Equity-Based Compensation

9 Months Ended

Sep. 30, 2014

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Equity-Based Compensation

5. Equity-Based Compensation

Certain employees of the 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 (“MICP”), 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.  As a result of the Williams Acquisition, both components of the MICP vested on July 1, 2014, resulting in total cash payments to MICP participants of $88.8 million and compensation expense of $41.1 million during the three-month period ended September 30, 2014.  

Included in operating expense, general and administrative expense, and income from unconsolidated affiliates is total equity-based compensation of $83.6 million and $5.8 million for the three-month periods ended September 30, 2014 and 2013, respectively.  Included in operating expense, general and administrative expense, and income from unconsolidated affiliates is equity-based compensation of $107.4 million and $22.2 million for the nine-month periods ended September 30, 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 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 a result of the Williams Acquisition, all unit awards outstanding under the LTIP at June 30, 2014, vested on July 1, 2014, resulting in total compensation expense of $38.5 million.  On July 16, 2014, the Partnership issued to certain key employees, equity retention awards that have various vesting periods between one and four years.  As of September 30, 2014, there was $45.8 million of unrecognized compensation expense attributable to the LTIP, of which $41.0 million is expected to be recognized over a period of one to four years following September 30, 2014.  

The following table summarizes LTIP award activity for the nine-month period ended September 30, 2014:

	Units			Value per Unit
Restricted units unvested at beginning of period		1,182,288		$	36.11
Granted		1,094,466		$	61.31
Vested		(882,784	)	$	39.53
Forfeited		(599,969	)	$	40.53
Restricted units unvested at end of period		794,001		$	63.70