Incentive Distribution Rights - IDRs

DEFINITION of 'Incentive Distribution Rights - IDRs'

These give a limited partnership's general partner an increasing share in the incremental distributable cash flow the partnership generates. This occurs alongside of per-unit distribution increases to the limited partners. The general partner's share of incremental distributable cash flow usually starts at 2% and climbs to higher levels such as 20% or 50%.

BREAKING DOWN 'Incentive Distribution Rights - IDRs'

These rights are thought to motivate the general partner to rapidly grow the distributions to the limited partners. Incentive distribution rights are generally determined based on quarterly distribution figures.