14. COMPENSATION PLANS

ARLP Long-Term Incentive Plan

The ARLP Partnership has the ARLP LTIP for certain employees and officers of MGP and its affiliates who perform services for the ARLP Partnership. The ARLP LTIP awards are grants of non-vested "phantom" or notional units, also referred to as "restricted units", which upon satisfaction of time and performance based vesting requirements, entitle the ARLP LTIP participant to receive ARLP common units. Annual grant levels and vesting provisions for designated participants are recommended by the President and Chief Executive Officer of MGP, subject to review and approval of the MGP Compensation Committee. Vesting of all grants outstanding is subject to the satisfaction of certain financial tests, which management currently believes is probable. Grants issued to ARLP LTIP participants are expected to cliff vest on January 1st of the third year following issuance of the grants. The ARLP Partnership accounts for forfeitures of non-vested LTIP grants as they occur. The ARLP Partnership expects to settle the non-vested ARLP LTIP grants by delivery of ARLP common units, except for the portion of the grants that will satisfy tax withholding obligations of LTIP participants. As provided under the distribution equivalent rights ("DERs") provisions of the ARLP LTIP and the terms of the ARLP LTIP awards, all non-vested grants include contingent rights to receive quarterly distributions in cash or, at the discretion of the MGP Compensation Committee, in lieu of cash, phantom units credited to a bookkeeping account with value, equal to the cash distributions we make to unitholders during the vesting period.

A summary of non-vested ARLP LTIP grants as of and for the years ended December 31, 2017, 2016 and 2015 is as follows:


	Number of units	Weighted average grant date fair value per unit		Intrinsic value
				(in thousands)

Non-vested grants at January 1, 2015	843,340	$	37.16	$	36,306
Granted	303,165		37.18
Vested (1)	(202,778)		38.85
Forfeited	(3,934)		36.49
Non-vested grants at December 31, 2015	939,793		36.80		12,678
Granted	960,992		12.38
Vested (1)	(284,272)		31.51
Forfeited	(11,765)		26.39
Non-vested grants at December 31, 2016	1,604,748		23.19		36,027
Granted	475,310		23.17
Vested (1)	(350,516)		40.73
Forfeited	(35,516)		20.01
Non-vested grants at December 31, 2017	1,694,026		19.62		33,372

(1)

During the years ended December 31, 2017, 2016 and 2015, the ARLP Partnership issued 222,011, 176,319 and 128,150, respectively, unrestricted common units to the ARLP LTIP participants. The remaining vested units were settled in cash to satisfy the individual statutory minimum tax obligations of the ARLP LTIP participants.

For the years ended December 31, 2017, 2016 and 2015, ARLP LTIP expense was $11.0 million, $12.7 million and $11.2 million, respectively. The total obligation associated with the ARLP LTIP as of December 31, 2017 and 2016 was $21.8 million and $25.1 million, respectively, and is included in Noncontrolling interests line item in our consolidated balance sheets. As of December 31, 2017, there was $11.4 million in total unrecognized compensation expense related to the non-vested ARLP LTIP grants that are expected to vest. That expense is expected to be recognized over a weighted-average period of 1.1 years.

On January 24, 2018, the MGP Compensation Committee determined that the vesting requirements for the 2015 grants of 290,706 restricted units (which was net of 12,459 forfeitures) had been satisfied as of January 1, 2018. As a result of this vesting, on February 8, 2018, the ARLP Partnership issued 191,858 unrestricted common units to the ARLP LTIP participants. The remaining units were settled in cash to satisfy tax withholding obligations of the ARLP LTIP participants. On January 24, 2018, the MGP Compensation Committee also authorized additional grants of 526,305 restricted units, of which 511,305 units were granted.

After consideration of the January 1, 2018 vesting and subsequent issuance of 191,858 common units, approximately 2.1 million units remain available under the ARLP LTIP for issuance in the future, assuming all grants issued in 2018, 2017 and 2016 and currently outstanding are settled with ARLP common units, without reduction for tax withholding, and no future forfeitures occur and DERs continue being paid in cash versus additional phantom units.

AHGP Long-Term Incentive Plan

We have also adopted a Long-Term Incentive Plan (the "AHGP LTIP") for employees, directors and consultants of our general partner and its affiliates, including the ARLP Partnership. Grants under the AHGP LTIP are to be made in AHGP restricted units, which are "phantom" units that entitle the grantee to receive either a common unit or equivalent amount of cash upon the vesting of the phantom unit. The aggregate number of common units reserved for issuance under the AHGP LTIP is 5,215,000. There have been no grants under the AHGP LTIP as of December 31, 2017.

Supplemental Executive Retirement Plan and Directors Deferred Compensation Plans

The ARLP Partnership utilizes the SERP to provide deferred compensation benefits for certain officers and key employees. All allocations made to participants under the SERP are made in the form of "phantom" ARLP units and SERP distributions will be settled in the form of ARLP common units. The SERP is administered by the MGP Compensation Committee.

Our directors participate in the AGP Deferred Compensation Plan, and the directors of MGP participate in the MGP Deferred Compensation Plan. Pursuant to the Deferred Compensation Plans, for amounts deferred either automatically or at the election of the director, a notional account is established and credited with notional common units of ARLP or AHGP, as appropriate, which are described in the Deferred Compensation Plans as "phantom" units. Distributions from the Deferred Compensation Plans will be settled in the form of ARLP or AHGP common units, as applicable.

For both the SERP and Deferred Compensation Plans, when quarterly cash distributions are made with respect to ARLP or AHGP common units, an amount equal to such quarterly distribution is credited to each participant's notional account as additional phantom units. All grants of phantom units under the SERP and Deferred Compensation Plans vest immediately.

A summary of SERP and MGP Deferred Compensation Plan activity as of and for the years ended December 31, 2017, 2016 and 2015 is as follows:


	Number of units	Weighted average grant date fair value per unit		Intrinsic value
				(in thousands)

Phantom units outstanding as of January 1, 2015	368,981	$	34.02	$	15,885
Granted	60,160		21.38
Phantom units outstanding as of December 31, 2015	429,141		32.25		5,789
Granted	74,799		16.31
Issued	(9,922)		33.76
Phantom units outstanding as of December 31, 2016	494,018		29.77		11,091
Granted	67,766		20.38
Phantom units outstanding as of December 31, 2017	561,784		28.64		11,067

Total SERP and MGP Deferred Compensation Plan expense was $1.4 million, $1.2 million and $1.3 million for the years ended December 31, 2017, 2016 and 2015, respectively. As of December 31, 2017 and 2016, the total obligation associated with the SERP and MGP Deferred Compensation Plan was $16.1 million and $14.7 million, respectively, and is included in Noncontrolling interests line item in our consolidated balance sheet. On February 8, 2018, the ARLP Partnership issued 7,181 ARLP common units to a participant under the SERP. Units issued to this participant were net of units settled in cash to satisfy tax withholding obligations.

A summary of the AGP Deferred Compensation Plan activity as of and for the years ended December 31, 2017, 2016 and 2015 is as follows:


	Number of units	Weighted average grant date fair value per unit		Intrinsic value
				(in thousands)

Phantom units outstanding as of January 1, 2015	19,376	$	53.96	$	1,182
Granted	5,478		40.87
Issued	(3,167)		55.83
Phantom units outstanding as of December 31, 2015	21,687		50.38		438
Granted	11,383		19.15
Issued	(6,958)		50.73
Phantom units outstanding as of December 31, 2016	26,112		36.67		734
Granted	2,168		27.28
Issued	(4,357)		39.18
Phantom units outstanding as of December 31, 2017	23,923		35.36		641

Total AGP Deferred Compensation Plan expense was $0.1 million for the year ended December 31, 2017 and $0.2 million in each of the years ended December 31, 2016 and 2015. The total obligation associated with the AGP Deferred Compensation Plan as of December 31, 2017 and 2016 was $0.8 million and $1.0 million, respectively, and is included in Limited partners – Common Unitholders line item in our consolidated balance sheets.

On February 20, 2018, we provided 9,851 AHGP common units to an AGP director under the AGP Deferred Compensation Plan.

See Note 2 – Summary of Significant Accounting Policies for more information on our accounting policy for unit-based compensation.