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Unit-Based Compensation Arrangements | 6 Months Ended
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Mar. 27, 2021
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Unit-Based Compensation Arrangements |
1 2. | Unit-Based Compensation Arrangements
The Partnership recognizes compensation cost over the respective service period for employee services received in exchange for an award of equity, or equity-based compensation, based on the grant date fair value of the award. The Partnership measures liability awards under an equity-based payment arrangement based on remeasurement of the award’s fair value at the conclusion of each interim and annual reporting period until the date of settlement, taking into consideration the probability that the performance conditions will be satisfied. Restricted Unit Plans. On July 22, 2009, the Partnership adopted the Suburban Propane Partners, L.P. 2009 Restricted Unit Plan, as amended (the “2009 Restricted Unit Plan”), which authorizes the issuance of Common Units to executives, managers and other employees and members of the Board of Supervisors of the Partnership. The total number of Common Units authorized for issuance under the 2009 Restricted Unit Plan was 2,400,000 as of July 31, 2019, the date on which this plan expired. At the Partnership’s Tri-Annual Meeting held on May 15, 2018, the Unitholders approved the Partnership’s 2018 Restricted Unit Plan authorizing the issuance of up to 1,800,000 Common Units (the “2018 Restricted Unit Plan” and together with the 2009 Restricted Unit Plan, from which there are still unvested awards outstanding, the “Restricted Unit Plans”). Unless otherwise stipulated by the Compensation Committee of the Partnership’s Board of Supervisors on or before the grant date, 33.33% of all outstanding awards under the Restricted Unit Plans will vest on each of the first three anniversaries of the award grant date. Participants in the Restricted Unit Plans are not eligible to receive quarterly distributions on, or vote, their respective restricted units until vested. Restricted units cannot be sold or transferred prior to vesting. The value of each restricted unit is established by the market price of the Common Unit on the date of grant, net of estimated future distributions during the vesting period. Restricted units are subject to forfeiture in certain circumstances as defined in the Restricted Unit Plans. Compensation expense for the unvested awards is recognized ratably over the vesting periods and is net of estimated forfeitures. During the six months ended March 27, 2021, the Partnership awarded 753,177 restricted units under the Restricted Unit Plans at an aggregate grant date fair value of $10,922. The following is a summary of activity for the Restricted Unit Plans for the six months ended March 27, 2021:
|  |  |  |  |  | Weighted Average |
|  | Restricted |  |  | Grant Date Fair |
|  | Units |  |  | Value Per Unit |
Outstanding September 26, 2020 |  |  | 961,816 |  |  | $ | 17.60 |
Awarded |  |  | 753,177 |  |  |  | 14.50 |
Forfeited |  |  | (10,960 | ) |  |  | (15.26 | )
Vested (1) |  |  | (475,168 | ) |  |  | (18.63 | )
Outstanding March 27, 2021 |  |  | 1,228,865 |  |  | $ | 15.32 |
(1) | During fiscal 2021, the Partnership withheld 92,336 Common Units from participants for income tax withholding purposes for those executive officers of the Partnership whose shares of restricted units vested during the period.
As of March 27, 2021, unrecognized compensation cost related to unvested restricted units awarded under the Restricted Unit Plans amounted to $8,692. Compensation cost associated with unvested awards is expected to be recognized over a weighted-average period of approximately one year. Compensation expense for the Restricted Unit Plans, net of forfeitures, for the three and six months ended March 27, 2021 was $2,595 and $4,953, respectively, and $2,260 and $4,822 for the three and six months ended March 28, 2020, respectively. Distribution Equivalent Rights Plan. On January 17, 2017, the Partnership adopted the Distribution Equivalent Rights Plan (the “DER Plan”), which gives the Compensation Committee of the Partnership’s Board of Supervisors discretion to award distribution equivalent rights (“DERs”) to executive officers of the Partnership. Once awarded, DERs entitle the grantee to a cash payment each time the Board of Supervisors declares a cash distribution on the Partnership’s Common Units, which cash payment will be equal to an amount calculated by multiplying the number of unvested restricted units which are held by the grantee on the record date of the distribution, by the amount of the declared distribution per Common Unit. Compensation expense recognized under the DER Plan for the three and six months ended March 27, 2021 was $206 and $413, respectively, and $301 and $605 for the three and six months ended March 28, 2020, respectively. Long-Term Incentive Plan. On August 6, 2013, the Partnership adopted the 2014 Long-Term Incentive Plan (“2014 LTIP”) and on November 10, 2020, the Partnership adopted the 2021 Long-Term Incentive Plan (“2021 LTIP” and together with the 2014 LTIP, “the LTIPs”). The LTIPs are non-qualified, unfunded, long-term incentive plans for executive officers and key employees that provide for payment, in the form of cash, of an award of equity-based compensation at the end of a three-year performance period. The 2014 LTIP document governs the terms and conditions of the outstanding fiscal 2019 and fiscal 2020 awards and the 2021 LTIP document governs the terms and conditions of the outstanding fiscal 2021 award and any awards granted in fiscal years thereafter. The level of compensation earned under the 2014 LTIP is based on the Partnership’s average distribution coverage ratio over the three-year measurement period. The Partnership’s average distribution coverage ratio is calculated as the Partnership’s average distributable cash flow, as defined by the 2014 LTIP document, for each of the three years in the measurement period, subject to certain adjustments as set forth in the 2014 LTIP document, divided by the amount of annualized cash distributions to be paid by the Partnership. The level of compensation earned under the 2021 LTIP is evaluated using two separate measurement components: (i) 75% weight based on the level of average distributable cash flow of the Partnership over the three-year measurement period; and (ii) 25% weight based on the achievement of certain operating and strategic objectives, set by the Compensation Committee of the Board of Supervisors, over the three-year measurement period. The distributable cash flow component and operating/strategic objectives component are defined and described in the 2021 LTIP document. As a result of the quarterly remeasurement of the liability for awards under the LTIPs, compensation expense (income) recognized for three and six months ended March 27, 2021 was $1,255 and $3,076, respectively, and ($3,276) and ($1,286) for the three and six months ended March 28, 2020, respectively. As of March 27, 2021, and September 26, 2020, the Partnership had a liability included within accrued employment and benefit costs (or other liabilities, as applicable) of $7,440 and $7,718, respectively, related to estimated future payments under the LTIPs. In the first quarter of fiscal 2021, cash payouts totaling $3,354 were made relating to the fiscal 2018 award granted under the 2014 LTIP.

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