2019 LTIP. In April 2019, our common unitholders approved the 2019 Long-Term Incentive Plan (2019 LTIP) for eligible employees, consultants and directors of NuStar Energy L.P., and of NuStar GP, LLC, and their respective affiliates who perform services for us and our subsidiaries. The 2019 LTIP allows for the awarding of (i) options; (ii) restricted units; (iii) distribution equivalent rights (DERs); (iv) performance cash; (v) performance units; and (vi) unit awards. DERs entitle the participant to receive cash equal to cash distributions made on any award prior to its vesting. The 2019 LTIP permits the granting of awards totaling an aggregate of 2,500,000 common units, subject to adjustment as provided in the 2019 LTIP. The 2019 LTIP generally will be administered by the compensation committee of our board of directors. As of December 31, 2019, a total of 2,230,392 common units remained available to be awarded under the 2019 LTIP.

2000 LTIP. We sponsor the 2000 Long-Term Incentive Plan, as amended (2000 LTIP), which terminated with respect to new grants when the unitholders approved the 2019 LTIP. However, unvested restricted unit and performance unit awards granted under the 2000 LTIP remain outstanding.

2006 LTIP. Effective July 20, 2018 and in conjunction with the Merger, we assumed the 2006 Long-Term Incentive Plan, as amended (the 2006 LTIP). Prior to the Merger, Holdings sponsored the 2006 LTIP. At the effective time of the Merger, each outstanding award of Holdings restricted units was converted, on the same terms and conditions as were applicable to the awards immediately prior to the Merger, into an award of NuStar Energy restricted units. The number of NuStar Energy

restricted units subject to the converted awards was determined pursuant to the 0.55 exchange ratio provided in the Merger agreement. The Holdings units remaining available to be awarded under the 2006 LTIP were also converted pursuant to the exchange ratio provided in the Merger agreement. Effective with the approval of the 2019 LTIP, the 2006 LTIP terminated with respect to new grants; however, unvested restricted unit awards granted under the 2006 LTIP remain outstanding.



	Units Outstanding December 31,			Compensation Expense Year Ended December 31,
	2019	2018	2017	2019		2018		2017
				(Thousands of Dollars)
Restricted Units:
Domestic employees	1,223,143	1,028,484	736,746	$	9,437	$	8,233	$	7,881
Non-employee directors (NEDs)	61,349	59,752	27,097	774		524		251
International employees	10,243	30,918	58,107	711		1,158		595
Performance Units	161,561	158,326	80,961	4,172		1,889		—
Unit Awards	—	—	—	22,846		18,895		—
Total	1,456,296	1,277,480	902,911	$	37,940	$	30,699	$	8,727

Our restricted unit awards are considered phantom units, as they represent the right to receive our common units upon vesting. We account for restricted units as either equity-classified awards or liability-classified awards, depending on expected method of settlement. Awards we settle with the issuance of common units upon vesting are equity-classified. Awards we settle in cash upon vesting are liability-classified. We record compensation expense ratably over the vesting period based on the fair value of the common units at the grant date (for domestic employees and NEDs) or the fair value of the common units measured at each reporting period (for international employees). DERs paid with respect to outstanding equity-classified unvested restricted units reduce equity, similar to cash distributions to unitholders, whereas DERs paid with respect to outstanding liability-classified unvested restricted units are expensed. In connection with the DERs for equity awards, we paid $2.7 million, $2.0 million and $3.0 million respectively, in cash, for the years ended December 31, 2019, 2018 and December 31, 2017.

Domestic Employees. The outstanding restricted units granted to domestic employees are equity-classified awards and generally vest over five years, beginning one year after the grant date. The fair value of these awards is measured at the grant date.

Non-Employee Directors. The outstanding restricted units granted to NEDs are equity-classified awards that vest over three years. As discussed in Note 3, on January 1, 2019 we adopted amended guidance that will allow for the fair value of these awards to be measured at the grant date. The unvested restricted units granted to NEDs as of January 1, 2019 were measured at the fair value as of that date. Previously, the fair value of these awards was equal to the market price of our common units at each reporting period.

International Employees. The outstanding restricted units granted to international employees are cash-settled and accounted for as liability-classified awards. These awards vest over three years and the fair value is equal to the market price of our common units at each reporting period. For the year ended December 31, 2019, we granted 5,378 restricted units and 26,053 restricted units vested.



	Number of Restricted Units		Weighted-Average Grant-Date Fair Value Per Unit
Nonvested units as of January 1, 2017	647,340		$	39.72
Granted	307,009		29.56
Vested	(201,466	)	38.74
Forfeited	(16,137	)	40.00
Nonvested units as of December 31, 2017	736,746		35.95
Converted on July 20, 2018	53,447		24.99
Granted	518,282		24.07
Vested	(235,746	)	35.12
Forfeited	(44,245	)	36.05
Nonvested units as of December 31, 2018	1,028,484		29.47
NEDs	59,752		20.93
Granted	596,881		26.46
Vested	(328,386	)	30.11
Forfeited	(72,239	)	28.05
Nonvested units as of December 31, 2019	1,284,492		27.48

The total fair value of our equity-classified restricted unit awards vested for the years ended December 31, 2019, 2018 and 2017 was $9.3 million, $6.2 million and $6.5 million, respectively. We issued 242,199, 189,399 and 152,017 common units in connection with these award vestings, net of employee tax withholding requirements, for the years ended December 31, 2019, 2018 and 2017, respectively. Unrecognized compensation cost related to our equity-classified employee awards totaled $32.5 million as of December 31, 2019, which we expect to recognize over a weighted-average period of 3.8 years.

Performance units are issued to certain of our key employees and represent rights to receive our common units upon achieving performance measures for the performance period established by the NuStar GP, LLC Compensation Committee for the following year. Achievement of the performance measures determines the rate at which the performance units convert into our common units, which ranges from zero to 200% for certain awards.

Performance units awarded vest in three annual increments (tranches), based upon our achievement of the performance measures set by the Compensation Committee during the one-year performance periods that end on December 31 of each applicable year. Therefore, the performance units are not considered granted for accounting purposes until the Compensation Committee has set the performance measures for each tranche of awards. Performance units are equity-classified awards measured at the grant date fair value. In addition, since the performance units granted do not receive DERs, the grant date fair value of these awards is reduced by the per unit distributions expected to be paid to common unitholders during the vesting period. We record compensation expense ratably for each vesting tranche over its requisite service period (one year) if it is probable that the specified performance measures will be achieved. Additionally, changes in the actual or estimated outcomes that affect the quantity of performance units expected to be converted are recognized as a cumulative adjustment.

A summary of our performance units is shown below:



			Granted for Accounting Purposes
	Total Performance Units Awarded		Performance Units		Weighted-Average Grant Date Fair Value per Unit
Outstanding as of January 1, 2017	77,014		35,373		$	31.75
Granted	39,320		38,865		50.04
Performance adjustments (a)	17,690		17,690		31.75
Vested	(53,063	)	(53,063	)	31.75
Outstanding as of December 31, 2017	80,961		38,865		50.04
Granted	116,230		80,690		23.43
Forfeitures	(38,865	)	(38,865	)	50.04
Outstanding as of December 31, 2018	158,326		80,690		23.43
Granted	95,969		74,439		28.01
Vested	(80,690	)	(80,690	)	23.43
Forfeitures	(12,044	)	—		—
Outstanding as of December 31, 2019	161,561		74,439		28.01

For the year ended December 31, 2017, we issued 33,438 common units in connection with the performance award vestings related to 2016 performance, net of employee tax withholding requirements, and the total fair value of performance awards vested was $2.9 million. For the year ended December 31, 2018, no performance units vested with respect to 2017 performance. For the year ended December 31, 2019, we issued 50,054 common units in connection with the performance award vestings related to 2018 performance, net of employee tax withholding requirements, and the total fair value of performance awards vested was $2.1 million.

Unit awards are equity-classified awards of fully vested common units. We accrued compensation expense in 2019 and 2018 that was paid in unit awards in February of the subsequent years. We base the number of unit awards granted on the fair value of the common units at the grant date. A summary of our unit awards is shown below:



Date of Grant	Grant Date Fair Value		Unit Awards Granted	Common Units Issued, Net of Employee Withholding Tax
	(Thousands of Dollars)
February 11, 2020	$	22,846	822,979	563,806
February 11, 2019	$	17,537	704,886	482,971
July 23, 2018	$	1,358	55,133	35,745