10. UNIT-BASED COMPENSATION PLANS

We award unit-based compensation to employees and directors primarily under the Buckeye Partners, L.P. 2013 Long-Term Incentive Plan (the “LTIP”), which was approved by the Partnership’s unitholders in June 2013. The LTIP replaced the 2009 Long-Term Incentive Plan (the “2009 Plan”), which was merged with and into the LTIP, and no further grants will be made under the 2009 Plan. We formerly awarded options to acquire LP Units to employees pursuant to the Buckeye Partners, L.P. Unit Option and Distribution Equivalent Plan (the “Option Plan”).

We recognized compensation expense related to the LTIP, which includes awards under the 2009 Plan, and the Option Plan of $4.0 million and $5.1 million for the three months ended June 30, 2013 and 2012, respectively. For the six months ended June 30, 2013 and 2012, we recognized compensation expense of $7.3 million and $7.7 million, respectively. These compensation plans are discussed below.

LTIP

The LTIP is the successor long-term incentive compensation plan to the 2009 Plan. Following the approval by unitholders of the LTIP, (i) the 2009 Plan was merged with and into the LTIP, (ii) no further grants will be made under the 2009 Plan, and (iii) LP Units with respect to all grants outstanding under the 2009 Plan will be issued under the LTIP. As a result of the merger of the 2009 Plan into the LTIP on June 4, 2013, the LTIP provides for the issuance of up to 3,000,000 LP Units, plus 889,491 LP Units subject to outstanding grants under the 2009 Plan and 193,913 LP Units that remained available for issuance under the 2009 Plan. Therefore, as of June 30, 2013, there were 3,207,094 LP Units available for issuance under the LTIP.

Deferral Plan under the LTIP

We also maintain the Buckeye Partners, L.P. Unit Deferral and Incentive Plan (the “Deferral Plan”), pursuant to which we issue phantom and matching units under the LTIP to certain employees in lieu of a portion of the cash payments such employees would be entitled to receive under our Annual Incentive Compensation Plan. At December 31, 2012 and 2011, actual compensation awards deferred under the Deferral Plan were $1.4 million and $0.7 million, for which 51,668 and 23,426 phantom units (including matching units) were granted during the six months ended June 30, 2013, and the year ended 2012, respectively. These grants are included as granted in the LTIP activity table below.

Awards under the LTIP

During the six months ended June 30, 2013, the Compensation Committee granted 185,497 phantom units to employees (including the 51,668 phantom units granted as discussed above), 14,000 phantom units to independent directors of Buckeye GP and 169,735 performance units to employees.

The following table sets forth the LTIP activity for the periods indicated (in thousands, except per unit amounts):

			Weighted
			Average
			Grant Date
	Number of		Fair Value
	LP Units		per LP Unit
Unvested at January 1, 2013	745		$	62.08
Granted	406		53.62
Vested	(222	)	56.90
Forfeited	(58	)	59.15
Unvested at June 30, 2013	871		$	59.66

At June 30, 2013, approximately $27.0 million of compensation expense related to the LTIP is expected to be recognized over a weighted average period of approximately 2.0 years.

Unit Option and Distribution Equivalent Plan

The following is a summary of the changes in the options outstanding (all of which are vested) under the Option Plan for the periods indicated (in thousands, except per unit amounts):

					Weighted
			Weighted		Average
			Average		Remaining	Aggregate
	Number of		Strike Price		Contractual	Intrinsic
	LP Units		per LP Unit		Term (in years)	Value (1)
Outstanding at January 1, 2013	74		$	47.19	3.3	$	35
Exercised	(22	)	47.56
Outstanding at June 30, 2013	52		47.04		2.8	$	1,207

Exercisable at June 30, 2013	52		$	47.04	2.8	$	1,207

(1) Aggregate intrinsic value reflects fully vested LP Unit options at the date indicated. Intrinsic value is determined by calculating the difference between our closing LP Unit price on the last trading day in June 2013 and the exercise price, multiplied by the number of exercisable, in-the-money options.

The total intrinsic value of options exercised was $0.4 million and $0.3 million during the six months ended June 30, 2013 and 2012, respectively.