Benefit Plans | NOTE 14—BENEFIT PLANS 2015 Long-Term Incentive Plan The Board of Directors of the Company approved and adopted the Company’s 2015 Long-Term Incentive Plan (“2015 LTIP”) effective February 2015. The 2015 LTIP provides equity incentive awards to officers, employees and managing board members of the Company and its affiliates, consultants and joint-venture partners (collectively, the “Participants”) who perform services for the Company. The 2015 LTIP is administered by a committee consisting of the Board or committee of the Board or board of an affiliate appointed by the Board (the “LTIP Committee”). Under the 2015 LTIP, the LTIP Committee may grant awards of phantom units, restricted units or unit options for an aggregate of 5,250,000 units. At June 30, 2015, the Company had 2,764,210 phantom units and unit options outstanding under the 2015 LTIP, with 2,485,790 phantom units and unit options available for grant. In the case of awards held by eligible employees, following a “change in control”, as defined in the 2015 LTIP, upon the eligible employee’s termination of employment without “cause”, as defined in the 2015 LTIP, or upon any other type of termination specified in the eligible employee’s applicable award agreement(s), any unvested award will immediately vest in full and, in the case of options, become exercisable for the one-year period following the date of termination of employment, but in any case not later than the end of the original term of the option. Upon a change in control, all unvested awards held by directors will immediately vest in full. In connection with a change in control, the LTIP Committee, in its sole and absolute discretion and without obtaining the approval or consent of the unitholders or any Participant, subject to the terms of any award agreements and employment agreements to which the Company (or any affiliate) and any Participant are party, may take one or more of the following actions (with discretion to differentiate between individual Participants and awards for any reason): · cause awards to be assumed or substituted by the surviving entity (or a parent, subsidiary or affiliate of such surviving entity); · accelerate the vesting of awards as of immediately prior to the consummation of the transaction that constitutes the change in control so that awards shall vest (and, with respect to options, become exercisable) as to the units that otherwise would have been unvested so that participants (as holders of awards granted under the new equity plan) may participate in the transaction; · provide for the payment of cash or other consideration to Participants in exchange for the cancellation of outstanding awards (in an amount equal to the fair market value of such cancelled awards); · terminate all or some awards upon the consummation of the change-in-control transaction, but only if the LTIP Committee provides for full vesting of awards immediately prior to the consummation of such transaction; and · make such other modifications, adjustments or amendments to outstanding awards as the LTIP Committee deems necessary or appropriate. 2015 Phantom Units. A phantom unit entitles a Participant to receive a Company common unit or its then-Fair Market Value in cash or other securities or property, upon vesting of the phantom unit. In tandem with phantom unit grants, the LTIP Committee may grant Distribution Equivalent Rights (“DERs”), which are the right to receive cash, securities, or property per phantom unit in an amount equal to, and at the same time as, the cash distributions or other distributions of securities or property the Company makes on a common unit during the period such phantom unit is outstanding. Generally, phantom units to be granted to employees under the 2015 LTIP will vest over a designated period of time and phantom units granted to non-employee directors generally vest over a four year period, 25% per year. Of the phantom units outstanding under the 2015 LTIP at June 30, 2015, there are 906,663 units that will vest within the following twelve months. The director phantom units outstanding under the 2015 LTIP at June 30, 2015 include DERs. No amounts were paid during the three and six months ended June 30, 2015 and 2014 with respect to DERs. The following table sets forth the 2015 LTIP phantom unit activity for the periods indicated: Three Months Ended June 30, 2015 2014 Number Weighted Number Weighted Outstanding, beginning of period 68,910 $ 9.07 — $ — Granted 2,695,300 6.43 — — Vested (1) — — — — Forfeited — — — — Outstanding, end of period (2)(3)(4) 2,764,210 $ 6.50 — $ — Non-cash compensation expense recognized (in thousands) $ 926 $ — Six Months Ended June 30, 2015 2014 Number Weighted Number Weighted Outstanding, beginning of year — $ — — $ — Granted 2,764,210 6.50 — — Vested (1) — — — — Forfeited — — — — Outstanding, end of period (2)(3)(4) 2,764,210 $ 6.50 — $ — Non-cash compensation expense recognized (in thousands) $ 946 $ — (1) (2) The aggregate intrinsic value of phantom unit awards outstanding at June 30, 2015 was approximately $13.8 million. (3) At June 30, 2015, the Company had approximately $16.7 million of unrecognized compensation expense related to unvested phantom units outstanding under the 2015 LTIP based upon the fair value of the awards 2015 Unit Options. A unit option entitles a Participant to receive a common unit of the Company upon payment of the exercise price for the option after completion of vesting of the unit option. The exercise price of the unit option shall not be less than the fair market value of the Company’s common unit on the date of grant of the option. The LTIP Committee also determines how the exercise price may be paid by the Participant. The LTIP Committee will determine the vesting and exercise period for unit options. Unit option awards expire 10 years from the date of grant. Generally, unit options to be granted under the 2015 LTIP will vest over a designated period of time. There are no unit options outstanding under the 2015 LTIP at June 30, 2015. No cash was received from the exercise of options for the three and six months ended June 30, 2015 and 2014, respectively. Restricted Units Restricted units are actual common units issued to a participant that are subject to vesting restrictions and evidenced in such manner as the LTIP Committee may deem appropriate, including book-entry registration or issuance of one or more unit certificates. Prior to or upon the grant of an award of restricted units, the LTIP Committee will condition the vesting or transferability of the restricted units upon continued service, the attainment of performance goals or both. A holder of restricted units will have certain rights of holders of common units in general, including the right to vote the restricted units. However, during the period in which the restricted units are subject to vesting restrictions, the holder will not be permitted to sell, assign, transfer, pledge or otherwise encumber the restricted units. Rabbi Trust In 2011, the Company established an excess 401(k) plan relating to certain executives. In connection with the plan, the Company established a “rabbi” trust for the contributed amounts. At June 30, 2015 and December 31, 2014, the Company reflected $5.7 million and $3.9 million, respectively, related to the value of the rabbi trust within other assets, net on its combined consolidated balance sheets, and recorded corresponding liabilities of $5.7 million and $3.9 million as of those same dates within asset retirement obligations and other on its combined consolidated balance sheets. During the three and six months ended June 30, 2015 and 2014, no distributions were made to participants related to the rabbi trust. ARP Long-Term Incentive Plan ARP’s 2012 Long-Term Incentive Plan (the “ARP LTIP”), effective March 2012, provides incentive awards to officers, employees and directors as well as employees of the Company and its affiliates, consultants and joint venture partners who perform services for ARP. The ARP LTIP is administered by the board of the Company, a committee of the board or the board (or committee of the board) of an affiliate (the “ARP LTIP Committee”). Under ARP’s 2012 LTIP, the ARP LTIP Committee may grant awards of phantom units, restricted units, or unit options for an aggregate of 2,900,000 common limited partner units of ARP. At June 30, 2015, ARP had 1,864,057 phantom units, restricted units and unit options outstanding under the ARP LTIP with 134,308 phantom units, restricted units and unit options available for grant. Share based payments to non-employee directors, which have a cash settlement option, are recognized within liabilities in the consolidated financial statements based upon their current fair market value. In the case of awards held by eligible employees, following a “change in control”, as defined in the ARP LTIP, upon the eligible employee’s termination of employment without “cause”, as defined in the ARP LTIP, or upon any other type of termination specified in the eligible employee’s applicable award agreement(s), any unvested award will immediately vest in full and, in the case of options, become exercisable for the one-year period following the date of termination of employment, but in any case not later than the end of the original term of the option. Upon a change in control, all unvested awards held by directors will immediately vest in full. In connection with a change in control, the ARP LTIP Committee, in its sole and absolute discretion and without obtaining the approval or consent of the unitholders or any participant, but subject to the terms of any award agreements and employment agreements to which the Company, as general partner, (or any affiliate) and any participant are party, may take one or more of the following actions (with discretion to differentiate between individual participants and awards for any reason): · cause awards to be assumed or substituted by the surviving entity (or affiliate of such surviving entity); · accelerate the vesting of awards as of immediately prior to the consummation of the transaction that constitutes the change in control so that awards will vest (and, with respect to options, become exercisable) as to ARP’s common units that otherwise would have been unvested so that participants (as holders of awards granted under the new equity plan) may participate in the transaction; · provide for the payment of cash or other consideration to participants in exchange for the cancellation of outstanding awards (in an amount equal to the fair market value of such cancelled awards); · terminate all or some awards upon the consummation of the change-in-control transaction, but only if the ARP LTIP Committee provides for full vesting of awards immediately prior to the consummation of such transaction; and · make such other modifications, adjustments or amendments to outstanding awards or the new equity plan as the ARP LTIP Committee deems necessary or appropriate. ARP Phantom Units . Phantom units represent rights to receive a common unit, an amount of cash or other securities or property based on the value of a common unit, or a combination of common units and cash or other securities or property upon vesting. Phantom units are subject to terms and conditions determined by the ARP LTIP Committee, which may include vesting restrictions. In tandem with phantom unit grants, the ARP LTIP Committee may grant DERs, which are the right to receive an amount in cash, securities, or other property equal to, and at the same time as, the cash distributions or other distributions of securities or other property made by ARP with respect to a common unit during the period that the underlying phantom unit is outstanding. Phantom units granted under the ARP LTIP generally will vest 25% of the original granted amount on each of the four anniversaries of the date of grant. Of the phantom units outstanding under the ARP LTIP at June 30, 2015, 191,408 units will vest within the following twelve months. All phantom units outstanding under the ARP LTIP at June 30, 2015 include DERs. During the three months ended June 30, 2015 and 2014, ARP paid $0.2 million and $0.4 million, respectively, with respect to the ARP LTIP’s DERs. During the six months ended June 30, 2015 and 2014, ARP paid $0.5 million and $1.1 million, respectively, with respect to the ARP LTIP’s DERs. These amounts were recorded as reductions of equity on the Company’s combined consolidated balance sheets. The following table sets forth the ARP LTIP phantom unit activity for the periods indicated: Three Months Ended June 30, 2015 2014 Number Weighted Number Weighted Outstanding, beginning of period 632,010 $ 22.37 812,308 $ 24.35 Granted 9,730 8.50 223,523 20.29 Vested and issued (1) (222,358 ) 24.07 (131,374 ) 24.69 Forfeited (8,125 ) 23.04 (3,250 ) 24.80 Outstanding, end of period (2)(3) 411,257 $ 21.10 901,207 $ 23.29 Vested and not yet issued (4) 24,750 $ 20.39 74,850 $ 24.49 Non-cash compensation expense recognized (in thousands) $ 803 $ 1,590 Six Months Ended June 30, 2015 2014 Number Weighted Number Weighted Outstanding, beginning of year 799,192 $ 22.70 839,808 $ 24.31 Granted 9,730 8.50 227,023 20.30 Vested and issued (1) (389,540 ) 24.02 (146,874 ) 24.48 Forfeited (8,125 ) 23.04 (18,750 ) 23.00 Outstanding, end of period (2)(3) 411,257 $ 21.10 901,207 $ 23.29 Vested and not yet issued (4) 24,750 $ 20.39 74,850 $ 24.49 Non-cash compensation expense recognized (in thousands) $ 3,317 $ 3,321 (1) The intrinsic values of phantom unit awards vested and issued during the three months ended June 30, 2015 and 2014 were $2.0 million and $2.5 million, respectively, and $3.6 million and $2.9 million during the six months ended June 30, 2015 and 2014, respectively. (2) The aggregate intrinsic value for phantom unit awards outstanding at June 30, 2015 2.6 (3) There were approximately $24,000 and $0.1 million recognized as liabilities on the Company’s consolidated balance sheets at June 30, 2015 and December 31, 2014, respectively, representing 14,005 and 26,579 (4) The intrinsic values of phantom unit awards vested, but not yet issued at June 30, 2015 and 2014 were $0.2 million and $1.5 million, respectively. At June 30, 2015, ARP had approximately $3.2 million in unrecognized compensation expense related to unvested phantom units outstanding under the ARP LTIP based upon the fair value of the awards, which is expected to be recognized over a weighted average period of 1.8 years. ARP Unit Options . A unit option is the right to purchase an ARP common unit in the future at a predetermined price (the exercise price). The exercise price of each ARP unit option is determined by the ARP LTIP Committee and may be equal to or greater than the fair market value of ARP’s common unit on the date of grant of the option. The ARP LTIP Committee will determine the vesting and exercise restrictions applicable to an ARP award of options, if any, and the method by which the exercise price may be paid by the participant. Unit option awards expire 10 years from the date of grant. Unit options granted under the ARP LTIP generally will vest 25% on each of the next four anniversaries of the date of grant. There were 106,949 unit options outstanding under the ARP LTIP at June 30, 2015 that will vest within the following twelve months. No cash was received from the exercise of options for the three and six months ended June 30, 2015 and 2014. The following table sets forth the ARP LTIP unit option activity for the periods indicated: Three Months Ended June 30, 2015 2014 Number Weighted Number Weighted Outstanding, beginning of period 1,453,300 $ 24.66 1,472,675 $ 24.66 Granted — — — — Exercised (1) — — — — Forfeited (500 ) 25.14 (3,750 ) 24.67 Outstanding, end of period (2)(3) 1,452,800 $ 24.66 1,468,925 $ 24.66 Options exercisable, end of period (4) 1,342,976 $ 24.67 734,400 $ 24.67 Non-cash compensation expense recognized (in thousands) $ 61 $ 420 Six Months Ended June 30, 2015 2014 Number Weighted Number Weighted Outstanding, beginning of year 1,458,300 $ 24.66 1,482,675 $ 24.66 Granted — — — — Exercised (1) — — — — Forfeited (5,500 ) 24.71 (13,750 ) 24.40 Outstanding, end of period (2)(3) 1,452,800 $ 24.66 1,468,925 $ 24.66 Options exercisable, end of period (4) 1,342,976 $ 24.67 734,400 $ 24.67 Non-cash compensation expense recognized (in thousands) $ 892 $ 1,033 (1) No options were exercised during the three and six months ended June 30, 2015 and 2014. (2) The weighted average remaining contractual life for outstanding options at June 30, 2015 was 6.9 (3) There was no aggregate intrinsic value of options outstanding at June 30, 2015. The aggregate intrinsic value of options outstanding at June 30, 2014 was approximately $2,000. (4) The weighted average remaining contractual life for exercisable options at June 30, 2015 was 6.9 no At June 30, 2015, ARP had approximately $0.1 million in unrecognized compensation expense related to unvested unit options outstanding under the ARP LTIP based upon the fair value of the awards, which is expected to be recognized over a weighted average period of 0.8 years. ARP used the Black-Scholes option pricing model, which is based on Level 3 inputs, to estimate the weighted average fair value of options granted. Restricted Units Restricted units are actual common units issued to a participant that are subject to vesting restrictions and evidenced in such manner as the ARP LTIP Committee may deem appropriate, including book-entry registration or issuance of one or more unit certificates. Prior to or upon the grant of an award of restricted units, the ARP LTIP Committee will condition the vesting or transferability of the restricted units upon continued service, the attainment of performance goals or both. A holder of restricted units will have certain rights of holders of common units in general, including the right to vote the restricted units. However, during the period in which the restricted units are subject to vesting restrictions, the holder will not be permitted to sell, assign, transfer, pledge or otherwise encumber the restricted units. |