Equity-Based Compensation

3 Months Ended

Mar. 31, 2014

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’s common 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 affiliates is total equity-based compensation of $9.8 million and $7.4 million for the three-month periods ended March 31, 2014 and 2013, respectively.

The LTIP provides for an aggregate of 3.5 million 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 March 31, 2014, there was $41.9 million of unrecognized compensation expense attributable to the LTIP, of which $37.0 million is expected to be recognized over a four year period following March 31, 2014.

The following table summarizes LTIP award activity for the three months ended March 31, 2014:


	Units			Value per Unit
Restricted units unvested at beginning of period		1,182,288		$	36.11
Granted		250,949		$	52.91
Vested		(132,771	)	$	33.30
Forfeited		(109,345	)	$	35.19
Restricted units unvested at end of period		1,191,121		$	40.05

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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