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EQUITY-BASED COMPENSATION
6 Months Ended
Jun. 30, 2014
EQUITY-BASED COMPENSATION
15. EQUITY-BASED COMPENSATION

The Partnership has granted equity-based compensation awards to Blackstone’s senior managing directors, non-partner professionals, non-professionals and selected external advisers under the Partnership’s 2007 Equity Incentive Plan (the “Equity Plan”), the majority of which to date were granted in connection with Blackstone’s initial public offering (“IPO”). The Equity Plan allows for the granting of options, unit appreciation rights or other unit-based awards (units, restricted units, restricted common units, deferred restricted common units, phantom restricted common units or other unit-based awards based in whole or in part on the fair value of the Blackstone common units or Blackstone Holdings Partnership Units) which may contain certain service or performance requirements. As of January 1, 2014, the Partnership had the ability to grant 164,224,426 units under the Equity Plan.

For the three and six months ended June 30, 2014, the Partnership recorded compensation expense of $186.9 million and $381.6 million, respectively, in relation to its equity-based awards with corresponding tax benefits of $6.4 million and $13.6 million, respectively. For the three and six months ended June 30, 2013, the Partnership recorded compensation expense of $183.2 million and $378.6 million, respectively, in relation to its equity-based awards with corresponding tax benefits of $6.2 million and $11.7 million, respectively. As of June 30, 2014, there was $943.1 million of estimated unrecognized compensation expense related to unvested awards. This cost is expected to be recognized over a weighted-average period of 1.6 years.

Total vested and unvested outstanding units, including Blackstone common units, Blackstone Holdings Partnership Units and deferred restricted common units, were 1,153,326,805 as of June 30, 2014. Total outstanding unvested phantom units were 74,414 as of June 30, 2014.

A summary of the status of the Partnership’s unvested equity-based awards as of June 30, 2014 and of changes during the period January 1, 2014 through June 30, 2014 is presented below:

 

    Blackstone Holdings     The Blackstone Group L.P.  
                Equity Settled Awards     Cash Settled Awards  

Unvested Units

  Partnership
Units
    Weighted-
Average
Grant
Date Fair
Value
    Deferred
Restricted
Common
Units and
Options
    Weighted-
Average
Grant
Date Fair
Value
    Phantom
Units
    Weighted-
Average
Grant
Date Fair
Value
 

Balance, December 31, 2013

    48,057,816      $ 26.64        20,004,139      $ 15.57        147,169      $ 12.00   

Granted

    555,917        31.48        830,022        27.02        461        28.05   

Vested

    (17,318,368     29.88        (3,121,112     19.00        (72,646     11.82   

Forfeited

    (324,557     19.63        (459,095     13.94        (570     33.41   
 

 

 

     

 

 

     

 

 

   

Balance, June 30, 2014

    30,970,808      $ 24.99        17,253,954      $ 15.55        74,414      $ 12.29   
 

 

 

     

 

 

     

 

 

   

 

Units Expected to Vest

The following unvested units, after expected forfeitures, as of June 30, 2014, are expected to vest:

 

     Units      Weighted-Average
Service Period in
Years
 

Blackstone Holdings Partnership Units

     28,002,135         1.7   

Deferred Restricted Blackstone Common Units

     14,750,278         2.1   
  

 

 

    

 

 

 

Total Equity-Based Awards

     42,752,413         1.8   
  

 

 

    

 

 

 

Phantom Units

     75,514         0.05   
  

 

 

    

 

 

 

Equity-Based Awards with Performance Conditions

The Partnership has also granted certain equity-based awards with performance requirements. These awards are based on the performance of certain businesses over a three to five year period beginning January 2012, relative to a predetermined threshold. Blackstone has determined that it is probable that the relevant performance thresholds will be exceeded in future periods and, therefore, has recorded compensation expense since the beginning of the performance period of $79.1 million.