Business Context and Reporting Period
This Form 8-K is a current report filed by Plains GP Holdings, L.P. (PAGP) on August 15, 2019. 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 provide revenue, profit, cash flow, margin, debt, or liquidity metrics. The document focuses exclusively on executive compensation arrangements.
Material Changes
The primary material change disclosed is an adjustment to the annual Long-Term Incentive Plan (LTIP) target for Richard McGee, Executive Vice President, General Counsel, and Secretary. His target was increased from 250% of base salary to 300% of base salary. All other executive targets remained consistent with the 2019 proxy statement disclosures.
Guidance, Outlook, and Management Commentary
The filing details the vesting conditions for the granted phantom units and tandem distribution equivalent rights (DERs), which are tied to the performance of Plains All American Pipeline, L.P. (PAA):
- Phantom Unit Vesting: 50% vests on the August 2022 distribution date. The remaining 50% vests on the later of the August 2022 date or the first distribution date following PAA achieving a distributable cash flow (DCF) per common unit of at least $2.65 on a trailing four-quarter basis.
- DER Vesting: 50% vests on the August 2020 distribution date. The remaining 50% vests on the first distribution date after January 1, 2021, if PAA achieves a DCF per common unit of at least $2.50 on a trailing four-quarter basis.
- Performance Periods: The trailing four-quarter period for the $2.65 DCF target may not begin until after December 31, 2020.
Executive Compensation Details
| Name and Title | Annual LTIP Target | 2019 Award Value | Phantom Units Granted |
|---|---|---|---|
| Willie Chiang, CEO | 500% of base salary | $3,000,000 | 125,740 |
| Al Swanson, EVP & CFO | 300% of base salary | $1,200,000 | 50,300 |
| Richard McGee, EVP, GC & Secretary | 300% of base salary | $1,200,000 | 50,300 |
Investor Verification Checklist
- Verify the specific base salary figures for the named executives to confirm the calculated award values.
- Monitor PAA's quarterly distributable cash flow (DCF) per common unit reports to track progress toward the $2.50 and $2.65 vesting thresholds.
- Confirm the exact distribution dates for August 2020 and August 2022 to determine vesting timelines.
- Review the 2019 proxy statement to compare the disclosed LTIP targets against the grants approved in this filing.