THE BLACKSTONE GROUP L.P.
Notes to Condensed Consolidated Financial StatementsContinued
(All Dollars Are in Thousands, Except Unit and Per Unit Data, Except Where Noted)
The Partnership applies the treasury stock method to determine the dilutive
weighted-average common units outstanding. The Partnership applies the
if-converted
method to the Blackstone Holdings Partnership Units to determine the dilutive weighted-average common units
represented by the Blackstone Holdings Partnership Units.
In computing the dilutive effect that the exchange of Blackstone
Holdings Partnership Units would have on net income per common unit, the Partnership considered that net income available to holders of common units would increase due to the elimination of
non-controlling
interests in Blackstone Holdings, inclusive of any tax impact. Because the hypothetical conversion may result in a different tax rate, the Blackstone Holdings Partnership Units are considered anti-dilutive in certain periods and dilutive in other
periods.
Unit Repurchase Program
On April 16, 2018, the Board of Directors of our general partner, Blackstone Group Management L.L.C., authorized the repurchase by Blackstone of up to $1.0 billion of Blackstone common
units and Blackstone Holdings Partnership Units. Under the unit repurchase program, units may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual number of units
repurchased will depend on a variety of factors, including legal requirements, price and economic and market conditions. The unit repurchase program may be changed, suspended or discontinued at any time and does not have a specified expiration date.
During the three and nine months ended September 30, 2017, no units were repurchased. During the three and nine
months ended September 30, 2018, Blackstone repurchased 6.0 million and 8.2 million Blackstone common units, respectively, at a total cost of $218.4 million and $290.1 million, respectively. As of
September 30, 2018, the amount remaining available for repurchases under this program was $709.9 million.
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EQUITY-BASED COMPENSATION
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The Partnership has granted equity-based compensation awards to Blackstones senior managing directors,
non-partner
professionals,
non-professionals
and selected external advisers under the Partnerships 2007 Equity Incentive Plan (the Equity Plan). The Equity Plan allows for the granting of options, unit appreciation rights or
other unit-based awards (units, restricted units, restricted common units, deferred restricted common units, phantom restricted common units or other unit-based awards based in whole or in part on the fair value of the Blackstone common units or
Blackstone Holdings Partnership Units) which may contain certain service or performance requirements. As of January 1, 2018, the Partnership had the ability to grant 172,155,134 units under the Equity Plan.
For the three and nine months ended September 30, 2018, the Partnership recorded compensation expense of $73.7 million and
$282.7 million, respectively, in relation to its equity-based awards with corresponding tax benefits of $11.7 million and $46.3 million, respectively. For the three and nine months ended September 30, 2017, the Partnership
recorded compensation expense of $83.0 million and $262.8 million, respectively, in relation to its equity-based awards with corresponding tax benefits of $16.9 million and $53.7 million, respectively. As of
September 30, 2018, there was $743.6 million of estimated unrecognized compensation expense related to unvested awards. This cost is expected to be recognized over a weighted-average period of 4.1 years.
Total vested and unvested outstanding units, including Blackstone common units, Blackstone Holdings Partnership Units and deferred
restricted common units, were 1,202,105,411 as of September 30, 2018. Total outstanding phantom units were 49,858 as of September 30, 2018.
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