Equity-Indexed Compensation Plans

6 Months Ended

Jun. 30, 2014

Note 9—Equity-Indexed Compensation Plans

We refer to the PAGP LTIP, PAA LTIPs and AAP Management Units collectively as our “Equity-indexed compensation plans.” For additional discussion of our equity-indexed compensation plans and awards, see Note 15 to our Consolidated Financial Statements included in Part IV of our 2013 Annual Report on Form 10-K.

In connection with our IPO in October 2013, our general partner adopted the PAGP LTIP, which is intended to align the interests of employees and directors with those of our shareholders by providing such employees and directors incentive compensation awards that reward achievement of targeted distribution levels and other business objectives. The PAGP LTIP provides for awards of options, restricted shares, phantom shares and share appreciation rights. Certain awards may also include distribution equivalent rights (“DERs”), which, subject to applicable vesting criteria, entitle the grantee to a cash payment equal to the cash distribution paid on an outstanding Class A share. The PAGP LTIP authorizes the issuance of up to 10 million Class A shares deliverable upon vesting. In February 2014, an aggregate of 83,200 phantom Class A shares were issued to our directors, resulting in expense of less than $1 million for the six months ended June 30, 2014. These awards will vest annually in 25% increments, beginning in February 2015, and have an automatic re-grant feature such that as they vest, an equivalent amount is granted.

Equity-indexed compensation activity for PAA and PAGP LTIP awards is summarized in the following table (units and shares in millions):

			Weighted Average			Weighted Average
			Grant Date			Grant Date
	PAA Units (1)		Fair Value per Unit		PAGP Shares (1)	Fair Value per Share
Outstanding at December 31, 2013	8.4		$	36.97	—	$	—
Granted	0.9		$	46.61	0.1	$	27.84
Vested (2)	(1.8	)	$	25.39	—	$	—
Cancelled or forfeited	(0.3	)	$	38.88	—	$	—
Outstanding at June 30, 2014	7.2		$	41.05	0.1	$	27.84

(1) Amounts do not include AAP Management Units.

(2) Approximately 0.6 million PAA common units were issued, net of tax withholding of 0.3 million units, during the six months ended June 30, 2014 in connection with the settlement of vested awards. The remaining PAA awards that vested during the six months ended June 30, 2014 of approximately 0.9 million units were settled in cash.

AAP Management Units

The following table contains a summary of AAP Management Units (in millions):

	Reserved for Future Grants		Outstanding	Outstanding Units Earned	Grant Date Fair Value Of Outstanding AAP Management Units (1)
Balance at December 31, 2013	3.5		48.6	47.0	$	51
Granted	(0.4	)	0.4	—	11
Earned	N/A		N/A	0.8	N/A
Balance at June 30, 2014	3.1		49.0	47.8	$	62

(1) Of the grant date fair value, approximately $4 million was recognized as expense during the six months ended June 30, 2014. Of the $62 million grant date fair value, approximately $52 million had been recognized through June 30, 2014.

Other Consolidated Equity-Indexed Compensation Information

The table below summarizes the expense recognized and the value of vesting (settled both in PAA common units and cash) related to our equity-indexed compensation plans and includes both liability-classified and equity-classified awards (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Equity-indexed compensation expense	$	34	$	27	$	68	$	78
LTIP unit-settled vestings	$	44	$	46	$	51	$	46
LTIP cash-settled vestings	$	51	$	60	$	52	$	60
DER cash payments	$	2	$	2	$	4	$	4

- 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.

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