Employee Incentive Plans | (12) Employee Incentive Plans (a) Long-Term Incentive Plans The Partnership accounts for unit-based compensation in accordance with FASB ASC 718, which requires that compensation related to all unit-based awards, including unit options, be recognized in the condensed consolidated financial statements. On April 7, 2016, the General Partner amended and restated the EnLink Midstream GP, LLC Long-Term Incentive Plan (the “GP Plan”). Amendments to the GP Plan included an increase to the number of the Partnership's common units authorized for issuance under the GP Plan by 5,000,000 common units to an aggregate of 14,070,000 common units and other technical changes. The Partnership and we each have similar unit-based compensation payment plans for officers and employees, which are described below. Unit-based compensation associated with ENLC's unit-based compensation plan awarded to officers and employees of the Partnership is recorded by the Partnership since ENLC has no substantial or managed operating activities other than its interests in the Partnership and EnLink Oklahoma T.O. Amounts recognized in the condensed consolidated financial statements with respect to these plans are as follows (in millions): Three Months Ended Six Months Ended 2016 2015 2016 2015 Cost of unit-based compensation charged to general and administrative expense $ 5.7 $ 6.6 $ 12.0 $ 18.5 Cost of unit-based compensation charged to operating expense 1.7 1.1 3.4 3.0 Total amount charged to income $ 7.4 $ 7.7 $ 15.4 $ 21.5 Interest of non-controlling partners in unit-based compensation $ 2.7 $ 3.7 $ 5.6 $ 9.2 Amount of related income tax benefit recognized in income $ 1.8 $ 1.5 $ 3.7 $ 4.6 (b) EnLink Midstream Partners, LP Restricted Incentive Units The Partnership's restricted incentive units are valued at their fair value at the date of grant, which is equal to the market value of common units on such date. A summary of the restricted incentive unit activity for the six months ended June 30, 2016 is provided below: Six Months Ended EnLink Midstream Partners, LP Restricted Incentive Units: Number of Units Weighted Average Grant-Date Fair Value Non-vested, beginning of period 1,253,729 $ 29.59 Granted 1,046,685 10.03 Vested* (297,439 ) 30.33 Forfeited (40,998 ) 22.17 Non-vested, end of period 1,961,977 $ 19.20 Aggregate intrinsic value, end of period (in millions) $ 32.6 * Vested units include 85,366 units withheld for payroll taxes paid on behalf of employees. A summary of the restricted incentive units’ aggregate intrinsic value (market value at vesting date) and fair value of units vested during the three and six months ended June 30, 2016 and 2015, respectively, is provided below (in millions): Three Months Ended Six Months Ended EnLink Midstream Partners, LP Restricted Incentive Units: 2016 2015 2016 2015 Aggregate intrinsic value of units vested $ 0.1 $ 0.4 $ 3.8 $ 7.2 Fair value of units vested $ — $ 0.5 $ 9.0 $ 7.5 As of June 30, 2016 , there was $ 19.0 million of unrecognized compensation cost related to non-vested restricted incentive units. That cost is expected to be recognized over a weighted-average period of 1.8 years . (c) EnLink Midstream Partners, LP Performance Units In 2016, the General Partner and the managing member of ENLC granted performance awards under the GP Plan and the EnLink Midstream, LLC 2014 Long-Term Incentive Plan (the “LLC Plan”), respectively. The performance award agreements provide that the vesting of restricted incentive units granted thereunder is dependent on the achievement of certain total shareholder return (“TSR”) performance goals relative to the TSR achievement of a peer group of companies (the “Peer Companies”) over the applicable performance period. The performance award agreements contemplate that the Peer Companies for an individual performance award (the “Subject Award”) are the companies comprising the Alerian MLP Index for Master Limited Partnerships (“AMZ”), excluding the Partnership and the Company (collectively, “EnLink”), on the grant date for the Subject Award. The performance units will vest based on the percentile ranking of the average of the Partnership’s and ENLC’s TSR achievement (“EnLink TSR”) for the applicable performance period relative to the TSR achievement of the Peer Companies. At the end of the vesting period, recipients receive distribution equivalents, if any, with respect to the number of performance units vested. The vesting of units range from zero to 200 percent of the units granted depending on the EnLink TSR as compared to the TSR of the Peer Companies on the vesting date. The fair value of each performance unit is estimated as of the date of grant using a Monte Carlo simulation with the following assumptions used for all performance unit grants made under the plan: (i) a risk-free interest rate based on United States Treasury rates as of the grant date; (ii) a volatility assumption based on the historical realized price volatility of the Partnership's common units and the designated peer group securities; (iii) an estimated ranking of the Partnership among the designated peer group; and (iv) the distribution yield. The fair value of the performance unit on the date of grant is expensed over a vesting period of three years. The following table presents a summary of the grant-date fair values of performance units granted and the related assumptions: EnLink Midstream Partners, LP Performance Units: January 2016 February 2016 Beginning TSR Price $ 14.82 $ 14.82 Risk-free interest rate 1.10 % 0.89 % Volatility factor 39.71 % 42.33 % Distribution yield 12.10 % 19.20 % The following table presents a summary of the Partnership's performance units: Six Months Ended EnLink Midstream Partners, LP Performance Units: Number of Weighted Non-Vested, beginning of period 118,126 $ 35.41 Granted 258,078 9.81 Forfeited (2,798 ) 36.18 Non-vested, end of period 373,406 $ 17.71 Aggregate intrinsic value, end of period (in millions) $ 6.2 As of June 30, 2016 there was $4.4 million of unrecognized compensation expense that related to non-vested Partnership performance units. That cost is expected to be recognized over a weighted-average period of 2.0 years . (d) EnLink Midstream, LLC Restricted Incentive Units ENLC restricted incentive units are valued at their fair value at the date of grant, which is equal to the market value of the common units on such date. A summary of the restricted incentive unit activity for the six months ended June 30, 2016 is provided below: Six Months Ended EnLink Midstream, LLC Restricted Incentive Units: Number of Weighted Average Grant-Date Fair Value Non-vested, beginning of period 1,148,893 $ 34.78 Granted 1,038,619 9.44 Vested* (320,497 ) 36.92 Forfeited (37,952 ) 23.95 Non-vested, end of period 1,829,063 $ 20.24 Aggregate intrinsic value, end of period (in millions) $ 29.1 * Vested units include 91,256 units withheld for payroll taxes paid on behalf of employees. A summary of the restricted incentive units’ aggregate intrinsic value (market value at vesting date) and fair value of units vested during the three and six months ended June 30, 2016 and 2015, respectively, are provided below (in millions): Three Months Ended Six Months Ended EnLink Midstream, LLC Restricted Incentive Units: 2016 2015 2016 2015 Aggregate intrinsic value of units vested $ — $ 0.6 $ 3.8 $ 8.9 Fair value of units vested $ — $ 0.6 $ 11.8 $ 9.2 As of June 30, 2016 , there was $ 18.6 million of unrecognized compensation costs related to non-vested ENLC restricted incentive units. The cost is expected to be recognized over a weighted-average period of 1.7 years . (e) EnLink Midstream, LLC's Performance Units In 2016, ENLC granted performance awards under the LLC Plan discussed in Note (c) above. At the end of the vesting period, recipients receive distribution equivalents, if any, with respect to the number of performance units vested. The vesting of units range from zero to 200 percent of the units granted depending on the EnLink TSR as compared to the TSR of the Peer Companies on the vesting date. The fair value of each performance unit is estimated as of the date of grant using a Monte Carlo simulation with the following assumptions used for all performance unit grants made under the plan: (i) a risk-free interest rate based on United States Treasury rates as of the grant date; (ii) a volatility assumption based on the historical realized price volatility of ENLC's common units and the designated peer group securities; (iii) an estimated ranking of ENLC among the designated peer group and (iv) the distribution yield. The fair value of the unit on the date of grant is expensed over a vesting period of three years. The following table presents a summary of the grant-date fair values of performance units granted and the related assumptions: EnLink Midstream, LLC Performance Units: January 2016 February 2016 Beginning TSR Price $ 15.38 $ 15.38 Risk-free interest rate 1.10 % 0.89 % Volatility factor 46.02 % 52.05 % Distribution yield 8.60 % 14.00 % The following table presents a summary of the Company's performance units: Six Months Ended EnLink Midstream, LLC Performance Units: Number of Weighted Non-Vested, beginning of period 105,080 $ 40.50 Granted 242,646 9.59 Forfeited (2,525 ) 41.31 Non-vested, end of period 345,201 $ 18.76 Aggregate intrinsic value, end of period (in millions) $ 5.5 As of June 30, 2016 , there was $4.2 million of unrecognized compensation expense that related to non-vested ENLC performance units. That cost is expected to be recognized over a weighted-average period of 2.0 years . |