Form 4: Plains All American Pipeline EVP & COO Chris Chandler Reports Changes in Beneficial Ownership

Chris Chandler, EVP & COO of Plains All American Pipeline, reports the acquisition and disposal of common units and phantom units, impacting his beneficial ownership.

Summary

• On August 14, 2024, Chris Chandler, EVP & COO of Plains All American Pipeline LP, reported changes in his beneficial ownership of the company's securities.
• He acquired 167,378 common units and disposed of 65,864 common units at a price of $17.05.
• He also acquired 143,100 phantom units that will vest in August 2027, contingent on continued service and the company's performance relative to total shareholder return (TSR) and distributable cash flow (DCF) per common unit equivalent (CUE).
• The phantom units are part of the Long-Term Incentive Plan and include distribution equivalent rights payable in cash.

Sentiment

Score: 6

Explanation: The document is a neutral disclosure of transactions and compensation plans. The sentiment is moderately positive due to the alignment of management incentives with shareholder value.

Positives

• The granting of phantom units aligns management's interests with those of shareholders through TSR and DCF/CUE performance metrics.
• The Long-Term Incentive Plan encourages continued service through the vesting requirements.

Risks

• The vesting of a portion of the phantom units is contingent on achieving specific TSR and DCF/CUE targets, which may not be met.
• The payout for Tranches 2 and 3 of the phantom units can be reduced if PAA's leverage ratio exceeds the upper end of its target range.

Future Outlook

The vesting of phantom units in August 2027 is contingent on the company's performance over the next three years, specifically TSR relative to peers and achievement of DCF/CUE targets.

Industry Context

This filing is a routine disclosure of changes in beneficial ownership by a company executive, which is common in the energy sector. The use of phantom units as part of executive compensation is also a standard practice to align management incentives with shareholder value creation.

Comparison to Industry Standards

• Companies like Enterprise Products Partners (EPD) and Kinder Morgan (KMI) also utilize long-term incentive plans with performance-based vesting conditions for their executives.
• The specific TSR and DCF/CUE targets are tailored to Plains All American Pipeline's financial goals and operational strategy, but the overall structure is consistent with industry norms.

Stakeholder Impact

• Shareholders: The vesting of phantom units based on TSR and DCF/CUE aligns management's interests with shareholder value.
• Employees: The Long-Term Incentive Plan provides incentives for continued service and achievement of company goals.

Next Steps

• Monitor Plains All American Pipeline's performance against the TSR and DCF/CUE targets to assess the likelihood of phantom unit vesting.
• Track changes in the company's leverage ratio to understand potential impacts on phantom unit payouts.

Key Dates