Form 4: Plains All American Pipeline LP: Executive Changes in Beneficial Ownership

Jeremy L. Goebel, EVP & CCO of Plains All American Pipeline LP, reports changes in beneficial ownership of common units and phantom units.

Summary

• On August 14, 2024, Jeremy L. Goebel reported transactions involving Plains All American Pipeline LP common units and phantom units.
• These transactions include the acquisition and disposal of common units, as well as the granting of phantom units under the Long-Term Incentive Plan.
• Goebel directly owns 101,514 common units and indirectly owns 380,737 common units through a Family Limited Partnership.
• He also holds 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).
• Some phantom units are subject to reduction based on the company's leverage ratio.

Sentiment

Score: 6

Explanation: The document is a standard regulatory filing, indicating routine executive compensation adjustments. The sentiment is neutral, with a slight positive bias due to the alignment of executive incentives with shareholder value.

Positives

• The granting of phantom units under the Long-Term Incentive Plan aligns executive compensation with the company's long-term performance.
• The vesting criteria based on TSR and DCF/CUE incentivize management to improve shareholder returns and cash flow generation.

Negatives

• The potential reduction in phantom unit payout based on the company's leverage ratio could disincentivize growth if it leads to higher debt levels.

Risks

• The vesting of phantom units is contingent on meeting specific performance targets, which may not be achieved.
• Changes in the company's leverage ratio could impact the payout of phantom units.
• Negative TSR could reduce the payout of Tranche 2 phantom units.

Future Outlook

The vesting of phantom units is tied to the company's performance over the three-year period ending June 30, 2027, incentivizing management to focus on long-term value creation.

Industry Context

This filing is a routine disclosure of changes in beneficial ownership by a company executive, which is common in the energy infrastructure industry.

Comparison to Industry Standards

• Long-term incentive plans using TSR and DCF metrics are common among publicly traded energy companies to align executive compensation with shareholder value.
• Peer groups for TSR comparisons often include companies like Enterprise Products Partners (EPD), Magellan Midstream Partners (MMP), and Kinder Morgan (KMI).
• Target leverage ratios in the 2.5x to 3.0x range are typical for midstream companies seeking to maintain financial flexibility and investment-grade credit ratings.

Stakeholder Impact

• Shareholders: The vesting of phantom units based on TSR and DCF/CUE aligns management's interests with shareholder returns.
• Employees: The Long-Term Incentive Plan provides incentives for employees to contribute to the company's success.

Next Steps

• Continued monitoring of the company's performance against the TSR and DCF/CUE targets.
• Tracking changes in the company's leverage ratio.
• Observation of the vesting of phantom units in August 2027.

Key Dates