Energy Transfer LP

9. EQUITY INCENTIVE PLANS:

We, Sunoco LP and USAC, have issued equity incentive plans for employees, officers and directors, which provide for various types of awards, including options to purchase Common Units, restricted units, phantom units, distribution equivalent rights (“DERs”), common unit appreciation rights, cash restricted units and other equity-based compensation awards. As of December 31, 2024, an aggregate total of 38.6 million Energy Transfer Common Units remain available to be awarded under our equity incentive plans.

Energy Transfer Long-Term Incentive Plan

We have granted restricted unit awards to employees that vest over a specified time period, typically a five-year service vesting requirement, with vesting based on continued employment as of each applicable vesting date. Upon vesting, Energy Transfer Common Units are issued. These unit awards entitle the recipients of the unit awards to receive, with respect to each Common Unit subject to such award that has not either vested or been forfeited, a cash payment equal to each cash distribution per Common Unit made by us on our Common Units promptly following each such distribution by us to our Unitholders. We refer to these rights as “distribution equivalent rights.” Under our equity incentive plans, our non-employee directors each receive grants with a five-year service vesting requirement.

The following table shows the activity of the awards granted to employees and non-employee directors:

During the years ended December 31, 2024, 2023, and 2022, the weighted average grant-date fair value per unit award granted was $18.95, $13.78 and $11.56, respectively, and the total fair value of awards vested was $194 million, $106 million and $103 million, respectively, based on the market price of the respective Common Units as of the vesting date. As of December 31, 2024, a total of 36.1 million unit awards remain unvested, for which Energy Transfer expects to recognize a total of $313 million in compensation expense over a weighted average period of 3.0 years.

Cash Restricted Units. The Partnership has also granted cash restricted units, which vest through three years of service. A cash restricted unit entitles the award recipient to receive cash equal to the market value of one Energy Transfer Common Unit upon vesting. For the years ended December 31, 2024, 2023 and 2022, the Partnership granted a total of 2.8 million,3.2 million and 3.8 million cash restricted units, respectively. As of December 31, 2024, a total of 6.0 million cash restricted units were unvested. As of December 31, 2024, the Partnership’s consolidated balance sheet reflected aggregate liabilities of $5.1 million related to cash restricted units.

Subsidiary Long-Term Incentive Plans

Each of Sunoco LP and USAC has granted restricted or phantom unit awards (collectively, the “Subsidiary Unit Awards”) to employees and directors that entitle the grantees to receive common units of the respective subsidiary. In some cases, at the discretion of the respective subsidiary’s compensation committee, the grantee may instead receive an amount of cash equivalent to the value of common units upon vesting. Substantially all of the Subsidiary Unit Awards are time-vested grants, which generally vest over a three or five-year period, that entitles the grantees of the unit awards to receive an amount of cash equal to the per unit cash distributions made by the respective subsidiaries during the period the restricted unit is outstanding.

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The following table summarizes the activity of the Subsidiary Unit Awards:

The following table summarizes the weighted average grant-date fair value per unit award granted:

The total fair value of Subsidiary Unit Awards vested for the years ended December 31, 2024, 2023 and 2022 was $29 million, $37 million and $26 million, respectively, based on the market price of Sunoco LP and USAC common units as of the vesting date. As of December 31, 2024, estimated compensation cost related to Subsidiary Unit Awards not yet recognized was $51 million, and the weighted average period over which this cost is expected to be recognized in expense is 3.7 years.

As of December 31, 2024, Sunoco LP and USAC also had outstanding grants of cash restricted units totaling 134,225 and 107,820, respectively, for which an aggregate liability of $0.1 million is included on the Partnership’s consolidated balance sheet.