PLAINS ALL AMERICAN PIPELINE LPPAA

PLAINS ALL AMERICAN PIPELINE LP Stock Compensation Disclosure

10-KFiled Feb 27, 20263 min read
Equity-Indexed Compensation Plans
Our equity-indexed compensation plans primarily include LTIPs. Although other types of awards are contemplated under certain of the LTIPs, currently outstanding awards are limited to “phantom units,” which mature into the right to receive common units of PAA (or cash equivalent) upon vesting, and “tracking units,” which, upon vesting, represent the right to receive a cash payment in an amount based upon the market value of a PAA common unit at the time of vesting. Some awards also include DERs, which, subject to applicable vesting criteria, entitle the grantee to a cash payment equal to the cash distribution paid on an outstanding PAA common unit. The DERs terminate with the vesting or forfeiture of the underlying LTIP award.

Our LTIP awards include both liability-classified and equity-classified awards. In accordance with FASB guidance regarding share-based payments, the fair value of liability-classified LTIP awards is calculated based on the closing market price of the underlying PAA unit at each balance sheet date and adjusted for the present value of any distributions that are estimated to occur on the underlying units over the vesting period that will not be received by the award recipients. The fair value for equity-classified awards is calculated in a similar manner on the respective grant dates. These fair values are recognized as compensation expense over the service period. We have elected to recognize forfeitures of awards when they occur.
Our LTIP awards contain (i) time-based vesting criteria, (ii) performance conditions, (iii) market conditions or (iv) a combination of time-based vesting criteria and performance conditions. For awards with performance conditions, expense is accrued over the service period only if the performance condition is considered probable of occurring. When awards with performance conditions that were previously considered improbable become probable, we incur additional expense in the period that the probability assessment changes. This is necessary to bring the accrued obligation associated with these awards up to the level it would have been if we had been accruing for these awards since the grant date. For awards with market conditions, the probable outcomes are determined on the respective dates that the fair values are calculated, and the resulting expense is accrued over the service period.

The following is a summary of the awards authorized under our LTIPs (including those associated with discontinued operations) as of December 31, 2025 (in millions):

LTIPLTIP
Awards Authorized
Plains All American 2021 Long-Term Incentive Plan28.8 
Plains All American PNG Successor Long-Term Incentive Plan1.3 
Plains All American GP LLC 2006 Long-Term Incentive Tracking Unit Plan13.4 
Total (1)
43.5 
(1)Of the 43.5 million total awards authorized, 13.4 million awards are currently available for future grant. The remaining balance has already vested or is currently outstanding.

As of December 31, 2025, 10.5 million LTIP awards were outstanding (including those associated with discontinued operations). Of the awards outstanding, 8.9 million include associated DERs. At December 31, 2025, certain of the outstanding LTIP awards were considered probable of vesting and such awards are expected to vest at various dates between August 2026 and August 2030. As of December 31, 2025, the outstanding awards that are considered probable of vesting have a remaining unrecognized fair value of approximately $69 million.
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Historical Timeline

Fiscal YearFiled
2025Feb 27, 2026Showing above
2024Feb 28, 2025
2023Feb 29, 2024

About Stock Compensation Disclosures

Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.

Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.

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