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Equity-based Awards | 9 Months Ended
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Sep. 30, 2015
Equity-based Awards [Abstract] |
Equity-based Awards | Note 3. 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 September 30, |  |  | For the Nine Months Ended September 30, |
|  | 2015 |  |  | 2014 |  |  | 2015 |  |  | 2014 |
Equity-classified awards: |  |  |  |  |  |  |  |  |  |  |  |
Restricted common unit awards |  | $ | 3.1 |  |  | $ | 8.7 |  |  | $ | 13.1 |  |  | $ | 29.3 |
Phantom unit awards |  |  | 20.3 |  |  |  | 12.9 |  |  |  | 60.2 |  |  |  | 32.3 |
Liability-classified awards |  |  | -- |  |  |  | 0.1 |  |  |  | 0.2 |  |  |  | 0.4 |
Total |  | $ | 23.4 |  |  | $ | 21.7 |  |  | $ | 73.5 |  |  | $ | 62.0 |
The fair value of equity-classified awards is amortized into earnings over the requisite service or vesting period. Equity-classified awards are expected to result in the issuance of common units upon vesting. Compensation expense for liability-classified awards is recognized over the requisite service or vesting period based on the fair value of the award remeasured at each reporting date. Liability-classified awards are settled in cash upon vesting. At September 30, 2015, EPCO’s significant long-term incentive plans applicable to us were the Enterprise Products 1998 Long-Term Incentive Plan (“1998 Plan”) and the 2008 Enterprise Products Long-Term Incentive Plan (Third Amendment and Restatement) (“2008 Plan”). Up to 14,000,000 of our common units may be issued as awards under the 1998 Plan. The maximum number of common units available for issuance under the 2008 Plan was 30,000,000 at September 30, 2015. This amount will automatically increase under the terms of the 2008 Plan by 5,000,000 common units on January 1, 2016 and will continue to automatically increase annually on January 1 thereafter during the term of the 2008 Plan; provided, however, that in no event shall the maximum aggregate number exceed 70,000,000 common units. After giving effect to awards granted under the 1998 Plan and 2008 Plan through September 30, 2015, a total of 3,040,506 and 16,277,823 additional common units were available for issuance under these plans, respectively. Restricted Common Unit Awards Restricted common unit awards allow recipients to acquire our common units (at no cost to the recipient apart from fulfilling service and other conditions) once a defined vesting period expires, subject to customary forfeiture provisions. Restricted common unit awards generally vest at a rate of 25% per year beginning one year after the grant date and are non-vested until the required service periods expire. Restricted common units are included in the number of common units outstanding as presented on our Unaudited Condensed Consolidated Balance Sheets. The fair value of a restricted common unit award is based on the market price per unit of our common units on the date of grant. Compensation expense is recognized based on the grant date fair value, net of an allowance for estimated forfeitures, over the requisite service or vesting period. The following table presents information regarding restricted common unit awards for the period indicated:
|  | Number of Units |  |  | Weighted- Average Grant Date Fair Value per Unit (1) |
Restricted common units at December 31, 2014 |  |  | 4,229,790 |  |  | $ | 26.96 |
Vested |  |  | (1,997,194 | ) |  | $ | 25.99 |
Forfeited |  |  | (157,750 | ) |  | $ | 27.64 |
Restricted common units at September 30, 2015 |  |  | 2,074,846 |  |  | $ | 27.85 |
(1) Determined by dividing the aggregate grant date fair value of awards (before an allowance for forfeitures) by the number of awards issued. |
Each recipient of a restricted common unit award is entitled to nonforfeitable cash distributions equal to the product of the number of restricted common units outstanding for the participant and the cash distribution per unit paid to our common unitholders. These distributions are included in “Cash distributions paid to limited partners” as presented on our Unaudited Condensed Statements of Consolidated Cash Flows. The following table presents supplemental information regarding our restricted common unit awards for the periods indicated:
|  | For the Three Months Ended September 30, |  |  | For the Nine Months Ended September 30, |
|  | 2015 |  |  | 2014 |  |  | 2015 |  |  | 2014 |
Cash distributions paid to restricted common unitholders |  | $ | 0.8 |  |  | $ | 1.6 |  |  | $ | 3.2 |  |  | $ | 5.7 |
Total intrinsic value of restricted common unit awards that vested during period |  |  | 1.5 |  |  |  | 1.3 |  |  |  | 66.9 |  |  |  | 85.4 |
For the EPCO group of companies, the unrecognized compensation cost associated with restricted common unit awards was an aggregate $11.5 million at September 30, 2015, of which our share of the cost is currently estimated to be $9.6 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 1.1 years. Phantom Unit Awards Phantom unit awards allow recipients to acquire our common units (at no cost to the recipient apart from fulfilling service and other conditions) once a defined vesting period expires, subject to customary forfeiture provisions. Phantom unit awards generally vest at a rate of 25% per year beginning one year after the grant date and are non-vested until the required service periods expire. At September 30, 2015, substantially all of our phantom unit awards are expected to result in the issuance of common units upon vesting; therefore, the applicable awards are accounted for as equity-classified awards. The grant date fair value of a phantom unit award is based on the market price per unit of our common units on the date of grant. Compensation expense is recognized based on the grant date fair value, net of an allowance for estimated forfeitures, over the requisite service or vesting period. 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, 2014 |  |  | 3,342,390 |  |  | $ | 33.13 |
Granted (2) |  |  | 3,491,040 |  |  | $ | 33.97 |
Vested |  |  | (933,890 | ) |  | $ | 33.13 |
Forfeited |  |  | (275,356 | ) |  | $ | 33.51 |
Phantom unit awards at September 30, 2015 |  |  | 5,624,184 |  |  | $ | 33.63 |
(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 2015 was $118.6 million based on a grant date market price of our common units ranging from $27.31 to $34.40 per unit. An estimated annual forfeiture rate of 3.5% was applied to these awards. |
Our long-term incentive plans provide for the issuance of distribution equivalent rights (“DERs”) in connection with phantom unit awards. A DER 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 to our 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 our phantom unit awards and DERs for the periods indicated:
|  | For the Three Months Ended September 30, |  |  | For the Nine Months Ended September 30, |
|  | 2015 |  |  | 2014 |  |  | 2015 |  |  | 2014 |
Cash payments made in connection with DERs |  | $ | 2.2 |  |  | $ | 1.2 |  |  | $ | 5.6 |  |  | $ | 2.4 |
Total intrinsic value of phantom unit awards that vested during period |  |  | 2.3 |  |  |  | 0.1 |  |  |  | 31.0 |  |  |  | 1.3 |
For the EPCO group of companies, the unrecognized compensation cost associated with phantom unit awards was $100.4 million at September 30, 2015, of which our share of the cost is currently estimated to be $91.7 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 2.0 years. Unit Option Awards EPCO’s long-term incentive plans provide for the issuance of non-qualified incentive options denominated in our common units. In general, unit option awards have a vesting period of four years from the date of grant and expire at the end of the calendar year following the year of vesting (e.g., an option vesting on May 29, 2014 will expire on December 31, 2015). However, unit option awards only become exercisable at certain times during the calendar year following the year in which they vest (typically the months of February, May, August and November). The following table presents unit option award activity for the period indicated:
|  | Number of Units (1) |  |  | Weighted- Average Strike Price (dollars/unit) |  |  | Weighted- Average Remaining Contractual Term (in years) |  |  | Aggregate Intrinsic Value (2) |
Unit option awards at December 31, 2014 |  |  | 1,270,000 |  |  | $ | 16.14 |  |  |  |  |  |  |
Exercised |  |  | (1,080,000 | ) |  | $ | 16.14 |  |  |  |  |  |  |
Unit option awards at September 30, 2015 |  |  | 190,000 |  |  | $ | 16.14 |  |  |  | 0.3 |  |  | $ | 1.7 |
(1) All of the unit option awards outstanding at September 30, 2015 were exercisable. None of the unit option awards outstanding at December 31, 2014 were exercisable. (2) Aggregate intrinsic value reflects fully vested unit option awards at the dates indicated. |
In order to fund its unit option award-related obligations, EPCO may purchase common units at fair value either in the open market or directly from us. When employees exercise unit option awards, we reimburse EPCO for the cash difference between the strike price paid by the employee and the actual purchase price paid by EPCO for the units issued to the employee. The following table presents supplemental information regarding unit option awards during the periods indicated:
|  | For the Three Months Ended September 30, |  |  | For the Nine Months Ended September 30, |
|  | 2015 |  |  | 2014 |  |  | 2015 |  |  | 2014 |
Total intrinsic value of unit option awards exercised during period |  | $ | 0.2 |  |  | $ | -- |  |  | $ | 19.8 |  |  | $ | 57.5 |
Cash received from EPCO in connection with the exercise of unit option awards |  |  | 0.2 |  |  |  | -- |  |  |  | 11.5 |  |  |  | 33.4 |
Unit option award-related cash reimbursements to EPCO |  |  | 0.2 |  |  |  | -- |  |  |  | 19.8 |  |  |  | 57.5 |
As of September 30, 2015, all compensation expense related to unit option awards had been recognized.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=51659978&loc=d3e25284-112666 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 + Details
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