Share-Based Compensation

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Share-Based Compensation

(7) Share-Based Compensation

CVR Partners’ Phantom Unit Awards

CVR Partners has a Long-Term Incentive Plan (“LTIP”) which permits the granting of options, stock and unit appreciation rights (“SARs”), restricted shares, restricted stock units, phantom units, unit awards, substitute awards, other unit-based awards, cash awards, dividend and distribution equivalent rights, share awards, and performance awards (including performance share units, performance units, and performance-based restricted stock). As of December 31, 2019, only phantom unit awards under the LTIP remained outstanding. Individuals who are eligible to receive awards and grants under the LTIP include CVR Energy’s and the Partnership’s employees, officers, consultants, advisors, and directors.

A summary of phantom unit award activity and changes under the LTIP during the year ended December 31, 2019 is presented below:

(in thousands, except per unit data)	Units	Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value
Non-vested at December 31, 2018	1,246,815	$	3.84	$	4,239
Granted	920,884	3.46
Vested	(531,351)	4.03
Forfeited	(79,434)	3.83
Non-vested at December 31, 2019	1,556,914	$	3.55	$	4,826

Unrecognized compensation expense associated with the phantom units at December 31, 2019 was approximately $3.9 million, which is expected to be recognized over a weighted average period of 1.7 years. Compensation expense recorded for the years ended December 31, 2019, 2018, and 2017 related to awards under the CVR Partners LTIP was approximately $2.3 million, $1.9 million, and $1.1 million, respectively.

As of December 31, 2019 and 2018, the Partnership had a liability of $1.2 million and $0.5 million, respectively, for cash settled non-vested phantom unit awards and associated distribution equivalent rights. For the years ended December 31, 2019, 2018, and 2017, the Partnership paid cash of $1.7 million, $1.7 million, and $1.4 million, respectively, to settle liability-classified awards upon vesting.

Incentive Unit Awards — CVR Energy

CVR Energy grants awards of incentive units and dividend and distribution equivalent rights to certain of its employees and those of its subsidiaries, including CVR GP, who provide shared services for CVR Energy and its subsidiaries, including the Partnership. Costs related to these incentive unit awards are allocated to the Partnership based on time spent on Partnership business.

As of December 31, 2019 and 2018, the Partnership had liabilities related to these incentive unit awards of $1.4 million and $0.4 million, respectively, which is recorded in Other current liabilities. For the year ended December 31, 2019, the Partnership had no reimbursements and $0.8 million, and $1.0 million for the years ended December 31, 2018 and 2017, respectively, related to its allocated portion of CVR Energy’s incentive unit awards payments. Total compensation expense for the years ended December 31, 2019, 2018, and 2017 related to the incentive units was $1.0 million, $0.5 million and $1.4 million, respectively.

Performance Unit Awards

In connection with an employment agreement dated November 1, 2017, the Partnership’s executive chairman received two performance unit awards:

A performance unit award was granted for the performance cycle from January 1, 2018 to December 31, 2018 (the “2018 Performance Unit Award”) that vested and was paid in February 2019. Compensation cost for the 2018 Performance Unit Award of $0.1 million was allocated to the Partnership and was recorded within Other current liabilities on the Consolidated Balance Sheets as of December 31, 2018. The Partnership reimbursed CVR Energy for this allocated portion of the performance unit award in 2019.

Additionally, on November 1, 2017, CVR Energy entered into a performance unit award agreement (the “2017 Performance Unit Award Agreement”) with our executive chairman representing the right to receive upon vesting, a cash payment equal to $10.0 million if the average closing price of CVR Energy’s common stock over the 30 day trading period from January 4, 2022 to February 15, 2022 is equal to or greater than $60 per share. Compensation costs recognized for the years ended December 31, 2019, 2018, and 2017 were $0.0 million, $0.4 million, and $0.5 million, respectively. As of December 31, 2019 and 2018, the Partnership had an outstanding liability of $0.4 million and $0.4 million, which was recorded in Other current liabilities on the Consolidated Balance Sheets. At December 31, 2019, there was approximately $1.1 million of total unrecognized compensation costs related to the 2017 Performance Unit Award Agreement.

Other Benefit Plans

CVR Energy sponsors and administers two defined contribution 401(k) plans, the CVR Energy 401(k) Plan and the CVR Energy 401(k) Plan for Represented Employees (the “Plans”), in which employees of the general partner, CVR Partners and its subsidiaries may participate. Participants in the Plans may elect to contribute a designated percentage of their eligible compensation in accordance with the Plans, subject to statutory limits. CVR Partners provides a matching contribution of 100% of the first 6% of eligible compensation contributed by participants. Participants in both Plans are immediately vested in their individual contributions. The Plans provide for a three-year vesting schedule for the Partnership’s matching contributions and contain a provision to count service with predecessor organizations. The Partnership’s contributions under the Plans were approximately $1.8 million, $1.8 million, and $1.6 million for the years ended December 31, 2019, 2018, and 2017, respectively.