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, 2013, the Partnership had the ability to grant 163,217,431 units under the Equity Plan.

For the three and nine months ended September 30, 2013, the Partnership recorded compensation expense of $193.6 million and $572.1 million, respectively, in relation to its equity-based awards with corresponding tax benefits of $4.3 million and $16.0 million, respectively. For the three and nine months ended September 30, 2012, the Partnership recorded compensation expense of $223.6 million and $690.6 million, respectively, in relation to its equity-based awards with corresponding tax benefits of $2.3 million and $15.0 million, respectively. As of September 30, 2013, there was $1.4 billion of estimated unrecognized compensation expense related to unvested awards. This cost is expected to be recognized over a weighted-average period of 2.1 years.

Total vested and unvested outstanding units, including Blackstone Common Units, Blackstone Holdings Partnership Units and deferred restricted common units, were 1,149,898,936 as of September 30, 2013. Total outstanding unvested phantom units were 150,725 as of September 30, 2013.

A summary of the status of the Partnership’s unvested equity-based awards as of September 30, 2013 and a summary of changes during the period January 1, 2013 through September 30, 2013 are 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, 2012		66,591,089		$	28.19		20,199,382		$	15.76		221,356		$	14.89
Granted		4,645,938			20.65		4,057,293			17.44		5,384			20.63
Vested		(20,206,544	)		29.87		(3,150,007	)		19.28		(76,015	)		20.60
Forfeited		(1,038,930	)		29.92		(820,298	)		17.36		—			—

Balance, September 30, 2013		49,991,553		$	26.78		20,286,370		$	15.49		150,725		$	23.70

Units Expected to Vest

The following unvested units, after expected forfeitures, as of September 30, 2013, are expected to vest:


	Units		Weighted-Average Service Period in Years
Blackstone Holdings Partnership Units		46,743,135		2.1
Deferred Restricted Blackstone Common Units and Options		16,398,203		2.5

Total Equity-Based Awards		63,141,338		2.2

Phantom Units		142,313		1.7

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 $57.3 million.