Effective March 15, 2018, the MPLX LP 2012 Incentive Compensation Plan (“MPLX 2012 Plan”) was replaced by the MPLX LP 2018 Incentive Compensation Plan (“MPLX 2018 Plan”). The MPLX 2018 Plan will continue in effect until February 28, 2028, unless terminated earlier. Subject to customary anti-dilution adjustments, the MPLX 2018 Plan allows for no more than 16 million common units representing limited partnership interests in MPLX to be delivered under the plan. The MPLX LP 2012 Plan allowed for no more than 2.75 million MPLX LP common limited partner units to be delivered.

Consistent with the MPLX 2012 Plan, the MPLX 2018 Plan authorizes the MPLX GP board of directors (the “Board”) to grant unit options, unit appreciation rights, restricted units and phantom units, distribution equivalent rights, unit awards, profits interest units, performance units and other unit-based awards to the employees, officers and directors of the General Partner, MPLX, or any of their affiliates, including MPC. Common units delivered pursuant to an award granted under the MPLX 2018 Plan may be newly issued common units or acquired in the open market or from any other person, including an affiliate of MPLX, as determined by the Board.

MPLX expenses all unit-based payments to employees and non-employee directors based on the grant date fair value of the awards over the requisite service period, adjusted for estimated forfeitures.

Phantom Units – MPLX has granted phantom units under the MPLX 2018 Plan and the MPLX 2012 Plan to non-employee directors of MPLX LP’s general partner and of MPC. Awards to non-employee directors are accounted for as non-employee awards. Phantom units granted to non-employee directors vest immediately at the time of the grant, as they are non-forfeitable, but are not issued until the director’s departure from the board of directors. Prior to issuance, non-employee directors do not have the right to

MPLX has granted phantom units under the MPLX 2018 Plan and the MPLX 2012 Plan to certain officers and non-officers of MPLX, MPLX’s general partner and MPC who make significant contributions to our business. These grants are accounted for as employee awards. In general, these phantom units will vest over a requisite service period of up to three years. Prior to vesting, these phantom unit recipients will not have the right to vote such units and cash distributions declared will be accrued and paid upon vesting. The accrued distributions at December 31, 2019 and 2018 were $6 million and $4 million, respectively.

Performance Units – MPLX has granted performance units under the MPLX 2018 Plan and the MPLX 2012 Plan to certain officers of the general partner and certain eligible MPC officers who make significant contributions to our business. Performance units are designed to pay out 75 percent in cash and 25 percent in MPLX common units. The performance units paying out in cash are accounted for as liability awards and recorded at fair value with a mark-to-market adjustment made each quarter. The performance units paying out in units are accounted for as equity awards.

The performance units granted in 2017 are hybrid awards having a three-year performance period of January 1, 2017 through December 31, 2019. The payout of the award is dependent on two independent conditions, each constituting 50 percent of the overall target units granted. The awards have a performance condition based on MPLX’s DCF during the last twelve months of the performance period, and a market condition based on MPLX’s total unitholder return over the entire three-year performance period.

During the first quarter of 2018, a performance award was granted; however, a grant date could not be established based on the nature of the award terms. Given that a grant date cannot be established, no expense or units have been recorded. When a grant date is established, the fair value of the award will be recognized over the remaining service period.

The performance units granted in 2019 are hybrid awards having a three-year performance period of January 1, 2019 through December 31, 2021. The payout of the award is dependent on two independent conditions, each constituting 50 percent of the overall target units granted. The awards have a performance condition based on MPLX’s DCF during the performance period and a market condition based on MPLX’s total unitholder return over the performance period. The market condition was valued using a Monte Carlo valuation, resulting in a grant date fair value of $0.68 per unit for the 2019 equity-classified performance units. Grant date fair value of the performance condition is based on potential payouts per unit of up to $2.00 per unit. Compensation cost associated with the performance condition is based on the grant date fair value of the payout deemed most probable to occur and is adjusted as the expectation for payout changes.



	Phantom Units
	Number of Units		Weighted Average Fair Value		Aggregate Intrinsic Value (In millions)
Outstanding at December 31, 2018	1,154,335		$	34.34
Granted	219,488		32.62
Legacy ANDX phantom units converted to MPLX phantom units at the Merger	208,533		43.64
Settled	(426,451	)	33.84
Forfeited	(46,337	)	33.63
Outstanding at December 31, 2019	1,109,568		35.97
Vested and expected to vest at December 31, 2019	1,104,552		35.98		$	28
Non-forfeitable at December 31, 2019⁽¹⁾	507,471		$	37.32	$	13



	Phantom Units
	Intrinsic Value of Units Issued During the Period (in millions)		Weighted Average Grant Date Fair Value of Units Granted During the Period
2019	$	14	$	32.62
2018	18		33.84
2017	$	15	$	36.26



	Performance Units
	Number of Units		Weighted Average Fair Value
Outstanding at December 31, 2018	1,941,750		$	0.80
Granted	987,994		0.76
Settled	(772,397	)	0.63
Forfeited	—		—
Outstanding at December 31, 2019	2,157,347		$	0.84

As of December 31, 2019, unrecognized compensation cost related to equity-classified performance unit awards was $1 million which is expected to be recognized over a weighted average period of 2.0 years.

Performance units paying out in MPLX common units have a grant date fair value calculated using a Monte Carlo valuation model, which requires the input of subjective assumptions. The following table provides a summary of the weighted average inputs used for these assumptions:



	2019	2018	2017
Risk-free interest rate	2.51%	N/A	1.52%
Look-back period	2.84 years	N/A	2.83 years
Expected volatility	25.01%	N/A	49.34%
Grant date fair value of performance units granted	$0.76	N/A	$0.90

The assumption for expected volatility of our unit price reflects the historical volatility of MPLX common units. The look-back period reflects the remaining performance period at the grant date. The risk-free interest rate for the remaining performance period as of the grant date is based on the U.S. Treasury yield curve in effect at the time of the grant. No grant date fair value has been calculated for performance units granted in 2018, since due to the award terms, a grant date has not yet been established.