Equity-Based Compensation

6 Months Ended

Jun. 30, 2013

Equity-Based Compensation

5. Equity-Based Compensation

Certain employees of the Partnership’s general partner receive equity-based compensation through the Partnership’s equity-based compensation programs. The fair value of the awards issued is determined based on the fair market value of the shares on the date of grant. This value is amortized over the vesting period, which is generally four years from the date of grant.

Certain key members of management have been designated as participants in the Management Incentive Compensation Plan which is made up of two components.  The first component is an annual cash bonus based on “excess” cash distributions made by the Partnership above a specified target amount with respect to each fiscal quarter during which the award is outstanding.  The second component is based on an increase in value of the Partnership’scommon units at the end of a specified five-year period beginning on the award commencement date.

Included in operating expense, general and administrative expense, and income from unconsolidated affiliatestotal equity-based compensation of $8.9 million for the three-month period ended June30, 2013. No expense was recorded in the three-month period June30, 2012, due to a decrease in the Partnership’s unit price. Included in operating expense, general and administrative expense, and income from unconsolidated affiliates is equity-based compensation of $16.3 million and $0.7 million for the six-month periods ended June30, 2013 and 2012, respectively.

The LTIP provides for an aggregate of 3,500,000 common units to be awarded to employees, directors and consultants of the Partnership’s general partner and its affiliates through various award types, including unit awards, restricted units, phantom units, unit options, unit appreciation rights and other unit-based awards. The LTIP has been designed to promote the interests of the Partnership and its unitholders by strengthening its ability to attract, retain and motivate qualified individuals to serve as employees, directors and consultants. As of June30, 2013, there was $31.6 million of unrecognized compensation expense attributable to the LTIP, of which $29.1 million is expected to be recognized over a four year period following June30, 2013.

The following table summarizes LTIP award activity for the six months ended June30, 2013:

	Units			Valueper Unit
Restricted units unvested at beginning of period		511,177		$	28.55
Granted		696,022			35.09
Vested		(50,328	)		28.94
Forfeited		(93,193	)		31.62
Restricted units unvested at end of period		1,063,678		$	32.54