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Equity-Based Awards

6 Months Ended

Jun. 30, 2019

Note 12. Equity-Based Awards

An allocated portion of the fair value of EPCO’s equity-based awards is charged to us under the ASA. The following table summarizes compensation expense we recognized in connection with equity-based awards for the periods indicated:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2019		2018		2019		2018
Equity-classified awards:
Phantom unit awards	$	35.5	$	25.9	$	64.9	$	50.5
Profits interest awards		3.0		1.0		5.6		2.6
Liability-classified awards		–		0.1		–		0.2
Total	$	38.5	$	27.0	$	70.5	$	53.3

The fair value of equity-classified awards is amortized to earnings over the requisite service or vesting period. Equity-classified awards are expected to result in the issuance of common units upon vesting. Compensation expense for liability-classified awards is recognized over the requisite service or vesting period based on the fair value of the award remeasured at each reporting date. Liability-classified awards are settled in cash upon vesting.

Phantom Unit Awards

Phantom unit awards allow recipients to acquire EPD common units (at no cost to the recipient apart from fulfilling service and other conditions) once a defined vesting period expires, subject to customary forfeiture provisions. The following table presents phantom unit award activity for the period indicated:

	Number of Units			Weighted- Average Grant Date Fair Value per Unit (1)
Phantom unit awards at December 31, 2018		10,333,277		$	26.97
Granted (2)		6,836,920		$	27.75
Vested		(3,561,704	)	$	27.58
Forfeited		(182,095	)	$	27.18
Phantom unit awards at June 30, 2019		13,426,398		$	27.21

(1)	Determined by dividing the aggregate grant date fair value of awards (before an allowance for forfeitures) by the number of awards issued.
(2)	The aggregate grant date fair value of phantom unit awards issued during 2019 was $189.7 million based on a grant date market price of EPD common units ranging from $27.75 to $28.55 per unit. An estimated annual forfeiture rate of 3.0% was applied to these awards.

Each phantom unit award includes a DER, which entitles the recipient to receive cash payments equal to the product of the number of phantom unit awards and the cash distribution per unit paid to EPD’s common unitholders. Cash payments made in connection with DERs are nonforfeitable and charged to partners’ equity when the phantom unit award is expected to result in the issuance of common units; otherwise, such amounts are expensed.

The following table presents supplemental information regarding phantom unit awards for the periods indicated:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2019		2018		2019		2018
Cash payments made in connection with DERs	$	6.0	$	4.7	$	10.5	$	8.6
Total intrinsic value of phantom unit awards that vested during period		4.7		3.1		101.7		85.1

The unrecognized compensation cost associated with phantom unit awards was $209.3 million at June 30, 2019, of which our share of the cost is currently estimated to be $178.2 million. Due to the graded vesting provisions of these awards, we expect to recognize our share of the unrecognized compensation cost for these awards over a weighted-average period of 2.2 years.

Profits Interest Awards

EPCO has established five limited partnerships (referred to as “Employee Partnerships”) that serve as long-term incentive arrangements for key employees of EPCO by providing them a profits interest in one or more of the Employee Partnerships. At June 30, 2019, our share of the total unrecognized compensation cost related to the Employee Partnerships was $30.0 million, which we expect to recognize over a weighted-average period of 3.5 years.