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| ☐ | Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||
| ☒ | Definitive Proxy Statement | |
| ☐ | Definitive Additional Materials | |
| ☐ | Soliciting Material under §240.14a-12 |
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Letter to Unitholders
Dear Fellow Crestwood Unitholders,
On behalf of the Board of Directors and management of Crestwood, I am pleased to invite you to participate in our second annual meeting of unitholders on Thursday, May 11, 2023, at 2:00 pm CDT, which will be held virtually via live webcast. Your participation in the meeting and vote is important — please read the proxy materials and follow the voting instructions to ensure your units are represented at the meeting.
This unitholder meeting allows me to thank our Board of Directors and management team for their dedication and execution in repositioning Crestwood to meet current and future industry challenges and take advantage of long-term midstream opportunities. Clearly, in 2022, the US oil and gas industry faced numerous challenges including global supply and demand disruption, commodity price volatility, cost inflation and supply chain issues leading to modest capital investment in the upstream and midstream sectors compared to previous cycles. The industry has now shifted to roughly maintaining current oil and gas supply levels, with minimal growth, through better capital efficiency resulting in improved returns to investors. We believe Crestwood’s regional consolidation strategy, initiated in 2021 and completed in early 2023 with the sale of our Tres Palacios natural gas storage facility, best positions the Partnership to compete in this environment and deliver stable unitholder returns with long-term growth upside potential related to stronger commodity prices in late 2023 and beyond.
With this strategy in mind during 2022, Crestwood achieved its goal of becoming a top-tier gatherer and processor in the Williston, Delaware and Powder River basins with critical midstream infrastructure that supports
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Robert G. Phillips Founder, Chairman and
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Letter to Unitholders
In October 2021,2023, we announcedplan to execute on a core-asset optimization strategy which will focus on driving lower operating and organizational costs from recent acquisitions and divestitures, connecting a record number of new wells planned by our producers, and reducing growth capital year over year. Looking forward, we will utilize a disciplined capital allocation strategy that delivers both near term debt reduction and a high-returning accretive capital program to increase system capacity where needed for future producer development and add to our long-term dedicated inventory position.
Capturing these opportunities over the acquisition of Oasis Midstream Partners, a premier gathering and processing company, in a $1.8 billion transaction. We closed that transaction in February 2022 and are currently integrating the two companies which significantly increases our scale and competitive positioning in the Williston and Delaware basins. The Oasis Midstream assets are highly complementarynext few years should provide Crestwood’s investors with Crestwood’s existing assets in these growth basins which should allow usimproved visibility to capture meaningful commercial and operational synergies. Additionally, the combination will significantly strengthen our financial position by increasing Crestwood’s annual Adjusted EBITDA by approximately 40 percent and generate free cash flow, in 2022 while maintaining a conservative balance sheet.
These exciting transactions have accelerated Crestwood’s development as a leader in the industry. Our strategic goal continuesdebt reduction back to beour long-term 3.5x leverage target, and greater distribution growth and coverage potential which should lead to build a best-in-class MLP midstream infrastructure company through the acquisition, integration and optimization of high-quality midstream assetsattractive capital allocation priorities that connect fundamental energy supply with energy demand across North America. The continued successful execution of that strategy is premised on meeting the needs of our customers, employees, business partners and key stakeholders, while creating sustainabledrive value creation for our investors.
Increased Gathering & Processing Activity Drives Growth in 2022
Following a successful 2021 and based onFinally, I am also pleased to acknowledge the current prices of crude oil, natural gas and natural gas liquids,entire Crestwood is excited about our 2022 outlook. Across our three core growth areas, the Williston, Powder River and Delaware Basins, producers have forecasted, and we are currently experiencing, increased drilling and development activity compared to the last couple of years. Given our available gathering and processing capacity, budgeted capital expansions and improving customer base, we expect meaningful volume growth across our assets.
As part of our return of capital strategy to our investors, Crestwood is committed to providing a visible, secure and growing common distribution to create sustainable valueorganization by highlighting recognition from leading third-party organizations for our unitholders. Based on our 2021 achievementsefforts in sustainability, customer service and strong outlook for 2022, Crestwood announced that we will recommend to our Board of Directors, an increase of approximately 5 percent to its common distribution beginning with the first quarter 2022 payment to unitholders.
Our Authentic Approach to ESG Leadership
Crestwood takes pride in our sector leadership role for promoting sustainability principles across our organization and the midstream industry. We understand that as Crestwood grows through acquisition and organic development, it is our responsibility to engrain ESG principles into our business, operations, and culture. We believe this approach differentiates Crestwoodinvestor and employee relations. These awards include an upgrade to an A rating by MSCI, inclusion into the Bloomberg Gender-Equality Index for the third consecutive year, #1 rankings in customer service and operations by EnergyPoint Research, numerous #1 rankings by Institutional Investor, and for five consecutive years, recognition as one of Houston Chronicle’s Top Workplaces. These accomplishments exemplify Crestwood’s commitment to being a leading midstream company and is an essential component of ouroperator with a sharp focus on safety, customer service, environmental stewardship, community engagement and community first approach.a best-in-class employer to our valued employees.
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Our key ESG actions during 2021 are further described in these proxy materials. We look forward to continuing a dialogue with our stakeholders on our ESG performance.
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Letter to Unitholders
Recognizing our Energized Workforce
Nonethe upcoming annual meeting and remain appreciative of this would be possible without our dedicated team of approximately 700 employees. I am proud of their steadfast commitment to advancing Crestwood as a best-in-class midstream operator. In recent years, the Crestwood team has received numerous industry awards which reflect our core values and commitment to customer service. Due to the many talents of our innovative team, we were able to generate record financial results in 2021 delivering record Adjusted EBITDA of $600 million while showcasing solid operating performance and expanding key customer relationships.
When you consider Crestwood’s financial flexibility, history of disciplined growth, and commitment to strong operational results, we are in an excellent position. Looking to the future, we will continue to organically grow our business as new expansion opportunities arise and participate in strategic M&A when prospects emerge that fit our strategic model. I am grateful to our employees, our management team and our Board for their unwavering commitment to excellence every day.
On behalf of the entire Board of Directors we thank you, our unitholders, for your continuedon-going support and investment in Crestwood.
Sincerely,
Robert G. Phillips
Founder, Chairman and CEO
Crestwood Equity Partners LPChief Executive Officer
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Carlsbad Processing Plant acquired from Sendero Midstream in July 2022
About Crestwood
About Crestwood
Crestwood Equity Partners LP (NYSE: CEQP) is a publicly traded master limited partnership that owns and operates midstream assets located primarily in the Williston Basin, Delaware Basin and Powder River Basin, Marcellus Shale and Barnett Shale.Basin. Our operations and financial results are divided into three segments that include Gathering & Processing North, Gathering & Processing South and Storage & Logistics. Across our three segments Crestwood is engaged in the gathering, processing, treating, compression, storage and transportation of natural gas; storage, transportation, terminalling and marketing of NGLs; gathering, storage, transportation, terminalling and marketing of crude oil; and gathering and disposal of produced water.
KEY CORPORATE HIGHLIGHTS
Corporate Profile (1) | ||||||
Market Capitalization | $2,743 MM | Net Income | $72.5 MM | |||
Units Outstanding | 105.2 MM | Adjusted EBITDA | $762.1 MM | |||
| 10% | Gas Gathering Capacity | 1.9 Bcf/d | |||
Annualized Distribution per Unit | $2.62 | Gas Processing Capacity | 1.4 Bcf/d | |||
Full-time Employees | 753(2) | Crude Oil Gathering Capacity | 340 MBbls/d | |||
(1) Market data as of February (2) As of December 31, 2022 |
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CRESTWOOD’S COMMITMENT TO EXCELLENCE
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Notice of 2022 Annual Meeting of
Unitholders
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Date & Time |  |
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| Items of Business: |
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• To elect the three directors named in this proxy statement to serve as Class
• To approve, on a non-binding advisory basis, our named executive officer compensation
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• To approve an amendment to the Crestwood Equity Partners LP 2018 Long-Term Incentive Plan to increase the number of units authorized for issuance under the plan • To transact such other business as may properly come before the meeting or any adjournment or postponement thereof The Board of Directors has fixed March 15, 2023, as the record date for determining unitholders entitled to receive notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof. Only unitholders of record at the close of business on that date will be entitled to notice of, and to vote at, the Annual Meeting. | ||
Thursday, May 11, 2023 2:00 p.m., Central Time | ||
| Virtual Meeting | |
| Register to attend at www.proxydocs.com/CEQP | ||
The Board of Directors Recommends You Vote:
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The Board of Directors has fixed March 21, 2022, as the record date for determining unitholders entitled to receive notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof. Only unitholders of record at the close of business on that date will be entitled to notice of, and to vote at, the Annual Meeting.
By Order of the Board of Directors,
Robert G. Phillips
Founder, Chairman and Chief Executive Officer
Houston, Texas
March 30, 202231, 2023
Important Notice Regarding the Availability of Proxy Materials for the Crestwood Equity
Partners LP Unitholder Meeting to be Held on Thursday, May 12, 2022.11, 2023. The Proxy
Statement and our 20212022 Annual Report on Form 10-K are available at www.proxydocs.com/CEQP
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Summary
Summary
This summary highlights some information about us and this Proxy Statement. It may not contain all of the information that is important to you. You should read this Proxy Statement in its entirety together with the more detailed information found in the documents we file with the SEC, including those listed under the heading “Incorporation of Documents by Reference.” You should assume that the information in this Proxy Statement is accurate only as of the date of this Proxy Statement, or, in the case of documents we previously filed with the SEC and incorporated by reference, as of the date of those documents. Our business, financial condition, results of operations, and prospects may have changed since those dates. In this Proxy Statement, unless specifically noted otherwise, “we,” “us” and, “our,” the “Company” or the “Partnership” refer to Crestwood Equity Partners LP and its subsidiaries.
Annual Meeting of Shareholders
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Virtual Meeting |  |
Record Date | |||||
Thursday, May 2:00 p.m., Central Time | Register to attend at www.proxydocs.com/CEQP | March | ||||||||
Meeting Agenda and Voting Recommendations
| Board Voting Recommendation | Page Reference | |||||||
Proposal 1 – Election of Directors | FOR | 4 | ||||||
Proposal 2 – Advisory Vote for Executive Compensation | FOR | |||||||
Proposal 3 | ||||||||
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Proposal 4 – Amendment to the 2018 Crestwood Equity Partners LP Long-Term Incentive Plan | FOR | 66 | ||||||
Any additional matters | ||||||||
Board Members
Name | Director Since | Independent | Committees | ||||||||||||||
Robert G. Phillips | 2010 | ||||||||||||||||
Warren H. Gfeller | 2001 | ✓ | Nominating & Governance (Chair) | ||||||||||||||
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Janeen S. Judah | 2018 | ✓ | Nominating & Governance, Sustainability (Chair) | ||||||||||||||
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David Lumpkins | 2015 | ✓ | Audit, Finance (Chair) | ||||||||||||||
Angela A. Minas | 2022 | ✓ | Audit (Chair), Compensation | ||||||||||||||
Gary D. Reaves | 2022 | ✓ | Finance | ||||||||||||||
John J. Sherman | 2001 | ✓ | Finance, | ||||||||||||||
Frances M. Vallejo | 2021 | ✓ | Audit, Compensation, Sustainability | ||||||||||||||
Clay C. Williams | 2022 | ✓ | Compensation (Chair), Nominating & Governance | ||||||||||||||
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Summary
Board Profile
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Strong Corporate Governance
Exceptional business behavior requires strong corporate governance, which we demonstrate through our Board of Directors structure that is supported by clearly articulated policies.
Transitioned to a publicly elected board; one of only three MLP’s to take such action
Enhanced the number of independent directors with diverse perspectives, expertise and experience
Enhanced Board diversity, tenure and independence as we evolved our board structure
Established a Lead Director role
Ongoing succession planning for CEO and other senior management
Corporate Governance Guidelines and Charters reviewed annually
Director unit ownership guidelines in place to align interests with our unitholders
Established a Nominating and Governance Committee in 2021
Established a Sustainability Committee in 2018 to provide oversight of our sustainability strategy and disclosures
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Summary
Integrated Approach to Risk Management
Crestwood is committed to enterprise risk management practices that are inclusive of all disciplines within the organization and support our goal of shaping ESG in the midstream sectorsector.
 | Crestwood’s Enterprise Risk Management (ERM) process enables our company to remain vigilant and prepared for potential risks to the business |
| As ESG risks continue to rise in importance to our business and our industry, we are integrating and combining the ESG risk assessment with our ERM process |
| Assigned key enterprise risks, including ESG-related risks, to each Board Committee for oversight |
| The final risk profile is reviewed by executive management, the Audit Committee, the Sustainability Committee and the Board of Directors |
| Board Committees | Risk Oversight | |||||||
| Audit | Practices related to assessing, managing and mitigating risk, including the integrity of our financial statements and financial reporting processes and cybersecurity risks. | ||||||
| Sustainability | Sustainability risks including climate-related risks, | ||||||
| Compensation | People and compensation-related risks, employee retention and performance. | ||||||
| Finance | Financial risks, including liquidity and capital structure, distribution policy and compliance with material debt instruments. | ||||||
| Nominating and Governance | Corporate governance framework, including director appointment, education and evaluation processes, Crestwood’s corporate governance practices and Code of Business Conduct. | ||||||
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The Board has responsibility for overall risk oversight for the company. | ||||||||
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Summary
Corporate Governance Highlights
We remain committed to strong corporate governance and we demonstrate our corporate responsibility by adhering to the highest ethical standards. Crestwood’s policies are designed to promote exceptional business behavior with a commitment to transparency.
Oversight | Policies & Disclosure | |
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| * | Bolded highlights were implemented in 2022. |
Board Composition
Mix of director tenure, skills and background provides a balance of experience and institutional knowledge with fresh perspectives
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| 89% | INDEPENDENT DIRECTORS | 33% | WOMEN DIRECTORS | 44% | THREE YEARS OR LESS TENURE | |||||
(100% independent directors on all Board committees) | 22% | RACIAL AND ETHNIC GROUP REPRESENTATION | ||||||||
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This document includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current facts, including statements regarding our environmental and other sustainability plans and goals, made in this document are forward-looking. We use words such as anticipates, believes, expects, future, intends, and similar expressions to identify forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Actual results could differ materially for a variety of reasons. Risks and uncertainties that could cause our actual results to differ significantly from management’s expectations are described in our 20212022 Annual Report on Form 10-K. Website references throughout this document are provided for convenience only, and the content on the referenced websites is not incorporated by reference into this document.
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The enclosed proxy is solicited by the Board of Directors of the General Partner for the Annual Meeting of Unitholders to be held at 2:00 p.m., Central Time, on Thursday, May 12, 2022,11, 2023, and any adjournment or postponement thereof. We will conduct a virtual online Annual Meeting, this year, so our unitholders can participate from any geographic location with Internet connectivity. We believe this enhances accessibility to our Annual Meeting for all our unitholders and is particularly important for our unitholders, employees, and community considering the COVID-19 pandemic.employees. Unitholders may participate in the Annual Meeting by registering at www.proxydocs.com/CEQP and entering the control number listed on your Notice of Internet Availability of Proxy Materials, proxy card, or voting instruction form,and may submit questions during, or in advance, of the Annual Meeting. Our principal offices areoffice is located at 811 Main Street, Suite 3400, Houston, Texas 77002. This proxy statement is first being made available to our unitholders on or about March 30, 2022.31, 2023. References to “the Company,” “the Partnership,” “CEQP,” “we,” “us,” “our,” “ours” and similar terms refer to Crestwood Equity Partners LP.
Outstanding Securities and Quorum
Only holders of record of our common units and preferred units (collectively, “Units”) at the close of business on March 21, 2022,15, 2023, the record date, will be entitled to notice of, and to vote at, the Annual Meeting. On that date, we had 97,978,074105,354,037 common units outstanding and 71,257,445preferred units outstanding and entitled to vote. Each common unit is entitled to one vote for each director nominee and one vote for each other item to be voted on at the Annual Meeting. Each preferred unitholder is entitled to vote on a 1-for-10 as converted basis with every ten preferred units entitled to one vote for each director nominee and one vote for each other item to be voted on at the Annual Meeting. A majority of the aggregate outstanding Units entitled to vote, present or represented by proxy, constitutes a quorum for the transaction of business at the Annual Meeting. Abstentions and broker nonvotes will be included in determining the presence of a quorum for the Annual Meeting.
Internet Availability of Proxy Materials
We are furnishing proxy materials to some of our unitholders via the Internet by mailing a Notice of Internet Availability of Proxy Materials, instead of mailing or e-mailing copies of those materials. The Notice of Internet Availability of Proxy Materials directs unitholders to a website where they can access our proxy materials, including our Proxy Statement and our Annual Report on Form 10-K, and view instructions on how to vote via the Internet, mobile device, or by telephone. If you received a Notice of Internet Availability of Proxy Materials and would prefer to receive a paper copy of our proxy materials, please follow the instructions included in the Notice of Internet Availability of Proxy Materials. If you have previously elected to receive our proxy materials via e-mail, you will continue to receive access to those materials electronically unless you elect otherwise.
We encourage you to register to receive all future unitholder communications electronically, instead of in print. This means that access to the Annual Report on Form 10-K, Proxy Statement, and other correspondence will be delivered to you via e-mail.
Units that are properly voted via the Internet, mobile device, or by telephone or for which proxy cards are properly executed and returned will be voted at the Annual Meeting in accordance with the directions given or, in the absence of directions, will be voted in accordance with the Board’s
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Annual Meeting Information
recommendations as follows: “FOR” the election of each of the nominees to the Board named herein; “FOR” the ratification of the appointment of our independent auditors; and “FOR” approval, on
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Annual Meeting Information
an advisory basis, of our executive compensation as described in this proxy statement.statement and “FOR the amendment to our 2018 Long-Term Incentive Plan. It is not expected that any additional matters will be brought before the Annual Meeting, but if other matters are properly presented, the persons named as proxies in the proxy card or their substitutes will vote in their discretion on such matters.
Voting via the Internet, mobile device, or by telephone helps save money by reducing postage and proxy tabulation costs. To vote by any of these methods, read this proxy statement, have your Notice of Internet Availability of Proxy Materials, proxy card, or voting instruction form in hand, and follow the instructions below for your preferred method of voting. Each of these voting methods is available 24 hours per day, seven days per week.
We encourage you to cast your vote by one of the following methods:
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VOTE BY INTERNET Units Held of Record: www.proxypush.com/CEQP | VOTE BY TELEPHONE Units Held of Record: 866-318-2454 | |||||
| Units Held in Street Name: See Notice of Internet Availability orVoting Instruction Form | Units Held in Street Name: See Voting Instruction Form | ||||
The way your Units may be voted depends on how your Units are held. If you own Units of record, meaning that your Units are represented by certificates or book entries in your name so that you appear as a unitholder on the records of American Stock Transfer & Trust Company, LLC, our transfer agent, you may vote by proxy, meaning you authorize individuals named in the proxy card to vote your Units. You may provide this authorization by voting via the Internet, mobile device, by telephone, or (if you have received paper copies of our proxy materials) by returning a proxy card. You also may participate in and vote during the Annual Meeting. If you own Units of record and you do not vote by proxy or at the Annual Meeting, your Units will not be voted.
If you own Units in street name, meaning that your Units are held by a bank, brokerage firm, or other nominee, you may instruct that institution on how to vote your shares. You may provide these instructions by voting via the Internet, mobile device, by telephone, or (if you have received paper copies of proxy materials through your bank, brokerage firm, or other nominee) by returning a voting instruction form received from that institution. You also may participate in and vote during the Annual Meeting. If you own Units in street name and do not either provide voting instructions or vote during the Annual Meeting, the institution that holds your Units cannot vote your Units at the meeting.Annual Meeting.
A nominee for director shall be elected to the Board by a plurality of the votes cast, in person or by proxy, by the holders of outstanding Units, voting as a single class. The conversion ratio of preferred units to common units is currently 10-to-1, but may be adjusted to account for unpaid distributiondistributions on such preferred units as needed. Abstentions and broker nonvotes will have no effect on the outcome of the election. Broker non-votes occur when a person holding Units in street name, such as through a brokerage firm, does not provide instructions as to how to vote those common units and the broker does not then vote those Units on the unitholder’s behalf.
For all other matters proposed for a vote at the Annual Meeting, the affirmative vote of a majority of the outstanding Units present or represented by proxy and entitled to vote on the matter is
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Annual Meeting Information
required to approve the matter. For these matters, abstentions are not counted as affirmative votes on a matter but are counted as present and entitled to vote, and broker nonvotes, if any, will have no effect on the outcome of these matters.
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Annual Meeting Information
If you own Units of record, you may revoke your proxy or change your voting instructions at any time before your Units are voted at the Annual Meeting by delivering to the General Partner a written notice of revocation or a duly executed proxy (via the Internet, mobile device, or telephone or by returning a proxy card) bearing a later date or by participating in and voting during the Annual Meeting. A unitholder owning Units in street name may revoke or change voting instructions by contacting the bank, brokerage firm, or other nominee holding the Units or by participating in and voting during the Annual Meeting.
Participating in the Annual Meeting
This year’s Annual Meeting will be accessible through the Internet. We are conducting a virtual online Annual Meeting so our unitholders can participate from any geographic location with Internet connectivity. We believe this enhances accessibility to our Annual Meeting for all of our unitholders and is particularly important for our unitholders, employees, and community members considering the impacts from the COVID-19 pandemic.employees.
You are entitled to participate in the Annual Meeting if you were a unitholder as of the close of business on March 21, 2022,15, 2023, the record date, or hold a valid proxy for the meeting. To participate in the Annual Meeting, including to vote and to view the list of registered unitholders as of the record date during the meeting, unitholders of record must access the meeting website at www.proxydocs.com/CEQP and enter the control number found on the Notice of Internet Availability of Proxy Materials or on the proxy card provided to you with this Proxy Statement, or that is set forth within the body of the email sent to you with the link to this Proxy Statement. If your Units are held in street name and your Notice of Internet Availability of Proxy Materials or voting instruction form indicates that you may vote those common units through the www.proxypush.com/CEQP website, then you may access, participate in, and vote at the Annual Meeting with the control number indicated on that Notice of Internet Availability of Proxy Materials or voting instruction form. Otherwise, unitholders who hold their Units in street name should contact their bank, broker, or other nominee (preferably at least five days before the Annual Meeting) and obtain a “legal proxy” to be able to attend, participate in, or vote at the Annual Meeting.
Regardless of whether you plan to participate in the Annual Meeting, it is important that your Units be represented and voted at the Annual Meeting. Accordingly, we encourage you to vote in advance of the Annual Meeting.
Unitholders are able to submit questions for the Annual Meeting’s question and answer session during the meeting. Unitholders who have been provided or obtained a control number may submit a question in advance of the meeting at www.proxydocs.com/CEQP after logging in with that control number. We also will post a replay of the Annual Meeting on our investor relations website, which will be available following the meeting. Additional information regarding the rules and procedures for participating in the Annual Meeting (including any adjournment thereof) will be set forth in our meeting rules of conduct, which unitholders can view during the meeting. GenerallyThe meeting Rules,rules, procedures and code of conduct arewill be posted only during15 minutes before the meeting on the meeting site, not available prior to check-in (15 minutes before meeting start).start.
We encourage you to access the Annual Meeting before it begins. Online check-in will be available at 1:45pm CT,approximately 15 minutes before the meeting starts on May 12, 2022.11, 2023. If you have difficulty accessing the meeting, please call the technical support number that will be posted in your instructional email you will receive after registering to attend the Annual Meeting. We will have technicians available to assist you.
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Board and Governance Structure
Summary of Recent Governance Changes
On August 20, 2021, the Fifth Amended and Restated Agreement of Limited Partnership of the Partnership, was amended and restated as the Sixth Amended and Restated Agreement of Limited Partnership of the Partnership (the “Partnership Agreement”) to, among other things, provide the holders of common units (the “common units”) and preferred units (the “preferred units”) representing limited partner interests of the Partnership with voting rights in the election of the members of the board of directors (the “Board”) of Crestwood Equity GP LLC, a Delaware limited liability company and the general partner of the Partnership (the “General Partner”) on a staggered basis beginning in 2022. Pursuant to the Partnership Agreement, effective as of August 20, 2021, the Board has been divided into three classes of directors. Three Class I directors will serve for an initial term that expires at the 2022 Annual Meeting, three Class II directors will serve for an initial term that expires at the 2023 Annual Meeting, and one Class III director will serve for an initial term that expires at the 2024 Annual Meeting.
Additionally, on August 20, 2021, the Amended and Restated Limited Liability Company Agreement of the General Partner was amended and restated as the Second Amended and Restated Limited Liability Company Agreement of the General Partner (the “GP LLC Agreement” and together with the Partnership Agreement, the “Governing Documents”) to, among other things, reflect the provisions in the Partnership Agreement providing the holders of common units with voting rights in the election of the members of the Board on a staggered basis beginning in 2022. Our Partnership Agreement is filed as Exhibit 3.1 to our Current Report on Form 8-K filed on August 20, 2021, and the GP LLC Agreement is filed as Exhibit 3.2 to our Current Report on Form 8-K filed on August 20, 2021.
General Overview and Board Makeup
The Board currently has tennine members, including the CEO, who currently serves as Chairman of the Board. Pursuant to the terms of the Director Nomination Agreement, on February 1, 2022, Oasis Petroleum Inc. (“Oasis Petroleum”), designated two directors to serve on the Board (Mr. Jacobi and Mr. Lancaster). Mr. Lancaster serves as a Class II director and Mr. Jacobi serves as a Class III director. Oasis Petroleum will continue to have the right to nominate up to two directors to the Board, subject to ongoing minimum ownership levels.
The Board is divided into three staggered classes, as set forth below. At each annual meeting, only the eligible directors of a class whose term is expiring will be up for election and, upon election, the elected directors in that class will serve for a term of three years, subject to a director’s earlier resignation, death or removal. If a director is elected to the Board to fill a vacancy, that director will have the same remaining term as his or her predecessor.
Our governing documents require that at least a majority of directors must meet the independence requirements of the national securities exchange on which the securities of the Partnership are listed (currently New York Stock Exchange or NYSE).
Class III Directors Standing for Election at the 20222023 Annual Meeting
The Board has currently fixed the number of directors constituting the Board at ten.nine. The Board, based on the recommendation of the Nominating and Governance Committee, proposed that the following three nominees be elected at the Annual Meeting, each of whom will hold office until the 20252026 annual meeting of unitholders or until his or her successor shall have been elected and qualified:
Warren H. Gfeller
Janeen S. Judah
John J. Sherman
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| David Lumpkins |
| • | Frances M. Vallejo |
| • | Gary D. Reaves |
Item 1 — ElectionGary Reaves was appointed to the Board on September 15, 2022, pursuant to a Director Nomination and Voting Support Agreement between the Company and FR XIII Crestwood Permian Basin Holding LLC, a subsidiary of Class I DirectorsFirst Reserve (“First Reserve”). The Director Nomination and Voting Support Agreement grants First Reserve certain designation rights pursuant to which First Reserve may cause the Board to nominate a designee selected by First Reserve, subject to ongoing ownership thresholds.
Each of the nominees is currently a director of the General Partner and has been elected to hold office until the 20222023 Annual Meeting or until his or her successor has been elected and qualified. Each ofMr. Lumpkins was appointed to the nomineesBoard in 2015 and Ms. Vallejo was most recently appointed to the Board in 2021. Both Mr. Lumpkins and Ms. Vallejo were classified as Class III directors on August, 20, 2021. Mr. Reaves was appointed to the Board in 2022 and classified as a Class II director on November 10, 2022. Biographical and related information on each nominee is set forth below.
The Board expects that the three nominees will be available to serve as directors. However, if any of them should be unwilling or unable to serve, the Board may nominate and elect substitute nominees, and the proxies will be voted in favor of any such substitute nominees.
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In evaluating the nominees for the Board of Directors, the Board and the Nominating and Governance Committee took into account the qualities they seek for directors, and the directors’ individual qualifications, skills, and background that enable the directors to effectively and productively contribute to the Board’s oversight of the Partnership, as discussed below in each biography and under “Director Nominee Tenure, Skills, and Characteristics.” When evaluating re-nomination of existing directors, the Nominating and Governance Committee also considers the nominees’ past and ongoing effectiveness on the Board and their independence.
Director Biographical Information
Directors Standing for Election at the 2022 Annual Meeting
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Board of Directors Information
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Board of Directors Information
Other Directors Not Standing for Election at the 2022 Annual Meeting
Class II Directors (terms expire by 2023 annual meeting of unitholders)
David Lumpkins
| Biography David Lumpkins was appointed to the Board in November
Mr. Lumpkins is currently the President of DKLF, L.P., a private investment partnership. He previously served as the Chairman of PetroLogistics II, LLC, a petrochemical development company. He was the co-founder and Executive Chairman of PetroLogistics, a NYSE listed company which was acquired by Flint Hills Resources in July 2014. Mr. Lumpkins was also previously the co-founder and Chairman of PL Midstream, a pipeline transportation and storage company based in Louisiana, which was sold to Boardwalk Partners in 2012. Prior to the formation of these companies, Mr. Lumpkins worked in the investment banking industry for 17 years, principally for Morgan Stanley and Credit Suisse. In 1995, Mr. Lumpkins opened Morgan Stanley’s Houston office and served as head of the firm’s southwest region. Mr. Lumpkins previously served as a director of Westlake Chemical Partners LP and Crestwood Midstream GP LLC.
Mr. Lumpkins received his undergraduate degree and MBA from the University of Texas.
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Board of Directors Information
Joined the Board 2015 Age 68
Finance |
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Board of Directors Information
Frances M. Vallejo
| Biography Frances
Ms. Vallejo currently serves on the Board of Directors of Coterra Energy Inc., which she joined following her tenure on the Board of Directors of Cimarex Energy Co., which began in 2017. At Coterra she is a member of the Audit Committee
Ms. Vallejo holds a Bachelor of Science in mineral engineering mathematics from Colorado School of Mines and a Master of Business Administration from Rice University, where she was named a Jones Scholar.
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Independent | ||||
Joined the Board 2021 Age 57 Committees: Audit Compensation Sustainability | ||||
Gary D. Reaves | Biography Gary Reaves was appointed to the Board in September 2022 Mr. Reaves is currently a Managing Director at First Reserve, which he joined in 2006. Mr. Reaves’ responsibilities include investment origination, execution, and
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Independent | ||||
Joined the Board 2022 Age 43 Committee: Finance | ||||
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Board of Directors Information
| Other Directors Not Standing for Election at the 2023 Annual Meeting | ||
Class III Directors (terms(term expires by 2024 annual meeting of unitholders)
Robert G. Phillips
| Biography Robert G. Phillips has served as Chairman and Chief Executive Officer of our general partner since June 2013, and, until January 2022, also served as
Mr. Phillips served as Chairman, President and CEO of, the Partnership’s predecessor, from November 2007 until October 2013. Previously, Mr. Phillips served as President and Chief Executive Officer and a Director of Enterprise Products Partners L.P. from February 2005 until June 2007 and Chief Operating Officer and a Director of Enterprise Products Partners L.P. from September 2004 until February 2005. Mr. Phillips also served on the Board of Directors of Enterprise GP Holdings L.P., the general partner of Enterprise Products Partners L.P., from February 2006 until April 2007. He previously served as Chairman of the Board and CEO of GulfTerra Energy Partners, L.P. (GTM) from 1999 to 2004 prior to GTM’s merger with Enterprise Product Partners, LP, and held senior executive management positions with El Paso Corporation, including President of El Paso Field Services from 1996 to 2004. Prior to that he was Chairman, President and CEO of Eastex Energy, Inc. from 1981 to 1995. Mr. Phillips previously served as a Director of Pride International, Inc. from October 2007 to May 31, 2011, one of the world’s largest offshore drilling contractors, and was a member of its Audit Committee. Mr. Phillips served as a Director of Bonavista Energy Corporation, a Canadian independent oil and gas producer, from May 2015 to March 2020. In 2021, Mr. Phillips was appointed to the National Petroleum Council which advises the United States Department of Energy on oil and gas related matters.
Mr. Phillips holds a B.B.A. from the University of Texas at Austin and a Juris
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Founder, Chairman and
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Joined the board 2010 Age 68 | ||||
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Board of Directors Information
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Board of Directors Information
Angela A. Minas
| Biography Angela A. Minas was appointed to the Board in January 2022 Ms. Minas currently serves on the Board of Directors
Ms. Minas holds a Bachelor of Arts and a Master of Business Administration from Rice University where she currently serves as a member of the
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Compensation
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Clay C. Williams
| Biography Clay C. Williams was appointed to the Board in January
Mr. Williams currently serves as Chairman, President and Chief Executive Officer of NOV Inc., a multinational oilfield services company with more than 25,000 employees across 61 countries that is a provider of expert solutions, equipment and operational support for the drilling and production industries. Mr. Williams brings a unique perspective with more than 35 years of global energy industry experience to the Crestwood board, having served as NOV’s Chief Operating Officer and Chief Financial Officer and in numerous financial roles with Varco before its merger with National Oilwell in 2005. From 2009
Mr. Williams holds a Bachelor of Science degree in Civil & Geological Engineering from Princeton University and a Master of Business Administration from the University of Texas.
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Independent | ||||
Joined the board 2022 Age 60 Committees: Compensation (Chair) Nominating & Governance |
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Board of Directors Information
Class I Directors (terms expire by 2025 annual meeting of unitholders)
Warren H. Gfeller | Biography Warren H. Gfeller was appointed to the Board in July 2001 He currently serves at the lead independent director and
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Lead Independent | ||||
Joined the board 2001 Age 70 Committee: Nominating & Governance (Chair) | ||||
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Board of Directors Information
Janeen S. Judah | Biography Janeen Judah was appointed to the Board in November 2018 Ms. Judah has served as a director of Patterson-UTI since April 2018. Ms. Judah has also served as a director for privately held Aethon Energy III, LLC since June 2019, and as a member of the University Lands Advisory Board since August 2020. Ms. Judah served as a director of Jagged Peak Energy Inc. from April 2019 to January 2020, when Jagged Peak was acquired by Parsley Energy. Ms. Judah served as the President of the Society of Petroleum Engineers from September 2016 to October 2017 while on secondment from Chevron, and as a member of the Board of Directors of the Society of Petroleum Engineers from 2003 to 2006 and from 2012 to 2018. Ms. Judah held numerous leadership positions at Chevron, including general manager for Chevron’s Southern Africa business unit from August 2010 to September 2016, president of Chevron Environmental Management Company from August 2007 to August 2010 and general manager of reservoir and production engineering for Chevron Energy Technology Company from June 2004 to August 2007. Before joining Chevron in 1998, she held various upstream petroleum engineering positions for Texaco and Arco, starting in Midland in 1981. Ms. Judah holds Bachelor of Science and Masters of Science degrees in petroleum engineering from Texas A&M University, a Masters of Business Administration from the University of Texas of the Permian Basin and a Juris Doctorate from the University of Houston Law Center. | |||
Independent | ||||
Joined the Board 2018 Age 63 Committees: Sustainability (Chair) Nominating & Governance | ||||
John J. Sherman | Biography John J. Sherman was appointed to the Board in July 2001 Mr. Sherman is the former Chairman, Chief Executive Officer and President of Inergy Holdings GP, LLC, Inergy, L.P. and Inergy Midstream, L.P., and served in those positions until 2013. He is currently the Chairman and CEO of the Kansas City Royals Baseball Club and previously served as the Vice Chairman of the Cleveland Guardians Baseball Club. Prior to joining our predecessor, he was a Vice President with Dynegy Inc. from 1996 through 1997. From 1991 through 1996, Mr. Sherman was the president of LPG Services Group, Inc., a company he co-founded and grew to become one of the nation’s largest wholesale marketers of propane before Dynegy acquired LPG Services in 1996. From 1984 through 1991, Mr. Sherman was a Vice President and member of the management committee of Ferrellgas. Mr. Sherman previously served on the board for Evergy and currently serves on the board for Tech Accel LLC. Mr. Sherman is a graduate of Ottawa University. | |||
Independent | ||||
Joined the Board 2001 Age 67 Committees: Finance Sustainability |
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Board of Directors Information
Board Skills & Diversity
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Board of Directors Information
Director Nominee Tenure, Skills, and Characteristics
In 2021, we established a Nominating and Governance Committee, which meets at least quarterly and reviews the performance, and contributions of existing Board members to the extent they are candidates for re-election and considers all aspects of each candidate’s qualifications and skills in the context of the Partnership’s needs at that point in time. The Nominating and Governance Committee includes, and has any search firm that it engages include, women and individuals from underrepresented racial/ethnic groups in the pool from which the Committee selects director candidates. When considering candidates as potential Board members, the Board and the Nominating and Governance Committee will evaluate the candidates’ ability to contribute to such diversity. The Board assesses its effectiveness in this regard as part of its Board and director evaluation process. Currently, of our three director nominees, one is a woman, all are independent, and one hastwo have served for five years or less. The Board’s composition also represents a balanced approach to director tenure, allowing the Board to benefit from the experience of longer-serving directors combined with fresh perspectives from newer directors. The tenure range of our Board is as follows:
Tenure on Board | Number of Directors | ||||||
More than 10 years | 2 | ||||||
3-10 years | 3 | ||||||
2 years or less | 4 | ||||||
Among the qualifications and skills of a candidate considered important by the Nominating and Governance Committee are:
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• | • Technical/Engineering | |
• Government Relations/Public Policy | • Health, Safety, Environmental (HSE) | |
• Senior Executive (C-Suite) Experience | • Cybersecurity/IT | |
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Board Leadership
The Board is responsible for the control and direction of the Partnership. The Board represents the unitholders and its primary purpose is to build long-term unitholder value. The Board has no policy that requires that the positions of the Chairman of the Board (the Chairman) and the Chief Executive Officer (CEO) be separate or that they be held by the same individual. The Board believes that this determination should be based on circumstances existing from time to time, including the composition, skills and experience of the Board and its members, specific challenges faced by us or the industry in which it operates, and governance efficiency.
The Chair of the Board is selected by the Board and currently is our Founder and CEO, Robert G. Phillips. The Board believes that this leadership structure is appropriate given Mr. Phillips’ role in founding the Partnership and his significant ownership stake. The Board believes that this leadership structure improves the Board’s ability to focus on key policy and operational issues and helps the Partnership operate in the long-term interests of unitholders.
In addition, the independent directors on the Board have appointed a lead directorLead Director from the Board’s independent directors, currently Warren Gfeller, in order to promote independent leadership of the Board. The lead director presides over the executive sessions of the independent directors (which occur
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Board of Directors Information
at least once a year), chairs Board meetings in the Chair’s absence, works with management and the independent directors to approve agendas, schedules, information, and
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Board of Directors Information
materials for Board meetings, and is available to engage directly with major shareholders where appropriate. In addition, the lead director confers from time to time with the Chair of the Board and the independent directors and reviews, as appropriate, the annual schedule of regular Board meetings and major Board meeting agenda topics. The guidance and direction provided by the lead directorLead Director reinforce the Board’s independent oversight of management and contribute to communication among members of the Board.
Director Independence
Because we are a limited partnership, the listing standards of the NYSE do not require that we have a majority of independent directors on the Board, nor that the Partnership establish or maintain a Nominating and Governance Committee or Compensation Committee of the Board. We are, however, required to have an audit committeeAudit Committee consisting of at least three members, all of whom are required to be independent as defined by the NYSE. The Board has determined that, Warren Gfeller, John Jacobi, Janeen Judah, N. John Lancaster, Jr., David Lumpkins, Angela Minas, Gary Reaves, John Sherman, Frances Vallejo, and Clay Williams qualify as independent pursuant to independence standards established by the NYSE as set forth in Section 303A.02 of the NYSE Listed Company Manual. To be considered an independent director under the NYSE listing standards, the Board must affirmatively determine that a director has no material relationship with us other than as a director. In making this determination, the Board adheres to all of the specific tests for independence included in the NYSE listing standards and considers all other facts and circumstances it deems necessary or advisable.
A Directordirector need not be a member of the General Partner or a Limited Partner; however, a majority of the Directors comprising the Board of Directors must meet the independence standards required of directors who serve on a board of directors established by the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules and regulations of the U.S. Securities and Exchange Commission (the “Commission”) thereunder and by the National Securities Exchange on which the common units are listed or admitted to trading (or if no such National Securities Exchange, the New York Stock Exchange)NYSE).
Risk Oversight
The Partnership faces a number of risks, including environmental and regulatory risks, and others, such as the impact of competition. Management is responsible for the day-to-day management of risks the Partnership faces, while the Board, as a whole and through its committees, has responsibility for the oversight of risk management. In fulfilling its risk oversight role, the Board must determine whether risk management processes designed and implemented by our management are adequate and functioning as designed. Senior management regularly delivers presentations to the Board on strategic matters, operations, risk management and other matters, and is available to address any questions or concerns raised by the Board.
Our board committees assist the Board in fulfilling its oversight responsibilities in certain areas of risk. The Audit Committee assists with risk management oversight including in the areas of financial reporting, internal controls and compliance with legal and regulatory requirements and our risk management policy relatingrelated to our hedging program.commodity price risk management activities. The Compensation Committee assists the Board with risk management relatingrelated to our compensation policies and programs. The Sustainability Committee assists the Board on matters relating to sustainability, which include environmental risks and opportunities, social responsibility and impacts, employee, contractor and community health and safety, and activities related to stakeholder engagement and community investment. The Finance Committee assists the Board in fulfilling its oversight responsibilities across the principal areas of corporate finance and financial risk management. The Nominating and Governance Committee assists the Board on matters related to the evaluation of the Board and its standing committees.committees, succession planning of the CEO and key executive officers and oversight responsibilities regarding the governance of the Partnership.
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Board of Directors Information
Oversight of Cybersecurity Risk
As with any key operational risk, the Company has a robust governance structure around cybersecurity. Our program is governed at the Board level through the Audit Committee where our Senior Vice President of Internal Audit, Technology and Implementation Services provides quarterly updates to the committee and executive management. Internally, a Cybersecurity Steering Committee, which is represented by a cross-section of leaders, meets on a frequent basis and is responsible for developing the Company’s cybersecurity goals and objectives, reviewing the results of penetration testing and drills, and monitoring current trends and threats. Our framework extends to all stakeholders at the Company where our goal is to protect privacy, equipment and sensitive information in both the corporate network and throughout our field operations.
Risk Assessment in Compensation Programs
During the year our Compensation Committee conducted an analysis of potential risks posed by the Company’s compensation program, asking, in essence, whether the program might encourage the executive officers to take unnecessary or excessive risks, or whether the program might encourage the manipulation of reported earnings. As part of its analysis, the Compensation Committee also considered mitigating factors and controls. Based on its analysis, the Compensation Committee determined that our compensation program is unlikely to motivate inappropriate risk-taking.
| Component | Potential Risk | Mitigating Factors | ||
| Base Salary | • Unsustainable fixed expenses • Retention challenges if too low | • Management of expenses and increases • Periodic market surveys | ||
| Annual Incentive Plan | • Imprudent risk taking to maximize short-term reported financial results • Earnings manipulation | • Internal financial controls • Award limits • Long-term incentive awards at risk • Unit ownership guidelines • Independent audit | ||
Long-Term, Equity-Based Incentive Plans | • Imprudent risk taking to maximize short-term reported financial results • Earnings manipulation | • Award limits • Unit ownership guidelines • Long vesting periods • Internal financial controls • Independent audit | ||
| Health & Insurance Benefits | • Unsustainable fixed expenses • Retention challenges if too low | • Management of expenses • Periodic market surveys | ||
Retirement Benefits | • Unsustainable fixed expenses • Retention challenges if too low • Legal compliance risks | • Management of expenses • Limited nonqualified retirement benefits • Third-party professional advisors • Periodic market surveys • Independent audit | ||
| Severance Plans | • Unsustainable fixed expenses | • Limitations within employment agreements • Award limits | ||
| Perquisites | • Unsustainable fixed expenses • Retention challenges if too low | • Management of expenses • Periodic market surveys | ||
Board Evaluation
On an annual basis we conduct a comprehensive Board self-evaluation to assess the effectiveness of our Board, committees, and members. The Board conducts annual evaluations through the use of both individual interviews by the Lead Director with each Board member and a written questionnaire completed by all Board members completethat covers a detailed confidential questionnaire which provides for qualitative ratings in key areasbroad range of matters relating to governance, meetings, materials, and seeks subjective comment in eachother agenda topics.
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Board of those areas. A summary report is prepared and presented to the Board. The responses from Board members are summarized without attribution to a particular member to facilitate candid feedback.Directors Information
The Board and senior executives then review and discuss the evaluation results and any actions to be taken. The results are used to inform Board and committee composition and refreshment, including potential expansion and refinement of the attributes and experience criteria for Board membership, and to address the evolving needs of the company.Company. The evaluation aims (1) to find opportunities where the Board and committees can improve their performance and effectiveness, (2) to assess any need to evolve the composition and expertise of the Board, and (3) to assure that our Board and committees are operating in accordance with our Corporate Governance Guidelines, committee charters and committee charters.best practices.
Code of Ethics
Crestwood is committed to running an ethical business, which is supported by our clearly articulated policies and rigorous management systems and processes. We have adopted a Code of Business EthicsConduct and ConductEthics that outlines our guiding principles and expectations, which can be found at www.crestwoodlp.com/investors/governance.
Each officer, director and employee is responsible for upholding our standards for ethics and integrity as set forth in the Code. Every two years all directors and employees are required to complete ethics training on our Code.
Any employee witnessing a violation of the Code is asked to report their concern through our independent Ethics Hotline, which is available 24 hours a day, seven days a week. All employees receive regular communication about the hotline to ensure that everyone knows their reporting options and understands Crestwood’s commitment to ethics and integrity. Our compliance team takes all concerns seriously and follows the necessary protocols and processes to quickly resolve them. We maintain absolute anonymity, to the extent possible, and empower any employee reporting a violation to discuss their concern without fear of retaliation.
We track the number of requests made and the length of time from reporting to resolution to evaluate the success of the hotline. Any ethics violations and results of the whistleblower hotline are reported to the Audit Committee by our Chief Compliance Officer, who also shares quarterly general ethics updates with the Board.
Corporate Governance Guidelines
The Board has adopted a robust set of Corporate Governance Guidelines that addresses the goals and expectations with respect to key corporate governance matters. The Guidelines address the following topics:
| • | Director Qualifications |
| • | Director Responsibilities |
| • | Lead Director Responsibilities |
| • | Director Access to Officers, Employees and Other Advisors |
| • | Director Orientation and Continuing Education |
Director Common Unit Ownership Guidelines
Directors who are not also executive officers of the Company are required to hold common units with a value equal to five times the amount of the annual retainer paid to directors. Until such guideline is met, a director is required to retain 100% of all vested equity awards under the Company’s director compensation program.
Director Stock Ownership
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Board of Directors Information
Communications with Directors
Parties wishing to send written communications to the Board, other than sales-related communications, should send a letter addressed to the member or members of the Board to whom the communication is directed, care of the Corporate Secretary, 811 Main St., Suite 3400, Houston, Texas 77002. All such communications will be forwarded to the Board member or members specified.
Director Attendance at Annual Meetings
The Company does not have a formal policy with respect to director attendance at annual unitholder meetings. In 2022, all members of the Board were in attendance at the annual meeting.
Please visit our investor relations website at www.crestwoodlp.com/investors, “Governance,” for additional information on our corporate governance.
Board Meetings and Committees
The Board meets in regularly scheduled sessions and holds special meetings and acts by unanimous written consent whenever circumstances require such meetings. Our independent directors meet in executive session at least once a year. During 2022, there were 13 total meetings of the Board. All incumbent directors attended at least 97% of the aggregate of the meetings of the Board and committees on which they served occurring during 2022.
The Board has established an Audit Committee, a Compensation Committee, a Finance Committee, a Nominating and Governance Committee and a Sustainability Committee, each of which is comprised entirely of directors who meet the applicable independence requirements of the NYSE rules. The committees keep the Board informed of their actions and provide assistance to the Board in fulfilling its oversight responsibility to unitholders. The table below provides current board membership information as well as committee meeting information for the last fiscal year.
Name | Audit Committee | Compensation Committee | Finance Committee | Nominating and Governance Committee | Sustainability Committee | |||||
Robert G. Phillips | ||||||||||
Warren H. Gfeller |
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Janeen S. Judah |  |  | ||||||||
David Lumpkins |  |
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Angela A. Minas | | | ||||||||
Gary D. Reaves | | |||||||||
John J. Sherman | | | ||||||||
Frances M. Vallejo | | | | |||||||
Clay C. Williams | | | ||||||||
Total Meetings in 2022 | 8 | 5 | 7 | 4 | 4 | |||||
2022 Attendance Percentage | 100% | 100% | 90% | 100% | 100% | |||||
Committee Chair
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Board of Directors Information
The functions performed by these committees, which are set forth in more detail in their charters, are summarized below.
Committee Oversight
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Board of Directors Information
Meetings:
8 meetings and acts by unanimous written consent whenever circumstances require. Ourwith 100% attendance
Independence:
3 independent directors, meet in executive session at least once a year. During 2021, there were 17 total meetings100% independent
Mandate:
• Provide oversight of the Board. All incumbent directors attended at least 90 percent of the aggregate of the meetings of the Board and committees on which they served occurring during 2021.Company’s financial statements
The Board has established an Audit Committee, a Compensation Committee, a Finance Committee, a Nominating and Governance Committee and a Sustainability Committee, each of which is comprised entirely of directors who meet the applicable independence requirements of the NYSE rules. The committees keep the Board informed of their actions and provide assistance to the Board in fulfilling its oversight responsibility to unitholders. In February 2022, in connection with the Oasis transaction, the Board approved several changes to the Committee assignments. The table below provides current board membership information as well as committee meeting information for the last fiscal year.
Name | Audit Committee | Compensation Committee | Finance Committee | Nominating and Governance Committee | Sustainability Committee | |||||
Robert G. Phillips |
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Warren H. Gfeller |
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John Jacobi |
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Janeen S. Judah |
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N. John Lancaster, Jr. |
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David Lumpkins | |
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Angela A. Minas | | |
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John J. Sherman |
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Frances M. Vallejo | |
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Clay C. Williams |
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Total Meetings in 2021 | 7 | 6 | 4 | 0 | 4 | |||||
2021 Attendance Percentage | 97% | 100% | 100% | N/A | 100% | |||||
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The functions performed by these committees, which are set forth in more detail in their charters, are summarized below.
Audit Committee
The members of the Audit Committee are Angela Minas (Chair), David Lumpkins and Frances Vallejo. The Board has determined that each of the members of the Audit Committee meet the independence standards of the NYSE and is financially literate. In addition, the Board has determined that Ms. Minas is an audit committee financial expert based upon the experience stated in her biography. The Audit Committee’s primary responsibilities are to monitor: (i)• Monitor the integrity of our financial reporting process and internal control system; (ii)system
• Ensure the independence and performance of the independent registered public accounting firm; and (iii)firm
• Oversee the performance of the disclosure controls and procedures established by management, performance of the internal audit function and compliance with legal and regulatory requirements. The Audit Committee charter may be foundrequirements
2022 Key Achievements:
• Oversaw enhanced annual enterprise risk management process including input from committee chairs
• Received quarterly updates on our website at www.crestwoodlp.com/investors/governance.
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Board• Received quarterly updates on our independently managed, confidential ethics hotline
• Reviewed quarterly investment spending, including capital expenditures and acquisition performance and achievement of Directors Informationsynergies.
The members of the Compensation Committee are 
Clay Williams (Chair), N. John Lancaster, Jr., and
Angela Minas. Although we are not required by NYSE listing standards to have a Compensation Committee, three members of the Board serve as members of our Compensation Committee, which oversees compensation decisions for members of the Board, the executive officers of the General Partner, as well as the compensation plans described below. Each year, the Compensation Committee reviewsMinas
Frances Vallejo
Meetings:
5 meetings with 100% attendance
Independence:
3 independent directors, 100% independent
Mandate:
• Review the Partnership’s goals and objectives relevant to the compensation of the Chief Executive Officer and key executive officers and makes recommendations to the Board with respect to the compensation of the Chief Executive Officer and key executive officers. The Compensation Committee also assistsofficers
• Assist with administering the equity-based compensation plans and reviewing the compensation related disclosures in the Partnership’s annual proxy statement on Form DEF 14A. The Compensation Committee charter may be found on our website at www.crestwoodlp.com/investors/governance.
2022 Key Achievements:
• Eliminated single-trigger Change of Control equity vesting
• Reviewed and approved Clawback Policy
• Revised metrics in the short-term and long-term incentive plans to minimize overlap
• Eliminated non-routine equity awards
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Board of Directors Information
| Finance Committee | ||
| Current Members:
David Lumpkins (Chair) Gary Reaves John | Meetings: 7 meetings with | |
Independence: 3 independent directors, 100% independent | ||
Mandate: • Provide guidance on • Review the Partnership’s financial strategies, policies, guidelines and • Oversee the Partnership’s compliance with its material debt instruments and credit | ||
2022 Key Achievements: • Developed process for | ||
| Nominating and Governance Committee | ||
| Current Members:
Warren Gfeller (Chair) Janeen Judah Clay Williams | Meetings: 4 meetings with 100% attendance | |
Independence: 3 independent directors, 100% independent | ||
Mandate: • Assist the Board in identifying individuals qualified to become Board members consistent with criteria approved by the Board, selects or recommends that the Board select director nominees, oversees the set of corporate governance principles applicable to the Partnership, and oversees the evaluation of the • Review the size and composition of the Board and its committees and recommend any changes to the Board for approval in its sole • Review appropriately submitted unitholder proposals and • Oversee the succession planning for the 2022 Key Achievements: • Onboarded three new independent directors • Approved enhanced board skills matrix process • Revised annual board self-assessment process to elicit better feedback • Approved executive unit ownership guidelines | ||
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Board of Directors Information
Board of Directors Information
| Sustainability Committee | ||
| Current Members:
Janeen Judah (Chair) Frances Vallejo John | Meetings: 4 meetings with 100% attendance | |
Independence: 3 independent directors, 100% independent | ||
Mandate: • Provide oversight of • Oversee the development of • Review and | ||
2022 Key Achievements: • Reviewed and approved the 2021 sustainability report • Oversaw the enterprise risk management activities related to ESG risks including climate-related risks • Provided oversight of the • Received updates on the • Monitored updates to U.S. climate change regulation and
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Director Nominations
Pursuant to Section 13.4(b)(vi) of our Partnership Agreement, nominations of persons for election of directors to the Board may be made at an annual meeting of the Partnership (a) by or at the direction of a majority of the directors then in office or (b) by a limited partner (i.e. a unitholder) or group of limited partners (a “limited partner group”), that holds or beneficially owns, and has continuously held without interruption for the prior two years, at least 10% of the outstanding common units or outstanding preferred units that on a converted basis represent at least 10% of the outstanding common units, or any combination thereof.
Any eligible unitholders or limited partner group that wishes to submit a director nomination for the 2023 Annual Meeting must deliver written notice thereof to the General Partner at 811 Main Street, Suite 3400, Houston, Texas 77002. The written notice must comply with Section 13.4(b)(vi)(A)(2) of our Partnership Agreement and the procedures set forth in Section 13.4(b)(vi)(C) of our Partnership Agreement, including the information requirements included in 13.4(b)(vi)(A)(2) of our Partnership Agreement. The Chairman designated by the General Partner pursuant to Section 13.10 of our Partnership Agreement shall have the power and duty to (a) determine whether a nomination was made in accordance with the above procedures and (b) declare that such nomination shall be disregarded if any proposed nomination was not made in compliance with Section 13.4(b) of our Partnership Agreement.
If each member of the limited partner group (or a qualified representative of each member) does not appear at the annual meeting to present a nomination, such nomination shall be disregarded notwithstanding that proxies in respect of such vote may have been received by the General Partner or the Partnership. To be considered a qualified representative of a member of the limited partner group, a person must be a duly authorized officer, manager or partner of such limited partner or must be authorized by a writing executed by such limited partner or an electronic transmission delivered by such limited partner to act for such limited partner as proxy at the meeting of limited partners and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission at the meeting of limited partners.
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Board of Directors Information
chairperson and Sustainability Committee chairperson each receive additional cash compensation of $20,000 per year. All cash compensation is paid to the non-employee directors in quarterly installments. Additionally, each non-employee
Board of Directors Information
Compensation of Directors
Officers of the General Partner who also serve as directors, such as Mr. Phillips, do not receive additional compensation. All of the non-employee directors except for Mr. Reaves receives cash compensation of $100,000 per year for serving on the Board. The Lead Director, Audit Committee chairperson, Finance Committee chairperson, Compensation Committee chairperson, Nominating and Governance Committee chairperson and Sustainability Committee chairperson each receive additional cash compensation of $20,000 per year. In August 2022, the Compensation Committee approved additional annual compensation in the amount of $10,000 be paid to any non-employee director that serves on three or more board committees. All cash compensation is paid to the non-employee directors in quarterly installments. Additionally, each non-employee director receives an annual grant of restricted units under our long-term incentive plan equal to approximately $110,000 in value that vests on the first anniversary of the date of issuance. Each grant compensates for future performance, and generally no portion of a restricted unit vests until the year after it is granted. If a director leaves the Board prior to a vest date for any reason other than a Change of Control (as defined under our long-term incentive plan), death or Permanent Disability, he or she will forfeit all or any portion of the restricted units that has not previously vested, unless vesting is otherwise accelerated at the discretion of the Compensation Committee. If the director’s service relationship ends due to a Change of Control or the director’s death or Permanent Disability, then the forfeiture restrictions lapse and the award vests in full. Permanent Disability means the director’s inability, with or without reasonable accommodation, by reason of illness, incapacity, or other disability, to perform his or her duties, as determined by the Board for a cumulative total of 180 days in any 12-month period. Each non-employee director is reimbursed for out-of-pocket expenses in connection with attending meetings of the Board or committees.
The following table sets forth, for the year ended December 31, 2022, all compensation reportable for directors who served during 2022, as determined by SEC rules.
Director Compensation for 2022
Name | Fee Earned or Paid in Cash ($) | Unit Awards ($)(1) | Total ($) | ||||||||||||
Alvin Bledsoe(2) | 120,000 | 111,209 | 231,209 | ||||||||||||
Warren H. Gfeller | 140,000 | 111,209 | 251,209 | ||||||||||||
Janeen S. Judah | 120,000 | 111,209 | 231,209 | ||||||||||||
David Lumpkins | 120,000 | 111,209 | 231,209 | ||||||||||||
Angela A. Minas | 120,000 | 111,209 | 231,209 | ||||||||||||
John J. Sherman | 100,000 | 111,209 | 211,209 | ||||||||||||
Frances M. Vallejo | 105,000 | 111,209 | 216,209 | ||||||||||||
Clay C. Williams | 120,000 | 111,209 | 231,209 | ||||||||||||
Gary D. Reaves | — | 27,475 | 27,475 | ||||||||||||
John Jacobi(3) | 50,000 | — | 50,000 | ||||||||||||
N. John Lancaster, Jr.(3) | 50,000 | — | 50,000 | ||||||||||||
Samantha Holroyd(4) | 25,000 | — | 25,000 | ||||||||||||
Paul Korus(4) | 25,000 | — | 25,000 | ||||||||||||
| (1) | Reflects the grant date fair value of unit awards. See Part IV, Item 15. Exhibits, Financial Statement Schedules, Note 13 of the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2022. The restricted unit grants issued to Mr. Gfeller, Ms. Judah, Mr. Lumpkins, Ms. Minas, Mr. Sherman, Ms. Vallejo and Mr. Williams will vest on the first anniversary of the grant date. Mr. Reaves’ restricted unit grant was issued on September 15, 2022 and will vest on January 5, 2023, the same date as the other |
| 20 | | |||
Board of Directors Information
| directors. As of |
| (2) | Mr. Bledsoe resigned from the |
| (3) | Mr. Jacobi and Mr. Lancaster resigned from the board effective July 1, 2022 and each forfeited their 2022 restricted unit grant of |
Executive Compensation
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2012, as well as Section 14A of the Exchange Act, and the rules promulgated thereunder, enables our unitholders the opportunity to express their views, on an advisory basis, on the compensation of the named executive officers. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the named executive officers and the philosophy, policies and practices described in this proxy statement.
As an advisory vote, this proposal is not binding on the Board or the Compensation Committee, will not overrule any decisions made by the Board or the Compensation Committee or require the Board or the Compensation Committee to take any action. Although the vote is non-binding, the Board and the Compensation Committee value the opinions of our unitholders and will carefully consider the outcome of the vote when making future compensation decisions. In particular, to the extent there is any significant vote against the named executive officers’ compensation as disclosed in this proxy statement, we will consider our unitholders’ concerns, and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.
Compensation Committee Report
The Compensation Committee, which is composed solely of independent members of the Board of Directors, assists the Board in fulfilling its oversight responsibility relating to, among other things, establishing and reviewing compensation of the Partnership’s executive officers. The Compensation Committee reviewed and discussed with management the Partnership’s Compensation Discussion and Analysis and, based on the review and discussion, recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
The Compensation Committee
Clay C. Williams (Chair)
N. John Lancaster, Jr.Angela A. Minas
Angela MinasFrances M. Vallejo
| 45 | |||
Executive Compensation
The following table sets forth for the year ended December 31, 2021,2022, the compensation reportable for the named executive officers, as determined by SEC rules.
20212022 Summary Compensation Table
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Unit Awards ($)(1) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($)(2) | Total ($) | |||||||||||||||||||||
Robert G. Phillips Chief Executive Officer and Director |
| 2021 |
|
| 800,000 |
|
| 5,581,674 |
|
| 2,000,000 |
|
| 158,404 |
|
| 8,540,078 |
| ||||||||||
| 2020 |
|
| 829,807 |
|
| — |
|
| 4,783,070 |
|
| 1,200,000 |
|
| 153,409 |
|
| 6,966,286 |
| ||||||||
| 2019
|
|
| 774,038 |
|
| — |
|
| 7,154,121 |
|
| 1,085,000 |
|
| 52,138 |
|
| 9,065,297 |
| ||||||||
Robert T. Halpin President, Chief Financial Officer |
| 2021 |
|
| 500,000 |
|
| 2,052,504 |
|
| 1,000,000 |
|
| 50,985 |
|
| 3,603,489 |
| ||||||||||
| 2020 |
|
| 517,884 |
|
| — |
|
| 2,314,193 |
|
| 600,000 |
|
| 21,402 |
|
| 3,453,479 |
| ||||||||
| 2019 |
|
| 464,423 |
|
| — |
|
| 2,414,740 |
|
| 651,000 |
|
| 21,705 |
|
| 3,551,868 |
| ||||||||
William H. Moore Executive Vice President, Corporate Strategy |
| 2021 |
|
| 395,000 |
|
| 1,573,701 |
|
| 790,000 |
|
| 20,108 |
|
| 2,778,809 |
| ||||||||||
| 2020 |
|
| 409,807 |
|
| — |
|
| 1,716,894 |
|
| 474,000 |
|
| 20,266 |
|
| 2,620,967 |
| ||||||||
| 2019
|
|
| 385,000 |
|
| — |
|
| 1,706,964 |
|
| 539,000 |
|
| 20,379 |
|
| 2,651,343 |
| ||||||||
Steven M. Dougherty Executive Vice President, Chief Accounting Officer |
| 2021 |
|
| 435,000 |
|
| 1,509,706 |
|
| 783,000 |
|
| 21,747 |
|
| 2,749,453 |
| ||||||||||
| 2020 |
|
| 451,230 |
|
| — |
|
| 1,555,474 |
|
| 469,800 |
|
| 24,222 |
|
| 2,500,726 |
| ||||||||
| 2019 |
|
| 421,538 |
|
| — |
|
| 1,800,332 |
|
| 472,640 |
|
| 21,654 |
|
| 2,716,164 |
| ||||||||
Joel C. Lambert Executive Vice President, Chief Legal, Compliance and Safety Officer |
| 2021 |
|
| 470,000 |
|
| 1,706,269 |
|
| 740,250 |
|
| 44,365 |
|
| 2,960,884 |
| ||||||||||
| 2020 |
|
| 486,730 |
|
| — |
|
| 1,578,347 |
|
| 507,600 |
|
| 22,902 |
|
| 2,595,579 |
| ||||||||
| 2019
|
|
| 434,038 |
|
| — |
|
| 2,138,998 |
|
| 435,000 |
|
| 22,839 |
|
| 3,030,875 |
| ||||||||
Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Unit Awards ($)(1) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($)(2) | Total ($) | ||||||||||||||||||||||||||||
Robert G. Phillips Chief Executive Officer | 2022 | 800,000 | — | 5,287,994 | 850,000 | 102,839 | 7,040,833 | ||||||||||||||||||||||||||||
| 2021 | 800,000 | — | 5,581,674 | 2,000,000 | 158,404 | 8,540,078 | |||||||||||||||||||||||||||||
| 2020 | 829,807 | — | 4,783,070 | 1,200,000 | 153,409 | 6,966,286 | |||||||||||||||||||||||||||||
Robert T. Halpin President | 2022 | 600,000 | — | 2,295,567 | 612,000 | 32,601 | 3,540,168 | ||||||||||||||||||||||||||||
| 2021 | 500,000 | — | 2,052,504 | 1,000,000 | 50,985 | 3,603,489 | |||||||||||||||||||||||||||||
| 2020 | 517,884 | — | 2,314,193 | 600,000 | 21,402 | 3,453,479 | |||||||||||||||||||||||||||||
John W. Black Executive Vice President, | 2022 | 365,625 | — | 641,303 | 306,000 | 18,354 | 1,331,282 | ||||||||||||||||||||||||||||
William H. Moore Executive Vice President, | 2022 | 425,000 | — | 1,621,086 | 467,500 | 38,643 | 2,552,229 | ||||||||||||||||||||||||||||
| 2021 | 395,000 | — | 1,573,701 | 790,000 | 20,108 | 2,778,809 | |||||||||||||||||||||||||||||
| 2020 | 409,807 | — | 1,716,894 | 474,000 | 20,266 | 2,620,967 | |||||||||||||||||||||||||||||
Steven M. Dougherty Executive Vice President, | 2022 | 450,000 | — | 1,567,930 | 344,250 | 18,714 | 2,380,894 | ||||||||||||||||||||||||||||
| 2021 | 435,000 | — | 1,509,706 | 783,000 | 21,747 | 2,749,453 | |||||||||||||||||||||||||||||
| 2020 | 451,230 | — | 1,555,474 | 469,800 | 24,222 | 2,500,726 | |||||||||||||||||||||||||||||
Joel C. Lambert Executive Vice President, | 2022 | 470,000 | — | 1,786,732 | 359,550 | 18,714 | 2,634,996 | ||||||||||||||||||||||||||||
| 2021 | 470,000 | — | 1,706,269 | 740,250 | 44,365 | 2,960,884 | |||||||||||||||||||||||||||||
| 2020 | 486,730 | — | 1,578,347 | 507,600 | 22,902 | 2,595,579 | |||||||||||||||||||||||||||||
| (1) | The material terms of our outstanding LTIP awards are described in “Compensation Discussion and Analysis - Long-Term Incentive Plan Awards.” Unit award amounts reflect the aggregate grant date fair value of unit awards granted during the periods. For performance units granted in |
| (2) | All Other Compensation for Fiscal Year |
Name | 401(k) Matching Contributions ($) | Group Term Life Insurance ($) | Other ($)(1) | Total ($) | 401(k) Matching Contributions ($) | Group Term Life Insurance ($) | Other ($)(1)(2) | Total ($) | ||||||||||||||||||||||||||||
Robert G. Phillips | 17,400 | 7,641 | 133,363 | 158,404 | 18,300 | 2,286 | 82,253 | 102,839 | ||||||||||||||||||||||||||||
Robert T. Halpin | 17,400 | 4,812 | 28,772 | 50,984 | 18,300 | 162 | 14,139 | 32,601 | ||||||||||||||||||||||||||||
John W. Black | 18,300 | 54 | — | 18,354 | ||||||||||||||||||||||||||||||||
William H. Moore | 17,400 | 2,708 | — | 20,108 | 18,300 | 60 | 20,283 | 38,643 | ||||||||||||||||||||||||||||
Steven M. Dougherty | 17,400 | 4,347 | — | 21,747 | 18,300 | 414 | — | 18,714 | ||||||||||||||||||||||||||||
Joel C. Lambert | 17,400 | 6,502 | 20,463 | 44,365 | 18,300 | 414 | — | 18,714 | ||||||||||||||||||||||||||||
| (1) | Represents the incremental cost to the Partnership |
| 46 | | |||
Executive Compensation
| (2) | Mr. Phillips received reimbursements for membership dues in the amount of $24,210 for a country club, and $4,149 for a dining club. Incremental expenses related to these organizations are primarily for business purposes. |
Grants of Plan-Based Awards in 20212022
| Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payout Under Equity Incentive Plan Awards(2) | All Other Unit Awards (#)(3) | Grant Date Fair Value of Unit and Option Awards ($)(4) | Grant Date |
Estimated Future Payouts |
Estimated Future Payout | All Other Unit Awards (#)(3) | Grant Date Fair Value of Unit and Option Awards ($)(4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert G. Phillips | 01/06/21 | 168,599 | 3,205,067 | 01/05/22 | 115,984 | 3,235,954 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 01/06/21 | 30,000 | 570,300 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12/27/21 | 38,022 | 999,979 | 02/14/22 | 800,000 | 1,000,000 | 1,400,000 | 32,751 | 65,502 | 131,004 | 2,052,040 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02/16/21 | 800,000 | 1,000,000 | 2,000,000 | 15,000 | 30,000 | 60,000 | 748,860 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert T. Halpin | 01/06/21 | 72,445 | 1,377,179 | 01/05/22 | 59,804 | 1,668,532 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02/14/22 | 600,000 | 720,000 | 1,008,000 | 10,008 | 20,015 | 40,030 | 627,035 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John W. Black | 01/05/22 | 18,757 | 523,320 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 01/06/21 | 6,000 | 114,060 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12/27/21 | 15,209 | 399,997 | 02/14/22 | 400,000 | 360,000 | 504,000 | 1,883 | 3,766 | 7,532 | 117,983 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02/16/21 | 500,000 | 500,000 | 1,000,000 | 3,000 | 6,000 | 12,000 | 149,772 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
William H. Moore | 01/06/21 | 46,826 | 890,162 | 01/05/22 | 34,659 | 966,986 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 01/06/21 | 4,000 | 76,040 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12/27/21 | 19,011 | 499,989 | 02/14/22 | 425,000 | 425,000 | 595,000 | 10,440 | 20,879 | 41,758 | 654,100 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02/16/21 | 395,000 | 395,000 | 790,000 | 2,000 | 4,000 | 8,000 | 99,848 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Steven M. Dougherty | 01/06/21 | 51,567 | 980,289 | 01/05/22 | 42,407 | 1,183,155 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 01/06/21 | 5,000 | 95,050 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12/27/21 | 11,406 | 299,978 | 02/14/22 | 450,000 | 405,000 | 567,000 | 6,141 | 12,282 | 24,564 | 384,775 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02/16/21 | 435,000 | 391,500 | 783,000 | 2,500 | 5,000 | 10,000 | 124,811 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joel C. Lambert | 01/06/21 | 61,907 | 1,176,852 | 01/05/22 | 42,588 | 1,188,205 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 01/06/21 | 5,000 | 95,050 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12/27/21 | 11,406 | 299,978 | 02/14/22 | 470,000 | 423,000 | 592,200 | 9,553 | 19,105 | 38,210 | 598,527 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 02/16/21 | 470,000 | 423,000 | 740,250 | 2,500 | 5,000 | 10,000 | 124,811 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | Actual amounts paid pursuant to the annual incentive bonus are reported in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. |
| (2) | Represents grants of performance |
| (3) | Represents grants of restricted units granted under the Long-Term Incentive Plan. For each NEO, the restricted unit awards granted on January |
| (4) | Unit award amounts reflect the aggregate grant date fair value of unit awards granted during |
| 47 | |||
Executive Compensation
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table1
Employment Agreements
The Executive Employment Agreements provide for the base salary, target bonus amounts and a target equity compensation grant described in our “Compensation Discussion and Analysis.”
Under the terms of the Executive Employment Agreements, if the named executive officer’s employment is terminated during the initial term or a subsequent one-year renewal by Crestwood Operations, LLC (“Crestwood Operations”) without “employer cause” or the executive resigns due to “employee cause” or the named executive officer’s employment with Crestwood Operations terminates as a result of Crestwood Operations’ election not to renew the Executive Employment Agreement or due to the executive’s death or permanent disability, the executive will be entitled to receive, subject to the executive’s execution of a release of claims, severance equal to two (or, in the case of Mr. Phillips, three) times the sum of the executive’s base salary and average annual bonus for the prior two years, payable in equal installments over an 18-month period following termination. In addition, the named executive officer would be entitled to certain subsidized medical benefits over such 18-month period. If the named executive officer fails to comply with covenants in the Executive Employment Agreement, the release of claims or similar agreement, he forfeits the right to receive any severance payment installments following such failure to comply.
On February 22, 2018, Crestwood Operations entered into an Omnibus Amendment to each Executive Employment Agreement (“Omnibus Amendment”). Pursuant to the Omnibus Amendment, if the employment of Messrs. Halpin, Moore, Dougherty or Lambert is terminated during the period beginning three months prior to a Change inof Control and ending twelve months after a Change inof Control, then the severance amount payable shall be increased to three times the sum of base salary and average annual bonus for the prior two years.
On January 6, 2023, Crestwood Operations entered into a 2023 Omnibus Amendment to each Executive Employment Agreement with each the NEOs (“Second Omnibus Amendment”). Pursuant to the Second Omnibus Amendment, equity awards issued on or after January 1, 2023, will not become vested in connection with a Change of Control (as defined in the Plan). Such awards will, however, become vested in connection with any termination by the Employer for reasons other than Employer Cause or any resignation by the employee due to Employee Cause (each as defined in the Executive Employment Agreement). The Second Omnibus Amendment also makes certain additional changes to the Executive Employment Agreements, including updating the definition of “Employee Cause” in each employment agreement to provide that a change in the employee’s reporting relationship will be a basis for resignation, clarifying the manner performance awards will become vested in connection with a termination by the Employer for reasons other than Employer Cause or resignation by the employee due to Employee Cause, and conforming the terms of the confidentiality provisions to comply with changes in applicable law.
For more information regarding potential severance and/or change in controlChange of Control payments for the NEOs, please see the section below titled “Potential Payments Upon Termination or Change inof Control.”
| 48 | | |||
Executive Compensation
Outstanding Equity Awards and Units Vested
The following table summarizes the outstanding equity awards as of the end of Fiscal 20212022 for the each of our NEOs (although as noted below, some of these awards may have vested prior to this filing). The table includes restricted units and phantom performance units granted under the Crestwood Equity Partners LP Long Term Incentive Plan. The market value for CEQP units is based on the NYSE closing price of $27.59$26.19 on December 31, 2021.30, 2022.
Outstanding Equity Awards at 2022 Fiscal Year-End
Unit Awards | ||||||||||||||||||||||||||||||
Name | Restricted Units That Have Not Vested | Vest Date | Market Value of Units That Have Not Vested($) | Equity (#)(1) | Vest Date | Equity Incentive Plan Awards: Market Value of Unearned Units That Have Not Vested ($) | ||||||||||||||||||||||||
Robert G. Phillips | 34,610 | January 3, 2023 | 906,436 | 51,796 | February 10, 2023 | 1,356,536 | ||||||||||||||||||||||||
| 38,661 | January 5, 2023 | 1,012,532 | 30,000 | February 16, 2024 | 785,700 | |||||||||||||||||||||||||
| 56,200 | January 6, 2023 | 1,471,878 | 65,502 | February 14, 2025 | 1,715,497 | |||||||||||||||||||||||||
| 38,661 | January 5, 2024 | 1,012,532 | ||||||||||||||||||||||||||||
| 30,000 | January 6, 2024 | 785,700 | ||||||||||||||||||||||||||||
| 56,200 | January 6, 2024 | 1,471,878 | ||||||||||||||||||||||||||||
| 38,022 | December 27, 2024 | 995,796 | ||||||||||||||||||||||||||||
| 38,662 | January 5, 2025 | 1,012,558 | ||||||||||||||||||||||||||||
Robert T. Halpin | 16,223 | January 2, 2023 | 424,880 | 13,813 | February 10, 2023 | 361,762 | ||||||||||||||||||||||||
| 14,872 | January 3, 2023 | 389,498 | 6,000 | February 16, 2024 | 157,140 | |||||||||||||||||||||||||
| 19,934 | January 5, 2023 | 522,071 | 20,015 | February 14, 2025 | 524,193 | |||||||||||||||||||||||||
| 24,148 | January 6, 2023 | 632,436 | ||||||||||||||||||||||||||||
| 19,935 | January 5, 2024 | 522,098 | ||||||||||||||||||||||||||||
| 6,000 | January 6, 2024 | 157,140 | ||||||||||||||||||||||||||||
| 24,149 | January 6, 2024 | 632,462 | ||||||||||||||||||||||||||||
| 15,209 | December 27, 2024 | 398,324 | ||||||||||||||||||||||||||||
| 19,935 | January 5, 2025 | 522,098 | ||||||||||||||||||||||||||||
John W. Black | 4,867 | January 2, 2023 | 127,467 | 7,750 | February 10, 2023 | 202,973 | ||||||||||||||||||||||||
| 3,353 | January 3, 2023 | 87,815 | 3,766 | February 14, 2025 | 98,632 | |||||||||||||||||||||||||
| 6,252 | January 5, 2023 | 163,740 | ||||||||||||||||||||||||||||
| 5,444 | January 6, 2023 | 142,578 | ||||||||||||||||||||||||||||
| 20,000 | August 12, 2023 | 523,800 | ||||||||||||||||||||||||||||
| 6,252 | January 5, 2024 | 163,740 | ||||||||||||||||||||||||||||
| 5,445 | January 6, 2024 | 142,605 | ||||||||||||||||||||||||||||
| 3,333 | July 9, 2024 | 87,291 | ||||||||||||||||||||||||||||
| 8,000 | July 9, 2024 | 209,520 | ||||||||||||||||||||||||||||
| 6,253 | January 5, 2025 | 163,766 | ||||||||||||||||||||||||||||
| ||||
Executive Compensation
Outstanding Equity Awards at 2021 Fiscal Year-End
| Unit Awards | Unit Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Restricted Units That Have Not Vested | Vest Date | Market Value of Units That Have Not Vested($) | Equity (#)(2) | Vest Date | Equity Incentive Plan Awards: Market Value of Unearned Units That Have Not Vested ($) | Restricted Units That Have Not Vested | Vest Date | Market Value of Units That Have Not Vested($) | Equity (#)(1) | Vest Date | Equity Incentive Plan Awards: Market Value of Unearned Units That Have Not Vested ($) | ||||||||||||||||||||||||||||||||||||||||
Robert G. Phillips | 34,610 | January 3, 2022 | 954,890 | 107,488 | February 12, 2022 | 2,965,594 | ||||||||||||||||||||||||||||||||||||||||||||||
| 56,199 | January 6, 2022 | 1,550,530 | 65,272 | February 10, 2023 | 1,800,854 | |||||||||||||||||||||||||||||||||||||||||||||||
| 37,024 | January 10, 2022 | 1,021,492 | 32,008 | February 16, 2024 | 883,101 | |||||||||||||||||||||||||||||||||||||||||||||||
| 34,610 | January 3, 2023 | 954,890 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 56,200 | January 6, 2023 | 1,550,558 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 30,000 | January 6, 2024 | 827,700 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 56,200 | January 6, 2024 | 1,550,558 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 38,022 | December 27, 2024 | 1,049,027 |
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||
Robert T. Halpin | 14,871 | January 3, 2022 | 410,291 | 28,663 | February 12, 2022 | 790,812 | ||||||||||||||||||||||||||||||||||||||||||||||
| 24,148 | January 6, 2022 | 666,243 | 17,407 | February 10, 2023 | 480,259 | |||||||||||||||||||||||||||||||||||||||||||||||
| 15,273 | January 10, 2022 | 421,382 | 6,402 | February 16, 2024 | 176,631 | |||||||||||||||||||||||||||||||||||||||||||||||
| 16,223 | January 2, 2023 | 447,593 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 14,872 | January 3, 2023 | 410,318 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 24,148 | January 6, 2023 | 666,243 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 6,000 | January 6, 2024 | 165,540 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 24,149 | January 6, 2024 | 666,271 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 15,209 | December 27, 2024 | 419,616 |
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||
William H. Moore | 9,612 | January 3, 2022 | 265,195 | 21,497 | February 12, 2022 | 593,102 | 16,223 | January 2, 2023 | 424,880 | 10,360 | February 10, 2023 | 271,328 | ||||||||||||||||||||||||||||||||||||||||
| 15,608 | January 6, 2022 | 430,625 | 13,056 | February 10, 2023 | 360,215 | |||||||||||||||||||||||||||||||||||||||||||||||
| 10,346 | January 10, 2022 | 285,446 | 4,268 | February 16, 2024 | 117,754 | 9,613 | January 3, 2023 | 251,764 | 4,000 | February 16, 2024 | 104,760 | |||||||||||||||||||||||||||||||||||||||||
| 16,223 | January 2, 2023 | 447,593 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 9,613 | January 3, 2023 | 265,223 | 11,553 | January 5, 2023 | 302,573 | 20,879 | February 14, 2025 | 546,821 | ||||||||||||||||||||||||||||||||||||||||||||
| 15,609 | January 6, 2023 | 430,652 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 4,000 | January 6, 2024 | 110,360 | 15,609 | January 6, 2023 | 408,800 | |||||||||||||||||||||||||||||||||||||||||||||||
| 15,609 | January 6, 2024 | 430,652 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 19,011 | December 27, 2024 | 524,513 |
|
|
| 11,553 | January 5, 2024 | 302,573 | |||||||||||||||||||||||||||||||||||||||||||
| 4,000 | January 6, 2024 | 104,760 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 15,609 | January 6, 2024 | 408,800 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 19,011 | December 27, 2024 | 497,898 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 11,553 | January 5, 2025 | 302,573 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Steven M. Dougherty | 10,586 | January 3, 2022 | 292,068 | 21,497 | February 12, 2022 | 593,102 | 8,112 | January 2, 2023 | 212,453 | 10,360 | February 10, 2023 | 271,328 | ||||||||||||||||||||||||||||||||||||||||
Steven M. Dougherty | 10,586 | January 3, 2023 | 277,247 | 5,000 | February 16, 2024 | 130,950 | ||||||||||||||||||||||||||||||||||||||||||||||
| 14,135 | January 5, 2023 | 370,196 | 12,282 | February 14, 2025 | 321,666 | |||||||||||||||||||||||||||||||||||||||||||||||
| 17,189 | January 6, 2023 | 450,180 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 14,136 | January 5, 2024 | 370,222 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 17,189 | January 6, 2022 | 474,245 | 13,056 | February 10, 2023 | 360,215 | |||||||||||||||||||||||||||||||||||||||||||||||
| 11,340 | January 10, 2022 | 312,871 | 5,334 | February 16, 2024 | 147,165 | 5,000 | January 6, 2024 | 130,950 | ||||||||||||||||||||||||||||||||||||||||||||
| 8,112 | January 2, 2023 | 223,810 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 10,586 | January 3, 2023 | 292,068 | 17,189 | January 6, 2024 | 450,180 | |||||||||||||||||||||||||||||||||||||||||||||||
| 17,189 | January 6, 2023 | 474,245 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 5,000 | January 6, 2024 | 137,950 | 11,406 | December 27, 2024 | 298,723 | |||||||||||||||||||||||||||||||||||||||||||||||
| 17,189 | January 6, 2024 | 474,245 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 11,406 | December 27, 2024 | 314,692 |
|
|
| 14,136 | January 5, 2025 | 370,222 | |||||||||||||||||||||||||||||||||||||||||||
Joel C. Lambert | 12,708 | January 3, 2022 | 350,614 | 26,872 | February 12, 2022 | 741,398 | 12,709 | January 3, 2023 | 332,849 | 12,949 | February 10, 2023 | 339,134 | ||||||||||||||||||||||||||||||||||||||||
| 20,635 | January 6, 2022 | 569,320 | 16,319 | February 10, 2023 | 450,241 | |||||||||||||||||||||||||||||||||||||||||||||||
| 12,989 | January 10, 2022 | 358,367 | 5,334 | February 16, 2024 | 147,165 | 14,196 | January 5, 2023 | 371,793 | 5,000 | February 16, 2024 | 130,950 | |||||||||||||||||||||||||||||||||||||||||
| 12,709 | January 3, 2023 | 350,641 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 20,636 | January 6, 2023 | 569,347 | 20,636 | January 6, 2023 | 540,457 | 19,105 | February 14, 2025 | 500,360 | ||||||||||||||||||||||||||||||||||||||||||||
| 5,000 | January 6, 2024 | 137,950 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 20,636 | January 6, 2024 | 569,347 | 14,196 | January 5, 2024 | 371,793 | |||||||||||||||||||||||||||||||||||||||||||||||
| 11,406 | December 27, 2024 | 314,692 |
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||
| 5,000 | January 6, 2024 | 130,950 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 20,636 | January 6, 2024 | 540,457 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 11,406 | December 27, 2024 | 298,723 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 14,196 | January 5, 2025 | 371,793 | ||||||||||||||||||||||||||||||||||||||||||||||||||
As described further in the CD&A section, the awards will vest on a combination of Adjusted EBITDA, Distributable Cash Flow per Unit and Total Unitholder Return, as determined over a three year period for each award as described below. Potential acceleration or forfeiture events are described in more detail below within the section titled “Potential Payments Upon Termination or Change |
| ||||
Executive Compensation
The following table provides information regarding restricted and performance units vesting during Fiscal 20212022 for each of the NEOs. For the restricted units, the value realized on vesting was calculated by using the NYSE closing price of CEQP common units on the day immediately prior to the date that the award vested. For the performance units, the value realized on vesting was calculated by using the NYSE closing price of CEQP common units on the day the award vested.
| UNIT AWARDS | Unit Awards | |||||||||||||||||
| Name | Number of Units Acquired on Vesting | Value Realized on Vesting ($) | Number of Units Acquired on Vesting | Value Realized on Vesting ($) | ||||||||||||||
Robert G. Phillips | 175,703 | 3,388,619 | 402,441 | 11,324,193 | ||||||||||||||
Robert T. Halpin | 121,132 | 2,340,972 | 127,518 | 3,585,190 | ||||||||||||||
John W. Black | 20,871 | 589,230 | ||||||||||||||||
William H. Moore | 83,734 | 1,618,523 | 90,485 | 2,544,856 | ||||||||||||||
Steven M. Dougherty | 83,844 | 1,620,148 | 94,034 | 2,644,227 | ||||||||||||||
Joel C. Lambert | 87,615 | 1,692,216 | 114,982 | 3,233,226 | ||||||||||||||
Nonqualified Deferred Compensation Plan
None of the NEOs currently participate in the Crestwood Nonqualified Deferred Compensation Plan.
Potential Payments Upon Termination of Employment or Change-in-ControlChange of Control
Termination and Change-in-ControlChange of Control Agreements or Arrangements
Under the terms of the Executive Employment Agreements, if the named executive officer’s employment is terminated during the initial term or a subsequent one-year renewal by Crestwood Operations without “employer cause” or the executive resigns due to “employee cause” or the named executive officer’s employment with Crestwood Operations terminates as a result of death, permanent disability, or Crestwood Operations’ election not to renew the Executive Employment Agreement, the executive will be entitled to receive, subject to the executive’s execution of a release of claims, severance equal to two (or, in the case of Mr. Phillips, three) times the sum of the executive’s base salary and average annual bonus for the prior two years, payable in equal installments over an 18-month period following termination. In addition, the named executive officer would be entitled to certain subsidized medical benefits over such 18-month period and all restricted units held by the named executive officer would vest in full. The vesting of the performance units would depend on how much of the original performance period remains outstanding.
Under the terms of the Executive Employment Agreements (other than Mr. Phillips), if the named executive officer is terminated during the period beginning three months prior to a Change inof Control and ending twelve months after a Change inof Control, then the severance amount payable shall be increased to three times the sum of his base salary and average annual bonus for the prior two years.
If the named executive officer fails to comply with covenants in the Executive Employment Agreement (such as non-compete restrictions), the release of claims or similar agreement, he forfeits the right to receive any severance payment installments following such failure to comply.
For purposes of the Executive Employment Agreements, the following terms are generally defined as follows:
| • | “Employee |
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Executive Compensation
| total of Employee’s Base Salary, target term sheet bonus potential and target equity percentage; (D) a reassignment by the Company of the employee’s principal place of employment to a location more than 50 miles from his principal place of employment on the Effective Date, but excluding normal business travel consistent with Employee’s duties, responsibilities and position. |
| • | “Permanent Disability” shall mean the inability of Employee, with or without reasonable accommodation, by reason of illness, incapacity, or other disability, to perform Employee’s duties or fulfill Employee’s employment obligations to Employer, as determined by Employer’s Senior Executive Committee and as certified in writing by a competent medical physician chosen by such Senior Executive Committee, for a cumulative total of 180 days in any 12 month period; provided, however, that such period of absence may be extended if required by applicable law. |
TheAs of December 31, 2022, the restricted units and the performance units granted to our NEOs pursuant to the Crestwood Equity Long-Term Incentive Plan will receive accelerated vesting upon the occurrence of a Change inof Control, or a termination due to a termination without cause. In August 2021, the plan was amended to modify the definition of a Change inof Control, the new definition of which is defined below. With respect to any performance unit that is outstanding at the time of a Change inof Control, the award will vest at different levels depending on how much of the original performance period remains outstanding. If there are less than twelve months left in the performance period, the awards will be calculated at actual performance levels; if there are more than twelve months left within the original performance period, the awards will be calculated using 100% of target levels. Effective as of January 1, 2023, we further amended the plan to eliminate accelerated vesting solely in the event of a Change of Control.
In the event that an NEO is terminated due to a death or disability, the restricted units and performance units will also be accelerated. Performance units will accelerate at 100% of target levels.
The new “Change inof Control” definition is generally as follows:. “Change of Control,” means and shall be deemed to have occurred upon one or more of the following events:
(i) any direct or indirect sale, lease, exchange, liquidation, division or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Partnership to any person or persons, other than to one or more Affiliates;
(ii) the consolidation, reorganization, merger, recapitalization, exchange, division or other similar transaction (in one transaction or a series of related transactions) (any such transaction or series of transactions referred to herein as a “Merger”) pursuant to which (a) more than 50% of the combined voting power of the outstanding equity interests in the General Partner or its successor entities cease to be owned, directly or indirectly, by the Partnership, (b) more than 50% of the combined voting power of the outstanding equity interests in the Partnership or its successor entities cease to be, directly or indirectly, owned immediately following the Merger by the owners of such interests immediately prior to the Merger, or (c) the General Partner or one or more other Affiliates of the Partnership cease to be general partner(s) of the Partnership or its successor;
(iii) a person or group other than the Partnership or its consolidated subsidiaries directly or indirectly becoming the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 35% of the voting power of the then outstanding common units of the Partnership or its successor; or
(iv) individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board or of the board of directors or equivalent body of any successor parent of the Partnership or of the General Partner; provided, however, that any individual becoming a director subsequent to the date hereof whose election or nomination for election by the Partnership’s unitholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board in the ordinary course of business shall be considered as though such individual was a member of the Incumbent Board, but
| 52 | | |||
Executive Compensation
excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the
| ||||
Executive Compensation
election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board or otherwise outside the ordinary course of business.
The terms “cause” and “disability” generally have the same meaning as the terms provided above with respect to the Executive Employment Agreements.
The following table presents information about the gross payments potentially payable to our named executive officers pursuant to the Executive Employment Agreements, assuming each such named executive officer experienced a qualifying termination of employment on December 31, 2021.2022. The amounts that each NEO could receive separately upon a Change inof Control event, without an accompanying termination of employment, pursuant to the accelerated vesting and settlement of awards pursuant to the Crestwood Equity Long-Term Incentive Plan are also listed separately in the table below. Each value is calculated using the closing market price of the units as of December 31, 2021,30, 2022, which was $27.59.$26.19. Each of the amounts below reflect our best estimate of the amounts that could become payable to the NEOs pursuant to existing compensation arrangements but will not be fully determinable unless or until the triggering event were to take place.
Name | Cash Severance ($)(1) | Accelerated Vesting of Restricted and Performance Units ($)(2) | Benefit Continuation ($)(3) | Employment Agreement Total ($) | ||||||||||||
Robert G. Phillips | 5,827,500 | 15,109,190 | 27,058 | 20,963,748 | ||||||||||||
Robert T. Halpin | 2,251,000 | 5,721,183 | 29,613 | 8,001,796 | ||||||||||||
William H. Moore | 1,803,000 | 4,261,307 | 29,619 | 6,093,926 | ||||||||||||
Steven M. Dougherty | 1,812,440 | 4,096,677 | 29,619 | 5,938,736 | ||||||||||||
Joel C. Lambert | 1,882,600 | 4,559,074 | 31,336 | 6,473,010 | ||||||||||||
|
|
|
| Phillips | Halpin | Dougherty | Lambert | Moore | Black(2)(3) | |||||||||||||||||||
Resignation without Employee Cause, Termination for Employer Cause, Retirement | ||||||||||||||||||||||||
Accrued, unused vacation pay | $ | 61,538 | $ | 46,154 | $ | 34,615 | $ | 36,154 | $ | 32,692 | $ | 30,769 | ||||||||||||
TOTAL: | $ | 61,538 | $ | 46,154 | $ | 34,615 | $ | 36,154 | $ | 32,692 | $ | 30,769 | ||||||||||||
Resignation with Employee Cause, | ||||||||||||||||||||||||
Cash Severance | $ | 2,400,000 | $ | 1,200,000 | $ | 900,000 | $ | 940,000 | $ | 850,000 | $ | 800,000 | ||||||||||||
Average Annual Bonus | $ | 4,800,000 | $ | 1,600,000 | $ | 1,252,800 | $ | 1,247,850 | $ | 1,264,000 | $ | 588,160 | ||||||||||||
Accelerated Restricted Units | $ | 8,669,309 | $ | 4,201,007 | $ | 2,930,372 | $ | 2,958,816 | $ | 3,004,620 | $ | 1,812,322 | ||||||||||||
Accelerated Performance Units1 | $ | 4,361,903 | $ | 1,177,530 | $ | 824,785 | $ | 1,096,480 | $ | 1,023,749 | $ | 377,052 | ||||||||||||
Benefit Continuation | $ | 25,618 | $ | 29,613 | $ | 29,619 | $ | 29,896 | $ | 29,619 | $ | — | ||||||||||||
Accrued, unused vacation pay | $ | 61,538 | $ | 46,154 | $ | 34,615 | $ | 36,154 | $ | 32,692 | $ | 30,769 | ||||||||||||
TOTAL: | $ | 20,318,368 | $ | 8,254,304 | $ | 5,972,191 | $ | 6,309,196 | $ | 6,204,680 | $ | 3,608,303 | ||||||||||||
Change of Control (Prior to January 1, 2023 Amendments) |
| |||||||||||||||||||||||
Cash Severance | $ | 2,400,000 | $ | 1,800,000 | $ | 1,350,000 | $ | 1,410,000 | $ | 1,275,000 | $ | 800,000 | ||||||||||||
Average Annual Bonus | $ | 4,800,000 | $ | 2,400,000 | $ | 1,879,200 | $ | 1,871,775 | $ | 1,896,000 | $ | 588,160 | ||||||||||||
Accelerated Restricted Units | $ | 8,669,309 | $ | 4,201,007 | $ | 2,930,372 | $ | 2,958,816 | $ | 3,004,620 | $ | 1,812,322 | ||||||||||||
Accelerated Performance Units1 | $ | 4,361,903 | $ | 1,177,530 | $ | 824,785 | $ | 1,096,480 | $ | 1,023,749 | $ | 377,052 | ||||||||||||
Benefit Continuation | $ | 25,618 | $ | 29,613 | $ | 29,619 | $ | 29,896 | $ | 29,619 | $ | — | ||||||||||||
Accrued, unused vacation pay | $ | 61,538 | $ | 46,154 | $ | 34,615 | $ | 36,154 | $ | 32,692 | $ | 30,769 | ||||||||||||
TOTAL: | $ | 20,318,368 | $ | 9,654,304 | $ | 7,048,591 | $ | 7,403,121 | $ | 7,261,680 | $ | 3,608,303 | ||||||||||||
| ||||
Executive Compensation
| 1 | All unvested Performance Unit Awards illustrated in table are accelerated at 100% or target, except the 2020 PUAs. The value for these awards in the table reflect actual performance achievement certified in February 2023, as prescribed in the employee agreements when there are fewer than 12 months to the restriction period ending on December 31. |
| 2 | Mr. Black’s Employment Agreement excludes subsidized medical benefits. |
| 3 | Mr. Black’s Cash Severance value is composed of 2 times salary and average annual bonus for the prior two years in a Change of Control termination, but increased to 3 times, effective January 1, 2023, as described in the 2023 Omnibus Amendment to Employee Agreements. |
Securities Authorized for Issuance Under
Equity Compensation Plans
The following table sets forth in tabular format, a summary of CEQP’s equity compensation plan information as of December 31, 2021:2022:
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)) | |||||||||||||||||
|
| (a) | (b) | (c) | |||||||||||||||||
Equity compensation plans approved by security holders | — | $ | — | — | ||||||||||||||||
Equity compensation plans not approved by security holders | — | $ | — | |||||||||||||||||
| 2,496,119 | ||||||||||||||||||||
Total | — | $ | — | |||||||||||||||||
Equity Compensation Plans Not Approved by Security Holders
The Board adopted the Crestwood Nonqualified Deferred Compensation Plan (the “NQDC”) in December 2016 and an employee unit purchase plan (the “Plan” and together with NQDC, the “Compensation Plans”) in August 2018, both of which are further described below. The Compensation Plans have not been approved by our unitholders. The Compensation Committee is the administrator of the Compensation Plans, and as such determines all matters relating to options granted under the Compensation Plans, including the selection of the recipients, the size of the grants, and the conditions to vesting and exercisability.Plans.
Non-QualifiedNonqualified Deferred Compensation Plan
Our Compensation Committee adopted the Crestwood Nonqualified Deferred Compensation Plan (the “NQDC”) under which designated eligible participants may elect to defer compensation. Eligible participants include the executive officers, certain other senior officers and members of the Board.
Subject to applicable tax laws, the eligible executive and senior officers may elect to defer up to 50% of their base salary and up to 100% of incentive compensation earned and equity grants and the members of the Board may elect to defer up to 100% of their directors’ fees and up to 100% of equity grants. In addition to elective deferrals, the NQDC permits us to make matching contributions and discretionary contributions. Participants may elect to receive payment of their vested account balances in a single cash payment or in annual installments for a period of up to five years. Payments will be made on March 15 of any year at least one year after the deferral date, or upon separation from service. If a participant’s employment terminates before the designated year, payment is accelerated and paid in a lump sum. Compensation deferred under the Plan represents an unsecured obligation of the Partnership.
Currently, none of our NEOs or directors participate in the NQDC.
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Securities Authorized for Issuance Under EquityExecutive Compensation Plans
Employee Unit Purchase Plan
In August 2018, the Board approved an employee unit purchase plan (the “Plan”) under which employees of the General Partner may purchase common units through payroll deductions up to a maximum of 10% of the employees’ eligible compensation, not to exceed $25,000 for any calendar year. Under the Plan, we anticipate purchasing common units on the open market for the benefit of participating employees based on their payroll deductions. In addition, we may match up to 10% of participating employees’ payroll deductions to purchase additional common units for participating employees. The Board authorized 1,500,000 common units (subject to adjustment as provided in the Plan) to be available for purchase. During the years ended December 31, 2022, 2021 and 2020, 9,934, 9,932 and 2019, 9,932, 29,784 and 6,341 common units were purchased under the Plan, respectively.
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As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of our CEO.
We identified the median employee by examining 20212022 cash compensation (including, but not limited to, salary and overtime earned, 401(k) employer matches and equity grants), for all individuals, including our CEO, who were employed on December 31, 2021.2022. We included all fulltime, salaried and hourly employees. As of December 31, 2021,2022, we employed 618727 such persons. We annualized the compensation for any employees that were not employed for all of 2021,2022, but did not make any other assumptions, adjustments, or estimates with respect to total cash compensation or equity. Since all of our employees, including our CEO, are located in the United States, we did not make any cost-of-living adjustments in identifying the median employee. We believe the use of total cash and equity compensation for all employees is the most appropriate compensation measure since it includes the main elements of compensation for the majority of our employees.
After identifying the median employee, we calculated annual 20212022 compensation for the median employee using the same methodology used to calculate the Chief Executive Officer’sCEO’s total compensation as reflected in the Summary Compensation Table above. The median employee’s annual 20212022 compensation was as follows:
Name | Year | Salary | Bonus | Stock Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | Year | Salary | Bonus | Equity Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Median Employee | 2021 | $ | 88,000 | $ | 0 | $ | 0 | $ | 22,880 | $ | 6,030 | $ | 116,910 | 2022 | $90,781 | $0 | $0 | $14,583 | $6,709 | $112,073 | |||||||||||||||||||||||||||||||||||||||||||
With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our 20212022 Summary Compensation Table included in this Annual Report,Proxy Statement, which was $8,540,078.$7,040,833. Our 20212022 ratio of Chief Executive Officer total compensation to our median employee’s total compensation is reasonably estimated to be 74:63:1.
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Year | Summary Compensation Table Total for PEO ($)(1)(4) | Compensation Actually Paid to PEO ($)(3)(4) | Average Summary Compensation Table Totals for Non-PEO NEOs ($)(2)(4) | Average Compensation Actually Paid to Non-PEO NEOs ($)(2)(3)(4) | Value of Initial Fixed $100 Investment Based On: | Net Income (Loss) ($) | Consolidated Adjusted EBITDA ($)(7) | |||||||||||||||||||||||||||||||||
Total Shareholder Return ($)(5) | Peer Group Total Shareholder Return ($)(6) | |||||||||||||||||||||||||||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||||||||||||||||||||||||
| 2022 | 7,040,833 | 6,797,345 | 2,487,914 | 2,378,416 | 115.51 | 188.53 | 72,500,000 | 762,100,000 | ||||||||||||||||||||||||||||||||
| 2021 | 8,540,078 | 15,312,180 | 3,023,159 | 4,425,602 | 110.50 | 127.84 | (37,400,000 | ) | 600,100,000 | |||||||||||||||||||||||||||||||
| 2020 | 6,966,286 | 1,380,580 | 2,792,688 | 830,408 | 69.70 | 84.00 | (15,300,000 | ) | 580,300,000 | |||||||||||||||||||||||||||||||
| (1) | Mr. Phillips was the CEO for 2020, 2021 and 2022 and is designated as the principal executive officer (“PEO”). |
| (2) | Messrs. Halpin, Moore, Dougherty, Lambert were NEOs for 2020, 2021 and 2022. Mr. Black was appointed to NEO status in August 2022. He does not factor into the Summary Compensation Table (SCT) for years 2020 and 2021, but equity compensation values from 2020, 2021 and 2022 were included in the average CAP for Non-PEO NEOs. |
| (3) | CAP values for 2022 is calculated based on the aggregate value of: (a) Salary earnings; (b) Unit Awards granted in 2022 and their fair market values on December 31, 2022 (performance award grants with market conditions are valued using a Monte Carlo simulation estimate); (c) Non-Equity Incentive Plan compensation earned in 2022 and paid in 2023; (d) All other Compensation consisting of benefits and perquisites shown in the SCT. CAP values for 2020 and 2021 used the same calculation methodology with an additional step for Unit Awards granted prior to 2022. For these grants, compensation was calculated considering actual vested values and any incremental value changes between the previous reporting year end between vesting or unvested units. CAP values illustrated in the table for the CEO and other NEOs is, therefore, combination of realized and estimated compensation not yet earned. |
| (4) | The tables below illustrate adjustments made to the SCT to arrive at the CAP values in the above table for both the CEO and other NEOs. Adjustments made to these values are confined to year-end differences between equity awards versus the grant date values of such awards reported in the SCT. No adjustments are made for dividend equivalent rights (DER) units or cash distributions on unvested units since these are considered a return of capital and captured in the fair value of awards. No Equity awards failed to meet vesting conditions during any of the reported years in the table. |
PEO — Pay Versus Performance Reconciled to Summary Compensation Table (SCT) | ||||||||||||||||||||
Year | SCT Total ($) | Equity Award Deductions from SCT Total ($) | Equity Award Adjustments at Year End* ($) | CAP Total ($) | ||||||||||||||||
| 2022 | 7,040,833 | (5,287,994 | ) | 5,044,506 | 6,797,345 | |||||||||||||||
| 2021 | 8,540,078 | (5,581,674 | ) | 12,353,776 | 15,312,180 | |||||||||||||||
| 2020 | 6,966,286 | (4,783,070 | ) | ( 802,636 ) | 1,380,580 | |||||||||||||||
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PEO — * Equity award adjustment reconciliation | ||||||||||||||||||||
Year | Year-end Fair Value of Unvested Awards Granted During Year ($) | Year-over-year Change in Fair Value of Outstanding and Unvested Equity Awards ($) | Year-over-year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year ($) | Total Equity Award Adjustments ($) | ||||||||||||||||
| 2022 | 4,839,185 | 22,883 | 182,438 | 5,044,506 | ||||||||||||||||
| 2021 | 7,314,943 | 4,985,057 | 53,776 | 12,353,776 | ||||||||||||||||
| 2020 | 3,048,755 | (3,510,348 | ) | (341,043 | ) | (802,636 | ) | |||||||||||||
Non-PEO NEOs — Pay Versus Performance Reconciled to Summary Compensation Table (SCT) | ||||||||||||||||||||
Year | SCT Total ($) | Equity Award Deductions from SCT Total ($) | Equity Award Adjustments at Year End* ($) | CAP Total ($) | ||||||||||||||||
| 2022 | 2,487,914 | (1,582,524 | ) | 1,473,026 | 2,378,416 | |||||||||||||||
| 2021 | 3,023,159 | (1,710,545 | ) | 3,112,988 | 4,425,602 | |||||||||||||||
| 2020 | 2,792,688 | (1,791,227 | ) | (171,053 | ) | 830,408 | ||||||||||||||
Non- PEO NEOs — * Equity Award Adjustment Reconciliation | ||||||||||||||||||||
Year | Year-end Fair Value of Unvested Awards Granted During Year ($) | Year-over-year Change in Fair Value of Outstanding and Unvested Equity Awards ($) | Year-over-year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year ($) | Total Equity Award Adjustments ($) | ||||||||||||||||
| 2022 | 1,456,571 | (39,817 | ) | 56,272 | 1,473,026 | |||||||||||||||
| 2021 | 1,966,886 | 1,119,861 | 26,241 | 3,112,988 | ||||||||||||||||
| 2020 | 1,060,546 | (1,168,873 | ) | (62,726 | ) | (171,053 | ) | |||||||||||||
| (5) | TSR is calculated on the value of an initial, fixed investment on January 1, 2020 of $100 in our common units at the end of each reporting year in the table, after considering distributions received by holders of our common units during each reporting year. |
| (6) | Peer Group TSR is calculated on the value of an initial, fixed investment on January 1, 2020 of $100 in the common units of a group of our peer companies during 2020, 2021 and 2022 weighted based on their relative market capitalization during that period. TSR is calculated on a cumulative basis at the end of each reporting year in the table, after considering distributions received by holders of their common units during each reporting year. Our peers for the 2020 year consisted of WMB, NGL, DCP, ENBL, ENLC, ETRN, GEL, MMP, MPLX, NS, SMLP, SRLP, TRGP and WES. Our peers for the 2021 year consisted of TRGP, DCP, ENLC, MPLX, SRLP, ENBL, MMP, GEL, WMB, WES, NS, ETRN and SMLP. Our peers for the 2022 year consisted of TRGP, DCP, ENLC, MPLX, AM, MMP, GEL, WMB, WES, NS, ETRN, NGL and SMLP. |
| (7) | Consolidated Adjusted EBITDA is defined as income before income taxes, plus debt-related costs (interest and debt expense, net and gain (loss) on modification/extinguishment of debt) and depreciation, amortization and accretion expense (“EBITDA”), after considering the adjusted earnings impact of our unconsolidated affiliates by adjusting equity earnings or losses from our unconsolidated affiliates to reflect our proportionate share (based on the distribution percentage) of their EBITDA, excluding gains and losses on long-lived assets and other impairments. Adjusted EBITDA also considers the impact of certain significant items, such as unit-based compensation charges, gains or losses and impairments on long-lived assets, impairments of goodwill, third party costs incurred related to potential and completed acquisitions, certain environmental remediation costs, the change in fair value of commodity inventory-related derivative contracts, costs associated with the realignment and restructuring of our operations and corporate structure, and other transactions identified in a specific reporting period. For more information about Adjusted EBITDA along with a reconciliation of net income (loss) to Adjusted EBITDA, please see Item 7. Results of Operations in our Annual Report on Form 10-K as of December 31, 2022. |
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Tabular List of Most Important Performance Measures used to Link CAP to NEOs for the Most Recently Completed Fiscal Year to Company Performance |
Count (1) | Measure (2) | Category | ||
| 1 | Consolidated Adjusted EBITDA | Financial | ||
| 2 | Consolidated Distributable Cash Flow Per Unit | Financial | ||
| 3 | Return on Capital Invested | Financial | ||
| 4 | Total Unitholder Return (TSR) | Financial | ||
| 5 | Safety | Non-Financial | ||
| 6 | Sustainability | Non-Financial | ||
| (1) | Counts are provided for quantitative purposes only and do not imply or infer any ranking of one measure over the other. |
| (2) | Safety and Sustainability are separate measures comprised of weighted subsets. See Annual Incentive Awards for constituent parts to these measures. |
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Review, Approval or Ratification of Transactions with Related Persons
Our related person transactions policy applies to any transaction since the beginning of our fiscal year (or currently proposed transaction) in which we or any of our subsidiaries was or is to be a participant, the amount involved exceeds $120,000 and any director, director nominee, executive officer, 5% or greater unitholder (or their immediate family members) had, has or will have a direct or indirect material interest. A transaction that would be covered by this policy would include, but not be limited to, any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangements or relationships.
Under our related person transactions policy, related person transactions may be entered into or continue only if the transaction is deemed to be “fair and reasonable” to us, in accordance with the terms of our Partnership Agreement. Under our Partnership Agreement, transactions that represent a “conflict of interest” may be approved in one of three ways and, if approved in any of those ways, will be considered “fair and reasonable” to us and the holders of our common units. The three ways enumerated in our related person transactions policy for reaching this conclusion include:
| i. | approval by the Conflicts Committee under Section 7.9 of our Partnership Agreement (Special Approval); |
| ii. | approval by our Chief Executive Officer applying the criteria specified in Section 7.9 of our Partnership Agreement if the transaction is in the normal course of the Partnership’s business and is (a) on terms no less favorable to the Partnership than those generally being provided to or available from unrelated third parties or (b) fair to the Partnership, taking into account the totality of the relationships between the parties involved (including other transactions that may be particularly favorable or advantageous to the Partnership); and |
| iii. | approval by an independent committee of the Board (either the Audit Committee or a Special Committee) applying the criteria in Section 7.9 of our Partnership |
Once a transaction is approved in any of these ways, it is “fair and reasonable” and accordingly deemed (i) approved by all of our partners and (ii) not to be a breach of any fiduciary duties of the General Partner.
The General Partner determines in its discretion which method of approval is required depending on the circumstances.
Under our Partnership Agreement, when determining whether a related party transaction is “fair and reasonable,” if the General Partner elects to adopt a resolution or a course of action that has not received Special Approval, then the General Partner may consider:
| • | the relative interests of any party to such conflict, agreement, transaction or situation and the benefits and burdens relating to such interest;
A related party transaction that is approved by the Conflicts Committee is conclusively deemed to be fair and reasonable to us. Under our Partnership Agreement, the material facts known to the General Partner or any of our affiliates regarding the transaction must be disclosed to the Conflicts
Certain Relationships and Related Person Transactions Committee at the time the committee gives its approval. When approving a related party transaction, the Conflicts Committee considers all factors it considers relevant, reasonable or appropriate under the circumstances, including the relative interests of any party to the transaction, customary industry practices and generally accepted accounting principles. Under our Partnership Agreement, in the absence of bad faith by the General Partner, the resolution, action or terms so made, taken or provided by the General Partner with respect to approval of the related party transaction will not constitute a breach of our Partnership Agreement or any standard of fiduciary duty. Under our related person transactions policy, as well as under our Partnership Agreement, there is no obligation to take any particular conflict to the Conflicts Committee
When determining whether a related party transaction is in the normal course of our business and is (a) on terms no less favorable to us than those generally being provided to or available from unrelated third parties or (b) fair to us, taking into account the totality of the relationships between the parties involved (including other transactions that may be particularly favorable or advantageous to us), the General Partner considers any facts and circumstances that it deems to be relevant, including:
The Audit Committee of the Board oversees the Partnership’s financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. In fulfilling its oversight responsibilities, the The Partnership’s independent registered public accounting firm, Ernst & Young LLP, is responsible for expressing an opinion on the conformity of the audited financial statements with accounting principles generally accepted in the United States of America. The Audit Committee reviewed with Ernst & Young LLP the firm’s judgment as to the quality, not just the acceptability, of the Partnership’s accounting principles and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards. The Based on the reviews and discussions referred to above, the The Audit Committee Angela A. Minas, Chair David Lumpkins Frances M. Vallejo
Proposal 3
The Audit Committee of the Board of Directors has selected Ernst & Young LLP as the independent auditors of the Partnership for the fiscal year ending December 31, The Board of Directors is submitting the selection of Ernst & Young LLP for ratification at the Annual Meeting. The submission of this matter for approval by unitholders is not legally required, but the Board of Directors and the Audit Committee believe the submission provides an opportunity for unitholders through their vote to communicate with the Board of Directors and the Audit Committee about an important aspect of corporate governance. If the unitholders do not ratify the selection of Ernst & Young LLP, the Audit Committee will reconsider the selection of that firm as the Partnership’s auditors. The Audit Committee has the sole authority and responsibility to retain, evaluate and replace the Partnership’s auditors. The unitholders’ ratification of the selection of Ernst & Young LLP does not limit the authority of the Audit Committee to change auditors at any time. The Company expects that representatives of Ernst & Young LLP will be present at the Annual Meeting to respond to appropriate questions and to make a statement if they desire to do so.
The Audit Committee has approved the use of Ernst & Young LLP as our independent principal accountant. All services provided by our independent principal accountant are subject to pre-approval by the Audit Committee. The Audit Committee is informed of each engagement of the independent principal accountant to provide services to us. We have engaged Ernst & Young LLP as our independent principal accountant. The following table summarizes fees we were billed by Ernst & Young LLP for independent auditing, tax and related services for each of the last two fiscal years:
PROPOSAL 4 – TO APPROVE THE THIRD AMENDMENT TO THE CRESTWOOD EQUITY PARTNERS LP 2018 LONG TERM INCENTIVE PLAN (THE “LTIP PROPOSAL”) The Crestwood Equity Partners LP 2018 Long Term Incentive Plan (the “LTIP”), was adopted by the Board of Directors of our General Partner (the “Board”) and approved by the unitholders on May 10, 2018. At this Annual Meeting, unitholders will be asked to approve an increase in the number of units available for issuance under the LTIP (the “Third Amendment”) by 2,500,000 units. If approved by the Partnership’s unitholders at the Annual Meeting, the Third Amendment to the LTIP will become effective April 1, 2023. The terms of the Third Amendment is attached hereto as Annex A. If the Third Amendment becomes effective, the Partnership will register the additional units on a Registration Statement on Form S-8 as soon as practicable following the effective date. Summary of the Third Amendment to the LTIP The use of unit-based awards under the LTIP continues to be a key element of the Partnership’s compensation program. The purpose of the Third Amendment is to increase the number of common units that the Partnership may issue under the LTIP by 2,500,000 units, from 4,000,000 to 6,500,000 units. As of February 17, 2023, 2,005,476 units associated with outstanding awards were expected to vest, and there were no options, vested and unvested, outstanding and unexercised. No other equity awards were outstanding under the LTIP as of such date. Of the 4,000,000 units currently authorized for issuance under the LTIP, there remain only 1,516,305 units available for grant as of February 17, 2023. Consequence of Failing to Approve the LTIP Proposal If this LTIP Proposal and the Third Amendment is not approved by the Partnership’s unitholders, the LTIP will continue to be effective, and there will be no impact on the rights of existing award holders under the LTIP. However, if this LTIP Proposal and the Third Amendment is not approved by the Partnership’s unitholders, we do not expect to be able to issue any meaningful equity-based compensation awards pursuant to the LTIP to eligible employees and directors in the future, and the Partnership would be required to reevaluate our compensation programs in general. Summary of the Amended Plan Equity-based compensation awards have always been integral to our compensation strategy and we have used grants of equity-based awards to provide employees, consultants and directors with incentive compensation awards to encourage superior performance and enhance the ability of our General Partner, the Partnership and their respective affiliates to attract and retain the services of individuals who are essential for the growth and profitability of the Partnership and to encourage them to devote their best efforts to advancing the business of the Partnership. Therefore, to attract, retain and motivate non-employee directors, officers and key management employees of exceptional abilities and, in recognition of the significant contributions to the long-term performance and growth of the Partnership and its subsidiaries made by these individuals, the Board has adopted the Third Amendment to the LTIP, subject to unitholder approval. Approval of the Third Amendment will permit the Partnership to continue to use unit-based compensation to align unitholder and employee interests and to motivate employees and others providing services to the Partnership or any subsidiary. While the Board is cognizant of the potential dilutive effect of compensatory awards, it also recognizes the significant motivational and performance benefits that are achieved from making such awards. The Board determined that an increase of 2,500,000 units was appropriate based on a number of factors, including: the current number of units available under the LTIP, the number of units that remain subject to outstanding options, phantom units and restricted units, the potential dilutive effects on the Partnership’s unitholders, the Partnership’s historical annual burn rates, and the anticipated future needs for equity to be able to attract and retain key employees and members of our leadership team.
Proposal to Approve the Third Amendment to the Crestwood Equity Partners LP 2018 Long Term Incentive Plan (the “LTIP Proposal”) Description of the LTIP Plan The following description is a summary of the principal provisions of the LTIP, including the terms of the Third Amendment. A copy of this Third Amendment is attached to this proxy statement as Annex A, and you should refer to the LTIP for further details of the plan and awards that may be made thereunder. This summary is qualified in its entirety by reference to Annex A and the terms of the LTIP. Key Terms of the LTIP
Proposal to Approve the Third Amendment to the Crestwood Equity Partners LP 2018 Long Term Incentive Plan (the “LTIP Proposal”)
Purpose of the LTIP The purpose of the LTIP is to promote the interests of our General Partner, us and the affiliates of both us and our General Partner by providing to employees, consultants and directors incentive compensation awards to encourage superior performance. The LTIP is also contemplated to enhance the ability of our General Partner, us and our respective affiliates to attract and retain the services of individuals who are essential for our growth and profitability and to encourage them to devote their best efforts to advancing our business. In furtherance of such purpose, the LTIP provides for the issuance of a variety of equity-based grants, including grants of (i) options, (ii) unit appreciation rights, (iii) restricted units, (iv) phantom units, (v) cash awards, (vi) performance awards, (vii) distribution equivalent rights, and (viii) other unit-based awards (collectively or individually referred to as “Awards”). The LTIP is not subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended. The LTIP will be effective as of the date the LTIP is approved by our unitholders, and will terminate on the earliest of (i) the date terminated by the Board or the Compensation Committee of the Board, (ii) the date all available common units under the LTIP have been paid or issued, or (iii) the ten-year anniversary of August 20, 2021. Awards granted prior to the LTIP’s
Proposal to Approve the Third Amendment to the Crestwood Equity Partners LP 2018 Long Term Incentive Plan (the “LTIP Proposal”) termination date will continue to be effective in accordance with their respective terms and conditions even after the LTIP’s termination. Administration of the LTIP The LTIP will be administered by a committee (the “Committee”) of the Board, appointed by such Board, which will administer the LTIP pursuant to its terms and applicable laws, unless the Board declines to appoint a committee, in which case, the Board shall serve as the Committee and administer the LTIP. The Committee has broad discretion to administer the LTIP, interpret its provisions, and adopt policies for implementing the LTIP. This discretion includes the power to:
The plan administrator may delegate any or all of its powers and duties under the LTIP, including the power to grant Awards, to the Chief Executive Officer of our General Partner. However, pursuant to any such delegation, the Chief Executive Officer of our General Partner would not be permitted to grant Awards to, or take any action with respect to any Award previously granted to, a person who is an officer subject to Rule 16b-3 promulgated by the Securities Exchange Commission (“SEC”) or a member of the Board. Units Subject to the Plan Subject to unitholder approval of the Third Amendment to the LTIP, the total aggregate number of common units that will be available for delivery with respect to Awards under the LTIP will be 4,016,305 units. This number consists of the 2,500,000 units being requested in connection with this Third Amendment, as well as 1,516,305 units that were still available for issuance, or were forfeited or otherwise generally terminated without delivery. As of December 30, 2022 (the last trading day of fiscal year 2022), the price per share of the Partnership’s common unit was $26.19. The units issued pursuant to Awards under the LTIP may be authorized and unissued units or units that the Partnership reacquired, including units purchased in the open market. Pursuant to the terms of the LTIP, if any Award is forfeited, canceled, exercised, settled in cash, or otherwise terminated without the actual delivery of common units pursuant to such Award, then any common units that are so forfeited, canceled, exercised, settled in cash, or otherwise terminated without the actual delivery of common units shall be available to satisfy future Awards under the LTIP. The common units delivered pursuant to the LTIP shall consist, in whole or part, of (i) common units acquired in the open market, (ii) common units acquired from us (including newly issued units), our General Partner, any of our affiliates or any other person or (iii) any combination of the foregoing. The fair market value of a common unit on a given date will be the closing sales price of a common unit on the immediately preceding trading date.
Proposal to Approve the Third Amendment to the Crestwood Equity Partners LP 2018 Long Term Incentive Plan (the “LTIP Proposal”) Persons Who May Participate in the LTIP Employees of us, our General Partner, or any of our respective affiliates, and the non-employee members of the Board, are eligible to receive Awards (the “Eligible Persons”). As of February 17, 2023, approximately 157 individuals, including 7 executive officers, 7 non-employee directors and 143 other employees were eligible to receive Awards under the LTIP. Eligible persons designated by the plan administrator to receive Awards under the LTIP are referred to as “Participants.” A Participant under the LTIP will be eligible, at the discretion of the plan administrator, to receive an Award pursuant to the terms of the LTIP and subject to any limitations imposed by appropriate action of the plan administrator or within the individual award agreement. Awards under the LTIP Options. Options may be granted under the LTIP to purchase a specific number of common units at a set exercise price. The exercise price of each option granted under the LTIP will be determined by the plan administrator at the time the option is granted, provided that each option may not have an exercise price that is less than the fair market value of a common unit on the date of grant unless the option is a substitute award, is exempt from Section 409A as a short-term deferral, or complies with Section 409A. The plan administrator will determine the manner in which, and time or times at which, an option will vest and become exercisable, in whole or in part. The plan administrator will also determine the methods and form of payment for the exercise of an option (including, without limitation, payment in cash, check acceptable to us, withholding Units from the Award, a “cashless-broker” exercise through procedures approved by us, or any combination thereof) and the methods and forms in which common units will be delivered to a Participant. Unit Appreciation Rights. A unit appreciation right is an Award that, upon exercise, entitles the holder to receive the excess, if any, of the fair market value of a common unit on the exercise date over the grant price of the unit appreciation right. The excess may be paid in cash and/or in common units as determined by the plan administrator in its discretion. The plan administrator will have the authority to determine to whom unit appreciation rights will be granted, the number of common units to be covered by each grant, and the conditions and limitations applicable to the exercise of the unit appreciation right. The grant price per unit appreciation right will be determined by the plan administrator at the time the unit appreciation right is granted, but each unit appreciation right (other than a substitute award, an award that is exempt from Section 409A by reason of the short-term deferral rule, or an award that is compliant with Section 409A), must have an exercise price that is not less than the fair market value of a common unit on the date of grant. The plan administrator will determine the time or times at which a unit appreciation right may be exercised in whole or in part. Restricted Unit Awards. A restricted unit is a common unit granted under the LTIP that is subject to a risk of forfeiture, restrictions on transferability, and any other restrictions that may be imposed by the plan administrator in its discretion. The plan administrator will have the authority to determine to whom restricted units will be granted, the number of restricted units to be granted to each Participant, the duration of any restrictions, the conditions under which the restricted units may become vested or forfeited, and any other terms and conditions as the plan administrator may establish with respect to the Awards. Upon or as soon as reasonably possible following the vesting of each restricted unit, subject to any applicable federal income tax withholding, a Participant will be entitled to have the restrictions removed from his or her Award so that the Participant then holds an unrestricted common unit. To the extent provided by the plan administrator in its discretion, a grant of restricted units may provide that a distribution made by us with respect to the restricted units (a “Unit Distribution Right” or “UDR”) will be subject to the same forfeiture and other restrictions as the restricted unit.
Proposal to Approve the Third Amendment to the Crestwood Equity Partners LP 2018 Long Term Incentive Plan (the “LTIP Proposal”) If restricted, UDRs will be held, without interest, until the restricted unit vests or is forfeited, with the UDR being paid or forfeited at the same time, as the case may be. Absent a restriction on UDRs in the applicable Award agreement, UDRs will be paid to the holder of the restricted unit without restriction at the same time as cash distributions are paid by us to our unitholders. Phantom Unit Awards. A phantom unit is a right to receive a common unit or an amount of cash equal to the fair market value of a common unit if certain conditions set forth in the Award agreement are met. The plan administrator will have the authority to determine the eligible persons to whom phantom units will be granted, the number of phantom units to be granted to each Participant, and any other terms and conditions as the plan administrator may establish. Upon vesting of each phantom unit, subject to any applicable federal income tax withholding, the Participant will be entitled to settlement of the phantom unit and shall receive either a common unit or cash equal to the fair market value of a common unit, as determined by the plan administrator in its discretion and as provided in the applicable Award agreement. Distribution Equivalent Rights. To the extent provided by the plan administrator in its discretion, an Award granted under the LTIP may include a contingent right, granted in tandem or as a separate Award to receive an amount of cash, units, restricted units and/or phantom units, as determined by the plan administrator, equal to the value of any distributions made by us with respect to a common unit during the period such Award is outstanding (a “Distribution Equivalent Right” or “DER”). A DER grant may provide that the DER will be paid directly to the Participant, be credited to a bookkeeping account (with or without interest in the discretion of the plan administrator), be subject to the same vesting restrictions as a respective tandem Award, or be subject to other provisions or restrictions as determined by the plan administrator in its discretion and as provided in the applicable Award agreement. Unit Awards. The LTIP permits the grant of units under the LTIP in a number determined by the plan administrator in its discretion, as a bonus or additional compensation or in lieu of cash compensation the individual is otherwise entitled to receive, in such amounts as the plan administrator determines to be appropriate. Other Unit-Based Awards and Cash Awards. The LTIP also permits the grant of “other unit-based awards,” which are awards that, in whole or in part, are valued or based on or related to the value of a common unit. The vesting of other unit-based awards may be based on a Participant’s continued service, the achievement of specified performance criteria or other measures. On vesting (or on a deferred basis upon specified future dates or events), other unit-based awards may be paid in cash and/or in units, as determined by the plan administrator. The LTIP also permits the grant of cash awards, as an element of or supplement to, or independent of any other Award under the LTIP. Performance-Based Awards. The right of a Participant to exercise, vest in or receive settlement of any Award, and the timing thereof, may be subject to such performance conditions as the plan administrator may specify. Performance conditions may be based on one or more performance goals as determined by the plan administrator. Other Provisions Tax Withholding. We or one of our affiliates will be authorized to withhold from any Award, from any payment due or transfer made under any Award or from any compensation or other amount owing to a Participant, the amount (in cash, common units, other securities or other property) of any applicable taxes payable with respect to the grant of an Award, its exercise, the lapse of restrictions applicable to an Award or in connection with any payment relating to an Award or the transfer of an Award and to take such other actions as may be necessary to satisfy the withholding obligations with respect to an Award. With respect to any Participant who is subject to Rule 16b-3, such tax withholding shall be effected in a way to ensure that such withholding is exempt from Section 16(b) of the Exchange Act pursuant to Rule 16b-3 or other applicable exemption.
Proposal to Approve the Third Amendment to the Crestwood Equity Partners LP 2018 Long Term Incentive Plan (the “LTIP Proposal”) Anti-Dilution Adjustments. Upon the occurrence of any “equity restructuring” event that could result in an additional compensation expense under Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”) if adjustments to Awards with respect to such event were discretionary, the plan administrator will equitably adjust the number and type of common units covered by each outstanding Award and the terms and conditions of such Award to equitably reflect the restructuring event, and the plan administrator will adjust the number and type of common units with respect to which future Awards may be granted under the LTIP. Upon the occurrence of a similar event that would not result in a FASB ASC Topic 718 accounting charge if adjustments to Awards were discretionary, the plan administrator shall have complete discretion to adjust Awards in the manner it deems appropriate. In the event the plan administrator makes any such adjustments, a corresponding and proportionate adjustment shall be made with respect to the maximum number of common units available under the LTIP and the kind of units or other securities available for grant under the LTIP. Change of Control. If specifically provided in an Award agreement, upon a Change of Control, the Award may automatically vest and be payable or become exercisable in full, as the case may be. “Change of Control” for purposes of the LTIP has the meaning set forth above. Amendment. The Board or the plan administrator may terminate or amend the LTIP or any part of the LTIP at any time in any manner, including increasing the number of common units that may be granted, subject to the requirements of the securities exchange upon which the common units are listed at that time and of applicable tax and securities laws. The plan administrator may also waive any conditions or rights under, amend the terms of or alter any outstanding Award as long as no such change would materially reduce the rights or benefits of a Participant without the consent of the Participant or cause the LTIP or cause such Award to fail to comply with the requirements of Section 409A of the Code. Transferability of Awards. Options and unit appreciation rights are only exercisable by the Participant during the Participant’s lifetime, or by the person to whom the Participant’s rights pass by will or the laws of descent and distribution. No Award or right granted under the LTIP may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered and any such purported transfer shall be void and unenforceable. Notwithstanding the foregoing, (i) the plan administrator may, in its discretion, allow a Participant to transfer an Award without consideration to an immediate family member or a related family trust, limited partnership, or similar entity on the terms and conditions established by the plan administrator from time to time; and (ii) an Award may be transferred pursuant to a domestic relations order entered or approved by a court of competent jurisdiction upon delivery to us of a written request for such transfer and a certified copy of such order. Forfeiture of Awards. Unless waived by the plan administrator or otherwise provided in a written agreement between us and a Participant, an unvested Award that is still outstanding will be forfeited by the Participant upon termination of the Participant’s employment with or service to our General Partner or its affiliates or membership on the Board, as applicable. Federal Income Tax Consequences The following discussion is for general information only and is intended to summarize briefly the United States federal tax consequences to Participants arising from participation in the LTIP. This description is based on current law, which is subject to change (possibly retroactively). The tax treatment of Participants in the LTIP may vary depending on the particular situation and may, therefore, be subject to special rules not discussed below. No attempt has been made to discuss any potential foreign, state, or local tax consequences. In addition, options or unit appreciation rights that provide for a “deferral of compensation” within the meaning of Section 409A, phantom units, and certain other Awards that may be granted pursuant to the LTIP could be subject to
Proposal to Approve the Third Amendment to the Crestwood Equity Partners LP 2018 Long Term Incentive Plan (the “LTIP Proposal”) additional taxes unless they are designed to comply with certain restrictions set forth in Section 409A and the guidance promulgated thereunder. Options; Unit Appreciation Rights Participants will not realize taxable income upon the grant of an option or a unit appreciation right. Upon the exercise or, if later, the settlement of an option or a unit appreciation right, a Participant will recognize ordinary compensation income (subject to withholding) in an amount equal to the excess of (i) the amount of cash or the fair market value of the common units received, over (ii) the exercise price (if any) paid therefore. A Participant will generally have a tax basis in any common units received pursuant to the exercise of a unit appreciation right, or pursuant to the cash exercise of an option, that equals the fair market value of the common units on the date of exercise. Subject to the discussion under “Tax Code Limitations on Deductibility” below, we or one of our affiliates will be entitled to a deduction for federal income tax purposes that corresponds as to timing and amount with the compensation income recognized by a Participant under the foregoing rules. When a Participant sells the common units acquired as a result of the exercise of an option or unit appreciation right, any appreciation (or depreciation) in the value of the common units after the exercise date is treated as long-term or short-term capital gain or loss for federal income tax purposes, depending on the holding period. The common units must be held for more than 12 months in order to qualify for long-term capital gain treatment. The LTIP allows the plan administrator to permit the transfer of Awards in limited circumstances. See “Other Provisions — Transferability of Awards.” The Internal Revenue Service (the “IRS”) has not provided formal guidance on, nor even specifically addressed, the income tax consequences of a transfer of options or unit appreciation rights. However, the IRS has informally indicated that after a transfer of options (other than to a former spouse pursuant to a domestic relations order), the transferor will recognize income, which will be subject to withholding, and FICA/FUTA taxes will be collectible at the time the transferee exercises the option. If options are transferred to a former spouse pursuant to a domestic relations order, the transferee will recognize ordinary income upon exercise by the transferee, which will be subject to withholding, and FICA/FUTA taxes (attributable to and reported with respect to the transferor) will be collectible from the transferee at such time. Options granted under the LTIP and that are transferred will likely be subject to the same tax treatment. The transfer of an option may result in gift tax consequences to a Participant. Phantom Unit Awards; Restricted Unit Awards A Participant will not have taxable income at the time of the grant of a phantom unit Award, but rather, will generally recognize ordinary compensation income at the time such Participant receives common units or a cash payment in satisfaction of the phantom unit Award in an amount equal to the fair market value of the common units received or the cash payment, whichever is applicable. In addition, the Participant will be subject to ordinary income tax upon the payment of a DER. In general, a Participant will recognize ordinary compensation income as a result of the receipt of common units pursuant to a restricted unit Award in an amount equal to the fair market value of the common units when the common units are received over the amount, if any, paid for such units, provided, that if the common units are not transferable or are subject to a substantial risk of forfeiture when received, the Participant will recognize ordinary compensation income in an amount equal to such excess based on the fair market value of common units (i) when the common units first become transferable or are no longer subject to a substantial risk of forfeiture, in cases where a Participant does not make a valid election under Section 83(b) of the Code, or (ii) when the common units are received, in cases where a Participant makes a valid election under Section 83(b) of the Code.
Proposal to Approve the Third Amendment to the Crestwood Equity Partners LP 2018 Long Term Incentive Plan (the “LTIP Proposal”) A Participant who is an employee will be subject to withholding for federal, and generally for state and local, income taxes at the time such Participant recognizes income under the rules described above with respect to common units or cash received. Directors must make their own arrangements for satisfying any tax obligations they may incur in connection with the receipt of an Award under the LTIP. Distributions that are received by a Participant prior to the time that the common units are taxed to the Participant under the rules described in the preceding paragraph are taxed as additional compensation, not as distributions on common units. The tax basis in the common units received by a Participant will equal the amount recognized by such Participant as compensation income under the rules described in the preceding paragraph plus the amount, if any, paid for the common units, and the Participant’s capital gains holding period in those common units will commence on the later of the date the common units are received or the restrictions lapse (provided that, if a valid election under Section 83(b) of the Code is made with respect to restricted units, then the holding period in such units will begin on the date of receipt of the units). Subject to the discussion immediately below, we or one of our affiliates will be entitled to a deduction for federal income tax purposes that corresponds as to timing and amount with the compensation income recognized by a Participant under the foregoing rules. Tax Code Limitations on Deductibility In order for the amounts described above to be deductible by us or one of our affiliates, the amounts must constitute reasonable compensation for services rendered or to be rendered and must be ordinary and necessary business expenses. New Plan Benefits The Awards, if any, that will be made to eligible persons under the LTIP are subject to the discretion of the plan administrator and, therefore, we cannot currently determine the benefits or number of units subject to Awards that may be granted in the future to eligible employees, officers and directors under the LTIP, or the amount or the number of units that would have been granted to the eligible individuals had the LTIP been in place during the prior fiscal year. The Partnership made its annual equity awards under the LTIP for fiscal year 2022 to the NEOs, non-employee directors, and to its other eligible employees. The grants to the NEOs are reflected in the “Fiscal Year 2022 Grants of Plan-Based Awards” section that can be found on page 47 of this proxy statement. The grants to the non-employee directors are reflected in the “Director Compensation for 2022” table on page 20.
Proposal to Approve the Third Amendment to the Crestwood Equity Partners LP 2018 Long Term Incentive Plan (the “LTIP Proposal”) As of the date of this proxy statement, the following Awards have been granted under the LTIP since August 20, 2021:
Securities Authorized for Issuance Under Equity Compensation Plans As of the date of the adoption of the Third Amendment to the LTIP, the number of units that may be delivered with respect to awards under the LTIP may not exceed 4,016,305 units, subject to specified anti-dilution adjustments. Vote Required The approval of a majority of the votes cast by our common unitholders is required to approve the LTIP Proposal. Votes “for” and “against” and abstentions count as votes cast. Thus, abstentions have the effect of a vote against the LTIP Proposal. Executed proxies returned by a broker or other nominee holding common units in “street name” indicating that the broker or other nominee does not have discretionary authority as to certain common units to vote on the proposals (a “broker non-vote”) do not count as votes cast. The number of votes cast “for” the LTIP Proposal must represent a majority of the votes cast in respect of the LTIP Proposal in order to be approved. A properly executed proxy submitted without voting instructions will be voted (except to the extent that the authority to vote has been withheld) “FOR” the LTIP Proposal. Recommendation
The accompanying proxy is solicited by and on behalf of the Board of Directors, and the cost of such solicitation will be borne by the Partnership. D.F. King & Co., Inc. may solicit proxies by personal interview, mail, telephone, and electronic communications. We will pay $25,000 for additional proxy solicitation services. We will also supply proxy materials to brokers and other nominees to solicit proxies from beneficial owners, and we will reimburse them for their expenses in forwarding solicitation materials. Solicitations also may be made by personal interview, mail, telephone, and electronic communications by directors, officers, and other employees of the Partnership without additional compensation. Other Matters As of the date of this proxy statement there are no other matters that we intend to present, or have reason to believe others will present, at the Annual Meeting. If, however, other matters properly come before the Annual Meeting, the accompanying proxy authorizes the persons named as proxies or their substitutes to vote on such matters as they determine appropriate. Proposals of Unitholders Our Partnership Agreement includes separate advance notice provisions applicable to unitholders desiring to bring nominations for directors before an annual To be timely, a unitholder who intends to present nominations or a proposal at the 2023 Annual Meeting of Unitholders other than pursuant to the Partnership Agreement’ proxy access provisions or Rule 14a-8 must provide the information set forth in the Partnership Agreement to the General Partner no later than the close of business on the 90th day, nor earlier than the close of business on the 120th day, prior to the first anniversary of this Annual Meeting. However, if we hold the 2023 Annual Meeting of Unitholders more than 30 days before, or more than 70 days after, the anniversary of the 2022 Annual Meeting date, then the information must be received no earlier than the 120th day prior to the 2023 Annual Meeting date, and not later than (i) the 90th day prior to the 2023 Annual Meeting date and (ii) the tenth day after public disclosure of the 2023 Annual Meeting date, whichever is later. If a unitholder fails to meet these deadlines and fails to satisfy the requirements of Rule 14a-4 under the Securities Exchange Act of 1934, we may exercise discretionary voting authority under proxies we solicit to vote on any such proposal as we determine appropriate. We reserve the right to reject, rule out of order, or take other appropriate action with respect to any nomination or proposal that does not comply with these and other applicable requirements. Householding; Availability of Annual Report on Form 10-K and Proxy Statement A copy of our Annual Report on Form 10-K for the year ended December 31,
Other Information and proxy statement, or Notice of Internet Availability of Proxy Materials, as applicable, from each
company whose units are held in such accounts. This practice, known as “householding,” is designed to reduce the volume of duplicate information and reduce printing and postage costs. Unless you responded that you did not want to participate in householding, you were deemed to have consented to it, and a single copy of this proxy statement and the If you would like to revoke your consent to householding and in the future receive your own set of proxy materials (or your own Notice of Internet Availability of Proxy Materials, as applicable), or if your household is currently receiving multiple copies of the same items and you would like in the future to receive only a single copy at your address, please contact Investor Relations at (832) 519-2200, or write to Crestwood Equity Partners LP, 811 Main Street, Suite 3400, Houston, Texas 77002, and indicate your name, the name of each of your brokerage firms or banks where your common units are held, and your account numbers. The revocation of a consent to householding will be effective 30 days following its receipt. You will also have an opportunity to opt in or opt out of householding by contacting your bank or broker. If you would like an additional copy of the If you own common units in street name, you can also register to receive all future unitholder communications electronically, instead of in print. This means that links to the annual report, proxy statement, and other correspondence will be delivered to you via e-mail. Holders in street name should follow the instructions received from your bank or broker to register for electronic delivery.
Annex A THIRD AMENDMENT TO THE CRESTWOOD EQUITY PARTNERS LP 2018 LONG TERM INCENTIVE PLAN WHEREAS, Crestwood Equity GP, LLC, a Delaware limited liability company (the “General Partner”), the general partner of Crestwood Equity Partners LP, a Delaware limited partnership (the “Partnership”) has previously adopted the Crestwood Equity Partners LP 2018 Long Term Incentive Plan (the “Plan”); WHEREAS, the General Partner now desires to amend the Plan to increase the number of units available for issuance pursuant to the Plan; WHEREAS, the Plan was previously amended pursuant to the First Amendment to the Plan which amendment was effective immediately prior to the closing of the acquisition by the Partnership of all of the outstanding limited liability company interests in the General Partner (the “First Amendment Effective Date”) NOW, THEREFORE, the Plan shall be amended pursuant to this Third Amendment as follows effective April 1, 2023 (the “Amendment Effective Date”), subject to approval of the Partnership’s unitholders at the 2023 Annual Meeting:
“Subject to adjustment as provided in Section 4(c) and Section 7, the number of Units that may be delivered on and after the First Amendment Effective Date, with respect to Awards under the Plan is 6.5 million and includes 4 million Units available as of the First Amendment Effective Date and an additional 2.5 million Units available as of the Third Amendment Effective Date.”
IN WITNESS WHEREOF, the undersigned has caused this Third Amendment to be on the Amendment Effective Date, effective for all purposes as provided above.
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This proxy is being solicited on behalf of the Board of Directors The undersigned hereby appoints Robert T. Halpin, Joel C. Lambert and Michael K. Post (the “Named Proxies”), and each or either of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote all the units of Crestwood Equity Partners LP which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given. THE UNITS REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, UNITS WILL BE VOTED IDENTICAL TO THE BOARD OF DIRECTORS’ RECOMMENDATION. This proxy, when properly executed, will be voted in the manner directed herein. In their discretion, the Named Proxies are authorized to vote upon such other matters that may properly come before the meeting or any adjournment or postponement thereof. You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board of Directors’ recommendation. The Named Proxies cannot vote your units unless you sign (on the reverse side) and return this card. PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE Crestwood Equity Partners LP Annual Meeting of Holders Please make your marks like this: ☒
THE BOARD OF DIRECTORS RECOMMENDS A VOTE:
You must register to attend the meeting online and/or participate at www.proxydocs.com/CEQP Authorized Signatures - Must be completed for your instructions to be executed. Please sign exactly as your name(s) appears on your account. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy/Vote Form.
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