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Compensation Related Costs, Retirement Benefits | 12 Months Ended
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Dec. 31, 2024
Retirement Benefits [Abstract] |
Unit-Based Compensation | Unit-Based Compensation The Partnership has issued phantom units to its employees and non-employee directors, which vest 60% after three years and 40% after five years. Phantom units have the right to receive distributions prior to vesting. The fair value of these units is the market price of our common units on the grant date, and is amortized over the five-year vesting period using the straight-line method. Unit-based compensation expense related to the Partnership included in our consolidated statements of operations and comprehensive income was $17 million, $17 million and $14 million for the years ended December 31, 2024, 2023 and 2022, respectively. The total fair value of phantom units vested for the years ended December 31, 2024, 2023 and 2022, was $23 million, $30 million and $22 million, respectively, based on the market price of SUN’s common units as of the vesting date. Unrecognized compensation expenses related to ou r unvested p hantom units totaled $43 million as of December 31, 2024, which are expected to be recognized over a weighted average period of 4 years. The fair value of unvested phantom units outstanding as of December 31, 2024 and 2023, totaled $86 million and $96 million, respectively. Phantom unit award activity for the years ended December 31, 2024 and 2023 consisted of the following:
| Number of Phantom Common Units |  | Weighted Average Grant Date Fair Value
Outstanding at December 31, 2022 | 1,821,773 |  |  | $ | 34.29 |
Granted | 399,377 |  |  | 53.37 |
Vested | (552,145) |  |  | 28.35 |
Forfeited | (68,640) |  |  | 34.64 |
Outstanding at December 31, 2023 | 1,600,365 |  |  | $ | 41.08 |
Granted | 584,303 |  |  | 55.24 |
Vested | (412,461) |  |  | 34.76 |
Forfeited | (95,282) |  |  | 42.06 |
Outstanding at December 31, 2024 | 1,676,925 |  |  | $ | 47.55 |
Cash Restricted Units. Beginning in 2024, the Partnership also granted cash restricted units, which vest through three years of service. A cash restricted unit entitles the award recipient to receive cash equal to the market value of one SUN Common Unit upon vesting. For the year ended December 31, 2024, the Partnership granted a total of 134,225 cash restricted units, all of which were unvested as of December 31, 2024.
Retirement Benefits | Employee Benefit Plans Pension and Other Postretirement Benefits The NuStar Pension Plan (the “Pension Plan”) is a qualified non-contributory defined benefit pension plan that provided certain eligible NuStar employees with retirement income as calculated under a cash balance formula. Under the cash balance formula, benefits were determined based on age, years of vesting service and interest credits, and employees become fully vested in their benefits upon attaining three years of vesting service. NuStar also maintained an excess pension plan (the “Excess Pension Plan”), which is a non qualified deferred compensation plan that provides benefits to a select group of management or other highly compensated employees. Neither the Excess Thrift Plan nor the Excess Pension Plan is intended to constitute either a qualified plan under the provisions of Section 401 of the Code or a funded plan subject to the Employee Retirement Income Security Act. The Pension Plan and Excess Pension Plan are collectively referred to as the “Pension Plans” in the tables and discussion below. Other postretirement benefit plans include NuStar’s contributory medical benefits plan for U.S. employees who retired prior to April 1, 2014 and, for employees who retire on or after April 1, 2014, a partial reimbursement for eligible third-party health care premiums. We use December 31 as the measurement date for our pension and other postretirement plans. We made no contributions to the Pension Plans subsequent to the NuStar acquisition, and the Pension Plan was terminated on November 30, 2024. The changes in the benefit obligation, the changes in fair value of plan assets, the funded status and the amounts recognized in the consolidated balance sheets for our Pension Plans and other postretirement benefit plans as of December 31, 2024 were as follows:
| Pension Plans |  | Other Postretirement Benefit Plans
Change in benefit obligation: |  |  |
Benefit obligation at beginning of period | $ | — |  |  | $ | — |
NuStar acquisition | 152 |  |  | 12 |
Service cost | 1 |  |  | — |
Interest cost | 5 |  |  | 1 |
Plan amendments | — |  |  | (11) |
Benefits paid, net | (36) |  |  | — |
Actuarial loss and other | 15 |  |  | (1) |
Benefit obligation at end of period | 137 |  |  | 1 |
Change in plan assets: |  |  |
Fair value of plan assets at beginning of period | $ | — |  |  | $ | — |
NuStar acquisition | 178 |  |  | — |
Actual return on plan assets | 12 |  |  | — |
Employer contributions | 5 |  |  | — |
Benefits paid, net | (35) |  |  | — |
Fair value of plan assets at end of period | 160 |  |  | — |
Amount underfunded (overfunded) at end of period | $ | (23) |  |  | $ | 1 |
| Pension Plans |  | Other Postretirement Benefit Plans
Amounts recognized in the consolidated balance sheets consist of: |  |  |
Non-current assets | $ | 24 |  |  | $ | — |
Current liabilities | (1) |  |  | (1) |
| $ | 23 |  |  | $ | (1) |
Amounts recognized in accumulated other comprehensive income (pre-tax basis) consist of: |  |  |
Net actuarial loss | $ | (9) |  |  | $ | — |
Prior service credit | — |  |  | 11 |
| $ | (9) |  |  | $ | 11 |
The actuarial loss rel ated to the benefit obligation for our pension plans was primarily attributable to the termination of the Pension Plan. The fair value of our plan assets is affected by the return on plan assets resulting primarily from the performance of equity and bond markets during the period. The Excess Pension Plan has no plan assets and an accumulated benefit obligati on of $1 million as of December 31, 2024. The accumulated benefit obligation is the present value of benefits earned to date, while the projected benefit obligation may include future salary increase assumptions. The projected benefit obligation for the Excess Pension Plan was $1 million as of December 31, 2024. The components of net periodic benefit cost for the p eriod from the NuStar acquisition (May 3, 2024) to December 31, 2024 related to our Pension Plans and other postretirement benefit plans were as follows:
| Pension Plans |  | Other Postretirement Benefit Plans
Net periodic benefit cost: |  |  |
Service cost | $ | 1 |  |  | $ | — |
Interest cost | 5 |  |  | 1 |
Expected return on plan assets | (8) |  |  | — |
Settlement charge | 2 |  |  | — |
Net periodic benefit cost | $ | — |  |  | $ | 1 |
We amortize prior service costs and credits on a straight-line basis over the average remaining service period of employees expected to receive benefits under our Pension Plans and other postretirement benefit plans (“Prior service amortization” in table above). We amortize the actuarial gains and losses that exceed 10% of the greater of the projected benefit obligation or market-related value of plan assets (smoothed asset value) over the average remaining service period of active employees expected to receive benefits under our Pension Plans and other postretirement benefit pl ans (“Actuarial gain amortization” in ta ble above). The service cost component of net periodic benefit cost is repo rted in “General and administrative” expenses and “Other Operating” expenses on the consolidated statements of operations, and the remaining comp onents of net periodic benefit cost are reported in “Other, net.” Fair Value of Plan Assets We disclose the fair value for each major class of plan assets in the Pension Plan in three levels: Level 1, defined as observable inputs such as quoted prices for identical assets or liabilities in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets that are not active; and Level 3, defined as unobservable inputs for which little or no market data exists. The major classes of plan assets measured at fair value for the Pension Plan at December 31, 2024 were as follows:
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Cash equivalent securities | $ | 80 |  |  | $ | — |  |  | $ | — |  |  | $ | 80 |
Investment trusts(1) | — |  |  | 44 |  |  | — |  |  | 44 |
Fixed income securities | 36 |  |  | — |  |  | — |  |  | 36 |
Total | $ | 116 |  |  | $ | 44 |  |  | $ | — |  |  | $ | 160 |
(1) Includes long-term and intermediate credit bonds. Estimated Future Benefit Payments As of December 31, 2024, the following benefit payments were expected to be paid for the years ending December 31:
| Pension Plans |  | Other Postretirement Benefit Plans
2025 | $ | 71 |  |  | $ | 1 |
2026 | 3 |  |  | — |
2027 | 3 |  |  | — |
2028 | 3 |  |  | — |
2029 | 4 |  |  | — |
2030-2034 | 19 |  |  | — |
Assumptions The discount rate is based on a hypothetical yield curve represented by a series of annualized individual discount rates. Each bond issue underlying the hypothetical yield curve required an average rating of double-A, when averaging all available ratings by Moody’s Investor Service Inc., S&P Global Ratings and Fitch Ratings. The expected long-term rate of return on plan assets is based on the weighted averages of the expected long-term rates of return for each asset class of investments held in our plans as determined using historical data and the assumption that capital markets are informationally efficient. The expected rate of compensation increase represents average long-term salary increases. The weighted-average assumptions used to determine the benefit obligations at December 31, 2024 were as follows:
| Pension Plans |  | Other Postretirement Benefit Plans
Discount rate | 5.46 | % |  | 5.64 | %
Rate of compensation increase | n/a |  | n/a
Cash balance interest crediting rate | 2.59 | % |  | n/a
The weighted-average assumptions used to determine the net periodic benefit cost for the period from acquisition to December 31, 2024 related to o ur Pension Plans and other postretirement benefit plans were as follows:
| Pension Plans |  | Other Postretirement Benefit Plans
Discount rate | 5.76 | % |  | 5.74 | %
Expected long-term rate of return on plan assets | 6.75 | % |  | n/a
Rate of compensation increase | n/a |  | n/a
Cash balance interest crediting rate | 4.26 | % |  | n/a

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