LGCYP Legacy Reserves LP - 8% Series A Fixed-To-Floating Rate Cumulative Redeemable Perpetual Preferred Units (delisted)

PROPOSAL 3

ADVISORY (NON-BINDING) VOTE ON FREQUENCY OF FUTURE VOTES ON EXECUTIVE COMPENSATION

In accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC, we are providing the unitholders with an opportunity to provide an advisory (non-binding) vote with respect to whether future unitholder advisory votes on executive compensation should occur every three years, every two years or every year.

The Board recommends that unitholders support a frequency period of every three years for future advisory unitholder votes on compensation for our named executive officers. The Board believes holding an advisory vote on executive compensation every three years would allow us sufficient time to conduct a meaningful and detailed review of its pay practices in response to such unitholder advisory vote. Further, the Board believes that holding an advisory vote on executive compensation every three years would align more closely with our compensation philosophy, which is to drive and support the long-term goal of growing asset value and total unitholder return by paying for performance.

This advisory vote on frequency of advisory votes on executive compensation gives unitholders the opportunity to state their preference on how frequently we conduct the advisory vote on our executive compensation. Unitholders will be able to specify one of four choices for this proposal on the proxy card: three years, two years, one year or abstain.

While the Board recommends holding an advisory vote on executive compensation every three years, the Board recognizes that a more frequent advisory vote may be appropriate if a majority of our unitholders indicate their disapproval of the Partnership’s executive compensation practices.

This advisory vote on the frequency of future advisory votes on executive compensation is non-binding on the Board. Unitholders are not voting to approve or disapprove the Board’s recommendation. Although non-binding, the Board and the Compensation Committee will carefully review the voting results and consider these results in setting the future advisory vote frequency.

THE BOARD RECOMMENDS THAT YOU VOTE “3 YEARS” WITH RESPECT
TO THE FREQUENCY OF VOTES ON EXECUTIVE COMPENSATION.

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CORPORATE GOVERNANCE

Management of Legacy Reserves LP

The directors and officers of Legacy Reserves GP, LLC, as our general partner, manage our operations and activities. Our general partner is not elected by our unitholders and will not be subject to re-election on a regular basis in the future. Other than through their ability to elect directors of our general partner as described below, unitholders will not be entitled to directly or indirectly participate in our management or operation.

Our general partner owes a fiduciary duty to the Partnership. Our general partner will be liable, as general partner, for all of our debts (to the extent not paid from our assets), except for indebtedness or other obligations that are made specifically nonrecourse to it. Our general partner therefore may cause us to incur indebtedness or other obligations that are nonrecourse to it.

The amended and restated limited liability company agreement, as amended, of our general partner provides for a board of directors of not less than seven and not more than nine members.

Our unitholders, including affiliates of our general partner, are entitled to elect all of the directors of our general partner annually. Directors of our general partner hold office for a one-year term and thereafter until the earlier of their death, resignation, removal or disqualification or until their successors have been elected and qualified.

Board of Directors

During the fiscal year ended December 31, 2016, our Board of Directors held 10 meetings. It is the policy of our Board of Directors to encourage directors to attend each meeting of unitholders. All of our directors serving on the Board of Directors at the time of the Annual Meeting held in 2016 attended the Annual Meeting held in 2016.

Director Independence

The Board of Directors includes four individuals who the Board of Directors has determined meet the independence and experience standards established by the NASDAQ Global Select Market, or NASDAQ, and the Exchange Act: Messrs. Granberry, Lawrence, Sullivan and Vann.

The Board annually reviews all relevant business relationships any director may have with Legacy and the independence standards established by the NASDAQ.

During 2016, the audit committee met 4 times, the compensation committee met 4 times, and the nominating, governance and conflicts committee met 7 times.

Leadership Structure of the Board

As prescribed by the Amended and Restated Limited Liability Company Agreement of our general partner, the Chairman of the Board of Directors has the power to preside at all meetings of the Board. Mr. C. Brown served as Chairman of our Board from our founding until May 12, 2016 and also previously served as our President and Chief Executive Officer until March 1, 2015.

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On May 12, 2016, the Board appointed Mr. Horne as Chairman of the Board. Mr. Horne also currently serves as our President and Chief Executive Officer. The nominating, governance and conflicts committee believes that Mr. Horne’s history as one of the Partnership’s founders, his industry experience and excellent performance in his previous roles at Legacy make him the appropriate leader of the Board. Also on May 12, 2016, the Board named Mr. Vann as the Lead Independent Director of the Board. The Lead Independent Director has clearly defined leadership authority and responsibilities, which include presiding at all meetings of the Board at which the Chairman of the Board is not present, including executive sessions of the independent directors, and serving as liaison between the Chairman of the Board and the independent directors. Our Lead Independent Director is afforded direct and complete access to the Chairman of the Board at any time as such director deems necessary or appropriate. The nominating, governance and conflicts committee will reevaluate its view on the Board’s leadership structure periodically.

Risk Oversight

While it is the job of management to assess and manage our risk, the Board and its audit committee (each where applicable) discuss the guidelines and policies that govern the process by which risk assessment and management is undertaken and evaluate reports from various functions with the management team on risk assessment and management. The Board interfaces regularly with management and receives periodic reports that include updates on operational, financial, legal and risk management matters. The audit committee assists the Board in oversight of the integrity of our financial statements and our compliance with legal and regulatory requirements, including those related to the health, safety and environmental performance of Legacy. The audit committee also reviews and assesses the performance of our internal audit function and our independent auditors. The Board receives regular reports from the audit committee. We do not believe that the Board’s role in risk oversight has an effect on the Board’s leadership structure.

Evaluation of Compensation Risk

Our compensation committee has reviewed our employee compensation programs and overall compensation structure and internal controls. There are several design features of our compensation policy that reduce the likelihood of excessive risk-taking:

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Audit Committee

Membership

The audit committee has been established in accordance with Rule 10A-3 promulgated under the Exchange Act. The Board of Directors has appointed Messrs. Lawrence, Sullivan, and Granberry as members of the audit committee. Mr. Lawrence serves as the chairman of the committee. Each of the members of the audit committee has been determined by the Board of Directors to be independent under NASDAQ’s standards for audit committee members to serve on its audit committee. In addition, the Board of Directors has determined that at least one member of the audit committee (Mr. Lawrence) has such accounting or related financial management expertise sufficient to qualify such person as the audit committee financial expert in accordance with Item 407 of Regulation S-K and NASDAQ requirements.

Responsibilities

The audit committee assists the Board of Directors in overseeing:

The audit committee is also charged with making regular reports to the Board of Directors and preparing any reports that may be required under NASDAQ-listing standards or SEC rules.

Charter

The Board of Directors has adopted a charter for the audit committee, a copy of which is available on our website at www.legacylp.com . Please note that the preceding Internet address is for information purposes only and is not intended to be a hyperlink. Accordingly, no information found or provided at that Internet address or at our website in general is intended or deemed to be incorporated by reference herein.

Compensation Committee

Membership

The compensation committee consists of three members of the Board of Directors, Messrs. Vann, Granberry and Sullivan, all of whom have been determined by the Board of Directors to be independent under NASDAQ-listing standards. In addition, each member of the compensation committee qualifies as a “non-employee” director within the meaning of Rule 16b-3 promulgated under the Exchange Act, and as an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code. Mr. Vann is the chairman of the compensation committee.

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Responsibilities

The committee’s responsibilities under its charter are to:

Charter

The Board of Directors has adopted a charter for the compensation committee, a copy of which is available on our website at www.legacylp.com . Please note that the preceding Internet address is for information purposes only and is not intended to be a hyperlink. Accordingly, no information found or provided at that Internet address or at our website in general is intended or deemed to be incorporated by reference herein.

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Nominating, Governance and Conflicts Committee

Membership

The nominating, governance and conflicts committee consists of Messrs. Granberry, Lawrence, Sullivan and Vann. Mr. Granberry serves as the chairman of the committee. The Board of Directors has determined that all members of the nominating and governance committee are independent under NASDAQ-listing standards.

Responsibilities

The duties of the nominating, governance and conflicts committee are to:

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Further, the nominating, governance and conflicts committee, at the request of the Board of Directors, will review specific matters that the Board of Directors believes may involve a conflict of interest. The committee will determine if the resolution of the conflict of interest is fair and reasonable to the unitholders. Any matters approved by the committee will be conclusively deemed to be fair and reasonable to us, approved by all of our partners and not a breach by our general partner of any duties it may owe us or our unitholders.

Director Nominations

Under our fifth amended and restated agreement of limited partnership, unitholders desiring to suggest a Board nominee must give prior written notice to our Secretary regarding the persons to be nominated. The notice must be received at our principal executive offices at the address shown on the cover page within the specified period and must be accompanied by the information and documents specified in the fifth amended and restated agreement of limited partnership. A copy of the fifth amended and restated agreement of limited partnership may be obtained by writing to our Secretary at the address shown on the cover page of this proxy statement.

Recommendations by unitholders for directors to be nominated at the 2018 annual meeting of unitholders must be in writing and include sufficient biographical and other relevant information such that an informed judgment as to the proposed nominee’s qualifications can be made and the name, address and the class and number of units owned by such unitholder. Recommendations must be accompanied by a notarized statement executed by the proposed nominee consenting to be named in the proxy statement, if nominated, and to serve as a director, if elected. Notice and the accompanying information must be received by our Secretary at our principal executive office at the address shown on the cover page of this proxy statement no later than January 11, 2018 and no earlier than December 27, 2017.

The fifth amended and restated agreement of limited partnership does not affect any unitholder’s right to request inclusion of proposals in our proxy statement pursuant to Rule 14a-8 promulgated under the Exchange Act. For more information with respect to Rule 14a-8, please see “Other Matters–Unitholder Proposals.”

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Nomination Criteria

The nominating, governance and conflicts committee is responsible for assessing the skills and characteristics that candidates for election to our Board of Directors should possess, as well as the composition of our Board of Directors as a whole. The assessments include qualifications under applicable independence standards and other standards applicable to our Board of Directors and its committees as well as consideration of skills and experience in the context of the needs of our Board of Directors. Each candidate must meet certain minimum qualifications including:

The nominating, governance and conflicts committee may also consider the ability of a prospective candidate to work with the then-existing interpersonal dynamics of our Board of Directors and the candidate’s ability to contribute to the collaborative culture among the members of the Board of Directors.

The nominating, governance and conflicts committee will also evaluate each nominee based upon a consideration of diversity, age, skills and experience in the context of the needs of the Board of Directors. The committee does not have a policy with regard to the consideration of diversity in identifying director nominees. Diversity, including diversity of experience, professional expertise, gender, race and age, is one factor considered in evaluating a nominee.

Based on this initial evaluation, the nominating, governance and conflicts committee will determine whether to interview the candidate and, if warranted, will recommend that one or more of its members, other members of our Board of Directors or senior management, as appropriate, interview the candidate in person or by telephone. After completing this evaluation and interview process, the committee ultimately determines its list of nominees and submits it to the full Board of Directors for consideration and approval.

Charter

Our Board of Directors has adopted a charter for the nominating, governance and conflicts committee, a copy of which is available on our website at www.legacylp.com . Please note that the preceding Internet address is for information purposes only and is not intended to be a hyperlink. Accordingly, no information found or provided at that Internet address or at our website in general is intended or deemed to be incorporated by reference herein.

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Code of Ethics

The Board of Directors has adopted a Code of Ethics and Business Conduct applicable to officers and directors of our general partner and our employees, including the principal executive officer, principal financial officer, principal accounting officer and controller, or those persons performing similar functions, of our general partner. The Code of Ethics and Business Conduct is available on our website at www.legacylp.com and in print to any unitholder who requests it. Amendments to or waivers from the Code of Ethics and Business Conduct will also be available on our website and reported as may be required under SEC rules; however, any technical, administrative or other non-substantive amendments to the Code of Ethics and Business Conduct may not be posted. Please note that the preceding Internet address is for information purposes only and is not intended to be a hyperlink. Accordingly, no information found or provided at that Internet address or at our website in general is intended or deemed to be incorporated by reference herein.

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COMPENSATION DISCUSSION AND ANALYSIS

The following discussion and analysis of compensation arrangements of the named executive officers of our general partner, Legacy Reserves GP, LLC, should be read together with the compensation tables and related disclosures set forth below.

Introduction

Our general partner manages our operations and activities through its Board of Directors. Under our fifth amended and restated agreement of limited partnership, we reimburse our general partner for direct and indirect general and administrative expenses incurred on our behalf, including the compensation of our general partner’s executive officers. Our general partner has not incurred any reimbursable expenses related to the compensation of our general partner’s executive officers for their management of us. Currently, our general partner’s executive officers are employed by our wholly owned subsidiary, Legacy Reserves Services, Inc., and are directly compensated for their management of us pursuant to their employment agreements. The compensation amounts disclosed in this section and under “Executive Compensation” reflect the total compensation paid to the executive officers of our general partner. Please read “Executive Compensation - Employment Agreements.”

Executive Summary

We are a master limited partnership headquartered in Midland, Texas, focused on the acquisition and development of oil and natural gas properties primarily located in the Permian Basin, East Texas, Rocky Mountain and Mid-Continent regions of the United States. Our compensation policy, as adopted by the compensation committee and approved by the Board of Directors in March 2013 and subsequently amended (the “ Compensation Policy ”), is designed to make our executive officers’ total compensation comparable to that of similarly-sized publicly traded limited partnerships and exploration and production companies. The goals of our Compensation Policy are to:

In meeting the goal of sustainable growth, we intend to invest in our long-term opportunities while meeting our short-term commitments.

In order to support and enhance the goals of the Compensation Policy, the compensation committee and the Board, as applicable, have approved the payment of quarterly cash retention bonuses to be paid pursuant to the terms described in “— Components of Compensation — 2017 Adjustments to the Compensation Policy and Quarterly Cash Retention Bonuses .”

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To achieve these goals, our total compensation to our executive officers is comprised of base salary, annual cash incentive compensation (annual cash bonus), quarterly cash retention bonus and equity-based incentive compensation. The charts below illustrate the allocation of compensation opportunities between salary, target annual cash bonus, quarterly cash retention bonus and target annual grants of equity to our Chief Executive Officer and other named executive officers (“ NEOs ”) with respect to fiscal year 2016. Base salaries in the charts below are represented by annualized base salaries that were effective during the year ended December 31, 2016, beginning on March 1, 2016. Target incentive compensation is based on the targets in place with respect to 2016 performance. Quarterly cash retention bonuses included in the charts below are based upon actual amounts paid to the Chief Executive Officer and the other NEOs and are deducted from each respective NEO’s target equity incentive compensation pertaining to 2016 performance.

Chief Executive Officer	Average Other NEOs

On February 21, 2017, the compensation committee approved certain amendments to our Compensation Policy as further described under “— Components of Compensation — 2017 Adjustments to the Compensation Policy and Quarterly Cash Retention Bonuses .”

The total compensation provided to our executive officers in fiscal year 2015 was comprised of compensation elements attributable solely to our Compensation Policy and the total compensation provided to our executive officers in fiscal year 2016 was comprised of elements attributable to our Compensation Policy and the Retention Bonus Agreements as described under “— Quarterly Cash Retention Bonuses .”

Cash Incentive Compensation . We believe meaningful annual cash incentive compensation to be a strong motivating factor that will result in significant increases in value and in growth. Payouts of annual cash incentive compensation to our executive officers during fiscal year 2016 and 2017 were made in accordance with the Compensation Policy based on performance during fiscal year 2015 and 2016, respectively. For more information regarding cash incentive compensation earned in fiscal year 2016 please see “— Components of Compensation — Cash Incentive Compensation (Cash Bonus) under the Compensation Policy.”

Subjective Component of Cash Incentive Compensation . In determining cash incentive awards earned in fiscal year 2016, our compensation committee conducted a subjective evaluation of individual officer and Partnership performance attributable to fiscal year 2016 for 50% of target annual cash incentive compensation. Under the Compensation Policy, the compensation committee has the discretion to award up to 150% of the subjective component of target annual cash incentive compensation.

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Objective Component of Cash Incentive Compensation . The remaining 50% of target annual cash incentive compensation earned in fiscal year 2016 was objectively determined in accordance with the objective criteria set forth in our Compensation Policy, which are based on our results and the achievement of operational and financial goals and objectives during fiscal year 2016 and are designed to align the incentive compensation of each executive officer with unitholder return by rewarding performance that maintains or grows distributions and exceeds the specified target levels for EBITDA (which is defined to mean Adjusted EBITDA, a non-GAAP financial measure, as described in the Partnership’s annual report on Form 10-K). The respective criteria target levels, for purposes of the determination of annual objective cash incentive compensation only, are set by the compensation committee at the beginning of each year after considering management’s recommendation.

Set forth below are the target levels for EBITDA and cash distribution growth targets used to determine the objective component of each executive officer’s annual cash bonus that may be earned with respect to fiscal year 2016. Achievement of less than 85% of Target EBITDA or failure to maintain the prior cash distribution level, respectively, will result in no annual cash bonus awarded with respect to that particular performance measure.

Set forth in the table below is a summary of the target cash incentive award amounts attributable to performance during 2016 of each named executive officer pursuant to the Compensation Policy, expressed as a percentage of each of such executive officer’s applicable base salary.

(1)       Salaries effective March 1, 2016.

(2)       On May 12, 2016, Mr. Horne was appointed as the Chairman of the Board.

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Quarterly Cash Retention Bonuses. Additionally, on June 13, 2016, the compensation committee approved, with respect to Mr. Horne, and the Board approved the recommendation of the compensation committee, with respect to Messrs. Westcott, Hammond, McGraw and LeRoy, the payment of quarterly cash retention bonuses for fiscal quarters ended June 30, September 30 and December 31, 2016 in the amounts per quarter as follows: $125,000 to Mr. Horne, $100,000 to Mr. Westcott, $100,000 to Mr. Hammond, $50,000 to Mr. McGraw and $25,000 to Mr. LeRoy. The total amount of the quarterly cash retention bonuses paid in 2016 will be subtracted from the cash settlement of phantom units to be paid to such executive officers in 2019, if any, in connection with the vesting of phantom units awarded to such executive officers in 2016. For more information, including updates to the cash quarterly cash retention bonuses for 2017, please see “— Components of Compensation — 2017 Adjustments to the Compensation Policy and Quarterly Cash Retention Bonuses ”

Equity-Based Incentive Compensation . We believe meaningful equity participation by each named executive officer to be a strong motivating factor that will result in significant increases in value and in growth. Grants of equity-based compensation to our executive officers during fiscal year 2016 and 2017 were made in accordance with the Compensation Policy based on performance during fiscal year 2015 and 2016, respectively.

The subjective or service-based component of equity-based incentive compensation awarded as phantom units and associated distribution equivalent rights (“ DERs ”) is determined by a subjective evaluation of prior fiscal year performance by the compensation committee. The objective or performance-based component of equity-based incentive compensation, awarded as phantom units and associated DERs, is designed to reward our executive officers for their long-term performance and to align their interests with those of our unitholders. For more information regarding grants made during the fiscal years 2017 and 2016, please see “— Components of Compensation — Equity-Based Incentive Compensation under the Compensation Policy. ”

Subjective Component of Equity –Based Incentive Compensation under the Compensation Policy (60% of target) . Under the Compensation Policy, equity-based incentive compensation awarded under this component and associated DERs cliff vest after a three-year period and are not subject to any performance criteria. The DERs entitle the recipient of the award to a payment equivalent to the amount of the per unit distribution payable to unitholders over the vesting period. The compensation committee has the discretion to award up to 200% of the subjective component of target equity-based incentive compensation.

Objective Component of Equity –Based Incentive Compensation under the Compensation Policy (40% of target) . Under the Compensation Policy, the objective component is granted at 200% of the target amount each year but is subject to cliff vesting after a three-year period in accordance with an objective performance-related formula (as set forth under “ Calculation of Vesting of Objective Component of Equity–Based Compensation under the Compensation Policy ” below) based on our objective average annual total unitholder return and the following: 1) our total unitholder return compared to the total unitholder returns of a group of our peers, and 2) our total unitholder return compared to the total unitholder returns of a broader group of MLPs. All total unitholder returns are measured during the cumulative three-year measurement period prior to the vesting date. If none or only a portion of phantom units vest as a result of target levels not being met, the unvested portion of phantom units and associated DERs will be forfeited.

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Set forth in the table below is a summary of the target equity-based incentive award amounts attributable to performance during 2016 (and granted during fiscal year 2017) of each named executive officer pursuant to the Compensation Policy, expressed as a percentage of each of such executive officer’s applicable base salary.

Set forth in the table below is a summary of the target equity-based incentive award amounts attributable to performance during 2015 (and granted during fiscal year 2016) of each named executive officer pursuant to the Compensation Policy, expressed as a percentage of each of such executive officer’s applicable base salary.

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Corporate Governance

Compensation Committee Authority

Executive officer compensation is administered by the compensation committee of the Board of Directors, which is currently composed of three members, Messrs. Vann, Granberry and Sullivan. The Board of Directors appoints the compensation committee members and, pursuant to the compensation committee’s charter amended on January 18, 2017, delegates to the compensation committee the direct responsibility for, among other things, determining and approving the compensation for the general partner’s executive officers, establishing equity and non-equity incentive plans, and administering our LTIP.

Prior to the compensation committee charter being amended on January 18, 2017, the compensation committee had direct responsibility for determining and approving the Chief Executive Officer’s compensation and recommending compensation for the general partner’s other executive officers.

The Board of Directors has determined that each committee member is independent under NASDAQ-listing standards, SEC rules and the relevant securities laws, and that each member qualifies as a “non-employee” director within the meaning of Rule 16-3 promulgated under the Exchange Act, and as an “outside director” as defined in Section 162(m) of the Internal Revenue Code.

Role of Compensation Experts in Determining Executive Officer Compensation

The compensation committee is authorized to obtain, at the Partnership’s expense, compensation surveys, reports on the design and implementation of compensation programs for directors, officers and employees and other data and documentation as the compensation committee considers appropriate. In addition, the compensation committee has the sole authority to retain and terminate any outside counsel or other experts or consultants engaged to assist it in the evaluation of compensation of our directors and executive officers, including the sole authority to approve such consultants’ fees and other retention terms.

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The compensation committee retained BDO USA, LLP (“ BDO ”) as a compensation consultant for performance years 2016 and 2015. BDO was engaged to provide a study of compensation programs related to named executive officers and outside directors offered by a broad peer group of exploration and production companies and publicly traded limited partnerships. The compensation committee charged BDO with undertaking this study to ascertain how the members of this peer group structure their compensation as a basis for establishing and maintaining an appropriate compensation program to better enable the Partnership to attract and retain highly qualified executive officers and to further align the interests of our executive officers with those of our unitholders.

BDO served as the Partnership’s independent registered public accountants during 2016. In appointing BDO’s compensation consulting group, the compensation committee considered whether such appointment would represent a conflict of interest. In particular, the compensation committee reviewed the structure of the consulting engagement which complies with SEC and Public Company Accounting Oversight Board independence rules and the relatively small amount of fees paid by the Partnership to BDO for compensation consulting services. The committee also evaluated its prior experience with BDO as its consultant and concluded that the advice received was, in its opinion, independent, that the relationship represented no conflict of interest, and that the compensation committee benefitted from the BDO consultants’ unique experience in consulting for publicly-traded partnerships.

Selection of Compensation Comparative Data

As discussed in greater detail below, central to our compensation philosophy is the alignment of the interests of our named executive officers with the interests of our unitholders. It is the goal of our compensation philosophy to provide financial incentives to our executive officers to focus on business strategies designed to maximize total return to our unitholders. In addition to comparing compensation packages of our named executive officers and outside directors with the compensation of their counterparts within a comparable group of exploration and production companies and publicly traded limited partnerships, other specific performance levels or “benchmarks,” as described in the Compensation Policy, were used in 2016 to establish the compensation packages of our named executive officers and outside directors.

The 2016 comparable group included Breitburn Energy Partners L.P.; Carrizo Oil & Gas, Inc.; Clayton Williams Energy, Inc.; Diamondback Energy, Inc.; EP Energy Corporation; EV Energy Partners, L.P.; Gulfport Energy Corporation; Halcón Resources Corporation; Laredo Petroleum Inc.; Linn Energy, LLC; Memorial Production Partners LP; Mid-Con Energy Partners, LP; Parsley Energy, Inc.; RSP Permian, Inc.; SandRidge Energy, Inc.; Summit Midstream Partners, LP; Southcross Energy Partners, L.P.; Swift Energy Company and Vanguard Natural Resources, LLC.

The 2015 comparable group included Atlas Resource Partners, L.P.; Breitburn Energy Partners L.P.; Carrizo Oil & Gas, Inc.; Clayton Williams Energy, Inc.; Crestwood Equity Partners LP; Diamondback Energy, Inc.; Eagle Rock Energy Partners, L.P.; EnLink Midstream Partners, LP; EV Energy Partners, L.P.; Gulfport Energy Corporation; Halcón Resources Corporation; Linn Energy, LLC; LRR Energy, L.P.; Memorial Production Partners LP; Mid-Con Energy Partners, LP; Parsley Energy, Inc.; Resolute Energy Corporation; Rosetta Resources Inc.; RSP Permian, Inc.; SandRidge Energy, Inc.; Summit Midstream Partners, LP; Southcross Energy Partners, L.P.; Swift Energy Company and Vanguard Natural Resources, LLC.

Our comparable group is determined by the compensation committee from time to time to ensure that the peer group’s size and composition produces relevant information for the compensation committee’s consideration.

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Decision-Making Process and Role of Executive Officers

Compensation decisions for executive officers involve both objective and subjective criteria. For performance year 2016, under the amended compensation committee charter, the compensation committee consultant first provided information to the compensation committee regarding competitive market data. The second component of the decision-making process was our Chief Executive Officer providing a written overview of performance by the Partnership, including an overview of the performance by each named executive officer other than himself, in light of established operational and financial goals and objectives. After reviewing this written overview, the compensation committee met with the Chief Executive Officer in order to ask questions regarding the information set forth in the written overview and to gather any additional information needed in order to approve the compensation of all of the named executive officers.

In determining the compensation of the named executive officers, the compensation committee took into account the information provided by the compensation committee consultant. The compensation committee then evaluated the performance of the named executive officers in light of established operational and financial goals and objectives and determined as a committee, together with any other independent directors participating in the process, the named executive officers’ compensation.

For the performance year 2015, the compensation committee consultant first provided information to the compensation committee regarding competitive market data. The second component of the decision-making process was our Chief Executive Officer providing a written overview of performance by the Partnership, including an overview of the performance by each named executive officer other than himself, in light of established operational and financial goals and objectives. After reviewing this written overview, the compensation committee met with the Chief Executive Officer in order to ask questions regarding the information set forth in the written overview and to gather any additional information needed in order to make recommendations to the Board of Directors regarding the compensation of the named executive officers other than the Chief Executive Officer.

In determining the compensation of the Chief Executive Officer, the compensation committee took into account the information provided by the compensation committee consultant. The compensation committee then evaluated the Chief Executive Officer’s performance in light of established operational and financial goals and objectives and determined as a committee, together with any other independent directors participating in the process, the Chief Executive Officer’s compensation.

Executive Officer Compensation Strategy and Philosophy

Our Compensation Policy is designed to make our executive officers total compensation comparable to that of similarly sized publicly traded limited partnerships and exploration and production companies.

Our executive officer compensation strategy is designed to:

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In meeting the goal of sustainable growth, we intend to invest in our long-term opportunities while meeting our short-term commitments. As all our executive officers hold units in the Partnership, we have attempted to maintain competitive levels of compensation while focusing on the growth of our business. Through this approach, our executives receive cash and equity compensation for the market value of their services, which creates alignment of interests with our unitholders.

At our named executive officers’ 2016 compensation levels and due to our organizational structure, we did not believe that Internal Revenue Code Section 162(m) would be applicable and accordingly, did not consider it in setting compensation levels.

Components of Compensation

Named Executive Officer Compensation

Total compensation to our executive officers is comprised of base salary, cash incentive compensation (annual cash bonus), quarterly cash retention bonus and equity-based incentive compensation.

2016 Performance Goals and Objectives

For the 2016 performance year, the operational and financial goals and objectives were as follows:

These goals and objectives, as supplemented by more detailed supporting goals and objectives put forth by our named executive officers, provided a framework for the compensation committee to assess our 2016 performance and to determine named executive officers’ total compensation levels. Relative weight is not assigned to any of these goals and objectives. Additionally, the financial goals were based on various assumptions, with the understanding that our actual financial performance would be assessed based on factors considered relevant by the compensation committee at the time compensation for the named executive officers was reviewed and determined.

2016 Performance Assessment for Determination of Incentive Compensation under the Compensation Policy

The compensation committee assessed the 2016 performance of executive officers for purposes of the determination of the subjective components of cash incentive compensation and its consideration of equity-based incentive compensation earned with respect to fiscal year 2016 based on the attainment of the foregoing goals and objectives and the performance-related factors that it considered to be relevant.

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Among other relevant considerations, the compensation committee considered the following achievements by the Partnership and the executive officers during 2016:

2015 Performance Goals and Objectives

For the 2015 performance year, the operational and financial goals and objectives were as follows:

These goals and objectives, as supplemented by more detailed supporting goals and objectives put forth by our named executive officers, provided a framework for the compensation committee to assess our 2015 performance and to determine named executive officers’ incentive compensation levels. Relative weight is not assigned to any of these goals and objectives. Additionally, the financial goals were based on various assumptions, with the understanding that our actual financial performance would be assessed based on factors considered relevant by the compensation committee at the time compensation for the named executive officers was reviewed and determined.

2015 Performance Assessment for Determination of Incentive Compensation under the Compensation Policy

The compensation committee assessed the 2015 performance of executive officers for purposes of the determination of the subjective components of cash incentive compensation and its consideration of equity-based incentive compensation earned with respect to fiscal year 2015 based on the attainment of the foregoing goals and objectives and the performance-related factors that it considered to be relevant.

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Among other relevant considerations, the compensation committee considered the following achievements by the Partnership and the executive officers during 2015:

Base Salaries

Overview

We pay base salary to attract talented executives and provide a fixed base of cash compensation. Under its charter in effect until January 18, 2017, the compensation committee determined and approved the Chief Executive Officer’s compensation including salary based on a review of the Chief Executive Officer’s performance in light of established corporate goals and objectives. The compensation committee, with information provided by the compensation committee consultant and input of the Chief Executive Officer, also made recommendations to the Board of Directors as a whole with respect to the compensation, including base salary, to be paid to the other executive officers of our general partner. Under the compensation committee’s charter in effect as of January 18, 2017, the compensation committee (rather than a combination of the compensation committee and Board) determines and approves the total compensation levels (including salary, annual cash bonus, quarterly cash retention bonus and equity compensation) of all of the executive officers of our general partner.

It is the intent of the compensation committee to have the base salaries of our named executive officers reviewed on an annual basis as well as at the time of a promotion or other material change in responsibilities.

2016 Base Salary Determinations

Effective March 1, 2016, base salaries were set at the following: Mr. Horne: $550,000; Mr. Westcott: $380,000; Mr. Hammond: $380,000; Mr. McGraw: $360,000; and Mr. LeRoy: $260,000.

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2017 Base Salary Determinations

Effective March 1, 2017, base salaries were set at the following: Mr. Horne: $625,000; Mr. Westcott: $450,000; Mr. Hammond: $425,000; Mr. McGraw: $380,000; and Mr. LeRoy: $300,000 .

Cash Incentive Compensation (Cash Bonus) under the Compensation Policy

Overview

As a component of total compensation, the compensation committee chooses to pay annual incentives to drive the achievement of key results and to recognize individuals based on their contributions to those results. The compensation committee recognizes that short-term results contribute to achieving long-term goals. The amount of annual incentives is based upon our results and the achievement of operational and financial goals and objectives. The range and target amounts are recommended to the compensation committee by our Chief Executive Officer.

In determining cash incentive awards earned during a fiscal year, a subjective evaluation of the individual officer and Partnership performance (subjective criteria) for the fiscal year such awards are to be earned and our results and the achievement of operational and financial goals and objectives during such fiscal year (objective criteria) are considered.

The objective and subjective components of the cash incentive compensation each comprise 50% of the target bonus available expressed as a percentage of annual salary for each executive officer, as set forth in the following table for fiscal year 2016.

Objective Component of Cash Bonus

The objective component (up to 50% of the annual target cash incentive compensation) is based on two measures of equal weight:

The percentage levels that may be earned each year are based on the ranges of performance levels with respect to each target as set forth in the following table, as determined by straight-line interpolation.

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Our executive officers will not receive an annual cash bonus under this objective component unless the Partnership maintains its cash distribution per unit or achieves EBITDA that is at least 85% of the target EBITDA for the year.

These objective measures are intended to align the cash incentive compensation of each executive officer with unitholder return by rewarding performance that maintains or grows distributions and achieves the EBITDA target. The respective target levels of EBITDA and growth in cash distributions per unit, respectively, for purposes of the annual cash bonus determination only, will be set by the compensation committee at the beginning of each year after considering management’s recommendation. On February 21, 2017, the compensation committee approved certain amendments to our Compensation Policy as further described under “— Components of Compensation — 2017 Adjustments to the Compensation Policy ” which will change of the objective component of our annual cash bonuses in future payment periods.

During 2016, the Partnership achieved EBITDA of $155.6 million, or 124.1% of the $125.4 million target EBITDA, resulting in a Percentage Earned (pursuant to the table above) of 150% (weighted at 50% or 75%) and distribution growth in 2016 was 0% resulting in a Percentage Earned of 50% (weighted at 50% or 25%), resulting in bonus amounts at 100% of the potential target level of the objective component of the cash incentive compensation (the “ Objective Factor ” as set forth in the table below).

Subjective Cash Award

Each executive officer was awarded the annual cash bonuses in the amounts determined by the percentage of target levels available, as set forth under “ % of Subjective Factor Earned ” in the table below, and the potential target level of the subjective component of cash incentive compensation for 2016 (the “ Subjective Factor ” as set forth below). Under the Compensation Policy, the compensation committee and Board of Directors have the discretion to award up to 150% of the subjective target annual cash bonus.

Based on Legacy’s and the individual executive officers’ accomplishments and performances as set forth above, under the caption “— 2016 Performance Assessment ,” the Board, based on the compensation committee’s recommendation, set the subjective portion of the annual cash bonus as shown in the table below.

Quarterly Cash Retention Bonus

Each executive officer was awarded the quarterly cash retention bonuses in the total amounts for 2016 as set forth under “ Cash Retention Bonus ” in the table below. The quarterly cash retention bonuses were paid with respect to quarters ending June 30, September 30 and December 31, 2016 because the executive officer remained continuously employed with the Partnership through the end of such quarter. The total amount of the quarterly cash retention bonuses paid in 2016 will be subtracted from the cash settlement of phantom units to be paid to such executive officers in 2019, if any, in connection with the vesting of phantom units awarded to such executive officers in 2016.

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The chart below illustrates the cash incentive award and quarterly cash retention bonus earned during 2016 for each named executive officer in accordance with the performance level/percentage earned calculation set forth in the Compensation Policy and applicable retention bonus agreement:

Equity-Based Incentive Compensation – Overview

We provide performance-based equity-based incentive compensation opportunities to our executive officers as part of the compensation program because we believe that this element of compensation ties the interests of our executive officers directly to the interests of our unitholders. We also believe that equity-based incentive compensation serves as an important attraction and retention tool.

More specifically, the equity-based incentive compensation program of the Compensation Policy is designed to reward our named executive officers for their long-term performance by aligning grants of phantom units with total return to unitholders.

We consider equity-based incentive compensation to be an important element of our compensation program for named executive officers. We believe meaningful equity participation by each named executive officer to be a strong motivating factor that will result in significant increases in value and in growth. This belief is reflected in the aggregate awards of phantom units that have been made to named executive officers that did not already have a significant interest in our units. Our award structure for long-term equity-based incentives employs a mix of subjective and objective measures as set forth below.

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Equity-Based Incentive Compensation under the Compensation Policy

Subjective or Service-Based Component . The subjective or service-based component is determined by a subjective evaluation of prior fiscal year performance and, with respect to each executive officer, may be awarded up to 200% of the specified percentage of annual salary as set forth in the tables below. Once granted, the only condition to vesting will be that the executive officer remain in the service of the Partnership until the end of the respective 3-year cliff vesting period. The vesting of service-based equity-based awards including associated DERs, once granted, is not subject to the attainment of any performance criteria.

Objective or Performance-Based Component under the Compensation Policy . The objective component is granted each year at 200% of the targeted percentage listed in the table below, but the amount vested at the end of the three-year period is determined on the vesting date in accordance with an objective performance-related formula (as set forth under “ Calculation of Vesting of Objective Component of Equity-Based Compensation under the Compensation Policy ” below) based on the objective average annual total unitholder return and our total unitholder return compared to the total unitholder returns of a group of our peers as well as the total unitholder returns of a broader group of MLPs achieved during the cumulative three-year measurement period prior to the vesting date. If none or only a portion of phantom units vest as a result of target levels not being met, the unvested portion of phantom units will be forfeited.

All equity-based incentive compensation awards are phantom units, with associated DERs, up to 200% of the specified percentage of annual salary as set forth in the following table.

A phantom unit is a notional unit that entitles the holder upon vesting to receive the same number of Partnership units. Under the Compensation Policy, the number of phantom units granted was determined by dividing the dollar amount of the intended grant value by the average closing price of Partnership units over the 20 trading days ended the last trading day prior to January 1st in the year of the grant. All phantom unit grants cliff vest on the third anniversary of the initial grant date or such date as determined by the compensation committee.

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Calculation of Vesting of Objective Component of Equity-Based Compensation under the Compensation Policy

The objective-based phantom units granted at 200% of the target level each year are subject to a three-year measurement and vesting period. At the three-year vesting date of the objective or performance-based component of equity-based compensation, the number of phantom units to vest is determined based on the following three-step process, with the total vested amount to be determined by adding the values arrived at in Step 1 and Step 2.

Step 1: 50% of the performance-based award will be a function of the three-year average annual Total Unitholder Return for the Partnership (“ Legacy TUR ”) and the percentile rank of the Legacy TUR among the Total Unitholder Return (“ TUR ”) for such upstream master limited partnership (“ MLP ”) peer companies as determined by the compensation committee (such peer companies, the “ Peer Group ”), using a single measurement date at the end of each three-year performance period. The average annual Legacy TUR or the average annual TUR for any entity in the Peer Group for any three-year performance period means the percentage increase in the value of a $100 investment in a unit or common unit purchased at the average closing price of such a unit or common unit over the 20 trading days prior to January 1 of the year with respect to which the grant is made, assuming such investment is liquidated on the January 1 immediately prior to the vesting date, at a price that is the average price of the unit or common unit over the 20 trading days prior to the liquidation, plus any cash distributions paid in the three-year period from the grant date to the vesting date, divided by three. The following matrix will be used to determine the Legacy TUR vs. Peer Group TUR portion of the award.

> = 90 th %ile 75 th %ile 50 th %ile 25 th %ile < = 10 th %ile

0%	125%	150%	175%	200%
0%	100%	125%	150%	175%
0%	75%	100%	125%	150%
0%	50%	75%	100%	125%
0%	25%	50%	75%	100%
< = 0%	8%	12%	20%	> = 25%
Three-Year Average Annual Legacy TUR

____________________
 

*

For the 2014-2016 performance period, the Peer Group consisted of Atlas Resource Partners, L.P.; Breitburn Energy Partners L.P.; EV Energy Partners, L.P.; Linn Energy, LLC; Memorial Production Partners LP; Mid-Con Energy Partners, LP; and Vanguard Natural Resources, LLC. If any company in the Peer Group ceases to be publicly traded during any performance period, the compensation committee will adjust the composition of the Peer Group as it deems appropriate.

To determine the performance-based awards earned for this Legacy TUR vs. Peer Group component, the percentage determined in accordance with the performance grid (using straight-line interpolation between the percentages given above) is multiplied by 50% and multiplied by the target number of phantom units available for vesting.

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Step 2: 50% of the performance-based award will be a function of the three-year average Legacy TUR and the percentile rank of the Partnership among a group of MLPs included in the Alerian MLP Index (such group of MLPs as determined by the compensation committee, excluding publicly traded general partners of MLPs and shipping companies) (the “ Adjusted Alerian Index ”) based on such entities’ three-year average annual TUR. The following matrix will be used to determine the Legacy TUR vs. Adjusted Alerian Index portion of the award.

> = 90 th %ile 75 th %ile 50 th %ile 25 th %ile < = 10 th %ile

0%	125%	150%	175%	200%
0%	100%	125%	150%	175%
0%	75%	100%	125%	150%
0%	50%	75%	100%	125%
0%	25%	50%	75%	100%
< = 0%	8%	12%	20%	> = 25%
Three- Year Average Annual Legacy TUR

____________________

 

**

“ Adjusted Alerian Index ” means a subset of companies included in the Alerian MLP Index as determined by the compensation committee and excludes publicly traded general partners of MLPs and shipping companies, as of the beginning of each fiscal year. The calculation of the Adjusted Alerian Index along with calculation of percentile results and the Legacy TUR percentile ranking is subject to third-party review.

To determine the performance-based awards earned on this Legacy TUR vs. Adjusted Alerian Index component, the percentage earned in accordance with the above matrix (using straight-line interpolation between the percentages set forth in the matrix) is multiplied by 50% and multiplied by the target number of phantom units available for vesting.

Step 3: The respective award values arrived at by performing the calculations set forth in Step 1 and Step 2 above will be added to determine the total vested portion of the performance-based equity award with respect to a particular three-year performance period.

For more information on how these awards will be determined in future periods, please see “—2017 Adjustments to the Compensation Policy and Quarterly Cash Retention Bonuses.”

2017 Phantom Unit Grants under the Compensation Policy

On February 21, 2017, in accordance with the Compensation Policy, the compensation committee approved the following phantom unit awards and associated DERs for the named executive officers:

					2017 Phantom Unit Grants (and associated DERs)
					Subjective Grant								Objective Performance-
					(Based on 2016 Performance)								Based Grant
									Phantom		Phantom				Maximum
									Units to		Units to be				Phantom
		2016			Subjective		Subjective		be Paid in		Paid in		Objective		Units(c)(d)
Named Executive Officer		Salary			Factor(a)		Award		Units (b)		Cash(b)(d)		Factor(a)		(e)
Paul T. Horne		$	550,000		195%		100%		157,489		314,978		130%		629,956
James Daniel Westcott		$	380,000		150%		100%		83,700		167,401		100%		334,802
Kyle M. Hammond		$	380,000		120%		100%		66,960		133,921		80%		267,842
Kyle A. McGraw		$	360,000		105%		100%		55,507		111,013		70%		222,026
Dan G. LeRoy		$	260,000		48%		100%		18,326		36,652		32%		73,304

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____________________

(a)		Represents percentage of 2016 salary effective March 1, 2016.
(b)		Based on the 20-day average closing price of our units ended on the last trading day prior to January 1, 2017, or $2.27. Phantom units are subject to cliff vesting after a three-year period ending on February 18, 2020.
(c)		Based on the 20-day average closing price of our units ended on the last trading day prior to January 1, 2017, or $2.27. Represents maximum number of phantom units subject to cliff vesting after a three-year period ending on February 18, 2020, pending attaining specified performance criteria. Unvested phantom units will be forfeited.
(d)		Not subject to a cap on the maximum amount payable per phantom unit.
(e)		Phantom units granted pursuant to the objective component of the equity-based compensation settle in cash.

2016 Phantom Unit Grants under the Compensation Policy

On June 13, 2016, in accordance with the Compensation Policy, the compensation committee approved the following phantom unit awards and associated DERs for Mr. Paul Horne, and, with respect to the remaining named executive officers, recommended the following phantom unit awards and associated DERs to the Board and the Board, on June 13, 2016, approved such awards:

					2016 Phantom Unit Grants (and associated DERs)
															Objective
					Subjective Grant										Performance-
					(Based on 2015 Performance)										Based Grant
											Phantom
											Units to		Phantom					Maximum
											be Paid		Units to be					Phantom
		2015			Subjective			Subjective			in Units		Paid in		Objective			Units(c)(d)
Named Executive Officer		Salary			Factor(a)			Award			(b)		Cash(b)(d)		Factor(a)			(e)
Paul T. Horne		$	550,000		195	%		100	%		155,435		510,714		130	%		888,200
James Daniel Westcott		$	380,000		150	%		100	%		82,609		271,429		100	%		472,050
Kyle M. Hammond		$	380,000		120	%		100	%		66,087		217,143		80	%		377,640
Kyle A. McGraw		$	360,000		105	%		100	%		54,783		180,000		70	%		313,044
Dan G. LeRoy		$	260,000		48	%		100	%		18,087		59,429		32	%		103,354

____________________

(a)		Represents percentage of 2015 salary effective March 1, 2015.
(b)		Based on the 20-day average closing price of our units ended on the last trading day prior to January 1, 2016, or $1.61. Phantom units are subject to cliff vesting after a three-year period ending on February 18, 2019.
(c)		Based on the 20-day average closing price of our units ended on the last trading day prior to January 1, 2016, or $1.61. Represents maximum number of phantom units subject to cliff vesting after a three-year period ending on February 18, 2019, pending attaining specified performance criteria. Unvested phantom units will be forfeited.

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(d)		The phantom units granted pursuant to the objective component and subjective component which are settled in cash are limited to a maximum possible settlement value of $10 per phantom unit.
(e)		Phantom units granted pursuant to the objective component of the equity-based compensation settle in cash.

2017 Objective Phantom Unit Vesting

In accordance with the calculation of the objective component of equity compensation as set forth in the Compensation Policy and calculated as described above in “— Equity-Based Incentive Compensation ” and “— Calculation of Vesting of Objective Component of Equity-Based Compensation ,” the phantom units granted to each executive officer on March 3, 2014 vested on February 18, 2017 in the amounts set forth below. No other objective phantom units granted under the objective component of equity-based incentive compensation portion of the Compensation Policy will vest in 2017 as such grants are subject to a three-year cliff vesting and measurement period.

The Performance Factor is determined based on the Partnership’s performance from 2014 through 2016 as measured by the Partnership’s 3 year average annual TUR, the Partnership’s 3 year average annual TUR compared to the 3 year average annual TUR of an index of other MLPs, and the Partnership’s 3 year average annual TUR compared to its peer group.

		Objective Grant
		Maximum
		Phantom
		Units				Phantom
		Subject to		Performance		Units
Executive Officer		Vesting(1)		Factor(2)		Vested
Cary D. Brown (3)		41,300		0%		0
James Daniel Westcott		15,402		0%		0
Paul T. Horne		17,970		0%		0
Kyle A. McGraw		17,970		0%		0
Dan G. LeRoy		5,500		0%		0

____________________

(1)		Represents the total phantom units granted to each executive officer on March 3, 2014 pursuant to the objective component of the Compensation Policy.
(2)		The Partnership’s 3 year average annual TUR for 2014-2016 of -25.8% results in a 0% Performance Factor.
(3)		Mr. C. Brown resigned as President and Chief Executive Officer effective March 1, 2015. Pursuant to the terms of the applicable grant agreement, Mr. C. Brown remained entitled to continued vesting of his outstanding equity incentive awards.

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2017 Adjustments to the Compensation Policy and Quarterly Cash Retention Bonuses

On February 21, 2017, the compensation committee approved certain amendments to the Compensation Policy. Except as otherwise noted herein, the amendments to the Compensation Policy apply to incentive awards granted commencing in fiscal year 2018 in accordance with this Compensation Policy with respect to the Partnership’s and the executive officers’ performance during fiscal year 2017, as described herein. The amendments to the Compensation Policy are set forth below.

Cash Incentive Compensation (Cash Bonus) . The objective component pertaining to growth in cash distributions has been deleted and replaced by a measure of ratio of Total Debt (as defined in our Third Amended and Restated Credit Agreement, as amended) to EBITDA (as defined as Adjusted EBITDA in our annual report on Form 10-K) at the last day of the given period.

The percentage levels that may be earned each year are based on the ranges of performance levels with respect to the target as set forth in the following table, as determined by straight-line interpolation. In addition, such levels pertaining to the EBITDA target have been amended as set forth in the table below.

Our general partner’s executive officers will not receive an annual cash bonus (with respect to either of the two performance measures) under this objective component unless we achieve a Total Debt to EBITDA ratio that is less than 125% of the target Total Debt to EBITDA ratio or achieves EBITDA that is greater than 75% of the target EBITDA for the year.

Measure		Weight		Performance Level/Percent Earned
EBITDA		50%		75% of Target		100% of Target		125% of Target
				0%		100%		200%
Ratio of Total Debt to EBITDA		50%		125% of Target		Target		75% of Target
				0%		100%		200%

The target levels and the related tiers of percent earned relative to performance level, for purposes of the annual cash bonus determination only, will be set by the Committee at the beginning of each year after considering management’s recommendation.

The percentages listed below will be applied with respect to the Partnership’s and the executive officers’ performance during fiscal year 2017, but may change in the future at the compensation committee’s discretion.

				Target Cash Bonus
				As a Percentage of Annual Salary
Executive Officer		Title		Subjective		Objective		Total
Paul T. Horne		Chairman of the Board, President and		55%		55%		110%
		Chief Executive Officer
James Daniel Westcott		Executive Vice President and Chief		45%		45%		90%
		Financial Officer
Kyle M. Hammond		Executive Vice President and Chief		40%		40%		80%
		Operating Officer
Kyle A. McGraw		Director, Executive Vice President		40%		40%		80%
		and Chief Development Officer
Dan G. LeRoy		Vice President, General Counsel		37.5%		37.5%		75%
		and Secretary

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All other components of the Cash Incentive Compensation (Cash Bonus) remain in effect.

Equity-Based Incentive Compensation . The equity-based incentive compensation also employs a mix of subjective (weighted at 60% of total) and objective (weighted at 40% of total) measures.

The percentages listed below will be applied with respect to the Partnership’s and executive officers’ performance during fiscal year 2017, but may change in the future at the compensation committee’s discretion.

				Target Value of Phantom Units as a
				Percentage of Annual Salary
Executive Officer		Title		Subjective		Objective		Total
Paul T. Horne		Chairman of the Board, President		240%		160%		400%
		and Chief Executive Officer
James Daniel Westcott		Executive Vice President and Chief		180%		120%		300%
		Financial Officer
Kyle M. Hammond		Executive Vice President and Chief		180%		120%		300%
		Operating Officer
Kyle A. McGraw		Director, Executive Vice President		105%		70%		175%
		and Chief Development Officer
Dan G. LeRoy		Vice President, General Counsel		60%		40%		100%
		and Secretary

Subjective or Service-Based Component . The subjective or service-based component is determined by a subjective evaluation of prior fiscal year performance and, with respect to each executive officer, may be awarded up to two times the target percentage of annual salary as set forth in the table below. Once granted, subject to the respective executive officer’s employment agreement, the only condition to vesting will be that the executive officer remain in the service of the Partnership until the end of the three-year vesting period. The vesting of service-based equity-based awards, once granted, is not subject to the attainment of any performance criteria. Phantom units granted pursuant to the subjective component, including those made in 2017 with respect to 2016 performance, will be settled two thirds in cash and one third in units and will not be subject to a cap on the maximum amount payable per unit.

Objective or Performance-Based Component . The matrix used to evaluate our total unitholder return for determining the percentage of equity grants made under the objective component that will vest has been amended to the following:

> = 90 th %ile 75 th %ile 50 th %ile 25 th %ile < = 10 th %ile

100%	125%	150%	175%	200%
75%	100%	125%	150%	175%
50%	75%	100%	125%	150%
0%	50%	75%	100%	125%
0%	25%	50%	75%	100%
< = 0%	8.0%	12.0%	20.0%	> = 25%
Three-Year Average Annual Legacy TUR

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Phantom units granted pursuant to the objective component, including those granted in 2017 with respect to 2016 performance, will be settled in cash and will not be subject to a cap on the maximum amount payable per phantom unit.

All other components of the Equity-Based Incentive Compensation remain in effect.

On February 21, 2017, the Committee approved the payment of quarterly cash retention bonuses to the General Partner’s executive officers for each quarter of the fiscal year ending December 31, 2017. The quarterly cash retention bonuses shall be paid with respect to the quarters ending March 31, June 30, September 30 and December 31, 2017 in the event that the executive officer remains continuously employed with the Partnership through the end of such quarter. The amounts of the quarterly cash retention bonuses will not offset any award of phantom units to the executive officers that are payable in cash. The quarterly cash retention bonuses with respect to each of the quarters ended March 31, June 30, September 30 and December 31, 2017 to the following executive officers are as follows:

		Quarterly Cash
		Retention Bonus
Executive Officer		Amount
Paul T. Horne		$	125,000
James Daniel Westcott		$	100,000
Kyle M. Hammond		$	100,000
Kyle A. McGraw		$	50,000
Dan G. LeRoy		$	25,000

Amended and Restated Legacy Reserves LP Long-Term Incentive Plan (LTIP)

Long-term incentive compensation awards are administered through our LTIP adopted in March 2006 and amended and restated on August 17, 2007, and, by a vote the unitholders at the 2015 Annual Meeting, amended on June 12, 2015. The plan is administered by the compensation committee and permits the grant of awards resulting in the issuance of an aggregate of 5,000,000 units (of which 1,659,839 remain available for grant, as of March 7, 2017). Employees, consultants and directors of our general partner and its affiliates who perform services for us are eligible to receive awards under the LTIP (“ Eligible Persons ”).

As of March 7, 2017, grants of awards that could result in the issuance of units, net of forfeitures, covering 3,103,970 units have been made, including 1,014,499 restricted units, 266,014 unit options, 1,389,773 phantom units and 433,684 units primarily issued to directors. We selected these types of awards because of the expectation by most of our employees as well as our directors that part of their compensation would be derived from the growth in value of Partnership units.

Our Board of Directors, or its compensation committee, in its discretion may terminate, suspend or discontinue the LTIP at any time with respect to any award that has not yet been granted. Our Board of Directors, or its compensation committee, also has the right to alter or amend the LTIP or any part of the plan from time to time, including increasing the number of units that may be granted, subject to unitholder approval as required by the exchange upon which the units are listed at that time. However, no change in any outstanding grant may be made that would materially impair the rights of the participant without the consent of the participant.

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Unit Grants

The LTIP permits the grant of units. A unit grant is a grant of units that vests immediately upon issuance. In 2015 and 2016, the only unit grants made were to non-employee directors.

Restricted Units and Phantom Units

A restricted unit is a unit that is subject to forfeiture prior to the vesting of the award. A phantom unit is a notional unit that entitles the grantee to receive a unit or, in the discretion of our Board of Directors or its compensation committee, cash equal to market value of a unit upon the vesting of the phantom unit. The compensation committee may make grants under the LTIP of restricted units and phantom units to employees, consultants and directors containing such terms, consistent with the LTIP, as the compensation committee shall determine. The compensation committee will determine the period over which the restricted units and phantom units granted to employees, consultants and directors will vest. The compensation committee may base vesting upon the achievement of specified financial objectives or on the grantee’s completion of a period of service. In addition, the restricted units and phantom units will vest upon a change of control of the Partnership or our general partner, unless provided otherwise by the compensation committee in the award agreement. All restricted unit and phantom unit grants to our executive officers and employees provide for at least one year vesting periods with some providing for three and five year vesting. All 2016 and 2017 phantom unit grants to executive officers have three year vesting.

If the grantee’s employment, service relationship or membership on the Board of Directors terminates for any reason, the grantee’s unvested restricted units and phantom units will be automatically forfeited unless, and to the extent, the compensation committee provides otherwise in the award agreement or waives (in whole or in part) any such forfeiture. Units to be delivered in connection with the grant of restricted units or upon the vesting of phantom units settled in units may be units acquired by us on the open market, or from any other person, or we may issue new units, or any combination of the foregoing. Our general partner is entitled to reimbursement by us for the cost it incurs in acquiring units. Thus, the cost of the restricted units and the delivery of units upon the vesting of phantom units will be borne by us. If we issue new units in connection with the grant of restricted units or upon vesting of the phantom units settled in units, the total number of units outstanding will increase. The compensation committee, in its discretion, may provide for tandem distribution rights with respect to restricted units and grant tandem DERs with respect to phantom units that entitle the holder to receive cash equal to any cash distributions made on units prior to the vesting of a restricted or phantom unit. On phantom units, any such cash distributions will accumulate and accrue based on the assumed 100% vesting of any such phantom units but will not be payable until such vesting occurs. The actual amounts payable pursuant to such tandem DERs will be based solely on the number of underlying restricted or phantom units that actually vest. Holders of unvested restricted units are entitled to receive cash payments equal to any cash distribution payable at the time any cash distribution is paid to unitholders regardless of whether vesting has occurred.

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Unit Options and Unit Appreciation Rights (“ UARs ”)

The LTIP permits the grant of options covering units and the grant of unit appreciation rights. A unit appreciation right is an award that, upon exercise, entitles the participant to receive the excess of the fair market value of a unit on the exercise date over the exercise price established for the unit appreciation right. Such excess may be paid in units, cash, or a combination thereof, as determined by the compensation committee in its discretion. The compensation committee will be able to make grants of unit options and unit appreciation rights under the plan to employees, consultants and directors containing such terms as the committee shall determine consistent with the plan. Unit options and unit appreciation rights may not have an exercise price that is less than the fair market value of the units on the date of grant. In general, unit options and unit appreciation rights granted will become exercisable over a period determined by the compensation committee. In addition, the unit options and unit appreciation rights will become exercisable upon a change in control of the Partnership or our general partner, unless provided otherwise by the committee in the award agreement. The compensation committee, in its discretion may grant tandem DERs with respect to unit options and unit appreciation rights.

Upon exercise of a unit option (or a unit appreciation right settled in units), we will acquire units on the open market or from any other person or we may issue new units, or any combination of the foregoing. If we issue new units upon exercise of the unit options (or a unit appreciation right settled in units), the total number of units outstanding will increase, and we will receive the proceeds from an optionee’s exercise of a unit option. The availability of unit options and unit appreciation rights is intended to furnish additional compensation to employees, consultants and directors and to align their economic interests with those of unitholders.

Currently, we only settle UARs in cash and not in units and therefore such UARs are not taken into consideration in calculating the number of units available for issuance under the LTIP. In 2016, we discontinued the granting of UARs.

Unit Option Practices

Although our LTIP permits us to award options under a variety of circumstances, we have not granted unit options since early 2007 and do not anticipate granting any further unit options. We have not back-dated any option awards. The option grants we have made to date had an exercise price that corresponded with the offering price to purchasers of our units in a private offering we conducted in March 2006, the price at which our units traded on the Portal Market, the price to the public of our units in our January 2007 initial public offering, or the market value of our units at the close of trading on the date of the grant. Any option grants we may make in the future will have an exercise price equal to the market value of our units at the close of trading on the date of the grant.

Perquisites and Other Personal Benefits

We maintain a 401(k) plan. The plan permits eligible full-time employees, including named executive officers, to make voluntary, pre-tax contributions to the plan up to a specified percentage of compensation, subject to applicable tax limitations. We may make a discretionary matching contribution to the plan for each eligible employee equal to 8.0% (6.0% prior to January 1, 2015) of an employee’s annual compensation not in excess of $260,000 for 2014, $265,000 for 2015 and $265,000 for 2016, subject to applicable tax limitations. Eligible employees who elect to participate in the plan are generally vested in any matching contribution after commencement of employment with the company. The plan is intended to be qualified under Section 401(a) of the Internal Revenue Code so that contributions to the plan, and income earned on plan contributions, are not taxable to employees until withdrawn from the plan, and so that contributions, if any, will be deductible when made.

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We maintain an employee benefit plan that provides our employees with the opportunity to enroll in our health, dental and life insurance plans. We pay all of our employees’ health and life insurance premiums. Our dental plan requires the employee to pay a portion of the premium, and we pay the remainder. We provide these benefits so that we will remain competitive in the employment market and offer the benefits to all employees on the same basis.

Unit Ownership Guidelines

On November 19, 2013, the nominating, governance and conflicts committee recommended and the Board of Directors approved a policy of unit ownership by executive officers and directors. Target ownership, which is based on market values, is in excess of the following thresholds: 5 times annual cash retainers for directors, 6 times base salary for the Chief Executive Officer, and 3 times base salary for all other executive officers. To accumulate this target ownership, executive officers and directors are not required to purchase units in the open market, but are generally required to retain at least 50% of each vesting of units or grant of unrestricted units, net of reductions for taxes due, until such target ownership is achieved. Notwithstanding the severe decline in our unit price that has rendered certain executive officers’ and directors’ unit ownership below the policy’s thresholds, as of March 30, 2017, all executive officers and directors are in compliance with this policy.

As of December 31, 2016, our named executive officers as a group beneficially owned 1,498,747 units. Our named executive officers beneficially own approximately 2.1% of our 72,624,954 issued and outstanding units.

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