include NS unit options, restricted units, performance units, DERs and contractual rights to receive common units.

On March 1, 2016, in conjunction with the Employee Transfer, we transferred to NuStar Services Co all outstanding awards under the 2000 LTIP, which totaled 730,288 units, including 77,014 performance units, and removed the obligation related to these unit-based awards from our consolidated balance sheet. However, of the performance units transferred, only 35,373 were considered granted for accounting purposes, as the performance measure for the remaining units had not yet been set.

The following table summarizes information about awards we granted under the 2000 LTIP, prior to the Employee Transfer:



		Awards Granted
		Year Ended December 31,
	Vesting		2016	2015
2000 LTIP:
Performance units	(a)		47,646	29,633
Restricted units	1/5 per year		—	250,563
Restricted units (grants to non-employee directors of NuStar GP, LLC)	1/3 per year		—	7,553


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

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



	Year Ended December 31,
		2017		2016		2015
	(Thousands of Dollars)
Long-term incentive plan compensation expense charged to NuStar Energy		$	—	$	490	$	6,397
Expenses resulting from NuStar GP Holdings awards		$	849	$	661	$	239