Enterprise Products Partners L.P.

SEC Filings

10-K
ENTERPRISE PRODUCTS PARTNERS L P filed this Form 10-K on 02/28/2018
Entire Document
 

ENTERPRISE PRODUCTS PARTNERS L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Phantom Unit Awards
Phantom unit awards allow recipients to acquire our common units (at no cost to the recipient apart from fulfilling service and other conditions) once a defined vesting period expires, subject to customary forfeiture provisions.  Phantom unit awards generally vest at a rate of 25% per year beginning one year after the grant date and are non-vested until the required service periods expire.  All of the phantom unit awards were issued under the 2008 Plan.

At December 31, 2017, substantially all of our phantom unit awards are expected to result in the issuance of common units upon vesting; therefore, the applicable awards are accounted for as equity-classified awards.  The grant date fair value of a phantom unit award is based on the market price per unit of our common units on the date of grant. Compensation expense is recognized based on the grant date fair value, net of an allowance for estimated forfeitures, over the requisite service or vesting period.  

The following table presents phantom unit award activity for the periods indicated:

 
 
Number of
Units
   
Weighted-
Average Grant
Date Fair Value
per Unit (1)
 
Phantom unit awards at January 1, 2015
   
3,342,390
   
$
33.13
 
Granted (2)
   
3,496,140
   
$
33.96
 
Vested
   
(940,415
)
 
$
33.14
 
Forfeited
   
(471,166
)
 
$
33.51
 
Phantom unit awards at December 31, 2015
   
5,426,949
   
$
33.63
 
Granted (3)
   
4,508,310
   
$
21.90
 
Vested
   
(1,761,455
)
 
$
33.10
 
Forfeited
   
(406,303
)
 
$
28.52
 
Phantom unit awards at December 31, 2016
   
7,767,501
   
$
27.20
 
Granted (4)
   
4,268,920
   
$
28.83
 
Vested
   
(2,490,081
)
 
$
28.30
 
Forfeited
   
(256,839
)
 
$
27.60
 
Phantom unit awards at December 31, 2017
   
9,289,501
   
$
27.65
 
   
(1)   Determined by dividing the aggregate grant date fair value of awards (before an allowance for forfeitures) by the number of awards issued.
(2)   The aggregate grant date fair value of phantom unit awards issued during 2015 was $118.7 million based on a grant date market price of our common units ranging from $27.31 to $34.40 per unit. An estimated annual forfeiture rate of 3.5 percent was applied to these awards.
(3)   The aggregate grant date fair value of phantom unit awards issued during 2016 was $98.7 million based on a grant date market price of our common units ranging from $21.86 to $27.39 per unit. An estimated annual forfeiture rate of 3.9 percent was applied to these awards.
(4)   The aggregate grant date fair value of phantom unit awards issued during 2017 was $123.1 million based on a grant date market price of our common units ranging from $24.55 to $28.87 per unit. An estimated annual forfeiture rate of 3.8 percent was applied to these awards.
 

After taking into account tax withholding requirements, we issued 1,687,692, 1,170,600 and 618,395 common units in connection with the vesting of phantom unit awards in the years ended December 31, 2017, 2016 and 2015, respectively.

The 2008 Plan provides for the issuance of DERs in connection with phantom unit awards.  A DER entitles the participant to nonforfeitable cash payments equal to the product of the number of phantom unit awards outstanding for the participant and the cash distribution per common unit paid to our common unitholders.  Cash payments made in connection with DERs are charged to partners’ equity when the phantom unit award is expected to result in the issuance of common units; otherwise, such amounts are expensed.

The following table presents supplemental information regarding phantom unit awards for the periods indicated:
 
 
 
For the Year Ended December 31,
 
 
 
2017
   
2016
   
2015
 
Cash payments made in connection with DERs
 
$
15.1
   
$
11.7
   
$
7.7
 
Total intrinsic value of phantom unit awards that vested during period
 
$
69.8
   
$
40.9
   
$
31.2
 
 
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