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TABLE OF CONTENT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Preliminary Proxy Statement | ||
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Definitive Proxy Statement | ||
o | Definitive Additional Materials | |
o | Soliciting Material under §240.14a-12 |
Equitrans Midstream Corporation | ||||
(Name of Registrant as Specified In Its Charter) | ||||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
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April 3, 2020March 8, 2021
Fellow Shareholders, |
On behalf of the Board of Directors and management of Equitrans Midstream Corporation, I am pleased to invite you to participate in our secondthird annual meeting of shareholders on Wednesday, May 20, 2020,Tuesday, April 27, 2021, at 2:9:00 p.m.a.m. (ET), which willto be held virtually via live webcast at www.virtualshareholdermeeting.com/ETRN2020. As manyETRN2021. Given the ongoing public health considerations associated with COVID-19, and because the health, safety, and well-being of you know, our employees and shareholders is of utmost importance to us, conducting our meeting virtually will enhance shareholders' ability to participate, vote, and ask questions during the annual meeting in a safe and efficient manner.
Equitrans Midstream began operations as an independent, public company in November 2018 and our common stock is traded on the New York Stock Exchange under the symbol "ETRN."
Due to the ongoing public health considerations associated with "coronavirus disease 2019" or COVID-19, Your continued interest in and because the health, safety, and well-beingsupport of our employeesCompany is invaluable and shareholdersreceiving shareholder feedback is of utmost importanceinstrumental to us, we will be holding our 2020 annual meeting of shareholders solely via webcast. future success.
This virtual approach will enhance shareholders' ability to participate, vote, and ask questions during the annual meeting in a safe and efficient manner.
Youyear you will be asked to vote on several items at the annual meeting, including the election of directors, approval of our executive compensation program for 20192020 (the say-on-pay vote), approval of amendments to our Articles of Incorporation and Bylaws to remove the supermajority voting requirements, and ratification of the appointment of our independent registered public accounting firm for 2020.2021. The proxy statement describes these items in more detail. Your vote is important — please read the proxy materials and follow the voting instructions to ensure your shares are represented at the meeting.
Whether or not you plan to participate in the annual meeting, please vote as soon as possible — by telephone, via the Internet, or by completing and signing your paper proxy card or vote instruction form — to ensure that your shares are represented and voted.
During the past year, our employees have taken much pride in helping Equitrans Midstream Corporation achieve its vision to become the premier midstream services company in North America. We move the energy that keeps America moving and our mission is simple — to provide safe, reliable, and innovative infrastructure solutions for the energy industry. The principles that guide our behaviors and decisions are based on our five core values: safety, integrity, collaboration, transparency, and excellence. With these values in mind, we will:
I look forward to reporting on our progress and many successes during the annual meeting.meeting, including efforts to enhance our Environmental, Social, and Governance platform; and the publication of our first annual Corporate Sustainability Report, produced in accordance with the Global Reporting Initiative and the Sustainability Accounting Standards Board Oil & Gas — Midstream Standards. Thank you for your investment in Equitrans Midstream Corporation and your participation in our annual meeting of shareholders.
Thomas F. Karam Chairman and Chief Executive Officer |
Notice ofAnnual Meeting of Shareholders |
WHEN: The annual meeting of shareholders of Equitrans Midstream Corporation (the Company or Equitrans Midstream) will be held on Wednesday, May 20, 2020,Tuesday, April 27, 2021, at 2:9:00 p.m.a.m. (Eastern Time) virtually via live webcast at www.virtualshareholdermeeting.com/ETRN2020.ETRN2021.
RECORD DATE: Our Board of Directors has established the close of business on March 12, 2020February 19, 2021 as the record date for determining shareholders entitled to receive notice of, and to vote at, the annual meeting and any adjournment or postponement of the meeting.
ITEMS OF BUSINESS: The following matters will be voted on at the meeting:
VOTING: Please consider the issues presented in the attached proxy statement and vote your shares as soon as possible by following the voting instructions included in the proxy statement.
PARTICIPATING IN THE MEETING: Due to the ongoing public health considerations associated with COVID-19,the coronavirus disease 2019 (COVID-19), we will be holding our 20202021 annual meeting of shareholders solely via webcast. You will be able to participate in the meeting online, vote your shares electronically and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/ETRN2020.ETRN2021. To participate in the meeting, you will need the 16-digit control number on your notice of Internet availability of proxy materials, your voting instruction form or your proxy card. If you plan to participate in the meeting, please follow the instructions under "Additional Information — Participating in the Annual Meeting" on page 6062 of the proxy statement.
On behalf of the Board of Directors,
Tobin M. Nelson |
Deputy General Counsel & Corporate Secretary
April 3, 2020March 8, 2021
Important NoticeRegarding the Availability of Proxy Materials
for the Annual Meeting of Shareholders to Be Held May 20, 2020:April 27, 2021:
This notice and proxy statement and our annual report on Form 10-K for the year ended
December 31, 20192020 are also available online at http://www.proxyvote.com.
| We commenced providing our proxy materials, or a notice of Internet availability providing access to such materials, on or about | |
TABLE OF CONTENTS |
Proxy Statement Summary | | i |
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Item No. 1 – Election of Directors | | 1 |
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Director Nominees | | 3 |
Corporate Governance and Board Matters | | |
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Board Meetings and Committees | | |
Compensation Process | | 10 |
Board Leadership Structure | | 12 |
Board's Role in Risk Oversight | | 13 |
Director Nominations | | 14 |
Contacting the Board | | |
Governance Principles | | 16 |
Independence and Related Person Transactions | | |
Compensation Committee Interlocks and Insider Participation | | |
Directors' Compensation | | |
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Equity-Based Compensation | | |
Deferred Compensation | | |
Stock Ownership Guidelines | | |
Other | | |
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Equity Ownership | | |
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Stock Ownership of Significant Shareholders | | |
Equity Ownership of Directors and Executive Officers | | |
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Delinquent Section 16(a) Reports | | |
Executive Compensation Information | | |
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Compensation Discussion and Analysis | | |
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Our | | |
Executive Summary | | |
Compensation Philosophy and Practices | | |
How We Determine Executive Compensation | | |
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Other Considerations Important to Our Compensation Program | | |
Report of the Management Development and Compensation Committee | |
Option Exercises and Stock Vested | | |
Potential Payments Upon Termination or Change of Control | | |
Pay Ratio Disclosure | | |
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Employee, Officer and Director Hedging | | |
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Item No. 2 – Advisory Vote on the Compensation of the Company's Named Executive Officers for | | |
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Item No. 3 – | | 53 |
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Report of the Audit Committee | | 54 |
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Item No. 4 – Ratification of Appointment of Independent Registered Public Accounting Firm | | 56 |
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Securities Authorized for Issuance Under Equity Compensation Plans | | |
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Equitrans Midstream Corporation Directors' Deferred Compensation Plan | | |
Additional Information | | |
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Proposals, Board Recommendations, Vote Required, and Broker Non-Votes | | |
Corporate Secretary Contact Information | | |
Notice of Internet Availability of Proxy Materials | | |
Voting Instructions | | |
Participating in the Annual Meeting | | |
Other Matters | | |
Appendices | | A-1 |
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Appendix A – Related Person Transactions with EQT | | A-1 |
Appendix B – Non-GAAP Financial Information | | B-1 |
Appendix C – Proposed Amendments to Amended and Restated Articles of Incorporation of Equitrans Midstream Corporation to Remove the Supermajority Voting Requirements | | C-1 |
Appendix D – Proposed Amendments to Second Amended and Restated Bylaws of Equitrans Midstream Corporation to Remove the Supermajority Voting Requirements | | D-1 |
PROXY STATEMENT SUMMARY OUR
WE EXECUTED ON THE FINAL STEP OF OUR SIMPLIFICATION STRATEGY | | This summary highlights information about Equitrans Midstream Corporation and the upcoming |
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Following the Separation,In June 2020, we executed a serieson the final step of transactions to enhance and simplify our operating structure (the Simplification Transactions) as well as grow our asset footprint, including the acquisition of 100%simplification strategy when we acquired all of the outstanding public common units of EQGP Holdings, LP (EQGP) and the elimination of the EQM Midstream Partners, LP (EQM) incentive distribution rights (IDRs), our former publicly traded master limited partnership, in a share-for-unit transaction in which each outstanding EQM common unit was exchanged for 2.44 shares of Company common stock (the EQM Merger). Following completionIn connection with the EQM Merger, EQM redeemed $600 million aggregate principal amount of EQM's outstanding Series A Perpetual Convertible Preferred Units (EQM Series A Preferred Units), and the Company issued newly created Equitrans Midstream preferred stock (Series A Preferred Shares) for the remaining portion of the Simplification Transactions,outstanding EQM successfully completedSeries A Preferred Units. Contemporaneously with the strategic acquisitionannouncement of a 60% interestthe EQM Merger in Eureka Midstream Holdings, LLC (Eureka Midstream) and a 100% interest in Hornet Midstream Holdings, LLC (Hornet Midstream). On February 27, 2020, the Company also announced several transformational transactions including: (i) EQM's execution of a new 15-year global gas gathering agreement with EQT Corporation (EQT), the largest natural gas producer in the United States, based on average daily sales volumes, and the Company's largest customer, providing for 3.0 Bcf per day of initial minimum volume commitments (MVCs) with gradual step-ups to 4.0 Bcf per day;day following the full in-service date of the Mountain Valley Pipeline (MVP), as well as the dedication of a substantial majority of EQT's core acreage in the prolific Marcellus Shale play in Pennsylvania and West Virginia (the EQT Global GGA), and (ii) the Company's execution of two share purchase agreements with EQT pursuant to which the Company repurchased and retired 25,299,752 shares of its common stock; and (iii) a definitive agreement to acquire allstock, which at the time represented approximately 10% of the outstanding public common units of EQM in a share-for-unit transaction in which eachCompany's outstanding common unitstock. A graphical depiction of EQM will be exchanged for 2.44 shares of Company common stock (the EQM Merger). In connection withthe Company's key strategic transactions since its separation from EQT in November 2018 that culminated in the EQM Merger ETRN will issue newly created ETRN preferred stock forand a portion of the issued and outstanding Series A Preferred Units of EQM. The EQM Mergersingle, pure-play midstream, public corporation is expected to close in mid-2020, following which EQM will no longer be a publicly traded entity.below:
Equitrans Midstream Corporation - 20202021 Proxy Statement i
ANNUAL MEETING |
Time and Date: | |||
Place: | Online at www.virtualshareholdermeeting.com/ | ||
Record Date: | |||
Participation: | You are entitled to participate in the virtual annual meeting if you were an Equitrans Midstream shareholder as of the close of business on the record date. See "Additional Information — Participating in the Annual Meeting" on page |
VIRTUAL ANNUAL MEETING |
Due to the ongoing public health considerations associated with COVID-19, and because the health, safety and well-being of our employees and shareholders is of utmost importance to us, we will be holding our 20202021 annual meeting of shareholders solely via webcast. We remain sensitive to concerns regarding virtual meetings generally from investor advisory groups and other shareholder rights advocates that have voiced concerns that virtual meetings may diminish shareholder voice or reduce accountability. Accordingly, we have designed the procedures for our virtual meeting format to enhance, rather than constrain, shareholder access, participation and communication, allowing a shareholder to participate fully and equally from any location at no cost to the shareholder. For example, the online format allows shareholders to communicate with us during the meeting so they can ask appropriate questions of our Board of Directors or management in accordance with the rules of conduct for the meeting and allow shareholders to vote electronically. See "Participating in the Annual Meeting" for additional information.
MATTERS TO BE VOTED UPON |
| Board Voting Recommendation | Page for Information | |||
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Item No. 1: Election of nine directors, each for a one-year term expiring at the | FOR EACH NOMINEE | 1 | |||
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Item No. 2: Approval, on an advisory basis, of the compensation of Equitrans Midstream's named executive officers for | FOR | | |||
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Item No. 3: | FOR | 53 | |||
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Item No. 4:Ratification of the appointment of Ernst & Young LLP as Equitrans Midstream's independent registered public accounting firm for 2021 | FOR | 56 | |||
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ii Equitrans Midstream Corporation - 20202021 Proxy Statement
BOARD AND BOARD COMMITTEES |
| | | | Equitrans Midstream Board Committee Membership | | | | | Equitrans Midstream Board Committee Membership | |||||||||||||||||||||
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Name, Principal Occupation & Current Other Public Company Board Service | | Director Since | | Name, Principal Occupation & Current Other Public Company Board Service | | Director Since | | |||||||||||||||||||||||
Age | Independent | AC | CGC | MDCC | HSSE | Age | Independent | AC | CGC | MDCC | HSSE | |||||||||||||||||||
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Vicky A. Bailey | 67 | 2018 | Vicky A. Bailey | 68 | 2018 | |||||||||||||||||||||||||
President, Anderson Stratton International, LLC & Vice President, BHMM Energy Services, LLC | Chair | President, Anderson Stratton International, LLC & Vice President, BHMM Energy Services, LLC | Chair | |||||||||||||||||||||||||||
Current Other Public Company Boards: Cheniere Energy, Inc., PNM Resources, Inc. | Current Other Public Company Boards: Cheniere Energy, Inc., PNM Resources, Inc. | |||||||||||||||||||||||||||||
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Sarah M. Barpoulis | 55 | 2020 | Sarah M. Barpoulis | 55 | 2020 | |||||||||||||||||||||||||
President, Interim Energy Solutions, LLC | President, Interim Energy Solutions, LLC | |||||||||||||||||||||||||||||
Current Other Public Company Boards: South Jersey Industries, Inc. | Current Other Public Company Boards: South Jersey Industries, Inc. | |||||||||||||||||||||||||||||
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Kenneth M. Burke | 70 | 2018 | Kenneth M. Burke | 71 | 2018 | |||||||||||||||||||||||||
Retired Partner, Ernst & Young LLP | Chair | Retired Partner, Ernst & Young LLP | Chair | |||||||||||||||||||||||||||
Current Other Public Company Boards: EQM Midstream Partners, LP | Current Other Public Company Boards: None | |||||||||||||||||||||||||||||
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Patricia K. Collawn | 61 | 2020 | Patricia K. Collawn | 62 | 2020 | |||||||||||||||||||||||||
Chairman, President and Chief Executive Officer, PNM Resources, Inc. | Chairman, President and Chief Executive Officer, PNM Resources, Inc. | |||||||||||||||||||||||||||||
Current Other Public Company Boards: PNM Resources, Inc., CTS Corporation* | Current Other Public Company Boards: PNM Resources, Inc., CTS Corporation* | |||||||||||||||||||||||||||||
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Margaret K. Dorman | 56 | 2018 | Margaret K. Dorman | 57 | 2018 | |||||||||||||||||||||||||
Retired Executive Vice President, Chief Financial Officer and Treasurer, Smith International, Inc. | Chair | Retired Executive Vice President, Chief Financial Officer and Treasurer, Smith International, Inc. | Chair | |||||||||||||||||||||||||||
Current Other Public Company Boards: Range Resources Corporation | Current Other Public Company Boards: Range Resources Corporation | |||||||||||||||||||||||||||||
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Thomas F. Karam (Chairman) | 61 | 2018 | Thomas F. Karam (Chairman) | 62 | 2018 | |||||||||||||||||||||||||
Chairman and Chief Executive Officer, Equitrans Midstream Corporation and the general partner of EQM Midstream Partners, LP | Chairman and Chief Executive Officer, Equitrans Midstream Corporation | |||||||||||||||||||||||||||||
Current Other Public Company Boards: EQM Midstream Partners, LP | Current Other Public Company Boards: None | |||||||||||||||||||||||||||||
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D. Mark Leland | 58 | 2020 | D. Mark Leland | 59 | 2020 | |||||||||||||||||||||||||
Retired Interim Chief Executive Officer, Deltic Timber Corporation and former Executive Vice President and Chief Financial Officer, El Paso Corporation | Retired Interim Chief Executive Officer, Deltic Timber Corporation and former Executive Vice President and Chief Financial Officer, El Paso Corporation | |||||||||||||||||||||||||||||
Current Other Public Company Boards: PotlatchDeltic Corporation, Altus Midstream Company | Current Other Public Company Boards: PotlatchDeltic Corporation, Altus Midstream Company | |||||||||||||||||||||||||||||
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Norman J. Szydlowski | 68 | 2018 | Norman J. Szydlowski | 69 | 2018 | |||||||||||||||||||||||||
Retired President and Chief Executive Officer, SemGroup Corporation | Chair | Retired President and Chief Executive Officer, SemGroup Corporation | Chair | |||||||||||||||||||||||||||
Current Other Public Company Boards: None | Current Other Public Company Boards: None | |||||||||||||||||||||||||||||
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Robert F. Vagt (Lead Independent Director) | 73 | 2018 | Robert F. Vagt (Lead Independent Director) | 73 | 2018 | |||||||||||||||||||||||||
Retired President, The Heinz Endowments | Retired President, The Heinz Endowments | |||||||||||||||||||||||||||||
Current Other Public Company Boards: Kinder Morgan, Inc. | Current Other Public Company Boards: Kinder Morgan, Inc. | |||||||||||||||||||||||||||||
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AC | Audit Committee | MDCC | Management Development and Compensation Committee | ||||
CGC | Corporate Governance Committee | HSSE | Health, Safety, Security and Environmental Committee |
Equitrans Midstream Corporation - 20202021 Proxy Statement iii
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iv Equitrans Midstream Corporation - 2020 Proxy Statement
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BUSINESS HIGHLIGHTS |
While the COVID-19 outbreak has significantly impacted the manner in which our employees and contractors perform their job functions, the outbreak has had, and continues to have, a minimal impact on our overall operations. As 2019 wasa midstream energy company, during applicable state-issued stay-at-home orders, we have been recognized as an essential business under various regulations related to the COVID-19 outbreak and continued to operate as permitted under these regulations. We have proactively undertaken a number of companywide measures intended to promote the safety of field and office-based employees and contractors. These measures include, among other things, establishing an Infectious Disease Response Team, instituting enhanced self-protection and office sanitation measures, eliminating non-essential business travel, implementing a mandatory work-from-home protocol for a substantial majority of our first full year asemployees through at least June 1, 2021, instituting face covering protocols, providing certain medical benefit enhancements, practicing social distancing in the field where possible, sharing our infectious disease response plan with suppliers and contractors, and timely communicating updates to employees and other relevant parties. In addition, we have implemented additional mitigation efforts in connection with the remobilization of certain field level employees and contractors. Our Infectious Disease Response Team continues to monitor and assist in implementing mitigation efforts in respect of potential areas of risk for us and our stakeholders. Additionally, we have provided support to local communities through corporate giving and the Equitrans Midstream Foundation. We have been able to maintain a publicly traded company,consistent level of effectiveness through the measures taken.
iv Equitrans Midstream Corporation - 2021 Proxy Statement
COMPENSATION HIGHLIGHTS |
The Management Development and Compensation Committee (Compensation Committee) of the Company's Board of Directors adopted a compensation philosophy and developed new programs and practices which differed materially from the pre-Separation compensation structure. Our new compensation program:that seek to (i) seeks to align total direct compensation for our named executive officers (NEOs) using market comparables and other relevant factors; and (ii) is weighted towards variable pay which requires the Company to achieve well-defined performance metrics in order for NEOs to realize annual and certain performance-based long-term incentives; (iii) limits executive perquisites and provides retirement and other benefit programs that are the same for all salaried employees; and (iv) deliversdeliver transparency and fairness to shareholders, employees and other stakeholders while encouraging sound business strategy and execution that leads to long-term and sustainable shareholder value. At our 2020 annual meeting, our say-on-pay proposal received support from over 97% of our shares voted, leading the Compensation Committee to believe our compensation programs and practices have strong shareholder support. The primary components of our 2020 compensation program were:
The majoritycompensation program is designed to provide an appropriate mix of our NEO compensationfixed and variable pay to encourage retention and corporate sustainability to increase long-term and sustainable shareholder value. The program is performance-based and is issuedweighted towards variable pay that requires the Company to achieve well defined performance metrics in the form of bothorder for NEOs to realize performance-based annual and long-term incentives. IndividualsThe charts below reflect the fixed and at-risk components of the 2020 compensation for (i) Mr. Karam, our Chief Executive Officer, and (ii) our other NEOs. The amounts for each component of total direct compensation (TDC) set forth in the charts below were calculated in accordance with Securities and Exchange Commission (SEC) rules. TDC, which is not a position to influencesubstitute for the growth of shareholder wealth have larger portions of their total compensation deliveredas reported in the formSummary Compensation Table on page 39 of equity-based long-term incentives. The target mix ofthis proxy statement, omits certain other compensation (e.g., 401(k) contributions and perquisites) that is reflected in the Summary Compensation Table. For additional information, including information regarding how total compensation program elements foris calculated under SEC rules, see the CEO and other NEOs is shown below.footnotes accompanying the Summary Compensation Table.
Equitrans Midstream Corporation - 20202021 Proxy Statement v
IMPORTANT DATES FOR |
Shareholder proposals submitted for inclusion in Equitrans Midstream's |
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Under Equitrans Midstream's |
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Under |
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For additional information, see "Additional Information – Shareholder Proposals and Director Nominations" on page |
vi Equitrans Midstream Corporation - 20202021 Proxy Statement
ITEM NO. 1 – ELECTION OF DIRECTORS |
The Board of Directors recommends a voteFOReach nominee for the Board of Directors. |
Our Board of Directors, sometimes referred to in this proxy statement as the Board or our Board, is presenting nine nominees for election as directors at our annual meeting. All nominees currently serve on our Board of Directors and their current terms will expire at the 20202021 annual meeting. Mses. Vicky A. Bailey, Sarah M. Barpoulis, Patricia K. Collawn, and Margaret K. Dorman, and Messrs. Kenneth M. Burke, Thomas F. Karam, D. Mark Leland, Norman J. Szydlowski, and Robert F. Vagt, have been nominated to serve for a term of one year to expire at the 20212022 annual meeting, or until their earlier removal or resignation or a successor is duly elected and qualified. Each nominee consents to being named in this proxy statement and to serve if elected. The Board has no reason to believe that any nominee will be unavailable or unable to serve. If any nominee is unable to stand for election for any reason, then the shares represented at our annual meeting will be voted by the persons named as proxies for substitute nominees proposed by the Board, unless the Board decides to reduce its size.
The Board, following the recommendation of the Corporate Governance Committee, selected our nine nominees based on a review of the attributes discussed on page 14 under "Corporate Governance and Board Matters – Director Nominations." Our Board believes that the nominees, individually and as a whole, possess qualifications consistent with our desired attributes and will provide management with strong independent oversight as we implement our strategic objectives. The following chart provides an overview of the attributes represented on our Board of Directors, in addition to each director's competencies included in the director profiles on the following pages.
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Equitrans Midstream Corporation - 2020 Proxy Statement1
Each of our director nominees brings a unique skillset to the Board of Directors. Notably, all nine of our director nominees:
Equitrans Midstream Corporation - 2021 Proxy Statement1
Our director nominees are also experienced in the following areas:
Each nominee must be elected by a majority of the votes cast FOR that director's election, and votes may not be cumulated. The persons named as proxies will vote FOR the nominees named, unless you vote against, or abstain from voting for or against, one or more of them.
In addition, under our bylaws,Bylaws, each nominee has submitted an irrevocable conditional resignation to be effective if the nominee receives a greater number of votes against than votes FOR his or her election in an uncontested election. If this occurs, the Board will decide whether to accept the tendered resignation no later than 90 days after certification of the election. The Board's determination shall be made without the participation of any nominee whose resignation is under consideration with respect to the election. The Board's explanation of its decision will be promptly disclosed on a Form 8-K furnished to the SEC.
2 Equitrans Midstream Corporation - 20202021 Proxy Statement
Director Nominees |
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Vicky A. Bailey | | Age | | Director since November 2018 |
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Ms. Baileyhas served as President, Anderson Stratton International, LLC (strategic consulting and government relations), since November 2005; and Vice President, BHMM Energy Services, LLC (utility and facilities management services), since January 2006. Ms. Bailey has been a director of Cheniere Energy, Inc. (an energy company primarily engaged in liquefied natural gas related businesses) since March 2006 where she serves as a member of the Audit and Governance and Nominating Committees and a director of PNM Resources, Inc. (an investor-owned holding company with two regulated utilities providing electricity and electric services in New Mexico and Texas) (PNM Resources)(PNM) since January 2019.2019 where she serves as a member of the Audit and Ethics Committee and Chair of the Nominating and Governance Committee. She was a director of EQT Corporation from June 2004 until the SeparationNovember 12, 2018, when EQT spun out Equitrans Midstream into a separate publicly traded company (the Separation), and of Cleco Corporation (an energy services company with regulated utility and wholesale energy businesses) from June 2013 through March 2016.
Qualifications: Ms. Bailey has substantial regulatory and senior management experience in the energy industry, having previously served as a commissioner of the Federal Energy Regulatory Commission, President of PSI Energy, Inc. (a regulated utility) and commissioner of the Indiana Utility Regulatory Commission. These experiences enable her to provide valuable insights into issues facing the Company's regulated transmission business, particularly with respect to interacting with regulatory agencies. In addition, Ms. Bailey provides leadership to the Board with respect to energy policy issues, owing to her previous experience as Assistant Secretary for the Office of Policy and International Affairs at the Department of Energy. Ms. Bailey also draws upon public company board experience in supporting the Company's strategic efforts.
Ms. Bailey is Chair of the Corporate Governance Committee and a member of the Health, Safety, Security and Environmental (HSSE) Committee.
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Sarah M. Barpoulis | | Age 55 | | Director since February 2020 |
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Ms. Barpoulishas served as a director of Equitrans Midstream since February 2020. Ms. Barpoulis is the founder and President of Interim Energy Solutions, LLC (an advisory service firm providing asset management and risk management consulting, and litigation support services to the energy sector) since 2003. She has served as a director of South Jersey Industries, Inc. (a publicly traded energy services holding company) (SJI) since April 2012 and currentlywhere she serves as a member of the Audit Committee (serving as Chair since 2017), the Executive Committee, the Strategy and Finance Committee and the Compensation Committee of SJI.Committee. She previously served as a director of SemGroup Corporation (a publicly traded provider of gathering, transmission, storage, distribution, marketing and other midstream services) (SemGroup) from October 2009 through the sale of SemGroup to Energy Transfer, LP in December 2019.
Qualifications:Ms. Barpoulis brings nearly 30 years of experience in the energy industry, significant executive-level leadership experience as well as valuable risk management, business planning and commercial expertise through her work as an energy advisor and consultant through Interim Energy Solutions, LLC and her varied roles of increasing responsibility over more than a decade with PG&E National Energy Group, a company that, among other things, developed, built, owned and operated electric generating and natural gas pipeline facilities. Ms. Barpoulis also brings significant public company board experience from her service on the boards of directors of a number of public companies. Ms. Barpoulis is a National Association of Corporate Directors Board Leadership Fellow, demonstrating her commitment to the highest standards of board leadership.
Ms. Barpoulis is a member of the Corporate Governance Committee and the HSSE Committee.
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Equitrans Midstream Corporation - 20202021 Proxy Statement 3
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Kenneth M. Burke | | Age | | Director since November 2018 |
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Mr. Burkewas a Partner at Ernst & Young LLP (EY) (a Big Four accounting firm) betweenfrom October 1982 andthrough June 2004. Mr. Burke served on the board of directors of Nexeo Solutions, Inc. (a publicly traded global chemical distributor) from November 2011 until its acquisition in March 2019. Mr. Burke also was appointed to the boards of directors of the general partners of EQM Midstream Partners, LP (EQM) and EQGP Holdings, LP (EQGP), both of which were publicly traded master limited partnerships controlled by the Company, in September 2018, and serves as a memberserving in such capacities until the Company's acquisitions of the outstanding public common units of each of EQM and EQGP in June 2020 and January 2019, respectively. Mr. Burke also served on and chaired the Audit CommitteeCommittees of EQM'sthe boards of directors of the general partner.partners of EQM and EQGP. Mr. Burke served as a director of EQT Corporation from January 2012 until the Separation and on the board of directors and as Chair of the Audit Committee of EQGP's general partner until the Company's acquisition of the interests in EQGP not held by the Company in January 2019 (the EQGP Buy-In).Separation.
Qualifications: Mr. Burke brings over three decades of experience focused on the energy industry, primarily oil and gas. Mr. Burke retired from EY in 2004, where he held a number of leadership positions, including National Energy Industry Director and Partner-in-Charge of the Houston Energy Services Group. He also co-authored the book "Oil and Gas Limited Partnerships: Accounting, Reporting and Taxation." During his years at EY, Mr. Burke served as audit partner for numerous companies in the oil and gas industry. Mr. Burke also has substantial experience as a director of both public and private companies where he has served on and chaired a number of committees.
Mr. Burke is Chair of the Audit Committee and a member of the Corporate Governance Committee.
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Patricia K. Collawn | | Age | | Director since April 2020 |
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Ms. Collawnhas served as director of Equitrans Midstream since April 2020. Ms. Collawn has served as President and Chief Executive Officer of PNM Resources, Inc. (a publicly traded energy holding company that provides electricity to homes and businesses in New Mexico and Texas through two regulated utilities) (PNM Resources) since 2010. She has also served as a director of PNM Resources since 2010 and was appointed Chairman of its board of directors in 2012. Ms. Collawn joined PNM Resources in 2007 and served as President and Chief Operating Officer and President, Utilities of PNM Resources prior to her promotion to President and Chief Executive Officer in 2010. In addition to serving on the board of directors of PNM, Resources, Ms. Collawn has served as an independent director of CTS Corporation (a publicly traded designer and manufacturer of sensors, actuators and electronic components for various industries) since 2003.2003, most recently serving as the Chair of the Compensation Committee and a member of the Nominating and Governance Committee. Ms. Collawn has indicated that she will step down fromnot stand for re-election to the board of directors of CTS Corporation at its 2021 annual meeting of shareholders in the second quarter of 2021. Additionally, Ms. Collawn will step down as promptly as practicableChairman, President and Chief Executive Officer of PNM upon the closing of PNM's merger combination with Avangrid, Inc., which PNM expects to close in order to minimize disruption during the COVID-19 outbreak.second half of 2021.
Qualifications: As a senior executive in the power utilities sector for more than 2025 years, Ms. Collawn has an in-depth understanding of the complex regulatory structure of the utility industry, as well as substantial operations experience, having also served as President and Chief Executive Officer of Public Service Company of Colorado, an Xcel Energy, Inc. subsidiary. Additionally, she is servingpreviously served as chairman of the Electric Power Research Institute (an independent, non-profit center for public interest energy and environmental research, including sustainability and carbon reduction matters); and she previously served, as well as the first female chairman of the board of directors of the Edison Electric Institute (a national association of investor-owned electric companies). Along with her executive leadership experience and a focus on corporate governance, cybersecurity, and environmental and sustainability matters, Ms. Collawn brings both commercial and operational expertise through her work in the public utility sector.
Ms. Collawn is a member of the Compensation Committee and the HSSE Committee.
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4 Equitrans Midstream Corporation - 20202021 Proxy Statement
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Margaret K. Dorman | | Age | | Director since November 2018 |
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Ms. Dormanserved as Chief Financial Officer and Treasurer of Smith International, Inc. (a publicly traded supplier of oil and gas products and services) (now part of Schlumberger Limited), between May 1999 and October 2009. Ms. Dorman has served as a director and member of the Audit Committee and Governance and Nominating Committee of Range Resources Corporation (a publicly traded petroleum and natural gas exploration and production company) since July 2019. Ms. Dorman has also been a director of privately-held Rubicon Oilfield International (provider(a privately-held provider of oilfield products and technologies) since August 2018, where she serves as Chair of the Audit Committee and a member of the Compensation Committee. She also served as a director of EQT Corporation from January 2012 until the Separation.
Qualifications: Ms. Dorman brings to Equitrans Midstream a wealth of financial expertise and experience in the energy industry, having served in numerous financial positions with Smith International, Inc., including as the Chief Financial Officer for more than a decade, during a period of expansive growth. Previously, Ms. Dorman held management positions with Landmark Graphics, prior to its acquisition by Halliburton Corporation, and EY. She has experience directing financial accounting functions, building banking relationships, structuring debt and equity financings, integrating acquisitions and interacting with shareholders as the lead investor relations executive. Ms. Dorman also has other board and audit committee experience, having served as a director of EQT as well as Hanover Compressor Company (a full service natural gas compression business) (now part of Exterran Holdings, Inc.) from February 2004 through the date of the Exterran Holdings merger in August 2007.
Ms. Dorman is Chair of the Compensation Committee and a member of the AuditCorporate Governance Committee.
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Thomas F. Karam | | Age | | Director since November 2018 |
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Mr. Karamwas appointed Chairman of the Board of Directors and Chief Executive Officer of Equitrans Midstream in July 2019. Prior to that, Mr. Karam served as President and Chief Executive Officer of Equitrans Midstream since September 2018 and a member of the Board of Equitrans Midstream since November 2018. Prior to Equitrans Midstream, he served as Senior Vice President, EQT Corporation and President, Midstream from August 2018 until the Separation in November 2018. Mr. Karam is also currentlyserved as the Chairman and Chief Executive Officer of EQM's general partner sincefrom July 2019 until the closing of the EQM Merger in June 2020, and previously served as Chairman, President and Chief Executive Officer, from October 2018 to July 2019, and as President, Chief Executive Officer and director, from August 2018 to October 2018. In addition, Mr. Karam served as Chairman, President and Chief Executive Officer of EQGP's general partner from October 2018 through the closing of the Company's acquisition of the outstanding public common units of EQGP Buy-in in January 2019, as well as President, Chief Executive Officer and director from August 2018 to October 2018. Mr. Karam served on EQT's board of directors from November 2017 until the Separation. Mr. Karam was the founder and served as Chairman of Karbon Partners, LLC, which invests in, owns, constructs and operates midstream energy assets, from April 2017 to August 2018. Mr. Karam was the founder and previously served as Chairman and Chief Executive Officer of PennTex Midstream Partners, LP, a publicly traded master limited partnership with operations in North Louisiana and the Permian Basin (PennTex), from 2014 until the sale of its general partner to Energy Transfer Partners in 2016.
Qualifications: Mr. Karam has been a senior executive and entrepreneur in the midstream energy sector for more than 25 years. Preceding PennTex, he was the founder, Chairman and Chief Executive Officer of Laser Midstream Partners, LLC (Laser), one of the first independent natural gas gathering systems in the northeast Marcellus Shale, from 2010 until 2012 when it was acquired by Williams Partners. Prior to Laser, Mr. Karam was the President, Chief Operating Officer and director of Southern Union Company, where he led its successful transformation from a large local distribution company to one of the largest pipeline companies in the United States at the time. Prior to Southern Union Company, Mr. Karam was the President and Chief Executive Officer of Pennsylvania Enterprises and PG Energy, a natural gas utility in central and northeastern Pennsylvania, until its acquisition by Southern Union Company. He began his professional career in investment banking with Legg Mason Inc. and Thomson McKinnon.
Mr. Karam is a member of the Health, Safety, Security and Environmental Committee.
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Equitrans Midstream Corporation - 20202021 Proxy Statement 5
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D. Mark Leland | | Age | | Director since January 2020 |
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Mr. Lelandhas served as a director of Equitrans Midstream since January 2020. Previously, Mr. Leland served as Interim Chief Executive Officer of Deltic Timber Corporation from October 2016 to March 2017, prior to the company's merger with Potlatch Corporation to form PotlatchDeltic Corporation (a publicly traded timberland real estate investment trust) (PotlatchDeltic) in February 2018. Mr. Leland has served as a director of PotlatchDeltic since February 2018 where he serves as a member of its Audit Committee and its Executive Compensation and Personnel Policies Committee. Mr. Leland has also served as a director of Altus Midstream Company (and its predecessor) (a publicly traded midstream company providing gathering processing and transportation services in the Permian Basin) since April 2016.2016 where he serves as the Chair of its Conflicts Committee and a member of its Audit Committee. Previously, he served as a director and Chair of the Audit Committee of Deltic Timber Corporation from June 2016 to February 2018 and the general partner of Rice Midstream Partners LP (RMP) from December 2014 until its merger with EQM in July 2018. Mr. Leland served on the board of directors of the general partner of Oiltanking Partners, L.P. (a publicly traded company providing terminaling, storage and transportation of crude oil, refined petroleum products and LPG)liquefied petroleum gas) from June 2012 to February 2015 and on the board of directors of KiOR, Inc. (a publicly traded renewables fuel company) from June 2013 to March 2015.
Qualifications: Mr. Leland brings extensive operational and financial experience in the midstream energy industry, having served as President of El Paso Corporation's (El Paso) midstream business unit from October 2009 to May 2012, and as director of El Paso Pipeline Partners, L.P. from its formation in 2007 to May 2012. Among other senior-level roles at El Paso, Mr. Leland also previously served as Executive Vice President and Chief Financial Officer of El Paso from August 2005 to October 2009. This experience as well as experience on the boards of numerous publicly traded energy and private energy companies provide significant contributions to the Board.
Mr. Leland is a member of the Audit Committee and the Compensation Committee.
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Norman J. Szydlowski | | Age | | Director since November 2018 |
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Mr. Szydlowskiserved as President and Chief Executive Officer of SemGroup from November 2009 through June 2014, and director of SemGroup from November 2009 through April 2014. Mr. Szydlowski served as a director of EQT Corporation from November 2017 until the Separation and as a director of the general partner of 8point3 Energy Partners, LP (a publicly traded joint venture formed to own and operate solar generation assets) from June 2015 until its acquisition by Capital Dynamics, Inc. in June 2018. He also served as a director of the general partner of JP Energy Partners LP (a publicly traded oil and natural gas company) from July 2014 through March 2017, a director of Transocean Partners, LLC (a publicly traded offshore drilling contractor) from November 2014 through December 2016, and a director of the general partner of NGL Energy Partners LP (a publicly traded company specializing in transportation, storage, blending and marketing of crude oils, natural gas, refined products, renewables and water solutions) from November 2011 through April 2014.
Qualifications: Mr. Szydlowski's experience at SemGroup and before that as Chief Executive Officer of Colonial Pipeline Company (a refined pipeline system) and elsewhere provides him with significant executive and operational midstream experience. In particular, Mr. Szydlowski has a thorough understanding of the midstream business and midstream customers.
Mr. Szydlowski is Chair of the Health, Safety, Security and EnvironmentalHSSE Committee and a member of the Compensation Committee.
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6 Equitrans Midstream Corporation - 20202021 Proxy Statement
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Robert F. Vagt | | Age 73 | | Director since November 2018 |
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Mr. Vagtcurrently serves as the Lead Independent Director of Equitrans Midstream. Mr. Vagt served as President of Davidson College (an independent liberal arts college) from July 1997 through August 2007, and served as President of The Heinz Endowments (a private philanthropic foundation) from January 2008 through January 2014. Mr. Vagt served as a director of EQT Corporation from November 2017 until the Separation. Mr. Vagt was a director of Rice Energy Inc. (Rice Energy), serving as that board's independent Chair, Chair of its Health, Safety and Environmental Committee, and a member of the Audit and Nominating and Governance Committees, from January 2014 through EQT's acquisition of Rice Energy in November 2017. From January 2014 to July 2018, Mr. Vagt also served on the board of directors of the general partner of Rice Midstream Partners LPRMP (acquired by EQM in July 2018), serving as board Chair from December 2014 through November 2017. Mr. Vagt has served as a director of Kinder Morgan, Inc. (a publicly traded energy infrastructure company) since May 2012, where he serves as a member of the Audit Committee and Chair of its Environmental, Health and Safety Committee.
Qualifications: Prior to his service to The Heinz Endowments and Davidson College, Mr. Vagt had significant executive and operational oil and gas industry experience, having served as President and Chief Operating Officer of Seagull Energy Corporation (an oil and gas exploration and production company) from 1996 to 1997, as President, Chairman and Chief Executive Officer of Global Natural Resources (a producer of oil and natural gas) from 1992 to 1996 and as President and Chief Operating Officer of Adobe Resources Corporation (an oil and natural gas production company) from 1989 to 1992. Mr. Vagt also served as a director of El Paso Corporation (a provider of natural gas and related energy products) (now part of Kinder Morgan, Inc.) from May 2005 to 2012, where he was a member of the Compensation and Health, Safety and Environmental Committees. Mr. Vagt's professional background, including operations and management experience in both the public and private sectors, makes him an important advisor and member of Equitrans Midstream's Board. Mr. Vagt brings to the Board operations and management expertise in both the public and private sectors. In addition, Mr. Vagt provides the Board with diversity of perspective gained from service as the President of The Heinz Endowments, as well as from service as the President of Davidson College.
Mr. Vagt is a member of the Audit Committee, the Compensation Committee, and the Corporate Governance Committee.
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Equitrans Midstream Corporation - 2020 Proxy Statement7
CORPORATE GOVERNANCE AND BOARD MATTERS |
Board Meetings and Committees |
The Board currently has four standing Committees: Audit, Management Development and Compensation, Corporate Governance, and Health, Safety, Security and Environmental. The Board may from time to time form new Committees, disband an existing Committee and delegate additional responsibilities to a Committee. Our Committees report on their activities to the Board on a routine basis and also make recommendations regarding matters to be approved by the Board. The responsibilities of the Committees are included in written charters, which are reviewed at least annually by the Committees and the Board. All charters may be viewed on the Company's website at www.equitransmidstream.com by clicking on "Investors""About" on the main page and then on "Governance."
The Company does not have a formal policy of requiring its directors to attend the annual meeting, but the Company encourages them to do so. All but one of our directors, who had a previous engagement, participated in the 2020 annual meeting.
In 2019,2020, our Board held 1418 meetings, with regular communication between meetings, and each of our directors serving on the Board during 20192020 attended at least 90%100% of the aggregate meetings of our Board and the Committees on which he or she served. The following charts summarize each Committee's primary responsibilities, membership and number of meetings held in 2019.2020.
Equitrans Midstream Corporation - 2021 Proxy Statement7
Audit Committee |
Members Kenneth M. Burke (Chair) Robert F. Vagt | Meetings Held in |
Primary Responsibilities: The Audit Committee assists the Board by overseeing:
Independence: Each member of the Committee is independent under the Company's corporate governance guidelines and applicable New York Stock Exchange (NYSE) listing standards and SEC rules. Each member of the Committee is financially literate. The Board has determined that each of Ms. Dorman and Messrs. Burke, Leland and Vagt qualify as an audit committee financial expert as defined under SEC rules. The designation as an audit committee financial expert does not impose any duties, obligations, or liabilities that are greater than those generally imposed upon a director who is a member of the Committee and the Board. As audit committee financial experts, Ms. Dorman and Messrs. Burke, Leland and Vagt also have accounting or related financial management experience under applicable NYSE listing standards.
8 Equitrans Midstream Corporation - 2020 Proxy Statement
Management Development and Compensation Committee |
Members Margaret K. Dorman (Chair) Patricia K. Collawn D. Mark Leland Norman J. Szydlowski | Meetings Held in |
Primary Responsibilities: The Compensation Committee:
The Committee has the authority, in its sole discretion, to retain or obtain the advice of an independent compensation consultant, outside legal counsel or other personnel. It may also obtain advice and assistance from internal legal, accounting, human resources and other advisors. Pursuant to its Charter, the Committee may delegate authority and responsibilities to subcommittees as it deems proper provided that no subcommittee shall consist of less than two members.
Independence: Each member of the Committee (i) meets the independence requirements of the NYSE or any other national securities exchange on which the securities of the Company are listed and applicable federal securities law, including the rules and regulations of the SEC, and (ii) satisfies the requirements of an outside director for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the Code).SEC.
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Corporate Governance Committee |
Members Vicky A. Bailey (Chair) Sarah M. Barpoulis Kenneth M. Burke | Meetings Held in |
Primary Responsibilities: The Corporate Governance Committee is responsible for:
Independence: Each member of the Committee is independent under the Company's corporate governance guidelines and applicable NYSE listing standards.
Equitrans Midstream Corporation - 2020 Proxy Statement9
Health, Safety, Security and Environmental Committee |
Members Norman J. Szydlowski (Chair) Vicky A. Bailey Patricia K. Collawn | Meetings Held in |
Primary Responsibilities: The Health, Safety, Security and Environmental (HSSE)HSSE Committee:
Equitrans Midstream Corporation - 2021 Proxy Statement9
Compensation Process |
In discharging the Board's responsibilities relating to compensation of the Company's executive officers, the Compensation Committee recommends, and the Board approves, the target total direct compensation for named executive officersNEOs by establishing base salaries and setting short-term (bonus) and long-term incentive targets. This process includes consideration of the items discussed in more detail in ourthe section titled "Compensation Discussion and Analysis — Determination of Target Total Direct Compensation (TDC)" below. When appropriate, the Compensation Committee may also provideprovides certain limited perquisites and other benefits to executive officers and other key employees.
The Compensation Committee, with the approval of the Company's Board, establishes the plan designs and performance metrics for all of the Company's short-term and long-term incentive programs. The Compensation Committee also sets target and maximum metrics and related payouts under the Company's programs for executive officers and reviews the appropriateness of these for all other Company personnel. After completion of the performance period, the Compensation Committee reviews actual performance in comparison to established metrics to determine the amount of short-term and long-term incentive awards earned for each executive officer and for other Company personnel in total.
The Compensation Committee has retained the services of Mercer (US) Inc. (Mercer) as its independent consultant to aid the Compensation Committee in performing its duties. Representatives of Mercer provided the Compensation Committee with market data and counsel regarding executive officer compensation programs and practices, discussed in more detail in ourthe section titled "Compensation Discussion and Analysis" below. Representatives of Mercer do not make recommendations on, or approve, the amount of compensation for any executive officer. The Company has affirmatively determined that no conflict of interest has arisen in connection with the work of Mercer as compensation consultant for the Compensation Committee.
The Company's compensation process includes discussions among the members of the Compensation Committee, other independent directors of the Board, management and Mercer. The Compensation Committee always seeks approval of the Board with respect to the total direct compensation for each named executive officer.
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Certain executive officers may review information with the Compensation Committee during meetings and may present management's views or recommendations. The Compensation Committee evaluates these recommendations including, if desired, in consultation with its independent compensation consultant, and takes them into consideration when making the Compensation Committee's decisions and recommendations. When establishing total direct compensation for executive officers and reviewing actual performance against established metrics, the Compensation Committee considers the Chief Executive Officer'sCEO's compensation recommendations. The Chief Executive OfficerCEO does not participate in Compensation Committee or Board deliberations about his compensation.
TheBeginning in 2019, the Compensation Committee has delegated limited authority to Mr. Karam, in his capacity as a director of the Company, to issue special bonus payments and grant certain long-term incentive awards under the Equitrans Midstream Corporation 2018 Long-Term Incentive Plan (ETRN(as amended, the ETRN LTIP). These awards must follow established guidelines (which were subsequently amended in the third quarter of 2020), are reviewed by the Compensation Committee on a quarterly basis, and include New Hire, CEO, Retention and Discretionary New Hire Awards.
The Compensation Committee has approved a pre-established basket to provide for off-cycle New Hire awards pursuant to new hires eligible for an award under the ETRN LTIP. The guidelines are as follows:following guidelines:
10 Equitrans Midstream Corporation - 2021 Proxy Statement
The Compensation Committee has also approved a pre-established basket to provide for CEO Awards, Retention Awards, and Discretionary New Hire Awards to individuals other than executive officers and direct reports of the Chief Executive Officer. The guidelines are as follows:CEO pursuant to the following guidelines:
The Compensation Committee has not delegated its authority to award equity to any other executive officer.
We provide additional information regarding the Compensation Committee and ourthe Company's policies and procedures regarding executive compensation below under the caption "Compensation Discussion and Analysis."
Equitrans Midstream Corporation - 20202021 Proxy Statement 11
Board Leadership Structure |
As described in the Company's corporate governance guidelines, the Board of Directors believes that the functions of the Chairman of the Board are distinct from those of the Chief Executive OfficerCEO but that both functions may be effectively performed by the same individual. From time to time, generally in connection with succession planning, the Board will consider whether the Chairman and the Chief Executive OfficerCEO should be separate, and if separate, whether the Chairman should be an outside director or an inside director. In July 2019, the Board concluded that combining the functions of Chairman and Chief Executive OfficerCEO was the most effective leadership structure for the Company and appointed Mr. Karam as the Chairman of the Board. The Board reaffirmed its conclusion in May 2020 and, based on a recommendation of the Corporate Governance Committee, reappointed Mr. Karam as Chairman of the Board for a term expiring at the Board's 2021 annual meeting. The Board believes the present structure provides the Company and the Board with strong leadership and appropriate independent oversight of management, with a strong Lead Independent Director in Mr. Vagt and a board structure that is now 89% independent. In addition, a combined Chairman and Chief Executive OfficerCEO allows the Company to communicate its business, strategy and value to shareholders, investors, employees, other stakeholders, regulators and the public with a single voice.
Under the Company's corporate governance guidelines, when the Board does not have an independent Chairman, the Board must designate an independent director as the Lead Independent Director. The Lead Independent Director's exclusive duties are described in the box on this page.
A Lead Independent Director's term is generally for one year, but an individual may serve multiple consecutive terms as ourthe Lead Independent Director if recommended by the Corporate Governance Committee and approved by the Board.
In July 2019,May 2020, the Board, based on a recommendation from the Corporate Governance Committee, re-elected Mr. Vagt to serve as Lead Independent Director of the Board for a one-year term. Mr. Vagt has held this position since the Separation.
Our Lead Independent Director: |
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Board's Role in Risk Oversight |
The Board
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Audit Committee ➢ Discusses the Company's process for assessing major risk exposures and the policies management has implemented to monitor and control such exposures, including the Company's financial risk exposures, including financial statement risk and such other risk exposures as may be delegated by the Board to the Committee for oversight, and the Company's risk management policies ➢ Reviews the integrity of the Company's financial statements ➢ Reviews the qualifications, independence and performance of the Company's registered public accountants ➢ Reviews the qualifications and performance of the Company's internal audit function | | | Corporate Governance Committee ➢ Addresses governance of the Company, including its director compensation structure, that is in full compliance with law, reflects good corporate governance, encourages flexible and dynamic management without undue burdens and effectively manages the risks of the business and operations of the Company ➢ Identifies board members of the highest possible caliber to provide insightful, intelligent, and effective guidance to management ➢ Reviews plans for management succession ➢ Reviews periodically and makes such recommendations regarding the Company's risks as may be delegated to the Committee by the Board | |
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Management Development and Compensation Committee ➢ Oversees the performance of an annual risk assessment of the Company's compensation policies and practices ➢ Reviews periodically and makes recommendations regarding the Company's risks as may be delegated to the Committee by the Board | | | Health, Safety, Security and Environmental Committee ➢ Provides input and direction to management and the Board about the Company's approach to ESG issues and HSSE policies, programs and initiatives, and reviews the Company's activities in those areas ➢ Reviews the overall adequacy of, and provides oversight with respect to, HSSE policies, programs, procedures and initiatives of the Company ➢ Reviews periodically and makes recommendations regarding the Company's risks (including, without limitation, risks relating to energy transition, emissions and climate change, as well as biodiversity matters) as may be delegated to the Committee by the Board | |
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Management
Equitrans Midstream Corporation - 20202021 Proxy Statement 13
Director Nominations |
The responsibilities of the Corporate Governance Committee include identifying and recommending to the Board for approval the requisite skills and characteristics to be found in individuals who will serve as members of the Board. The Committee strives to ensure that the Board consists of individuals from diverse educational and professional experiences and backgrounds who, collectively, provide meaningful counsel to management. The Corporate Governance Committee reviews the qualifications and backgrounds of the directors, as well as the overall composition of the Board, and recommends to the Board for approval the slate of directors to be recommended for nomination for election at ourthe Company's annual meeting of shareholders.
When assessing new director candidates for nomination, regardless of who recommends the candidate for consideration, the Corporate Governance Committee will consider the background, diversity, personal characteristics and business experience of the candidate against the ideal attributes identified below. Candidates generally possessing these attributes are further evaluated against of the current needs of the Company to determine the appropriate fit in light of overall Board composition. The Corporate Governance Committee reviews the attributes from time to time and recommends revisions for approval by the Board as the Corporate Governance Committee considers appropriate.
The Board initiated a search for one or more new directors in the fourth quarter of 2019. While a third-party search firm was hired to identify potential director candidates, non-management members ofindependent directors on the Board identified Mses. Barpoulis and Collawn and Mr. Leland as potential candidates and after, among other things, a thorough vetting process, interviews with ourthe Company's entire Board and recommendations by the Corporate Governance Committee, the Board appointed Mses. Barpoulis and Collawn and Mr. Leland to the Board effective February 1, 2020, April 1, 2020 and January 30, 2020, respectively, with a termterms expiring at the 2020 annual meeting of shareholders.shareholders, each of whom were re-elected at such meeting. With the appointment of the three new directors, the Company has expanded its Board size to nine directors, eight of whom are independent and four of whom are female.independent.
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As indicated in the Corporate Governance Committee's charter, the Corporate Governance Committee will consider, in its normal course, submissions from shareholders in making its recommendations for director nominees. Any shareholder desiring to recommend an individual to serve as a director of the Company should submit the information listed below to the Corporate Governance Committee Chair, care of the Corporate Secretary. The Corporate Governance Committee will consider recommendations received no earlier than the close of business on January 20,December 28, 2021, and no later than the close of business on February 19, 2021.January 27, 2022.
A submitting shareholder must provide the following:
Additionally, as set forth in Section 1.11 of the Company's Bylaws, a shareholder, or group of twenty or fewer shareholders, in each case owning continuously for at least three years as of both the date the notice is received by the Company and the record date for the annual meeting, shares of the Company representing an aggregate of at least 3% of the voting power entitled to vote in the election of directors, may nominate and include in the Company's proxy statement director nominees constituting the greater of (i) two and (ii) 20% of the Board, provided that such nominations are submitted in writing and received by the Company's Corporate Secretary not earlier than the close of business on October 16, 2021 (the 150th day prior to the first anniversary of the date that the Company mailed its proxy statement for the prior annual meeting) and not later than the close of business on November 15, 2021 (the 120th day prior to the first anniversary of the date that the Company mailed its proxy statement for the prior year's annual meeting) and include the following:
Please see "Corporate Secretary Contact Information" under the caption "Additional Information" on page 56.59.
Equitrans Midstream Corporation - 2021 Proxy Statement15
Contacting the Board |
Interested parties may communicate directly with the Lead Independent Director (and with independent directors, individually or as a group, through the Lead Independent Director) by sending an email | ||
to ETRNPresidingDirector@equitransmidstream.com. You may also write to the Lead Independent Director, the entire Board, any Board Committee, or any individual director by addressing such communication to the applicable director or directors, care of the Corporate Secretary, at Equitrans Midstream Corporation, 2200 Energy Drive, Canonsburg, Pennsylvania 15317. The Corporate Secretary will open the communication and promptly deliver it to the Lead Independent Director or the named director, unless the communication is junk mail or a mass mailing. |
Equitrans Midstream Corporation - 2020 Proxy Statement15
Governance Principles |
The Company maintains a corporate governance page on its website that includes key information about its corporate governance practices, including its corporate governance guidelines, code of business conduct and ethics, and charters for each Committee of the Board. The corporate governance page can be found at www.equitransmidstream.com, by clicking on the "Investors""About" link on the main page and then on the "Governance" link. The Company will provide copies of its corporate governance guidelines, code of business conduct and ethics, and any of the Board Committee charters upon request by a shareholder to the Corporate Secretary. See "Corporate Secretary Contact Information" under the caption "Additional Information."
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The Board is committed to strong corporate governance practices. Through the Corporate Governance Committee, the Board monitors its corporate governance policies and practices against evolving best practices. Below are highlights of some of our corporate governance policies and practices.
Corporate Governance Highlights
16 Equitrans Midstream Corporation - 2020 Proxy Statement
Shareholder Engagement |
We value feedback from our shareholders and are committed to engaging in an active dialogue with our shareholders year-round. During our first year as an independent publicly traded company,2020, our management team spent a significant amount of time meeting and speaking to our shareholders. We welcome feedback from our shareholders and strive to maintain the best governance, compensation and oversight practices.
Equitrans Midstream Corporation - 2021 Proxy Statement17
Sustainability and Corporate Responsibility |
We recognize, and appreciate, that our shareholders, employees, customers, regulators, and other stakeholders expect us to continue to focus on long-term sustainable performance, including by addressing significant, relevant ESG factors. We have, throughout our corporate history, embraced conducting business in a socially responsible and ethical manner by respecting all stakeholders, and we believe that our continued commitment to sustainability, including minimizing impacts to the environment and society, will enable us to create long-term value. We have highlighted below certain important steps that we have taken to further communicate, structure, and embed within our operations our sustainability practices.
More information regarding our sustainability initiatives and copies of our CSR for 2020 and Climate Policy are available on our website (www.equitransmidstream.com) by selecting the "Sustainability" tab on the main page. Information included in the CSR and Climate Policy is not incorporated into this proxy statement.
Independence and Related Person Transactions |
Director Independence |
The NYSE listing standards and our governance documents require a majority of our directors and each member of our Audit, Compensation and Corporate Governance Committees to be independent. For a director to be considered independent, the Board must annually determine that he or she has no material relationship with the Company except as a director. To assist it in determining director independence, the Board established guidelines that meet or exceed the independence requirements under the NYSE listing standards, and which are included in ourstandards. These corporate governance guidelines may be found on the Company's website at www.equitransmidstream.com.www.equitransmidstream.com by clicking on "About" on the main page and then on "Governance."
The Board considers all relevant facts and circumstances in making an independence determination. Any relationship involving a Company director that complies with the independence standards included in ourthe Company's corporate governance guidelines and is not otherwise a related person transaction under the Company's related person transaction approval policy (the related person transaction policy) is deemed to be an immaterial relationship not requiring consideration by the Board in assessing independence. In the first quarter of 2020,2021, our Board, in coordination with our Corporate Governance Committee, made an independence determination for each of our directors and director nominees and affirmatively determined that all of our directors and director nominees are independent, other than Mr. Karam.
18 Equitrans Midstream Corporation - 2021 Proxy Statement
Director ownership of Company stock is encouraged and is not in itself a basis for determining that a director is not independent, provided that such ownership may preclude participation on the Audit Committee if its magnitude is sufficient to make the director an affiliated person of the Company as described in the Audit Committee charter. See "Equity-Based Compensation" under the caption "Directors' Compensation" below for a description of the stock ownership guidelines for directors.
Review, Approval or Ratification of Transactions with Related Persons |
Our Board has adopted a related person transaction policy. Under the policy, it is the responsibility of the Corporate Governance Committee to review Related Person Transactions (as defined below) not otherwise approved by the Board. Company management, with the assistance of the Company's legal department, is responsible for determining whether a transaction between the Company and a Related Person (as defined below) constitutes a Related Person Transaction. This determination is based on a review of the facts and circumstances regarding the transaction, including information provided in annual director and executive officer questionnaires. If it is determined that a transaction is a Related Person Transaction that has not been approved by the Board, the material facts regarding the transaction are reported to the Corporate Governance Committee for its review. The Corporate Governance Committee, thenor in certain cases the Chair of the Corporate Governance Committee followed by a report to the Corporate Governance Committee, determines whether to approve, ratify, revise, reject, or take other action with respect to the Related Person Transaction.
Under the related person transaction policy, a Related Person Transaction is generally a transaction in which the Company or a subsidiary is a participant, the amount involved exceeds $120,000, and a Related Person has a direct or indirect material interest in the transaction. A Related Person is generally any person who is a director or executive officer of the Company, any nominee for director, any shareholder known to the Company to be the beneficial owner of more than 5% of any class of the Company's voting securities, and any immediate family member (as defined by the SEC) of any of the foregoing persons.
Equitrans Midstream Corporation - 2020 Proxy Statement17
Under the policy, the following transactions are deemed to be automatically pre-approved and do not need to be brought to the Corporate Governance Committee for individual approval:
Equitrans Midstream Corporation - 2021 Proxy Statement19
The related person transaction policy does not limit or affect the application of the Company's code of business conduct and ethics and related policies, which require directors and executive officers to avoid engaging in any activity or relationship that may interfere, or have the appearance of interfering, with the performance of the directors' or executive officers' duties to the Company. Such policies require all directors and executive officers to report and fully disclose the nature of any proposed conduct or transaction that involves, or could involve, a conflict of interest and to obtain approval before any action is undertaken.
Related Person Transactions with Directors and Executive Officers |
No reportable transactions between the Company and any of its directors or executive officers occurred during 2019,2020, and there are no such proposed transactions.
Related Person Transactions with EQT |
A discussion of related person transactions with EQT and EQM is attached on Appendix A to this Proxy Statement.
Compensation Committee Interlocks and Insider Participation |
No member of the Compensation Committee has served as an officer or employee of Equitrans Midstream at any time. During 2019,2020, no Equitrans Midstream executive officer served as a member of the compensation committee or on the board of directors of any company at which a member of Equitrans Midstream's Compensation Committee or Board of Directors served as an executive officer.
1820 Equitrans Midstream Corporation - 20202021 Proxy Statement
DIRECTORS' COMPENSATION |
The Corporate Governance Committee reviews and the Board approves director compensation on an annual basis. No compensation is paid to employee directors for their service as directors. The Corporate Governance Committee engaged Mercer to review director compensation. Mercer performed a review of the compensation paid to our non-employee directors relative to a group of peer companies identified by Mercer and approved by the Corporate Governance Committee. In light of the non-employee directors' roles and responsibilities and after considering director compensation at relevant peer group companies, Mercer recommended the following non-employee director cash and equity-based compensation, which was approved by our Board for the 20192020 and 20202021 calendar years.
Compensation Feature | 2019 | 2020 | 2020 | 2021 | ||||
Annual cash retainer — Board member | $100,000 | $100,000 | $100,000 | $100,000 | ||||
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Annual cash retainer — Committee Chair | Audit:$20,000 Compensation:$20,000 All other Committees:$15,000 | $20,000 $20,000 $15,000 | Audit: $20,000 Compensation: $20,000 All other Committees: $15,000 | $20,000 $20,000 $15,000 | ||||
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Annual cash retainer — Committee member (excluding the Chair) | Audit:$7,500 Corporate Governance, | $7,500 None | Audit: $7,500 Corporate Governance, | $7,500 None | ||||
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Annual retainer — Chairman of the Board and Lead Independent Director | Chairman:$25,000 Lead Independent Director: $25,000 | $0 $25,000 | Chairman: $0 Lead Independent Director: $25,000 | $0 $25,000 | ||||
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Deferred stock units | Value equal to $150,000 | Value equal to $150,000 | Value equal to $150,000 | Value equal to $150,000 | ||||
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Equity-Based Compensation |
The Company grants to each non-employee director, on an annual basis, stock units under the ETRN LTIP, the payouts of which are deferred under Equitrans Midstream's Amended and Restated Directors' Deferred Compensation Plan (the Director Plan). Each deferred stock unit vests upon award and will be payable upon termination of service as a director of Equitrans Midstream. Each deferred stock unit is equal in value to one share of Equitrans Midstream common stock and does not have voting rights. The deferred stock unit awards are automatically deferred into the Director Plan, and dividends thereon are credited quarterly in the form of additional deferred stock units.
Newly elected non-employee directors of Equitrans Midstream are generally expected to receive an equity grant upon joining the Board equal to the pro-rata amount of the then applicable annual grant. Accordingly, Mses. Barpoulis and Collawn and Mr. Leland received pro-rated grants of 14,200, 8,440, and 13,970 deferred stock units, respectively, when they joined the Board on February 1, 2020, April 1, 2020, and January 30, 2020, respectively.
Deferred Compensation |
The Company maintains the Director Plan. Under the Director Plan, in addition to the automatic deferral of deferred stock unit awards, non-employee directors are permitted to elect to defer up to 100% of their retainers and any fees into the Director Plan and receive an investment return on the deferred funds as if the funds were invested in Company common stock or permitted mutual funds. Prior to the deferral, plan participants are required to irrevocably elect to receive the deferred funds either in a lump sum or in equal annual installments. Deferred funds for which directors have elected to receive an investment return as if the funds were invested in Company common stock will be distributed in shares of Company common stock. Distributions will be made or, if applicable, commence following termination of service as a director. The directors' deferred compensation accounts are unsecured obligations of the Company. Messrs.Mr. Szydlowski and Porges, the Chairman of our Board through December 31, 2019,Ms. Collawn deferred fees under the Director Plan during 2019.2020.
Equitrans Midstream Corporation - 20202021 Proxy Statement 1921
Stock Ownership Guidelines |
The non-employee directors are subject to stock ownership guidelines which require them to hold shares (or share equivalents, including deferred stock units) with a value equal to five times the annual cash retainer. Under the guidelines, directors have up to five years from joining the Board to acquire a sufficient number of shares (or share equivalents, including deferred stock units) to meet the stock ownership guidelines. Each of the Company's non-employee directors satisfies the stock ownership guidelines or is within the five-year grace period.
Other |
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The table below shows the total 20192020 compensation of the Company's non-employee directors.
Name (1) | Fees Earned or Paid in Cash ($)(2) | Stock Awards ($)(3) | All Other Compensation ($)(4) | Total ($) | Fees Earned or Paid in Cash ($)(2) | Stock Awards ($)(3) | All Other Compensation ($)(4) | Total ($) | ||||||||||||||||||||||||
Ms. Bailey | | | 114,559 | | | 150,150 | | | 92,603 | | | 357,312 | | | 115,000 | | | 150,033 | | | 79,240 | | | 344,273 | ||||||||
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Ms. Barpoulis | | | 91,484 | | | 137,314 | | | 13,243 | | | 242,041 | ||||||||||||||||||||
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Mr. Burke | | | 119,539 | | | 150,150 | | | 220,684 | | | 490,373 | | | 120,000 | | | 150,033 | | | 178,503 | | | 448,536 | ||||||||
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Ms. Collawn | | | 75,000 | | | 42,453 | | | 3,913 | | | 121,366 | ||||||||||||||||||||
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Ms. Dorman | | | 127,011 | | | 150,150 | | | 54,247 | | | 331,408 | | | 122,926 | | | 150,033 | | | 41,599 | | | 314,558 | ||||||||
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Mr. Porges | | | 113,179 | | | 150,150 | | | 76,481 | | | 339,810 | ||||||||||||||||||||
Mr. Leland | | | 96,607 | | | 138,163 | | | 13,029 | | | 247,799 | ||||||||||||||||||||
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Mr. Szydlowski | | | 115,000 | | | 150,150 | | | 66,795 | | | 331,945 | | | 115,000 | | | 150,033 | | | 78,858 | | | 343,891 | ||||||||
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Mr. Vagt | | | 131,992 | | | 150,150 | | | 82,055 | | | 364,197 | | | 132,500 | | | 150,033 | | | 78,858 | | | 361,391 | ||||||||
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2022 Equitrans Midstream Corporation - 20202021 Proxy Statement
EQUITY OWNERSHIP |
Stock Ownership of Significant Shareholders |
The following shareholders reported to the SEC or, in the case of the Series A Preferred Shares, to the Company, that they owned more than 5% of the Company's (i) outstanding common stock or (ii) outstanding Series A Preferred Shares as of December 31, 2019:2020:
Name and Address | Shares Beneficially Owned | Percent of Common Stock Outstanding | Shares of Common Stock Beneficially Owned | Percent of Common Stock Outstanding | Shares of Series A Preferred Stock Beneficially Owned | Percent of Series A Preferred Stock Outstanding | ||||||||||||||||||||||||||
EQT Corporation | | | 50,599,503 | (1) | | | 19.9 | % | | |||||||||||||||||||||||
Capital International Investors(1) | | | 49,507,028 | | | 11.4 | % | | — | | | — | | | ||||||||||||||||||
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Capital International Investors | | | 31,207,042 | (2) | | | 12.3 | % | | |||||||||||||||||||||||
The Vanguard Group(2) | | | 38,925,528 | | | 9.0 | % | | — | | | — | | | ||||||||||||||||||
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The Vanguard Group | | | 19,984,036 | (3) | | | 7.8 | % | | |||||||||||||||||||||||
BlackRock, Inc.(3) | | | 36,038,222 | | | 8.3 | % | | 7,719,392 | | | 25.7 | % | | ||||||||||||||||||
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BlackRock, Inc. | | | 19,282,874 | (4) | | | 7.6 | % | | |||||||||||||||||||||||
EQT Corporation(4) | | | 25,296,026 | | | 5.8 | % | | — | | | — | | | ||||||||||||||||||
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T. Rowe Price Associates, Inc. | | | 16,026,282 | (5) | | | 6.2 | % | | |||||||||||||||||||||||
GSO Equitable Finance LP | | | — | | | — | | | 7,125,591 | | | 23.7 | % | | ||||||||||||||||||
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NB Burlington Aggregator LP(5) | | | — | | | — | | | 3,752,308 | | | 12.5 | % | | ||||||||||||||||||
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CEQM Holdings, LLC | | | — | | | — | | | 2,501,537 | | | 8.3 | % | | ||||||||||||||||||
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Equitrans Midstream Corporation - 2021 Proxy Statement23
1 Lafayette Place, Greenwich, Connecticut 06830, or 601 Union Street 56th Floor, Seattle, Washington 98101. Shares shown include only the Series A Preferred Shares that are beneficially held by BlackRock, Inc. and may not incorporate all shares deemed to be beneficially held by BlackRock, Inc.
Equitrans Midstream Corporation - 2020 Proxy Statement21
all 3,752,308 shares held by NB Burlington Aggregator LP.
Equity Ownership of Directors and Executive Officers |
The tablestable below provideprovides the number of shares of Company common stock and EQM common units beneficially owned by the Company's directors and named executive officersNEOs and all directors and executive officers of the Company as a group as of March 12, 2020,February 11, 2021, determined under SEC rules, which include Company shares and EQM common units they had the right to acquire within 60 days after March 12, 2020.February 11, 2021. At the close of business on March 12, 2020,February 11, 2021, Equitrans Midstream had 229,689,721433,931,154 shares of common stock outstanding and EQM had 200,457,630 common units outstanding. None of the executive officers or directors of the Company beneficially own any Series A Preferred Shares of the Company. Under SEC rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of a security, or investment power, which includes the power to dispose of or to direct the disposition of a security. Except as indicated by footnote, the persons named below have sole voting and investment power with respect to all Company common stock and EQM common units beneficially owned by them, subject to community property laws where applicable. None of the shares of Company common stock or the EQM common units are subject to a pledge.
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Name | | Common Stock (1) | Percent of Class (2) | ||
Non-Employee Directors: | |||||
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Vicky A. Bailey | * | ||||
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Sarah M. Barpoulis | * | ||||
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Kenneth M. Burke | * | ||||
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Patricia K. Collawn | * | ||||
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Margaret K. Dorman | * | ||||
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D. Mark Leland | * | ||||
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Norman J. Szydlowski | * | ||||
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Robert F. Vagt | * | ||||
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Executive Officers: | |||||
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Thomas F. Karam(3) | * | ||||
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Diana M. Charletta | * | ||||
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Stephen M. Moore | * | ||||
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Kirk R. Oliver | * | ||||
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Brian P. Pietrandrea | |||||
| * | ||||
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Directors and | * | ||||
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24 Equitrans Midstream Corporation - 2021 Proxy Statement
26,229 deferred stock units, including accrued dividends, respectively, that will be settled in common stock in connection with the deferral of director fees, over which Ms. Collawn and Mr. Szydlowski hashave sole investment but no voting power prior to settlement.
22 Equitrans Midstream Corporation - 2020 Proxy Statement
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Delinquent Section 16(a) Reports |
Section 16(a) of the Securities Exchange Act of 1934, as amended (Exchange Act), requires our directors, executive officers, and anyone holding 10% or more of a registered class of our equity securities (reporting persons) to file reports with the SEC showing their holdings of, and transactions in, these securities. Based solely on a review of copies of such reports, and written representations from each reporting person that no other reports are required, we believe that for 20192020 all reporting persons filed the required reports on a timely basis under Section 16(a), except that, due to an administrative error at the Company, on January 6,as follows. On June 18, 2020, Ms. CharlettaEQT Corporation filed a late Form 4 amendment related to the vestingsale of 25,299,752 shares of Equitrans Midstream common stock on March 5, 2020 to the Company pursuant to those certain Share Purchase Agreements between EQT and the Company, each dated February 26, 2020. Additionally, during 2021, Mr. Leland became aware that his investment advisor, without his knowledge, sold 127 shares of the Company's common stock held indirectly by him on February 20, 2020. Promptly after Mr. Leland became aware of the sale, a former EQT award that converted into an ETRN award in connection withForm 5 reporting the Separation held by her husband, whichtransaction was settled in cash.filed.
Equitrans Midstream Corporation - 20202021 Proxy Statement 2325
EXECUTIVE COMPENSATION INFORMATION |
COMPENSATION DISCUSSION AND ANALYSIS |
Our Compensation Discussion and Analysis (CD&A) describes the objectives, principles and components of the material elements of our compensation program for our named executive officers (NEOs). This CD&A focuses on the programs and related compensation for our NEOs in 2020.
Our |
As of December 31, 2019,2020, our NEOs were:
Our NEOs have significant experience in the energy industry and possess the necessary skills and business acumen to better position and grow our business as an independent midstream company.
This CD&A and the executive compensation tables in this proxy statement also include Robert C. Williams, former Vice President and General Counsel of the Company, who is required to be included as an NEO under the SEC rules. Mr. Williams was not employed by the Company at December 31, 2019. We discuss certain aspects of his 2019 compensation in this CD&A and describe compensation received upon his departure from the Company in the section titled "Potential Payments Upon Termination or Change of Control".
This CD&A is divided into the following sections:
2426 Equitrans Midstream Corporation - 20202021 Proxy Statement
Executive Summary |
COMPENSATION PHILOSOPHY AND OVERVIEW |
➢ The Management Development and Compensation Committee (and for purposes of this CD&A, the Committee) functions independently from management in determining and overseeing compensation programs and practices.
➢ The compensation program includes three key elements (base salary, annual incentives and long-term incentives) and seeks to align total direct compensation (TDC) for our NEO positions with our peers using market comparables and other relevant information. ➢ The program is designed to pay for performance and is weighted towards variable pay which requires the Company to achieve well-defined performance metrics in order for NEOs to realize performance-based annual and ➢ Retirement and other benefit programs are the same for all employees and executive perquisites are limited. ➢ The program delivers transparency and fairness to shareholders, employees and other stakeholders while encouraging sound business strategy and execution that leads to long-term and sustainable shareholder value. | |
COMPANY HIGHLIGHTS IN 2020 | ➢
➢
➢
➢
➢ Delivered ➢ Achieved record gathered volumes of ➢ Delivered an 86% reduction in our Controllable Erosion and Sediment Rate (see below) from 2019. ➢ Achieved 10% and 11% improvements in our Incidents with Serious Potential Rate (see below) and Occupational Safety and Health Administration Total Recordable Incident Rate, respectively, from 2019. ➢ Completed an EQM senior notes offering in June 2020 resulting in net proceeds of approximately $1.6 billion, which was primarily used to repay outstanding indebtedness under EQM's $3.0 billion revolver, enhancing the Company's liquidity and strengthening the Company's balance sheet. ➢ Added three new members to the Board, further diversifying the governance of our Company. | |
Equitrans Midstream Corporation - 2021 Proxy Statement27
HOW DID WE PAY OUR NEOS IN | ➢
➢
➢ Amounts earned under the ➢
➢ We did not pay any discretionary bonuses to our NEOs in 2020. ➢ Our first PRSUs as a standalone company were |
Equitrans Midstream Corporation - 2020 Proxy Statement25
This CD&A, the "Narrative Disclosure to Summary Compensation Table" and "2019the "2020 Grants of Plan-Based Awards Table" contain references to 20192020 Company EBITDA aand 2020 adjusted EBITDA, financial measuremeasures that hashave not been calculated in accordance with U.S. generally accepted accounting principles (GAAP), which isare also referred to as a non-GAAP supplemental financial measure.measures. Attached as Appendix B is a reconciliationare reconciliations of 20192020 Company EBITDA and 2020 adjusted EBITDA to 20192020 Company net income, (loss), the most directly comparable GAAP financial measure, as well as other important disclosures regarding non-GAAP financial measures.
Compensation Philosophy and Practices |
The first step byIn designing the 2020 compensation structure, the Committee in the design of the 2019 compensation structure was to adoptutilized the following guidelines as the foundation for the program:
2628 Equitrans Midstream Corporation - 20202021 Proxy Statement
In addition to what we do and do not do, we have implementedmaintain the following compensation policies to provide accountability to our Company and our shareholders:
Equitrans Midstream Corporation - 20202021 Proxy Statement 2729
How We Determine Executive Compensation |
Compensation Program is Based on Three Key Elements of Compensation |
The Company's compensation program is based on three key elements of compensation:
Each element is determined with a view of offering competitive TDC versus similar peer group positions while also providing compensation levels that aid in the retention of high performing executives. The following table describes each element and outlines the Committee's objectives in using each element of compensation.
Compensation Element | Description | Objectives | | |||||
Base Salary | Fixed compensation that is reviewed annually and is based on performance, experience, responsibilities, skillset and market value. | ➢ Provide a base level of compensation that corresponds to position and responsibilities. ➢ Attract, retain, reward and motivate qualified and experienced executives. | ||||||
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| Annual Incentive Program (STIP) | "At-risk" compensation measured against clearly-defined annual financial and operational goals, including Company EBITDA, HSE metrics & Controllable Costs. | ➢ Incentivize | | ||||
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Long-Term Incentive Program (LTIP) | Mix of PRSUs earned at zero to 200 percent of target units based on RSAs subject to three-year cliff vesting. | ➢ Align executives' interests with those of Company shareholders. ➢ Promote stability among leadership via incentives to remain with the Company long-term. ➢ Incentivize executives to achieve goals that drive Company performance over the long-term. ➢ Pay-for-performance structure that results in no payout for PRSUs in the event of poor relative performance versus peers and, | ||||||
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TheA majority of our NEO compensation is performance-basedat-risk and is issued in the form of both short- and long-term incentives. Individuals in a position to influence the growth of shareholder wealth have larger portions of their total compensation delivered in the form of equity-based long-term incentives. The target mixcharts below reflect the fixed and at-risk of the 2020 compensation for (i) Mr. Karam, our Chief Executive Officer, and (ii) our other NEOs. The amounts for each component of TDC set forth in the charts below were calculated in accordance with SEC rules. TDC, which is not a substitute for the total compensation as reported in the Summary Compensation Table on page 39 of this proxy statement, omits certain other compensation (e.g., 401(k) contributions and perquisites) that is reflected in the Summary Compensation Table. For additional information, including information regarding how total compensation is calculated under SEC rules, see the footnotes accompanying the Summary Compensation Table.
2830 Equitrans Midstream Corporation - 20202021 Proxy Statement
compensation program elements for the CEO and other NEOs is shown below. The charts outline the size, in percentage terms, of each element of target compensation.
Determination of Target Total Direct Compensation (TDC) |
For 2019,2020, the Committee established the target TDC for NEOs by establishing base salaries and setting annual and long-term incentive targets which were then recommended to, and approved by, the Board.
When establishing target TDC for each NEO, the Committee considered:
In considering the amount and type of each component of compensation, the Committee considers the effect of each element on all other elements as well as the allocation of target TDC between fixed and at-risk pay as well as cash and equity. The Committee is committed to providing that a significant portion of each NEO's compensation inTDC opportunity take the form of performance-based awards.awards that only pay out upon attainment of performance goals that drive Company performance over the long-term.
As noted above, one of the several factors the Committee considers in determining TDC is the relationship of such TDC with a group of peer companies selected by the Committee in consultation with its independent compensation consultant. TheFor 2020, the Compensation Peer Group is comprisedwas composed of ninethe following eight companies that are generally similar to the Company with respect to business activity and of a similar size as measured by market capitalization, total assets and EBITDA. The 2019 Compensation Peer Group consisted of the following companies:EBITDA:
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➢ Crestwood Equity Partners LP | ➢ Magellan Midstream Partners, L.P. | |
➢ DCP Midstream, LP | ➢ ONEOK Inc. | |
➢ | ➢ Targa Resources Corp. | |
➢ | ➢ Western | |
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The 2020 Compensation Peer Group was unchanged from the 2019 Compensation Peer Group other than the removal of Buckeye Partners, L.P., which was acquired in the fourth quarter of 2019.
Determination of Final Total Compensation for Performance-Based Elements |
Throughout the year, the Committee reviews performance against the established STIP and LTIP program matrices.performance metrics. Once the fiscal year has ended, the Committee determines achievement of the performance goals for the STIP and, after the completion of the performance period, the applicable LTIP awards and determines the actual amount to be paid under the STIP and each PRSU award, as applicable. Our first
Equitrans Midstream Corporation - 20202021 Proxy Statement 2931
PRSUs as a standalone company were awarded in 2019 for the 2019-2021 period; thus, no payouts have been earned under the plan.
Role of Independent Compensation Consultant |
The Committee has the sole authority to hire, terminate and approve fees for compensation consultants, outside legal counsel and other advisors as it deems to be necessary to assist in the fulfillment of its responsibilities. The Committee retained the services of Mercer as its independent compensation consultant to aid the Committee in performing its duties and designing the compensation philosophy and structure for the Company. RepresentativesDuring 2020, representatives of Mercer provided the Committee with market data and counsel regarding executive officer compensation programs and practices, including specifically:
Representatives of Mercer do not make recommendations on, or approve, the amount of compensation for any executive officer. The Committee has affirmatively determined that no conflict of interest has arisen in connection with the work of Mercer as compensation consultant for the Committee.
Shareholder Engagement and |
Shareholders holding over 90 percent97% of our outstanding shares voted at our 20192020 annual shareholders' meeting to approve our Say on Paysay-on-pay proposal regarding our NEOs' 20182019 compensation. We recognizeBased on these results, the Committee concluded that the 2019 Say on Pay results represent a brief snapshot of our compensation arrangements following the Separation and believe the implementation of new compensation programs and practices specifically designed to our Company's needs as a stand-alone midstream business wasare in our shareholders' best interests.interests and have strong shareholder support. Nonetheless, the Committee did undertake a thorough analysis of its compensation programs and made appropriate modifications as described below.
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The following discussion outlines the targeted 20192020 executive compensation program and what we actually paid our NEOs (other than Mr. WilliamsNEOs. These compensation decisions were made in early 2020 prior to the COVID-19 pandemic. The Committee reviewed the compensation elements and determined that there was no justification for 2019 performance). A description of Mr. Williams' 2019 compensation is addressed separately in this CD&A as he was not employed bymodifying the Company throughoutNEOs' base salaries nor the entirety of 2019.NEOs' annual or long-term incentive awards due to the ongoing COVID-19 pandemic.
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Our Board, uponIn light of market conditions, we did not provide salary adjustments for our executives during 2020. The Committee determined existing salaries were competitive versus designated peer group positions and sufficient to retain executives in the recommendation of our Committee, approved the base salaries set forth below for each of our NEOs for 2019:current environment.
Name | Title | Base Salary | | |||||||
Thomas F. Karam | Chairman and Chief Executive Officer | $675,000 | ||||||||
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| Kirk R. Oliver | Senior Vice President and Chief Financial Officer | $500,000 | | ||||||
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Diana M. Charletta | President and Chief Operating Officer | $ | ||||||||
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| Stephen M. Moore | Senior Vice President and General Counsel | $375,000 | | ||||||
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Brian P. Pietrandrea | Vice President and Chief Accounting Officer | $ | ||||||||
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3032 Equitrans Midstream Corporation - 20202021 Proxy Statement
20192020 Annual Incentives (STIP)
Our STIP focuses our NEOs' attention onto achieving key near-term goals that drive long-term performance for our Company. In 2019,2020, our STIP's performance goals and results were as shown:
STIP Metrics |
In designing the STIP for 2019,2020, our Committee determined that Company EBITDA, Controllable Costs and HSE performance metrics were key drivers to the successful execution of our business.business, but recommended to the Board that the weighting of Company EBITDA be increased to 60% for 2020 (from 50% for 2019) and the weighting of Controllable Costs be correspondingly decreased to 15% for 2020 (from 25% for 2019) in order to emphasize and prioritize near-term performance objectives for the Company.
Metric | What it Measures | What it Does | | |||||
Company EBITDA | • Key business indicator used by management and our investors to evaluate overall performance. | ✓ Rewards our NEOs based on our annual financial results. | ||||||
| | | | | | | | |
| Controllable Costs | • Evaluates how well we manage our costs. | ✓ Focuses attention on expenses that can erode earnings and drives overall culture of cost control. | | ||||
| | | | | | | | |
Health, Safety and Environmental | • Determines performance against stringent safety and environmental goals. | ✓ Promotes a culture where safety, health and the environment is embedded into all aspects of our decision-making. | ||||||
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2019 STIP Performance | 2020 STIP Performance | |||||||||||||||||||||||||||||||||||||||||||||||
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Category | Metric | | Weight | | Threshold (50%) | | Target (100%) | | Maximum (200%) | | 2019 Results | | 2019 Payout | | Category | Metric | | Weight | | Threshold (50%) | | Target (100%) | | Maximum (200%) | | 2020 Results | | 2020 Payout | | |||||||||||||||||||
Financial | EBITDA | 50 | % | $ | 1,175 | $ | 1,263 | $ | 1,351 | $ | 1,271 | (1) | 109 | % | Financial | Company EBITDA | 60 | % | $ | 1,066 | (1) | $ | 1,171 | (1) | $ | 1,276 | (1) | $ | 1,228 | (2) | 155 | % | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||||
($ in millions) | Controllable Costs | 25 | % | $ | 364 | $ | 340 | $ | 316 | $ | 262 | (2) | 200 | % | ($ in millions) | Controllable Costs | 15 | % | $ | 332 | $ | 305 | $ | 278 | $ | 282 | (3) | 184 | % | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |||
ISP | 10 | % | 1.91 | 1.56 | 1.22 | 0.81 | ISP | 10 | % | 1.43 | 1.17 | 0.91 | 0.84 | |||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
HSE(3) | Adj. ISP | 5 | % | If Actual Rate '0' — Matches ISP Rate Payout | 0 | 200 | % | HSE(4) | Adj. ISP | 5 | % | If Actual Rate '0' — Matches ISP Rate Payout | 0 | 200 | % | |||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||
Controllable Erosion and Sediment Rate | 10 | % | 0.66 | 0.54 | 0.42 | 0.13 | Controllable Erosion and Sediment Rate | 10 | % | 0.50 | 0.41 | 0.36 | 0.02 | |||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
Total 2019 STIP Payout | 154 | % | Total 2020 STIP Payout | 170 | % | |||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Notes:
Equitrans Midstream Corporation - 2021 Proxy Statement33
2020 performance metrics, this would have resulted in an unintended increase to the 2020 STIP payout from 170% to 196% of the target payout, or an increase in the aggregate 2020 STIP payout of approximately $5 million. As a result, on July 22, 2020, the Board, following the recommendation thereof from the Committee as well as the Company's senior management team, equitably adjusted "Threshold," "Target" and "Maximum" amounts for the Company's 2020 Company EBITDA performance metric under the STIP to remove the impact of the approximately $89 million change in the deferred revenue forecast from the approved 2020 performance metrics. In addition, the Board, following the recommendation of the Committee, determined to adjust the STIP to remove the impact of any future changes in deferred revenue from the Company EBITDA metric because the Company's employees have no control over changes to the estimated deferred revenue amounts resulting from certain provisions within the EQT Global GGA.
Equitrans Midstream Corporation - 2020 Proxy Statement31
|
| NEO | | Threshold | | Target | | Maximum | | 2019 STIP Award Earned | | ||||||
| Thomas F. Karam | $ | 336,058 | $ | 672,115 | $ | 1,344,230 | $ | 1,035,057 | |||||||
| | | | | | | | | | | | | | | | |
| Kirk R. Oliver | $ | 225,001 | $ | 450,001 | $ | 900,002 | $ | 693,000 | | ||||||
| | | | | | | | | | | | | | | | |
| Diana M. Charletta | $ | 208,381 | $ | 416,761 | $ | 833,522 | $ | 641,812 | |||||||
| | | | | | | | | | | | | | | | |
| Stephen M. Moore | $ | 150,000 | $ | 300,000 | $ | 600,000 | $ | 462,000 | | ||||||
| | | | | | | | | | | | | | | | |
| Brian P. Pietrandrea | $ | 43,124 | $ | 86,248 | $ | 172,496 | $ | 165,400 | * | ||||||
| | | | | | | | | | | | | | | | |
|
During 2019,The Board, upon recommendation of the Committee, approved a $1 million discretionary bonus pool undermade no adjustments to the STIPtarget percentages for the NEOs' short-term incentive plan opportunities for the 2020 plan year, other than Mr. Pietrandrea's short-term incentive plan opportunity. The Board, upon recommendation of the Committee, increased Mr. Pietrandrea's target short-term incentive opportunity by approximately 17% to provide additional payments for individuals demonstrating exceptional performance in connection$100,800 to better align his target with the Separation and other non-routine activities. None of our NEOsmarket median. The NEOs' short-term incentive opportunities for 2020 were eligible for the discretionary aspect of the STIP, except for Mr. Pietrandrea, who became an executive officer during 2019. The Committee considered Mr. Pietrandrea's service to the Company prior to his promotion, including serving as principal accounting officer on an interim basis after the Company's former Chief Accounting Officer retired, and his critical role in integration of the Eureka Midstream and Hornet Midstream businesses, in awarding Mr. Pietrandrea a discretionary bonus for 2019.follows:
| NEO | | Threshold | | Target | | Maximum | | 2020 STIP Award Earned | | ||||||
| Thomas F. Karam | $ | 337,500 | $ | 675,000 | $ | 1,350,000 | $ | 1,147,500 | |||||||
| | | | | | | | | | | | | | | | |
| Kirk R. Oliver | $ | 225,000 | $ | 450,000 | $ | 900,000 | $ | 765,000 | | ||||||
| | | | | | | | | | | | | | | | |
| Diana M. Charletta | $ | 225,000 | $ | 450,000 | $ | 900,000 | $ | 765,000 | |||||||
| | | | | | | | | | | | | | | | |
| Stephen M. Moore | $ | 150,000 | $ | 300,000 | $ | 600,000 | $ | 510,000 | | ||||||
| | | | | | | | | | | | | | | | |
| Brian P. Pietrandrea | $ | 50,400 | $ | 100,800 | $ | 201,600 | $ | 171,360 | |||||||
| | | | | | | | | | | | | | | | |
STIP payouts are prorated for the portion of the year an individual wasis employed and based on actual performance achievement. Additionally, in the event of death, disability, qualifying retirement or change in control, the STIP would provide a prorated payout but amountspayout. Amounts would be forfeited in all other separation scenarios. The Committee has the authority to make exceptions to the treatment of payouts under the STIP. In connection with the hiring
34 Equitrans Midstream Corporation - 2021 Proxy Statement
Long-Term Incentive Program (LTIP)
Our LTIP aligns our NEOs' interests with those of our shareholders by providing the opportunity to earn incentive compensation based on the Company's long-term success.
Both RSAs and PRSUs awarded to our NEOs are paid in Company stock, further aligning their interests with those of our shareholders.
Time-Based RSAs |
The time-based RSAs issued under the 20192020 LTIP program cliff-vestcliff vest after three years of continuous service following the vesting commencement date, which was January 1, 2019.2020. The grant of time-based RSAs helps
32 Equitrans Midstream Corporation - 2020 Proxy Statement
align our NEOs' interests with those of our shareholders and provides a powerful retention incentive that assists us in maintaining continuity among our senior executive team.
Performance-Based RSUs (PRSUs) |
Performance-Based RSUs (PRSUs)For purposes of the 2020 LTIP, the Committee continued to refine the performance-based aspects of the incentive structure instituted following the Company's Separation from EQT. The Committee, with input from other members of the Board and the Committee's independent compensation consultant, undertook a thorough review of the design and performance metrics used for the Company's performance-based program. The Committee elected to eliminate the Cumulative TSR Per Share metric used in 2019, as the primary driver (i.e., share price) was already reflected in the existing Relative TSR metric. The Committee also implemented a multi-year performance period structure that the Committee believed would enhance the retentive effect of the program and incorporated a negative TSR cap for the 2020 long-term incentive program. The Committee believed that the ability for employees to earn a portion of the PRSUs each year, based on the Company's Relative TSR performance, enhanced the award's retention element, while providing that the largest incremental portion of the program weighted towards a three-year performance period continued to emphasize the importance of delivering long-term value creation for the Company's shareholders. All PRSUs are eligible to vest, to the extent earned, at the end of the three-year period. The Committee recommended, and the Board approved, the above modifications for the 2020 long-term performance-based incentive design.
The PRSUs issued under the 20192020 LTIP program aremay be earned based on Relative TSRover four separate performance periods as follows: (i) 20% for each of the three calendar years that occur following the vesting commencement date (i.e., the 2020, 2021 and Cumulative TSR Per Share performance over a2022 calendar years) and (ii) 40% for the cumulative three-year period with straight-line interpolationfollowing the vesting commencement date (i.e., January 1, 2020 through December 31, 2022) (such three-year period, the cumulative performance period). All payouts for the PRSUs are contingent on continued employment over the full three-year performance between points.period and are paid following the Committee's certification of results following the end of such performance period.
By basing our PRSUs on Relative and Cumulative TSR Per Share performance over the 2019-20212020-2022 performance period, we align our NEOs' interests with those of our shareholders by tying compensation outcomes to our performance relative to our TSR Peer Group and forto delivering shareholder value.
Equitrans Midstream Corporation - 2021 Proxy Statement35
The tablestable below summarizesummarizes the Relative and Cumulative TSR Per Share performance goals and potential payouts:payouts for each of the four performance periods:
| | 2020-2022 PRSUs — Relative | | |||||
| Threshold | Target | Maximum | | ||||
| 25th Percentile | | 50th Percentile | | 75th Percentile or Above | | ||
| | | | | | | | |
| 50% Payout | | 100% Payout | | 200% Payout | | ||
| | | | | | | | |
* | TSR performance between points will be determined by straight-line interpolation. In the event that the Company's TSR is negative for any one of the four performance periods, the payout will not exceed 100% of target for such performance period notwithstanding performance above target. |
Our 20192020 TSR Peer Group consists of a subset of similarly-sized companiesC-corporations with market values in excess of $2 billion included in the Alerian US Midstream Energy Index (AMUS), as well as all members of the Compensation Peer Group. The Committee selected the TSR Peer Group in consultation with Mercer, its independent compensation consultant. The 2020 TSR Peer Group represents a decrease in peer companies from our 2019 peer group, based upon market consolidation, as well as, a selection of companies that the Committee believes are more aligned with the Company's corporate structure and dividend policy following the EQM Merger. The Committee believes this larger peer group (as compared to the Compensation Peer Group) is appropriate as it represents the companies with which the Company competes for investment purposes.
➢ | ➢ Kinder Morgan, Inc. | |
➢ | ➢ Magellan Midstream Partners, | |
|
| |
|
| |
➢ Crestwood Equity Partners LP | ➢ | |
➢ DCP Midstream, LP | ➢ | |
➢ Enable Midstream Partners, LP | ➢ | |
|
| |
➢ EnLink Midstream, LLC | ➢ | |
|
Western Midstream Partners, LP |
Equitrans Midstream Corporation - 2020 Proxy Statement33
In calculating our Cumulative TSR Per Share, we add the cumulative amount of dividends per share paid during the performance period (measured at the ex dividend date) to the change in our Company's beginning versus ending stock price.
Under all PRSU awards, we utilize the 15-day average closing price of our stock prior to the beginning of the respective performance period and the 15-day average closing price of our stock at the end of the respective performance period to determine Relative and Cumulative TSR Per Share.TSR.
The target long-term incentive awards to the NEOs were made consistent with the Committee's methodology described above.above and were unchanged from the target long-term incentive awards (by dollar value) approved for the NEOs in 2019. The number of RSAs and PRSUs awarded to the NEOs were as follows:
| NEO | | 2019 Time-Based RSAs Awarded | | 2019 PRSUs Awarded | | NEO | | 2020 Time-Based RSAs Awarded | | 2020 PRSUs Awarded | | ||||||||
| Thomas F. Karam | 80,919 | 121,379 | Thomas F. Karam | 121,260 | 181,890 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | ||
| Kirk R. Oliver | | 15,984 | | 23,976 | | Kirk R. Oliver | | 23,960 | | 35,930 | | ||||||||
| | | | | | | | | | | | | | | | | | | | |
| Diana M. Charletta | 23,976 | 35,964 | Diana M. Charletta | 40,420 | 60,630 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | ||
| Stephen M. Moore | | 13,616 | | 20,424 | | Stephen M. Moore | | 21,670 | | 32,510 | | ||||||||
| | | | | | | | | | | | | | | | | | | | |
| Brian P. Pietrandrea | 2,398 | 3,596 | Brian P. Pietrandrea | 5,970 | 8,960 | ||||||||||||||
| | | | | | | | | | | | | | | | | | |
|
Prior to our Separation fromIn February 2021, the Committee certified the performance for the two-thirds of the EQT Ms. Charletta and Messrs. Pietrandrea and Williams received awards under EQT's 2018 Incentive Performance Share Unit Program (EQT 2018 IPSUP). Effective as award component that was subject to performance goals established by our Board, upon recommendation of the Separation and pursuant to an Employee Matters Agreement, dated as of November 12, 2018, between us and EQT (Employee Matters Agreement),our Committee.
The remaining one-third of the EQT 2018 IPSUP performance shares remained subject to and arewere earned based on actual performance of EQT for the period beginning January 1, 2018 and ended on December 31, 2018. This tranche
36 Equitrans Midstream Corporation - 2021 Proxy Statement
For the remaining two-thirds of the EQT 2018 IPSUP performance shares, the following new performance goals for the post-Separation Company award component were established by our Board, upon recommendation of our Committee, which will vest based on our performance for the period beginning January 1, 2019 and ending December 31, 2020. Note that these awards were designed to mirror the original EQT awards with the exception of the performance goals themselves. Thus, the maximum payout of 300% of target was retained, consistent with the conditions under which they were originally granted:
Certain of our NEOs also hold other EQT Incentive Performance Share Unit Program awards that were awarded prior to the Separation and are subject to EQT performance conditions.
Our Committee had no involvement in the setting of performance goals for the outstanding EQT Incentive Performance Share Unit Program awards, including the one-third portion of the EQT 2018 IPSUP that is attributable to the 2018 calendar year;year or the two-thirds of the EQT 2018 IPSUP award component that was subject to performance goals established by EQT; however, as a result of the Separation, it certifies performance achievement pursuant to the applicable plan documents and thean Employee Matters Agreement.Agreement, dated November 12, 2018, between us and EQT.
Other Considerations Important to Our Compensation Program |
In general, our NEOs participate in the same retirement and health and welfare benefit plans offered to other Company employees, including 401(k) plan, medical, prescription drug, dental, vision, short- and long-term
34 Equitrans Midstream Corporation - 2020 Proxy Statement
disability, wellness and employee assistance programs.employees. The same contribution amounts, deductibles and plan design provisions are generally applicable to all employees.
Stock Ownership Guidelines |
The NEOs are subject to stock ownership guidelines requiring each NEO to hold a specified multiple of the NEO's base salary (five times for the CEO and three times for all other NEOs). The NEOs are required to meet the ownership guidelines within a reasonable period of time from becoming an NEO; provided, however, in the event the individual ownership guidelines are not met within a five-year period, the net shares acquired through incentive compensation plans must be retained. As of December 31, 2020, Mr. Karam met his ownership guidelines, as his Company stock holdings represented approximately 10 times his base salary. Our remaining NEOs are on track to satisfy the guidelines within the prescribed time period.
Retirement Program |
Our NEOs participate in the same defined contribution 401(k) plan as all other Company employees. During 2019,2020, we contributed an amount equal to 6 percent6% of each participant's base salary and annual incentive award to an individual account for each employee (subject to IRSInternal Revenue Service (IRS) regulations). Beginning in 2020, we began making this 6 percent contribution based on participants' base salaries and annual incentive awards.
We also match every participant's elective deferral contributions by an amount equal to 50 percent50% of each dollar contributed, subject to a maximum Company matching contribution of 3 percent3% of the employee's base salary and for 2020, annual incentive awards (subject to IRS regulations).
We do not provide separate executive retirement benefits for our NEOs and eliminated our Payroll Deduction and Contribution Program in 2019 (assumed by us as part of the Separation).NEOs.
Health Benefits |
Our NEOs participate in the same health and welfare benefit plans as all other Company employees. We provide medical, prescription drug, dental, vision, short- and long-term disability, wellness and employee assistance programs. We also provide our NEOs and certain other senior members of management with access to an annual executive physical and modest additional life / AD&Daccidental death & dismemberment insurance coverage reflecting their compensation levels.
NEOs pay the same health benefit contribution amounts and have the same deductibles as applicable to all other Company employees.
Limited Perquisites |
The Company provides limited perquisites to its NEOs that, in number and value, are below median competitive levels for the Company's Compensation Peer Group. The perquisites program provides an executive physical and access to a concierge medical program as well as an annual stipend to offset the cost of financial planning services.
Beginning in 2020, Mr. Karam also was reimbursed for a one-time club initiation fee as well as the costs of his 2020 monthly dues. The Company reflected the entire cost of the membership, including the initiation fee and monthly dues in the Summary Compensation Table below. However, Mr. Karam's use of the club is primarily for businesses purposes, and the Company therefore believes that only a portion of the cost represents a perquisite. See footnote (4)(3) to the Summary Compensation Table below for a discussion of the perquisites provided to the named executive officers in 2019.during 2020.
Compensation Policies and Practices and Risk Management |
Culminating inIn early 2020,2021, members of the Company's management, with the assistance of the Committee's independent compensation consultant, reviewed the risk assessment of the Company's compensation programs for all
Equitrans Midstream Corporation - 2021 Proxy Statement37
employees. The results of such assessment were presented to the Committee. Based on the assessment, the Company and the Committee believe that the Company's compensation programs are balanced and do not create risks reasonably likely to have a material adverse impact on the Company.
Agreements with the Named Executive Officers |
The Committee believes that severance protections play a valuable role in attracting, motivating and retaining highly talented executives. Accordingly, we provide such protections for the NEOs under their agreements whichthat are described in detail under the caption "Potential Payments Upon Termination or Change of Control" below.
Importantly, the executive agreements include covenants not to compete with, or solicit employees, customers, potential customers, vendors or independent contractors from, or, with respect to all NEOs except Mr. Pietrandrea, compete with, the Company for a specified period of time and to maintain the confidentiality of the Company's information. The Committee believes that these covenants are extremely valuable to the Company.
In connection with his promotionAs explained below, in August 2019,March 2020 the Committee amendedCompany replaced Mr. Pietrandrea's existing confidentiality, non-solicitation and non-competition agreement to increase the lengthwith a confidentiality, non-solicitation and change of his non-competition and non-solicitation covenants and to increase the severance benefits he is entitled to upon termination.control agreement in connection with a holistic review of all of our agreements with our executive officers. See "Potential Payments Upon Termination or Change of Control" below for additional information on
Equitrans Midstream Corporation - 2020 Proxy Statement35
Mr. Pietrandrea's confidentiality, non-solicitation and non-competition agreement that was in effect during 2019.
|
The Company and Mr. Williams, the Company's former Vice President and General Counsel, entered into a Separation Agreement and General Release (the Separation Agreement) in connection with his stepping down from his position on March 28, 2019. Prior to his departure, Mr. Williams' annual base salary was $297,003 and he participated in the STIP and LTIP, along with the Company's broad-based retirement and health plans. For more information regarding the compensation Mr. Williams received pursuant to the Separation Agreement, which was consistent with the compensation provided for in his confidentiality, non-solicitation and non-competition agreement, please see "Potential Payments Upon Termination or Changechange of Control" below.control agreement.
Report of the Management Development and Compensation Committee |
We have reviewed and discussed the CD&A with the Company's management. Based on our review and discussions, we recommend to the Board of Directors that the CD&A be included in the Equitrans Midstream Corporation Proxy Statement for 2020.2021.
This report has been furnished by the Management Development and Compensation Committee
of the Board of Directors.
Margaret K. Dorman, Chair
Patricia K. Collawn
D. Mark Leland
Norman J. SzydlowskiRobert F. Vagt
36 Equitrans Midstream Corporation - 2020 Proxy Statement
EXECUTIVE COMPENSATION TABLES |
The following tables reflect the compensation of the Company's named executive officers.NEOs. The information set forth below with respect to the period prior to the Separation and year ended December 31, 2017 is historical EQT compensation. This historical EQT compensation, which was, as applicable, approved by the EQT Corporation Management Development and Compensation Committee, has been provided by, or derived from information provided by, EQT and reflects compensation earned during 2018 prior to the Separation and for the year ended December 31, 2017 based upon services performed during such periods. The Company provided the compensation information for periods following the Separation in 2018, most of which was attributable to EQT programs assumed by the Company as a result of the Separation, and for 2019 and 2020, which reflects the Company's own compensation program as an independent company.
38 Equitrans Midstream Corporation - 2021 Proxy Statement
Summary Compensation Table |
The table below sets forth the compensation earned by or paid to our named executive officersNEOs during the fiscal years ended December 31, 2020, 2019, 2018, and 2017,2018, as applicable.
| Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Non-equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | | Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Non-equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | |||||||||||||||||||||||||||||||||||||||||||||
| Thomas F. Karam | | | 2019 | | | 680,769 | | — | | 3,251,737 | | | 1,035,057 | | | 45,659 | | | 5,013,222 | | | Thomas F. Karam | | | 2020 | | | 675,000 | | — | | 2,636,435 | | | 1,147,500 | | | 203,759 | | | 4,662,694 | | |||||||||||||||||||
| Chairman and Chief | | | 2018 | | | 212,308 | | 267,000 | | 3,000,230 | | | — | | | 205,941 | | | 3,685,479 | | | Chairman and Chief | | | 2019 | | | 680,769 | | — | | 3,251,737 | | | 1,035,057 | | | 45,659 | | | 5,013,222 | | |||||||||||||||||||
| Executive Officer | | | 2017 | | | — | | — | | — | | | — | | | — | | | — | | | Executive Officer | | | 2018 | | | 212,308 | | 267,000 | | 3,000,230 | | | — | | | 205,941 | | | 3,685,479 | | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||
| | Kirk R. Oliver | | | 2019 | | | 500,001 | | — | | 642,317 | | | 693,000 | | | 44,500 | | | 1,879,818 | | | | Kirk R. Oliver | | | 2020 | | | 500,001 | | — | | 520,883 | | | 765,000 | | | 44,772 | | | 1,830,656 | | | ||||||||||||||||
| | Senior Vice President | | | 2018 | | | 134,616 | | 20,000 | | 405,538 | | | — | | | 10,189 | | | 570,343 | | | | Senior Vice President | | | 2019 | | | 500,001 | | — | | 642,317 | | | 693,000 | | | 44,500 | | | 1,879,818 | | | ||||||||||||||||
| | and Chief Financial Officer | | | 2017 | | | — | | — | | — | | | — | | | — | | | — | | | | and Chief Financial Officer | | | 2018 | | | 134,616 | | 20,000 | | 405,538 | | | — | | | 10,189 | | | 570,343 | | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||
| Diana M. Charletta | | | 2019 | | | 429,940 | | — | | 963,476 | | | 641,812 | | | 44,371 | | | 2,079,599 | | | Diana M. Charletta | | | 2020 | | | 450,000 | | — | | 878,811 | | | 765,000 | | | 44,656 | | | 2,138,467 | | |||||||||||||||||||
| President and Chief | | | 2018 | | | 283,167 | | 321,040 | | 510,890 | | | — | | | 36,017 | | | 1,151,114 | | | President and Chief | | | 2019 | | | 429,940 | | — | | 963,476 | | | 641,812 | | | 44,371 | | | 2,079,599 | | |||||||||||||||||||
| Operating Officer | | | 2017 | | | 270,150 | | — | | 499,170 | | | 220,900 | | | 35,716 | | | 1,025,936 | | | Operating Officer | | | 2018 | | | 283,167 | | 321,040 | | 510,890 | | | — | | | 36,017 | | | 1,151,114 | | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||
| | Stephen M. Moore | | | 2019 | | | 252,405 | | — | | 596,994 | | | 462,000 | | | 23,378 | | | 1,334,777 | | | | Stephen M. Moore | | | 2020 | | | 375,001 | | — | | 471,177 | | | 510,000 | | | 44,487 | | | 1,400,665 | | | ||||||||||||||||
| | Senior Vice President | | | 2018 | | | — | | — | | — | | | — | | | — | | | — | | | | Senior Vice President | | | 2019 | | | 252,405 | | — | | 596,994 | | | 462,000 | | | 23,378 | | | 1,334,777 | | | ||||||||||||||||
| | and General Counsel | | | 2017 | | | — | | — | | — | | | — | | | — | | | — | | | | and General Counsel | | | 2018 | | | — | | — | | — | | | — | | | — | | | — | | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||
| Brian P. Pietrandrea | | | 2019 | | | 210,360 | | 32,579 | | 96,349 | | | 132,821 | | | 19,526 | | | 491,635 | | | Brian P. Pietrandrea | | | 2020 | | | 224,000 | | — | | 129,827 | | | 171,360 | | | 26,161 | | | 551,348 | | |||||||||||||||||||
| Vice President and | | | 2018 | | | — | | — | | — | | | — | | | — | | | — | | | Vice President and | | | 2019 | | | 210,360 | | 32,579 | | 96,349 | | | 132,821 | | | 19,526 | | | 491,635 | | |||||||||||||||||||
| Chief Accounting Officer | | | 2017 | | | — | | — | | — | | | — | | | — | | | — | | | Chief Accounting Officer | | | 2018 | | | — | | — | | — | | | — | | | — | | | — | | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||
| | Robert C. Williams(5) | | | 2019 | | | 86,420 | | — | | 460,231 | | | — | | | 978,226 | | | 1,524,877 | | | |||||||||||||||||||||||||||||||||||||||
| | Former Vice President | | | 2018 | | | 279,011 | | 235,680 | | 336,314 | | | — | | | 25,393 | | | 876,398 | | | |||||||||||||||||||||||||||||||||||||||
| | and General Counsel | | | 2017 | | | 275,400 | | — | | 465,474 | | | 240,300 | | | 33,229 | | | 1,014,403 | | | |||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | |
Equitrans Midstream Corporation - 2020 Proxy Statement37
may pay out up to 200% of the target award, which would have amounted to the maximum total grant date fair values listed in the table below.
| | Name | Target Total Grant Date Fair Value ($) | Maximum Total Grant Date Fair Value ($) | | | Name | Target Total Grant Date Fair Value ($) | Maximum Total Grant Date Fair Value ($) | | ||||||||||||||||||
| | Thomas F. Karam | | | 1,824,326 | | | 3,648,652 | | | | Thomas F. Karam | | | 1,016,401 | | | 2,032,802 | | | ||||||||
| | | | | | | | | | | | | | | | | ||||||||||||
| | Kirk R. Oliver | | | 360,359 | | | 720,718 | | | | | Kirk R. Oliver | | | 200,777 | | | 401,554 | | | | ||||||
| | | | | | | | | | | | | | | | | ||||||||||||
| | Diana M. Charletta | | | 540,539 | | | 1,081,078 | | | | Diana M. Charletta | | | 338,800 | | | 677,600 | | | ||||||||
| | | | | | | | | | | | | | | | | ||||||||||||
| | Stephen M. Moore | | | 306,973 | | | 613,946 | | | | | Stephen M. Moore | | | 181,666 | | | 363,332 | | | | ||||||
| | | | | | | | | | | | | | | | | ||||||||||||
| | Brian P. Pietrandrea | | | 54,048 | | | 108,096 | | | | Brian P. Pietrandrea | | | 50,068 | | | 100,136 | | | ||||||||
| | | | | | | | | | | | | | | | | ||||||||||||
| | Robert C. Williams | | | 258,200 | | | 516,400 | | | | |||||||||||||||||
| | | | | | | | |
Equitrans Midstream Corporation - 2021 Proxy Statement39
| | Name | Insurance Premiums ($) | 401(k) Contributions ($) | Perquisites (See Below) ($) | Other ($) | Total ($) | | | Name | Insurance Premiums ($) | 401(k) Contributions ($) | Perquisites ($)(a) | Other ($)(b) | Total ($) | | ||||||||||||||||||||||||||||||||||
| | Thomas F. Karam | | | 1,782 | | | 25,200 | | | 18,677 | | | — | | 45,659 | | | Thomas F. Karam | | | 1,539 | | | 25,650 | | | 175,370 | | | 1,200 | | 203,759 | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
| | Kirk R. Oliver | | | 1,320 | | | 25,200 | | | 17,980 | | | — | | 44,500 | | | | Kirk R. Oliver | | | 1,142 | | | 25,650 | | | 17,980 | | | — | | 44,772 | | | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
| | Diana M. Charletta | | | 1,191 | | | 25,200 | | | 17,980 | | | — | | 44,371 | | | Diana M. Charletta | | | 1,026 | | | 25,650 | | | 17,980 | | | — | | 44,656 | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
| | Stephen M. Moore | | | 662 | | | 22,716 | | | — | | | — | | 23,378 | | | | Stephen M. Moore | | | 857 | | | 25,650 | | | 17,980 | | | — | | 44,487 | | | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
| | Brian P. Pietrandrea | | | 594 | | | 18,932 | | | — | | | — | | 19,526 | | | Brian P. Pietrandrea | | | 511 | | | 25,650 | | | — | | | — | | 26,161 | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||
| | Robert C. Williams | | | 197 | | | 10,862 | | | — | | | 967,167 | | 978,226 | | | ||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |
38 Equitrans Midstream Corporation - 2020 Proxy Statement
|
The table below sets forth additional information regarding restricted shares and restricted share units granted to our named executive officersNEOs during the 20192020 fiscal year.
| |
| | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares | Grant Date Fair Value of Stock and | |
| | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares | Grant Date Fair Value of Stock and | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | Name | Type of Award (1) | Grant Date | Approval Date | Threshold ($) | Target ($)(2) | Maximum ($)(2) | Threshold (#) | Target (#)(3) | Maximum (#)(3) | of Stock or Units (#)(4) | Option Awards ($) | | | Name | Type of Award (1) | Grant Date | Approval Date | Threshold ($) | Target ($)(2) | Maximum ($)(2) | Threshold (#) | Target (#)(3) | Maximum (#)(3) | of Stock or Units (#)(4) | Option Awards ($) | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | Thomas F. Karam | | STIP | | — | | — | | | 336,058 | | | 672,115 | | | 1,344,230 | | | — | | | — | | | — | | | — | | | — | | | | Thomas F. Karam | | STIP | | — | | — | | | 337,500 | | | 675,000 | | | 1,350,000 | | | — | | | — | | | — | | | — | | | — | | | ||||||||||||||||||||||||
| | | PSU | | 3/1/2019 | | 2/5/2019 | | | — | | | — | | | — | | | 60,690 | | | 121,379 | | | 242,758 | | | — | | | 1,824,326 | | | | | PSU | | 3/31/2020 | | 3/28/2020 | | | — | | | — | | | — | | | 90,945 | | | 181,890 | | | 363,780 | | | — | | | 1,016,401 | | | ||||||||||||||||||||||||||
| | | RS | | 3/1/2019 | | 2/5/2019 | | | — | | | — | | | — | | | — | | | — | | | — | | | 80,919 | | | 1,427,411 | | | | | RS | | 3/31/2020 | | 3/28/2020 | | | — | | | — | | | — | | | — | | | — | | | — | | | 121,260 | | | 1,620,034 | | | ||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||
| | Kirk R. Oliver | | STIP | | — | | — | | | 225,001 | | | 450,001 | | | 900,002 | | | | — | — | | — | | — | | — | | | Kirk R. Oliver | | STIP | | — | — | | 225,000 | | | 450,000 | | | 900,000 | | | | — | — | | — | | — | | — | | ||||||||||||||||||||||||||||||||||||
| | | | PSU | | 3/1/2019 | | 2/5/2019 | | | — | — | | — | | 11,988 | | | 23,976 | | | 47,952 | | | | — | | 360,359 | | | | | | | PSU | | 3/31/2020 | | 3/28/2020 | | | — | — | | — | | 17,965 | | | 35,930 | | | 71,860 | | | | — | | 200,777 | | | | ||||||||||||||||||||||||||||||
| | | | RS | | 3/1/2019 | | 2/5/2019 | | | — | — | | — | | — | — | | — | | 15,984 | | | 281,958 | | | | | | | RS | | 3/31/2020 | | 3/28/2020 | | | — | — | | — | | — | — | | — | | 23,960 | | | 320,106 | | | | ||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||
| | Diana M. Charletta | | STIP | | — | | — | | | 208,381 | | | 416,761 | | | 833,522 | | | — | | | — | | | — | | | — | | | — | | | | Diana M. Charletta | | STIP | | — | | — | | | 225,000 | | | 450,000 | | | 900,000 | | | — | | | — | | | — | | | — | | | — | | | ||||||||||||||||||||||||
| | | PSU | | 3/1/2019 | | 2/5/2019 | | | — | | | — | | | — | | | 17,982 | | | 35,964 | | | 71,928 | | | — | | | 540,539 | | | | | PSU | | 3/31/2020 | | 3/28/2020 | | | — | | | — | | | — | | | 30,315 | | | 60,630 | | | 121,260 | | | — | | | 338,800 | | | ||||||||||||||||||||||||||
| | | RS | | 3/1/2019 | | 2/5/2019 | | | — | | | — | | | — | | | — | | | — | | | — | | | 23,976 | | | 422,937 | | | | | RS | | 3/31/2020 | | 3/28/2020 | | | — | | | — | | | — | | | — | | | — | | | — | | | 40,420 | | | 540,011 | | | ||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||
| | Stephen M. Moore | | STIP | | — | | — | | | 150,000 | | | 300,000 | | | 600,000 | | | | — | — | | — | | — | | — | | | Stephen M. Moore | | STIP | | — | — | | 150,000 | | | 300,000 | | | 600,000 | | | | — | — | | — | | — | | — | | ||||||||||||||||||||||||||||||||||||
| | | | PSU | | 4/15/2019 | | 4/3/2019 | | | — | — | | — | | 10,212 | | | 20,424 | | | 40,848 | | | | — | | 306,973 | | | | | | | PSU | | 3/31/2020 | | 3/28/2020 | | | — | — | | — | | 16,255 | | | 32,510 | | | 65,020 | | | | — | | 181,666 | | | | ||||||||||||||||||||||||||||||
| | | | RS | | 4/15/2019 | | 4/3/2019 | | | — | — | | — | | — | — | | — | | 13,616 | | | 290,021 | | | | | | | RS | | 3/31/2020 | | 3/28/2020 | | | — | — | | — | | — | — | | — | | 21,670 | | | 289,511 | | | | ||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||
| | Brian P. Pietrandrea | | STIP | | — | | — | | | 43,124 | | | 86,248 | | | 172,496 | | | — | | | — | | | — | | | — | | | — | | | | Brian P. Pietrandrea | | STIP | | — | | — | | | 50,400 | | | 100,800 | | | 201,600 | | | — | | | — | | | — | | | — | | | — | | | ||||||||||||||||||||||||
| | | PSU | | 3/1/2019 | | 2/5/2019 | | | — | | | — | | | — | | | 1,798 | | | 3,596 | | | 7,192 | | | — | | | 54,048 | | | | | PSU | | 3/31/2020 | | 3/28/2020 | | | — | | | — | | | — | | | 4,480 | | | 8,960 | | | 17,920 | | | — | | | 50,068 | | | ||||||||||||||||||||||||||
| | | RS | | 3/1/2019 | | 2/5/2019 | | | — | | | — | | | — | | | — | | | — | | | — | | | 2,398 | | | 42,301 | | | | | RS | | 3/31/2020 | | 3/28/2020 | | | — | | | — | | | — | | | — | | | — | | | — | | | 5,970 | | | 79,759 | | | ||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||
| | Robert C. Williams | | STIP | | — | | — | | | 28,519 | | | 57,037 | | | 114,074 | | | | — | — | | — | | — | | — | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | PSU | | 3/1/2019 | | 2/5/2019 | | | — | — | | — | | 8,590 | | | 17,179 | | | 34,358 | | | | — | | 258,200 | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | RS | | 3/1/2019 | | 2/5/2019 | | | — | — | | — | | — | — | | — | | 11,453 | | | 202,031 | | | | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
40 Equitrans Midstream Corporation - 2021 Proxy Statement
Narrative Disclosure to Summary Compensation Table and |
Confidentiality, Non-Solicitation and Non-Competition Agreements |
TheEach of the Company's named executive officersNEOs have (and Mr. Pietrandrea had) a confidentiality, non-solicitation and non-competition agreementsagreement with the Company.Company (the non-competition agreements). In eachMarch 2020, with the assistance of Mercer, the Company undertook a review of its practices with respect to non-competition agreements in an effort to prevent the excessive use of such agreements. As a result of such review, the Company identified a number of job categories, including the Chief Accounting Officer role, for which it determined the use of non-competition agreements was not market-based. Accordingly, the Company replaced Mr. Pietrandrea's non-competition agreement with a confidentiality, non-solicitation and change of control agreement (the change of control agreement), pursuant to which the Company maintains protections regarding its confidential information and restrictions on customer and employee, vendor or independent contractor solicitation. In the non-competition agreements and Mr. Pietrandrea's change of control agreement, the named executive officerNEO agrees, among other things, to the following restrictive covenants:
In order to receive any severance benefits under his or her agreement, the named executive officerNEO must execute and deliver to the Company a general release of claims.
The agreements do not provide for any tax gross-ups. In the event the named executive officerNEO would be subject to the 20% excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended (imposed on individuals who receive compensation in connection with a change of control that exceeds certain specified limits), the payments and benefits to the named executive officerNEO would be reduced to the maximum amount that does not trigger the excise tax unless the named executive officerNEO would retain greater value (on an after-tax basis) by receiving all payments and benefits and paying all excise and income taxes.
Please see "Compensation Discussion and Analysis" above for a discussion of the Company's compensation programs.
Equitrans Midstream Corporation - 20202021 Proxy Statement 3941
Please see the "Compensation Discussion and Analysis" for a discussion of the Company's compensation program.
Outstanding Equity Awards at Fiscal Year-End |
The table below provides additional information regarding each outstanding equity award held by our named executive officersNEOs as of December 31, 2019.2020.
| Equity Awards | | Equity Awards | |||||||||||||||||||||||||||||
Name | | Number of Shares or Units of Stock That Have Not Vested (#)(1) | | Market Value of Shares or Units of Stock that Have Not Vested ($)(2) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(4) | Name | | Number of Shares or Units of Stock That Have Not Vested (#)(1) | | Market Value of Shares or Units of Stock that Have Not Vested ($)(2) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(4) | |||||||||||||||
Thomas F. Karam | — | — | 60,690 | (j) | 810,818 | Thomas F. Karam | — | — | 60,690 | (h) | 487,944 | |||||||||||||||||||||
60,059 | (a)* | 654,641 | — | — | — | — | 145,512 | (i) | 1,169,917 | |||||||||||||||||||||||
53,564 | (a) | 715,610 | — | — | 60,362 | (a)* | 767,201 | — | — | |||||||||||||||||||||||
80,919 | (e) | 1,081,078 | — | — | 59,219 | (a) | 476,121 | — | — | |||||||||||||||||||||||
80,919 | (d) | 650,589 | — | — | ||||||||||||||||||||||||||||
34,559 | (e) | 277,855 | — | — | ||||||||||||||||||||||||||||
121,260 | (f) | 974,930 | — | — | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | |||||||||||||||||
| Kirk R. Oliver | | — | | — | | 11,988 | (h) | | 96,384 | | |||||||||||||||||||||
| | | — | | — | | 28,744 | (i) | | 231,102 | | |||||||||||||||||||||
| | | 8,852 | (a)* | | 112,509 | | — | | — | | |||||||||||||||||||||
| | | 8,679 | (a) | | 69,779 | | — | | — | | |||||||||||||||||||||
| | | 15,984 | (d) | | 128,511 | | — | | — | | |||||||||||||||||||||
| | | 6,827 | (e) | | 54,887 | | — | | — | | |||||||||||||||||||||
| | | 23,960 | (f) | | 192,638 | | — | | — | | |||||||||||||||||||||
| | | | | | | | | | | | | | | | |||||||||||||||||
Diana M. Charletta | 2,108 | (b)* | 26,793 | — | — | |||||||||||||||||||||||||||
2,108 | (g)* | 26,793 | — | — | ||||||||||||||||||||||||||||
— | — | 17,982 | (h) | 144,575 | ||||||||||||||||||||||||||||
— | — | 48,504 | (i) | 389,972 | ||||||||||||||||||||||||||||
2,066 | (b) | 16,611 | — | — | ||||||||||||||||||||||||||||
23,976 | (d) | 192,767 | — | — | ||||||||||||||||||||||||||||
11,520 | (e) | 92,618 | — | — | ||||||||||||||||||||||||||||
40,420 | (f) | 324,977 | — | — | ||||||||||||||||||||||||||||
2,066 | (g) | 16,611 | — | — | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | |||||||||||||||||
| | | | | | | | | | | | | | | | Stephen M. Moore | | — | | — | | 10,212 | (h) | | 82,104 | | ||||||
| Kirk R. Oliver | | — | | — | | 11,988 | (j) | | 160,160 | | | | — | | — | | 26,008 | (i) | | 209,104 | | ||||||||||
| | | 8,809 | (a)* | | 96,017 | | — | | — | | | | 13,616 | (d) | | 109,473 | | — | | — | | ||||||||||
| | | 7,859 | (a) | | 104,999 | | — | | — | | | | 6,177 | (e) | | 49,662 | | — | | — | | ||||||||||
| | | 15,984 | (e) | | 213,546 | | — | | — | | | | 21,670 | (f) | | 174,227 | | — | | — | | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
Diana M. Charletta | — | — | 5,421 | (h)* | 59,089 | Brian P. Pietrandrea | 417 | (b)* | 5,300 | — | — | |||||||||||||||||||||
— | — | 2,097 | (i)* | 22,859 | 671 | (c)* | 8,528 | — | — | |||||||||||||||||||||||
1,807 | (b)* | 19,697 | — | — | 418 | (g)* | 5,313 | — | — | |||||||||||||||||||||||
2,097 | (c)* | 22,860 | — | — | — | — | 1,798 | (h) | 14,456 | |||||||||||||||||||||||
5,484 | (g)* | 59,770 | — | — | — | — | 7,168 | (i) | 57,631 | |||||||||||||||||||||||
— | — | 4,839 | (h) | 64,649 | 410 | (b) | 3,296 | — | — | |||||||||||||||||||||||
— | — | 1,871 | (i) | 24,999 | 659 | (c) | 5,298 | — | — | |||||||||||||||||||||||
— | — | 17,982 | (j) | 240,240 | 2,398 | (d) | 19,278 | — | — | |||||||||||||||||||||||
1,613 | (b) | 21,548 | — | — | 1,702 | (e) | 13,687 | — | — | |||||||||||||||||||||||
1,871 | (c) | 24,999 | — | — | 5,970 | (f) | 47,999 | — | — | |||||||||||||||||||||||
23,976 | (e) | 320,319 | — | — | 410 | (g) | 3,296 | — | — | |||||||||||||||||||||||
4,992 | (g) | 66,699 | — | — | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Stephen M. Moore | | — | | — | | 10,212 | (j) | | 136,432 | | |||||||||||||||||||||
| | | 13,616 | (e) | | 181,910 | | — | | — | | |||||||||||||||||||||
| | | | | | | | | | | | | | | | |||||||||||||||||
Brian P. Pietrandrea | — | — | 415 | (i)* | 4,528 | |||||||||||||||||||||||||||
467 | (b)* | 5,090 | — | — | ||||||||||||||||||||||||||||
415 | (c)* | 4,528 | — | — | ||||||||||||||||||||||||||||
668 | (d)* | 7,280 | — | — | ||||||||||||||||||||||||||||
329 | (f)* | 3,587 | — | — | ||||||||||||||||||||||||||||
904 | (g)* | 9,849 | — | — | ||||||||||||||||||||||||||||
— | — | 371 | (i) | 4,958 | ||||||||||||||||||||||||||||
— | — | 1,798 | (j) | 24,021 | ||||||||||||||||||||||||||||
417 | (b) | 5,575 | — | — | ||||||||||||||||||||||||||||
371 | (c) | 4,958 | — | — | ||||||||||||||||||||||||||||
597 | (d) | 7,971 | — | — | ||||||||||||||||||||||||||||
2,398 | (e) | 32,037 | — | — | ||||||||||||||||||||||||||||
293 | (f) | 3,918 | — | — | ||||||||||||||||||||||||||||
825 | (g) | 11,020 | — | — | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | |||||||||||||||||
| Robert C. Williams | | — | | — | | 5,055 | (h)* | | 55,100 | | |||||||||||||||||||||
| | | — | | — | | 1,378 | (i)* | | 15,019 | | |||||||||||||||||||||
| | | — | | — | | 4,515 | (h) | | 60,320 | | |||||||||||||||||||||
| | | — | | — | | 1,229 | (i) | | 16,425 | | |||||||||||||||||||||
| | | — | | — | | 8,590 | (j) | | 114,762 | | |||||||||||||||||||||
| | | | | | | | | | | | | | | |
40 Equitrans Midstream Corporation - 2020 Proxy Statement
reflects restricted stock units granted to Mr. Oliver in September 2018 that will vest on September 10, 2021, contingent upon continued service with the Company.
42 Equitrans Midstream Corporation - 2021 contingent upon continued service with the Company.
Proxy Statement
Equitrans Midstream Corporation - 20202021 Proxy Statement 4143
Option Exercises and Stock Vested |
The table below sets forth the number of shares and cash acquired in the 20192020 fiscal year as a result of the vesting of restricted stock units, restricted shares or performance awards.
| Stock Awards | ||||||||||
Name | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | |||||||||
Thomas F. Karam | | | — | | | | — | | | ||
Kirk R. Oliver | | | — | | | | — | | | ||
Diana M. Charletta | | | 14,155 | * | | | 269,762 | | | ||
| | 11,308 | | | | 225,530 | | | |||
Stephen M. Moore | | | — | | | | — | | | ||
Brian P. Pietrandrea | | | 2,267 | * | | | 42,814 | | | ||
| | 1,820 | | | | 36,149 | | | |||
Robert C. Williams | | | 19,266 | * | | | 377,914 | | | ||
| | | 26,992 | | | | 558,968 | | |
| | | | Stock Awards | ||||||||||
| | | | | | | | | ||||||
| | Name | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | | |||||||||
| | Thomas F. Karam | | | — | | | | — | | | |||
| | | | | | | | | ||||||
| | Kirk R. Oliver | | | — | | | | — | | | | ||
| | | | | | | | | ||||||
| | Diana M. Charletta | | | 10,254 | * | | | 111,769 | | | |||
| | | | 9,607 | | | | 128,344 | | | ||||
| | | | | | | | | ||||||
| | Stephen M. Moore | | | — | | | | — | | | | ||
| | | | | | | | | ||||||
| | Brian P. Pietrandrea | | | 1,701 | * | | | 17,274 | | | |||
| | | | 1,588 | | | | 18,788 | | | ||||
| | | | | | | | |
Potential Payments Upon Termination or Change of Control |
The tables below set forth the amount of compensation that may be paid to each NEO in the event of certain terminations of employment or a change of control of the Company. The amounts shown assume a termination date or change of control date, as applicable, of December 31, 2019 (except for Mr. Williams, which uses his actual termination date on March 28, 2019).2020.
|
Our NEOs may receive various forms of compensation or benefits in connection with a termination of employment. These benefits result primarily from confidentiality, non-solicitationthe non-compete agreements and non-competition
42 Equitrans Midstream Corporation - 2020 Proxy Statement
agreementscontrol agreement, as applicable, and the terms of equity-based grants received from the Company or previously from EQT as described further below. For purposes of this discussion, certain defined terms are as follows.
44 Equitrans Midstream Corporation - 2021 Proxy Statement
| | | | | | |
Cause | | The NEO's: ➢ conviction of a felony, a crime of moral turpitude or fraud or the ➢ willful and repeated failures to substantially perform assigned duties; or ➢ violation of any provision of a written employment-related agreement or express significant policies of the Company. | | |||
| | | | | | |
| | | | | | |
Good Reason | | The NEO's resignation within 90 days after: ➢ a reduction in the NEO's base salary of 10% or more (unless the reduction is applicable to all similarly situated employees); ➢ a reduction in the NEO's annual short-term bonus target of 10% or more (unless the reduction is applicable to all similarly situated employees); ➢ a significant diminution in the NEO's job responsibilities, duties or authority; ➢ a change in the geographic location of the NEO's primary reporting location of more than 50 miles; and/or ➢ any other action or inaction that constitutes a material breach by the Company of the agreement. | | |||
| | | | | | |
| | | | | | |
Retirement | | The NEO's voluntary termination of employment with the Company after he or she has: ➢ a length of service of at least ten (10) years; and ➢ a combined age and length of service equal to at least sixty (60) years. | | |||
| | | | | | |
| | | | | | |
Change of Control | | Generally means any of the following events: ➢ the sale of all or substantially all of the Company's assets, unless the Company's shareholders prior to the sale own at least 80% of the acquirer's stock after the sale; ➢ the acquisition by a person or group of beneficial ownership of 30% or more of the Company's outstanding common stock, subject to enumerated exceptions; ➢ the termination of the Company's business and the liquidation of the Company; ➢ the consummation of a merger, consolidation, reorganization, share exchange or similar transaction of the Company, unless the Company's shareholders immediately prior to the transaction continue to hold more than 50% of the voting securities of the resulting entity, no person beneficially owns 30% or more of the resulting entity's voting securities and individuals serving on the Company's Board immediately prior to the transaction constitute at least a majority of the resulting entity's board; and ➢ a change in the composition of the Board, so that existing Board members and their approved successors do not constitute a majority of the Board. | | |||
| | | | | | |
| | | | | | |
Structural Termination | | ➢ Termination of the NEO by the Company as a result of (i) the sale, consolidation or full or partial shutdown of a facility, department or business unit or (ii) a position elimination because of a reorganization or lack of work. | | |||
| | | | | | |
Confidentiality, Non-Solicitation and Non-Competition Agreements |
Each of our NEOs serving at year-end had entered into a confidentiality, non-solicitation and non-competition agreement with the Company. In March 2020, Mr. Pietrandrea's non-competition agreement was terminated and replaced with a change of control agreement. The non-competition agreements contain restrictive covenants that prohibit each applicable NEO from competing with or soliciting customers of the Company for 24 months or soliciting employees of the Company for 36 months following termination, except fortermination. Mr. Pietrandrea's change of control agreement prohibits Mr. Pietrandrea from soliciting customers or employees of the Company for which the restrictive periods area period of 12 months.months following termination. The agreements provide for cash payments if the Company terminates employment of the NEO without cause or if the NEO (with the exception of Mr. Pietrandrea) terminates employment for good reason, regardless of whether the termination occurs before or after a change of control (with respect to Mr. Pietrandrea, such termination must occur after a change of control, and
Equitrans Midstream Corporation - 20202021 Proxy Statement 4345
the termination occurs before or after aEQM Merger was expressly carved out of the definition of change of control.control for purposes of his change of control agreement). If such termination occurs, the NEO is entitled to a lump sum cash payment as follows:
Cash | | |||||||
| | | | | | | | |
| Severance | | Health Insurance | | ||||
| | | | | | | | |
24 months base salary (12 months base salary | 18 X monthly COBRA rate for | |||||||
| | | | | | | | |
| For each NEO (other than Mr. Pietrandrea), two times target annual incentive under the Company's short-term incentive plan | family coverage (12 X for | ||||||
| | | | | | | | |
A lump sum of $15,000 for Mr. Pietrandrea | Mr. Pietrandrea) | |||||||
| | | | | | | | |
Annual Incentives |
The STIP provides guidelines to determine awards when a participant's status changed during the year as follows:
| | | | | | |
Resignation | | ➢ No payment if employee resigns for any reason before awards are paid. | | |||
| | | | | | |
| | | | | | |
Death/Disability/ Retirement* | | ➢ Considered for | | |||
| | | | | | |
| | | | | | |
Change of Control* | | ➢ The performance period will end on the date of the change of control+, and the performance metrics will be deemed to be achieved for the pro-rata portion of the performance period that elapsed through the date of the change of control, at actual levels. | | |||
| | | | | | |
Treatment of Outstanding Equity Awards |
All outstanding equity awards will be paid in accordance with the terms of the plans and are subject to the Compensation Committee's discretion to reduce or eliminate the award. As a result of the EQM Merger, the Company experienced a change of control under the ETRN LTIP for purposes of the EQT 2018 Restricted Shares and Restricted Share Units, the EQT 2018 IPSUP, the 2019 Equitrans Midstream Restricted Shares and Restricted Share Units and the 2019 PSUP. The EQM Merger was expressly carved out of the definition of change of control under the 2020 PSUP and 2020 Restricted Share and Unit Awards. However, each NEO signed a letter agreement during the first quarter of 2020 pursuant to which each NEO agreed to waive the change of control resulting from the EQM Merger for purposes of his or her outstanding ETRN LTIP awards. Additionally, the EQM Merger was expressly carved out of the definition of Change of Control under the 2020 PSUP and the 2020 Restricted Share and Unit Awards.
4446 Equitrans Midstream Corporation - 20202021 Proxy Statement
Termination Resulting from Death or Disability |
If the NEO's employment is terminated as a result of disability or death on or after January 1, 20192020 but prior to the applicable vesting date, unvested equity awards would vest as follows:
Restricted Shares and Restricted Share Units | | |||||||
| EQT | | ||||||
Vesting on termination due to | ||||||||
| | | ||||||
| | | | |||||
| Termination on or after the second anniversary of grant date and prior to the third anniversary of grant date | 50% | | |||||
| | | | | | | ||
If termination is due to death, the 2018 Restricted Share Units vest in full | ||||||||
| | | | | | |
| 2019 and 2020 Restricted Shares | | ||||
If termination is due to death or disability, the 2019 and 2020 Restricted Shares vest in full | ||||||
| | | | | | |
Performance Share Units | | |||||
In the event of death or disability before payment the NEO may receive payment for a percentage of awarded units, contingent upon achievement of the applicable performance conditions, as follows: | ||||||
| | | | | | |
| EQT | | ||||
50% | ||||||
| | | | | | |
| ||||||
Disability after December 31, 2020 | 100% | |||||
| | | | | | |
If termination is due to death, the 2018 Incentive PSU Program share units vest in full at target performance. | ||||||
Equitrans Midstream Corporation - 2020 Proxy Statement45
|
| | | | | | |
| 2019 PSUP Awards and 2020 PSUP Awards | | ||||
If termination is due to death or disability, the 2019 and 2020 PSUP award shares vest in full at target performance. | ||||||
| | | | | | |
Termination Due to Named Executive Officer's Retirement |
2019 and 2020 Restricted Share Awards | | |||||
In the event the NEO's termination is due to qualifying retirement, a pro-rata portion* of the 2019 and 2020 Restricted Share Awards will vest, subject to the NEO's continued employment with the Company through such retirement date. | ||||||
| | | | | | |
2019 and 2020 PSUP Awards | | |||||
In the event the NEO's termination is due to qualifying retirement, the NEO will retain a | ||||||
| | | | | | |
* The |
In the event the NEO's termination is due to retirement, no payments will be made under any outstanding EQT awards.
Equitrans Midstream Corporation - 2021 Proxy Statement47
Change of Control |
In the event of a change of control of the Company, the treatment of outstanding equity awards depends on whether the awards are assumed by an acquirer in a change of control or equitably converted in the transaction.
If awards are assumed by the acquirer or equitably convertedand the executive dies, becomes disabled, is terminated without cause or resigns for good reason under the ETRN LTIP, within two years after the change of control, then upon such termination or resignation:
As a result of the EQM Merger, the Company experienced a change of control under the ETRN LTIP for purposes of the EQT 2018 Restricted Shares and Restricted Share Units, the EQT 2018 IPSUP, the 2019 Equitrans Midstream Restricted Shares and Restricted Share Units and the 2019 PSUP. However, each NEO signed a letter agreement during the first quarter of 2020 pursuant to which each NEO agreed to waive the change of control resulting from the EQM Merger for purposes of his or her outstanding ETRN LTIP awards. Additionally, the EQM Merger was expressly carved out of the definition of Change of Control under the 2020 PSUP and the 2020 Restricted Share and Unit Awards.
If awards are not assumed by the acquirer or equitably converted in the transaction:
Other Matters |
The NEOs' outstanding equity awards provide that if following a voluntary termination (other than for good reason) the executive remains on the board of directors of the Company, or its publicly traded subsidiary, then awarded share units continue to vest for so long as the NEO remains on such board.
Additionally, under the outstanding EQT awards that converted into Company awards in connection with the Separation, in the event of a Structural Termination, the NEO will be treated in the same manner as a disability (described above).
For Mr. Pietrandrea's 2018 EQT SIA that vested in March of 2020, if his employment was terminated by the Company for any reason other than for cause, all unvested restricted units would have vested in full.
46 Equitrans Midstream Corporation - 2020 Proxy Statement
Life Insurance Benefits |
The Company provides a life insurance benefit equal to one times base salary for all employees. Each NEO receives an additional one times base salary life insurance benefit.
Payments on Termination or Change of Control |
The tables below reflect the estimated compensation payable to each NEO upon a hypothetical termination of employment or change of control on December 31, 2019.2020. In calculating potential payments, we have quantified our equity-based payments using the Company's and EQT's closing stock prices on December 31, 2019,2020, which were $13.36$8.04 and $10.90,$12.71, respectively. For purposes of the analysis, the Company has assumed that (i) no NEO will remain on the Company's Board of Directors or the Board of Directors of EQM's general partner (the EQM Board) following termination of employment and (ii) in the event of a change of control, the acquirer does not assume or equitably convert the outstanding long-term incentive awards issued under the ETRN LTIP (a Qualifying Change of Control) and therefore such awards accelerate and pay out upon the change of control. In addition, the Company has not factored in any reduction that may apply as a result of the potential reduction to avoid an excise tax imposed on individuals who received compensation in connection with a change of control that exceeds certain specified limits. For performance share units, the Company assumed performance at the end of the applicable performance period remains unchanged from performance as of
48 Equitrans Midstream Corporation - 2021 Proxy Statement
December 31, 2019.2020. In an actual termination scenario, the Company's actual payment obligation would be determined based on actual performance through the end of the performance period and payment would be made to the then-former executive at the same time it is made to all Company employees holding such awards, if at all.
There would be no compensation paid to an NEO if the executive is terminated by the Company for cause or the executive resigns without good reason.
Thomas F. Karam | Thomas F. Karam | | Thomas F. Karam | | ||||||||||||||||||||||||||||||||||||||||
Executive Benefits and Payments Upon Termination | | Termination by Company Without Cause ($) | | Resignation by Executive for Good Reason ($) | | Death ($) | | Disability ($) | | Retirement ($) | | Qualifying Change of Control ($) | | Executive Benefits and Payments Upon Termination | | Termination by Company Without Cause ($) | | Resignation by Executive for Good Reason ($) | | Death ($) | | Disability ($) | | Retirement ($) | | Qualifying Change of Control ($) | | |||||||||||||||||
Cash Severance Payments | 2,723,576 | 2,723,576 | 672,115 | 672,115 | — | 2,723,576 | Cash Severance Payments | 2,732,058 | 2,732,058 | 1,147,500 | 1,147,500 | — | 2,732,058 | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| LTIP | | 654,641 | * | | 654,641 | * | | 4,346,055 | | 3,318,366 | | — | | 2,560,570 | | LTIP | | 767,202 | * | | 767,202 | * | | 6,035,134 | | 5,413,471 | | — | | 4,786,144 | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Life Insurance | — | — | 1,350,000 | — | — | — | Life Insurance | — | — | 1,350,000 | — | — | — | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Total | | 3,378,217 | | 3,378,217 | | 6,368,170 | | 3,990,481 | | 0 | | 5,284,146 | | Total | | 3,499,260 | | 3,499,260 | | 8,532,634 | | 6,560,971 | | 0 | | 7,518,202 | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
In addition, under outstanding EQT long-term incentive programs, Mr. Karam would be entitled to stock payments with an aggregate value of $833,544$1,005,264 upon a Structural Termination.
Kirk R. Oliver | Kirk R. Oliver | | Kirk R. Oliver | | ||||||||||||||||||||||||||||||||||||||||
Executive Benefits and Payments Upon Termination | | Termination by Company Without Cause ($) | | Resignation by Executive for Good Reason ($) | | Death ($) | | Disability ($) | | Retirement ($) | | Qualifying Change of Control ($) | | Executive Benefits and Payments Upon Termination | | Termination by Company Without Cause ($) | | Resignation by Executive for Good Reason ($) | | Death ($) | | Disability ($) | | Retirement ($) | | Qualifying Change of Control ($) | | |||||||||||||||||
Cash Severance Payment | 1,929,348 | 1,929,348 | 450,001 | 450,001 | — | 1,929,348 | Cash Severance Payment | 1,932,058 | 1,932,058 | 765,000 | 765,000 | — | 1,932,058 | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| LTIP | | 96,017 | * | | 96,017 | * | | 788,827 | | 638,065 | | — | | 436,140 | | LTIP | | 112,513 | * | | 112,513 | * | | 1,128,898 | | 1,037,752 | | — | | 882,185 | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Life Insurance | — | — | 1,000,000 | — | — | — | Life Insurance | — | — | 1,000,000 | — | — | — | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Total | | 2,025,365 | | 2,025,365 | | 2,238,828 | | 1,088,066 | | 0 | | 2,365,488 | | Total | | 2,044,571 | | 2,044,571 | | 2,893,898 | | 1,802,752 | | 0 | | 2,814,243 | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Equitrans Midstream Corporation - 2020 Proxy Statement47
In addition, under outstanding EQT long-term incentive programs, Mr. Oliver would be entitled to cash payments with an aggregate value of $122,266$147,403 upon a Structural Termination.
Diana M. Charletta | Diana M. Charletta | | | | | | | Diana M. Charletta | | | | | | | ||||||||||||||||||||||||||||||
Executive Benefits and Payments Upon Termination | | Termination by Company Without Cause ($) | | Resignation by Executive for Good Reason ($) | | Death ($) | | Disability ($) | | Retirement ($) | | Qualifying Change of Control ($) | | Executive Benefits and Payments Upon Termination | | Termination by Company Without Cause ($) | | Resignation by Executive for Good Reason ($) | | Death ($) | | Disability ($) | | Retirement ($) | | Qualifying Change of Control ($) | ||||||||||||||||||
Cash Severance Payment | 1,762,868 | 1,762,868 | 416,761 | 416,761 | 416,761 | 1,762,868 | Cash Severance Payment | 1,832,058 | 1,832,058 | 765,000 | 765,000 | 765,000 | 1,832,058 | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| LTIP | | 106,251 | * | | 158,250 | * | | 1,184,346 | * | | 1,045,556 | * | | 117,562 | | 668,688 | | LTIP | | 68,760 | * | | 68,760 | * | | 1,611,635 | * | | 1,565,902 | * | | 465,604 | | 1,241,566 | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Life Insurance | — | — | 900,000 | — | — | — | Life Insurance | — | — | 900,000 | — | — | — | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Total | | 1,869,119 | | 1,921,118 | | 2,501,107 | | 1,462,317 | | 534,323 | | 2,431,556 | | Total | | 1,900,818 | | 1,900,818 | | 3,276,635 | | 2,330,902 | | 1,230,604 | | 3,073,624 | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
In addition, under outstanding EQT long-term incentive programs, Ms. Charletta would be entitled to cash payments with an aggregate value of $228,585$80,113 upon a Structural Termination assuming actual performance through the end of the applicable performance period is consistent with performance through December 31, 2019.2020.
Equitrans Midstream Corporation - 2021 Proxy Statement49
Stephen M. Moore | Stephen M. Moore | | | | | | | Stephen M. Moore | | | | | | | ||||||||||||||||||||||||||||||
Executive Benefits and Payments Upon Termination | | Termination by Company Without Cause ($) | | Resignation by Executive for Good Reason ($) | | Death ($) | | Disability ($) | | Retirement ($) | | Qualifying Change of Control ($) | | Executive Benefits and Payments Upon Termination | | Termination by Company Without Cause ($) | | Resignation by Executive for Good Reason ($) | | Death ($) | | Disability ($) | | Retirement ($) | | Qualifying Change of Control ($) | | |||||||||||||||||
Cash Severance Payment | 1,379,346 | 1,379,346 | 300,000 | 300,000 | — | 1,379,346 | Cash Severance Payment | 1,382,058 | 1,382,058 | 510,000 | 510,000 | — | 1,382,058 | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| LTIP | | — | | — | | 500,728 | | 500,728 | | — | | 200,291 | | LTIP | | — | | — | | 834,641 | | 834,641 | | — | | 624,478 | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Life Insurance | — | — | 750,000 | — | — | — | Life Insurance | — | — | 750,000 | — | — | — | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Total | | 1,379,346 | | 1,379,346 | | 1,550,728 | | 800,728 | | 0 | | 1,579,637 | | Total | | 1,382,058 | | 1,382,058 | | 2,094,641 | | 1,344,641 | | 0 | | 2,006,536 | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Brian P. Pietrandrea | Brian P. Pietrandrea | | Brian P. Pietrandrea | | ||||||||||||||||||||||||||||||||||||||||
Executive Benefits and Payments Upon Termination | | Termination by Company Without Cause ($) | | Resignation by Executive for Good Reason ($) | | Death ($) | | Disability ($) | | Retirement ($) | | Qualifying Change of Control ($) | | Executive Benefits and Payments Upon Termination | | Termination by Company Without Cause ($) | | Resignation by Executive for Good Reason ($) | | Death ($) | | Disability ($) | | Retirement ($) | | Qualifying Change of Control ($) | | |||||||||||||||||
Cash Severance Payment | 258,564 | 258,564 | 86,248 | 86,248 | 86,248 | 258,564 | Cash Severance Payment | 122,686 | 0 | 171,360 | 171,360 | 171,360 | 260,372 | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| LTIP | | 33,841 | * | | 31,426 | * | | 158,646 | * | | 121,797 | * | | 11,758 | | 105,547 | | LTIP | | 22,150 | * | | 22,150 | * | | 227,103 | * | | 211,128 | * | | 60,942 | | 190,100 | | ||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Life Insurance | — | — | 448,000 | — | — | — | Life Insurance | — | — | 448,000 | — | — | — | |||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
| Total | | 292,405 | | 289,990 | | 692,894 | | 208,045 | | 98,006 | | 364,111 | | Total | | 144,836 | | 22,150 | | 846,463 | | 382,488 | | 232,302 | | 450,472 | | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
In addition, under outstanding EQT long-term incentive programs, Mr. Pietrandrea would be entitled to cash payments with an aggregate value of $50,915$27,050 upon a Structural Termination assuming actual performance through the end of the applicable performance period is consistent with performance through December 31, 2019.2020.
Robert C. Williams: Mr. Williams' employment with the Company under his confidentiality, non-solicitation and non-competition agreement terminated effective March 28, 2019. In connection with such termination, Mr. Williams received a lump sum payment of cash and shares with a value of $967,167 in accordance with his confidentiality, non-solicitation and non-competition agreement and separation agreement. Also in connection with such termination, Mr. Williams vested in his outstanding long-term incentive awards and became entitled to receive the benefit of such awards to the extent and at the same time as other participants. Such awards have an
48 Equitrans Midstream Corporation - 2020 Proxy Statement
aggregate value of $84,633 assuming actual performance through the end of the applicable performance periods is consistent with performance through December 31, 2019.
Pay Ratio Disclosure |
The following is an estimate of the relationship of the annual total compensation of Mr. Karam, the Chief Executive Officer of the Company (CEO),CEO, on December 31, 2019,2020, and the median of the annual total compensation of all employees (other than the CEO), calculated in accordance with the SEC rules. In making this pay ratio disclosure, other companies may use assumptions, estimates and methodologies different than the Company; as a result, the following information may not be comparable to the information provided by other companies.
For 2019:2020:
Based on this information, the ratio of the total compensation of Mr. Karam to the median of the annual total compensation of all other employees was 4036 to 1.
The compensation identified above for both Mr. Karam and the median employee was calculated using the same methodology used for the named executive officersNEOs as set forth in the 20192020 Summary Compensation Table. See "Compensation Discussion and Analysis" above for a discussion of Mr. Karam's compensation.
TheIn accordance with SEC rules, the Company has chosen to use the same median employee that was selected in 2019, as there has been no change in the Company's employee population or employee compensation arrangements that the Company believes would significantly impact the pay ratio disclosure. In 2019, the Company identified the median employee by selecting total cash compensation as the compensation measure. Total cash compensation is annual base salary plus target annual bonus or, in the case of hourly employees, annualized regular earnings including actual overtime earned plus target annual bonus. The Company did not make any other assumptions, adjustments, or estimates with respect to total cash compensation. The Company believes total cash compensation is an appropriate compensation measure because the Company does not
50 Equitrans Midstream Corporation - 2021 Proxy Statement
widely distribute annual equity awards to employees. The Company then selected the median employee, having identified the 2019 total cash compensation for all of its employees (excluding the CEO) on the measurement date, December 31, 2019, the last day of the payroll year.
Employee, Officer and Director Hedging |
Under the Company's Corporate Stock Trading Policy, no officer, director or employee may engage in any short sale or hedging transaction involving, or purchase or sell options in, Equitrans Midstream or EQM securities. For purposes of the policy, prohibited hedging transactions are transactions designed to hedge or offset any change in the market value of Equitrans Midstream or EQM securities held, directly or indirectly, by the officer, director or employee (including incentive and other compensation awards) and include, but are not limited to, the use of financial instruments such as prepaid variable forwards, equity swaps, puts, calls, forwards, collars, exchange funds and other derivative instruments. Additionally, under the policy, no executive officer or director of Equitrans Midstream or executive officer or director of EQM's general partner, as applicable, may pledge (or otherwise allow a lien to be imposed upon) Equitrans Midstream or EQM securities as applicable, including through the use of a margin account with a broker. The holding of securities in a brokerage account that permits margining is not a violation of the policy so long as the owner of the account does not engage in any transaction that results in a lien upon the Equitrans Midstream or EQM securities as applicable, held in the account.
Equitrans Midstream Corporation - 20202021 Proxy Statement 4951
ITEM NO. 2 – ADVISORY VOTE ON THE COMPENSATION OF THE COMPANY'S NAMED EXECUTIVE OFFICERS FOR |
The Board of Directors recommends a voteFORapproval of the compensation of the Company's named executive officers for |
We are seeking an advisory vote to approve the compensation of our named executive officers for 2019.2020.
This proposal, commonly known as a say-on-pay proposal, gives the Company's shareholders the opportunity to express their views on the compensation of its named executive officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the Company's named executive officers and the philosophy, policies and practices described in this proxy statement.
After our shareholders voted in 2019, the Board determined that the Company will hold an advisory vote on executive compensation every year until the next shareholder advisory vote on the frequency of say-on-pay proposals, which we expect will be conducted at our 2025 annual meeting of shareholders.
The say-on-pay vote is advisory, and therefore not binding on the Company, the Compensation Committee, or the Board of Directors. However, the Board and the Compensation Committee value the opinions of the Company's shareholders and will consider the outcome of the vote when making future decisions regarding the compensation of our named executive officers.
As discussed in the "Compensation Discussion and Analysis" above, our Board believes that the Company's compensation program, policies and practices drive performance, and align our executives' interests with those of our shareholders.
Our Board invites you to review the "Compensation Discussion and Analysis" and the tabular and other disclosures on compensation included under the "Executive Compensation" section of this proxy statement.
Our Board recommends that you voteFOR the following advisory resolution:
"Resolved, that the shareholders approve the compensation of the Company's named executive officers for 2019,2020, as discussed and disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the executive compensation tables and any related material disclosed in this proxy statement."
5052 Equitrans Midstream Corporation - 20202021 Proxy Statement
ITEM NO. 3 – APPROVAL OF AMENDMENTS TO EQUITRANS MIDSTREAM'S ARTICLES OF INCORPORATION AND BYLAWS TO REMOVE THE SUPERMAJORITY VOTING REQUIREMENTS |
The Board of Directors recommends a vote FOR amendments to Equitrans Midstream's Articles of Incorporation and Bylaws to remove the supermajority voting requirements. |
The Company's Amended and Restated Articles of Incorporation (Articles) currently require the affirmative vote of at least 80% of the Company's outstanding shares of capital stock entitled to vote in an annual election of directors (the Voting Stock) for shareholders to approve the following actions:
The Bylaws currently require the affirmative vote of at least 80% of the Voting Stock for shareholders to approve an amendment to the Bylaws, unless such action has been previously approved by a two-thirds vote of the whole Board.
The Board has unanimously approved, and is recommending that our shareholders approve, amendments to the Articles and Bylaws to eliminate the current 80% supermajority voting requirements for shareholders to approve amendments to the Articles and Bylaws and to remove directors outside of the annual meeting process. Because the Board has unanimously approved the proposed amendments, under the provisions of our current Articles, the vote required in order for shareholders to approve the proposed amendments is the vote specified by applicable law for valid shareholder action, rather than the current 80% supermajority voting requirement noted above. The Pennsylvania Business Corporation Law (the Pennsylvania BCL) provides generally that (except as otherwise provided under a company's articles of incorporation or bylaws) whenever any corporate action is to be taken by vote of the shareholders of a business corporation, it will be authorized upon receiving the affirmative vote of a majority of the votes cast by all shareholders entitled to vote thereon. If approved, the proposed amendments would reduce the voting threshold for shareholders to approve amendments to the Articles and Bylaws and to remove directors outside of the annual meeting process from the current threshold of the affirmative vote of at least 80% of the Voting Stock to the affirmative vote of a majority of the votes cast by all shareholders entitled to vote thereon, consistent with the standard generally applicable under the Pennsylvania BCL.
The supermajority voting requirements reflected in our Articles and Bylaws were adopted by EQT in connection with the Separation. Since the Separation, the Corporate Governance Committee of the Board and the Board, together with the Company's management, have engaged in an ongoing review of the Company's corporate governance principles, including a review of the legacy supermajority vote requirements. The Board believes in maintaining best practices related to the Company's corporate governance, and it recognizes that supermajority voting requirements are often criticized as impeding director accountability and responsiveness to shareholders and limiting shareholder rights. The Corporate Governance Committee and the Board carefully considered the advantages and disadvantages of maintaining the 80% supermajority voting requirements in the Articles and Bylaws. After carefully reviewing these considerations, the Corporate Governance Committee determined, and the Board agreed, that it is in the best interest of the Company to eliminate these supermajority voting requirements. The Board concluded that elimination of these supermajority voting provisions will both enhance Equitrans Midstream's corporate governance practices and be an effective way to maintain and enhance the accountability of the Company to its shareholders. Accordingly, the Board, upon the recommendation of the Corporate Governance Committee, has unanimously determined that it is in the best interests of the Company to amend the Articles and the Bylaws to eliminate the 80% supermajority voting requirements described above.
Equitrans Midstream Corporation - 2021 Proxy Statement53
Conforming Changes to the Bylaws |
Equitrans Midstream's Bylaws also currently include 80% supermajority voting provisions relating to shareholder amendments, consistent with the provisions that presently exist under the Articles. Conditional upon approval by the shareholders of the amendment to the Articles as described in this proposal, the Board of Directors has voted to similarly remove the related 80% supermajority voting standards from the Bylaws for consistency with the proposed amendment to the Articles.
Complete Text of Proposed Amendment |
The general descriptions of the proposed amendments to the Articles and Bylaws are qualified in their entirety by reference to the full text of the proposed amendments to the Articles and Bylaws, which are provided as Appendices C and D to this proxy statement. Proposed additions are double-underlined, and proposed deletions are stricken through.
REPORT OF THE AUDIT COMMITTEE |
The primary role of the Audit Committee is to assist the Board of Directors in its oversight of the Company's accounting and financial reporting processes. In doing so, the Audit Committee is responsible for the appointment and compensation of the Company's independent registered public accounting firm and has oversight for its qualification, independence and performance. The Audit Committee's charter guides the Committee's duties and responsibilities. The Audit Committee charter, which was amended in December 2019,2020, is available on the Company's website at www.equitransmidstream.com. As described in the charter, management is responsible for the internal controls and accounting and financial reporting processes of the Company. The independent registered public accounting firm is responsible for expressing opinions on the conformity of the Company's audited consolidated financial statements with generally accepted accounting principles and on the effectiveness of the Company's internal control over financial reporting. Our responsibilities include monitoring and overseeing these processes.
The Committee is composed of three non-employee, independent members of the Board of Directors. No member currently serves on more than onetwo other public company audit committee.committees. The Board has determined that each of Kenneth M. Burke, Margaret K. DormanD. Mark Leland and Robert F. Vagt is an audit committee financial expert, as that term is defined by the SEC. The members of the Committee are not professionally engaged in the practice of auditing or accounting. The Committee's considerations and discussions referred to below do not assure that the audit of the Company's financial statements has been carried out in accordance with generally accepted auditing standards, that the financial statements are presented in accordance with generally accepted accounting principles or that the Company's auditors are in fact "independent."
In fiscal year 2019,2020, we fulfilled, through the following, our oversight responsibilities with respect to financial statement and disclosure matters (including oversight of the Company's processes and policies regarding risks to the financial reporting process, financial risks, risks to the Company's internal control system and information
54 Equitrans Midstream Corporation - 2021 Proxy Statement
technology and cybersecurity risks), the Company's relationship with its independent registered public accounting firm, the Company's internal audit function and compliance matters:
Equitrans Midstream Corporation - 2020 Proxy Statement51
Based on the reports and discussions above, we recommended to the Board of Directors that the audited financial statements be included in the Equitrans Midstream Corporation 20192020 Annual Report on Form 10-K.
This report has been furnished by the Audit Committee of the Board of Directors.
Kenneth M. Burke, ChairMargaret K. DormanD. Mark Leland
Robert F. Vagt
52 Equitrans Midstream Corporation - 20202021 Proxy Statement55
ITEM NO. |
The Board of Directors recommends a voteFOR ratification of the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for |
The Audit Committee is responsible for the appointment and oversight of our independent registered public accounting firm and is involved in the selection of the lead engagement partner. The Committee has appointed Ernst & Young LLP (Ernst & Young) as the Company's independent registered public accounting firm to examine the consolidated financial statements of the Company and its subsidiaries for the calendar year 2020.2021. Ernst & Young has audited our financial statements since we became an independent publicly-tradedpublicly traded company in 2018, and EQM's financial statementswas the auditor of EQM, our former publicly traded subsidiary, since its initial public offering in 2012 and was the auditor of our former parent company for many years. InAs an annual matter, in deciding whether to reappoint Ernst & Young, the Audit Committee evaluatedevaluates the firm's qualifications and performance, considering, among other things, the quality of services, sufficiency of resources, effectiveness of communications, and knowledge of the industry.industry and the Company including its personnel, processes, accounting systems and risk profile, as well as its independence.
Shareholder approval is not required for the appointment of our independent accounting firm. However, the Board is submitting the appointment for ratification by the Company's shareholders as a matter of good corporate governance. If our shareholders do not ratify the appointment of Ernst & Young, the Audit Committee will consider the appointment of another independent accounting firm for the following year. Whether or not our shareholders ratify the appointment of Ernst & Young, the Audit Committee may appoint a different independent accounting firm at any time if it determines that such a change would be appropriate.
Representatives of Ernst & Young are expected to be present atparticipate in the annual meeting to respond to appropriate questions and to make a statement if they desire to do so.
The following chart details the fees billed or services rendered to the Company by Ernst & Young during 20192020 and 20182019 (excluding the fees billed to EQM prior to the closing of the EQM Merger, as described below):
2019 | 2018 | 2020 | 2019 | |||||
Audit Fees(1) | $662,373 | $200,000 | $1,391,073 | $662,373 | ||||
| | | | | | | | |
Audit-Related Fees(2) | $68,960 | — | $51,850 | $68,960 | ||||
| | | | | | | | |
Tax Fees | — | — | — | — | ||||
| | | | | | | | |
All Other Fees(3) | $567,925 | — | $193,819 | $567,925 | ||||
| | | | | | | | |
Total | $1,299,258 | $200,000 | $1,636,742 | $1,299,258 | ||||
| | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
56 Equitrans Midstream Corporation - 2021 Proxy Statement
The Audit Committee has adopted a Policy Relating to Services of Registered Public Accountant under which the Company's independent accounting firm is not allowed to perform any service that may have the effect of jeopardizing the independent accounting firm's independence. Without limiting the foregoing, the independent accounting firm may not be retained to perform the following:
Equitrans Midstream Corporation - 2020 Proxy Statement53
All audit and permitted non-audit services for the Company and its subsidiaries (other than for EQM, its consolidated subsidiaries, related parties and its respective subsidiaries)affiliates prior to the closing of the EQM Merger) must be pre-approved by the Audit Committee. The Audit Committee has delegated specific pre-approval authority with respect to audit and permitted non-audit services to the Chair of the Audit Committee but only where pre-approval is required to be acted upon prior to the next Audit Committee meeting and where the aggregate audit and permitted non-audit services fees pre-approved under such policy since the last Audit Committee meeting are not more than $75,000. The Audit Committee encourages management to seek pre-approval from the Audit Committee at its regularly scheduled meetings. In 2019,2020, 100% of the professional fees required to be pre-approved complied with the above policy.
Ernst & Young also served as the independent accounting firm for EQM during 2019. The2020. Prior to the closing of the EQM Merger on June 17, 2020, the Audit Committee of the EQM Board approvesof Directors of EQM's general partner approved all audit and permitted non-audit services pertaining to EQM, its consolidated subsidiaries, related parties and its subsidiaries.affiliates. All fees associated with such services arewere reported to the Company's Audit Committee at its next meeting. In connection with such services, the following fees were billed by Ernst & Young;Young:
54 Equitrans Midstream Corporation - 20202021 Proxy Statement57
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS |
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column A) | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column A) | | ||||||||||||||||||||||||
| (A) | | (B) | | (C) | | | (A) | | (B) | | (C) | | |||||||||||||||||||
Equity Compensation Plans Approved by Shareholders(1) | | | 2,669,316 | (3) | | | 38.55 | (5) | | | 28,987,669 | (6) | | | | 4,595,619 | (3) | | | 38.55 | (5) | | | 28,597,724 | 6) | | ||||||
| | | | | | | | | | | | | | | ||||||||||||||||||
Equity Compensation Plans Not Approved by Shareholders(2) | | | 14,521 | (4) | | | N/A | | | 85,480 | | | | | 69,597 | (4) | | | N/A | | | 63,338 | | | ||||||||
| | | | | | | | | | | | | | | ||||||||||||||||||
Total | | | 2,683,837 | | | N/A | | | 29,073,149 | | | | | 4,665,216 | | | N/A | | | 28,661,062 | | | ||||||||||
| | | | | | | | | | | | | | |
Equitrans Midstream Corporation Directors' Deferred Compensation Plan |
The Director Plan was adopted by the Board of Directors in connection with the Separation and subsequently amended and restated in April 2020, to provide an opportunity for the members of the Board of Directors of Equitrans Midstream to defer payment of all or a portion of the fees to which they are entitled as compensation for their services as members of the Board. The Director Plan also administers the payment of stock units and phantom stock awarded to non-employee directors pursuant to the ETRN LTIP (or, as applicable, pursuant to long-term incentive plans administered by EQT prior to the Separation and converted into Company stock units and phantom stock in connection with the Separation).
Amounts in deferral accounts under the EQT Corporation 2005 Directors' Deferred Compensation Plan of any individuals who became members of the Board upon the Separation were transferred into a deferral account under the Director Plan in connection with the Separation.
58 Equitrans Midstream Corporation - 20202021 Proxy Statement55
ADDITIONAL INFORMATION |
Proposals, Board Recommendations, Vote Required, and Broker Non-Votes |
Only holders of record at the close of business on March 12, 2020,February 19, 2021, the record date for the annual meeting, are entitled to receive notice of and to vote at the annual meeting. Each share of Equitrans Midstream common stock and each Series A Preferred Share (on an as-converted basis) that you own as of the record date represents one vote, and shareholders do not have cumulative voting rights. At the close of business on March 12, 2020,February 19, 2021, Equitrans Midstream had 229,689,721433,931,154 shares of common stock outstanding and 30,018,446 Series A Preferred Shares outstanding. A quorum is necessary to conduct business at the annual meeting. A majority of the outstanding shares (including Series A Preferred Shares on an as-converted basis), present or represented by proxy, constitutes a quorum. You are part of the quorum if you have returned a proxy.
If you are a beneficial owner whose shares are held of record by a broker, bank or other holder of record, you have the right to direct your broker, bank or other holder of record in voting your shares. If you do not provide voting instructions, your shares will not be voted on any proposal for which the holder of record does not have discretionary authority to vote. This is called a broker non-vote. In these cases, the broker, bank or other holder of record can register your shares as being present at the annual meeting for purposes of determining the presence of a quorum but will not be able to vote on those matters for which specific authorization is required under NYSE rules.
The following summarizes the voting requirements for each proposal:
Proposal | Board Recommendation | Vote Required | Broker Discretionary Voting Allowed | |||
Item No. 1:Election of directors, each for a one-year term expiring at the | FOR EACH NOMINEE | Majority of votes cast.* | No | |||
| | | | | | |
Item No. 2:Approval, on an advisory basis, of the compensation of our named executive officers for | FOR | Majority of votes cast. | No | |||
| | | | | | |
Item No. 3:Approval of amendments to the Company's Articles and Bylaws to remove the supermajority voting requirements | FOR | Majority of votes cast. | No | |||
| | | | | | |
Item No. 4: Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for | FOR | Majority of votes cast. | Yes | |||
| | | | | | |
For purposes of the approval of the proposals above, abstentions, broker non-votes and the failure to vote are not votes cast and, accordingly, have no effect on the outcome of such proposals, although brokers do have discretionary authority to cast a vote on Item No. 34 if no instructions are received.
Corporate Secretary Contact Information |
You may contact the Company's Corporate Secretary by sending correspondence to: Equitrans Midstream Corporation, 2200 Energy Drive, Canonsburg, Pennsylvania 15317, Attn:Attention: Corporate Secretary.
56 Equitrans Midstream Corporation - 20202021 Proxy Statement59
Notice of Internet Availability of Proxy Materials |
The SEC permits us to electronically distribute proxy materials to shareholders. We have elected to provide access to our proxy materials and annual report to certain of our shareholders on the Internet instead of mailing the full set of printed proxy materials. On or about April 9, 2020,March 15, 2021, we will mail to certain shareholders a notice of Internet availability of proxy materials (eProxy Notice) containing instructions regarding how to access our proxy statement and annual report and how to submit your vote over the Internet. If you received an eProxy Notice by mail, you will not receive printed copies of the proxy materials and annual report in the mail unless you request them. If you received an eProxy Notice by mail and would like to receive a printed copy of our proxy materials, follow the instructions for requesting such materials included in the eProxy Notice.
Voting Instructions |
Voting Instructions for Shareholders of Record |
If your shares are registered directly in your name with the Company's transfer agent, American Stock Transfer & Trust Company, LLC (AST), you are considered the shareholder of record of those shares. The proxy materials have been sent directly to you by Broadridge Financial Solutions, Inc. You may vote your shares at our annual meeting or by submitting your proxy by:
➢ Mail: completing the proxy card as outlined in the instructions on the card and mailing the card in the prepaid envelope provided; | ||
| ➢ Internet: following the instructions at the Internet site http://www.proxyvote.com; or | |
➢ Telephone: following the instructions for telephone voting after calling |
If you vote by submitting your proxy card, your shares will be voted as indicated on your properly completed unrevoked proxy card. If you return your proxy card but do not indicate how your shares should be voted on an item, the shares represented by your properly completed unrevoked proxy card will be voted as recommended by the Board of Directors.Board. If you do not return a properly completed proxy card and do not vote electronically during the virtual annual meeting, by telephone or on the Internet, your shares will not be voted.
You may also vote electronically during the virtual meeting using your 16-digit control number included on your eProxy Notice or proxy card. In the case of Internet or telephone voting, you should have your proxy card in hand and retain the card until you have completed the voting process. If you vote by Internet or telephone, you do not need to return the proxy card by mail. Even if you plan to participate in the virtual annual meeting, we encourage you to vote by proxy as soon as possible.
See "Notice of Internet Availability of Proxy Materials" above if you received an eProxy Notice. If you receive an eProxy notice, you will only be able to vote over the Internet unless you request paper copies of the proxy materials.
Equitrans Midstream Corporation - 2020 Proxy Statement57
Voting Instructions for Beneficial Owners |
If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered the beneficial owner of shares held in street name. You should receive an eProxy Notice or a vote instruction form (VIF) together with copies of the proxy statement and annual report from your broker, bank or other holder of record of those shares. As the beneficial owner, you have the right to direct your broker, bank or other holder of record in voting your shares by following the instructions included in the mailing on how to submit your voting instructions, including by:
➢ Mail: completing the VIF as outlined in the instructions on the form and mailing the form in the prepaid envelope provided; | ||
➢ Internet: following the instructions at the Internet site http://www.proxyvote.com; or | ||
➢ Telephone: following the instructions for telephone voting after calling |
60 Equitrans Midstream Corporation - 2021 Proxy Statement
See "Proposals, Board Recommendations, Vote Required, and Broker Non-Votes" above for the right of brokers, banks and other holders of record to vote on routine matters for which they have not received voting instructions.
Please review your VIF for the date by which your instructions must be received in order for your shares to be voted. You may also vote electronically during the virtual annual meeting using your 16 digit control numberthe instructions provided by your broker, bank, trustee or broker.other nominee. In the case of Internet or telephone voting, you should have your VIF in hand and retain the form until you have completed the voting process. If you vote by Internet or telephone, you do not need to return the VIF by mail.
If your shares are held through the Equitrans Midstream Corporation Employee Savings Plan (the Employee Savings Plan) or the ETRN LTIP, see "Voting Shares Held Through the Employee Savings Plan" and "Voting Restricted Shares Held Through the ETRN LTIP" below for instructions regarding how to vote your shares and the right of the holders of record to vote your shares on matters for which they have not received voting instructions.
See "Notice of Internet Availability of Proxy Materials" above if you received an eProxy Notice. If you receive an eProxy notice, you will only be able to vote over the Internet unless you request paper copies of the proxy materials.
Voting Shares Held Through the Employee Savings Plan |
If you hold shares through the Employee Savings Plan, you will receive a separate proxy card, proxy statement and annual report. You must use this separate proxy card to instruct the trustee of the Employee Savings Plan onregarding how to vote your shares held in the plan. You may instruct the trustee to vote your shares by:
➢ Mail: completing the proxy card as outlined in the instructions on the card and mailing the card in the prepaid envelope provided; | ||
➢ Internet: following the instructions at the Internet site http://www. proxyvote.com; or | ||
➢ Telephone: following the instructions for telephone voting after calling |
If you do not return a proxy card or if you return a proxy card with no instructions, the trustee will vote your shares in proportion to the way other plan participants vote their shares. Please note that the proxy cards for the Employee Savings Plan have an earlier return date. Please review your proxy card for the date by which your instructions must be received in order for your Employee Saving Plan shares to be voted.
58 Equitrans Midstream Corporation - 2020 Proxy Statement
In the case of Internet or telephone voting, you should have your proxy card in hand and retain the card until you have completed the voting process. If you vote by Internet or telephone, you do not need to return the proxy card by mail.
Voting Restricted Shares Held Through the ETRN LTIP |
If you hold restricted shares through the ETRN LTIP, you will receive a separate proxy card, proxy statement, and annual report. You must use this separate proxy card to instruct the ETRN LTIP administrator onregarding how to vote your restricted shares held in the plan. You may instruct the administrator to vote your shares by:
➢ Mail: completing the proxy card as outlined in the instructions on the card and mailing the card in the prepaid envelope provided; | ||
➢ Internet: following the instructions at the Internet site http://www. proxyvote.com; or | ||
➢ Telephone: following the instructions for telephone voting after calling |
If you return a proxy card with no instructions, the administrator or its designee will vote your shares as recommended by the Board of Directors.Board. If you do not return a proxy card, your shares will not be voted. Please note that the proxy cards for the ETRN LTIP have an earlier return date. Please review your proxy card for the date by which your instructions must be received in order for your shares to be voted.
Equitrans Midstream Corporation - 2021 Proxy Statement61
In the case of Internet or telephone voting, you should have your proxy card in hand and retain the card until you have completed the voting process. If you vote by Internet or telephone, you do not need to return the proxy card by mail.
How to Change Your Vote |
If you are a shareholder of record, you may revoke your proxy before polls are closed at the meeting by:
If you are a beneficial owner of shares, you may submit new voting instructions by contacting your broker, bank or other holder of record. Your last validly submitted vote is the vote that will be counted. If the meeting is postponed or adjourned, your proxy will still be good and may be voted at the postponed or adjourned meeting. You will be able to change or revoke your proxy until it is voted.
Receiving More Than One Proxy Card and/or VIF |
If you receive more than one proxy card as a shareholder of record, you have shares registered differently in more than one account. We encourage you to have all accounts registered in the same name and address whenever possible. You can do this by contacting our transfer agent, American Stock Transfer & Trust Company, LLC, at 6201 15th Avenue, Brooklyn, NY 11219, at its toll free number (1-800-937-5449), by email at help@astfinancial.com, or on its website www.astfinancial.com. If you receive more than one proxy card, it is important that you return each proxy card with voting instructions for your votes to be counted.
If you receive more than one VIF, please contact the broker, bank or other holder of record holding your shares to determine whether you can consolidate your accounts.
Voting on Other Matters |
Since no shareholder has indicated an intention to present any matter not included in this proxy statement to the annual meeting in accordance with the advance notice provision in the Company's bylaws,Bylaws, the Board is not aware of any other proposals for the meeting. If another proposal is properly presented, the persons named as proxies will vote your returned proxy in their discretion.
Equitrans Midstream Corporation - 2020 Proxy Statement59
Participating in the Annual Meeting |
You may participate in the virtual annual meeting if you were a shareholder on March 12, 2020.February 19, 2021. You will be able to participate in the annual meeting online and submit your questions during the meeting by visitingwww.virtualshareholdermeeting.com/ETRN2020ETRN2021. You also will be able to vote your shares electronically at the annual meeting (other than shares held through the ETRN LTIP or the Employee Savings Plan, which must be voted prior to the meeting). Information regarding the rules of conduct at the annual meeting will be posted on our investor relations website at ir.equitransmidstream.com by clicking "Governance" in advance of the annual meeting and will also be available on the virtual meeting platform during the annual meeting.
To participate in the annual meeting, you will need the 16-digit control number included on your notice of Internet availability of proxy materials,eProxy Notice, on your proxy card or on the VIF that accompanied your proxy materials. The annual meeting webcast will begin promptly at 2:9:00 p.m.a.m. Eastern Time on May 20, 2020,April 27, 2021, and shareholders will be able to log in beginning at 1:8:45 p.m.a.m. Eastern Time on May 20, 2020.April 27, 2021. We encourage you to access the meeting prior to the start time.
The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a strong Wi-Fi connection wherever they intend to participate in the meeting. Participants should also give themselves plenty of time to log in and ensure that they can hear streaming audio prior to the start of the meeting.
62 Equitrans Midstream Corporation - 2021 Proxy Statement
Voting During the Annual Meeting |
Shares registered directly in your name as the shareholder of record may be voted electronically during the annual meeting. If you choose to vote your shares online during the annual meeting, please follow the instructions provided on the notice of Internet availability of proxy materialsyour eProxy Notice or the proxy card to log in towww.virtualshareholdermeeting.com/ETRN2020ETRN2021. You will need the 16-digit control number included on your notice of Internet availability of proxy materialseProxy Notice or on your proxy card. If your shares are held in a stock brokerage account or by a bank, broker or other holder of record, you may also vote electronically during the virtual annual meeting using your 16 digit16-digit control number provided by your bank, broker or broker.other holder of record.
Even if you plan to participate in the annual meeting, the Company strongly recommends that you vote your shares in advance as described above so that your vote will be counted if you later decide not to participate in the annual meeting.
Questions |
During the live question and answer portion of the annual meeting, shareholders may submit questions, which will be answered as they come in, as time permits. If you wish to submit a question, you may do so by logging into the virtual meeting platform atwww.virtualshareholdermeeting.com/ETRN2020ETRN2021, type your question into the "Ask a Question" field, and click "Submit." Only questions pertinent to meeting matters will be answered during the meeting, subject to time constraints.
Technical Difficulties |
We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual annual meeting. If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the Virtual Shareholder Meeting log inlogin page.
Other Matters |
Solicitation of Proxies |
We are soliciting proxies primarily by use of the mails. However, we may also solicit proxies in person, by telephone, by facsimile, by courier or by electronic means. To the extent that our directors, officers or other employees participate in this solicitation, they will not receive any compensation for their participation, other than their normal compensation. D.F. King & Co., Inc. assists us with the solicitation for a fee of $10,000 plus reasonable out-of-pocket expenses. We also reimburse brokerage firms and other custodians, nominees, and
60 Equitrans Midstream Corporation - 2020 Proxy Statement
fiduciaries for their reasonable out-of-pocket expenses for sending proxy materials to shareholders and obtaining their proxies.
The Company bears all costs associated with this proxy solicitation.
Shareholder Proposals and Director Nominations |
Under SEC rules, eligible shareholders may submit proposals for inclusion in the proxy statement for our 20212022 annual meeting. Shareholder proposals must comply with the requirements established by the SEC and must be submitted in writing and received by our Corporate Secretary on or before the close of business on December 10, 2020November 15, 2021 (for them to be considered for inclusion in the 20212022 proxy statement).
If you would like to present a matter not included in our proxy statement for consideration at our 20212022 annual meeting, including nominations for director candidates, you must send advance written notice to our Corporate Secretary. According to our bylaws,Bylaws, the Corporate Secretary must receive notice of any matter or nominations to be presented at the 20212022 annual meeting no earlier than the close of business on January 20,December 28, 2021 (the 120th day prior to May 20, 2021,April 27, 2022, the one-year anniversary of this year's annual meeting) and no later than the close of business on February 19, 2021January 27, 2022 (the 90th day prior to May 20, 2021)April 27, 2022). Any matter or nomination must comply with our bylaws.Bylaws.
Under our proxy access bylawsBylaws provision, a shareholder, or group of twenty or fewer shareholders, in each case owning continuously for at least three years as of both the date the notice is received by us and the record date for the annual meeting, shares of the Company representing an aggregate of at least 3% of the voting power entitled to vote in the election of directors, may nominate and include in our proxy statement director nominees
Equitrans Midstream Corporation - 2021 Proxy Statement63
constituting the greater of (i) two and (ii) 20% of the Board, provided that such nominations are submitted in writing and received by our Corporate Secretary no earlier than the close of business on theOctober 16, 2021 (the 150th day prior to the first anniversary of the date that the Company mailed its proxy statement for the prior annual meetingmeeting) and no later than the close of business on theNovember 15, 2021 (the 120th day prior to the first anniversary of the date that the Company mailed its proxy statement for the prior annual meeting. Shareholders will not be able to take advantage of our proxy access bylaws to satisfy the ownership requirement until our shareholders' meeting in 2022 (which is three years from the Separation)meeting).
In addition, the Board's Corporate Governance Committee will consider in its normal course candidates recommended by the Company's shareholders. If the Corporate Governance Committee determines to nominate as a director an individual recommended by a shareholder, then the recommended individual will be included on the Company's slate for the next annual proxy statement. To make such a recommendation, you must comply with the requirements described under "Corporate Governance and Board Matters — Director Nominations" on page 14 of this proxy statement.
Cautionary Statements |
Disclosures in this proxy statement may contain certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Statements that do not relate strictly to historical or current facts are forward-looking and usually identified by the use of words such as "anticipate," "estimate," "could," "would," "will," "may," "forecast," "approximate," "expect," "project," "intend," "plan," "believe""believe," "target" and other words of similar meaning in connection with any discussion of future operating or financial matters. Without limiting the generality of the foregoing, forward-looking statements contained in this proxy statement include the matters discussed regarding the expectation of performance under compensation plans, anticipated financial and operational performance of the Company and its subsidiaries the expected timing of the closing of the EQM Merger, and the expected positive impacts of EQM's new global gathering agreement withthe EQT Global GGA, including expected increases in MVCs. These statements involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The Company has based these forward-looking statements on current expectations and assumptions about future events. While the Company considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties, many of which are difficult to predict and are beyond the Company's control. The risks and uncertainties that may affect the operations, performance and results of
Equitrans Midstream Corporation - 2020 Proxy Statement61
the Company's business and forward-looking statements include, but are not limited to, those set forth in the Company's annual report on Form 10-K for the year ended December 31, 2019.2020.
Any forward-looking statement speaks only as of the date on which such statement is made, and the Company does not intend to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise.
Websites |
Website addresses referenced in this proxy statement are provided for convenience only, and the content on the referenced websites does not constitute a part of this proxy statement.
6264 Equitrans Midstream Corporation - 20202021 Proxy Statement
APPENDIX A |
Related Person Transactions with EQT |
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As of March 12, 2020,February 22, 2021, EQT held a 11%5.8% ownership interest in the Company.Company (excluding the Company's Series A Preferred Shares). Therefore, EQT is a related person of the Company under SEC rules.
Separation and Distribution Agreement. On November 12, 2018, the Company, EQT and EQT Production Company (EPC) entered into thea separation and distribution agreement (the Separation and Distribution Agreement,Agreement), pursuant to which, among other things, EQT effected the Separation. The Separation and Distribution Agreement provides for, among other things, indemnification obligations designed to make the Company financially responsible for substantially all liabilities that may exist relating to the midstream business, that was transferred to the Company whether incurred prior to or after the Separation.
Transition Services Agreement. On November 12, 2018, in connection with the Separation, the Company and EQT entered into a transition services agreement, as amended (the Transition Services Agreement). Pursuant to the Transition Services Agreement, each party agreed to provide certain services to the other on an interim, transitional basis, including services related to information technology, the administration of certain employee benefits and other corporate support services. The Company and EQT agreed to pay the other a fee for these services on a monthly basis. The Transition Services Agreement terminated on June 30, 2019.
Tax Matters Agreement. On November 12, 2018, in connection with the Separation, the Company and EQT entered into a tax matters agreement (the Tax Matters Agreement) that governs the parties' respective rights, responsibilities and obligations with respect to taxes (including taxes arising in the ordinary course of business and taxes, if any, incurred as a result of any failure of EQT's distribution of 80.1% of the distributionthen outstanding shares of the Company's common stock to EQT shareholders (the Distribution) made in connection with the Separation and certain related transactions to qualify as generally tax-free for U.S. federal income tax purposes), tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and assistance and cooperation with respect to tax matters. In addition, the Tax Matters Agreement imposesthrough November 12, 2020, imposed certain restrictions on the Company and its subsidiaries, including restrictions on share issuances, business combinations, sales of assets and similar transactions, that arewere designed to preserve the tax-free status of the distributionDistribution and certain related transactions. The Tax Matters Agreement provides special rules that allocate tax liabilities in the event that the distributionDistribution made in connection with the Separation, together with certain related transactions, are not tax-free. In general, under the Tax Matters Agreement, each party is expected to be responsible for any taxes, whether imposed on the Company or EQT, that arise from (i) the failure of the distribution,Distribution, together with certain related transactions, to qualify for tax-free treatment, or (ii) if certain related transactions were to fail to qualify for their intended tax treatment, in each case, to the extent that the failure to qualify is attributable to actions, events or transactions relating to such party's respective stock, assets or business or a breach of the relevant representations or covenants made by that party in the Tax Matters Agreement.
Employee Matters Agreement. On November 12, 2018, in connection with the Separation, the Company and EQT entered into an employee matters agreement (the Employee Matters Agreement). Pursuant to the Employee Matters Agreement, the Company and EQT allocated liabilities and responsibilities related to employment and compensation and benefits matters and generally agreed to the Company's assumption of liabilities associated with employees transferred from EQT to the Company (and certain former employees associated with the midstream business) in connection with the Separation. The Company also agreed to establish certain retirement and welfare plans that mirrored similar plans in effect at EQT, and EQT and the Company agreed to the adjustment and replacement of equity compensation awards denominated in EQT common stock in part with awards denominated in Equitrans Midstream common stock.
Shareholder and Registration Rights Agreement. On November 12, 2018, in connection with the Separation, and Distribution, the Company entered into a shareholder and registration rights agreement (the Registration Rights Agreement) with EQT, pursuant to which the Company agreed that, upon the request of EQT, the Company would use commercially reasonable efforts to effect the registration of the shares comprising the 19.9% interest inof the Company retained by EQT in connection with the Separation (the Retained Interest), and EQT agreed to vote any shares comprising the Retained Interest then held by the Company in proportion to the votes cast by the Company's other shareholders. EQT granted the Company a proxy to vote its shares comprising the Retained Interest then held by the Company in such proportion. The Registration Rights Agreement also includes provisions to facilitate the transferability of the Retained Interest.
EQGP's, EQM's and RMP's Omnibus Agreements with EQT. Prior to the Separation, EQGP (now a subsidiary of EQM), EQM and RM Partners, LP (then known as Rice Midstream Partners LP (nowand now an operating subsidiary of EQM)the Company) (RMP) each had an omnibus agreement with EQT. Pursuant to the omnibus agreements, EQT performed centralized corporate general and administrative services for EQGP, EQM and RMP and provided a license for EQGP's and EQM's use of the name "EQT" and related marks in connection with their businesses.RMP. EQGP, EQM and RMP reimbursed EQT for the expenses incurred by EQT in providing these services. EQM's and RMP's omnibus agreements also provided for certain indemnification obligations between EQM and RMP on the one hand, and EQT on the other hand. On November 12, 2018, EQT terminated the EQGP, EQM and RMP omnibus agreements. Certain indemnification obligations of EQT, EQM and RMP remain in effect following the termination and have been memorialized pursuant to (i) the amended and restated omnibus agreement, dated November 13, 2018, among EQT, EQM and EQM's former general partner, and (ii) the second amended and restated omnibus agreement, dated November 13, 2018, among EQT, EQT RE, LLC, RM Partners LP,RMP, EQM Midstream Management LLC, the general partner of RMP, and EQM Poseidon Midstream LLC. The Company is generally responsible for these surviving obligations of EQT pursuant to the Separation and Distribution Agreement.
Shared Use Agreement. In connection with the Separation, EQM executed a shared use agreement with EPC, pursuant to which, subject to the terms and conditions thereof, each party is entitled to access and use certain real property (including rights-of-way), equipment, facilities and records identified therein of the other party.
Commercial Agreements with EQT |
Commercial Agreements with EQT.In the ordinary course of business, the Company through EQM, engages in transactions with EQT and its affiliates,subsidiaries, including, but not limited to, gas gathering agreements, transportation service and precedent agreements, storage agreements, and water service agreements. For the year ended December 31, 2019,2020, the Company's operating revenues under these agreements were $1,122.6approximately $964.2 million. These agreements under which 20192020 operating revenues were recognized by the Company are described below.
Eureka Gas Gathering Agreement.EQT Global GGA. On February 26, 2020, the Company and EQT (as assignee of Stone Energy Company) is party toentered into the EQT Global GGA, a gas gathering and compression agreement for the provision of certain gas gathering services agreementto EQT in the Marcellus and Utica Shales of Pennsylvania and West Virginia, which was subsequently amended on August 26, 2020 and November 1, 2020. The EQT Global GGA expires on December 31, 2035 and will renew annually thereafter unless terminated by EQT or the Company pursuant to its terms. The EQT Global GGA provides for, among other things, a 3.0 Bcf per day minimum volume commitment (MVC), which gradually steps up to a 4.0 Bcf per day for several years following the full in-service date of the MVP, and the dedication of a substantial majority of EQT's core acreage in Pennsylvania and West Virginia to the Company. Under the EQT Global GGA, EQT will receive certain gathering fee relief (as described below) over a period of three years following the full in-service date of the MVP. Additionally, the EQT Global GGA provides for potential cash bonus payments payable by EQT to the Company during the period beginning on the first day of the calendar quarter in which the MVP in-service date occurs through the earlier of the twelfth calendar quarter from that point or the calendar quarter ending December 31, 2024. The potential cash bonus payments are conditioned upon the quarterly average of certain Henry Hub natural gas prices exceeding certain price thresholds. The gathering fees payable by EQT to the Company set forth in the EQT Global GGA are subject to potential reductions (i.e., the gathering fee relief) for certain contract years as set forth in the EQT Global GGA, conditioned upon the in-service date of the MVP, which provide for estimated aggregate fee relief of approximately $270 million in the first year after the in-service date of the MVP, approximately $230 million in the second year after the in-service date of the MVP and approximately $35 million in the third year after the in-service date of the MVP. In addition, if the MVP in-service date has not occurred by January 1, 2022, EQT has an option, exercisable for a period of twelve months (or such shorter period if the in-service date of the MVP occurs), to forgo approximately $145 million of the fee relief in the first year after the MVP in-service date and approximately $90 million of the fee relief in the second year after the MVP in-service date in exchange for a cash payment from the Company to EQT in the amount of approximately $196 million (the EQT Cash Option). As consideration for the additional rate relief subject to the EQT Cash Option, the Company purchased certain shares of the Company's common stock that were held by EQT (as described below).
On February 26, 2020, in connection with Eureka Midstream,the execution of the EQT Global GGA, each of the Jupiter Gas Gathering Agreement, the WG-100 Gas Gathering Agreement, the MPPS Gas Gathering Agreement, the AMTT Gathering Agreement, the Stonewall Valley Gathering Agreement, the River Pad Gas Gathering Agreement, the Claysville Gas Gathering Agreement, the RMP PA Gathering Agreement, the Cracker Jack Gathering Agreement, the Cash Dollar Gathering Agreement, the ANGS Gathering Agreement, the Windridge Gathering Agreement, the ASR Gathering Agreement, the State Gamelands Gathering Agreement (as each is defined below) and the Letter Agreement regarding the Connection of Kentor, Carpenter, Shipman and Beazer Wells Pads to Jupiter Gathering System, dated March 1, 2019, by and among Rice Drilling B LLC, (as successor-in-interest to Eureka Hunter Pipeline, LLC) (Eureka), aEQM Gathering Opco, LLC, an indirect wholly owned subsidiary of Eureka Midstream, dated February 17, 2012, for gathering services subject to two separate Individual Transaction Confirmations (each an ITC). Under ITC No. EHP-Stone-005, Eureka provides gathering services on the Lewis Wetzel Low Pressure GasCompany (EQM Gathering SystemOpco), and produced liquids gathering for an 8-year term (with year-to-year rollovers). Under the agreement, Eureka gathers EQT's gas from the Mills Wetzel production area and delivers gas to a central production facility (Carbide Facility) for compression, dehydration, metering and delivery to the MarkWest Mobley Gas Processing Plant. Eureka is also responsible for separation of produced liquids at the Carbide Facility. Under ITC No. EHP-Stone-004, Eureka Midstream provides interruptible gathering services on its TCP Residue Lateral line, by accepting residue gas at the MarkWest Mobley Gas Processing Plant and delivering the same to the Smithfield — Mobley TCO meter. The term of such service is month to month.Equitrans, L.P. was terminated.
EQM Gas Gathering Agreements. On April 30, 2014, EQT entered into a gas gathering agreement (the Jupiter Gas Gathering Agreement) with EQT Gathering, LLC, an indirect wholly owned subsidiary of EQT (EQT Gathering) for gathering services on the Jupiter gathering system (Jupiter). The Jupiter Gas Gathering Agreement hashad a 10-year term (with year-to-year rollovers), which began on May 1, 2014. Under the agreement, EQT subscribed for approximately 225 MMcf per day of firm compression capacity which was available on Jupiter at that time. In the fourth quarter of 2014, EQM placed one compressor station in service and added compression at the two existing compressor stations in Greene County, Pennsylvania. This expansion added approximately 350 MMcf per day of compression capacity. EQT's firm capacity subscribed under the Jupiter Gas Gathering Agreement increased by 200 MMcf per day effective December 1, 2014 and by 150 MMcf per day effective January 1, 2015. In the fourth quarter of 2015, EQM completed an additional expansion project which brought the total Jupiter compression capacity to approximately 775 MMcf per day. EQT's firm capacity subscribed under the Jupiter Gas Gathering Agreement increased by approximately 50 MMcf per day effective October 1, 2015 and approximately 150 MMcf per day effective November 1, 2015. The Jupiter Gas Gathering Agreement provided for separate terms of up to 10 years from the applicable in service date (with year-to-year rollovers) for the compression capacity associated with each expansion project. EQT also agreed to pay a monthly usage fee for volumes gathered in excess of firm compression capacity. In connection with the closing of EQT's contribution of Jupiter to EQM Gathering Opco, LLC, an indirect wholly owned subsidiary of EQM (EQM Gathering Opco), on May 7, 2014, the Jupiter Gas Gathering Agreement was assigned to EQM Gathering Opco.
On March 10, 2015, EQT entered into two gas gathering agreements with EQT Gathering for gathering services on the NWVCompany's Northern West Virginia Gathering system.System (NWV Gathering). The gathering agreement for gathering services on the wet gas header pipeline (WG-100 Gas Gathering Agreement) had a 10-year term (with year-to-year rollovers), beginning March 1, 2015. Under the agreement, EQT had subscribed for approximately 400 MMcf per day of firm capacity currentlythen available on the wet gas header pipeline. EQT also agreed to pay a usage fee for each dekatherm of natural gas gathered in excess of firm capacity. In connection with the closing of theEQM's acquisition of NWV Gathering Acquisition (as defined below),from EQT in 2015, the WG-100 Gas Gathering Agreement was assigned to EQM Gathering Opco.
The gas gathering agreement for gathering services in the Mercury, Pandora, Pluto and Saturn development areas (MPPS Gas Gathering Agreement) had a 10-year term (with year-to-year rollovers), beginning March 1, 2015. Under the agreement, EQT initially subscribed for approximately 200 MMcf per day of firm capacity then available in the Mercury development area, 40 MMcf per day of firm capacity in the Pluto development area and 220 MMcf per day of firm capacity in the Saturn development area. EQT's firm capacity subscribed under the MPPS Gas Gathering Agreement increased by 100 MMcf per day effective December 1, 2015 related to the completedan expansion project in the Pandora development area. An additional expansion project brought the total Saturn compression capacity to 300 MMcf per day effective November 1, 2016.
EQT had agreed to separate 10-year terms (with year-to-year rollovers) for the compression capacity associated with each expansion project.project under the MPPS Gas Gathering Agreement. EQT also agreed to pay a usage fee for each dekatherm of natural gas gathered in excess of firm capacity. In connection with the closing of theEQM's acquisition of NWV Gathering Acquisition,from EQT in 2015, the MPPS Gas Gathering Agreement was assigned to EQM Gathering Opco.
Effective as of October 1, 2016, EQT entered into a 10-year (with year-to-year rollovers) gas gathering agreement for services in the Applegate/McIntosh and Terra development areas in southwestern Pennsylvania and the Taurus development area in northern West Virginia (the AMTT Gathering Agreement). Under the agreement, EQT initially subscribed for total firm capacity of approximately 235 MMcf per day. Effective September 1, 2018, the contracted firm capacity under the agreement increased to an aggregate of 365 MMcf per day during the remaining life of the contract in connection with, among other things, an expansion project in the Applegate/McIntosh development area. EQT also agreed to pay a usage fee for each dekatherm of natural gas gathered in excess of firm capacity. In connection with the closing of EQM's acquisition of certain gathering and transmission assets from EQT in October 2016, the AMTT Gathering Agreement was assigned to EQM Gathering Opco.
Effective as of April 1, 2019, EQT and EPC entered into a gas gathering agreement (the Stonewall Valley Gathering Agreement) with EQM for gathering services with respect to production from natural gas wells from EQT's Stonewall Valley Unit, Mingo Unit and Kevech Unit, all located in Washington County, Pennsylvania. The Stonewall Valley Gathering Agreement had a 10-year term (with year-to-year rollovers).
As a result of the 2017 merger (the Rice Merger) among EQT, its wholly-owned merger subsidiary, and Rice Energy, (the Rice Merger), the surviving entity acquired all of Rice Energy's rights and assumed all of Rice Energy's obligations under a second amended and restated gas gathering and compression agreement executed on March 31, 2017 with EQMRice Olympus Midstream LLC (the Ohio Gathering Agreement), which became a wholly-owned subsidiary of EQM on May 22, 2018 as a result of the 2018 Drop-Down Transaction (as defined below).2018. Pursuant to the Ohio Gathering Agreement, EQM provides gathering services to EQT in Belmont County, Ohio. The agreement has a 15-year term that began on December 22, 2014 (with month-to-month rollovers). Under the agreement, Rice Energy initially subscribed for total guaranteed capacity of approximately 100 MMcf per day to the Dominion East Ohio delivery point. Over the course of the agreement, new delivery points came online: Texas Eastern Pipeline (April 30, 2015; 200 MMcf per day), Rockies Express Pipeline (December 31, 2015; 225 MMcf per day), ET Rover Pipeline (September 1, 2017; 100 MMcf per day) and Leach Xpress Pipeline (November 1, 2017; 200 MMcf per day). With the foregoing expansion, the total guaranteed capacity under the agreement increased to approximately 825 MMcf per day across all delivery points. EQT also delivers gas to the Goliath delivery point on an interruptible basis. EQT pays a fixed fee (based on the applicable receipt and delivery points) per dekatherm of natural gas delivered. In addition to gathering services, EQM agreed to provide interconnection and compression services for an additional fee.
On June 8, 2017, EQT and two third partythen third-party producers entered into a 15-year (with year-to-year rollovers) gas gathering agreement with EQM Gathering Opco for gathering services on the Marianna Gathering System (the Marianna Gas Gathering Agreement), pursuant to which EQT pays a fixed fee per dekatherm of natural gas, subject to certain annual and other adjustments, gathered by EQM Gathering Opco. During 2019, EQM connected EQT's Gahagan Pad to the Marianna Gathering System. Under the Marianna Gas Gathering Agreement, EQT and the other two producers alsocurrent producer on the system have dedicated approximately 10,10014,200 acres and any future acreage EQT acquires within the dedication area during the term to EQM Gathering Opco.
On August 8, 2017, EQT entered into a 10-year (with year-to-year rollovers) gas gathering agreement with EQM Gathering Opco for gathering services on the River Pad Gathering System (the River Pad Gas Gathering Agreement). Under the agreement, EQT had subscribed for approximately 30 MMcf per day of firm capacity that became available in the second quarter of 2018. Under the River Pad Gas Gathering Agreement,2018, dedicated certain EQT also dedicated approximately 30,000 acres and any future acreage EQT acquires within the dedicated area during the term to EQM Gathering Opco and agreed to pay a usage fee for each dekatherm of natural gas gathered in excess of firm capacity.
EQT Energy, LLC (EQT Energy), an indirect wholly owned subsidiary of EQT, is a party to a gas gathering agreement with EQM for interruptible service on EQM's FERC-regulated low pressure gathering system. The agreement has a primary term of one year and renews automatically for one-month periods, subject to 30 days prior written notice by either party to terminate. Service under this gathering agreement is fee based at the rate specified in EQM's tariff.
On February 12, 2018, EQT Energy and EPC executed a gas gathering agreement (the Hammerhead Gas Gathering Agreement) with EQM Gathering Opco to provide certain gathering and transmission services from receipt points on the Jupiter gathering system, Marianna gathering system and a gathering systemEQM's Hammerhead pipeline to EQT in Washington County,southwestern Pennsylvania and delivery into the Texas Eastern Pipeline and the Mountain Valley Pipeline (MVP).northwestern West Virginia. The Hammerhead Gas Gathering Agreement has a 20-year term (with year-to-year rollovers). A portion ofThe Hammerhead pipeline is a 1.6 Bcf per day gathering header pipeline that is primarily designed to connect natural gas produced in Pennsylvania and West Virginia to the MVP, Texas Eastern Transmission and Dominion Transmission. The Company believes the Hammerhead project is expected to become operational in the second quarter of 2020 and will provide interruptible service until MVP ispipeline was placed in-service at which time the firm capacity commitment will begin. The Hammerhead project has a targeted full in-service date of lateeffective August 1, 2020. Under the agreement, EQT has subscribed for approximately 1,200 million dekatherm (MDth) per day of firm gathering capacity during the life of the contract. The capacity reservation charge under the contract is fixed, subject to certain annual and other adjustments, including certain adjustments in the event the in-service date under the agreement has not occurred by the end of the third quarter of 2020.adjustments. EQT has agreed to pay a usage fee for each dekatherm of natural gas gathered in excess of firm capacity. Effective as of June 1, 2019, the parties agreed that the western receipt point on the Jupiter Gathering System would be removed from the Hammerhead project, and that associated capital would be redeployed in order to (i) connect the Hammerhead pipeline to the DTI TL-360 downstream pipeline, (ii) add a receipt point at Throckmorton with an associated MDQmaximum daily quantity of 600,000 Dth per day, and (iii) add incremental compression on the gathering system up to 1440 psig and extending high pressure-low pressure system upstream of the Throckmorton receipt point. These amendments were made in connection with other agreements of the parties relative to Claysville (Pisces) Gathering Systemdevelopment area described below. The Company's and EQT's obligations under the Hammerhead Gas Gathering Agreement are subject to a pending contractual dispute that is currently being arbitrated. See "Hammerhead Pipeline" under "Outlook" in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of the Company's Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 23, 2021, for additional information.
On June 7, 2018, EQT Energy and EPC executed a gas gathering agreement with EQM for gathering services in the Claysville (Pisces) development area (the Claysville Gas Gathering Agreement). The Claysville Gas Gathering Agreement had a 10-year term (with year-to-year rollovers). Under the agreement, EQT initially subscribed for total firm capacity of approximately 200,000 MDth per day. The contracted firm capacity would have increased to 300,000 MDth per day during the life of the contract. The capacity reservation charge under the contract was fixed, subject to certain annual and other adjustments.
Legacy RMP Gas Gathering Agreements. As a result of EQM's merger with RMP in July 2018 (the EQM-RMP Merger), the surviving entity acquired all of RMP's rights and assumed all of RMP's obligations under various gas gathering agreements with EQT and its affiliates, as described in detail below.
As a result of the EQM-RMP Merger, the surviving entity assumed RMP's obligations under a fixed price per unit gathering and compression agreement executed on December 22, 2014 with Rice Energy (which was acquired by EQT as a result of the Rice Merger) that expireswould have expired in December 2029 (the RMP PA Gathering Agreement). Pursuant to the agreement, EQM gathered natural gas on certain of the Washington and Greene Counties, Pennsylvania gathering systems acquired by EQM as a result of the EQM-RMP Merger and provided compression services.services to EQT. Under the agreement, EQM charged EQT a gathering fee of $0.30 per dekatherm and a compression fee of $0.07 per dekatherm per stage of compression, each subject to annual adjustment for inflation based on the Consumer Price Index. This agreement covered approximately 209,000 gross acres of EQT's acreage position in the dry gas core of the Marcellus Shale in southwestern Pennsylvania as of December 31, 2019 and, subject to certain exceptions and limitations pursuant to the gas gathering and compression agreement, any future acreage certain affiliates of EQT acquire within these counties.
EQM was obligated to connect all of EQT's wells that produce gas from the area dedicated to EQM under the gas gathering and compression agreement that (i) were completed as of the closing date of RMP's initial public offering, (ii) were included in Rice Energy's initial development plan for drilling activity for the period from the closing date of RMP's initial public offering through December 31, 2017 or (iii) were within five miles of the gas gathering system acquired by EQM as a result of the EQM-RMP Merger on the date EQT provided EQM with notice that a new well pad was expected to require gathering services. For wells other than those described in the preceding sentence, EQM and EQT agreed to negotiate in good faith an appropriate gathering fee. If EQM cannot reach agreement with EQT on a gathering fee for any such additional well, EQT had the option to have EQM connect such well to its gathering systems for a gathering fee of $0.30 per dekatherm and bear the incremental cost of constructing the connection to such well in excess of the cost EQM would have incurred to connect a well located on the five-mile perimeter, or EQT could cause such well to be released from EQM's dedication under the gas gathering and compression agreement.
As a result of the EQM-RMP Merger, the surviving entity assumed RMP's obligations under a fixed price per unit gathering and compression agreement executed on December 18, 2015 with Rice Energy (which was acquired by EQT as a result of the Rice Merger) (the Cracker Jack Gathering Agreement). Pursuant to the agreement, EQM gathered natural gas on the Washington County, Pennsylvania gathering system acquired by EQM as a result of the EQM-RMP Merger and provided compression services to EQT. The term of this agreement would have expired in January 2021 with a 10-year extension term. Under the agreement, EQM received fixed gathering and compression fees per dekatherm, each subject to annual adjustment for inflation based on the Consumer Price Index. This agreement covered the Cracker Jack Area of Mutual Interest, which consisted of approximately 29,000 gross acres of EQT's acreage position in Washington County (the CJ AMI) as of December 31, 2019. Upon notice from EQT, EQM will be obligated to connect additional EQT wells within the CJ AMI.
Also, as a result of the EQM-RMP Merger, EQM assumed RMP's obligations under a 15-year, fixed price per unit gathering and compression agreement executed on October 21, 2015 with Rice Energy (which was acquired by EQT as a result of the Rice Merger) (the Cash Dollar Gathering Agreement). Pursuant to the agreement, EQM gathered natural gas on the Washington County, Pennsylvania gathering system acquired by EQM as a result of the EQM-RMP Merger and provided compression services to EQT. Under the agreement, EQM received fixed gathering and compression fees per dekatherm, each subject to annual adjustment for inflation based on the Consumer Price Index. This agreement covered approximately 2,200 gross acres
Table of EQT's acreage position in Washington County as of December 31, 2019.Contents
Effective as of December 16, 2016, in connection with an acquisition by EQT, EQT assumed the obligations under the Appalachia North Gathering System Gas Gathering Agreement, to which RMP was a party prior to the EQM-RMP Merger (the ANGS Gathering Agreement). As a result of the EQM-RMP Merger, the surviving entity assumed RMP's obligations under this agreement to gather natural gas on the Washington County, Pennsylvania gathering system acquired by EQM as a result of the EQM-RMP Merger and provide compression services to EQT. Under the agreement, EQM received fixed gathering and compression fees per dekatherm, each subject to annual adjustment for inflation based on the Consumer Price Index. The initial term of this agreement was until December 31, 2023 and it covered approximately 4,000 gross acres of EQT's acreage position in Washington County as of December 31, 2019.
Effective as of October 19, 2016, in connection with RMP's acquisition in October 2016 of certain midstream assets previously owned by affiliates of Vantage Energy, LLC, (the Vantage Midstream Asset Acquisition), RMP acquired Vantage Energy II Access LLC (Vantage Access), which became an indirect wholly-owned subsidiary of EQM as a result of the EQM-RMP Merger. Vantage Access was party to a gas gathering agreement with an affiliate of EQT (the Windridge Gathering Agreement). Pursuant to the agreement, EQM gathered natural gas on its Windridge gathering system and provided compression and dehydration services to EQT. The initial term of this agreement would have expired in December 2023. Under the agreement, EQM received fixed gathering, compression and dehydration fees per dekatherm, each subject to an annual adjustment for inflation based upon the Consumer Price Index. Under this agreement, EQT dedicated the first 20,000 dekathermdekatherms per day of gas in Greene County, Pennsylvania to the Windridge gathering system.
Additionally, Vantage Access was party to a letter agreement with an affiliate of EQT, among other parties, pursuant to which EQM facilitated the crossflow of EQT's gas into the Windridge gathering system from its Rogersville gathering system for an additional 25% of the gathering fee and an additional 100% of the compression fee applicable to services provided to EQT on its Windridge system.
On November 25, 2015, Rice Poseidon Midstream LLC, which became an indirect wholly-owned subsidiary of EQM as a result of the EQM-RMP Merger, executed a fixed price per unit gas gathering agreement with a subsidiary of Rice Energy (which was acquired by EQT as a result of the Rice Merger) (the ASR Gathering Agreement). Pursuant to the agreement, EQM gathered and compressed natural gas on its Whipkey gathering system and connected its gathering system with the ASR gathering system. The primary term of this agreement would have expired in November 2025. EQM received fixed gathering and compression fees per dekatherm. Additionally, it received an interconnect fee on a monthly basis per dekatherm received at each applicable receipt point. All fees were subject to an annual adjustment based on the Consumer Price Index. This agreement covered approximately 2,200 gross acres of EQT's gross acreage position in Greene County, Pennsylvania as of December 31, 2019.
On September 14, 2017, Rice Poseidon Midstream LLC which became an indirect wholly-owned subsidiary of EQM as a result of the EQM-RMP Merger, executed a gas gathering agreement with two subsidiaries of EQT (the State Gamelands Gathering Agreement). Pursuant to the agreement, EQM provided gathering services for EQT's State Gamelands 179 Well Pad in Greene County, Pennsylvania. The initial term of the agreement would have expired in September 2032 (with year-to-year rollovers). EQT initially subscribed for total guaranteed capacity of approximately 200 MMcf per day, with additional volumes delivered on an interruptible basis. Under the agreement, EQT had dedicated all gas from the Marcellus formation or above that is produced from wells located in the State Gamelands 179 Well Pad. EQM provided both gathering and compression services, with separate fixed fees charged per dekatherm of gas gathered and compressed.
On February 26, 2020, in connection with the EQM's and EQT's execution of the global gas gathering agreement, each of the Jupiter Gas Gathering Agreement, the WG-100 Gas Gathering Agreement, the MPPS Gas Gathering Agreement, the AMTT Gathering Agreement, the Stonewall Valley Gathering Agreement, the River Pad Gas Gathering Agreement, the Claysville Gas Gathering Agreement, the RMP PA Gathering Agreement, the Cracker Jack Gathering Agreement, the Cash Dollar Gathering Agreement, the ANGS Gathering Agreement, the ASR Gathering Agreement, the State Gamelands Gathering Agreement and the Letter Agreement regarding the connection of Kentor, Carpenter, Shipman and Beazer Wells Pads to Jupiter Gathering System, dated March 1, 2019 by and among Rice Drilling B LLC, EQM Gathering Opco, LLC and Equitrans, L.P. was terminated.
NWV Gathering Contribution Agreement and Preferred Interest. On March 10, 2015, EQM entered into a Contribution and Sale Agreement pursuant to which, on March 17, 2015, EQT contributed the Northern West Virginia MarcellusNWV Gathering System (NWV Gathering) to EQM Gathering (NWV Gathering Acquisition).Opco. The Contribution and Sale Agreement also contemplated the sale to EQM of a preferred interest in EQT Energy Supply, LLC (EES), which at the time was an indirect wholly owned subsidiary of EQT. EES generates revenue from services provided to a local distribution company. This sale was completed on April 15, 2015. During the year ended December 31, 2019, EQM2020, the Company received $11.0$11.1 million of distributions from EES in respect of its preferred interest.
Eureka Gas Gathering Agreement. EQT (as assignee of Stone Energy Company) is party to a gas gathering agreement with Eureka Midstream, LLC (as successor-in-interest to Eureka Hunter Pipeline, LLC) (Eureka), a wholly owned subsidiary of Eureka Midstream Holdings, LLC (in which the Company owns a 60% ownership interest), dated February 17, 2012, for gathering services subject to two separate Individual Transaction Confirmations (each an ITC). Under ITC No. EHP-Stone-005, Eureka provides gathering services on the Lewis Wetzel Low Pressure Gas Gathering System and produced liquids gathering for an 8-year term (with year-to-year rollovers). Under the agreement, Eureka gathers EQT's gas from the Mills Wetzel production area and delivers gas to a central production facility (Carbide Facility) for compression, dehydration, metering and delivery to the MarkWest Mobley Gas Processing Plant. Eureka is also responsible for separation of produced liquids at the Carbide Facility. Under ITC No. EHP-Stone-004, Eureka provides interruptible gathering services on its TCP Residue Lateral line, by accepting residue gas at the MarkWest Mobley Gas Processing Plant and delivering the same to the Smithfield — Mobley TCO meter. The term of such service is month to month.
Transportation Service and Precedent Agreements. EQT Energy has contracted with Equitrans, L.P., an indirect wholly owned subsidiary of EQM, for firm transmission capacity with a primary term through October of 2024. The reserved capacity under this contract was 1,076 BBtu per day through August 1, 2016, is 1,035 BBtu through July 1, 2023 and will decrease as follows thereafter: 630 BBtu on July��July 1, 2023, 325 BBtu on September 1, 2023 and 30 BBtu on October 1, 2024. EQT Energy's firm transportation agreement will automatically renew for one year periods upon the expiration of the primary term, subject to six months prior written notice by either party to terminate. In addition, during 2017, EQT Energy assumed a contract for 20 BBtu per day of firm transmission capacity with a primary term through June 30, 2024 which will automatically renew for one year periods upon the expiration of the primary term, subject to six months prior written notice by either party to terminate. On November 13, 2017, EQT acquired a contract for 105 BBtu per day of firm transmission capacity with a primary term through October 31, 2018, which automatically renewed on November 1, 2018, November 1, 2019, and November 1, 20192020, and will continue to automatically renew for one year periods upon the expiration of the then-current term, subject to six months prior written notice by either party to terminate. EQMEquitrans, L.P. has also entered into agreements with EQT Energy to provide (i) interruptible transmission service, which is currently renewing automatically for one year periods, subject to six months prior written notice by either party to terminate; and (ii) interruptible wheeling service, which is currently renewing automatically for one year periods, subject to one month prior written notice by either party to terminate.terminate; and (iii) loan and parking service, effective March 1, 2020 through June 30, 2022.
In January 2016, EQT Energy entered into a firm transportation agreement for 650 BBtu per day of firm transmission capacity on EQM'sthe Company's Ohio Valley Connector pipeline. The firm transmission capacity became available when the pipeline began service on October 1, 2016. This agreement has a primary term through September 30, 2036.
EQT Energy is also party to a precedent agreement and service agreement with Equitrans, L.P. for 300 BBtu per day of firm transmission capacity for a 20-year term utilizing proposed capacity that will bewas created by EQM's proposedthe Company's Equitrans, L.P. Expansion project.project (EEP). The firm reservation charges and EQT Energy's associated capacity commitment for the Equitrans, L.P. Expansion projectEEP will commence once MVP is placed in service. A portion of the EEP commenced operations with interruptible service which EQM is targeting in late 2020.
In connection with the Marianna Gas Gathering Agreement, on August 7, 2017, EQT Energy entered into a two-year (with month-to-month rollovers) transportation service agreement with Equitrans, under which EQT Energy pays a fixed fee per dekathermthird quarter of natural gas transported under the agreement. The transmission agreement was effective on September 1, 2017.2019.
In connection with the River Pad Gas Gathering Agreement, on July 25, 2017, EQT Energy entered into a 10-year (with year-to-year rollovers) transportation service agreement with Equitrans for approximately 30 MMcf per day of firm transportation capacity. The firm transmission capacity became available upon completion of the River Pad project, which was completed in the second quarter of 2018.
Storage Agreements. EQMThe Company is not currently a party to any firm storage agreements with EQT. EQMThe Company does, however, provide balancing, lending and parking services to EQT pursuant to Rate Schedule LPS.
EQM Water Services Agreements. On June 18, 2018, EQM executed a water services agreement with EQT whereby EQM agreed to provide, on an interruptible basis, fresh water for use in connection with well drilling, hydro-fracturing and extraction operations at EQT's Carpenter well pad located in Greene County, Pennsylvania. The agreement has an initial term of five years, beginning on the in-service date of the water system, which occurred on July 17, 2018, and may be extended by the written agreement of the parties thereafter. Under the agreement, EQM receives a fixed fee for freshwater deliveries by pipeline directly to the Carpenter well pad. EQM and EQT entered into an Amended and Restated Water Services Agreement for the Carpenter well pad effective December 3, 2018 (Amended Carpenter Agreement). Pursuant to the Amended Carpenter Agreement, EQM will provideprovides fresh water from its Washington and Greene County and Southwestern Pennsylvania Water Authority (SPWA) systems to the Carpenter well pad at a fixed rate paid by EQT. EQM's service will beis provided on an interruptible basis, although EQT has committed to exclusively use EQM's water for the Carpenter well pad up to the required daily volume (on days EQT withdraws water). The Amended Carpenter Agreement hashad an in-service date of June 1, 2019, has an initial term of five years from the effective date and may be extended by written agreement of the parties thereafter.
Effective July 13, 2018, EQM executed a water services agreement with EQT whereby EQM agreed to provide, on an interruptible basis, fresh water for use in connection with hydraulic fracturing and drilling operations and other related operations in EQT's Claysville (Pisces) development area, subject to a minimum annual volume commitment. Under the agreement, EQM agreed to construct and operate a fresh water system connecting the SPWA's water system to each well within the Claysville (Pisces) development area for the delivery of fresh water under the water services agreement. EQM and EQT entered into a First Amendment to the Water Services Agreement for the Claysville (Pisces) development area effective January 1, 2020 (First Claysville Amendment). The First Claysville Amendment redefines the contract start date and contract year to correspond with the in-service date of the Claysville fresh water system. The First Claysville Amendment providesprovided EQT a full calendar year to reach eachan established annual minimum volume commitment. The term of agreement is ten years from the contract start date of January 1, 2020 and will continue from year to year thereafter. Under the agreement, EQM will receive, in addition to certain other fees, (i) fixed fees per gallon based upon the volume of fresh water deliveries over the term of the agreement, subject to annual consumer price index adjustments, (ii) fees assessed by SPWA or another third party to source fresh water for delivery through the fresh water system; and (iii) reimbursement for all operational costs and fees to provide water to EQT.
In December 2018, Equitrans Water Services (PA), LLCEQM executed three (3) additional water services agreements with EQT Production CompanyEPC to design, construct, operate and maintain fresh water systems for the purpose of providing fresh water services to support EQT's well drilling, hydraulic fracturing and extraction work at several of its operations at various locations in Washington and Greene Counties, Pennsylvania:
EQM Gathering Opco and EQT also entered into a letter agreement dated December 3, 2018 memorializing EQM's commitment in furtherance of existing water services agreements between Equitrans Water Services (OH) LLC and Equitrans Water Services (PA) LLCsubsidiaries of EQM and EQT to provide and transfer fresh water from EQM ownedEQM-owned and operated impoundments in Ohio and Pennsylvania to EQT operations (Impoundment Agreement). Pursuant to the Impoundment Agreement, EQM provides this service on an interruptible basis and EQM has the sole right to agree to, limit or reject EQT service requests. EQT is responsible for all costs incurred to provide this service and pays EQM a fixed rate for supplied water. EQT shallis obligated to provide as much notice as reasonably possible prior to required in-service dates, and the Impoundment Agreement will remain effective until the parties mutually agree to terminate it.
EQM has also entered into certain immaterial produced water services agreements with EQT.
Legacy RMP Water Services Agreements. As a result of the EQM-RMP Merger, the surviving entity assumed RMP's obligations under a Second Amended and Restated Water Services Agreement executed on June 13, 2017 with EQT, pursuant to which EQM provides certain freshwater services to EQT for various delivery points in Washington and Greene Counties, Pennsylvania. The term of the agreement expires on October 15, 2020. Under the agreement, EQM receives fees per gallon based upon the relevant delivery point.
As a result of the EQM-RMP Merger, the surviving entity assumed RMP's obligations under water services agreements executed on November 4, 2015 with Rice Energy (which was acquired by EQT as a result of the Rice Merger), pursuant to which EQM provides certain fluid handling services to EQT, including the exclusive right to provide fresh water for well completions operations in the Marcellus and Utica Shales and to collect and recycle or dispose of flowback and produced water within areas of dedication in defined service areas in Pennsylvania and Ohio.Ohio (the RMP Water Services Agreements). The initial term of the water services agreementsRMP Water Services Agreements expires in December 2029 and continues from month to month thereafter. Under the agreements, EQM receives (i) a variable fee, based on volumes of water supplied, for freshwater deliveries by pipeline directly to the well site, subject to annual consumer price index adjustments, and (ii) a produced water hauling fee of actual out-of-pocket cost incurred by it, plus a 2% margin.
Water Services Letter Agreement. On February 26, 2020, the Company entered into a letter agreement with EQT, pursuant to which EQT agreed to utilize the Company for the provision of water services in Pennsylvania under existing water services agreements and new water services agreements if negotiated between the parties (such letter agreement, the Water Services Letter Agreement). The Water Services Letter Agreement is effective as of the first day of the first month following the MVP full in-service date and shall expire on the fifth anniversary of such date. During each year of the Water Services Letter Agreement, EQT agreed that fixed MVC fees payable to the Company for water services incurred on a volumetric basis, provided in accordance with existing agreements and new agreements entered into between the parties pursuant to the Water Services Letter Agreement (or the related agreements), shall be equal to or greater than $60 million per year in Pennsylvania.
Other Agreements with EQT |
Rice Water Services Acquisition. As a result of the EQM-RMP Merger, EQM acquired RMP's interest in Rice Water Services (PA) LLC and Rice Water Services (OH) LLCcertain subsidiaries of RMP (the Rice Water Entities) and, until December 31, 2025, (i) the exclusive right to develop water treatment facilities in the areas of dedication defined in the RMP Water Services Agreements (as further discussed below) and (ii) an option to purchase any water treatment facilities acquired by certain subsidiaries of EQT in such areas at the acquisition cost (collectively, the Option). RMP executed a Purchase and Sale Agreement with Rice Energy on November 4, 2015, pursuant to which RMP acquired from Rice Energy all of the outstanding limited liability company interests of the Rice Water Entities (the Rice Water Services Acquisition). The acquired business included Rice Energy's Pennsylvania and Ohio fresh water distribution systems and related facilities that provided access to 59.0 MMgal per day (49.0 MMgal per day in Pennsylvania and 10.0 MMgal per day in Ohio) of fresh water from the Monongahela River, the Ohio River and other regional water sources in Pennsylvania and Ohio as of December 31, 2018. In connection with the Rice Water Services Acquisition, Rice Energy also granted RMP the Option. The closing of the Rice Water Services Acquisition occurred on November 4, 2015.
EQT Corporation Guaranty. EQT has guaranteed the payment obligations of certain of its subsidiaries, up to a maximum amount of $115 million, $50 million and $30 million related to gathering, transmission and water services, respectively, across all applicable contracts, for the benefit of the subsidiaries of EQM providing such services. In January 2020, EQT's guaranty in relation to its transmission contracts with EQM increased to $131 million.
Credit Letter Agreement. On February 26, 2020, in connection with the execution of the EQT Global GGA, the Company and EQT entered into a letter agreement (the Credit Letter Agreement) pursuant to which, among other things, (a) the Company relieved certain credit posting requirements for EQT, in an amount up to approximately $250 million, under certain commercial agreements with the Company, subject to EQT maintaining a minimum credit rating from two of three rating agencies of (i) Ba3 with Moody's Investors Service, (ii) BB– with S&P Global Ratings and (iii) BB– with Fitch Investor Services and (b) the Company agreed to use commercially reasonable good faith efforts to negotiate similar credit support arrangements for EQT in respect of its commitments to Mountain Valley Pipeline, LLC.
Share Purchase Agreements. On February 26, 2020, the Company entered into two share purchase agreements (the Share Purchase Agreements) with EQT, pursuant to which the Company agreed to (i) purchase 4,769,496 shares of Equitrans Midstream common stock (the Cash Shares) from EQT in exchange for approximately $46 million in cash, (ii) purchase 20,530,256 shares of Equitrans Midstream common stock (the Rate Relief Shares and, together with the Cash Shares, the Share Purchases) from EQT in exchange for a promissory note in the aggregate principal amount of approximately $196 million (which EQT subsequently assigned to EQM as consideration for certain commercial terms under the EQT Global GGA), and (iii) pay EQT cash in the amount of approximately $7 million (the Cash Amount). On March 5, 2020, the Company completed the Share Purchases and paid the Cash Amount.
Transmission Acreage Dedication. Pursuant to an acreage dedication to EQM by EQT, EQM has the right to elect to transport, at a negotiated rate, which will be the higher of a market or cost of service rate, all natural gas produced from wells drilled by EQT on the dedicated acreage, which is an area covering approximately 60,000 acres surrounding EQM's storage assets in Allegheny, Washington and Greene counties in Pennsylvania and Wetzel, Marion, Taylor, Tyler, Doddridge, Harrison and Lewis counties in West Virginia. The acreage dedication is contained in a sublease agreement in which EQM granted to EQT all of the oil and gas interests, including the exclusive rights to drill, explore for, produce and market such oil and gas, EQM had received as part of certain of its oil and gas leasehold estates EQM uses for gas storage and protection. Furthermore, if EQT acquires acreage with natural gas storage rights within the area of mutual interest established by the acreage dedication, then EQT will enter into an agreement with EQM to permit it to store natural gas on such acreage. Likewise, if EQM acquires acreage within the area of mutual interest with natural gas or oil production, development, marketing and exploration rights, such acreage will automatically become subject to EQT's rights under the acreage dedication.
Pipeline, Construction, Ownership and Operating Agreement. A subsidiary of EQM is party to a Pipeline, Construction, Ownership and Operating Agreement (the Whipkey Agreement) pursuant to which it owned a 60% working interest in a joint venture that owns a natural gas gathering pipeline in Greene County, Pennsylvania. The gathering pipeline owned by the joint venture is connected to seven producing wells operated by EQT. The Whipkey Agreement was contributed to RMP, which was acquired by EQM as a result of the EQM-RMP Merger, discussed below, in connection with the closing of RMP's initial public offering.
EQM-RMP Merger. On April 25, 2018, EQM entered into an Agreement and Plan of Merger (the Merger Agreement) with RMP, RMP's general partner, EQM's former general partner, EQM Acquisition Sub, LLC, a wholly owned subsidiary of EQM (Merger Sub), EQM GP Acquisition Sub, LLC, a wholly owned subsidiary of EQM (GP Merger Sub), and, solely for certain limited purposes set forth therein, EQT. Pursuant to the Merger Agreement, on July 23, 2018, Merger Sub and GP Merger Sub merged with and into RMP and RMP's general partner, respectively, with RMP and RMP's general partner surviving as wholly owned subsidiaries of EQM (the EQM-RMP Merger). Pursuant to the Merger Agreement, each RMP common unit issued and outstanding immediately prior to the effective time of the EQM-RMP Merger was converted into the right to receive 0.3319 EQM common units (the Merger Consideration), the issued and outstanding incentive distribution rights of RMP were canceled and each outstanding award of phantom units in respect of RMP common units fully vested and converted into the right to receive the Merger Consideration, less applicable tax withholding, in respect of each RMP common unit subject thereto. The aggregate Merger Consideration consisted of approximately 34 million EQM common units, of which 9,544,530 EQM common units were received by an indirect wholly owned subsidiary of EQT and were transferred to the Company in connection with the Separation.
2018 Drop-Down Transaction. On April 25, 2018, EQM executed a Contribution and Sale Agreement (the Contribution Agreement) with EQT, Rice Midstream Holdings LLC, a wholly owned subsidiary of EQT, and EQM Gathering Holdings, LLC (EQM Gathering), a wholly owned subsidiary of EQM, pursuant to which EQM Gathering acquired from EQT all of the outstanding limited liability company interests in each of (i) EQM Olympus Midstream LLC (EQM Olympus), (ii) Strike Force Midstream Holdings LLC and (iii) EQM West Virginia Midstream LLC in exchange for an aggregate of 5,889,282 EQM common units and aggregate cash consideration of $1.15 billion, subject to customary purchase price adjustments (the 2018 Drop-Down Transaction). The parties to the Contribution Agreement completed the 2018 Drop-Down Transaction on May 22, 2018, with an effective date of May 1, 2018. As a result of the 2018 Drop-Down Transaction and a separate transaction with an affiliate of Gulfport Energy Corporation, EQM currently owns 100% of Strike Force Midstream LLC.
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As of December 31, 2019, the Company owned, directly or indirectly, 117,245,455 EQM common units and 7,000,000 Class B units (collectively representing a 59.9% limited partner interest in EQM, excluding the Series A Preferred Units) and the entire non-economic general partner interest in EQM, while the public owned a 40.1% limited partner interest in EQM (excluding the Series A Preferred Units).
EQM's operations and activities are managed by the general partner of EQM through its officers and directors. During 2019, Messrs. Karam, Oliver, Pietrandrea (beginning in August 2019) and Swisher (through July 2019) and Ms. Charletta served as executive officers of both ETRN and the general partner of EQM. In addition, Messrs. Karam and Burke served as directors of both ETRN and the general partner of EQM at that time.
On November 13, 2018 in connection with the Separation, the Company entered into an Omnibus Agreement (as amended and restated on March 31, 2019) and a Secondment Agreement with EQM and the general partner of EQM to replace similar agreements that these subsidiaries had in place with EQT prior to the Separation (as discussed above). These agreements relate primarily to selling, general and administrative expenses incurred by the Company for the benefit of EQM and the secondment of the Company's employees to EQM. The Company incurred expenses of $141 million during 2019 for which EQM was obligated to reimburse the Company under these agreements.
EQM IDR Transaction. On February 22, 2019, the Company completed a simplification transaction pursuant to that certain Agreement and Plan of Merger, dated as of February 13, 2019 (the IDR Merger Agreement), by and among the Company and certain related parties, pursuant to which, among other things, (i) Equitrans Merger Sub, LP, a party to the IDR Merger Agreement, merged with and into EQGP (the Merger) with EQGP continuing as the surviving limited partnership and a wholly-owned subsidiary of EQM following the Merger, and (ii) each of (a) the incentive distribution rights in EQM, (b) the economic portion of the general partner interest in EQM and (c) the issued and outstanding EQGP common units representing limited partner interests in EQGP were canceled, and, as consideration for such cancellation, certain affiliates of the Company received on a pro rata basis 80,000,000 newly-issued EQM common units and 7,000,000 newly-issued Class B units (Class B units), both representing limited partner interests in EQM, and the EQM General Partner retained the non-economic general partner interest in EQM (the EQM IDR Transaction). Additionally, as part of the EQM IDR Transaction, the 21,811,643 EQM common units held by EQGP were canceled and 21,811,643 EQM common units were issued pro rata to certain affiliates of the Company. The Class B units are substantially similar in all respects to EQM's common units, except that the Class B units are not entitled to receive distributions of available cash until the applicable Class B unit conversion date (or, if earlier, a change of control).
Shared Assets Transaction. On March 31, 2019, the Company entered into an Assignment and Bill of Sale (the Assignment and Bill of Sale) with EQM pursuant to which EQM acquired certain assets and assumed certain leases that primarily support EQM's operations for an aggregate cash purchase price of $49.7 million (the initial purchase price), which reflected the net book value of in-service assets and expenditures made for assets not yet in-service (collectively, and inclusive of the additional assets subsequently acquired as described in the following sentences, the Shared Assets Transaction). Further, pursuant to the Assignment and Bill of Sale, EQM acquired, effective on the first day of the second quarter of 2019, certain additional assets from the Company for $8.9 million of cash consideration, reflecting the net book value of in-service assets and expenditures made in respect of assets not yet in-service as of June 30, 2019, which subsequent purchase price was subject to certain adjustments. Additionally, pursuant to the Assignment and Bill of Sale, EQM acquired, effective on the first day of the third quarter of 2019, an additional asset from the Company for a de minimus dollar amount reflecting the net book value of such asset as of September 30, 2019. In connection with the entry into the Assignment and Bill of Sale, that certain omnibus agreement (Equitrans Midstream Omnibus Agreement) among the Company, EQM and the EQM General Partner (as successor to the former EQM general partner) was amended and restated in order to, among other things, govern the Company's use of the acquired assets following their conveyance to EQM and provide for reimbursement of EQM by the Company for expenses incurred by EQM in connection with such use.
APPENDIX B |
Non-GAAP Financial Information |
Company EBITDA and Adjusted EBITDA |
As used in this proxy statement, Company EBITDA means Equitrans Midstream Corporation's (the Company) net loss,income, (i) plus the Company's income tax expense, net interest expense, loss on early extinguishment of debt, depreciation, amortization of intangible assets, impairments of long-lived assets, and transaction costs and credit loss expense associated with a customer bankruptcy, (ii) less the Company's equity income and other income, and (iii) less the earnings before interest, taxes, depreciation and amortization (EBITDA) of any business or assets acquired during the period, as set forth in the Company's 2019Amended and Restated Short-Term Incentive Plan for the 2020 plan year (the 2019 STIP). As used in this proxy statement, adjusted EBITDA means the Company's net income, (i) plus the Company's income tax expense, net interest expense, loss on early extinguishment of debt, depreciation, amortization of intangible assets, impairments of long-lived assets, payments on the preferred interest in EQT Energy Supply, LLC (Preferred Interest), non-cash long-term compensation expense (income) and transaction costs, (ii) less the Company's equity income, AFUDC-equity, unrealized gain (loss) on derivative instruments and adjusted EBITDA attributable to noncontrolling interest. Company EBITDA is aand adjusted EBITDA are non-GAAP supplemental financial measuremeasures that management and external users of the Company's consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, use to assess:
The Company believes that Company EBITDA providesand adjusted EBITDA provide useful information to investors in assessing itsthe Company's results of operations and financial condition. Company EBITDA and adjusted EBITDA should not be considered as an alternativealternatives to the Company's net income, operating income or any other measure of financial performance presented in accordance with GAAP. Company EBITDA hasand adjusted EBITDA have important limitations as an analytical tooltools because it excludesthey exclude some, but not all, items that affect net income. Additionally, because Company EBITDA and adjusted EBITDA may be defined differently by other companies in the Company's industry, the Company's definitiondefinitions of Company EBITDA and adjusted EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing the utility of the measure.measures. The tabletables below reconcilesreconcile Company EBITDA and adjusted EBITDA with net income as derived from the statements of consolidated comprehensive income included in the Company's annual report on Form 10-K for the year ended December 31, 2019.2020.
Company EBITDA
($ in thousands)
| Year Ended December 31, 2019 | | | Year Ended December 31, 2020 | | |||||||||
Net loss | $ | (64,959 | ) | Net income | $ | 638,044 | ||||||||
| | | | | | | | | | | | | | |
| Add: | | | | Add: | | | | ||||||
| | | | | | | | | | | | | | |
Income tax expense | 50,704 | Income tax expense | 105,331 | |||||||||||
| | | | | | | | | | | | | ||
| Net interest expense | | 256,195 | | Net interest expense | | 307,380 | | ||||||
| | | | | | | | | | | | | | |
Depreciation | 227,364 | Loss on early extinguishment of debt | 24,864 | |||||||||||
| | | | | | | | | | | | |||
| Amortization of intangible assets | | 53,258 | | Depreciation | | 259,613 | | ||||||
| | | | | | | | | | | | | | |
Impairments of long-lived assets | 969,258 | Amortization of intangible assets | 63,195 | |||||||||||
| | | | | | | | | | | | | | |
| Transaction costs | | 1,257 | | Impairments of long-lived assets | | 55,581 | | ||||||
| | | | | | | | | | | | | | |
Less: | Transaction costs | 23,797 | ||||||||||||
| | | | | | | | | | | | | | |
| Equity income | | (163,279 | ) | | Credit loss expense associated with customer bankruptcy | | 1,734 | | |||||
| | | | | | | | | | | | | | |
Other income | (2,661 | ) | Less: | |||||||||||
| | | | | | | | | | | | | | |
| EBITDA attributable to the Eureka Midstream and Hornet Midstream* | | (56,119 | ) | | Equity income | | (233,833 | ) | | ||||
| | | | | | | | | | | | | | |
| | | | | | | | |||||||
Company EBITDA | $ | 1,271,018 | Other income | (17,225 | ) | |||||||||
| | | | | | | | | | | ||||
| | | | | | | | | | |||||
| | | | | | Company EBITDA | $ | 1,228,481 | | |||||
| | | | | | | | | | | | | | |
| | | | | | | | |||||||
| | | | | | | | |||||||
| | | | | | | |
Adjusted EBITDA
($ in thousands)
| Year Ended December 31, 2020 | | |||||
Net income | $ | 638,044 | |||||
| | | | | | | |
| Add: | | | | |||
| | | | | | | |
Income tax expense | 105,331 | ||||||
| | | | | | | |
| Net interest expense | | 307,380 | | |||
| | | | | | | |
Loss on early extinguishment of debt | 24,864 | ||||||
| | | | | | | |
| Depreciation | | 259,613 | | |||
| | | | | | | |
Amortization of intangible assets | 63,195 | ||||||
| | | | | | | |
| Impairments of long-lived assets | | 55,581 | | |||
| | | | | | | |
Preferred Interest payments | 11,057 | ||||||
| | | | | | | |
| Non-cash long-term compensation expense | | 12,301 | | |||
| | | | | | | |
Transaction costs | 23,797 | ||||||
| | | | | | | |
| Less: | | | | |||
| | | | | | | |
Equity income | (233,833 | ) | |||||
| | | | | | | |
| AFUDC — equity | | (818 | ) | | ||
| | | | | | | |
Unrealized gain on derivative instruments | (16,460 | ) | |||||
| | | | | | | |
| Adjusted EBITDA attributable to noncontrolling interest(1) | | (35,424 | ) | | ||
| | | | | | | |
| | | | | | | |
Adjusted EBITDA | $ | 1,214,628 | |||||
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
APPENDIX C |
Proposed Amendments to Amended and Restated Articles of Incorporation of Equitrans Midstream Corporation to Remove the Supermajority Voting Requirements |
The full text of the proposed amendments to Division B and Division C of the Articles to remove the 80% supermajority voting requirements for shareholders to approve amendments to the Articles and the Bylaws and to remove directors from office outside of the annual meeting process is as follows (proposed additions are double underlined, and proposed deletions are stricken through):
Proposed Amendments to Division B of the Articles: |
2.3 Amendments to Bylaws. The Board of Directors may make, amend and repeal the Bylaws with respect to those matters which are not, by statute, reserved exclusively to the shareholders, subject always to the power of the shareholders to change such action as provided herein.No Bylaw may be made, amended or repealed by the shareholders unless such action is approved by the affirmative vote of the holders of not less than 80% of the voting power of the then outstanding shares of capital stock of the Company entitled to vote in an annual election of directors, voting together as a single class, unless such action has been previously approved by a two-thirds vote of the whole Board of Directors, in which event (unless otherwise expressly provided in the Articles or the Bylaws) the vote specified by applicable law for valid shareholder action shall be required.
2.4 Amendments to Articles. Subject to the voting rights given to any particular series of the Preferred Stock by the Board of Directors pursuant to Subdivision 1.1, and except as may be specifically provided to the contrary in any other provision in the Articles with respect to amendment or repeal of such provision, the affirmative vote of the holders of not less than 80% of the voting power of the then outstanding shares of capital stock of the Company entitled to vote in an annual election of directors, voting together as a single class, shall be required to amend the Articles of the Company or repeal any provision thereof, unless such action has been previously approved by a two-thirds vote of the whole Board of Directors, in which event (unless otherwise expressly provided in the Articles) such shareholder approval as may be specified by law shall be required.
2.42.5General. The Company may issue and dispose of any of its authorized shares for such consideration as may be fixed by the Board of Directors subject to the laws then applicable.
Amendments to Division C of the Articles: |
3.1 The business and affairs of the Company shall be managed by a Board of Directors comprised as follows:
(a) The number of persons comprising the Board of Directors shall be fixed from time to time by the Board of Directors pursuant to a resolution adopted by a majority vote of the directors then in office.
(b) Each person elected as a director of the Company, whether to succeed a person whose term of office as a director has expired (including the expiration of such person's term) or to fill any vacancy, shall be elected for a term expiring at the next annual meeting. Notwithstanding the foregoing, each director elected shall hold office until such director's successor shall have been duly elected and qualified or until such director's earlier death, resignation or removal.
(c) Any director or the entire Board of Directors may be removed from office by shareholder vote at any time, without assigning any cause,but only if shareholders entitled to cast at least 80%by the affirmative vote of a majority of the voteswhichcast by all shareholderswould be entitled tocastvote at an annual election of directorsshall vote in favor of such removal.
(d) Vacancies in the Board of Directors, including vacancies resulting from an increase in the number of directors, shall be filled only by a majority vote of the remaining directors then in office, though less than a quorum, except that vacancies resulting from removal from office by a vote of the shareholders may be filled by the shareholders at the same meeting at which such removal occurs. A person elected to fill a vacancy in the Board of Directors shall hold office for a term expiring at the next annual meeting of shareholders held
immediately following such person being elected to fill the vacancy. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.
(e) Whenever the holders of any class or series of Preferred Stock shall have the right, voting separately as a class, to elect one or more directors of the Company, none of the foregoing provisions of this Subdivision 3.1 shall apply with respect to the director or directors elected by such holders of Preferred Stock.
3.2 Notwithstanding any other provisions of law, the Articles or the Bylaws of the Company, the affirmative vote of the holders of not less than 80% of the voting power of the then outstanding shares of capital stock of the Company entitled to vote in an annual election of directors, voting together as a single class, shall be required to amend, alter, change or repeal, or adopt any provision inconsistent with, this Division C, unless such action has been previously approved by a two-thirds vote of the whole Board of Directors.
3.23.3 No director shall be personally liable for monetary damages as such (except to the extent otherwise provided by law) for any action taken, or any failure to take any action, unless such director has breached or failed to perform the duties of his or her office under Title 15, Chapter 17, Subchapter B of the Pennsylvania Consolidated Statutes (or any successor statute relating to directors' standard of care and justifiable reliance), and the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness.
If the Pennsylvania Consolidated Statutes are amended after November 9, 2018, the date this Subdivision received shareholder approval, to further eliminate or limit the personal liability of directors, then a director shall not be liable, in addition to the circumstances set forth in this Subdivision, to the fullest extent permitted by the Pennsylvania Consolidated Statutes, as so amended.
APPENDIX D |
Proposed Amendment to Second Amended and Restated Bylaws of Equitrans Midstream Corporation to Remove the Supermajority Voting Requirements |
The full text of the proposed amendments to Section 9.01 of the Bylaws to remove the 80% supermajority voting requirements for shareholders to approve amendments to the Bylaws is as follows (proposed deletions are stricken through):
Proposed Amendments to Section 9.01 of the Bylaws |
Section 9.01 (a) The Board of Directors may make, amend and repeal the Bylaws with respect to those matters which are not, by statute, reserved exclusively to the shareholders, subject always to the power of the shareholders to change such action as provided herein.No Bylaw may be made, amended or repealed by the shareholder sunless such action is approved by the affirmative vote of the holders of not less than eighty percent (80%) of the voting power of the then outstanding shares of capital stock of the Company entitled to vote in an annual election of directors, voting together as a single class, unless such action has been previously approved by a two-thirds vote of the whole Board of Directors, in which event (unless otherwise expressly provided in the Restated Articles or the Bylaws) the vote specified by applicable law for valid shareholder action shall be required.
(b) Unless otherwise provided by a Bylaw, by the Restated Articles or by law, any Bylaw may be amended, altered or repealed, and new Bylaws may be adopted, by vote of a majority of the directors present at any regular or special meeting duly convened, but only if notice of the specific Sections to be amended, altered, repealed or added is included in the notice of meeting. No provision of the Bylaws shall vest any property or contract right in any shareholder.
VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. EQUITRANS MIDSTREAM CORPORATION ATTN: CORPORATE SECRETARY 2200 ENERGY DRIVE CANONSBURG, PA 15317 During The Meeting - Go to www.virtualshareholdermeeting.com/ETRN2020ETRN2021 You may attendparticipate in the meeting via the Internet and vote electronically during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D07479-TBDD32276-P48942-Z79019 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. EQUITRANS MIDSTREAM CORPORATION The Board of Directors recommends you vote FOR the following: For Withhold For All AllAllExcept To withhold authority to vote for any individual nominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. ! !!following proposals: 1. To elect nine (9) directors to the Board of Directors of the Company to serve until the next annual meeting of shareholders. Nominees: 01) 02) 03) 04) 05) Vicky A. Bailey Sarah M. Barpoulis Kenneth M. Burke Patricia K. Collawn Margaret K. Dorman 06) 07) 08) 09) Thomas F. Karam D. Mark Leland Norman J. Szydlowski Robert F. Vagt The Board of Directors recommends you vote FOR the following proposals: For Against Abstain ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1a. Vicky A. Bailey For Against Abstain 2. Approval, on an advisory basis, of the compensation of the Company's named executive officers for 20192020 (Say-on-Pay). Approval of Amendments to the Company's Articles of Incorporation and Bylaws to remove the supermajority voting requirements. ! ! ! ! ! ! 1b. Sarah M. Barpoulis 3. 1c. Kenneth M. Burke 1d. Patricia K. Collawn 4. Ratification of the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for 2020. 4.2021. To transact any other business as may properly be presented at the Annual Meeting or any adjournment or postponement thereof. ! For address changes and/or comments, please check this box and write them on the back where indicated.! ! 1e. Margaret K. Dorman 1f. Thomas F. Karam 5. 1g. D. Mark Leland 1h. Norman J. Szydlowski 1i. Robert F. Vagt Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. D07480-TBDD32277-P48942-Z79019 EQUITRANS MIDSTREAM CORPORATION Proxy for Annual Meeting of Shareholders to be held May 20, 2020April 27, 2021 Solicited on Behalf of the Board of Directors The undersigned hereby appoints Tobin M. Nelson and Nathaniel D. DeRose, and each of them, with full power of substitution and power to act alone, as proxies to vote all the shares of Equitrans Midstream Corporation Common Stock and/or Series A Perpetual Convertible Preferred Stock which the undersigned would be entitled to vote if personallyelectronically present and acting at the Annual Meeting of Shareholders of EQUITRANS MIDSTREAM CORPORATION, to be held May 20, 2020April 27, 2021 at 2:9:00 p.m.a.m. Eastern Time, via live webcast at www.virtualshareholdermeeting.com/ETRN2020,ETRN2021, and at any adjournments or postponements thereof. In their discretion, the proxies are authorized, in accordance with their best judgment, to vote upon such other business as may properly come before the Annual Meeting or any adjournments thereof. This proxy when properly executed will be voted as directed herein by the undersigned shareholder. A vote FOR the election of nominees herein includes discretionary authority to vote for a substitute nominee if any nominee becomes unavailable for election for any reason. If no direction is made, the proxies will vote in accordance with the Board of Directors' recommendations on all matters listed on this proxy card. If you hold shares in the Equitrans Midstream Corporation 2018 Long-Term Incentive Plan, as amended (LTIP), or the Equitrans Midstream Corporation Employee Savings Plan (401(k) Plan), your vote must be received by 11:59 P.M. Eastern Time on May 11, 2020.April 19, 2021. This card also serves as voting instructions to the applicable Trustee and administrator of the Equitrans Midstream Corporation Employee Savings401(k) Plan (401(k) Plan) and the Equitrans Midstream Corporation 2018 Long-Term Incentive Plan (LTIP),or LTIP, respectively. This card, when properly executed, directs the applicable Trustee andor administrator, as applicable, to vote the Equitrans Midstream Corporation shares related to your 401(k) Plan shares or restricted shares, as applicable, at such Annual Meeting as indicated on the reverse side. If this card is returned signed with no direction given or not returned at all, the shares held through theyour 401(k) Plan shares will be voted by the Trustee of the 401(k) Plan in proportion to how other participants vote their shares. If this card is returned signed with no direction given, the administrator of the LTIP will vote your restricted shares as recommended by the Board of Directors of the Company. If you do not return this card, the administrator of the LTIP will not vote your restricted shares. All voting instructions will be kept confidential. You may not vote your 401(k) Plan shares or restricted shares at the Annual Meeting. The Trustee or the administrator, as applicable, must receive your proxy instructions no later than 11:59 p.m. Eastern Time on May 11, 2020April 19, 2021 to be counted in the final tabulation. (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) (Continued and to be signed on the reverse side.) Address Changes/Comments: