Long-Term Incentive Plan

Plan Description

We have a long-term incentive plan (“LTIP”) covering certain of our employees and independent directors of our general partner. The LTIP primarily consists of phantom units and permits the grant of awards covering an aggregate of 9.4 million of our limited partner units. The estimated units available under the LTIP at December 31, 2015 total 1.0 million. The compensation committee of our general partner's board of directors administers our LTIP.

Under our LTIP, the compensation committee has granted performance-based and time-based phantom unit awards. Time-based awards are subject to forfeiture by a participant if their employment is terminated for any reason other than retirement, death or disability prior to the vesting date. In addition, there are certain other employment restrictions that can result in the forfeiture of these awards. Performance-based awards are subject to forfeiture by a participant if their employment is terminated for any reason other than retirement, death or disability prior to the vesting date or for a termination within two years of a change-in-control that occurs on an involuntary basis without cause or on a voluntary basis for good cause. If a performance-based or time-based award recipient retires, dies or becomes disabled prior to the end of the vesting period, the recipient's award will be prorated based upon the completed months of employment during the vesting period, and the award will be settled shortly after the end of the vesting period. Our agreement with the award participants requires these awards to be paid in our limited partner units. Award grants under our LTIP do not have an early vesting feature except for the performance-based and time-based awards issued to our executive officers, which can vest early under certain circumstances following a change in control of our general partner.

For performance-based phantom unit awards issued prior to 2014, we based the payout calculation for 80% of the award solely on the attainment of a financial metric established by the compensation committee. We accounted for this portion of these award grants as equity. The payout calculation for the remaining 20% of the unit awards was based on both the attainment of a financial metric and the individual employee's personal performance as determined by the compensation committee. We accounted for this portion of these award grants as a liability.

The payout for the performance-based phantom unit awards issued in 2014 and 2015 is subject to the attainment of a financial metric and a market performance adjustment, with no individual employee personal performance component. The payout of the performance-based awards is based on our actual distributable cash flow excluding commodity-related activities for the last year of the 3-year vesting period as compared against established threshold, target and stretch goals. The payouts for the performance-related component of the award can range from 0% for below threshold results, up to 200% for actual results at stretch or above. The market performance adjustment component of the awards is based on our total unitholder return over the 3-year vesting period of the award in relation to the total unitholder returns of certain peer entities and can increase or decrease the calculated performance-based payout of the award by as much as 50%. We account for these awards as equity.

The payout for the time-based phantom unit awards that have been granted by the compensation committee is subject only to the participant's continued employment with us. We account for these award grants as equity.

Non-Vested Unit Awards

The following table includes the changes during the current fiscal year in the number of non-vested units that have been granted by the compensation committee. The amounts below include no adjustments for above-target or below-target performance and forfeitures are actual amounts through December 31, 2015.



	Equity Method								Liability Method Performance-Based Awards
	Performance-Based Awards				Time-Based Awards				Liability Method Performance-Based Awards				Total Awards
	Number of Unit Awards		Weighted-Average Grant Date Fair Value		Number of Unit Awards		Weighted-Average Grant Date Fair Value		Number of Unit Awards		Weighted-Average Fair Value		Number of Unit Awards		Weighted-Average Fair Value
Non-vested units - 1/1/2015	350,317		$	62.85	46,668		$	76.99	40,878		$	82.66	437,863		$	66.21
Units granted during 2015	148,028		$	88.78	26,421		$	81.51	—		$	—	174,449		$	87.68
Units vested during 2015	(161,898	)	$	51.42	(444	)	$	56.42	(40,470	)	$	67.92	(202,812	)	$	54.73
Units forfeited during 2015	(23,207	)	$	81.28	(14,963	)	$	67.41	(408	)	$	67.92	(38,578	)	$	75.76
Non-vested units - 12/31/15	313,240		$	79.64	57,682		$	81.74	—		$	—	370,922		$	79.97

The table below summarizes the total non-vested unit awards granted by the compensation committee adjusted for units we estimate will be forfeited by the end of the vesting period and for estimated amounts of above-target financial performance to determine the total number of unit awards included in our total equity-based liability accrual.



Grant Date	Unit Awards Granted	Estimated Forfeitures	Adjustment to Unit Awards in Anticipation of Achieving Above- Target Financial Results	Total Unit Award Accrual	Vesting Date	Unrecognized Compensation Expense^(a) (in millions)
Performance-Based Awards:
2014 Awards	187,371	21,662	124,283	289,992	12/31/2016	$	7.0
2015 Awards	148,028	15,105	33,232	166,155	12/31/2017	9.8
Time-Based Awards:
2016 Vesting Date	20,757	12,121	—	8,636	12/31/2016	0.2
2017 Vesting Date	51,859	4,612	—	47,247	12/31/2017	2.6
Total	408,015	53,500	157,515	512,030		$	19.6

(a) Unrecognized compensation expense will be recognized over the remaining vesting period of the awards.

Weighted-Average Grant Date Fair Values

The weighted-average grant-date fair value of award grants issued during 2013, 2014 and 2015 were as follows:



	Equity Method
	Performance-Based Awards			Time-Based Awards			Liability Method Performance-Based Awards
	Number of Unit Awards	Weighted-Average Grant Date Fair Value		Number of Unit Awards	Weighted-Average Grant Date Fair Value		Number of Unit Awards	Weighted-Average Fair Value
Units granted during 2013	182,798	$	51.49	22,668	$	53.02	45,700	$	51.49
Units granted during 2014	187,371	$	72.77	33,903	$	82.86	—	$	—
Units granted during 2015	148,028	$	88.78	26,421	$	81.51	—	$	—

Vested Unit Awards

The table below sets forth the numbers and values of units that vested in each of the three years ended December 31, 2015. The vested limited partner units include adjustments for above-target performance.



Vesting Date	Vested Limited Partner Units	Fair Value of Unit Awards on Vesting Date (in millions)	Intrinsic Value of Unit Awards on Vesting Date (in millions)
12/31/2013	572,353	$20.5	$36.2
12/31/2014	528,984	$22.4	$43.7
12/31/2015	506,393	$27.7	$34.4

Cash Flow Effects of LTIP Settlements

We settle awards that vest by issuing limited partner units. The difference between the limited partner units issued to the participants and the total units accrued represents the minimum tax withholdings associated with the award settlement, which we pay in cash.



Settlement Date	Number of Limited Partner Units Issued, Net of Tax Withholdings	Minimum Tax Withholdings (in millions)	Employer Taxes (in millions)	Total Cash Taxes Paid (in millions)
January 2013	476,682	$12.3	$1.1	$13.4
January 2014	387,216	$14.8	$1.2	$16.0
January 2015	354,529	$17.8	$1.7	$19.5

Compensation Expense Summary

Equity-based incentive compensation expense for 2013, 2014 and 2015 was as follows (in thousands):



	Year Ended December 31, 2013						Year Ended December 31, 2014						Year Ended December 31, 2015
	Equity Method		Liability Method		Total		Equity Method		Liability Method		Total		Equity Method		Liability Method		Total
2010 awards	$	121	$	73	$	194	$	—	$	—	$	—	$	—	$	—	$	—
2011 awards	5,359		4,280		9,639		—		—		—		—		—		—
2012 awards	4,751		2,747		7,498		4,418		3,896		8,314		—		—		—
2013 awards	4,726		1,451		6,177		7,427		3,425		10,852		8,661		1,997		10,658
2014 awards	—		—		—		6,494		—		6,494		7,471		—		7,471
2015 awards	—		—		—		—		—		—		4,917		—		4,917
Time-based awards	575		—		575		1,624		—		1,624		1,199		—		1,199
Total	$	15,532	$	8,551	$	24,083	$	19,963	$	7,321	$	27,284	$	22,248	$	1,997	$	24,245

Allocation of LTIP expense on our consolidated statements of income:
G&A expense					$	23,264					$	26,700					$	23,937
Operating expense					819						584						308
Total					$	24,083					$	27,284					$	24,245