Business Context and Reporting Period
This Form 8-K is a current report filed by Plains GP Holdings, L.P. (PAGP) on August 13, 2020. The filing discloses the approval of phantom unit grants to Named Executive Officers by the board of directors of PAA GP Holdings LLC, the general partner of PAGP.
Key Financial Metrics
The filing does not report revenue, profit, cash flow, margins, debt, or liquidity metrics. It focuses exclusively on executive compensation details.
| Executive Officer | Title | 2020 LTIP Award Value | Phantom Units Granted |
|---|---|---|---|
| Willie Chiang | Chief Executive Officer | $3,000,000 | 375,940 |
| Al Swanson | Executive Vice President and CFO | $1,200,000 | 150,380 |
| Richard McGee | Executive Vice President, General Counsel and Secretary | $1,200,000 | 150,380 |
| Chris Chandler | Executive Vice President and COO | $1,200,000 | 150,380 |
| Jeremy Goebel | Executive Vice President – Commercial | $1,200,000 | 150,380 |
Note: Unit counts are based on a 10-day volume-weighted average price of $7.98.
Material Changes
The filing reports the execution of annual Long-Term Incentive Plan (LTIP) targets consistent with disclosures in the 2020 proxy statement. There are no reported material changes to financial performance or corporate structure in this document.
Outlook, Risks, and Compensation Structure
The phantom units vest in three tranches on the August 2023 distribution date, contingent on continued service and performance metrics:
- Tranche 1 (50%): Vests based on continued service.
- Tranche 2 (25%): Performance-based on Total Shareholder Return (TSR) relative to a peer group (including S&P 500 and Alerian MLP Index) over three years ending June 30, 2023. Payout range is 0% to 200%.
- Tranche 3 (25%): Performance-based on (i) cumulative distributable cash flow per common unit of $6.00 over three years ending June 30, 2023, and (ii) achieving a leverage ratio consistent with the long-term plan as of August 2020. Payout range is 0% to 200%.
Units convert 1-for-1 into common units of Plains All American Pipeline, L.P. (PAA). Tandem distribution equivalent rights (DERs) accrue and are paid in cash, with Tranche 1 DERs paid quarterly starting November 2021 and Tranches 2 and 3 paid in a lump sum upon vesting.
Investor Verification Checklist
- Verify the 10-day volume-weighted average price of $7.98 used to calculate unit grants.
- Confirm the specific leverage ratio target assumed in the long-term plan as of August 2020 for Tranche 3 vesting.
- Review the 2020 proxy statement to validate the disclosed LTIP target percentages (500% for CEO, 300% for others).
- Monitor PAA's TSR performance against the S&P 500 and Alerian MLP Index through June 30, 2023.
- Track PAA's cumulative distributable cash flow per common unit to assess Tranche 3 eligibility.