UNIT-BASED COMPENSATION

9 Months Ended

Sep. 30, 2017

UNIT-BASED COMPENSATION

UNIT-BASED COMPENSATION

NOTE 7—UNIT-BASED COMPENSATION

The Partnership’s LTIP authorizes grants of up to 2,041,600 common units in the aggregate to its employees, directors and consultants.  The restricted units issued under our LTIP generally vest in one-third installments on each of the first three anniversaries of the grant date, subject to the grantee’s continuous service through the applicable vesting date. Compensation expense for such awards will be recognized over the term of the service period on a straight-line basis over the requisite service period for the entire award. Management elects not to estimate forfeiture rates and to account for forfeitures in compensation cost when they occur. Compensation expense for consultants will be accrued for services provided during the intervening periods between the grant and vesting dates, utilizing then-current fair values for the awards and applying mark-to-market accounting until actual vesting occurs.

Distributions related to the restricted units are paid concurrently with our distributions for common units. The fair value of our restricted units issued under our LTIP to our employees and directors is determined by utilizing the market value of our common units on the respective grant date. The restricted units issued to non-employee consultants will utilize current market value of our common units for the awards and apply mark-to-market accounting until vesting occurs. The following table presents a summary of the Partnership’s unvested common units.

		Weighted		Weighted		Weighted
		Average		Average		Average
		Grant-Date		Market-Date		Remaining
		Fair Value		Fair Value		Contractual
	Units	per Unit		per Unit		Term
Unvested at February 8, 2017	—	$	—	$	—	—
Granted - service condition employees	143,318		18.655		—	—
Granted - service condition consultants	24,253		—		15.780	—
Granted - non-employee directors	9,520				15.780
Vested	(9,520)		—		—	—
Forfeited	—		—		—	—
Exercised	—		—		—	—
Unvested at September 30, 2017	167,571	$	18.655	$	15.780	1.616 years

Prior to the IPO, the Predecessor had a long-term incentive plan that provided for the issuance of up to 110,000 membership units in the form of options as compensation for services performed for the Predecessor. The options carried a distribution right, whereby the option holder received distributions that were commensurate with those given to holders of membership units.

A summary of the option activity as of February 7, 2017 is as follows:

				Weighted
		Weighted		Average
		Average		Remaining
		Exercise		Contractual
	Units	Price		Term
Outstanding, December 31, 2016 - Predecessor	110,000	$	100	8.00 years
Granted	—		—	—
Forfeited	—		—	—
Exercised	—		—	—
Outstanding, February 7, 2017	110,000	$	100	7.92 years
Exercisable, February 7, 2017	—	$	—	—

For the Predecessor 2017 Period and the nine months ended September 30, 2016, total compensation expense for awards under the Predecessor’s long-term incentive plan was $50,422 and $453,795, respectively, and is included general and administrative expenses in the accompanying unaudited consolidated statements of operations. In connection with the transactions that were completed at the closing of the Partnership’s IPO, the outstanding options to purchase membership units under the Predecessor’s long-term incentive plan expired and were not converted to units in the Partnership.