Common Stock and Equity-Based Compensation

Common Stock

On January 30, 2014, the Company’s Board of Directors authorized the repurchase of up to 15,000,000 shares of UGI Corporation Common Stock over a four-year period. Pursuant to such authorization, during Fiscal 2015 and Fiscal 2014, the Company purchased and placed in treasury stock 1,000,000 and 1,227,654 shares at a total cost of $34.1 and $39.8, respectively.

UGI Common Stock share activity for Fiscal 2013, Fiscal 2014 and Fiscal 2015 follows:



	Issued	Treasury		Outstanding
Balance, September 30, 2012	173,436,891	(4,506,259	)	168,930,632
Issued:
Employee and director plans	238,800	3,933,507		4,172,307
Dividend reinvestment plan	—	93,253		93,253
Shares reacquired - employee and director plans	—	(1,552,905	)	(1,552,905	)
Balance, September 30, 2013	173,675,691	(2,032,404	)	171,643,287
Issued:
Employee and director plans	94,950	2,928,140		3,023,090
Repurchases of Common Stock	—	(1,227,654	)	(1,227,654	)
Shares reacquired - employee and director plans	—	(1,164,942	)	(1,164,942	)
Balance, September 30, 2014	173,770,641	(1,496,860	)	172,273,781
Issued:
Employee and director plans	36,350	1,155,376		1,191,726
Repurchases of Common Stock	—	(1,000,000	)	(1,000,000	)
Shares reacquired - employee and director plans	—	(77,004	)	(77,004	)
Balance, September 30, 2015	173,806,991	(1,418,488	)	172,388,503

Equity-Based Compensation

The Company grants equity-based awards to employees and non-employee directors comprising UGI stock options, UGI Common stock-based equity instruments and AmeriGas Partners Common Unit-based equity instruments as further described below. We recognized total pre-tax equity-based compensation expense of $29.2 ($18.9 after-tax), $25.8 ($16.6 after-tax) and $17.6 ($11.4 after-tax) in Fiscal 2015, Fiscal 2014 and Fiscal 2013, respectively.

UGI Equity-Based Compensation Plans and Awards. On January 24, 2013, the Company’s shareholders approved the UGI Corporation 2013 Omnibus Incentive Compensation Plan (the “2013 OICP”). The 2013 OICP succeeds the UGI Corporation 2004 Omnibus Equity Compensation Plan Amended and Restated as of December 5, 2006 (the “2004 OECP”) for awards granted on or after January 24, 2013. The 2004 OECP will continue in effect but all future grants issued pursuant to it will be solely in the form of options to acquire Common Stock. Under the 2013 OICP, we may grant options to acquire shares of UGI Common Stock, stock appreciation rights (“SARs”), UGI Units (comprising “Stock Units” and “UGI Performance Units”), other equity-based awards and cash to employees and non-employee directors. The exercise price for options may not be less than the fair market value on the grant date. Awards granted under the 2013 OICP may vest immediately or ratably over a period of years, and stock options can be exercised no later than ten years from the grant date. In addition, the 2013 OICP provides that awards of UGI Units may also provide for the crediting of dividend equivalents to participants’ accounts. Except in the event of retirement, death or disability, each grant, unless paid, will terminate when the participant ceases to be employed. There are certain change of control and retirement eligibility conditions that, if met, generally result in accelerated vesting or elimination of further service requirements.

Under the 2004 OECP, we could grant options to acquire shares of UGI Common Stock, UGI Units and other equity-based awards to employees and non-employee directors through January 23, 2013 (except with respect to the granting of stock option awards as previously mentioned). Under the 2004 OECP, the exercise price for stock options could not be less than the fair market value on the grant date. Awards granted under the 2004 OECP could vest immediately or ratably over a period of years, and stock options could be exercised no later than ten years from the date of grant. In addition, the 2004 OECP provided that the awards of UGI Units could include the crediting of dividend equivalents to participants’ accounts.

Under the 2013 OICP, awards representing up to 21,750,000 shares of UGI Common Stock may be granted. Dividend equivalents on UGI Unit awards to employees will be paid in cash. Dividend equivalents on non-employee director awards are accumulated in additional Stock Units. UGI Unit awards granted to employees and non-employee directors are settled in shares of Common Stock and cash. Substantially all UGI Unit awards granted to UGI France employees are settled in shares of Common Stock and do not accrue dividend equivalents. With respect to UGI Performance Unit awards, the actual number of shares (or their cash equivalent) ultimately issued, and the actual amount of dividend equivalents paid, is generally dependent upon the achievement of market performance goals and service conditions. It is currently our practice to issue treasury shares to satisfy substantially all option exercises and UGI Unit awards. Stock options may be net exercised whereby shares equal to the option price and the grantee’s minimum applicable payroll tax withholding are withheld from the number of shares payable (“net exercise”). We record shares withheld pursuant to a net exercise as shares reacquired.

UGI Stock Option Awards. Stock option transactions under equity-based compensation plans during Fiscal 2013, Fiscal 2014 and Fiscal 2015 follow:



	Shares		Weighted Average Option Price		Total Intrinsic Value		Weighted Average Contract Term (Years)
Shares under option — September 30, 2012	12,086,658		$	17.75	$	41.4	6.1
Granted	2,275,350		$	22.38
Canceled	(134,754	)	$	20.34
Exercised	(4,033,302	)	$	16.39	$	35.4
Shares under option — September 30, 2013	10,193,952		$	19.28	$	69.6	6.8
Granted	1,665,600		$	27.93
Canceled	(86,707	)	$	22.76
Exercised	(2,815,555	)	$	17.44	$	37.4
Shares under option — September 30, 2014	8,957,290		$	21.44	$	113.3	7.0
Granted	1,336,985		$	37.70
Canceled	(85,365	)	$	30.45
Exercised	(953,533	)	$	19.10	$	15.4
Shares under option — September 30, 2015	9,255,377		$	23.97	$	104.5	6.6
Options exercisable — September 30, 2013	5,871,091		$	17.95
Options exercisable — September 30, 2014	5,073,347		$	19.45
Options exercisable — September 30, 2015	6,050,946		$	20.74	$	85.4	5.8
Options not exercisable — September 30, 2015	3,204,431		$	30.05	$	19.1	8.3

Cash received from stock option exercises and associated tax benefits were $16.2 and $5.8, $22.2 and $13.0, and $30.8 and $12.1 in Fiscal 2015, Fiscal 2014 and Fiscal 2013, respectively. As of September 30, 2015, there was $5.2 of unrecognized compensation cost associated with unvested stock options that is expected to be recognized over a weighted-average period of 1.9 years.

The following table presents additional information relating to stock options outstanding and exercisable at September 30, 2015:



	Range of exercise prices
	Under $20.00		$20.01 - $25.00		$25.01 - $30.00		Over $30.00
Options outstanding at September 30, 2015:
Number of options	2,956,873		3,178,416		1,713,903		1,406,185
Weighted average remaining contractual life (in years)	4.9		6.3		8.1		9.2
Weighted average exercise price	$	18.21	$	21.47	$	27.46	$	37.45
Options exercisable at September 30, 2015:
Number of options	2,835,673		2,475,420		634,602		105,251
Weighted average exercise price	$	18.15	$	21.38	$	27.29	$	35.93

UGI Stock Option Fair Value Information. The per share weighted-average fair value of stock options granted under our option plans was $5.47 in Fiscal 2015, $4.97 in Fiscal 2014 and $3.29 in Fiscal 2013. These amounts were determined using a Black-Scholes option pricing model which values options based on the stock price at the grant date, the expected life of the option, the estimated volatility of the stock, expected dividend payments and the risk-free interest rate over the expected life of the option. The expected life of option awards represents the period of time during which option grants are expected to be outstanding and is derived from historical exercise patterns. Expected volatility is based on historical volatility of the price of UGI’s Common Stock. Expected dividend yield is based on historical UGI dividend rates. The risk free interest rate is based on U.S. Treasury bonds with terms comparable to the options in effect on the date of grant.

The assumptions we used for valuing option grants during Fiscal 2015, Fiscal 2014 and Fiscal 2013 are as follows:



	2015	2014	2013
Expected life of option	5.75 years	5.75 years	5.75 years
Weighted average volatility	19.5%	24.3%	24.9%
Weighted average dividend yield	2.5%	2.9%	3.6%
Expected volatility	19.1% -19.5%	23.7% - 24.4%	24.4% - 24.9%
Expected dividend yield	2.5%	2.7% - 2.9%	3.2% - 3.7%
Risk free rate	1.5% - 1.8%	1.8% - 2.0%	0.8% - 1.7%

UGI Unit Awards. UGI Stock Unit and UGI Performance Unit awards entitle the grantee to shares of UGI Common Stock or cash once the service condition is met and, with respect to UGI Performance Unit awards, subject to market performance conditions. UGI Performance Unit grant recipients are awarded a target number of Performance Units. The number of UGI Performance Units ultimately paid at the end of the performance period (generally three years) may be higher or lower than the target amount, or even zero, based on UGI’s Total Shareholder Return (“TSR”) percentile rank relative to (i) companies in the Standard & Poor’s Utilities Index for grants prior to January 1, 2011 and (ii) the Russell Midcap Utility Index, excluding telecommunication companies, for grants on or after January 1, 2011 (each a respective “UGI comparator group”). For grants issued on or after January 1, 2013, grantees may receive 0% to 200% of the target award granted. For such grants, if UGI’s TSR ranks below the 25th percentile compared to the UGI comparator group, the employee will not be paid. At the 25th percentile, the employee will be paid an award equal to 25% of the target award; at the 40th percentile, 70%; at the 50th percentile, 100%; and at the 90th percentile and above, 200%. For grants issued prior to January 1, 2013, grantees may receive 0% to 200% of the target award granted. For such grants, if UGI’s TSR ranks below the 40th percentile compared to the UGI comparator group, the employee will not be paid. At the 40th percentile, the employee will be paid an award equal to 50% of the target award; at the 50th percentile, 100%; and at the 100th percentile, 200%. The actual amount of the award is interpolated between these percentile rankings. Dividend equivalents are paid in cash only on UGI Performance Units that eventually vest.

The fair value of UGI Stock Units on the grant date is equal to the market price of UGI Stock on the grant date plus the fair value of dividend equivalents if applicable. Under GAAP, UGI Performance Units are equity awards with a market-based condition which, if settled in shares, results in the recognition of compensation cost over the requisite employee service period regardless of whether the market-based condition is satisfied. The fair values of UGI Performance Units are estimated using a Monte Carlo valuation model. The fair value associated with the target award is accounted for as equity and the fair value of the award over the target, as well as all dividend equivalents, is accounted for as a liability. The expected term of the UGI Performance Unit awards is three years based on the performance period. Expected volatility is based on the historical volatility of UGI Common Stock over a three-year period. The risk-free interest rate is based on the yields on U.S. Treasury bonds at the time of grant. Volatility for all companies in the UGI comparator groups is based on historical volatility.

The following table summarizes the weighted average assumptions used to determine the fair value of UGI Performance Unit awards and related compensation costs:



	Grants Awarded in Fiscal
	2015		2014		2013
Risk free rate	1.1	%	0.8	%	0.4	%
Expected life	3 years		3 years		3 years
Expected volatility	15.9	%	20.3	%	21.1	%
Dividend yield	2.3	%	2.7	%	3.3	%

The weighted-average grant date fair value of UGI Performance Unit awards was estimated to be $38.43 for Units granted in Fiscal 2015, $32.32 for Units granted in Fiscal 2014 and $25.31 for Units granted in Fiscal 2013.

The following table summarizes UGI Unit award activity for Fiscal 2015:



	Total				Vested				Non-Vested
	Number of UGI Units		Weighted Average Grant Date Fair Value (per Unit)		Number of UGI Units		Weighted Average Grant Date Fair Value (per Unit)		Number of UGI Units		Weighted Average Grant Date Fair Value (per Unit)
September 30, 2014	1,306,181		$	20.58	781,231		$	16.60	524,950		$	26.51
UGI Performance Units:
Granted	140,923		$	38.43	22,942		$	38.51	117,981		$	38.41
Forfeited	(18,144	)	$	30.16	—		$	—	(18,144	)	$	30.16
Vested	—		$	—	290,678		$	24.60	(290,678	)	$	24.60
Unit awards paid	(263,966	)	$	19.10	(263,966	)	$	19.10	—		$	—
UGI Stock Units:
Granted (a)	39,801		$	37.39	38,101		$	37.37	1,700		$	37.75
Forfeited	(1,125	)	$	29.84	—		$	—	(1,125	)	$	29.84
Vested	—		$	—	2,250		$	22.86	(2,250	)	$	22.86
Unit awards paid	(67,419	)	$	17.04	(67,419	)	$	17.04	—		$	—
September 30, 2015	1,136,251		$	23.78	803,817		$	20.19	332,434		$	32.28


(a)	Generally, shares granted under UGI Stock Unit awards are paid approximately 70% in shares. UGI Stock Unit awards granted in Fiscal 2014 and Fiscal 2013 were 44,814 and 51,038, respectively.

During Fiscal 2015, Fiscal 2014 and Fiscal 2013, the Company paid UGI Performance Unit and UGI Stock Unit awards in shares and cash as follows:



	2015		2014		2013
UGI Performance Unit awards:
Number of original awards granted	294,300		331,038		328,025
Fiscal year granted	2012		2011		2010
Payment of awards:
Shares of UGI Common Stock issued	188,418		174,168		97,622
Cash paid	$	13.3	$	3.1	$	1.6
UGI Stock Unit awards:
Number of original awards granted	67,419		34,639		54,269
Payment of awards:
Shares of UGI Common Stock issued	44,034		22,604		35,274
Cash paid	$	0.8	$	0.4	$	0.5

During Fiscal 2015, Fiscal 2014 and Fiscal 2013, we granted UGI Unit awards representing 180,724, 234,264 and 381,900 shares, respectively, having weighted-average grant date fair values per Unit of $38.20, $31.38 and $24.87, respectively.

As of September 30, 2015, there was a total of approximately $6.9 of unrecognized compensation cost associated with 1,136,251 UGI Unit awards outstanding that is expected to be recognized over a weighted-average period of 1.7 years. The total fair values of UGI Units that vested during Fiscal 2015, Fiscal 2014 and Fiscal 2013 were $15.3, $8.7 and $6.0, respectively. As of September 30, 2015 and 2014, total liabilities of $19.9 and $18.5, respectively, associated with UGI Unit awards are reflected in employee compensation and benefits accrued and other noncurrent liabilities in the Consolidated Balance Sheets.

At September 30, 2015, 15,528,898 shares of Common Stock were available for future grants under the 2013 OICP, and up to 34,774 shares of Common Stock were available for future grants of stock options under the 2004 OECP.

AmeriGas Partners Equity-Based Compensation Plans and Awards. Under the AmeriGas Propane, Inc. 2010 Long-Term Incentive Plan on Behalf of AmeriGas Partners, L.P. (“2010 Propane Plan”), the General Partner may award to employees and non-employee directors grants of AmeriGas Partners Units (comprising “AmeriGas Stock Units” and “AmeriGas Performance Units”), options, phantom units, unit appreciation rights and other Common Unit-based awards. The total aggregate number of Common Units that may be issued under the 2010 Propane Plan is 2,800,000. The exercise price for options may not be less than the fair market value on the date of grant. Awards granted under the 2010 Propane Plan may vest immediately or ratably over a period of years, and options can be exercised no later than ten years from the grant date. In addition, the 2010 Propane Plan provides that Common Unit-based awards may also provide for the crediting of Common Unit distribution equivalents to participants’ accounts.

AmeriGas Stock Unit and AmeriGas Performance Unit awards entitle the grantee to AmeriGas Partners Common Units or cash once the service condition is met and, with respect to AmeriGas Performance Units, subject to market performance conditions, and for certain awards granted in January 2015, actual net customer acquisition and retention performance. Recipients of AmeriGas Performance Unit awards are awarded a target number of AmeriGas Performance Units. The number of AmeriGas Performance Units ultimately paid at the end of the performance period (generally three years) may be higher or lower than the target number, or it may be zero. For that portion of Performance Unit awards whose ultimate payout is based upon market-based conditions (as further described below), the number of awards ultimately paid is based upon AmeriGas Partners’ Total Unitholder Return (“TUR”) percentile rank relative to entities in a master limited partnership peer group (“Alerian MLP Group”) and, for certain AmeriGas Performance Unit awards granted beginning in January 2014, based upon AmeriGas Partners’ TUR relative to the two other publicly traded propane master limited partnerships in the Alerian MLP Group (“Propane MLP Group”). For Performance Unit awards granted in January 2015, the number of AmeriGas Performance Units ultimately paid is based upon AmeriGas Partner’s TUR percentile rank relative to entities in the Alerian MLP Group as modified by AmeriGas Partners’ performance relative to the Propane MLP Group.

With respect to AmeriGas Performance Unit awards subject to measurement compared with the Alerian MLP Group, grantees may receive from 0% to 200% of the target award granted. For grants issued before January 1, 2013, grantees of AmeriGas Performance Units will not be paid if AmeriGas Partners’ TUR is below the 40th percentile of the Alerian MLP Group. At the 40th percentile, the grantee will be paid an award equal to 50% of the target award; at the 50th percentile, 100%; at the 60th percentile, 125%; at the 75th percentile, 150%; at the 90th percentile, 175%; and at the 100th percentile, 200%. The actual amount of the award is interpolated between these percentile rankings. For such grants issued on or after January 1, 2013, if AmeriGas Partners’ TUR is below the 25th percentile compared to the peer group, the grantee will not be paid. At the 25th percentile, the employee will be paid an award equal to 25% of the target award; at the 40th percentile, 70%; at the 50th percentile, 100%; at the 60th percentile, 125%; at the 75th percentile, 162.5%; and at the 90th percentile or above, 200%. For such grants issued in January 2015, the amount ultimately paid shall be modified based upon AmeriGas Partners’ TUR ranking relative to the Propane MLP Group over the performance period (“MLP Modifier”). Such modification ranges from 70% to 130%, but in no event shall the amount ultimately paid, after such modification, exceed 200% of the target award grant.

With respect to AmeriGas Performance Unit awards granted in January 2014 subject to measurement compared with the Propane MLP Group, grantees will receive 150% of the target award if AmeriGas Partners’ TUR exceeds the TUR of all the other members in the Propane MLP Group. Otherwise there will be no payout of such AmeriGas Performance Units. If one of the other two members of the Propane MLP Group ceases to exist as a publicly traded company or declares bankruptcy (“MLP Event”) and depending upon the timing of such MLP Event, the ultimate amount of such AmeriGas Performance Unit awards to be issued pursuant to the January 2014 grant, and the amount of distribution equivalents to be paid, will depend upon AmeriGas Partners’ TUR rank relative to (1) the Alerian MLP Group for the entire performance period; (2) the Alerian MLP Group for the entire performance period and the Propane MLP Group (through the date of the MLP Event); or (3) the Propane MLP Group through the date of the MLP Event. For those performance awards granted in January 2015 that are subject to the MLP Modifier, if an MLP Event were to occur during the performance period such MLP Modifier would be based upon AmeriGas Partners’ TUR rank as determined in (1),(2) or (3) above, as appropriate.

With respect to AmeriGas Performance Unit awards granted in January 2015 whose payout is based upon net customer gain and retention performance, grantees may ultimately receive between 0% and 200% of the target award based upon the annual actual net customer gain and retention performance as adjusted for the net customer gain and retention performance over the three-year performance period.

Any Common Unit distribution equivalents earned are paid in cash. Generally, except in the event of retirement, death or disability, each grant, unless paid, will terminate when the participant ceases to be employed by the General Partner. There are certain change of control and retirement eligibility conditions that, if met, generally result in accelerated vesting or elimination of further service requirements.

Under GAAP, AmeriGas Performance Units awards that are subject to market-based conditions are equity awards which, if settled in Common Units, results in the recognition of compensation cost over the requisite employee service period regardless of whether the market-based condition is satisfied. The fair values of AmeriGas Performance Units subject to market-based conditions are estimated using a Monte Carlo valuation model. The fair value associated with the target award, which will be paid in Common Units, is accounted for as equity and the fair value of the award over the target, as well as all Common Unit distribution equivalents, which will be paid in cash, is accounted for as a liability. For purposes of valuing AmeriGas Performance Unit awards that are subject to market-based conditions, expected volatility is based on the historical volatility of Common Units over a three-year period. The risk-free interest rate is based on the rates on U.S. Treasury bonds at the time of grant. Volatility for all entities in the peer group is based on historical volatility. The expected term of the AmeriGas Performance Unit awards is three years based on the performance period. AmeriGas Performance Unit awards whose ultimate payout is based upon net customer acquisition and retention performance measures are recorded as expense when it is probable all or a portion of the award will be paid. The fair value associated with the target award is the market price of the Common Units on the date of grant. The fair value of the award over the target, as well as all Common Unit distribution equivalents, which will be paid in cash, is accounted for as a liability.

The following table summarizes the weighted-average assumptions used to determine the fair value of AmeriGas Performance Unit awards subject to market-based conditions and related compensation costs:



	Grants Awarded in Fiscal Year
	2015		2014		2013
Risk-free rate	0.9	%	0.8	%	0.4	%
Expected life	3 years		3 years		3 years
Expected volatility	19.2	%	21.1	%	20.7	%
Dividend yield	6.8	%	7.5	%	8.2	%

The General Partner granted awards under the 2010 Propane Plan representing 80,336, 86,458 and 65,136 Common Units in Fiscal 2015, Fiscal 2014 and Fiscal 2013, respectively, having weighted-average grant date fair values per Common Unit subject to award of $61.00, $43.34 and $42.58, respectively. At September 30, 2015, 2,416,473 Common Units were available for future award grants under the 2010 Propane Plan.

The following table summarizes AmeriGas Common Unit-based award activity for Fiscal 2015:



	Total				Vested				Non-Vested
	Number of AmeriGas Partners Common Units Subject to Award		Weighted Average Grant Date Fair Value (per Unit)		Number of AmeriGas Partners Common Units Subject to Award		Weighted Average Grant Date Fair Value (per Unit)		Number of AmeriGas Partners Common Units Subject to Award		Weighted Average Grant Date Fair Value (per Unit)
September 30, 2014	200,235		$	44.82	37,207		$	44.27	163,028		$	44.95
AmeriGas Performance Units:
Granted	65,525		$	64.02	3,290		$	64.85	62,235		$	63.97
Forfeited	(12,110	)	$	55.09	—		$	—	(12,110	)	$	55.09
Vested	—		$	—	39,516		$	46.39	(39,516	)	$	46.39
Performance criteria not met	(37,981	)	$	48.24	(37,981	)	$	48.24	—		$	—
AmeriGas Stock Units:
Granted	14,811		$	47.65	8,011		$	48.93	6,800		$	46.13
Forfeited	(4,177	)	$	50.89	—		$	—	(4,177	)	$	50.89
Vested	—		$	—	30,577		$	47.57	(30,577	)	$	47.57
Awards paid	(33,720	)	$	47.65	(33,720	)	$	47.65	—		$	—
September 30, 2015	192,583		$	49.70	46,900		$	44.97	145,683		$	51.22

During Fiscal 2015, Fiscal 2014 and Fiscal 2013, the Partnership paid AmeriGas Performance Unit and AmeriGas Stock Unit awards in Common Units and cash as follows:



	2015		2014		2013
AmeriGas Performance Unit awards:
Number of Common Units subject to original awards granted	55,750		41,251		48,150
Fiscal year granted	2012		2011		2010
Payment of awards:
AmeriGas Partners Common Units issued	—		—		—
Cash paid	$	—	$	—	$	—
AmeriGas Stock Unit awards:
Number of Common Units subject to original awards granted	42,532		72,023		35,934
Payment of awards:
AmeriGas Partners Common Units issued	21,509		40,842		23,192
Cash paid	$	0.8	$	1.4	$	0.6

As of September 30, 2015, there was a total of approximately $2.7 of unrecognized compensation cost associated with 192,583 Common Units subject to award that is expected to be recognized over a weighted-average period of 1.6 years. The total fair values of Common Unit-based awards that vested during Fiscal 2015, Fiscal 2014 and Fiscal 2013 were $2.6, $4.1 and $2.8, respectively. As of September 30, 2015 and 2014, total liabilities of $3.3 and $1.5 associated with Common Unit-based awards are reflected in employee compensation and benefits accrued and other noncurrent liabilities in the Consolidated Balance Sheets. It is the Partnership’s practice to issue new AmeriGas Partners Common Units for the portion of any Common Unit-based awards paid in AmeriGas Partners Common Units.