Long-Term Incentive Plan

Plan Description

We have a long-term incentive plan (“LTIP”) covering certain of our employees and directors of our general partner. The LTIP primarily consists of phantom units and permits the grant of awards covering an aggregate of 9.4 million of our limited partner units. The remaining units available under the LTIP at December 31, 2013 total approximately 1.8 million. The compensation committee administers our LTIP.

Under our LTIP, the compensation committee has granted performance-based awards and retention awards. Retention awards are subject to forfeiture by a participant if their employment is terminated for any reason other than death or disability prior to the vesting date. Performance-based awards are subject to forfeiture by a participant if their employment is terminated for any reason other than retirement, death or disability prior to the vesting date. If a performance-based award recipient retires, dies or becomes disabled prior to the end of the vesting period, the recipient's award will be prorated based upon the completed months of employment during the vesting period, and the award will be settled shortly after the end of the vesting period. Our agreement with the award participants requires these awards to be paid in our limited partner units. Award grants under our LTIP do not have an early vesting feature except for the performance-based awards which can vest early under certain circumstances following a change in control of our general partner.

For performance-based awards, we base the payout calculation for 80% of the award solely on the attainment of a financial metric established by the compensation committee. We account for this portion of the award grants as equity. The payout calculation for the remaining 20% of the unit awards is based on both the attainment of a financial metric and the individual employee's personal performance as determined by the compensation committee. We account for this portion of the award grants as a liability. The payout for the retention awards that have been granted by the compensation committee is subject only to the participant's continued employment with us. We account for these award grants as equity.

Non-Vested Unit Awards

The following table includes the changes during the current fiscal year in the number of non-vested units that have been granted by the compensation committee. The amounts below include no adjustments for above-target or below-target performance and forfeitures are actual amounts through December 31, 2013.



	Equity Method								Liability Method Performance-Based Awards
	Performance-Based Awards				Retention Awards				Liability Method Performance-Based Awards				Total Awards
	Number of Unit Awards		Weighted-Average Grant Date Fair Value		Number of Unit Awards		Weighted-Average Grant Date Fair Value		Number of Unit Awards		Weighted-Average Fair Value		Number of Unit Awards		Weighted-Average Fair Value
Non-vested units - 1/1/2013	444,090		$	31.24	58,802		$	24.60	111,025		$	43.19	613,917		$	32.77
Units granted during 2013	182,798		$	51.49	22,668		$	53.02	45,700		$	51.49	251,166		$	51.63
Units vested during 2013	(228,058	)	$	29.07	(2,207	)	$	34.02	(57,015	)	$	63.27	(287,280	)	$	35.90
Units forfeited during 2013	(9,420	)	$	35.98	(4,052	)	$	25.00	(2,355	)	$	63.27	(15,827	)	$	37.23
Non-vested units - 12/31/13	389,410		$	41.90	75,211		$	32.87	97,355		$	63.27	561,976		$	44.40

The table below summarizes the total non-vested unit awards granted by the compensation committee. The award grants have been adjusted for units we estimate will be forfeited by the end of the vesting period and for estimated amounts of above-target financial performance to determine the total number of unit awards included in our total equity-based liability accrual.



Grant Date	Unit Awards Granted	Estimated Forfeitures	Adjustment to Unit Awards in Anticipation of Achieving Above- Target Financial Results	Total Unit Award Accrual	Vesting Date	Unrecognized Compensation Expense^(a) (in millions)
Performance-Based Awards:
2012 Awards	267,322	39,225	228,097	456,194	12/31/2014	$	6.0
2013 Awards	228,498	31,869	147,472	344,101	12/31/2015	12.4
Retention Awards:
2014 Vesting Date	71,849	10,778	—	61,071	12/31/2014	0.7
2015 Vesting Date	444	22	—	422	12/31/2015	—
2016 Vesting Date	13,300	665	—	12,635	12/31/2016	0.7
Total	581,413	82,559	375,569	874,423		$	19.8

(a) Unrecognized compensation expense will be recognized over the remaining vesting period of the awards.

Weighted-Average Grant Date Fair Values

The weighted-average grant-date fair value of award grants issued during 2011, 2012 and 2013 were as follows:



	Equity Method
	Performance-Based Awards			Retention Awards			Liability Method Performance-Based Awards
	Number of Unit Awards	Weighted-Average Grant Date Fair Value		Number of Unit Awards	Weighted-Average Grant Date Fair Value		Number of Unit Awards	Weighted-Average Fair Value
Units granted during 2011	281,180	$	28.52	59,880	$	23.96	70,296	$	34.32
Units granted during 2012	214,232	$	33.57	7,016	$	30.54	53,558	$	33.57
Units granted during 2013	182,798	$	51.49	22,668	$	53.02	45,700	$	51.49

Vested Unit Awards

The table below sets forth the numbers and values of units that vested in each of the three years ended December 31, 2013. The vested limited partner units include adjustments for above-target performance.



Vesting Date	Vested Limited Partner Units	Fair Value of Unit Awards on Vesting Date (in millions)*		Intrinsic Value of Unit Awards on Vesting Date (in millions)
12/31/2011	1,100,276	$	16.5	$	37.9
12/31/2012	751,237	$	17.1	$	32.5
12/31/2013	572,353	$	20.5	$	36.2

* Represents the amount of the equity-based liabilities settled in January of the year following the vesting date.

Cash Flow Effects of LTIP Settlements

We settle awards that vest by issuing limited partner units. The difference between the limited partner units issued to the participants and the total units accrued represents the minimum tax withholdings associated with the award settlement, which we pay in cash.



Settlement Date	Number of Limited Partner Units Issued, Net of Tax Withholdings	Minimum Tax Withholdings (in millions)		Employer Taxes (in millions)		Total Cash Taxes Paid (in millions)
January 2011	505,492	$	7.4	$	0.9	$	8.3
January 2012	722,766	$	13.0	$	1.3	$	14.3
January 2013	476,682	$	12.3	$	1.1	$	13.4

Compensation Expense Summary

Equity-based incentive compensation expense, excluding amounts for directors (discussed below), for 2011, 2012 and 2013 was as follows (in thousands):



	Year Ended December 31, 2011						Year Ended December 31, 2012						Year Ended December 31, 2013
	Equity Method		Liability Method		Total		Equity Method		Liability Method		Total		Equity Method		Liability Method		Total
2009 awards	$	4,418	$	4,264	$	8,682	$	—	$	—	$	—	$	—	$	—	$	—
2010 awards	3,100		1,562		4,662		4,937		3,723		8,660		121		73		194
2011 awards	2,839		841		3,680		5,062		2,094		7,156		5,359		4,280		9,639
2012 awards	—		—		—		3,426		1,101		4,527		4,751		2,747		7,498
2013 awards	—		—		—		—		—		—		4,726		1,451		6,177
Retention awards	686		—		686		693		—		693		575		—		575
Total	$	11,043	$	6,667	$	17,710	$	14,118	$	6,918	$	21,036	$	15,532	$	8,551	$	24,083

Allocation of LTIP expense on our consolidated statements of income:
G&A expense					$	16,024					$	18,587					$	23,264
Operating expense					1,686						2,449						819
Total					$	17,710					$	21,036					$	24,083

Director Compensation Expense

Pursuant to our LTIP, long-term incentive awards are granted to independent members of the board of directors of our general partner. Most directors elect to defer all or a portion of their compensation. The table below summarizes the phantom limited partner units earned by our independent directors and total equity-based director compensation expense recognized. The phantom unit and compensation amounts below include amounts credited to the directors' accounts for distribution equivalents earned.



	Year Ended December 31,
	2011			2012			2013
Phantom units earned pursuant to the LTIP	20,284			20,054			16,424

(in thousands)
Compensation - phantom unit expense	$	446		$	523		$	533
Distribution equivalents	139			195			267
Changes in market value of phantom units	568			973			2,535
Total value of phantom units	1,153			1,691			3,335
Compensation paid in cash	292			345			422
Compensation paid in our limited partner units	140			170			85
Total director compensation	1,585			2,206			3,842
Distribution equivalents charged to partners' capital	(139		)	(195		)	(267		)
Total director compensation expense	$	1,446		$	2,011		$	3,575