Equity-Based Awards

3 Months Ended

Mar. 31, 2024

Equity-based Awards [Abstract]

Equity-based Awards

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 March 31,
	2024		2023
Equity-classified awards:
Phantom unit awards	$	46	$	40
Profits interest awards		10		1
Total	$	56	$	41

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 the Partnership’s common units upon vesting.  

Phantom Unit Awards

Subject to customary forfeiture provisions, phantom unit awards allow recipients to acquire the Partnership’s common units once a defined vesting period expires (at no cost to the recipient apart from fulfilling required service and other conditions).  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, 2023		19,557,251		$	24.47
Granted (2)		8,866,820		$	26.25
Vested		(6,871,756	)	$	24.47
Forfeited		(71,079	)	$	25.23
Phantom unit awards at March 31, 2024		21,481,236		$	25.21

(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 2024 was $233 million based on a grant date market price of the Partnership’s common units of $26.25 per unit.  An estimated annual forfeiture rate of 2.0% was applied to these awards.

Each phantom unit award includes a DER, which entitles the participant to nonforfeitable cash payments equal to the product of the number of phantom unit awards outstanding for the participant and the cash distribution per common unit paid by the Partnership to its common unitholders.  Cash payments made in connection with DERs are 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 March 31,
	2024		2023
Cash payments made in connection with DERs	$	10	$	9
Total intrinsic value of phantom unit awards that vested during period		187		171

For the EPCO group of companies, the unrecognized compensation cost associated with phantom unit awards was $349 million at March 31, 2024, of which our share of such cost is currently estimated to be $289 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 2.4 years.

Profits Interest Awards

As of January 1, 2024, EPCO had two limited partnerships (referred to as “Employee Partnerships”) that served as long-term incentive arrangements for key employees of EPCO by providing them profits interest awards (or Class B limited partner interests) in one or more of the Employee Partnerships.

The Class B limited partner interests of these two Employee Partnerships vested on March 26, 2024 when the closing market price of the Partnership’s common units exceeded $29.02 per unit.  As a result of these vesting events, we recognized an incremental $7 million of non-cash compensation expense in the three months ended March 31, 2024.